G.R. No.

L-63915 April 24, 1985

LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR
BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON.
JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President ,
MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacaang Records Office, and
FLORENDO S. PABLO, in his capacity as Director, Bureau of Printing, respondents.

e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492,
494-507, 509-510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-553,
560, 563, 567-568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679703, 705-707, 712-786, 788-852, 854-857.

ESCOLIN, J.:
Invoking the people's right to be informed on matters of public concern, a right recognized in Section
6, Article IV of the 1973 Philippine Constitution, 1 as well as the principle that laws to be valid and
enforceable must be published in the Official Gazette or otherwise effectively promulgated,
petitioners seek a writ of mandamus to compel respondent public officials to publish, and/or cause
the publication in the Official Gazette of various presidential decrees, letters of instructions, general
orders, proclamations, executive orders, letter of implementation and administrative orders.
Specifically, the publication of the following presidential issuances is sought:
a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197,
200, 234, 265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360,
361, 368, 404, 406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521,
528, 551, 566, 573, 574, 594, 599, 644, 658, 661, 718, 731, 733, 793, 800,
802, 835, 836, 923, 935, 961, 1017-1030, 1050, 1060-1061, 1085, 1143, 1165,
1166, 1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808, 1810, 18131817, 1819-1826, 1829-1840, 1842-1847.
b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150,
153, 155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213,
215-224, 226-228, 231-239, 241-245, 248, 251, 253-261, 263-269, 271-273,
275-283, 285-289, 291, 293, 297-299, 301-303, 309, 312-315, 325, 327, 343,
346, 349, 357, 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444445, 473, 486, 488, 498, 501, 399, 527, 561, 576, 587, 594, 599, 600, 602,
609, 610, 611, 612, 615, 641, 642, 665, 702, 712-713, 726, 837-839, 878-879,
881, 882, 939-940, 964,997,1149-1178,1180-1278.
c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.

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d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526,
1529, 1532, 1535, 1538, 1540-1547, 1550-1558, 1561-1588, 1590-1595, 15941600, 1606-1609, 1612-1628, 1630-1649, 1694-1695, 1697-1701, 1705-1723,
1731-1734, 1737-1742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 17891795, 1797, 1800, 1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829,
1831-1832, 1835-1836, 1839-1840, 1843-1844, 1846-1847, 1849, 1853-1858,
1860, 1866, 1868, 1870, 1876-1889, 1892, 1900, 1918, 1923, 1933, 1952,
1963, 1965-1966, 1968-1984, 1986-2028, 2030-2044, 2046-2145, 2147-2161,
2163-2244.

f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76,
80-81, 92, 94, 95, 107, 120, 122, 123.
g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.
The respondents, through the Solicitor General, would have this case dismissed outright on the
ground that petitioners have no legal personality or standing to bring the instant petition. The view is
submitted that in the absence of any showing that petitioners are personally and directly affected or
prejudiced by the alleged non-publication of the presidential issuances in question 2 said petitioners
are without the requisite legal personality to institute this mandamus proceeding, they are not being
"aggrieved parties" within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote:
SEC. 3. Petition for Mandamus.When any tribunal, corporation, board or
person unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust, or station, or unlawfully
excludes another from the use a rd enjoyment of a right or office to which such
other is entitled, and there is no other plain, speedy and adequate remedy in
the ordinary course of law, the person aggrieved thereby may file a verified
petition in the proper court alleging the facts with certainty and praying that
judgment be rendered commanding the defendant, immediately or at some
other specified time, to do the act required to be done to Protect the rights of
the petitioner, and to pay the damages sustained by the petitioner by reason of
the wrongful acts of the defendant.
Upon the other hand, petitioners maintain that since the subject of the petition concerns a public
right and its object is to compel the performance of a public duty, they need not show any specific
interest for their petition to be given due course.

The issue posed is not one of first impression. As early as the 1910 case of Severino vs. Governor
General, 3 this Court held that while the general rule is that "a writ of mandamus would be granted to
a private individual only in those cases where he has some private or particular interest to be
subserved, or some particular right to be protected, independent of that which he holds with the
public at large," and "it is for the public officers exclusively to apply for the writ when public rights are
to be subserved [Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless, "when the question is one of
public right and the object of the mandamus is to procure the enforcement of a public duty, the
people are regarded as the real party in interest and the relator at whose instigation the proceedings
are instituted need not show that he has any legal or special interest in the result, it being sufficient
to show that he is a citizen and as such interested in the execution of the laws [High, Extraordinary
Legal Remedies, 3rd ed., sec. 431].
Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a proper
party to the mandamus proceedings brought to compel the Governor General to call a special
election for the position of municipal president in the town of Silay, Negros Occidental. Speaking for
this Court, Mr. Justice Grant T. Trent said:
We are therefore of the opinion that the weight of authority supports the
proposition that the relator is a proper party to proceedings of this character
when a public right is sought to be enforced. If the general rule in America were
otherwise, we think that it would not be applicable to the case at bar for the
reason 'that it is always dangerous to apply a general rule to a particular case
without keeping in mind the reason for the rule, because, if under the particular
circumstances the reason for the rule does not exist, the rule itself is not
applicable and reliance upon the rule may well lead to error'
No reason exists in the case at bar for applying the general rule insisted upon
by counsel for the respondent. The circumstances which surround this case are
different from those in the United States, inasmuch as if the relator is not a
proper party to these proceedings no other person could be, as we have seen
that it is not the duty of the law officer of the Government to appear and
represent the people in cases of this character.
The reasons given by the Court in recognizing a private citizen's legal personality in the
aforementioned case apply squarely to the present petition. Clearly, the right sought to be enforced
by petitioners herein is a public right recognized by no less than the fundamental law of the land. If
petitioners were not allowed to institute this proceeding, it would indeed be difficult to conceive of
any other person to initiate the same, considering that the Solicitor General, the government officer
generally empowered to represent the people, has entered his appearance for respondents in this
case.

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Respondents further contend that publication in the Official Gazette is not a sine qua non
requirement for the effectivity of laws where the laws themselves provide for their own effectivity
dates. It is thus submitted that since the presidential issuances in question contain special
provisions as to the date they are to take effect, publication in the Official Gazette is not
indispensable for their effectivity. The point stressed is anchored on Article 2 of the Civil Code:
Art. 2. Laws shall take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided, ...
The interpretation given by respondent is in accord with this Court's construction of said article. In a
long line of decisions, 4 this Court has ruled that publication in the Official Gazette is necessary in
those cases where the legislation itself does not provide for its effectivity date-for then the date of
publication is material for determining its date of effectivity, which is the fifteenth day following its
publication-but not when the law itself provides for the date when it goes into effect.
Respondents' argument, however, is logically correct only insofar as it equates the effectivity of laws
with the fact of publication. Considered in the light of other statutes applicable to the issue at hand,
the conclusion is easily reached that said Article 2 does not preclude the requirement of publication
in the Official Gazette, even if the law itself provides for the date of its effectivity. Thus, Section 1 of
Commonwealth Act 638 provides as follows:
Section 1. There shall be published in the Official Gazette [1] all important
legisiative acts and resolutions of a public nature of the, Congress of the
Philippines; [2] all executive and administrative orders and proclamations,
except such as have no general applicability; [3] decisions or abstracts of
decisions of the Supreme Court and the Court of Appeals as may be deemed
by said courts of sufficient importance to be so published; [4] such documents
or classes of documents as may be required so to be published by law; and [5]
such documents or classes of documents as the President of the Philippines
shall determine from time to time to have general applicability and legal effect,
or which he may authorize so to be published. ...
The clear object of the above-quoted provision is to give the general public adequate notice of the
various laws which are to regulate their actions and conduct as citizens. Without such notice and
publication, there would be no basis for the application of the maxim "ignorantia legis non excusat."
It would be the height of injustice to punish or otherwise burden a citizen for the transgression of a
law of which he had no notice whatsoever, not even a constructive one.
Perhaps at no time since the establishment of the Philippine Republic has the publication of laws
taken so vital significance that at this time when the people have bestowed upon the President a
power heretofore enjoyed solely by the legislature. While the people are kept abreast by the mass
media of the debates and deliberations in the Batasan Pambansaand for the diligent ones, ready

access to the legislative recordsno such publicity accompanies the law-making process of the
President. Thus, without publication, the people have no means of knowing what presidential
decrees have actually been promulgated, much less a definite way of informing themselves of the
specific contents and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo la
denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos,
Instrucciones, Circulares y Reales ordines dictadas de conformidad con las mismas por el Gobierno
en uso de su potestad. 5
The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in the
Official Gazette ... ." The word "shall" used therein imposes upon respondent officials an imperative
duty. That duty must be enforced if the Constitutional right of the people to be informed on matters of
public concern is to be given substance and reality. The law itself makes a list of what should be
published in the Official Gazette. Such listing, to our mind, leaves respondents with no discretion
whatsoever as to what must be included or excluded from such publication.
The publication of all presidential issuances "of a public nature" or "of general applicability" is
mandated by law. Obviously, presidential decrees that provide for fines, forfeitures or penalties for
their violation or otherwise impose a burden or. the people, such as tax and revenue measures, fall
within this category. Other presidential issuances which apply only to particular persons or class of
persons such as administrative and executive orders need not be published on the assumption that
they have been circularized to all concerned. 6
It is needless to add that the publication of presidential issuances "of a public nature" or "of general
applicability" is a requirement of due process. It is a rule of law that before a person may be bound
by law, he must first be officially and specifically informed of its contents. As Justice Claudio
Teehankee said in Peralta vs. COMELEC 7:
In a time of proliferating decrees, orders and letters of instructions which all
form part of the law of the land, the requirement of due process and the Rule of
Law demand that the Official Gazette as the official government repository
promulgate and publish the texts of all such decrees, orders and instructions so
that the people may know where to obtain their official and specific contents.
The Court therefore declares that presidential issuances of general application, which have not been
published, shall have no force and effect. Some members of the Court, quite apprehensive about the
possible unsettling effect this decision might have on acts done in reliance of the validity of those
presidential decrees which were published only during the pendency of this petition, have put the
question as to whether the Court's declaration of invalidity apply to P.D.s which had been enforced
or implemented prior to their publication. The answer is all too familiar. In similar situations in the
past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage
District vs. Baxter Bank 8 to wit:

3|Page

The courts below have proceeded on the theory that the Act of Congress,
having been found to be unconstitutional, was not a law; that it was inoperative,
conferring no rights and imposing no duties, and hence affording no basis for
the challenged decree. Norton v. Shelby County, 118 U.S. 425, 442; Chicago,
1. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, however, that
such broad statements as to the effect of a determination of unconstitutionality
must be taken with qualifications. The actual existence of a statute, prior to
such a determination, is an operative fact and may have consequences which
cannot justly be ignored. The past cannot always be erased by a new judicial
declaration. The effect of the subsequent ruling as to invalidity may have to be
considered in various aspects-with respect to particular conduct, private and
official. Questions of rights claimed to have become vested, of status, of prior
determinations deemed to have finality and acted upon accordingly, of public
policy in the light of the nature both of the statute and of its previous
application, demand examination. These questions are among the most difficult
of those which have engaged the attention of courts, state and federal and it is
manifest from numerous decisions that an all-inclusive statement of a principle
of absolute retroactive invalidity cannot be justified.
Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the right of a party
under the Moratorium Law, albeit said right had accrued in his favor before said law was declared
unconstitutional by this Court.
Similarly, the implementation/enforcement of presidential decrees prior to their publication in the
Official Gazette is "an operative fact which may have consequences which cannot be justly ignored.
The past cannot always be erased by a new judicial declaration ... that an all-inclusive statement of
a principle of absolute retroactive invalidity cannot be justified."
From the report submitted to the Court by the Clerk of Court, it appears that of the presidential
decrees sought by petitioners to be published in the Official Gazette, only Presidential Decrees Nos.
1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have not been so published. 10 Neither
the subject matters nor the texts of these PDs can be ascertained since no copies thereof are
available. But whatever their subject matter may be, it is undisputed that none of these unpublished
PDs has ever been implemented or enforced by the government. In Pesigan vs. Angeles, 11the
Court, through Justice Ramon Aquino, ruled that "publication is necessary to apprise the public of
the contents of [penal] regulations and make the said penalties binding on the persons affected
thereby. " The cogency of this holding is apparently recognized by respondent officials considering
the manifestation in their comment that "the government, as a matter of policy, refrains from
prosecuting violations of criminal laws until the same shall have been published in the Official
Gazette or in some other publication, even though some criminal laws provide that they shall take
effect immediately.

WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all
unpublished presidential issuances which are of general application, and unless so published, they
shall have no binding force and effect.
SO ORDERED.

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G.R. No. L-63915 December 29, 1986

LORENZO M. TA;ADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR
BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. (MABINI), petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON.
JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President,
MELQUIADES P. DE LA CRUZ, ETC., ET AL., respondents.
RESOLUTION

CRUZ, J.:
Due process was invoked by the petitioners in demanding the disclosure of a number of presidential
decrees which they claimed had not been published as required by law. The government argued that
while publication was necessary as a rule, it was not so when it was "otherwise provided," as when
the decrees themselves declared that they were to become effective immediately upon their
approval. In the decision of this case on April 24, 1985, the Court affirmed the necessity for the
publication of some of these decrees, declaring in the dispositive portion as follows:
WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all
unpublished presidential issuances which are of general application, and unless so
published, they shall have no binding force and effect.
The petitioners are now before us again, this time to move for reconsideration/clarification of that
decision. 1Specifically, they ask the following questions:
1. What is meant by "law of public nature" or "general applicability"?
2. Must a distinction be made between laws of general applicability and laws which are not?
3. What is meant by "publication"?
4. Where is the publication to be made?
5. When is the publication to be made?

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Resolving their own doubts, the petitioners suggest that there should be no distinction between laws
of general applicability and those which are not; that publication means complete publication; and
that the publication must be made forthwith in the Official Gazette. 2
In the Comment 3 required of the then Solicitor General, he claimed first that the motion was a
request for an advisory opinion and should therefore be dismissed, and, on the merits, that the
clause "unless it is otherwise provided" in Article 2 of the Civil Code meant that the publication
required therein was not always imperative; that publication, when necessary, did not have to be
made in the Official Gazette; and that in any case the subject decision was concurred in only by
three justices and consequently not binding. This elicited a Reply 4 refuting these arguments. Came
next the February Revolution and the Court required the new Solicitor General to file a Rejoinder in
view of the supervening events, under Rule 3, Section 18, of the Rules of Court. Responding, he
submitted that issuances intended only for the internal administration of a government agency or for
particular persons did not have to be 'Published; that publication when necessary must be in full and
in the Official Gazette; and that, however, the decision under reconsideration was not binding
because it was not supported by eight members of this Court. 5
The subject of contention is Article 2 of the Civil Code providing as follows:
ART. 2. Laws shall take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided. This Code shall take
effect one year after such publication.
After a careful study of this provision and of the arguments of the parties, both on the original
petition and on the instant motion, we have come to the conclusion and so hold, that the clause
"unless it is otherwise provided" refers to the date of effectivity and not to the requirement of
publication itself, which cannot in any event be omitted. This clause does not mean that the
legislature may make the law effective immediately upon approval, or on any other date, without its
previous publication.
Publication is indispensable in every case, but the legislature may in its discretion provide that the
usual fifteen-day period shall be shortened or extended. An example, as pointed out by the present
Chief Justice in his separate concurrence in the original decision, 6 is the Civil Code which did not
become effective after fifteen days from its publication in the Official Gazette but "one year after
such publication." The general rule did not apply because it was "otherwise provided. "
It is not correct to say that under the disputed clause publication may be dispensed with altogether.
The reason. is that such omission would offend due process insofar as it would deny the public
knowledge of the laws that are supposed to govern the legislature could validly provide that a law e
effective immediately upon its approval notwithstanding the lack of publication (or after an
unreasonably short period after publication), it is not unlikely that persons not aware of it would be

prejudiced as a result and they would be so not because of a failure to comply with but simply
because they did not know of its existence, Significantly, this is not true only of penal laws as is
commonly supposed. One can think of many non-penal measures, like a law on prescription, which
must also be communicated to the persons they may affect before they can begin to operate.
We note at this point the conclusive presumption that every person knows the law, which of course
presupposes that the law has been published if the presumption is to have any legal justification at
all. It is no less important to remember that Section 6 of the Bill of Rights recognizes "the right of the
people to information on matters of public concern," and this certainly applies to, among others, and
indeed especially, the legislative enactments of the government.
The term "laws" should refer to all laws and not only to those of general application, for strictly
speaking all laws relate to the people in general albeit there are some that do not apply to them
directly. An example is a law granting citizenship to a particular individual, like a relative of President
Marcos who was decreed instant naturalization. It surely cannot be said that such a law does not
affect the public although it unquestionably does not apply directly to all the people. The subject of
such law is a matter of public interest which any member of the body politic may question in the
political forums or, if he is a proper party, even in the courts of justice. In fact, a law without any
bearing on the public would be invalid as an intrusion of privacy or as class legislation or as anultra
vires act of the legislature. To be valid, the law must invariably affect the public interest even if it
might be directly applicable only to one individual, or some of the people only, and t to the public as
a whole.
We hold therefore that all statutes, including those of local application and private laws, shall be
published as a condition for their effectivity, which shall begin fifteen days after publication unless a
different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in
the exercise of legislative powers whenever the same are validly delegated by the legislature or, at
present, directly conferred by the Constitution. administrative rules and regulations must a also be
published if their purpose is to enforce or implement existing law pursuant also to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of
the administrative agency and not the public, need not be published. Neither is publication required
of the so-called letters of instructions issued by administrative superiors concerning the rules or
guidelines to be followed by their subordinates in the performance of their duties.
Accordingly, even the charter of a city must be published notwithstanding that it applies to only a
portion of the national territory and directly affects only the inhabitants of that place. All presidential
decrees must be published, including even, say, those naming a public place after a favored
individual or exempting him from certain prohibitions or requirements. The circulars issued by the

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Monetary Board must be published if they are meant not merely to interpret but to "fill in the details"
of the Central Bank Act which that body is supposed to enforce.
However, no publication is required of the instructions issued by, say, the Minister of Social Welfare
on the case studies to be made in petitions for adoption or the rules laid down by the head of a
government agency on the assignments or workload of his personnel or the wearing of office
uniforms. Parenthetically, municipal ordinances are not covered by this rule but by the Local
Government Code.
We agree that publication must be in full or it is no publication at all since its purpose is to inform the
public of the contents of the laws. As correctly pointed out by the petitioners, the mere mention of
the number of the presidential decree, the title of such decree, its whereabouts (e.g., "with Secretary
Tuvera"), the supposed date of effectivity, and in a mere supplement of the Official Gazette cannot
satisfy the publication requirement. This is not even substantial compliance. This was the manner,
incidentally, in which the General Appropriations Act for FY 1975, a presidential decree undeniably of
general applicability and interest, was "published" by the Marcos administration. 7 The evident
purpose was to withhold rather than disclose information on this vital law.
Coming now to the original decision, it is true that only four justices were categorically for publication
in the Official Gazette 8 and that six others felt that publication could be made elsewhere as long as
the people were sufficiently informed. 9 One reserved his vote 10 and another merely acknowledged
the need for due publication without indicating where it should be made. 11 It is therefore necessary
for the present membership of this Court to arrive at a clear consensus on this matter and to lay
down a binding decision supported by the necessary vote.
There is much to be said of the view that the publication need not be made in the Official Gazette,
considering its erratic releases and limited readership. Undoubtedly, newspapers of general
circulation could better perform the function of communicating, the laws to the people as such
periodicals are more easily available, have a wider readership, and come out regularly. The trouble,
though, is that this kind of publication is not the one required or authorized by existing law. As far as
we know, no amendment has been made of Article 2 of the Civil Code. The Solicitor General has not
pointed to such a law, and we have no information that it exists. If it does, it obviously has not yet
been published.
At any rate, this Court is not called upon to rule upon the wisdom of a law or to repeal or modify it if
we find it impractical. That is not our function. That function belongs to the legislature. Our task is
merely to interpret and apply the law as conceived and approved by the political departments of the
government in accordance with the prescribed procedure. Consequently, we have no choice but to
pronounce that under Article 2 of the Civil Code, the publication of laws must be made in the Official
Gazett and not elsewhere, as a requirement for their effectivity after fifteen days from such
publication or after a different period provided by the legislature.

We also hold that the publication must be made forthwith or at least as soon as possible, to give
effect to the law pursuant to the said Article 2. There is that possibility, of course, although not
suggested by the parties that a law could be rendered unenforceable by a mere refusal of the
executive, for whatever reason, to cause its publication as required. This is a matter, however, that
we do not need to examine at this time.
Finally, the claim of the former Solicitor General that the instant motion is a request for an advisory
opinion is untenable, to say the least, and deserves no further comment.
The days of the secret laws and the unpublished decrees are over. This is once again an open
society, with all the acts of the government subject to public scrutiny and available always to public
cognizance. This has to be so if our country is to remain democratic, with sovereignty residing in the
people and all government authority emanating from them.
Although they have delegated the power of legislation, they retain the authority to review the work of
their delegates and to ratify or reject it according to their lights, through their freedom of expression
and their right of suffrage. This they cannot do if the acts of the legislature are concealed.
Laws must come out in the open in the clear light of the sun instead of skulking in the shadows with
their dark, deep secrets. Mysterious pronouncements and rumored rules cannot be recognized as
binding unless their existence and contents are confirmed by a valid publication intended to make
full disclosure and give proper notice to the people. The furtive law is like a scabbarded saber that
cannot feint parry or cut unless the naked blade is drawn.
WHEREFORE, it is hereby declared that all laws as above defined shall immediately upon their
approval, or as soon thereafter as possible, be published in full in the Official Gazette, to become
effective only after fifteen days from their publication, or on another date specified by the legislature,
in accordance with Article 2 of the Civil Code.
SO ORDERED.

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G.R. No. 103144

April 4, 2001

PHILSA INTERNATIONAL PLACEMENT and SERVICES CORPORATION, petitioner,

vs.
THE HON. SECRETARY OF LABOR AND EMPLOYMENT, VIVENCIO DE MESA, RODRIGO
MIKIN and CEDRIC LEYSON, respondents.

2. Payment of salary differentials;

3. Illegal deduction/withholding of salaries;
4. Illegal exactions/refund of placement fees; and
5. Contract substitution. 4

GONZAGA-REYES, J.:
The case was docketed as POEA Case No. (L) 85-05 0370.
This is a petition for certiorari from the Order dated November 25, 1991 issued by public respondent
Secretary of Labor and Employment. The November 25, 1991 Order affirmed in toto the August 29,
1988 Order of the Philippine Overseas Employment Administration (hereinafter the "POEA") which
found petitioner liable for three (3) counts of illegal exaction, two (2) counts of contract substitution
and one count of withholding or unlawful deduction from salaries of workers in POEA Case No. (L)
85-05-0370.
Petitioner Philsa International Placement and Services Corporation (hereinafter referred to as
"Philsa") is a domestic corporation engaged in the recruitment of workers for overseas employment.
Sometime in January 1985, private respondents, who were recruited by petitioner for employment in
Saudi Arabia, were required to pay placement fees in the amount of P5,000.00 for private
respondent Rodrigo L. Mikin and P6,500.00 each for private respondents Vivencio A. de Mesa and
Cedric P. Leyson.1

Under the rules of the POEA dated May 21, 1985, complaints involving employer-employee relations
arising out of or by virtue of any law or contract involving Filipino workers for overseas employment,
including money claims, are adjudicated by the Workers' Assistance and Adjudication Office
(hereinafter the "WAAO") thru the POEA Hearing Officers.5 On the other hand, complaints involving
recruitment violations warranting suspension or cancellation of the license of recruiting agencies are
cognizable by the POEA thru its Licensing and Recruitment Office (hereinafter the "LRO"). 6 In cases
where a complaint partakes of the nature of both an employer-employee relationship case and a
recruitment regulation case, the POEA Hearing Officer shall act as representative of both the WAAO
and the LRO and both cases shall be heard simultaneously. In such cases, the Hearing Officer shall
submit two separate recommendations for the two aspects of the case. 7

After the execution of their respective work contracts, private respondents left for Saudi Arabia on
January 29, 1985. They then began work for Al-Hejailan Consultants A/E, the foreign principal of
petitioner.

In the case at bench, the first two causes of action were in the nature of money claims arising from
the employer-employee relations and were properly cognizable by the WAAO. The last two causes
of action were in the nature of recruitment violations and may be investigated by the LRO. The third
cause of action, illegal deduction/withholding of salary, is both a money claim and a violation of
recruitment regulations and is thus under the investigatory jurisdiction of both the WAAO and the
LRO.

While in Saudi Arabia, private respondents were allegedly made to sign a second contract on
February 4, 1985 which changed some of the provisions of their original contract resulting in the
reduction of some of their benefits and privileges.2 On April 1, 1985, their foreign employer allegedly
forced them to sign a third contract which increased their work hours from 48 hours to 60 hours a
week without any corresponding increase in their basic monthly salary. When they refused to sign
this third contract, the services of private respondents were terminated by Al-Hejailan and they were
repatriated to the Philippines.3

Several hearings were conducted before the POEA Hearing Officer on the two aspects of private
respondents' complaint. During these hearings, private respondents supported their complaint with
the presentation of both documentary and testimonial evidence. When it was its turn to present its
evidence, petitioner failed to do so and consequently, private respondents filed a motion to decide
the case on the basis of the evidence on record. 8

Upon their arrival in the Philippines, private respondents demanded from petitioner Philsa the return
of their placement fees and for the payment of their salaries for the unexpired portion of their
contract. When petitioner refused, they filed a case before the POEA against petitioner Philsa and its
foreign principal, Al-Hejailan., with the following causes of action:
1. Illegal dismissal;

8|Page

On the aspects of the case involving money claims arising from the employer-employee relations
and illegal dismissal, the POEA rendered a decision dated August 31, 1988 9 , the dispositive portion
of which reads:
"CONFORMABLY TO THE FOREGOING, judgment is hereby rendered ordering
respondent PHILSA INTERNATIONAL PLACEMENT AND SERVICE CORPORATION to
pay complainants, jointly and severally with its principal Al-Hejailan, the following
amounts, to wit:

1. TWO THOUSAND TWO HUNDRED TWENTY FIVE SAUDI RIYALS (SR2,225.00) to

each complainant, representing the refund of their unpaid separation pay;
2. ONE THOUSAND SAUDI RIYALS (SR1,000.00) for V.A. de Mesa alone, representing
the salary deduction from his March salary;
3. TWO THOUSAND SAUDI RIYALS (SR2,000.00) each for R.I. Mikin and C.A.P. Leyson
only, representing their differential pay for the months of February and March, 1985; and
4. Five percent (5%) of the total awards as and by way of attorney's fees.
All payments of the abovestated awards shall be made in Philippine Currency equivalent
to the prevailing exchange rate according to the Central Bank at the time of payment.
All other claims of complainants as well as the counterclaims of respondent are dismissed
for lack of merit.
SO ORDERED." 10
Under the Rules and Regulations of the POEA, the decision of the POEA-Adjudication Office on
matters involving money claims arising from the employer-employee relationship of overseas Filipino
workers may be appealed to the National Labor Relations Commission (hereinafter the "NLRC)11 .
Thus, as both felt aggrieved by the said POEA Decision, petitioner and private respondents filed
separate appeals from the August 31, 1988 POEA Decision to the NLRC.
In a decision dated July 26, 1989 12 , the NLRC modified the appealed decision of the POEA
Adjudication Office by deleting the award of salary deductions and differentials. These awards to
private respondents were deleted by the NLRC considering that these were not raised in the
complaint filed by private respondents. The NLRC likewise stated that there was nothing in the text
of the decision which would justify the award.
Private respondents filed a Motion for Reconsideration but the same was denied by the NLRC in a
Resolution dated October 25; 1989.
Private respondents then elevated the July 26, 1989 decision of the NLRC to the Supreme Court in
a petition for review for certiorari where it was docketed as G.R. No. 89089. However, in a
Resolution dated October 25, 1989, the petition was dismissed outright for "insufficiency in form and
substance, having failed to comply with the Rules of Court and Circular No. 1-88 requiring
submission of a certified true copy of the questioned resolution dated August 23, 1989." 13
Almost simultaneous with the promulgation of the August 31, 1988 decision of the POEA on private
respondents' money claims, the POEA issued a separate Order dated August 29, 1988 14 resolving
9|Page

the recruitment violations aspect of private respondents' complaint. In this Order, the POEA found
petitioner guilty of illegal exaction, contract substitution, and unlawful deduction. The dispositive
portion of this August 29, 1988 POEA Order reads:
"WHEREFORE, premises considered, this Office finds herein respondent PHILSA
International Placement and Services Corporation liable for three (3) counts of illegal
exaction, two (2) counts of contract substitution and one count of withholding or unlawful
deduction from salaries of workers.
Accordingly, respondent is hereby ordered to refund the placement fees in the amount of
P2,500.00 to Rodrigo L. Mikin, P4,000.00, each, to Vivencio A. de Mesa and Cedric A.P.
Leyson plus restitution of the salaries withheld in the amount of SR1,000.00 to Vivencio A.
de Mesa.
Moreover, respondent's license is hereby suspended for eight (8) months to take effect
immediately and to remain as such until full refund and restitution of the above-stated
amounts have been effected or in lieu thereof, it is fined the amount of SIXTY
THOUSAND (P60,000.00) PESOS plus restitution.
SO ORDERED."
In line with this August 29, 1988 Order, petitioner deposited the check equivalent to the claims of
private respondents and paid the corresponding fine under protest. From the said Order, petitioner
filed a Motion for Reconsideration which was subsequently denied in an Order dated October 10,
1989.
Under the POEA Rules and Regulations, the decision of the POEA thru the LRO suspending or
canceling a license or authority to act as a recruitment agency may be appealed to the Ministry (now
Department) of Labor and Employment. 15 Accordingly, after the denial of its motion for
reconsideration, petitioner appealed the August 21, 1988 Order to the Secretary of Labor and
Employment. However, in an Order dated September 13, 1991,16 public respondent Secretary of
Labor and Employment affirmed in toto the assailed Order. Petitioner filed a Motion for
Reconsideration but this was likewise denied in an Order dated November 25, 1991.
Hence, the instant Petition for Certiorari where petitioner raises the following grounds for the
reversal of the questioned Orders:
I
THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF
JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION IN HOLDING PETITIONER

GUILTY OF ILLEGAL EXACTIONS. THE FINDING IS NOT SUPPORTED BY EVIDENCE

AND IN ANY EVENT, THE LAW ON WHICH THE CONVICTION IS BASED IS VOID.
II
THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF
JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION IN PENALIZING
PETITIONER WITH CONTRACT SUBSTITUTION. IN THE PREMISES, THE
CONTRACT SUBSTITUTION IS VALID AS IT IMPROVED THE TERMS AND
CONDITIONS OF PRIVATE RESPONDENTS' EMPLOYMENT.

On this point, we have carefully examined the records of the case and it is clear that the ruling of
public respondent POEA that petitioner is guilty of illegal exaction is supported by substantial
evidence. Aside from the testimonial evidence offered by private respondents, they also presented
documentary evidence consisting of receipts issued by a duly authorized representative of petitioner
which show the payment of amounts in excess of those allowed by the POEA. In contrast, petitioner
did not present any evidence whatsoever to rebut the claims of private respondents despite the
many opportunities for them to do so.
Petitioner insists, however, that it cannot be held liable for illegal exaction as POEA Memorandum
Circular No. 11, Series of 1983, which enumerated the allowable fees which may be collected from
applicants, is void for lack of publication.

III.
There is merit in the argument.
THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF
JURISDICTION, OR WITH GRAVE ABUSE OF DISCRETION IN HOLDING PETITIONER
LIABLE FOR ILLEGAL DEDUCTIONS/WITHHOLDING OF SALARIES FOR THE
SUPREME COURT ITSELF HAS ALREADY ABSOLVED PETITIONER FROM THIS
CHARGE.
With respect to the first ground, petitioner would want us to overturn the findings of the POEA,
subsequently affirmed by the Secretary of the Department of Labor and Employment, that it is guilty
of illegal exaction committed by collecting placement fees in excess of the amounts allowed by law.
This issue, however, is a question of fact which cannot be raised in a petition for certiorari under
Rule 65. 17 As we have previously held:
"It should be noted, in the first place, that the instant petition is a special civil action for
certiorari under Rule 65 of the Revised Rules of Court. An extraordinary remedy, its use is
available only and restrictively in truly exceptional cases wherein the action of an inferior
court, board or officer performing judicial or quasi-judicial acts is challenged for being
wholly void on grounds of jurisdiction. The sole office of the writ of certiorari is the
correction of errors of jurisdiction including the commission of grave abuse of discretion
amounting to lack or excess of jurisdiction. It does not include correction of public
respondent NLRC's evaluation of the evidence and factual findings based thereon, which
are generally accorded not only great respect but even finality." 18
The question of whether or not petitioner charged private respondents placement fees in excess of
that allowed by law is clearly a question of fact which is for public respondent POEA, as a trier of
facts, to determine. As stated above, the settled rule is that the factual findings of quasi-judicial
agencies like the POEA, which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but at times even finality if such findings
are supported by substantial evidence. 19

10 | P a g e

In Taada vs. Tuvera 20 , the Court held, as follows:

"We hold therefore that all statutes, including those of local application and private laws,
shall be published as a condition for their effectivity, which shall begin fifteen days after
publication unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the
President in the exercise of legislative powers whenever the same are validly delegated
by the legislature or, at present, directly conferred by the Constitution: Administrative rules
and regulations must also be published if their purpose is to enforce or implement existing
law pursuant to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the
personnel of the administrative agency and the public, need not be published. Neither is
publication required of the so-called letter of instructions issued by the administrative
superiors concerning the rules or guidelines to be followed by their subordinates in the
performance of their duties."
Applying this doctrine, we have previously declared as having no force and effect the following
administrative issuances: a) Rules and Regulations issued by the Joint Ministry of Health-Ministry of
Labor and Employment Accreditation Committee regarding the accreditation of hospitals, medical
clinics and laboratories; 21 b) Letter of Instruction No. 416 ordering the suspension of payments due
and payable by distressed copper mining companies to the national government; 22 c) Memorandum
Circulars issued by the POEA regulating the recruitment of domestic helpers to Hong Kong; 23 d)
Administrative Order No. SOCPEC 89-08-01 issued by the Philippine International Trading
Corporation regulating applications for importation from the People's Republic of China; 24and e)
Corporate Compensation Circular No. 10 issued by the Department of Budget and Management
discontinuing the payment of other allowances and fringe benefits to government officials and

employees. 25 In all these cited cases, the administrative issuances questioned therein were
uniformly struck down as they were not published or filed with the National Administrative Register
as required by the Administrative Code of 1987. 26

persons." Considering that POEA Administrative Circular No. 2 was never filed with the National
Administrative Register, the same cannot be used as basis for the imposition of administrative
sanctions against petitioner.

POEA Memorandum Circular No. 2, Series of 1983 must likewise be declared ineffective as the
same was never published or filed with the National Administrative Register.

The Office of the Solicitor General likewise argues that the questioned administrative circular is not
among those requiring publication contemplated by Taada vs. Tuvera as it is addressed only to a
specific group of persons and not to the general public.

POEA Memorandum Order No. 2, Series of 1983 provides for the applicable schedule of placement
and documentation fees for private employment agencies or authority holders. Under the said Order,
the maximum amount which may be collected from prospective Filipino overseas workers is
P2,500.00. The said circular was apparently issued in compliance with the provisions of Article 32 of
the Labor Code which provides, as follows:
"ARTICLE 32. Fees to be paid by workers. Any person applying with a private feecharging employment agency for employment assistance shall not be charged any fee
until he has obtained employment through its efforts or has actually commenced
employment. Such fee shall be always covered with the approved receipt clearly showing
the amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees."
(italic supplied)
It is thus clear that the administrative circular under consideration is one of those issuances which
should be published for its effectivity, since its purpose is to enforce and implement an existing law
pursuant to a valid delegation. 27 Considering that POEA Administrative Circular No. 2, Series of
1983 has not as yet been published or filed with the National Administrative Register, the same is
ineffective and may not be enforced.
The Office of the Solicitor General argues however that the imposition of administrative sanctions on
petitioner was based not on the questioned administrative circular but on Article 32 and Article 34
(a) 28 of the Labor Code.
The argument is not meritorious. The said articles of the Labor Code were never cited, much less
discussed, in the body of the questioned Orders of the POEA and Secretary of Labor and
Employment. In fact, the said Orders were consistent in mentioning that petitioner's violation of
Administrative Circular No. 2, Series of 1983 was the basis for the imposition of administrative
sanctions against petitioner. Furthermore, even assuming that petitioner was held liable under the
said provisions of the Labor Code, Articles 32 and 34 (a) of the Labor Code presupposes the
promulgation of a valid schedule of fees by the Department of Labor and Employment. Considering
that, as, previously discussed, Administrative Circular No. 2, Series of 1983 embodying such a
schedule of fees never took effect, there is thus no basis for the imposition of the administrative
sanctions against petitioner. Moreover, under Book VI, Chapter II, Section 3 of the Administrative
Code of 1987, "(r)ules in force on the date of the effectivity of this Code which are not filed within
three (3) months from that date shall not thereafter be the basis of any sanction against any party or

11 | P a g e

Again, there is no merit in this argument.

The fact that the said circular is addressed only to a specified group, namely private employment
agencies or authority holders, does not take it away from the ambit of our ruling in Taada vs.
Tuvera. In the case of Phil. Association of Service Exporters vs. Torres, 29 the administrative circulars
questioned therein were addressed to an even smaller group, namely Philippine and Hong Kong
agencies engaged in the recruitment of workers for Hong Kong, and still the Court ruled therein that,
for lack of proper publication, the said circulars may not be enforced or implemented.
Our pronouncement in Taada vs. Tuvera is clear and categorical. Administrative rules and
regulations must be published if their purpose is to enforce or implement existing law pursuant to a
valid delegation., The only exceptions are interpretative regulations, those merely internal in nature,
or those so-called letters of instructions issued by administrative superiors concerning the rules and
guidelines to be followed by their subordinates in the performance of their duties. Administrative
Circular No. 2, Series of 1983 has not been shown to fall under any of these exceptions.
In this regard, the Solicitor General's reliance on the case of Yaokasin vs. Commissioner of
Customs 30 is misplaced. In the said case, the validity of certain Customs Memorandum Orders were
upheld despite their lack of publication as they were addressed to a particular class of persons, the
customs collectors, who were also the subordinates of the Commissioner of the Bureau of Customs.
As such, the said Memorandum Orders clearly fall under one of the exceptions to the publication
requirement, namely those dealing with instructions from an administrative superior to a subordinate
regarding the performance of their duties, a circumstance which does not obtain in the case at
bench.
With respect to the second ground, petitioner would want us to review the findings of fact of the
POEA regarding the two counts of alleged contract substitution. Again, this is a question of fact
which may not be disturbed if the same is supported by substantial evidence. A reading of the
August 29, 1988 Order of the POEA shows that, indeed, the ruling that petitioner is guilty of two (2)
counts of prohibited contract substitution is supported by substantial evidence. Thus:
"2. As admitted by respondent, there was definitely a contract of substitution in the first
count. The first contract was duly approved by the Administration and, therefore, the
parties are bound by the terms and condition thereof until its expiration. The mere

intention of respondents to increase the number of hours of work, even if there was a
corresponding increase in wage is clear violation of the contract as approved by the
Administration, and notwithstanding the same, the amendment is evidently contrary to
law, morals, good customs and public policy and hence, must be shunned (Art. 1306, Civil
Code of the Philippines, Book III, Title I, Chapter 1, Article 83, Labor Code of the
Philippines, as amended). Moreover, it would appear that the proposed salary increase
corresponding to the increase in number of work bonus may just have been a ploy as
complainant were (sic) thereafter not paid at the increased rate.
As to contract substitution in the second part, a third contract was emphatically intended
by respondent to be signed by complainants which, however, was not consummated due
to the adamant refusal of complainants to sign thereon. Mere intention of the respondent
to commit contract substitution for a second time should not be left unpunished. It is the
duty of this Office to repress such acts by teaching agencies a lesson to avoid repetition
of the same violation." 31
With respect to the third ground, petitioner argues that the public respondent committed grave abuse
of discretion in holding petitioner liable for illegal deductions/withholding of salaries considering that
the Supreme Court itself has already absolved petitioner from this charge. Petitioner premises its
argument on the fact that the July 26, 1989 Decision of the NLRC absolving it from private
respondent de Mesa's claim for salary deduction has already attained finality by reason of the
dismissal of private respondents' petition for certiorari of the said NLRC decision by the Supreme
Court.
Petitioner is correct in stating that the July 26, 1989 Decision of the NLRC has attained finality by
reason of the dismissal of the petition for certiorari assailing the same. However, the said NLRC
Decision dealt only with the money claims of private respondents arising from employer-employee
relations and illegal dismissal and as such, it is only for the payment of the said money claims that
petitioner is absolved. The administrative sanctions, which are distinct and separate from the money
claims of private respondents, may still be properly imposed by the POEA. In fact, in the August 31,
1988 Decision of the POEA dealing with the money claims of private respondents, the POEA
Adjudication Office precisely declared that "respondent's liability for said money claims is without
prejudice to and independent of its liabilities for the recruitment violations aspect of the case which is
the subject of a separate Order." 32
The NLRC Decision absolving petitioner from paying private respondent de Mesa's claim for salary
deduction based its ruling on a finding that the said money claim was not raised in the
complaint. 33 While there may be questions regarding such finding of the NLRC, the finality of the
said NLRC Decision prevents us from modifying or reviewing the same. But the fact that the claim
for salary deduction was not raised by private respondents in their complaint will not bar the POEA
from holding petitioner liable for illegal deduction or withholding of salaries as a ground for the
suspension or cancellation of petitioner's license.

12 | P a g e

Under the POEA Rules and Regulations, the POEA, on its own initiative, may conduct the necessary
proceeding for the suspension or cancellation of the license of any private placement agency on any
of the grounds mentioned therein. 34 As such, even without a written complaint from an aggrieved
party, the POEA can initiate proceedings against an erring private placement agency and, if the
result of its investigation so warrants, impose the corresponding administrative sanction thereof.
Moreover, the POEA, in an investigation of an employer-employee relationship case, may still hold a
respondent liable for administrative sanctions if, in the course of its investigation, violations of
recruitment regulations are uncovered. 35 It is thus clear that even if recruitment violations were not
included in a complaint for money claims initiated by a private complainant, the POEA, under its
rules, may still take cognizance of the same and impose administrative sanctions if the evidence so
warrants.
As such, the fact that petitioner has been absolved by final judgment for the payment of the money
claim to private respondent de Mesa does not mean that it is likewise absolved from the
administrative sanctions which may be imposed as a result of the unlawful deduction or withholding
of private respondents' salary. The POEA thus committed no grave abuse of discretion in finding
petitioner administratively liable of one count of unlawful deduction/withholding of salary.
To summarize, petitioner should be absolved from the three (3) counts of illegal exaction as POEA
Administrative Circular No. 2, Series of 1983 could not be the basis of administrative sanctions
against petitioner for lack of publication. However, we affirm the ruling of the POEA and the
Secretary of Labor and Employment that petitioner should be held administratively liable for two (2)
counts of contract substitution and one (1) count of withholding or unlawful deduction of salary.
Under the applicable schedule of penalties imposed by the POEA, the penalty for each count of
contract substitution is suspension of license for two (2) months or a fine of P10,000.00 while the
penalty for withholding or unlawful deduction of salaries is suspension of license for two (2) months
or fine equal to the salary withheld but not less than P10,000.00 plus restitution of the amount in
both instances.36 Applying the said schedule on the instant case, the license of petitioner should be
suspended for six (6) months or, in lieu thereof, it should be ordered to pay fine in the amount of
P30,000.00. Petitioner should likewise pay the amount of SR1,000.00 to private respondent Vivencio
A. de Mesa as restitution for the amount withheld from his salary.
WHEREFORE, premises considered, the September 13, 1991 and November 25, 1991 Orders of
public respondent Secretary of Labor and Employment are hereby MODIFIED. As modified, the
license of private respondent Philsa International Placement and Services Corporation is hereby
suspended for six (6) months or, in lieu thereof, it is hereby ordered to pay the amount of
P30,000.00 as fine. Petitioner is likewise ordered to pay the amount of SR1,000.00 to private
respondent Vivencio A. de Mesa. All other monetary awards are deleted.
SO ORDERED.

13 | P a g e

G.R. No. 100335. April 7, 1993.

DECISION

UNCIANO PARAMEDICAL COLLEGE, INC. (now UNCIANO COLLEGES & GENERAL HOSPITAL,
INC.); MIRANDO C. UNCIANO, SR., DOMINADOR SANTOS AND EDITHA MORA, petitioners,
vs.
THE COURT OF APPEALS, Honorable LOURDES K. TAYAO-JAGUROS, in her capacity as
Presiding Judge, Regional Trial Court, Branch 21, Manila; ELENA VILLEGAS thru VICTORIA
VILLEGAS; and TED MAGALLANES thru JACINTA MAGALLANES, respondents.

NOCON, J p:
This is a petition for review on certiorari seeking reversal of the decision 1 of public respondent
Court of Appeals dated February 7, 1991, in CA-G.R. SP No. 21020; and its resolution dated June 3,
1991.
The antecedent facts are, as follows:

Bernardo P. Fernandez for petitioners.

Free Legal Assistance Group for private respondents.
SYLLABUS
1. STATUTORY CONSTRUCTION; RULE WHEN A DOCTRINE OF THE SUPREME COURT IS
OVERRULED AND A DIFFERENT VIEW IS ADOPTED. In the case of People v. Jabinal, (G.R.
No. 82499, 178 SCRA 493 [1989]), it is a settled rule that when a doctrine of this Court is overruled
and a different view is adopted, the new doctrine should be applied prospectively, and should not
apply to parties who had relied on the old doctrine and acted on the faith thereof.
2. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; PURPOSE. As
to the question on the propriety of the issuance of the writ of preliminary mandatory injunction, the
case of Capitol Medical Center, Inc., et al. v. Court of Appeals, et al. discussed exhaustively the
purpose in issuing said writ: "The sole object of a preliminary injunction, whether prohibitory or
mandatory, is to preserve the status quo until the merits of the case can be heard. The status quo is
the last actual peaceable uncontested status which preceded the controversy (Rodulfa vs. Alfonso,
76 Phil. 225). It may only be resorted to by a litigant for the preservation or protection of his rights or
interests and for no other purpose during the pendency of the principal action (Calo vs. Roldan, 76
Phil. 445). It should only be granted if the party asking for it is clearly entitled thereto (Climaco vs.
Macaraeg, 4 SCRA 930; Subido vs. Gopengco, 27 SCRA 455; Police Commission vs. Bello, 37
SCRA 230). Inasmuch as a mandatory injunction tends to do more than to maintain the status quo, it
is generally improper to issue such an injunction prior to the final hearing (Manila Electric Railroad
and Light Co. vs. Del Rosario, 22 Phil. 433). It may, however, issue 'in cases of extreme urgency;
where the right is very clear; where considerations of relative inconvenience bear strongly in
complainant's favor; where there is a willful and unlawful invasion of plaintiff's right against his
protest and remonstrance, the injury being a continuing one; and where the effect of the mandatory
injunction is rather to reestablish and maintain a preexisting continuing relation between the parties,
recently and arbitrarily interrupted by the defendant, than to establish a new relation. Indeed, the writ
should not be denied the complainant when he makes out a clear case, free from doubt and
dispute.' (Commissioner of Customs vs. Cloribel, et al., 19 SCRA 235)."

14 | P a g e

On April 16, 1990, private respondents Elena Villegas and Ted Magallanes, thru their mothers,
Victoria Villegas and Jacinta Magallanes, respectively, filed before the Regional Trial Court, National
Capital Judicial Region, Branch 21, a petition for injunction and damages with prayer for a writ of
preliminary mandatory injunction against petitioners Unciano Paramedical College, Inc. (now
Unciano Colleges and General Hospital, Inc.), Mirando C. Unciano, Sr., Dominador Santos, Editha
Mora, Dr. Evelyn Moral and Laureana Vitug, docketed as Civil Case No. 90-52745. Among other
things, they alleged therein that:
"6.01. Around the latter part of July 1989, the above-named students initiated a petition proposing to
the school authorities the organization of a student council in the school. They solicited support of
their petition from the studentry by asking the students to endorse the same with their signatures.
They were able to get at least 180 signatures.
"6.02. On August 18, 1989, Elena Villegas and a certain student named Solomon Barroa were
summoned to the Office of Dr. Moral and were admonished not to proceed with the proposal
because, according to her, the school does not allow and had never allowed such an organization.
"6.03. On September 12, 1989, when news leaked out that the above-named students would be
barred from enrollment, they sought confirmation with respondent Dr. Moral, Dean of Discipline, who
told them 'it's not true unless you violate the rules and regulations of the school and if you still insist
with your student council.'
"6.04. On October 28, 1989, in compliance with an announcement to see the Dean of Nursing, the
above-named students met with Dean Vitug and Dr. Moral who informed them that they would be
barred from enrollment for the second semester because they supposedly harassed a female
student, invited an outsider to the school to speak before the students, and also because the school
has an arrangement with the Department of Education, Culture and Sports not to allow their
students to put up a student council. Dr. Moral advised them to get their Honorable Dismissal, and
warned them that if she herself were to give it, it would be marked `expelled.'
"6.05. On November 6, 1989, the students again approached Dr. Moral who informed them that they
were no longer allowed to enroll because they are allegedly members of the National Union of

Students of the Philippines (NUSP) and the League of Filipino Students (LFS), officers of the student
organization they organized, and, moreover 'drug addicts.' The students asked for proof of these
accusations but were not given any, and were told by Dr. Moral that the school has people
investigating for (sic) them but she did not disclose their identities nor provide any proof to support
her allegations.

Petitioners filed an opposition to the prayer for a preliminary mandatory injunction on the ground that
private respondents are not entitled thereto and have no clear legal right to the relief demanded. On
the same date, the trial court issued an order, the pertinent parts of which, read:

"6.06. On November 13, 1989, a few days after petitioners retained the services of counsel FREE
LEGAL ASSISTANCE GROUP (FLAG), counsel sent a letter to Mr. Mirando Unciano, President of
the College, demanding that the constitutional requirements of due process be complied with prior to
unilaterally dismissing the students, and requesting that a conference be held prior to 17 November
1989, as the enrollment deadline was fast approaching . . .:

"It is the opinion of the Court that there will be irreparable injury to the petitioners if they are not
allowed to enroll. At least they will miss another semester.

"6.07. On 17 November 1989, acceding to the demand, a meeting was held, attended by Dr. Moral,
Dean Vitug, Mr. Rustico Lopez, the students, and their counsel. Due, however, to the inability of Dr.
Moral to resolve the problem in the absence of the College President and their legal counsel, the
meeting was reset to November 22, 1989 upon Dr. Moral's request. However, notice was sent to the
students' counsel from Unciano Paramedical College resetting the meeting to November 27, 1989
stating that the President will attend personally therein . . .

"xxx xxx xxx

"On the other hand, the injuries mentioned by Dr. Unciano, in particular the withdrawal of the other
students and the school will lose money if the petitioners are allowed to enroll is still a speculation,
and may not take place.
"In view thereof, the Court hereby GRANTS the petition for issuance of a preliminary mandatory
injunction, ordering the respondents to allow petitioners to enroll for the first semester of school year
1990-1991, upon filing by petitioners of a bond in the amount of P2,000.00 each.
"xxx xxx xxx

"6.08. On 27 November 1989, due to the absence of the school's legal counsel and the President
who allegedly just arrived from the United States, Dr. Moral again requested that the meeting be
reset. A verbal altercation occurred between the parties due to the delaying tactics of the school
officials and the failure to resolve the problem by their continuous refusal to discuss the merits of the
accusations against the students. The meeting, attended by Dr. Moral, Dean Vitug and Dean
Dominador Santos, ended with the school officials' request that it be reset for 29 November 19B9
and that the students bring their parents or guardian with them at said meeting. The students agreed
to this request and their counsel prepared a written summary of the matters discussed and agreed
during the meeting. The school officials refused to sign it, however . . .

"SO ORDERED." 4

"6.09. On 29 November 1989, the students were informed that the President had unilaterally refused
to allow them to enroll and it was up to their parents to request or appeal to the school officials to
change their decision. Mrs. Victoria Villegas and Mrs. Jacinta Magallanes wrote to the school
officials to request that their children be allowed to enroll . . . Dr. Moral informed them that the Board
of Trustees will have to decide on these requests.

"The arguments advanced in support of the petition are mainly anchored on the decision of the
Supreme Court in the case of ALCUAZ, et al. vs. Philippine School of Business Administration,
Quezon City Branch (PSBA), et al., L-76353, May 2, 1988; 161 SCRA 7 where it was held that

"6.10. On 11 December 1989, the students were informed that the Board of Trustees had refused to
grant the parents' request." 2
On May 16, 1990, the trial court issued a temporary restraining order effective May 17, 1990,
enjoining petitioner school from not enrolling private respondents in its College of Nursing and
setting the hearing for the issuance of the writ of preliminary injunction on June 4, 1990. 3

15 | P a g e

On June 11. 1990, the writ of preliminary mandatory injunction was issued. 5
On June 13, 1990, petitioners' motion for reconsideration of the Order of June 4, 1990 was denied. 6
Elevating the matter to the Court of Appeals in a petition for certiorari and prohibition with preliminary
injunction, the same was dismissed on February 7, 1991 for lack of merit. 7 Said the court:

'It is beyond dispute that a student once admitted by the school is considered enrolled for one
semester. It is provided in Paragraph 137 (of the) Manual of Regulations for Private Schools, that
when a college student registers in a school, it is understood that he is enrolling for the entire
semester. Likewise, it is provided in the Manual, that the 'written contracts' required for college
teachers are for 'one semester.' It is thus evident that after the close of the first semester, the PSBAQC no longer has any existing contract either with the students or with the intervening teachers . . .

"However, in the more recent case of Ariel Non, et al. vs. Hon. Sancho Dames II, et al., G.R. No.
89317, May 20, 1990 (185 SCRA 523), the Supreme Court, abandoned and overruled its decision in
Alcuaz and declared thus:
The Court, in Alcuaz, anchored its decision on the 'termination of contract' theory. But it must be
repeatedly emphasized that the contract between the school and the student is not an ordinary
contract. It is imbued with public interest, considering the high priority given by the Constitution to
education and the grant to the State of supervisory and regulatory powers over all educational
institutions [See Art. XIV, Secs. 1-2, 4(1).]
'Respondent school cannot justify its actions by relying on Paragraph 137 of the Manual of
Regulations for Private School which provides that '(w)hen a student registers in a school, it is
understood that he is enrolling for the entire semester for collegiate courses,' which the Court in
Alcuaz construed as authority for schools to refuse enrollment to a student on the ground that his
contract, which has a term of one semester, has already expired.
'The 'termination of contract' theory does not even find support in the Manual. Paragraph 137 merely
clarifies that a college student enrolls for the entire semester. It serves to protect schools wherein
tuition fees are collected and paid on an installment basis, i.e. collection and payment of the
downpayment upon enrollment and the balance before examinations. Thus, even if a student does
not complete the semester for which he was enrolled, but has stayed on for more than two weeks,
he may be required to pay his tuition fees for the whole semester before he is given his credentials
for transfer. This is the import of Paragraph 137, subsumed under Section VII on Tuition and Other
Fees, which in its totality provides:
'137. When a student registers in a school, it is understood that he is enrolling for the entire school
year for elementary and secondary courses, and for the entire semester for collegiate courses. A
student who transfers or otherwise withdraws, in writing, within two weeks after the beginning of
classes and who has already paid the pertinent tuition and other school fees in full or for any length
of time longer than one month may be charged ten per cent of the total amount due for the term if he
withdraws within the first week of classes, or twenty per cent if within the second week of classes,
regardless of whether or not he has actually attended classes. The student may be charged all the
school fees in full if he withdraws anytime after the second week of classes. However, if the transfer
or withdrawal is due to a justifiable reason, the student shall be charged the pertinent fees only up to
and including the last month of attendance.'
'Clearly, in no way may Paragraph 137 be construed to mean that the student shall be enrolled for
only one semester, and that after the semester is over his re-enrollment is dependent solely on the
sound discretion of the school. On the contrary, the Manual recognizes the right of the student to be
enrolled in his course for the entire period he is expected to complete it. Thus, Paragraph 107
states:

16 | P a g e

'Every student has the right to enroll in any school, college or university upon meeting its specific
requirement and reasonable regulation: Provided, that except in the case of academic delinquency
and violation of disciplinary regulation, the student is presumed to be qualified for enrollment for the
entire period he is expected to his (sic) complete his course without prejudice to his right to transfer.'
'This 'presumption' has been translated into a right in Batas Pambansa Blg. 232, the 'Education Act
of 1982.' Section 9 of this act provides:
'SEC. 9. Rights of Students in School. In addition to other rights, and subject to the limitations
prescribed by law and regulations, students and pupils in all schools shall enjoy the following rights:
xxx xxx xxx
12. The right to freely choose their field of study subject to existing curricula and to continue their
course therein up to graduation, except in cases of academic deficiency, or violation of disciplinary
regulations.' " 8
On June 3, 1991, the motion for reconsideration was denied, again, for lack of merit. 9 Hence, the
present petition.
Petitioners raise this lone issue:
"WHETHER OR NOT THE NON DOCTRINE SHOULD BE APPLIED RETROACTIVELY TO
GOVERN AND INVALIDATE THE LEGAL EFFECTS OF INCIDENTS THAT TOOK PLACE PRIOR
TO ITS ADOPTION AND WHICH INCIDENTS WERE PROPER AND VALID UNDER THE ALCUAZ
DOCTRINE PREVAILING AT THE TIME SAID INCIDENTS TOOK PLACE." 10
Petitioners argue that under the then prevailing Alcuaz doctrine which was promulgated on May 2,
1988, the contract between them and private respondents was validly terminated upon the end of
the first semester of school year 1989-1990. Although said doctrine was later abandoned in Non, et
al. v. Dames II, et al., supra, this case was promulgated much later, or on May 20, 1990, when the
termination of the contract between them had long become fait accompli. Settled is the rule that
when a doctrine of this Court is overruled and a different view is adopted, the new doctrine is applied
prospectively, and should not apply to parties who relied on the old doctrine and acted on the faith
thereof, conformably with the case of People v. Jabinal, G.R. No. L-30061, 55 SCRA 607 (1974).
Thus, the writ of preliminary mandatory injunction was issued by the trial court with grave abuse of
discretion.
We agree with the arguments of petitioners.
The ruling in the Non case should not be given a retroactive effect to cases that arose before its
promulgation on May 20, 1990, as in this case, which was filed on April 16, 1990. If it were

otherwise, it would result in oppression to petitioners and other schools similarly situated who relied
on the ruling in the Alcuaz case, promulgated on May 2, 1988, which recognized the termination of
contract theory. We had an opportunity to resolve a similar issue in National Service Corporation, et
al. v. NLRC. 11 In this case, petitioner claimed that as a government corporation (by virtue of its
being a subsidiary of the National Investment and Development Corporation, a subsidiary wholly
owned by the Philippine National Bank, which in turn is a government owned corporation), the terms
and conditions of employment of its employees are governed by the civil service law, rules and
regulations. In support thereof, petitioner cited the ruling in National Housing Corporation v. Juco, 12
that employees of government owned or controlled corporations are governed by the civil service
law, rules and regulations, we rejected this claim of petitioner and held that:
"It would appear that, in the interest of justice, the holding in said case should not be given
retroactive effect, that is, to cases that arose before its promulgation on 17 January 1985. To do
otherwise would be oppressive to Credo and other employees similarly situated, because under the
same 1973 Constitution but prior to the ruling in National Housing Corporation vs. Juco, this Court
had recognized the applicability of the Labor Code to, and the authority of the NLRC to exercise
jurisdiction over, disputes involving terms and conditions of employment in government-owned or
controlled corporations, among them, the National Service Corporation (NASECO)." 13

establish and maintain a pre-existing continuing relation between the parties, recently and arbitrarily
interrupted by the defendant, than to establish a new relation. Indeed, the writ should not be denied
the complainant when he makes out a clear case, free from doubt and dispute.' (Commissioner of
Customs vs. Cloribel, et al., 19 SCRA 235.)." 15
In the present case, the contract between the parties was validly terminated upon the end of the first
semester of school year 1989-1990, or in October, 1989. This is the status quo. The trial court
gravely abused its discretion in issuing the writ of preliminary mandatory injunction which ordered
petitioners to allow private respondents "to enroll for the first semester of school year 1990-1190." 16
Guided by the Capitol case, certainly, this writ will not restore the status quo but will go a step
backward, then restore the condition preceding the status quo. Private respondents do not possess
any clear legal right to re-enroll, corollarily, petitioners are not obliged legally to re-admit them.
WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated
February 7, 1991 and its resolution dated June 3, 1991 are SET ASIDE. The orders of the trial court
dated June 4, 1990 and June 13, 1990 and the writ of preliminary mandatory injunction are likewise
SET ASIDE.
SO ORDERED.

In addition, We reiterate Our earlier pronouncement in the case of People v. Jabinal, supra, that it is
a settled rule that when a doctrine of this Court is overruled and a different view is adopted, the new
doctrine should be applied prospectively, and should not apply to parties who had relied on the old
doctrine and acted on the faith thereof.
Coming now to the question on the propriety of the issuance of the writ of preliminary mandatory
injunction, the case of Capitol Medical Center, Inc., et al. v. Court of Appeals, et al. 14 discussed
exhaustively the purpose in issuing said writ:
"The sole object of a preliminary injunction, whether prohibitory or mandatory, is to preserve the
status quo until the merits of the case can be heard. The status quo is the last actual peaceable
uncontested status which preceded the controversy (Rodulfa vs. Alfonso, 76 Phil. 225). It may only
be resorted to by a litigant for the preservation or protection of his rights or interests and for no other
purpose during the pendency of the principal action (Calo vs. Roldan, 76 Phil. 445). It should only be
granted if the party asking for it is clearly entitled thereto (Climaco vs. Macaraeg, 4 SCRA 930;
Subido vs. Gopengco, 27 SCRA 455; Police Commission vs. Bello, 37 SCRA 230).
Inasmuch as a mandatory injunction tends to do more than to maintain the status quo, it is generally
improper to issue such an injunction prior to the final hearing (Manila Electric Railroad and Light Co.
vs. Del Rosario, 22 Phil. 433). It may, however, issue 'in cases of extreme urgency; where the right
is very clear; where considerations of relative inconvenience bear strongly in complainant's favor
where there is a willful and unlawful invasion of plaintiff's right against his protest and remonstrance,
the injury being a continuing one and where the effect of the mandatory injunction is rather to re-

17 | P a g e

G.R. No. L-15127

May 30, 1961

EMETERIO CUI, plaintiff-appellant,

vs.
ARELLANO UNIVERSITY, defendant-appellee.

Before defendant awarded to plaintiff the scholarship grants as above stated, he was
made to sign the following contract covenant and agreement:
"In consideration of the scholarship granted to me by the University, I hereby waive my
right to transfer to another school without having refunded to the University (defendant)
the equivalent of my scholarship cash.

G.A.S. Sipin, Jr., for plaintiff-appellant.

E. Voltaire Garcia for defendant-appellee.
CONCEPCION, J.:
Appeal by plaintiff Emeterio Cui from a decision of the Court of First Instance of Manila, absolving
defendant Arellano University from plaintiff's complaint, with costs against the plaintiff, and
dismissing defendant's counter claim, for insufficiency of proof thereon.

(Sgd.) Emeterio Cui".

It is admitted that, on August 16, 1949, the Director of Private Schools issued Memorandum No. 38,
series of 1949, on the subject of "Scholarship," addressed to "All heads of private schools, colleges
and universities," reading:

In the language of the decision appealed from:

The essential facts of this case are short and undisputed. As established by the
agreement of facts Exhibits X and by the respective oral and documentary evidence
introduced by the parties, it appears conclusive that plaintiff, before the school year 19481949 took up preparatory law course in the defendant University. After finishing his
preparatory law course plaintiff enrolled in the College of Law of the defendant from the
school year 1948-1949. Plaintiff finished his law studies in the defendant university up to
and including the first semester of the fourth year. During all the school years in which
plaintiff was studying law in defendant law college, Francisco R. Capistrano, brother of the
mother of plaintiff, was the dean of the College of Law and legal counsel of the defendant
university. Plaintiff enrolled for the last semester of his law studies in the defendant
university but failed to pay his tuition fees because his uncle Dean Francisco R.
Capistrano having severed his connection with defendant and having accepted the
deanship and chancellorship of the College of Law of Abad Santos University, plaintiff left
the defendant's law college and enrolled for the last semester of his fourth year law in the
college of law of the Abad Santos University graduating from the college of law of the
latter university. Plaintiff, during all the time he was studying law in defendant university
was awarded scholarship grants, for scholastic merit, so that his semestral tuition fees
were returned to him after the ends of semester and when his scholarship grants were
awarded to him. The whole amount of tuition fees paid by plaintiff to defendant and
refunded to him by the latter from the first semester up to and including the first semester
of his last year in the college of law or the fourth year, is in total P1,033.87. After
graduating in law from Abad Santos University he applied to take the bar examination. To
secure permission to take the bar he needed the transcripts of his records in defendant
Arellano University. Plaintiff petitioned the latter to issue to him the needed transcripts.
The defendant refused until after he had paid back the P1,033 87 which defendant
refunded to him as above stated. As he could not take the bar examination without those
transcripts, plaintiff paid to defendant the said sum under protest. This is the sum which
plaintiff seeks to recover from defendant in this case.

