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ABUSE OF RIGHTS (ART.

19) that the pieces of jewelry which she placed


inside the comfort room in a paper bag were
G.R. No. 151866 September 9, lost. The jewelry pieces consist of two (2)
2004 diamond rings, one (1) set of diamond
earrings, bracelet and necklace with a total
SOLEDAD CARPIO, petitioner, vs. value of about one million pesos. The hotel
LEONORA A. VALMONTE, respondent. security was called in to help in the search.
The bags and personal belongings of all the
DECISION people inside the room were searched.
Valmonte was allegedly bodily searched,
TINGA, J.: interrogated and trailed by a security guard
throughout the evening. Later, police officers
Assailed in the instant petition for review is arrived and interviewed all persons who had
the Decision of the Court of Appeals in C.A.- access to the suite and fingerprinted them
G.R. CV No. 69537,1promulgated on 17 including Valmonte. During all the time
January 2002.2 The appellate court reversed Valmonte was being interrogated by the
the trial courts decision denying police officers, petitioner kept on saying the
respondents claim for damages against words "Siya lang ang lumabas ng kwarto."
petitioner and ordered the latter to pay moral Valmontes car which was parked at the hotel
damages to the former in the amount premises was also searched but the search
ofP100,000.00. yielded nothing.

Respondent Leonora Valmonte is a wedding A few days after the incident, petitioner
coordinator. Michelle del Rosario and Jon received a letter from Valmonte demanding a
Sierra engaged her services for their church formal letter of apology which she wanted to
wedding on 10 October 1996. At about 4:30 be circulated to the newlyweds relatives and
p.m. on that day, Valmonte went to the guests to redeem her smeared reputation as
Manila Hotel where the bride and her family a result of petitioners imputations against
were billeted. When she arrived at Suite 326- her. Petitioner did not respond to the letter.
A, several persons were already there Thus, on 20 February 1997, Valmonte filed a
including the bride, the brides parents and suit for damages against her before the
relatives, the make-up artist and his Regional Trial Court (RTC) of Pasig City,
assistant, the official photographers, and the Branch 268. In her complaint, Valmonte
fashion designer. Among those present was prayed that petitioner be ordered to pay
petitioner Soledad Carpio, an aunt of the actual, moral and exemplary damages, as
bride who was preparing to dress up for the well as attorneys fees.
occasion.
Responding to the complaint, petitioner
After reporting to the bride, Valmonte went denied having uttered words or done any act
out of the suite carrying the items needed for to confront or single out Valmonte during the
the wedding rites and the gifts from the investigation and claimed that everything
principal sponsors. She proceeded to the that transpired after the theft incident was
Maynila Restaurant where the reception was purely a police matter in which she had no
to be held. She paid the suppliers, gave the participation. Petitioner prayed for the
meal allowance to the band, and went back dismissal of the complaint and for the court
to the suite. Upon entering the suite, to adjudge Valmonte liable on her
Valmonte noticed the people staring at her. It counterclaim.
was at this juncture that petitioner allegedly
uttered the following words to The trial court rendered its Decision on 21
Valmonte: "Ikaw lang ang lumabas ng August 2000, dismissing Valmontes
kwarto, nasaan ang dala mong bag? Saan ka complaint for damages. It ruled that when
pumunta? Ikaw lang and lumabas ng kwarto, petitioner sought investigation for the loss of
ikaw ang kumuha." Petitioner then ordered her jewelry, she was merely exercising her
one of the ladies to search Valmontes bag. It right and if damage results from a person
turned out that after Valmonte left the room exercising his legal right, it is damnum
to attend to her duties, petitioner discovered absque injuria. It added that no proof was

1 | S P E C I A L T O RT S I N H U M A N R E L AT I O N S
presented by Valmonte to show that In essence, petitioner would want this Court
petitioner acted maliciously and in bad faith to review the factual conclusions reached by
in pointing to her as the culprit. The court the appellate court. The cardinal rule adhered
said that Valmonte failed to show that she to in this jurisdiction is that a petition for
suffered serious anxiety, moral shock, social review must raise only questions of law,3 and
humiliation, or that her reputation was judicial review under Rule 45 does not extend
besmirched due to petitioners wrongful act. to an evaluation of the sufficiency of
evidence unless there is a showing that the
Respondent appealed to the Court of Appeals findings complained of are totally devoid of
alleging that the trial court erred in finding support in the record or that they are so
that petitioner did not slander her good name glaringly erroneous as to constitute serious
and reputation and in disregarding the abuse of discretion.4 This Court, while not a
evidence she presented. trier of facts, may review the evidence in
order to arrive at the correct factual
The Court of Appeals ruled differently. It conclusion based on the record especially so
opined that Valmonte has clearly established when the findings of fact of the Court of
that she was singled out by petitioner as the Appeals are at variance with those of the trial
one responsible for the loss of her jewelry. It court, or when the inference drawn by the
cited the testimony of Serena Manding, Court of Appeals from the facts is manifestly
corroborating Valmontes claim that mistaken.5
petitioner confronted her and uttered words
to the effect that she was the only one who Contrary to the trial courts finding, we find
went out of the room and that she was the sufficient evidence on record tending to
one who took the jewelry. The appellate court prove that petitioners imputations against
held that Valmontes claim for damages is not respondent was made with malice and in bad
predicated on the fact that she was subjected faith.
to body search and interrogation by the
police but rather petitioners act of publicly Petitioners testimony was shorn of substance
accusing her of taking the missing jewelry. It and consists mainly of denials. She claimed
categorized petitioners utterance not to have uttered the words imputing the
defamatory considering that it imputed upon crime of theft to respondent or to have
Valmonte the crime of theft. The court mentioned the latters name to the
concluded that petitioners verbal assault authorities as the one responsible for the loss
upon Valmonte was done with malice and in of her jewelry. Well-settled is the rule that
bad faith since it was made in the presence denials, if unsubstantiated by clear and
of many people without any solid proof convincing evidence, are negative and self-
except petitioners suspicion. Such serving which merit no weight in law and
unfounded accusation entitles Valmonte to an cannot be given greater evidentiary value
award of moral damages in the amount over the testimony of credible witnesses who
of P100,000.00 for she was publicly testify on affirmative matters.6
humiliated, deeply insulted, and
embarrassed. However, the court found no Respondent, however, has successfully
sufficient evidence to justify the award of refuted petitioners testimony. Quite credibly,
actual damages. she has narrated in great detail her
distressing experience on that fateful day.
Hence, this petition. She testified as to how rudely she was
treated by petitioner right after she returned
Petitioner contends that the appellate courts to the room. Petitioner immediately
conclusion that she publicly humiliated confronted her and uttered the words "Ikaw
respondent does not conform to the evidence lang ang lumabas ng kwarto. Nasaan ang
presented. She adds that even on the dala mong bag? Saan ka pumunta? Ikaw ang
assumption that she uttered the words kumuha." Thereafter, her body was searched
complained of, it was not shown that she did including her bag and her car. Worse, during
so with malice and in bad faith. the reception, she was once more asked by
the hotel security to go to the ladies room
and she was again bodily searched.7

2 | S P E C I A L T O RT S I N H U M A N R E L AT I O N S
Serea Manding, a make-up artist, A Leo Valmonte.
corroborated respondents testimony. She Q Did the defendant tell this matter to other
testified that petitioner confronted people inside the room?
respondent in the presence of all the people A Yes, the mother of the bride.
inside the suite accusing her of being the Q And who else did she talk to?
only one who went out of the comfort room A The father of the bride also.
before the loss of the jewelry. Manding added Q And what did the defendant tell the mother
regarding this matter?
that respondent was embarrassed because
A "Nawawala yung alahas ko." Sabi naman
everybody else in the room thought she was
nung mother baka naman hindi mo dala
a thief.8 If only to debunk petitioners tignan mo munang mabuti.
assertion that she did not utter the Q Who was that other person that she talked
accusatory remarks in question publicly and to?
with malice, Mandings testimony on the A Father of the bride.9
point deserves to be reproduced. Thus, Significantly, petitioners counsel elected not
to pursue her cross-examination of the
Q After that what did she do? witness on this point following her terse and
A Then Leo came out from the other room firm declaration that she remembered
she said, she is (sic) the one I only saw from petitioners exact defamatory words in
the comfort room. answer to the counsels question.10
Q Now, what exact word (sic) were said by
Mrs. Carpio on that matter?
Jaime Papio, Security Supervisor at Manila
A She said "siya lang yung nakita kong galing
Hotel, likewise contradicted petitioners
sa C.R."
Q And who was Mrs. Carpio or the defendant allegation that she did not suspect or
referring to? mention the name of respondent as her
A Leo Valmonte. suspect in the loss of the jewelry. 11
Q Did she say anything else, the defendant?
A Her jewelry were lost and Leo was the only To warrant recovery of damages, there must
one she saw in the C.R. After that she get be both a right of action, for a wrong inflicted
(sic) the paper bag then the jewelry were by the defendant, and the damage resulting
already gone. therefrom to the plaintiff. Wrong without
Q Did she confront the plaintiff Mrs. Valmonte damage, or damage without wrong, does not
regarding that fact? constitute a cause of action.12
A Yes.
Q What did the defendant Mrs. Carpio tell the In the sphere of our law on human relations,
plaintiff, Mrs. Valmonte?
the victim of a wrongful act or omission,
A "Ikaw yung nakita ko sa C.R. nawawala
whether done willfully or negligently, is not
yung alahas ko."
Q When the defendant Mrs. Carpio said that left without any remedy or recourse to obtain
to plaintiff Mrs. Valmonte were there other relief for the damage or injury he sustained.
people inside the room? Incorporated into our civil law are not only
A Yes, sir. principles of equity but also universal moral
Q Were they able to hear what Mrs. Carpio precepts which are designed to indicate
said to Mrs. Valmonte? certain norms that spring from the fountain of
A Yes, sir. good conscience and which are meant to
Q What was your thinking at that time that serve as guides for human conduct. 13 First of
Mrs. Carpio said that to Mrs. Valmonte? these fundamental precepts is the principle
A "Nakakahiya kasi akala ng iba doon na commonly known as "abuse of rights" under
talagang magnanakaw siya. Kasi marami na Article 19 of the Civil Code. It provides
kaming nandodoon, dumating na yung that "Every person must, in the exercise of
couturier pati yung video man and we sir. his rights and in the performance of his
Q Who was the person you [were] alleging
duties, act with justice, give everyone his due
"na nakakahiya" whose (sic) being accused or
and observe honesty and good faith." To find
being somebody who stole those item of
jewelry? the existence of an abuse of right, the
A "Nakakahiya para kay Leo kasi following elements must be present: (1) there
pinagbibintangan siya. Sa dami namin doon is a legal right or duty; (2) which is exercised
siya yung napagbintangan." in bad faith; (3) for the sole intent or
Q And who is Leo, what is her full name? prejudicing or injuring another. 14 When a right

3 | S P E C I A L T O RT S I N H U M A N R E L AT I O N S
is exercised in a manner which discards these actually stole the jewelry is an act which, by
norms resulting in damage to another, a legal any standard or principle of law is
wrong is committed for which the actor can impermissible. Petitioner had willfully caused
be held accountable.15 One is not allowed to injury to respondent in a manner which is
exercise his right in a manner which would contrary to morals and good customs. Her
cause unnecessary prejudice to another or if firmness and resolve to find her missing
he would thereby offend morals or good jewelry cannot justify her acts toward
customs. Thus, a person should be protected respondent. She did not act with justice and
only when he acts in the legitimate exercise good faith for apparently, she had no other
of his right, that is when he acts with purpose in mind but to prejudice respondent.
prudence and good faith; but not when he Certainly, petitioner transgressed the
acts with negligence or abuse.16 provisions of Article 19 in relation to Article
21 for which she should be held accountable.
Complementing the principle of abuse of
rights are the provisions of Articles 20 and 21 Owing to the rule that great weight and even
of the Civil Code which read, thus: finality is given to factual conclusions of the
Court of Appeals which affirm those of the
Art. 20. Every person who, contrary to trial court,18 we sustain the findings of the
law, willfully or negligently causes trial court and the appellate court that
damage to another, shall indemnify the respondents claim for actual damages has
latter for the same. not been substantiated with satisfactory
evidence during the trial and must therefore
Art. 21. Any person who willfully be denied. To be recoverable, actual damages
causes loss or injury to another in a must be duly proved with reasonable degree
manner that is contrary to morals or of certainty and the courts cannot rely on
good customs or public policy shall speculation, conjecture or guesswork.19
compensate the latter for the damage.
Respondent, however, is clearly entitled to an
The foregoing rules provide the legal award of moral damages. Moral damages
bedrock for the award of damages to a may be awarded whenever the defendants
party who suffers damage whenever wrongful act or omission is the proximate
one commits an act in violation of cause of the plaintiffs physical suffering,
some legal provision, or an act which mental anguish, fright, serious anxiety,
though not constituting a transgression besmirched reputation, wounded feelings,
of positive law, nevertheless violates moral shock, social humiliation, and similar
certain rudimentary rights of the party injury20 in the cases specified or analogous to
aggrieved. those provided in Article 2219 of the Civil
Code.21Though no proof of pecuniary loss is
In the case at bar, petitioners verbal necessary in order that moral damages may
reproach against respondent was certainly be adjudicated, courts are mandated to take
uncalled for considering that by her own into account all the circumstances obtaining
account nobody knew that she brought such in the case and assess damages according to
kind and amount of jewelry inside the paper their discretion.22 Worthy of note is that moral
bag.17 This being the case, she had no right damages are not awarded to penalize the
to attack respondent with her innuendos defendant,23 or to enrich a complainant, but
which were not merely inquisitive but to enable the latter to obtain means,
outrightly accusatory. By openly accusing diversions or amusements that will serve to
respondent as the only person who went out alleviate the moral suffering he has
of the room before the loss of the jewelry in undergone, by reason of defendants culpable
the presence of all the guests therein, and action. In any case, award of moral damages
ordering that she be immediately bodily must be proportionate to the sufferings
searched, petitioner virtually branded inflicted.24
respondent as the thief. True, petitioner had
the right to ascertain the identity of the Based on the foregoing jurisprudential
malefactor, but to malign respondent without pronouncements, we rule that the appellate
an iota of proof that she was the one who court did not err in awarding moral damages.

4 | S P E C I A L T O RT S I N H U M A N R E L AT I O N S
Considering respondents social standing, SEACOM is a corporation engaged in the
and the fact that her profession is based business of selling and distributing
primarily on trust reposed in her by her agricultural machinery, products and
clients, the seriousness of the imputations equipment. On September 20, 1966, SEACOM
made by petitioner has greatly tarnished her and JII entered into a dealership agreement
reputation and will in one way or the other, whereby SEACOM appointed JII as its
affect her future dealings with her clients, the exclusive dealer in the City and Province of
award of P100,000.00 as moral damages Iloilo 1. Tirso Jamandre executed a suretyship
appears to be a fair and reasonable agreement binding himself jointly and
assessment of respondents damages. severally with JII to pay for all obligations of JII
to SEACOM 2. The agreement was
WHEREFORE, the subsequently amended to include Capiz in
instant Petition is DENIED. Costs against the territorial coverage and to make the
petitioner. SO ORDERED. dealership agreement on a non-exclusive
basis 3. In the course of the dealership
G.R. No. 122823 November 25, 1999 agreement, JII allegedly incurred a balance of
P18,843.85 for unpaid deliveries, and
SEA COMMERCIAL COMPANY, SEACOM brought action to recover said
INC., petitioner, vs. THE HONORABLE amount plus interest and attorney's fees.
COURT OF APPEALS, JAMANDRE
INDUSTRIES, INC. and TIRSO JII filed an Answer denying the obligation and
JAMANDRE, respondents. interposing a counterclaim for damages
representing unrealized profits when JII sold
GONZAGA-REYES, J.: to the Farm System Development Corporation
(FSDC) twenty one (21) units of Mitsubishi
In this petition for review by certiorari, SEA power tillers. In the counterclaim, JII alleged
Commercial Company, Inc. (SEACOM) assails that as a dealer in Capiz, JII contracted to sell
the decision of the Court of Appeals in CA- in 1977 twenty-four (24) units of Mitsubishi
G.R. CV NO. 31263 affirming in toto the power tillers to a group of farmers to be
decision of the Regional Trial Court of Manila, financed by said corporation, which fact JII
Branch 5, in Civil Case No. 122391, in favor of allegedly made known to petitioner, but the
Jamandre Industries, Inc. (JII) et al., the latter taking advantage of said information
dispositive portion of which reads: and in bad faith, went directly to FSDC and
dealt with it and sold twenty one (21) units of
WHEREFORE, judgment is hereby said tractors, thereby depriving JII of
rendered in favor of the defendant and unrealized profit of eighty-five thousand four
against the plaintiff, ordering the hundred fifteen and 61/100 pesos
plaintiff: (P85,415.61).

1) To pay defendant the sum of The trial court rendered its decision on
P66,156.15 (minus 18,843.85) with January 24, 1990 ordering JII to pay SEACOM
legal interest thereon, from the date of the amount of Eighteen Thousand Eight
the filing of the counterclaim until fully Hundred Forty Three and 85/100
paid; (P18,843.85) representing its outstanding
obligation. The trial court likewise granted
2) To pay defendant P2,000.00 as JII's counterclaim for unrealized profits, and
moral and exemplary damages; for moral and exemplary damages and
attorney' fees as above quoted.
3) To pay attorney's fees in the sum of
P10,000.00; and SEACOM appealed the decision on the
counterclaim.
4) To pay the costs of this suit.
The Court of Appeals held that while there
SO ORDERED. exists no agency relationship between
SEACOM and JII, SEACOM is liable for
damages and unrealized profits to JII.

5 | S P E C I A L T O RT S I N H U M A N R E L AT I O N S
This Court, however, is convinced that Hence this petition for review on certiorari,
with or without the existence of an which submits the following reasons for the
agency relationship between appellant allowance thereof:
SEACOM and appellee JII and
notwithstanding the error committed THE RESPONDENT COURT OF APPEALS
by the lower court in finding that an DECIDED QUESTIONS OF SUBSTANCE IN A
agency relationship existed between WAY NOT IN ACCORDANCE WITH LAW AND
appellant and defendant corporation JURISPRUDENCE, CONSIDERING THAT:
the former is liable for the unrealized A
profits which the latter could have THE RESPONDENT COURT OF APPEALS
gained had not appellant unjustly GARAVELY ERRED IN RULING THAT
PETITIONER IS LIABLE TO PAY DAMAGES AND
stepped in and in bad faith unethically
UNREALIZED PROFITS TO THE PRIVATE
intervened.
RESPONDENTS DESPITE THE FACT THAT NO
AGENCY RELATIONSHIP EXISTS BETWEEN
It should be emphasized that the very THEM.
purpose of the dealership agreement is B
for SEACOM to have JII as its dealer to THE RESPONDENT COURT OF APPEALS
sell its products in the provinces of GRAVELY ERRED IN RULING THAT PETITIONER
Capiz and Iloilo. In view of this ACTED IN BAD FAITH AGAINST THE PRIVATE
agreement, the second assigned error RESPONDENT CORPORATION DESPITE THE
that the lower court erred in holding FACT THAT SAID RULING IS CONTRARY TO
that appellant learned of the FSDC THE EVIDENCE ON RECORD.
transaction from defendant JII is clearly C
immaterial and devoid of merit. The THE RESPONDENT COURT OF APPEALS
fact that the dealership is on a non- GRAVELY ERRED IN RULING THAT THE NON-
exclusive basis does not entitle EXCLUSIVITY CLAUSE IN THE DEALERSHIP
AGREEMENT EXECUTED BETWEEN THE
appellant SEACOM to join the fray as
PETITIONER AND PRIVATE RESPONDENT
against its dealer. To do so, is to violate
CORPORATION PRECLUDES THE PETITIONER
the norms of conduct enjoined by Art. FROM COMPETING WITH THE PRIVATE
19 of the Civil Code. By virtue of such RESPONDENT CORPORAITON.
agreement, the competition in the D
market as regards the sale of farm THE RESPONDENT COURT OF APPEALS
equipment shall be between JII, as the GRAVELY ERRED IN RULING THAT PRIVATE
dealer of SEACOM and other RESPONDENT IS ENTITLED TO UNREALIZED
companies, not as against SEACOM PROFITS, MORAL AND EXEMPLARY DAMAGES
itself. However, SEACOM, not satisfied AND ATTORNEY'S FEES. 4
with the presence of its dealer JII in the Petitioner SEACOM disputes the conclusion of
market, joined the competition even as the Court of Appeals that despite the fact
the against the latter and, therefore, that no agency relationship existed between
changed the scenario of the the parties, the SEACOM is still liable in
competition thereby rendering inutile damages and unrealized profits for the
the dealership agreement which they reason that it acted in bad faith. Petitioner
entered into the manifest prejudice of SEACOM invokes the non-exclusivity clause in
JII. Hence, the trial court was correct the dealership agreement and claims that the
when it applied Art. 19 of the Civil transaction with FSDC was concluded
Code in the case at bar in that pursuant to a public bidding and not on the
appellant SEACOM acted in bad faith basis of alleged information it received from
when it competed with its own dealer private respondent Tirso Jamandre. Moreover,
as regards the sale of farm petitioner SEACOM claims that it did not
machineries, thereby depriving underprice its products during the public
appellee JII of the opportunity to gain a bidding wherein both SEACOM and JII
clear profit of P85,000.00. participated. Petitioner also disputes the
award of moral damages to JII which is a
and affirmed the judgment appealed corporation, in the absence of any evidence
from in toto. that the said corporation had a good
reputation which was debased.

