ANDRADA VS PHILHINO CORPORATION

BERSAMIN, J.:
An appeal by petition for review on certiorari under Rule 45 shall raise only questions of law. Thus, the
herein petition for review must fail for raising a question essentially of fact.
Antecedents
On December 28, 1990, respondent Pilhino Sales Corporation (Pilhino) sued Jose Andrada, Jr.
and his wife, Maxima, in the Regional Trial Court in Davao City (RTC) to recover the principal sum
of P240,863.00, plus interest and incidental charges (Civil Case No. 20,489-90). Upon Pilhinos
application, the RTC issued a writ of preliminary attachment, which came to be implemented against a
Hino truck and a Fuso truck both owned by Jose Andrada, Jr. However, the levies on attachment were
lifted after Jose filed a counter-attachment bond.
In due course, the RTC rendered a decision against Jose Andrada, Jr. and his wife. Pilhino opted to
enforce the writ of execution against the properties of the Andradas instead of claiming against the
counter-attachment bond considering that the premium on the bond had not been paid. As a result, the
sheriff seized the Hino truck and sold it at the ensuing public auction, with Pilhino as the highest bidder.
However, the Hino truck could not be transferred to Pilhinos name due to its having been already
registered in the name of petitioner Moises Andrada. It appears that the Hino truck had been meanwhile
sold by Jose Andrada, Jr. to Moises Andrada, which sale was unknown to Pilhino, and that Moises had
mortgaged the truck to BA Finance Corporation (BA Finance) to secure his own obligation.
BA Finance sued Moises Andrada for his failure to pay the loan (Civil Case No. 5117). After a
decision was rendered in the action in favor of BA Finance, a writ of execution issued, by which the
sheriff levied upon and seized the Hino truck while it was in the possession of Pilhino and sold it at public
auction, with BA Finance as the highest bidder.
Consequently, Pilhino instituted this action in the RTC in Davao City against Spouses Jose
Andrada, Jr. and Maxima Andrada, Spouses Moises Andrada and Clemencia Andrada, Jose Andrada,
Sr., BA Finance, Land Transportation Office (in Surallah, South Cotabato), and the Registrar of Deeds of
General Santos City to annul the following: (a) the deed of sale between Jose Andrada, Jr. and Moises
Andrada; (b) the chattel mortgage involving the Hino truck between Moises Andrada and BA Finance; (c)
the deed of conveyance executed by Jose Andrada, Jr. in favor of his father, Jose Andrada, Sr., involving
a hard-top jeep; and (d) the certificate of registration of the Hino truck in the name of Moises Andrada as
well as the registration of the chattel mortgage with the Registry of Deeds of General Santos City. The
action was docketed as Civil Case No. 21,898-93.
Of the Andradas who were defendants in Civil Case No. 21,898-93, only Moises Andrada and his
wife filed their responsive pleading. Later on, Jose Andrada, Jr. and his wife and Pilhino submitted a
compromise agreement dated August 20, 1993. They submitted a second compromise agreement
dated March 4, 1994 because the first was found to be defective and incomplete. The RTC thereafter
rendered a partial judgment on March 21, 1994 based on the second compromise agreement. After that,
further proceedings were taken in Civil Case No. 21,898-93 only with respect to Moises Andrada and his
wife, and BA Finance.
Moises Andrada and his wife averred as defenses that they had already acquired the Hino truck
from Jose Andrada, Jr. free from any lien or encumbrance prior to its seizure by the sheriff pursuant to
the writ of execution issued in Civil Case No. 20,489-90; that their acquisition had been made in good
faith, considering that at the time of the sale the preliminary attachment had already been lifted; and that
Pilhinos recourse was to proceed against the counter-attachment bond.
For its part, BA Finance claimed lack of knowledge of the truth of the material allegations of the
complaint of Pilhino; and insisted that the Hino truck had been validly mortgaged to it by Moises
Andrada, the lawful owner, to secure his own valid obligation.
On March 25, 1998, the RTC, citing the compromise agreement between Pilhino and Jose
Andrada, Jr. that had settled all the claims of Pilhino against Jose Andrada, Jr., and the good faith of
Pilhino and BA Finance in filing their respective actions, rendered its decision in Civil Case No. 21,89893,[1] disposing:

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WHEREFORE, judgment is rendered dismissing this case insofar as the spouses Moises Andrada and
Clemencia Andrada, Jose Andrada, Sr. and BA Finance Corporation, now accordingly BA Savings Bank,
including the counterclaims.
SO ORDERED.
Spouses Moises and Clemencia Andrada appealed the decision rendered on March 25, 1998 to
the extent that the RTC thereby: (a) dismissed their counterclaim; (b) declared that the deed of sale of
the Hino truck between Jose Andrada, Jr. and Moises Andrada had been simulated; and (c) approved
the compromise agreement between Pilhino and Spouses Jose Andrada, Jr. and Maxima Andrada.
On December 13, 2001, the Court of Appeals (CA) promulgated its decision, as follows:[2]
WHEREFORE, the judgment appealed from is AFFIRMED with the modification that the sale of the Hino
truck by defendant Jose Andrada, Jr. in favor of defendant-appellant Moises Andrada is declared valid,
subject to the rights of BA Finance as mortgagee and highest bidder.
SO ORDERED.
Spouses Moises and Clemencia Andrada are now before the Court via petition for review on certiorari to
pose the following issues: [3]
1. Whether or not Pilhino should be held liable for the damages the petitioners sustained from
Pilhinos levy on execution upon the Hino truck under Civil Case No. 20,489-90; and
2. Whether or not Pilhino was guilty of bad faith when it proceeded with the levy on execution upon
the Hino truck owned by Moises Andrada.
Ruling
We find no merit in the petition for review.
The petitioners assail the decision promulgated by the CA to the extent that it denied their claim
for the damages they had sought by way of counterclaim. They anchored their claim on Article 21 of
the Civil Code, which provides that any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the latter for damage.
Article 21 of the Civil Code, in conjunction with Article 19 of the Civil Code, is part of the cause of action
known in this jurisdiction as abuse of rights. The elements of abuse of rights are: (a) there is a legal
right or duty; (b) exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another.[4]
In its assailed decision, the CA found that Pilhino had acted in good faith in bringing Civil Case No.
21,898-93 to annul the deed of sale involving the Hino truck executed by Jose Andrada, Jr. in favor of
Moises Andrada, considering that Pilhino had believed that the sale in favor of defendants-appellants
[had been] resorted to so that Jose Andrada [might] evade his obligations.[5] The CA concluded that no
remedy was available for any damages that the petitioners sustained from the filing of Civil Case No.
21,898-93 against them because the law affords no remedy for such damages resulting from an act
which does not amount to a legal injury or wrong.[6]
Worthy to note is that the CAs finding and conclusion rested on the RTCs own persuasion that the sale
of the Hino truck to Moises Andrada had been simulated.[7]
Yet, the petitioners still insist in this appeal that both lower courts erred in their conclusion on the
absence of bad faith on the part of Pilhino.
We cannot side with the petitioners. Their insistence, which represents their disagreement with the CAs
declaration that the second and third elements of abuse of rights,supra, were not established, requires
the consideration and review of factual issues. Hence, this appeal cannot succeed, for an appeal by
petition for review on certiorari cannot determine factual issues. In the exercise of its power of review,
the Court is not a trier of facts and does not normally undertake the re-examination of the evidence
presented by the contending parties during the trial. Perforce, the findings of fact by the CA are
conclusive and binding on the Court. This restriction of the review to questions of law has been
institutionalized in Section 1, Rule 45 of the Rules of Court, viz:
Section 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial
Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for

review on certiorari. The petition shall raise only questions of law which must be distinctly set forth. (1a,
2a)[8]
It is true that the Court has, at times, allowed exceptions from the restriction. Among the recognized
exceptions are the following, to wit:[9]
(a) When the findings are grounded entirely on speculation, surmises, or conjectures;
(b) When the inference made is manifestly mistaken, absurd, or impossible;

But, as noted by the Court in Morales v. Court of Appeals,[15] the award of attorneys fees is the exception
rather than the rule. The power of a court to award attorneys fees under Article 2208 of the Civil
Code demands factual, legal, and equitable justification; its basis cannot be left to speculation and
conjecture.[16] The general rule is that attorneys fees cannot be recovered as part of damages because
of the policy that no premium should be placed on the right to litigate.[17]
Herein, the element of bad faith on the part of Pilhino in commencing and prosecuting Civil Case No.
21,898-93, which was necessary to predicate the lawful grant of attorneys fees based on Article 2208
(4) of the Civil Code, was not established. Accordingly, the petitioners demand for attorneys fees must
fail.

(c) When there is grave abuse of discretion;

(d) When the judgment is based on a misapprehension of facts;
(e) When the findings of facts are conflicting;
(f) When in making its findings the CA went beyond the issues of the case, or its findings are contrary to
the admissions of both the appellant and the appellee;
(g) When the CAs findings are contrary to those by the trial court;
(h) When the findings are conclusions without citation of specific evidence on which they are based;
(i) When the facts set forth in the petition as well as in the petitioners main and reply briefs are not
disputed by the respondent;
(j) When the findings of fact are premised on the supposed absence of evidence and contradicted by
the evidence on record; or
(k) When the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion.
However, the circumstances of this case do not warrant reversing or modifying the findings of the CA,
which are consistent with the established facts. Verily, the petitioners did not prove the concurrence of
the elements of abuse of rights.
The petitioners further seek attorneys fees based on Article 2208 (4) of the Civil Code, which provides
that in the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs,
cannot be recovered, except xxx (4) in cases of clearly unfounded civil action or proceeding against the
plaintiff xxx.
The petitioners are not entitled to attorneys fees.
It is well accepted in this jurisdiction that no premium should be placed on the right to litigate and that not
every winning party is entitled to an automatic grant of attorneys fees. [10] Indeed, before the effectivity of
the new Civil Code, such fees could not be recovered in the absence of a stipulation.[11] It was only with
the advent of the new Civil Code that the right to collect attorneys fees in the instances mentioned in
Article 2208 was recognized,[12] and such fees are now included in the concept of actual damages.[13]One
such instance is where the defendant is guilty of gross and evident bad faith in refusing to satisfy the
plaintiffs plainly valid, just and demandable claim.[14] This is a corollary of the general principle
expressed in Article 19 of the Civil Code that everyone must, in the performance of his duties, observe
honesty and good faith and the rule embodied in Article 1170 that anyone guilty of fraud (bad faith) in the
performance of his obligation shall be liable for damages.

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WHEREFORE, we deny the petition for review on certiorari for its lack of merit, and affirm the decision of
the Court of Appeals.
SO ORDERED.

EUSEBIO GONZALES,
Petitioner,

G.R. No. 180257

Present:

payment of the periodic interest dues from their PCIB account which apparently was not maintained with
enough deposits. PCIB allegedly called the attention of Gonzales regarding the July 1998 defaults and
the subsequent accumulating periodic interest dues which were left still left unpaid.

CORONA, C.J., Chairperson,

VELASCO, JR.,
NACHURA,*
DEL CASTILLO, and
PEREZ, JJ.

In the meantime, Gonzales issued a check dated September 30, 1998 in favor of Rene Unson (Unson)
for PhP 250,000 drawn against the credit line (COHLA). However, on October 13, 1998, upon
presentment for payment by Unson of said check, it was dishonored by PCIB due to the termination by
PCIB of the credit line under COHLA onOctober 7, 1998 for the unpaid periodic interest dues from the
loans of Gonzales and the spouses Panlilio. PCIB likewise froze the FCD account of Gonzales.

Promulgated:

Consequently, Gonzales had a falling out with Unson due to the dishonor of the check. They had a
heated argument in the premises of the Philippine Columbian Association (PCA) where they are both
members, which caused great embarrassment and humiliation to Gonzales. Thereafter, on November 5,
1998, Unson sent a demand letter[5] to Gonzales for the PhP 250,000. And on December 3, 1998, the
counsel of Unson sent a second demand letter[6] to Gonzales with the threat of legal action. With his
FCD account that PCIB froze, Gonzales was forced to source out and pay the PhP 250,000 he owed to
Unson in cash.

- versus -

PHILIPPINE COMMERCIAL AND INTERNATIONAL BANK,

EDNA OCAMPO, and ROBERTO NOCEDA,
Respondents.

February 23, 2011

x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:
The Case
This is an appeal via a Petition for Review on Certiorari under Rule 45 from the Decision[1] dated October
22, 2007 of the Court of Appeals (CA) in CA-G.R. CV No. 74466, which denied petitioners appeal from
the December 10, 2001 Decision[2] in Civil Case No. 99-1324 of the Regional Trial Court (RTC), Branch
138 in Makati City. The RTC found justification for respondents dishonor of petitioners check and found
petitioner solidarily liable with the spouses Jose and Jocelyn Panlilio (spouses Panlilio) for
thethree promissory notes they executed in favor of respondent Philippine Commercial and International
Bank (PCIB).

On January 28, 1999, Gonzales, through counsel, wrote PCIB insisting that the check he issued had
been fully funded, and demanded the return of the proceeds of his FCD as well as damages for the
unjust dishonor of the check.[7] PCIB replied on March 22, 1999 and stood its ground in freezing
Gonzales accounts due to the outstanding dues of the loans.[8] On May 26, 1999, Gonzales reiterated
his demand, reminding PCIB that it knew well that the actual borrowers were the spouses Panlilio and he
never benefited from the proceeds of the loans, which were serviced by the PCIB account of the
spouses Panlilio.[9]
PCIBs refusal to heed his demands compelled Gonzales to file the instant case for damages with the
RTC, on account of the alleged unjust dishonor of the check issued in favor of Unson.

The Facts

The Ruling of the RTC

Petitioner Eusebio Gonzales (Gonzales) was a client of PCIB for a good 15 years before he filed the
instant case. His account with PCIB was handled by respondent Edna Ocampo (Ocampo) until she was
replaced by respondent Roberto Noceda (Noceda).

After due trial, on December 10, 2001, the RTC rendered a Decision in favor of PCIB. The decretal
portion reads:
WHEREFORE, judgment is rendered as follows

In October 1992, PCIB granted a credit line to Gonzales through the execution of a Credit-On-Hand
Loan Agreement[3] (COHLA), in which the aggregate amount of the accounts of Gonzales with PCIB
served as collateral for and his availment limit under the credit line. Gonzales drew from said credit line
through the issuance of check. At the institution of the instant case, Gonzales had a Foreign Currency
Deposit (FCD) of USD 8,715.72 with PCIB.
On October 30, 1995, Gonzales and his wife obtained a loan for PhP 500,000. Subsequently, on
December 26, 1995 and January 3, 1999, the spouses Panlilio and Gonzales obtained two additional
loans from PCIB in the amounts of PhP 1,000,000 and PhP 300,000, respectively. These three loans
amounting to PhP 1,800,000 were covered by three promissory notes.[4] To secure the loans, a real
estate mortgage (REM) over a parcel of land covered by Transfer Certificate of Title (TCT) No. 38012
was executed by Gonzales and the spouses Panlilio. Notably, the promissory notes specified, among
others, the solidary liability of Gonzales and the spouses Panlilio for the payment of the loans. However,
it was the spouses Panlilio who received the loan proceeds of PhP 1,800,000.
The monthly interest dues of the loans were paid by the spouses Panlilio through the automatic debiting
of their account with PCIB. But the spouses Panlilio, from the month of July 1998, defaulted in the

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(a) on the first issue, plaintiff is liable to pay defendant Bank as principal under the promissory notes,
Exhibits A, B and C;
(b) on the second issue, the Court finds that there is justification on part of the defendant Bank to
dishonor the check, Exhibit H;
(c) on the third issue, plaintiff and defendants are not entitled to damages from each other.
No pronouncement as to costs.
SO ORDERED.[10]
The RTC found Gonzales solidarily liable with the spouses Panlilio on the three promissory notes
relative to the outstanding REM loan. The trial court found no fault in the termination by PCIB of the
COHLA with Gonzales and in freezing the latters accounts to answer for the past due PhP 1,800,000

loan. The trial court ruled that the dishonor of the check issued by Gonzales in favor of Unson was
proper considering that the credit line under the COHLA had already been terminated or revoked before
the presentment of the check.

land covered by TCT No. 38012 was constituted as security; and second, whether PCIB properly
dishonored the check of Gonzales drawn against the COHLA he had with the bank.
The petition is partly meritorious.

Aggrieved, Gonzales appealed the RTC Decision before the CA.

The Ruling of the CA

First Issue: Solidarily Liability on Promissory Notes

On September 26, 2007, the appellate court rendered its Decision dismissing Gonzales appeal and
affirming in toto the RTC Decision. The fallo reads:

A close perusal of the records shows that the courts a quo correctly found Gonzales solidarily liable with
the spouses Panlilio for the three promissory notes.

WHEREFORE, in view of the foregoing, the decision, dated December 10, 2001, in Civil Case No. 991324 is hereby AFFIRMED in toto.

The promissory notes covering the PhP 1,800,000 loan show the following:

SO ORDERED.[11]
In dismissing Gonzales appeal, the CA, first, confirmed the RTCs findings that Gonzales was indeed
solidarily liable with the spouses Panlilio for the three promissory notes executed for the REM
loan; second, it likewise found neither fault nor negligence on the part of PCIB in dishonoring the check
issued by Gonzales in favor of Unson, ratiocinating that PCIB was merely exercising its rights under the
contractual stipulations in the COHLA brought about by the outstanding past dues of the REM loan and
interests for which Gonzales was solidarily liable with the spouses Panlilio to pay under the promissory
notes.