18 | P a g e

1. School catalogs and prospectuses submitted to this, Bureau show that some schools
offer full or partial scholarships to deserving students for excellence in scholarship or
for leadership in extra-curricular activities. Such inducements to poor but gifted students
should be encouraged. But to stipulate the condition that such scholarships are good only
if the students concerned continue in the same school nullifies the principle of merit in the
award of these scholarships.
2. When students are given full or partial scholarships, it is understood that such
scholarships are merited and earned. The amount in tuition and other fees corresponding
to these scholarships should not be subsequently charged to the recipient students when
they decide to quit school or to transfer to another institution. Scholarships should not be
offered merely to attract and keep students in a school.
3. Several complaints have actually been received from students who have enjoyed
scholarships, full or partial, to the effect that they could not transfer to other schools since
their credentials would not be released unless they would pay the fees corresponding to
the period of the scholarships. Where the Bureau believes that the right of the student to
transfer is being denied on this ground, it reserves the right to authorize such transfer.
that defendant herein received a copy of this memorandum; that plaintiff asked the Bureau of Private
Schools to pass upon the issue on his right to secure the transcript of his record in defendant
University, without being required to refund the sum of P1,033.87; that the Bureau of Private Schools
upheld the position taken by the plaintiff and so advised the defendant; and that, this
notwithstanding, the latter refused to issue said transcript of records, unless said refund were made,
and even recommended to said Bureau that it issue a written order directing the defendant to
release said transcript of record, "so that the case may be presented to the court for judicial action."
As above stated, plaintiff was, accordingly, constrained to pay, and did pay under protest, said sum
of P1,033.87, in order that he could take the bar examination in 1953. Subsequently, he brought this

action for the recovery of said amount, aside from P2,000 as moral damages, P500 as exemplary
damages, P2,000 as attorney's fees, and P500 as expenses of litigation.
In its answer, defendant reiterated the stand it took, vis-a-vis the Bureau of Private Schools, namely,
that the provisions of its contract with plaintiff are valid and binding and that the memorandum
above-referred to is null and void. It, likewise, set up a counterclaim for P10,000.00 as damages,
and P3,000 as attorney's fees.
The issue in this case is whether the above quoted provision of the contract between plaintiff and the
defendant, whereby the former waived his right to transfer to another school without refunding to the
latter the equivalent of his scholarships in cash, is valid or not. The lower court resolved this
question in the affirmative, upon the ground that the aforementioned memorandum of the Director of
Private Schools is not a law; that the provisions thereof are advisory, not mandatory in nature; and
that, although the contractual provision "may be unethical, yet it was more unethical for plaintiff to
quit studying with the defendant without good reasons and simply because he wanted to follow the
example of his uncle." Moreover, defendant maintains in its brief that the aforementioned
memorandum of the Director of Private Schools is null and void because said officer had no
authority to issue it, and because it had been neither approved by the corresponding department
head nor published in the official gazette.
We do not deem it necessary or advisable to consider as the lower court did, the question whether
plaintiff had sufficient reasons or not to transfer from defendant University to the Abad Santos
University. The nature of the issue before us, and its far reaching effects, transcend personal
equations and demand a determination of the case from a high impersonal plane. Neither do we
deem it essential to pass upon the validity of said Memorandum No. 38, for, regardless of the same,
we are of the opinion that the stipulation in question is contrary to public policy and, hence, null and
void. The aforesaid memorandum merely incorporates a sound principle of public policy. As the
Director of Private Schools correctly pointed, out in his letter, Exhibit B, to the defendant,
There is one more point that merits refutation and that is whether or not the contract
entered into between Cui and Arellano University on September 10, 1951 was void as
against public policy. In the case of Zeigel vs. Illinois Trust and Savings Bank, 245 Ill. 180,
19 Ann. Case 127, the court said: 'In determining a public policy of the state, courts are
limited to a consideration of the Constitution, the judicial decisions, the statutes, and the
practice of government officers.' It might take more than a government bureau or office to
lay down or establish a public policy, as alleged in your communication, but courts
consider the practices of government officials as one of the four factors in determining a
public policy of the state. It has been consistently held in America that under the principles
relating to the doctrine of public policy, as applied to the law of contracts, courts of justice
will not recognize or uphold a transaction which its object, operation, or tendency is
calculated to be prejudicial to the public welfare, to sound morality or to civic
honesty (Ritter vs. Mutual Life Ins. Co., 169 U.S. 139; Heding vs. Gallaghere 64 L.R.A.
811; Veazy vs. Allen, 173 N.Y. 359). If Arellano University understood clearly the real
essence of scholarships and the motives which prompted this office to issue
Memorandum No. 38, s. 1949, it should have not entered into a contract of waiver with
Cui on September 10, 1951, which is a direct violation of our Memorandum and an open
challenge to the authority of the Director of Private Schools because the contract was
repugnant to sound morality and civic honesty. And finally, in Gabriel vs. Monte de Piedad,

19 | P a g e

Off. Gazette Supp. Dec. 6, 1941, p. 67 we read: 'In order to declare a contract void as
against public policy, a court must find that the contract as to consideration or the thing to
be done, contravenes some established interest of society, or isinconsistent with sound
policy and good morals or tends clearly to undermine the security of individual rights. The
policy enunciated in Memorandum No. 38, s. 1949 is sound policy. Scholarship are
awarded in recognition of merit not to keep outstanding students in school to bolster its
prestige. In the understanding of that university scholarships award is a business
scheme designed to increase the business potential of an education institution. Thus
conceived it is not only inconsistent with sound policy but also good morals. But what is
morals? Manresa has this definition. It is good customs; those generally accepted
principles of morality which have received some kind of social and practical confirmation.
The practice of awarding scholarships to attract students and keep them in school is not
good customs nor has it received some kind of social and practical confirmation except in
some private institutions as in Arellano University. The University of the Philippines which
implements Section 5 of Article XIV of the Constitution with reference to the giving of free
scholarships to gifted children, does not require scholars to reimburse the corresponding
value of the scholarships if they transfer to other schools. So also with the leading
colleges and universities of the United States after which our educational practices or
policies are patterned. In these institutions scholarships are granted not to attract and to
keep brilliant students in school for their propaganda mine but to reward merit or help
gifted students in whom society has an established interest or a first lien. (Emphasis
supplied.)
WHEREFORE, the decision appealed from is hereby reversed and another one shall be entered
sentencing the defendant to pay to the plaintiff the sum of P1,033.87, with interest thereon at the
legal rate from September 1, 1954, date of the institution of this case, as well as the costs, and
dismissing defendant's counterclaim. It is so ordered.

G.R. No. L-30061 February 27, 1974

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellees,
vs.
JOSE JABINAL Y CARMEN, defendant-appellant.
Office of the Solicitor General Felix V. Makasiar and Solicitor Antonio M. Martinez for plaintiffappellee.
Pedro Panganiban y Tolentino for defendant-appellant.

ANTONIO, J.:p
Appeal from the judgment of the Municipal Court of Batangas (provincial capital), Batangas, in
Criminal Case No. 889, finding the accused guilty of the crime of Illegal Possession of Firearm and
Ammunition and sentencing him to suffer an indeterminate penalty ranging from one (1) year and
one (1) day to two (2) years imprisonment, with the accessories provided by law, which raises in
issue the validity of his conviction based on a retroactive application of Our ruling in People v.
Mapa. 1
The complaint filed against the accused reads:
That on or about 9:00 o'clock, p.m., the 5th day of September, 1964, in the
poblacion, Municipality of Batangas, Province of Batangas, Philippines, and
within the jurisdiction of this Honorable Court, the above-named accused, a
person not authorized by law, did then and there wilfully, unlawfully and
feloniously keep in his possession, custody and direct control a revolver Cal. .
22, RG8 German Made with one (1) live ammunition and four (4) empty shells
without first securing the necessary permit or license to possess the same.
At the arraignment on September 11, 1964, the accused entered a plea of not guilty, after which trial
was accordingly held.

Indeed, the accused had appointments from the above-mentioned officials as claimed by him. His
appointment from Governor Feliciano Leviste, dated December 10, 1962, reads:
Reposing special trust and confidence in your civic spirit, and trusting that you
will be an effective agent in the detection of crimes and in the preservation of
peace and order in the province of Batangas, especially with respect to the
suppression of trafficking in explosives, jueteng, illegal cockfighting, cattle
rustling, robbery and the detection of unlicensed firearms, you are hereby
appointed a SECRET AGENT of the undersigned, the appointment to take
effect immediately, or as soon as you have qualified for the position. As such
Secret Agent, your duties shall be those generally of a peace officer and
particularly to help in the preservation of peace and order in this province and
to make reports thereon to me once or twice a month. It should be clearly
understood that any abuse of authority on your part shall be considered
sufficient ground for the automatic cancellation of your appointment and
immediate separation from the service. In accordance with the decision of the
Supreme Court in G.R. No. L-12088 dated December 23, 1959, you will have
the right to bear a firearm, particularly described below, for use in connection
with the performance of your duties.
By virtue hereof, you may qualify and enter upon the performance of your
duties by taking your oath of office and filing the original thereof with us.
Very truly yours,(Sgd.) FELICIANO LEVISTE
Provincial Governor
FIREARM AUTHORIZED TO CARRY:
Kind: ROHM-Revolver
Make: German
SN: 64
Cal: .22

The accused admitted that on September 5, 1964, he was in possession of the revolver and the
ammunition described in the complaint, without the requisite license or permit. He, however, claimed
to be entitled to exoneration because, although he had no license or permit, he had an appointment
as Secret Agent from the Provincial Governor of Batangas and an appointment as Confidential
Agent from the PC Provincial Commander, and the said appointments expressly carried with them
the authority to possess and carry the firearm in question.

20 | P a g e

On March 15, 1964, the accused was also appointed by the PC Provincial Commander of Batangas
as Confidential Agent with duties to furnish information regarding smuggling activities, wanted
persons, loose firearms, subversives and other similar subjects that might affect the peace and order
condition in Batangas province, and in connection with these duties he was temporarily authorized
to possess a ROHM revolver, Cal. .22 RG-8 SN-64, for his personal protection while in the
performance of his duties.

The accused contended before the court a quo that in view of his above-mentioned appointments as
Secret Agent and Confidential Agent, with authority to possess the firearm subject matter of the
prosecution, he was entitled to acquittal on the basis of the Supreme Court's decision in People vs.
Macarandang 2 and People vs. Lucero. 3 The trial court, while conceding on the basis of the evidence
of record the accused had really been appointed Secret Agent and Confidential Agent by the
Provincial Governor and the PC Provincial Commander of Batangas, respectively, with authority to
possess and carry the firearm described in the complaint, nevertheless held the accused in its
decision dated December 27, 1968, criminally liable for illegal possession of a firearm and
ammunition on the ground that the rulings of the Supreme Court in the cases
of Macarandang and Lucero were reversed and abandoned in People vs. Mapa, supra. The court
considered as mitigating circumstances the appointments of the accused as Secret Agent and
Confidential Agent.
Let us advert to Our decisions in People v. Macarandang, supra, People v. Lucero,
supra, and People v. Mapa, supra. In Macarandang, We reversed the trial court's judgment of
conviction against the accused because it was shown that at the time he was found to possess a
certain firearm and ammunition without license or permit, he had an appointment from the Provincial
Governor as Secret Agent to assist in the maintenance of peace and order and in the detection of
crimes, with authority to hold and carry the said firearm and ammunition. We therefore held that
while it is true that the Governor has no authority to issue any firearm license or permit,
nevertheless, section 879 of the Revised Administrative Code provides that "peace officers" are
exempted from the requirements relating to the issuance of license to possess firearms; and
Macarandang's appointment as Secret Agent to assist in the maintenance of peace and order and
detection of crimes, sufficiently placed him in the category of a "peace officer" equivalent even to a
member of the municipal police who under section 879 of the Revised Administrative Code are
exempted from the requirements relating to the issuance of license to possess firearms. In Lucero,
We held that under the circumstances of the case, the granting of the temporary use of the firearm
to the accused was a necessary means to carry out the lawful purpose of the batallion commander
to effect the capture of a Huk leader. In Mapa, expressly abandoning the doctrine in Macarandang,
and by implication, that in Lucero, We sustained the judgment of conviction on the following ground:
The law is explicit that except as thereafter specifically allowed, "it shall be
unlawful for any person to ... possess any firearm, detached parts of firearms or
ammunition therefor, or any instrument or implement used or intended to be
used in the manufacture of firearms, parts of firearms, or ammunition." (Sec.
878, as amended by Republic Act No. 4, Revised Administrative Code.) The
next section provides that "firearms and ammunition regularly and lawfully
issued to officers, soldiers, sailors, or marines [of the Armed Forces of the
Philippines], the Philippine Constabulary, guards in the employment of the
Bureau of Prisons, municipal police, provincial governors, lieutenant governors,
provincial treasurers, municipal treasurers, municipal mayors, and guards of
provincial prisoners and jails," are not covered "when such firearms are in

21 | P a g e

possession of such officials and public servants for use in the performance of
their official duties." (Sec. 879, Revised Administrative Code.)
The law cannot be any clearer. No provision is made for a secret agent. As
such he is not exempt. ... .
It will be noted that when appellant was appointed Secret Agent by the Provincial Government in
1962, and Confidential Agent by the Provincial Commander in 1964, the prevailing doctrine on the
matter was that laid down by Us in People v. Macarandang (1959) and People v. Lucero (1958). Our
decision in People v. Mapa reversing the aforesaid doctrine came only in 1967. The sole question in
this appeal is: Should appellant be acquitted on the basis of Our rulings
in Macarandang and Lucero, or should his conviction stand in view of the complete reversal of
the Macarandang and Lucero doctrine in Mapa? The Solicitor General is of the first view, and he
accordingly recommends reversal of the appealed judgment.
Decisions of this Court, although in themselves not laws, are nevertheless evidence of what the laws
mean, and this is the reason why under Article 8 of the New Civil Code "Judicial decisions applying
or interpreting the laws or the Constitution shall form a part of the legal system ... ." The
interpretation upon a law by this Court constitutes, in a way, a part of the law as of the date that law
originally passed, since this Court's construction merely establishes the contemporaneous legislative
intent that law thus construed intends to effectuate. The settled rule supported by numerous
authorities is a restatement of legal maxim "legis interpretatio legis vim obtinet" the interpretation
placed upon the written law by a competent court has the force of law. The doctrine laid down
inLucero and Macarandang was part of the jurisprudence, hence of the law, of the land, at the time
appellant was found in possession of the firearm in question and when he arraigned by the trial
court. It is true that the doctrine was overruled in the Mapa case in 1967, but when a doctrine of this
Court is overruled and a different view is adopted, the new doctrine should be applied prospectively,
and should not apply to parties who had relied on the old doctrine and acted on the faith thereof.
This is especially true in the construction and application of criminal laws, where it is necessary that
the punishability of an act be reasonably foreseen for the guidance of society.
It follows, therefore, that considering that appellant conferred his appointments as Secret Agent and
Confidential Agent and authorized to possess a firearm pursuant to the prevailing doctrine
enunciated in Macarandang andLucero, under which no criminal liability would attach to his
possession of said firearm in spite of the absence of a license and permit therefor, appellant must be
absolved. Certainly, appellant may not be punished for an act which at the time it was done was held
not to be punishable.
WHEREFORE, the judgment appealed from is hereby reversed, and appellant is acquitted, with
costs de oficio.

G.R. No. L-68470 October 8, 1985

ALICE REYES VAN DORN, petitioner,
vs.
HON. MANUEL V. ROMILLO, JR., as Presiding Judge of Branch CX, Regional Trial Court of
the National Capital Region Pasay City and RICHARD UPTON respondents.

MELENCIO-HERRERA, J.:\
In this Petition for certiorari and Prohibition, petitioner Alice Reyes Van Dorn seeks to set aside the
Orders, dated September 15, 1983 and August 3, 1984, in Civil Case No. 1075-P, issued by
respondent Judge, which denied her Motion to Dismiss said case, and her Motion for
Reconsideration of the Dismissal Order, respectively.
The basic background facts are that petitioner is a citizen of the Philippines while private respondent
is a citizen of the United States; that they were married in Hongkong in 1972; that, after the
marriage, they established their residence in the Philippines; that they begot two children born on
April 4, 1973 and December 18, 1975, respectively; that the parties were divorced in Nevada, United
States, in 1982; and that petitioner has re-married also in Nevada, this time to Theodore Van Dorn.
Dated June 8, 1983, private respondent filed suit against petitioner in Civil Case No. 1075-P of the
Regional Trial Court, Branch CXV, in Pasay City, stating that petitioner's business in Ermita, Manila,
(the Galleon Shop, for short), is conjugal property of the parties, and asking that petitioner be
ordered to render an accounting of that business, and that private respondent be declared with right
to manage the conjugal property. Petitioner moved to dismiss the case on the ground that the cause
of action is barred by previous judgment in the divorce proceedings before the Nevada Court
wherein respondent had acknowledged that he and petitioner had "no community property" as of
June 11, 1982. The Court below denied the Motion to Dismiss in the mentioned case on the ground
that the property involved is located in the Philippines so that the Divorce Decree has no bearing in
the case. The denial is now the subject of this certiorari proceeding.
Generally, the denial of a Motion to Dismiss in a civil case is interlocutory and is not subject to
appeal. certiorari and Prohibition are neither the remedies to question the propriety of an
interlocutory order of the trial Court. However, when a grave abuse of discretion was patently
committed, or the lower Court acted capriciously and whimsically, then it devolves upon this Court in
a certiorari proceeding to exercise its supervisory authority and to correct the error committed which,
in such a case, is equivalent to lack of jurisdiction. 1 Prohibition would then lie since it would be
useless and a waste of time to go ahead with the proceedings. 2 Weconsider the petition filed in this
case within the exception, and we have given it due course.

22 | P a g e

For resolution is the effect of the foreign divorce on the parties and their alleged conjugal property in
the Philippines.
Petitioner contends that respondent is estopped from laying claim on the alleged conjugal property
because of the representation he made in the divorce proceedings before the American Court that
they had no community of property; that the Galleon Shop was not established through conjugal
funds, and that respondent's claim is barred by prior judgment.
For his part, respondent avers that the Divorce Decree issued by the Nevada Court cannot prevail
over the prohibitive laws of the Philippines and its declared national policy; that the acts and
declaration of a foreign Court cannot, especially if the same is contrary to public policy, divest
Philippine Courts of jurisdiction to entertain matters within its jurisdiction.
For the resolution of this case, it is not necessary to determine whether the property relations
between petitioner and private respondent, after their marriage, were upon absolute or relative
community property, upon complete separation of property, or upon any other regime. The pivotal
fact in this case is the Nevada divorce of the parties.
The Nevada District Court, which decreed the divorce, had obtained jurisdiction over petitioner who
appeared in person before the Court during the trial of the case. It also obtained jurisdiction over
private respondent who, giving his address as No. 381 Bush Street, San Francisco, California,
authorized his attorneys in the divorce case, Karp & Gradt Ltd., to agree to the divorce on the
ground of incompatibility in the understanding that there were neither community property nor
community obligations. 3 As explicitly stated in the Power of Attorney he executed in favor of the law
firm of KARP & GRAD LTD., 336 W. Liberty, Reno, Nevada, to represent him in the divorce
proceedings:
xxx xxx xxx
You are hereby authorized to accept service of Summons, to file an Answer,
appear on my behalf and do an things necessary and proper to represent me,
without further contesting, subject to the following:
1. That my spouse seeks a divorce on the ground of incompatibility.
2. That there is no community of property to be adjudicated by the Court.
3. 'I'hat there are no community obligations to be adjudicated by the court.
xxx xxx xxx 4

There can be no question as to the validity of that Nevada divorce in any of the States of the United
States. The decree is binding on private respondent as an American citizen. For instance, private
respondent cannot sue petitioner, as her husband, in any State of the Union. What he is contending
in this case is that the divorce is not valid and binding in this jurisdiction, the same being contrary to
local law and public policy.
It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, 5 only
Philippine nationals are covered by the policy against absolute divorces the same being considered
contrary to our concept of public police and morality. However, aliens may obtain divorces abroad,
which may be recognized in the Philippines, provided they are valid according to their national
law. 6 In this case, the divorce in Nevada released private respondent from the marriage from the
standards of American law, under which divorce dissolves the marriage. As stated by the Federal
Supreme Court of the United States in Atherton vs. Atherton, 45 L. Ed. 794, 799:
The purpose and effect of a decree of divorce from the bond of matrimony by a
court of competent jurisdiction are to change the existing status or domestic
relation of husband and wife, and to free them both from the bond. The
marriage tie when thus severed as to one party, ceases to bind either. A
husband without a wife, or a wife without a husband, is unknown to the law.
When the law provides, in the nature of a penalty. that the guilty party shall not
marry again, that party, as well as the other, is still absolutely freed from the
bond of the former marriage.
Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He
would have no standing to sue in the case below as petitioner's husband entitled to exercise control
over conjugal assets. As he is bound by the Decision of his own country's Court, which validly
exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his
own representation before said Court from asserting his right over the alleged conjugal property.
To maintain, as private respondent does, that, under our laws, petitioner has to be considered still
married to private respondent and still subject to a wife's obligations under Article 109, et. seq. of the
Civil Code cannot be just. Petitioner should not be obliged to live together with, observe respect and
fidelity, and render support to private respondent. The latter should not continue to be one of her
heirs with possible rights to conjugal property. She should not be discriminated against in her own
country if the ends of justice are to be served.
WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to dismiss the
Complaint filed in Civil Case No. 1075-P of his Court.
Without costs.
SO ORDERED.

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G.R. No. 124862 December 22, 1998

FE D. QUITA, petitioner,
vs.
COURT OF APPEALS and BLANDINA DANDAN, * respondents.

BELLOSILLO, J.:
FE D. QUITA and Arturo T. Padlan, both Filipinos, were married in the Philippines on 18 May 1941.
They were not however blessed with children. Somewhere along the way their relationship soured.
Eventually Fe sued Arturo for divorce in San Francisco, California, U.S.A. She submitted in the
divorce proceedings a private writing dated 19 July 1950 evidencing their agreement to live
separately from each other and a settlement of their conjugal properties. On 23 July 1954 she
obtained a final judgment of divorce. Three (3) weeks thereafter she married a certain Felix Tupaz in
the same locality but their relationship also ended in a divorce. Still in the U.S.A., she married for the
third time, to a certain Wernimont.

Arturo. Consecuently, it expressed the view that their marriage subsisted until the death of Arturo in
1972. Neither did it consider valid their extrajudicial settlement of conjugal properties due to lack of
judicial approval.3 On the other hand, it opined that there was no showing that marriage existed
between private respondent and Arturo, much less was it shown that the alleged Padlan children
had been acknowledged by the deceased as his children with her. As regards Ruperto, it found that
he was a brother of Arturo. On 27 November 1987 4 only petitioner and Ruperto were declared the
intestate heirs of Arturo. Accordingly, equal adjudication of the net hereditary estate was ordered in
favor of the two intestate heirs. 5
On motion for reconsideration, Blandina and the Padlan children were allowed to present proofs that
the recognition of the children by the deceased as his legitimate children, except Alexis who was
recognized as his illegitimate child, had been made in their respective records of birth. Thus on 15
February 1988 6 partial reconsideration was granted declaring the Padlan children, with the
exception of Alexis, entitled to one-half of the estate to the exclusion of Ruperto Padlan, and
petitioner to the other half. 7 Private respondent was not declared an heir. Although it was stated in
the aforementioned records of birth that she and Arturo were married on 22 April 1947, their
marriage was clearly void since it was celebrated during the existence of his previous marriage to
petitioner.

On 16 April 1972 Arturo died. He left no will. On 31 August 1972 Lino Javier Inciong filed a petition
with the Regional Trial Court of Quezon City for issuance of letters of administration concerning the
estate of Arturo in favor of the Philippine Trust Company. Respondent Blandina Dandan (also
referred to as Blandina Padlan), claiming to be the surviving spouse of Arturo Padlan, and Claro,
Alexis, Ricardo, Emmanuel, Zenaida and Yolanda, all surnamed Padlan, named in the children of
Arturo Padlan opposed the petition and prayed for the appointment instead of Atty. Leonardo
Casaba, which was resolved in favor of the latter. Upon motion of the oppositors themselves, Atty.
Cabasal was later replaced by Higino Castillon. On 30 April 1973 the oppositors (Blandina and
Padlan children) submitted certified photocopies of the 19 July 1950 private writing and the final
judgment of divorce between petitioner and Arturo. Later Ruperto T. Padlan, claiming to be the sole
surviving brother of the deceased Arturo, intervened.

In their appeal to the Court of Appeals, Blandina and her children assigned as one of the errors
allegedly committed by the trial court the circumstance that the case was decided without a hearing,
in violation of Sec. 1, Rule 90, of the Rules of Court, which provides that if there is a controversy
before the court as to who are the lawful heirs of the deceased person or as to the distributive
shares to which each person is entitled under the law, the controversy shall be heard and decided
as in ordinary cases.

On 7 October 1987 petitioner moved for the immediate declaration of heirs of the decedent and the
distribution of his estate. At the scheduled hearing on 23 October 1987, private respondent as well
as the six (6) Padlan children and Ruperto failed to appear despite due notice. On the same day, the
trial court required the submission of the records of birth of the Padlan children within ten (10) days
from receipt thereof, after which, with or without the documents, the issue on the declaration of heirs
would be considered submitted for resolution. The prescribed period lapsed without the required
documents being submitted.

Should this case be remanded to the lower court for further proceedings? Petitioner insists that there
is no need because, first, no legal or factual issue obtains for resolution either as to the heirship of
the Padlan children or as to the decedent; and, second, the issue as to who between petitioner and
private respondent is the proper hier of the decedent is one of law which can be resolved in the
present petition based on establish facts and admissions of the parties.

The trial court invoking Tenchavez v. Escao 1 which held that "a foreign divorce between Filipino
citizens sought and decreed after the effectivity of the present Civil Code (Rep. Act 386) was not
entitled to recognition as valid in this jurisdiction," 2 disregarded the divorce between petitioner and

24 | P a g e

Respondent appellate court found this ground alone sufficient to sustain the appeal; hence, on 11
September 1995 it declared null and void the 27 November 1987 decision and 15 February 1988
order of the trial court, and directed the remand of the case to the trial court for further
proceedings. 8 On 18 April 1996 it denied reconsideration. 9

We cannot sustain petitioner. The provision relied upon by respondent court is clear: If there is
a controversybefore the court as to who are the lawful heirs of the deceased person or as to the
distributive shares to which each person is entitled under the law, the controversy shall be heard
and decided as in ordinary cases.

We agree with petitioner that no dispute exists either as to the right of the six (6) Padlan children to
inherit from the decedent because there are proofs that they have been duly acknowledged by him
and petitioner herself even recognizes them as heirs of Arturo Padlan; 10 nor as to their respective
hereditary shares. But controversy remains as to who is the legitimate surviving spouse of Arturo.
The trial court, after the parties other than petitioner failed to appear during the scheduled hearing
on 23 October 1987 of the motion for immediate declaration of heirs and distribution of estate,
simply issued an order requiring the submission of the records of birth of the Padlan children within
ten (10) days from receipt thereof, after which, with or without the documents, the issue on
declaration of heirs would be deemed submitted for resolution.
We note that in her comment to petitioner's motion private respondent raised, among others, the
issue as to whether petitioner was still entitled to inherit from the decedent considering that she had
secured a divorce in the U.S.A. and in fact had twice remarried. She also invoked the above quoted
procedural rule. 11 To this, petitioner replied that Arturo was a Filipino and as such remained legally
married to her in spite of the divorce they obtained. 12Reading between the lines, the implication is
that petitioner was no longer a Filipino citizen at the time of her divorce from Arturo. This should
have prompted the trial court to conduct a hearing to establish her citizenship. The purpose of a
hearing is to ascertain the truth of the matters in issue with the aid of documentary and testimonial
evidence as well as the arguments of the parties either supporting or opposing the evidence.
Instead, the lower court perfunctorily settled her claim in her favor by merely applying the ruling
in Tenchavez v. Escao.
Then in private respondent's motion to set aside and/or reconsider the lower court's decision she
stressed that the citizenship of petitioner was relevant in the light of the ruling in Van Dorn v. Romillo
Jr. 13 that aliens may obtain divorces abroad, which may be recognized in the Philippines, provided
they are valid according to their national law. She prayed therefore that the case be set for
hearing. 14 Petitioner opposed the motion but failed to squarely address the issue on her
citizenship. 15 The trial court did not grant private respondent's prayer for a hearing but proceeded to
resolve her motion with the finding that both petitioner and Arturo were "Filipino citizens and were
married in the Philippines." 16 It maintained that their divorce obtained in 1954 in San Francisco,
California, U.S.A., was not valid in Philippine jurisdiction. We deduce that the finding on their
citizenship pertained solely to the time of their marriage as the trial court was not supplied with a
basis to determine petitioner's citizenship at the time of their divorce. The doubt persisted as to
whether she was still a Filipino citizen when their divorce was decreed. The trial court must have
overlooked the materiality of this aspect. Once proved that she was no longer a Filipino citizen at the
time of their divorce, Van Dorn would become applicable and petitioner could very well lose her right
to inherit from Arturo.
Respondent again raised in her appeal the issue on petitioner's citizenship; 17 it did not merit
enlightenment however from petitioner. 18 In the present proceeding, petitioner's citizenship is
brought anew to the fore by private respondent. She even furnishes the Court with the transcript of
stenographic notes taken on 5 May 1995 during the hearing for the reconstitution of the original of a

25 | P a g e

certain transfer certificate title as well as the issuance of new owner's duplicate copy thereof before
another trial court. When asked whether she was an American citizen petitioner answered that she
was since 1954. 19 Significantly, the decree of divorce of petitioner and Arturo was obtained in the
same year. Petitioner however did not bother to file a reply memorandum to erase the uncertainty
about her citizenship at the time of their divorce, a factual issue requiring hearings to be conducted
by the trial court. Consequently, respondent appellate court did not err in ordering the case returned
to the trial court for further proceedings.
We emphasize however that the question to be determined by the trial court should be limited only
to the right of petitioner to inherit from Arturo as his surviving spouse. Private respondent's claim to
heirship was already resolved by the trial court. She and Arturo were married on 22 April 1947 while
the prior marriage of petitioner and Arturo was subsisting thereby resulting in a bigamous marriage
considered void from the beginning under Arts. 80 and 83 of the Civil Code. Consequently, she is not
a surviving spouse that can inherit from him as this status presupposes a legitimate relationship. 20
As regards the motion of private respondent for petitioner and a her counsel to be declared in
contempt of court and that the present petition be dismissed for forum shopping, 21 the same lacks
merit. For forum shopping to exist the actions must involve the same transactions and same
essential facts and circumstances. There must also be identical causes of action, subject matter and
issue. 22 The present petition deals with declaration of heirship while the subsequent petitions filed
before the three (3) trial courts concern the issuance of new owner's duplicate copies of titles of
certain properties belonging to the estate of Arturo. Obviously, there is no reason to declare the
existence of forum shopping.
WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals ordering the
remand of the case to the court of origin for further proceedings and declaring null and void its
decision holding petitioner Fe D. Quita and Ruperto T. Padlan as intestate heirs is AFFIRMED. The
order of the appellate court modifying its previous decision by granting one-half (1/2) of the net
hereditary estate to the Padlan children, namely, Claro, Ricardo, Emmanuel, Zenaida and Yolanda,
with the exception of Alexis, all surnamed Padlan, instead of Arturo's brother Ruperto Padlan, is
likewise AFFIRMED. The Court however emphasizes that the reception of evidence by the trial
court should he limited to the hereditary rights of petitioner as the surviving spouse of Arturo Padlan.
The motion to declare petitioner and her counsel in contempt of court and to dismiss the present
petition for forum shopping is DENIED.
SO ORDERED.

G.R. No. 167109

February 6, 2007

3) The donation in consideration of marriage is ordered revoked and the property donated
is ordered awarded to the heirs of Juliana Braganza.

FELICITAS AMOR-CATALAN, Petitioner,

vs.
COURT OF APPEALS, MANILA, ORLANDO B. CATALAN and MEROPE E.
BRAGANZA, Respondents.
DECISION

Furnish copies of this Decision to Atty. Napoleon B. Arenas, Jr. and Atty. Nolan Evangelista.
SO ORDERED.10
Respondents appealed the decision to the Court of Appeals, which reversed the decision of the
RTC, thus:

YNARES-SANTIAGO, J.:
1

This petition for review assails the Decision of the Court of Appeals in CA-G.R. CV No. 69875 dated
August 6, 2004, which reversed the Decision2 of the Regional Trial Court (RTC) of Dagupan City,
Branch 44, in Civil Case No. D-10636, declaring the marriage between respondents Orlando B.
Catalan and Merope E. Braganza void on the ground of bigamy, as well as the Resolution3 dated
January 27, 2005, which denied the motion for reconsideration.
Petitioner Felicitas Amor-Catalan married respondent Orlando on June 4, 1950 in Mabini,
Pangasinan.4Thereafter, they migrated to the United States of America and allegedly became
naturalized citizens thereof. After 38 years of marriage, Felicitas and Orlando divorced in April 1988. 5

WHEREFORE, premises considered, we hereby GRANT the appeal and consequently REVERSE
and SET ASIDE the appealed decision. We likewise DISMISS Civil Case No. D-10636, RTC, Branch
44, Dagupan City. No costs.
SO ORDERED.11
After the motion for reconsideration was denied, petitioner filed the instant petition for review raising
the following issues:
I.

Two months after the divorce, or on June 16, 1988, Orlando married respondent Merope in
Calasiao, Pangasinan.6 Contending that said marriage was bigamous since Merope had a prior
subsisting marriage with Eusebio Bristol, petitioner filed a petition for declaration of nullity of
marriage with damages in the RTC of Dagupan City7 against Orlando and Merope.

WHETHER PETITIONER HAS THE REQUIRED STANDING IN COURT TO QUESTION THE

NULLITY OF THE MARRIAGE BETWEEN RESPONDENTS;

Respondents filed a motion to dismiss8 on the ground of lack of cause of action as petitioner was
allegedly not a real party-in-interest, but it was denied.9 Trial on the merits ensued.

WHETHER THE FAILURE OF THE COURT OF APPEALS TO DECLARE THE QUESTIONED

MARRIAGE VOID CONSTITUTES REVERSIBLE ERROR. 12

On October 10, 2000, the RTC rendered judgment in favor of the petitioner, the dispositive portion of
which reads:

Petitioner contends that the bigamous marriage of the respondents, which brought embarrassment
to her and her children, confers upon her an interest to seek judicial remedy to address her
grievances and to protect her family from further embarrassment and humiliation. She claims that
the Court of Appeals committed reversible error in not declaring the marriage void despite
overwhelming evidence and the state policy discouraging illegal and immoral marriages. 13

WHEREFORE, judgment is declared in favor of plaintiff Felicitas Amor Catalan and against
defendants Orlando B. Catalan and Merope E. Braganza, as follows:
1) The subsequent marriage of Merope Braganza with Orlando B. Catalan is declared null
and void ab initio;
2) The defendants are ordered jointly and severally to pay plaintiff by way of moral
damages the amount of P300,000.00, exemplary damages in the amount of P200,000.00
and attorneys fees in the amount of P50,000.00, including costs of this suit; and

26 | P a g e

II.

The main issue to be resolved is whether petitioner has the personality to file a petition for the
declaration of nullity of marriage of the respondents on the ground of bigamy. However, this issue
may not be resolved without first determining the corollary factual issues of whether the petitioner
and respondent Orlando had indeed become naturalized American citizens and whether they had
actually been judicially granted a divorce decree.

While it is a settled rule that the Court is not a trier of facts and does not normally undertake the reexamination of the evidence presented by the contending parties during the trial of the case,14 there
are, however, exceptions to this rule, like when the findings of facts of the RTC and the Court of
Appeals are conflicting, or when the findings are conclusions without citation of specific evidence on
which they are based.15
Both the RTC and the Court of Appeals found that petitioner and respondent Orlando were
naturalized American citizens and that they obtained a divorce decree in April 1988. However, after a
careful review of the records, we note that other than the allegations in the complaint and the
testimony during the trial, the records are bereft of competent evidence to prove their naturalization
and divorce.
The Court of Appeals therefore had no basis when it held:
In light of the allegations of Felicitas complaint and the documentary and testimonial evidence she
presented, we deem it undisputed that Orlando and Felicitas are American citizens and had this
citizenship status when they secured their divorce decree in April 1988. We are not therefore dealing
in this case with Filipino citizens whose marital status is governed by the Family Code and our Civil
Code, but with American citizens who secured their divorce in the U.S. and who are considered by
their national law to be free to contract another marriage. x x x16
Further, the Court of Appeals mistakenly considered the failure of the petitioner to refute or contest
the allegation in respondents brief, that she and respondent Orlando were American citizens at the
time they secured their divorce in April 1988, as sufficient to establish the fact of naturalization and
divorce.17 We note that it was the petitioner who alleged in her complaint that they acquired
American citizenship and that respondent Orlando obtained a judicial divorce decree.18 It is settled
rule that one who alleges a fact has the burden of proving it and mere allegation is not evidence.19

respondents void for being bigamous, there being already in evidence two existing marriage
certificates, which were both obtained in the Philippines, one in Mabini, Pangasinan dated
December 21, 1959 between Eusebio Bristol and respondent Merope,24 and the other, in Calasiao,
Pangasinan dated June 16, 1988 between the respondents.25
However, if there was indeed a divorce decree obtained and which, following the national law of
Orlando, does not restrict remarriage, the Court of Appeals would be correct in ruling that petitioner
has no legal personality to file a petition to declare the nullity of marriage, thus:
Freed from their existing marital bond, each of the former spouses no longer has any interest nor
should each have the personality to inquire into the marriage that the other might subsequently
contract. x x x Viewed from another perspective, Felicitas has no existing interest in Orlandos
subsequent marriage since the validity, as well as any defect or infirmity, of this subsequent
marriage will not affect the divorced status of Orlando and Felicitas. x x x26
True, under the New Civil Code which is the law in force at the time the respondents were married,
or even in the Family Code, there is no specific provision as to who can file a petition to declare the
nullity of marriage; however, only a party who can demonstrate "proper interest" can file the same. A
petition to declare the nullity of marriage, like any other actions, must be prosecuted or defended in
the name of the real party in interest27 and must be based on a cause of action.28 Thus, in Nial v.
Bayadog,29 the Court held that the children have the personality to file the petition to declare the
nullity of the marriage of their deceased father to their stepmother as it affects their successional
rights.1awphi1.net
Significantly, Section 2(a) of The Rule on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages, which took effect on March 15, 2003, now specifically provides:
SECTION 2. Petition for declaration of absolute nullity of void marriages.

Divorce means the legal dissolution of a lawful union for a cause arising after marriage. But divorces
are of different types. The two basic ones are (1) absolute divorce or a vinculo matrimonii and (2)
limited divorce or a mensa et thoro. The first kind terminates the marriage, while the second
suspends it and leaves the bond in full force.20 A divorce obtained abroad by an alien may be
recognized in our jurisdiction, provided such decree is valid according to the national law of the
foreigner.21 However, before it can be recognized by our courts, the party pleading it must prove the
divorce as a fact and demonstrate its conformity to the foreign law allowing it, which must be proved
considering that our courts cannot take judicial notice of foreign laws.22
Without the divorce decree and foreign law as part of the evidence, we cannot rule on the issue of
whether petitioner has the personality to file the petition for declaration of nullity of marriage. After
all, she may have the personality to file the petition if the divorce decree obtained was a limited
divorce or a mensa et thoro; or the foreign law may restrict remarriage even after the divorce decree
becomes absolute.23 In such case, the RTC would be correct to declare the marriage of the

27 | P a g e

(a) Who may file. A petition for declaration of absolute nullity of void marriage may be filed solely
by the husband or the wife.
xxxx
In fine, petitioners personality to file the petition to declare the nullity of marriage cannot be
ascertained because of the absence of the divorce decree and the foreign law allowing it. Hence, a
remand of the case to the trial court for reception of additional evidence is necessary to determine
whether respondent Orlando was granted a divorce decree and whether the foreign law which
granted the same allows or restricts remarriage. If it is proved that a valid divorce decree was
obtained and the same did not allow respondent Orlandos remarriage, then the trial court should
declare respondents marriage as bigamous and void ab initio but reduce the amount of moral
damages from P300,000.00 to P50,000.00 and exemplary damages from P200,000.00

to P25,000.00. On the contrary, if it is proved that a valid divorce decree was obtained which allowed
Orlando to remarry, then the trial court must dismiss the instant petition to declare nullity of marriage
on the ground that petitioner Felicitas Amor-Catalan lacks legal personality to file the same.
WHEREFORE, in view of the foregoing, let this case be REMANDED to the trial court for its proper
disposition. No costs.
SO ORDERED.

28 | P a g e

G.R. No. 133743

February 6, 2007

EDGAR SAN LUIS, Petitioner,

vs.
FELICIDAD SAN LUIS, Respondent.
x ---------------------------------------------------- x
G.R. No. 134029

February 6, 2007

RODOLFO SAN LUIS, Petitioner,

vs.
FELICIDAD SAGALONGOS alias FELICIDAD SAN LUIS, Respondent.
DECISION
YNARES-SANTIAGO, J.:
Before us are consolidated petitions for review assailing the February 4, 1998 Decision 1 of the Court
of Appeals in CA-G.R. CV No. 52647, which reversed and set aside the September 12, 1995 2 and
January 31, 1996 3Resolutions of the Regional Trial Court of Makati City, Branch 134 in SP. Proc.
No. M-3708; and its May 15, 1998 Resolution 4 denying petitioners motion for reconsideration.
The instant case involves the settlement of the estate of Felicisimo T. San Luis (Felicisimo), who was
the former governor of the Province of Laguna. During his lifetime, Felicisimo contracted three
marriages. His first marriage was with Virginia Sulit on March 17, 1942 out of which were born six
children, namely: Rodolfo, Mila, Edgar, Linda, Emilita and Manuel. On August 11, 1963, Virginia
predeceased Felicisimo.
Five years later, on May 1, 1968, Felicisimo married Merry Lee Corwin, with whom he had a son,
Tobias. However, on October 15, 1971, Merry Lee, an American citizen, filed a Complaint for
Divorce 5 before the Family Court of the First Circuit, State of Hawaii, United States of America
(U.S.A.), which issued a Decree Granting Absolute Divorce and Awarding Child Custody on
December 14, 1973. 6
On June 20, 1974, Felicisimo married respondent Felicidad San Luis, then surnamed Sagalongos,
before Rev. Fr. William Meyer, Minister of the United Presbyterian at Wilshire Boulevard, Los
Angeles, California, U.S.A. 7 He had no children with respondent but lived with her for 18 years from
the time of their marriage up to his death on December 18, 1992.

29 | P a g e

Thereafter, respondent sought the dissolution of their conjugal partnership assets and the settlement
of Felicisimos estate. On December 17, 1993, she filed a petition for letters of
administration 8 before the Regional Trial Court of Makati City, docketed as SP. Proc. No. M-3708
which was raffled to Branch 146 thereof.
Respondent alleged that she is the widow of Felicisimo; that, at the time of his death, the decedent
was residing at 100 San Juanico Street, New Alabang Village, Alabang, Metro Manila; that the
decedents surviving heirs are respondent as legal spouse, his six children by his first marriage, and
son by his second marriage; that the decedent left real properties, both conjugal and exclusive,
valued at P30,304,178.00 more or less; that the decedent does not have any unpaid debts.
Respondent prayed that the conjugal partnership assets be liquidated and that letters of
administration be issued to her.
On February 4, 1994, petitioner Rodolfo San Luis, one of the children of Felicisimo by his first
marriage, filed a motion to dismiss 9 on the grounds of improper venue and failure to state a cause of
action. Rodolfo claimed that the petition for letters of administration should have been filed in the
Province of Laguna because this was Felicisimos place of residence prior to his death. He further
claimed that respondent has no legal personality to file the petition because she was only a mistress
of Felicisimo since the latter, at the time of his death, was still legally married to Merry Lee.
On February 15, 1994, Linda invoked the same grounds and joined her brother Rodolfo in seeking
the dismissal 10of the petition. On February 28, 1994, the trial court issued an Order 11 denying the
two motions to dismiss.
Unaware of the denial of the motions to dismiss, respondent filed on March 5, 1994 her
opposition 12 thereto. She submitted documentary evidence showing that while Felicisimo exercised
the powers of his public office in Laguna, he regularly went home to their house in New Alabang
Village, Alabang, Metro Manila which they bought sometime in 1982. Further, she presented the
decree of absolute divorce issued by the Family Court of the First Circuit, State of Hawaii to prove
that the marriage of Felicisimo to Merry Lee had already been dissolved. Thus, she claimed that
Felicisimo had the legal capacity to marry her by virtue of paragraph 2, 13 Article 26 of the Family
Code and the doctrine laid down in Van Dorn v. Romillo, Jr. 14
Thereafter, Linda, Rodolfo and herein petitioner Edgar San Luis, separately filed motions for
reconsideration from the Order denying their motions to dismiss. 15 They asserted that paragraph 2,
Article 26 of the Family Code cannot be given retroactive effect to validate respondents bigamous
marriage with Felicisimo because this would impair vested rights in derogation of Article 256 16 of the
Family Code.
On April 21, 1994, Mila, another daughter of Felicisimo from his first marriage, filed a motion to
disqualify Acting Presiding Judge Anthony E. Santos from hearing the case.

On October 24, 1994, the trial court issued an Order 17 denying the motions for reconsideration. It
ruled that respondent, as widow of the decedent, possessed the legal standing to file the petition
and that venue was properly laid. Meanwhile, the motion for disqualification was deemed moot and
academic 18 because then Acting Presiding Judge Santos was substituted by Judge Salvador S.
Tensuan pending the resolution of said motion.
Mila filed a motion for inhibition 19 against Judge Tensuan on November 16, 1994. On even date,
Edgar also filed a motion for reconsideration 20 from the Order denying their motion for
reconsideration arguing that it does not state the facts and law on which it was based.
On November 25, 1994, Judge Tensuan issued an Order 21 granting the motion for inhibition. The
case was re-raffled to Branch 134 presided by Judge Paul T. Arcangel.
On April 24, 1995, 22 the trial court required the parties to submit their respective position papers on
the twin issues of venue and legal capacity of respondent to file the petition. On May 5, 1995, Edgar
manifested 23 that he is adopting the arguments and evidence set forth in his previous motion for
reconsideration as his position paper. Respondent and Rodolfo filed their position papers on June
14, 24 and June 20, 25 1995, respectively.
On September 12, 1995, the trial court dismissed the petition for letters of administration. It held
that, at the time of his death, Felicisimo was the duly elected governor and a resident of the
Province of Laguna. Hence, the petition should have been filed in Sta. Cruz, Laguna and not in
Makati City. It also ruled that respondent was without legal capacity to file the petition for letters of
administration because her marriage with Felicisimo was bigamous, thus, void ab initio. It found that
the decree of absolute divorce dissolving Felicisimos marriage to Merry Lee was not valid in the
Philippines and did not bind Felicisimo who was a Filipino citizen. It also ruled that paragraph 2,
Article 26 of the Family Code cannot be retroactively applied because it would impair the vested
rights of Felicisimos legitimate children.
Respondent moved for reconsideration 26 and for the disqualification 27 of Judge Arcangel but said
motions were denied. 28
Respondent appealed to the Court of Appeals which reversed and set aside the orders of the trial
court in its assailed Decision dated February 4, 1998, the dispositive portion of which states:

the personal, actual or physical habitation, or actual residence or place of abode of a person as
distinguished from legal residence or domicile. It noted that although Felicisimo discharged his
functions as governor in Laguna, he actually resided in Alabang, Muntinlupa. Thus, the petition for
letters of administration was properly filed in Makati City.
The Court of Appeals also held that Felicisimo had legal capacity to marry respondent by virtue of
paragraph 2, Article 26 of the Family Code and the rulings in Van Dorn v. Romillo, Jr. 30 and Pilapil v.
Ibay-Somera. 31 It found that the marriage between Felicisimo and Merry Lee was validly dissolved
by virtue of the decree of absolute divorce issued by the Family Court of the First Circuit, State of
Hawaii. As a result, under paragraph 2, Article 26, Felicisimo was capacitated to contract a
subsequent marriage with respondent. Thus
With the well-known rule express mandate of paragraph 2, Article 26, of the Family Code of the
Philippines, the doctrines in Van Dorn, Pilapil, and the reason and philosophy behind the enactment
of E.O. No. 227, there is no justiciable reason to sustain the individual view sweeping
statement of Judge Arc[h]angel, that "Article 26, par. 2 of the Family Code, contravenes the basic
policy of our state against divorce in any form whatsoever." Indeed, courts cannot deny what the law
grants. All that the courts should do is to give force and effect to the express mandate of the law.
The foreign divorce having been obtained by the Foreigner on December 14, 1992,32 the Filipino
divorcee, "shall x x x have capacity to remarry under Philippine laws". For this reason, the marriage
between the deceased and petitioner should not be denominated as "a bigamous marriage.
Therefore, under Article 130 of the Family Code, the petitioner as the surviving spouse can institute
the judicial proceeding for the settlement of the estate of the deceased. x x x 33
Edgar, Linda, and Rodolfo filed separate motions for reconsideration 34 which were denied by the
Court of Appeals.
On July 2, 1998, Edgar appealed to this Court via the instant petition for review on
certiorari. 35 Rodolfo later filed a manifestation and motion to adopt the said petition which was
granted. 36

WHEREFORE, the Orders dated September 12, 1995 and January 31, 1996 are hereby
REVERSED and SET ASIDE; the Orders dated February 28 and October 24, 1994 are
REINSTATED; and the records of the case is REMANDED to the trial court for further
proceedings. 29

In the instant consolidated petitions, Edgar and Rodolfo insist that the venue of the subject petition
for letters of administration was improperly laid because at the time of his death, Felicisimo was a
resident of Sta. Cruz, Laguna. They contend that pursuant to our rulings in Nuval v. Guray 37 and
Romualdez v. RTC, Br. 7, Tacloban City, 38 "residence" is synonymous with "domicile" which denotes
a fixed permanent residence to which when absent, one intends to return. They claim that a person
can only have one domicile at any given time. Since Felicisimo never changed his domicile, the
petition for letters of administration should have been filed in Sta. Cruz, Laguna.

The appellante court ruled that under Section 1, Rule 73 of the Rules of Court, the term "place of
residence" of the decedent, for purposes of fixing the venue of the settlement of his estate, refers to

Petitioners also contend that respondents marriage to Felicisimo was void and bigamous because it
was performed during the subsistence of the latters marriage to Merry Lee. They argue that

30 | P a g e

paragraph 2, Article 26 cannot be retroactively applied because it would impair vested rights and
ratify the void bigamous marriage. As such, respondent cannot be considered the surviving wife of
Felicisimo; hence, she has no legal capacity to file the petition for letters of administration.
The issues for resolution: (1) whether venue was properly laid, and (2) whether respondent has legal
capacity to file the subject petition for letters of administration.
The petition lacks merit.
Under Section 1, 39 Rule 73 of the Rules of Court, the petition for letters of administration of the
estate of Felicisimo should be filed in the Regional Trial Court of the province "in which he resides at
the time of his death." In the case of Garcia Fule v. Court of Appeals, 40 we laid down the doctrinal
rule for determining the residence as contradistinguished from domicile of the decedent for
purposes of fixing the venue of the settlement of his estate:
[T]he term "resides" connotes ex vi termini "actual residence" as distinguished from "legal residence
or domicile." This term "resides," like the terms "residing" and "residence," is elastic and should be
interpreted in the light of the object or purpose of the statute or rule in which it is employed. In the
application of venue statutes and rules Section 1, Rule 73 of the Revised Rules of Court is of such
nature residence rather than domicile is the significant factor. Even where the statute uses the
word "domicile" still it is construed as meaning residence and not domicile in the technical sense.
Some cases make a distinction between the terms "residence" and "domicile" but as generally used
in statutes fixing venue, the terms are synonymous, and convey the same meaning as the term
"inhabitant." In other words, "resides" should be viewed or understood in its popular sense, meaning,
the personal, actual or physical habitation of a person, actual residence or place of abode. It
signifies physical presence in a place and actual stay thereat. In this popular sense, the term means
merely residence, that is, personal residence, not legal residence or domicile. Residence simply
requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence
in that place and also an intention to make it ones domicile. No particular length of time of residence
is required though; however, the residence must be more than temporary. 41 (Emphasis supplied)
It is incorrect for petitioners to argue that "residence," for purposes of fixing the venue of the
settlement of the estate of Felicisimo, is synonymous with "domicile." The rulings in Nuval and
Romualdez are inapplicable to the instant case because they involve election cases. Needless to
say, there is a distinction between "residence" for purposes of election laws and "residence" for
purposes of fixing the venue of actions. In election cases, "residence" and "domicile" are treated as
synonymous terms, that is, the fixed permanent residence to which when absent, one has the
intention of returning. 42 However, for purposes of fixing venue under the Rules of Court, the
"residence" of a person is his personal, actual or physical habitation, or actual residence or place of
abode, which may not necessarily be his legal residence or domicile provided he resides therein
with continuity and consistency.43 Hence, it is possible that a person may have his residence in one
place and domicile in another.

31 | P a g e

In the instant case, while petitioners established that Felicisimo was domiciled in Sta. Cruz, Laguna,
respondent proved that he also maintained a residence in Alabang, Muntinlupa from 1982 up to the
time of his death. Respondent submitted in evidence the Deed of Absolute Sale 44 dated January 5,
1983 showing that the deceased purchased the aforesaid property. She also presented billing
statements 45 from the Philippine Heart Center and Chinese General Hospital for the period August
to December 1992 indicating the address of Felicisimo at "100 San Juanico, Ayala Alabang,
Muntinlupa." Respondent also presented proof of membership of the deceased in the Ayala Alabang
Village Association 46 and Ayala Country Club, Inc., 47 letter-envelopes 48 from 1988 to 1990 sent by
the deceaseds children to him at his Alabang address, and the deceaseds calling cards 49stating
that his home/city address is at "100 San Juanico, Ayala Alabang Village, Muntinlupa" while his
office/provincial address is in "Provincial Capitol, Sta. Cruz, Laguna."
From the foregoing, we find that Felicisimo was a resident of Alabang, Muntinlupa for purposes of
fixing the venue of the settlement of his estate. Consequently, the subject petition for letters of
administration was validly filed in the Regional Trial Court 50 which has territorial jurisdiction over
Alabang, Muntinlupa. The subject petition was filed on December 17, 1993. At that time, Muntinlupa
was still a municipality and the branches of the Regional Trial Court of the National Capital Judicial
Region which had territorial jurisdiction over Muntinlupa were then seated in Makati City as per
Supreme Court Administrative Order No. 3. 51 Thus, the subject petition was validly filed before the
Regional Trial Court of Makati City.
Anent the issue of respondent Felicidads legal personality to file the petition for letters of
administration, we must first resolve the issue of whether a Filipino who is divorced by his alien
spouse abroad may validly remarry under the Civil Code, considering that Felicidads marriage to
Felicisimo was solemnized on June 20, 1974, or before the Family Code took effect on August 3,
1988. In resolving this issue, we need not retroactively apply the provisions of the Family Code,
particularly Art. 26, par. (2) considering that there is sufficient jurisprudential basis allowing us to rule
in the affirmative.
The case of Van Dorn v. Romillo, Jr. 52 involved a marriage between a foreigner and his Filipino wife,
which marriage was subsequently dissolved through a divorce obtained abroad by the latter.
Claiming that the divorce was not valid under Philippine law, the alien spouse alleged that his
interest in the properties from their conjugal partnership should be protected. The Court, however,
recognized the validity of the divorce and held that the alien spouse had no interest in the properties
acquired by the Filipino wife after the divorce. Thus:
In this case, the divorce in Nevada released private respondent from the marriage from the
standards of American law, under which divorce dissolves the marriage. As stated by the Federal
Supreme Court of the United States in Atherton vs. Atherton, 45 L. Ed. 794, 799:
"The purpose and effect of a decree of divorce from the bond of matrimony by a competent
jurisdiction are to change the existing status or domestic relation of husband and wife, and to free

them both from the bond. The marriage tie, when thus severed as to one party, ceases to bind
either. A husband without a wife, or a wife without a husband, is unknown to the law. When the law
provides, in the nature of a penalty, that the guilty party shall not marry again, that party, as well as
the other, is still absolutely freed from the bond of the former marriage."

In the recent case of Republic v. Orbecido III, 62 the historical background and legislative intent
behind paragraph 2, Article 26 of the Family Code were discussed, to wit:

Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He
would have no standing to sue in the case below as petitioners husband entitled to exercise control
over conjugal assets. As he is bound by the Decision of his own countrys Court, which validly
exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his
own representation before said Court from asserting his right over the alleged conjugal property. 53

On July 6, 1987, then President Corazon Aquino signed into law Executive Order No. 209, otherwise
known as the "Family Code," which took effect on August 3, 1988. Article 26 thereof states:

As to the effect of the divorce on the Filipino wife, the Court ruled that she should no longer be
considered married to the alien spouse. Further, she should not be required to perform her marital
duties and obligations. It held:
To maintain, as private respondent does, that, under our laws, petitioner has to be
considered still married to private respondent and still subject to a wife's obligations under
Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live
together with, observe respect and fidelity, and render support to private respondent. The latter
should not continue to be one of her heirs with possible rights to conjugal property. She should not
be discriminated against in her own country if the ends of justice are to be
served. 54 (Emphasis added)
This principle was thereafter applied in Pilapil v. Ibay-Somera 55 where the Court recognized the
validity of a divorce obtained abroad. In the said case, it was held that the alien spouse is not a
proper party in filing the adultery suit against his Filipino wife. The Court stated that "the severance
of the marital bond had the effect of dissociating the former spouses from each other, hence the
actuations of one would not affect or cast obloquy on the other." 56
Likewise, in Quita v. Court of Appeals, 57 the Court stated that where a Filipino is divorced by his
naturalized foreign spouse, the ruling in Van Dorn applies. 58 Although decided on December 22,
1998, the divorce in the said case was obtained in 1954 when the Civil Code provisions were still in
effect.
The significance of the Van Dorn case to the development of limited recognition of divorce in the
Philippines cannot be denied. The ruling has long been interpreted as severing marital ties between
parties in a mixed marriage and capacitating the Filipino spouse to remarry as a necessary
consequence of upholding the validity of a divorce obtained abroad by the alien spouse. In his
treatise, Dr. Arturo M. Tolentino cited Van Dorn stating that "if the foreigner obtains a valid foreign
divorce, the Filipino spouse shall have capacity to remarry under Philippine law." 59 In Garcia v.
Recio, 60 the Court likewise cited the aforementioned case in relation to Article 26. 61

32 | P a g e

Brief Historical Background

All marriages solemnized outside the Philippines in accordance with the laws in force in the country
where they were solemnized, and valid there as such, shall also be valid in this country, except
those prohibited under Articles 35, 37, and 38.
On July 17, 1987, shortly after the signing of the original Family Code, Executive Order No. 227 was
likewise signed into law, amending Articles 26, 36, and 39 of the Family Code. A second paragraph
was added to Article 26. As so amended, it now provides:
ART. 26. All marriages solemnized outside the Philippines in accordance with the laws in force in the
country where they were solemnized, and valid there as such, shall also be valid in this country,
except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino
spouse shall have capacity to remarry under Philippine law. (Emphasis supplied)
xxxx
Legislative Intent
Records of the proceedings of the Family Code deliberations showed that the intent of Paragraph 2
of Article 26, according to Judge Alicia Sempio-Diy, a member of the Civil Code Revision Committee,
is to avoid the absurd situation where the Filipino spouse remains married to the alien spouse who,
after obtaining a divorce, is no longer married to the Filipino spouse.
Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case of Van Dorn v.
Romillo, Jr. TheVan Dorn case involved a marriage between a Filipino citizen and a foreigner.
The Court held therein that a divorce decree validly obtained by the alien spouse is valid in
the Philippines, and consequently, the Filipino spouse is capacitated to remarry under
Philippine law. 63 (Emphasis added)
As such, the Van Dorn case is sufficient basis in resolving a situation where a divorce is validly
obtained abroad by the alien spouse. With the enactment of the Family Code and paragraph 2,
Article 26 thereof, our lawmakers codified the law already established through judicial
precedent.1awphi1.net

Indeed, when the object of a marriage is defeated by rendering its continuance intolerable to one of
the parties and productive of no possible good to the community, relief in some way should be
obtainable. 64 Marriage, being a mutual and shared commitment between two parties, cannot
possibly be productive of any good to the society where one is considered released from the marital
bond while the other remains bound to it. Such is the state of affairs where the alien spouse obtains
a valid divorce abroad against the Filipino spouse, as in this case.
Petitioners cite Articles 15 65 and 17 66 of the Civil Code in stating that the divorce is void under
Philippine law insofar as Filipinos are concerned. However, in light of this Courts rulings in the cases
discussed above, the Filipino spouse should not be discriminated against in his own country if the
ends of justice are to be served. 67 In Alonzo v. Intermediate Appellate Court, 68 the Court stated:
But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its
purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern of the judge
should be to discover in its provisions the intent of the lawmaker. Unquestionably, the law should
never be interpreted in such a way as to cause injustice as this is never within the legislative intent.
An indispensable part of that intent, in fact, for we presume the good motives of the legislature, is
to render justice.
Thus, we interpret and apply the law not independently of but in consonance with justice. Law and
justice are inseparable, and we must keep them so. To be sure, there are some laws that, while
generally valid, may seem arbitrary when applied in a particular case because of its peculiar
circumstances. In such a situation, we are not bound, because only of our nature and functions, to
apply them just the same, in slavish obedience to their language. What we do instead is find a
balance between the word and the will, that justice may be done even as the law is obeyed.
As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded,
yielding like robots to the literal command without regard to its cause and consequence. "Courts are
apt to err by sticking too closely to the words of a law," so we are warned, by Justice Holmes again,
"where these words import a policy that goes beyond them."

personality to file the present petition as Felicisimos surviving spouse. However, the records show
that there is insufficient evidence to prove the validity of the divorce obtained by Merry Lee as well
as the marriage of respondent and Felicisimo under the laws of the U.S.A. In Garcia v. Recio, 70 the
Court laid down the specific guidelines for pleading and proving foreign law and divorce judgments.
It held that presentation solely of the divorce decree is insufficient and that proof of its authenticity
and due execution must be presented. Under Sections 24 and 25 of Rule 132, a writing or document
may be proven as a public or official record of a foreign country by either (1) an official publication or
(2) a copy thereof attested by the officer having legal custody of the document. If the record is not
kept in the Philippines, such copy must be (a) accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign service stationed in the foreign country in
which the record is kept and (b) authenticated by the seal of his office. 71
With regard to respondents marriage to Felicisimo allegedly solemnized in California, U.S.A., she
submitted photocopies of the Marriage Certificate and the annotated text 72 of the Family Law Act of
California which purportedly show that their marriage was done in accordance with the said law. As
stated in Garcia, however, the Court cannot take judicial notice of foreign laws as they must be
alleged and proved. 73
Therefore, this case should be remanded to the trial court for further reception of evidence on the
divorce decree obtained by Merry Lee and the marriage of respondent and Felicisimo.
Even assuming that Felicisimo was not capacitated to marry respondent in 1974, nevertheless, we
find that the latter has the legal personality to file the subject petition for letters of administration, as
she may be considered the co-owner of Felicisimo as regards the properties that were acquired
through their joint efforts during their cohabitation.
Section 6, 74 Rule 78 of the Rules of Court states that letters of administration may be granted to the
surviving spouse of the decedent. However, Section 2, Rule 79 thereof also provides in part:
SEC. 2. Contents of petition for letters of administration. A petition for letters of administration must
be filed by an interested person and must show, as far as known to the petitioner: x x x.

xxxx
More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to
render every one his due." That wish continues to motivate this Court when it assesses the facts and
the law in every case brought to it for decision. Justice is always an essential ingredient of its
decisions. Thus when the facts warrants, we interpret the law in a way that will render justice,
presuming that it was the intention of the lawmaker, to begin with, that the law be dispensed with
justice. 69
Applying the above doctrine in the instant case, the divorce decree allegedly obtained by Merry Lee
which absolutely allowed Felicisimo to remarry, would have vested Felicidad with the legal

33 | P a g e

An "interested person" has been defined as one who would be benefited by the estate, such as an
heir, or one who has a claim against the estate, such as a creditor. The interest must be material and
direct, and not merely indirect or contingent. 75
In the instant case, respondent would qualify as an interested person who has a direct interest in the
estate of Felicisimo by virtue of their cohabitation, the existence of which was not denied by
petitioners. If she proves the validity of the divorce and Felicisimos capacity to remarry, but fails to
prove that her marriage with him was validly performed under the laws of the U.S.A., then she may
be considered as a co-owner under Article 144 76 of the Civil Code. This provision governs the
property relations between parties who live together as husband and wife without the benefit of

marriage, or their marriage is void from the beginning. It provides that the property acquired by
either or both of them through their work or industry or their wages and salaries shall be governed
by the rules on co-ownership. In a co-ownership, it is not necessary that the property be acquired
through their joint labor, efforts and industry. Any property acquired during the union is prima
facie presumed to have been obtained through their joint efforts. Hence, the portions belonging to
the co-owners shall be presumed equal, unless the contrary is proven. 77
Meanwhile, if respondent fails to prove the validity of both the divorce and the marriage, the
applicable provision would be Article 148 of the Family Code which has filled the hiatus in Article 144
of the Civil Code by expressly regulating the property relations of couples living together as husband
and wife but are incapacitated to marry. 78In Saguid v. Court of Appeals, 79 we held that even if the
cohabitation or the acquisition of property occurred before the Family Code took effect, Article 148
governs. 80 The Court described the property regime under this provision as follows:
The regime of limited co-ownership of property governing the union of parties who are not legally
capacitated to marry each other, but who nonetheless live together as husband and wife, applies to
properties acquired during said cohabitation in proportion to their respective contributions. Coownership will only be up to the extent of the proven actual contribution of money, property or
industry. Absent proof of the extent thereof, their contributions and corresponding shares shall be
presumed to be equal.
xxxx
In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved the issue of coownership of properties acquired by the parties to a bigamous marriage and an adulterous
relationship, respectively, we ruled that proof of actual contribution in the acquisition of the property
is essential. x x x
As in other civil cases, the burden of proof rests upon the party who, as determined by the pleadings
or the nature of the case, asserts an affirmative issue. Contentions must be proved by competent
evidence and reliance must be had on the strength of the partys own evidence and not upon the
weakness of the opponents defense. x x x 81
In view of the foregoing, we find that respondents legal capacity to file the subject petition for letters
of administration may arise from her status as the surviving wife of Felicisimo or as his co-owner
under Article 144 of the Civil Code or Article 148 of the Family Code.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals reinstating and
affirming the February 28, 1994 Order of the Regional Trial Court which denied petitioners motion to
dismiss and its October 24, 1994 Order which dismissed petitioners motion for reconsideration is
AFFIRMED. Let this case be REMANDED to the trial court for further proceedings.