6 | S P E C I A L T O RT S I N H U M A N R E L AT I O N S
Private respondents in their comment, for every delivery from November 26, 1976 to
contends that the four assigned errors raise December 24, 1978. Private respondents
mixed questions of fact and law and are maintain that SEACOM "torpedoed the
therefore beyond the jurisdiction of the emerging deal between JII and FSDC after
Supreme Court which may take cognizance of being informed about it by JII by dealing
only questions of law. The assigned errors directly with FSDC at a lower price" and after
were also refuted to secure affirmance of the betraying JII, SEACOM would cover up the
appealed decision. JII maintains that the deceit by conniving with FSDC to post up a
bidding set by FSDC on March 24, 1997 was "sham public bidding.
scheduled after the demonstration conducted
by JII, and after JII informed SEACOM about SEACOM's sur-rejoinder contains basically a
the preference of the farmers to buy reiteration of its contention in previous
Mitsubishi tillers. JII further rebuts the pleadings. Additionally, it is contended that
SEACOM's contention that the transaction private respondents are barred from
with FSDC was pursuant to a public bidding questioning in their Rejoinder, the finding of
with full disclosure to the public and private the Court of Appeals that there is no agency
respondent JII considering that JII had nothing relationship between the parties since this
to do with the list of 37 bidders and cannot matter was not raised as error in their
be bound by the listing made by SEACOM's comment.
employee; moreover, JII did not participate in
the bidding not having been informed about The core issue is whether SEACOM acted in
it. Furthermore, the price at which SEACOM bad faith when it competed with its own
sold to FSDC was lower than the price it gave dealer as regards the sale of farm
to JII. Also, even if the dealership agreement machineries to FSDC.
was not exclusive, it was breached when
petitioner in bad faith sold directly to FSDC Both the trial court and the Court of Appeals
with whom JII had previously offered the held affirmatively; the trial court found that JII
subject farm equipment. With respect to the was an agent of SEACOM and the act of
awards of moral and exemplary damages, JII SEACOM in dealing directly with FSDC was
seeks an affirmation of the ruling of the Court unfair and unjust to its agent, and that there
of Appeals justifying the awards. was fraud in the transaction between FSDC
and SEACOM to the prejudice of JII. On the
SEACOM filed Reply defending the jurisdiction other hand, the Court of Appeals ruled that
of this Court over the instant petition since there was no agency relationship between
the decision of the Court of Appeals was the parties but SEACOM is nevertheless liable
"based on a misapprehension of facts". in damages for having acted in bad faith
SEACOM insists that FSDC's purchase was when it competed with its own dealer in the
made pursuant to a public bidding, and even sale of the farm machineries to FSDC. Both
if SEACOM did not participate thereon, JII courts invoke as basis for the award Article
would not necessarily have closed the deal 19 of the Civil Code which reads as follows:
since thirty seven (37) bidders participated.
SEACOM contends that no evidence was Art. 19. Every person must, in the
presented to prove that the bidding was a exercise of his rights and in the
fraudulent scheme of SEACOM and FSDC. performance of his duties, act with
SEACOM further controverts JII's contention justice, give everyone his due and
that JII did not take part in the bidding as observe honesty and good faith.
Tirso Jamandre was one of the bidders and
that SEACOM underpriced its products to The principle of abuse of rights stated in the
entice FSDC to buy directly from it. In fine, JII above article, departs from the classical
is not entitled to the award of unrealized theory that "he who uses a right injures no
profits and damages. one". The modern tendency is to depart from
the classical and traditional theory, and to
In its Rejoinder, private responder insist that grant indemnity for damages in cases where
there is an agency relationship, citing the there is an abuse of rights, even when the act
evidence showing that credit memos and not is not illicit. 5
cash vouchers were issued to JII by SEACOM

7 | S P E C I A L T O RT S I N H U M A N R E L AT I O N S
Art. 19 was intended to expand the concept basis", granted the requested extension of
of torts by granting adequate legal remedy the warranty period and stated that "we are
for the untold number of moral wrongs which glad to note that you have quite a number of
is impossible for human foresight to provide units pending with the FSDC."
specifically in statutory law. 6 If mere fault or
negligence in one's acts can make him liable The trial court ruled that with said
for damages for injury caused thereby, with information, SEACOM dealt directly with FSDC
more reason should abuse or bad faith make and offered its units at a lower price, leaving
him liable. The absence of good faith is FSDC "no choice but to accept the said offer
essential to abuse of right. Good faith is an of (SEACOM)".
honest intention to abstain from taking any
unconscientious advantage of another, even In affirming the judgment of the of the trial
through the forms or technicalities of the law, court, the Court of Appeals held that by
together with an absence of all information or virtue of the dealership agreement the
belief of fact which would render the competition in the market as regards the sale
transaction unconscientious. In business of farm equipment shall be between JII, as
relations, it means good faith as understood the dealer of SEACOM, and other companies,
by men of affairs. 7 not as against SEACOM itself, the Court
stated:
While Article 19 may have been intended as
a mere declaration of However, SEACOM not satisfied with
8
principle , the "cardinal law on human the presence of its dealer JII in the
conduct" expressed in said article has given market, joined the competition even as
rise to certain rules, e.g. that where a person against the latter, and thereby
exercises his rights but does so arbitrarily or changed the scenario of the
unjustly or performs his duties in a manner competition thereby rendering inutile
that is not in keeping with honesty and good the dealership agreement which they
faith, he opens himself to liability. 9 The entered into to the manifest prejudice
elements of an abuse of rights under Article of JII. Hence the trial court trial court
19 are: (1) there is a legal right or duty; (2) was correct when it applied Art. 19 of
which is exercised in bad faith; (3) for the the Civil Code in the case at bar in that
sole intent of prejudicing or injuring appellant SEACOM acted in bad faith
another. 10 when it competed with its own dealer
as regards the sale of farm
The issue whether JII is "entitled to recovery machineries, thereby depriving
on its counterclaim for unrealized profit in the appellee JII of the opportunity to gain a
twenty one (21) units of Mitsubishi power clear profit of P85,000.00.
tillers sold by SEACOM to FSDC" was resolved
by the trial court in favor of JII on the basis of We find no cogent reason to overturn the
documentary evidence 11 showing that (1) JII factual finding of the two courts that SEACOM
has informed SEACOM as early as February joined the bidding for the sale of the farm
1977 of the promotions undertaken by JII for equipment after it was informed that JII was
the sale of 24 contracted units to FSDC and in already promoting the sales of said
connection therewith, requested a 50% equipment to the FSDC. Moreover, the
discount to make the price competitive, and conclusion of the trial court that the SEACOM
to increase the warranty period for eight offered FSDC a lower price than the price
months to one year. In said letter Jamandre offered by JII to FSDC is supported by the
clarified that they were not amenable to evidence: the price offered by JII to FSDC is
SEACOM's offering directly to FSDC" and to P27,167 per unit 12 but the prices at which
be only given the usual overriding SEACOM sold to FSDC were at P22,867.00 for
commission as "we have considerable Model CT 83-2, P21,093.50 for model CT 83-
investments on this transaction". (2) In E, and P18,979.25 for model CT 534. The fact
response, the general sales manager of that SEACOM may have offered to JII, in lieu
SEACOM declined to give the requested 50% of a requested 50% discount, a discount
discount and offered a "less 30% less 10% up effectively translating to 37% of the list price
to end March . . . on cash before delivery and actually sold to FSDC at 35% less than

8 | S P E C I A L T O RT S I N H U M A N R E L AT I O N S
the list price 13 does not detract from the fact order." 20 What is sought to be written into
that by participating in the bidding of FSDC, it the law is the pervading principle of equity
actually competed with its own dealer who and justice above strict legalism. 21
had earlier conducted demonstrations and
promoted its own products for the sale of the We accordingly resolve to affirm the award
very same equipment, Exh. "N" for the for unrealized profits. The Court of Appeals
plaintiff confirms that both SEACOM and noted that the trial court failed to specify to
Jamandre participated in the which the two appellees the award for moral
bidding. 14 However, the SEACOM was and exemplary damages in granted.
awarded the contract directly from However, in view of the fact that moral
Manila. 15 The testimony of Tirso Jamandre damages are not as a general rule granted to
that JII was the sole representative of a corporation, and that Tirso Jamandre was
SEACOM in the local demonstrations to the one who testified on his feeling very
convince the farmers and cooperative officers aggrieved and on his mental anguish and
to accept the Mitsubishi brand of equipment sleepless nights thinking of how SEACOM
in preference to other brands, was "dealt with us behind (our) backs", 22 the
unrebutted by SEACOM. award should go to defendant Jamandre,
President of JII.
Clearly, the bad faith of SEACOM was
established. By appointing as a dealer of its WHEREFORE. the judgment appealed from is
agricultural equipment, SEACOM recognized AFFIRMED with the modification that the
the role and undertaking of JII to promote and award of P2,000.00 in moral and exemplary
sell said equipment. Under the dealership damages shall be paid to defendant Tirso
agreement, JII was to act as a middleman to Jamandre.
sell SEACOM's products, in its area of
operations, i.e. Iloilo and Capiz provinces, to Costs against appellant. SO ORDERED.
the exclusion of other places, 16 to send its
men to Manila for training on repair, servicing G.R. No. 141011 July 19, 2001
and installation of the items to be handled by
it, and to comply with other personnel and CITYTRUST BANKING CORPORATION
vehicle requirements intended for the benefit (now Bank of the Philippine
of the dealership. 17 After being informed of Islands), petitioner,
the demonstrations JII had conducted to vs.
promote the sales of SEACOM equipment, ISAGANI C. VILLANUEVA, respondent.
including the operations at JII's expense
conducted for five months, and the approval x---------------------------------------------------------x
of its facilities (service and parts) by
FSDC, 18 SEACOM participated in the bidding G.R. No. 141028 July 19, 2001
for the said equipment at a lower price,
placing itself in direct competition with its ISAGANI C. VILLANUEVA, petitioner,
own dealer. The actuations of SEACOM are vs.
tainted by bad faith. CITYTRUST BANKING
CORPORATION, respondent.
Even if the dealership agreement was
amended to make it on a non-exclusive DAVIDE, JR., C.J.:
basis, 19 SEACOM may not exercise its right
unjustly or in a manner that is not in keeping In these consolidated cases, the Court is
with honesty or good faith; otherwise it opens called upon to determine whether the
itself to liability under the abuse of right rule repeated dishonor of a check drawn against a
embodied in Article 19 of the Civil Code well-funded account but bearing the account
above-quoted. This provision, together with number of another depositor with the same
the succeeding article on human relation, name and surname as the drawer would
was intended to embody certain basic entitle the drawer to compensatory and
principles "that are to be observed for the moral damages and to attorneys fees.
rightful relationship between human being.
and for the stability of the social The antecedent facts are as follows:

9 | S P E C I A L T O RT S I N H U M A N R E L AT I O N S
Sometime in February 1984, Isagani C. informing him that she had already placed a
Villanueva (hereafter VILLANUEVA) opened a trading order in his behalf and delivered the
savings account and a current account with check to Kingly Commodities. The check was
Citytrust Banking Corporation (hereafter the deposited with the China Banking
BANK), which were assigned account Corporation. The next day, he deposited
numbers 1-033-02337-1 and 33-00977-5, P31,600 in cash to his savings account to
respectively, with an automatic transfer cover the full amount of the check he issued.
arrangement. His deposits in both accounts totalled
P51,304.91.4
On 21 May 1986, VILLANUEVA deposited
some money in his savings account with the However, on 23 June 1986, VILLANUEVAs
BANKs Legaspi Village Branch in Makati, Check No. 396701 was dishonored due to
Metro Manila. Realizing that he had run out of insufficiency of funds and disparity in the
blank checks, VILLANUEVA requested a new signature. VILLANUEVA called Kingly
checkbook from one of the BANKs customer Commodities and explained that there was a
service representatives. He then filled up a mistake in the dishonor of the check because
checkbook requisition slip with the obligatory he had sufficient funds. Forthwith on the
particulars, except for his current account same day, VILLANUEVA called up the BANKs
number which he could not remember. He Legaspi Village Branch Operations Manager,
expressed his predicament to a lady Maritess Gamboa, and inquired about the
customer service representative of the BANK, dishonor of his well-funded check. Gamboa
who in turn assured him that she could promised to look into the matter and
supply the information from the BANKs instructed VILLANUEVA to advise his payee,
account records. After signing the requisition Kingly Commodities, to re-deposit the check.
slip, he gave it to her.1 Gamboa assured VILLANUEVA that the check
would be honored after the sufficiency of the
Pia Rempillo, another customer service funds was ascertained.5
representative of the BANK, saw
VILLANUEVAs checkbook requisition slip. She On 26 June 1986 at about 4:00 p.m.,
took it and proceeded to check the BANKs VILLANUEVA learned that his check was again
checkbook register which contained all the dishonored due to insufficiency of funds and
names and account numbers of the BANKs a stop- payment order he allegedly issued.
clients who were issued checkbooks. Upon Dismayed by the turn of events, VILLANUEVA
seeing the name "Isagani Villanueva -- called up the BANK and inquired from
Account No. 33-00446-3" in the checkbook Gamboa the reason for the dishonor of his
register, Rempillo copied the aforesaid well-funded check and the alleged stop-
account number on the space intended for it payment order which he never issued.
in VILLANUEVAs requisition slip.2 Gamboa promised to investigate the matter
and to call VILLANUEVA in fifteen (15)
On 17 June 1986, VILLANUEVA received from minutes.6 In the meantime, she advised
the BANK his requested checkbook. On the VILLANUEVA to re-deposit the check.
same day, he immediately signed Check No.
396701 bearing the amount of P50,000 VILLANUEVA then requested Lawrence Chin
payable to the order of Kingly Commodities of Kingly Commodities to give him until 5:30
Traders and Multi Resources, Inc. (hereafter p.m. that same day to make good his
Kingly Commodities). VILLANUEVA thereafter P50,000 check. He then proceeded to the
delivered the check to Helen Chu, his BANKs Legaspi Village Branch Office,
investment consultant at Kingly together with his investment consultant and
Commodities, with his express instruction to his trading partner, to personally inquire into
use said check in placing a trading order at the matter. They were met by Marilou
Kingly Commodities future trading business Genuino, the BANKs Branch Manager. There
as soon as a favorable opportunity presented he complained that his trading order was
itself.3 rejected because of the dishonor of the check
and that Kingly Commodities threatened to
Two days later, or on 19 June 1986, close his trading account unless his check
VILLANUEVA received a call from Helen Chu, payment would be made good before 5:30

10 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
p.m. that day. After making the necessary consequence, he suffered and sustained (1)
investigation, Genuino related to VILLANUEVA actual damages consisting of loss of profits in
that the reason for the dishonor of the check the amount of at least P240,000, for he was
was that the account number assigned to his not allowed to trade by Kingly Commodities;
new checkbook was the account number of and (2) P2 Million as moral damages because
another depositor also named "Isagani of the intolerable physical inconvenience,
Villanueva" but with a different middle initial. 7 discomfort, extreme humiliation, indignities,
etc., that he had borne before his peers and
To resolve the matter, Genuino promised to colleagues in the firm, his trading partners,
send to Kingly Commodities a managers and the officers of Kingly Commodities. He
check for P50,000 before 5:30 p.m., the prayed for an additional award of P500,000
deadline given to VILLANUEVA. She also for exemplary damages, attorneys fees,
personally called Kingly Commodities and litigation expenses and costs of the suit.11
explained the reason for the dishonor of the
check.8 In its answer, the BANK alleged that
VILLANUEVA suffered no actionable injury,
On 30 June 1986, VILLANUEVA sent a much less damages, considering his blatant
letter9 to the BANK addressed to the irresponsibility in not remembering his
President, Jose Facundo, demanding current account number and in failing to
indemnification for alleged losses and bring his checkbook re-order slip form on
damages suffered by him as a result of the which his account number was inscribed
dishonor of his well-funded check. He when he requested a new set of checks. His
demanded the amount of P70,000 as negligence in verifying the account number
indemnification for actual damages in the of the new set of checks issued to him also
form of lost profits and P2 Million for moral contributed to the dishonor of his check. The
and other damages. BANK claimed that it acted in good faith
when it twice dishonored the check. It further
On 10 July 1986, in answer to VILLANUEVAs asserted that VILLANUEVAs negligence was
letter, Gregorio Anonas III, the BANKs Senior the proximate cause of his self-proclaimed
Vice-President, apologized for the unfortunate injury; and the alleged losses and damages
oversight, but reminded VILLANUEVA that the could not likewise be deemed the natural and
dishonor of his check was due to his failure to probable consequences of the BANKs breach
state his current account number in his of obligation, had there been any. Finally, it
requisition slip. Anonas further stated that as claimed that VILLANUEVA acted with malice
soon as the mistake was discovered, the in filing the case, and interposed
BANK promptly sent a managers check to counterclaims of P500,000 as exemplary
Kingly Commodities before 5:30 p.m. on 26 damages; P250,000 as attorneys fees; and
June 1986 to avoid any damage the dishonor actual damages as may be determined by the
of the check might have caused.10 court.12

Failing to obtain from the BANK a favorable After due proceedings, the trial court
action on his demand for indemnification, rendered on 3 July 1992 a
13
VILLANUEVA filed on 27 August 1986 a decision dismissing the complaint and the
complaint for damages based on breach of compulsory counterclaim for lack of merit. To
contract and/or quasi-delict before the the trial court, the basic issue was whether it
Regional Trial Court of Makati City. The case was VILLANUEVAs or the BANKs negligence
was docketed as Civil Case No. 14749 and which was the proximate cause of the
was raffled to Branch 63 thereof. formers alleged injury. After an evaluation of
the respective allegations and evidence of
VILLANUEVA alleged in his complaint that the the parties, the trial court found that
BANK breached its contractual obligation to VILLANUEVAs negligence set the chain of
him as a depositor because of its repeated events which resulted in his alleged losses
dishonor of his valid and well-funded check. and damages. His negligence consisted in his
The breach arose from the BANKs gross failure to (a) indicate his current account
negligence and culpable recklessness in number when he filled up his requisition slip
supplying the wrong account number. As a for a new set of checks; (b) remember his

11 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
account number; (c) bring the used supplied by the applicant, it in effect took
checkbook to which was attached the pre- upon itself the obligation to supply the
order requisition slip on which the account correct account number. Thus, when the new
number was pre-indicated; (d) give the checkbook was released to VILLANUEVA on
requisition slip to the care and custody of a 17 June 1986, the BANK was deemed to have
BANK officer or employee instead of leaving waived any defect in the requisition slip and
the requisition slip on top of one of the tables estopped from putting the blame on
of the BANK; and (e) verify the account VILLANUEVAs failure to indicate his account
number of the new set of checks when it was number. VILLANUEVA had every right to
delivered to him. These omissions directly assume that everything was in order in his
resulted in the dishonor of his check drawn application for a new checkbook; for, after all,
from an account bearing the account number he was banking with a world class universal
of another BANK client whose name and bank. The banking industry is imbued with
surname were similar to his. VILLANUEVA public interest and is mandated by law to
then must bear the consequent damages and serve its clients with extraordinary care and
losses he allegedly suffered. diligence.