(1) Promissory Note BD-090-1766-95,[13] dated October 30, 1995, for PhP 500,000 was signed by
Gonzales and his wife, Jessica Gonzales;
(2) Promissory Note BD-090-2122-95,[14] dated December 26, 1995, for PhP 1,000,000 was signed by
Gonzales and the spouses Panlilio; and
(3) Promissory Note BD-090-011-96,[15] dated January 3, 1996, for PhP 300,000 was signed by
Gonzales and the spouses Panlilio.
Clearly, Gonzales is liable for the loans covered by the above promissory notes. First, Gonzales
admitted that he is an accommodation party which PCIB did not dispute. In his testimony, Gonzales
admitted that he merely accommodated the spouses Panlilio at the suggestion of Ocampo, who was
then handling his accounts, in order to facilitate the fast release of the loan. Gonzales testified:

Thus, we have this petition.

The Issues

ATTY. DE JESUS:
Now in this case you filed against the bank you mentioned there was a loan also applied for by the
Panlilios in the sum of P1.8 Million Pesos. Will you please tell this Court how this came about?

Gonzales, as before the CA, raises again the following assignment of errors:
I - IN NOT CONSIDERING THAT THE LIABILITY ARISING FROM PROMISSORY NOTES (EXHIBITS
A, B AND C, PETITIONER; EXHIBITS 1, 2 AND 3, RESPONDENT) PERTAINED TO
BORROWER JOSE MA. PANLILIO AND NOT TO APPELLANT AS RECOGNIZED AND
ACKNOWLEDGE[D] BY RESPONDENT PHILIPPINE COMMERCIAL & INDUSTRIAL BANK
(RESPONDENT BANK).
II - IN FINDING THAT THE RESPONDENTS WERE NOT AT FAULT NOR GUILTY OF GROSS
NEGLIGENCE IN DISHONORING PETITIONERS CHECK DATED 30 SEPTEMBER 1998 IN THE
AMOUNT OF P250,000.00 FOR THE REASON ACCOUNT CLOSED, INSTEAD OF MERELY REFER
TO DRAWER GIVEN THE FACT THAT EVEN AFTER DISHONOR, RESPONDENT SIGNED A
CERTIFICATION DATED 7 DECEMBER 1998 THAT CREDIT ON HAND (COH) LOAN AGREEMENT
WAS STILL VALID WITH A COLLATERAL OF FOREIGN CURRENCY DEPOSIT (FCD) OF [USD]
48,715.72.
III - IN NOT AWARDING DAMAGES AGAINST RESPONDENTS DESPITE PRESENTATION OF
CLEAR PROOF TO SUPPORT ACTION FOR DAMAGES.[12]

GONZALES:
Mr. Panlilio requested his account officer . . . . at that time it is a P42.0 Million loan and if he secures
another P1.8 Million loan the release will be longer because it has to pass to XO.
Q:
After that what happened?
A:
So as per suggestion since Mr. Panlilio is a good friend of mine and we co-owned the property I
agreed initially to use my name so that the loan can be utilized immediately by Mr. Panlilio.
Q:
A:

Who is actually the borrower of this P1.8 Million Pesos?

Well, in paper me and Mr. Panlilio.

Q:
A:

Who received the proceeds of said loan?

Mr. Panlilio.

Q:
Do you have any proof that it was Mr. Panlilio who actually received the proceeds of this P1.8
Million Pesos loan?
A:
A check was deposited in the account of Mr. Panlilio.[16]
xxxx

The Courts Ruling

The core issues can be summarized, as follows: first, whether Gonzales is liable for the three promissory
notes covering the PhP 1,800,000 loan he made with the spouses Panlilio where a REM over a parcel of

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Q:
By the way upon whose suggestion was the loan of Mr. Panlilio also placed under your name
initially?
A:
Well it was actually suggested by the account officer at that time Edna Ocampo.

Q:
How about this Mr. Rodolfo Noceda?
A:
As you look at the authorization aspect of the loan Mr. Noceda is the boss of Edna so he has
been familiar with my account ever since its inception.
Q:
So these two officers Ocampo and Noceda knew that this was actually the account of Mr. Panlilio
and not your account?
A:
Yes, sir. In fact even if there is a change of account officer they are always informing me that the
account will be debited to Mr. Panlilios account.[17]
Moreover, the first note for PhP 500,000 was signed by Gonzales and his wife as borrowers, while the
two subsequent notes showed the spouses Panlilio sign as borrowers with Gonzales. It is, thus, evident
that Gonzales signed, as borrower, the promissory notes covering the PhP 1,800,000 loan despite not
receiving any of the proceeds.
Second, the records of PCIB indeed bear out, and was admitted by Noceda, that the PhP 1,800,000 loan
proceeds went to the spouses Panlilio, thus:
ATTY. DE JESUS: [on Cross-Examination]
Is it not a fact that as far as the records of the bank [are] concerned the proceeds of the 1.8 million loan
was received by Mr. Panlilio?

accessory or collateral to a valid principal obligation, the suretys liability to the creditor
is immediate, primaryand absolute; he is directly and equally bound with the principal. As an equivalent
of a regular party to the undertaking, a surety becomes liable to the debt and duty of the principal obligor
even without possessing a direct or personal interest in the obligations nor does he receive any benefit
therefrom.[21]
Thus, the knowledge, acquiescence, or even demand by Ocampo for an accommodation by Gonzales in
order to extend the credit or loan of PhP 1,800,000 to the spouses Panlilio does not exonerate Gonzales
from liability on the three promissory notes.
Fourth, the solidary liability of Gonzales is clearly stipulated in the promissory notes which uniformly
begin, For value received, the undersigned (the BORROWER)jointly and severally promise to pay x x
x. Solidary liability cannot be presumed but must be established by law or contract.[22] Article 1207 of
the Civil Code pertinently states that there is solidary liability only when the obligation expressly so
states, or when the obligation requires solidarity. This is true in the instant case where Gonzales, as
accommodation party, is immediately, equally, and absolutely bound with the spouses Panlilio on the
promissory notes which indubitably stipulated solidary liability for all the borrowers. Moreover, the three
promissory notes serve as the contract between the parties. Contracts have the force of law between
the parties and must be complied with in good faith.[23]
Second Issue: Improper Dishonor of Check

NOCEDA:
Yes sir.[18]
The fact that the loans were undertaken by Gonzales when he signed as borrower or co-borrower for
the benefit of the spouses Panlilioas shown by the fact that the proceeds went to the spouses Panlilio
who were servicing or paying the monthly duesis beside the point. For signing as borrower and coborrower on the promissory notes with the proceeds of the loans going to the spouses Panlilio, Gonzales
has extended an accommodation to said spouses.
Third, as an accommodation party, Gonzales is solidarily liable with the spouses Panlilio for the
loans. In Ang v. Associated Bank,[19] quoting the definition of an accommodation party under Section 29
of the Negotiable Instruments Law, the Court cited that an accommodation party is a person who has
signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for
the purpose of lending his name to some other person.[20] The Court further explained:
[A]n accommodation party is one who meets all the three requisites, viz: (1) he must be a party to the
instrument, signing as maker, drawer, acceptor, or indorser; (2) he must not receive value therefor; and
(3) he must sign for the purpose of lending his name or credit to some other person. An accommodation
party lends his name to enable the accommodated party to obtain credit or to raise money; he receives
no part of the consideration for the instrument but assumes liability to the other party/ies thereto. The
accommodation party is liable on the instrument to a holder for value even though the holder, at the time
of taking the instrument, knew him or her to be merely an accommodation party, as if the contract was
not for accommodation.
As petitioner acknowledged it to be, the relation between an accommodation party and the
accommodated party is one of principal and suretythe accommodation party being the surety. As
such, he is deemed an original promisor and debtor from the beginning; he is considered in law as the
same party as the debtor in relation to whatever is adjudged touching the obligation of the latter since
their liabilities are interwoven as to be inseparable. Although a contract of suretyship is in essence

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Having ruled that Gonzales is solidarily liable for the three promissory notes, We shall now touch upon
the question of whether it was proper for PCIB to dishonor the check issued by Gonzales against the
credit line under the COHLA.
We answer in the negative.
As a rule, an appeal by certiorari under Rule 45 of the Rules of Court is limited to review of errors of law.
[24]
The factual findings of the trial court, especially when affirmed by the appellate court, are generally
binding on us unless there was a misapprehension of facts or when the inference drawn from the facts
was manifestly mistaken.[25] The instant case falls within the exception.
The courts a quo found and held that there was a proper dishonor of the PhP 250,000 check issued by
Gonzales against the credit line, because the credit line was already closed prior to the presentment of
the check by Unson; and the closing of the credit line was likewise proper pursuant to the stipulations in
the promissory notes on the banks right to set off or apply all moneys of the debtor in PCIBs hand and
the stipulations in the COHLA on the PCIBs right to terminate the credit line on grounds of default by
Gonzales.
Gonzales argues otherwise, pointing out that he was not informed about the default of the spouses
Panlilio and that the September 21, 1998 account statement of the credit line shows a balance of PhP
270,000 which was likewise borne out by the December 7, 1998 PCIBs certification that he has USD
8,715.72 in his FCD account which is more than sufficient collateral to guarantee the PhP 250,000
check, dated September 30, 1998, he issued against the credit line.
A careful scrutiny of the records shows that the courts a quo committed reversible error in not finding
negligence by PCIB in the dishonor of the PhP 250,000 check.
First. There was no proper notice to Gonzales of the default and delinquency of the PhP 1,800,000
loan. It must be borne in mind that while solidarily liable with the spouses Panlilio on the PhP 1,800,000

loan covered by the three promissory notes, Gonzales is only an accommodation party and as such only
lent his name and credit to the spouses Panlilio. While not exonerating his solidary liability, Gonzales
has a right to be properly apprised of the default or delinquency of the loan precisely because he is a cosignatory of the promissory notes and of his solidary liability.
We note that it is indeed understandable for Gonzales to push the spouses Panlilio to pay the
outstanding dues of the PhP 1,800,000 loan, since he was only an accommodation party and was not
personally interested in the loan. Thus, a meeting was set by Gonzales with the spouses Panlilio and
the PCIB officers, Noceda and Ocampo, in the spouses Panlilios jewelry shop in SM Megamall on
October 5, 1998. Unfortunately, the meeting did not push through due to the heavy traffic Noceda and
Ocampo encountered.
Such knowledge of the default by Gonzales was, however, not enough to properly apprise Gonzales
about the default and the outstanding dues. Verily, it is not enough to be merely informed to pay over a
hundred thousand without being formally apprised of the exact aggregate amount and the corresponding
dues pertaining to specific loans and the dates they became due.
Gonzales testified that he was not duly notified about the outstanding interest dues of the loan:
ATTY. DE JESUS:
Now when Mr. Panlilios was encountering problems with the bank did the defendant bank [advise] you
of any problem with the same account?
GONZALES:
They never [advised] me in writing.
Q:
A:

How did you come to know that there was a problem?

When my check bounced sir.[26]

On the other hand, the PCIB contends otherwise, as Corazon Nepomuceno testified:
ATTY. PADILLA:
Can you tell this Honorable Court what is it that you told Mr. Gonzales when you spoke to him at the
celphone?
NEPOMUCENO:
I just told him to update the interest so that we would not have to cancel the COH Line and he could
withdraw the money that was in the deposit because technically, if an account is past due we are not
allowed to let the client withdraw funds because they are allowed to offset funds so, just to help him get
his money, just to update the interest so that we could allow him to withdraw.
Q:
Withdraw what?
A:
His money on the COH, whatever deposit he has with us.
Q:
Did you inform him that if he did not update the interest he would not be able to withdraw his
money?
A:
Yes sir, we will be forced to hold on to any assets that he has with us so thats why we suggested
just to update the interest because at the end of everything, he would be able to withdraw more funds
than the interest that the money he would be needed to update the interest.[27]

6|P a g e

From the foregoing testimonies, between the denial of Gonzales and the assertion by PCIB that
Gonzales was properly apprised, we find for Gonzales. We find the testimonies of the former PCIB
employees to be self-serving and tenuous at best, for there was no proper written notice given by the
bank. The record is bereft of any document showing that, indeed, Gonzales was formally informed by
PCIB about the past due periodic interests.
PCIB is well aware and did not dispute the fact that Gonzales is an accommodation party. It also acted
in accordance with such fact by releasing the proceeds of the loan to the spouses Panlilio and likewise
only informed the spouses Panlilio of the interest dues. The spouses Panlilio, through their
account[28] with PCIB, were paying the periodic interest dues and were the ones periodically informed by
the bank of the debiting of the amounts for the periodic interest payments. Gonzales never paid any of
the periodic interest dues. PCIBs Noceda admitted as much in his cross-examination:
ATTY. DE JESUS: [on Cross-Examination]
And there was no instance that Mr. Gonzales ever made even interest for this loan, is it not, its always
Mr. Panlilio who was paying the interest for this loan?
NOCEDA:
Yes sir.[29]
Indeed, no evidence was presented tending to show that Gonzales was periodically sent notices or
notified of the various periodic interest dues covering the three promissory notes. Neither do the records
show that Gonzales was aware of amounts for the periodic interests and the payment for them. Such
were serviced by the spouses Panlilio.
Thus, PCIB ought to have notified Gonzales about the status of the default or delinquency of the interest
dues that were not paid starting July 1998. And such notification must be formal or in written form
considering that the outstanding periodic interests became due at various dates, i.e., on July 8, 17, and
28, 1998, and the various amounts have to be certain so that Gonzales is not only properly apprised but
is given the opportunity to pay them being solidarily liable for the loans covered by the promissory
notes.
It is the bank which computes these periodic interests and such dues must be put into writing and
formally served to Gonzales if he were asked to pay them, more so when the payments by the spouses
Panlilio were charged through the account of the spouses Panlilio where the interest dues were simply
debited. Such arrangement did not cover Gonzales bank account with PCIB, since he is only an
accommodation party who has no personal interest in the PhP 1,800,000 loan. Without a clear and
determinate demand through a formal written notice for the exact periodic interest dues for the loans,
Gonzales cannot be expected to pay for them.
In business, more so for banks, the amounts demanded from the debtor or borrower have to be definite,
clear, and without ambiguity. It is not sufficient simply to be informed that one must pay over a hundred
thousand aggregate outstanding interest dues without clear and certain figures. Thus, We find PCIB
negligent in not properly informing Gonzales, who is an accommodation party, about the default and the
exact outstanding periodic interest dues. Without being properly apprised, Gonzales was not given the
opportunity to properly act on them.
It was only through a letter[30] sent by PCIB dated October 2, 1998 but incongruously showing the
delinquencies of the PhP 1,800,000 loan at a much later date, i.e., as of October 31, 1998, when
Gonzales was formally apprised by PCIB. In it, the interest due was PhP 106,1616.71 and penalties for
the unpaid interest due of PhP 64,766.66, or a total aggregate due of PhP 171,383.37. But it is not

certain and the records do not show when the letter was sent and when Gonzales received it. What is
clear is that such letter was belatedly sent by PCIB and received by Gonzales after the fact that the
latters FCD was already frozen, his credit line under the COHLA was terminated or suspended, and his
PhP 250,000 check in favor of Unson was dishonored.
And way much later, or on May 4, 1999, was a demand letter from the counsel of PCIB sent to Gonzales
demanding payment of the PhP 1,800,000 loan. Obviously, these formal written notices sent to
Gonzales were too late in the day for Gonzales to act properly on the delinquency and he already
suffered the humiliation and embarrassment from the dishonor of his check drawn against the credit
line.

ATTY. DE JESUS: [on Cross-Examination]

Now we go to the other credit facility which is the credit on hand extended solely of course to Mr.
Eusebio Gonzales who is the plaintiff here, Mr. Panlilio is not included in this credit on hand facility. Did I
gather from you as per your Exhibit 7 as of October 2, 1998 you were the one who recommended the
cancellation of this credit on hand facility?
NEPOMUCENO:
It was recommended by the account officer and I supported it.
Q:
A:

And you approved it?

Yes sir.

Q:
A:

Did you inform Mr. Gonzales that you have already cancelled his credit on hand facility?
As far as I know, it is the account officer who will inform him.

Second. PCIB was grossly negligent in not giving prior notice to Gonzales about its course of action to
suspend, terminate, or revoke the credit line, thereby violating the clear stipulation in the COHLA.

Q:
A:

But you have no record that he was informed?

I dont recall and we have to look at the folder to determine if they were informed.

The COHLA, in its effectivity clause, clearly provides:

4.
EFFECTIVITY The COH shall be effective for a period of one (1) year commencing from the
receipt by the CLIENT of the COH checkbook issued by the BANK, subject to automatic renewals for
same periods unless terminated by the BANK upon prior notice served on CLIENT.[31] (Emphasis ours.)

Q:
If you will notice, this letter . . . what do you call this letter of yours?
A:
That is our letter advising them or reminding them of their unpaid interest and that if he is able to
update his interest he can extend the promissory note or restructure the outstanding.

To reiterate, a written notice on the default and deficiency of the PhP 1,800,000 loan covered by the
three promissory notes was required to apprise Gonzales, an accommodation party. PCIB is obliged to
formally inform and apprise Gonzales of the defaults and the outstanding obligations, more so when
PCIB was invoking the solidary liability of Gonzales. This PCIB failed to do.

It is undisputed that the bank unilaterally revoked, suspended, and terminated the COHLA without giving
Gonzales prior notice as required by the above stipulation in the COHLA. Noceda testified on crossexamination on the Offering Ticket[32] recommending the termination of the credit line, thus:
ATTY. DE JESUS: [on Cross-Examination]
This Exhibit 8, you have not furnished at anytime a copy to the plaintiff Mr. Gonzales is it not?
NOCEDA:
No sir but verbally it was relayed to him.
Q:
A:

But you have no proof that Mr. Gonzales came to know about this Exhibit 8?
It was relayed to him verbally.

Q:
A:

But there is no written proof?

No sir.