34 | P a g e

SO ORDERED.

G.R. No. L-16749

January 31, 1963

xxx

IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN, DECEASED.

ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the deceased, Executor and
Heir-appellees,
vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.
M. R. Sotelo for executor and heir-appellees.
Leopoldo M. Abellera and Jovito Salonga for oppositor-appellant.

xxx

12. I hereby give, devise and bequeath, unto my well-beloved daughter, the said MARIA
LUCY CHRISTENSEN DANEY (Mrs. Bernard Daney), now residing as aforesaid at No.
665 Rodger Young Village, Los Angeles, California, U.S.A., all the income from the rest,
remainder, and residue of my property and estate, real, personal and/or mixed, of
whatsoever kind or character, and wheresoever situated, of which I may be possessed at
my death and which may have come to me from any source whatsoever, during her
lifetime: ....
It is in accordance with the above-quoted provisions that the executor in his final account and project
of partition ratified the payment of only P3,600 to Helen Christensen Garcia and proposed that the
residue of the estate be transferred to his daughter, Maria Lucy Christensen.

LABRADOR, J.:
This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N. Cusi, Jr.,
presiding, in Special Proceeding No. 622 of said court, dated September 14, 1949, approving
among things the final accounts of the executor, directing the executor to reimburse Maria Lucy
Christensen the amount of P3,600 paid by her to Helen Christensen Garcia as her legacy, and
declaring Maria Lucy Christensen entitled to the residue of the property to be enjoyed during her
lifetime, and in case of death without issue, one-half of said residue to be payable to Mrs. Carrie
Louise C. Borton, etc., in accordance with the provisions of the will of the testator Edward E.
Christensen. The will was executed in Manila on March 5, 1951 and contains the following
provisions:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY CHRISTENSEN (now
Mrs. Bernard Daney), who was born in the Philippines about twenty-eight years ago, and
who is now residing at No. 665 Rodger Young Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no descendants except my
above named daughter, MARIA LUCY CHRISTENSEN DANEY.
xxx

xxx

xxx

7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN, now married to
Eduardo Garcia, about eighteen years of age and who, notwithstanding the fact that she
was baptized Christensen, is not in any way related to me, nor has she been at any time
adopted by me, and who, from all information I have now resides in Egpit, Digos, Davao,
Philippines, the sum of THREE THOUSAND SIX HUNDRED PESOS (P3,600.00),
Philippine Currency the same to be deposited in trust for the said Maria Helen
Christensen with the Davao Branch of the Philippine National Bank, and paid to her at the
rate of One Hundred Pesos (P100.00), Philippine Currency per month until the principal
thereof as well as any interest which may have accrued thereon, is exhausted..

35 | P a g e

xxx

Opposition to the approval of the project of partition was filed by Helen Christensen Garcia, insofar
as it deprives her (Helen) of her legitime as an acknowledged natural child, she having been
declared by Us in G.R. Nos. L-11483-84 an acknowledged natural child of the deceased Edward E.
Christensen. The legal grounds of opposition are (a) that the distribution should be governed by the
laws of the Philippines, and (b) that said order of distribution is contrary thereto insofar as it denies
to Helen Christensen, one of two acknowledged natural children, one-half of the estate in full
ownership. In amplification of the above grounds it was alleged that the law that should govern the
estate of the deceased Christensen should not be the internal law of California alone, but the entire
law thereof because several foreign elements are involved, that the forum is the Philippines and
even if the case were decided in California, Section 946 of the California Civil Code, which requires
that the domicile of the decedent should apply, should be applicable. It was also alleged that Maria
Helen Christensen having been declared an acknowledged natural child of the decedent, she is
deemed for all purposes legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the United States and of the
State of California at the time of his death, the successional rights and intrinsic validity of the
provisions in his will are to be governed by the law of California, in accordance with which a testator
has the right to dispose of his property in the way he desires, because the right of absolute dominion
over his property is sacred and inviolable (In re McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d
952, and In re Kaufman, 117 Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal). Oppositor
Maria Helen Christensen, through counsel, filed various motions for reconsideration, but these were
denied. Hence, this appeal.
The most important assignments of error are as follows:
I

THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE HONORABLE SUPREME
COURT THAT HELEN IS THE ACKNOWLEDGED NATURAL CHILD OF EDWARD E.
CHRISTENSEN AND, CONSEQUENTLY, IN DEPRIVING HER OF HER JUST SHARE IN THE
INHERITANCE.
II
THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO RECOGNIZE THE
EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND CIRCUMSTANCES CALLING FOR THE
APPLICATION OF INTERNAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER INTERNATIONAL LAW,
PARTICULARLY UNDER THE RENVOI DOCTRINE, THE INTRINSIC VALIDITY OF THE
TESTAMENTARY DISPOSITION OF THE DISTRIBUTION OF THE ESTATE OF THE DECEASED
EDWARD E. CHRISTENSEN SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES.

In December, 1904, Mr. Christensen returned to the United States and stayed there for
the following nine years until 1913, during which time he resided in, and was teaching
school in Sacramento, California.
Mr. Christensen's next arrival in the Philippines was in July of the year 1913. However, in
1928, he again departed the Philippines for the United States and came back here the
following year, 1929. Some nine years later, in 1938, he again returned to his own country,
and came back to the Philippines the following year, 1939.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted
and approved by this Honorable Court, without prejudice to the parties adducing other
evidence to prove their case not covered by this stipulation of facts. 1wph1.t
Being an American citizen, Mr. Christensen was interned by the Japanese Military Forces
in the Philippines during World War II. Upon liberation, in April 1945, he left for the United
States but returned to the Philippines in December, 1945. Appellees Collective Exhibits
"6", CFI Davao, Sp. Proc. 622, as Exhibits "AA", "BB" and "CC-Daney"; Exhs. "MM", "MMl", "MM-2-Daney" and p. 473, t.s.n., July 21, 1953.)

IV
THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF DISTRIBUTION
SUBMITTED BY THE EXECUTOR IS CONTRARY TO THE PHILIPPINE LAWS.
V
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE PHILIPPINE LAWS
HELEN CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE ESTATE IN FULL
OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United States and of the State
of California at the time of his death. But there is also no question that at the time of his death he
was domiciled in the Philippines, as witness the following facts admitted by the executor himself in
appellee's brief:
In the proceedings for admission of the will to probate, the facts of record show that the
deceased Edward E. Christensen was born on November 29, 1875 in New York City, N.Y.,
U.S.A.; his first arrival in the Philippines, as an appointed school teacher, was on July 1,
1901, on board the U.S. Army Transport "Sheridan" with Port of Embarkation as the City
of San Francisco, in the State of California, U.S.A. He stayed in the Philippines until 1904.

36 | P a g e

In April, 1951, Edward E. Christensen returned once more to California shortly after the
making of his last will and testament (now in question herein) which he executed at his
lawyers' offices in Manila on March 5, 1951. He died at the St. Luke's Hospital in the City
of Manila on April 30, 1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are persuaded
by the fact that he was born in New York, migrated to California and resided there for nine years,
and since he came to the Philippines in 1913 he returned to California very rarely and only for short
visits (perhaps to relatives), and considering that he appears never to have owned or acquired a
home or properties in that state, which would indicate that he would ultimately abandon the
Philippines and make home in the State of California.
Sec. 16. Residence is a term used with many shades of meaning from mere temporary
presence to the most permanent abode. Generally, however, it is used to denote
something more than mere physical presence. (Goodrich on Conflict of Laws, p. 29)
As to his citizenship, however, We find that the citizenship that he acquired in California when he
resided in Sacramento, California from 1904 to 1913, was never lost by his stay in the Philippines,
for the latter was a territory of the United States (not a state) until 1946 and the deceased appears to
have considered himself as a citizen of California by the fact that when he executed his will in 1951
he declared that he was a citizen of that State; so that he appears never to have intended to
abandon his California citizenship by acquiring another. This conclusion is in accordance with the
following principle expounded by Goodrich in his Conflict of Laws.

The terms "'residence" and "domicile" might well be taken to mean the same thing, a
place of permanent abode. But domicile, as has been shown, has acquired a technical
meaning. Thus one may be domiciled in a place where he has never been. And he may
reside in a place where he has no domicile. The man with two homes, between which he
divides his time, certainly resides in each one, while living in it. But if he went on business
which would require his presence for several weeks or months, he might properly be said
to have sufficient connection with the place to be called a resident. It is clear, however,
that, if he treated his settlement as continuing only for the particular business in hand, not
giving up his former "home," he could not be a domiciled New Yorker. Acquisition of a
domicile of choice requires the exercise of intention as well as physical presence.
"Residence simply requires bodily presence of an inhabitant in a given place, while
domicile requires bodily presence in that place and also an intention to make it one's
domicile." Residence, however, is a term used with many shades of meaning, from the
merest temporary presence to the most permanent abode, and it is not safe to insist that
any one use et the only proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in Article 16 of the Civil
Code of the Philippines, which is as follows:
ART. 16. Real property as well as personal property is subject to the law of the country
where it is situated.
However, intestate and testamentary successions, both with respect to the order of
succession and to the amount of successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the national law of the person whose
succession is under consideration, whatever may be the nature of the property and
regardless of the country where said property may be found.
The application of this article in the case at bar requires the determination of the meaning of the
term "national law" is used therein.
There is no single American law governing the validity of testamentary provisions in the United
States, each state of the Union having its own private law applicable to its citizens only and in force
only within the state. The "national law" indicated in Article 16 of the Civil Code above quoted can
not, therefore, possibly mean or apply to any general American law. So it can refer to no other than
the private law of the State of California.
The next question is: What is the law in California governing the disposition of personal property?
The decision of the court below, sustains the contention of the executor-appellee that under the
California Probate Code, a testator may dispose of his property by will in the form and manner he
desires, citing the case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176 P. 2d 952. But appellant
invokes the provisions of Article 946 of the Civil Code of California, which is as follows:

37 | P a g e

If there is no law to the contrary, in the place where personal property is situated, it is
deemed to follow the person of its owner, and is governed by the law of his domicile.
The existence of this provision is alleged in appellant's opposition and is not denied. We have
checked it in the California Civil Code and it is there. Appellee, on the other hand, relies on the case
cited in the decision and testified to by a witness. (Only the case of Kaufman is correctly cited.) It is
argued on executor's behalf that as the deceased Christensen was a citizen of the State of
California, the internal law thereof, which is that given in the abovecited case, should govern the
determination of the validity of the testamentary provisions of Christensen's will, such law being in
force in the State of California of which Christensen was a citizen. Appellant, on the other hand,
insists that Article 946 should be applicable, and in accordance therewith and following the doctrine
of therenvoi, the question of the validity of the testamentary provision in question should be referred
back to the law of the decedent's domicile, which is the Philippines.
The theory of doctrine of renvoi has been defined by various authors, thus:
The problem has been stated in this way: "When the Conflict of Laws rule of the forum
refers a jural matter to a foreign law for decision, is the reference to the purely internal
rules of law of the foreign system; i.e., to the totality of the foreign law minus its Conflict of
Laws rules?"
On logic, the solution is not an easy one. The Michigan court chose to accept the renvoi,
that is, applied the Conflict of Laws rule of Illinois which referred the matter back to
Michigan law. But once having determined the the Conflict of Laws principle is the rule
looked to, it is difficult to see why the reference back should not have been to Michigan
Conflict of Laws. This would have resulted in the "endless chain of references" which has
so often been criticized be legal writers. The opponents of the renvoi would have looked
merely to the internal law of Illinois, thus rejecting the renvoi or the reference back. Yet
there seems no compelling logical reason why the original reference should be the
internal law rather than to the Conflict of Laws rule. It is true that such a solution avoids
going on a merry-go-round, but those who have accepted the renvoi theory avoid
this inextricabilis circulas by getting off at the second reference and at that point applying
internal law. Perhaps the opponents of the renvoi are a bit more consistent for they look
always to internal law as the rule of reference.
Strangely enough, both the advocates for and the objectors to the renvoi plead that
greater uniformity will result from adoption of their respective views. And still more strange
is the fact that the only way to achieve uniformity in this choice-of-law problem is if in the
dispute the two states whose laws form the legal basis of the litigation disagree as to
whether the renvoi should be accepted. If both reject, or both accept the doctrine, the
result of the litigation will vary with the choice of the forum. In the case stated above, had
the Michigan court rejected the renvoi, judgment would have been against the woman; if

the suit had been brought in the Illinois courts, and they too rejected the renvoi, judgment
would be for the woman. The same result would happen, though the courts would switch
with respect to which would hold liability, if both courts accepted the renvoi.
The Restatement accepts the renvoi theory in two instances: where the title to land is in
question, and where the validity of a decree of divorce is challenged. In these cases the
Conflict of Laws rule of the situs of the land, or the domicile of the parties in the divorce
case, is applied by the forum, but any further reference goes only to the internal law.
Thus, a person's title to land, recognized by the situs, will be recognized by every court;
and every divorce, valid by the domicile of the parties, will be valid everywhere.
(Goodrich, Conflict of Laws, Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving movable
property in Massachusetts, England, and France. The question arises as to how this
property is to be distributed among X's next of kin.
Assume (1) that this question arises in a Massachusetts court. There the rule of the
conflict of laws as to intestate succession to movables calls for an application of the law of
the deceased's last domicile. Since by hypothesis X's last domicile was France, the
natural thing for the Massachusetts court to do would be to turn to French statute of
distributions, or whatever corresponds thereto in French law, and decree a distribution
accordingly. An examination of French law, however, would show that if a French court
were called upon to determine how this property should be distributed, it would refer the
distribution to the national law of the deceased, thus applying the Massachusetts statute
of distributions. So on the surface of things the Massachusetts court has open to it
alternative course of action: (a) either to apply the French law is to intestate succession,
or (b) to resolve itself into a French court and apply the Massachusetts statute of
distributions, on the assumption that this is what a French court would do. If it accepts the
so-called renvoidoctrine, it will follow the latter course, thus applying its own law.
This is one type of renvoi. A jural matter is presented which the conflict-of-laws rule of the
forum refers to a foreign law, the conflict-of-laws rule of which, in turn, refers the matter
back again to the law of the forum. This is renvoi in the narrower sense. The German term
for this judicial process is 'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523-571.)
After a decision has been arrived at that a foreign law is to be resorted to as governing a
particular case, the further question may arise: Are the rules as to the conflict of laws
contained in such foreign law also to be resorted to? This is a question which, while it has
been considered by the courts in but a few instances, has been the subject of frequent
discussion by textwriters and essayists; and the doctrine involved has been descriptively
designated by them as the "Renvoyer" to send back, or the "Ruchversweisung", or the
"Weiterverweisung", since an affirmative answer to the question postulated and the

38 | P a g e

operation of the adoption of the foreign law in toto would in many cases result in returning
the main controversy to be decided according to the law of the forum. ... (16 C.J.S. 872.)
Another theory, known as the "doctrine of renvoi", has been advanced. The theory of the
doctrine of renvoiis that the court of the forum, in determining the question before it, must
take into account the whole law of the other jurisdiction, but also its rules as to conflict of
laws, and then apply the law to the actual question which the rules of the other jurisdiction
prescribe. This may be the law of the forum. The doctrine of therenvoi has generally been
repudiated by the American authorities. (2 Am. Jur. 296)
The scope of the theory of renvoi has also been defined and the reasons for its application in a
country explained by Prof. Lorenzen in an article in the Yale Law Journal, Vol. 27, 1917-1918, pp.
529-531. The pertinent parts of the article are quoted herein below:
The recognition of the renvoi theory implies that the rules of the conflict of laws are to be
understood as incorporating not only the ordinary or internal law of the foreign state or
country, but its rules of the conflict of laws as well. According to this theory 'the law of a
country' means the whole of its law.
xxx

xxx

xxx

Von Bar presented his views at the meeting of the Institute of International Law, at
Neuchatel, in 1900, in the form of the following theses:
(1) Every court shall observe the law of its country as regards the application of foreign
laws.
(2) Provided that no express provision to the contrary exists, the court shall respect:
(a) The provisions of a foreign law which disclaims the right to bind its nationals
abroad as regards their personal statute, and desires that said personal statute
shall be determined by the law of the domicile, or even by the law of the place
where the act in question occurred.
(b) The decision of two or more foreign systems of law, provided it be certain
that one of them is necessarily competent, which agree in attributing the
determination of a question to the same system of law.
xxx

xxx

xxx

If, for example, the English law directs its judge to distribute the personal estate of an
Englishman who has died domiciled in Belgium in accordance with the law of his domicile,

he must first inquire whether the law of Belgium would distribute personal property upon
death in accordance with the law of domicile, and if he finds that the Belgian law would
make the distribution in accordance with the law of nationality that is the English law
he must accept this reference back to his own law.
We note that Article 946 of the California Civil Code is its conflict of laws rule, while the rule applied
in In re Kaufman, Supra, its internal law. If the law on succession and the conflict of laws rules of
California are to be enforced jointly, each in its own intended and appropriate sphere, the principle
cited In re Kaufman should apply to citizens living in the State, but Article 946 should apply to such
of its citizens as are not domiciled in California but in other jurisdictions. The rule laid down of
resorting to the law of the domicile in the determination of matters with foreign element involved is in
accord with the general principle of American law that the domiciliary law should govern in most
matters or rights which follow the person of the owner.
When a man dies leaving personal property in one or more states, and leaves a will
directing the manner of distribution of the property, the law of the state where he was
domiciled at the time of his death will be looked to in deciding legal questions about the
will, almost as completely as the law of situs is consulted in questions about the devise of
land. It is logical that, since the domiciliary rules control devolution of the personal estate
in case of intestate succession, the same rules should determine the validity of an
attempted testamentary dispostion of the property. Here, also, it is not that the domiciliary
has effect beyond the borders of the domiciliary state. The rules of the domicile are
recognized as controlling by the Conflict of Laws rules at the situs property, and the
reason for the recognition as in the case of intestate succession, is the general
convenience of the doctrine. The New York court has said on the point: 'The general
principle that a dispostiton of a personal property, valid at the domicile of the owner, is
valid anywhere, is one of the universal application. It had its origin in that international
comity which was one of the first fruits of civilization, and it this age, when business
intercourse and the process of accumulating property take but little notice of boundary
lines, the practical wisdom and justice of the rule is more apparent than ever. (Goodrich,
Conflict of Laws, Sec. 164, pp. 442-443.)
Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as the national
law is the internal law of California. But as above explained the laws of California have prescribed
two sets of laws for its citizens, one for residents therein and another for those domiciled in other
jurisdictions. Reason demands that We should enforce the California internal law prescribed for its
citizens residing therein, and enforce the conflict of laws rules for the citizens domiciled abroad. If
we must enforce the law of California as in comity we are bound to go, as so declared in Article 16 of
our Civil Code, then we must enforce the law of California in accordance with the express mandate
thereof and as above explained, i.e., apply the internal law for residents therein, and its conflict-oflaws rule for those domiciled abroad.

39 | P a g e

It is argued on appellees' behalf that the clause "if there is no law to the contrary in the place where
the property is situated" in Sec. 946 of the California Civil Code refers to Article 16 of the Civil Code
of the Philippines and that the law to the contrary in the Philippines is the provision in said Article 16
that the national law of the deceased should govern. This contention can not be sustained. As
explained in the various authorities cited above the national law mentioned in Article 16 of our Civil
Code is the law on conflict of laws in the California Civil Code, i.e., Article 946, which authorizes the
reference or return of the question to the law of the testator's domicile. The conflict of laws rule in
California, Article 946, Civil Code, precisely refers back the case, when a decedent is not domiciled
in California, to the law of his domicile, the Philippines in the case at bar. The court of the domicile
can not and should not refer the case back to California; such action would leave the issue
incapable of determination because the case will then be like a football, tossed back and forth
between the two states, between the country of which the decedent was a citizen and the country of
his domicile. The Philippine court must apply its own law as directed in the conflict of laws rule of the
state of the decedent, if the question has to be decided, especially as the application of the internal
law of California provides no legitime for children while the Philippine law, Arts. 887(4) and 894, Civil
Code of the Philippines, makes natural children legally acknowledged forced heirs of the parent
recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40 Phil. 105;
Miciano vs. Brimo, 50 Phil. 867; Babcock Templeton vs. Rider Babcock, 52 Phil. 130; and Gibbs vs.
Government, 59 Phil. 293.) cited by appellees to support the decision can not possibly apply in the
case at bar, for two important reasons, i.e., the subject in each case does not appear to be a citizen
of a state in the United States but with domicile in the Philippines, and it does not appear in each
case that there exists in the state of which the subject is a citizen, a law similar to or identical with
Art. 946 of the California Civil Code.
We therefore find that as the domicile of the deceased Christensen, a citizen of California, is the
Philippines, the validity of the provisions of his will depriving his acknowledged natural child, the
appellant, should be governed by the Philippine Law, the domicile, pursuant to Art. 946 of the Civil
Code of California, not by the internal law of California..
WHEREFORE, the decision appealed from is hereby reversed and the case returned to the lower
court with instructions that the partition be made as the Philippine law on succession provides.
Judgment reversed, with costs against appellees.

G.R. No. L-12105

January 30, 1960

TESTATE ESTATE OF C. O. BOHANAN, deceased. PHILIPPINE TRUST CO., executor-appellee,

vs.
MAGDALENA C. BOHANAN, EDWARD C. BOHANAN, and MARY LYDIA BOHANAN, oppositorsappellants.
Jose D. Cortes for appellants.
Ohnick, Velilla and Balonkita for appellee.
LABRADOR, J.:
Appeal against an order of the Court of First Instance of Manila, Hon. Ramon San Jose, presiding,
dismissing the objections filed by Magdalena C. Bohanan, Mary Bohanan and Edward Bohanan to
the project of partition submitted by the executor and approving the said project.
On April 24, 195 0, the Court of First Instance of Manila, Hon. Rafael Amparo, presiding, admitted to
probate a last will and testament of C. O. Bohanan, executed by him on April 23, 1944 in Manila. In
the said order, the court made the following findings:
According to the evidence of the opponents the testator was born in Nebraska and
therefore a citizen of that state, or at least a citizen of California where some of his
properties are located. This contention in untenable. Notwithstanding the long residence
of the decedent in the Philippines, his stay here was merely temporary, and he continued
and remained to be a citizen of the United States and of the state of his pertinent
residence to spend the rest of his days in that state. His permanent residence or domicile
in the United States depended upon his personal intent or desire, and he selected
Nevada as his homicide and therefore at the time of his death, he was a citizen of that
state. Nobody can choose his domicile or permanent residence for him. That is his
exclusive personal right.
Wherefore, the court finds that the testator C. O. Bohanan was at the time of his death a
citizen of the United States and of the State of Nevada and declares that his will and
testament, Exhibit A, is fully in accordance with the laws of the state of Nevada and
admits the same to probate. Accordingly, the Philippine Trust Company, named as the
executor of the will, is hereby appointed to such executor and upon the filing of a bond in
the sum of P10,000.00, let letters testamentary be issued and after taking the prescribed
oath, it may enter upon the execution and performance of its trust. (pp. 26-27, R.O.A.).
It does not appear that the order granting probate was ever questions on appeal. The executor filed
a project of partition dated January 24, 1956, making, in accordance with the provisions of the will,
the following adjudications: (1) one-half of the residuary estate, to the Farmers and Merchants

40 | P a g e

National Bank of Los Angeles, California, U.S.A. in trust only for the benefit of testator's grandson
Edward George Bohanan, which consists of several mining companies; (2) the other half of the
residuary estate to the testator's brother, F.L. Bohanan, and his sister, Mrs. M. B. Galbraith, share
and share alike. This consist in the same amount of cash and of shares of mining stock similar to
those given to testator's grandson; (3) legacies of P6,000 each to his (testator) son, Edward Gilbert
Bohana, and his daughter, Mary Lydia Bohanan, to be paid in three yearly installments; (4) legacies
to Clara Daen, in the amount of P10,000.00; Katherine Woodward, P2,000; Beulah Fox, P4,000; and
Elizabeth Hastings, P2,000;
It will be seen from the above that out of the total estate (after deducting administration expenses) of
P211,639.33 in cash, the testator gave his grandson P90,819.67 and one-half of all shares of stock
of several mining companies and to his brother and sister the same amount. To his children he gave
a legacy of only P6,000 each, or a total of P12,000.
The wife Magadalena C. Bohanan and her two children question the validity of the testamentary
provisions disposing of the estate in the manner above indicated, claiming that they have been
deprived of the legitimate that the laws of the form concede to them.
The first question refers to the share that the wife of the testator, Magdalena C. Bohanan, should be
entitled to received. The will has not given her any share in the estate left by the testator. It is argued
that it was error for the trial court to have recognized the Reno divorce secured by the testator from
his Filipino wife Magdalena C. Bohanan, and that said divorce should be declared a nullity in this
jurisdiction, citing the case of Querubin vs.Querubin, 87 Phil., 124, 47 Off. Gaz., (Sup, 12) 315,
Cousins Hiz vs. Fluemer, 55 Phil., 852, Ramirez vs. Gmur, 42 Phil., 855 and Gorayeb vs. Hashim,
50 Phil., 22. The court below refused to recognize the claim of the widow on the ground that the laws
of Nevada, of which the deceased was a citizen, allow him to dispose of all of his properties without
requiring him to leave any portion of his estate to his wife. Section 9905 of Nevada Compiled Laws
of 1925 provides:
Every person over the age of eighteen years, of sound mind, may, by last will, dispose of
all his or her estate, real and personal, the same being chargeable with the payment of
the testator's debts.
Besides, the right of the former wife of the testator, Magdalena C. Bohanan, to a share in the
testator's estafa had already been passed upon adversely against her in an order dated June 19,
1955, (pp. 155-159, Vol II Records, Court of First Instance), which had become final, as Magdalena
C. Bohanan does not appear to have appealed therefrom to question its validity. On December 16,
1953, the said former wife filed a motion to withdraw the sum of P20,000 from the funds of the
estate, chargeable against her share in the conjugal property, (See pp. 294-297, Vol. I, Record,
Court of First Instance), and the court in its said error found that there exists no community property
owned by the decedent and his former wife at the time the decree of divorce was issued. As already

and Magdalena C. Bohanan may no longer question the fact contained therein, i.e. that there was
no community property acquired by the testator and Magdalena C. Bohanan during their converture.

accompanied, if the record is not kept in the Philippines, with a certificate that such officer
has the custody. . . . (Rule 123).

Moreover, the court below had found that the testator and Magdalena C. Bohanan were married on
January 30, 1909, and that divorce was granted to him on May 20, 1922; that sometime in 1925,
Magdalena C. Bohanan married Carl Aaron and this marriage was subsisting at the time of the
death of the testator. Since no right to share in the inheritance in favor of a divorced wife exists in
the State of Nevada and since the court below had already found that there was no conjugal
property between the testator and Magdalena C. Bohanan, the latter can now have no longer claim
to pay portion of the estate left by the testator.

We have, however, consulted the records of the case in the court below and we have found that
during the hearing on October 4, 1954 of the motion of Magdalena C. Bohanan for withdrawal of
P20,000 as her share, the foreign law, especially Section 9905, Compiled Nevada Laws. was
introduced in evidence by appellant's (herein) counsel as Exhibits "2" (See pp. 77-79, VOL. II, and
t.s.n. pp. 24-44, Records, Court of First Instance). Again said laws presented by the counsel for the
executor and admitted by the Court as Exhibit "B" during the hearing of the case on January 23,
1950 before Judge Rafael Amparo (se Records, Court of First Instance, Vol. 1).

The most important issue is the claim of the testator's children, Edward and Mary Lydia, who had
received legacies in the amount of P6,000 each only, and, therefore, have not been given their
shares in the estate which, in accordance with the laws of the forum, should be two-thirds of the
estate left by the testator. Is the failure old the testator to give his children two-thirds of the estate left
by him at the time of his death, in accordance with the laws of the forum valid?

In addition, the other appellants, children of the testator, do not dispute the above-quoted provision
of the laws of the State of Nevada. Under all the above circumstances, we are constrained to hold
that the pertinent law of Nevada, especially Section 9905 of the Compiled Nevada Laws of 1925,
can be taken judicial notice of by us, without proof of such law having been offered at the hearing of
the project of partition.

The old Civil Code, which is applicable to this case because the testator died in 1944, expressly
provides that successional rights to personal property are to be earned by the national law of the
person whose succession is in question. Says the law on this point:

As in accordance with Article 10 of the old Civil Code, the validity of testamentary dispositions are to
be governed by the national law of the testator, and as it has been decided and it is not disputed that
the national law of the testator is that of the State of Nevada, already indicated above, which allows
a testator to dispose of all his property according to his will, as in the case at bar, the order of the
court approving the project of partition made in accordance with the testamentary provisions, must
be, as it is hereby affirmed, with costs against appellants.

Nevertheless, legal and testamentary successions, in respect to the order of succession

as well as to the extent of the successional rights and the intrinsic validity of their
provisions, shall be regulated by the national law of the person whose succession is in
question, whatever may be the nature of the property and the country in which it is found.
(par. 2, Art. 10, old Civil Code, which is the same as par. 2 Art. 16, new Civil Code.)
In the proceedings for the probate of the will, it was found out and it was decided that the testator
was a citizen of the State of Nevada because he had selected this as his domicile and his
permanent residence. (See Decision dated April 24, 1950, supra). So the question at issue is
whether the estementary dispositions, especially hose for the children which are short of the legitime
given them by the Civil Code of the Philippines, are valid. It is not disputed that the laws of Nevada
allow a testator to dispose of all his properties by will (Sec. 9905, Complied Nevada Laws of
1925, supra). It does not appear that at time of the hearing of the project of partition, the abovequoted provision was introduced in evidence, as it was the executor's duly to do. The law of Nevada,
being a foreign law can only be proved in our courts in the form and manner provided for by our
Rules, which are as follows:
SEC. 41. Proof of public or official record. An official record or an entry therein, when
admissible for any purpose, may be evidenced by an official publication thereof or by a
copy tested by the officer having the legal custody of he record, or by his deputy, and

41 | P a g e

G.R. No. L-23678

June 6, 1967

TESTATE ESTATE OF AMOS G. BELLIS, deceased.

PEOPLE'S BANK and TRUST COMPANY, executor.
MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants,
vs.
EDWARD A. BELLIS, ET AL., heirs-appellees.
Vicente R. Macasaet and Jose D. Villena for oppositors appellants.
Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis, et al.
Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.
J. R. Balonkita for appellee People's Bank & Trust Company.
Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.
BENGZON, J.P., J.:
This is a direct appeal to Us, upon a question purely of law, from an order of the Court of First
Instance of Manila dated April 30, 1964, approving the project of partition filed by the executor in
Civil Case No. 37089 therein.1wph1.t
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United States." By his
first wife, Mary E. Mallen, whom he divorced, he had five legitimate children: Edward A. Bellis,
George Bellis (who pre-deceased him in infancy), Henry A. Bellis, Alexander Bellis and Anna Bellis
Allsman; by his second wife, Violet Kennedy, who survived him, he had three legitimate children:
Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he had three illegitimate children:
Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he directed that after
all taxes, obligations, and expenses of administration are paid for, his distributable estate should be
divided, in trust, in the following order and manner: (a) $240,000.00 to his first wife, Mary E. Mallen;
(b) P120,000.00 to his three illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis, Miriam
Palma Bellis, or P40,000.00 each and (c) after the foregoing two items have been satisfied, the
remainder shall go to his seven surviving children by his first and second wives, namely: Edward A.
Bellis, Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S. Bellis,
and Dorothy E. Bellis, in equal shares.1wph1.t
Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas, U.S.A. His
will was admitted to probate in the Court of First Instance of Manila on September 15, 1958.

42 | P a g e

The People's Bank and Trust Company, as executor of the will, paid all the bequests therein
including the amount of $240,000.00 in the form of shares of stock to Mary E. Mallen and to the
three (3) illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis, various
amounts totalling P40,000.00 each in satisfaction of their respective legacies, or a total of
P120,000.00, which it released from time to time according as the lower court approved and allowed
the various motions or petitions filed by the latter three requesting partial advances on account of
their respective legacies.
On January 8, 1964, preparatory to closing its administration, the executor submitted and filed its
"Executor's Final Account, Report of Administration and Project of Partition" wherein it reported, inter
alia, the satisfaction of the legacy of Mary E. Mallen by the delivery to her of shares of stock
amounting to $240,000.00, and the legacies of Amos Bellis, Jr., Maria Cristina Bellis and Miriam
Palma Bellis in the amount of P40,000.00 each or a total of P120,000.00. In the project of partition,
the executor pursuant to the "Twelfth" clause of the testator's Last Will and Testament divided
the residuary estate into seven equal portions for the benefit of the testator's seven legitimate
children by his first and second marriages.
On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective oppositions
to the project of partition on the ground that they were deprived of their legitimes as illegitimate
children and, therefore, compulsory heirs of the deceased.
Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of which is
evidenced by the registry receipt submitted on April 27, 1964 by the executor.1
After the parties filed their respective memoranda and other pertinent pleadings, the lower court, on
April 30, 1964, issued an order overruling the oppositions and approving the executor's final
account, report and administration and project of partition. Relying upon Art. 16 of the Civil Code, it
applied the national law of the decedent, which in this case is Texas law, which did not provide for
legitimes.
Their respective motions for reconsideration having been denied by the lower court on June 11,
1964, oppositors-appellants appealed to this Court to raise the issue of which law must apply
Texas law or Philippine law.
In this regard, the parties do not submit the case on, nor even discuss, the doctrine of renvoi,
applied by this Court in Aznar v. Christensen Garcia, L-16749, January 31, 1963. Said doctrine is
usually pertinent where the decedent is a national of one country, and a domicile of another. In the
present case, it is not disputed that the decedent was both a national of Texas and a domicile
thereof at the time of his death.2 So that even assuming Texas has a conflict of law rule providing
that the domiciliary system (law of the domicile) should govern, the same would not result in a
reference back (renvoi) to Philippine law, but would still refer to Texas law. Nonetheless, if Texas has
a conflicts rule adopting the situs theory (lex rei sitae) calling for the application of the law of the

place where the properties are situated, renvoi would arise, since the properties here involved are
found in the Philippines. In the absence, however, of proof as to the conflict of law rule of Texas, it
should not be presumed different from ours.3 Appellants' position is therefore not rested on the
doctrine of renvoi. As stated, they never invoked nor even mentioned it in their arguments. Rather,
they argue that their case falls under the circumstances mentioned in the third paragraph of Article
17 in relation to Article 16 of the Civil Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the decedent,
in intestate or testamentary successions, with regard to four items: (a) the order of succession; (b)
the amount of successional rights; (e) the intrinsic validity of the provisions of the will; and (d) the
capacity to succeed. They provide that
ART. 16. Real property as well as personal property is subject to the law of the country
where it is situated.
However, intestate and testamentary successions, both with respect to the order of
succession and to the amount of successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the national law of the person whose
succession is under consideration, whatever may he the nature of the property and
regardless of the country wherein said property may be found.
ART. 1039. Capacity to succeed is governed by the law of the nation of the decedent.
Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating that
Prohibitive laws concerning persons, their acts or property, and those which have for their
object public order, public policy and good customs shall not be rendered ineffective by
laws or judgments promulgated, or by determinations or conventions agreed upon in a
foreign country.
prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not correct.
Precisely, Congressdeleted the phrase, "notwithstanding the provisions of this and the next
preceding article" when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new Civil
Code, while reproducing without substantial change the second paragraph of Art. 10 of the old Civil
Code as Art. 16 in the new. It must have been their purpose to make the second paragraph of Art. 16
a specific provision in itself which must be applied in testate and intestate succession. As further
indication of this legislative intent, Congress added a new provision, under Art. 1039, which decrees
that capacity to succeed is to be governed by the national law of the decedent.
It is therefore evident that whatever public policy or good customs may be involved in our System of
legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For

43 | P a g e

it has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's
national law. Specific provisions must prevail over general ones.
Appellants would also point out that the decedent executed two wills one to govern his Texas
estate and the other his Philippine estate arguing from this that he intended Philippine law to
govern his Philippine estate. Assuming that such was the decedent's intention in executing a
separate Philippine will, it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil.
867, 870, a provision in a foreigner's will to the effect that his properties shall be distributed in
accordance with Philippine law and not with his national law, is illegal and void, for his national law
cannot be ignored in regard to those matters that Article 10 now Article 16 of the Civil Code
states said national law should govern.
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and
that under the laws of Texas, there are no forced heirs or legitimes. Accordingly, since the intrinsic
validity of the provision of the will and the amount of successional rights are to be determined under
Texas law, the Philippine law on legitimes cannot be applied to the testacy of Amos G. Bellis.
Wherefore, the order of the probate court is hereby affirmed in toto, with costs against appellants. So
ordered.

G.R. No. 124371

November 23, 2000

PAULA T. LLORENTE, petitioner,

vs.
COURT OF APPEALS and ALICIA F. LLORENTE, respondents.
DECISION
PARDO, J.:
The Case
The case raises a conflict of laws issue.
What is before us is an appeal from the decision of the Court of Appeals1 modifying that of the
Regional Trial Court, Camarines Sur, Branch 35, Iriga City2 declaring respondent Alicia F. Llorente
(herinafter referred to as "Alicia"), as co-owners of whatever property she and the deceased Lorenzo
N. Llorente (hereinafter referred to as "Lorenzo") may have acquired during the twenty-five (25)
years that they lived together as husband and wife.
The Facts
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy from
March 10, 1927 to September 30, 1957.3
On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter referred to as "Paula")
were married before a parish priest, Roman Catholic Church, in Nabua, Camarines Sur.4
Before the outbreak of the Pacific War, Lorenzo departed for the United States and Paula stayed in
the conjugal home in barrio Antipolo, Nabua, Camarines Sur.5

On December 4, 1945, Paula gave birth to a boy registered in the Office of the Registrar of Nabua
as "Crisologo Llorente," with the certificate stating that the child was not legitimate and the line for
the fathers name was left blank.9
Lorenzo refused to forgive Paula and live with her. In fact, on February 2, 1946, the couple drew a
written agreement to the effect that (1) all the family allowances allotted by the United States Navy
as part of Lorenzos salary and all other obligations for Paulas daily maintenance and support would
be suspended; (2) they would dissolve their marital union in accordance with judicial proceedings;
(3) they would make a separate agreement regarding their conjugal property acquired during their
marital life; and (4) Lorenzo would not prosecute Paula for her adulterous act since she voluntarily
admitted her fault and agreed to separate from Lorenzo peacefully. The agreement was signed by
both Lorenzo and Paula and was witnessed by Paulas father and stepmother. The agreement was
notarized by Notary Public Pedro Osabel.10
Lorenzo returned to the United States and on November 16, 1951 filed for divorce with the Superior
Court of the State of California in and for the County of San Diego. Paula was represented by
counsel, John Riley, and actively participated in the proceedings. On November 27, 1951, the
Superior Court of the State of California, for the County of San Diego found all factual allegations to
be true and issued an interlocutory judgment of divorce.11
On December 4, 1952, the divorce decree became final.12
In the meantime, Lorenzo returned to the Philippines.
On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila.13 Apparently, Alicia had no
knowledge of the first marriage even if they resided in the same town as Paula, who did not oppose
the marriage or cohabitation.14
From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife.15 Their twenty-five (25)
year union produced three children, Raul, Luz and Beverly, all surnamed Llorente.16

On November 30, 1943, Lorenzo was admitted to United States citizenship and Certificate of
Naturalization No. 5579816 was issued in his favor by the United States District Court, Southern
District of New York.6

On March 13, 1981, Lorenzo executed a Last Will and Testament. The will was notarized by Notary
Public Salvador M. Occiano, duly signed by Lorenzo with attesting witnesses Francisco Hugo,
Francisco Neibres and Tito Trajano. In the will, Lorenzo bequeathed all his property to Alicia and
their three children, to wit:

Upon the liberation of the Philippines by the American Forces in 1945, Lorenzo was granted an
accrued leave by the U. S. Navy, to visit his wife and he visited the Philippines. 7 He discovered that
his wife Paula was pregnant and was "living in" and having an adulterous relationship with his
brother, Ceferino Llorente.8

"(1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively my residential house and lot,
located at San Francisco, Nabua, Camarines Sur, Philippines, including ALL the personal properties
and other movables or belongings that may be found or existing therein;
"(2) I give and bequeath exclusively to my wife Alicia R. Fortuno and to my children, Raul F. Llorente,
Luz F. Llorente and Beverly F. Llorente, in equal shares, all my real properties whatsoever and

44 | P a g e

wheresoever located, specifically my real properties located at Barangay Aro-Aldao, Nabua,

Camarines Sur; Barangay Paloyon, Nabua, Camarines Sur; Barangay Baras, Sitio Puga, Nabua,
Camarines Sur; and Barangay Paloyon, Sitio Nalilidong, Nabua, Camarines Sur;
"(3) I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno and unto my children,
Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal shares, my real properties located
in Quezon City Philippines, and covered by Transfer Certificate of Title No. 188652; and my lands in
Antipolo, Rizal, Philippines, covered by Transfer Certificate of Title Nos. 124196 and 165188, both of
the Registry of Deeds of the province of Rizal, Philippines;
"(4) That their respective shares in the above-mentioned properties, whether real or personal
properties, shall not be disposed of, ceded, sold and conveyed to any other persons, but could only
be sold, ceded, conveyed and disposed of by and among themselves;
"(5) I designate my wife ALICIA R. FORTUNO to be the sole executor of this my Last Will and
Testament, and in her default or incapacity of the latter to act, any of my children in the order of age,
if of age;
"(6) I hereby direct that the executor named herein or her lawful substitute should served (sic)
without bond;
"(7) I hereby revoke any and all my other wills, codicils, or testamentary dispositions heretofore
executed, signed, or published, by me;
"(8) It is my final wish and desire that if I die, no relatives of mine in any degree in the Llorentes Side
should ever bother and disturb in any manner whatsoever my wife Alicia R. Fortunato and my
children with respect to any real or personal properties I gave and bequeathed respectively to each
one of them by virtue of this Last Will and Testament."17
On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga, Camarines Sur, a petition
for the probate and allowance of his last will and testament wherein Lorenzo moved that Alicia be
appointed Special Administratrix of his estate.18
On January 18, 1984, the trial court denied the motion for the reason that the testator Lorenzo was
still alive.19
On January 24, 1984, finding that the will was duly executed, the trial court admitted the will to
probate.20
On June 11, 1985, before the proceedings could be terminated, Lorenzo died.21

45 | P a g e

On September 4, 1985, Paula filed with the same court a petition22 for letters of administration over
Lorenzos estate in her favor. Paula contended (1) that she was Lorenzos surviving spouse, (2) that
the various property were acquired during their marriage, (3) that Lorenzos will disposed of all his
property in favor of Alicia and her children, encroaching on her legitime and 1/2 share in the conjugal
property.23
On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR-755), a petition for
the issuance of letters testamentary.24
On October 14, 1985, without terminating the testate proceedings, the trial court gave due course to
Paulas petition in Sp. Proc. No. IR-888.25
On November 6, 13 and 20, 1985, the order was published in the newspaper "Bicol Star".26
On May 18, 1987, the Regional Trial Court issued a joint decision, thus:
"Wherefore, considering that this court has so found that the divorce decree granted to the late
Lorenzo Llorente is void and inapplicable in the Philippines, therefore the marriage he contracted
with Alicia Fortunato on January 16, 1958 at Manila is likewise void. This being so the petition of
Alicia F. Llorente for the issuance of letters testamentary is denied. Likewise, she is not entitled to
receive any share from the estate even if the will especially said so her relationship with Lorenzo
having gained the status of paramour which is under Art. 739 (1).
"On the other hand, the court finds the petition of Paula Titular Llorente, meritorious, and so declares
the intrinsic disposition of the will of Lorenzo Llorente dated March 13, 1981 as void and declares
her entitled as conjugal partner and entitled to one-half of their conjugal properties, and as primary
compulsory heir, Paula T. Llorente is also entitled to one-third of the estate and then one-third should
go to the illegitimate children, Raul, Luz and Beverly, all surname (sic) Llorente, for them to partition
in equal shares and also entitled to the remaining free portion in equal shares.
"Petitioner, Paula Llorente is appointed legal administrator of the estate of the deceased, Lorenzo
Llorente. As such let the corresponding letters of administration issue in her favor upon her filing a
bond in the amount (sic) of P100,000.00 conditioned for her to make a return to the court within
three (3) months a true and complete inventory of all goods, chattels, rights, and credits, and estate
which shall at any time come to her possession or to the possession of any other person for her, and
from the proceeds to pay and discharge all debts, legacies and charges on the same, or such
dividends thereon as shall be decreed or required by this court; to render a true and just account of
her administration to the court within one (1) year, and at any other time when required by the court
and to perform all orders of this court by her to be performed.
"On the other matters prayed for in respective petitions for want of evidence could not be granted.

"SO ORDERED."27

Thus, as a rule, issues arising from these incidents are necessarily governed by foreign law.

In time, Alicia filed with the trial court a motion for reconsideration of the aforequoted decision.28

The Civil Code clearly provides:

On September 14, 1987, the trial court denied Alicias motion for reconsideration but modified its
earlier decision, stating that Raul and Luz Llorente are not children "legitimate or otherwise" of
Lorenzo since they were not legally adopted by him.29 Amending its decision of May 18, 1987, the
trial court declared Beverly Llorente as the only illegitimate child of Lorenzo, entitling her to one-third
(1/3) of the estate and one-third (1/3) of the free portion of the estate.30

"Art. 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of
persons arebinding upon citizens of the Philippines, even though living abroad.

On September 28, 1987, respondent appealed to the Court of Appeals.31

"However, intestate and testamentary succession, both with respect to the order of succession and
to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be
regulated by the national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country wherein said property may
be found." (emphasis ours)

On July 31, 1995, the Court of Appeals promulgated its decision, affirming with modification the
decision of the trial court in this wise:
"WHEREFORE, the decision appealed from is hereby AFFIRMED with the MODIFICATION that
Alicia is declared as co-owner of whatever properties she and the deceased may have acquired
during the twenty-five (25) years of cohabitation.
"SO ORDERED."32
On August 25, 1995, petitioner filed with the Court of Appeals a motion for reconsideration of the
decision.33
34

On March 21, 1996, the Court of Appeals, denied the motion for lack of merit.

"Art. 16. Real property as well as personal property is subject to the law of the country where it is
situated.

True, foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to
take judicial notice of them. Like any other fact, they must be alleged and proved.37
While the substance of the foreign law was pleaded, the Court of Appeals did not admit the foreign
law. The Court of Appeals and the trial court called to the fore the renvoi doctrine, where the case
was "referred back" to the law of the decedents domicile, in this case, Philippine law.
We note that while the trial court stated that the law of New York was not sufficiently proven, in the
same breath it made the categorical, albeit equally unproven statement that "American law follows
the domiciliary theory hence, Philippine law applies when determining the validity of Lorenzos will. 38

Hence, this petition.35

The Issue
Stripping the petition of its legalese and sorting through the various arguments raised, 36 the issue is
simple. Who are entitled to inherit from the late Lorenzo N. Llorente?
We do not agree with the decision of the Court of Appeals. We remand the case to the trial court for
ruling on the intrinsic validity of the will of the deceased.
The Applicable Law
The fact that the late Lorenzo N. Llorente became an American citizen long before and at the time
of: (1) his divorce from Paula; (2) marriage to Alicia; (3) execution of his will; and (4) death, is duly
established, admitted and undisputed.

46 | P a g e

First, there is no such thing as one American law.1wph!1 The "national law" indicated in Article 16
of the Civil Code cannot possibly apply to general American law. There is no such law governing the
validity of testamentary provisions in the United States. Each State of the union has its own law
applicable to its citizens and in force only within the State. It can therefore refer to no other than the
law of the State of which the decedent was a resident.39 Second, there is no showing that the
application of the renvoi doctrine is called for or required by New York State law.
The trial court held that the will was intrinsically invalid since it contained dispositions in favor of
Alice, who in the trial courts opinion was a mere paramour. The trial court threw the will out, leaving
Alice, and her two children, Raul and Luz, with nothing.
The Court of Appeals also disregarded the will. It declared Alice entitled to one half (1/2) of whatever
property she and Lorenzo acquired during their cohabitation, applying Article 144 of the Civil Code of
the Philippines.

The hasty application of Philippine law and the complete disregard of the will, already probated as
duly executed in accordance with the formalities of Philippine law, is fatal, especially in light of the
factual and legal circumstances here obtaining.

Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best proved by
foreign law which must be pleaded and proved. Whether the will was executed in accordance with
the formalities required is answered by referring to Philippine law. In fact, the will was duly probated.

Validity of the Foreign Divorce

As a guide however, the trial court should note that whatever public policy or good customs may be
involved in our system of legitimes, Congress did not intend to extend the same to the succession of
foreign nationals. Congress specifically left the amount of successional rights to the decedent's
national law.45

In Van Dorn v. Romillo, Jr.40 we held that owing to the nationality principle embodied in Article 15 of
the Civil Code, only Philippine nationals are covered by the policy against absolute divorces, the
same being considered contrary to our concept of public policy and morality. In the same case, the
Court ruled that aliens may obtain divorces abroad, provided they are valid according to their
national law.

Having thus ruled, we find it unnecessary to pass upon the other issues raised.
The Fallo

Citing this landmark case, the Court held in Quita v. Court of Appeals,41 that once proven that
respondent was no longer a Filipino citizen when he obtained the divorce from petitioner, the ruling
in Van Dorn would become applicable and petitioner could "very well lose her right to inherit" from
him.
In Pilapil v. Ibay-Somera,42 we recognized the divorce obtained by the respondent in his country, the
Federal Republic of Germany. There, we stated that divorce and its legal effects may be recognized
in the Philippines insofar as respondent is concerned in view of the nationality principle in our civil
law on the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals must be reversed. 43 We hold
that the divorce obtained by Lorenzo H. Llorente from his first wife Paula was valid and recognized
in this jurisdiction as a matter of comity. Now, the effects of this divorce (as to the succession to the
estate of the decedent) are matters best left to the determination of the trial court.
Validity of the Will
The Civil Code provides:
"Art. 17. The forms and solemnities of contracts, wills, and other public instruments shall be
governed by the laws of the country in which they are executed.
"When the acts referred to are executed before the diplomatic or consular officials of the Republic of
the Philippines in a foreign country, the solemnities established by Philippine laws shall be observed
in their execution." (underscoring ours)
The clear intent of Lorenzo to bequeath his property to his second wife and children by her is
glaringly shown in the will he executed. We do not wish to frustrate his wishes, since he was a
foreigner, not covered by our laws on "family rights and duties, status, condition and legal
capacity."44
47 | P a g e

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G. R. SP No.
17446 promulgated on July 31, 1995 is SET ASIDE.
In lieu thereof, the Court REVERSES the decision of the Regional Trial Court and RECOGNIZES as
VALID the decree of divorce granted in favor of the deceased Lorenzo N. Llorente by the Superior
Court of the State of California in and for the County of San Diego, made final on December 4, 1952.
Further, the Court REMANDS the cases to the court of origin for determination of the intrinsic validity
of Lorenzo N. Llorentes will and determination of the parties successional rights allowing proof of
foreign law with instructions that the trial court shall proceed with all deliberate dispatch to settle the
estate of the deceased within the framework of the Rules of Court.
No costs.
SO ORDERED.

G.R. No. L-8883

July 14, 1959

ALFREDO M. VELAYO, ETC., plaintiff,

vs.
SHELL COMPANY OF THE PHILIPPINES ISLANDS, LTD., defendant-appellee.
ALFONSO Z. SYCIP, ET. AL., intervenors-appellants.
Sycip, Quisumbing, Salazar and Associates for appellants.
Ozaeta, Lichauco and Picazo for appellee.
BAUTISTA ANGELO, J.:
On December 17, 1948, Alfredo M. Velayo as assignees of the insolvent Commercial Airlines, Inc.,
instituted an action against Shell Company of the Philippine Islands, Ltd., in the Court of First
Instance of Manila for injunction and damages (Civil Case No. 6966). On October 26, 1951, a
complaint in intervention was filed by Alfonso Sycip, Paul Sycip, and Yek Trading Corporation, and
on November 14, 1951, by Mabasa & Company.

On November 19, 1954, counsel for intervenors filed with the lower court a petition for relief under
Rule 38 of the Rules of Court, wherein he reiterated the same grounds they alleged in the petition
for correction filed by them in the Supreme Court, which petition was denied on November 27, 1954,
for having been filed outside the reglementary period fixed in said Rule 38. Counsel filed a motion
for reconsideration, which was again denied, the Court stating that "no judgment or order has been
rendered, nor any other proceeding taken by this Court on the right of the intervenors to appeal."
On December 20, 1954, counsel filed once more a motion to amend the record on appeal based on
grounds identical with those alleged in the petition for correction filed before the Supreme Court. On
December 27, 1954, the lower court denied the motion. On January 6, 1955, counsel filed a petition
for relief from this last order entered on December 27, 1954, to which counsel for defendant filed an
opposition. On February 5, 1955, hearing was had on both the petition for relief and the opposition,
and on February 9, 1955, the petition was denied on the ground that the case is already before the
Supreme Court on appeal. It is from this order that the counsel for intervenors has taken the appeal
now before us.
The instant appeal has no merit.

After trial wherein plaintiff presented evidence in his behalf, but none in behalf of intervenors, the
court rendered decision dismissing plaintiff's complaint as well as those filed by the intervenors. On
March 31, 1954, counsel for plaintiff filed a notice of appeal, appeal bond, and record on appeal in
behalf only of plaintiff even if they also represent the intervenors, which in due time were approved,
the Court instructing its clerk to forward the record on appeal to the Supreme Court together with all
the evidence presented in the case. This instruction was actually complied with.

To begin with, the only remedy which appellants now seek in this appeal is the inclusion of the
intervenors as appellants in the appeal from the decision rendered in the main case, but this remedy
has already been denied twice by this Court, first, in its resolution of November 12, 1954 denying
their petition for correction of the record on appeal, and, second, in denying their motion for
reconsideration of said resolution. It should be noted that the grounds relied upon in this appeal are
the same grounds alleged in said petition for correction.

On August 31, 1954, the Deputy Clerk of the Supreme Court notified counsel of plaintiff that the
record as well as the evidence have already been received and that they should file their brief within
45 days from receipt of the notice. On November 2, 1954, counsel filed their brief for appellants. On
November 6, 1954, or 7 months after the judgment had become final as against the intervenors, and
4 days after counsel for appellants had submitted the latter's brief, counsel for intervenors filed with
the Supreme Court a petition for correction of the record on appeal in order to enable them to insert
therein the names of the intervenors as appellants, the petition being based, among others, on the
ground that the omission of the names of the intervenors in said record on appeal was due to the
mistake of the typist who prepared it while the attorney in charge was on vacation. The petition was
vigorously opposed by counsel for defendant, contending that the same would serve no purpose,
whatsoever considering that the intervenors had not presented any evidence in support of their
claim, aside from the fact that the alleged absence of the attorney of the intervenors cannot
constitute a justification for the alleged omission of the intervenors as appellants. On November 12,
1954, the Court denied the petition. Counsel intervenors moved for a reconsideration of the order,
but the same was denied.

In the second place, the intervenors have no right or reason to appeal from the decision in the main
case, it appearing that they did not introduce any evidence during the trial in support of their
complaint, which shows that their appeal would be merely pro-forma. And, in any event, they made
the attempt to amend the record on appealseven (7) months after the decision had become final
against them.

48 | P a g e

In the third place, the intervenors have no right or reason to file a petition for relief under Rule 38 of
the Rules of Court from the order of the lower court issued on December 27, 1954, for the reason
that the same was entered upon a motion filed by them. Indeed they cannot reasonably assert that
the order was entered against them through fraud, accident, mistake, or negligence. The fraud
mentioned in Rule 38 is the fraud committed by the adverse party and certainly the same cannot be
attributed to the Court.
Finally, it appears that the main case has already been decided by this Court on the merits on
October 31, 1956, reversing the decision of the lower court and awarding damages to plaintiff, which
apparently is the very purpose which the intervenors seek to accomplish in joining the appeal as coappellants. This appeal, therefore, has already become moot.

Wherefore, the order appealed from is affirmed, with costs against appellants.

49 | P a g e

G.R. No. 88694 January 11, 1993

ALBENSON ENTERPRISES CORP., JESSE YAP, AND BENJAMIN MENDIONA, petitioners,
vs.
THE COURT OF APPEALS AND EUGENIO S. BALTAO, respondents.
Puruganan, Chato, Chato & Tan for petitioners.

After obtaining the foregoing information, Albenson, through counsel, made an extrajudicial demand
upon private respondent Eugenio S. Baltao, president of Guaranteed, to replace and/or make good
the dishonored check.
Respondent Baltao, through counsel, denied that he issued the check, or that the signature
appearing thereon is his. He further alleged that Guaranteed was a defunct entity and hence, could
not have transacted business with Albenson.

Lino M. Patajo, Francisco Ma. Chanco, Ananiano Desierto and Segundo Mangohig for private
respondent.

On February 14, 1983, Albenson filed with the Office of the Provincial Fiscal of Rizal a complaint
against Eugenio S. Baltao for violation of Batas Pambansa Bilang 22. Submitted to support said
charges was an affidavit of petitioner Benjamin Mendiona, an employee of Albenson. In said
affidavit, the above-mentioned circumstances were stated.

BIDIN, J.:

It appears, however, that private respondent has a namesake, his son Eugenio Baltao III, who
manages a business establishment, E.L. Woodworks, on the ground floor of the Baltao Building,
3267 V. Mapa Street, Sta. Mesa, Manila, the very same business address of Guaranteed.

This petition assails the decision of respondent Court of Appeals in

CA-GR CV No. 14948 entitled "Eugenio S. Baltao, plaintiff-appellee vs. Albenson Enterprises
Corporation, et al, defendants-appellants", which modified the judgment of the Regional Trial Court
of Quezon City, Branch XCVIII in Civil Case No. Q-40920 and ordered petitioner to pay private
respondent, among others, the sum of P500,000.00 as moral damages and attorney's fees in the
amount of P50,000.00.
The facts are not disputed.
In September, October, and November 1980, petitioner Albenson Enterprises Corporation (Albenson
for short) delivered to Guaranteed Industries, Inc. (Guaranteed for short) located at 3267 V. Mapa
Street, Sta. Mesa, Manila, the mild steel plates which the latter ordered. As part payment thereof,
Albenson was given Pacific Banking Corporation Check No. 136361 in the amount of P2,575.00 and
drawn against the account of E.L. Woodworks (Rollo, p. 148).
When presented for payment, the check was dishonored for the reason "Account Closed."
Thereafter, petitioner Albenson, through counsel, traced the origin of the dishonored check. From
the records of the Securities and Exchange Commission (SEC), Albenson discovered that the
president of Guaranteed, the recipient of the unpaid mild steel plates, was one "Eugenio S. Baltao."
Upon further inquiry, Albenson was informed by the Ministry of Trade and Industry that E.L.
Woodworks, a single proprietorship business, was registered in the name of one "Eugenio Baltao".
In addition, upon verification with the drawee bank, Pacific Banking Corporation, Albenson was
advised that the signature appearing on the subject check belonged to one "Eugenio Baltao."

On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an information against Eugenio S.
Baltao for Violation of Batas Pambansa Bilang 22. In filing said information, Fiscal Sumaway claimed
that he had given Eugenio S. Baltao opportunity to submit controverting evidence, but the latter
failed to do so and therefore, was deemed to have waived his right.
Respondent Baltao, claiming ignorance of the complaint against him, immediately filed with the
Provincial Fiscal of Rizal a motion for reinvestigation, alleging that it was not true that he had been
given an opportunity to be heard in the preliminary investigation conducted by Fiscal Sumaway, and
that he never had any dealings with Albenson or Benjamin Mendiona, consequently, the check for
which he has been accused of having issued without funds was not issued by him and the signature
in said check was not his.
On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal reversed the finding of Fiscal
Sumaway and exonerated respondent Baltao. He also instructed the Trial Fiscal to move for
dismissal of the information filed against Eugenio S. Baltao. Fiscal Castro found that the signature in
PBC Check No. 136361 is not the signature of Eugenio S. Baltao. He also found that there is no
showing in the records of the preliminary investigation that Eugenio S. Baltao actually received
notice of the said investigation. Fiscal Castro then castigated Fiscal Sumaway for failing to exercise
care and prudence in the performance of his duties, thereby causing injustice to respondent who
was not properly notified of the complaint against him and of the requirement to submit his counter
evidence.
Because of the alleged unjust filing of a criminal case against him for allegedly issuing a check
which bounced in violation of Batas Pambansa Bilang 22 for a measly amount of P2,575.00,

50 | P a g e

respondent Baltao filed before the Regional Trial Court of Quezon City a complaint for damages
against herein petitioners Albenson Enterprises, Jesse Yap, its owner, and Benjamin Mendiona, its
employee.
In its decision, the lower court observed that "the check is drawn against the account of "E.L.
Woodworks," not of Guaranteed Industries of which plaintiff used to be President. Guaranteed
Industries had been inactive and had ceased to exist as a corporation since 1975. . . . . The
possibility is that it was with Gene Baltao or Eugenio Baltao III, a son of plaintiff who had a business
on the ground floor of Baltao Building located on V. Mapa Street, that the defendants may have been
dealing with . . . ." (Rollo, pp. 41-42).
The dispositive portion of the trial court 's decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against
defendants ordering the latter to pay plaintiff jointly and severally:

1. Concluding that private respondent's cause of action is not one based on

malicious prosecution but one for abuse of rights under Article 21 of the Civil
Code notwithstanding the fact that the basis of a civil action for malicious
prosecution is Article 2219 in relation to Article 21 or Article 2176 of the Civil
Code . . . .
2. Concluding that "hitting at and in effect maligning (private respondent) with
an unjust criminal case was, without more, a plain case of abuse of rights by
misdirection" and "was therefore, actionable by itself," and which "became
inordinately blatant and grossly aggravated when . . . (private respondent) was
deprived of his basic right to notice and a fair hearing in the so-called
preliminary investigation . . . . "
3. Concluding that petitioner's "actuations in this case were coldly deliberate
and calculated", no evidence having been adduced to support such a sweeping
statement.

1. actual or compensatory damages of P133,350.00;

2. moral damages of P1,000,000.00 (1 million pesos);

4. Holding the petitioner corporation, petitioner Yap and petitioner Mendiona

jointly and severally liable without sufficient basis in law and in fact.