The trial court conceded, however, that the The Court of Appeals also considered the
BANK was negligent when it failed to supply BANKs voluntary processing of the
VILLANUEVAs correct account number requisition slip as the "cause which in the
despite its promise to do so; but its natural and continuous sequence, unbroken
negligence was merely contributory, which by any efficient intervening cause, produced
would have "reduced the damages the injury and without which the result would
recoverable" by VILLANUEVA had the latter not have occurred."16 However, although it
proved his claims for actual, moral and conceded that the BANKs negligence was not
exemplary damages, and attorneys fees. attended with malice and bad faith, it
nonetheless awarded moral damages in the
Likewise, the trial court doubted that amount of P100,000. It also awarded
VILLANUEVA sustained actual damages in the attorneys fees in the amount of P50,000,
amount of P240,000 due to loss of profits as since VILLANUEVA was compelled to incur
averred in the complaint considering that his expenses to protect his interests by reason of
initial claim against the BANK for actual loss the unjustified act or omission of the BANK.
was merely P70, 00014 and the evidence However, it rejected VILLANUEVAs claim for
presented in support thereof was hearsay, compensatory damages and affirmed the trial
unreliable and not the best evidence. courts finding thereon.

VILLANUEVA appealed to the Court of Upon the denial17 of their respective motions
Appeals. The appeal was docketed as CA-G.R. for reconsideration, both VILLANUEVA and the
CV No. 40931. BANK appealed to us by way of petition for
review.
In his appeal, VILLANUEVA maintained that
the BANK was guilty of gross or culpable In its petition, the BANK ascribes to the Court
negligence amounting to bad faith when its of Appeals as reversible errors its (1) reversal
customer service representative furnished an of the court a quos decision; (2) declaration
erroneous account number. He further that the proximate and efficient cause of the
contended that the same was the proximate injury allegedly suffered by VILLANUEVA was
cause of the repeated dishonor of his check. the BANKs processing of the checkbook and
He should, therefore, be entitled to an award assigning an erroneous account number, and
of actual, moral and exemplary damages, not the negligent act of VILLANUEVA in
including attorneys fees and costs of the leaving the checkbook requisition slip on top
suit. of one of the desks with the account number
entry blank; and (3) award of moral damages
The Court of Appeals, in its decision of 2 and attorneys fees despite the absence of a
February 1999,15 ruled that when the BANK finding of bad faith on the part of the BANK.
voluntarily processed the requisition slip
without the requisite account number being

12 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
In his petition, VILLANUEVA asserts that the before us from the Court of Appeals is limited
Court of Appeals erred in holding that his to the review of errors of law.20
actual losses in the amount of P234,059.04
was not sufficiently proved with reasonable Nonetheless, is VILLANUEVA entitled to the
certainty. Had his fully-funded check not been moral damages and attorneys fees granted
dishonored twice, his four trading orders with by the Court of Appeals?
Kingly Commodities consisting of two (2)
open sell positions on 17 and 18 of June 1986 Moral damages include physical suffering,
and two (2) settle buy orders on 26 June 1986 mental anguish, fright, serious anxiety,
would have earned him profits in the amount besmirched reputation, wounded feelings,
he claimed. He emphatically maintains that moral shock, social humiliation, and similar
the loss had been satisfactorily proved by the injury.21 Although incapable of pecuniary
testimony of Helen Chu, his investment computation, moral damages may be
consultant. Ms. Chus testimony was not recovered if they are the proximate result of
controverted; hence, it should have been the defendants wrongful act or
considered and admitted as factually true. omission.22 Thus, case law establishes the
Considering that his claim for actual damages requisites for the award of moral damages,
has been adequately established and that the viz: (1) there must be an injury, whether
BANK committed gross negligence amounting physical, mental or psychological, clearly
to bad faith, his concomitant demand for sustained by the claimant; (2) there must be
exemplary damages should likewise be a culpable act or omission factually
awarded. established; (3) the wrongful act or omission
of the defendant is the proximate cause of
The issue of whether VILLANUEVA suffered the injury sustained by the claimant; and (4)
actual or compensatory damages in the form the award of damages is predicated on any of
of loss of profits is factual. Both the Court of the cases stated in Article 2219 of the Civil
Appeals and the trial court have ascertained Code.23
that VILLANUEVA was unable to prove his
demand for compensatory damages arising It is beyond cavil that VILLANUEVA had
from loss. His evidence thereon was found sufficient funds for the check. Had his
inadequate, uncorroborated, speculative, account number been correct, the check
hearsay and not the best evidence. Basic is would not have been dishonored. Hence, we
the jurisprudential principle that in can say that VILLANUEVAs injury arose from
determining actual damages, the court the dishonor of his well-funded check. We
cannot rely on mere assertions, speculations, have already ruled that the dishonor of the
conjectures or guesswork but must depend check does not entitle him to compensatory
on competent proof and on the best damages. But, could the dishonor result in his
obtainable evidence of the actual amount of alleged "intolerable physical inconvenience
the loss.18Actual damages cannot be and discomfort, extreme humiliation,
presumed but must be duly proved with indignities, etc, which he had borne before
reasonable certainty.19 his peers, trading partners and officers of
Kingly Commodities?" True, we find that
It must also be stressed that the unanimity under the circumstances of this case,
on the factual ascertainment on this point by VILLANUEVA might have suffered some form
the trial court and the Court of Appeals bars of inconvenience and discomfort as a result
us from supplanting their finding and of the dishonor of his check. However, the
substituting it with our own assessment. Well- same could not have been so grave or
entrenched in our jurisprudence is the intolerable as he attempts to portray or
doctrine that the factual determinations of impress upon us.
the lower courts are conclusive and binding
upon appellate courts and hence should not Further, it is clear from the records that the
be disturbed. None of the recognized BANK was able to remedy the caveat of
exceptions to said principle exists in this case Kingly Commodities to VILLANUEVA that his
to warrant a reexamination of such finding. trading account would be closed at 5:30 p.m.
Besides, our jurisdiction in cases brought on 26 June 1986. The BANK was able to issue
a managers check in favor of Kingly

13 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
Commodities before the deadline. It was able G.R. No. 154259 February 28,
to likewise explain to Kingly Commodities the 2005
circumstances surrounding the unfortunate
situation. Verily, the alleged embarrassment NIKKO HOTEL MANILA GARDEN and
or inconvenience caused to VILLANUEVA as a RUBY LIM, petitioners, vs. ROBERTO
result of the incident was timely and REYES, a.k.a. "AMAY BISAYA," respondent.
adequately contained, corrected, mitigated, if
not entirely eradicated. VILLANUEVA, thus, DECISION
failed to support his claim for moral
damages. In short, none of the circumstances CHICO-NAZARIO, J.:
mentioned in Article 2219 of the Civil Code
exists to sanction the award for moral In this petition for review on certiorari,
damages. petitioners Nikko Hotel Manila Garden (Hotel
Nikko)1 and Ruby Lim assail the Decision 2 of
The award of attorneys fees should likewise the Court of Appeals dated 26 November
be deleted. The general rule is that attorneys 2001 reversing the Decision3 of the Regional
fees cannot be recovered as part of damages Trial Court (RTC) of Quezon City, Branch 104,
because of the policy that no premium should as well as the Resolution4 of the Court of
be placed on the right to litigate. They are Appeals dated 09 July 2002 which denied
not to be awarded every time a party wins a petitioners motion for reconsideration.
suit. The power of the court to award
attorneys fees under Article 2208 of the Civil The cause of action before the trial court was
Code demands factual, legal and equitable one for damages brought under the human
justification. Even when a claimant is relations provisions of the New Civil Code.
compelled to litigate with third persons or to Plaintiff thereat (respondent herein) Roberto
incur expenses to protect his rights, still Reyes, more popularly known by the screen
attorneys fees may not be awarded where name "Amay Bisaya," alleged that at around
there is no sufficient showing of bad faith in 6:00 oclock in the evening of 13 October
the parties persistence of a case other than 1994, while he was having coffee at the lobby
an erroneous conviction of the righteousness of Hotel Nikko,5 he was spotted by his friend
of his cause.24 of several years, Dr. Violeta Filart, who then
approached him.6 Mrs. Filart invited him to
In view of the foregoing discussion, we need join her in a party at the hotels penthouse in
not deliberate on the dispute as to whether it celebration of the natal day of the hotels
was the BANKs or VILLANUEVAs negligence manager, Mr. Masakazu Tsuruoka.7 Mr. Reyes
which was the proximate cause of the latters asked if she could vouch for him for which
injury because, in the first place, he did not she replied: "of course." 8 Mr. Reyes then went
sustain any compensable injury. If any up with the party of Dr. Filart carrying the
damage had been suffered at all, it could be basket of fruits which was the latters present
equivalent to damnum absque injuria, i.e., for the celebrant.9 At the penthouse, they
damage without injury or damage or injury first had their picture taken with the
inflicted without injustice, or loss or damage celebrant after which Mr. Reyes sat with the
without violation of a legal right, or a wrong party of Dr. Filart. 10 After a couple of hours,
done to a man for which the law provides no when the buffet dinner was ready, Mr. Reyes
remedy.25 lined-up at the buffet table but, to his great
shock, shame and embarrassment, he was
WHEREFORE, the decision of the Court of stopped by petitioner herein, Ruby Lim, who
Appeals in CA-G.R. CV No. 40931 is hereby claimed to speak for Hotel Nikko as Executive
REVERSED, and the judgment of the Regional Secretary thereof.11 In a loud voice and within
Trial Court of Makati City, Branch 63, in Civil the presence and hearing of the other guests
Case No. 14749 dismissing the complaint and who were making a queue at the buffet table,
the counterclaim is hereby REINSTATED. Ruby Lim told him to leave the party ("huwag
ka nang kumain, hindi ka imbitado, bumaba
No costs. SO ORDERED. ka na lang").12 Mr. Reyes tried to explain that
he was invited by Dr. Filart. 13 Dr. Filart, who
was within hearing distance, however,

14 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
completely ignored him thus adding to his vicinity.30 However, as Mr. Reyes was already
shame and humiliation.14 Not long after, while helping himself to the food, she decided to
he was still recovering from the traumatic wait.31When Mr. Reyes went to a corner and
experience, a Makati policeman approached started to eat, Ms. Lim approached him and
and asked him to step out of the hotel.15 Like said: "alam ninyo, hindo ho kayo dapat
a common criminal, he was escorted out of nandito. Pero total nakakuha na ho kayo ng
the party by the policeman.16 Claiming pagkain, ubusin na lang ninyo at pagkatapos
damages, Mr. Reyes asked for One Million kung pwede lang po umalis na kayo."32 She
Pesos actual damages, One Million Pesos then turned around trusting that Mr. Reyes
moral and/or exemplary damages and Two would show enough decency to leave, but to
Hundred Thousand Pesos attorneys fees. 17 her surprise, he began screaming and making
a big scene, and even threatened to dump
Ruby Lim, for her part, admitted having asked food on her.331awphi1.nt
Mr. Reyes to leave the party but not under
the ignominious circumstance painted by the Dr. Violeta Filart, the third defendant in the
latter. Ms. Lim narrated that she was the complaint before the lower court, also gave
Hotels Executive Secretary for the past her version of the story to the effect that she
twenty (20) years.18 One of her functions never invited Mr. Reyes to the
34
included organizing the birthday party of the party. According to her, it was Mr. Reyes
hotels former General Manager, Mr. who volunteered to carry the basket of fruits
Tsuruoka.19 The year 1994 was no different. intended for the celebrant as he was likewise
For Mr. Tsuruokas party, Ms. Lim generated going to take the elevator, not to the
an exclusive guest list and extended penthouse but to Altitude 49. 35 When they
invitations accordingly.20 The guest list was reached the penthouse, she reminded Mr.
limited to approximately sixty (60) of Mr. Reyes to go down as he was not properly
Tsuruokas closest friends and some hotel dressed and was not invited.36 All the while,
employees and that Mr. Reyes was not one of she thought that Mr. Reyes already left the
those invited.21 At the party, Ms. Lim first place, but she later saw him at the bar
noticed Mr. Reyes at the bar counter ordering talking to Col. Batung.37 Then there was a
a drink.22 Mindful of Mr. Tsuruokas wishes to commotion and she saw Mr. Reyes
keep the party intimate, Ms. Lim approached shouting.38 She ignored Mr. Reyes.39 She was
Mr. Boy Miller, the "captain waiter," to inquire embarrassed and did not want the celebrant
as to the presence of Mr. Reyes who was not to think that she invited him.40
invited.23 Mr. Miller replied that he saw Mr.
Reyes with the group of Dr. Filart. 24 As Dr. After trial on the merits, the court a
Filart was engaged in conversation with quo dismissed the complaint,41 giving more
another guest and as Ms. Lim did not want to credence to the testimony of Ms. Lim that she
interrupt, she inquired instead from the sister was discreet in asking Mr. Reyes to leave the
of Dr. Filart, Ms. Zenaida Fruto, who told her party. The trial court likewise ratiocinated
that Dr. Filart did not invite Mr. Reyes. 25 Ms. that Mr. Reyes assumed the risk of being
Lim then requested Ms. Fruto to tell Mr. Reyes thrown out of the party as he was uninvited:
to leave the party as he was not invited. 26 Mr.
Reyes, however, lingered prompting Ms. Lim Plaintiff had no business being at the party
to inquire from Ms. Fruto who said that Mr. because he was not a guest of Mr. Tsuruoka,
Reyes did not want to leave.27 When Ms. Lim the birthday celebrant. He assumed the risk
turned around, she saw Mr. Reyes conversing of being asked to leave for attending a party
with a Captain Batung whom she later to which he was not invited by the host.
approached.28 Believing that Captain Batung Damages are pecuniary consequences which
and Mr. Reyes knew each other, Ms. Lim the law imposes for the breach of some duty
requested from him the same favor from Ms. or the violation of some right. Thus, no
Fruto,i.e., for Captain Batung to tell Mr. Reyes recovery can be had against defendants
to leave the party as he was not Nikko Hotel and Ruby Lim because he himself
invited.29 Still, Mr. Reyes lingered. When Ms. was at fault (Garciano v. Court of Appeals,
Lim spotted Mr. Reyes by the buffet table, she 212 SCRA 436). He knew that it was not the
decided to speak to him herself as there were party of defendant Violeta Filart even if she
no other guests in the immediate allowed him to join her and took

15 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
responsibility for his attendance at the party. human dignity but respect of such dignity.
His action against defendants Nikko Hotel Under Article 20 of the Civil Code, every
and Ruby Lim must therefore fail.42 person who violates this duty becomes liable
for damages, especially if said acts were
On appeal, the Court of Appeals reversed the attended by malice or bad faith. Bad faith
ruling of the trial court as it found more does not simply connote bad judgment or
commanding of belief the testimony of Mr. simple negligence. It imports a dishonest
Reyes that Ms. Lim ordered him to leave in a purpose or some moral obliquity and
loud voice within hearing distance of several conscious doing of a wrong, a breach of a
guests: known duty to some motive or interest or ill-
will that partakes of the nature of fraud
In putting appellant in a very embarrassing (Cojuangco, Jr. v. CA, et al., 309 SCRA 603). 44
situation, telling him that he should not finish
his food and to leave the place within the Consequently, the Court of Appeals imposed
hearing distance of other guests is an act upon Hotel Nikko, Ruby Lim and Dr. Violeta
which is contrary to morals, good Filart the solidary obligation to pay Mr. Reyes
customs . . ., for which appellees should (1) exemplary damages in the amount of Two
compensate the appellant for the damage Hundred Thousand Pesos (P200,000); (2)
suffered by the latter as a consequence moral damages in the amount of Two
therefore (Art. 21, New Civil Code). The Hundred Thousand Pesos (P200,000); and (3)
liability arises from the acts which are in attorneys fees in the amount of Ten
themselves legal or not prohibited, but Thousand Pesos (P10,000).45 On motion for
contrary to morals or good customs. reconsideration, the Court of Appeals
Conversely, even in the exercise of a formal affirmed its earlier decision as the argument
right, [one] cannot with impunity intentionally raised in the motion had "been amply
cause damage to another in a manner discussed and passed upon in the decision
contrary to morals or good customs.43 sought to be reconsidered."46

The Court of Appeals likewise ruled that the Thus, the instant petition for review. Hotel
actuation of Ms. Lim in approaching several Nikko and Ruby Lim contend that the Court of
people to inquire into the presence of Mr. Appeals seriously erred in
Reyes exposed the latter to ridicule and was
uncalled for as she should have approached I.
Dr. Filart first and both of them should have NOT APPLYING THE DOCTRINE OF VOLENTI
talked to Mr. Reyes in private: NON FIT INJURIA CONSIDERING THAT BY ITS
OWN FINDINGS, AMAY BISAYA WAS A GATE-
Said acts of appellee Lim are uncalled for. CRASHER
What should have been done by appellee Lim II.
was to approach appellee Mrs. Filart and HOLDING HOTEL NIKKO AND RUBY LIM
JOINTLY AND SEVERALLY LIABLE WITH DR.
together they should have told appellant
FILART FOR DAMAGES SINCE BY ITS OWN
Reyes in private that the latter should leave
RULING, AMAY BISAYA "COULD NOT HAVE
the party as the celebrant only wanted close SUFFERED SUCH HUMILIATION," "WERE IT
friends around. It is necessary that Mrs. Filart NOT FOR DR. FILARTS INVITATION"
be the one to approach appellant because it III.
was she who invited appellant in that DEPARTING FROM THE FINDINGS OF FACT
occasion. Were it not for Mrs. Filarts OF THE TRIAL COURT AS REGARDS THE
invitation, appellant could not have suffered CIRCUMSTANCES THAT ALLEGEDLY CAUSED
such humiliation. For that, appellee Filart is THE HUMILIATION OF AMAY BISAYA
equally liable. IV.
IN CONCLUDING THAT AMAY BISAYA WAS
... TREATED UNJUSTLY BECAUSE OF HIS
POVERTY, CONSIDERING THAT THIS WAS
The acts of [appellee] Lim are causes of NEVER AN ISSUE AND NO EVIDENCE WAS
PRESENTED IN THIS REGARD
action which are predicated upon mere
V.
rudeness or lack of consideration of one
person, which calls not only protection of

16 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
IN FAILING TO PASS UPON THE ISSUE ON that Ms. Lim is liable for damages as she
THE DEFECTS OF THE APPELLANTS BRIEF, needlessly embarrassed Mr. Reyes by telling
THEREBY DEPARTING FROM THE ACCEPTED him not to finish his food and to leave the
AND USUAL COURSE OF JUDICIAL place within hearing distance of the other
PROCEEDINGS guests. Both courts, however, were in
Petitioners Lim and Hotel Nikko contend that agreement that it was Dr. Filarts invitation
pursuant to the doctrine of volenti non fit that brought Mr. Reyes to the party.
injuria, they cannot be made liable for
damages as respondent Reyes assumed the The consequential question then is: Which
risk of being asked to leave (and being version is credible?
embarrassed and humiliated in the process)
as he was a "gate-crasher." From an in depth review of the evidence, we
find more credible the lower courts findings
The doctrine of volenti non fit injuria ("to of fact.
which a person assents is not esteemed in
law as injury"47 ) refers to self-inflicted First, let us put things in the proper
injury48 or to the consent to injury 49 which perspective.
precludes the recovery of damages by one
who has knowingly and voluntarily exposed We are dealing with a formal party in a posh,
himself to danger, even if he is not negligent five-star hotel,53 for-invitation-only, thrown for
in doing so.50 As formulated by petitioners, the hotels former Manager, a Japanese
however, this doctrine does not find national. Then came a person who was
application to the case at bar because even if clearly uninvited (by the celebrant) 54 and who
respondent Reyes assumed the risk of being could not just disappear into the crowd as his
asked to leave the party, petitioners, under face is known by many, being an actor. While
Articles 19 and 21 of the New Civil Code, he was already spotted by the organizer of
were still under obligation to treat him fairly the party, Ms. Lim, the very person who
in order not to expose him to unnecessary generated the guest list, it did not yet appear
ridicule and shame. that the celebrant was aware of his presence.
Ms. Lim, mindful of the celebrants instruction
Thus, the threshold issue is whether or not to keep the party intimate, would naturally
Ruby Lim acted abusively in asking Roberto want to get rid of the "gate-crasher" in the
Reyes, a.k.a. "Amay Bisaya," to leave the most hush-hush manner in order not to call
party where he was not invited by the attention to a glitch in an otherwise seamless
celebrant thereof thereby becoming liable affair and, in the process, risk the displeasure
under Articles 19 and 21 of the Civil Code. of the celebrant, her former boss. To
Parenthetically, and if Ruby Lim were so unnecessarily call attention to the presence
liable, whether or not Hotel Nikko, as her of Mr. Reyes would certainly reflect badly on
employer, is solidarily liable with her. Ms. Lims ability to follow the instructions of
the celebrant to invite only his close friends
As the trial court and the appellate court and some of the hotels personnel. Mr. Reyes,
reached divergent and irreconcilable upon whom the burden rests to prove that
conclusions concerning the same facts and indeed Ms. Lim loudly and rudely ordered him
evidence of the case, this Court is left without to leave, could not offer any satisfactory
choice but to use its latent power to review explanation why Ms. Lim would do that and
such findings of facts. Indeed, the general risk ruining a formal and intimate affair. On
rule is that we are not a trier of facts as our the contrary, Mr. Reyes, on cross-
jurisdiction is limited to reviewing and examination, had unwittingly sealed his fate
revising errors of law.51 One of the exceptions by admitting that when Ms. Lim talked to
to this general rule, however, obtains herein him, she was very close. Close enough for
as the findings of the Court of Appeals are him to kiss:
contrary to those of the trial court. 52 The
lower court ruled that Ms. Lim did not abuse Q: And, Mr. Reyes, you testified that Miss Lim
her right to ask Mr. Reyes to leave the party approached you while you were at the buffet
as she talked to him politely and discreetly. table? How close was she when she
The appellate court, on the other hand, held approached you?