Q:
And it is only now that you claim that it was verbally relayed to him, its only now when you
testified in Court?
A:
Before . . .
Q:
To whom did you relay this information?
A:
It was during the time that we were going to Megamall, it was relayed by Liza that he has to pay
his obligations or else it will adversely affect the status of the account.[33]
On the other hand, the testimony of Corazon Nepomuceno shows:

7|P a g e

Q:
Now, I call your attention madam witness, there is nothing in this letter to the clients advising
them or Mr. Gonzales that his credit on hand facility was already cancelled?
A:
I dont know if there are other letters aside from this.
Q:
So in this letter there is nothing to inform or to make Mr. Eusebio aware that his credit on hand
facility was already cancelled?
A:
No actually he can understand it from the last sentence. If you will be able to update your
outstanding interest, we can apply the extention of your promissory note so in other words we are
saying that if you dont, you cannot extend the promissory note.
Q:
You will notice that the subject matter of this October 2, 1998 letter is only the loan of 1.8 million
is it not, as you can see from the letter? Okay?
A:
Ah . . .
Q:
Okay. There is nothing there that will show that that also refers to the credit on hand facility
which was being utilized by Mr. Gonzales is it not?
A:
But I dont know if there are other letters that are not presented to me now. [34]
The foregoing testimonies of PCIB officers clearly show that not only did PCIB fail to give prior notice to
Gonzales about the Offering Ticket for the process of termination, suspension, or revocation of the credit
line under the COHLA, but PCIB likewise failed to inform Gonzales of the fact that his credit line has
been terminated. Thus, we find PCIB grossly negligent in the termination, revocation, or suspension of
the credit line under the COHLA. While PCIB invokes its right on the so-called cross default provisions,
it may not with impunity ignore the rights of Gonzales under the COHLA.
Indeed, the business of banking is impressed with public interest and great reliance is made on the
banks sworn profession of diligence and meticulousness in giving irreproachable service. Like a
common carrier whose business is imbued with public interest, a bank should exercise extraordinary

diligence to negate its liability to the depositors.[35] In this instance, PCIB is sorely remiss in the diligence
required in treating with its client, Gonzales. It may not wantonly exercise its rights without respecting
and honoring the rights of its clients.
Art. 19 of the New Civil Code clearly provides that [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. This is the basis of the principle of abuse of right which, in turn, is based upon the maxim suum
jus summa injuria (the abuse of right is the greatest possible wrong).[36]
In order for Art. 19 to be actionable, the following elements must be present: (1) the existence of a legal
right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or injuring
another.[37] We find that such elements are present in the instant case. The effectivity clause of the
COHLA is crystal clear that termination of the COH should be done only upon prior notice served on the
CLIENT. This is the legal duty of PCIBto inform Gonzales of the termination. However, as shown by
the above testimonies, PCIB failed to give prior notice to Gonzales.
Malice or bad faith is at the core of Art. 19. Malice or bad faith implies a conscious and intentional
design to do a wrongful act for a dishonest purpose or moral obliquity.[38] In the instant case, PCIB was
able to send a letter advising Gonzales of the unpaid interest on the loans[39] but failed to mention
anything about the termination of the COHLA. More significantly, no letter was ever sent to him about the
termination of the COHLA. The failure to give prior notice on the part of PCIB is already prima facie
evidence of bad faith.[40] Therefore, it is abundantly clear that this case falls squarely within the purview
of the principle of abuse of rights as embodied in Art. 19.
Third. There is no dispute on the right of PCIB to suspend, terminate, or revoke the COHLA under the
cross default provisions of both the promissory notes and the COHLA. However, these cross default
provisions do not confer absolute unilateral right to PCIB, as they are qualified by the other stipulations
in the contracts or specific circumstances, like in the instant case of an accommodation party.
The promissory notes uniformly provide:
The lender is hereby authorized, at its option and without notice, to set off or apply to the payment of this
Note any and all moneys which may be in its hands on deposit or otherwise belonging to the Borrower.
The Borrower irrevocably appoint/s the Lender, effective upon the nonpayment of this Note on
demand/at maturity or upon the happening of any of the events of default, but without any obligation on
the Lenders part should it choose not to perform this mandate, as the attorney-in-fact of the Borrower, to
sell and dispose of any property of the Borrower, which may be in the Lenders possession by public or
private sale, and to apply the proceeds thereof to the payment of this Note; the Borrower, however, shall
remain liable for any deficiency.[41] (Emphasis ours.)

The above provisos are indeed qualified with the specific circumstance of an accommodation party who,
as such, has not been servicing the payment of the dues of the loans, and must first be properly
apprised in writing of the outstanding dues in order to answer for his solidary obligation.
The same is true for the COHLA, which in its default clause provides:
16.
DEFAULT The CLIENT shall be considered in default under the COH if any of the following
events shall occur:

1.
xxx
2.
Violation of the terms and conditions of this Agreement or any contract of the CLIENT with the
BANK or any bank, persons, corporations or entities for the payment of borrowed money, or any other
event of default in such contracts.[42]
The above pertinent default clause must be read in conjunction with the effectivity clause (No. 4 of the
COHLA, quoted above), which expressly provides for the right of client to prior notice. The rationale is
simple: in cases where the bank has the right to terminate, revoke, or suspend the credit line, the client
must be notified of such intent in order for the latter to act accordinglywhether to correct any ground
giving rise to the right of the bank to terminate the credit line and to dishonor any check issued or to act
in accord with such termination, i.e., not to issue any check drawn from the credit line or to replace any
checks that had been issued. This, the bankwith gross negligencefailed to accord Gonzales, a
valued client for more than 15 years.
Fourth. We find the testimony[43] of Ocampo incredible on the point that the principal borrower of the PhP
1,800,000 loan covered by the three promissory notes is Gonzales for which the bank officers had
special instructions to grant and that it was through the instructions of Gonzales that the payment of the
periodic interest dues were debited from the account of the spouses Panlilio.
For one, while the first promissory note dated October 30, 1995 indeed shows Gonzales as the principal
borrower, the other promissory notes dated December 26, 1995 and January 3, 1996 evidently show that
it was Jose Panlilio who was the principal borrower with Gonzales as co-borrower. For another, Ocampo
cannot feign ignorance on the arrangement of the payments by the spouses Panlilio through the debiting
of their bank account. It is incredulous that the payment arrangement is merely at the behest of
Gonzales and at a mere verbal directive to do so. The fact that the spouses Panlilio not only received
the proceeds of the loan but were servicing the periodic interest dues reinforces the fact that Gonzales
was only an accommodation party.
Thus, due to PCIBs negligence in not giving Gonzalesan accommodation partyproper notice
relative to the delinquencies in the PhP 1,800,000 loan covered by the three promissory notes, the
unjust termination, revocation, or suspension of the credit line under the COHLA from PCIBs gross
negligence in not honoring its obligation to give prior notice to Gonzales about such termination and in
not informing Gonzales of the fact of such termination, treating Gonzales account as closed and
dishonoring his PhP 250,000 check, was certainly a reckless act by PCIB. This resulted in the actual
injury of PhP 250,000 to Gonzales whose FCD account was frozen and had to look elsewhere for money
to pay Unson.
With banks, the degree of diligence required is more than that of a good father of the family considering
that the business of banking is imbued with public interest due to the nature of their function. The law
imposes on banks a high degree of obligation to treat the accounts of its depositors with meticulous
care, always having in mind the fiduciary nature of banking.[44] Had Gonzales been properly notified of
the delinquencies of the PhP 1,800,000 loan and the process of terminating his credit line under the
COHLA, he could have acted accordingly and the dishonor of the check would have been avoided.
Third Issue: Award of Damages
The banking system has become an indispensable institution in the modern world and plays a vital role
in the economic life of every civilized societybanks have attained a ubiquitous presence among the
people, who have come to regard them with respect and even gratitude and most of all, confidence, and
it is for this reason, banks should guard against injury attributable to negligence or bad faith on its part.
[45]

8|P a g e

In the instant case, Gonzales suffered from the negligence and bad faith of PCIB. From the testimonies
of Gonzales witnesses, particularly those of Dominador Santos[46]and Freddy Gomez,[47] the
embarrassment and humiliation Gonzales has to endure not only before his former close friend Unson
but more from the members and families of his friends and associates in the PCA, which he continues to
experience considering the confrontation he had with Unson and the consequent loss of standing and
credibility among them from the fact of the apparent bouncing check he issued. Credit is very important
to businessmen and its loss or impairment needs to be recognized and compensated.[48]
The termination of the COHLA by PCIB without prior notice and the subsequent dishonor of the check
issued by Gonzales constitute acts of contra bonus mores. Art. 21 of the Civil Code refers to such acts
when it says, Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for damage.
Accordingly, this Court finds that such acts warrant the payment of indemnity in the form of nominal
damages. Nominal damages are recoverable where a legal right is technically violated and must be
vindicated against an invasion that has produced no actual present loss of any kind x x x. [49] We further
explained the nature of nominal damages in Almeda v. Cario:
x x x Its award is thus not for the purpose of indemnification for a loss but for the recognition and
vindication of a right. Indeed, nominal damages are damages in name only and not in fact. When
granted by the courts, they are not treated as an equivalent of a wrong inflicted but simply a recognition
of the existence of a technical injury. A violation of the plaintiffs right, even if only technical, is sufficient
to support an award of nominal damages. Conversely, so long as there is a showing of a violation of the
right of the plaintiff, an award of nominal damages is proper.[50] (Emphasis Ours.)
In the present case, Gonzales had the right to be informed of the accrued interest and most especially,
for the suspension of his COHLA. For failure to do so, the bank is liable to pay nominal damages. The
amount of such damages is addressed to the sound discretion of the court, taking into account the
relevant circumstances.[51] In this case, the Court finds that the grant of PhP 50,000 as nominal damages
is proper.
Moreover, as We held in MERALCO v. CA,[52] failure to give prior notice when required, such as in the
instant case, constitutes a breach of contract and is a clear violation of Art. 21 of the Code. In cases
such as this, Art. 2219 of the Code provides that moral damages may be recovered in acts referred to in
its Art. 21. Further, Art. 2220 of the Code provides that [w]illful 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. Similarly, every person who, contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.[53] Evidently, Gonzales is entitled to recover moral
damages.
Even in the absence of malice or bad faith, a depositor still has the right to recover reasonable moral
damages, if the depositor suffered mental anguish, serious anxiety, embarrassment, and humiliation.
[54]
Although incapable of pecuniary estimation, moral damages are certainly recoverable if they are the
proximate result of the defendants wrongful act or omission. The factual antecedents bolstered by
undisputed testimonies likewise show the mental anguish and anxiety Gonzales had to endure with the
threat of Unson to file a suit. Gonzales had to pay Unson PhP 250,000, while his FCD account in PCIB
was frozen, prompting Gonzales to demand from PCIB and to file the instant suit.
The award of moral damages is aimed at a restoration within the limits of the possible, of the
spiritual status quo anteit must always reasonably approximate the extent of injury and be proportional

9|P a g e

to the wrong committed.[55] Thus, an award of PhP 50,000 is reasonable moral damages for the unjust
dishonor of the PhP 250,000 which was the proximate cause of the consequent humiliation,
embarrassment, anxiety, and mental anguish suffered by Gonzales from his loss of credibility among his
friends, colleagues and peers.
Furthermore, the initial carelessness of the banks omission in not properly informing Gonzales of the
outstanding interest duesaggravated by its gross neglect in omitting to give prior notice as stipulated
under the COHLA and in not giving actual notice of the termination of the credit linejustifies the grant
of exemplary damages of PhP 10,000. Such an award is imposed by way of example or correction for
the public good.
Finally, an award for attorneys fees is likewise called for from PCIBs negligence which compelled
Gonzales to litigate to protect his interest. In accordance with Art. 2208(1) of the Code, attorneys fees
may be recovered when exemplary damages are awarded. We find that the amount of PhP 50,000 as
attorneys fees is reasonable.
WHEREFORE, this petition is PARTLY GRANTED. Accordingly, the CA Decision dated October 22,
2007 in CA-G.R. CV No. 74466 is hereby REVERSED andSET ASIDE. The Philippine Commercial and
International Bank (now Banco De Oro) is ORDERED to pay Eusebio Gonzales PhP 50,000 as nominal
damages, PhP 50,000 as moral damages, PhP 10,000 as exemplary damages, and PhP 50,000 as
attorneys fees.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 189311

December 6, 2010
DENNIS R. MANZANAL and BAGUIO COUNTRY CLUB CORPORATION, Petitioners,
vs.
RAMON K. ILUSORIO, Respondent.
DECISION
CARPIO MORALES, J.:
The only issue presented in this case is whether the complaint for damages filed by Ramon K. Ilusorio
(respondent) against petitioners Dennis R. Manzanal and Baguio Country Club Corporation (BCCC)
states a cause of action.
On July 7, 1994, a penthouse unit (PH-1) at the BCCC building in Baguio was assigned to respondent by
one Felix Adolfo B. Lopez, Jr., with the conformity of BCCC.
By respondents claim, he, for a period of five (5) years since the assignment, enjoyed the use of the unit
and the clubs facilities, along with his business colleagues and friends but that when conflict within the
family arose in 1998 and escalated to great proportions, he was barred from using the unit and was
almost expelled as member of the club. Hence, spawned his filing of multiple suits against BCCC before
the courts and SEC.
Respondent sent a May 31, 2001 letter to BCCC requesting for his current statement of account.
Replying, BCCC charged him the amount of P102,076.74 which he paid under protest. He, however,
requested a breakdown of the amount which BCCC, thru Manzanal, complied with, via letter of
November 26, 2001 to which was attached respondents Statement of Account itemizing the amount
which in fact totaled P2,928,223.26. The letter reads:
Attached herewith please find Statement of Account with total amount of P2,928,223.26.
Our records also show that from April 1995 to July 1999, you sponsored an estimated ninety-seven
guests, many of whom are Multinational Investment Bancorporation partners and personnel, Club
charges for which amount to Two Million Four Hundred Thirty One thousand Pesos (P2,431,000.00) for
guest room charges exclusive of interest, guest fees and penalties.
This is also to follow-up payment due from you regarding our letter of December 20, 20001, copy
attached herewith for your reference.
In light of the foregoing, please remit in full the amount of P2,928,223.26. to BCC within seven (7) days
from receipt hereof, otherwise we shall be constrained to take the appropriate action and remedies to
enforce payment of your obligation.2
BCCC subsequently sent a final demand letter dated December 19, 2001 to respondent for the
immediate payment of the unpaid charges, failing which, BCCC stated, it "shall be constrained to take
the necessary action available under the clubs rules to protect the interests of the club."
Respondent questioned, by reply letter of January 18, 2002, Manzanals authority as an Assistant Vice
President, as well as the billing for P2,431,000 and P599,300 as bereft of bases, thus:
I understand you are one of the lawyers of my estranged siblings (Sylvia, Lin, and Max) and now you
claim to be the Assistant Vice-President of Baguio Country Club. Under what authority are you holding
the said position in the Club? Please present the proof of your authority.
You claim that I have incurred charges from April 1995 to July 1999 amounting to P2,431,000.00. There
is no basis for your claim. It is highly irregular for a member to be billed for charges allegedly incurred 6
years ago.1avvphi1
With regard to your claim pertaining to the alleged Penthouse rectification works amounting to
P599,300.00, the same has no basis in fact and in law.
It is obvious that you and your principals are using the Club to harass me. Please refrain from dragging
the Club into the family feud.3
Taking the demand letters letter as a form of harassment from his family who was utilizing Manzanal and
BCCC (petitioners) for that purpose, respondent filed in 2002 a complaint for damages against
petitioners before the Makati Regional Trial Court (RTC), alleging:
xxxx
FIRST CAUSE OF ACTION