3. exemplary damages of P200,000.00;

5. Awarding respondents

4. attorney's fees of P100,000.00;

5 costs.
Defendants' counterclaim against plaintiff and claim for damages against
Mercantile Insurance Co. on the bond for the issuance of the writ of attachment
at the instance of plaintiff are hereby dismissed for lack of merit. (Rollo, pp. 3839).
On appeal, respondent court modified the trial court's decision as follows:
WHEREFORE, the decision appealed from is MODIFIED by reducing the moral
damages awarded therein from P1,000,000.00 to P500,000.00 and the
attorney's fees from P100,000.00 to P50,000.00, said decision being hereby
affirmed in all its other aspects. With costs against appellants. (Rollo, pp. 5051)
Dissatisfied with the above ruling, petitioners Albenson Enterprises Corp., Jesse Yap, and Benjamin
Mendiona filed the instant Petition, alleging that the appellate court erred in:

51 | P a g e

5.1. P133,350.00 as actual or compensatory damages,

even in the absence of sufficient evidence to show that
such was actually suffered.
5.2. P500,000.00 as moral damages considering that the
evidence in this connection merely involved private
respondent's alleged celebrated status as a businessman,
there being no showing that the act complained of
adversely affected private respondent's reputation or that it
resulted to material loss.
5.3. P200,000.00 as exemplary damages despite the fact
that petitioners were duly advised by counsel of their legal
recourse.
5.4. P50,000.00 as attorney's fees, no evidence having
been adduced to justify such an award (Rollo, pp. 4-6).
Petitioners contend that the civil case filed in the lower court was one for malicious prosecution.
Citing the case ofMadera vs. Lopez (102 SCRA 700 [1981]), they assert that the absence of malice

on their part absolves them from any liability for malicious prosecution. Private respondent, on the
other hand, anchored his complaint for Damages on Articles 19, 20, and 21 ** of the Civil Code.
Article 19, known to contain what is commonly referred to as the principle of abuse of rights, sets
certain standards which may be observed not only in the exercise of one's rights but also in the
performance of one's duties. These standards are the following: to act with justice; to give everyone
his due; and to observe honesty and good faith. The law, therefore, recognizes the primordial
limitation on all rights: that in their exercise, the norms of human conduct set forth in Article 19 must
be observed. A right, though by itself legal because recognized or granted by law as such, may
nevertheless become the source of some illegality. When a right is exercised in a manner which
does not conform with the norms enshrined in Article 19 and results in damage to another, a legal
wrong is thereby committed for which the wrongdoer must be held responsible. Although the
requirements of each provision is different, these three (3) articles are all related to each other. As
the eminent Civilist Senator Arturo Tolentino puts it: "With this article (Article 21), combined with
articles 19 and 20, the scope of our law on civil wrongs has been very greatly broadened; it has
become much more supple and adaptable than the Anglo-American law on torts. It is now difficult to
conceive of any malevolent exercise of a right which could not be checked by the application of
these articles" (Tolentino, 1 Civil Code of the Philippines 72).
There is however, no hard and fast rule which can be applied to determine whether or not the
principle of abuse of rights may be invoked. The question of whether or not the principle of abuse of
rights has been violated, resulting in damages under Articles 20 and 21 or other applicable provision
of law, depends on the circumstances of each case. (Globe Mackay Cable and Radio Corporation
vs. Court of Appeals, 176 SCRA 778 [1989]).
The elements of an abuse of right under Article 19 are the following: (1) There is a legal right or duty;
(2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another. Article 20
speaks of the general sanction for all other provisions of law which do not especially provide for their
own sanction (Tolentino, supra, p. 71). Thus, anyone who, whether willfully or negligently, in the
exercise of his legal right or duty, causes damage to another, shall indemnify his victim for injuries
suffered thereby. Article 21 deals with acts contra bonus mores, and has the following elements: 1)
There is an act which is legal; 2) but which is contrary to morals, good custom, public order, or public
policy; 3) and it is done with intent to injure.
Thus, under any of these three (3) provisions of law, an act which causes injury to another may be
made the basis for an award of damages.
There is a common element under Articles 19 and 21, and that is, the act must be intentional.
However, Article 20 does not distinguish: the act may be done either "willfully", or "negligently". The
trial court as well as the respondent appellate court mistakenly lumped these three (3) articles
together, and cited the same as the bases for the award of damages in the civil complaint filed
against petitioners, thus:

52 | P a g e

With the foregoing legal provisions (Articles 19, 20, and 21) in focus, there is
not much difficulty in ascertaining the means by which appellants' first assigned
error should be resolved, given the admitted fact that when there was an
attempt to collect the amount of P2,575.00, the defendants were explicitly
warned that plaintiff Eugenio S. Baltao is not the Eugenio Baltao defendants
had been dealing with (supra, p. 5). When the defendants nevertheless insisted
and persisted in filing a case a criminal case no less against plaintiff, said
defendants ran afoul of the legal provisions (Articles 19, 20, and 21 of the Civil
Code) cited by the lower court and heretofore quoted (supra).
Defendants, not having been paid the amount of P2,575.00, certainly had the
right to complain. But that right is limited by certain constraints. Beyond that
limit is the area of excess, of abuse of rights. (Rollo, pp.
44-45).
Assuming, arguendo, that all the three (3) articles, together and not independently of each one,
could be validly made the bases for an award of damages based on the principle of "abuse of right",
under the circumstances, We see no cogent reason for such an award of damages to be made in
favor of private respondent.
Certainly, petitioners could not be said to have violated the aforestated principle of abuse of right.
What prompted petitioners to file the case for violation of Batas Pambansa Bilang 22 against private
respondent was their failure to collect the amount of P2,575.00 due on a bounced check which they
honestly believed was issued to them by private respondent. Petitioners had conducted inquiries
regarding the origin of the check, and yielded the following results: from the records of the Securities
and Exchange Commission, it was discovered that the President of Guaranteed (the recipient of the
unpaid mild steel plates), was one "Eugenio S. Baltao"; an inquiry with the Ministry of Trade and
Industry revealed that E.L. Woodworks, against whose account the check was drawn, was
registered in the name of one "Eugenio Baltao"; verification with the drawee bank, the Pacific
Banking Corporation, revealed that the signature appearing on the check belonged to one "Eugenio
Baltao".
In a letter dated December 16, 1983, counsel for petitioners wrote private respondent demanding
that he make good the amount of the check. Counsel for private respondent wrote back and denied,
among others, that private respondent ever transacted business with Albenson Enterprises
Corporation; that he ever issued the check in question. Private respondent's counsel even went
further: he made a warning to defendants to check the veracity of their claim. It is pivotal to note at
this juncture that in this same letter, if indeed private respondent wanted to clear himself from the
baseless accusation made against his person, he should have made mention of the fact that there
are three (3) persons with the same name, i.e.: Eugenio Baltao, Sr., Eugenio S. Baltao, Jr. (private
respondent), and Eugenio Baltao III (private respondent's son, who as it turned out later, was the
issuer of the check). He, however, failed to do this. The last two Baltaos were doing business in the

same building Baltao Building located at 3267 V. Mapa Street, Sta. Mesa, Manila. The mild
steel plates were ordered in the name of Guaranteed of which respondent Eugenio S. Baltao is the
president and delivered to Guaranteed at Baltao building. Thus, petitioners had every reason to
believe that the Eugenio Baltao who issued the bouncing check is respondent Eugenio S. Baltao
when their counsel wrote respondent to make good the amount of the check and upon refusal, filed
the complaint for violation of BP Blg. 22.
Private respondent, however, did nothing to clarify the case of mistaken identity at first hand.
Instead, private respondent waited in ambush and thereafter pounced on the hapless petitioners at a
time he thought was propitious by filing an action for damages. The Court will not countenance this
devious scheme.
The criminal complaint filed against private respondent after the latter refused to make good the
amount of the bouncing check despite demand was a sincere attempt on the part of petitioners to
find the best possible means by which they could collect the sum of money due them. A person who
has not been paid an obligation owed to him will naturally seek ways to compel the debtor to pay
him. It was normal for petitioners to find means to make the issuer of the check pay the amount
thereof. In the absence of a wrongful act or omission or of fraud or bad faith, moral damages cannot
be awarded and that the adverse result of an action does not per se make the action wrongful and
subject the actor to the payment of damages, for the law could not have meant to impose a penalty
on the right to litigate (Rubio vs. Court of Appeals, 141 SCRA 488 [1986]).
In the case at bar, private respondent does not deny that the mild steel plates were ordered by and
delivered to Guaranteed at Baltao building and as part payment thereof, the bouncing check was
issued by one Eugenio Baltao. Neither had private respondent conveyed to petitioner that there are
two Eugenio Baltaos conducting business in the same building he and his son Eugenio Baltao III.
Considering that Guaranteed, which received the goods in payment of which the bouncing check
was issued is owned by respondent, petitioner acted in good faith and probable cause in filing the
complaint before the provincial fiscal.
To constitute malicious prosecution, there must be proof that the prosecution was prompted by a
sinister design to vex and humiliate a person, and that it was initiated deliberately by the defendant
knowing that his charges were false and groundless. Concededly, the mere act of submitting a case
to the authorities for prosecution does not make one liable for malicious prosecution. (Manila Gas
Corporation vs. Court of Appeals, 100 SCRA 602 [1980]). Still, private respondent argues that
liability under Articles 19, 20, and 21 of the Civil Code is so encompassing that it likewise includes
liability for damages for malicious prosecution under Article 2219 (8). True, a civil action for damages
for malicious prosecution is allowed under the New Civil Code, more specifically Articles 19, 20, 26,
29, 32, 33, 35, and 2219 (8) thereof. In order that such a case can prosper, however, the following
three (3) elements must be present, to wit: (1) The fact of the prosecution and the further fact that
the defendant was himself the prosecutor, and that the action was finally terminated with an
acquittal; (2) That in bringing the action, the prosecutor acted without probable cause; (3) The

53 | P a g e

prosecutor was actuated or impelled by legal malice (Lao vs. Court of Appeals, 199 SCRA 58,
[1991]).
Thus, a party injured by the filing of a court case against him, even if he is later on absolved, may
file a case for damages grounded either on the principle of abuse of rights, or on malicious
prosecution. As earlier stated, a complaint for damages based on malicious prosecution will prosper
only if the three (3) elements aforecited are shown to exist. In the case at bar, the second and third
elements were not shown to exist. It is well-settled that one cannot be held liable for maliciously
instituting a prosecution where one has acted with probable cause. "Probable cause is the existence
of such facts and circumstances as would excite the belief, in a reasonable mind, acting on the facts
within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he
was prosecuted. In other words, a suit will lie only in cases where a legal prosecution has been
carried on without probable cause. The reason for this rule is that it would be a very great
discouragement to public justice, if prosecutors, who had tolerable ground of suspicion, were liable
to be sued at law when their indictment miscarried" (Que vs. Intermediate Appellate Court, 169
SCRA 137 [1989]).
The presence of probable cause signifies, as a legal consequence, the absence of malice. In the
instant case, it is evident that petitioners were not motivated by malicious intent or by sinister design
to unduly harass private respondent, but only by a well-founded anxiety to protect their rights when
they filed the criminal complaint against private respondent.
To constitute malicious prosecution, there must be proof that the prosecution
was prompted by a sinister design to vex and humiliate a person, that it was
initiated deliberately by the defendant knowing that his charges were false and
groundless. Concededly, the mere act of submitting a case to the authorities for
prosecution does not make one liable for malicious prosecution. Proof and
motive that the institution of the action was prompted by a sinister design to vex
and humiliate a person must be clearly and preponderantly established to
entitle the victims to damages (Ibid.).
In the case at bar, there is no proof of a sinister design on the part of petitioners to vex or humiliate
private respondent by instituting the criminal case against him. While petitioners may have been
negligent to some extent in determining the liability of private respondent for the dishonored check,
the same is not so gross or reckless as to amount to bad faith warranting an award of damages.
The root of the controversy in this case is founded on a case of mistaken identity. It is possible that
with a more assiduous investigation, petitioners would have eventually discovered that private
respondent Eugenio S. Baltao is not the "Eugenio Baltao" responsible for the dishonored check.
However, the record shows that petitioners did exert considerable effort in order to determine the
liability of private respondent. Their investigation pointed to private respondent as the "Eugenio
Baltao" who issued and signed the dishonored check as the president of the debtor-corporation

Guaranteed Enterprises. Their error in proceeding against the wrong individual was obviously in the
nature of an innocent mistake, and cannot be characterized as having been committed in bad faith.
This error could have been discovered if respondent had submitted his counter-affidavit before
investigating fiscal Sumaway and was immediately rectified by Provincial Fiscal Mauro Castro upon
discovery thereof, i.e., during the reinvestigation resulting in the dismissal of the complaint.
Furthermore, the adverse result of an action does not per se make the act wrongful and subject the
actor to the payment of moral damages. The law could not have meant to impose a penalty on the
right to litigate, such right is so precious that moral damages may not be charged on those who may
even exercise it erroneously. And an adverse decision does not ipso facto justify the award of
attorney's fees to the winning party (Garcia vs. Gonzales, 183 SCRA 72 [1990]).
Thus, an award of damages and attorney's fees is unwarranted where the action was filed in good
faith. If damage results from a person's exercising his legal rights, it is damnum absque
injuria (Ilocos Norte Electric Company vs. Court of Appeals, 179 SCRA 5 [1989]).
Coming now to the claim of private respondent for actual or compensatory damages, the records
show that the same was based solely on his allegations without proof to substantiate the same. He
did not present proof of the cost of the medical treatment which he claimed to have undergone as a
result of the nervous breakdown he suffered, nor did he present proof of the actual loss to his
business caused by the unjust litigation against him. In determining actual damages, the court
cannot rely on speculation, conjectures or guesswork as to the amount. Without the actual proof of
loss, the award of actual damages becomes erroneous (Guilatco vs. City of Dagupan, 171 SCRA
382 [1989]).
Actual and compensatory damages are those recoverable because of pecuniary loss in business,
trade, property, profession, job or occupation and the same must be proved, otherwise, if the
proof is flimsy and unsubstantiated, no damages will be given (Rubio vs. Court of Appeals, 141
SCRA 488 [1986]). For these reasons, it was gravely erroneous for respondent court to have
affirmed the award of actual damages in favor of private respondent in the absence of proof thereof.
Where there is no evidence of the other party having acted in wanton, fraudulent or reckless, or
oppressive manner, neither may exemplary damages be awarded (Dee Hua Liong Electrical
Equipment Corporation vs. Reyes, 145 SCRA 488 [1986]).
As to the award of attorney's fees, it is well-settled that the same is the exception rather than the
general rule. Needless to say, the award of attorney's fees must be disallowed where the award of
exemplary damages is eliminated (Article 2208, Civil Code; Agustin vs. Court of Appeals, 186 SCRA
375 [1990]). Moreover, in view of the fact that there was no malicious prosecution against private
respondent, attorney's fees cannot be awarded him on that ground.

54 | P a g e

In the final analysis, there is no proof or showing that petitioners acted maliciously or in bad faith in
the filing of the case against private respondent. Consequently, in the absence of proof of fraud and
bad faith committed by petitioners, they cannot be held liable for damages (Escritor, Jr. vs.
Intermediate Appellate Court, 155 SCRA 577 [1987]). No damages can be awarded in the instant
case, whether based on the principle of abuse of rights, or for malicious prosecution. The questioned
judgment in the instant case attests to the propensity of trial judges to award damages without basis.
Lower courts are hereby cautioned anew against awarding unconscionable sums as damages
without bases therefor.
WHEREFORE, the petition is GRANTED and the decision of the Court of Appeals in C.A. G.R. C.V.
No. 14948 dated May 13, 1989, is hereby REVERSED and SET ASIDE. Costs against respondent
Baltao.
SO ORDERED.

G.R. No. 81262 August 25, 1989

GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS, respondents.
Atencia & Arias Law Offices for petitioners.

Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending Tobias
from work preparatory to the filing of criminal charges against him.
On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document Examiner, after
investigating other documents pertaining to the alleged anomalous transactions, submitted a second
laboratory crime report (Exh. "B") reiterating his previous finding that the handwritings, signatures,
and initials appearing in the checks and other documents involved in the fraudulent transactions
were not those of Tobias. The lie detector tests conducted on Tobias also yielded negative results.

Romulo C. Felizmena for private respondent.

CORTES, J.:
Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and Radio
Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and administrative
assistant to the engineering operations manager. In 1972, GLOBE MACKAY discovered fictitious
purchases and other fraudulent transactions for which it lost several thousands of pesos.
According to private respondent it was he who actually discovered the anomalies and reported them
on November 10, 1972 to his immediate superior Eduardo T. Ferraren and to petitioner Herbert C.
Hendry who was then the Executive Vice-President and General Manager of GLOBE MACKAY.
On November 11, 1972, one day after private respondent Tobias made the report, petitioner Hendry
confronted him by stating that he was the number one suspect, and ordered him to take a one week
forced leave, not to communicate with the office, to leave his table drawers open, and to leave the
office keys.
On November 20, 1972, when private respondent Tobias returned to work after the forced leave,
petitioner Hendry went up to him and called him a "crook" and a "swindler." Tobias was then ordered
to take a lie detector test. He was also instructed to submit specimen of his handwriting, signature,
and initials for examination by the police investigators to determine his complicity in the anomalies.
On December 6,1972, the Manila police investigators submitted a laboratory crime report (Exh. "A")
clearing private respondent of participation in the anomalies.
Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G.
Fernandez, who on December 10, 1972, submitted a report (Exh. "2") finding Tobias guilty. This
report however expressly stated that further investigation was still to be conducted.

55 | P a g e

Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact that the
report of the private investigator, was, by its own terms, not yet complete, petitioners filed with the
City Fiscal of Manila a complaint for estafa through falsification of commercial documents, later
amended to just estafa. Subsequently five other criminal complaints were filed against Tobias, four
of which were for estafa through Falsification of commercial document while the fifth was for of
Article 290 of' the Revised Penal Code (Discovering Secrets Through Seizure of
Correspondence).lwph1.t Two of these complaints were refiled with the Judge Advocate
General's Office, which however, remanded them to the fiscal's office. All of the six criminal
complaints were dismissed by the fiscal. Petitioners appealed four of the fiscal's resolutions
dismissing the criminal complaints with the Secretary of Justice, who, however, affirmed their
dismissal.
In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners that his
employment has been terminated effective December 13, 1972. Whereupon, Tobias filed a
complaint for illegal dismissal. The labor arbiter dismissed the complaint. On appeal, the National
Labor Relations Commission (NLRC) reversed the labor arbiter's decision. However, the Secretary
of Labor, acting on petitioners' appeal from the NLRC ruling, reinstated the labor arbiter's decision.
Tobias appealed the Secretary of Labor's order with the Office of the President. During the pendency
of the appeal with said office, petitioners and private respondent Tobias entered into a compromise
agreement regarding the latter's complaint for illegal dismissal.
Unemployed, Tobias sought employment with the Republic Telephone Company (RETELCO).
However, petitioner Hendry, without being asked by RETELCO, wrote a letter to the latter stating
that Tobias was dismissed by GLOBE MACKAY due to dishonesty.
Private respondent Tobias filed a civil case for damages anchored on alleged unlawful, malicious,
oppressive, and abusive acts of petitioners. Petitioner Hendry, claiming illness, did not testify during
the hearings. The Regional Trial Court (RTC) of Manila, Branch IX, through Judge Manuel T. Reyes
rendered judgment in favor of private respondent by ordering petitioners to pay him eighty thousand
pesos (P80,000.00) as actual damages, two hundred thousand pesos (P200,000.00) as moral
damages, twenty thousand pesos (P20,000.00) as exemplary damages, thirty thousand pesos
(P30,000.00) as attorney's fees, and costs. Petitioners appealed the RTC decision to the Court of
Appeals. On the other hand, Tobias appealed as to the amount of damages. However, the Court of

Appeals, an a decision dated August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion
for reconsideration having been denied, the instant petition for review on certiorari was filed.
The main issue in this case is whether or not petitioners are liable for damages to private
respondent.
Petitioners contend that they could not be made liable for damages in the lawful exercise of their
right to dismiss private respondent.
On the other hand, private respondent contends that because of petitioners' abusive manner in
dismissing him as well as for the inhuman treatment he got from them, the Petitioners must
indemnify him for the damage that he had suffered.
One of the more notable innovations of the New Civil Code is the codification of "some basic
principles that are to be observed for the rightful relationship between human beings and for the
stability of the social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL
CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the
old Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated
certain fundamental precepts which were "designed to indicate certain norms that spring from the
fountain of good conscience" and which were also meant to serve as "guides for human conduct
[that] should run as golden threads through society, to the end that law may approach its supreme
ideal, which is the sway and dominance of justice" (Id.) Foremost among these principles is that
pronounced in Article 19 which provides:
Art. 19. Every person must, in the exercise of his rights and in the performance
of his duties, act with justice, give everyone his due, and observe honesty and
good faith.
This article, known to contain what is commonly referred to as the principle of abuse of rights, sets
certain standards which must be observed not only in the exercise of one's rights but also in the
performance of one's duties. These standards are the following: to act with justice; to give everyone
his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation
on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be
observed. A right, though by itself legal because recognized or granted by law as such, may
nevertheless become the source of some illegality. When a right is exercised in a manner which
does not conform with the norms enshrined in Article 19 and results in damage to another, a legal
wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19
lays down a rule of conduct for the government of human relations and for the maintenance of social
order, it does not provide a remedy for its violation. Generally, an action for damages under either
Article 20 or Article 21 would be proper.
Article 20, which pertains to damage arising from a violation of law, provides that:

56 | P a g e

Art. 20. Every person who contrary to law, wilfully or negligently causes
damage to another, shall indemnify the latter for the same.
However, in the case at bar, petitioners claim that they did not violate any provision of law since they
were merely exercising their legal right to dismiss private respondent. This does not, however, leave
private respondent with no relief because Article 21 of the Civil Code provides that:
Art. 21. Any person who wilfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for the damage.
This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims of
moral wrongs helpless, even though they have actually suffered material and moral injury" [Id.]
should "vouchsafe adequate legal remedy for that untold number of moral wrongs which it is
impossible for human foresight to provide for specifically in the statutes" [Id. it p. 40; See also PNB v.
CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247].
In determining whether or not the principle of abuse of rights may be invoked, there is no rigid test
which can be applied. While the Court has not hesitated to apply Article 19 whether the legal and
factual circumstances called for its application [See for e.g., Velayo v. Shell Co. of the Phil., Ltd., 100
Phil. 186 (1956); PNB v. CA, supra;Grand Union Supermarket, Inc. v. Espino, Jr., G.R. No. L-48250,
December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L-46558, July 31,1981,106 SCRA 391;
United General Industries, Inc, v. Paler G.R. No. L-30205, March 15,1982,112 SCRA 404; Rubio v.
CA, G.R. No. 50911, August 21, 1987, 153 SCRA 183] the question of whether or not the principle of
abuse of rights has been violated resulting in damages under Article 20 or Article 21 or other
applicable provision of law, depends on the circumstances of each case. And in the instant case, the
Court, after examining the record and considering certain significant circumstances, finds that all
petitioners have indeed abused the right that they invoke, causing damage to private respondent
and for which the latter must now be indemnified.
The trial court made a finding that notwithstanding the fact that it was private respondent Tobias who
reported the possible existence of anomalous transactions, petitioner Hendry "showed belligerence
and told plaintiff (private respondent herein) that he was the number one suspect and to take a one
week vacation leave, not to communicate with the office, to leave his table drawers open, and to
leave his keys to said defendant (petitioner Hendry)" [RTC Decision, p. 2; Rollo, p. 232]. This,
petitioners do not dispute. But regardless of whether or not it was private respondent Tobias who
reported the anomalies to petitioners, the latter's reaction towards the former upon uncovering the
anomalies was less than civil. An employer who harbors suspicions that an employee has committed
dishonesty might be justified in taking the appropriate action such as ordering an investigation and
directing the employee to go on a leave. Firmness and the resolve to uncover the truth would also
be expected from such employer. But the high-handed treatment accorded Tobias by petitioners was
certainly uncalled for. And this reprehensible attitude of petitioners was to continue when private

respondent returned to work on November 20, 1972 after his one week forced leave. Upon reporting
for work, Tobias was confronted by Hendry who said. "Tobby, you are the crook and swindler in this
company." Considering that the first report made by the police investigators was submitted only on
December 10, 1972 [See Exh. A] the statement made by petitioner Hendry was baseless. The
imputation of guilt without basis and the pattern of harassment during the investigations of Tobias
transgress the standards of human conduct set forth in Article 19 of the Civil Code. The Court has
already ruled that the right of the employer to dismiss an employee should not be confused with the
manner in which the right is exercised and the effects flowing therefrom. If the dismissal is done
abusively, then the employer is liable for damages to the employee [Quisaba v. Sta. Ines-Melale
Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA 771; See also Philippine
Refining Co., Inc. v. Garcia, G.R. No. L-21871, September 27,1966, 18 SCRA 107] Under the
circumstances of the instant case, the petitioners clearly failed to exercise in a legitimate manner
their right to dismiss Tobias, giving the latter the right to recover damages under Article 19 in relation
to Article 21 of the Civil Code.
But petitioners were not content with just dismissing Tobias. Several other tortious acts were
committed by petitioners against Tobias after the latter's termination from work. Towards the latter
part of January, 1973, after the filing of the first of six criminal complaints against Tobias, the latter
talked to Hendry to protest the actions taken against him. In response, Hendry cut short Tobias'
protestations by telling him to just confess or else the company would file a hundred more cases
against him until he landed in jail. Hendry added that, "You Filipinos cannot be trusted." The threat
unmasked petitioner's bad faith in the various actions taken against Tobias. On the other hand, the
scornful remark about Filipinos as well as Hendry's earlier statements about Tobias being a "crook"
and "swindler" are clear violations of 'Tobias' personal dignity [See Article 26, Civil Code].
The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime in
October 1974, stating that Tobias had been dismissed by GLOBE MACKAY due to dishonesty.
Because of the letter, Tobias failed to gain employment with RETELCO and as a result of which,
Tobias remained unemployed for a longer period of time. For this further damage suffered by Tobias,
petitioners must likewise be held liable for damages consistent with Article 2176 of the Civil Code.
Petitioners, however, contend that they have a "moral, if not legal, duty to forewarn other employers
of the kind of employee the plaintiff (private respondent herein) was." [Petition, p. 14; Rollo, p. 15].
Petitioners further claim that "it is the accepted moral and societal obligation of every man to advise
or warn his fellowmen of any threat or danger to the latter's life, honor or property. And this includes
warning one's brethren of the possible dangers involved in dealing with, or accepting into
confidence, a man whose honesty and integrity is suspect" [Id.]. These arguments, rather than justify
petitioners' act, reveal a seeming obsession to prevent Tobias from getting a job, even after almost
two years from the time Tobias was dismissed.
Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias.
Petitioners contend that there is no case against them for malicious prosecution and that they
cannot be "penalized for exercising their right and prerogative of seeking justice by filing criminal

57 | P a g e

complaints against an employee who was their principal suspect in the commission of forgeries and
in the perpetration of anomalous transactions which defrauded them of substantial sums of money"
[Petition, p. 10, Rollo, p. 11].
While sound principles of justice and public policy dictate that persons shall have free resort to the
courts for redress of wrongs and vindication of their rights [Buenaventura v. Sto. Domingo, 103 Phil.
239 (1958)], the right to institute criminal prosecutions can not be exercised maliciously and in bad
faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 5871.] Hence, in Yutuk V.
Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2 SCRA 337, the Court held that the right to
file criminal complaints should not be used as a weapon to force an alleged debtor to pay an
indebtedness. To do so would be a clear perversion of the function of the criminal processes and of
the courts of justice. And in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court
upheld the judgment against the petitioner for actual and moral damages and attorney's fees after
making a finding that petitioner, with persistence, filed at least six criminal complaints against
respondent, all of which were dismissed.
To constitute malicious prosecution, there must be proof that the prosecution was prompted by a
design to vex and humiliate a person and that it was initiated deliberately by the defendant knowing
that the charges were false and groundless [Manila Gas Corporation v. CA, G.R. No. L-44190,
October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by itself, does not render a person
liable for malicious prosecution [Inhelder Corporation v. CA, G.R. No. 52358, May 301983122 SCRA
576]. The mere dismissal by the fiscal of the criminal complaint is not a ground for an award of
damages for malicious prosecution if there is no competent evidence to show that the complainant
had acted in bad faith [Sison v. David, G.R. No. L-11268, January 28,1961, 1 SCRA 60].
In the instant case, however, the trial court made a finding that petitioners acted in bad faith in filing
the criminal complaints against Tobias, observing that:
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 adverted to, two of these cases
were refiled with the Judge Advocate General's Office of the Armed Forces of
the Philippines to railroad plaintiffs arrest and detention in the military stockade,
but this was frustrated by a presidential decree transferring criminal cases
involving civilians to the civil courts.

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 plaintiff of participation or involvement in the fraudulent transactions
complained of, despite the negative results of the lie detector tests which
defendants compelled plaintiff to undergo, and although the police investigation
was "still under follow-up and a supplementary report will be submitted after all
the evidence has been gathered," defendants hastily filed six (6) criminal cases
with the city Fiscal's Office of Manila, five (5) for estafa thru falsification of
commercial document and one (1) for violation of Art. 290 of the Revised Penal
Code, so much so that as was to be expected, all six (6) cases were dismissed,
with one of the investigating fiscals, Asst. Fiscal de Guia, commenting in one
case that, "Indeed, the haphazard way this case was investigated is evident.
Evident likewise is the flurry and haste in the filing of this case against
respondent Tobias," there can be no mistaking that defendants would not but
be motivated by malicious and unlawful intent to harass, oppress, and cause
damage to plaintiff.

(P800,000.00) as moral damages; fifty thousand pesos (P50,000.00) as attorney's fees; and costs.
The trial court, after making a computation of the damages incurred by Tobias [See RTC Decision,
pp. 7-8; Rollo, pp. 154-1551, awarded him the following: eighty thousand pesos (P80,000.00) as
actual damages; two hundred thousand pesos (P200,000.00) as moral damages; twenty thousand
pesos (P20,000.00) as exemplary damages; thirty thousand pesos (P30,000.00) as attorney's fees;
and, costs. It must be underscored that petitioners have been guilty of committing several actionable
tortious acts, i.e., the abusive manner in which they dismissed Tobias from work including the
baseless imputation of guilt and the harassment during the investigations; the defamatory language
heaped on Tobias as well as the scornful remark on Filipinos; the poison letter sent to RETELCO
which resulted in Tobias' loss of possible employment; and, the malicious filing of the criminal
complaints. Considering the extent of the damage wrought on Tobias, the Court finds that, contrary
to petitioners' contention, the amount of damages awarded to Tobias was reasonable under the
circumstances.
Yet, petitioners still insist that the award of damages was improper, invoking the principle of damnum
absqueinjuria. It is argued that "[t]he only probable actual damage that plaintiff (private respondent
herein) could have suffered was a direct result of his having been dismissed from his employment,
which was a valid and legal act of the defendants-appellants (petitioners herein).lwph1.t "
[Petition, p. 17; Rollo, p. 18].

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 effect, the possible filing of one hundred more cases was
made to hang like the sword of Damocles over the head of Tobias. In fine, considering the haste in
which the criminal complaints were filed, the fact that they were filed during the pendency of the
illegal dismissal case against petitioners, the threat made by Hendry, the fact that the cases were
filed notwithstanding the two police reports exculpating Tobias from involvement in the anomalies
committed against GLOBE MACKAY, coupled by the eventual dismissal of all the cases, the Court is
led into no other conclusion than that petitioners were motivated by malicious intent in filing the six
criminal complaints against Tobias.
Petitioners next contend that the award of damages was excessive. In the complaint filed against
petitioners, Tobias prayed for the following: one hundred thousand pesos (P100,000.00) as actual
damages; fifty thousand pesos (P50,000.00) as exemplary damages; eight hundred thousand pesos

58 | P a g e

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. L47207, September 25, 1980, 100 SCRA 197; See also Gilchrist v. Cuddy 29 Phil, 542 (1915); The
Board of Liquidators v. Kalaw, G.R. No. L-18805, August 14, 1967, 20 SCRA 987]. This principle
finds no application in this case. It bears repeating that even granting that petitioners might have had
the right to dismiss Tobias from work, the abusive manner in which that right was exercised
amounted to a legal wrong for which petitioners must now be held liable. Moreover, the damage
incurred by Tobias was not only in connection with the abusive manner in which he was dismissed
but was also the result of several other quasi-delictual acts committed by petitioners.
Petitioners next question the award of moral damages. However, the Court has already ruled
in Wassmer v. Velez, G.R. No. L-20089, December 26, 1964, 12 SCRA 648, 653, that [p]er express
provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the cases
mentioned in Article 21 of said Code." Hence, the Court of Appeals committed no error in awarding
moral damages to Tobias.
Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of the
Civil Code provides that "[i]n quasi-delicts, exemplary damages may be granted if the defendant
acted with gross negligence," the Court, in Zulueta v. Pan American World Airways, Inc., G.R. No. 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 Zulueta case, 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.

59 | P a g e

G.R. No. 126486 February 9, 1998

BARONS MARKETING CORP., petitioner,
vs.
COURT OF APPEALS and PHELPS DODGE PHILS., INC. respondents.

P3,802,478.20 representing the value of the wires and cables the former had delivered to the latter,
including interest. Phelps Dodge likewise prayed that it be awarded attorney's fees at the rate of
25% of the amount demanded, exemplary damages amounting to at least P100,000.00, the
expenses of litigation and the costs of suit.

KAPUNAN, J.:

Petitioner, in its answer, admitted purchasing the wires and cables from private respondent but
disputed the amount claimed by the latter. Petitioner likewise interposed a counterclaim against
private respondent, alleging that it suffered injury to its reputation due to Phelps Dodge's acts. Such
acts were purportedly calculated to humiliate petitioner and constituted an abuse of rights.

The instant petition raises two issues: (1) whether or not private respondent is guilty of abuse of
right; and (2) whether or not private respondent is entitled to interest and attorney's fees.

After hearing, the trial court on 17 June 1991 rendered its decision, the dispositive portion of which
reads:

The facts are undisputed:

On August 31, 1973, plaintiff [Phelps Dodge, Philippines, Inc. private respondent herein]
appointed defendant [petitioner Barons Marketing, Corporation] as one of its dealers of
electrical wires and cables effective September 1, 1973 (Exh. A). As such dealer,
defendant was given by plaintiff 60 days credit for its purchases of plaintiff's electrical
products. This credit term was to be reckoned from the date of delivery by plaintiff of its
products to defendant (Exh. 1).

WHEREFORE, from all the foregoing considerations, the Court finds Phelps Dodge Phils.,
Inc. to have preponderantly proven its case and hereby orders Barons Marketing, Inc. to
pay Phelps Dodge the following:
1. P3,108,000.00 constituting the unpaid balance of defendant's purchases from plaintiff
and interest thereon at 12% per annum computed from the respective expiration of the 60
day credit term, vis-a-vis the various sales invoices and/or delivery receipts;
2. 25% of the preceding obligation for and as attorney's fees;

During the period covering December 1986 to August 17, 1987, defendant purchased, on
credit, from plaintiff various electrical wires and cables in the total amount of
P4,102,438.30 (Exh. B to K). These wires and cables were in turn sold, pursuant to
previous arrangements, by defendant to MERALCO, the former being the accredited
supplier of the electrical requirements of the latter. Under the sales invoices issued by
plaintiff to defendant for the subject purchases, it is stipulated that interest at 12% on the
amount due for attorney's fees and collection (Exh. BB). 1 On September 7, 1987,
defendant paid plaintiff the amount of P300,000.00 out of its total purchases as abovestated (Exh. S), thereby leaving an unpaid account on the aforesaid deliveries of
P3,802,478.20. On several occasions, plaintiff wrote defendant demanding payment of its
outstanding obligations due plaintiff (Exhs. L, M, N, and P). In response, defendant wrote
plaintiff on October 5, 1987 requesting the latter if it could pay its outstanding account in
monthly installments of P500,000.00 plus 1% interest per month commencing on October
15, 1987 until full payment (Exh. O and O-4). Plaintiff, however, rejected defendant's offer
and accordingly reiterated its demand for the full payment of defendant's account (Exh.
P). 2
On 29 October 1987, private respondent Phelps Dodge Phils., Inc. filed a complaint before the Pasig
Regional Trial Court against petitioner Barons Marketing Corporation for the recovery of
60 | P a g e

3. P10,000.00 as exemplary damages;

4. Costs of suit. 3
Both parties appealed to respondent court. Private respondent claimed that the trial court should
have awarded it the sum of P3,802,478.20, the amount which appeared in the body of the complaint
and proven during the trial rather than P3,1081000.00 The latter amount appears in petitioner's
prayer supposedly as a result of a typographical error.
On the other hand, petitioner reiterated its claims for damages as a result of "creditor's abuse." It
also alleged that private respondent failed to prove its cause of action against it.
On 25 June 1996, the Court of Appeals rendered a decision modifying the decision of the trial court,
thus:

WHEREFORE, from all the foregoing considerations, the Court finds Phelps Dodge Phils.,
Inc. to have preponderantly proven its case and hereby orders Barons Marketing, Inc. to
pay Phelps Dodge the following:
1. P3,802,478.20 constituting the unpaid balance of defendant's purchases from plaintiff
and interest thereon at 12% per annum computed from the respective expiration of the 60
day credit term, vis-a-vis the various sales invoices and/or delivery receipts; and
2. 5% of the preceding obligation for and as attorney's fees.
No costs. 4
Petitioner Barons Marketing is now before this Court alleging that respondent court erred when it
held (1) private respondent Phelps Dodge not guilty of "creditor's abuse," and (2) petitioner liable to
private respondent for interest and attorney's fees.
I
Petitioner does not deny private respondent's rights to institute an action for collection and to claim
full payment. Indeed, petitioner's right to file an action for collection is beyond cavil. 5 Likewise,
private respondent's right to reject petitioner's offer to pay in installments is guaranteed by Article
1248 of the Civil Code which states:
Art. 1248. Unless there is an express stipulation to that effect, the creditor cannot be
compelled partially to receive the prestations in which the obligation consists. Neither may
the debtor be required to make partial payments.
However, when the debt is in part liquidated and in part unliquidated, the creditor may
demand and the debtor may effect the payment of the former without waiting for the
liquidation of the latter.
Under this provision, the prestation, i.e., the object of the obligation, must be performed in one act,
not in parts.
Tolentino concedes that the right has its limitations:
Partial Prestations. Since the creditor cannot be compelled to accept partial
performance, unless otherwise stipulated, the creditor who refuses to accept partial
prestations does not incur in delay or mora accipiendi, except when there is abuse of right
or if good faith requires acceptance. 6

61 | P a g e

Indeed, the law, as set forth in Article 19 of the Civil Code, prescribes a "primordial limitation on all
rights" by setting certain standards that must be observed in the exercise thereof. 7 Thus:
Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
Petitioner now invokes Article 19 and Article 21 8 of the Civil Code, claiming that private respondent
abused its rights when it rejected petitioner's offer of settlement and subsequently filed the action for
collection considering:
. . . that the relationship between the parties started in 1973 spanning more than 13 years
before the complaint was filed, that the petitioner had been a good and reliable dealer
enjoying a good credit standing during the period before it became delinquent in 1987,
that the relationship between the parties had been a fruitful one especially for the private
respondent, that the petitioner exerted its outmost efforts to settle its obligations and avoid
a suit, that the petitioner did not evade in the payment of its obligation to the private
respondent, and that the petitioner was just asking a small concession that it be allowed
to liquidate its obligation to eight (8) monthly installments of P500,000.00 plus 1% interest
per month on the balance which proposal was supported by post-dated checks. 9
Expounding on its theory, petitioner states:
In the ordinary course of events, a suit for collection of a sum of money filed in court is
done for the primary purpose of collecting a debt or obligation. If there is an offer by the
debtor to pay its debt or obligation supported by post-dated checks and with provision for
interests, the normal response of a creditor would be to accept the offer of compromise
and not file the suit for collection. It is of common knowledge that proceedings in our
courts would normally take years before an action is finally settled. It is always wiser and
more prudent to accept an offer of payment in installment rather than file an action in court
to compel the debtor to settle his obligation in full in a single payment.
xxx xxx xxx
. . . Why then did private respondent elect to file a suit for collection rather than accept
petitioner's offer of settlement, supported by post-dated checks, by paying monthly
installments of P500,000.00 plus 1% per month commencing on October 15, 1987 until
full payment? The answer is obvious. The action of private respondent in filling a suit for
collection was an abuse of right and exercised for the sole purpose of prejudicing and
injuring the petitioner. 10

Petitioner prays that the Court order private respondent to pay petitioner moral and exemplary
damages, attorney's fees, as well as the costs of suit. It likewise asks that it be allowed to liquidate
its obligation to private respondent, without interests, in eight equal monthly installments.
Petitioner's theory is untenable.
Both parties agree that to constitute an abuse of rights under Article 19 the defendant must act with
bad faith or intent to prejudice the plaintiff. They cite the following comments of Tolentino as their
authority:
Test of Abuse of Right. Modern jurisprudence does not permit acts which, although not
unlawful, are anti-social. There is undoubtedly an abuse of right when it is exercised for
the only purpose of prejudicing or injuring another. When the objective of the actor is
illegitimate, the illicit act cannot be concealed under the guise of exercising a right. The
principle does not permit acts which, without utility or legitimate purpose cause damage to
another, because they violate the concept of social solidarity which considers law as
rational and just. Hence, every abnormal exercise of a right, contrary to its socioeconomic purpose, is an abuse that will give rise to liability. The exercise of a right must
be in accordance with the purpose for which it was established, and must not be
excessive or unduly harsh; there must be no intention to injure another. Ultimately,
however, and in practice, courts, in the sound exercise of their discretion, will have to
determine all the facts and circumstances when the exercise of a right is unjust, or when
there has been an abuse of right. 11
The question, therefore, is whether private respondent intended to prejudice or injure petitioner
when it rejected petitioner's offer and filed the action for collection.
We hold in the negative. It is an elementary rule in this jurisdiction that good faith is presumed and
that the burden of proving bad faith rests upon the party alleging the same. 12 In the case at bar,
petitioner has failed to prove bad faith on the part of private respondent. Petitioner's allegation that
private respondent was motivated by a desire to terminate its agency relationship with petitioner so
that private respondent itself may deal directly with Meralco is simply not supported by the evidence.
At most, such supposition is merely speculative.
Moreover, we find that private respondent was driven by very legitimate reasons for rejecting
petitioner's offer and instituting the action for collection before the trial court. As pointed out by
private respondent, the corporation had its own "cash position to protect in order for it to pay its own
obligations." This is not such "a lame and poor rationalization" as petitioner purports it to be. For if
private respondent were to be required to accept petitioner's offer, there would be no reason for the
latter to reject similar offers from its other debtors. Clearly, this would be inimical to the interests of
any enterprise, especially a profit-oriented one like private respondent. It is plain to see that what we
have here is a mere exercise of rights, not an abuse thereof Under these circumstances, we do not

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deem private respondent to have acted in a manner contrary to morals, good customs or public
policy as to violate the provisions of Article 21 of the Civil Code.
Consequently, petitioner's prayer for moral and exemplary damages must thus be rejected.
Petitioner's claim for moral damages is anchored on Article 2219 (10) of the Civil Code which states:
Art. 2219. Moral damages may be recovered in the following and analogous cases:
xxx xxx xxx
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
xxx xxx xxx
Having ruled that private respondent's acts did not transgress the provisions of Article 21, petitioner
cannot be entitled to moral damages or, for that matter, exemplary damages. While the amount of
exemplary damages need not be proved, petitioner must show that he is entitled to moral, temperate
or compensatory damages before the court may consider the question of whether or not exemplary
damages should be awarded. 13 As we have observed above; petitioner has failed to discharge this
burden.
It may not be amiss to state that petitioner's contract with private respondent has the force of law
between them.14 Petitioner is thus bound to fulfill what has been expressly stipulated therein. 15 In the
absence of any abuse of right, private respondent cannot be allowed to perform its obligation under
such contract in parts. Otherwise, private respondent's right under Article 1248 will be negated, the
sanctity of its contract with petitioner defiled. The principle of autonomy of contracts 16 must be
respected.
II
Under said contract, petitioner is liable to private respondent for the unpaid balance of its purchases
from private respondent plus 12% interest. Private respondent's sales invoices expressly provide
that:
. . . Interest at 12% per annum will be charged on all overdue account plus 25% on said
amount for attorney's fees and collection. . . . 17
It may also be noted that the above stipulation, insofar as it provides for the payment of "25% on
said amount for attorney's fees and collection (sic)," constitutes what is known as a penal
clause. 18 Petitioner is thus obliged to pay such penalty in addition to the 12% annual interest, there
being an express stipulation to that effect.

Petitioner nevertheless urges this Court to reduce the attorney's fees for being "grossly excessive,"
"considering the nature of the case which is a mere action for collection of a sum of money." It may
be pointed out however that the above penalty is supposed to answer not only for attorney's fees but
for collection fees as well. Moreover:
. . . the attorneys' fees here provided is not, strictly speaking, the attorneys' fees
recoverable as between attorney and client spoken of and regulated by the Rules of
Court. Rather, the attorneys' fees here are in the nature of liquidated damages and the
stipulation therefor is aptly called a penal clause. It has been said that so long as such
stipulation does not contravene law, morals, or public order, it is strictly binding upon
defendant. The attorneys' fees so provided are awarded in favor of the litigant, not his
counsel. It is the litigant, not counsel, who is the judgment creditor entitled to enforce the
judgment by execution. 19
Nonetheless, courts are empowered to reduce such penalty if the same is "iniquitous or
unconscionable." Article 1229 of the Civil Code states thus:
Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has
been partly or been irregularly complied with by the debtor. Even if there has no
performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable. (Emphasis supplied.)
The sentiments of the law are echoed in Article 2227 of the same Code:
Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be
equitably reduced if they are iniquitous or unconscionable.
It is true that we have upheld the reasonableness of penalties in the form of attorney's fees
consisting of twenty-five percent (25%) of the principal debt plus interest. 20 In the case at bar,
however, the interest alone runs to some four and a half million pesos (P4.5M), even exceeding the
principal debt amounting to almost four million pesos (P4.0M). Twenty five percent (25%) of the
principal and interest amounts to roughly two million pesos (P2M). In real terms, therefore, the
attorney's fees and collection fees are manifestly exorbitant. Accordingly, we reduce the same to ten
percent (10%) of the principal.
Private respondent, however, argues that petitioner failed to question the award of attorney's fees on
appeal before respondent court and raised the issue only in its motion for reconsideration.
Consequently, petitioner should be deemed to have waived its right to question such award.
Private respondent's attempts to dissuade us from reducing the penalty are futile. The Court is
clothed with ample authority to review matters, even if they are not assigned as errors in their
appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. 21

63 | P a g e

WHEREFORE, the decision of the Court of Appeals is hereby MODIFIED in that the attorney's and
collection fees are reduced to ten percent (10%) of the principal but is AFFIRMED in all other
respects. SO ORDERED.

G.R. No. 147076

June 17, 2004

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner,

vs.
ACT THEATER, INC., respondent.

WHEREFORE, for failure of the prosecution to prove the guilt of the accused beyond
reasonable doubt, the four (4) above-named Accused are hereby ACQUITTED of the
crime charged.3
In Civil Case No. Q-88-768

DECISION
CALLEJO, SR., J.:
Before the Court is a petition for review on certiorari filed by the Metropolitan Waterworks and
Sewerage System (MWSS), seeking to reverse and set aside the Decision1 dated January 31, 2001
of the Court of Appeals in CA-G.R. CV No. 58581, which affirmed the civil aspect of the
Decision2 dated May 5, 1997 of the Regional Trial Court of Quezon City, Branch 77, directing the
petitioner MWSS to pay the respondent Act Theater, Inc. damages and attorneys fees.
The present case stemmed from the consolidated cases of Criminal Case No. Q-89-2412
entitled People of the Philippines v. Rodolfo Tabian, et al., for violation of Presidential Decree (P.D.)
No. 401, as amended by Batas Pambansa Blg. 876, and Civil Case No. Q-88-768 entitled Act
Theater, Inc. v. Metropolitan Waterworks and Sewerage System. The two cases were jointly tried in
the court a quo as they arose from the same factual circumstances, to wit:
On September 22, 1988, four employees of the respondent Act Theater, Inc., namely,
Rodolfo Tabian, Armando Aguilar, Arnel Concha and Modesto Ruales, were apprehended
by members of the Quezon City police force for allegedly tampering a water meter in
violation of P.D. No. 401, as amended by B.P. Blg. 876. The respondents employees were
subsequently criminally charged (Criminal Case No. Q-89-2412) before the court a quo.
On account of the incident, the respondents water service connection was cut off.
Consequently, the respondent filed a complaint for injunction with damages (Civil Case
No. Q-88-768) against the petitioner MWSS.
In the civil case, the respondent alleged in its complaint filed with the court a quo that the petitioner
acted arbitrarily, whimsically and capriciously, in cutting off the respondents water service
connection without prior notice. Due to lack of water, the health and sanitation, not only of the
respondents patrons but in the surrounding premises as well, were adversely affected. The
respondent prayed that the petitioner be directed to pay damages.
After due trial, the court a quo rendered its decision, the dispositive portion of which reads:
In Criminal Case No. Q-89-2412

...
1. Ordering defendant MWSS to pay plaintiff actual or compensatory damages
in the amount ofP25,000.00; and to return the sum of P200,000.00 deposited
by the plaintiff for the restoration of its water services after its disconnection on
September 23, 1988;
2. Defendants counterclaim for undercollection of P530,759.96 is dismissed for
lack of merit;
3. Ordering defendant MWSS to pay costs of suit;
4. Ordering defendant MWSS to pay plaintiff the amount of P5,000.00 as
attorneys fees;
5. Making the mandatory injunction earlier issued to plaintiff Act Theater, Inc.
permanent.
SO ORDERED.4
Aggrieved, the petitioner appealed the civil aspect of the aforesaid decision to the CA. The appellate
court, however, dismissed the appeal. According to the CA, the court a quo correctly found that the
petitioners act of cutting off the respondents water service connection without prior notice was
arbitrary, injurious and prejudicial to the latter justifying the award of damages under Article 19 of the
Civil Code.
Undaunted, the petitioner now comes to this Court alleging as follows:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] VALIDLY AFFIRMED
THE DECISION OF THE REGIONAL TRIAL COURT IN RESOLVING THE
PETITIONERS APPEAL;
II

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WHETHER OR NOT THE HONORABLE COURT OF APPEALS VALIDLY UPHELD THE

AWARD OF ATTORNEYS FEES;
III
WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] CORRECTLY APPLIED
THE PROVISION OF ARTICLE 19 OF THE NEW CIVIL CODE WITHOUT
CONSIDERING THE APPLICABLE PROVISION OF ARTICLE 429 OF THE SAME
CODE.5
Preliminarily, the petitioner harps on the fact that, in quoting the decretal portion of the court a quos
decision, the CA erroneously typed P500,000 as the attorneys fees awarded in favor of the
respondent when the same should only be P5,000. In any case, according to the petitioner, whether
the amount is P500,000 or P5,000, the award of attorneys fees is improper considering that there
was no discussion or statement in the body of the assailed decision justifying such award. The
petitioner insists that in cutting off the respondents water service connection, the petitioner merely
exercised its proprietary right under Article 429 of the Civil Code.
The petition is devoid of merit.
Article 429 of the Civil Code, relied upon by the petitioner in justifying its act of disconnecting the
water supply of the respondent without prior notice, reads:
Art. 429. The owner or lawful possessor of a thing has the right to exclude any person
from the enjoyment and disposal thereof. For this purpose, he may use such force as may
be reasonable to repel or prevent an actual or threatened unlawful physical invasion or
usurpation of his property.

When a right is exercised in a manner which discards these norms resulting in damage to another, a
legal wrong is committed for which actor can be held accountable.9 In this case, the petitioner failed
to act with justice and give the respondent what is due to it when the petitioner unceremoniously cut
off the respondents water service connection. As correctly found by the appellate court:
While it is true that MWSS had sent a notice of investigation to plaintiff-appellee prior to
the disconnection of the latters water services, this was done only a few hours before the
actual disconnection. Upon receipt of the notice and in order to ascertain the matter, Act
sent its assistant manager Teodulo Gumalid, Jr. to the MWSS office but he was treated
badly on the flimsy excuse that he had no authority to represent Act. Acts water services
were cut at midnight of the day following the apprehension of the employees. Clearly, the
plaintiff-appellee was denied due process when it was deprived of the water services. As
a consequence thereof, Act had to contract another source to provide water for a number
of days. Plaintiff-appellee was also compelled to deposit with MWSS the sum
of P200,000.00 for the restoration of their water services.10
There is, thus, no reason to deviate from the uniform findings and conclusion of the court a quo and
the appellate court that the petitioners act was arbitrary, injurious and prejudicial to the respondent,
justifying the award of damages under Article 19 of the Civil Code.
Finally, the amount of P500,000 as attorneys fees in that portion of the assailed decision which
quoted the falloof the court a quos decision was obviously a typographical error. As attorneys fees,
the court a quo awarded the amount of P5,000 only. It was this amount, as well as actual and
compensatory damages of P25,000 and the reimbursement of P200,000 deposited by the
respondent for the restoration of its water supply, that the CA affirmed, as it expressly stated in its
dispositive portion that "finding no cogent reason to reverse the appealed Decision which is in
conformity with the law and evidence, the same is hereby AFFIRMED."11

A right is a power, privilege, or immunity guaranteed under a constitution, statute or decisional law,
or recognized as a result of long usage,6 constitutive of a legally enforceable claim of one person
against the other.7

The award of P5,000 as attorneys fees is reasonable and warranted. Attorneys fees may be
awarded when a party is compelled to litigate or incur expenses to protect his interest by reason of
an unjustified act of the other party.12

Concededly, the petitioner, as the owner of the utility providing water supply to certain consumers
including the respondent, had the right to exclude any person from the enjoyment and disposal
thereof. However, the exercise of rights is not without limitations. Having the right should not be
confused with the manner by which such right is to be exercised.8

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated January 31,
2001 in CA-G.R. CV No. 58581 is AFFIRMED in toto.

Article 19 of the Civil Code precisely sets the norms for the exercise of ones rights:
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.

65 | P a g e

SO ORDERED.

G.R. No. 151866

September 9, 2004

SOLEDAD CARPIO, petitioner,

vs.
LEONORA A. VALMONTE, respondent.

A few days after the incident, petitioner received a letter from Valmonte demanding a formal letter of
apology which she wanted to be circulated to the newlyweds relatives and guests to redeem her
smeared reputation as a result of petitioners imputations against her. Petitioner did not respond to
the letter. Thus, on 20 February 1997, Valmonte filed a suit for damages against her before the
Regional Trial Court (RTC) of Pasig City, Branch 268. In her complaint, Valmonte prayed that
petitioner be ordered to pay actual, moral and exemplary damages, as well as attorneys fees.

DECISION
TINGA, J.:
Assailed in the instant petition for review is the Decision of the Court of Appeals in C.A.-G.R. CV No.
69537,1promulgated on 17 January 2002.2 The appellate court reversed the trial courts decision
denying respondents claim for damages against petitioner and ordered the latter to pay moral
damages to the former in the amount ofP100,000.00.
Respondent Leonora Valmonte is a wedding coordinator. Michelle del Rosario and Jon Sierra
engaged her services for their church wedding on 10 October 1996. At about 4:30 p.m. on that day,
Valmonte went to the Manila Hotel where the bride and her family were billeted. When she arrived at
Suite 326-A, several persons were already there including the bride, the brides parents and
relatives, the make-up artist and his assistant, the official photographers, and the fashion designer.
Among those present was petitioner Soledad Carpio, an aunt of the bride who was preparing to
dress up for the occasion.
After reporting to the bride, Valmonte went out of the suite carrying the items needed for the wedding
rites and the gifts from the principal sponsors. She proceeded to the Maynila Restaurant where the
reception was to be held. She paid the suppliers, gave the meal allowance to the band, and went
back to the suite. Upon entering the suite, Valmonte noticed the people staring at her. It was at this
juncture that petitioner allegedly uttered the following words to Valmonte: "Ikaw lang ang lumabas
ng kwarto, nasaan ang dala mong bag? Saan ka pumunta? Ikaw lang and lumabas ng kwarto, ikaw
ang kumuha." Petitioner then ordered one of the ladies to search Valmontes bag. It turned out that
after Valmonte left the room to attend to her duties, petitioner discovered that the pieces of jewelry
which she placed inside the comfort room in a paper bag were lost. The jewelry pieces consist of
two (2) diamond rings, one (1) set of diamond earrings, bracelet and necklace with a total value of
about one million pesos. The hotel security was called in to help in the search. The bags and
personal belongings of all the people inside the room were searched. Valmonte was allegedly bodily
searched, interrogated and trailed by a security guard throughout the evening. Later, police officers
arrived and interviewed all persons who had access to the suite and fingerprinted them including
Valmonte. During all the time Valmonte was being interrogated by the police officers, petitioner kept
on saying the words "Siya lang ang lumabas ng kwarto." Valmontes car which was parked at the
hotel premises was also searched but the search yielded nothing.

66 | P a g e

Responding to the complaint, petitioner denied having uttered words or done any act to confront or
single out Valmonte during the investigation and claimed that everything that transpired after the
theft incident was purely a police matter in which she had no participation. Petitioner prayed for the
dismissal of the complaint and for the court to adjudge Valmonte liable on her counterclaim.
The trial court rendered its Decision on 21 August 2000, dismissing Valmontes complaint for
damages. It ruled that when petitioner sought investigation for the loss of her jewelry, she was
merely exercising her right and if damage results from a person exercising his legal right, it
is damnum absque injuria. It added that no proof was presented by Valmonte to show that petitioner
acted maliciously and in bad faith in pointing to her as the culprit. The court said that Valmonte failed
to show that she suffered serious anxiety, moral shock, social humiliation, or that her reputation was
besmirched due to petitioners wrongful act.
Respondent appealed to the Court of Appeals alleging that the trial court erred in finding that
petitioner did not slander her good name and reputation and in disregarding the evidence she
presented.
The Court of Appeals ruled differently. It opined that Valmonte has clearly established that she was
singled out by petitioner as the one responsible for the loss of her jewelry. It cited the testimony of
Serena Manding, corroborating Valmontes claim that petitioner confronted her and uttered words to
the effect that she was the only one who went out of the room and that she was the one who took
the jewelry. The appellate court held that Valmontes claim for damages is not predicated on the fact
that she was subjected to body search and interrogation by the police but rather petitioners act of
publicly accusing her of taking the missing jewelry. It categorized petitioners utterance defamatory
considering that it imputed upon Valmonte the crime of theft. The court concluded that petitioners
verbal assault upon Valmonte was done with malice and in bad faith since it was made in the
presence of many people without any solid proof except petitioners suspicion. Such unfounded
accusation entitles Valmonte to an award of moral damages in the amount of P100,000.00 for she
was publicly humiliated, deeply insulted, and embarrassed. However, the court found no sufficient
evidence to justify the award of actual damages.
Hence, this petition.

Petitioner contends that the appellate courts conclusion that she publicly humiliated respondent
does not conform to the evidence presented. She adds that even on the assumption that she uttered
the words complained of, it was not shown that she did so with malice and in bad faith.

A Then Leo came out from the other room she said, she is (sic) the one I only saw from
the comfort room.
Q Now, what exact word (sic) were said by Mrs. Carpio on that matter?

In essence, petitioner would want this Court to review the factual conclusions reached by the
appellate court. The cardinal rule adhered to in this jurisdiction is that a petition for review must raise
only questions of law,3 and judicial review under Rule 45 does not extend to an evaluation of the
sufficiency of evidence unless there is a showing that the findings complained of are totally devoid of
support in the record or that they are so glaringly erroneous as to constitute serious abuse of
discretion.4 This Court, while not a trier of facts, may review the evidence in order to arrive at the
correct factual conclusion based on the record especially so when the findings of fact of the Court of
Appeals are at variance with those of the trial court, or when the inference drawn by the Court of
Appeals from the facts is manifestly mistaken.5
Contrary to the trial courts finding, we find sufficient evidence on record tending to prove that
petitioners imputations against respondent was made with malice and in bad faith.
Petitioners testimony was shorn of substance and consists mainly of denials. She claimed not to
have uttered the words imputing the crime of theft to respondent or to have mentioned the latters
name to the authorities as the one responsible for the loss of her jewelry. Well-settled is the rule that
denials, if unsubstantiated by clear and convincing evidence, are negative and self-serving which
merit no weight in law and cannot be given greater evidentiary value over the testimony of credible
witnesses who testify on affirmative matters.6
Respondent, however, has successfully refuted petitioners testimony. Quite credibly, she has
narrated in great detail her distressing experience on that fateful day. She testified as to how rudely
she was treated by petitioner right after she returned to the room. Petitioner immediately confronted
her and uttered the words "Ikaw lang ang lumabas ng kwarto. Nasaan ang dala mong bag? Saan ka
pumunta? Ikaw ang kumuha." Thereafter, her body was searched including her bag and her car.
Worse, during the reception, she was once more asked by the hotel security to go to the ladies room
and she was again bodily searched.7
Serea Manding, a make-up artist, corroborated respondents testimony. She testified that petitioner
confronted respondent in the presence of all the people inside the suite accusing her of being the
only one who went out of the comfort room before the loss of the jewelry. Manding added that
respondent was embarrassed because everybody else in the room thought she was a thief.8 If only
to debunk petitioners assertion that she did not utter the accusatory remarks in question publicly
and with malice, Mandings testimony on the point deserves to be reproduced. Thus,
Q After that what did she do?

67 | P a g e

A She said "siya lang yung nakita kong galing sa C.R."

Q And who was Mrs. Carpio or the defendant referring to?
A Leo Valmonte.
Q Did she say anything else, the defendant?
A Her jewelry were lost and Leo was the only one she saw in the C.R. After that she get
(sic) the paper bag then the jewelry were already gone.
Q Did she confront the plaintiff Mrs. Valmonte regarding that fact?
A Yes.
Q What did the defendant Mrs. Carpio tell the plaintiff, Mrs. Valmonte?
A "Ikaw yung nakita ko sa C.R. nawawala yung alahas ko."
Q When the defendant Mrs. Carpio said that to plaintiff Mrs. Valmonte were there other
people inside the room?
A Yes, sir.
Q Were they able to hear what Mrs. Carpio said to Mrs. Valmonte?
A Yes, sir.
Q What was your thinking at that time that Mrs. Carpio said that to Mrs. Valmonte?
A "Nakakahiya kasi akala ng iba doon na talagang magnanakaw siya. Kasi marami na
kaming nandodoon, dumating na yung couturier pati yung video man and we sir.
Q Who was the person you [were] alleging "na nakakahiya" whose (sic) being accused or
being somebody who stole those item of jewelry?

A "Nakakahiya para kay Leo kasi pinagbibintangan siya. Sa dami namin doon siya yung
napagbintangan."
Q And who is Leo, what is her full name?
A Leo Valmonte.
Q Did the defendant tell this matter to other people inside the room?
A Yes, the mother of the bride.
Q And who else did she talk to?
A The father of the bride also.
Q And what did the defendant tell the mother regarding this matter?
A "Nawawala yung alahas ko." Sabi naman nung mother baka naman hindi mo dala
tignan mo munang mabuti.
Q Who was that other person that she talked to?
A Father of the bride.9
Significantly, petitioners counsel elected not to pursue her cross-examination of the witness on this
point following her terse and firm declaration that she remembered petitioners exact defamatory
words in answer to the counsels question.10
Jaime Papio, Security Supervisor at Manila Hotel, likewise contradicted petitioners allegation that
she did not suspect or mention the name of respondent as her suspect in the loss of the jewelry. 11
To warrant recovery of damages, there must be both a right of action, for a wrong inflicted by the
defendant, and the damage resulting therefrom to the plaintiff. Wrong without damage, or damage
without wrong, does not constitute a cause of action.12
In the sphere of our law on human relations, the victim of a wrongful act or omission, whether done
willfully or negligently, is not left without any remedy or recourse to obtain relief for the damage or
injury he sustained. Incorporated into our civil law are not only principles of equity but also universal
moral precepts which are designed to indicate certain norms that spring from the fountain of good
conscience and which are meant to serve as guides for human conduct.13 First of these fundamental
precepts is the principle commonly known as "abuse of rights" under Article 19 of the Civil Code. It

68 | P a g e

provides that "Every person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due and observe honesty and good faith." To find the existence of
an abuse of right, the following elements must be present: (1) there is a legal right or duty; (2) which
is exercised in bad faith; (3) for the sole intent or prejudicing or injuring another. 14 When a right is
exercised in a manner which discards these norms resulting in damage to another, a legal wrong is
committed for which the actor can be held accountable.15 One is not allowed to exercise his right in a
manner which would cause unnecessary prejudice to another or if he would thereby offend morals or
good customs. Thus, a person should be protected only when he acts in the legitimate exercise of
his right, that is when he acts with prudence and good faith; but not when he acts with negligence or
abuse.16
Complementing the principle of abuse of rights are the provisions of Articles 20 and 21 of the Civil
Code which read, thus:
Art. 20. Every person who, contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.
Art. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals or good customs or public policy shall compensate the latter for the
damage.
The foregoing rules provide the legal bedrock for the award of damages to a party who
suffers damage whenever one commits an act in violation of some legal provision, or an
act which though not constituting a transgression of positive law, nevertheless violates
certain rudimentary rights of the party aggrieved.
In the case at bar, petitioners verbal reproach against respondent was certainly uncalled for
considering that by her own account nobody knew that she brought such kind and amount of jewelry
inside the paper bag.17 This being the case, she had no right to attack respondent with her
innuendos which were not merely inquisitive but outrightly accusatory. By openly accusing
respondent as the only person who went out of the room before the loss of the jewelry in the
presence of all the guests therein, and ordering that she be immediately bodily searched, petitioner
virtually branded respondent as the thief. True, petitioner had the right to ascertain the identity of the
malefactor, but to malign respondent without an iota of proof that she was the one who actually stole
the jewelry is an act which, by any standard or principle of law is impermissible. Petitioner had
willfully caused injury to respondent in a manner which is contrary to morals and good customs. Her
firmness and resolve to find her missing jewelry cannot justify her acts toward respondent. She did
not act with justice and good faith for apparently, she had no other purpose in mind but to prejudice
respondent. Certainly, petitioner transgressed the provisions of Article 19 in relation to Article 21 for
which she should be held accountable.

Owing to the rule that great weight and even finality is given to factual conclusions of the Court of
Appeals which affirm those of the trial court,18 we sustain the findings of the trial court and the
appellate court that respondents claim for actual damages has not been substantiated with
satisfactory evidence during the trial and must therefore be denied. To be recoverable, actual
damages must be duly proved with reasonable degree of certainty and the courts cannot rely on
speculation, conjecture or guesswork.19
Respondent, however, is clearly entitled to an award of moral damages. Moral damages may be
awarded whenever the defendants wrongful act or omission is the proximate cause of the plaintiffs
physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury20 in the cases specified or analogous to those
provided in Article 2219 of the Civil Code.21Though no proof of pecuniary loss is necessary in order
that moral damages may be adjudicated, courts are mandated to take into account all the
circumstances obtaining in the case and assess damages according to their discretion.22 Worthy of
note is that moral damages are not awarded to penalize the defendant,23 or to enrich a complainant,
but to enable the latter to obtain means, diversions or amusements that will serve to alleviate the
moral suffering he has undergone, by reason of defendants culpable action. In any case, award of
moral damages must be proportionate to the sufferings inflicted.24
Based on the foregoing jurisprudential pronouncements, we rule that the appellate court did not err
in awarding moral damages. Considering respondents social standing, and the fact that her
profession is based primarily on trust reposed in her by her clients, the seriousness of the
imputations made by petitioner has greatly tarnished her reputation and will in one way or the other,
affect her future dealings with her clients, the award of P100,000.00 as moral damages appears to
be a fair and reasonable assessment of respondents damages.
WHEREFORE, the instant Petition is DENIED. Costs against petitioner.
SO ORDERED.