17 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
A: Very close because we nearly kissed each Article 19, known to contain what is
other. commonly referred to as the principle of
Q: And yet, she shouted for you to go down? abuse of rights,59 is not a panacea for all
She was that close and she shouted? human hurts and social grievances. Article 19
A: Yes. She said, "wag kang kumain, hindi ka states:
imbitado dito, bumaba ka na lang."
Q: So, you are testifying that she did this in a Art. 19. Every person must, in the exercise of
loud voice?
his rights and in the performance of his
...
duties, act with justice, give everyone his
A: Yes. If it is not loud, it will not be heard by
many.55 due, and observe honesty and good
In the absence of any proof of motive on the faith.1awphi1.nt
part of Ms. Lim to humiliate Mr. Reyes and
expose him to ridicule and shame, it is highly Elsewhere, we explained that when "a right is
unlikely that she would shout at him from a exercised in a manner which does not
very close distance. Ms. Lim having been in conform with the norms enshrined in Article
the hotel business for twenty years wherein 19 and results in damage to another, a legal
being polite and discreet are virtues to be wrong is thereby committed for which the
emulated, the testimony of Mr. Reyes that wrongdoer must be responsible." 60 The object
she acted to the contrary does not inspire of this article, therefore, is to set certain
belief and is indeed incredible. Thus, the standards which must be observed not only
lower court was correct in observing that in the exercise of ones rights but also in the
performance of ones duties.61 These
Considering the closeness of defendant Lim standards are the following: act with justice,
to plaintiff when the request for the latter to give everyone his due and observe honesty
leave the party was made such that they and good faith.62 Its antithesis, necessarily, is
nearly kissed each other, the request was any act evincing bad faith or intent to injure.
meant to be heard by him only and there Its elements are the following: (1) There is a
could have been no intention on her part to legal right or duty; (2) which is exercised in
cause embarrassment to him. It was bad faith; (3) for the sole intent of prejudicing
plaintiffs reaction to the request that must or injuring another.63 When Article 19 is
have made the other guests aware of what violated, an action for damages is proper
transpired between them. . . under Articles 20 or 21 of the Civil Code.
Article 20 pertains to damages arising from a
Had plaintiff simply left the party as violation of law64 which does not obtain
requested, there was no need for the police herein as Ms. Lim was perfectly within her
to take him out.56 right to ask Mr. Reyes to leave. Article 21, on
the other hand, states:
Moreover, another problem with Mr. Reyess
version of the story is that it is unsupported. Art. 21. Any person who willfully causes loss
It is a basic rule in civil cases that he who or injury to another in a manner that is
alleges proves. Mr. Reyes, however, had not contrary to morals, good customs or public
presented any witness to back his story up. policy shall compensate the latter for the
All his witnesses Danny Rodinas, Pepito damage.
Guerrero and Alexander Silva - proved only
that it was Dr. Filart who invited him to the Article 2165 refers to acts contra bonus
party.57 mores and has the following elements: (1)
There is an act which is legal; (2) but which is
Ms. Lim, not having abused her right to ask contrary to morals, good custom, public
Mr. Reyes to leave the party to which he was order, or public policy; and (3) it is done
not invited, cannot be made liable to pay for with intent to injure.66
damages under Articles 19 and 21 of the Civil
Code. Necessarily, neither can her employer, A common theme runs through Articles 19
Hotel Nikko, be held liable as its liability and 21,67 and that is, the act complained of
springs from that of its employee.58 must be intentional.68

18 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
As applied to herein case and as earlier And by way of example or correction for
discussed, Mr. Reyes has not shown that Ms. public good and to avert further commission
Lim was driven by animosity against him. of such acts, exemplary damages should be
These two people did not know each other imposed upon appellees.73
personally before the evening of 13 October
1994, thus, Mr. Reyes had nothing to offer for The fundamental fallacy in the above-quoted
an explanation for Ms. Lims alleged abusive findings is that it runs counter with the very
conduct except the statement that Ms. Lim, facts of the case and the evidence on
being "single at 44 years old," had a "very hand.l^vvphi1.net It is not disputed that at
strong bias and prejudice against (Mr. Reyes) the time of the incident in question, Mr. Reyes
possibly influenced by her associates in her was "an actor of long standing; a co-host of a
work at the hotel with foreign radio program over DZRH; a Board Member
businessmen."69 The lameness of this of the Music Singer Composer (MUSICO)
argument need not be belabored. Suffice it to chaired by popular singer Imelda Papin; a
say that a complaint based on Articles 19 and showbiz Coordinator of Citizen Crime Watch;
21 of the Civil Code must necessarily fail if it and 1992 official candidate of the KBL Party
has nothing to recommend it but innuendos for Governor of Bohol; and an awardee of a
and conjectures. number of humanitarian organizations of the
Philippines."74 During his direct examination
Parenthetically, the manner by which Ms. Lim on rebuttal, Mr. Reyes stressed that he had
asked Mr. Reyes to leave was likewise income75 and nowhere did he say otherwise.
acceptable and humane under the On the other hand, the records are bereft of
circumstances. In this regard, we cannot put any information as to the social and
our imprimatur on the appellate courts economic standing of petitioner Ruby Lim.
declaration that Ms. Lims act of personally Consequently, the conclusion reached by the
approaching Mr. Reyes (without first verifying appellate court cannot withstand scrutiny as
from Mrs. Filart if indeed she invited Mr. it is without basis.
Reyes) gave rise to a cause of action
"predicated upon mere rudeness or lack of All told, and as far as Ms. Lim and Hotel Nikko
consideration of one person, which calls not are concerned, any damage which Mr. Reyes
only protection of human dignity but respect might have suffered through Ms. Lims
of such dignity."70 Without proof of any ill- exercise of a legitimate right done within the
motive on her part, Ms. Lims act of by- bounds of propriety and good faith, must be
passing Mrs. Filart cannot amount to abusive his to bear alone.
conduct especially because she did inquire
from Mrs. Filarts companion who told her WHEREFORE, premises considered, the
that Mrs. Filart did not invite Mr. Reyes.71 If at petition filed by Ruby Lim and Nikko Hotel
all, Ms. Lim is guilty only of bad judgment Manila Garden is GRANTED. The Decision of
which, if done with good intentions, cannot the Court of Appeals dated 26 November
amount to bad faith. 2001 and its Resolution dated 09 July 2002
are hereby REVERSED and SET ASIDE. The
Not being liable for both actual and moral Decision of the Regional Trial Court of Quezon
damages, neither can petitioners Lim and City, Branch 104, dated 26 April 1999 is
Hotel Nikko be made answerable for hereby AFFIRMED. No costs. SO ORDERED.
exemplary damages72 especially for the
reason stated by the Court of Appeals. The
Court of Appeals held
ACTS & OMISSIONS CONTRARY TO
Not a few of the rich people treat the poor MORALS (Art. 20-21)
with contempt because of the latters lowly
station in life.l^vvphi1.net This has to be G.R. No. L-15526 December 28,
limited somewhere. In a democracy, such a 1963
limit must be established. Social equality is
not sought by the legal provisions under ENRIQUE J. L. RUIZ and JOSE V.
consideration, but due regard for decency HERRERA, in their behalf and as
and propriety (Code Commission, pp. 33-34). minority stockholders of the Allied

19 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
Technologists, Inc., plaintiffs-appellants, retained by the Department of National
vs. Defense was already paid to defendant
THE SECRETARY OF NATIONAL DEFENSE, corporation, as sought for by the plaintiffs in
COL. NICOLAS JIMENEZ, Head of the their complaint. In view of this development,
Engineer Group, Office of the Secretary the trial court invited the parties to a
of National Defense, THE FINANCE conference, in which the plaintiffs indicated
OFFICER of the Department of National their conformity, to the dismissal of the
Defense, THE AUDITOR of the Dept. of complaint with respect to the retention of the
National Defense, PABLO D. PANLILIO 15% of the contract price; but insisted upon
and ALLIED TECHNOLOGISTS, the hearing of the second question, which
INC.,defendants-appellees. sought the declaration and recognition of
plaintiffs Ruiz and Herrera, as two of the
PAREDES, J.: three architects of the hospital. The trial
court, nevertheless, dismissed the complaint,
This is an appeal by plaintiffs Enrique J. L. for being already academic and moot. Hence,
Ruiz and Jose V. Herrera from an Order of the this appeal by plaintiffs-appellants, who
Court of First Instance of Manila, in Civil Case alleged in their lone assignment of error that
No. 26601, dated February 25, 1959, "the lower court grievously erred in ordering
dismissing plaintiffs' complaint. the dismissal of the case, with costs against
the plaintiffs".
On September 11, 1950, a contract was
executed between the defendant Allied Plaintiffs-appellants contend that the only
Technologists, Inc. (corporation, for short), ground relied upon by the lower court to
and the Republic of the Philippines, for the dismiss the case without any trial is the
construction of the Veterans Memorial allegation contained in pars. 4 and (e) of the
Hospital. Ruiz and Herrera were stockholders answers of the appellees Panlilio and Allied
and officers of the corporation. The Technologists, Inc., respectively; that the
construction of the hospital was terminated in amount retained by the Department of
1955. On August 20, 1954, and June 20, National Defense had already been paid; that
1955, Civil Cases Nos. 23778 and 26601, except for this bare allegation of the
respectively, were filed by same plaintiffs appellees, no evidence was adduced to prove
herein, making as parties-defendants in both the truth of the same; that even assuming,
cases, the same defendants herein, the for the sake of argument, that the same is
Secretary of National Defense, Col. Nicolas true, nevertheless the first part of the first
Jimenez (Engineer), the Finance Officer, and cause of action still remains, for which they
the Auditor of the Dept. of National Defense, had insisted upon a hearing in order to
Pablo D. Panlilio and Allied Technologists, Inc. establish their right to be recognized as two
Civil Case No. 23778 was dismissed by the of the three architects of the hospital; that
CFI on October 12, 1954; and the dismissal because the pleadings do not show any
was affirmed by this Court on July 7, 1955, in ground which might legally justify the action
G.R. No. L-8638. Civil Case No. 26601 was taken by the lower court, the latter should
also dismissed on September 13, 1955. On not have ordered the dismissal of the entire
appeal, this Court reversed the order of case but should have ordered only the
dismissal, under the impression that the real striking out of the moot portion of appellants'
controversy was confined merely between first cause of action, citing Pacal v. Ramos, 81
defendant Panlilio and plaintiffs Ruiz and Phil. 30, 33; 27 C.J.S. 209-210; Bush v.
Herrera over the 15% of the contract price, Murray, 205 N.Y.S. 21, 26, 209 App. Div.
which was retained by the Department of 563; Bearden v. Longino. 190 S.E. 12, 183 Ga.
National Defense. The retention of the 15% of 819. Appellants further argue in their brief
the contract price in the sum of P34,740.00 that they base their cause of action on article
was made to answer for any claim or lien that 21, New Civil Code.
might arise, in the course of the construction.
The last case, however, was remanded to the The appeal has no merit. The order appealed
court of origin, for further proceedings. from, states
Panlilio and the corporation filed their
amended answers, stating that the amount

20 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
Considering the manifestation of A cursory reading of pars. 18 and 19 of the
counsel for plaintiffs that the latter amended complaint with injunction and
would insist on the hearing of the prayers (1) and (2) thereof, reveals that
above-entitled case for the purpose of appellants' first cause of action is composed
establishing their right to be of two parts, as follows:
recognized as the architects of the
Veterans Hospital together with (a) A judicial declaration or recognition that
defendant Pablo D. Panlilio, and it appellants Ruiz and Herrera, together with
appearing that plaintiffs' Amended appellee Panlilio, were the architects of the
Complaint with Injunction prays, Veterans Hospital; and
among others, "That this Honorable
Court order defendants Secretary of (b) An injunction restraining the appellee
National Defense, Col. Nicolas Jimenez, government officials paying their co-appellee
and the Finance Officer and Auditor of Panlilio the sum retained by the former, as
the Department of National Defense to per stipulation contained in the contract for
pay the Allied Technologists, Inc., the the construction of the hospital because
balance unpaid by virtue of the "they will not only be deprived of the
contract executed on September 11, monetary value of the services legally due
1950 (Annex "C" hereof) for services them, but that their professional prestige and
rendered under Title I and to be standing will be seriously
rendered under Title II of said contract; impaired".lawphil.net
that paragraph 4 of defendant Pablo
Panlilio's Amended Answer to said As appellants admitted, they no longer
complaint alleges "That whatever consider the Secretary and other officials of
amounts were retained by the Dept. of the Department of National Defense, as
National Defense on the contract price, parties-defendants in the case, said officials
which retention was authorized by the can no longer be compelled to recognize the
contract, was paid by the Dept. of appellants, Ruiz and Herrera, as co-architects
National Defense to the Allied with appellee Panlilio of the Veterans
Technologists Inc. as sought by the Hospital. And, as the amount retained by the
plaintiffs; that paragraph (e) of the Department on the contract price, which
ANSWER TO THE AMENDED retention was authorized by the contract,
COMPLAINT of defendant Allied was, as sought by the appellants, already
Technologists, Inc., also alleges "That paid to the Allied Technologists, Inc., there is
whatever amounts were retained by nothing more for the trial court to decide,
the Department of National Defense, even without first ruling on the special
per the stipulations contained in the defenses of appellees Panlilio and the
contract, have already been paid by corporation.
the Allied Technologists, Inc. and,
therefore, the present action seeking Moreover, by discarding the Secretary and
to compel the aforementioned other officials of the Department of National
Department of National Defense to pay Defense, as parties-defendants, appellants
to defendant Allied Technologists, Inc. could not expect the trial court to order them
the amounts retained by the to recognize and declare appellants as co-
Department of National Defense is architects in the construction of the hospital.
academic, groundless, unfounded and And this must be so, because the
malicious"; that the said allegations of construction agreement expressly provides
the separate answers of defendants that the architect being contracted by the
Pablo Panlilio and Allied Technologists, Government was appellee Pablo Panlilio. The
Inc., are not and can not be denied by said agreement states that the same was
plaintiffs, and that it is this Court's entered into by the government, party of the
understanding that defendant has no first part and "Allied Technologists, Inc. . . .
objection to the dismissal of this case and Mr. Pablo D. Panlilio, architect,
it is ordered that this case be, as it hereinafter called the party of the second
is hereby DISMISSED, with costs part" and "The Allied Technologists, Inc. for
against plaintiffs. rendering engineering services and Mr. Pablo

21 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
D. Panlilio, architect, for rendering There is a veiled insinuation that appellants,
architectural services". And the contract was thesis would fall under the provisions of the
signed for the Government by "Ramon Rules on declaratory relief, because
Magsaysay, Secretary of National Defense appellants wanted merely a declaration of
(party of the first part," and "Allied their rights in a contract in which they were
Technologists, Inc., by Enrique J. L. Ruiz, interested. The trial court, however, was
President, Contractor, Pablo D. Panlilio, correct in refusing to make such declaration,
Architect". because it was not necessary and proper
under the circumstances (sec. 6, Rule 66).
Appellants maintain that their claim for Appellants were not parties to the
recognition is divisible and separable from construction agreement. The sole object the
their allegations regarding the non-payment appeal is only to secure for them a
by the government of a portion of the recognition, that they were allegedly the co-
architectural fees; thereby concluding that architects of Panlilio, in the construction of
what the lower court should have done, the hospital, so as to enhance their
should have been merely to order the striking professional prestige and not to impair their
out of the moot portion of appellants' cause standing. If this is the goal of appellants, a
of action, and should have proceeded with judicial declaration to the effect would seem
hearing their claim for recognition. But the unnecessary. Let us ponder over the thought
allegations in pars. 18 and 19 of the that a brilliant professional enjoys the respect
amended complaint, show otherwise. There is and esteem of his fellowmen, even without
an indivisible and single cause of action any court declaration of such fact, and that
which is primarily to prevent payment an incompetent one may summon all the
exclusively to defendant Panlilio of the tribunals in the world, to proclaim his genius
amount of P34,740.00, which said appellants in vain.
contend should be paid to appellee Allied
Technologists, Inc.; the matter recognizing But appellants invoke Article 21 of the Civil
them together with Pablo Panlilio as Code, which states
architects of the hospital, being merely
incidental thereto. The case of Pacal v. Any person who willfully causes loss or
Ramos, 81 Phil. 30, cited by appellants is not injury to another in a manner that is
applicable. In this case, the grounds for quo contrary to morals, good customs or
warranto are separable from the grounds for public policy shall compensate the
election irregularities which are distinct and latter for the damages.
separate causes of action, entitling the
petitioner to separate and unrelated reliefs. contending that the word "injury" in the said
These two grounds were alleged under article, refers not only to any indeterminate
separate paragraphs and they were two right or property, but also to honor or credit (I
independent actions improperly joined in one Tolentino Civil Code, p. 67). It may be added,
proceeding. In the case at bar, in one however, that this article also envisions a
paragraph (par. 19 of the amended situation where a person has a legal right,
complaint), as first cause of action, the claim and such right is violated by another in a
for recognition is inseparably linked with their manner contrary to morals, good customs or
allegations regarding alleged threatened public policy; it presupposes losses or
payment of P34,740.00 to Panlilio alone, injuries, material or otherwise, which one
because "they will not only be deprived of the may suffer as a result of said violation. The
monetary value of the services legally due pleadings do not show that damages were
them, but that their professional prestige and ever asked or alleged, in connection with this
standing will be seriously impaired". When case, predicated upon the article aforecited.
the very defendant Allied Technologists, Inc. And under the facts and circumstances
itself asserted in its answer the amended obtaining in this case, one cannot plausibly
complaint, that the amount was paid to it, an sustain the contention that the failure or
assertion which was not at all denied, refusal to extend the recognition was an act
plaintiffs-appellants' cause of action under contrary to morals, good customs or public
said par. 19 dissipated entirely. policy.