10 | P a g e

20. The recent act of BCCC and MANZANAL to collect the amount of P2,928,223.26 is another form of
harassment against the plaintiff. To be precise, it is part of the series of harassment, characterized with
bad faith and malice, being done by BCCC, MANZANAL, and plaintiffs estranged siblings.
21. Plaintiff has no obligation to pay the amount of P2,928,223.26 to BCCC. It bears to note that under
Article 1157 of the Civil Code of the Philippines, obligations arise from law; contracts; quasi-contracts;
acts or omissions punished by law; and quasi-delicts. In the present case, it is quite clear that the
collection of the amount of P2,928,223.26 is clearly without legal or factual basis. Corollary thereto,
BCCC and MANZANAL have no right to collect the amount of P2,928,223.26 from the plaintiff.
22. Collecting room charges purportedly incurred as far as six (6) years ago, aside from the fact that it is
baseless, is also dubious and scheming. As owner of the subject UNIT, plaintiff should not be held liable
for its use and enjoyment considering that use and enjoyment of the UNIT are incidence of ownership.
23. Assuming without conceding that BCCC has the right to collect the amount of P2,928,223.26 from
the plaintiff the same had already prescribed.
24. Assuming without conceding that BCC has the right to collect the amount P2,928,223.26 from the
plaintiff, the latter is already guilty of laches and estoppel to effect collection thereof.
25. Moreover, it is improper for BCCC and MANZANAL to collect the amount pertaining to the
rectification works regarding a purported encroachment on BCCC common areas because the matter is
still subject of a pending case before the Regional Trial Court of Baguio City entitled "Baguio Country
Club vs. Ramon K. Ilusorio" docketed as Civil Case No. 4750-R.
26. Under the foregoing circumstances, BCCC and MANZANAL should be enjoined from collecting from
the plaintiff or in any way extra-judicially enforcing the payment of said claim or imposing any sanction
against the plaintiff on account of said claim.
SECOND CAUSE OF ACTION
27. As a consequence of the unlawful act of MANZANAL and BCCC in initiating collection of the amount
of P2,928,223.26 from the plaintiff, characterized with utter malice and gross and evident bad faith,
plaintiff has suffered moral damages, consisting of mental anguish, social humiliation, anxiety and the
like, which, considering his business and social standing in the community, is reasonably estimated in
the amount of One Million Pesos (P1,000,000.00).4
x x x x (emphasis and underscoring in the original)
Respondent averred that, inter alia, he should not be charged for the use of the unit as he, as owner, is
entitled to its use and enjoyment. And he cast doubt on billing him for charges dating back to 1995.
In lieu of an Answer, Manzanal filed a Motion to Dismiss the complaint for failure to state a cause of
action, he alleging that being merely an officer who signed on behalf of BCCC, he should not be
personally liable. He explained that the act of sending a demand letter does not constitute a cause of
action against the obligee/creditor. Alternatively, Manzanal claimed that respondents asseverations
against him and BCCC should be ventilated as a matter of defense in the collection suit filed against
him.
BCCC also filed a Motion to Dismiss on the ground of litis pendentia, it having filed a collection suit
against respondent before the RTC of Baguio City docketed as Civil Case No. 4750-R,5 to recover the
cost of removing illegal structures in his unit.
Branch 145 of RTC Makati to which respondents complaint was raffled, dismissed the complaint, by
Order of October 10, 2002 in this wise:
x x x To sustain plaintiff ILUSORIOs assertions that this Complaint states a cause of action would be to
rule that the act of sending a demand letter by itself constitutes a cause of action. When a creditor sends
a demand letter to a debtor, according to plaintiff ILUSORIOs theory, that is already an actionable
wrong, a cause of action. x x x 6
On appeal, the Court of Appeals, by Decision of November 26, 2008,7 reversed the RTC Makati
and ordered the reinstatement of respondents complaint, holding as follows.
x x x In this case, if the allegations in the complaint that (1) the plaintiff-appellant [Ilusorio] is a member
of the Baguio Country Club and an owner of one of the units of the Clubs House Building, thereby
entitling him to the possession and use of such unit subject to reasonable membership charges. (2) the
defendants-appellees had been unreasonably charging him

charges and bills for the use of his unit without factual and legal basis, and (3) despite his objections to
the amount charges billed in his name, the defendants-appellees had threatened to enforce the said
charges in the manner provided under the Clubs rules are assumed to be true, then the plaintiffappellant would be entitled to the relief demanded in his complaint.8 (underscoring supplied)
Petitioners motion for reconsideration was denied by Resolution of August 24, 2009. Hence, the filing of
the present petition for review.
The petition is meritorious.
A cause of action is the act or omission by which a party violates the right of another, entitling the injured
party to relief. Its existence is determined from the allegations in the complaint.9
The Court finds from the tenor of the demand letters, which respondent annexed to his complaint, that it
did not deviate from the standard practice of pursuing the satisfaction of a club members obligations.
Respondent did not indicate in his complaint how tenuous petitioners claim for unpaid charges is.10 In
his reply to petitioners final letter of demand, he in fact did not contradict petitioners statement that his
work partners and employees used his unit, thereby admitting that he welched on his undertaking in the
contract that only family members are allowed free usage.
As an exclusive organization which primarily derives life from membership fees and charges, BCCC is
expected to enforce claims from members in default of their contractual obligations.
Even under the principle of abuse of rights, Cebu Country Club, Inc. v. Elizagaque11 which expounds as
follows:
In GF Equity, Inc. v. Valenzona, we expounded Article 19 and correlated it with Article 21, thus: 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 ones rights but also in the performance of
ones duties. These standards are the following: to act with justice; to give everyone his due; and to
observe honesty and good faith. The law, therefore, recognizes 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 Article 20 or Article 21 would be proper. (citation omitted,
underscoring supplied),
respondent cannot seek refuge.
In fine, the RTC did not err in ordering the dismissal of the complaint against petitioners for lack of cause
of action. It was thus error for the appellate court to set aside the RTC decision.
WHEREFORE, the petition is GRANTED. The Court of Appeals Decision of November 26, 2008
is REVERSED andSET ASIDE. The Order of the Regional Trial Court of Makati City, Branch 145 dated
October 10, 2002 isREINSTATED.
SO ORDERED.

11 | P a g e

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,
- versus ISMAEL VELOSO III,
Respondent.

G.R. No. 171365

subject to the reimbursement by [petitioners] of one-half of the value of the improvements which it found
to be in the amount of P120,000.00. [Respondent] was also given the right to remove said
improvements pursuant to Article 1678 of the Civil Code, should [petitioners] refuse to payP60,000.00.

Present:
CORONA, C.J.,
Chairperson,
VELASCO, JR.,
NACHURA,*
LEONARDO-DE CASTRO, and
PEREZ, JJ.
Promulgated:
October 6, 2010

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

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 to P800,000.00.
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 respondents 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 Damages[4] 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 respondents 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:

LEONARDO-DE CASTRO, J.:

PRAYER
Before Us is a Petition for Review on Certiorari of the Decision[1] dated January 31, 2006 of the Court
Appeals in CA-G.R. CV No. 82610, which affirmed with modification the Resolution[2] dated September 2,
2003 of Branch 227 of the Regional Trial Court (RTC-Branch 227) of Quezon City in Civil Case No. Q02-48341.

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;

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 [respondents] failure to pay rentals
from May 23, 1997 to December 22, 1998 despite repeated demands. [Respondent] denied the nonpayment of rentals and alleged that he made an advance payment of P825,000.00 when he paid for the
repairs done on the leased property.
After trial, the Metropolitan Trial Court (MeTC) decided in favor of [petitioners] by ordering [respondent]
to (a) vacate the premises at No. 42 Big Horseshoe Drive, Horseshoe Village, Quezon City; (b) pay
[petitioners] the sum of P306,000.00 corresponding to the rentals due from May 23, 1997 to November
22, 1998, and the sum of P17,000.00 a month thereafter until [respondent] vacates the premises; and (c)
pay [petitioners] the sum of P5,000.00 as attorneys fees.
On appeal to the Regional Trial Court (RTC) [Branch 88, Quezon City], the MeTC decision was
reversed. [Respondent] was ordered to pay arrearages from May 23, 1997 up to the date of the decision
but he was also given an option to choose between staying in the leased property or vacating the same,

12 | P a g e

c)
P425,000.00 representing the difference of the expenses of the improvements of P825,000.00
and P400,000.00 pursuant to Art. 1678 of the Civil Code;
d)
P594,000.00 representing interest for three (3) years from 1998 to 2000 on the P825,000.00
advanced by the [respondent] at the rate of 24% per annum;
e)
P250,000.00 as compensation for the [respondents] labor and efforts in overseeing and
attending the needs of contractors the repair/renovation of the leased premises;
f)
P250,000.00, plus 20% of all recoveries from [petitioners] and P2,500.00 per hearing as
attorneys 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 Motion[6] on February 18, 2003 praying for, among other reliefs, the
dismissal of respondents 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 respondents present Complaint for Breach of
Contract and Damages was barred by prior judgment since it was a mere replication of respondents
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 respondents 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 Reconsideration[7] of said judgment on October 10, 2003,
which RTC-Branch 227 denied in an Order[8] 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 Appeal[9] on March 1, 2004. However, the RTC-Branch
227, in an Order[10] dated March 23, 2004, dismissed respondents 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 Reconsideration[11] of the same on May 3, 2004. The RTC-Branch 227, in another
Order[12] dated May 31, 2004, granted respondents 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 Resolution[13] dated February 8, 2005, resolved to give due course to
respondents 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 respondents second cause of action
(i.e., breach of contract) in Civil Case No. Q-02-48341. The appellate court, however, held that RTCBranch 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-

13 | P a g e

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 [respondents] 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 respondents appeal of the RTC-Branch 227 Resolution dated September 2,
2003, which dismissed the latters 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 untilOctober 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 respondents 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 respondents complaint
in Civil Case No. Q-02-48341 already attained finality.
Petitioners argue in the alternative that the award of damages in respondents 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 latters 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 respondents 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 respondents complaint on the ground of no cause of action, were deemed to have
hypothetically admitted as true the allegations in said complaint.

With the advent of the "fresh period rule" parties who availed themselves of the remedy of motion for
reconsideration are now allowed to file a notice of appeal within fifteen days from the denial of that
motion.
The "fresh period rule" is not inconsistent with Rule 41, Section 3 of the Revised Rules of Court which
states that the appeal shall be taken "within fifteen (15) days from notice of judgment or final order
appealed from." The use of the disjunctive word "or" signifies disassociation and independence of one
thing from another. It should, as a rule, be construed in the sense which it ordinarily implies. Hence, the
use of "or" in the above provision supposes that the notice of appeal may be filed within 15 days from
the notice of judgment or within 15 days from notice of the "final order," x x x.
xxxx
The "fresh period rule" finally eradicates the confusion as to when the 15-day appeal period should be
counted from receipt of notice of judgment or from receipt of notice of "final order" appealed from.

The petition is partly meritorious.

We note, at the outset, that the propriety of the dismissal by the RTC-Branch 227 of respondents
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 respondents first cause of action (e.g., for damages),
and in connection therewith, we are called upon to resolve the following issues: (1) whether respondent
timely filed his appeal of the Resolution dated September 2, 2003 of the RTC-Branch 227 before the
Court of Appeals; and (2) whether respondent is entitled to the award of moral and exemplary damages.

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.

We answer the first issue on the timeliness of respondents 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 15day 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

14 | P a g e

Thereafter, in First Aqua Sugar Traders, Inc. v. Bank of the Philippine Islands, we held that a party-litigant
may now file his notice of appeal either within fifteen days from receipt of the original decision or within
fifteen days from the receipt of the order denying the motion for reconsideration.
In De los Santos v. Vda. de Mangubat, we applied the same principle of "fresh period rule," expostulating
that procedural law refers to the adjective law which prescribes rules and forms of procedure in order
that courts may be able to administer justice. Procedural laws do not come within the legal conception of
a retroactive law, or the general rule against the retroactive operation of statutes. The "fresh period rule"
is irrefragably procedural, prescribing the manner in which the appropriate period for appeal is to be
computed or determined and, therefore, can be made applicable to actions pending upon its effectivity,
such as the present case, without danger of violating anyone else's rights.[18] (Emphases supplied.)
Also in Sumiran, we recognized the retroactive application of the fresh period rule to cases pending and
undetermined upon its effectivity:
The retroactivity of the Neypes rule in cases where the period for appeal had lapsed prior to the date of
promulgation of Neypes on September 14, 2005, was clearly explained by the Court in Fil-Estate
Properties, Inc. v. Homena-Valencia, stating thus:
The determinative issue is whether the "fresh period" rule announced in Neypes could retroactively apply
in cases where the period for appeal had lapsed prior to 14 September 2005 when Neypes was
promulgated. That question may be answered with the guidance of the general rule that procedural laws
may be given retroactive effect to actions pending and undetermined at the time of their passage, there
being no vested rights in the rules of procedure. Amendments to procedural rules are procedural or
remedial in character as they do not create new or remove vested rights, but only operate in furtherance
of the remedy or confirmation of rights already existing.[19] (Emphases supplied.)

In the case before us, respondent received a copy of the Resolution dated September 2, 2003 of the
RTC-Branch 227 dismissing his complaint in Civil Case No. Q-02-48341 on September 26,
2003. Fourteen days thereafter, on October 10, 2003, respondent filed a Motion for Reconsideration of
said resolution. The RTC-Branch 227 denied respondents 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 daysfrom 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
respondents 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]

30.
In order to deter [petitioners] and others from doing as abovementioned, [petitioners] should
likewise be assessed exemplary damages in the amount of P500,000.00.[21]
A cause of action (for damages) exists if the following elements are present: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part
of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of
such defendant violative of the right of the plaintiff or constituting a breach of the obligation of defendant
to the plaintiff for which the latter may maintain an action for recovery of damages.[22] We find that all
three elements exist in the case at bar. Respondent may not have specifically identified each element,
but it may be sufficiently determined from the allegations in his complaint.
First, respondent filed the complaint to protect his good character, name, and reputation. Every man has
a right to build, keep, and be favored with a good name. This right is protected by law with the
recognition of slander and libel as actionable wrongs, whether as criminal offenses or tortuous conduct.
[23]

Second, petitioners are obliged to respect respondents 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 Appeals[24] that:

Respondent made the following allegations in support of his claim for damages against petitioners:
FIRST CAUSE OF ACTION
28.
After the promulgation of the Metropolitan Trial Court of its Decision dated August 3, 1999,
ordering the [herein respondent] and all person claiming rights under him to
(a)
Vacate the leased premises;
(b)
pay the [herein petitioners] the sum of P306,000.00 as unpaid rentals from May 23, 1997 to
November 22, 1998; and
(c)
pay the sum of P5,000.00 as attorneys fees;
But while said Decision was still pending appeal with the Regional Trial Court, the [petitioners], through
[petitioner] Manaloto, already distributed copies of said Decision to some of the homeowners of
Horseshoe Village, who personally know the [respondent]. This act is a direct assault or character
assassination on the part of the [respondent] because as stated in the said decision, [respondent] has
been staying in the premises but did not or refused to pay his monthly rentals for a long period of time
when in truth and in fact was untrue.
29.
That from the time the said decision was distributed to said members homeowners, the
[respondent] became the subject of conversation or talk of the town and by virtue of which [respondents]
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.

15 | P a g e

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 ones 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 respondents 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 anothers residence;

(2)

Meddling with or disturbing the private life or family relations of another;

(3)

Intriguing to cause another to be alienated from his friends;

(4)
Vexing or humiliating another on account of his religious beliefs, lowly station in life, place of
birth, physical defect, or other personal condition.
Thus, Article 2219(10) of the Civil Code allows the recovery of moral damages for acts and actions
referred to in Article 26, among other provisions, of the Civil Code.
In Concepcion v. Court of Appeals,[26] we explained that:
The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil law. The Code
Commission stressed in no uncertain terms that the human personality must be exalted. The
sacredness of human personality is a concomitant consideration of every plan for human
amelioration. The touchstone of every system of law, of the culture and civilization of every country, is
how far it dignifies man. If the statutes insufficiently protect a person from being unjustly humiliated, in
short, if human personality is not exalted - then the laws are indeed defective. Thus, under this article,
the rights of persons are amply protected, and damages are provided for violations of a persons dignity,
personality, privacy and peace of mind.
It is petitioners 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 persons 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 defendants 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.
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 respondents 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

16 | P a g e

public, the question is whether they did so with the intent of humiliating respondent and destroying the
latters 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 respondents favor when the parties have not yet had the chance to present any
evidence before the RTC-Branch 227. In civil cases, he who alleges a fact has the burden of proving it
by a preponderance of evidence. It is incumbent upon the party claiming affirmative relief from the court
to convincingly prove its claim. Bare allegations, unsubstantiated by evidence are not equivalent to
proof under our Rules. In short, mere allegations are not evidence.[29]
At this point, the finding of the Court of Appeals of bad faith and malice on the part of petitioners has no
factual basis. Good faith is presumed and he who alleges bad faith has the duty to prove the
same. Good faith refers to the state of the mind which is manifested by the acts of the individual
concerned. It consists of the intention to abstain from taking an unconscionable and unscrupulous
advantage of another. Bad faith, on the other hand, does not simply connote bad judgment to simple
negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a
breach of known duty due to some motive or interest or ill will that partakes of the nature of fraud. Malice
connotes ill will or spite and speaks not in response to duty. It implies an intention to do ulterior and
unjustifiable harm.[30]
We cannot subscribe to respondents argument that there is no more need for the presentation of
evidence by the parties since petitioners, in moving for the dismissal of respondents complaint for
damages, hypothetically admitted respondents allegations. The hypothetical admission of respondents
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 isDELETED. 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. 174269

May 8, 2009
POLO S. PANTALEON, Petitioner,
vs.
AMERICAN EXPRESS INTERNATIONAL, INC., Respondent.
DECISION
TINGA, J.:
The petitioner, lawyer Polo Pantaleon, his wife Julialinda, daughter Anna Regina and son Adrian
Roberto, joined an escorted tour of Western Europe organized by Trafalgar Tours of Europe, Ltd., in
October of 1991. The tour group arrived in Amsterdam in the afternoon of 25 October 1991, the second
to the last day of the tour. As the group had arrived late in the city, they failed to engage in any sightseeing. Instead, it was agreed upon that they would start early the next day to see the entire city before
ending the tour.
The following day, the last day of the tour, the group arrived at the Coster Diamond House in Amsterdam
around 10 minutes before 9:00 a.m. The group had agreed that the visit to Coster should end by 9:30
a.m. to allow enough time to take in a guided city tour of Amsterdam. The group was ushered into Coster
shortly before 9:00 a.m., and listened to a lecture on the art of diamond polishing that lasted for around
ten minutes.1 Afterwards, the group was led to the stores showroom to allow them to select items for
purchase. Mrs. Pantaleon had already planned to purchase even before the tour began a 2.5 karat
diamond brilliant cut, and she found a diamond close enough in approximation that she decided to
buy.2 Mrs. Pantaleon also selected for purchase a pendant and a chain,3 all of which totaled U.S.
$13,826.00.
To pay for these purchases, Pantaleon presented his American Express credit card together with his
passport to the Coster sales clerk. This occurred at around 9:15 a.m., or 15 minutes before the tour
group was slated to depart from the store. The sales clerk took the cards imprint, and asked Pantaleon
to sign the charge slip. The charge purchase was then referred electronically to respondents Amsterdam
office at 9:20 a.m.
Ten minutes later, the store clerk informed Pantaleon that his AmexCard had not yet been approved. His
son, who had already boarded the tour bus, soon returned to Coster and informed the other members of
the Pantaleon family that the entire tour group was waiting for them. As it was already 9:40 a.m., and he
was already worried about further inconveniencing the tour group, Pantaleon asked the store clerk to
cancel the sale. The store manager though asked plaintiff to wait a few more minutes. After 15 minutes,
the store manager informed Pantaleon that respondent had demanded bank references. Pantaleon
supplied the names of his depositary banks, then instructed his daughter to return to the bus and
apologize to the tour group for the delay.
At around 10:00 a.m, or around 45 minutes after Pantaleon had presented his AmexCard, and 30
minutes after the tour group was supposed to have left the store, Coster decided to release the items
even without respondents approval of the purchase. The spouses Pantaleon returned to the bus. It is
alleged that their offers of apology were met by their tourmates with stony silence. 4 The tour groups
visible irritation was aggravated when the tour guide announced that the city tour of Amsterdam was to
be canceled due to lack of remaining time, as they had to catch a 3:00 p.m. ferry at Calais, Belgium to
London.5 Mrs. Pantaleon ended up weeping, while her husband had to take a tranquilizer to calm his
nerves.
It later emerged that Pantaleons purchase was first transmitted for approval to respondents Amsterdam
office at 9:20 a.m., Amsterdam time, then referred to respondents Manila office at 9:33 a.m, then finally
approved at 10:19 a.m., Amsterdam time.6 The Approval Code was transmitted to respondents
Amsterdam office at 10:38 a.m., several minutes after petitioner had already left Coster, and 78 minutes
from the time the purchases were electronically transmitted by the jewelry store to respondents
Amsterdam office.
After the star-crossed tour had ended, the Pantaleon family proceeded to the United States before
returning to Manila on 12 November 1992. While in the United States, Pantaleon continued to use his
AmEx card, several times without hassle or delay, but with two other incidents similar to the Amsterdam
brouhaha. On 30 October 1991, Pantaleon purchased golf equipment amounting to US $1,475.00 using