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G.R. No. 180764

January 19, 2010

TITUS B. VILLANUEVA, Petitioner,

vs.
EMMA M. ROSQUETA, Respondent.
DECISION
ABAD, J.:
This case is about the right to recover damages for alleged abuse of right committed by a superior
public officer in preventing a subordinate from doing her assigned task and being officially
recognized for it.
The Facts and the Case
Respondent Emma M. Rosqueta (Rosqueta), formerly Deputy Commissioner of the Revenue
Collection and Monitoring Group of the Bureau of Customs (the Bureau), tendered her courtesy
resignation from that post on January 23, 2001, shortly after President Gloria Macapagal-Arroyo
assumed office. But five months later on June 5, 2001, she withdrew her resignation, claiming that
she enjoyed security of tenure and that she had resigned against her will on orders of her superior.1
Meantime, on July 13, 2001 President Arroyo appointed Gil Valera (Valera) to respondent
Rosquetas position. Challenging such appointment, Rosqueta filed a petition for prohibition, quo
warranto, and injunction against petitioner Titus B. Villanueva (Villanueva), then Commissioner of
Customs, the Secretary of Finance, and Valera with the Regional Trial Court2 (RTC) of Manila in Civil
Case 01-101539. On August 27, 2001 the RTC issued a temporary restraining order (TRO),
enjoining Villanueva and the Finance Secretary3 from implementing Valeras appointment. On
August 28, 2001 the trial court superseded the TRO with a writ of preliminary injunction. 4
Petitioner Villanueva, Valera, and the Secretary of Finance challenged the injunction order before
the Court of Appeals (CA) in CA-G.R. SP 66070. On September 14, 2001 the CA issued its own
TRO, enjoining the implementation of the RTCs injunction order. But the TRO lapsed after 60 days
and the CA eventually dismissed the petition before it.
On November 22, 2001 while the preliminary injunction in the quo warranto case was again in force,
petitioner Villanueva issued Customs Memorandum Order 40-2001, authorizing Valera to exercise
the powers and functions of the Deputy Commissioner.
During the Bureaus celebration of its centennial anniversary in February 2002, its special Panorama
magazine edition featured all the customs deputy commissioners, except respondent Rosqueta. The
souvenir program, authorized by the Bureaus Steering Committee headed by petitioner Villanueva
70 | P a g e

to be issued on the occasion, had a space where Rosquetas picture was supposed to be but it
instead stated that her position was "under litigation." Meanwhile, the commemorative billboard
displayed at the Bureaus main gate included Valeras picture but not Rosquetas.
On February 28, 2002 respondent Rosqueta filed a complaint5 for damages before the RTC of
Quezon City against petitioner Villanueva in Civil Case Q-02-46256, alleging that the latter
maliciously excluded her from the centennial anniversary memorabilia. Further, she claimed that he
prevented her from performing her duties as Deputy Commissioner, withheld her salaries, and
refused to act on her leave applications. Thus, she asked the RTC to award her P1,000,000.00 in
moral damages, P500,000.00 in exemplary damages, and P300,000.00 in attorneys fees and costs
of suit.
But the RTC dismissed6 respondent Rosquetas complaint, stating that petitioner Villanueva
committed no wrong and incurred no omission that entitled her to damages. The RTC found that
Villanueva had validly and legally replaced her as Deputy Commissioner seven months before the
Bureaus centennial anniversary.
But the CA reversed the RTCs decision,7 holding instead that petitioner Villanuevas refusal to
comply with the preliminary injunction order issued in the quo warranto case earned for Rosqueta
the right to recover moral damages from him.8 Citing the abuse of right principle, the RTC said that
Villanueva acted maliciously when he prevented Rosqueta from performing her duties, deprived her
of salaries and leaves, and denied her official recognition as Deputy Commissioner by excluding her
from the centennial anniversary memorabilia. Thus, the appellate court ordered Villanueva to
pay P500,000.00 in moral damages, P200,000.00 in exemplary damages andP100,000.00 in
attorneys fees and litigation expenses. With the denial of his motion for reconsideration, Villanueva
filed this petition for review on certiorari under Rule 45.
The Issue Presented
The key issue presented in this case is whether or not the CA erred in holding petitioner Villanueva
liable in damages to respondent Rosqueta for ignoring the preliminary injunction order that the RTC
issued in the quo warranto case (Civil Case 01-101539), thus denying her of the right to do her job
as Deputy Commissioner of the Bureau and to be officially recognized as such public officer.
The Courts Ruling
Under the abuse of right principle found in Article 19 of the Civil Code,9 a person must, in the
exercise of his legal right or duty, act in good faith. He would be liable if he instead acts in bad faith,
with intent to prejudice another. Complementing this principle are Articles 20 10 and 2111 of the Civil
Code which grant the latter indemnity for the injury he suffers because of such abuse of right or
duty.12

Petitioner Villanueva claims that he merely acted on advice of the Office of the Solicitor General
(OSG) when he allowed Valera to assume the office as Deputy Commissioner since respondent
Rosqueta held the position merely in a temporary capacity and since she lacked the Career
Executive Service eligibility required for the job.
But petitioner Villanueva cannot seek shelter in the alleged advice that the OSG gave him. Surely, a
government official of his rank must know that a preliminary injunction order issued by a court of law
had to be obeyed, especially since the question of Valeras right to replace respondent Rosqueta
had not yet been properly resolved.
That petitioner Villanueva ignored the injunction shows bad faith and intent to spite Rosqueta who
remained in the eyes of the law the Deputy Commissioner. His exclusion of her from the centennial
anniversary memorabilia was not an honest mistake by any reckoning. Indeed, he withheld her
salary and prevented her from assuming the duties of the position. As the Court said in Amonoy v.
Spouses Gutierrez,13 a partys refusal to abide by a court order enjoining him from doing an act,
otherwise lawful, constitutes an abuse and an unlawful exercise of right.1avvphi1
That respondent Rosqueta was later appointed Deputy Commissioner for another division of the
Bureau is immaterial. While such appointment, when accepted, rendered the quo warranto case
moot and academic, it did not have the effect of wiping out the injuries she suffered on account of
petitioner Villanuevas treatment of her. The damage suit is an independent action.
The CA correctly awarded moral damages to respondent Rosqueta. Such damages may be
awarded when the defendants transgression is the immediate cause of the plaintiffs anguish14 in
the cases specified in Article 221915 of the Civil Code.16
Here, respondent Rosquetas colleagues and friends testified that she suffered severe anxiety on
account of the speculation over her employment status.17 She had to endure being referred to as a
"squatter" in her workplace. She had to face inquiries from family and friends about her exclusion
from the Bureaus centennial anniversary memorabilia. She did not have to endure all these affronts
and the angst and depression they produced had Villanueva abided in good faith by the courts order
in her favor. Clearly, she is entitled to moral damages.
The Court, however, finds the award of P500,000.00 excessive. As it held in Philippine Commercial
International Bank v. Alejandro,18 moral damages are not a bonanza. They are given to ease the
defendants grief and suffering. Moral damages should reasonably approximate the extent of hurt
caused and the gravity of the wrong done. Here, that would be P200,000.00.
The Court affirms the grant of exemplary damages by way of example or correction for the public
good but, in line with the same reasoning, reduces it to P50,000.00. Finally, the Court affirms the
award of attorneys fees and litigation expenses but reduces it to P50,000.00.

71 | P a g e

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals
dated April 30, 2007 in CA-G.R. CV 85931 with MODIFICATION in that petitioner Titus B. Villanueva
is ORDERED to pay respondent Emma M. Rosqueta the sum of P200,000.00 in moral
damages, P50,000.00 in exemplary damages, and P50,000.00 in attorneys fees and litigation
expenses.
SO ORDERED.

G.R. No. 171365

October 6, 2010

ERMELINDA C. MANALOTO, AURORA J. CIFRA, FLORDELIZA J. ARCILLA, LOURDES J.

CATALAN, ETHELINDA J. HOLT, BIENVENIDO R. JONGCO, ARTEMIO R. JONGCO, JR. and
JOEL JONGCO,Petitioners,
vs.
ISMAEL VELOSO III, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before Us is a Petition for Review on Certiorari of the Decision1 dated January 31, 2006 of the Court
Appeals in CA-G.R. CV No. 82610, which affirmed with modification the Resolution2 dated
September 2, 2003 of Branch 227 of the Regional Trial Court (RTC-Branch 227) of Quezon City in
Civil Case No. Q-02-48341.
We partly reproduce below the facts of the case as culled by the Court of Appeals from the records:
This case is an off-shoot of an unlawful detainer case filed by [herein petitioners] Ermelinda C.
Manaloto, Aurora J. Cifra, Flordeliza J. Arcilla, Lourdes J. Catalan, Ethelinda J. Holt, Bienvenido R.
Jongco, Artemio R. Jongco, Jr. and Joel Jongco against [herein respondent]. In said complaint for
unlawful detainer, it was alleged that they are the lessors of a residential house located at No. 42 Big
Horseshoe Drive, Horseshoe Village, Quezon City [subject property] which was leased to
[respondent] at a monthly rental of P17,000.00. The action was instituted on the ground of
[respondent's] failure to pay rentals from May 23, 1997 to December 22, 1998 despite repeated
demands. [Respondent] denied the non-payment of rentals and alleged that he made an advance
payment ofP825,000.00 when he paid for the repairs done on the leased property.

When both parties moved for the reconsideration of the RTC decision, the RTC issued an Order
dated February 23, 2001 modifying its previous ruling by increasing the value of the improvements
from P120,000.00 toP800,000.00.
After successive appeals to the Court of Appeals and the Supreme Court, the decision of the RTC
dated November 29, 2000 which reversed the decision of the MeTC, became final and executory. 3
Whilst respondent's appeal of the Metropolitan Trial Court (MeTC) judgment in the unlawful detainer
case was pending before the RTC-Branch 88, respondent filed before the RTC-Branch 227 on
November 26, 2002 a Complaint for Breach of Contract and Damages4 against the petitioners,
docketed as Civil Case No. Q-02-48341. The said complaint alleged two causes of action. The first
cause of action was for damages because the respondent supposedly suffered embarrassment and
humiliation when petitioners distributed copies of the above-mentioned MeTC decision in the
unlawful detainer case to the homeowners of Horseshoe Village while respondent's appeal was still
pending before the Quezon City RTC-Branch 88. The second cause of action was for breach of
contract since petitioners, as lessors, failed to make continuing repairs on the subject property to
preserve and keep it tenantable. Thus, respondent sought the following from the court a quo:
PRAYER
WHEREFORE, premises considered, it is respectfully prayed that after hearing the court render a
decision against the [herein petitioners] and in favor of the [herein respondent] by 1. Ordering [petitioners] to pay [respondent] the following amounts:
a) P1,500,000.00 as moral damages and consequential damages;
b) P500,000.00 as exemplary damages;

After trial, the Metropolitan Trial Court (MeTC) decided in favor of [petitioners] by ordering
[respondent] to (a) vacate the premises at No. 42 Big Horseshoe Drive, Horseshoe Village, Quezon
City; (b) pay [petitioners] the sum of P306,000.00 corresponding to the rentals due from May 23,
1997 to November 22, 1998, and the sum ofP17,000.00 a month thereafter until [respondent]
vacates the premises; and (c) pay [petitioners] the sum ofP5,000.00 as attorney's fees.

c) P425,000.00 representing the difference of the expenses of the improvements

of P825,000.00 andP400,000.00 pursuant to Art. 1678 of the Civil Code;

On appeal to the Regional Trial Court (RTC) [Branch 88, Quezon City], the MeTC decision was
reversed. [Respondent] was ordered to pay arrearages from May 23, 1997 up to the date of the
decision but he was also given an option to choose between staying in the leased property or
vacating the same, subject to the reimbursement by [petitioners] of one-half of the value of the
improvements which it found to be in the amount ofP120,000.00. [Respondent] was also given the
right to remove said improvements pursuant to Article 1678 of the Civil Code, should [petitioners]
refuse to pay P60,000.00.

e) P250,000.00 as compensation for the [respondent's] labor and efforts in overseeing

and attending the needs of contractors the repair/renovation of the leased premises;

72 | P a g e

d) P594,000.00 representing interest for three (3) years from 1998 to 2000 on
the P825,000.00 advanced by the [respondent] at the rate of 24% per annum;

f) P250,000.00, plus 20% of all recoveries from [petitioners] and P2,500.00 per hearing as
attorney's fees;

g) Cost of suit.
[Respondent] further prays for such other reliefs and remedies which are just and equitable under
the premises.5
The petitioners filed an Omnibus Motion6 on February 18, 2003 praying for, among other reliefs, the
dismissal of respondent's complaint in Civil Case No. Q-02-48341. Petitioners argued that
respondent had no cause of action against them because the MeTC decision in the unlawful
detainer case was a matter of public record and its disclosure to the public violated no law or any
legal right of the respondent. Moreover, petitioners averred that the respondent's present Complaint
for Breach of Contract and Damages was barred by prior judgment since it was a mere replication of
respondent's Answer with Compulsory Counterclaim in the unlawful detainer case before the MeTC.
The said unlawful detainer case was already judicially decided with finality.
On September 2, 2003, the RTC-Branch 227 issued a Resolution dismissing respondent's complaint
in Civil Case No. Q-02-48341 for violating the rule against splitting of cause of action, lack of
jurisdiction, and failure to disclose the pendency of a related case. The RTC-Branch 227 adjudged
that Civil Case No. Q-02-48341 involved the same facts, parties, and causes of action as those in
the unlawful detainer case, and the MeTC had already properly taken cognizance of the latter case.
Respondent received a copy of the RTC-Branch 227 decision in Civil Case No. Q-02-48341 on
September 26, 2003. He filed a Motion for Reconsideration7 of said judgment on October 10, 2003,
which RTC-Branch 227 denied in an Order8 dated December 30, 2003.
Respondent received a copy of the RTC-Branch 227 order denying his Motion for Reconsideration
on February 20, 2004, and he filed his Notice of Appeal9 on March 1, 2004. However, the RTCBranch 227, in an Order10 dated March 23, 2004, dismissed respondent's appeal for being filed out
of time.
Respondent received a copy of the RTC-Branch 27 order dismissing his appeal on April 30, 2004
and he filed a Motion for Reconsideration11 of the same on May 3, 2004. The RTC-Branch 227, in
another Order12 dated May 31, 2004, granted respondent's latest motion because it was "convinced
that it is but appropriate and fair to both parties that this matter of whether or not the Appeal was
filed on time, be resolved by the appellate court rather than by this Court." The RTC-Branch 227
then ordered that the records of the case be forwarded as soon as possible to the Court of Appeals
for further proceedings.
The Court of Appeals, in a Resolution13 dated February 8, 2005, resolved to give due course to
respondent's appeal. Said appeal was docketed as CA-G.R. CV No. 82610.
On January 31, 2006, the Court of Appeals rendered its Decision in CA-G.R. CV No. 82610. The
Court of Appeals fully agreed with the RTC-Branch 227 in dismissing respondent's second cause of

73 | P a g e

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

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

74 | P a g e

The petition is partly meritorious.

We note, at the outset, that the propriety of the dismissal by the RTC-Branch 227 of respondent's
second cause of action against petitioners (e.g., for breach of contract) was no longer disputed by
the parties. Thus, the present appeal pertains only to respondent's first cause of action (e.g., for
damages), and in connection therewith, we are called upon to resolve the following issues: (1)
whether respondent timely filed his appeal of the Resolution dated September 2, 2003 of the RTCBranch 227 before the Court of Appeals; and (2) whether respondent is entitled to the award of
moral and exemplary damages.
We answer the first issue on the timeliness of respondent's appeal affirmatively.
Jurisprudence has settled the "fresh period rule," according to which, an ordinary appeal from the
RTC to the Court of Appeals, under Section 3 of Rule 41 of the Rules of Court, shall be taken within
fifteen (15) days either from receipt of the original judgment of the trial court or from receipt of the
final order of the trial court dismissing or denying the motion for new trial or motion for
reconsideration. In Sumiran v. Damaso,17 we presented a survey of the cases applying the fresh
period rule:
As early as 2005, the Court categorically declared in Neypes v. Court of Appeals that by virtue of the
power of the Supreme Court to amend, repeal and create new procedural rules in all courts, the
Court is allowing a fresh period of 15 days within which to file a notice of appeal in the RTC, counted
from receipt of the order dismissing or denying a motion for new trial or motion for reconsideration.
This would standardize the appeal periods provided in the Rules and do away with the confusion as
to when the 15-day appeal period should be counted. Thus, the Court stated:
To recapitulate, a party-litigant may either file his notice of appeal within 15 days from receipt of the
Regional Trial Court's decision or file it within 15 days from receipt of the order (the "final order")
denying his motion for new trial or motion for reconsideration. Obviously, the new 15-day period may
be availed of only if either motion is filed; otherwise, the decision becomes final and executory after
the lapse of the original appeal period provided in Rule 41, Section 3.
The foregoing ruling of the Court was reiterated in Makati Insurance Co., Inc. v. Reyes, to wit:
Propitious to petitioner is Neypes v. Court of Appeals, promulgated on 14 September 2005 while the
present Petition was already pending before us. x x x.
xxxx
With the advent of the "fresh period rule" parties who availed themselves of the remedy of motion for
reconsideration are now allowed to file a notice of appeal within fifteen days from the denial of that
motion.

The "fresh period rule" is not inconsistent with Rule 41, Section 3 of the Revised Rules of Court
which states that the appeal shall be taken "within fifteen (15) days from notice of judgment or final
order appealed from." The use of the disjunctive word "or" signifies disassociation and
independence of one thing from another. It should, as a rule, be construed in the sense which it
ordinarily implies. Hence, the use of "or" in the above provision supposes that the notice of appeal
may be filed within 15 days from the notice of judgment or within 15 days from notice of the "final
order," x x x.

The determinative issue is whether the "fresh period" rule announced in Neypes could retroactively
apply in cases where the period for appeal had lapsed prior to 14 September 2005 when Neypes
was promulgated. That question may be answered with the guidance of the general rule that
procedural laws may be given retroactive effect to actions pending and undetermined at the time of
their passage, there being no vested rights in the rules of procedure. Amendments to procedural
rules are procedural or remedial in character as they do not create new or remove vested rights, but
only operate in furtherance of the remedy or confirmation of rights already existing.19(Emphases
supplied.)

xxxx
The "fresh period rule" finally eradicates the confusion as to when the 15-day appeal period should
be counted - from receipt of notice of judgment or from receipt of notice of "final order" appealed
from.
Taking our bearings from Neypes, in Sumaway v. Urban Bank, Inc., we set aside the denial of a
notice of appeal which was purportedly filed five days late. With the fresh period rule, the 15-day
period within which to file the notice of appeal was counted from notice of the denial of the therein
petitioner's motion for reconsideration.
We followed suit in Elbia v. Ceniza, wherein we applied the principle granting a fresh period of 15
days within which to file the notice of appeal, counted from receipt of the order dismissing a motion
for new trial or motion for reconsideration or any final order or resolution.
Thereafter, in First Aqua Sugar Traders, Inc. v. Bank of the Philippine Islands, we held that a partylitigant may now file his notice of appeal either within fifteen days from receipt of the original decision
or within fifteen days from the receipt of the order denying the motion for reconsideration.
In De los Santos v. Vda. de Mangubat, we applied the same principle of "fresh period rule,"
expostulating that procedural law refers to the adjective law which prescribes rules and forms of
procedure in order that courts may be able to administer justice. Procedural laws do not come within
the legal conception of a retroactive law, or the general rule against the retroactive operation of
statutes. The "fresh period rule" is irrefragably procedural, prescribing the manner in which the
appropriate period for appeal is to be computed or determined and, therefore, can be made
applicable to actions pending upon its effectivity, such as the present case, without danger of
violating anyone else's rights.18 (Emphases supplied.)
Also in Sumiran, we recognized the retroactive application of the fresh period rule to cases pending
and undetermined upon its effectivity:

In the case before us, respondent received a copy of the Resolution dated September 2, 2003 of the
RTC-Branch 227 dismissing his complaint in Civil Case No. Q-02-48341 on September 26, 2003.
Fourteen days thereafter, on October 10, 2003, respondent filed a Motion for Reconsideration of
said resolution. The RTC-Branch 227 denied respondent's Motion for Reconsideration in an Order
dated December 30, 2003, which the respondent received on February 20, 2004. On March 1, 2004,
just after nine days from receipt of the order denying his Motion for Reconsideration, respondent
already filed his Notice of Appeal. Clearly, under the fresh period rule, respondent was able to file his
appeal well-within the prescriptive period of 15 days, and the Court of Appeals did not err in giving
due course to said appeal in CA-G.R. CV No. 82610.
We likewise agree with the Court of Appeals that the RTC-Branch 227 should not have dismissed
respondent's complaint for damages on the ground of failure to state a cause of action.
According to Rule 2, Section 2 of the Rules of Court, a cause of action is the act or omission by
which a party violates a right of another.
When the ground for dismissal is that the complaint states no cause of action, such fact can be
determined only from the facts alleged in the complaint and from no other, and the court cannot
consider other matters aliunde. The test, therefore, is whether, assuming the allegations of fact in
the complaint to be true, a valid judgment could be rendered in accordance with the prayer stated
therein.20
Respondent made the following allegations in support of his claim for damages against petitioners:
FIRST CAUSE OF ACTION
28. After the promulgation of the Metropolitan Trial Court of its Decision dated August 3, 1999,
ordering the [herein respondent] and all person claiming rights under him to (a) Vacate the leased premises;

The retroactivity of the Neypes rule in cases where the period for appeal had lapsed prior to the date
of promulgation of Neypes on September 14, 2005, was clearly explained by the Court in Fil-Estate
Properties, Inc. v. Homena-Valencia, stating thus:

75 | P a g e

(b) pay the [herein petitioners] the sum of P306,000.00 as unpaid rentals from May 23,
1997 to November 22, 1998; and

(c) pay the sum of P5,000.00 as attorneys fees;

But while said Decision was still pending appeal with the Regional Trial Court, the [petitioners],
through [petitioner] Manaloto, already distributed copies of said Decision to some of the
homeowners of Horseshoe Village, who personally know the [respondent]. This act is a direct
assault or character assassination on the part of the [respondent] because as stated in the said
decision, [respondent] has been staying in the premises but did not or refused to pay his monthly
rentals for a long period of time when in truth and in fact was untrue.
29. That from the time the said decision was distributed to said members homeowners, the
[respondent] became the subject of conversation or talk of the town and by virtue of which
[respondent's] good name within the community or society where he belongs was greatly damaged;
his reputation was besmirched; [respondent] suffered sleepless night and serious anxiety.
[Respondent], who is the grandson of the late Senator Jose Veloso and Congressman Ismael
Veloso, was deprived of political career and to start with was to run as candidate for Barangay
Chairman within their area which was being offered to him by the homeowners but this offer has
started to fade and ultimately totally vanished after the distribution of said Decision. Damages to his
good names and reputations and other damages which he suffered as a consequence thereof, may
be reasonably compensated for at least P1,500,000.00 as moral and consequential damages.
30. In order to deter [petitioners] and others from doing as abovementioned, [petitioners] should
likewise be assessed exemplary damages in the amount of P500,000.00.21
A cause of action (for damages) exists if the following elements are present: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the
part of the named defendant to respect or not to violate such right; and (3) an act or omission on the
part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of
defendant to the plaintiff for which the latter may maintain an action for recovery of damages. 22 We
find that all three elements exist in the case at bar. Respondent may not have specifically identified
each element, but it may be sufficiently determined from the allegations in his complaint.

The principle of abuse of rights stated in the above article, departs from the classical theory that "he
who uses a right injures no one." The modern tendency is to depart from the classical and traditional
theory, and to grant indemnity for damages in cases where there is an abuse of rights, even when
the act is not illicit.
Article 19 was intended to expand the concept of torts by granting adequate legal remedy for the
untold number of moral wrongs which is impossible for human foresight to provide specifically in
statutory law. If mere fault or negligence in one's acts can make him liable for damages for injury
caused thereby, with more reason should abuse or bad faith make him liable. The absence of good
faith is essential to abuse of right. Good faith is an honest intention to abstain from taking any
unconscientious advantage of another, even through the forms or technicalities of the law, together
with an absence of all information or belief of fact which would render the transaction
unconscientious. In business relations, it means good faith as understood by men of affairs.
While Article 19 may have been intended as a mere declaration of principle, the "cardinal law on
human conduct" expressed in said article has given rise to certain rules, e.g. that where a person
exercises his rights but does so arbitrarily or unjustly or performs his duties in a manner that is not in
keeping with honesty and good faith, he opens himself to liability. The elements of an abuse of rights
under Article 19 are: (1) there is a legal right or duty; (2) which is exercised in bad faith; (3) for the
sole intent of prejudicing or injuring another.25
Petitioners are also expected to respect respondent's "dignity, personality, privacy and peace of
mind" under Article 26 of the Civil Code, which provides:
ART. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his
neighbors and other persons. The following and similar acts, though they may not constitute a
criminal offense, shall produce a cause of action for damages, prevention and other relief:
(1) Prying into the privacy of another's residence;
(2) Meddling with or disturbing the private life or family relations of another;

First, respondent filed the complaint to protect his good character, name, and reputation. Every man
has a right to build, keep, and be favored with a good name. This right is protected by law with the
recognition of slander and libel as actionable wrongs, whether as criminal offenses or tortuous
conduct.23
Second, petitioners are obliged to respect respondent's good name even though they are opposing
parties in the unlawful detainer case. As Article 19 of the Civil Code requires, "[e]very person must,
in the exercise of his rights and in the performance of his duties, act with justice, give everyone his
due, and observe honesty and good faith." A violation of such principle constitutes an abuse of
rights, a tortuous conduct. We expounded in Sea Commercial Company, Inc. v. Court of
Appeals24 that:

76 | P a g e

(3) Intriguing to cause another to be alienated from his friends;

(4) Vexing or humiliating another on account of his religious beliefs, lowly station in life,
place of birth, physical defect, or other personal condition.
Thus, Article 2219(10) of the Civil Code allows the recovery of moral damages for acts and actions
referred to in Article 26, among other provisions, of the Civil Code.
In Concepcion v. Court of Appeals,26 we explained that:

The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil law. The Code
Commission stressed in no uncertain terms that the human personality must be exalted. The
sacredness of human personality is a concomitant consideration of every plan for human
amelioration. The touchstone of every system of law, of the culture and civilization of every country,
is how far it dignifies man. If the statutes insufficiently protect a person from being unjustly
humiliated, in short, if human personality is not exalted - then the laws are indeed defective. Thus,
under this article, the rights of persons are amply protected, and damages are provided for violations
of a person's dignity, personality, privacy and peace of mind.
It is petitioner's position that the act imputed to him does not constitute any of those enumerated in
Arts. 26 and 2219. In this respect, the law is clear. The violations mentioned in the codal provisions
are not exclusive but are merely examples and do not preclude other similar or analogous acts.
Damages therefore are allowable for actions against a person's dignity, such as profane, insulting,
humiliating, scandalous or abusive language. Under Art. 2217 of the Civil Code, moral damages
which include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury, although incapable of
pecuniary computation, may be recovered if they are the proximate result of the defendant's
wrongful act or omission.27
And third, respondent alleged that the distribution by petitioners to Horseshoe Village homeowners
of copies of the MeTC decision in the unlawful detainer case, which was adverse to respondent and
still on appeal before the RTC-Branch 88, had no apparent lawful or just purpose except to humiliate
respondent or assault his character. As a result, respondent suffered damages - becoming the talk of
the town and being deprived of his political career.1avvphi1
Petitioners reason that respondent has no cause of action against them since the MeTC decision in
the unlawful detainer case was part of public records.
It is already settled that the public has a right to see and copy judicial records and
documents.28 However, this is not a case of the public seeking and being denied access to judicial
records and documents. The controversy is rooted in the dissemination by petitioners of the MeTC
judgment against respondent to Horseshoe Village homeowners, who were not involved at all in the
unlawful detainer case, thus, purportedly affecting negatively respondent's good name and
reputation among said homeowners. The unlawful detainer case was a private dispute between
petitioners and respondent, and the MeTC decision against respondent was then still pending
appeal before the RTC-Branch 88, rendering suspect petitioners' intentions for distributing copies of
said MeTC decision to non-parties in the case. While petitioners were free to copy and distribute
such copies of the MeTC judgment to the public, the question is whether they did so with the intent
of humiliating respondent and destroying the latter's good name and reputation in the community.
Nevertheless, we further declare that the Court of Appeals erred in already awarding moral and
exemplary damages in respondent's favor when the parties have not yet had the chance to present

77 | P a g e

any evidence before the RTC-Branch 227. In civil cases, he who alleges a fact has the burden of
proving it by a preponderance of evidence. It is incumbent upon the party claiming affirmative relief
from the court to convincingly prove its claim. Bare allegations, unsubstantiated by evidence are not
equivalent to proof under our Rules. In short, mere allegations are not evidence. 29
At this point, the finding of the Court of Appeals of bad faith and malice on the part of petitioners has
no factual basis. Good faith is presumed and he who alleges bad faith has the duty to prove the
same. Good faith refers to the state of the mind which is manifested by the acts of the individual
concerned. It consists of the intention to abstain from taking an unconscionable and unscrupulous
advantage of another. Bad faith, on the other hand, does not simply connote bad judgment to simple
negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong,
a breach of known duty due to some motive or interest or ill will that partakes of the nature of fraud.
Malice connotes ill will or spite and speaks not in response to duty. It implies an intention to do
ulterior and unjustifiable harm.30
We cannot subscribe to respondent's argument that there is no more need for the presentation of
evidence by the parties since petitioners, in moving for the dismissal of respondent's complaint for
damages, hypothetically admitted respondent's allegations. The hypothetical admission of
respondent's allegations in the complaint only goes so far as determining whether said complaint
should be dismissed on the ground of failure to state a cause of action. A finding that the complaint
sufficiently states a cause of action does not necessarily mean that the complaint is meritorious; it
shall only result in the reinstatement of the complaint and the hearing of the case for presentation of
evidence by the parties.
WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The Decision
dated January 31, 2006 of the Court of Appeals in CA-G.R. CV No. 82610 is AFFIRMED WITH
MODIFICATIONS. The award of moral and exemplary damages made by the Court of Appeals in
favor of respondent Ismael Veloso III is DELETED. The complaint of respondent Ismael Veloso III in
Civil Case No. Q-02-48341 is hereby REINSTATED before Branch 227 of the Regional Trial Court of
Quezon City only in so far as the first cause of action is concerned. The said court is DIRECTED to
hear and dispose of the case with dispatch.
SO ORDERED.

G.R. No. L-44748 August 29, 1986

RADIO COMMUNICATIONS OF THE PHILS., INC. (RCPI). petitioner,
vs.
COURT OF APPEALS and LORETO DIONELA, respondents.

operator manned the teletype machine which automatically receives telegrams being transmitted.
The said telegram was detached from the machine and placed inside a sealed envelope and
delivered to plaintiff, obviously as is. The additional words in Tagalog were never noticed and were
included in the telegram when delivered.
The trial court in finding for the plaintiff ruled as follows:

O. Pythogoras Oliver for respondents.

PARAS, J.:
Before Us, is a Petition for Review by certiorari of the decision of the Court of Appeals, modifying the
decision of the trial court in a civil case for recovery of damages against petitioner corporation by
reducing the award to private respondent Loreto Dionela of moral damages from P40,000 to
Pl5,000, and attorney's fees from P3,000 to P2,000.
The basis of the complaint against the defendant corporation is a telegram sent through its Manila
Office to the offended party, Loreto Dionela, reading as follows:

The defendant is sued directly not as an employer. The business of the

defendant is to transmit telegrams. It will open the door to frauds and allow the
defendant to act with impunity if it can escape liability by the simple expedient
of showing that its employees acted beyond the scope of their assigned tasks.

176 AS JR 1215PM 9 PAID MANDALUYONG JUL 22-66 LORETO DIONELA

CABANGAN LEGASPI CITY

The liability of the defendant is predicated not only on Article 33 of the Civil
Code of the Philippines but on the following articles of said Code:

WIRE ARRIVAL OF CHECK FER

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.

LORETO DIONELA-CABANGAN-WIRE ARRIVAL OF CHECK-PER

115 PM
SA IYO WALANG PAKINABANG DUMATING KA DIYAN-WALA-KANG
PADALA DITO KAHIT BULBUL MO
(p. 19, Annex "A")
Plaintiff-respondent Loreto Dionela alleges that the defamatory words on the telegram sent to him
not only wounded his feelings but also caused him undue embarrassment and affected adversely his
business as well because other people have come to know of said defamatory words. Defendant
corporation as a defense, alleges that the additional words in Tagalog was a private joke between
the sending and receiving operators and that they were not addressed to or intended for plaintiff and
therefore did not form part of the telegram and that the Tagalog words are not defamatory. The
telegram sent through its facilities was received in its station at Legaspi City. Nobody other than the

78 | P a g e

There is no question that the additional words in Tagalog are libelous. They
clearly impute a vice or defect of the plaintiff. Whether or not they were
intended for the plaintiff, the effect on the plaintiff is the same. Any person
reading the additional words in Tagalog will naturally think that they refer to the
addressee, the plaintiff. There is no indication from the face of the telegram that
the additional words in Tagalog were sent as a private joke between the
operators of the defendant.

ART. 20.-Every person who, contrary to law, wilfully or negligently causes

damage to another, shall indemnify the latter for the same.
There is sufficient publication of the libelous Tagalog words. The office file of
the defendant containing copies of telegrams received are open and held
together only by a metal fastener. Moreover, they are open to view and
inspection by third parties.
It follows that the plaintiff is entitled to damages and attorney's fees. The
plaintiff is a businessman. The libelous Tagalog words must have affected his
business and social standing in the community. The Court fixes the amount of
P40,000.00 as the reasonable amount of moral damages and the amount of
P3,000.00 as attorney's fee which the defendant should pay the plaintiff. (pp.
15-16, Record on Appeal)

The respondent appellate court in its assailed decision confirming the aforegoing findings of the
lower court stated:

III
The Honorable Court of Appeals erred in holding that the liability of petitionercompany-employer is predicated on Articles 19 and 20 of the Civil Code,
Articles on Human Relations.

The proximate cause, therefore, resulting in injury to appellee, was the failure
of the appellant to take the necessary or precautionary steps to avoid the
occurrence of the humiliating incident now complained of. The company had
not imposed any safeguard against such eventualities and this void in its
operating procedure does not speak well of its concern for their clientele's
interests. Negligence here is very patent. This negligence is imputable to
appellant and not to its employees.
The claim that there was no publication of the libelous words in Tagalog is also
without merit. The fact that a carbon copy of the telegram was filed among
other telegrams and left to hang for the public to see, open for inspection by a
third party is sufficient publication. It would have been otherwise perhaps had
the telegram been placed and kept in a secured place where no one may have
had a chance to read it without appellee's permission.

The Honorable Court of Appeals erred in awarding Atty's. fees. (p. 4, Record)
Petitioner's contentions do not merit our consideration. The action for damages was filed in the lower
court directly against respondent corporation not as an employer subsidiarily liable under the
provisions of Article 1161 of the New Civil Code in relation to Art. 103 of the Revised Penal Code.
The cause of action of the private respondent is based on Arts. 19 and 20 of the New Civil Code
(supra). As well as on respondent's breach of contract thru the negligence of its own employees. 1

ASSIGNMENT OF ERRORS

Petitioner is a domestic corporation engaged in the business of receiving and transmitting

messages. Everytime a person transmits a message through the facilities of the petitioner, a
contract is entered into. Upon receipt of the rate or fee fixed, the petitioner undertakes to transmit
the message accurately. There is no question that in the case at bar, libelous matters were included
in the message transmitted, without the consent or knowledge of the sender. There is a clear case of
breach of contract by the petitioner in adding extraneous and libelous matters in the message sent
to the private respondent. As a corporation, the petitioner can act only through its employees. Hence
the acts of its employees in receiving and transmitting messages are the acts of the petitioner. To
hold that the petitioner is not liable directly for the acts of its employees in the pursuit of petitioner's
business is to deprive the general public availing of the services of the petitioner of an effective and
adequate remedy. In most cases, negligence must be proved in order that plaintiff may recover.
However, since negligence may be hard to substantiate in some cases, we may apply the doctrine
of RES IPSA LOQUITUR (the thing speaks for itself), by considering the presence of facts or
circumstances surrounding the injury.

WHEREFORE, premises considered, the judgment of the appellate court is hereby AFFIRMED.

The Honorable Court of Appeals erred in holding that Petitioner-employer

should answer directly and primarily for the civil liability arising from the criminal
act of its employee.

SO ORDERED.

The additional Tagalog words at the bottom of the telegram are, as correctly
found by the lower court, libelous per se, and from which malice may be
presumed in the absence of any showing of good intention and justifiable
motive on the part of the appellant. The law implies damages in this instance
(Quemel vs. Court of Appeals, L-22794, January 16, 1968; 22 SCRA 44). The
award of P40,000.00 as moral damages is hereby reduced to P15,000.00 and
for attorney's fees the amount of P2,000.00 is awarded. (pp. 22-23, record)
After a motion for reconsideration was denied by the appellate court, petitioner came to Us with the
following:

II
The Honorable Court of Appeals erred in holding that there was sufficient
publication of the alleged libelous telegram in question, as contemplated by law
on libel.
79 | P a g e

IV

G.R. No. 168512

March 20, 2007

ORLANDO D. GARCIA, JR., doing business under the name and style COMMUNITY
DIAGNOSTIC CENTER and BU CASTRO,1 Petitioners,
vs.
RANIDA D. SALVADOR and RAMON SALVADOR, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review2 under Rule 45 of the Rules of Court assailing the February 27, 2004
Decision3 of the Court of Appeals in CA-G.R. CV No. 58668 finding petitioner Orlando D. Garcia
liable for gross negligence; and its June 16, 2005 Resolution4 denying petitioners motion for
reconsideration.
On October 1, 1993, respondent Ranida D. Salvador started working as a trainee in the Accounting
Department of Limay Bulk Handling Terminal, Inc. (the Company). As a prerequisite for regular
employment, she underwent a medical examination at the Community Diagnostic Center (CDC).
Garcia who is a medical technologist, conducted the HBs Ag (Hepatitis B Surface Antigen) test and
on October 22, 1993, CDC issued the test result5 indicating that Ranida was "HBs Ag: Reactive."
The result bore the name and signature of Garcia as examiner and the rubber stamp signature of
Castro as pathologist.
When Ranida submitted the test result to Dr. Sto. Domingo, the Company physician, the latter
apprised her that the findings indicated that she is suffering from Hepatitis B, a liver disease. Thus,
based on the medical report6submitted by Sto. Domingo, the Company terminated Ranidas
employment for failing the physical examination.7
When Ranida informed her father, Ramon, about her ailment, the latter suffered a heart attack and
was confined at the Bataan Doctors Hospital. During Ramons confinement, Ranida underwent
another HBs Ag test at the said hospital and the result8 indicated that she is non-reactive. She
informed Sto. Domingo of this development but was told that the test conducted by CDC was more
reliable because it used the Micro-Elisa Method.
Thus, Ranida went back to CDC for confirmatory testing, and this time, the Anti-HBs test conducted
on her indicated a "Negative" result.9
Ranida also underwent another HBs Ag test at the Bataan Doctors Hospital using the Micro-Elisa
Method. The result indicated that she was non-reactive.10

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Ranida submitted the test results from Bataan Doctors Hospital and CDC to the Executive Officer of
the Company who requested her to undergo another similar test before her re-employment would be
considered. Thus, CDC conducted another HBs Ag test on Ranida which indicated a "Negative"
result.11 Ma. Ruby G. Calderon, Med-Tech Officer-in-Charge of CDC, issued a Certification
correcting the initial result and explaining that the examining medical technologist (Garcia)
interpreted the delayed reaction as positive or reactive.12
Thereafter, the Company rehired Ranida.
On July 25, 1994, Ranida and Ramon filed a complaint13 for damages against petitioner Garcia and
a purportedly unknown pathologist of CDC, claiming that, by reason of the erroneous interpretation
of the results of Ranidas examination, she lost her job and suffered serious mental anxiety, trauma
and sleepless nights, while Ramon was hospitalized and lost business opportunities.
On September 26, 1994, respondents amended their complaint14 by naming Castro as the "unknown
pathologist."
Garcia denied the allegations of gross negligence and incompetence and reiterated the scientific
explanation for the "false positive" result of the first HBs Ag test in his December 7, 1993 letter to the
respondents.15
For his part, Castro claimed that as pathologist, he rarely went to CDC and only when a case was
referred to him; that he did not examine Ranida; and that the test results bore only his rubber-stamp
signature.
On September 1, 1997,16 the trial court dismissed the complaint for failure of the respondents to
present sufficient evidence to prove the liability of Garcia and Castro. It held that respondents should
have presented Sto. Domingo because he was the one who interpreted the test result issued by
CDC. Likewise, respondents should have presented a medical expert to refute the testimonies of
Garcia and Castro regarding the medical explanation behind the conflicting test results on Ranida. 17
Respondents appealed to the Court of Appeals which reversed the trial courts findings, the
dispositive portion of which states:
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE and another one entered
ORDERING defendant-appellee Orlando D. Garcia, Jr. to pay plaintiff-appellant Ranida D. Salvador
moral damages in the amount of P50,000.00, exemplary damages in the amount of P50,000.00 and
attorneys fees in the amount of P25,000.00.
SO ORDERED.18

The appellate court found Garcia liable for damages for negligently issuing an erroneous HBs Ag
result. On the other hand, it exonerated Castro for lack of participation in the issuance of the results.

happened, non-compliance with the ordinance was not only an act of negligence, but also the
proximate cause of the death.23

After the denial of his motion for reconsideration, Garcia filed the instant petition.

In fine, violation of a statutory duty is negligence. Where the law imposes upon a person the duty to
do something, his omission or non-performance will render him liable to whoever may be injured
thereby.

The main issue for resolution is whether the Court of Appeals, in reversing the decision of the trial
court, correctly found petitioner liable for damages to the respondents for issuing an incorrect
HBsAG test result.

Section 2 of Republic Act (R.A.) No. 4688, otherwise known as The Clinical Laboratory Law,
provides:

Garcia maintains he is not negligent, thus not liable for damages, because he followed the
appropriate laboratory measures and procedures as dictated by his training and experience; and
that he did everything within his professional competence to arrive at an objective, impartial and
impersonal result.

Sec. 2. It shall be unlawful for any person to be professionally in-charge of a registered clinical
laboratory unless he is a licensed physician duly qualified in laboratory medicine and authorized by
the Secretary of Health, such authorization to be renewed annually.

At the outset, we note that the issues raised are factual in nature. Whether a person is negligent or
not is a question of fact which we cannot pass upon in a petition for review on certiorari which is
limited to reviewing errors of law.19

No license shall be granted or renewed by the Secretary of Health for the operation and
maintenance of a clinical laboratory unless such laboratory is under the administration, direction and
supervision of an authorized physician, as provided for in the preceding paragraph.

Negligence is the failure to observe for the protection of the interest of another person that degree of
care, precaution and vigilance which the circumstances justly demand,20 whereby such other person
suffers injury. For health care providers, the test of the existence of negligence is: did the health care
provider either fail to do something which a reasonably prudent health care provider would have
done, or that he or she did something that a reasonably prudent health care provider would not have
done; and that failure or action caused injury to the patient;21 if yes, then he is guilty of negligence.

Corollarily, Sections 9(9.1)(1), 11 and 25(25.1)(1) of the DOH Administrative Order No. 49-B Series
of 1988, otherwise known as the Revised Rules and Regulations Governing the Registration,
Operation and Maintenance of Clinical Laboratories in the Philippines, read:

Thus, the elements of an actionable conduct are: 1) duty, 2) breach, 3) injury, and 4) proximate
causation.
All the elements are present in the case at bar.
Owners and operators of clinical laboratories have the duty to comply with statutes, as well as rules
and regulations, purposely promulgated to protect and promote the health of the people by
preventing the operation of substandard, improperly managed and inadequately supported clinical
laboratories and by improving the quality of performance of clinical laboratory examinations.22 Their
business is impressed with public interest, as such, high standards of performance are expected
from them.
In F.F. Cruz and Co., Inc. v. Court of Appeals, we found the owner of a furniture shop liable for the
destruction of the plaintiffs house in a fire which started in his establishment in view of his failure to
comply with an ordinance which required the construction of a firewall. In Teague v. Fernandez, we
stated that where the very injury which was intended to be prevented by the ordinance has

81 | P a g e

Sec. 9. Management of the Clinical Laboratory:

9.1 Head of the Clinical Laboratory: The head is that person who assumes technical and
administrative supervision and control of the activities in the laboratory.
For all categories of clinical laboratories, the head shall be a licensed physician certified by the
Philippine Board of Pathology in either Anatomic or Clinical Pathology or both provided that:
(1) This shall be mandatory for all categories of free-standing clinical laboratories; all tertiary
category hospital laboratories and for all secondary category hospital laboratories located in areas
with sufficient available pathologist.
xxxx
Sec. 11. Reporting: All laboratory requests shall be considered as consultations between the
requesting physician and pathologist of the laboratory. As such all laboratory reports on various
examinations of human specimens shall be construed as consultation report and shall bear the
name of the pathologist or his associate. No person in clinical laboratory shall issue a report, orally
or in writing, whole portions thereof without a directive from the pathologist or his authorized

associate and only to the requesting physician or his authorized representative except in
emergencies when the results may be released as authorized by the pathologist.
xxxx
Sec. 25. Violations:
25.1 The license to operate a clinical laboratory may be suspended or revoked by the
Undersecretary of Health for Standards and Regulation upon violation of R.A. 4688 or the rules and
regulations issued in pursuance thereto or the commission of the following acts by the persons
owning or operating a clinical laboratory and the persons under their authority.
(1) Operation of a Clinical Laboratory without a certified pathologist or qualified licensed physician
authorized by the Undersecretary of Health or without employing a registered medical technologist
or a person not registered as a medical technologist in such a position.
And Section 29(b) of R.A. No. 5527, otherwise known as The Philippine Medical Technology Act of
1969, reads:
Section 29. Penal Provisions.- Without prejudice to the provision of the Medical Act of 1959, as
amended relating to illegal practice of Medicine, the following shall be punished by a fine of not less
than two thousand pesos nor more than five thousand pesos, or imprisonment for not less than six
months nor more than two years, or both, in the discretion of the court:
xxxx
(b) Any medical technologist, even if duly registered, who shall practice medical technology in the
Philippines without the necessary supervision of a qualified pathologist or physician authorized by
the Department of Health;
From the foregoing laws and rules, it is clear that a clinical laboratory must be administered, directed
and supervised by a licensed physician authorized by the Secretary of Health, like a pathologist who
is specially trained in methods of laboratory medicine; that the medical technologist must be under
the supervision of the pathologist or a licensed physician; and that the results of any examination
may be released only to the requesting physician or his authorized representative upon the direction
of the laboratory pathologist.
These rules are intended for the protection of the public by preventing performance of substandard
clinical examinations by laboratories whose personnel are not properly supervised. The public
demands no less than an effective and efficient performance of clinical laboratory examinations
through compliance with the quality standards set by laws and regulations.

82 | P a g e

We find that petitioner Garcia failed to comply with these standards.

First, CDC is not administered, directed and supervised by a licensed physician as required by law,
but by Ma. Ruby C. Calderon, a licensed Medical Technologist.24 In the License to Open and
Operate a Clinical Laboratory for the years 1993 and 1996 issued by Dr. Juan R. Naagas, M.D.,
Undersecretary for Health Facilities, Standards and Regulation, defendant-appellee Castro was
named as the head of CDC.25 However, in his Answer with Counterclaim, he stated:
3. By way of affirmative and special defenses, defendant pathologist further avers and plead as
follows:
Defendant pathologist is not the owner of the Community Diagnostic Center nor an employee of the
same nor the employer of its employees. Defendant pathologist comes to the Community Diagnostic
Center when and where a problem is referred to him. Its employees are licensed under the Medical
Technology Law (Republic Act No. 5527) and are certified by, and registered with, the Professional
Regulation Commission after having passed their Board Examinations. They are competent within
the sphere of their own profession in so far as conducting laboratory examinations and are allowed
to sign for and in behalf of the clinical laboratory. The defendant pathologist, and all pathologists in
general, are hired by laboratories for purposes of complying with the rules and regulations and
orders issued by the Department of Health through the Bureau of Research and Laboratories.
Defendant pathologist does not stay that long period of time at the Community Diagnostic Center but
only periodically or whenever a case is referred to him by the laboratory. Defendant pathologist does
not appoint or select the employees of the laboratory nor does he arrange or approve their
schedules of duty.26
Castros infrequent visit to the clinical laboratory barely qualifies as an effective administrative
supervision and control over the activities in the laboratory. "Supervision and control" means the
authority to act directly whenever a specific function is entrusted by law or regulation to a
subordinate; direct the performance of duty; restrain the commission of acts; review, approve, revise
or modify acts and decisions of subordinate officials or units.27
Second, Garcia conducted the HBsAG test of respondent Ranida without the supervision of
defendant-appellee Castro, who admitted that:
[He] does not know, and has never known or met, the plaintiff-patient even up to this time nor has he
personally examined any specimen, blood, urine or any other tissue, from the plaintiff-patient
otherwise his own handwritten signature would have appeared in the result and not merely stamped
as shown in Annex "B" of the Amended Complaint.28
Last, the disputed HBsAG test result was released to respondent Ranida without the authorization of
defendant-appellee Castro.29

Garcia may not have intended to cause the consequences which followed after the release of the
HBsAG test result. However, his failure to comply with the laws and rules promulgated and issued
for the protection of public safety and interest is failure to observe that care which a reasonably
prudent health care provider would observe. Thus, his act or omission constitutes a breach of duty.
Indubitably, Ranida suffered injury as a direct consequence of Garcias failure to comply with the
mandate of the laws and rules aforequoted. She was terminated from the service for failing the
physical examination; suffered anxiety because of the diagnosis; and was compelled to undergo
several more tests. All these could have been avoided had the proper safeguards been scrupulously
followed in conducting the clinical examination and releasing the clinical report.
Article 20 of the New Civil Code provides:
Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall
indemnify the latter for the same.
The foregoing provision provides the legal basis for the award of damages to a party who suffers
damage whenever one commits an act in violation of some legal provision.30 This was incorporated
by the Code Commission to provide relief to a person who suffers damage because another has
violated some legal provision.31
We find the Court of Appeals award of moral damages reasonable under the circumstances bearing
in mind the mental trauma suffered by respondent Ranida who thought she was afflicted by Hepatitis
B, making her "unfit or unsafe for any type of employment."32 Having established her right to moral
damages, we see no reason to disturb the award of exemplary damages and attorneys fees.
Exemplary damages are imposed, by way of example or correction for the public good, in addition to
moral, temperate, liquidated or compensatory damages,33 and attorneys fees may be recovered
when, as in the instant case, exemplary damages are awarded.34
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 58668 dated February 27,
2004 finding petitioner Orlando D. Garcia, Jr. guilty of gross negligence and liable to pay to
respondents P50,000.00 as moral damages, P50,000.00 as exemplary damages, and P25,000.00
as attorneys fees, is AFFIRMED.
SO ORDERED.

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G.R. No. L-39019 January 22, 1988

MANILA ELECTRIC COMPANY and PEDRO YAMBAO, petitioners-appellants,
vs.
THE HONORABLE COURT OF APPEALS and ISAAC CHAVEZ, SR., ISAAC O. CHAVEZ, JR.,
ROSENDO O. CHAVES, and JUAN O. CHAVES, respondents-appellees.

time this family went to reside at the place aforementioned, at No. 2656
Mercedes Street, Singalong, Manila. ...
At or about the end of March, 1965, defendant Pedro Yambao went to the
residence of plaintiffs and presented two overdue bills, one for January 11 to
February 9,1965, for the sum of P7.90 (Exhibit "C"), and the other for February
9 to March 10, 1965, for the amount of P7.20 (Exhibit "C"). Juana O. Chaves,
however, informed Yambao that these bills would be paid at the MERALCO
main office.

YAP, J.:
In an action for recovery of damages for embarassment, humiliation, wounded feelings and hurt
pride, caused to herein private respondents, by reason of the disconnection of their electrical service
by the petitioners, the then Court of First Instance of Manila, Sixth Judicial District, Branch XXIV,
rendered a decision dated December 13,1967, ordering herein petitioners jointly and severally to
pay private respondents the sum of Ten Thousand (P10,000.00) Pesos as moral damages, Two
Thousand (P2,000.00) Pesos as exemplary damages and, One Thousand (P1,000.00) Pesos as
attorney's fees, and dismissing petitioners' counterclaim.
On appeal, the Court of Appeals and in toto the trial court's decision. Their Motion for
Reconsideration having been denied, petitioners filed the instant petition for certiorari.
Petitioner Manila Electric Company (MERALCO) is a public utility corporation providing electric
power for the consumption of the general public in Metro Manila. Petitioner Pedro Yambao is a bill
collector of MERALCO.
Private respondents Isaac Chaves and Juana O. Chaves, husband and wife, filed the complaint for
damages, together with their children, Isaac O. Chaves, Jr. and Rosendo O. Chaves. Isaac Sr. and
Isaac Jr. and Rosendo were members of the Philippine Bar; Isaac, Sr. and Isaac, Jr. were practicing
lawyers and Rosendo was a Legal Officer at the Agricultural Productivity Commission. Juana O.
Chaves was a public school teacher.
The facts as found by the trial court and adopted by the Court of Appeals are as follows:
Plaintiff Isaac Chaves became a customer of defendant MERALCO in the year
1953 when he and his family were residing at No. 211-D Rubi, Manila. In
connection with the contract for electrical service, he deposited the sum of
P5.00 (Exh. "A") with defendant MERALCO on February 12, 1953. This deposit
in the name of plaintiff Isaac Chaves was retained by MERALCO and made to
apply to subsequent contracts for electrical service entered into after
subsequent transfers of the Chaves family to other residences and up to the

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Accordingly, on April 2, 1965, Isaac Chaves went to the defendant's main office
at San Marcelino, Manila, but paid only the bill marked as Exhibit 'C" leaving
the other bill Identified as Exhibit "C-l" unpaid.
Past 2:30 o'clock in the afternoon of April 21,1965, MERALCO caused the
electric service in plaintiff's residence to be discontinued and the power line cut
off.
The next day, April 22, 1965, at about 9:00 a.m., plaintiff Rosendo O. Chaves
went to the MERALCO main office and paid the amount of P7.20 for the bill
marked as Exhibit "C-l", and the sum of P7.00 for the subsequent bill
corresponding to the period from March 10 up to April 8, 1965 (Exhibit "C-2")
after his attention was called to the latter account. Rosendo O. Chaves then
sought the help of Atty. Lourdy Torres, one of the defendants' counsel, and,
thereafter, the power line was reconnected and electric service restored to the
Chaves residence at about 7:00 p.m. of that same day. 1
Petitioners dispute the finding that there was no notice given to herein respondent. However, since
only questions of law may be raised in a petition for certiorari under Rule 45 of the Revised Rules of
Court, petitioners, 'for the sake of argument and for the purpose of giving focus on the legal issues',
do not take issue with such finding.
Petitioners contend that in the absence of bad faith, they could not be held liable for moral and
exemplary damages as well as attorney's fees. The failure to give a notice of disconnection to
private respondents might have been a breach of duty or breach of contract, but by itself does not
constitute bad faith or fraud; it must be shown that such a failure was motivated by in or done with
fraudulent intent.Petitioners also maintain that ' private respondents were in arrears in the payment
of their electricity bills when their electric service was connected, no moral damages may be
recovered by them under the 'clean hands' doctrine enunciated in Mabutas vs. Calapan Electric
Company, CA-G.R. No. L-9683-R, May 26, 1964.

In its decision, the respondent Court of Appeals held that MERALCO's right to disconnect the
electric service of a delinquent customer "is an absolute one, subject only to the requirement that
defendant MERALCO should give the customer a written notice of disconnection 48 hours in
advance." This requirement is embodied in Section 97 of the Revised Order No. 1 of the Public
Service Commission which provides as follows:
Section 97. Payment of bills. A public service, may require that bills for
service be paid within a specified time after rendition. When the billing period
covers a month or more, the minimum time allowed will be ten days and upon
expiration of the specified time, service may be discontinued for the nonpayment of bills, provided that a 48 hours' written notice of such disconnection
has been given the customer: Provided, however, that disconnections of
service shall not be made on Sundays and official holidays and never after 2
p.m. of any working day: Provided, further, that if at the moment the
disconnection is to be made the customer tenders payment of the unpaid bill to
the agent or employee of the operator who is to effect the disconnection, the
said agent or employee shall be obliged to accept tender of payment and issue
a temporary receipt for the amount and shall desist from disconnecting the
service. 2
The respondent court stressed the importance and necessity of the 48-hour advance written
notification before a disconnection of service may be effected. Said the court:
... It sets in motion the disconnection of an electrical service of the customer by
giving the notice, determining the expiration date thereof, and executing the
disconnection. It, therefore, behooves the defendant MERALCO that before it
disconnects a customer's electrical service, there should be sufficient evidence
that the requirements for the disconnection had been duly complied with,
otherwise, the poor consumer can be subjected to the whims and caprices of
the defendant, by the mere pretension that the written notice had been duly
served upon the customer. 3
We find no reversible error in the decision appealed from. One can not deny the vital role which a
public utility such as MERALCO, having a monopoly of the supply of electrical power in Metro
Manila and some nearby municipalities, plays in the life of people living in such areas. Electricity has
become a necessity to most people in these areas justifying the exercise by the State of its
regulatory power over the business of supplying electrical service to the public, in which petitioner
MERALCO is engaged. Thus, the state may regulate, as it has done through Section 97 of the
Revised Order No. 1 of the Public Service Commission, the conditions under which and the manner
by which a public utility such as MERALCO may effect a disconnection of service to a delinquent
customer. Among others, a prior written notice to the customer is required before disconnection of

85 | P a g e

the service. Failure to give such prior notice amounts to a tort, as held by us in a similar
case, 4 where we said:
... petitioner's act in 'disconnecting respondent Ongsip's gas service without
prior notice constitutes breach of contract amounting to an independent tort.
The prematurity of the action is indicative of an intent to cause additional
mental and moral suffering to private respondent. This is a clear violation of
Article 21 of the Civil Code which provides that any person who wilfully causes
loss or injury to another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for damages. This is reiterated by
paragraph 10 of Article 2219 of the Code. Moreover, the award of moral
damages is sanctioned by Article 2220 which provides that wilfull injury to
property may be a legal ground for awarding moral damages if the court should
find that, under the circumstances, such damages are justly due. The same
rule applies to breaches of contract where the defendant acted fraudulently or
in bad faith.
Likewise, we find no merit in petitioners' contention that being in arrears in the payment of their bills,
the private respondents are not entitled to moral damages under the doctrine that "he who comes to
court in demand of equity, must come with clean hands." We rejected this argument in the Manila
Gas Corporation case, supra, wherein we held that respondents' default in the payment of his bills
"cannot be utilized by petitioner to defeat or null the claim for damages. At most, this circumstance
can be considered as a mitigating factor in ascertaining the amount of damages to which respondent
... is entitled."
Accordingly, we find no grave abuse of discretion committed by respondent court in affirming the trial
court's decision. The petition is hereby DISMISSED for lack of merit.
SO ORDERED.

G.R. No. 116100

February 9, 1996

SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and MARIA CRISTINA
SANTOS,petitioners,
vs.
COURT OF APPEALS, HEIRS OF PACIFICO C. MABASA and REGIONAL TRIAL COURT OF
PASIG, METRO MANILA, BRANCH 181, respondents.
DECISION
REGALADO, J.:
This petition for review on certiorari assails the decision of respondent Court of Appeals in CA-G.R.
CV No. 29115, promulgated on November 10, 1993, which affirmed with modification the decision of
the trial court, as well as its resolution dated July 8, 1994 denying petitioner's motion for
reconsideration.1
On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right of way was filed by
Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio, Rosalina R. Morato, Lito Santos
and Maria Cristina C. Santos before the Regional Trial Court of Pasig and assigned to Branch 22
thereof.2
The generative facts of the case, as synthesized by the trial court and adopted by the Court of
Appeals, are as follows:
Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died during
the pendency of this case and was substituted by Ofelia Mabasa, his surviving spouse
[and children].
The plaintiff owns a parcel of land with a two-door apartment erected thereon situated at
Interior P. Burgos St., Palingon, Tipas, Tagig, Metro Manila. The plaintiff was able to
acquire said property through a contract of sale with spouses Mamerto Rayos and
Teodora Quintero as vendors last September 1981. Said property may be described to be
surrounded by other immovables pertaining to defendants herein. Taking P. Burgos Street
as the point of reference, on the left side, going to plaintiff's property, the row of houses
will be as follows: That of defendants Cristino and Brigido Custodio, then that of Lito and
Maria Cristina Santos and then that of Ofelia Mabasa. On the right side (is) that of
defendant Rosalina Morato and then a Septic Tank (Exhibit "D"). As an access to P.
Burgos Street from plaintiff's property, there are two possible passageways. The first
passageway is approximately one meter wide and is about 20 meters distan(t) from
Mabasa's residence to P. Burgos Street. Such path is passing in between the previously
86 | P a g e

mentioned row of houses. The second passageway is about 3 meters in width and length
from plaintiff Mabasa's residence to P. Burgos Street; it is about 26 meters. In passing
thru said passageway, a less than a meter wide path through the septic tank and with 5-6
meters in length, has to be traversed.
When said property was purchased by Mabasa, there were tenants occupying the
remises and who were acknowledged by plaintiff Mabasa as tenants. However, sometime
in February, 1982, one of said tenants vacated the apartment and when plaintiff Mabasa
went to see the premises, he saw that there had been built an adobe fence in the first
passageway making it narrower in width. Said adobe fence was first constructed by
defendants Santoses along their property which is also along the first passageway.
Defendant Morato constructed her adobe fence and even extended said fence in such a
way that the entire passageway was enclosed. (Exhibit "1-Santoses and Custodios, Exh.
"D" for plaintiff, Exhs. "1-C", "1-D" and "1-E") And it was then that the remaining tenants of
said apartment vacated the area. Defendant Ma. Cristina Santos testified that she
constructed said fence because there was an incident when her daughter was dragged by
a bicycle pedalled by a son of one of the tenants in said apartment along the first
passageway. She also mentioned some other inconveniences of having (at) the front of
her house a pathway such as when some of the tenants were drunk and would bang their
doors and windows. Some of their footwear were even lost. . . .3 (Emphasis in original
text; corrections in parentheses supplied)
On February 27, 1990, a decision was rendered by the trial court, with this dispositive part:
Accordingly, judgment is hereby rendered as follows:
1) Ordering defendants Custodios and Santoses to give plaintiff permanent access
ingress and egress, to the public street;
2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight
Thousand Pesos (P8,000) as indemnity for the permanent use of the passageway.
The parties to shoulder their respective litigation expenses.4
Not satisfied therewith, therein plaintiff represented by his heirs, herein private respondents, went to
the Court of Appeals raising the sole issue of whether or not the lower court erred in not awarding
damages in their favor. On November 10, 1993, as earlier stated, the Court of Appeals rendered its
decision affirming the judgment of the trial court with modification, the decretal portion of which
disposes as follows:

WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH
MODIFICATION only insofar as the herein grant of damages to plaintiffs-appellants. The
Court hereby orders defendants-appellees to pay plaintiffs-appellants the sum of Sixty
Five Thousand (P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000) Pesos
as Moral Damages, and Ten Thousand (P10,000) Pesos as Exemplary Damages. The
rest of the appealed decision is affirmed to all respects.5
On July 8, 1994, the Court of Appeals denied petitioner's motion for reconsideration.6 Petitioners
then took the present recourse to us, raising two issues, namely, whether or not the grant of right of
way to herein private respondents is proper, and whether or not the award of damages is in order.
With respect to the first issue, herein petitioners are already barred from raising the same.
Petitioners did not appeal from the decision of the court a quo granting private respondents the right
of way, hence they are presumed to be satisfied with the adjudication therein. With the finality of the
judgment of the trial court as to petitioners, the issue of propriety of the grant of right of way has
already been laid to rest.
For failure to appeal the decision of the trial court to the Court of Appeals, petitioners cannot obtain
any affirmative relief other than those granted in the decision of the trial court. That decision of the
court below has become final as against them and can no longer be reviewed, much less reversed,
by this Court. The rule in this jurisdiction is that whenever an appeal is taken in a civil case, an
appellee who has not himself appealed may not obtain from the appellate court any affirmative relief
other than what was granted in the decision of the lower court. The appellee can only advance any
argument that he may deem necessary to defeat the appellant's claim or to uphold the decision that
is being disputed, and he can assign errors in his brief if such is required to strengthen the views
expressed by the court a quo. These assigned errors, in turn, may be considered by the appellate
court solely to maintain the appealed decision on other grounds, but not for the purpose of reversing
or modifying the judgment in the appellee's favor and giving him other affirmative reliefs.7
However, with respect to the second issue, we agree with petitioners that the Court of Appeals erred
in awarding damages in favor of private respondents. The award of damages has no substantial
legal basis. A reading of the decision of the Court of Appeals will show that the award of damages
was based solely on the fact that the original plaintiff, Pacifico Mabasa, incurred losses in the form of
unrealized rentals when the tenants vacated the leased premises by reason of the closure of the
passageway.
However, the mere fact that the plaintiff suffered losses does not give rise to a right to recover
damages. To warrant the recovery of damages, there must be both a right of action for a legal wrong
inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong without damage, or
damage without wrong, does not constitute a cause of action, since damages are merely part of the
remedy allowed for the injury caused by a breach or wrong.8

87 | P a g e

There is a material distinction between damages and injury. Injury is the illegal invasion of a legal
right; damage is the loss, hurt, or harm which results from the injury; and damages are the
recompense or compensation awarded for the damage suffered. Thus, there can be damage without
injury in those instances in which the loss or harm was not the result of a violation of a legal duty.
These situations are often called damnum absque injuria.9
In order that a plaintiff may maintain an action for the injuries of which he complains, he must
establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff a
concurrence of injury to the plaintiff and legal responsibility by the person causing it.10 The
underlying basis for the award of tort damages is the premise that an individual was injured in
contemplation of law. Thus, there must first be the breach of some duty and the imposition of liability
for that breach before damages may be awarded; it is not sufficient to state that there should be tort
liability merely because the plaintiff suffered some pain and suffering.11
Many accidents occur and many injuries are inflicted by acts or omissions which cause damage or
loss to another but which violate no legal duty to such other person, and consequently create no
cause of action in his favor. In such cases, the consequences must be borne by the injured person
alone. The law affords no remedy for damages resulting from an act which does not amount to a
legal injury or wrong.12
In other words, in order that the law will give redress for an act causing damage, that act must be
not only hurtful, but wrongful. There must be damnum et injuria.13 If, as may happen in many cases,
a person sustains actual damage, that is, harm or loss to his person or property, without sustaining
any legal injury, that is, an act or omission which the law does not deem an injury, the damage is
regarded as damnum absque injuria.14
In the case at bar, although there was damage, there was no legal injury. Contrary to the claim of
private respondents, petitioners could not be said to have violated the principle of abuse of right. In
order that the principle of abuse of right provided in Article 21 of the Civil Code can be applied, it is
essential that the following requisites concur: (1) The defendant should have acted in a manner that
is contrary to morals, good customs or public policy; (2) The acts should be willful; and (3) There
was damage or injury to the plaintiff.15
The act of petitioners in constructing a fence within their lot is a valid exercise of their right as
owners, hence not contrary to morals, good customs or public policy. The law recognizes in the
owner the right to enjoy and dispose of a thing, without other limitations than those established by
law.16 It is within the right of petitioners, as owners, to enclose and fence their property. Article 430 of
the Civil Code provides that "(e)very owner may enclose or fence his land or tenements by means of
walls, ditches, live or dead hedges, or by any other means without detriment to servitudes
constituted thereon."