22 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
IN VIEW HEREOF, the order appealed from is they reconciled. This time they planned to
affirmed, with costs against plaintiffs- get married and then elope. To facilitate the
appellants. elopement, Vicenta had brought some of her
clothes to the room of Pacita Noel in St.
G.R. No. L-19671 November 29, Mary's Hall, which was their usual trysting
1965 place.

PASTOR B. TENCHAVEZ, plaintiff- Although planned for the midnight following


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

23 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
society. There, a lawyer filed for her a The appealed judgment did not decree a
petition, drafted by then Senator Emmanuel legal separation, but freed the plaintiff from
Pelaez, to annul her marriage. She did not supporting his wife and to acquire property to
sign the petition (Exh. "B-5"). The case was the exclusion of his wife. It allowed the
dismissed without prejudice because of her counterclaim of Mamerto Escao and Mena
non-appearance at the hearing (Exh. "B-4"). Escao for moral and exemplary damages
and attorney's fees against the plaintiff-
On 24 June 1950, without informing her appellant, to the extent of P45,000.00, and
husband, she applied for a passport, plaintiff resorted directly to this Court.
indicating in her application that she was
single, that her purpose was to study, and The appellant ascribes, as errors of the trial
she was domiciled in Cebu City, and that she court, the following:
intended to return after two years. The
application was approved, and she left for the 1. In not declaring legal separation; in
United States. On 22 August 1950, she filed a not holding defendant Vicenta F.
verified complaint for divorce against the Escao liable for damages and in
herein plaintiff in the Second Judicial District dismissing the complaint;.
Court of the State of Nevada in and for the
County of Washoe, on the ground of "extreme 2. In not holding the defendant parents
cruelty, entirely mental in character." On 21 Mamerto Escano and the heirs of Doa
October 1950, a decree of divorce, "final and Mena Escao liable for damages;.
absolute", was issued in open court by the
said tribunal. 3 In holding the plaintiff liable for and
requiring him to pay the damages to
In 1951 Mamerto and Mena Escao filed a the defendant parents on their
petition with the Archbishop of Cebu to annul counterclaims; and.
their daughter's marriage to Pastor (Exh.
"D"). On 10 September 1954, Vicenta sought 4. In dismissing the complaint and in
papal dispensation of her marriage (Exh. "D"- denying the relief sought by the
2). plaintiff.

On 13 September 1954, Vicenta married an That on 24 February 1948 the plaintiff-


American, Russell Leo Moran, in Nevada. She appellant, Pastor Tenchavez, and the
now lives with him in California, and, by him, defendant-appellee, Vicenta Escao, were
has begotten children. She acquired validly married to each other, from the
American citizenship on 8 August 1958. standpoint of our civil law, is clearly
established by the record before us. Both
But on 30 July 1955, Tenchavez had initiated parties were then above the age of majority,
the proceedings at bar by a complaint in the and otherwise qualified; and both consented
Court of First Instance of Cebu, and amended to the marriage, which was performed by a
on 31 May 1956, against Vicenta F. Escao, Catholic priest (army chaplain Lavares) in the
her parents, Mamerto and Mena Escao, presence of competent witnesses. It is
whom he charged with having dissuaded and nowhere shown that said priest was not duly
discouraged Vicenta from joining her authorized under civil law to solemnize
husband, and alienating her affections, and marriages.
against the Roman Catholic Church, for
having, through its Diocesan Tribunal, The chaplain's alleged lack of ecclesiastical
decreed the annulment of the marriage, and authorization from the parish priest and the
asked for legal separation and one million Ordinary, as required by Canon law, is
pesos in damages. Vicenta claimed a valid irrelevant in our civil law, not only because of
divorce from plaintiff and an equally valid the separation of Church and State but also
marriage to her present husband, Russell Leo because Act 3613 of the Philippine
Moran; while her parents denied that they Legislature (which was the marriage law in
had in any way influenced their daughter's force at the time) expressly provided that
acts, and counterclaimed for moral damages.

24 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
SEC. 1. Essential requisites. Essential It is equally clear from the record that the
requisites for marriage are the legal valid marriage between Pastor Tenchavez and
capacity of the contracting parties and Vicenta Escao remained subsisting and
consent. (Emphasis supplied) undissolved under Philippine law,
notwithstanding the decree of absolute
The actual authority of the solemnizing divorce that the wife sought and obtained on
officer was thus only a formal requirement, 21 October 1950 from the Second Judicial
and, therefore, not essential to give the District Court of Washoe County, State of
marriage civil effects,3 and this is emphasized Nevada, on grounds of "extreme cruelty,
by section 27 of said marriage act, which entirely mental in character." At the time the
provided the following: divorce decree was issued, Vicenta Escao,
like her husband, was still a Filipino
SEC. 27. Failure to comply with formal citizen.4 She was then subject to Philippine
requirements. No marriage shall be law, and Article 15 of the Civil Code of the
declared invalid because of the Philippines (Rep. Act No. 386), already in
absence of one or several of the formal force at the time, expressly provided:
requirements of this Act if, when it was
performed, the spouses or one of them Laws relating to family rights and
believed in good faith that the person duties or to the status, condition and
who solemnized the marriage was legal capacity of persons are binding
actually empowered to do so, and that upon the citizens of the Philippines,
the marriage was perfectly legal. even though living abroad.

The good faith of all the parties to the The Civil Code of the Philippines, now in
marriage (and hence the validity of their force, does not admit absolute divorce, quo
marriage) will be presumed until the contrary ad vinculo matrimonii; and in fact does not
is positively proved (Lao vs. Dee Tim, 45 Phil. even use that term, to further emphasize its
739, 745; Francisco vs. Jason, 60 Phil. 442, restrictive policy on the matter, in contrast to
448). It is well to note here that in the case at the preceding legislation that admitted
bar, doubts as to the authority of the absolute divorce on grounds of adultery of
solemnizing priest arose only after the the wife or concubinage of the husband (Act
marriage, when Vicenta's parents consulted 2710). Instead of divorce, the present Civil
Father Reynes and the archbishop of Cebu. Code only provides for legal separation (Title
Moreover, the very act of Vicenta in IV, Book 1, Arts. 97 to 108), and, even in that
abandoning her original action for annulment case, it expressly prescribes that "the
and subsequently suing for divorce implies an marriage bonds shall not be severed" (Art.
admission that her marriage to plaintiff was 106, subpar. 1).
valid and binding.
For the Philippine courts to recognize and
Defendant Vicenta Escao argues that when give recognition or effect to a foreign decree
she contracted the marriage she was under of absolute divorce betiveen Filipino citizens
the undue influence of Pacita Noel, whom she could be a patent violation of the declared
charges to have been in conspiracy with public policy of the state, specially in view of
appellant Tenchavez. Even granting, for the third paragraph of Article 17 of the Civil
argument's sake, the truth of that contention, Code that prescribes the following:
and assuming that Vicenta's consent was
vitiated by fraud and undue influence, such Prohibitive laws concerning persons,
vices did not render her marriage ab their acts or property, and those which
initio void, but merely voidable, and the have for their object public order,
marriage remained valid until annulled by a policy and good customs, shall not be
competent civil court. This was never done, rendered ineffective by laws or
and admittedly, Vicenta's suit for annulment judgments promulgated, or by
in the Court of First Instance of Misamis was determinations or conventions agreed
dismissed for non-prosecution. upon in a foreign country.

25 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
Even more, the grant of effectivity in this Philippines, in disregarding absolute divorces,
jurisdiction to such foreign divorce decrees in effect merely reverted to the policies on
would, in effect, give rise to an irritating and the subject prevailing before Act 2710. The
scandalous discrimination in favor of wealthy rulings, therefore, under the Civil Code of
citizens, to the detriment of those members 1889, prior to the Act above-mentioned, are
of our polity whose means do not permit now, fully applicable. Of these, the decision
them to sojourn abroad and obtain absolute in Ramirez vs. Gmur, 42 Phil. 855, is of
divorces outside the Philippines. particular interest. Said this Court in that
case:
From this point of view, it is irrelevant that
appellant Pastor Tenchavez should have As the divorce granted by the French
appeared in the Nevada divorce court. Court must be ignored, it results that
Primarily because the policy of our law the marriage of Dr. Mory and Leona
cannot be nullified by acts of private parties Castro, celebrated in London in 1905,
(Civil Code,Art. 17, jam quot.); and could not legalize their relations; and
additionally, because the mere appearance of the circumstance that they afterwards
a non-resident consort cannot confer passed for husband and wife in
jurisdiction where the court originally had Switzerland until her death is wholly
none (Area vs. Javier, 95 Phil. 579). without legal significance. The claims
of the very children to participate in
From the preceding facts and considerations, the estate of Samuel Bishop must
there flows as a necessary consequence that therefore be rejected. The right to
in this jurisdiction Vicenta Escao's divorce inherit is limited to legitimate,
and second marriage are not entitled to legitimated and acknowledged natural
recognition as valid; for her previous union to children. The children of adulterous
plaintiff Tenchavez must be declared to be relations are wholly excluded. The
existent and undissolved. It follows, likewise, word "descendants" as used in Article
that her refusal to perform her wifely duties, 941 of the Civil Code cannot be
and her denial of consortium and her interpreted to include illegitimates
desertion of her husband constitute in law a born of adulterous relations. (Emphasis
wrong caused through her fault, for which the supplied)
husband is entitled to the corresponding
indemnity (Civil Code, Art. 2176). Neither an Except for the fact that the successional
unsubstantiated charge of deceit nor an rights of the children, begotten from Vicenta's
anonymous letter charging immorality marriage to Leo Moran after the invalid
against the husband constitute, contrary to divorce, are not involved in the case at bar,
her claim, adequate excuse. Wherefore, her the Gmur case is authority for the proposition
marriage and cohabitation with Russell Leo that such union is adulterous in this
Moran is technically "intercourse with a jurisdiction, and, therefore, justifies an action
person not her husband" from the standpoint for legal separation on the part of the
of Philippine Law, and entitles plaintiff- innocent consort of the first marriage, that
appellant Tenchavez to a decree of "legal stands undissolved in Philippine law. In not so
separation under our law, on the basis of declaring, the trial court committed error.
adultery" (Revised Penal Code, Art. 333).
True it is that our ruling gives rise to
The foregoing conclusions as to the untoward anomalous situations where the status of a
effect of a marriage after an invalid divorce person (whether divorced or not) would
are in accord with the previous doctrines and depend on the territory where the question
rulings of this court on the subject, arises. Anomalies of this kind are not new in
particularly those that were rendered under the Philippines, and the answer to them was
our laws prior to the approval of the absolute given in Barretto vs. Gonzales, 58 Phil. 667:
divorce act (Act 2710 of the Philippine
Legislature). As a matter of legal history, our The hardship of the existing divorce
statutes did not recognize divorces a laws in the Philippine Islands are well
vinculo before 1917, when Act 2710 became known to the members of the
effective; and the present Civil Code of the Legislature. It is the duty of the Courts

26 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
to enforce the laws of divorce as abetted her original suit for annulment, or
written by Legislature if they are her subsequent divorce; she appears to have
constitutional. Courts have no right to acted independently, and being of age, she
say that such laws are too strict or too was entitled to judge what was best for her
liberal. (p. 72) and ask that her decisions be respected. Her
parents, in so doing, certainly cannot be
The appellant's first assignment of error is, charged with alienation of affections in the
therefore, sustained. absence of malice or unworthy motives,
which have not been shown, good faith being
However, the plaintiff-appellant's charge that always presumed until the contrary is proved.
his wife's parents, Dr. Mamerto Escao and
his wife, the late Doa Mena Escao, SEC. 529. Liability of Parents,
alienated the affections of their daughter and Guardians or Kin. The law
influenced her conduct toward her husband distinguishes between the right of a
are not supported by credible evidence. The parent to interest himself in the marital
testimony of Pastor Tenchavez about the affairs of his child and the absence of
Escao's animosity toward him strikes us to rights in a stranger to intermeddle in
be merely conjecture and exaggeration, and such affairs. However, such distinction
are belied by Pastor's own letters written between the liability of parents and
before this suit was begun (Exh. "2-Escao" that of strangers is only in regard to
and "Vicenta," Rec. on App., pp. 270-274). In what will justify interference. A parent
these letters he expressly apologized to the isliable for alienation of affections
defendants for "misjudging them" and for the resulting from his own malicious
"great unhappiness" caused by his "impulsive conduct, as where he wrongfully
blunders" and "sinful pride," "effrontery and entices his son or daughter to leave his
audacity" [sic]. Plaintiff was admitted to the or her spouse, but he is not liable
Escao house to visit and court Vicenta, and unless he acts maliciously, without
the record shows nothing to prove that he justification and from unworthy
would not have been accepted to marry motives. He is not liable where he acts
Vicente had he openly asked for her hand, as and advises his child in good faith with
good manners and breeding demanded. Even respect to his child's marital relations
after learning of the clandestine marriage, in the interest of his child as he sees it,
and despite their shock at such unexpected the marriage of his child not
event, the parents of Vicenta proposed and terminating his right and liberty to
arranged that the marriage be recelebrated interest himself in, and be extremely
in strict conformity with the canons of their solicitous for, his child's welfare and
religion upon advice that the previous one happiness, even where his conduct and
was canonically defective. If no recelebration advice suggest or result in the
of the marriage ceremony was had it was not separation of the spouses or the
due to defendants Mamerto Escao and his obtaining of a divorce or annulment, or
wife, but to the refusal of Vicenta to proceed where he acts under mistake or
with it. That the spouses Escao did not seek misinformation, or where his advice or
to compel or induce their daughter to assent interference are indiscreet or
to the recelebration but respected her unfortunate, although it has been held
decision, or that they abided by her resolve, that the parent is liable for
does not constitute in law an alienation of consequences resulting from
affections. Neither does the fact that recklessness. He may in good faith
Vicenta's parents sent her money while she take his child into his home and afford
was in the United States; for it was natural him or her protection and support, so
that they should not wish their daughter to long as he has not maliciously enticed
live in penury even if they did not concur in his child away, or does not maliciously
her decision to divorce Tenchavez (27 Am. Jur. entice or cause him or her to stay
130-132). away, from his or her spouse. This rule
has more frequently been applied in
There is no evidence that the parents of the case of advice given to a married
Vicenta, out of improper motives, aided and

27 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
daughter, but it is equally applicable in reduces the damages awarded to P5,000
the case of advice given to a son. only.

Plaintiff Tenchavez, in falsely charging Summing up, the Court rules:


Vicenta's aged parents with racial or social
discrimination and with having exerted (1) That a foreign divorce between Filipino
efforts and pressured her to seek annulment citizens, sought and decreed after the
and divorce, unquestionably caused them effectivity of the present Civil Code (Rep. Act
unrest and anxiety, entitling them to recover 386), is not entitled to recognition as valid in
damages. While this suit may not have been this jurisdiction; and neither is the marriage
impelled by actual malice, the charges were contracted with another party by the
certainly reckless in the face of the proven divorced consort, subsequently to the foreign
facts and circumstances. Court actions are decree of divorce, entitled to validity in the
not established for parties to give vent to country;
their prejudices or spleen.
(2) That the remarriage of divorced wife and
In the assessment of the moral damages her co-habitation with a person other than
recoverable by appellant Pastor Tenchavez the lawful husband entitle the latter to a
from defendant Vicente Escao, it is proper to decree of legal separation conformably to
take into account, against his patently Philippine law;
unreasonable claim for a million pesos in
damages, that (a) the marriage was (3) That the desertion and securing of an
celebrated in secret, and its failure was not invalid divorce decree by one consort entitles
characterized by publicity or undue the other to recover damages;
humiliation on appellant's part; (b) that the
parties never lived together; and (c) that (4) That an action for alienation of affections
there is evidence that appellant had originally against the parents of one consort does not
agreed to the annulment of the marriage, lie in the absence of proof of malice or
although such a promise was legally invalid, unworthy motives on their part.
being against public policy (cf. Art. 88, Civ.
Code). While appellant is unable to remarry WHEREFORE, the decision under appeal is
under our law, this fact is a consequence of hereby modified as follows;
the indissoluble character of the union that
appellant entered into voluntarily and with (1) Adjudging plaintiff-appellant Pastor
open eyes rather than of her divorce and her Tenchavez entitled to a decree of legal
second marriage. All told, we are of the separation from defendant Vicenta F. Escao;
opinion that appellant should recover
P25,000 only by way of moral damages and (2) Sentencing defendant-appellee Vicenta
attorney's fees. Escao to pay plaintiff-appellant Tenchavez
the amount of P25,000 for damages and
With regard to the P45,000 damages attorneys' fees;
awarded to the defendants, Dr. Mamerto
Escao and Mena Escao, by the court below, (3) Sentencing appellant Pastor Tenchavez to
we opine that the same are excessive. While pay the appellee, Mamerto Escao and the
the filing of this unfounded suit must have estate of his wife, the deceased Mena
wounded said defendants' feelings and Escao, P5,000 by way of damages and
caused them anxiety, the same could in no attorneys' fees.
way have seriously injured their reputation,
or otherwise prejudiced them, lawsuits Neither party to recover costs.
having become a common occurrence in
present society. What is important, and has G.R. No. L-17396 May 30, 1962
been correctly established in the decision of
the court below, is that said defendants were CECILIO PE, ET AL., plaintiffs-appellants, vs.
not guilty of any improper conduct in the ALFONSO PE, defendant-appellee.
whole deplorable affair. This Court, therefore,
SYLLABUS

28 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
1. DAMAGES; ACTS CONTRARY TO MORALS. decision dismissing the
Defendant won Lolitas affection thru an complaint.1wph1.t
ingenious scheme or trickery and seduced
her to the extent of making her fall in love Plaintiffs brought this case on appeal before
with him. This is shown by the fact that this Court on the ground that the issues
defendant frequented the house of Lolita on involved are purely of law.
the pretext that he wanted her to teach him
how to pray the rosary. Because of the The facts as found by the trial court are:
frequency of his visits to the latters family Plaintiffs are the parents, brothers and sisters
who was allowed free access because he was of one Lolita Pe. At the time of her
a collateral relative and was considered as a disappearance on April 14, 1957, Lolita was
member of her family, the two eventually fell 24 years old and unmarried. Defendant is a
in love with each other and conducted married man and works as agent of the La
clandestine love affairs not only in Gasan but Perla Cigar and Cigarette Factory. He used to
in Boac where Lolita used to teach in a barrio stay in the town of Gasan, Marinduque, in
school. When the rumors about their illicit connection with his aforesaid occupation.
affair reached the knowledge of her parents, Lolita was staying with her parents in the
defendant was forbidden from going to their same town. Defendant was an adopted son of
house and even from seeing Lolita. Plaintiff a Chinaman named Pe Beco, a collateral
even filed deportation proceedings against relative of Lolita's father. Because of such
defendant who is a Chinese national. fact and the similarity in their family name,
Nevertheless, defendant continued his love defendant became close to the plaintiffs who
affairs with Lolita until she disappeared from regarded him as a member of their family.
the parental home, Held; The wrong Sometime in 1952, defendant frequented the
defendant has caused Lolita and her family is house of Lolita on the pretext that he wanted
indeed immeasurable considering the fact her to teach him how to pray the rosary. The
that he is a married man. Verily, he has two eventually fell in love with each other
committed an injury to Lolitas family in a and conducted clandestine trysts not only in
manner contrary to morals, good customs the town of Gasan but also in Boac where
and public policy as contemplated in Article Lolita used to teach in a barrio school. They
21 of the New Civil Code. exchanged love notes with each other the
contents of which reveal not only their
BAUTISTA ANGELO, J.: infatuation for each other but also the extent
to which they had carried their relationship.
Plaintiffs brought this action before the Court The rumors about their love affairs reached
of First Instance of Manila to recover moral, the ears of Lolita's parents sometime, in
compensatory, exemplary and corrective 1955, and since then defendant was
damages in the amount of P94,000.00 forbidden from going to their house and from
exclusive of attorney's fees and expenses of further seeing Lolita. The plaintiffs even filed
litigation. deportation proceedings against defendant
who is a Chinese national. The affair between
Defendant, after denying some allegations defendant and Lolita continued nonetheless.
contained in the complaint, set up as a
defense that the facts alleged therein, even if Sometime in April, 1957, Lolita was staying
true, do not constitute a valid cause of action. with her brothers and sisters at their
residence at 54-B Espaa Extension, Quezon
After trial, the lower court, after finding that City. On April 14, 1957, Lolita disappeared
defendant had carried on a love affair with from said house. After she left, her brothers
one Lolita Pe, an unmarried woman, being a and sisters checked up her thing and found
married man himself, declared that that Lolita's clothes were gone. However,
defendant cannot be held liable for moral plaintiffs found a note on a crumpled piece of
damages it appearing that plaintiffs failed to paper inside Lolita's aparador. Said note,
prove that defendant, being aware of his written on a small slip of paper approximately
marital status, deliberately and in bad faith 4" by 3" in size, was in a handwriting
tried to win Lolita's affection. So it rendered recognized to be that of defendant's. In
English it reads:

29 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
Honey, suppose I leave here on Sunday win Lolita's affection cannot lead, to any
night, and that's 13th of this month other conclusion than that it was he who,
and we will have a date on the 14th, thru an ingenious scheme or trickery,
that's Monday morning at 10 a.m. seduced the latter to the extent of making
her fall in love with him. This is shown by the
Reply fact that defendant frequented the house of
Lolita on the pretext that he wanted her to
Love teach him how to pray the rosary. Because of
the frequency of his visits to the latter's
The disappearance of Lolita was reported to family who was allowed free access because
the police authorities and the NBI but up to he was a collateral relative and was
the present there is no news or trace of her considered as a member of her family, the
whereabouts. two eventually fell in love with each other
and conducted clandestine love affairs not
The present action is based on Article 21 of only in Gasan but also in Boac where Lolita
the New Civil Code which provides: used to teach in a barrio school. When the
rumors about their illicit affairs reached the
Any person who wilfully causes loss or knowledge of her parents, defendant was
injury to another in a manner which is forbidden from going to their house and even
contrary to morals, good customs or from seeing Lolita. Plaintiffs even filed
public policy shall compensate the deportation proceedings against defendant
latter for the damage. who is a Chinese national. Nevertheless,
defendant continued his love affairs with
There is no doubt that the claim of plaintiffs Lolita until she disappeared from the parental
for damages is based on the fact that home. Indeed, no other conclusion can be
defendant, being a married man, carried on a drawn from this chain of events than that
love affair with Lolita Pe thereby causing defendant not only deliberately, but through
plaintiffs injury in a manner contrary to a clever strategy, succeeded in winning the
morals, good customs and public policy. But affection and love of Lolita to the extent of
in spite of the fact that plaintiffs have clearly having illicit relations with her. The wrong he
established that in illicit affair was carried on has caused her and her family is indeed
between defendant and Lolita which caused immeasurable considering the fact that he is
great damage to the name and reputation of a married man. Verily, he has committed an
plaintiffs who are her parents, brothers and injury to Lolita's family in a manner contrary
sisters, the trial court considered their to morals, good customs and public policy as
complaint not actionable for the reason that contemplated in Article 21 of the new Civil
they failed to prove that defendant Code.
deliberately and in bad faith tried to win
Lolita's affection Thus, the trial court said: "In WHEREFORE, the decision appealed from is
the absence of proof on this point, the court reversed. Defendant is hereby sentenced to
may not presume that it was the defendant pay the plaintiffs the sum of P5,000.00 as
who deliberately induced such relationship. damages and P2,000.00 as attorney's fees
We cannot be unmindful of the uncertainties and expenses of litigations. Costs against
and sometimes inexplicable mysteries of the appellee.
human emotions. It is a possibility that the
defendant and Lolita simply fell in love with G.R. No. L-20089 December 26, 1964
each other, not only without any desire on
their part, but also against their better BEATRIZ P. WASSMER, plaintiff-
judgment and in full consciousness of what it appellee, vs. FRANCISCO X.
will bring to both of them. This is specially so VELEZ, defendant-appellant.
with respect to Lolita, being an unmarried
woman, falling in love with defendant who is BENGZON, J.P., J.:
a married man."
The facts that culminated in this case started
We disagree with this view. The with dreams and hopes, followed by
circumstances under which defendant tried to appropriate planning and serious endeavors,

30 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
but terminated in frustration and, what is On August 23, 1955 defendant failed to
worse, complete public humiliation. appear before court. Instead, on the following
day his counsel filed a motion to defer for two
Francisco X. Velez and Beatriz P. Wassmer, weeks the resolution on defendants petition
following their mutual promise of love, for relief. The counsel stated that he would
decided to get married and set September 4, confer with defendant in Cagayan de Oro City
1954 as the big day. On September 2, 1954 the latter's residence on the possibility
Velez left this note for his bride-to-be: of an amicable element. The court granted
two weeks counted from August 25, 1955.
Dear Bet
Plaintiff manifested on June 15, 1956 that the
Will have to postpone wedding My two weeks given by the court had expired on
mother opposes it. Am leaving on the September 8, 1955 but that defendant and
Convair today. his counsel had failed to appear.

Please do not ask too many people Another chance for amicable settlement was
about the reason why That would given by the court in its order of July 6, 1956
only create a scandal. calling the parties and their attorneys to
appear on July 13, 1956. This time. however,
Paquing defendant's counsel informed the court that
chances of settling the case amicably were
But the next day, September 3, he sent her nil.
the following telegram:
On July 20, 1956 the court issued an order
NOTHING CHANGED REST ASSURED denying defendant's aforesaid petition.
RETURNING VERY SOON APOLOGIZE Defendant has appealed to this Court. In his
MAMA PAPA LOVE . petition of June 21, 1955 in the court a
quo defendant alleged excusable negligence
PAKING as ground to set aside the judgment by
default. Specifically, it was stated that
Thereafter Velez did not appear nor was he defendant filed no answer in the belief that
heard from again. an amicable settlement was being
negotiated.
Sued by Beatriz for damages, Velez filed no
answer and was declared in default. Plaintiff A petition for relief from judgment on grounds
adduced evidence before the clerk of court as of fraud, accident, mistake or excusable
commissioner, and on April 29, 1955, negligence, must be duly supported by an
judgment was rendered ordering defendant affidavit of merits stating facts constituting a
to pay plaintiff P2,000.00 as actual damages; valid defense. (Sec. 3, Rule 38, Rules of
P25,000.00 as moral and exemplary Court.) Defendant's affidavit of merits
damages; P2,500.00 as attorney's fees; and attached to his petition of June 21, 1955
the costs. stated: "That he has a good and valid
defense against plaintiff's cause of action, his
On June 21, 1955 defendant filed a "petition failure to marry the plaintiff as scheduled
for relief from orders, judgment and having been due to fortuitous event and/or
proceedings and motion for new trial and circumstances beyond his control." An
reconsideration." Plaintiff moved to strike it affidavit of merits like this stating mere
cut. But the court, on August 2, 1955, conclusions or opinions instead of facts is not
ordered the parties and their attorneys to valid. (Cortes vs. Co Bun Kim, L-3926, Oct.
appear before it on August 23, 1955 "to 10, 1951; Vaswani vs. P. Tarrachand Bros., L-
explore at this stage of the proceedings the 15800, December 29, 1960.)
possibility of arriving at an amicable
settlement." It added that should any of them Defendant, however, would contend that the
fail to appear "the petition for relief and the affidavit of merits was in fact unnecessary, or
opposition thereto will be deemed submitted a mere surplusage, because the judgment
for resolution." sought to be set aside was null and void, it

31 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
having been based on evidence adduced have to postpone wedding My mother
before the clerk of court. In Province opposes it ... " He enplaned to his home city
of Pangasinan vs. Palisoc, L-16519, October in Mindanao, and the next day, the day
30, 1962, this Court pointed out that the before the wedding, he wired plaintiff:
procedure of designating the clerk of court as "Nothing changed rest assured returning
commissioner to receive evidence is soon." But he never returned and was never
sanctioned by Rule 34 (now Rule 33) of the heard from again.
Rules of Court. Now as to defendant's
consent to said procedure, the same did not Surely this is not a case of mere breach of
have to be obtained for he was declared in promise to marry. As stated, mere breach of
default and thus had no standing in court promise to marry is not an actionable wrong.
(Velez vs. Ramas, 40 Phil. 787; Alano vs. But to formally set a wedding and go through
Court of First Instance, L-14557, October 30, all the above-described preparation and
1959). publicity, only to walk out of it when the
matrimony is about to be solemnized, is quite
In support of his "motion for new trial and different. This is palpably and unjustifiably
reconsideration," defendant asserts that the contrary to good customs for which
judgment is contrary to law. The reason given defendant must be held answerable in
is that "there is no provision of the Civil Code damages in accordance with Article 21
authorizing" an action for breach of promise aforesaid.
to marry. Indeed, our ruling in Hermosisima
vs. Court of Appeals (L-14628, Sept. 30, Defendant urges in his afore-stated petition
1960), as reiterated in Estopa vs. Biansay (L- that the damages awarded were excessive.
14733, Sept. 30, 1960), is that "mere breach No question is raised as to the award of
of a promise to marry" is not an actionable actual damages. What defendant would really
wrong. We pointed out that Congress assert hereunder is that the award of moral
deliberately eliminated from the draft of the and exemplary damages, in the amount of
new Civil Code the provisions that would P25,000.00, should be totally eliminated.
have it so.
Per express provision of Article 2219 (10) of
It must not be overlooked, however, that the the New Civil Code, moral damages are
extent to which acts not contrary to law may recoverable in the cases mentioned in Article
be perpetrated with impunity, is not limitless 21 of said Code. As to exemplary damages,
for Article 21 of said Code provides that "any defendant contends that the same could not
person who wilfully causes loss or injury to be adjudged against him because under
another in a manner that is contrary to Article 2232 of the New Civil Code the
morals, good customs or public policy shall condition precedent is that "the defendant
compensate the latter for the damage." acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner." The
The record reveals that on August 23, 1954 argument is devoid of merit as under the
plaintiff and defendant applied for a license above-narrated circumstances of this case
to contract marriage, which was defendant clearly acted in a "wanton ... ,
subsequently issued (Exhs. A, A-1). Their reckless [and] oppressive manner." This
wedding was set for September 4, 1954. Court's opinion, however, is that considering
Invitations were printed and distributed to the particular circumstances of this case,
relatives, friends and acquaintances (Tsn., 5; P15,000.00 as moral and exemplary damages
Exh. C). The bride-to-be's trousseau, party is deemed to be a reasonable award.
drsrses and other apparel for the important
occasion were purchased (Tsn., 7-8). Dresses PREMISES CONSIDERED, with the above-
for the maid of honor and the flower girl were indicated modification, the lower court's
prepared. A matrimonial bed, with judgment is hereby affirmed, with costs.
accessories, was bought. Bridal showers were
given and gifts received (Tsn., 6; Exh. E). And
then, with but two days before the wedding,
defendant, who was then 28 years old,: UNJUST ENRICHMENT (Arts. 22-23)
simply left a note for plaintiff stating: "Will

32 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
G.R. No. L-1299 November 16, services might be punctually rendered, the
1903 agent, Pomar, assured him that the
Tabacalera Company always generously
VICENTE PEREZ, plaintiff-appellee, vs. repaid services rendered it, and that he
EUGENIO POMAR, Agent of the therefore did not trouble himself about his
Compaia General de Tabacos, defendant- inability to devote the necessary amount of
appellant. time to his business, the defendant going so
far as to make him flattering promises of
TORRES, J.: employment with the company, which he did
not accept; that these statements were made
In a decision dated February 9, 1903, the in the absence of witnesses and that
judge of the Sixth Judicial District, deciding a therefore his only proof as to the same was
case brought by the plaintiff against the Mr. Pomar's word as a gentleman; that the
defendant for the recovery of wages due and employees of the company did not
unpaid, gave judgment against the latter for understand English, and by reason of the
the sum of $600 and the costs of suit, less plaintiff's mediation between the agent, and
the sum of $50, Mexican. the military authorities large profits were
obtained, as would appear from the account
On August 27, 1902, Don Vicente Perez filed and letterpress books of the agency
in the Court of First Instance of Laguna a corresponding to those dates. In the
complaint, which was amended on the 17th amended complaint it was added that the
of January of this year, asking that the court defendant, on behalf of the company, offered
determine the amount due the plaintiff, at to renumerate the plaintiff for the services
the customary rate of compensation for rendered in the most advantageous manner
interpreting in these Islands, for services in which such services are compensated, in
rendered in the Tabacalera Company, and view of the circumstances under which they
that, in view of the circumstances of the were requested; and that the plaintiff, by
case, judgment be rendered in his favor for rendering the company such services, was
such sum. The complaint also asked that the obliged to abandon his own business, the
defendant be condemned to the payment of manufacture of soap, and thereby suffered
damages in the sum of $3,200, gold, together damages in the sum of $3,200, United States
with the costs of suit. In this complaint it was currency.
alleged that Don Eugenio Pomar, as general
agent of the Compaia General de Tabacos in The defendant, on the 25th of September,
the said province, verbally requested the 1902, filed an answer asking for the dismissal
plaintiff on the 8th of December, 1901, to act of the complaint, with costs to the plaintiff. In
as interpreter between himself and the his answer the defendant denied the
military authorities; that after the date allegation in the first paragraph of the
mentioned the plaintiff continued to render complaint, stating that it was wholly untrue
such services up to and including May 31, that the company, and the defendant as its
1902; that he had accompanied the agent, had solicited the services of the
defendant, Pomar, during that time at plaintiff as interpreter before the military
conferences between the latter and the authorities for the period stated, or for any
colonel commanding the local garrison, and other period, or that the plaintiff had
with various officers and doctors residing in accompanied Pomar at the conferences
the capital, and at conferences with Captain mentioned, concerning shipments from
Lemen in the town of Pilar, and with the Manila and exports from some of the towns of
major in command at the town of Pagsanjan, the province to this capital. He stated that he
concerning the shipment of goods from especially denied paragraphs 2 of the
Manila, and with respect to Pagsanjan to this complaint, as it was absolutely untrue that
city; that the plaintiff during this period held the plaintiff had been at the disposal of the
himself in readiness to render services defendant for the purpose of rendering such
whenever required; that on this account his services; that he therefore had not been
private business, and especially a soap obliged to abandon his occupation or his soap
factory established in the capital, was factory, and that the statement that an offer
entirely abandoned; that to the end that such of employment with the company had been

33 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
made to him was false. The defendant also and concluded by asking that the complaint
denied that through the mediation of the be dismissed, with the costs to the plaintiff.
plaintiff the company and himself had Under these circumstances and construing
obtained large profits. The statements in the statutes liberally, we think it proper to
paragraphs 6, 7, 8, and 9 of the complaint decide the case pending between both
were also denied. The defendant stated that, parties in accordance with law and the strict
on account of the friendly relations which principles of justice.
sprang up between the plaintiff and himself,
the former borrowed from him from time to From the oral testimony introduced at the
time money amounting to $175 for the trial, it appears that the plaintiff, Perez, did
purposes of his business, and that he had on various occasions render Don Eugenio
also delivered to the plaintiff 36 arrobas of oil Pomar services as interpreter of English; and
worth $106, and three packages of resin for that he obtained passes and accompanied
use in coloring his soap; that the plaintiff the defendant upon his journeys to some of
accompanied the defendant to Pagsanjan, the towns in the Province of Laguna. It does
Pilar, and other towns when the latter made not appear from the evidence, however, that
business trips to them for the purpose of the plaintiff was constantly at the disposal of
extending his business and mercantile the defendant during the period of six
relations therein; that on these excursions, as months, or that he rendered services as such
well as on private and official visits which he interpreter continuously and daily during that
had to make, the plaintiff occasionally period of time.
accompanied him through motives of
friendship, and especially because of the free It does not appear that any written contract
transportation given him, and not on behalf was entered into between the parties for the
of the company of which he was never employment of the plaintiff as interpreter, or
interpreter and for which he rendered no that any other innominate contract was
services; that the plaintiff in these entered into; but whether the plaintiff's
conferences acted as interpreter of his own services were solicited or whether they were
free will, without being requested to do so by offered to the defendant for his assistance,
the defendant and without any offer of inasmuch as these services were accepted
payment or compensation; that therefore and made use of by the latter, we must
there existed no legal relation whatever consider that there was a tacit and mutual
between the company and the plaintiff, and consent as to the rendition of the services.
that the defendant, when accepting the This gives rise to the obligation upon the
spontaneous, voluntary and officious services person benefited by the services to make
of the plaintiff, did so in his private capacity compensation therefor, since the bilateral
and not as agent of the company, and that it obligation to render services as interpreter,
was for this reason that he refused to enter on the one hand, and on the other to pay for
into negotiations with the plaintiff, he being the services rendered, is thereby incurred.
in no way indebted to the latter. The (Arts. 1088, 1089, and 1262 of the Civil
defendant concluded by saying that he Code). The supreme court of Spain in its
answered in his individual capacity. decision of February 12, 1889, holds, among
other things, "that not only is there an
A complaint having been filed against the express and tacit consent which produces
Compaia General de Tabacos and Don real contract but there is also a presumptive
Eugenio Pomar, its agent in the Province of consent which is the basis of quasi contracts,
Laguna, the latter, having been duly this giving rise to the multiple juridical
summoned, replied to the complaint, which relations which result in obligations for the
was subsequently amended, and stated that delivery of a thing or the rendition of a
he made such reply in his individual capacity service."
and not as agent of the company, with which
the plaintiff had had no legal relations. The Notwithstanding the denial of that defendant,
suit was instituted between the plaintiff and it is unquestionable that it was with his
Pomar, who, as such, accepted the issue and consent that the plaintiff rendered him
entered into the controversy without services as interpreter, thus aiding him at a
objection, opposed the claim of the plaintiff, time when, owing to the existence of an

34 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
insurrection in the province, the most respect to the service rendered by the
disturbed conditions prevailed. It follows, plaintiff, and the reciprocal benefits accruing
hence, that there was consent on the part of to each, are the best evidence of the fact that
both in the rendition of such services as there was an implied contract sufficient to
interpreter. Such service not being contrary create a legal bond, from which arose
to law or to good custom, it was a perfectly enforceable rights and obligations of a
licit object of contract, and such a contract bilateral character.lawphi1.net
must necessarily have existed between the
parties, as alleged by the plaintiff. (Art. 1271, In contracts the will of the contracting parties
Civil Code.) is law, this being a legal doctrine based upon
the provisions of articles 1254, 1258, 1262,
The consideration for the contract is also 1278, 1281, 1282, and 1289 of the Civil
evident, it being clear that a mutual benefit Code. If it is a fact sufficiently proven that the
was derived in consequence of the service defendant, Pomar, on various occasions
rendered. It is to be supposed that the consented to accept an interpreter's services,
defendant accepted these services and that rendered in his behalf and not gratuitously, it
the plaintiff in turn rendered them with the is but just that he should pay a reasonable
expectation that the benefit would be remuneration therefor, because it is a well-
reciprocal. This shows the concurrence of the known principle of law that no one should be
three elements necessary under article 1261 permitted to enrich himself to the damage of
of the Civil Code to constitute a contract of another.
lease of service, or other innominate
contract, from which an obligation has arisen With respect to the value of the services
and whose fulfillment is now demanded. rendered on different occasions, the most
important of which was the first, as it does
Article 1254 of the Civil Code provides that a not appear that any salary was fixed upon by
contract exists the moment that one or more the parties at the time the services were
persons consent to be bound, with respect to accepted, it devolves upon the court to
another or others, to deliver some thing or to determine, upon the evidence presented, the
render some service. Article 1255 provides value of such services, taking into
that the contracting parties may establish consideration the few occasions on which
such covenants, terms, and conditions as they were rendered. The fact that no fixed or
they deem convenient, provided they are not determined consideration for the rendition of
contrary to law, morals or public policy. the services was agreed upon does not
Whether the service was solicited or offered, necessarily involve a violation of the
the fact remains that Perez rendered to provisions of article 1544 of the Civil Code,
Pomar services as interpreter. As it does not because at the time of the agreement this
appear that he did this gratuitously, the duty consideration was capable of being made
is imposed upon the defendant, having certain. The discretionary power of the court,
accepted the benefit of the service, to pay a conferred upon it by the law, is also
just compensation therefor, by virtue of the supported by the decisions of the supreme
innominate contract of facio ut des implicitly court of Spain, among which may be cited
established. that of October 18, 1899, which holds as
follows: "That as stated in the article of the
The obligations arising from this contract are Code cited, which follows the provisions of
reciprocal, and, apart from the general law 1, title 8, of the fifth partida, the contract
provisions with respect to contracts and for lease of services is one in which one of
obligations, the special provisions concerning the parties undertakes to make some thing or
contracts for lease of services are applicable to render some service to the other for a
by analogy. certain price, the existence of such a price
being understood, as this court has held not
In this special contract, as determined by only when the price has been expressly
article 1544 of the Civil Code, one of the agreed upon but also when it may be
parties undertakes to render the other a determined by the custom and frequent use
service for a price certain. The tacit of the place in which such services were
agreement and consent of both parties with rendered."