17 | P a g e

his AmEx card, but he cancelled his credit card purchase and borrowed money instead from a friend,
after more than 30 minutes had transpired without the purchase having been approved. On 3 November
1991, Pantaleon used the card to purchase childrens shoes worth $87.00 at a store in Boston, and it
took 20 minutes before this transaction was approved by respondent.
On 4 March 1992, after coming back to Manila, Pantaleon sent a letter7 through counsel to the
respondent, demanding an apology for the "inconvenience, humiliation and embarrassment he and his
family thereby suffered" for respondents refusal to provide credit authorization for the aforementioned
purchases.8 In response, respondent sent a letter dated 24 March 1992,9 stating among others that the
delay in authorizing the purchase from Coster was attributable to the circumstance that the charged
purchase of US $13,826.00 "was out of the usual charge purchase pattern established."10 Since
respondent refused to accede to Pantaleons demand for an apology, the aggrieved cardholder instituted
an action for damages with the Regional Trial Court (RTC) of Makati City, Branch 145.11 Pantaleon
prayed that he be awarded P2,000,000.00, as moral damages; P500,000.00, as exemplary
damages; P100,000.00, as attorneys fees; and P50,000.00 as litigation expenses.12
On 5 August 1996, the Makati City RTC rendered a decision13 in favor of Pantaleon, awarding
him P500,000.00 as moral damages, P300,000.00 as exemplary damages, P100,000.00 as attorneys
fees, and P85,233.01 as expenses of litigation. Respondent filed a Notice of Appeal, while Pantaleon
moved for partial reconsideration, praying that the trial court award the increased amount of moral and
exemplary damages he had prayed for.14The RTC denied Pantaleons motion for partial reconsideration,
and thereafter gave due course to respondents Notice of Appeal.15
On 18 August 2006, the Court of Appeals rendered a decision16 reversing the award of damages in favor
of Pantaleon, holding that respondent had not breached its obligations to petitioner. Hence, this petition.
The key question is whether respondent, in connection with the aforementioned transactions, had
committed a breach of its obligations to Pantaleon. In addition, Pantaleon submits that even assuming
that respondent had not been in breach of its obligations, it still remained liable for damages under
Article 21 of the Civil Code.
The RTC had concluded, based on the testimonial representations of Pantaleon and respondents credit
authorizer, Edgardo Jaurigue, that the normal approval time for purchases was "a matter of seconds."
Based on that standard, respondent had been in clear delay with respect to the three subject
transactions. As it appears, the Court of Appeals conceded that there had been delay on the part of
respondent in approving the purchases. However, it made two critical conclusions in favor of respondent.
First, the appellate court ruled that the delay was not attended by bad faith, malice, or gross negligence.
Second, it ruled that respondent "had exercised diligent efforts to effect the approval" of the purchases,
which were "not in accordance with the charge pattern" petitioner had established for himself, as
exemplified by the fact that at Coster, he was "making his very first single charge purchase of
US$13,826," and "the record of [petitioner]s past spending with [respondent] at the time does not
favorably support his ability to pay for such purchase."17
On the premise that there was an obligation on the part of respondent "to approve or disapprove with
dispatch the charge purchase," petitioner argues that the failure to timely approve or disapprove the
purchase constituted mora solvendi on the part of respondent in the performance of its obligation. For its
part, respondent characterizes the depiction by petitioner of its obligation to him as "to approve
purchases instantaneously or in a matter of seconds."
Petitioner correctly cites that under mora solvendi, the three requisites for a finding of default are that the
obligation is demandable and liquidated; the debtor delays performance; and the creditor judicially or
extrajudicially requires the debtors performance.18 Petitioner asserts that the Court of Appeals had
wrongly applied the principle of mora accipiendi, which relates to delay on the part of the obligee in
accepting the performance of the obligation by the obligor. The requisites of mora accipiendi are: an offer
of performance by the debtor who has the required capacity; the offer must be to comply with the
prestation as it should be performed; and the creditor refuses the performance without just cause.19 The
error of the appellate court, argues petitioner, is in relying on the invocation by respondent of "just cause"
for the delay, since while just cause is determinative of mora accipiendi, it is not so with the case of mora
solvendi.

We can see the possible source of confusion as to which type of mora to appreciate. Generally, the
relationship between a credit card provider and its card holders is that of creditor-debtor, 20 with the card
company as the creditor extending loans and credit to the card holder, who as debtor is obliged to repay
the creditor. This relationship already takes exception to the general rule that as between a bank and its
depositors, the bank is deemed as the debtor while the depositor is considered as the
creditor.21 Petitioner is asking us, not baselessly, to again shift perspectives and again see the credit
card company as the debtor/obligor, insofar as it has the obligation to the customer as creditor/obligee to
act promptly on its purchases on credit.
Ultimately, petitioners perspective appears more sensible than if we were to still regard respondent as
the creditor in the context of this cause of action. If there was delay on the part of respondent in its
normal role as creditor to the cardholder, such delay would not have been in the acceptance of the
performance of the debtors obligation (i.e., the repayment of the debt), but it would be delay in the
extension of the credit in the first place. Such delay would not fall under mora accipiendi, which
contemplates that the obligation of the debtor, such as the actual purchases on credit, has already been
constituted. Herein, the establishment of the debt itself (purchases on credit of the jewelry) had not yet
been perfected, as it remained pending the approval or consent of the respondent credit card company.
Still, in order for us to appreciate that respondent was in mora solvendi, we will have to first recognize
that there was indeed an obligation on the part of respondent to act on petitioners purchases with
"timely dispatch," or for the purposes of this case, within a period significantly less than the one hour it
apparently took before the purchase at Coster was finally approved.
The findings of the trial court, to our mind, amply established that the tardiness on the part of respondent
in acting on petitioners purchase at Coster did constitute culpable delay on its part in complying with its
obligation to act promptly on its customers purchase request, whether such action be favorable or
unfavorable. We quote the trial court, thus:
As to the first issue, both parties have testified that normal approval time for purchases was a matter of
seconds.
Plaintiff testified that his personal experience with the use of the card was that except for the three
charge purchases subject of this case, approvals of his charge purchases were always obtained in a
matter of seconds.
Defendants credit authorizer Edgardo Jaurique likewise testified:
Q. You also testified that on normal occasions, the normal approval time for charges would be 3 to 4
seconds?
A. Yes, Maam.
Both parties likewise presented evidence that the processing and approval of plaintiffs charge purchase
at the Coster Diamond House was way beyond the normal approval time of a "matter of seconds".
Plaintiff testified that he presented his AmexCard to the sales clerk at Coster, at 9:15 a.m. and by the
time he had to leave the store at 10:05 a.m., no approval had yet been received. In fact, the Credit
Authorization System (CAS) record of defendant at Phoenix Amex shows that defendants Amsterdam
office received the request to approve plaintiffs charge purchase at 9:20 a.m., Amsterdam time or 01:20,
Phoenix time, and that the defendant relayed its approval to Coster at 10:38 a.m., Amsterdam time, or
2:38, Phoenix time, or a total time lapse of one hour and [18] minutes. And even then, the approval was
conditional as it directed in computerese [sic] "Positive Identification of Card holder necessary further
charges require bank information due to high exposure. By Jack Manila."
The delay in the processing is apparent to be undue as shown from the frantic successive queries of
Amexco Amsterdam which reads: "US$13,826. Cardmember buying jewels. ID seen. Advise how long
will this take?" They were sent at 01:33, 01:37, 01:40, 01:45, 01:52 and 02:08, all times Phoenix. Manila
Amexco could be unaware of the need for speed in resolving the charge purchase referred to it, yet it sat
on its hand, unconcerned.
xxx
To repeat, the Credit Authorization System (CAS) record on the Amsterdam transaction shows how
Amexco Netherlands viewed the delay as unusually frustrating. In sequence expressed in Phoenix time
from 01:20 when the charge purchased was referred for authorization, defendants own record shows:

18 | P a g e

01:22 the authorization is referred to Manila Amexco

01:32 Netherlands gives information that the identification of the cardmember has been presented and
he is buying jewelries worth US $13,826.
01:33 Netherlands asks "How long will this take?"
02:08 Netherlands is still asking "How long will this take?"
The Court is convinced that defendants delay constitute[s] breach of its contractual obligation to act on
his use of the card abroad "with special handling."22 (Citations omitted)
xxx
Notwithstanding the popular notion that credit card purchases are approved "within seconds," there
really is no strict, legally determinative point of demarcation on how long must it take for a credit card
company to approve or disapprove a customers purchase, much less one specifically contracted upon
by the parties. Yet this is one of those instances when "youd know it when youd see it," and one hour
appears to be an awfully long, patently unreasonable length of time to approve or disapprove a credit
card purchase. It is long enough time for the customer to walk to a bank a kilometer away, withdraw
money over the counter, and return to the store.
Notably, petitioner frames the obligation of respondent as "to approve or disapprove" the purchase "in
timely dispatch," and not "to approve the purchase instantaneously or within seconds." Certainly, had
respondent disapproved petitioners purchase "within seconds" or within a timely manner, this particular
action would have never seen the light of day. Petitioner and his family would have returned to the bus
without delay internally humiliated perhaps over the rejection of his card yet spared the shame of
being held accountable by newly-made friends for making them miss the chance to tour the city of
Amsterdam.
We do not wish do dispute that respondent has the right, if not the obligation, to verify whether the credit
it is extending upon on a particular purchase was indeed contracted by the cardholder, and that the
cardholder is within his means to make such transaction. The culpable failure of respondent herein is not
the failure to timely approve petitioners purchase, but the more elemental failure to timely act on the
same, whether favorably or unfavorably. Even assuming that respondents credit authorizers did not
have sufficient basis on hand to make a judgment, we see no reason why respondent could not have
promptly informed petitioner the reason for the delay, and duly advised him that resolving the same
could take some time. In that way, petitioner would have had informed basis on whether or not to pursue
the transaction at Coster, given the attending circumstances. Instead, petitioner was left uncomfortably
dangling in the chilly autumn winds in a foreign land and soon forced to confront the wrath of foreign folk.
Moral damages avail in cases of breach of contract where the defendant acted fraudulently or in bad
faith, and the court should find that under the circumstances, such damages are due. The findings of the
trial court are ample in establishing the bad faith and unjustified neglect of respondent, attributable in
particular to the "dilly-dallying" of respondents Manila credit authorizer, Edgardo Jaurique.23 Wrote the
trial court:
While it is true that the Cardmembership Agreement, which defendant prepared, is silent as to the
amount of time it should take defendant to grant authorization for a charge purchase, defendant
acknowledged that the normal time for approval should only be three to four seconds. Specially so with
cards used abroad which requires "special handling", meaning with priority. Otherwise, the object of
credit or charge cards would be lost; it would be so inconvenient to use that buyers and consumers
would be better off carrying bundles of currency or travellers checks, which can be delivered and
accepted quickly. Such right was not accorded to plaintiff in the instances complained off for reasons
known only to defendant at that time. This, to the Courts mind, amounts to a wanton and deliberate
refusal to comply with its contractual obligations, or at least abuse of its rights, under the contract. 24
xxx
The delay committed by defendant was clearly attended by unjustified neglect and bad faith, since it
alleges to have consumed more than one hour to simply go over plaintiffs past credit history with
defendant, his payment record and his credit and bank references, when all such data are already stored
and readily available from its computer. This Court also takes note of the fact that there is nothing in

plaintiffs billing history that would warrant the imprudent suspension of action by defendant in
processing the purchase. Defendants witness Jaurique admits:
Q. But did you discover that he did not have any outstanding account?
A. Nothing in arrears at that time.
Q. You were well aware of this fact on this very date?
A. Yes, sir.
Mr. Jaurique further testified that there were no "delinquencies" in plaintiffs account. 25
It should be emphasized that the reason why petitioner is entitled to damages is not simply because
respondent incurred delay, but because the delay, for which culpability lies under Article 1170, led to the
particular injuries under Article 2217 of the Civil Code for which moral damages are
remunerative.26 Moral damages do not avail to soothe the plaints of the simply impatient, so this decision
should not be cause for relief for those who time the length of their credit card transactions with a
stopwatch. The somewhat unusual attending circumstances to the purchase at Coster that there was a
deadline for the completion of that purchase by petitioner before any delay would redound to the injury of
his several traveling companions gave rise to the moral shock, mental anguish, serious anxiety,
wounded feelings and social humiliation sustained by the petitioner, as concluded by the RTC.27Those
circumstances are fairly unusual, and should not give rise to a general entitlement for damages under a
more mundane set of facts.
We sustain the amount of moral damages awarded to petitioner by the RTC. There is no hard-and-fast
rule in determining what would be a fair and reasonable amount of moral damages, since each case
must be governed by its own peculiar facts, however, it must be commensurate to the loss or injury
suffered.28 Petitioners original prayer for P5,000,000.00 for moral damages is excessive under the
circumstances, and the amount awarded by the trial court of P500,000.00 in moral damages more
seemly.1avvphi1
Likewise, we deem exemplary damages available under the circumstances, and the amount
of P300,000.00 appropriate. There is similarly no cause though to disturb the determined award
of P100,000.00 as attorneys fees, and P85,233.01 as expenses of litigation.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is REVERSED
and SET ASIDE. The Decision of the Regional Trial Court of Makati, Branch 145 in Civil Case No. 921665 is hereby REINSTATED. Costs against respondent.
SO ORDERED.

19 | P a g e

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 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 and P100,000.00 in attorneys fees and litigation

20 | P a g e

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 2010 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.
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.

EMILIO GANCAYCO,
Petitioner,

G.R. No. 177807

- versus -

DECISION

CITY GOVERNMENT OF QUEZON CITY AND

METRO MANILADEVELOPMENT AUTHORITY,
Respondents.
x-----------------------------------------------x
METRO MANILA DEVELOPMENT AUTHORITY,
Petitioner,

G.R. No. 177933

Present:

-versus-

JUSTICE EMILIO A. GANCAYCO (Retired),

Respondent,
x-----------------------------------------x

CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,*
DEL CASTILLO,*
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.
Promulgated:
October 11, 2011

21 | P a g e

x - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

SERENO, J.:
Before us are consolidated Petitions for Review under Rule 45 of the Rules of Court assailing the
Decision[1] promulgated on 18 July 2006 and the Resolution[2] dated 10 May 2007 of the Court of Appeals
in CA-G.R. SP No. 84648.
The Facts
In the early 1950s, retired Justice Emilio A. Gancayco bought a parcel of land located at 746
Epifanio delos Santos Avenue (EDSA),[3] Quezon City with an area of 375 square meters and covered by
Transfer Certificate of Title (TCT) No. RT114558.
On 27 March 1956, the Quezon City Council issued Ordinance No. 2904, entitled An Ordinance
Requiring the Construction of Arcades, for Commercial Buildings to be Constructed in Zones Designated
as Business Zones in the Zoning Plan of Quezon City, and Providing Penalties in Violation Thereof.[4]
An arcade is defined as any portion of a building above the first floor projecting over the sidewalk beyond
the first storey wall used as protection for pedestrians against rain or sun.[5]
Ordinance No. 2904 required the relevant property owner to construct an arcade with a width of 4.50
meters and height of 5.00 meters along EDSA, from the north side ofSantolan Road to one lot
after Liberty Avenue, and from one lot before Central Boulevard to the Botocan transmission line.
At the outset, it bears emphasis that at the time Ordinance No. 2904 was passed by the city council,
there was yet no building code passed by the national legislature. Thus, the regulation of the
construction of buildings was left to the discretion of local government units. Under this particular
ordinance, the city council required that the arcade is to be created by constructing the wall of the
ground floor facing the sidewalk a few meters away from the property line. Thus, the building owner is
not allowed to construct his wall up to the edge of the property line, thereby creating a space or shelter
under the first floor. In effect, property owners relinquish the use of the space for use as an arcade for
pedestrians, instead of using it for their own purposes.
The ordinance was amended several times. On 8 August 1960, properties located at the Quezon CitySan Juan boundary were exempted by Ordinance No. 60-4477 from the construction of arcades. This
ordinance was further amended by Ordinance No. 60-4513, extending the exemption to commercial
buildings from Balete Street to Seattle Street. Ordinance No. 6603 dated 1 March 1966 meanwhile
reduced the width of the arcades to three meters for buildings along V. Luna Road, Central
District, Quezon City.
The ordinance covered the property of Justice Gancayco. Subsequently, sometime in 1965, Justice
Gancayco sought the exemption of a two-storey building being constructed on his property from the
application of Ordinance No. 2904 that he be exempted from constructing an arcade on his property.
On 2 February 1966, the City Council acted favorably on Justice Gancaycos request and issued
Resolution No. 7161, S-66, subject to the condition that upon notice by the City Engineer, the owner
shall, within reasonable time, demolish the enclosure of said arcade at his own expense when public
interest so demands.[6]
Decades after, in March 2003, the Metropolitan Manila Development Authority (MMDA) conducted
operations to clear obstructions along the sidewalk of EDSA in Quezon City pursuant to Metro Manila
Councils (MMC) Resolution No. 02-28, Series of 2002.[7] The resolution authorized the MMDA and local
government units to clear the sidewalks, streets, avenues, alleys, bridges, parks and other public places
in Metro Manila of all illegal structures and obstructions.[8]
On 28 April 2003, the MMDA sent a notice of demolition to Justice Gancayco alleging that a portion of
his building violated the National Building Code of the Philippines(Building Code)[9] in relation to
Ordinance No. 2904. The MMDA gave Justice Gancayco fifteen (15) days to clear the portion of the
building that was supposed to be an arcade along EDSA.[10]