At the time of the construction of the fence, the lot was not subject to any servitudes. There was no
easement of way existing in favor of private respondents, either by law or by contract. The fact that
private respondents had no existing right over the said passageway is confirmed by the very
decision of the trial court granting a compulsory right of way in their favor after payment of just
compensation. It was only that decision which gave private respondents the right to use the said
passageway after payment of the compensation and imposed a corresponding duty on petitioners
not to interfere in the exercise of said right.
Hence, prior to said decision, petitioners had an absolute right over their property and their act of
fencing and enclosing the same was an act which they may lawfully perform in the employment and
exercise of said right. To repeat, whatever injury or damage may have been sustained by private
respondents by reason of the rightful use of the said land by petitioners is damnum absque injuria.17
A person has a right to the natural use and enjoyment of his own property, according to his pleasure,
for all the purposes to which such property is usually applied. As a general rule, therefore, there is
no cause of action for acts done by one person upon his own property in a lawful and proper
manner, although such acts incidentally cause damage or an unavoidable loss to another, as such
damage or loss is damnum absque injuria. 18 When the owner of property makes use thereof in the
general and ordinary manner in which the property is used, such as fencing or enclosing the same
as in this case, nobody can complain of having been injured, because the incovenience arising from
said use can be considered as a mere consequence of community life. 19
The proper exercise of a lawful right cannot constitute a legal wrong for which an action will
lie, 20 although the act may result in damage to another, for no legal right has been invaded. 21 One
may use any lawful means to accomplish a lawful purpose and though the means adopted may
cause damage to another, no cause of action arises in the latter's favor. An injury or damage
occasioned thereby is damnum absque injuria. The courts can give no redress for hardship to an
individual resulting from action reasonably calculated to achieve a lawful means. 22
WHEREFORE, under the compulsion of the foregoing premises, the appealed decision of
respondent Court of Appeals is hereby REVERSED and SET ASIDE and the judgment of the trial
court is correspondingly REINSTATED.

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G.R. No. 156168

December 14, 2004
EQUITABLE BANKING CORPORATION, petitioner,
vs.
JOSE T. CALDERON, respondent.
DECISION
GARCIA, J.:
Thru this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Equitable
Banking Corporation (EBC), seeks the reversal and setting aside of the decision dated November
25, 20021 of the Court of Appeals in CA-G.R. CV No. 60016, which partially affirmed an earlier
decision of the Regional Trial Court at Makati City, Branch 61, insofar as it grants moral damages
and costs of suit to herein respondent, Jose T. Calderon.
The decision under review recites the factual background of the case, as follows:
Plaintiff-appellee [now respondent] Jose T. Calderon (Calderon for brevity), is a
businessman engaged in several business activities here and abroad, either in his
capacity as President or Chairman of the Board thereon. In addition thereto, he is a
stockholder of PLDT and a member of the Manila Polo Club, among others. He is a
seasoned traveler, who travels at least seven times a year in the U.S., Europe and Asia.
On the other hand, the defendant-appellant [now petitioner] Equitable Banking
Corporation (EBC for brevity), is one of the leading commercial banking institutions in the
Philippines, engaged in commercial banking, such as acceptance of deposits, extension
of loans and credit card facilities, among others.
xxx

xxx

xxx

Sometime in September 1984, Calderon applied and was issued an Equitable

International Visa card (Visa card for brevity). The said Visa card can be used for both
peso and dollar transactions within and outside the Philippines. The credit limit for the
peso transaction is TWENTY THOUSAND (P20,000.00) PESOS; while in the dollar
transactions, Calderon is required to maintain a dollar account with a minimum deposit of
$3,000.00, the balance of dollar account shall serve as the credit limit.
In April 1986, Calderon together with some reputable business friends and associates,
went to Hongkong for business and pleasure trips. Specifically on 30 April 1986, Calderon
accompanied by his friend, Ed De Leon went to Gucci Department Store located at the
basement of the Peninsula Hotel (Hongkong). There and then, Calderon purchased
several Gucci items (t-shirts, jackets, a pair of shoes, etc.). The cost of his total purchase
amounted to HK$4,030.00 or equivalent to US$523.00. Instead of paying the said items
in cash, he used his Visa card (No. 4921 6400 0001 9373) to effect payment thereof on
credit. He then presented and gave his credit card to the saleslady who promptly referred
it to the store cashier for verification. Shortly thereafter, the saleslady, in the presence of
his friend, Ed De Leon and other shoppers of different nationalities, informed him that his
Visa card was blacklisted. Calderon sought the reconfirmation of the status of his Visa
card from the saleslady, but the latter simply did not honor it and even threatened to cut it
into pieces with the use of a pair of scissors.

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Deeply embarrassed and humiliated, and in order to avoid further indignities, Calderon
paid cash for the Gucci goods and items that he bought.
Upon his return to the Philippines, and claiming that he suffered much torment and embarrassment
on account of EBCs wrongful act of blacklisting/suspending his VISA credit card while at the Gucci
store in Hongkong, Calderon filed with the Regional Trial Court at Makati City a complaint for
damages2 against EBC.
In its Answer,3 EBC denied any liability to Calderon, alleging that the latters credit card privileges for
dollar transactions were earlier placed under suspension on account of Calderons prior use of the
same card in excess of his credit limit, adding that Calderon failed to settle said prior credit purchase
on due date, thereby causing his obligation to become past due. Corollarily, EBC asserts that
Calderon also failed to maintain the required minimum deposit of $3,000.00.
To expedite the direct examination of witnesses, the trial court required the parties to submit
affidavits, in question-and-answer form, of their respective witnesses, to be sworn to in court, with
cross examination to be made in open court.
Eventually, in a decision dated October 10, 1997,4 the trial court, concluding that "defendant bank
was negligent if not in bad faith, in suspending, or blacklisting plaintiffs credit card without notice or
basis", rendered judgment in favor of Calderon, thus:
WHEREFORE PREMISES ABOVE CONSIDERED, judgment is hereby rendered in favor
of plaintiff as against defendant EQUITABLE BANKING CORPORATION, which is hereby
ORDERED to pay plaintiff as follows:
1. the sum of US$150.00 as actual damages;
2. the sum of P200,000.00 as and by way of moral damages;
3. the amount of P100,000.00 as exemplary damages;
4. the sum of P100,000.00 as attorneys fees plus P500.00 per court hearing
and
5. costs of suit.
SO ORDERED.
Therefrom, EBC went to the Court of Appeals (CA), whereat its recourse was docketed as CA G.R.
CV No. 60016.
After due proceedings, the CA, in a decision dated November 25, 2002,5 affirmed that of the trial
court but only insofar as the awards of moral damages, the amount of which was even reduced, and
the costs of suits are concerned. More specifically, the CA decision dispositively reads: 6

WHEREFORE, in consideration of the foregoing disquisitions, the decision of the court a

quo dated 10 October 1997 is AFFIRMED insofar as the awards of moral damages and
costs of suit are concerned. However, anent the award of moral damages, the same is
reduced to One Hundred Thousand (P100,000.00) Pesos.
The rest of the awards are deleted.
SO ORDERED.
Evidently unwilling to accept a judgment short of complete exemption from any liability to Calderon,
EBC is now with us via the instant petition on its lone submission that "THE COURT OF APPEALS
ERRED IN HOLDING THAT THE RESPONDENT IS ENTITLED TO MORAL DAMAGES
NOTWITHSTANDING ITS FINDING THAT PETITIONERS ACTIONS HAVE NOT BEEN ATTENDED
WITH ANY MALICE OR BAD FAITH."7
The petition is impressed with merit.
In law, moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation and similar injury. 8 However, to be
entitled to the award thereof, it is not enough that one merely suffered sleepless nights, mental
anguish or serious anxiety as a result of the actuations of the other party.9 In Philippine Telegraph &
Telephone Corporation vs. Court of Appeals,10 we have had the occasion to reiterate the conditions
to be met in order that moral damages may be recovered, viz:
An award of moral damages would require, firstly, evidence of besmirched reputation, or
physical, mental or psychological suffering sustained by the claimant; secondly, a
culpable act or omission factually established; thirdly, proof that the wrongful act or
omission of the defendant is the proximate cause of the damages sustained by the
claimant; and fourthly, that the case is predicated on any of the instances expressed or
envisioned by Articles 2219 and 2220 of the Civil Code.
Particularly, in culpa contractual or breach of contract, as here, moral damages are recoverable only
if the defendant has acted fraudulently or in bad faith,11 or is found guilty of gross negligence
amounting to bad faith, or in wanton disregard of his contractual obligations.12 Verily, the breach
must be wanton, reckless, malicious or in bad faith, oppressive or abusive.13
Here, the CA ruled, and rightly so, that no malice or bad faith attended petitioners dishonor of
respondents credit card. For, as found no less by the same court, petitioner was justified in doing so
under the provisions of its Credit Card Agreement14 with respondent, paragraph 3 of which states:
xxx the CARDHOLDER agrees not to exceed his/her approved credit limit, otherwise, all
charges incurred including charges incurred through the use of the extension CARD/S, if
any in excess of credit limit shall become due and demandable and the credit privileges
shall be automatically suspended without notice to the CARDHOLDER in accordance
with Section 11 hereof.

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We are thus at a loss to understand why, despite its very own finding of absence of bad faith or
malice on the part of the petitioner, the CA nonetheless adjudged it liable for moral damages to
respondent.
Quite evidently, in holding petitioner liable for moral damages, the CA justified the award on its
assessment that EBC was negligent in not informing Calderon that his credit card was already
suspended even before he left for Hongkong, ratiocinating that petitioners right to automatically
suspend a cardholders privileges without notice should not have been indiscriminately used in the
case of respondent because the latter has already paid his past obligations and has an existing
dollar deposit in an amount more than the required minimum for credit card at the time he made his
purchases in Hongkong. But, as explained by the petitioner in the memorandum it filed with this
Court,15 which explanations were never controverted by respondent:
"xxx prior to the incident in question (i.e., April 30, 1986 when the purchases at the Gucci
store in Hongkong were made), respondent made credit purchases in Japan and
Hongkong from August to September 1985 amounting to US$14,226.12, while only
having a deposit of US$3,639.00 in his dollar account as evidenced by the pertinent
monthly statement of respondents credit card transactions and his bank passbook, thus
exceeding his credit limit; these purchases were accommodated by the petitioner on the
condition that the amount needed to cover the same will be deposited in a few days as
represented by respondents secretary and his companys general manager a certain
Mrs. Zamora and Mr. F.R. Oliquiano; respondent however failed to make good on his
commitment; later, respondent likewise failed to make the required deposit on the due
date of the purchases as stated in the pertinent monthly statement of account; as a
consequence thereof, his card privileges for dollar transactions were suspended; it was
only four months later on 31 January 1986, that respondent deposited the sum
of P14,501.89 in his dollar account to cover his purchases; the said amount however was
not sufficient to maintain the required minimum dollar deposit of $3,000.00 as the
respondents dollar deposit stood at only US$2,704.94 after satisfaction of his outstanding
accounts; a day before he left for Hongkong, respondent made another deposit of
US$14,000.00 in his dollar account but did not bother to request the petitioner for the
reinstatement of his credit card privileges for dollar transactions, thus the same remained
under suspension."16
The foregoing are based on the sworn affidavit of petitioners Collection Manager, a certain Lourdes
Canlas, who was never cross examined by the respondent nor did the latter present any evidence to
refute its veracity.
Given the above, and with the express provision on automatic suspension without notice under
paragraph 3,supra, of the parties Credit Card Agreement, there is simply no basis for holding
petitioner negligent for not notifying respondent of the suspended status of his credit card privileges.
It may be so that respondent, a day before he left for Hongkong, made a deposit of US$14,000.00 to
his dollar account with petitioner. The sad reality, however, is that he never verified the status of his
card before departing for Hongkong, much less requested petitioner to reinstate the same.17

And, certainly, respondent could not have justifiably assumed that petitioner must have reinstated
his card by reason alone of his having deposited US$14,000.00 a day before he left for Hongkong.
As issuer of the card, petitioner has the option to decide whether to reinstate or altogether terminate
a credit card previously suspended on considerations which the petitioner deemed proper, not the
least of which are the cardholders payment record, capacity to pay and compliance with any
additional requirements imposed by it. That option, after all, is expressly embodied in the same
Credit Card Agreement, paragraph 12 of which unmistakably states:
The issuer shall likewise have the option of reinstating the card holders privileges which
have been terminated for any reason whatsoever upon submission of a new
accomplished application form if required by the issuer and upon payment of an additional
processing fee equivalent to annual fee.18
Even on the aspect of negligence, therefore, petitioner could not have been properly adjudged liable
for moral damages.
Unquestionably, respondent suffered damages as a result of the dishonor of his card. There is,
however, a material distinction between damages and injury. To quote from our decision in BPI
Express Card Corporation vs. Court of Appeals:19
Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results
from the injury; and damages are the recompense or compensation awarded for the
damage suffered. Thus, there can be damage without injury in those instances in
which the loss or harm was not the result of a violation of a legal duty. In such
cases the consequences must be borne by the injured person alone, the law affords no
remedy for damages resulting from an act which does not amount to a legal injury or
wrong. These situations are often called damnum absque injuria.
In other words, in order that a plaintiff may maintain an action for the injuries of which he
complains, he must establish that such injuries resulted from a breach of duty which the
defendant owed to the plaintiff- a concurrence of injury to the plaintiff and legal
responsibility by the person causing it. The underlying basis for the award of tort damages
is the premise that an individual was injured in contemplation of law. Thus, there must
first be a breach of some duty and the imposition of liability for that breach before
damages may be awarded; and the breach of such duty should be the proximate cause of
the injury. (Emphasis supplied).
In the situation in which respondent finds himself, his is a case of damnum absque injuria.
We do not take issue with the appellate court in its observation that the Credit Card Agreement
herein involved is a contract of adhesion, with the stipulations therein contained unilaterally prepared
and imposed by the petitioner to prospective credit card holders on a take-it-or-leave-it basis. As
said by us in Polotan, Sr. vs. Court of Appeals:20
A contract of adhesion is one in which one of the contracting parties imposes a readymade form of contract which the other party may accept or reject, but cannot modify. One
party prepares the stipulation in the contract, while the other party merely affixes his
91 | P a g e

signature or his adhesion thereto giving no room for negotiation and depriving the latter
of the opportunity to bargain on equal footing.
On the same breath, however, we have equally ruled that such a contract is "as binding as ordinary
contracts, the reason being that the party who adheres to the contract is free to reject it entirely."21
Moreover, the provision on automatic suspension without notice embodied in the same Credit Card
Agreement is couched in clear and unambiguous term, not to say that the agreement itself was
entered into by respondent who, by his own account, is a reputable businessman engaged in
business activities here and abroad.
On a final note, we emphasize that "moral damages are in the category of an award designed to
compensate the claim for actual injury suffered and not to impose a penalty on the wrongdoer."22
WHEREFORE, the instant petition is hereby GRANTED and the decision under review REVERSED
and SET ASIDE.
SO ORDERED.

G.R. No. 97336 February 19, 1993

GASHEM SHOOKAT BAKSH, petitioner,
vs.
HON. COURT OF APPEALS and MARILOU T. GONZALES, respondents.
Public Attorney's Office for petitioner.
Corleto R. Castro for private respondent.

DAVIDE, JR., J.:

This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to review and set aside
the Decision 1of the respondent Court of Appeals in CA-G.R. CV No. 24256 which affirmed in
toto the 16 October 1939 Decision of Branch 38 (Lingayen) of the Regional Trial Court (RTC) of
Pangasinan in Civil Case No. 16503. Presented is the issue of whether or not damages may be
recovered for a breach of promise to marry on the basis of Article 21 of the Civil Code of the
Philippines.
The antecedents of this case are not complicated:
On 27 October 1987, private respondent, without the assistance of counsel, filed with the aforesaid
trial court a complaint 2 for damages against the petitioner for the alleged violation of their agreement
to get married. She alleges in said complaint that: she is twenty-two (22) years old, single, Filipino
and a pretty lass of good moral character and reputation duly respected in her community; petitioner,
on the other hand, is an Iranian citizen residing at the Lozano Apartments, Guilig, Dagupan City, and
is an exchange student taking a medical course at the Lyceum Northwestern Colleges in Dagupan
City; before 20 August 1987, the latter courted and proposed to marry her; she accepted his love on
the condition that they would get married; they therefore agreed to get married after the end of the
school semester, which was in October of that year; petitioner then visited the private respondent's
parents in Baaga, Bugallon, Pangasinan to secure their approval to the marriage; sometime in 20
August 1987, the petitioner forced her to live with him in the Lozano Apartments; she was a virgin
before she began living with him; a week before the filing of the complaint, petitioner's attitude
towards her started to change; he maltreated and threatened to kill her; as a result of such
maltreatment, she sustained injuries; during a confrontation with a representative of the barangay
captain of Guilig a day before the filing of the complaint, petitioner repudiated their marriage
agreement and asked her not to live with him anymore and; the petitioner is already married to
someone living in Bacolod City. Private respondent then prayed for judgment ordering the petitioner
to pay her damages in the amount of not less than P45,000.00, reimbursement for actual expenses

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amounting to P600.00, attorney's fees and costs, and granting her such other relief and remedies as
may be just and equitable. The complaint was docketed as Civil Case No. 16503.
In his Answer with Counterclaim, 3 petitioner admitted only the personal circumstances of the parties
as averred in the complaint and denied the rest of the allegations either for lack of knowledge or
information sufficient to form a belief as to the truth thereof or because the true facts are those
alleged as his Special and Affirmative Defenses. He thus claimed that he never proposed marriage
to or agreed to be married with the private respondent; he neither sought the consent and approval
of her parents nor forced her to live in his apartment; he did not maltreat her, but only told her to stop
coming to his place because he discovered that she had deceived him by stealing his money and
passport; and finally, no confrontation took place with a representative of the barangay captain.
Insisting, in his Counterclaim, that the complaint is baseless and unfounded and that as a result
thereof, he was unnecessarily dragged into court and compelled to incur expenses, and has suffered
mental anxiety and a besmirched reputation, he prayed for an award of P5,000.00 for miscellaneous
expenses and P25,000.00 as moral damages.
After conducting a pre-trial on 25 January 1988, the trial court issued a Pre-Trial Order 4 embodying
the stipulated facts which the parties had agreed upon, to wit:
1. That the plaintiff is single and resident (sic) of Baaga, Bugallon,
Pangasinan, while the defendant is single, Iranian citizen and resident (sic) of
Lozano Apartment, Guilig, Dagupan City since September 1, 1987 up to the
present;
2. That the defendant is presently studying at Lyceum Northwestern, Dagupan
City, College of Medicine, second year medicine proper;
3. That the plaintiff is (sic) an employee at Mabuhay Luncheonette , Fernandez
Avenue, Dagupan City since July, 1986 up to the present and a (sic) high
school graduate;
4. That the parties happened to know each other when the manager of the
Mabuhay Luncheonette, Johhny Rabino introduced the defendant to the
plaintiff on August 3, 1986.
After trial on the merits, the lower court, applying Article 21 of the Civil Code, rendered on 16
October 1989 a decision 5 favoring the private respondent. The petitioner was thus ordered to pay
the latter damages and attorney's fees; the dispositive portion of the decision reads:
IN THE LIGHT of the foregoing consideration, judgment is hereby rendered in
favor of the plaintiff and against the defendant.

1. Condemning (sic) the defendant to pay the plaintiff the sum of twenty
thousand (P20,000.00) pesos as moral damages.
2. Condemning further the defendant to play the plaintiff the sum of three
thousand (P3,000.00) pesos as atty's fees and two thousand (P2,000.00)
pesos at (sic) litigation expenses and to pay the costs.
3. All other claims are denied. 6
The decision is anchored on the trial court's findings and conclusions that (a) petitioner and private
respondent were lovers, (b) private respondent is not a woman of loose morals or questionable
virtue who readily submits to sexual advances, (c) petitioner, through machinations, deceit and false
pretenses, promised to marry private respondent, d) because of his persuasive promise to marry
her, she allowed herself to be deflowered by him, (e) by reason of that deceitful promise, private
respondent and her parents in accordance with Filipino customs and traditions made some
preparations for the wedding that was to be held at the end of October 1987 by looking for pigs and
chickens, inviting friends and relatives and contracting sponsors, (f) petitioner did not fulfill his
promise to marry her and (g) such acts of the petitioner, who is a foreigner and who has abused
Philippine hospitality, have offended our sense of morality, good customs, culture and traditions. The
trial court gave full credit to the private respondent's testimony because, inter alia, she would not
have had the temerity and courage to come to court and expose her honor and reputation to public
scrutiny and ridicule if her claim was false. 7
The above findings and conclusions were culled from the detailed summary of the evidence for the
private respondent in the foregoing decision, digested by the respondent Court as follows:
According to plaintiff, who claimed that she was a virgin at the time and that
she never had a boyfriend before, defendant started courting her just a few
days after they first met. He later proposed marriage to her several times and
she accepted his love as well as his proposal of marriage on August 20, 1987,
on which same day he went with her to her hometown of Baaga, Bugallon,
Pangasinan, as he wanted to meet her parents and inform them of their
relationship and their intention to get married. The photographs Exhs. "A" to "E"
(and their submarkings) of defendant with members of plaintiff's family or with
plaintiff, were taken that day. Also on that occasion, defendant told plaintiffs
parents and brothers and sisters that he intended to marry her during the
semestral break in October, 1987, and because plaintiff's parents thought he
was good and trusted him, they agreed to his proposal for him to marry their
daughter, and they likewise allowed him to stay in their house and sleep with
plaintiff during the few days that they were in Bugallon. When plaintiff and
defendant later returned to Dagupan City, they continued to live together in
defendant's apartment. However, in the early days of October, 1987, defendant

93 | P a g e

would tie plaintiff's hands and feet while he went to school, and he even gave
her medicine at 4 o'clock in the morning that made her sleep the whole day and
night until the following day. As a result of this live-in relationship, plaintiff
became pregnant, but defendant gave her some medicine to abort the fetus.
Still plaintiff continued to live with defendant and kept reminding him of his
promise to marry her until he told her that he could not do so because he was
already married to a girl in Bacolod City. That was the time plaintiff left
defendant, went home to her parents, and thereafter consulted a lawyer who
accompanied her to the barangay captain in Dagupan City. Plaintiff, her lawyer,
her godmother, and a barangay tanod sent by the barangay captain went to talk
to defendant to still convince him to marry plaintiff, but defendant insisted that
he could not do so because he was already married to a girl in Bacolod City,
although the truth, as stipulated by the parties at the pre-trial, is that defendant
is still single.
Plaintiff's father, a tricycle driver, also claimed that after defendant had informed
them of his desire to marry Marilou, he already looked for sponsors for the
wedding, started preparing for the reception by looking for pigs and chickens,
and even already invited many relatives and friends to the forthcoming
wedding. 8
Petitioner appealed the trial court's decision to the respondent Court of Appeals which docketed the
case as CA-G.R. CV No. 24256. In his Brief, 9 he contended that the trial court erred (a) in not
dismissing the case for lack of factual and legal basis and (b) in ordering him to pay moral damages,
attorney's fees, litigation expenses and costs.
On 18 February 1991, respondent Court promulgated the challenged decision 10 affirming in toto the
trial court's ruling of 16 October 1989. In sustaining the trial court's findings of fact, respondent Court
made the following analysis:
First of all, plaintiff, then only 21 years old when she met defendant who was
already 29 years old at the time, does not appear to be a girl of loose morals. It
is uncontradicted that she was a virgin prior to her unfortunate experience with
defendant and never had boyfriend. She is, as described by the lower court, a
barrio lass "not used and accustomed to trend of modern urban life", and
certainly would (sic) not have allowed
"herself to be deflowered by the defendant if there was no persuasive promise
made by the defendant to marry her." In fact, we agree with the lower court that
plaintiff and defendant must have been sweethearts or so the plaintiff must
have thought because of the deception of defendant, for otherwise, she would
not have allowed herself to be photographed with defendant in public in so (sic)
loving and tender poses as those depicted in the pictures Exhs. "D" and "E".

We cannot believe, therefore, defendant's pretense that plaintiff was a nobody

to him except a waitress at the restaurant where he usually ate. Defendant in
fact admitted that he went to plaintiff's hometown of Baaga, Bugallon,
Pangasinan, at least thrice; at (sic) the town fiesta on February 27, 1987 (p. 54,
tsn May 18, 1988), at (sic) a beach party together with the manager and
employees of the Mabuhay Luncheonette on March 3, 1987 (p. 50, tsn id.), and
on April 1, 1987 when he allegedly talked to plaintiff's mother who told him to
marry her daughter (pp. 55-56, tsn id.). Would defendant have left Dagupan
City where he was involved in the serious study of medicine to go to plaintiff's
hometown in Baaga, Bugallon, unless there was (sic) some kind of special
relationship between them? And this special relationship must indeed have led
to defendant's insincere proposal of marriage to plaintiff, communicated not
only to her but also to her parents, and (sic) Marites Rabino, the owner of the
restaurant where plaintiff was working and where defendant first proposed
marriage to her, also knew of this love affair and defendant's proposal of
marriage to plaintiff, which she declared was the reason why plaintiff resigned
from her job at the restaurant after she had accepted defendant's proposal (pp.
6-7, tsn March 7, 1988).
Upon the other hand, appellant does not appear to be a man of good moral
character and must think so low and have so little respect and regard for
Filipino women that he openly admitted that when he studied in Bacolod City
for several years where he finished his B.S. Biology before he came to
Dagupan City to study medicine, he had a common-law wife in Bacolod City. In
other words, he also lived with another woman in Bacolod City but did not
marry that woman, just like what he did to plaintiff. It is not surprising, then, that
he felt so little compunction or remorse in pretending to love and promising to
marry plaintiff, a young, innocent, trustful country girl, in order to satisfy his lust
on her. 11

advantage of the opportunity to study in one of our institutions of learning,

defendant-appellant should indeed be made, under Art. 21 of the Civil Code of
the Philippines, to compensate for the moral damages and injury that he had
caused plaintiff, as the lower court ordered him to do in its decision in this
case. 12
Unfazed by his second defeat, petitioner filed the instant petition on 26 March 1991; he raises
therein the single issue of whether or not Article 21 of the Civil Code applies to the case at bar. 13
It is petitioner's thesis that said Article 21 is not applicable because he had not committed any moral
wrong or injury or violated any good custom or public policy; he has not professed love or proposed
marriage to the private respondent; and he has never maltreated her. He criticizes the trial court for
liberally invoking Filipino customs, traditions and culture, and ignoring the fact that since he is a
foreigner, he is not conversant with such Filipino customs, traditions and culture. As an Iranian
Moslem, he is not familiar with Catholic and Christian ways. He stresses that even if he had made a
promise to marry, the subsequent failure to fulfill the same is excusable or tolerable because of his
Moslem upbringing; he then alludes to the Muslim Code which purportedly allows a Muslim to take
four (4) wives and concludes that on the basis thereof, the trial court erred in ruling that he does not
posses good moral character. Moreover, his controversial "common law life" is now his legal wife as
their marriage had been solemnized in civil ceremonies in the Iranian Embassy. As to his unlawful
cohabitation with the private respondent, petitioner claims that even if responsibility could be pinned
on him for the live-in relationship, the private respondent should also be faulted for consenting to an
illicit arrangement. Finally, petitioner asseverates that even if it was to be assumed arguendo that he
had professed his love to the private respondent and had also promised to marry her, such acts
would not be actionable in view of the special circumstances of the case. The mere breach of
promise is not actionable. 14
On 26 August 1991, after the private respondent had filed her Comment to the petition and the
petitioner had filed his Reply thereto, this Court gave due course to the petition and required the
parties to submit their respective Memoranda, which they subsequently complied with.

and then concluded:

In sum, we are strongly convinced and so hold that it was defendant-appellant's
fraudulent and deceptive protestations of love for and promise to marry plaintiff
that made her surrender her virtue and womanhood to him and to live with him
on the honest and sincere belief that he would keep said promise, and it was
likewise these (sic) fraud and deception on appellant's part that made plaintiff's
parents agree to their daughter's living-in with him preparatory to their
supposed marriage. And as these acts of appellant are palpably and
undoubtedly against morals, good customs, and public policy, and are even
gravely and deeply derogatory and insulting to our women, coming as they do
from a foreigner who has been enjoying the hospitality of our people and taking

94 | P a g e

As may be gleaned from the foregoing summation of the petitioner's arguments in support of his
thesis, it is clear that questions of fact, which boil down to the issue of the credibility of witnesses,
are also raised. It is the rule in this jurisdiction that appellate courts will not disturb the trial court's
findings as to the credibility of witnesses, the latter court having heard the witnesses and having had
the opportunity to observe closely their deportment and manner of testifying, unless the trial court
had plainly overlooked facts of substance or value which, if considered, might affect the result of the
case. 15
Petitioner has miserably failed to convince Us that both the appellate and trial courts had overlooked
any fact of substance or values which could alter the result of the case.

Equally settled is the rule that only questions of law may be raised in a petition for review
on certiorari under Rule 45 of the Rules of Court. It is not the function of this Court to analyze or
weigh all over again the evidence introduced by the parties before the lower court. There are,
however, recognized exceptions to this rule. Thus, inMedina vs. Asistio, Jr., 16 this Court took the
time, again, to enumerate these exceptions:
xxx xxx xxx
(1) When the conclusion is a finding grounded entirely on speculation, surmises
or conjectures (Joaquin v. Navarro, 93 Phil. 257 [1953]); (2) When the inference
made is manifestly mistaken, absurb or impossible (Luna v. Linatok, 74 Phil. 15
[1942]); (3) Where there is a grave abuse of discretion (Buyco v. People, 95
Phil. 453 [1955]); (4) When the judgment is based on a misapprehension of
facts (Cruz v. Sosing,
L-4875, Nov. 27, 1953); (5) When the findings of fact are conflicting (Casica v.
Villaseca, L-9590 Ap. 30, 1957; unrep.) (6) When the Court of Appeals, in
making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellate and appellee (Evangelista v. Alto
Surety and Insurance Co., 103 Phil. 401 [1958]);
(7) The findings of the Court of Appeals are contrary to those of the trial court
(Garcia v. Court of Appeals, 33 SCRA 622 [1970]; Sacay v. Sandiganbayan,
142 SCRA 593 [1986]); (8) When the findings of fact are conclusions without
citation of specific evidence on which they are based (Ibid.,); (9) When the facts
set forth in the petition as well as in the petitioners main and reply briefs are not
disputed by the respondents (Ibid.,); and (10) The finding of fact of the Court of
Appeals is premised on the supposed absence of evidence and is contradicted
by the evidence on record (Salazar v. Gutierrez, 33 SCRA 242 [1970]).

designing women and unscrupulous men. It is this experience which has led to
the abolition of rights of action in the so-called Heart Balm suits in many of the
American states. . . . 19
This notwithstanding, the said Code contains a provision, Article 21, which is designed to expand the
concept of torts or quasi-delict in this jurisdiction by granting adequate legal remedy for the untold
number of moral wrongs which is impossible for human foresight to specifically enumerate and
punish in the statute books. 20
As the Code Commission itself stated in its Report:
But the Code Commission had gone farther than the sphere of wrongs defined
or determined by positive law. Fully sensible that there are countless gaps in
the statutes, which leave so many victims of moral wrongs helpless, even
though they have actually suffered material and moral injury, the Commission
has deemed it necessary, in the interest of justice, to incorporate in the
proposed Civil Code the following rule:
Art. 23. Any person who wilfully causes loss or injury to
another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the
damage.

And now to the legal issue.

An example will illustrate the purview of the foregoing norm: "A" seduces the
nineteen-year old daughter of "X". A promise of marriage either has not been
made, or can not be proved. The girl becomes pregnant. Under the present
laws, there is no crime, as the girl is above nineteen years of age. Neither can
any civil action for breach of promise of marriage be filed. Therefore, though
the grievous moral wrong has been committed, and though the girl and family
have suffered incalculable moral damage, she and her parents cannot bring
action for damages. But under the proposed article, she and her parents would
have such a right of action.

The existing rule is that a breach of promise to marry per se is not an actionable wrong. 17 Congress
deliberately eliminated from the draft of the New Civil Code the provisions that would have made it
so. The reason therefor is set forth in the report of the Senate Committees on the Proposed Civil
Code, from which We quote:

Thus at one stroke, the legislator, if the forgoing rule is approved, would
vouchsafe adequate legal remedy for that untold number of moral wrongs
which it is impossible for human foresight to provide for specifically in the
statutes. 21

Petitioner has not endeavored to joint out to Us the existence of any of the above quoted exceptions
in this case. Consequently, the factual findings of the trial and appellate courts must be respected.

The elimination of this chapter is proposed. That breach of promise to marry is

not actionable has been definitely decided in the case of De Jesus vs.
Syquia. 18 The history of breach of promise suits in the United States and in
England has shown that no other action lends itself more readily to abuse by

95 | P a g e

Article 2176 of the Civil Code, which defines a quasi-delict thus:

Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if

there is no pre-existing contractual relation between the parties, is called

a quasi-delict and is governed by the provisions of this Chapter.
is limited to negligent acts or omissions and excludes the notion of willfulness or
intent. Quasi-delict, known in Spanish legal treatises as culpa aquiliana, is a civil law
concept while torts is an Anglo-American or common law concept. Torts is much broader
than culpa aquiliana because it includes not only negligence, but international criminal
acts as well such as assault and battery, false imprisonment and deceit. In the general
scheme of the Philippine legal system envisioned by the Commission responsible for
drafting the New Civil Code, intentional and malicious acts, with certain exceptions, are to
be governed by the Revised Penal Code while negligent acts or omissions are to be
covered by Article 2176 of the Civil Code. 22 In between these opposite spectrums are
injurious acts which, in the absence of Article 21, would have been beyond redress. Thus,
Article 21 fills that vacuum. It is even postulated that together with Articles 19 and 20 of
the Civil Code, Article 21 has greatly broadened the scope of the law on civil wrongs; it
has become much more supple and adaptable than the Anglo-American law on torts. 23
In the light of the above laudable purpose of Article 21, We are of the opinion, and so hold, that
where a man's promise to marry is in fact the proximate cause of the acceptance of his love by a
woman and his representation to fulfill that promise thereafter becomes the proximate cause of the
giving of herself unto him in a sexual congress, proof that he had, in reality, no intention of marrying
her and that the promise was only a subtle scheme or deceptive device to entice or inveigle her to
accept him and to obtain her consent to the sexual act, could justify the award of damages pursuant
to Article 21 not because of such promise to marry but because of the fraud and deceit behind it and
the willful injury to her honor and reputation which followed thereafter. It is essential, however, that
such injury should have been committed in a manner contrary to morals, good customs or public
policy.
In the instant case, respondent Court found that it was the petitioner's "fraudulent and deceptive
protestations of love for and promise to marry plaintiff that made her surrender her virtue and
womanhood to him and to live with him on the honest and sincere belief that he would keep said
promise, and it was likewise these fraud and deception on appellant's part that made plaintiff's
parents agree to their daughter's living-in with him preparatory to their supposed marriage." 24 In
short, the private respondent surrendered her virginity, the cherished possession of every single
Filipina, not because of lust but because of moral seduction the kind illustrated by the Code
Commission in its example earlier adverted to. The petitioner could not be held liable for criminal
seduction punished under either Article 337 or Article 338 of the Revised Penal Code because the
private respondent was above eighteen (18) years of age at the time of the seduction.
Prior decisions of this Court clearly suggest that Article 21 may be applied in a breach of promise to
marry where the woman is a victim of moral seduction. Thus, in Hermosisima vs. Court of
Appeals, 25 this Court denied recovery of damages to the woman because:

96 | P a g e

. . . we find ourselves unable to say that petitioner is morally guilty of seduction,

not only because he is approximately ten (10) years younger than the
complainant who was around thirty-six (36) years of age, and as highly
enlightened as a former high school teacher and a life insurance agent are
supposed to be when she became intimate with petitioner, then a mere
apprentice pilot, but, also, because the court of first instance found that,
complainant "surrendered herself" to petitioner because, "overwhelmed by her
love" for him, she "wanted to bind" him by having a fruit of their engagement
even before they had the benefit of clergy.
In Tanjanco vs. Court of Appeals, 26 while this Court likewise hinted at possible recovery if there had
been moral seduction, recovery was eventually denied because We were not convinced that such
seduction existed. The following enlightening disquisition and conclusion were made in the said
case:
The Court of Appeals seem to have overlooked that the example set forth in the
Code Commission's memorandum refers to a tort upon a minor who had
been seduced. The essential feature is seduction, that in law is more than mere
sexual intercourse, or a breach of a promise of marriage; it connotes essentially
the idea of deceit, enticement, superior power or abuse of confidence on the
part of the seducer to which the woman has yielded (U.S. vs. Buenaventura, 27
Phil. 121; U.S. vs. Arlante, 9 Phil. 595).
It has been ruled in the Buenaventura case (supra) that
To constitute seduction there must in all cases be some
sufficient promise or inducementand the woman must
yield because of the promise or other inducement. If she
consents merely from carnal lust and the intercourse is
from mutual desire, there is no seduction (43 Cent. Dig. tit.
Seduction, par. 56) She must be induced to depart from
the path of virtue by the use of some species of arts,
persuasions and wiles, which are calculated to have and
do have that effect, and which result in her person to
ultimately submitting her person to the sexual embraces of
her seducer (27 Phil. 123).
And in American Jurisprudence we find:
On the other hand, in an action by the woman, the
enticement, persuasion or deception is the essence of the

injury; and a mere proof of intercourse is insufficient to

warrant a recovery.
Accordingly it is not seduction where the willingness arises
out of sexual desire of curiosity of the female, and the
defendant merely affords her the needed opportunity for
the commission of the act. It has been emphasized that to
allow a recovery in all such cases would tend to the
demoralization of the female sex, and would be a reward
for unchastity by which a class of adventuresses would be
swift to profit. (47 Am. Jur. 662)
xxx xxx xxx
Over and above the partisan allegations, the fact stand out that for one whole
year, from 1958 to 1959, the plaintiff-appellee, a woman of adult age, maintain
intimate sexual relations with appellant, with repeated acts of intercourse. Such
conduct is incompatible with the idea of seduction. Plainly there is here
voluntariness and mutual passion; for had the appellant been deceived, had
she surrendered exclusively because of the deceit, artful persuasions and wiles
of the defendant, she would not have again yielded to his embraces, much less
for one year, without exacting early fulfillment of the alleged promises of
marriage, and would have cut short all sexual relations upon finding that
defendant did not intend to fulfill his defendant did not intend to fulfill his
promise. Hence, we conclude that no case is made under article 21 of the Civil
Code, and no other cause of action being alleged, no error was committed by
the Court of First Instance in dismissing the complaint. 27
In his annotations on the Civil Code, 28 Associate Justice Edgardo L. Paras, who recently retired
from this Court, opined that in a breach of promise to marry where there had been carnal
knowledge, moral damages may be recovered:
. . . if there be criminal or moral seduction, but not if the intercourse was due to
mutual lust. (Hermosisima vs. Court of Appeals,
L-14628, Sept. 30, 1960; Estopa vs. Piansay, Jr., L-14733, Sept. 30, 1960;
Batarra vs. Marcos, 7 Phil. 56 (sic); Beatriz Galang vs. Court of Appeals, et al.,
L-17248, Jan. 29, 1962). (In other words, if the CAUSE be the promise to
marry, and the EFFECT be the carnal knowledge, there is a chance that there
was criminal or moral seduction, hence recovery of moral damages will
prosper. If it be the other way around, there can be no recovery of moral
damages, because here mutual lust has intervened). . . .

97 | P a g e

together with "ACTUAL damages, should there be any, such as the expenses for the
wedding presentations (See Domalagon v. Bolifer, 33 Phil. 471).
Senator Arturo M. Tolentino 29 is also of the same persuasion:
It is submitted that the rule in Batarra vs. Marcos, 30 still subsists,
notwithstanding the incorporation of the present article 31 in the Code. The
example given by the Code Commission is correct, if there wasseduction, not
necessarily in the legal sense, but in the vulgar sense of deception. But when
the sexual act is accomplished without any deceit or qualifying circumstance of
abuse of authority or influence, but the woman, already of age, has knowingly
given herself to a man, it cannot be said that there is an injury which can be the
basis for indemnity.
But so long as there is fraud, which is characterized by willfulness (sic), the
action lies. The court, however, must weigh the degree of fraud, if it is sufficient
to deceive the woman under the circumstances, because an act which would
deceive a girl sixteen years of age may not constitute deceit as to an
experienced woman thirty years of age. But so long as there is a wrongful act
and a resulting injury, there should be civil liability, even if the act is not
punishable under the criminal law and there should have been an acquittal or
dismissal of the criminal case for that reason.
We are unable to agree with the petitioner's alternative proposition to the effect that granting, for
argument's sake, that he did promise to marry the private respondent, the latter is nevertheless also
at fault. According to him, both parties are in pari delicto; hence, pursuant to Article 1412(1) of the
Civil Code and the doctrine laid down inBatarra vs. Marcos, 32 the private respondent cannot recover
damages from the petitioner. The latter even goes as far as stating that if the private respondent had
"sustained any injury or damage in their relationship, it is primarily because of her own doing, 33 for:
. . . She is also interested in the petitioner as the latter will become a doctor
sooner or later. Take notice that she is a plain high school graduate and a mere
employee . . . (Annex "C") or a waitress (TSN, p. 51, January 25, 1988) in a
luncheonette and without doubt, is in need of a man who can give her
economic security. Her family is in dire need of financial assistance. (TSN, pp.
51-53, May 18, 1988). And this predicament prompted her to accept a
proposition that may have been offered by the petitioner. 34
These statements reveal the true character and motive of the petitioner. It is clear that he harbors a
condescending, if not sarcastic, regard for the private respondent on account of the latter's ignoble
birth, inferior educational background, poverty and, as perceived by him, dishonorable employment.
Obviously then, from the very beginning, he was not at all moved by good faith and an honest

motive. Marrying with a woman so circumstances could not have even remotely occurred to him.
Thus, his profession of love and promise to marry were empty words directly intended to fool, dupe,
entice, beguile and deceive the poor woman into believing that indeed, he loved her and would want
her to be his life's partner. His was nothing but pure lust which he wanted satisfied by a Filipina who
honestly believed that by accepting his proffer of love and proposal of marriage, she would be able
to enjoy a life of ease and security. Petitioner clearly violated the Filipino's concept of morality and
brazenly defied the traditional respect Filipinos have for their women. It can even be said that the
petitioner committed such deplorable acts in blatant disregard of Article 19 of the Civil Code which
directs every person to act with justice, give everyone his due and observe honesty and good faith in
the exercise of his rights and in the performance of his obligations.
No foreigner must be allowed to make a mockery of our laws, customs and traditions.
The pari delicto rule does not apply in this case for while indeed, the private respondent may not
have been impelled by the purest of intentions, she eventually submitted to the petitioner in sexual
congress not out of lust, but because of moral seduction. In fact, it is apparent that she had qualms
of conscience about the entire episode for as soon as she found out that the petitioner was not
going to marry her after all, she left him. She is not, therefore, in pari delicto with the petitioner. Pari
delicto means "in equal fault; in a similar offense or crime; equal in guilt or in legal fault." 35 At most,
it could be conceded that she is merely in delicto.
Equity often interferes for the relief of the less guilty of the parties, where his
transgression has been brought about by the imposition of undue influence of
the party on whom the burden of the original wrong principally rests, or where
his consent to the transaction was itself procured by
fraud. 36
In Mangayao vs. Lasud, 37 We declared:
Appellants likewise stress that both parties being at fault, there should be no
action by one against the other (Art. 1412, New Civil Code). This rule, however,
has been interpreted as applicable only where the fault on both sides is, more
or less, equivalent. It does not apply where one party is literate or intelligent
and the other one is not. (c.f. Bough vs. Cantiveros, 40 Phil. 209).
We should stress, however, that while We find for the private respondent, let it not be said that this
Court condones the deplorable behavior of her parents in letting her and the petitioner stay together
in the same room in their house after giving approval to their marriage. It is the solemn duty of
parents to protect the honor of their daughters and infuse upon them the higher values of morality
and dignity.

98 | P a g e

WHEREFORE, finding no reversible error in the challenged decision, the instant petition is hereby
DENIED, with costs against the petitioner.
SO ORDERED.

G.R. No. 138964

August 9, 2001

VICENTE RELLOSA, CYNTHIA ORTEGA assisted by husband Roberto Ortega, petitioner,

vs.
GONZALO PELLOSIS, INESITA MOSTE, and DANILO RADAM, respondents.
VITUG, J.:
"Every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith." 1 This provision in our law is
not just a declaration of principle for it can in itself constitute, when unduly ignored or violated, a
valid source of a cause of action or defense.

Official. On 12 December 1989, petitioners once again hired workers and proceeded with the
demolition of respondents' houses.
Resultantly, respondents filed Civil Case No. 89-49176 before the Regional Trial Court of Manila,
Branch 54, praying that petitioners be ordered to pay moral and exemplary damages, as well as
attorney's fee, for the untimely demolition of the houses. After trial, the court dismissed the complaint
of respondents and instead ordered them to pay petitioners moral damages. On appeal, the Court of
Appeals, on the basis of its findings and conclusions, reversed the decision of the trial court and
ordered petitioners to pay respondents the following sums:
"1) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five Thousand Pesos
(P25,000.00) for each appellant, by way of moral damages;"

The case seeks to reverse the Court of Appeals in not countenancing an attempt to abridge and
render inutile a legal right to contest an adverse ruling of an agency of government.

"2) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five thousand Pesos
(P25,000.00) for each appellant, by way of exemplary damages;"

Respondents were lessees of a parcel of land, owned by one Marta Reyes, located at San Pascual
Street, Malate, Manila. Respondents had built their houses on the land which, over the years,
underwent continuous improvements. After the demise of Marta, the land was inherited by her son
Victor Reyes. Sometime in 1986, Victor informed respondents that, for being lessees of the land for
more than twenty (20) years, they would have a right of first refusal to buy the land. Sometime in the
early part of 1989, without the knowledge of respondents, the land occupied by them was sold to
petitioner Cynthia Ortega who was able to ultimately secure title to the property in her name.

"3) Fifteen Thousand Pesos (P15,000.00) as and for attorney's fees; and

On 25 May 1989, Cynthia Ortega, filed a petition for condemnation, docketed Condemnation Case
No. 89-05-007, with the Office of the Building Official, City of Manila, of the structures on the land.
On 31 May 1989, respondents filed with the Regional Trial Court of Manila a suit for the "Declaration
of Nullity of the Sale," docketed as Civil Case No. 89-49176, made in favor of petitioner Cynthia
Ortega predicated upon their right of first refusal which was claimed to have been impinged upon the
sale of the land to petitioner Ortega without their knowledge.

"4) The costs of suit."2

The appellate court ruled:
"Thus, by the clear provisions of paragraph 23 of the Implementing Rules and Regulations
of PD 1096 (otherwise known as the Building Code), above, appellants, being the parties
adversely affected by the November 27, 1989 Resolution of the Office of the Building
Official, had fifteen (15) days from receipt of a copy of the same within which to perfect an
administrative appeal. Thus, since appellants received a copy of the Resolution on
December 7, 1989, they had until December 22, 1989 within which to perfect an
administrative appeal and until such time, the said Resolution was not yet final and
executory."
xxx

After due hearing in the condemnation case, the Office of the Building Official issued a resolution,
dated 27 November 1989, ordering the demolition of the houses of respondents. Copies of the
resolution were served upon respondents and their counsel on 07 December 1989. The following
day, or on 08 December 1989, Cynthia Ortega, together with her father and co-petitioner, Vicente
Rellosa, hired workers to commence the demolition of respondents' houses. Due to the timely
intervention of a mobile unit of the Western Police District, the intended demolition did not take place
following talks between petitioner Rellosa and counsel who pleaded that the demolition be
suspended since the order sought to be implemented was not yet final and executory. On 11
December 1989, respondents filed their appeal contesting the order of the Office of the Building

99 | P a g e

xxx

xxx

"It cannot be denied, therefore, that when appellees commenced to demolish appellants'
houses as early as December 8, 1989 and eventually on December 12, 1989, neither the
Resolution of the Building Official nor the Demolition Order itself were final and
executory."3
Petitioners filed the instant petition contending that the appellate court gravely erred in ruling that the
premature demolition of respondents' houses entitled them to the award of damages. Petitioners
pointed out that the order of the Office of the Building Official was eventually upheld on appeal by
the Department of Public Works and Highways in its decision of 14 March 1990. Furthermore,

petitioners added, the structures subject matter of the demolition order were declared to be
dangerous structures by the Office of the Building Official and, as such, could be abated to avoid
danger to the public.
The Court rules for affirmance of the assailed decision.
A right is a power, privilege, or immunity guaranteed under a constitution, statute or decisional law,
or recognized as a result of long usage,4 constitutive of a legally enforceable claim of one person
against another.
Petitioner might verily be the owner of the land, with the right to enjoy5 and to exclude any person
from the enjoyment and disposal thereof,6 but the exercise of these rights is not without limitations.
The abuse of rights rule established in Article 19 of the Civil Code requires every person to act with
justice, to give everyone his due; and to observe honesty and good faith.7 When a right is exercised
in a manner which discards these norms resulting in damage to another, a legal wrong is committed
for which the actor can be held accountable. In this instance, the issue is not so much about the
existence of the right or validity of the order of demolition as the question of whether or not
petitioners have acted in conformity with, and not in disregard of, the standard set by Article 19 of
the Civil Code.
At the time petitioners implemented the order of demolition, barely five days after respondents
received a copy thereof, the same was not yet final and executory. The law provided for a fifteen-day
appeal period in favor of a party aggrieved by an adverse ruling of the Office of the Building Official
but by the precipitate action of petitioners in demolishing the houses of respondents (prior to the
expiration of the period to appeal), the latter were effectively deprived of this recourse. The fact that
the order of demolition was later affirmed by the Department of Public Works and Highways was of
no moment. The action of petitioners up to the point where they were able to secure an order of
demolition was not condemnable but implementing the order unmindful of the right of respondents to
contest the ruling was a different matter and could only be held utterly indefensible.
The Court, however, finds the award of P75,000.00 exemplary damages and another of P75,000.00
moral damages for each respondent to be rather excessive given the circumstances; the awards
must be reduced to the reasonable amounts of P20,000.00 exemplary damages and P20,000.00
moral damages.
WHEREFORE, the assailed decision of the Court of Appeals is MODIFIED by reducing the awards
of P75,000.00 exemplary damages and of P75,000.00 moral damages to each respondent reduced
to P20,000.00 exemplary damages and P20,000.00 moral damages for each respondent. In all other
respects, the decision of the appellate court is AFFIRMED. No costs.
SO ORDERED.

100 | P a g e

60,000 +/ - 10% September 4, 1987[5]

[G.R. No. 126204. November 20, 2001]

NATIONAL POWER CORPORATION, petitioner, vs. PHILIPP
INC., respondent.

BROTHERS

OCEANIC,

DECISION
SANDOVAL-GUTIERREZ, J.:
Where a person merely uses a right pertaining to him, without bad faith or intent to injure, the
fact that damages are thereby suffered by another will not make him liable.[1]
This principle finds useful application to the present case.
Before us is a petition for review of the Decision [2] dated August 27, 1996 of the Court of
Appeals affirming in toto the Decision[3] dated January 16, 1992 of the Regional Trial Court, Branch
57, Makati City.
The facts are:
On May 14, 1987, the National Power Corporation (NAPOCOR) issued invitations to bid for
the supply and delivery of 120,000 metric tons of imported coal for its Batangas Coal-Fired Thermal
Power Plant in Calaca, Batangas. The Philipp Brothers Oceanic, Inc. (PHIBRO) prequalified and
was allowed to participate as one of the bidders. After the public bidding was conducted, PHIBROs
bid was accepted. NAPOCORs acceptance was conveyed in a letter dated July 8, 1987, which was
received by PHIBRO on July 15, 1987.
The Bidding Terms and Specifications[4] provide for the manner of shipment of coals, thus:
SECTION V
SHIPMENT
The winning TENDERER who then becomes the SELLER shall arrange and provide gearless bulk
carrier for the shipment of coal to arrive at discharging port on or before thirty (30) calendar days
after receipt of the Letter of Credit by the SELLER or its nominee as per Section XIV hereof to
meet the vessel arrival schedules at Calaca, Batangas, Philippines as follows:
60,000 +/ - 10 % July 20, 1987

101 | P a g e

On July 10, 1987, PHIBRO sent word to NAPOCOR that industrial disputes might soon plague
Australia, the shipments point of origin, which could seriously hamper PHIBROs ability to supply the
needed coal.[6] From July 23 to July 31, 1987, PHIBRO again apprised NAPOCOR of the situation in
Australia, particularly informing the latter that the ship owners therein are not willing to load cargo
unless a strike-free clause is incorporated in the charter party or the contract of carriage. [7] In order
to hasten the transfer of coal, PHIBRO proposed to NAPOCOR that they equally share the burden
of a strike-free clause. NAPOCOR refused.
On August 6, 1987, PHIBRO received from NAPOCOR a confirmed and workable letter of
credit.Instead of delivering the coal on or before the thirtieth day after receipt of the Letter of Credit,
as agreed upon by the parties in the July contract, PHIBRO effected its first shipment only on
November 17, 1987.
Consequently, in October 1987, NAPOCOR once more advertised for the delivery of coal to its
Calaca thermal plant. PHIBRO participated anew in this subsequent bidding. On November 24,
1987, NAPOCOR disapproved PHIBROs application for pre-qualification to bid for not meeting the
minimum requirements.[8] Upon further inquiry, PHIBRO found that the real reason for the
disapproval was its purported failure to satisfy NAPOCORs demand for damages due to the delay in
the delivery of the first coal shipment.
This prompted PHIBRO to file an action for damages with application for injunction against
NAPOCOR with the Regional Trial Court, Branch 57, Makati City. [9] In its complaint, PHIBRO alleged
that NAPOCORs act of disqualifying it in the October 1987 bidding and in all subsequent biddings
was tainted with malice and bad faith. PHIBRO prayed for actual, moral and exemplary damages
and attorneys fees.
In its answer, NAPOCOR averred that the strikes in Australia could not be invoked as reason
for the delay in the delivery of coal because PHIBRO itself admitted that as of July 28, 1987 those
strikes had already ceased. And, even assuming that the strikes were still ongoing, PHIBRO should
have shouldered the burden of a strike-free clause because their contract was C and F Calaca,
Batangas, Philippines, meaning, the cost and freight from the point of origin until the point of
destination would be for the account of PHIBRO. Furthermore, NAPOCOR claimed that due to
PHIBROs failure to deliver the coal on time, it was compelled to purchase coal from ASEA at a
higher price. NAPOCOR claimed for actual damages in the amount of P12,436,185.73, representing
the increase in the price of coal, and a claim of P500,000.00 as litigation expenses.[10]
Thereafter, trial on the merits ensued.

On January 16, 1992, the trial court rendered a decision in favor of PHIBRO, the dispositive
portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff Philipp Brothers Oceanic Inc.
(PHIBRO) and against the defendant National Power Corporation (NAPOCOR) ordering the said
defendant NAPOCOR:
1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the defendant National
Power Corporations list of accredited bidders and allow PHIBRO to participate in
any and all future tenders of National Power Corporation for the supply and delivery
of imported steam coal;
2 To pay Philipp Brothers Oceanic, Inc. (PHIBRO);
a. The peso equivalent at the time of payment of $864,000 as actual damages;
b. The peso equivalent at the time of payment of $100,000 as moral damages;
c. The peso equivalent at the time of payment of $ 50,000 as exemplary
damages;
d. The peso equivalent at the time of payment of $73,231.91 as reimbursement
for expenses, cost of litigation and attorneys fees;
3. To pay the costs of suit;
4. The counterclaims of defendant NAPOCOR are dismissed for lack of merit.
SO ORDERED.[11]
Unsatisfied, NAPOCOR, through the Solicitor General, elevated the case to the Court of
Appeals.On August 27, 1996, the Court of Appeals rendered a Decision affirming in toto the Decision
of the Regional Trial Court. It ratiocinated that:
There is ample evidence to show that although PHIBROs delivery of the shipment of coal was
delayed, the delay was in fact caused by a) Napocors own delay in opening a workable letter of
credit; and b) the strikes which plaqued the Australian coal industry from the first week of July to the
third week of September 1987. Strikes are included in the definition of force majeure in Section XVII
of the Bidding Terms and Specifications, (supra), so Phibro is not liable for any delay caused
thereby.

102 | P a g e

Phibro was informed of the acceptance of its bid on July 8, 1987. Delivery of coal was to be effected
thirty (30) days from Napocors opening of a confirmed and workable letter of credit. Napocor was
only able to do so on August 6, 1987.
By that time, Australias coal industry was in the middle of a seething controversy and unrest,
occasioned by strikes, overtime bans, mine stoppages. The origin, the scope and the effects of this
industrial unrest are lucidly described in the uncontroverted testimony of James Archibald, an
employee of Phibro and member of the Export Committee of the Australian Coal Association during
the time these events transpired.
xxxxxx
The records also attest that Phibro periodically informed Napocor of these developments as early as
July 1, 1987, even before the bid was approved. Yet, Napocor did not forthwith open the letter of
credit in order to avoid delay which might be caused by the strikes and their after-effects.
Strikes are undoubtedly included in the force majeure clause of the Bidding Terms and
Specifications (supra). The renowned civilist, Prof. Arturo Tolentino, defines force majeure as an
event which takes place by accident and could not have been foreseen. (Civil Code of the
Philippines, Volume IV, Obligations and Constracts, 126, [1991]) He further states:
Fortuitous events may be produced by two general causes: (1) by Nature, such as earthquakes,
storms, floods, epidemics, fires, etc., and (2) by the act of man, such as an armed invasion, attack
by bandits, governmental prohibitions, robbery, etc.
Tolentino adds that the term generally applies, broadly speaking, to natural accidents. In order that
acts of man such as a strike, may constitute fortuitous event, it is necessary that they have the force
of an imposition which the debtor could not have resisted. He cites a parallel example in the case
ofPhilippine National Bank v. Court of Appeals, 94 SCRA 357 (1979), wherein the Supreme Court
said that the outbreak of war which prevents performance exempts a party from liability.
Hence, by law and by stipulation of the parties, the strikes which took place in Australia from the first
week of July to the third week of September, 1987, exempted Phibro from the effects of delay of the
delivery of the shipment of coal.[12]
Twice thwarted, NAPOCOR comes to us via a petition for review ascribing to the Court of
Appeals the following errors:
I
Respondent Court of Appeals gravely and seriously erred in concluding and so holding that
PHIBROs delay in the delivery of imported coal was due to NAPOCORs alleged delay in

opening a letter of credit and to force majeure, and not to PHIBROs own deliberate acts and
faults.[13]
II
Respondent Court of Appeals gravely and seriously erred in concluding and so holding that
NAPOCOR acted maliciously and unjustifiably in disqualifying PHIBRO from participating in
the December 8, 1987 and future biddings for the supply of imported coal despite the
existence of valid grounds therefor such as serious impairment of its track record. [14]
III
Respondent Court of Appeals gravely and seriously erred in concluding and so holding that
PHIBRO was entitled to injunctive relief, to actual or compensatory, moral and exemplary
damages, attorneys fees and litigation expenses despite the clear absence of legal and
factual bases for such award.[15]
IV
Respondent Court of Appeals gravely and seriously erred in absolving PHIBRO from any
liability for damages to NAPOCOR for its unjustified and deliberate refusal and/or failure to
deliver the contracted imported coal within the stipulated period.[16]
V
Respondent Court of Appeals gravely and seriously erred in dismissing NAPOCORs
counterclaims for damages and litigation expenses.[17]
It is axiomatic that only questions of law, not questions of fact, may be raised before this Court
in a petition for review under Rule 45 of the Rules of Court. [18] The findings of facts of the Court of
Appeals are conclusive and binding on this Court[19] and they carry even more weight when the said
court affirms the factual findings of the trial court. [20] Stated differently, the findings of the Court of
Appeals, by itself, which are supported by substantial evidence, are almost beyond the power of
review by this Court.[21]
With the foregoing settled jurisprudence, we find it pointless to delve lengthily on the factual
issues raised by petitioner. The existence of strikes in Australia having been duly established in the
lower courts, we are left only with the burden of determining whether or not NAPOCOR acted
wrongfully or with bad faith in disqualifying PHIBRO from participating in the subsequent public
bidding.
Let us consider the case in its proper perspective.
103 | P a g e

The Court of Appeals is justified in sustaining the Regional Trial Courts decision exonerating
PHIBRO from any liability for damages to NAPOCOR as it was clearly established from the
evidence, testimonial and documentary, that what prevented PHIBRO from complying with its
obligation under the July 1987 contract was the industrial disputes which besieged Australia during
that time. Extant in our Civil Code is the rule that no person shall be responsible for those events
which could not be foreseeen, or which, though foreseen, were inevitable. [22] This means that when
an obligor is unable to fulfill his obligation because of a fortuitous event or force majeure, he cannot
be held liable for damages for non-performance.[23]
In addition to the above legal precept, it is worthy to note that PHIBRO and NAPOCOR
explicitly agreed in Section XVII of the Bidding Terms and Specifications [24] that neither seller
(PHIBRO) nor buyer (NAPOCOR) shall be liable for any delay in or failure of the performance of its
obligations, other than the payment of money due, if any such delay or failure is due to
Force Majeure. Specifically, theydefined force majeure as any disabling cause beyond the control of
and without fault or negligence of the party, which causes may include but are not restricted to Acts
of God or of the public enemy; acts of the Government in either its sovereign or contractual capacity;
governmental restrictions; strikes, fires, floods, wars, typhoons, storms, epidemics and quarantine
restrictions.
The law is clear and so is the contract between NAPOCOR and PHIBRO. Therefore, we have
no reason to rule otherwise.
However, proceeding from the premise that PHIBRO was prevented by force majeure from
complying with its obligation, does it necessarily follow that NAPOCOR acted unjustly, capriciously,
and unfairly in disapproving PHIBROs application for pre-qualification to bid?
First, it must be stressed that NAPOCOR was not bound under any contract to approve
PHIBROs pre-qualification requirements. In fact, NAPOCOR had expressly reserved its right to
reject bids. The Instruction to Bidders found in the Post-Qualification Documents/ Specifications for
the Supply and Delivery of Coal for the Batangas Coal-Fired Thermal Power Plant I at Calaca,
Batangas Philippines,[25] is explicit, thus:
IB-17 RESERVATION OF NAPOCOR TO REJECT BIDS
NAPOCOR reserves the right to reject any or all bids, to waive any minor
informality in the bids received. The right is also reserved to reject the bids of
any bidder who has previously failed to properly perform or complete on
time any and all contracts for delivery of coal or any supply undertaken by a
bidder.[26] (Emphasis supplied)
This Court has held that where the right to reject is so reserved, the lowest bid or any bid for
that matter may be rejected on a mere technicality.[27] And where the government as advertiser,

availing itself of that right, makes its choice in rejecting any or all bids, the losing bidder has no
cause to complain nor right to dispute that choice unless an unfairness or injustice is
shown. Accordingly, a bidder has no ground of action to compel the Government to award the
contract in his favor, nor to compel it to accept his bid. Even the lowest bid or any bid may be
rejected.[28] In Celeste v. Court of Appeals,[29] we had the occasion to rule:
Moreover, paragraph 15 of the Instructions to Bidders states that the Government hereby reserves
the right to reject any or all bids submitted. In the case of A.C. Esguerra and Sons v. Aytona, 4
SCRA 1245, 1249 (1962), we held:
x x x [I]n the invitation to bid, there is a condition imposed upon the bidders to the effect that the
bidders shall be subject to the right of the government to reject any and all bids subject to its
discretion.Here the government has made its choice, and unless an unfairness or injustice is
shown, the losing bidders have no cause to complain, nor right to dispute that choice.
Since there is no evidence to prove bad faith and arbitrariness on the part of the petitioners
in evaluating the bids, we rule that the private respondents are not entitled to damages
representing lost profits. (Emphasis supplied)
Verily, a reservation of the government of its right to reject any bid, generally vests in the
authorities a wide discretion as to who is the best and most advantageous bidder. The exercise of
such discretion involves inquiry, investigation, comparison, deliberation and decision, which are
quasi-judicial functions, and when honestly exercised, may not be reviewed by the court.
[30]
In Bureau Veritas v. Office of the President,[31] we decreed:
The discretion to accept or reject a bid and award contracts is vested in the Government
agencies entrusted with that function. The discretion given to the authorities on this matter is
of such wide latitude that the Courts will not interfere therewith, unless it is apparent that it is
used as a shield to a fraudulent award. (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x. The
exercise of this discretion is a policy decision that necessitates prior inquiry, investigation,
comparison, evaluation, and deliberation. This task can best be discharged by the Government
agencies concerned, not by the Courts.The role of the Courts is to ascertain whether a branch or
instrumentality of the Government has transgresses its constitutional boundaries. But the Courts will
not interfere with executive or legislative discretion exercised within those boundaries. Otherwise, it
strays into the realm of policy decision-making. x x x. (Emphasis supplied)

Owing to the discretionary character of the right involved in this case, the propriety of
NAPOCORs act should therefore be judged on the basis of the general principles regulating human
relations, the forefront provision of which is Article 19 of the Civil Code which provides that every
person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith. [32] Accordingly, a person will be protected
only when he acts in the legitimate exercise of his right, that is, when he acts with prudence and in
good faith; but not when he acts with negligence or abuse.[33]
Did NAPOCOR abuse its right or act unjustly in disqualifying PHIBRO from the public bidding?
We rule in the negative.
In practice, courts, in the sound exercise of their discretion, will have to determine under all
the facts and circumstances when the exercise of a right is unjust, or when there has been an abuse
of right.[34]
We went over the record of the case with painstaking solicitude and we are convinced that
NAPOCORs act of disapproving PHIBRO's application for pre-qualification to bid was without any
intent to injure or a purposive motive to perpetrate damage. Apparently, NAPOCOR acted on the
strong conviction that PHIBRO had a seriously-impaired track record. NAPOCOR cannot be faulted
from believing so. At this juncture, it is worth mentioning that at the time NAPOCOR issued its
subsequent Invitation to Bid, i.e., October 1987, PHIBRO had not yet delivered the first shipment of
coal under the July 1987 contract, which was due on or before September 5, 1987. Naturally,
NAPOCOR is justified in entertaining doubts on PHIBROs qualification or capability to assume an
obligation under a new contract.
Moreover, PHIBROs actuation in 1987 raised doubts as to the real situation of the coal
industry in Australia. It appears from the records that when NAPOCOR was constrained to consider
an offer from another coal supplier (ASEA) at a price of US$33.44 per metric ton, PHIBRO
unexpectedly offered the immediate delivery of 60,000 metric tons of Ulan steam coal at US$31.00
per metric ton for arrival at Calaca, Batangas on September 20-21, 1987. [35] Of course, NAPOCOR
had reason to ponder-- how come PHIBRO could assure the immediate delivery of 60,000
metric tons of coal from the same source to arrive at Calaca not later than September 20/21,
1987 but it could not deliver the coal it had undertaken under its contract?
Significantly, one characteristic of a fortuitous event, in a legal sense, and consequently in
relations to contracts, is that the concurrence must be such as to render it impossible for the debtor
to fulfill his obligation in a normal manner.[36] Faced with the above circumstance, NAPOCOR is
justified in assuming that, may be, there was really no fortuitous event or force majeure which could
render it impossible for PHIBRO to effect the delivery of coal. Correspondingly, it is also justified in
treating PHIBROs failure to deliver a serious impairment of its track record. That the trial court,
thereafter, found PHIBROs unexpected offer actually a result of its desire to minimize losses on the

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part of NAPOCOR is inconsequential. In determining the existence of good faith, the yardstick is the
frame of mind of the actor at the time he committed the act, disregarding actualities or facts outside
his knowledge. We cannot fault NAPOCOR if it mistook PHIBROs unexpected offer a mere attempt
on the latters part to undercut ASEA or an indication of PHIBROs inconsistency. The circumstances
warrant such contemplation.
That NAPOCOR believed all along that PHIBROs failure to deliver on time was unfounded is
manifest from its letters[37] reminding PHIBRO that it was bound to deliver the coal within 30 days
from its (PHIBROs) receipt of the Letter of Credit, otherwise it would be constrained to take legal
action. The same honest belief can be deduced from NAPOCORs Board Resolution, thus:
On the legal aspect, Management stressed that failure of PBO to deliver under the contract
makes them liable for damages, considering that the reasons invoked were not valid. The
measure of the damages will be limited to actual and compensatory damages. However, it was
reported that Philipp Brothers advised they would like to have continuous business relation with
NPC so they are willing to sit down or even proposed that the case be submitted to the Department
of Justice as to avoid a court action or arbitration.
xxxxxx
On the technical-economic aspect, Management claims that if PBO delivers in November 1987 and
January 1988, there are some advantages. If PBO reacts to any legal action and fails to deliver, the
options are: one, to use 100% Semirara and second, to go into urgent coal order. The first option will
result in a 75 MW derating and oil will be needed as supplement. We will stand to lose around P30
M.On the other hand, if NPC goes into an urgent coal order, there will be an additional expense of
$786,000 or P16.11 M, considering the price of the latest purchase with ASEA. On both points,
reliability is decreased.[38]
The very purpose of requiring a bidder to furnish the awarding authority its pre-qualification
documents is to ensure that only those responsible and qualified bidders could bid and be awarded
with government contracts. It bears stressing that the award of a contract is measured not solely by
the smallest amount of bid for its performance, but also by the responsibility of the
bidder. Consequently, the integrity, honesty, and trustworthiness of the bidder is to be
considered. An awarding official is justified in considering a bidder not qualified or not responsible if
he has previously defrauded the public in such contracts or if, on the evidence before him, the
official bona fide believes the bidder has committed such fraud, despite the fact that there is yet
no judicial determination to that effect.[39]Otherwise stated, if the awarding body bona
fide believes that a bidder has seriously impaired its track record because of a particular conduct, it
is justified in disqualifying the bidder. This policy is necessary to protect the interest of the awarding
body against irresponsible bidders.