35 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
No exception was taken to the judgment 117811. The issue arose from the following
below by the plaintiff on account of the facts:
rejection of his claim for damages. The
decision upon this point is, furthermore, In Civil Case No. 117811, which was an action
correct. instituted by Pacific Merchandising
Corporation (plaintiff-appellee) to collect the
Upon the supposition that the recovery of the sum of P2,562.88 from Consolacion Insurance
plaintiff should not exceed 200 Mexican & Surety Co., Inc., (defendant- appellee) who
pesos, owing to the inconsiderable number of in turn filed a third-party complaint against
times he acted as interpreter, it is evident Gregorio V. Pajarillo (third-party defendant-
that the contract thus implicitly entered into appellant). the City Court of Manila rendered
was not required to be in writing and that judgment on April 6, 1964, the dispositive
therefore it does not fall within article 1280 of portion of which reads, in part, thus:
the Civil Code; nor is it included within the
provisions of section 335 of the Code of Civil WHEREFORE, in view of the foregoing,
Procedure, as this innominate contract is not judgment is hereby rendered in favor
covered by that section. The contract of lease of the plaintiff and against the
of services is not included in any of the cases defendant, ordering the latter to pay
expressly designated by that section of the the former the sum of P2,562.88 with
procedural law, as affirmed by the appellant. interest thereon at the rate of 12% per
The interpretation of the other articles of the annum from May 30, 1963 until fully
Code alleged to have been infringed has also paid, P100.00 as for attorney's fees,
been stated fully in this opinion. plus the costs of suit; condemning
third defendant to pay third-party
For the reasons stated, we are of the opinion plaintiff for whatever sums or amounts
that judgment should be rendered against tlie latter paid the plaintiff on account
Don Eugenio Pomar for the payment to the of this judgment.
plaintiff of the sum of 200 Mexican pesos,
from which will be deducted the sum of 50 By virtue of the appeal interposed by the
pesos is made as to the costs of this instance. third-party defendant Gregorio V. Pajarillo,
The judgment below is accordingly affirmed the case was elevated, on May 12, 1964, to
in so far as it agrees with this opinion, and the Court of First Instance of Manila. On July
reversed in so far as it may be in conflict 21, 1964, the parties, through their
therewith. Judgment will be entered respective counsel, submitted the following
accordingly twenty days after this decision is Stipulation of Facts:
filed.
1. That on the 19th day of October,
G.R. No. L-30204 October 29, 1976 1962, a Writ of Execution as isstica Iy
the Court of First Instance of Manila
PACIFIC MERCHANDISING under Civil Case No. 49691,
CORPORATION, plaintiff-appellee, vs. entitled Pacific Merchandising
CONSOLACION INSURANCE & SURETY Corporation vs. Leo Enterprises, Inc., a
CO., INC., defendant-appellee, copy of the said Writ of Execution is
attached as ANNEX Ato the complaint;
CONSOLACION INSURANCE & SURETY
CO., INC., third party plaintiff-appellee, vs. 2. That by virtue of the aforesaid Writ
GREGORIO V. PAJARILLO, third of Execution, the Sheriff of Manila
party defendant-appellant. levied and attached the following:

ANTONIO, J.: 'l. Second Hand AUTOMATICKET


Machine No. MG-31833;and
Appeal, on a question of law, from the
judgment of the Court of First Instance Of '2. Cinema Projectors Complete,
Manila, dated August 8, 1964, affirming the trademark SIMPLEX PEERLESS
decision of the City Court in Civil Case No. MAGNARC NOS. 52625 and 62387'
which items were advertised for sale

36 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
on March 2, 1963, copy of Notice of P2,562.88 still unpaid aside from
sale attached as ANNEX 'B' to the interest at the rate of 1% per month
Complaint; and atto lnen s f cluiaient to 25% of tht
amount due as provided for in said
3. That Atty. Greg V. Pajarillo was undertaking (ANNEX 'C' to tlie
appointed on March 2, 1963 as complaint);
Receiver of all the assets, properties
and equipment of Paris Theatre, 9. That on July 1, 1963, a decision was
olwrated by Leo Enterprises, Inc. under rendered tne court of First Instance of
Civil Case No. 50201 entitled Gregorio Manila in Civil case No. 50201, copy of'
V. Pajarillo vs. Leo Enterprises, Inc.; which is attached its ANNEX 'A' to
Answer to Third Party Complaint, by
4. That the sale at public auction of the virtue of which Greg V. Pajarillo, as said
above described properties was Received stololcl making payments to
postponed and was later cancelled due plaintiff;
to thc representation of Atty. Greg V.
Pajarillo as Receiver of Paris Theatre 10. That the said decision in Civl Case
operated by Leo Enterprises, Inc. in No. 50201 dated July 1, 1963 was
which he undertook the 1anient of the appealed lix defendant Leo
judgment rendered in favor of the Enterprises, Inc. to the court of
plaintiff against Leo Enterprises, Inc. as Appeals and that the records kere
Ier undertaking dated March 11, 1963, eleattd to the aid ApiIiat court on
copy of which is attached as ANNEX 'C' August 27, 1963;
to the complaint;
11. That on October 9, 1963, plaintiff's
5. That on or about hie third of March, counsel demanded from the said
1963, third-party defendant Pajarillo principal, Greg V. Paiarillo, the payment
approached the third-party plaintiff of the installments corresponding to
and applied for a surety bond in the the months of May, June, July, August
amount of P5,000.00 to be rated in and September, 1963, which remain
favor of the abovenamed plaintiff in unpaid in spite of said demand, copy of
order to guarantee to said plaintiff the said letter being, attached as ANNEX
payment of obligations in its favor by 'E' to the complaint;
the Leo Enterprises, Inc.;
12. That the defendant was duly
6. That the bond applied for was in fact notified of the demand made on the
executed in favor of the pIaintiff rith principal, Greg V. Pajarillo and in spite
third-party defendant Pajarillo as of said notice the defendant has failed
principal and third-party plaintiff as and refused to pay the unpaid
surety in the context of the allegations obligation;
of the preceding paragraph and a copy
of the said bond is attached a ANNEX 13. That on December 19, 1963,
'A' to the third party complaint; plaintiff's counsel demanded from the
defendant the payment of the unpaid
7. That to protect thirrd party plaintiff obligation of the principal, Greg V.
against damage and injury, the third Pajarillo but refused and failed to pay
party defendant Pajarillo executed in the same in spite of said demand;
favor of the former an INDEMNITY
AGREEMENT, copy of which is attached 14. That when reminded by third-party
as ANNEX 'B' to third party complaint; plaintiff regarding his obligations in
tlie trms of which aie incorporated by favor of the plaintiff, the third-party
reference; defendant, Greg V. Pajarillo replied that
he no longer was bound to pay
8. That the plaintiff received from hie because he had ceased to be the
aid principal, Greg V. Pajarillo the sum receiver of Paris Theatre operated by
of P2,000.00 leaving a balance of Leo Enterprises, Inc. by virtue of the

37 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
decision of the Court in Civil Case No. Civil Case No. 50201, because a decision
50201 cited above, and for this reason, which is appealed cannot be the subject of
third- party plaintiff refused to pay the execution"; (2) "granting arguendo that the
demand of the plaintiff 2 decision is final and executory, the said
decision cannot bind nor can it be enforced
On the basis of the foregoing Stipulation of against the plaintiff in the present case
Facts, the Court of First Instance rendered because it is not a party in Civil Case No.
judgment on August 8, 1964, which judgment 50201"; and (3) "when Atty. Pajarillo assumed
was amended on August 25, 1964, affirming the obligation of Leo Enterprises, Inc., as a
the appealed decision of the City Court . 2* Receiver, there was a subrogation of the
party liable and, therefore, the plaintiff
The trial court predicated its judgment on the cannot enforce the judgment in Civil Case No.
following considerations: (1) Since the unpaid 49691 against Leo Enterprises, Inc."
claim represents the cost of certain materials
used in the construction of the Paris Theatre, From the foregoing judgment, third-party
the possession of which reverted to Gregorio defendant Gregorio V. Pajarillo interposed an
V. Pajarillo as owner of said property by virtue appeal to the Court of Appeals. The aforesaid
of the judgment in Civil Case No. 50201, "it is Appellate Court, in turn certified the same to
only simple justice that Pajarillo should pay this Court on the ground that there is no
for the said claim. otherwise he would be question of fact involved, but only one of law.
enriching himself by having the said building
without paying plaintiff for the cost of certain The legal question is whether or not third
materials that went into its construction"; (2) party defendant-appellant Gregorio V.
"under Section 7 of Rule 61 of the former Pajarillo is, under the facts and circumstances
Rules of Court, one of the powers of a obtaining, liable to plaintiff for the unpaid
receiver i8 to pay outstanding debts, and amount claimed. Upon the resolution of this
since the said plaintiff's claim has been issue will in turn depend the liability of
outstanding since August 27, 1962, if not defendant-third-party plaintiff Consolacion
before, Pajarillo should have paid the same Insurance & surety Co., Inc. under the Surety
long before the alleged termination of the Bond, on the basis of which it was ordered by
receivership on July 1, 1963"; (3) the the court a quo to pay the amount involved
procedure outlined in Section 8 of the Rule, to plaintiff-appellee.
namely, that whenever the court "shall
determine that the necessity for a receiver no 1. A receiver is not an agent or
longer exists, it shall, after due notice to all representative of any party to the action. He
interested parties and hearing, settle the is an officer of the court exercising his
accounts of the receiver, direct the delivery functions in the interest of neither plaintiff
of the funds and other property in his hands nor defendant, but for the common benefit of
to the persons adjudged entitled to receive all the parties in interest. 3He performs his
them, and order the discharge of the receiver duties "subject to the control of the Court,"
from further duty as such," has not been and every question involved in the
followed; and (4) when Gregorio V. Pajarillo receivership may be determined by the court
undertook to pay the amount owed to taking cognizance of the receivership
plaintiff (Annex "C") and executed the surety proceedings. 4 Thus, "a receiver, strictly
bond (Annex "D") in favor of plaintiff, he 4 6 speaking, has no right or power to make any
stepped into the shoes" of the dr Leo contract binding the property or fund in his
Enterprises, Inc., .4 and the properties of the custody or to pay out funds in his hands
said debtor having all subsequently passed without the authority or approval of the
on to Pajarillo, there is no reason, legal or court ... . 5 As explained by Justice Moran,
otherwise, for relieving defendants of their speaking for the Court in a 1939 case 6 ...
said undertaking." The custody of the receiver is the custody of
the court. His acts and possession are the
The court a quo likewise declared that (1) acts and possession of the court, and his
"the receivership was not terminated by contracts and liabilities are, in contemplation
virtue of the appeal interposed by Leo of law, the contracts and liabilities of the
Enterprises, Inc., one of the defendants in court. As a necessary consequence, receiver

38 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
is f subject to the control and supervision of undertaking as a receiver, he should have, as
the court at every step in his management of such receiver, submitted to the court an
the property or funds placed in his account of the status of the properties in his
hands. ... 7 He cannot operate independently hands including the outstanding obligations
of the court, and cannot enter into any of the receivership. 12 Had he done so, it is
contract without its approval. reasonable to assume that the judgment
creditor would have opposed the termination
... El depositario no puede obrar of the receivership, unless its claim was paid.
independientemente del jusgado; Having failed to perform his duty, to the
contrata bajo el control del mismo; sin prejudice of the creditor, appellant should not
su autorizacion o aprobaci6n expresa, be permitted to take advantage of his own
el depositario no puede perfeccionar wrong. The judgment creditor having been
ningun contrato. ... 8 induced to enter into the aforesaid
agreement by appellant Pajarillo it was the
2. In the case at bar, appellant Pajarillo does duty of the latter to comply with is end of the
not dispute the fact that he never secured bargain. He not only failed to perform his
the court's approal of either the agreement of undertaking, but now attempts to evade
March 11, 1963, with Pacific Merchandising completely his liability. Under such
Corporation or of his Indemnity Agreement circumstances, appellant is not entitled to
with the Consolacion Insurance & Surety Co., equitable relief. No ground for equitable relief
Inc. on March 14, 1963, in consideration of can be found in a case where a party has not
the performance bond submitted by the latter only failed to perform the conditions upon
to Pacific Merchandising Corporation to which he alone obtained the execution of the
guarantee the payment of the obligation. As contract, but where it is clear that he never,
the person to whom the possession of the at any time, intended to perform them. 13
theater and its equipment was awarded by
the court in Civil Case No. 50201, it was 3. Moreover, it will be recalled that the
certainly to his personal profit and advantage obligation due the Pacific Merchandising
that the sale at public auction of the Corporation represented the cost of materials
liquipment of the theater was prevented by used in the construction of the Paris Theatre.
his execution of the aforesaid agreement and There can not be any question that such
submission of the afore-mentioned bond. In improvements, in the final analysis,
order to bind the property or fund in his redounded to the advantage and personal
hands as receiver, he should have applied for profit of appellant Pajarillo because the
and obtained from the court authority to judgment in Civil Case No. 50201, which was
enter into the aforesaid in substance affirmed by the Appellate Court,
contract. 9 Unauthorized contracts of a ordered that the "possession of the lands,
receiver do not bind the court in charge of building equipment, furniture, and
receivership. They are the receiver's own accessories ..." of the theater be transferred
contracts and are not recognized by the to said appellant as owner thereof.
courts as contracts of the
receivership.10 Consequently, the aforesaid As the trial court aptly observed "... it is only
agreement and undertaking entered into by simple justice that Pajarillo should pay for the
appellant Pajarillo not having been approved said claim, otherwise he would be enriching
or authorized by the receivership court himself without paying plaintiff for the cost of
should, therefore, be considered as his certain materials that went into its
personal undertaking or obligation. Certainly, construction. ... It is argLicd however, that he
if such agreements were known by the did so only as a receiver of Leo Pajarillo by
receivership court, it would not have virtue of the judgment in Civil Case No.
terminated the receivership without due 50201 all of the properties of Leo Enterprises,
notice to the judgment creditor as required Inc. passed on to Pajarillo by virtue of the
by Section 8 of Rule 59 of the Rules of Court. judgment in Civil Case No. %201 ...". This
This must be assumed because of the legal Roman Law principle of "Nemo Cum alterious
presumption that official duty has been detrimento locupletari protest" is embodied
regularly performed. 11 Indeed, if it were true in Article 22 (Human Relations), 14 and
that he entered into the agreement and Articles 2142 to 2175 (QuasiContracts) of the

39 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
New Civil Code. Long before the enactment of Private respondent is a resident foreign
this Code, however, the principle of unjust insurance corporation organized under the
enrichment which is basic in every legal laws of the United States, authorized and
system, was already expressly recognized in duly licensed to do business in the
this jurisdiction. Philippines. It is a member of the American
Foreign Insurance Association, through which
its business is cleared (Brief for Respondents,
As early as as 1903, in Perez v. Pomar, 15 this
pp. 1-2)
Court ruled that where one has rendered
services to another, and these services are
The antecedent facts of this case are as
accepted by the latter, in the absence of
follows:
proof that the service ",as rendered
gratuitously, it is but just that he should pay From January, 1952 to December, 1958,
a reasonable remuneration therefore because herein private respondent Fireman's Fund
"it is a wellknown principle of law, that no one Insurance Company entered into various
should be permitted to enrich himself to the insurance contracts involving casualty, fire
damage of another." Similarly in 1914, this and marine risks, for which the corresponding
Court declared that in this jurisdiction, even insurance policies were issued. From January,
in the absence of statute," ... under the 1952 to 1956, documentary stamps were
general principle that one person may not bought and affixed to the monthly
enrich himself at the expense of another, a statements of policies issues; and from 1957
judgment creditor would not be permitted to to 1958 documentary stamps were bought
retain the purchase price of land sold as the and affixed to the corresponding pages of the
property of the judgment debtor after it has policy register, instead of on the insurance
been made to appear that the judgment policies issued. On July 3, 1959, respondent
company discovered that its monthly
debtor had no title to the land and that the
statements of business and policy register
purchaser had failed to secure title
were lost. The loss was reported to the
thereto ... 16 The foregoing equitable principle Building Administration of Ayala Building and
which springs from hie fountain of good the National Bureau of Investigation on July 6,
conscience are applicable to the case at bar. 1959. Herein petitioner was also informed of
such loss by respondent company, through
ACCORDINGLY, in view of the foregoing, the the latter's auditors, Sycip, Gorres and
judgment unirilleal is httcf AFFIRMED. Costs Velayo, in a letter dated July 14, 1959. After
against appellant. conducting an investigation of said loss,
petitioner's examiner ascertained that
G.R. No. L-30644 March 9, 1987 respondent company failed to affix the
required documentary stamps to the
COMMISSIONER OF INTERNAL insurance policies issued by it and failed to
REVENUE, petitioner, vs. FIREMAN'S FUND preserve its accounting records within the
INSURANCE COMPANY and the COURT time prescribed by Section 337 of the
OF TAX APPEALS, respondents. Revenue Code by using loose leaf forms as
registers of documentary stamps without
PARAS, J.: written authority from the Commissioner of
Internal Revenue as required by Section 4 of
Revenue Regulations No. V-1. As a
This is an appeal from the decision of the
consequence of these findings, petitioner, in
respondent Court of Tax Appeals dated May
a letter dated December 7, 1962, assessed
24, 1969, in C.T.A. Case No. 1629,
and demanded from petitioner the payment
entitled "FIREMAN'S FUND INSURANCE
of documentary stamp taxes for the years
COMPANY v. COMMISSIONER OF INTERNAL
1952 to 1958 in the total amount of P
REVENUE,"which reversed the decision of
79,806.87 and plus compromise penalties, a
petitioner Commissioner of Internal Revenue
total of P 81,406.87.
holding private respondent Fireman's Fund
Insurance Company liable for the payment of
the amount of P81,406.87 as documentary A breakdown of the amount of taxes due and
stamp taxes and compromise penalties for collectible are as follows:
the years 1952 to 1958.