Justice Gancayco did not comply with the notice. Soon after the lapse of the fifteen (15) days, the MMDA
proceeded to demolish the party wall, or what was referred to as the wing walls, of the ground floor
structure. The records of the present case are not entirely clear on the extent of the demolition;
nevertheless, the fact of demolition was not disputed. At the time of the demolition, the affected portion
of the building was being used as a restaurant.
On 29 May 2003, Justice Gancayco filed a Petition[11] with prayer for a temporary restraining order and/or
writ of preliminary injunction before the Regional Trial Court (RTC) of Quezon City, docketed as Civil
Case No. Q03-49693, seeking to prohibit the MMDA and the City Government of Quezon City from
demolishing his property. In his Petition,[12] he alleged that the ordinance authorized the taking of private
property without due process of law and just compensation, because the construction of an arcade will
require 67.5 square meters from the 375 square meter property. In addition, he claimed that the
ordinance was selective and discriminatory in its scope and application when it allowed the owners of
the buildings located in the Quezon City-San Juan boundary to Cubao Rotonda, and Balete to Seattle
Streets to construct arcades at their option. He thus sought the declaration of nullity of Ordinance No.
2904 and the payment of damages. Alternately, he prayed for the payment of just compensation should
the court hold the ordinance valid.
The City Government of Quezon City claimed that the ordinance was a valid exercise of police power,
regulating the use of property in a business zone. In addition, it pointed out that Justice Gancayco was
already barred by estoppel, laches and prescription.
Similarly, the MMDA alleged that Justice Gancayco could not seek the nullification of an ordinance that
he had already violated, and that the ordinance enjoyed the presumption of constitutionality. It further
stated that the questioned property was a public nuisance impeding the safe passage of pedestrians.
Finally, the MMDA claimed that it was merely implementing the legal easement established by
Ordinance No. 2904.[13]
The RTC rendered its Decision on 30 September 2003 in favor of Justice Gancayco.[14] It held that the
questioned ordinance was unconstitutional, ruling that it allowed the taking of private property for public
use without just compensation. The RTC said that because 67.5 square meters out of Justice
Gancaycos 375 square meters of property were being taken without compensation for the publics
benefit, the ordinance was confiscatory and oppressive. It likewise held that the ordinance violated
owners right to equal protection of laws. The dispositive portion thus states:
WHEREFORE, the petition is hereby granted and the Court hereby declares Quezon City Ordinance No.
2094,[15] Series of 1956 to be unconstitutional, invalid and void ab initio. The respondents are hereby
permanently enjoined from enforcing and implementing the said ordinance, and the respondent MMDA is
hereby directed to immediately restore the portion of the party wall or wing wall of the building of the
petitioner it destroyed to its original condition.
IT IS SO ORDERED.
The MMDA thereafter appealed from the Decision of the trial court. On 18 July 2006, the Court of
Appeals (CA) partly granted the appeal.[16] The CA upheld the validity of Ordinance No. 2904 and lifted
the injunction against the enforcement and implementation of the ordinance. In so doing, it held that the
ordinance was a valid exercise of the right of the local government unit to promote the general welfare of
its constituents pursuant to its police powers. The CA also ruled that the ordinance established a valid
classification of property owners with regard to the construction of arcades in their respective properties
depending on the location. The CA further stated that there was no taking of private property, since the
owner still enjoyed the beneficial ownership of the property, to wit:
Even with the requirement of the construction of arcaded sidewalks within his commercial lot, appellee
still retains the beneficial ownership of the said property. Thus, there is no taking for public use which
must be subject to just compensation. While the arcaded sidewalks contribute to the public good, for
providing safety and comfort to passersby, the ultimate benefit from the same still redounds to appellee,
his commercial establishment being at the forefront of a busy thoroughfare like EDSA. The arcaded
sidewalks, by their nature, assure clients of the commercial establishments thereat some kind of

22 | P a g e

protection from accidents and other hazards. Without doubt, this sense of protection can be a boon to
the business activity therein engaged. [17]
Nevertheless, the CA held that the MMDA went beyond its powers when it demolished the subject
property. It further found that Resolution No. 02-28 only refers to sidewalks, streets, avenues, alleys,
bridges, parks and other public places in Metro Manila, thus excluding Justice Gancaycos private
property. Lastly, the CA stated that the MMDA is not clothed with the authority to declare, prevent or
abate nuisances. Thus, the dispositive portion stated:
WHEREFORE, the appeals are PARTLY GRANTED. The Decision dated September 30, 2003 of the
Regional Trial Court, Branch 224, Quezon City, is MODIFIED, as follows:
1) The validity and constitutionality of Ordinance No. 2094,[18] Series of 1956, issued by the City
Council of Quezon City, is UPHELD; and
2) The injunction against the enforcement and implementation of the said Ordinance is LIFTED.
SO ORDERED.
This ruling prompted the MMDA and Justice Gancayco to file their respective Motions for Partial
Reconsideration.[19]
On 10 May 2007, the CA denied the motions stating that the parties did not present new issues nor offer
grounds that would merit the reconsideration of the Court.[20]
Dissatisfied with the ruling of the CA, Justice Gancayco and the MMDA filed their respective Petitions for
Review before this Court. The issues raised by the parties are summarized as follows:
I.
WHETHER OR NOT JUSTICE GANCAYCO WAS ESTOPPED FROM ASSAILING THE
VALIDITY OF ORDINANCE NO. 2904.
II.
WHETHER OR NOT ORDINANCE NO. 2904 IS CONSTITUTIONAL.
III.
WHETHER OR NOT THE WING WALL OF JUSTICE GANCAYCOS BUILDING IS A PUBLIC
NUISANCE.
IV.
WHETHER OR NOT THE MMDA LEGALLY DEMOLISHED THE PROPERTY OF JUSTICE
GANCAYCO.
The Courts Ruling
Estoppel
The MMDA and the City Government of Quezon City both claim that Justice Gancayco was
estopped from challenging the ordinance, because, in 1965, he asked for an exemption from the
application of the ordinance. According to them, Justice Gancayco thereby recognized the power of the
city government to regulate the construction of buildings.
To recall, Justice Gancayco questioned the constitutionality of the ordinance on two grounds: (1) whether
the ordinance takes private property without due process of law and just compensation; and (2)
whether the ordinance violates the equal protection of rights because it allowed exemptions from its
application.
On the first ground, we find that Justice Gancayco may still question the constitutionality of the ordinance
to determine whether or not the ordinance constitutes a taking of private property without due process
of law and just compensation. It was only in 2003 when he was allegedly deprived of his property when
the MMDA demolished a portion of the building. Because he was granted an exemption in 1966, there
was no taking yet to speak of.
Moreover, in Acebedo Optical Company, Inc. v. Court of Appeals,[21] we held:
It is therefore decisively clear that estoppel cannot apply in this case. The fact that petitioner acquiesced
in the special conditions imposed by the City Mayor in subject business permit does not preclude it from
challenging the said imposition, which is ultra vires or beyond the ambit of authority of respondent City
Mayor. Ultra vires acts or acts which are clearly beyond the scope of one's authority are null and void
and cannot be given any effect. The doctrine of estoppel cannot operate to give effect to an act which is
otherwise null and void or ultra vires. (Emphasis supplied.)

Recently, in British American Tobacco v. Camacho,[22] we likewise held:

We find that petitioner was not guilty of estoppel. When it made the undertaking to comply with all
issuances of the BIR, which at that time it considered as valid, petitioner did not commit any false
misrepresentation or misleading act. Indeed, petitioner cannot be faulted for initially undertaking to
comply with, and subjecting itself to the operation of Section 145(C), and only later on filing the subject
case praying for the declaration of its unconstitutionality when the circumstances change and the law
results in what it perceives to be unlawful discrimination. The mere fact that a law has been relied upon
in the past and all that time has not been attacked as unconstitutional is not a ground for considering
petitioner estopped from assailing its validity. For courts will pass upon a constitutional question only
when presented before it in bona fide cases for determination, and the fact that the question has not
been raised before is not a valid reason for refusing to allow it to be raised later. (Emphasis supplied.)
Anent the second ground, we find that Justice Gancayco may not question the ordinance on the ground
of equal protection when he also benefited from the exemption. It bears emphasis that Justice Gancayco
himself requested for an exemption from the application of the ordinance in 1965 and was eventually
granted one. Moreover, he was still enjoying the exemption at the time of the demolition as there was yet
no valid notice from the city engineer. Thus, while the ordinance may be attacked with regard to its
different treatment of properties that appears to be similarly situated, Justice Gancayco is not the proper
person to do so.
Zoning and the regulation of the
construction of buildings are valid
exercises of police power
.
In MMDA v. Bel-Air Village Association,[23] we discussed the nature of police powers exercised by local
government units, to wit:
Police power is an inherent attribute of sovereignty. It has been defined as the power vested by the
Constitution in the legislature to make, ordain, and establish all manner of wholesome and reasonable
laws, statutes and ordinances, either with penalties or without, not repugnant to the Constitution, as they
shall judge to be for the good and welfare of the commonwealth, and for the subjects of the same. The
power is plenary and its scope is vast and pervasive, reaching and justifying measures for public health,
public safety, public morals, and the general welfare.
It bears stressing that police power is lodged primarily in the National Legislature. It cannot be exercised
by any group or body of individuals not possessing legislative power. The National Legislature, however,
may delegate this power to the President and administrative boards as well as the lawmaking bodies of
municipal corporations or local government units. Once delegated, the agents can exercise only such
legislative powers as are conferred on them by the national lawmaking body.
To resolve the issue on the constitutionality of the ordinance, we must first determine whether there was
a valid delegation of police power. Then we can determine whether the City Government of Quezon City
acted within the limits of the delegation.
It is clear that Congress expressly granted the city government, through the city council, police power by
virtue of Section 12(oo) of Republic Act No. 537, or the Revised Charter of Quezon City,[24] which states:
To make such further ordinances and regulations not repugnant to law as may be necessary to carry into
effect and discharge the powers and duties conferred by this Act and such as it shall deem necessary
and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good
order, comfort, and convenience of the city and the inhabitants thereof, and for the protection of property
therein; and enforce obedience thereto with such lawful fines or penalties as the City Council may
prescribe under the provisions of subsection (jj) of this section.
Specifically, on the powers of the city government to regulate the construction of buildings, the Charter
also expressly provided that the city government had the power to regulate the kinds of buildings and
structures that may be erected within fire limits and the manner of constructing and repairing them. [25]

23 | P a g e

With regard meanwhile to the power of the local government units to issue zoning ordinances, we
apply Social Justice Society v. Atienza.[26] In that case, the Sangguniang
Panlungsod of Manila City enacted an ordinance on 28 November 2001 reclassifying certain areas of the
city from industrial to commercial. As a result of the zoning ordinance, the oil terminals located in those
areas were no longer allowed. Though the oil companies contended that they stood to lose billions of
pesos, this Court upheld the power of the city government to pass the assailed ordinance, stating:
In the exercise of police power, property rights of individuals may be subjected to restraints and burdens
in order to fulfil the objectives of the government. Otherwise stated, the government may enact
legislation that may interfere with personal liberty, property, lawful businesses and occupations to
promote the general welfare. However, the interference must be reasonable and not arbitrary. And to
forestall arbitrariness, the methods or means used to protect public health, morals, safety or welfare
must have a reasonable relation to the end in view.
The means adopted by the Sanggunian was the enactment of a zoning ordinance which reclassified the
area where the depot is situated from industrial to commercial. A zoning ordinance is defined as a local
city or municipal legislation which logically arranges, prescribes, defines and apportions a given political
subdivision into specific land uses as present and future projection of needs. As a result of the zoning,
the continued operation of the businesses of the oil companies in their present location will no longer be
permitted. The power to establish zones for industrial, commercial and residential uses is derived from
the police power itself and is exercised for the protection and benefit of the residents of a
locality. Consequently, the enactment of Ordinance No. 8027 is within the power of the Sangguniang
Panlungsod of the City of Manila and any resulting burden on those affected cannot be said to be
unjust... (Emphasis supplied)
In Carlos Superdrug v. Department of Social Welfare and Development,[27] we also held:
For this reason, when the conditions so demand as determined by the legislature, property rights must
bow to the primacy of police power because property rights, though sheltered by due process, must yield
to general welfare.
Police power as an attribute to promote the common good would be diluted considerably if on the mere
plea of petitioners that they will suffer loss of earnings and capital, the questioned provision is
invalidated. Moreover, in the absence of evidence demonstrating the alleged confiscatory effect of the
provision in question, there is no basis for its nullification in view of the presumption of validity which
every law has in its favor. (Emphasis supplied.)
In the case at bar, it is clear that the primary objectives of the city council of Quezon City when it issued
the questioned ordinance ordering the construction of arcades were the health and safety of the city and
its inhabitants; the promotion of their prosperity; and the improvement of their morals, peace, good order,
comfort, and the convenience. These arcades provide safe and convenient passage along the sidewalk
for commuters and pedestrians, not just the residents of Quezon City. More especially so because the
contested portion of the building is located on a busy segment of the city, in a business zone along
EDSA.
Corollarily, the policy of the Building Code,[28] which was passed after the Quezon City Ordinance,
supports the purpose for the enactment of Ordinance No. 2904. The Building Code states:
Section 102. Declaration of Policy. It is hereby declared to be the policy of the State to safeguard life,
health, property, and public welfare, consistent with the principles of sound environmental management
and control; and to this end, make it the purpose of this Code to provide for all buildings and structures,
a framework of minimum standards and requirements to regulate and control their location, site, design
quality of materials, construction, occupancy, and maintenance.
Section 1004 likewise requires the construction of arcades whenever existing or zoning ordinances
require it. Apparently, the law allows the local government units to determine whether arcades are
necessary within their respective jurisdictions.

Justice Gancayco argues that there is a three-meter sidewalk in front of his property line, and the arcade
should be constructed above that sidewalk rather than within his property line. We do not need to
address this argument inasmuch as it raises the issue of the wisdom of the city ordinance, a matter we
will not and need not delve into.
To reiterate, at the time that the ordinance was passed, there was no national building code enforced to
guide the city council; thus, there was no law of national application that prohibited the city council from
regulating the construction of buildings, arcades and sidewalks in their jurisdiction.
The wing walls of the building are not
nuisances per se.
The MMDA claims that the portion of the building in question is a nuisance per se.
We disagree.
The fact that in 1966 the City Council gave Justice Gancayco an exemption from constructing an arcade
is an indication that the wing walls of the building are not nuisancesper se. The wing walls do not per
se immediately and adversely affect the safety of persons and property. The fact that an ordinance may
declare a structure illegal does not necessarily make that structure a nuisance.
Article 694 of the Civil Code defines nuisance as any act, omission, establishment, business, condition
or property, or anything else that (1) injures or endangers the health or safety of others; (2) annoys or
offends the senses; (3) shocks, defies or disregards decency or morality; (4) obstructs or interferes with
the free passage of any public highway or street, or any body of water; or, (5) hinders or impairs the use
of property. A nuisance may be per se or per accidens. A nuisance per se is that which affects the
immediate safety of persons and property and may summarily be abated under the undefined law of
necessity.[29]
Clearly, when Justice Gancayco was given a permit to construct the building, the city council or the city
engineer did not consider the building, or its demolished portion, to be a threat to the safety of persons
and property. This fact alone should have warned the MMDA against summarily demolishing the
structure.
Neither does the MMDA have the power to declare a thing a nuisance. Only courts of law have the
power to determine whether a thing is a nuisance. In AC Enterprises v. Frabelle Properties Corp.,[30] we
held:
We agree with petitioner's contention that, under Section 447(a)(3)(i) of R.A. No. 7160, otherwise known
as the Local Government Code, the Sangguniang Panglungsod is empowered to enact ordinances
declaring, preventing or abating noise and other forms of nuisance. It bears stressing, however, that
the Sangguniang Bayan cannot declare a particular thing as a nuisance per se and order its
condemnation. It does not have the power to find, as a fact, that a particular thing is a nuisance when
such thing is not a nuisance per se; nor can it authorize the extrajudicial condemnation and destruction
of that as a nuisance which in its nature, situation or use is not such. Those things must be determined
and resolved in the ordinary courts of law. If a thing be in fact, a nuisance due to the manner of its
operation, that question cannot be determined by a mere resolution of the Sangguniang Bayan.
(Emphasis supplied.)