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Thus, one who acted pursuant to the sincere belief that another willfully committed an act
prejudicial to the interest of the government cannot be considered to have acted in bad faith. Bad
faith has always been a question of intention. It is that corrupt motive that operates in the mind. As
understood in law, it contemplates a state of mind affirmatively operating with furtive design or with
some motive of self-interest or ill-will or for ulterior purpose. [40] While confined in the realm of
thought, its presence may be ascertained through the partys actuation or through circumstantial
evidence.[41] The circumstances under which NAPOCOR disapproved PHIBRO's pre-qualification to
bid do not show an intention to cause damage to the latter. The measure it adopted was one of selfprotection. Consequently, we cannot penalize NAPOCOR for the course of action it took. NAPOCOR
cannot be made liable for actual, moral and exemplary damages.
Corollarily, in awarding to PHIBRO actual damages in the amount of $864,000, the Regional
Trial Court computed what could have been the profits of PHIBRO had NAPOCOR allowed it to
participate in the subsequent public bidding. It ruled that PHIBRO would have won the tenders for
the supply of about 960,000 metric tons out of at least 1,200,000 metric tons from the public bidding
of December 1987 to 1990. We quote the trial courts ruling, thus:
x x x. PHIBRO was unjustly excluded from participating in at least five (5) tenders beginning
December 1987 to 1990, for the supply and delivery of imported coal with a total volume of about
1,200,000 metric tons valued at no less than US$32 Million. (Exhs. AA, AA-1, to AA-2). The price of
imported coal for delivery in 1988 was quoted in June 1988 by bidders at US$ 41.35 to US $ 43.95
per metric ton (Exh. JJ); in September 1988 at US$41.50 to US$49.50 per metric ton (Exh. J-1); in
November 1988 at US$ 39.00 to US$ 48.50 per metric ton (Exh. J-2) and for the 1989 deliveries, at
US$ 44.35 to US$ 47.35 per metric ton (Exh. J-3) and US$38.00 to US$48.25 per metric ton in
September 1990 (Exh. JJ-6 and JJ-7). PHIBRO would have won the tenders for the supply and
delivery of about 960,000 metric tons of coal out of at least 1,200,000 metric tons awarded during
said period based on its proven track record of 80%. The Court, therefore finds that as a result of
its disqualification, PHIBRO suffered damages equivalent to its standard 3% margin in
960,000 metric tons of coal at the most conservative price of US$ 30.000 per metric ton, or
the total of US$ 864,000 which PHIBRO would have earned had it been allowed to participate
in biddings in which it was disqualified and in subsequent tenders for supply and delivery of
imported coal.
We find this to be erroneous.
Basic is the rule that to recover actual damages, the amount of loss must not only be capable
of proof but must actually be proven with reasonable degree of certainty, premised upon competent
proof or best evidence obtainable of the actual amount thereof. [42] A court cannot merely rely on
speculations, conjectures, or guesswork as to the fact and amount of damages. Thus, while
indemnification for damages shall comprehend not only the value of the loss suffered, but also that
of the profits which the obligee failed to obtain, [43] it is imperative that the basis of the alleged

unearned profits is not too speculative and conjectural as to show the actual damages which may be
suffered on a future period.
In Pantranco North Express, Inc. v. Court of Appeals,[44] this Court denied the plaintiffs claim
for actual damages which was premised on a contract he was about to negotiate on the ground that
there was still the requisite public bidding to be complied with, thus:
As to the alleged contract he was about to negotiate with Minister Hipolito, there is no showing that
the same has been awarded to him. If Tandoc was about to negotiate a contract with Minister
Hipolito, there was no assurance that the former would get it or that the latter would award the
contract to him since there was the requisite public bidding. The claimed loss of profit arising out
of that alleged contract which was still to be negotiated is a mere expectancy. Tandocs claim
that he could have earned P2 million in profits is highly speculative and no concrete
evidence was presented to prove the same.The only unearned income to which Tandoc is entitled
to from the evidence presented is that for the one-month period, during which his business was
interrupted, which is P6,125.00, considering that his annual net income was P73, 500.00.
In Lufthansa German Airlines v. Court of Appeals, [45] this Court likewise disallowed the trial
court's award of actual damages for unrealized profits in the amount of US$75,000.00 for being
highly speculative. It was held that the realization of profits by respondent x x x was not a certainty,
but depended on a number of factors, foremost of which was his ability to invite investors and to win
the bid. This Court went further saying that actual or compensatory damages cannot be presumed,
but must be duly proved, and proved with reasonable degree of certainty.
And in National Power Corporation v. Court of Appeals, [46] the Court, in denying the bidders
claim for unrealized commissions, ruled that even if NAPOCOR does not deny its (bidder's) claims
for unrealized commissions, and that these claims have been transmuted into judicial admissions,
these admissions cannot prevail over the rules and regulations governing the bidding for NAPOCOR
contracts, which necessarily and inherently include the reservation by the NAPOCOR of its right to
reject any or all bids.
The award of moral damages is likewise improper. To reiterate, NAPOCOR did not act in bad
faith.Moreover, moral damages are not, as a general rule, granted to a corporation. [47] While it is true
that besmirched reputation is included in moral damages, it cannot cause mental anguish to a
corporation, unlike in the case of a natural person, for a corporation has no reputation in the sense
that an individual has, and besides, it is inherently impossible for a corporation to suffer mental
anguish.[48] In LBC Express, Inc. v. Court of Appeals,[49] we ruled:
Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury.A corporation, being an artificial person and having existence only in legal contemplation, has
no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental

106 | P a g e

anguish.Mental suffering can be experienced only by one having a nervous system and it flows from
real ills, sorrows, and griefs of life all of which cannot be suffered by respondent bank as an artificial
person.
Neither can we award exemplary damages under Article 2234 of the Civil Code. Before the
court may consider the question of whether or not exemplary damages should be awarded, the
plaintiff must show that he is entitled to moral, temperate, or compensatory damages.
NAPOCOR, in this petition, likewise contests the judgment of the lower courts awarding
PHIBRO the amount of $73,231.91 as reimbursement for expenses, cost of litigation and attorneys
fees.
We agree with NAPOCOR.
This Court has laid down the rule that in the absence of stipulation, a winning party may be
awarded attorney's fees only in case plaintiff's action or defendant's stand is so untenable as to
amount to gross and evident bad faith. [50] This cannot be said of the case at bar. NAPOCOR is
justified in resisting PHIBROs claim for damages. As a matter of fact, we partially grant the prayer of
NAPOCOR as we find that it did not act in bad faith in disapproving PHIBRO's pre-qualification to
bid.
Trial courts must be reminded that attorney's fees may not be awarded to a party simply
because the judgment is favorable to him, for it may amount to imposing a premium on the right to
redress grievances in court. We adopt the same policy with respect to the expenses of litigation. A
winning party may be entitled to expenses of litigation only where he, by reason of plaintiff's clearly
unjustifiable claims or defendant's unreasonable refusal to his demands, was compelled to incur
said expenditures. Evidently, the facts of this case do not warrant the granting of such litigation
expenses to PHIBRO.
At this point, we believe that, in the interest of fairness, NAPOCOR should give PHIBRO
another opportunity to participate in future public bidding. As earlier mentioned, the delay on its part
was due to a fortuitous event.
But before we dispose of this case, we take this occasion to remind PHIBRO of the
indispensability of coal to a coal-fired thermal plant. With households and businesses being entirely
dependent on the electricity supplied by NAPOCOR, the delivery of coal cannot be
venturesome. Indeed, public interest demands that one who offers to deliver coal at an appointed
time must give a reasonable assurance that it can carry through. With the deleterious possible
consequences that may result from failure to deliver the needed coal, we believe there is greater
strain of commitment in this kind of obligation.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 126204 dated August
27, 1996 is hereby MODIFIED. The award, in favor of PHIBRO, of actual, moral and exemplary
damages, reimbursement for expenses, cost of litigation and attorneys fees, and costs of suit, is
DELETED.
SO ORDERED

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G.R. No. 143958

July 11, 2003

ALFRED FRITZ FRENZEL, petitioner,

vs.
EDERLINA P. CATITO, respondent.
CALLEJO, SR., J.:
Before us is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. CV No. 53485
which affirmed the Decision2 of the Regional Trial Court of Davao City, Branch 14, in Civil Case No.
17,817 dismissing the petitioner's complaint, and the resolution of the Court of Appeals denying his
motion for reconsideration of the said decision.
The Antecedents3
As gleaned from the evidence of the petitioner, the case at bar stemmed from the following factual
backdrop:
Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He is an electrical
engineer by profession, but worked as a pilot with the New Guinea Airlines. He arrived in the
Philippines in 1974, started engaging in business in the country two years thereafter, and married
Teresita Santos, a Filipino citizen. In 1981, Alfred and Teresita separated from bed and board without
obtaining a divorce.
Sometime in February 1983, Alfred arrived in Sydney, Australia for a vacation. He went to King's
Cross, a night spot in Sydney, for a massage where he met Ederlina Catito, a Filipina and a native of
Bajada, Davao City. Unknown to Alfred, she resided for a time in Germany and was married to Klaus
Muller, a German national. She left Germany and tried her luck in Sydney, Australia, where she
found employment as a masseuse in the King's Cross nightclub. She was fluent in German, and
Alfred enjoyed talking with her. The two saw each other again; this time Ederlina ended up staying in
Alfred's hotel for three days. Alfred gave Ederlina sums of money for her services. 4
Alfred was so enamored with Ederlina that he persuaded her to stop working at King's Cross, return
to the Philippines, and engage in a wholesome business of her own. He also proposed that they
meet in Manila, to which she assented. Alfred gave her money for her plane fare to the Philippines.
Within two weeks of Ederlina's arrival in Manila, Alfred joined her. Alfred reiterated his proposal for
Ederlina to stay in the Philippines and engage in business, even offering to finance her business
venture. Ederlina was delighted at the idea and proposed to put up a beauty parlor. Alfred happily
agreed.
Alfred told Ederlina that he was married but that he was eager to divorce his wife in Australia. Alfred
proposed marriage to Ederlina, but she replied that they should wait a little bit longer.
108 | P a g e

Ederlina found a building at No. 444 M.H. del Pilar corner Arquiza Street, Ermita, Manila, owned by
one Atty. Jose Hidalgo who offered to convey his rights over the property for P18,000.00. Alfred and
Ederlina accepted the offer. Ederlina put up a beauty parlor on the property under the business
name Edorial Beauty Salon, and had it registered with the Department of Trade and Industry under
her name. Alfred paid Atty. Hidalgo P20,000.00 for his right over the property and gave P300,000.00
to Ederlina for the purchase of equipment and furniture for the parlor. As Ederlina was going to
Germany, she executed a special power of attorney on December 13, 19835appointing her brother,
Aser Catito, as her attorney-in-fact in managing the beauty parlor business. She stated in the said
deed that she was married to Klaus Muller. Alfred went back to Papua New Guinea to resume his
work as a pilot.
When Alfred returned to the Philippines, he visited Ederlina in her Manila residence and found it
unsuitable for her. He decided to purchase a house and lot owned by Victoria Binuya Steckel in San
Francisco del Monte, Quezon City, covered by Transfer Certificate of Title No. 218429 for
US$20,000.00. Since Alfred knew that as an alien he was disqualified from owning lands in the
Philippines, he agreed that only Ederlina's name would appear in the deed of sale as the buyer of
the property, as well as in the title covering the same. After all, he was planning to marry Ederlina
and he believed that after their marriage, the two of them would jointly own the property. On January
23, 1984, a Contract to Sell was entered into between Victoria Binuya Steckel as the vendor and
Ederlina as the sole vendee. Alfred signed therein as a witness.6 Victoria received from Alfred, for
and in behalf of Ederlina, the amount of US$10,000.00 as partial payment, for which Victoria issued
a receipt.7 When Victoria executed the deed of absolute sale over the property on March 6,
1984,8 she received from Alfred, for and in behalf of Ederlina, the amount of US$10,000.00 as final
and full payment. Victoria likewise issued a receipt for the said amount.9 After Victoria had vacated
the property, Ederlina moved into her new house. When she left for Germany to visit Klaus, she had
her father Narciso Catito and her two sisters occupy the property.
Alfred decided to stay in the Philippines for good and live with Ederlina. He returned to Australia and
sold his fiber glass pleasure boat to John Reid for $7,500.00 on May 4, 1984.10 He also sold his
television and video business in Papua New Guinea for K135,000.00 to Tekeraoi Pty. Ltd.11 He had
his personal properties shipped to the Philippines and stored at No. 14 Fernandez Street, San
Francisco del Monte, Quezon City. The proceeds of the sale were deposited in Alfred's account with
the Hong Kong Shanghai Banking Corporation (HSBC), Kowloon Branch under Bank Account No.
018-2-807016.12 When Alfred was in Papua New Guinea selling his other properties, the bank sent
telegraphic letters updating him of his account.13 Several checks were credited to his HSBC bank
account from Papua New Guinea Banking Corporation, Westpac Bank of Australia and New Zealand
Banking Group Limited and Westpac Bank-PNG-Limited. Alfred also had a peso savings account
with HSBC, Manila, under Savings Account No. 01-725-183-01. 14
Once, when Alfred and Ederlina were in Hong Kong, they opened another account with HSBC,
Kowloon, this time in the name of Ederlina, under Savings Account No. 018-0-807950. 15 Alfred
transferred his deposits in Savings Account No. 018-2-807016 with the said bank to this new

account. Ederlina also opened a savings account with the Bank of America Kowloon Main Office
under Account No. 30069016.16

the property. By this time, Alfred had already spent P200,000.00 for the purchase, construction and
upkeep of the property.

On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter dated December 7,
1983 from Klaus Muller who was then residing in Berlin, Germany. Klaus informed Alfred that he and
Ederlina had been married on October 16, 1978 and had a blissful married life until Alfred intruded
therein. Klaus stated that he knew of Alfred and Ederlina's amorous relationship, and discovered the
same sometime in November 1983 when he arrived in Manila. He also begged Alfred to leave
Ederlina alone and to return her to him, saying that Alfred could not possibly build his future on his
(Klaus') misfortune.17

Ederlina often wrote letters to her family informing them of her life with Alfred. In a Letter dated
January 21, 1985, she wrote about how Alfred had financed the purchases of some real properties,
the establishment of her beauty parlor business, and her petition to divorce Klaus.27

Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He inquired if there was
any truth to Klaus' statements and Sally confirmed that Klaus was married to Ederlina. When Alfred
confronted Ederlina, she admitted that she and Klaus were, indeed, married. But she assured Alfred
that she would divorce Klaus. Alfred was appeased. He agreed to continue the amorous relationship
and wait for the outcome of Ederlina's petition for divorce. After all, he intended to marry her. He
retained the services of Rechtsanwaltin Banzhaf with offices in Berlin, as her counsel who informed
her of the progress of the proceedings.18 Alfred paid for the services of the lawyer.

In the meantime, Ederlina's petition for divorce was denied because Klaus opposed the same. A
second petition filed by her met the same fate. Klaus wanted half of all the properties owned by
Ederlina in the Philippines before he would agree to a divorce. Worse, Klaus threatened to file a
bigamy case against Ederlina.29

In the meantime, Alfred decided to purchase another house and lot, owned by Rodolfo Morelos
covered by TCT No. 92456 located in Pea Street, Bajada, Davao City.19 Alfred again agreed to
have the deed of sale made out in the name of Ederlina. On September 7, 1984, Rodolfo Morelos
executed a deed of absolute sale over the said property in favor of Ederlina as the sole vendee for
the amount of P80,000.00.20 Alfred paid US$12,500.00 for the property.
Alfred purchased another parcel of land from one Atty. Mardoecheo Camporedondo, located in
Moncado, Babak, Davao, covered by TCT No. 35251. Alfred once more agreed for the name of
Ederlina to appear as the sole vendee in the deed of sale. On December 31, 1984, Atty.
Camporedondo executed a deed of sale over the property for P65,000.00 in favor of Ederlina as the
sole vendee.21 Alfred, through Ederlina, paid the lot at the cost of P33,682.00 and US$7,000.00,
respectively, for which the vendor signed receipts.22 On August 14, 1985, TCT No. 47246 was issued
to Ederlina as the sole owner of the said property.23
Meanwhile, Ederlina deposited on December 27, 1985, the total amount of US$250,000 with the
HSBC Kowloon under Joint Deposit Account No. 018-462341-145.24
The couple decided to put up a beach resort on a four-hectare land in Camudmud, Babak, Davao,
owned by spouses Enrique and Rosela Serrano. Alfred purchased the property from the spouses for
P90,000.00, and the latter issued a receipt therefor.25 A draftsman commissioned by the couple
submitted a sketch of the beach resort.26 Beach houses were forthwith constructed on a portion of
the property and were eventually rented out by Ederlina's father, Narciso Catito. The rentals were
collected by Narciso, while Ederlina kept the proceeds of the sale of copra from the coconut trees in

109 | P a g e

Because Ederlina was preoccupied with her business in Manila, she executed on July 8, 1985, two
special powers of attorney28 appointing Alfred as attorney-in-fact to receive in her behalf the title and
the deed of sale over the property sold by the spouses Enrique Serrano.

Alfred proposed the creation of a partnership to Ederlina, or as an alternative, the establishment of a

corporation, with Ederlina owning 30% of the equity thereof. She initially agreed to put up a
corporation and contacted Atty. Armando Dominguez to prepare the necessary documents. Ederlina
changed her mind at the last minute when she was advised to insist on claiming ownership over the
properties acquired by them during their coverture.
Alfred and Ederlina's relationship started deteriorating. Ederlina had not been able to secure a
divorce from Klaus. The latter could charge her for bigamy and could even involve Alfred, who
himself was still married. To avoid complications, Alfred decided to live separately from Ederlina and
cut off all contacts with her. In one of her letters to Alfred, Ederlina complained that he had ruined
her life. She admitted that the money used for the purchase of the properties in Davao were his. She
offered to convey the properties deeded to her by Atty. Mardoecheo Camporedondo and Rodolfo
Morelos, asking Alfred to prepare her affidavit for the said purpose and send it to her for her
signature.30 The last straw for Alfred came on September 2, 1985, when someone smashed the front
and rear windshields of Alfred's car and damaged the windows. Alfred thereafter executed an
affidavit-complaint charging Ederlina and Sally MacCarron with malicious mischief. 31
On October 15, 1985, Alfred wrote to Ederlina's father, complaining that Ederlina had taken all his
life savings and because of this, he was virtually penniless. He further accused the Catito family of
acquiring for themselves the properties he had purchased with his own money. He demanded the
return of all the amounts that Ederlina and her family had "stolen" and turn over all the properties
acquired by him and Ederlina during their coverture.32
Shortly thereafter, Alfred filed a Complaint33 dated October 28, 1985, against Ederlina, with the
Regional Trial Court of Quezon City, for recovery of real and personal properties located in Quezon
City and Manila. In his complaint, Alfred alleged, inter alia, that Ederlina, without his knowledge and

consent, managed to transfer funds from their joint account in HSBC Hong Kong, to her own
account with the same bank. Using the said funds, Ederlina was able to purchase the properties
subject of the complaints. He also alleged that the beauty parlor in Ermita was established with his
own funds, and that the Quezon City property was likewise acquired by him with his personal
funds.34
Ederlina failed to file her answer and was declared in default. Alfred adduced his evidence ex parte.
In the meantime, on November 7, 1985, Alfred also filed a complaint35 against Ederlina with the
Regional Trial Court, Davao City, for specific performance, declaration of ownership of real and
personal properties, sum of money, and damages. He alleged, inter alia, in his complaint:
4. That during the period of their common-law relationship, plaintiff solely through his own
efforts and resources acquired in the Philippines real and personal properties valued more
or less at P724,000.00; The defendant's common-law wife or live-in partner did not
contribute anything financially to the acquisition of the said real and personal properties.
These properties are as follows:
I. Real Properties
a. TCT No. T-92456 located at Bajada, Davao City, consisting of 286 square
meters, (with residential house) registered in the name of the original title
owner Rodolfo M. Morelos but already fully paid by plaintiff. Valued at
P342,000.00;
b. TCT No. T-47246 (with residential house) located at Babak, Samal, Davao,
consisting of 600 square meters, registered in the name of Ederlina Catito, with
the Register of Deeds of Tagum, Davao del Norte valued at P144,000.00;
c. A parcel of agricultural land located at Camudmud, Babak, Samal, Davao del
Norte, consisting of 4.2936 hectares purchased from Enrique Serrano and
Rosela B. Serrano. Already paid in full by plaintiff. Valued at P228,608.32;
II. Personal Properties:

Alfred prayed that after hearing, judgment be rendered in his favor:

WHEREFORE, in view of the foregoing premises, it is respectfully prayed that judgment
be rendered in favor of plaintiff and against defendant:
a) Ordering the defendant to execute the corresponding deeds of transfer and/or
conveyances in favor of plaintiff over those real and personal properties enumerated in
Paragraph 4 of this complaint;
b) Ordering the defendant to deliver to the plaintiff all the above real and personal
properties or their money value, which are in defendant's name and custody because
these were acquired solely with plaintiffs money and resources during the duration of the
common-law relationship between plaintiff and defendant, the description of which are as
follows:
(1) TCT No. T-92456 (with residential house) located at Bajada, Davao City,
consisting of 286 square meters, registered in the name of the original title
owner Rodolfo Morelos but already fully paid by plaintiff. Valued at
P342,000.00;
(2) TCT No. T-47246 (with residential house) located at Babak, Samal, Davao,
consisting of 600 square meters, registered in the name of Ederlina Catito, with
the Register of Deeds of Tagum, Davao del Norte, valued at P144,000.00;
(3) A parcel of agricultural land located at Camudmud, Babak, Samal, Davao
del Norte, consisting of 4.2936 hectares purchased from Enrique Serrano and
Rosela B. Serrano. Already fully paid by plaintiff. Valued at P228,608.32;
c) Declaring the plaintiff to be the sole and absolute owner of the above-mentioned real
and personal properties;
d) Awarding moral damages to plaintiff in an amount deemed reasonable by the trial court;
e) To reimburse plaintiff the sum of P12,000.00 as attorney's fees for having compelled
the plaintiff to litigate;

a. Furniture valued at P10,000.00.

...
5. That defendant made no contribution at all to the acquisition, of the above-mentioned
properties as all the monies (sic) used in acquiring said properties belonged solely to
plaintiff;36
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f) To reimburse plaintiff the sum of P5,000.00 incurred as litigation expenses also for
having compelled the plaintiff to litigate; and
g) To pay the costs of this suit;

Plaintiff prays other reliefs just and equitable in the premises.37

In her answer, Ederlina denied all the material allegations in the complaint, insisting that she
acquired the said properties with her personal funds, and as such, Alfred had no right to the same.
She alleged that the deeds of sale, the receipts, and certificates of titles of the subject properties
were all made out in her name.38 By way of special and affirmative defense, she alleged that Alfred
had no cause of action against her. She interposed counterclaims against the petitioner.39
In the meantime, the petitioner filed a Complaint dated August 25, 1987, against the HSBC in the
Regional Trial Court of Davao City40 for recovery of bank deposits and damages.41 He prayed that
after due proceedings, judgment be rendered in his favor, thus:

(2) To deliver to the plaintiff the rights of ownership and management of the beauty parlor
located at 444 Arquiza St., Ermita, Manila, including the equipment and fixtures therein;
(3) To account for the earnings of rental of the house and lot in No. 14 Fernandez St., San
Francisco Del Monte, Quezon City, as well as the earnings in the beauty parlor at 444
Arquiza St., Ermita, Manila and turn over one-half of the net earnings of both properties to
the plaintiff;
(4) To surrender or return to the plaintiff the personal properties of the latter left in the
house at San Francisco Del Monte, to wit:
"(1) Mamya automatic camera

WHEREFORE, plaintiff respectfully prays that the Honorable Court adjudge defendant
bank, upon hearing the evidence that the parties might present, to pay plaintiff:

(1) 12 inch "Sonny" T.V. set, colored with remote control.

1. ONE HUNDRED TWENTY SIX THOUSAND TWO HUNDRED AND THIRTY U.S.
DOLLARS AND NINETY EIGHT CENTS (US$126,230.98) plus legal interests, either of
Hong Kong or of the Philippines, from 20 December 1984 up to the date of execution or
satisfaction of judgment, as actual damages or in restoration of plaintiffs lost dollar
savings;

(1) Micro oven

2. The same amount in (1) above as moral damages;

(1) Electric Washing Machine

3. Attorney's fees in the amount equivalent to TWENTY FIVE PER CENT (25%) of (1) and
(2) above;

(1) Office desk and chair

4. Litigation expenses in the amount equivalent to TEN PER CENT (10%) of the amount
in (1) above; and
5. For such other reliefs as are just and equitable under the circumstances.42
On April 28, 1986, the RTC of Quezon City rendered its decision in Civil Case No. Q-46350, in favor
of Alfred, the decretal portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered ordering the
defendant to perform the following:
(1) To execute a document waiving her claim to the house and lot in No. 14 Fernandez
St., San Francisco Del Monte, Quezon City in favor of plaintiff or to return to the plaintiff
the acquisition cost of the same in the amount of $20,000.00, or to sell the said property
and turn over the proceeds thereof to the plaintiff;

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(1) Electric fan (tall, adjustable stand)

(1) Office safe with (2) drawers and safe

(1) Double bed suits

(1) Mirror/dresser
(1) Heavy duty voice/working mechanic
(1) "Sony" Beta-Movie camera
(1) Suitcase with personal belongings
(1) Cardboard box with belongings
(1) Guitar Amplifier
(1) Hanger with men's suit (white)."

To return to the plaintiff, (1) Hi-Fi Stereo equipment left at 444 Arquiza Street, Ermita,
Manila, as well as the Fronte Suzuki car.
(4) To account for the monies (sic) deposited with the joint account of the plaintiff and
defendant (Account No. 018-0-807950); and to restore to the plaintiff all the monies (sic)
spent by the defendant without proper authority;
(5) To pay the amount of P5,000.00 by way of attorney's fees, and the costs of suit.

THE HONORABLE COURT OF APPEALS ERRED IN APPLYING THE RULE OF IN PARI

DELICTO IN THE INSTANT CASE BECAUSE BY THE FACTS AS NARRATED IN THE
DECISION IT IS APPARENT THAT THE PARTIES ARE NOT EQUALLY GUILTY BUT
RATHER IT WAS THE RESPONDENT WHO EMPLOYED FRAUD AS WHEN SHE DID
NOT INFORM PETITIONER THAT SHE WAS ALREADY MARRIED TO ANOTHER
GERMAN NATIONAL AND WITHOUT SUCH FRAUDULENT DESIGN PETITIONER
COULD NOT HAVE PARTED WITH HIS MONEY FOR THE PURCHASE OF THE
PROPERTIES.47
and

SO ORDERED.43
However, after due proceedings in the RTC of Davao City, in Civil Case No. 17,817, the trial court
rendered judgment on September 28, 1995 in favor of Ederlina, the dispositive portion of which
reads:
WHEREFORE, the Court cannot give due course to the complaint and hereby orders its
dismissal. The counterclaims of the defendant are likewise dismissed.
SO ORDERED.44
The trial court ruled that based on documentary evidence, the purchaser of the three parcels of land
subject of the complaint was Ederlina. The court further stated that even if Alfred was the buyer of
the properties; he had no cause of action against Ederlina for the recovery of the same because as
an alien, he was disqualified from acquiring and owning lands in the Philippines. The sale of the
three parcels of land to the petitioner was null and void ab initio. Applying the pari delicto doctrine,
the petitioner was precluded from recovering the properties from the respondent.
Alfred appealed the decision to the Court of Appeals45 in which the petitioner posited the view that
although he prayed in his complaint in the court a quo that he be declared the owner of the three
parcels of land, he had no intention of owning the same permanently. His principal intention therein
was to be declared the transient owner for the purpose of selling the properties at public auction,
ultimately enabling him to recover the money he had spent for the purchase thereof.
On March 8, 2000, the CA rendered a decision affirming in toto the decision of the RTC. The
appellate court ruled that the petitioner knowingly violated the Constitution; hence, was barred from
recovering the money used in the purchase of the three parcels of land. It held that to allow the
petitioner to recover the money used for the purchase of the properties would embolden aliens to
violate the Constitution, and defeat, rather than enhance, the public policy.46
Hence, the petition at bar.
The petitioner assails the decision of the court contending that:
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THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE

INTENTION OF THE PETITIONER IS NOT TO OWN REAL PROPERTIES IN THE
PHILIPPINES BUT TO SELL THEM AT PUBLIC AUCTION TO BE ABLE TO RECOVER
HIS MONEY USED IN PURCHASING THEM.48
Since the assignment of errors are intertwined with each other, the Court shall resolve the same
simultaneously.
The petitioner contends that he purchased the three parcels of land subject of his complaint
because of his desire to marry the respondent, and not to violate the Philippine Constitution. He
was, however, deceived by the respondent when the latter failed to disclose her previous marriage
to Klaus Muller. It cannot, thus, be said that he and the respondent are "equally guilty;" as such,
the pari delicto doctrine is not applicable to him. He acted in good faith, on the advice of the
respondent's uncle, Atty. Mardoecheo Camporedondo. There is no evidence on record that he was
aware of the constitutional prohibition against aliens acquiring real property in the Philippines when
he purchased the real properties subject of his complaint with his own funds. The transactions were
not illegal per se but merely prohibited, and under Article 1416 of the New Civil Code, he is entitled
to recover the money used for the purchase of the properties. At any rate, the petitioner avers, he
filed his complaint in the courta quo merely for the purpose of having him declared as the owner of
the properties, to enable him to sell the same at public auction. Applying by analogy Republic Act
No. 13349 as amended by Rep. Act No. 4381 and Rep. Act No. 4882, the proceeds of the sale would
be remitted to him, by way of refund for the money he used to purchase the said properties. To bar
the petitioner from recovering the subject properties, or at the very least, the money used for the
purchase thereof, is to allow the respondent to enrich herself at the expense of the petitioner in
violation of Article 22 of the New Civil Code.
The petition is bereft of merit.
Section 14, Article XIV of the 1973 Constitution provides, as follows:

Save in cases of hereditary succession, no private land shall be transferred or conveyed

except to individuals, corporations, or associations qualified to acquire or hold lands in the
public domain.50
Lands of the public domain, which include private lands, may be transferred or conveyed only to
individuals or entities qualified to acquire or hold private lands or lands of the public domain. Aliens,
whether individuals or corporations, have been disqualified from acquiring lands of the public
domain. Hence, they have also been disqualified from acquiring private lands.51
Even if, as claimed by the petitioner, the sales in question were entered into by him as the real
vendee, the said transactions are in violation of the Constitution; hence, are null and void ab
initio.52 A contract that violates the Constitution and the law, is null and void and vests no rights and
creates no obligations. It produces no legal effect at all.53 The petitioner, being a party to an illegal
contract, cannot come into a court of law and ask to have his illegal objective carried out. One who
loses his money or property by knowingly engaging in a contract or transaction which involves his
own moral turpitude may not maintain an action for his losses. To him who moves in deliberation and
premeditation, the law is unyielding.54 The law will not aid either party to an illegal contract or
agreement; it leaves the parties where it finds them.55 Under Article 1412 of the New Civil Code, the
petitioner cannot have the subject properties deeded to him or allow him to recover the money he
had spent for the purchase thereof.56 Equity as a rule will follow the law and will not permit that to be
done indirectly which, because of public policy, cannot be done directly.57 Where the wrong of one
party equals that of the other, the defendant is in the stronger position . . . it signifies that in such a
situation, neither a court of equity nor a court of law will administer a remedy.58 The rule is
expressed. in the maxims: EX DOLO ORITUR ACTIO and IN PARI DELICTO POTIOR EST
CONDITIO DEFENDENTIS.59
The petitioner cannot feign ignorance of the constitutional proscription, nor claim that he acted in
good faith, let alone assert that he is less guilty than the respondent. The petitioner is charged with
knowledge of the constitutional prohibition.60 As can be gleaned from the decision of the trial court,
the petitioner was fully aware that he was disqualified from acquiring and owning lands under
Philippine law even before he purchased the properties in question; and, to skirt the constitutional
prohibition, the petitioner had the deed of sale placed under the respondent's name as the sole
vendee thereof:
Such being the case, the plaintiff is subject to the constitutional restrictions governing the
acquisition of real properties in the Philippines by aliens.
From the plaintiff's complaint before the Regional Trial Court, National Capital Judicial
Region, Branch 84, Quezon City in Civil Case No. Q-46350 he alleged:
x x x "That on account that foreigners are not allowed by the Philippine laws to
acquire real properties in their name as in the case of my vendor Miss Victoria

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Vinuya (sic) although married to a foreigner, we agreed and I consented in

having the title to subject property placed in defendant's name alone although I
paid for the whole price out of my own exclusive funds." (paragraph IV, Exhibit
"W.")
and his testimony before this Court which is hereby quoted:
ATTY. ABARQUEZ:
Q.
In whose name the said house and lot placed, by the way, where is his house and
lot located?
A.

In 14 Fernandez St., San Francisco, del Monte, Manila.

Q.

In whose name was the house placed?

A.
Ederlina Catito because I was informed being not a Filipino, I cannot own the
property. (tsn, p. 11, August 27, 1986).
xxx

xxx

xxx

COURT:
Q.
So you understand that you are a foreigner that you cannot buy land in the
Philippines?
A.
That is correct but as she would eventually be my wife that would be owned by us
later on. (tsn, p. 5, September 3, 1986)
xxx

xxx

xxx

Q.

What happened after that?

A.

She said you foreigner you are using Filipinos to buy property.

Q.

And what did you answer?

A:
I said thank you very much for the property I bought because I gave you a lot of
money (tsn., p. 14,ibid).

It is evident that the plaintiff was fully aware that as a non-citizen of the Philippines, he was
disqualified from validly purchasing any land within the country.61
The petitioner's claim that he acquired the subject properties because of his desire to marry the
respondent, believing that both of them would thereafter jointly own the said properties, is belied by
his own evidence. It is merely an afterthought to salvage a lost cause. The petitioner admitted on
cross-examination that he was all along legally married to Teresita Santos Frenzel, while he was
having an amorous relationship with the respondent:
ATTY. YAP:
Q
When you were asked to identify yourself on direct examination you claimed
before this Honorable Court that your status is that of being married, do you confirm that?

The respondent was herself married to Klaus Muller, a German citizen. Thus, the petitioner and the
respondent could not lawfully join in wedlock. The evidence on record shows that the petitioner in
fact knew of the respondent's marriage to another man, but nonetheless purchased the subject
properties under the name of the respondent and paid the purchase prices therefor. Even if it is
assumed gratia arguendi that the respondent and the petitioner were capacitated to marry, the
petitioner is still disqualified to own the properties in tandem with the respondent.63
The petitioner cannot find solace in Article 1416 of the New Civil Code which reads:
Art. 1416. When the agreement is not illegal per se but is merely prohibited, and the
prohibition by the law is designed for the protection of the plaintiff, he may, if public policy
is thereby enhanced, recover what he has paid or delivered.64
The provision applies only to those contracts which are merely prohibited, in order to benefit private
interests. It does not apply to contracts void ab initio. The sales of three parcels of land in favor of
the petitioner who is a foreigner is illegal per se. The transactions are void ab initio because they
were entered into in violation of the Constitution. Thus, to allow the petitioner to recover the
properties or the money used in the purchase of the parcels of land would be subversive of public
policy.

Yes, sir.

To whom are you married?

To a Filipina, since 1976.

Would you tell us who is that particular person you are married since 1976?

Teresita Santos Frenzel.

Where is she now?

In Australia.

Is this not the person of Teresita Frenzel who became an Australian citizen?

I am not sure, since 1981 we were separated.

You were only separated, in fact, but not legally separated?

Thru my counsel in Australia I filed a separation case.

As of the present you are not legally divorce[d]?

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

I am still legally married.62

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

114 | P a g e

Neither may the petitioner find solace in Rep. Act No. 133, as amended by Rep. Act No. 4882, which
reads:
SEC. 1. Any provision of law to the contrary notwithstanding, private real property may be
mortgaged in favor of any individual, corporation, or association, but the mortgagee or his
successor-in-interest, if disqualified to acquire or hold lands of the public domain in the
Philippines, shall not take possession of the mortgaged property during the existence of
the mortgage and shall not take possession of mortgaged property except after default
and for the sole purpose of foreclosure, receivership, enforcement or other proceedings
and in no case for a period of more than five years from actual possession and shall not
bid or take part in any sale of such real property in case of foreclosure: Provided, That
said mortgagee or successor-in-interest may take possession of said property after
default in accordance with the prescribed judicial procedures for foreclosure and
receivership and in no case exceeding five years from actual possession.65

Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just
or legal ground, shall return the same to him.66
The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER DETREMENTO
PROTEST" (No person should unjustly enrich himself at the expense of another). An action for
recovery of what has been paid without just cause has been designated as an accion in rem
verso.67 This provision does not apply if, as in this case, the action is proscribed by the Constitution
or by the application of the pari delicto doctrine. 68 It may be unfair and unjust to bar the petitioner
from filing an accion in rem verso over the subject properties, or from recovering the money he paid
for the said properties, but, as Lord Mansfield stated in the early case of Holman vs. Johnson:69"The
objection that a contract is immoral or illegal as between the plaintiff and the defendant, sounds at all
times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever
allowed; but it is founded in general principles of policy, which the defendant has the advantage of,
contrary to the real justice, as between him and the plaintiff."
IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The decision of the Court of
Appeals is AFFIRMED in toto.
Costs against the petitioner.
SO ORDERED.

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G.R. No. 134241

August 11, 2003

DAVID REYES (Substituted by Victoria R. Fabella), petitioner,

vs.
JOSE LIM, CHUY CHENG KENG and HARRISON LUMBER, INC., respondents.
CARPIO, J.:
The Case
This is a petition for review on certiorari of the Decision1 dated 12 May 1998 of the Court of Appeals
in CA-G.R. SP No. 46224. The Court of Appeals dismissed the petition for certiorari assailing the
Orders dated 6 March 1997, 3 July 1997 and 3 October 1997 of the Regional Trial Court of
Paranaque, Branch 2602 ("trial court") in Civil Case No. 95-032.
The Facts
On 23 March 1995, petitioner David Reyes ("Reyes") filed before the trial court a complaint for
annulment of contract and damages against respondents Jose Lim ("Lim"), Chuy Cheng Keng
("Keng") and Harrison Lumber, Inc. ("Harrison Lumber").
The complaint3 alleged that on 7 November 1994, Reyes as seller and Lim as buyer entered into a
contract to sell ("Contract to Sell") a parcel of land ("Property") located along F.B. Harrison Street,
Pasay City. Harrison Lumber occupied the Property as lessee with a monthly rental of P35,000. The
Contract to Sell provided for the following terms and conditions:
1. The total consideration for the purchase of the aforedescribed parcel of land together
with the perimeter walls found therein is TWENTY EIGHT MILLION (P28,000,000.00)
PESOS payable as follows:
(a) TEN MILLION (P10,000,000.00) PESOS upon signing of this Contract to Sell;
(b) The balance of EIGHTEEN MILLION (P18,000,000.00) PESOS shall be paid on or
before March 8, 1995 at 9:30 A.M. at a bank to be designated by the Buyer but upon the
complete vacation of all the tenants or occupants of the property and execution of the
Deed of Absolute Sale. However, if the tenants or occupants have vacated the premises
earlier than March 8, 1995, the VENDOR shall give the VENDEE at least one week
advance notice for the payment of the balance and execution of the Deed of Absolute
Sale.
2. That in the event, the tenants or occupants of the premises subject of this sale shall not
vacate the premises on March 8, 1995 as stated above, the VENDEE shall withhold the
116 | P a g e

payment of the balance of P18,000,000.00 and the VENDOR agrees to pay a penalty of
Four percent (4%) per month to the herein VENDEE based on the amount of the
downpayment of TEN MILLION (P10,000,000.00) PESOS until the complete vacation of
the premises by the tenants therein.4
The complaint claimed that Reyes had informed Harrison Lumber to vacate the Property before the
end of January 1995. Reyes also informed Keng5 and Harrison Lumber that if they failed to vacate
by 8 March 1995, he would hold them liable for the penalty of P400,000 a month as provided in the
Contract to Sell. The complaint further alleged that Lim connived with Harrison Lumber not to vacate
the Property until the P400,000 monthly penalty would have accumulated and equaled the unpaid
purchase price of P18,000,000.
On 3 May 1995, Keng and Harrison Lumber filed their Answer6 denying they connived with Lim to
defraud Reyes. Keng and Harrison Lumber alleged that Reyes approved their request for an
extension of time to vacate the Property due to their difficulty in finding a new location for their
business. Harrison Lumber claimed that as of March 1995, it had already started transferring some
of its merchandise to its new business location in Malabon.7
On 31 May 1995, Lim filed his Answer8 stating that he was ready and willing to pay the balance of
the purchase price on or before 8 March 1995. Lim requested a meeting with Reyes through the
latters daughter on the signing of the Deed of Absolute Sale and the payment of the balance but
Reyes kept postponing their meeting. On 9 March 1995, Reyes offered to return the P10 million
down payment to Lim because Reyes was having problems in removing the lessee from the
Property. Lim rejected Reyes offer and proceeded to verify the status of Reyes title to the Property.
Lim learned that Reyes had already sold the Property to Line One Foods Corporation ("Line One")
on 1 March 1995 for P16,782,840. After the registration of the Deed of Absolute Sale, the Register of
Deeds issued to Line One TCT No. 134767 covering the Property. Lim denied conniving with Keng
and Harrison Lumber to defraud Reyes.
On 2 November 1995, Reyes filed a Motion for Leave to File Amended Complaint due to
supervening facts. These included the filing by Lim of a complaint for estafa against Reyes as well
as an action for specific performance and nullification of sale and title plus damages before another
trial court.9 The trial court granted the motion in an Order dated 23 November 1995.
In his Amended Answer dated 18 January 1996,10 Lim prayed for the cancellation of the Contract to
Sell and for the issuance of a writ of preliminary attachment against Reyes. The trial court denied the
prayer for a writ of preliminary attachment in an Order dated 7 October 1996.
On 6 March 1997, Lim requested in open court that Reyes be ordered to deposit the P10 million
down payment with the cashier of the Regional Trial Court of Paraaque. The trial court granted this
motion.

On 25 March 1997, Reyes filed a Motion to Set Aside the Order dated 6 March 1997 on the ground
the Order practically granted the reliefs Lim prayed for in his Amended Answer.11 The trial court
denied Reyes motion in an Order12 dated 3 July 1997. Citing Article 1385 of the Civil Code, the trial
court ruled that an action for rescission could prosper only if the party demanding rescission can
return whatever he may be obliged to restore should the court grant the rescission.
The trial court denied Reyes Motion for Reconsideration in its Order13 dated 3 October 1997. In the
same order, the trial court directed Reyes to deposit the P10 million down payment with the Clerk of
Court on or before 30 October 1997.
On 8 December 1997, Reyes14 filed a Petition for Certiorari15 with the Court of Appeals. Reyes
prayed that the Orders of the trial court dated 6 March 1997, 3 July 1997 and 3 October 1997 be set
aside for having been issued with grave abuse of discretion amounting to lack of jurisdiction. On 12
May 1998, the Court of Appeals dismissed the petition for lack of merit.
Hence, this petition for review.
The Ruling of the Court of Appeals
The Court of Appeals ruled the trial court could validly issue the assailed orders in the exercise of its
equity jurisdiction. The court may grant equitable reliefs to breathe life and force to substantive law
such as Article 138516 of the Civil Code since the provisional remedies under the Rules of Court do
not apply to this case.
The Court of Appeals held the assailed orders merely directed Reyes to deposit the P10 million to
the custody of the trial court to protect the interest of Lim who paid the amount to Reyes as down
payment. This did not mean the money would be returned automatically to Lim.
The Issues
Reyes raises the following issues:
1. Whether the Court of Appeals erred in holding the trial court could issue the questioned
Orders dated March 6, 1997, July 3, 1997 and October 3, 1997, requiring petitioner David
Reyes to deposit the amount of Ten Million Pesos (P10,000,000.00) during the pendency
of the action, when deposit is not among the provisional remedies enumerated in Rule 57
to 61 of the 1997 Rules on Civil Procedure.
2. Whether the Court of Appeals erred in finding the trial court could issue the questioned
Orders on grounds of equity when there is an applicable law on the matter, that is, Rules
57 to 61 of the 1997 Rules on Civil Procedure.17

117 | P a g e

The Courts Ruling

Reyes contentions are without merit.
Reyes points out that deposit is not among the provisional remedies enumerated in the 1997 Rules
of Civil Procedure. Reyes stresses the enumeration in the Rules is exclusive. Not one of the
provisional remedies in Rules 57 to 6118 applies to this case. Reyes argues that a court cannot apply
equity and require deposit if the law already prescribes the specific provisional remedies which do
not include deposit. Reyes invokes the principle that equity is "applied only in the absence of, and
never against, statutory law or x x x judicial rules of procedure."19Reyes adds the fact that the
provisional remedies do not include deposit is a matter of dura lex sed lex.20
The instant case, however, is precisely one where there is a hiatus in the law and in the Rules of
Court. If left alone, the hiatus will result in unjust enrichment to Reyes at the expense of Lim. The
hiatus may also imperil restitution, which is a precondition to the rescission of the Contract to Sell
that Reyes himself seeks. This is not a case of equity overruling a positive provision of law or judicial
rule for there is none that governs this particular case. This is a case of silence or insufficiency of the
law and the Rules of Court. In this case, Article 9 of the Civil Code expressly mandates the courts to
make a ruling despite the "silence, obscurity or insufficiency of the laws."21This calls for the
application of equity,22 which "fills the open spaces in the law."23
Thus, the trial court in the exercise of its equity jurisdiction may validly order the deposit of the P10
million down payment in court. The purpose of the exercise of equity jurisdiction in this case is to
prevent unjust enrichment and to ensure restitution. Equity jurisdiction aims to do complete justice in
cases where a court of law is unable to adapt its judgments to the special circumstances of a case
because of the inflexibility of its statutory or legal jurisdiction.24 Equity is the principle by which
substantial justice may be attained in cases where the prescribed or customary forms of ordinary
law are inadequate.25
Reyes is seeking rescission of the Contract to Sell. In his amended answer, Lim is also seeking
cancellation of the Contract to Sell. The trial court then ordered Reyes to deposit in court the P10
million down payment that Lim made under the Contract to Sell. Reyes admits receipt of the P10
million down payment but opposes the order to deposit the amount in court. Reyes contends that
prior to a judgment annulling the Contract to Sell, he has the "right to use, possess and enjoy"26 the
P10 million as its "owner"27 unless the court orders its preliminary attachment.28
To subscribe to Reyes contention will unjustly enrich Reyes at the expense of Lim. Reyes sold to
Line One the Property even before the balance of P18 million under the Contract to Sell with Lim
became due on 8 March 1995. On 1 March 1995, Reyes signed a Deed of Absolute Sale 29 in favor
of Line One. On 3 March 1995, the Register of Deeds issued TCT No. 13476730 in the name of Line
One.31 Reyes cannot claim ownership of the P10 million down payment because Reyes had already
sold to another buyer the Property for which Lim made the down payment. In fact, in his

Comment32 dated 20 March 1996, Reyes reiterated his offer to return to Lim the P10 million down
payment.
On balance, it is unreasonable and unjust for Reyes to object to the deposit of the P10 million down
payment. The application of equity always involves a balancing of the equities in a particular case, a
matter addressed to the sound discretion of the court. Here, we find the equities weigh heavily in
favor of Lim, who paid the P10 million down payment in good faith only to discover later that Reyes
had subsequently sold the Property to another buyer.
In Eternal Gardens Memorial Parks Corp. v. IAC,33 this Court held the plaintiff could not continue
to benefit from the property or funds in litigation during the pendency of the suit at the expense of
whomever the court might ultimately adjudge as the lawful owner. The Court declared:
In the case at bar, a careful analysis of the records will show that petitioner admitted among others
in its complaint in Interpleader that it is still obligated to pay certain amounts to private respondent;
that it claims no interest in such amounts due and is willing to pay whoever is declared entitled to
said amounts. x x x
Under the circumstances, there appears to be no plausible reason for petitioners objections to the
deposit of the amounts in litigation after having asked for the assistance of the lower court by filing a
complaint for interpleader where the deposit of aforesaid amounts is not only required by the nature
of the action but is a contractual obligation of the petitioner under the Land Development Program
(Rollo, p. 252).
There is also no plausible or justifiable reason for Reyes to object to the deposit of the P10 million
down payment in court. The Contract to Sell can no longer be enforced because Reyes himself
subsequently sold the Property to Line One. Both Reyes and Lim are now seeking rescission of the
Contract to Sell. Under Article 1385 of the Civil Code, rescission creates the obligation to return the
things that are the object of the contract. Rescission is possible only when the person demanding
rescission can return whatever he may be obliged to restore. A court of equity will not rescind a
contract unless there is restitution, that is, the parties are restored to the status quo ante.34
Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot refuse to deposit the P10
million down payment in court.35 Such deposit will ensure restitution of the P10 million to its rightful
owner. Lim, on the other hand, has nothing to refund, as he has not received anything under the
Contract to Sell.36
In Government of the Philippine Islands v. Wagner and Cleland Wagner,37 the Court ruled the
refund of amounts received under a contract is a precondition to the rescission of the contract. The
Court declared:

118 | P a g e

The Government, having asked for rescission, must restore to the defendants whatever it
has received under the contract. It will only be just if, as a condition to rescission, the
Government be required to refund to the defendants an amount equal to the purchase
price, plus the sums expended by them in improving the land. (Civil Code, art. 1295.)
The principle that no person may unjustly enrich himself at the expense of another is embodied in
Article 2238 of the Civil Code. This principle applies not only to substantive rights but also to
procedural remedies. One condition for invoking this principle is that the aggrieved party has no
other action based on contract, quasi-contract, crime, quasi-delict or any other provision of
law.39 Courts can extend this condition to the hiatus in the Rules of Court where the aggrieved party,
during the pendency of the case, has no other recourse based on the provisional remedies of the
Rules of Court.
Thus, a court may not permit a seller to retain, pendente lite, money paid by a buyer if the seller
himself seeks rescission of the sale because he has subsequently sold the same property to another
buyer.40 By seeking rescission, a seller necessarily offers to return what he has received from the
buyer. Such a seller may not take back his offer if the court deems it equitable, to prevent unjust
enrichment and ensure restitution, to put the money in judicial deposit.
There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a
person retains money or property of another against the fundamental principles of justice, equity and
good conscience.41In this case, it was just, equitable and proper for the trial court to order the
deposit of the P10 million down payment to prevent unjust enrichment by Reyes at the expense of
Lim.42
WHEREFORE, we AFFIRM the Decision of the Court of Appeals.
SO ORDERED.

[G.R. No. 148332. September 30, 2003]

NATIONAL DEVELOPMENT COMPANY, petitioner, vs. MADRIGAL WAN HAI LINES
CORPORATION, respondent.
DECISION

The respondents bid was rejected by petitioner and the Commission on Audit.
But since there was no other bidder, petitioner entered into a negotiated sale with respondent.
After several negotiations, respondent increased its offer to $18.5 million which was accepted by
petitioner. The negotiated sale was then approved by petitioners Board of Directors on August 26,
1993, the President of the Philippines on September 28, 1993, the Committee on Privatization on
October 7, 1993, and the Commission on Audit on February 2, 1994.[10]
[9]

SANDOVAL-GUTIERREZ, J.:
[1]

Before us is a petition for review on certiorari assailing the Decision of the Court of Appeals
dated May 21, 2001 in CA-G.R. CV No. 66026, affirming with modification the Decision dated August
6, 1999 of the Regional Trial Court, Branch 62, Makati City, in Civil Case No. 96-558 for sum of
money and damages.
The factual antecedents are:
The National Development Company, petitioner, is a government-owned and controlled
corporation created and existing under Commonwealth Act No. 182, as amended by Presidential
Decree No. 1648. The National Shipping Corporation of the Philippines (NSCP) is a whollyowned subsidiary of petitioner offering shipping services for containerized cargo between the Far
East ports and the U.S. West Coast.[2]
On March 1, 1993, petitioners Board of Directors approved the privatization plan of the NSCP.
In May 1993, the Board offered for sale to the public its one hundred percent (100%) stock
ownership in NSCP worth P150,000.00, as well as its three (3) ocean-going vessels (M/V National
Honor, M/V National Pride and M/V National Dignity).[4]
[3]

Consequently, petitioner released to the public an Information Package[5] containing NSCPs

background, assets, operational and financial status. Attached thereto is NSCPs Financial
Statements covering the period from December 1990 up to 1992.
The
Information
Package
likewise
contained
the Negotiated
Sale
Guidelines whichembodied the terms and conditions of the proposed sale. Attached thereto is
a Proposal Letter Form[6] wherein bidders were advised to submit their bids to be specified in the
same form. Petitioners desired price for the NSCP shares of stock and the vessels was Twenty-Six
Million Seven Hundred Fifty Thousand US Dollars ($26,750,000.00).[7]
During the public bidding on May 7, 1993, the lone bidder was herein respondent, Madrigal
Wan Hai Lines Corporation, a domestic private corporation duly organized and existing under the
Philippine laws with principal office in Manila. Mr. Willie J. Uy, respondents Consultant, submitted a
bid of $15 million through the Proposal Letter Form.[8]
119 | P a g e

Accordingly, on February 11, 1994, petitioner issued a Notice of Award to respondent of the
sale of the NSCP shares and vessels for $18.5 million. [11] On March 14, 1994, petitioner and
respondent executed the corresponding Contract of Sale, [12] and the latter acquired NSCP, its
assets, personnel, records and its three (3) vessels.[13]
On September 22, 1994, respondent was surprised to receive from the US Department
of Treasury, Internal Revenue Service (US IRS), a Notice of Final Assessment against NSCP
for deficiency taxes on gross transportation income derived from US sources for the years
ending 1990, 1991 and 1992.[14] The tax assessment was based on Section 887 of the US Internal
Revenue Code imposing a 4% tax on gross transportation income of any foreign corporation derived
from US sources.[15]
Anxious that the delay in the payment of the deficiency taxes may hamper its shipping
operations overseas, respondent, on October 14, 1994, assumed and paid petitioners tax
liabilities, including the tax due for the year 1993, in the total amount of $671,653.00.These
taxes were incurred prior to respondents take-over of NSCPs management. [16]Respondent
likewise paid the additional amount of $16,533.10 as penalty for late payment.[17]
Eventually, respondent demanded from petitioner reimbursement for the amounts it paid to the
US IRS. But petitioner refused despite repeated demands. Hence, on March 20, 1996, respondent
filed with the Regional Trial Court (RTC), Branch 62, Makati City a complaint [18]against petitioner for
reimbursement and damages, docketed as Civil Case No. 96-558.
On August 6, 1999, the RTC rendered a Decision [19] in favor of respondent and against
petitioner. The trial court found, among others, that even before the sale, petitioner knew that NSCP
had tax liabilities with the US IRS, yet it did not inform respondent about it. The dispositive portion of
the RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
(1) defendant (now petitioner) to pay plaintiff (now respondent), to wit:

a. US $671,653, US $14,415.87, and US $2,117.23 or their peso equivalent at

the time of payment;

formality of the bidding. Under the circumstance, the plaintiff, in taking such contracts, may not be
deemed to have been given the opportunity to bargain on equal footing.[23]

b. 6% interest of the above-mentioned amounts per annum from the time of the
filing of the complaint until the same shall have been fully paid;

Petitioner now comes to us via the instant petition, ascribing to the Court of Appeals the
following error:

c. P100,000.00 as exemplary damages;

THE COURT OF APPEALS ERRED IN CONCURRING WITH THE TRIAL COURT IN ORDERING
HEREIN PETITIONER TO REIMBURSE RESPONDENT THE DEFICIENCY TAXES IT PAID TO
THE US IRS.[24]

d. P100,000.00 as attorneys fees;

(2) The Counterclaims of the defendant dated August 20, 1996 is DISMISSED.[20]
Upon appeal, the Court of Appeals rendered a Decision [21] on May 21, 2001 affirming the trial
courts judgment with modification, thus:
WHEREFORE, upon the premises, the Decision appealed from is AFFIRMED with
theMODIFICATION that the award of exemplary damages is DELETED and the award of attorneys
fees is REDUCED to P20,000.00.
SO ORDERED.[22]
The Court of Appeals held:
We concur with the trial court in ordering defendant-appellant (now petitioner) to reimburse plaintiffappellee (now respondent) the deficiency taxes it paid to the US IRS, and quote with favor its wellwritten ratiocination as follows:
In its effort to extricate itself from liability, defendant further argues that the sale with the plaintiff was
on CASH, AS-WHERE-IS basis and that plaintiff, as an offeror, was responsible for informing itself
with respect to any and all conditions regarding the NSCP shares and vessels which may in any
manner affect the offer price or the nature of offerors proposal (Exhs. 8, 8-A to A-B).
The above-mentioned contracts form part of the NSCPs Negotiated Sale Guidelines dated March
1993 prepared by NSCP and required by NDC (now petitioner) to be attached with the Proposal
Letter Form, which was also prepared by NSCP, and submitted to NDC by bidders. These contracts
are ready-made form of contracts, the preparation of which was left entirely to the NSCP. Their
nature is that of a contract of adhesion. A contract of adhesion may be struck down as void and
unenforceable, for being subversive of public policy, when the weaker party is imposed upon in
dealing with the dominant bargaining party and is reduced to the alternative of taking it or leaving it,
completely deprived of the opportunity to bargain on equal footing (Saludo, Jr. vs. Court of Appeals,
207 SCRA 498 [1992]). In the case at bar, the acceptance of the Negotiated Sale Guidelines and
submission thereof together with the Proposal Letter Form by a prospective buyer is a required
120 | P a g e

Petitioner contends that contrary to the findings of both lower courts, the Negotiated Sale
Guidelines and the Proposal Letter Form are mere invitations to bid. As such, they are not contracts
and should be treated as mere offer or proposal to prospective buyers of the NSCP shares and
marine vessels.[25]
Petitioner further stresses that the sale was on an AS IS, WHERE IS basis. [26] By accepting
the terms and conditions of the sale, respondent, in effect, accepted the risk of an AS IS, WHERE IS
arrangement wherein the latter is charged with caution under the principle of caveat emptor.
[27]
Pursuant to the Negotiated Sale Guidelines and the Proposal Letter Form, respondent should
have apprised itself of the financial status and liabilities of NSCP and its marine vessels. Therefore,
for its predicament, respondent should not fault petitioner.[28]
For its part, respondent maintains that the Court of Appeals did not commit any error in its
challenged Decision. The Negotiated Sale Guidelines and the Proposal Letter Form constitute a
contract of adhesion because the buyer was required to submit its bid through a pro-formaproposal
letter.[29] The offer to bidders was on a take it, or leave it basis, leaving no room for argument or
negotiation, except as to the price. [30] Being a contract of adhesion, it should be strictly construed
against the seller, herein petitioner.[31]
Respondent also contends that under Articles 19,[32] 20[33] and 21[34] of the Civil Code,
petitioner had then the legal duty to disclose its tax liabilities. Records show that respondent
repeatedly inquired from petitioner about such matter.[35] Instead of telling the truth, petitioner made
several assurances that the NSCP was a clean, lien-free going concern and profitable entity. [36] In
fact, under Section 7.01 of the Negotiated Sale Guidelines, petitioner made a warranty against any
lien or encumbrance.[37]
In this petition, the issues for our resolution are:
(1) Whether the Negotiated Sale Guidelines and the Proposal Letter Form constitute a contract of
adhesion; and

(2) Whether petitioner is legally bound to reimburse respondent for the amounts it paid
corresponding to the formers tax liabilities to the US IRS.
On the first issue, we agree with both lower courts that the Negotiated Sale Guidelines and
the Proposal Letter Form constitute a contract of adhesion.
A contract of adhesion is one in which one of the parties imposes a ready-made form of
contract, which the other party may accept or reject, but which the latter cannot modify. In other
words, in such contract, the terms therein are fixed by one party, and the other party has merely to
take it, or leave it. [38] Thus, it can be struck down as void and unenforceable for being subversive of
public policy, especially when the will of the dominant party is imposed upon the weaker party and
the latter is denied the opportunity to bargain on equal footing.[39]
It must be stressed, however, that contracts of adhesion are not strictly against the law. InOng
Yiu vs. Court of Appeals[40] and Pan American World Airways, Inc. vs. Intermediate Appellate Court,
[41]
we held that contracts of adhesion wherein one party imposes a ready-made form of contract on
the other are not entirely prohibited. The other party is free to reject it entirely; if he adheres, he
gives his consent.
Nevertheless, the inequality of bargaining positions and the resulting impairment of the other
partys freedom to contract necessarily call upon us to exercise our mandate as a court of justice and
equity. Indeed, we have ruled that contracts of such nature obviously call for greater strictness and
vigilance on the part of the courts of justice with a view to protecting the weaker party from abuses
and imposition and prevent their becoming traps for the unwary.[42]
In the case at bar, the Negotiated Sale Guidelines and Proposal Letter Form fit the
characteristics of a contract of adhesion. On their very face, these documents show that petitioner
NDC had control over the terms and conditions of the sale. The Negotiated Sale Guidelines
provides:
4.0 PREPARATION OF OFFERS

NDC and APT may, at their discretion require additional information

and/or documents from any offeror.
14.02 NDC and APT reserve the right to amend the Guidelines prior to the
submission of offers x x x.
xxxxxxxxx
14.05 Violation of any of these terms and conditions shall cause the
cancellation of the award and the automatic forfeiture of the
deposit.[43] (Underscoring ours)
The Proposal Letter Form provides that the bidder is bound by the Negotiated Sale
Guidelines, thus:
It is understood that:
1. We accept and undertake without any reservations whatsoever that, if this offer to
purchase the vessels and NSCP shares is accepted, we shall be subjected to all the terms
and conditions issued by the NDC and APT including those outlined in the March, 1993
Information Memorandum and the Negotiated Sale Guidelines for the sale of NSCP and the
three vessels.
xxxxxxxxx

4.01 Offerors shall use the Proposal Letter Form for Sale of NSCP and
Vessels provided herein.

5. We represent and warrant that: (i) we have examined and understood the Information Package,
(ii) we accept the conditions of the March, 1993 Negotiated Sale Guidelines, including the
right of NDC and APT to reject any and all offers without thereby creating any liability in our
favor x x x.[44](Underscoring ours)

4.02 All offers should be accompanied by: x x x (b) the Negotiated Sale
Guidelines duly signed by the offeror or authorized
representative in every page thereofx x x.

Clearly, respondent had hardly any say in the terms and conditions expressed in the
Negotiated Sale Guidelines. Other than the price of the offer, respondent was left with little or no
alternative at all but to comply with its terms. Thus, the trial court correctly found:

xxxxxxxxx
14.0 OTHER PROVISIONS
121 | P a g e

14.01 NDC and APT reserve the right in their discretion to reject any and all
offers, to waive any formality therein and of these guidelines,
and to consider only such offer as may be advantageous to the
National Government.