MMDA illegally demolished

the property of Justice Gancayco.
MMDA alleges that by virtue of MMDA Resolution No. 02-28, Series of 2002, it is empowered to
demolish Justice Gancaycos property. It insists that the Metro Manila Council authorized the MMDA and
the local government units to clear the sidewalks, streets, avenues, alleys, bridges, parks and other
public places in Metro Manila of all illegal structures and obstructions. It further alleges that it demolished
the property pursuant to the Building Code in relation to Ordinance No. 2904 as amended.

24 | P a g e

However, the Building Code clearly provides the process by which a building may be demolished. The
authority to order the demolition of any structure lies with the Building Official. The pertinent provisions of
the Building Code provide:
SECTION 205.
Building Officials. Except as otherwise provided herein, the Building Official
shall be responsible for carrying out the provisions of this Code in the field as well as the enforcement of
orders and decisions made pursuant thereto.
Due to the exigencies of the service, the Secretary may designate incumbent Public Works District
Engineers, City Engineers and Municipal Engineers act as Building Officials in their respective areas of
jurisdiction.
The designation made by the Secretary under this Section shall continue until regular positions of
Building Official are provided or unless sooner terminated for causes provided by law or decree.
xxx

xxx

xxx

SECTION 207.
Duties of a Building Official. In his respective territorial jurisdiction, the Building
Official shall be primarily responsible for the enforcement of the provisions of this Code as well as of the
implementing rules and regulations issued therefor. He is the official charged with the duties of issuing
building permits.
In the performance of his duties, a Building Official may enter any building or its premises at all
reasonable times to inspect and determine compliance with the requirements of this Code, and the terms
and conditions provided for in the building permit as issued.
When any building work is found to be contrary to the provisions of this Code, the Building Official may
order the work stopped and prescribe the terms and/or conditions when the work will be allowed to
resume. Likewise, the Building Official is authorized to order the discontinuance of the occupancy or use
of any building or structure or portion thereof found to be occupied or used contrary to the provisions of
this Code.
xxx

xxx

xxx

SECTION 215.
Abatement of Dangerous Buildings. When any building or structure is found or
declared to be dangerous or ruinous, the Building Official shall order its repair, vacation or demolition
depending upon the degree of danger to life, health, or safety. This is without prejudice to further action
that may be taken under the provisions of Articles 482 and 694 to 707 of the Civil Code of
the Philippines. (Emphasis supplied.)
MMDA v. Trackworks Rail Transit Advertising, Vending and Promotions, Inc.[31] is applicable to the case
at bar. In that case, MMDA, invoking its charter and the Building Code, summarily dismantled the
advertising media installed on the Metro Rail Transit (MRT) 3. This Court held:
It is futile for MMDA to simply invoke its legal mandate to justify the dismantling of Trackworks'
billboards, signages and other advertising media. MMDA simply had no power on its own to dismantle,
remove, or destroy the billboards, signages and other advertising media installed on the MRT3 structure
by Trackworks. In Metropolitan Manila Development Authority v. Bel-Air Village
Association, Inc., Metropolitan Manila Development Authority v. Viron Transportation Co., Inc.,
and Metropolitan Manila Development Authority v. Garin, the Court had the occasion to rule that MMDA's
powers were limited to the formulation, coordination, regulation, implementation, preparation,
management, monitoring, setting of policies, installing a system, and administration. Nothing in Republic
Act No. 7924 granted MMDA police power, let alone legislative power.
Clarifying the real nature of MMDA, the Court held:

...The MMDA is, as termed in the charter itself, a "development authority". It is an agency created for the
purpose of laying down policies and coordinating with the various national government agencies,
people's organizations, non-governmental organizations and the private sector for the efficient and
expeditious delivery of basic services in the vast metropolitan area. All its functions are administrative in
nature and these are actually summed up in the charter itself, viz:
Sec.2. Creation of the Metropolitan Manila Development Authority.- xxx.
The MMDA shall perform planning, monitoring and coordinative functions, and in the process exercise
regulatory and supervisory authority over the delivery of metro-wide services within Metro Manila,
without diminution of the autonomy of local government units concerning purely local matters.
The Court also agrees with the CA's ruling that MMDA Regulation No. 96-009 and MMC Memorandum
Circular No. 88-09 did not apply to Trackworks' billboards, signages and other advertising media. The
prohibition against posting, installation and display of billboards, signages and other advertising media
applied only to public areas, but MRT3, being private property pursuant to the BLT agreement between
the Government and MRTC, was not one of the areas as to which the prohibition applied. Moreover,
MMC Memorandum Circular No. 88-09 did not apply to Trackworks' billboards, signages and other
advertising media in MRT3, because it did not specifically cover MRT3, and because it was issued a
year prior to the construction of MRT3 on the center island of EDSA. Clearly, MMC Memorandum
Circular No. 88-09 could not have included MRT3 in its prohibition.
MMDA's insistence that it was only implementing Presidential Decree No. 1096 (Building Code) and its
implementing rules and regulations is not persuasive. The power to enforce the provisions of
the Building Code was lodged in the Department of Public Works and Highways (DPWH), not in MMDA,
considering the law's following provision, thus:
Sec. 201. Responsibility for Administration and Enforcement. The administration and enforcement of the provisions of this Code including the imposition of penalties
for administrative violations thereof is hereby vested in the Secretary of Public Works, Transportation
and Communications, hereinafter referred to as the "Secretary."
There is also no evidence showing that MMDA had been delegated by DPWH to implement the Building
Code. (Emphasis supplied.)
Additionally, the penalty prescribed by Ordinance No. 2904 itself does not include the demolition of
illegally constructed buildings in case of violations. Instead, it merely prescribes a punishment of a fine
of not more than two hundred pesos (P200.00) or by imprisonment of not more than thirty (30) days, or
by both such fine and imprisonment at the discretion of the Court, Provided, that if the violation is
committed by a corporation, partnership, or any juridical entity, the Manager, managing partner, or any
person charged with the management thereof shall be held responsible therefor. The ordinance itself
also clearly states that it is the regular courts that will determine whether there was a violation of the
ordinance.
As pointed out in Trackworks, the MMDA does not have the power to enact ordinances. Thus, it cannot
supplement the provisions of Quezon City Ordinance No. 2904 merely through its Resolution No. 02-28.
Lastly, the MMDA claims that the City Government of Quezon City may be considered to have approved
the demolition of the structure, simply because then Quezon City Mayor Feliciano R. Belmonte signed
MMDA Resolution No. 02-28. In effect, the city government delegated these powers to the MMDA. The
powers referred to are those that include the power to declare, prevent and abate a nuisance[32] and
to further impose the penalty of removal or demolition of the building or structure by the owner or by the
city at the expense of the owner.[33]

25 | P a g e

MMDAs argument does not hold water. There was no valid delegation of powers to the MMDA. Contrary
to the claim of the MMDA, the City Government of Quezon City washed its hands off the acts of the
former. In its Answer,[34] the city government stated that the demolition was undertaken by the MMDA
only, without the participation and/or consent of Quezon City. Therefore, the MMDA acted on its own
and should be held solely liable for the destruction of the portion of Justice Gancaycos building.
WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals in CA-G.R. SP No. 84648
is AFFIRMED.
SO ORDERED.

GUILLERMO M. TELMO,
Petitioner,

G.R. No. 182567

told them that he would not record the same, because he was present when the incident
occurred. Consumo never recorded the incident in the barangay blotter.

Present:

- versus -

LUCIANO M. BUSTAMANTE,
Respondent.

YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.
Promulgated:
July 13, 2009

x------------------------------------------------------------------------------------x

Respondent complained that he and his co-owners did not receive any just compensation
from the government when it took a portion of their property for the construction of the NoveletaNaic-Tagaytay Road. Worse, they could not enjoy the use of the remaining part of their lot due to the
abusive, Illegal, and unjust acts of the Telmos and Consumo. Respondent charged the latter criminally
for violation of Article 312[5] of the Revised Penal Code and Section 3(e)[6] of Republic Act No.
3019[7] and administrativelyfor violation of Section 4 (a)[8], (b)[9], (c)[10], and (e)[11] of Republic
Act No. 6713.[12]
In his Counter-Affidavit,[13] petitioner denied having uttered the words attributed to him by respondent,
and claimed that he only performed his official duties in requiring an application for a building permit
before any structure can be erected on government property. He said that respondent insisted on
enclosing with barbed wire and concrete posts the lot that already belonged to the national government,
which had now been converted into a national road. He also alleged that if he allowed the enclosures
erected by the respondent, other residents would be denied ingress to and egress from their own
properties.

DECISION
NACHURA, J.:

For our consideration is a Petition[1] for Review on Certiorari under Rule 45 of the Rules of Court in
relation to Section 27, paragraph 3 of the Ombudsman Act of 1989 (Republic Act No. 6770). Subject of
the Petition is the Decision[2] dated October 13, 2005 and the Order[3] dated March 17, 2006 of the Office
of the Deputy Ombudsman forLuzon.
This case arose from the Verified Complaint[4] filed by respondent Luciano M. Bustamante before the
Office of the Deputy Ombudsman for Luzon against petitioner Guillermo Telmo, Municipal Engineer of
Naic, Cavite, Danilo Consumo, Barangay (Brgy.) Chairman, Brgy. Halang, Naic, Cavite, and Elizalde
Telmo, a private individual.
The complaint alleged that respondent is a co-owner of a real property of 616 square meters in Brgy.
Halang, Naic, Cavite, known as Lot 952-A and covered by Transfer Certificate of Title No. T-957643 of
the Register of Deeds of Cavite. Petitioner and Elizalde Telmo (Telmos) are the owners of the two (2)
parcels of land denominated as Lot 952-B and 952-C, respectively, located at the back of respondents
lot. When his lot was transgressed by the construction of the Noveleta-Naic-Tagaytay Road, respondent
offered for sale the remaining lot to the Telmos. The latter refused because they said they would have
no use for it, the remaining portion being covered by the roads 10-meter easement.

In his own counter-affidavit, Consumo denied collusion with petitioner in not recording in
the barangay blotter the subject incident. He explained that on May 10, 2005 at around 5:00 p.m., he
was summoned by petitioner to intercede, because the respondent and his men were fencing the subject
property. Consumo obliged, personally saw the fence being built, and observed that even the trucks
owned by petitioner were enclosed therein. When he asked respondent if he had the necessary permit
and the properbarangay clearance to do so, respondents lawyer, Atty. San Gaspar, replied that there
was no need for the permit and clearance since respondent was just fencing his own property. Thus,
Consumo could not prevent the ongoing fencing, but told respondent and company to wait for petitioner
to decide the matter.
Consumo further alleged that after putting up the fence, respondent and his companions left without
waiting for the arrival of petitioner. When petitioner arrived, he explained to the people present that the
property enclosed by respondent is owned by the government and that no one is allowed to construct
any fence without a permit from him, as the Municipal Engineer, or from any building official of the local
government of Naic, Cavite. Consumo said that the residents affected by the fence constructed by
respondent were the ones who pulled out the concrete posts in order to provide access to the national
road. These residents included the petitioner, whose trucks used for delivering sand and hollow blocks
were enclosed and also denied access.

The complaint further alleged that, on May 8, 2005, respondent caused the resurvey of Lot 952-A in the
presence of the Telmos. The resurvey showed that the Telmos encroached upon respondents
lot. Petitioner then uttered, Hanggat ako ang municipal engineer ng Naic, Cavite, hindi kayo
makakapagtayo ng anuman sa lupa nyo; hindi ko kayo bibigyan ng building permit.

In his Counter-Affidavit,[14] Elizalde Telmo denied having encroached, occupied or taken possession of
respondents property. He claimed that, on May 10, 2005, he was merely an onlooker to the altercation
between petitioner and respondent. He said that petitioner, his brother, insisted that respondent could
not enclose the property in question unless the latter obtains a building permit from the Office of the
Municipal Engineer/Building Official, since it appeared that the subject property was no longer a property
of respondent but was converted into government property by virtue of the 30-meter road set-back
imposed by the Zoning Ordinance of the Municipality of Naic, Cavite. Elizalde Telmo stated that he did
not offer any resistance to the fencing of the property in question. He observed, though, that when they
learned that petitioner was arriving at the place, respondent and his companions just left the vicinity.

On May 10, 2005, respondent put up concrete poles on his lot. However, around 7:00 p.m. of the same
day, the Telmos and their men allegedly destroyed the concrete poles. The following day, respondents
relatives went to Brgy. Chairman Consumo to report the destruction of the concrete poles. Consumo

Later, petitioner and respondent filed their respective position papers[15] upon the directive of the Graft
Investigating and Prosecuting Officer. Their position papers reiterated the allegations made in their
respective affidavits earlier submitted.

26 | P a g e

In the Decision[16] dated October 13, 2005, the Office of the Deputy Ombudsman for Luzon found
petitioner and Danilo Consumo administratively liable, but dismissed the charge against Elizalde Telmo
for lack of jurisdiction over his person, he being a private individual. The dispositive portion of the
Decision states
WHEREFORE, premises considered, the undersigned investigator respectfully recommends the
following, to wit:
(1)
That the administrative complaint against respondent Elizalde Telmo be DISMISSED for lack
of jurisdiction;
(2)
That respondent Guillermo Telmo be meted the PENALTY OF FINE EQUIVALENT TO SIX
(6) MONTHS SALARY for violation of Section 4 of Republic Act No. 6713; and
(3)
That respondent Danilo Consumo be meted the PENALTY OF FINE EQUIVALENT TO
THREE (3) MONTHS HONORARIA for violation of Section 4 of Republic Act No. 6713.
SO DECIDED.[17]
Petitioner filed a Motion for Reconsideration,[18] wherein he elaborated that he just performed his official
duties when he summarily removed the concrete posts erected by respondent to enclose the property.
In the Order[19] dated March 17, 2006, the Office of the Deputy Ombudsman for Luzon denied the Motion
for Reconsideration for lack of merit.
Hence, this petition anchored on the following grounds:
A. THE HONORABLE DEPUTY OMBUDSMAN FOR LUZON SERIOUSLY ERRED WHEN HE
DECLARED THAT THERE WAS NO VALID TAKING OF RESPONDENTS LOTBY MEANS OF
EXPROPRIATION.
B. THE HONORABLE DEPUTY OMBUDSMAN FOR LUZON SERIOUSLY ERRED WHEN HE
DECLARED THAT PETITIONER SHOULD BE AUTHORIZED BY THE MUNICIPAL MAYOR OR BY THE
COURT TO ABATE PUBLIC NUISANCE OR NUISANCE PER SE.
C. THE HONORABLE DEPUTY OMBUDSMAN FOR LUZON ERRED WHEN HE METED THE
PENALTY OF FINE EQUIVALENT TO SIX (6) MONTHS SALARY FOR VIOLATION OF SECTION 4 OF
REPUBLIC ACT NO. 6713.[20]
In essence, petitioner contends that the property claimed and enclosed with concrete posts by
respondent was validly taken by the National Government through its power of eminent domain,
pursuant to Executive Order No. 113, as amended by Executive Order No. 253, creating the NoveletaNaic-Tagaytay Road. In this context, petitioner contends that the concrete posts erected by respondent
were a public nuisance under Article 694 (4)[21] of the Civil Code, more particularly a nuisance per se,
which may be summarily abated under Article 699 (3)[22] of the same Code. Petitioner says that as the
Municipal Engineer, he is also the Building Official of Naic, Cavite; and thus, it was well within his
authority, pursuant to Section 214, paragraph two (2) of the National Building Code, to order the removal
of the concrete posts. Petitioner likewise claims that Section 23 of Revised Philippine Highway Act
(Presidential Decree No. 17)[23] mandated him to remove respondents concrete posts. Petitioner
concludes that since he merely performed his official duties in removing the concrete posts erected by

27 | P a g e

petitioner from the property, which is already owned by the government, he must be absolved of any
administrative liability.
Instead of filing his comment on the petition, respondent manifested through counsel that he is no longer
interested in pursuing this case, submitting therewith his Affidavit of Desistance [24] dated December 5,
2007. Respondent alleged in the affidavit that the administrative charges he lodged against petitioner
were brought about by a misunderstanding between them, which differences have already been
settled. Consequently, this case should now be dismissed.
We disagree.
The desistance of the complainant does not necessarily result in the dismissal of the administrative
complaint because the Court attaches no persuasive value to a desistance, especially when executed as
an afterthought.[25] It should be remembered that the issue in an administrative case is not whether the
complaint states a cause of action against the respondent, but whether the public officials have
breached the norms and standards of the public service.[26] Considering that petitioner admitted in his
pleadings that he summarily removed the concrete posts erected by respondent, allegedly within the
parameters of his authority as Municipal Engineer of Naic, Cavite, it is only proper that this case be
decided on its merits rather than on the basis of the desistance of respondent.
It cannot be denied that respondents property was taken by the National Government thru the
Department of Public Works and Highways when it constructed the Noveleta-Naic-Tagaytay Road. What
is not clear from the records of this case is whether respondents property was taken as part of the
national road itself or only as part of the right-of-way easement therefor. We observe that the re-survey
plan[27] of his property attached by respondent to his complaint and the survey plan[28] of the NoveletaNaic-Tagaytay Road submitted by petitioner appear to be different. Nevertheless, it is evident from the
sketch plans that respondent could not enclose his property because it is now being used by the
National Government. Therefore, whatever cause of action respondent may have in his claim for just
compensation for the taking of his property, the same should be lodged against the National
Government.
While it is settled that respondent does not have the legal right to enclose the property, we should now
determine whether petitioner indeed performed his official functions properly.
First. Petitioner claims that his act of summarily removing respondents concrete posts was authorized
under the National Building Code (Presidential Decree No. 1096). The provision he cites correctly
pertains to Section 215, which reads
Sec. 215. Abatement of Dangerous Buildings.When any building or structure is found or declared to
be dangerous or ruinous, the Building Official shall order its repair, vacation or demolition depending
upon the decree of danger to life, health, or safety. This is without prejudice to further action that may be
taken under the provisions of Articles 482 and 694 to 707 of the Civil Code of thePhilippines.
To better understand this provision, we refer to Section 214 of the same law, which defines what are
dangerous and ruinous buildings or structures susceptible of abatement. It provides
Sec. 214. Dangerous and Ruinous Buildings or Structures. Dangerous buildings are those which are
herein declared as such or are structurally unsafe or not provided with safe egress, or which constitute a
fire hazard, or are otherwise dangerous to human life, or which in relation to existing use, constitute a
hazard to safety or health or public welfare because of inadequate maintenance, dilapidation,
obsolescence, or abandonment, or which otherwise contribute to the pollution of the site or the
community to an intolerable degree.