The above-mentioned contracts form part of NSCPs Negotiated Sale Guidelines dated March 1993
prepared by NSCP and required by NDC to be attached with the Proposal Letter Form, which was
also prepared by NSCP, and submitted to NDC by bidders. These contracts are ready-made form

of contracts, the preparation of which was left entirely to the NSCP. Their nature is that of a
contract of adhesion. x x x. In the case at bar, the acceptance of the Negotiated Sale Guidelines
and submission thereof together with the Proposal Letter Form by a prospective buyer is a required
formality of the bidding. Under this circumstance, the plaintiff, in taking such contracts, may not be
deemed to have been given the opportunity to bargain on equal footing.[45] (Underscoring ours)
Being a contract of adhesion, we reiterate that it is our duty to apply a strict construction of its
terms upon the party who made the same [46] and to construe any ambiguity in such contract against
its author.[47] It is public policy to protect a party (herein respondent) against oppressive and onerous
conditions.[48]
We are not impressed by petitioners argument that the Negotiated Sale Guidelines was a
mere invitation to bid.[49] On the contrary, the Contract of Sale itself provides that it is an integral part
or applicable to this Contract, thus:
8. All of the terms and conditions of (a) the March 1993 NDC Information Memorandum and
Negotiated Sale Guidelines, including the amendments thereto, more particularly those contained
in NDCs letter to A. P. Madrigal Steamship Co. Inc. dated May 4, 1993, and (b) the Notice of Award
dated February 11, 1993 are hereby incorporated herein by reference and shall insofar as they
are not inconsistent with the terms and conditions hereof, be applicable to this Contract.
[50]
(Underscoring ours)
We now determine whether petitioner is obliged under the law and the contract to reimburse
respondent for the amounts it paid corresponding to the formers US tax liabilities.We quote with
approval the trial courts findings affirmed by the Court of Appeals, thus:
From the foregoing facts, there is no doubt that during the negotiation for the sale of defendants
(now petitioners) shares of stocks and three (3) ocean-going vessels, NSCP was already aware of
an impending assessment by the US government on NSCPs gross transportation income derived
from US sources. The exchanges of communications (Exhibits D, E, F, G, H and I) between
NSCP and US IRS are glaring proof of NSCPs prior knowledge of a possible assessment or
additional taxes.Moreover, in the Partial Printout of NSCPs Unaudited Financial Statements
for the Year ending December 31, 1993 (Exhibit V), NSCP made provisions for US taxes as
follows: for the year ending 1993, US $3,919,018.81 (Exh. V-2), and for the years ending 19901992, US $11,736,192.64 (Exh. V-3). Exhibit V is a clear indication that, indeed, NSCP had prior
knowledge of such deficiency taxes, and in fact, recognized the same even though there was no
final assessment yet from the US IRS.[51]

carries provisions for US taxes. The problem, however, with this evidence is there is no
showing that this had been furnished the plaintiff (now respondent). On the contrary, plaintiff
vehemently asserts having been denied by defendant access to the latters accounting books and
financial statements. Basic in the law of evidence that he who asserts the affirmative of the
allegation has the burden of proving it (Geraldez vs. CA, 230 SCRA 320). The defendant has failed
to prove that the pertinent statement made in this document or the document itself had been
disclosed to the plaintiff.
The Unaudited Financial Statements of NSCP (Exhs. 3, 3-A and 3-B), which allegedly includes the
subject US taxes among NSCPs Trade Payable and Accrued Expenses and Dividends, does not
clearly indicate the said taxes. The Trade Payable and Accrued Expenses and Dividends as
including the said taxes is vague or unequivocal on the matter. By mere reading of it, one
would not have the slightest inkling or suspicion that such taxes exist as among NSCPs
liabilities.[52] (Underscoring ours)
There is no dispute that petitioner was aware of its US tax liabilities considering its numerous
communications with the agents of the United States Internal Revenue Service, just prior to the sale
of NSCP and the marine vessels to respondent. [53] The NSCP itself made an ambiguous contingent
provision in its Unaudited Financial Statements for the year ending December 1993, thereby
indicating its awareness of a possible US tax assessment. [54] It bears stressing that petitioner did not
convey such information to respondent despite its inquiries. [55]Obviously, such concealment
constitutes bad faith on its part. Bad faith implies a conscious and intentional design to do a wrongful
act for a dishonest purpose or moral obliquity; it x x x contemplates a state of mind affirmatively
operating with furtive design or ill will.[56]
We see no reason to disturb the factual findings of both the trial court and Court of Appeals
which petitioner does not dispute. Absent any showing that such findings were reached arbitrarily or
without sufficient basis, the same must be respected and binding upon us.[57]
That petitioner has the obligation to reimburse respondent is likewise clear under the
Negotiated Sale Guidelines, which provides:
7.0 OFFERORS RESPONSIBILITY
7.01 x x x. Seller gives no warranty regarding the sale of the shares and
assets except for a warranty on ownership and against any liens or
encumbrances, and the offeror shall not be relieved of his obligation to make
the aforesaid examinations and verifications.[58] (Underscoring ours)

xxxxxxxxx
The Partial Printout of NSCPs Unaudited Financial Statements for the Year ending December 1993
(Exhs. 2, 2-A to 2-B or Exhs. V, V-2 to V-3), true to the word of the defendant (now petitioner),

122 | P a g e

The terms of the parties contract are clear and unequivocal. The seller (petitioner NDC) gives
a warranty as to the ownership of the object of sale and against any lien and encumbrance. A tax
liability of $688,186.10 was then a potential lien upon NSCPs marine vessels. Being in bad faith for

having failed to inform the buyer, herein respondent, of such potential lien, petitioner breached its
warranty and should, therefore, be held liable for the resulting damage, i.e., reimbursement for the
amounts paid by petitioner to the US IRS.
The Negotiated Sale Guidelines further provides:
2.0 TERMS OF SALE
2.01 The sale of the NSCP and the three vessels shall be strictly on CASH, AS
IS-WHERE IS basis.[59] (Underscoring ours)
[60]

In Hian vs. Court of Tax Appeals,

basis, thus:

we had the occasion to construe the phrase as is, where is

We cannot accept the contention in the Governments Memorandum of March 31, 1976 that
Condition No. 5 in the Notice of Sale to the effect that The above-mentioned articles (the tobacco)
are offered for sale AS IS and the Bureau of Customs gives no warranty as to their condition relieves
the Bureau of Customs of liability for the storage fees in dispute. As we understand said Condition
No. 5, it refers tothe physical condition of the tobacco and not to the legal situation in which it
was at the time of the sale, as could be implied from the right of inspection to prospective bidders
under Condition No. 1. x x x. (Underscoring ours)
The phrase as is, where is basis pertains solely to the physical condition of the thing
sold,not to its legal situation. In the case at bar, the US tax liabilities constitute a potential lien
which applies to NSCPs legal situation, not to its physical aspect. Thus, respondent as a buyer, has
no obligation to shoulder the same.
The case at bar calls to mind the principle of unjust enrichment Nemo cum alterius detrimento
locupletari potest. No person shall be allowed to enrich himself unjustly at the expense of
others. This principle of equity has been enshrined in our Civil Code, Article 22 of which provides:
Art. 22. Every person who through an act or performance by another or by any other means,
acquires or comes into possession of something at the expense of the latter without just or legal
ground, shall return the same to him.
Justice and equity thus oblige that petitioner be held liable for NSCPs tax liabilities and
reimburse respondent for the amounts it paid. It would be unjust enrichment on the part of petitioner
to be relieved of that obligation.
The deletion of the award of exemplary damages and reduction of the attorneys fees by the
Court of Appeals are not challenged by either of the parties. At any rate, we find no error in its ruling
quoted hereunder:
123 | P a g e

However, we find no basis for the grant of exemplary damages which can be granted only in addition
to moral, temperate, liquidated or compensatory damages (Art. 2229, Civil Code of the Philippines),
none of which was awarded or deserved in this case. The trial court merely granted plaintiffs prayer
in its main cause of action for reimbursement of taxes plaintiff paid to the U.S. Since no actual or
moral damages was awarded, there is no legal basis for the award of exemplary damages which
may only be granted in addition thereto (Scott Consultants and Resources Development Corp. Inc.
vs. CA, 242 SCRA 393).
xxxxxxxxx
Anent the award of attorneys fees, we find it excessive, considering that the instant case is a simple
action for reimbursement and did not involve extensive litigation. Nothing precludes the appellate
courts from reducing the award of attorneys fees when it is found to be unconscionable or excessive
under the circumstances (Brahm Industries Inc. vs. NLRC, 280 SCRA 828). Thus, the award of
attorneys fees is reduced to P20,000.00.[61]
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals is
AFFIRMED.SO ORDERED.

G.R. No. L-53642 April 15, 1988

LEONILO C. DONATO, petitioners,
vs.
HON. ARTEMON D. LUNA, PRESIDING JUDGE, COURT OF FIRST INSTANCE OF MANIIA,
BRANCH XXXII HON. JOSE FLAMINIANO, CITY FISCAL OF MANILA; PAZ B.
ABAYAN, respondents.
Leopoldo P. Dela Rosa for petitioner.
Emiterio C. Manibog for private respondent.

them on September 26, 1978, for which reason, the requisite marriage license was dispensed with
pursuant to Article 76 of the New Civil Code pertaining to marriages of exceptional character.
Prior to the date set for the trial on the merits of Criminal Case No. 43554, petitioner filed a motion to
suspend the proceedings of said case contending that Civil Case No. E-02627 seeking the
annulment of his second marriage filed by private respondent raises a prejudicial question which
must first be determined or decided before the criminal case can proceed.
In an order dated April 7, 1980. Hon. Artemon D. Luna denied the motion to suspend the
proceedings in Criminal Case No. 43554 for bigamy. Respondent judge's basis for denial is the
ruling laid down in the case of Landicho vs. Relova. 1 The order further directed that the proceedings
in the criminal case can proceed as scheduled.

City Fiscal of Manila for public respondent.

A motion for reconsideration was flied by herein petitioner thru counsel citing as one of his grounds
for suspension of proceedings the ruling laid down by this Court in the case of De la Cruz vs.
Ejercito 2 which was a much later case than that cited by respondent judge in his order of denial.
GANCAYCO, J.:
In this petition for certiorari and prohibition with preliminary injunction, the question for the resolution
of the Court is whether or not a criminal case for bigamy pending before the Court of First Itance of
Manila should be suspended in view of a civil case for annulment of marriage pending before the
Juvenile and Domestic Relations Court on the ground that the latter constitutes a prejudicial
question. The respondent judge ruled in the negative. We sustain him.
The pertinent facts as set forth in the records follow. On January 23, 1979, the City Fiscal of Manila
acting thru Assistant City Fiscal Amado N. Cantor filed an information for bigamy against herein
petitioner, Leonilo C. Donato with the Court of First Instance of Manila, docketed as Criminal Case
No. 43554 and assigned to Branch XXXII of said court. The information was filed based on the
complaint of private respondent Paz B. Abayan.
On September 28, 1979, before the petitioner's arraignment, private respondent filed with the
Juvenile and Domestic Relations Court of Manila a civil action for declaration of nullity of her
marriage with petitioner contracted on September 26, 1978, which action was docketed as Civil
Case No. E-02627. Said civil case was based on the ground that private respondent consented to
entering into the marriage, which was petitioner Donato's second one, since she had no previous
knowledge that petitioner was already married to a certain Rosalinda R. Maluping on June 30, 1978.
Petitioner Donato's answer in the civil case for nullity interposed the defense that his second
marriage was void since it was solemnized without a marriage license and that force, violence,
intimidation and undue influence were employed by private respondent to obtain petitioner's consent
to the marriage. Prior to the solemnization of the subsequent or second marriage, petitioner and
private respondent had lived together and deported themselves as husband and wife without the
benefit of wedlock for a period of at least five years as evidenced by a joint affidavit executed by
124 | P a g e

The motion for reconsideration of the said order was likewise denied in an order dated April 14,
1980, for lack of merit. Hence, the present petition for certiorari and prohibition with preliminary
injunction.
A prejudicial question has been defined to be one which arises in a case, the resolution of which
question is a logical antecedent of the issue involved in said case, and the cognizance of which
pertains to another tribunal. 3 It is one based on a fact distinct and separate from the crime but so
intimately connected with it that it determines the guilt or innocence of the accused, and for it to
suspend the criminal action, it must appear not only that said case involves facts intimately related
to those upon which the criminal prosecution would be based but also that in the resolution of the
issue or issues raised in the civil case, the guilt or innocence of the accused would necessarily be
determined. 4 A prejudicial question usually comes into play in a situation where a civil action and a
criminal action may proceed, because howsoever the issue raised in the civil action is resolved
would be determinative juris et de jure of the guilt or innocence of the accused in a criminal case. 5
The requisites of a prejudicial question do not obtain in the case at bar. It must be noted that the
issue before the Juvenile and Domestic Relations Court touching upon the nullity of the second
marriage is not determinative of petitioner Donato's guilt or innocence in the crime of bigamy.
Furthermore, it was petitioner's second wife, the herein private respondent Paz B. Abayan who filed
the complaint for annulment of the second marriage on the ground that her consent was obtained
through deceit.
Petitioner Donato raised the argument that the second marriage should have been declared null and
void on the ground of force, threats and intimidation allegedly employed against him by private
respondent only sometime later when he was required to answer the civil action for anulment of the

second marriage. The doctrine elucidated upon by the case of Landicho vs. Relova 6 may be applied
to the present case. Said case states that:
The mere fact that there are actions to annul the marriages entered into by the
accused in a bigamy case does not mean that "prejudicial questions" are
automatically raised in civil actions as to warrant the suspension of the case. In
order that the case of annulment of marriage be considered a prejudicial
question to the bigamy case against the accused, it must be shown that the
petitioner's consent to such marriage must be the one that was obtained by
means of duress, force and intimidation to show that his act in the second
marriage must be involuntary and cannot be the basis of his conviction for the
crime of bigamy. The situation in the present case is markedly different. At the
time the petitioner was indicted for bigamy on February 27, 1963, the fact that
two marriage ceremonies had been contracted appeared to be indisputable.
And it was the second spouse, not the petitioner who filed the action for nullity
on the ground of force, threats and intimidation. And it was only on June 15,
1963, that petitioner, as defendant in the civil action, filed a third-party
complaint against the first spouse alleging that his marriage with her should be
declared null and void on the ground of force, threats and intimidation.
Assuming that the first marriage was null and void on the ground alleged by
petitioner, the fact would not be material to the outcome of the case. Parties to
the marriage should not be permitted to judge for themselves its nullity, for the
same must be submitted to the judgment of the competent courts and only
when the nullity of the marriage is so declared can it be held as void, and so
long as there is no such declaration the presumption is that the marriage exists.
Therefore, he who contracts a second marriage before the judicial declaration
of nullity of the first marriage assumes the risk of being prosecuted for bigamy.
The lower court therefore, has not abused much less gravely abused, its
discretion in failing to suspend the hearing as sought by petitioner.
In the case at bar, petitioner has not even sufficiently shown that his consent to the second marriage
has been obtained by the use of threats, force and intimidation.
Petitioner calls the attention of this Court to the fact that the case of De la Cruz vs. Ejercito is a later
case and as such it should be the one applied to the case at bar. We cannot agree. The situation in
the case at bar is markedly different. In the aforecited case it was accused Milagros dela Cruz who
was charged with bigamy for having contracted a second marriage while a previous one existed.
Likewise, Milagros dela Cruz was also the one who filed an action for annulment on the ground of
duress, as contra-distinguished from the present case wherein it was private respondent Paz B.
Abayan, petitioner's second wife, who filed a complaint for annulment of the second marriage on the
ground that her consent was obtained through deceit since she was not aware that petitioner's
marriage was still subsisting. Moreover, in De la Cruz, a judgment was already rendered in the civil

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case that the second marriage of De la Cruz was null and void, thus determinative of the guilt or
innocence of the accused in the criminal case. In the present case, there is as yet no such judgment
in the civil case.
Pursuant to the doctrine discussed in Landicho vs. Relova, petitioner Donato cannot apply the rule
on prejudicial questions since a case for annulment of marriage can be considered as a prejudicial
question to the bigamy case against the accused only if it is proved that the petitioner's consent to
such marriage was obtained by means of duress, violence and intimidation in order to establish that
his act in the subsequent marriage was an involuntary one and as such the same cannot be the
basis for conviction. The preceding elements do not exist in the case at bar.
Obviously, petitioner merely raised the issue of prejudicial question to evade the prosecution of the
criminal case. The records reveal that prior to petitioner's second marriage on September 26, 1978,
he had been living with private respondent Paz B. Abayan as husband and wife for more than five
years without the benefit of marriage. Thus, petitioner's averments that his consent was obtained by
private respondent through force, violence, intimidation and undue influence in entering a
subsequent marriage is belled by the fact that both petitioner and private respondent executed an
affidavit which stated that they had lived together as husband and wife without benefit of marriage
for five years, one month and one day until their marital union was formally ratified by the second
marriage and that it was private respondent who eventually filed the civil action for nullity.
Another event which militates against petitioner's contentions is the fact hat it was only when Civil
Case No. E-02627 was filed on September 28, 1979, or more than the lapse of one year from the
solemnization of the second marriage that petitioner came up with the story that his consent to the
marriage was secured through the use of force, violence, intimidation and undue influence.
Petitioner also continued to live with private respondent until November 1978, when the latter left
their abode upon learning that Leonilo Donato was already previously married.
In the light of the preceding factual circumstances, it can be seen that the respondent Judge did not
err in his earlier order. There is no pivotal issue that must be pre-emptively resolved in Civil Case
No. E-02627 before proceedings in the criminal action for bigamy can be undertaken.
Accordingly, there being no prejudicial question shown to exit the order of denial issued by the
respondent judge dated April 14, 1980 should be sustained.
WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED for lack of merit.
We make no pronouncement as to costs.
SO ORDERED.

G.R. No. L-48157 March 16, 1988

RICARDO QUIAMBAO, petitioner,
vs.
HON. ADRIANO OSORIO, ZENAIDA GAZA BUENSUCERO, JUSTINA GAZA BERNARDO, and
FELIPE GAZA, respondents-appellees, LAND AUTHORITY, intervenor-appellant.

FERNAN, J.:
This case was certified to Us by the Court of Appeals as one involving pure questions of law
pursuant to Section 3, Rule 50 of the Revised Rules of Court.
The antecedents are as follows:
In a complaint for forcible entry filed by herein private respondents Zenaida Gaza Buensucero,
Justina Gaza Bernardo and Felipe Gaza against herein petitioner Ricardo Quiambao before the then
Municipal Court of Malabon, Rizal, docketed therein as Civil Case No. 2526, it was alleged that
private respondents were the legitimate possessors of a 30,835 sq. m. lot known as Lot No. 4, Block
12, Bca 2039 of the Longos Estate situated at Barrio Longos, Malabon Rizal, by virtue of the
Agreement to Sell No. 3482 executed in their favor by the former Land Tenure Administration [which
later became the Land Authority, then the Department of Agrarian Reform]; that under cover of
darkness, petitioner surreptitiously and by force, intimidation, strategy and stealth, entered into a
400 sq. m. portion thereof, placed bamboo posts "staka" over said portion and thereafter began the
construction of a house thereon; and that these acts of petitioner, which were unlawful per se,
entitled private respondents to a writ of preliminary injunction and to the ejectment of petitioner from
the lot in question.
Petitioner filed a motion to dismiss the complaint, and upon denial thereof, filed his Answer to the
complaint, specifically denying the material allegations therein and averring that the Agreement upon
which private respondents base their prior possession over the questioned lot had already been
cancelled by the Land Authority in an Order signed by its Governor, Conrado Estrella. By way of
affirmative defense and as a ground for dismissing the case, petitioner alleged the pendency of L.A.
Case No. 968, an administrative case before the Office of the Land Authority between the same
parties and involving the same piece of land. In said administrative case, petitioner disputed private
respondents' right of possession over the property in question by reason of the latter's default in the
installment payments for the purchase of said lot. Petitioner asserted that his administrative case
was determinative of private respondents' right to eject petitioner from the lot in question; hence a
prejudicial question which bars a judicial action until after its termination.

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After hearing, the municipal court denied the motion to dismiss contained in petitioner's affirmative
defenses. It ruled that inasmuch as the issue involved in the case was the recovery of physical
possession, the court had jurisdiction to try and hear the case.
Dissatisfied with this ruling, petitioner filed before the then Court of First Instance of Rizal, Branch
XII, Caloocan City in Civil Case No. C-1576 a petition for certiorari with injunction against public
respondent Judge Adriano Osorio of the Municipal Court of Malabon and private respondents,
praying for the issuance of a writ of preliminary injunction ordering respondent judge to suspend the
hearing in the ejectment case until after the resolution of said petition. As prayed for, the then CFI of
Rizal issued a restraining order enjoining further proceedings in the ejectment case.
In his answer, respondent municipal judge submitted himself to the sound discretion of the CFI in the
disposition of the petition for certiorari. Private respondents, on the other hand, filed a motion to
dismiss the petition, maintaining that the administrative case did not constitute a prejudicial question
as it involved the question of ownership, unlike the ejectment case which involved merely the
question of possession.
Meanwhile, the Land Authority filed an Urgent Motion for Leave to Intervene in Civil Case No. C1576 alleging the pendency of an administrative case between the same parties on the same
subject matter in L.A. Case No. 968 and praying that the petition for certiorari be granted, the
ejectment complaint be dismissed and the Office of the Land Authority be allowed to decide the
matter exclusively.
Finding the issue involved in the ejectment case to be one of prior possession, the CFI dismissed
the petition for certiorari and lifted the restraining order previously issued. Petitioner's motion for
reconsideration of the dismissal order, adopted in toto by Intervenor Land Authority was denied for
lack of merit. Hence, this appeal filed by petitioner Quiambao and intervenor Land Authority with the
Court of Appeals, and certified to Us as aforesaid.
The instant controversy boils down to the sole question of whether or not the administrative case
between the private parties involving the lot subject matter of the ejectment case constitutes a
prejudicial question which would operate as a bar to said ejectment case.
A prejudicial question is understood in law to be that which arises in a case the resolution of which is
a logical antecedent of the issue involved in said case and the cognizance of which pertains to
another tribunal. 1 The doctrine of prejudicial question comes into play generally in a situation where
civil and criminal actions are pending and the issues involved in both cases are similar or so closely
related that an issue must be pre-emptively resolved in the civil case before the criminal action can
proceed. Thus, the existence of a prejudicial question in a civil case is alleged in the criminal case to
cause the suspension of the latter pending final determination of the former.

The essential elements of a prejudicial question as provided under Section 5, Rule 111 of the
Revised Rules of Court are: [a] the civil action involves an issue similar or intimately related to the
issue in the criminal action; and [b] the resolution of such issue determines whether or not the
criminal action may proceed.
The actions involved in the case at bar being respectively civil and administrative in character, it is
obvious that technically, there is no prejudicial question to speak of. Equally apparent, however, is
the intimate correlation between said two [2] proceedings, stemming from the fact that the right of
private respondents to eject petitioner from the disputed portion depends primarily on the resolution
of the pending administrative case. For while it may be true that private respondents had prior
possession of the lot in question, at the time of the institution of the ejectment case, such right of
possession had been terminated, or at the very least, suspended by the cancellation by the Land
Authority of the Agreement to Sell executed in their favor. Whether or not private respondents can
continue to exercise their right of possession is but a necessary, logical consequence of the issue
involved in the pending administrative case assailing the validity of the cancellation of the
Agreement to Sell and the subsequent award of the disputed portion to petitioner. If the cancellation
of the Agreement to Sell and the subsequent award to petitioner are voided, then private
respondents would have every right to eject petitioner from the disputed area. Otherwise, private
respondent's light of possession is lost and so would their right to eject petitioner from said portion.
Faced with these distinct possibilities, the more prudent course for the trial court to have taken is to
hold the ejectment proceedings in abeyance until after a determination of the administrative case.
Indeed, logic and pragmatism, if not jurisprudence, dictate such move. To allow the parties to
undergo trial notwithstanding the possibility of petitioner's right of possession being upheld in the
pending administrative case is to needlessly require not only the parties but the court as well to
expend time, effort and money in what may turn out to be a sheer exercise in futility. Thus, 1 Am Jur
2d tells us:
The court in which an action is pending may, in the exercise of a sound
discretion, upon proper application for a stay of that action, hold the action in
abeyance to abide the outcome of another pending in another court, especially
where the parties and the issues are the same, for there is power inherent in
every court to control the disposition of causes on its dockets with economy of
time and effort for itself, for counsel, and for litigants. Where the rights parties
to the second action cannot be properly determined until the questions raised in
the first action are settled the second action should be stayed. 2
While this rule is properly applicable to instances involving two [2] court actions, the existence in the
instant case of the same considerations of Identity of parties and issues, economy of time and effort
for the court, the counsels and the parties as well as the need to resolve the parties' right of
possession before the ejectment case may be properly determined, justifies the rule's analogous
application to the case at bar.

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Fortich-Celdran, et al. vs. Celdran, et al., 19 SCRA 502, provides another analogous situation. In
sustaining the assailed order of the then Court of First Instance of Misamis Oriental ordering the
suspension of the criminal case for falsification of public document against several persons, among
them the subscribing officer Santiago Catane until the civil case involving the issue of the
genuineness of the alleged forged document shall have been decided, this Court cited as a reason
therefor its own action on the administrative charges against said Santiago Catane, as follows:
It should be mentioned here also that an administrative case filed in this Court
against Santiago Catane upon the same charge was held by Us in abeyance,
thus:
"As it appears that the genuineness of the document
allegedly forged by respondent attorneys in Administrative
Case No. 77 [Richard Ignacio Celdran vs. Santiago
Catane, etc., et al.] is necessarily involved in Civil Case
No. R-3397 of the Cebu Court of First Instance, action on
the herein complaint is withheld until that litigation has
finally been decided. Complainant Celdran shall inform the
Court about such decision." 3
If a pending civil case may be considered to be in the nature of a prejudicial question to an
administrative case, We see no reason why the reverse may not be so considered in the proper
case, such as in the petition at bar. Finally, events occuring during the pendency of this petition
attest to the wisdom of the conclusion herein reached. For in the Manifestation filed by counsel for
petitioner, it was stated that the intervenor Land Authority which later became the Department of
Agrarian Reform had promulgated a decision in the administrative case, L.A. Case No. 968
affiriming the cancellation of Agreement to Sell No. 3482 issued in favor of private respondents. With
this development, the folly of allowing the ejectment case to proceed is too evident to need further
elaboration.
WHEREFORE, the instant petition is hereby GRANTED. Civil Case No. 2526 of the then Municipal
Court of Malabon, Rizal is hereby ordered DISMISSED. No Costs.
SO ORDERED.

G.R. No. 112381 March 20, 1995

ISABELO APA, MANUEL APA and LEONILO JACALAN, petitioners,
vs.
HON. RUMOLDO R. FERNANDEZ, HON. CELSO V. ESPINOSA, and SPS. FELIXBERTO TIGOL,
JR. and ROSITA TAGHOY TIGOL, respondents.

Petitioners moved for the suspension of their arraignment on the ground that there was a prejudicial
question pending resolution in another case being tried in Branch 27 of the same court. The case,
docketed as Civil Case No. 2247-L and entitled "Anselmo Taghoy and Vicente Apa versus Felixberto
Tigol, Jr. and Rosita T. Tigol, et al.," concerns the ownership of Lot No. 3635-B. 1 In that case,
petitioners seek a declaration of the nullity of TCT No. 13250 of Rosita T. Tigol and the partition of
the lot in question among them and private respondent Rosita T. Tigol as heirs of Filomeno and Rita
Taghoy. The case had been filed in 1990 by petitioners, three years before May 27, 1993 when the
criminal case for squatting was filed against them.

MENDOZA, J.:

On August 25, 1993, the trial court denied the petitioners' motion and proceeded with their
arraignment. Petitioners, therefore, had to enter their plea (not guilty) to the charge.

This is a special civil action of certiorari to set aside orders of respondent Judge Rumoldo R.
Fernandez of the Regional Trial Court, Branch 54, at Lapu-Lapu City, denying petitioners oral motion
for the suspension of their arraignment in Criminal Case No. 012489, entitled: "People of the
Philippines v. Isabelo Apa; Manuel Apa and Leonilo Jacalan," as well as their motion for
reconsideration.
Criminal Case No. 012489 is a prosecution for violation of P.D. 772 otherwise known as the AntiSquatting Law. The information alleges:

On September 2, 1993, petitioners filed a motion for reconsideration but their motion was denied by
the court in its order dated September 21, 1993. Hence, this petition.
The only issue in this case is whether the question of ownership of Lot No. 3635-B, which was
pending, in Civil Case No. 2247-L, is a prejudicial question justifying suspension of the proceedings
in the criminal case against petitioners.
We hold that it is.

That on February 1990, or prior thereto, in Agus, Lapulapu City, Philippines and
within the jurisdiction of this Honorable Court, the above-named accused
[herein petitioners Isabelo Apa, Manuel Apa and Dionisio Jacalan], conspiring,
confederating and mutually helping with one another, without the knowledge
and consent of the owner, ROSITA TIGOL, did then and there wilfully,
unlawfully and feloniously take advantage of the absence or tolerance of the
said owner by occupying or possessing a portion of her real property, Lot No.
3635-B of Opon Cadastre, covered by Transfer Certificate of Title No. 13250,
situated in Agus Lapulapu City, whereon they constructed their respective
residential houses against the will of Rosita Tigol, which acts of the said
accused have deprived the latter of the use of a portion of her land, to her
damage and prejudice because despite repeated demands the said accused
failed and refused, as they still fail and refuse to vacate the premises abovementioned.

A prejudicial question is a question which is based on a fact distinct and separate from the crime but
so intimately connected with it that its resolution is determinative of the guilt or innocence of the
accused. To justify suspension of the criminal action, it must appear not only that the civil case
involves facts intimately related to those upon which the criminal prosecution is based but also that
the decision of the issue or issues raised in the civil case would be decisive of the guilt or innocence
of the accused. 2 Rule 111, 5 provides:
Sec. 6. Elements of prejudicial question. The two (2) essential elements of a
prejudicial questions are: (a) the civil action involves an issue similar or
intimately related to the issue raised in the criminal action; and (b) the
resolution of such issue determines whether or not the criminal action may
proceed.
In the criminal case, the question is whether petitioners occupied a piece of land not belonging to
them but to private respondent and against the latter's will. As already noted, the information alleges
that "without the knowledge and consent of the owner, ROSITA TIGOL" petitioners occupied or took
possession of a portion of "herproperty" by building their houses thereon and "deprived [her] of the
use of portion of her land to her damage and prejudice.
Now the ownership of the land in question, known as Lot 3635-B of the Opon cadastre covered by
TCT No. 13250, is the issue in Civil Case 2247-L now pending in Branch 27 of the RTC at Lapulapu

128 | P a g e

City. The resolution, therefore, of this question would necessarily be determinative of petitioners
criminal liability for squatting.
In fact it appears that on February 23, 1994, the court trying the civil case rendered a decision
nullifying TCT No. 13250 of private respondent and her husband and declared the lot in question to
be owned in common by the spouses and the petitioners as inheritance from their parents Filomeno
and Rita Taghoy. While private respondents claim that the decision in that case is not yet final
because they have filed a motion for new trial, the point is that whatever may be the ultimate
resolution of the question of ownership, such resolution will be determinative of the guilt or
innocence of petitioners in the criminal case. Surely, if petitioners are co-owners of the lot in
question, they cannot be found guilty of squatting because they are as much entitled to the use and
occupation of the land as are the private respondent Rosita T. Tigol and her family. 3
Private respondents argues that even the owner of a piece of a land can be ejected from his
property since the only issue in such a case is the right to its physical possession. Consequently,
they contend, he can also be prosecuted under the Anti-Squatting Law.
The contention misses the case is the essential point that the owner of a piece of land can be
ejected only if for some reason, e.g., he has let his property to the plaintiff, he has given up its
temporary possession. But in the case at bar, no such agreement is asserted by private respondent.
Rather private respondent claims the right to possession based on her claim of ownership.
Ownership is thus the pivotal question. Since this is the question in the civil case, the proceedings in
the criminal case must in the meantime be suspended.
WHEREFORE, the petition is GRANTED and respondent judge is ordered to SUSPEND the
proceedings in Criminal Case No. 012489 until the question of ownership in Civil Case No. 2247-L
has been resolved with finality and thereafter proceed with the trial of the criminal case if the civil
case is decided and terminated adversely against petitioners. Otherwise he should dismiss the
criminal case.
SO ORDERED.

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[G.R. No. 137567. June 20, 2000]

MEYNARDO L. BELTRAN, petitioner, vs. PEOPLE OF THE PHILIPPINES, and HON. JUDGE
FLORENTINO TUAZON, JR., being the Judge of the RTC, Branch 139, Makati
City, respondents.
DECISION
BUENA, J.:
This petition for review, filed under Rule 45 of the 1997 Rules of Civil Procedure, seeks to review
and set aside the Order dated January 28, 1999 issued by Judge Florentino A. Tuazon, Jr. of the
Regional Trial Court of Makati City, Branch 139 in Special Civil Case No. 98-3056, entitled
"Meynardo Beltran vs. People of the Philippines and Hon. Judge Alden Cervantes of the
Metropolitan Trial Court of Makati city, Branch 61." The said Order denied petitioners prayer for the
issuance of a writ of preliminary injunction to enjoin Judge Cervantes from proceeding with the trial
of Criminal Case No. 236176, a concubinage case against petitioner on the ground that the pending
petition for declaration of nullity of marriage filed by petitioner against his wife constitutes a
prejudicial question.
The antecedent facts of the case are undisputed:
Petitioner Meynardo Beltran and wife Charmaine E. Felix were married on June 16, 1973 at the
Immaculate Concepcion Parish Church in Cubao, Quezon City.[1]
On February 7, 1997, after twenty-four years of marriage and four children, [2] petitioner filed a
petition for nullity of marriage on the ground of psychological incapacity under Article 36 of the
Family Code before Branch 87 of the Regional Trial Court of Quezon City. The case was docketed
as Civil Case No. Q-97-30192.[3]
In her Answer to the said petition, petitioner's wife Charmaine Felix alleged that it was petitioner
who abandoned the conjugal home and lived with a certain woman named Milagros Salting.
[4]
Charmaine subsequently filed a criminal complaint for concubinage[5] under Article 334 of the
Revised Penal Code against petitioner and his paramour before the City Prosecutor's Office of
Makati who, in a Resolution dated September 16, 1997, found probable cause and ordered the filing
of an Information[6] against them. The case, docketed as Criminal Case No. 236176, was filed before
the Metropolitan Trial Court of Makati City, Branch 61.
On March 20, 1998, petitioner, in order to forestall the issuance of a warrant for his arrest, filed a
Motion to Defer Proceedings Including the Issuance of the Warrant of Arrest in the criminal case.
Petitioner argued that the pendency of the civil case for declaration of nullity of his marriage posed a
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prejudicial question to the determination of the criminal case. Judge Alden Vasquez Cervantes
denied the foregoing motion in the Order[7] dated August 31, 1998. Petitioner's motion for
reconsideration of the said Order of denial was likewise denied in an Order dated December 9,
1998.
In view of the denial of his motion to defer the proceedings in the concubinage case, petitioner went
to the Regional Trial Court of Makati City, Branch 139 on certiorari, questioning the Orders dated
August 31, 1998 and December 9, 1998 issued by Judge Cervantes and praying for the issuance of
a writ of preliminary injunction.[8] In an Order[9] dated January 28, 1999, the Regional Trial Court of
Makati denied the petition for certiorari. Said Court subsequently issued another Order[10] dated
February 23, 1999, denying his motion for reconsideration of the dismissal of his petition.
Undaunted, petitioner filed the instant petition for review.
Petitioner contends that the pendency of the petition for declaration of nullity of his marriage based
on psychological incapacity under Article 36 of the Family Code is a prejudicial question that should
merit the suspension of the criminal case for concubinage filed against him by his wife.
Petitioner also contends that there is a possibility that two conflicting decisions might result from the
civil case for annulment of marriage and the criminal case for concubinage. In the civil case, the trial
court might declare the marriage as valid by dismissing petitioner's complaint but in the criminal
case, the trial court might acquit petitioner because the evidence shows that his marriage is void on
ground of psychological incapacity. Petitioner submits that the possible conflict of the courts' ruling
regarding petitioner's marriage can be avoided, if the criminal case will be suspended, until the court
rules on the validity of marriage; that if petitioner's marriage is declared void by reason of
psychological incapacity then by reason of the arguments submitted in the subject petition, his
marriage has never existed; and that, accordingly, petitioner could not be convicted in the criminal
case because he was never before a married man.
Petitioner's contentions are untenable.
The rationale behind the principle of prejudicial question is to avoid two conflicting decisions. It has
two essential elements: (a) the civil action involves an issue similar or intimately related to the issue
raised in the criminal action; and (b) the resolution of such issue determines whether or not the
criminal action may proceed.[11]
The pendency of the case for declaration of nullity of petitioner's marriage is not a prejudicial
question to the concubinage case. For a civil case to be considered prejudicial to a criminal action
as to cause the suspension of the latter pending the final determination of the civil case, it must
appear not only that the said civil case involves the same facts upon which the criminal prosecution

would be based, but also that in the resolution of the issue or issues raised in the aforesaid civil
action, the guilt or innocence of the accused would necessarily be determined.

marriage exists. Therefore, he who contracts a second marriage before the

judicial declaration of nullity of the first marriage assumes the risk of being
prosecuted for bigamy."

Article 40 of the Family Code provides:

"The absolute nullity of a previous marriage may be invoked for purposes of
remarriage on the basis solely of a final judgment declaring such previous
marriage void."
In Domingo vs. Court of Appeals,[12] this Court ruled that the import of said provision is that for
purposes of remarriage, the only legally acceptable basis for declaring a previous marriage an
absolute nullity is a final judgment declaring such previous marriage void, whereas, for purposes of
other than remarriage, other evidence is acceptable. The pertinent portions of said Decision read:
"xxx Undoubtedly, one can conceive of other instances where a party might
well invoke the absolute nullity of a previous marriage for purposes other than
remarriage, such as in case of an action for liquidation, partition, distribution
and separation of property between the erstwhile spouses, as well as an action
for the custody and support of their common children and the delivery of the
latters' presumptive legitimes. In such cases, evidence needs must be
adduced, testimonial or documentary, to prove the existence of grounds
rendering such a previous marriage an absolute nullity. These needs not be
limited solely to an earlier final judgment of a court declaring such previous
marriage void."
So that in a case for concubinage, the accused, like the herein petitioner need not present a final
judgment declaring his marriage void for he can adduce evidence in the criminal case of the nullity
of his marriage other than proof of a final judgment declaring his marriage void.
With regard to petitioner's argument that he could be acquitted of the charge of concubinage should
his marriage be declared null and void, suffice it to state that even a subsequent pronouncement
that his marriage is void from the beginning is not a defense.
Analogous to this case is that of Landicho vs. Reloval[13] cited in Donato vs. Luna[14] where this
Court held that:
"xxx Assuming that the first marriage was null and void on the ground alleged
by petitioner, that fact would not be material to the outcome of the criminal
case. Parties to the marriage should not be permitted to judge for themselves
its nullity, for the same must be submitted to the judgment of the competent
courts and only when the nullity of the marriage is so declared can it be held as
void, and so long as there is no such declaration the presumption is that the

131 | P a g e

Thus, in the case at bar it must also be held that parties to the marriage should not be permitted to
judge for themselves its nullity, for the same must be submitted to judgment of the competent courts
and only when the nullity of the marriage is so declared can it be held as void, and so long as there
is no such declaration the presumption is that the marriage exists for all intents and purposes.
Therefore, he who cohabits with a woman not his wife before the judicial declaration of nullity of the
marriage assumes the risk of being prosecuted for concubinage. The lower court therefore, has not
erred in affirming the Orders of the judge of the Metropolitan Trial Court ruling that pendency of a
civil action for nullity of marriage does not pose a prejudicial question in a criminal case for
concubinage.
WHEREFORE, for lack of merit, the instant petition is DISMISSED.
SO ORDERED.

[G.R. No. 148595. July 12, 2004]

SPOUSES ANTONIO S. PAHANG and LOLITA T. PAHANG, petitioners, vs.HON. AUGUSTINE A.
VESTIL, Presiding Judge of Regional Trial Court- Branch 56, Mandaue City, DEPUTY
SHERIFF, Regional Trial Court-Branch 56 and METROPOLITAN BANK and TRUST
COMPANY,respondents.
DECISION

3. After trial on the merits, and after determination of plaintiffs true obligation with defendant bank, to
declare the foreclosure on the subject property as null and void, and to allow the plaintiffs to pay the
same; as alternative prayer, to allow the plaintiffs to redeem the subject real property based on the
amount determined and established as true and exact obligation of plaintiffs to defendant bank. [7]
After the expiration of the one-year redemption period, the respondent consolidated its
ownership over the foreclosed property. Consequently, TCT No. 44668 was issued by the Register
of Deeds in its name. On July 23, 1999, the respondent filed a Petition for Writ of Possession before
the RTC of Mandaue City (Branch 56), docketed as LRC Case No. 3.[8]

CALLEJO, SR., J.:

Before us is a petition for review on certiorari filed by the Spouses Antonio and Lolita Pahang,
for the nullification of the Decision[1] and Resolution[2] of the Court of Appeals in CA-G.R. SP No.
59157.
The Antecedents
On January 5, 1996, the petitioners, Spouses Antonio and Lolita Pahang, received a shortterm loan of one million five hundred thousand pesos (P1,500,000.00) from the respondent
Metropolitan Bank & Trust Company payable on December 27, 1996. The loan was covered by NonNegotiable Promissory Note No. 190601 [3] and was, likewise, secured by a real estate mortgage on
a parcel of land covered by Transfer Certificate of Title (TCT) No. 29607. [4] As the petitioners failed to
pay the loan, the interest and the penalties due thereon, the respondent foreclosed the real estate
mortgage extrajudicially. As a consequence, the mortgaged property was sold at public auction on
January 8, 1998 to the respondent bank as the highest bidder. A certificate of sale was executed by
Pasnonito D. Antiporda as Ex-Officio Sheriff in favor of the respondent on January 14, 1998 and was
registered with the Register of Deeds of Mandaue City on January 27, 1998.
On December 29, 1998, the respondent wrote the petitioners that the one-year redemption
period of the property would expire on January 27, 1999. [5] Instead of redeeming the property, the
petitioners filed, on January 19, 1999, a complaint for annulment of extrajudicial sale against the
respondent bank and the Sheriff in the Regional Trial Court of Cebu (Mandaue City), Branch 56,
docketed as Civil Case No. MAN-3454.[6] Therein, the petitioners alleged that the respondent bloated
their obligation of P1,500,000.00 to P2,403,770.73 by including excessive past due interest, penalty
charges, attorneys fees and sheriffs expense. They claimed that such exorbitant charges were made
to frustrate their chance to pay the loan, and to ensure that the respondent bank would be the
highest bidder during the auction sale. They also asserted that the respondent failed to remit to the
Sheriff the purchase price of the property and was, likewise, guilty of fraud, collusion, breach of trust
or misconduct in the conduct of the auction sale of their property. Besides praying for injunctive
relief, the petitioners prayed for the following alternative reliefs:

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The petitioners, citing the ruling of this Court in Belisario v. The Intermediate Appellate Court,
opposed the petition on the ground that the core issue in their complaint in Civil Case No. MAN3454 constituted a prejudicial question, which warranted a suspension of the proceedings
before the court. The petitioners averred that the filing of their complaint within the period to redeem
the foreclosed property was equivalent to an offer to redeem the same, and had the effect of
preserving such right. They also asserted that the respondent acted in bad faith in procuring the title
over the property despite the pendency of their complaint in Civil Case No. MAN-3454.
[9]

On March 28, 2000, the RTC of Mandaue City, Branch 56, rendered a decision in LRC Case
No. 3 granting the petition and ordering the issuance of a writ of possession in favor of the
respondent.[10]
Citing the case of Javelosa v. Court of Appeals,[11] and Gawaran v. Court of Appeals,[12]the RTC
ruled that since the petitioners failed to redeem the property within one year from the foreclosure,
the respondent was entitled to a writ of possession as a necessary consequence of the
readjudication of ownership and the corresponding issuance of the original certificate. [13]The
petitioners filed a motion for reconsideration of the decision, but the court issued an order denying
the motion, stating that it was merely its ministerial function to issue a writ of possession. [14]
The petitioners filed a petition for certiorari before the Court of Appeals, docketed as CA-G.R.
SP No. 59157 for the nullification of the March 28, 2000 Decision and the May 19, 2000 Order of the
RTC. Thepetitioners alleged that the RTC committed a grave abuse of its discretion amounting to
excess or lack of jurisdiction in granting the petition of the respondent bank for a writ of possession
in LRC Case No. 3 instead of suspending the proceedings therein based on the ruling of this Court
in Belisario vs. The Intermediate Appellate Court.[15]
The Ruling of the Court of Appeals
Finding that the RTC did not act with grave abuse of discretion in ordering the issuance of the
writ of possession, the CA rendered a decision on March 2, 2001, dismissing the petition. [16] Citing
the rulings of this Court in Vda. de Jacob v. Court of Appeals[17] and Navarra v. Court of Appeals,

[18]

the CA explained that the pendency of a separate proceeding questioning the validity of the
mortgage and the extrajudicial foreclosure thereof cannot bar the issuance of a writ of possession in
favor of the purchaser at public auction. The appellate court ruled that after a title on the property
has been consolidated in the mortgagee, the issuance of a writ of possession becomes a ministerial
act of the trial court. Furthermore, the right of the respondent bank to possess the property was
based on its right of ownership as a purchaser of the properties in the foreclosure sale. The CA
explained that the ruling in the Belisario case was inapplicable because it involved a complaint to
enforce the repurchase of the foreclosed property within the period of redemption, whereas, the
complaint filed by the petitioners in Civil Case No. MAN-3454 was for the annulment of the mortgage
or extrajudicial sale which was not equivalent to an offer to redeem the property.[19]
The Present Petition
The motion for reconsideration of the petitioners of the decision, having been denied by the
appellate court, the petitioners filed this instant petition, assigning the following errors:
1. THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONERS RIGHT
OF REDEMPTION OVER THEIR FORECLOSED PROPERTY AS HAVING
EXPIRED ON JANUARY 26, 1999, IN THE LIGHT OF THEIR PENDING
COMPLAINT TO ANNUL THE FORECLOSURE FILED BEFORE THE
EXPIRATION OF THE ONE-YEAR REDEMPTION PERIOD, ON THE GROUND
OF FRAUD, AND CONSIDERING FURTHER THEIR SPECIFIC PRAYER
THEREOF FOR DETERMINATION OF THEIR TRUE OBLIGATION
WITH PRIVATE RESPONDENT, AND TO ALLOW THEM TO PAY THE SAME
AND/OR TO REDEEM THEIR FORECLOSED PROPERTY. [20]
2. PETITIONERS COMPLAINT FOR ANNULMENT OF THE FORECLOSURE OF THEIR
PROPERTY WITH A PRAYER FOR TEMPORARY RESTRAINING ORDER AND
INJUNCTION TO STOP THE ISSUANCE OF A DEFINITE DEED OF SALE AND
CONSOLIDATION OF TITLE OF THEIR PROPERTY IN FAVOR OF PRIVATE
RESPONDENT, WHILE GIVING PREFERENCE AND ACTING WITH DISPATCH
ON PRIVATE RESPONDENTS PETITION FOR ISSUANCE OF WRIT OF
POSSESSION ON THE SAME PROPERTY, BY GRANTING THE WRIT OF
POSSESSION THEREON THEREBY RENDERING MOOT AND ACADEMIC
PETITIONERS PRAYERS IN THEIR COMPLAINT FOR ANNULMENT OF
FORECLOSURE.[21]
3. THE HONORABLE COURT OF APPEALS ERRED IN FINDING THE DECISION OF
THIS HONORABLE SUPREME COURT IN THE CASE OF BELISARIO VS. THE
INTERMEDIATE APPELLATE COURT, G.R. NO. L-73503, WHEREBY THE FILING
OF THE COMPLAINT TO ENFORCE REPURCHASE WITHIN THE PERIOD FOR
REDEMPTION IS EQUIVALENT TO AN OFFER TO REDEEM AND HAS THE

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EFFECT OF PRESERVING THE RIGHT OF REDEMPTION INAPPLICABLE TO

THE CASE OF PETITIONERS.[22]
4. THE HONORABLE COURT OF APPEALS ERRED IN NOT APPRECIATING THE FACT
THAT THE ISSUE OR ISSUES JOINED IN THE COMPLAINT FOR ANNULMENT
BEFORE RESPONDENT JUDGE DOCKETED AS CIVIL CASE NO. MAN-4353
(sic) IS A PREJUDICIAL QUESTION TO THE ISSUE RAISED IN THE PETITION
FOR WRIT OF POSSESSION IN LRC CASE NO. 3.[23]
5. THE HONORABLE COURT OF APPEALS ERRED IN HAVING FAILED TO CONSIDER
THE VALID CAUSES OF ACTION OF PETITIONERS IN THEIR COMPLAINT FOR
ANNULMENT IN CIVIL CASE NO. MAN-4354 (sic).[24]
The threshold issues are as follows: (a) whether or not the complaint of the petitioners in Civil
Case No. MAN-3454 for annulment of extrajudicial sale is a prejudicial question to the petition of the
respondent bank for the issuance of a writ of possession in LRC Case No. 3; and, (b) whether or not
the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in
granting the petition of the respondent in LRC Case No. 3 and in issuing the writ of possession in its
favor.
The issues being interrelated, the Court shall resolve the same simultaneously.
The petitioners contend that their complaint in Civil Case No. MAN-3454 and the respondents
petition for a writ of possession in LRC Case No. 3 were raffled to Branch 56 of the RTC. Although
their complaint in Civil Case No. MAN-3454 was for the nullification of the extrajudicial sale at public
auction on the ground of fraud, they also prayed, as an alternative remedy, that they be allowed to
redeem the property based on the amount to be determined by the court after trial. Hence, they
assert, the filing of their complaint before the expiry of the redemption period to enforce their right of
redemption was equivalent to a formal offer to redeem the property and had the effect of preserving
their right of redemption. They argue that the RTC should have suspended the proceedings in LRC
Case No. 3 pending the final resolution of Civil Case No. MAN-3454 so as not to render moot and
academic the latter case, conformably with the ruling of the Court in Belisario vs. The Intermediate
Appellate Court,[25]after all, the two cases were pending before the same court. The petitioners, thus,
aver that the trial court committed grave abuse of discretion amounting to excess or lack of
jurisdiction in granting the petition of the respondent bank for a writ of possession in LRC Case No.
3.They, likewise, aver that the Court of Appeals erred when it affirmed the decision of the trial court
and declared, thus:
Further, as to the applicability of the case of Belisario vs. Intermediate Appellate Court (G.R. No. L73503, Aug. 30, 1988, 165 SCRA 101, 108), suffice it to say, that the cause of action therein was to
enforce the repurchase of the foreclosed property within the period of redemption, which the
Supreme Court held that it has the effect of preserving the right of redemption. Whereas, Civil Case

No. MAN-3454 filed by the petitioners is for the annulment of mortgage or extrajudicial sale, which is
not in effect an offer to redeem. Verily, the pendency of said civil case does not preserve the right of
redemption of the petitioners after the period of redemption.[26]

statutory period to redeem the property, nor bar the purchaser at public auction from procuring a writ
of possession after the statutory period of redemption had lapsed, without prejudice to the final
outcome of such complaint to enforce the right of redemption.[31]

The Courts Ruling

The remedy of the petitioners from the assailed decision of the RTC in LRC Case No. 3 was
to appeal by writ of error to the Court of Appeals. [32] However, instead of appealing by writ of error,
the petitioners filed their petition for certiorari. Certiorari is not proper where the aggrieved party has
a plain, speedy and adequate remedy at law. Moreover, the error of the trial court in granting the
respondent bank a writ of possession, if at all, was an error of judgment correctible only by an
ordinary appeal.

The contentions of the petitioners have no merit.

A prejudicial question is one that arises in a case the resolution of which is a logical
antecedent of the issue involved therein, and the cognizance of which pertains to another tribunal. It
generally comes into play in a situation where a civil action and a criminal action are both pending
and there exists in the former an issue that must be preemptively resolved before the criminal action
may proceed, because howsoever the issue raised in the civil action is resolved would be
determinative juris et de jure of the guilt or innocence of the accused in the criminal case. The
rationale behind the principle of prejudicial question is to avoid two conflicting decisions. [27]
In the present case, the complaint of the petitioners for Annulment of Extrajudicial Sale is a
civil action and the respondents petition for the issuance of a writ of possession of Lot No. 3-A,
Block 1, Psd-07-021410, TCT No. 44668 is but an incident in the land registration case and,
therefore, no prejudicial question can arise from the existence of the two actions. [28] A similar issue
was raised in Manalo vs. Court of Appeals,[29] where we held that:

It bears stressing that the proceedings in a petition and/or motion for the issuance of a writ of
possession, after the lapse of the statutory period for redemption, is summary in nature. [33]The trial
court is mandated to issue a writ of possession upon a finding of the lapse of the statutory period for
redemption without the redemptioner having redeemed the property. It cannot be validly argued that
the trial court abused its discretion when it merely complied with its ministerial duty to issue the said
writ of possession.[34]
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED DUE COURSE. The assailed
decision of the Court of Appeals in CA-G.R. SP No. 59157 is AFFIRMED.
Cost against the petitioners.

At any rate, it taxes our imagination why the questions raised in Case No. 98-0868 must be
considered determinative of Case No. 9011. The basic issue in the former is whether the
respondent, as the purchaser in the extrajudicial foreclosure proceedings, may be compelled to
have the property repurchased or resold to a mortgagors successor-in-interest (petitioner); while that
in the latter is merely whether the respondent, as the purchaser in the extrajudicial foreclosure
proceedings, is entitled to a writ of possession after the statutory period for redemption has
expired. The two cases, assuming both are pending, can proceed separately and take their own
direction independent of each other.[30]
The focal issue in Civil Case No. MAN-3454 was whether the extrajudicial foreclosure of the
real estate mortgage executed by the petitioners in favor of the respondent bank and the sale of
their property at public auction for P2,403,770.73 are null and void, whereas, the issue in LRC Case
No. 3 was whether the respondent bank was entitled to the possession of the property after the
statutory period for redemption had lapsed and title was issued .
Our ruling in Belisario has no application in this case because in the said case, no prejudicial
question was involved. We merely held therein that the filing of an action to enforce redemption
within the period of redemption is equivalent to a formal offer to redeem, and should the Court allow
the redemption, the redemptioner should then pay the amount already determined. In fine, the filing
of an action by the redemptioner to enforce his right to redeem does not suspend the running of the

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SO ORDERED.

G.R. No. 154622

August 3, 2010

LAND BANK OF THE PHILIPPINES, Petitioner,

vs.
RAMON P. JACINTO, Respondent.
DECISION
VILLARAMA, JR., J.:
Petitioner Land Bank of the Philippines (Land Bank) seeks the reversal of the Decision1 dated
November 28, 2001 and the Resolution2 dated August 6, 2002 of the Court of Appeals (CA) in CAG.R. SP No. 62773. The CA had set aside the Resolutions dated October 25, 20003 and December
18, 20004 of the Department of Justice (DOJ) and reinstated the Resolution5 dated March 3, 1999 of
the City Prosecution Office of Makati which dismissed the petitioners complaint against respondent
Ramon P. Jacinto in I.S. Nos. 99-A-1536-44 for violation of Batas Pambansa Blg. (B.P.) 22 or "The
Bouncing Checks Law."
The undisputed facts, as gleaned from the records, are as follows:
The First Womens Credit Corporation (FWCC) obtained a loan from the petitioner Land Bank in the
aggregate amount of P400 million, evidenced by a Credit Line Agreement6 dated August 22, 1997.
As security for the loan, respondent Ramon P. Jacinto, President of FWCC, issued in favor of Land
Bank nine (9) postdated checks amounting to P465 million and drawn against FWCCs account at
the Philippine National Bank. Later, before the checks matured, petitioner and respondent executed
several letter agreements which culminated in the execution of a Restructuring Agreement on June
3, 1998. Under the new agreement, the loan obligation contracted under the Credit Line Agreement
of August 22, 1997 was restructured, its terms of payment, among others, having been changed or
modified. When FWCC defaulted in the payment of the loan obligation under the terms of their
restructured agreement, petitioner presented for payment to the drawee bank the postdated checks
as they matured. However, all the checks were dishonored or refused payment for the reason
"Payment Stopped" or "Drawn Against Insufficient Funds." Respondent also failed to make good the
checks despite demands.
Hence, on January 13, 1999, Land Bank, through its Assistant Vice President, Udela C. Salvo,
Financial Institutions Department, filed before the Makati City Prosecutors Office a ComplaintAffidavit7 against respondent for violation of B.P. 22. Respondent filed his Counter-Affidavit8 denying
the charges and averring that the complaint is baseless and utterly devoid of merit as the said loan
obligation has been extinguished by payment and novation by virtue of the execution of the
Restructuring Agreement. Respondent also invoked the proscription in the May 28, 1998 Order of
the Regional Trial Court (RTC) of Makati City, Branch 133 in Special Proceedings No. M-4686 for
Involuntary Insolvency which forbade FWCC from paying any of its debts.

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In a Resolution9 dated March 3, 1999, Prosecutor George V. De Joya dismissed the complaint
against respondent, finding that the letter-agreements between Land Bank and FWCC restructured
and novated the original loan agreement. It was held that there being novation, the checks issued
pursuant to the original loan obligation had lost their efficacy and validity and cannot be a valid basis
to sustain the charge of violation of B.P. 22.
On June 21, 1999, petitioners motion for reconsideration was likewise denied.10
Aggrieved, petitioner elevated the matter to the DOJ for review. On April 10, 2000, the DOJ issued a
Resolution11dismissing the appeal. However, upon motion for reconsideration filed by petitioner, the
DOJ reversed its ruling and issued a Resolution dated October 25, 2000 holding that novation is not
a mode of extinguishing criminal liability. Thus, the DOJ held that:
WHEREFORE, there being probable cause to hold respondent triable for the offense of violation of
BP 22 (nine (9) counts), the Department Resolution dated April 10, 2000 is hereby reconsidered and
set aside and the resolution of the Office of the City Prosecutor, Makati City, dismissing the
complaint should be, as it is, hereby REVERSED. Said office is directed to file the appropriate
informations for violation of BP 22 (nine (9) counts) against respondent. Report the action taken
within ten (10) days from receipt hereof.
SO ORDERED.12
Respondent moved for a reconsideration of the above Order but it was denied in a Resolution dated
December 18, 2000. Undaunted, respondent filed a petition for certiorari before the CA.
On November 28, 2001, the CA, in the assailed Decision, reversed the Resolution of the DOJ and
reinstated the Resolution of Prosecutor De Joya dismissing the complaint. While the CA ruled that
novation is not a mode of extinguishing criminal liability, it nevertheless held that novation may
prevent criminal liability from arising in certain cases if novation occurs before the criminal
information is filed in court because the novation causes doubt as to the true nature of the
obligation. Also, the CA found merit in respondents assertion that a prejudicial question exists in the
instant case because the issue of whether the original obligation of FWCC subject of the dishonored
checks has been novated by the subsequent agreements entered into by FWCC with Land Bank, is
already the subject of the appeal in Civil Case No. 98-2337 (entitled, "First Womens Credit
Corporation v. Land Bank of the Philippines" for Declaration of Novation) pending before the CA.
The CA also gave consideration to respondents assertion that the Order dated May 28, 1998 of the
RTC proscribing FWCC from paying its debts constitutes as a justifying circumstance which
prevents criminal liability from attaching.
Petitioners motion for reconsideration from the said decision having been denied, petitioner filed the
instant petition for review on certiorari, raising the following assignment of errors:

I
THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT THE ELEMENT OF A
PREJUDICIAL QUESTION EXISTS IN THE INSTANT CASE AND THAT THE RECOMMENDATION
FOR THE FILING OF INFORMATIONS IN COURT AGAINST THE RESPONDENT WAS MADE
WITH GRAVE ABUSE OF DISCRETION.
II
THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT THE ORDER DATED MAY
28, 1998 OF THE REGIONAL TRIAL COURT OF MAKATI, BRANCH 133, CONSTITUTES AS A
JUSTIFYING CIRCUMSTANCE THAT PREVENTS CRIMINAL LIABILITY FROM ATTACHING.

criminal liability since the obligation for which they were issued had already been novated or
abrogated.
We grant the petition.
A prejudicial question generally exists in a situation where a civil action and a criminal action are
both pending, and there exists in the former an issue that must be preemptively resolved before the
latter may proceed, because howsoever the issue raised in the civil action is resolved would be
determinative juris et de jure of the guilt or innocence of the accused in the criminal case.18 The
elements of a prejudicial question are provided under Section 7, Rule 111 of the Revised Rules of
Criminal Procedure, as amended, as follows: (i) the previously instituted civil action involves an
issue similar or intimately related to the issue raised in the subsequent criminal action, and (ii) the
resolution of such issue determines whether or not the criminal action may proceed.19

III
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO TAKE JUDICIAL NOTICE OF
THE PROVISIONS OF THE LANDBANK CHARTER RELATIVE TO THE COLLECTION OF ITS
FINANCIAL EXPOSURES.13
Essentially, the issue to be resolved in this case is whether the CA erred in reversing the Resolution
of the DOJ finding probable cause to hold respondent liable for violation of B.P. 22.
Petitioner asserts that the June 3, 1998 Restructuring Agreement did not release FWCC from its
obligation with Land Bank.14 It merely accommodated FWCCs sister company, RJ Ventures and
Development Corporation.15Whether there was novation or not is also not determinative of
respondents responsibility for violation of B.P. 22, as the said special law punishes the act of issuing
a worthless check and not the purpose for which the check was issued or the terms and conditions
relating to its issuance. In ruling that the Order dated May 28, 1998 of the RTC in Special
Proceedings No. M-4686 constituted a justifying circumstance, the CA failed to take judicial notice of
Section 86-B (4)16 of Republic Act No. 7907 which excludes the proceeds of the checks from the
property of the insolvent FWCC.
Respondent counters that there was novation which occurred prior to the institution of the criminal
complaint against him and that if proven, it would affect his criminal liability.17 Respondent averred
that if the CA would judicially confirm the existence of novation in the appeal of Civil Case No. 982337 before it, then it would follow that the value represented by the subject checks has been
extinguished. Respondent argues that the consideration or value of the subject checks have been
modified or novated with the execution of the Restructuring Agreement. The payment of the
obligation supposedly already depended on the terms and conditions of the Restructuring
Agreement and no longer on the respective maturity dates of the subject checks as the value or
consideration of the subject checks had been rendered inexistent by the subsequent execution of
the Restructuring Agreement. He maintains that the subject checks can no longer be the basis of

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A prejudicial question is understood in law as that which must precede the criminal action and which
requires a decision before a final judgment can be rendered in the criminal action with which said
question is closely connected.20 Not every defense raised in a civil action will raise a prejudicial
question to justify suspension of the criminal action. The defense must involve an issue similar or
intimately related to the same issue raised in the criminal case and its resolution should determine
whether or not the latter action may proceed. If the resolution of the issue in the civil action will not
determine the criminal responsibility of the accused in the criminal action based on the same facts,
or if there is no necessity that the civil case be determined first before taking up the criminal case,
the civil case does not involve a prejudicial question.21 Neither is there a prejudicial question if the
civil and the criminal action can, according to law, proceed independently of each other. 221avvphi1
In the instant case, we find that the question whether there was novation of the Credit Line
Agreement or not is not determinative of whether respondent should be prosecuted for violation of
the Bouncing Checks Law.
Respondents contention that if it be proven that the loan of FWCC had been novated and
restructured then his liability under the dishonored checks would be extinguished, fails to persuade
us. There was no express stipulation in the Restructuring Agreement that respondent is released
from his liability on the issued checks and in fact the letter-agreements between FWCC and Land
Bank expressly provide that respondents JSS (Joint and Several Signatures) continue to secure the
loan obligation and the postdated checks issued continue to guaranty the obligation. In fact, as aptly
pointed out by petitioner, out of the nine (9) checks in question, eight (8) checks were dated June 8
to October 30, 1998 or after the execution of the June 3, 1998 Restructuring Agreement. If indeed
respondents liability on the checks had been extinguished upon the execution of the Restructuring
Agreement, then respondent should have demanded the return of the checks.23 However, there was
no proof that he had been released from his obligation. On the contrary, the Restructuring
Agreement contains a proviso which states that "This Agreement shall not novate or extinguish all
previous security, mortgage, and other collateral agreements, promissory notes, solidary

undertaking previously executed by and between the parties and shall continue in full force and
effect modified only by the provisions of this Agreement."24
Moreover, it is well settled that the mere act of issuing a worthless check, even if merely as an
accommodation, is covered by B.P. 22.25 Thus, this Court has held that the agreement surrounding
the issuance of dishonored checks is irrelevant to the prosecution for violation of B.P. 22.26 The
gravamen of the offense punished by B.P. 22 is the act of making and issuing a worthless check or a
check that is dishonored upon its presentment for payment.27 Section 1 of B.P. 22 enumerates the
following elements: (1) the making, drawing, and issuance of any check to apply on account or for
value; (2) the knowledge of the maker, drawer, or issuer that at the time of issue he does not have
sufficient funds in or credit with the drawee bank for the payment of the check in full upon its
presentment; and (3) the subsequent dishonor of the check by the drawee bank for insufficiency of
funds or credit or dishonor for the same reason had not the drawer, without any valid cause, ordered
the bank to stop payment. Thus, even if it be subsequently declared that novation took place
between the FWCC and petitioner, respondent is not exempt from prosecution for violation of B.P. 22
for the dishonored checks.
As to the issue of whether the Order dated May 28, 1998 of the RTC of Makati City in Special
Proceedings No. M-4686 for Involuntary Insolvency constitutes as a justifying circumstance that

137 | P a g e

prevents criminal liability from attaching, we rule in the negative. As stated at the outset, the said
order forbids FWCC from paying its debts as well as from delivering any property belonging to it to
any person for its benefit. Respondent, however, cannot invoke this Order which was directed only
upon FWCC and is not applicable to him. Therefore, respondent, as surety of the loan is not exempt
from complying with his obligation for the issuance of the checks.
WHEREFORE, the petition for review on certiorari is GRANTED. The November 28, 2001 Decision
and August 6, 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 62773 are
hereby REVERSED and SET ASIDE. The Resolution dated October 25, 2000 of the Department of
Justice directing the filing of appropriate Informations for violation of B.P. 22 against respondent
Ramon P. Jacinto is hereby REINSTATED and UPHELD.
No costs.
SO ORDERED.