A careful reading of the foregoing provisions would readily show that they do not apply to the
respondents situation. Nowhere was it shown that the concrete posts put up by respondent in what he
believed was his and his co-owners property were ever declared dangerous or ruinous, such that they
can be summarily demolished by petitioner.
What is more, it appears that the concrete posts do not even fall within the scope of the provisions of the
National Building Code. The Code does not expressly define the word building. However, we find
helpful the dictionary definition of the word building, viz:

should have ordered respondent to remove the concrete posts. The petitioner failed to show that he was
duly authorized by the District Engineer to implement the Department Order in Naic, Cavite. More
importantly, even assuming that petitioner had been duly authorized to order the removal of the concrete
posts of respondent, he failed to prove that he issued the required notice to respondent to remove the
said structures before he did the removal himself. Note that petitioner, in fact, admitted in his pleadings
that he summarily removed the said posts.

[A] constructed edifice designed usually covered by a roof and more or less completely enclosed by
walls, and serving as a dwelling, storehouse, factory, shelter for animals, or other useful structure
distinguished from structures not designed for occupancy (as fences or monuments) and from structures
not intended for use in one place (as boats or trailers) even though subject to occupancy.[29]

The Revised Philippine Highway Act and Department Order No. 52 do not expressly provide for the
administrative sanction to be taken against public officials violating their provisions. Hence, we must
refer to the Uniform Rules on Administrative Cases in the Civil Service. We believe that the
administrative offense committed by petitioner through the questioned act was only Discourtesy in the
Course of Official Duties, which is a light offense under Rule IV, Section 52 of the said Rules. The
penalties imposable for such an offense are a reprimand for the first offense, a suspension from 1 day to
30 days for the second offense, and dismissal from public service for the third offense. Since this
appears to be petitioners first offense, his action warrants only a REPRIMAND.

The provisions of the National Building Code would confirm that building as used therein conforms to
this definition. Thus, applying the statutory construction principle of ejusdem generic,[30] the word
structure should be construed in the context of the definition of the word building. The concrete posts
put up by respondent on the property are not properly covered by the definition of the word building nor
is it embraced in the corresponding interpretation of the word structure.

WHEREFORE, the Decision dated October 13, 2005 and the Order dated March 17, 2006 of the Office
of the Deputy Ombudsman for Luzon finding petitioner Guillermo M. Telmo, Municipal Engineer of
Naic, Cavite, administratively culpable for violation of Section 4 of Republic Act No. 6713, imposing upon
him the penalty of fine equivalent to his six 6-month salary, must be MODIFIED. Guillermo M. Telmo is
instead found administratively guilty of DISCOURTESY IN THE COURSE OF OFFICIAL DUTIESand is
hereby REPRIMANDED. Costs against petitioner.

Second. Petitioner contends that respondents concrete posts were in the nature of a nuisance per se,
which may be the subject of summary abatement sans any judicial proceedings. Again, we disagree.
A nuisance per se is that which affects the immediate safety of persons and property and may be
summarily abated under the undefined law of necessity.[31] Evidently, the concrete posts summarily
removed by petitioner did not at all pose a hazard to the safety of persons and properties, which would
have necessitated immediate and summary abatement. What they did, at most, was to pose an
inconvenience to the public by blocking the free passage of people to and from the national road.
Third. Petitioner likewise maintains that his authority to perform the assailed official act sprang from
Section 23 of the Revised Philippine Highway Act. He posits that this provision is particularly
implemented by Department Order No. 52,[32] Series of 2003 of the Department of Public Works and
Highways for the Removal of Obstructions and Prohibited Uses within the Right-of-Way of National
Roads.
Department Order No. 52 directs all District Engineers to immediately remove or cause the removal of all
obstructions and prohibited uses within the right-of-way of all national roads in their respective
jurisdictions. These obstructions and prohibited uses include, among others, all kinds of private,
temporary and permanent structures, such as buildings, houses, shanties, stores, shops, stalls,
sheds, posts, canopies, billboards, signages, advertisements, fences, walls, railings, basketball courts,
garbage receptacles, and the like. The Department Order requires the District Engineers to issue
notices to the concerned persons to remove the obstructions and prohibited uses within the right-of-way,
and shall follow through prompt compliance with these notices and full implementation of the Order. It
further provides that appropriate sanctions will be taken against those who fail to comply with its
provisions.
Gauging the action of petitioner based on the guidelines set by Department Order No. 52, from which he
claims his authority, we cannot but conclude that petitioner went beyond the scope of his official power
because it is the concerned District Engineer of the Department of Public Works and Highways who

28 | P a g e

G.R. No. 148408

July 14, 2006
CONCEPCION PARAYNO, petitioner,
vs.
JOSE JOVELLANOS and the MUNICIPALITY OF CALASIAO, PANGASINAN, * respondents.
DECISION
CORONA, J.:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Court questioning the
resolution of the Court of Appeals (CA) which dismissed the petition for certiorari, mandamus and
prohibition, with prayer for issuance of a preliminary and mandatory injunction, filed by petitioner
Concepcion Parayno against respondents Jose Jovellanos and the Municipality of Calasiao,
Pangasinan.
Petitioner was the owner of a gasoline filling station in Calasiao, Pangasinan. In 1989, some residents of
Calasiao petitioned the Sangguniang Bayan (SB) of said municipality for the closure or transfer of the
station to another location. The matter was referred to the Municipal Engineer, Chief of Police, Municipal
Health Officer and the Bureau of Fire Protection for investigation. Upon their advise, the Sangguniang
Bayan recommended to the Mayor the closure or transfer of location of petitioner's gasoline station. In
Resolution No. 50, it declared:
a) xxx the existing gasoline station is a blatant violation and disregard of existing law to wit:
The Official Zoning Code of Calasiao, Art. 6, Section 44,1 the nearest school building which is San
Miguel Elementary School and church, the distances are less than 100 meters. No neighbors were
called as witnesses when actual measurements were done by HLURB Staff, Baguio City dated 22 June
1989.
b) The gasoline station remains in thickly populated area with commercial/residential buildings, houses
closed (sic) to each other which still endangers the lives and safety of the people in case of fire.
Moreover, additional selling and storing of several LPG tanks in the station (sic).
c) The residents of our barangay always complain of the irritating smell of gasoline most of the time
especially during gas filling which tend to expose residents especially children to frequent colds, asthma,
cough and the like nowadays.
d) xxx the gasoline station violated Building and Fire Safety Codes because the station has 2nd floor
storey building used for business rental offices, with iron grilled windows, no firewalls. It also endangers
the lives of people upstairs.
e) It hampers the flow of traffic, the gasoline station is too small and narrow, the entrance and exit are
closed to the street property lines. It couldn't cope situation (sic) on traffic because the place is a
congested area.2
Petitioner moved for the reconsideration of the SB resolution but it was denied. Hence, she filed a
special civil action for prohibition and mandamus with the Regional Trial Court (RTC) of Dagupan City,
Branch 44 against respondents. The case, docketed as SP Civil Case No. 99-03010-D, was raffled to
the sala of Judge Crispin Laron.
Petitioner claimed that her gasoline station was not covered by Section 44 of the Official Zoning Code
since it was not a "gasoline service station" but a "gasoline filling station" governed by Section 21
thereof. She added that the decision of the Housing and Land Use Regulatory Board (HLURB),3 in a
previous case filed by the same respondent Jovellanos against her predecessor (Dennis Parayno),
barred the grounds invoked by respondent municipality in Resolution No. 50. In the HLURB case,
respondent Jovellanos opposed the establishment of the gas station on the grounds that: (1) it was
within the 100-meter prohibited radius under Section 44 and (2) it posed a pernicious effect on the health
and safety of the people in Calasiao.
After the hearing on the propriety of issuing a writ of preliminary prohibitory and mandatory injunction,
the trial court ruled:
There is no basis for the court to issue a writ of preliminary prohibitory and mandatory injunction.
Albeit,Section 44 of the Official Zoning Code of respondent municipality does not mention a gasoline
filling station, [but] following the principle of ejusdem generis, a gasoline filling station falls within the
ambit of Section 44.

29 | P a g e

The gasoline filling station of the petitioner is located under the establishment belonging to the petitioner
and is very near several buildings occupied by several persons. Justice dictates that the same should
not be allowed to continue operating its business on that particular place. Further, the gasoline filling
station endangers the lives and safety of people because once there is fire, the establishment and
houses nearby will be razed to the ground.4(emphasis supplied)
Petitioner moved for reconsideration of the decision but it was denied by the trial court.
Petitioner elevated the case to the CA via a petition for certiorari, prohibition and mandamus,5 with a
prayer for injunctive relief. She ascribed grave abuse of discretion, amounting to lack or excess of
jurisdiction, on the part of Judge Laron who dismissed her case.
After the CA dismissed the petition, petitioner filed a motion for reconsideration but the same was
denied. Hence, this appeal.
Before us, petitioner insists that (1) the legal maxim of ejusdem generis did not apply to her case; (2) the
closure/transfer of her gasoline filling station by respondent municipality was an invalid exercise of the
latter's police powers and (3) it was the principle of res judicata that applied in this case.6
We find merit in the petition.
The Principle of Ejusdem Generis
We hold that the zoning ordinance of respondent municipality made a clear distinction between "gasoline
service station" and "gasoline filling station." The pertinent provisions read:
xxx
xxx
xxx
Section 21. Filling Station. A retail station servicing automobiles and other motor vehicles with gasoline
and oil only.7
xxx
xxx
xxx
Section 42. Service Station. A building and its premises where gasoline oil, grease, batteries, tires and
car accessories may be supplied and dispensed at retail and where, in addition, the following services
may be rendered and sales and no other.
a. Sale and servicing of spark plugs, batteries, and distributor parts;
b. Tire servicing and repair, but not recapping or regrooving;
c. Replacement of mufflers and tail pipes, water hose, fan belts, brake fluids, light bulbs, fuses, floor
mats, seat covers, windshield wipers and wiper blades, grease retainers, wheel, bearing, mirrors and the
like;
d. Radiator cleaning and flushing;
e. Washing and polishing, and sale of automobile washing and polishing materials;
f. Grease and lubricating;
g. Emergency wiring repairs;
h. Minor servicing of carburators;
i. Adjusting and repairing brakes;
j. Minor motor adjustments not involving removal of the head or crankcase, or raising the motor. 8
xxx
xxx
xxx
It is evident from the foregoing that the ordinance intended these two terms to be separate and distinct
from each other. Even respondent municipality's counsel admitted this dissimilarity during the hearing on
the application for the issuance of a writ of preliminary prohibitory and mandatory injunction. Counsel in
fact admitted:
1. That there exist[ed] an official zoning code of Calasiao, Pangasinan which [was] not yet amended;
2. That under Article III of said official zoning code there [were] certain distinctions made by said
municipality about the designation of the gasoline filling station and that of the gasoline service station as
appearing in Article III, Nos. 21 and 42, [respectively];
3. That the business of the petitioner [was] one of a gasoline filling station as defined in Article III,
Section 21 of the zoning code and not as a service station as differently defined under Article 42 of the
said official zoning code;
4. That under Section 44 of the official zoning code of Calasiao, the term filling station as clearly defined
under Article III, Section 21, [did] not appear in the wordings thereof;9(emphasis supplied)

The foregoing were judicial admissions which were conclusive on the municipality, the party making
them.10Respondent municipality thus could not find solace in the legal maxim of ejusdem generis11 which
means "of the same kind, class or nature." Under this maxim, where general words follow the
enumeration of particular classes of persons or things, the general words will apply only to persons or
things of the same general nature or class as those enumerated.12 Instead, what applied in this case was
the legal maxim expressio unius est exclusio alteriuswhich means that the express mention of one thing
implies the exclusion of others.13 Hence, because of the distinct and definite meanings alluded to the two
terms by the zoning ordinance, respondents could not insist that "gasoline service station" under Section
44 necessarily included "gasoline filling station" under Section 21. Indeed, the activities undertaken in a
"gas service station" did not automatically embrace those in a "gas filling station."
The Exercise of Police Powers
Respondent municipality invalidly used its police powers in ordering the closure/transfer of petitioner's
gasoline station. While it had, under RA 7160,14 the power to take actions and enact measures to
promote the health and general welfare of its constituents, it should have given due deference to the law
and the rights of petitioner.
A local government is considered to have properly exercised its police powers only when the following
requisites are met: (1) the interests of the public generally, as distinguished from those of a particular
class, require the interference of the State and (2) the means employed are reasonably necessary for
the attainment of the object sought to be accomplished and not unduly oppressive.15 The first
requirement refers to the equal protection clause and the second, to the due process clause of the
Constitution.16
Respondent municipality failed to comply with the due process clause when it passed Resolution No. 50.
While it maintained that the gasoline filling station of petitioner was less than 100 meters from the
nearest public school and church, the records do not show that it even attempted to measure the
distance, notwithstanding that such distance was crucial in determining whether there was an actual
violation of Section 44. The different local offices that respondent municipality tapped to conduct an
investigation never conducted such measurement either.
Moreover, petitioner's business could not be considered a nuisance which respondent municipality could
summarily abate in the guise of exercising its police powers. The abatement of a nuisance without
judicial proceedings is possible only if it is a nuisance per se. A gas station is not a nuisance per se or
one affecting the immediate safety of persons and property,17 hence, it cannot be closed down or
transferred summarily to another location.
As a rule, this Court does not pass upon evidence submitted by the parties in the lower courts.18 We
deem it necessary, however, to recall the findings of the HLURB which petitioner submitted as evidence
during the proceedings before the trial court, if only to underscore petitioner's compliance with the
requirements of law before she put up her gasoline station.
Another factor that should not be left unnoticed is the diligence exercised by [petitioner] in complying
with the requirements of the several laws prior to the actual implementation of the project as can be
attested by the fact that [petitioner] has secured the necessary building permit and approval of [her]
application for authority to relocate as per the letter of the Energy Regulatory Board xxx. 19
On the alleged hazardous effects of the gasoline station to the lives and properties of the people of
Calasiao, we again note:

30 | P a g e

Relative to the allegations that the project (gasoline station) is hazardous to life and property, the Board
takes cognizance of the respondent's contention that the project "is not a fire hazard since petroleum
products shall be safely stored in underground tanks and that the installation and construction of the
underground tanks shall be in accordance with the Caltex Engineering Procedures which is true to all
gasoline stations in the country. xxx
Hence, the Board is inclined to believe that the project being hazardous to life and property is more
perceived than factual. For, after all, even the Fire Station Commander, after studying the plans and
specifications of the subject proposed construction, recommended on 20 January 1989, "to build such
buildings after conform (sic) all the requirements of PP 1185." It is further alleged by the complainants
that the proposed location is "in the heart of the thickly populated residential area of Calasiao." Again,
findings of the [HLURB] staff negate the allegations as the same is within a designated
Business/Commercial Zone per the Zoning Ordinance. xxx20 (emphasis supplied)
The findings of fact of the HLURB are binding as they are already final and conclusive vis--vis the
evidence submitted by respondents.
The Principle of Res Judicata
Petitioner points out that the HLURB decision in the previous case filed against her predecessor (Dennis
Parayno) by respondent Jovellanos had effectively barred the issues in Resolution No. 50 based on the
principle of res judicata. We agree.
Res judicata refers to the rule that a final judgment or decree on the merits by a court of competent
jurisdiction is conclusive of the rights of the parties or their privies in all later suits on all points and
matters determined in the former suit.21 For res judicata to apply, the following elements must be present:
(1) the judgment or order must be final; (2) the judgment must be on the merits; (3) it must have been
rendered by a court having jurisdiction over the subject matter and the parties and (4) there must be,
between the first and second actions, identity of parties, of subject matter and of cause of action. 22
Respondent municipality does not contest the first, second and third requisites. However, it claims that it
was not a party to the HLURB case but only its co-respondent Jovellanos, hence, the fourth requisite
was not met. The argument is untenable.
The absolute identity of parties is not required for the principle of res judicata to apply.23 A shared identity
of interests is sufficient to invoke the application of this principle.24 The proscription may not be evaded
by the mere expedient of including an additional party.25 Res judicata may lie as long as there is a
community of interests between a party in the first case and a party in the second case although the
latter may not have been impleaded in the first.26
In the assailed resolution of respondent municipality, it raised the same grounds invoked by its corespondent in the HLURB: (1) that the resolution aimed to close down or transfer the gasoline station to
another location due to the alleged violation of Section 44 of the zoning ordinance and (2) that the
hazards of said gasoline station threatened the health and safety of the public. The HLURB had already
settled these concerns and its adjudication had long attained finality. It is to the interest of the public that
there should be an end to litigation by the parties over a subject matter already fully and fairly adjudged.
Furthermore, an individual should not be vexed twice for the same cause.27
WHEREFORE, the petition is hereby GRANTED. The assailed resolution of the Court of the Appeals
isREVERSED and SET ASIDE. Respondent Municipality of Calasiao is hereby directed to cease and
desist from enforcing Resolution No. 50 against petitioner insofar as it seeks to close down or transfer
her gasoline station to another location.No costs.SO ORDERED.