40 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
1957.......................
...............................
YEAR AMOUNT
......... p 416.82

1958.......................
1952 P ...............................
6,500.00 ..........2,096.72
2,513.54

AMOUNT DUE &


1953 9,977.72 COLLECTIBLE...............................
..............P 79,906.87

(CTA Decision, Rollo, pp. 16-17).


1954 10,908.89
The compromise penalties consisted of the
sum of P1,000.00 as penalty for the alleged
failure to affix documentary stamps and the
1955 14,204.52 further sum of P 600.00 as penalty for an
alleged violation of Revenue Regulations No.
V-1 otherwise known as the Bookkeeping
Regulations (Brief for Respondents, p. 4)
1956 12,108.26
In a letter dated January 14, 1963,
respondent company contested the
assessment. After petitioner denied the
1957 7,880.68 protest in a decision dated March 17, 1965,
respondent company appealed to the
respondent Court of Tax Appeals on May 8,
1965. After hearing respondent court
1958 16,257.60 rendered its decision dated May 24, 1969
(Rollo, pp. 16-21) reversing the decision of
the Commissioner of Internal Revenue. The
assailed decision reads in part:
Total stamp taxes due on
policies issued from 1952 to The affixture of documentary stamps
1958 77,837.67 to papers other than those authorized
by law is not tantamount to failure to
Add: Stamp taxes on monthly pay the same. It is true that the mode
statements during: of affixing the stamps as prescribed by
law was not followed, but the fact
1957....................... remains that the documentary stamps
............................... corresponding to the various insurance
............................... policies were purchased and paid by
.....1,218.35 petitioner. There is no legal justification
for respondent to require petitioner to
1958....................... pay again the documentary stamp tax
............................... which it had already paid. To sustain
............................... respondent's stand would require
.....3,264.39 petitioner to pay the same tax twice. If
at all, the petitioner should be
Total........................ proceeded against for failure to comply
............................... with the requirement of affixing the
............................P documentary stamps to the taxable
82,320.41 insurance policies and not for failure to
pay the tax. (See Sec. 239 and 332,
Less: Stamp taxes paid per Rev. Code).
voucher shown:

41 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
It should be observed that the law assignments, sales, and transfers of
allows the affixture of documentary the obligation, right, or property
stamps' to such other paper as may be incident thereto, there shall be levied,
indicated by law or regulations as the collected and paid for and in respect of
proper recipient of the stamp.' It the transaction so had or
appears from this provision that accomplished, the corresponding
respondent has authority to allow documentary stamp taxes prescribed
documentary stamps to be affixed to in the following sections of this Title,
papers other than the documents or by the person making, signing, issuing,
instruments taxed. Although the accepting, or transferring the same,
practice adopted by petitioner in and at the same time such act is done
affixing the documentary stamps to or transaction had. (Now. Sec. 222).
the business statements and policy
register was without specific SEC. 232. Stamp tax on life insurance
permission from respondent but only policies. On all policies of insurance
on the strength of his ruling given to or other instruments by whatever
Wise & Company (see Petitioner's name the same may be called,
Memorandum, p. 176, CTA rec.; p. 24, whereby any insurance shall be made
t.s.n.), one of the general agents of or renewed upon any life or lives, there
petitioner, however, considering that shall be collected a documentary
petitioner actually purchased the stamp tax of thirty-five centavos on
documentary stamps, affixed them to each two hundred pesos or fractional
the business statements and policy part thereof, of the amount issued by
register and cancelled the stamps by any such policy. (220) (As amended by
perforating them, we hold that PD 1457)
petitioner cannot be held liable to pay
again the same tax. Insurance policies issued by a
Philippine company to persons in other
With respect to the 'compromise countries are not subject to
penalties' in the total sum of P documentary stamp tax. (Rev. Regs.
1,600.00, suffice it to say that No. 26)
penalties cannot be imposed in the
absence of a showing that petitioner Medical certificate attached to an
consented thereto. A compromise insurance policy is not a part of the
implies agreement. If the offer is said policy. Insurance policy is subject
rejected by the taxpayer, as in this to Section 232 of the Tax Code while
case, respondent cannot enforce it medical certificate is taxable under
except through a criminal action. (See Section 237 of the same Code.
Comm. of Int. Rev. vs. Abad, L-19627,
June 27, 1968.) (CTA Decision, Rollo, Insurance policies are issued in the
pp. 20-21). place where delivered to the person
insured. (As amended.)
Hence, this petition filed on June 26, 1969
(Rollo, pp. 1-8). SEC. 221. Stamp tax on policies of
insurance upon property. On all
The petition is devoid of merit. policies of insurance or other
instruments by whatever name the
The principal issue in this case is whether or same may be called, by which
not respondent company may be required to insurance shall be made or renewed
pay again the documentary stamps it has upon property of any description,
actually purchased, affixed and cancelled. including rents or profits, against peril
by sea or on inland waters, or by fire or
The relevant provisions of the National lightning, there shall be collected a
Internal Revenue Code provide: documentary stamp tax of six
centavos on each four persons, or
SEC. 210. Stamp taxes upon fractional part thereof, of the amount
documents, instruments, and papers. of premium charged," (Now Sec. 233.)
Upon documents, instruments, and
papers, and upon acceptances,

42 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
SEC. 237. Payment of documentary on the document or instrument taxed is to
stamp tax. Documentary stamp insure that the corresponding tax has been
taxes shall be paid by the purchase paid for such document while the
and affixture of documentary stamps cancellation of the stamps is to obviate the
to the document or instrument taxed possibility that said stamps will be reused for
or to such other paper as may be similar documents for similar purposes.
indicated by law or regulations as the
proper recipient of the stamp, and by In the case at bar, there appears to be no
the subsequent cancellation of same, dispute on the fact that the documentary
such cancellation to be accomplished stamps corresponding to the various policies
by writing, stamping, or perforating the were purchased and paid for by the
date of the cancellation across the face respondent Company. Neither is there any
of each stamp in such manner that argument that the same were cancelled as
part of the writing, impression, or required by law. In fact such were the findings
perforation shall be on the stamp itself of petitioner's examiner Amando B. Melgar
and part on the paper to which it is who stated as follows:
attached; Provided, That if the
cancellation is accomplished by writing Investigation disclosed that the subject
or stamping the date of cancellation, a insurance company is a duly organized
hole sufficiently large to be visible to corporation doing business in the
the naked eye shall be punched, cut or Philippines. It keeps the necessary
perforated on both the stamp and the books of accounts and other
document either by the use of a hand accounting records needed by the
punch, knife, perforating machine, business. Further verification revealed
scissors, or any other cutting that it has, since July, 1959, been using
instrument; but if the cancellation is a "HASLER" franking machine, Model
accomplished by perforating the date F88, which stamps the documentary
of cancellation, no other hole need be stamps on the duplicates of the
made on the stamp. (Now Sec. 249.) policies issued. Prior to the acquisition
of the said machine, the company
SEC. 239. Failure to affix or cancel buys its stamps by allowing the
documentary stamps. Any person Manager to issue a Manager's check
who fails to affix the correct amount of drawn against the National City Bank
documentary stamps to any taxable of New York and payable to the City
document, instrument, or paper, or to Treasurer of Manila. It was also found
cancel in the manner prescribed by out that during this period (1952 to
section 237 any documentary stamp 1958), the total purchases of
affixed to any document, instrument, documentary stamps amounted to
or paper, shall be subject to a fine of P77,837.67, while the value of the
not less than twenty pesos or more used stamps lost amounted to
than three hundred pesos. (Emphasis P65,901.11. Verification with the files
supplied.) (Now Sec. 250.) revealed that most of the monthly
statements of business and registers of
As correctly pointed out by respondent Court documentary stamps corresponding to
of Tax Appeals, under the above-quoted insurance policies issued were missing
provisions of law, documentary tax is deemed while some where the punched
paid by: (a) the purchase of documentary documentary stamps affixed were
stamps; (b) affixture of documentary stamps small in amount are still intact.
to the document or instrument taxed or to
such other paper as may be indicated by law The taxpayer was found to be
or regulations; and (c) cancellation of the negligent in the preservation and
stamps as required by law (Rollo, p. 18). keeping of its records. Although the
loss was found by the company's
It will be observed however, that the over- private investigator (see attached true
riding purpose of these provisions of law is copies of his reports) was not an
the collection of taxes. The three steps "Inside Job," still the company should
above-mentioned are but the means to that be held liable for its negligence, it
end. Thus, the purchase of the stamps is the appearing that the said records were
form of payment made; the affixture thereof placed in a bodega, where almost all

43 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
patrons of the coffee shop nearby Later, respondent Court of Tax Appeals
could see them. The company also correctly observed that the purchase of
violated the provision of Section 221 of documentary stamps and their being affixed
the National Internal Revenue Code to the monthly statements of business and
which provides that the documentary policy registers were also admitted by
stamps should be affixed and cancelled counsel for the Government as could clearly
on the duplicates of bonds and policies be gleaned from his Memorandum submitted
issued. In this case, the said stamps to the respondent Court. (Decision, CTA Rollo,
were affixed on the register of pp. 4-5).
documentary stamps.(pp. 35-36, BIR
rec.; Emphasis supplied.) (CTA Thus, all investigations made by the
Decision, Rollo, pp, 18-19.) petitioner show the same factual findings
that respondent company purchased
Such findings were confirmed by the documentary stamps for the various policies
Memorandum of Acting Commissioner of it has issued for the period in question
Internal Revenue Jose B. Lingad, dated although it has attached the same on
November 7, 1962 to the Chief, Business Tax documents not authorized by law.
Division, which states:
There is no argument to petitioner's
The records show that the FIREMAN'S contention that the insurance policies with
FUND INSURANCE COMPANY allegedly the corresponding documentary stamps
paid P 77,837.67 in documentary affixed are the best evidence to prove
stamp taxes for the policies of payment of said documentary stamp tax.
insurance issued by it for the years This rule however does not preclude the
1952 to 1958 but could only present as admissibility of other proofs which are
proof of payment Pll,936.56 of said uncontradicted and of considerable weight,
taxes as the rest of the amount of P such as: copies of the applications for
65,901.11 were lost due to robbery. manager's checks, copies of the manager's
Upon verification of this payment check vouchers of the bank showing the
however it was found that the purchases of documentary stamps
FIREMAN'S FUND INSURANCE corresponding to the various insurance
COMPANY affixed the documentary policies issued during the years 1952-1958
stamps not on the individual insurance duly and properly Identified by the witnesses
policies issued by it but on a monthly for respondent company during the hearing
statement of business and a register of and admitted by the respondent Court of Tax
documentary stamps, the use of which Appeals (Brief for Respondent, p. 15).
was not authorized by this Office. It
was claimed that the same procedure It is a general rule in the interpretation of
was used in the case of the lost statutes levying taxes or duties, that in case
documentary stamps aforementioned. of doubt, such statutes are to be construed
As this practice is irregular and the most strongly against the government and in
remaining records are not conclusive favor of the subjects or citizens, because
proofs of the payment of the burdens are not to be imposed, nor presumed
corresponding documentary stamp tax to be imposed beyond what statutes
on the policies, the FIREMAN'S FUND expressly and clearly import (Manila Railroad
AND INSURANCE COMPANY is still liable Co. v. Collector of Customs, 52 Phil. 950
for the payment of the documentary [1929]).
stamp taxes on the policies found not
affixed with stamps. (Original B I R There appears to be no question that the
Record, p. 87). purpose of imposing documentary stamp
taxes is to raise revenue and the
corresponding amount has already been paid
by respondent and has actually become part
of the revenue of the government. In the
same manner, it is evident that the affixture
of the stamps on documents not authorized
by law is not attended by bad faith as the
practice was adopted from the authority
granted to Wise & Company, one of

44 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
respondent's general agents (CTA Decision, principal offices at the Hongkong and
Rollo, p. 20). Indeed, petitioner argued that Shanghai Bank building in the City of Manila.
such authority was not given to respondent
company specifically, but under the general Since the start of CALIs operations, its fuel
principle of agency, where the acts of the needs were all supplied by the Defendant. Mr.
agents bind the principal, the conclusion is Desmond Fitzgerald, its Credit Manager who
inescapable that the justification for the acts extended credit to CALI, was in charge of the
of the agents may also be claimed for the
collection thereof. However, all matters
acts of the principal itself (Brief for the
referring to extensions of the term of
Respondents, pp. 12-13).
payment had to be decided first by Mr.
Be that as it may, there is no justification for Stephen Crawford and later by Mr. Wildred
the government which has already realized Wooding, who represented in this
the revenue which is the object of the country Defendants Board of Directors, the
imposition of subject stamp tax, to require residence of which is in London, England
the payment of the same tax for the same (Exhs. 4-B and 4-A).
documents. Enshrined in our basic legal
principles is the time honored doctrine that As of August, 1948, the books of
no person shall unjustly enrich himself at the the Defendant showed a balance of
expense of another. It goes without saying P170,162.58 in its favor for goods it sold and
that the government is not exempted from delivered to CALI. Even before August 6,
the application of this doctrine (Ramie 1948, Defendant had reasons to believe that
Textiles, Inc. v. Mathay Sr., 89 SCRA 587 the financial condition of the CALI was for
[1979]). from being satisfactory. As a matter of fact,
according to Mr. Fitzgerald, CALIs Douglas C-
Under the circumstances, this court
54 plane, then in California, was offered to
RESOLVED to DISMISS this petition and to
him by Mr. Alfonso Sycip, CALIs President of
AFFIRM the assailed decision of the Court of
Tax Appeals. the Board of Directors, in partial settlement
of their accounts, which offer was, however,
[G.R. No. L-7817. October 31, 1956.] declined by Mr. Crawford, probably because
upon inquiries made by Mr. Fitzgerald
ALFREDO M. VELAYO, in his capacity as sometime before August 6, 1948, for the
Assignee of the insolvent COMMERCIAL purpose of preparing the report for its London
AIR LINES, INC. (CALI), Plaintif- office regarding CALIs indebtedness, Col.
Appellant, vs. SHELL COMPANY OF THE Lambert, CALIs Vice President and General
PHILIPPINE ISLANDS, LTD.,Defendant- Manager, answered that the total outstanding
Appellee, YEK HUA TRADING liabilities of his corporation was only
CORPORATION, PAUL SYCIP and MABASA P550,000, and the management
& CO., intervenors. of Defendant probably assumed that the
assets of the CALI could very well meet said
DECISION liabilities and were not included to take
charge of the sale of CALIs said Douglas C-54
plane to collect its credit.
FELIX, J.:
On August 6, 1948, the management of CALI
Antecedents The Commercial Air Lines,
informally convened its principal creditors
Inc., which will be hereinafter referred to as
(excepting only the insignificant small claims)
CALI, is a corporation duly organized and
who were invited to a luncheon that was held
existing in accordance with the Philippines
between 12:chanroblesvirtuallawlibrary00
laws, with offices in the City of Manila and
and 2:chanroblesvirtuallawlibrary00 oclock in
previously engaged in air transportation
the afternoon of that day in the Trade and
business. The Shell Company of the P. I., Ltd.,
Commerce Building at 123 Juan Luna St.,
which will be designated as the Defendant, is
Manila, and informed them that CALI was in a
on the other hand, a corporation organized
state of insolvency and had to stop operation.
under the laws of England and duly licensed
The creditors present, or represented at the
to do business in the Philippines, with
meeting, were: Mr. A. L. Bartolini,
representing Firestone Tire & Rubber Co.; Mr.

45 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
Quintin Yu, representing Commercial Alfonso Sycip 575,880.83
News; Mr. Mark Pringle, representing Smith,
Bell & Co. (Lloyds of London); Messrs. Vicente Yek Hua Trading Corp. 487,871.20
Liwag, C. Dominguez and Pacifico Agcaoili,
representing National Airports Corporation;
Messrs. W. J. Bunnel and Manuel Chan,
representing Goodrich International Rubber P1,512,762.87
Co.; Mr. G. E. Adair, representing Goodyear
Tire & Rubber Co.; Mr. J. T. Chuidian, What occurred in that meeting may be
representing Gibbs, Gibbs, Chuidian & summarized as follows: Mr. Alexander Sycip,
Quasha; Mr. E. Valera, representing Mabasa & Secretary of the Board of Directors of the
Co.; Mr. D. Fitzgerald, representing Shell Co. CALI, informed the creditors present that this
P.I. Ltd.; and Mr. Alfonso Z. Sycip, corporation was insolvent and had to stop
representing himself, Yek Hua Trading operations. He explained the memorandum
Corporation and Paul Sycip (Exhs. NN, JJJ, MM, agreement executed by the CALI with the
QQQ, II-4, SS, TT, UU, VV, WW, XX, YY, ZZ, Philippine Air Lines, Inc., on August 4, 1948,
AAA, BBB, CCC, DDD, EEE, FFF, GGG, and regarding the proposed sale to the latter of
HHH). the aviation equipments of the former (Exhs.
MM and QQQ, par. 1 memo of meeting; III
The persons present, including Mr. Desmond and PPP P. Agcaoilis memorandum dated
Fitzgerald, signed their names and the names August 7, 1948, to the General Manager of
of the companies they represented on a the National Airports Corp.). Mr. Alexander
memorandum pad of the law firm Sycip was assisted in the explanation by CPA
Quisumbing, Sycip, and Quisumbing (Exhs. Alfredo Velayo of Washington, Sycip &
VV and VV-1). Company, Auditors of the CALI, who
discussed the balance sheets and distributed
In that meeting at noontime of August 6, copies thereof to the creditors present (Exhs.
1948, out of the 194 creditors in all (Exh. OO) NN, NN-1 to 7; chan
15 were listed as principal creditors having roblesvirtualawlibraryExh. JJ P. Agcaoilis
big balances (Exh. NN), to wit: copy of balance sheet p. 229- 230 t.s.n., Nov.
27, 1951, of the testimony of D. Fitzgerald).
13th Air Force P12,880.00 The said balance sheet made mention of a C-
54 plane in the United States, the property
Civil Aeronautics Administration 98,127.00 now involved in this suit. He was likewise
assisted in his explanation by Mr. Curtis L.
Gibbs, Giibs, Chuidian & Quasha 5,544.90 Lambert, Vice President and General Manager
of the CALI, who described in greater detail
Goodrich Intl Rubber Co. 3,142.47 the assets of the CALI. There was a general
understanding among all the creditors
Goodyear Tire & Rubber Co. 1,727.50 present on the desirability of consummating
the sale in favor of the Philippine Air Lines
Mabasa & Co. 4,867.72 Inc. (Exhs. MM and QQQ, par. 2 Memo of
meeting; Exhs. III and PPP, par. 5 P.
Manila Intl Airport 55,280.04 Agcoailis memorandum dated August 7,
1948, to the General Manager of the National
Manila Intl Air Terminal (PAL) 36,163.68 Airports Corp.; pp. 299-300 t.s.n., January 15,
1952, of the testimony of Desmond
Shell Co. of the Phil., Ltd. 152,641.68 Fitzgerald).

Smith, Bell & Co., Ltd. 45,534.00 Then followed a discussion on the payment of
claims of creditors and the preferences
Paul Sycip 8,189.33 claimed for the accounts due to the
employees, the Government and the National
Mrs. Buenaventura 20,000.00 Airports Corporation. The representatives of
the latter Messrs. Vicente H. Liwag, C.
Firestone Tire & Rubber Co. 4,911.72 Dominguez and Pacifico V. Agcaoili,

46 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
contended that their accounts were To this working committee, Mr. Desmond
preferred. The other creditors disputed such Fitzgerald, Credit Manager, of the Defendant,
contention of preference (Exhs. MM and QQQ, Atty. Agcaoili of the National Airports
par. 3 0151 Memo of meeting; Exhs. III and Corporation and Atty. Alexander Sycip (Exhs.
PPP, par. 3 P. Agcaoilis memorandum III and PPP, par. 5 P. Agcaoilis
dated August 1, 1948, to the General memorandum dated August 7, 1948, to the
Manager of the National Airports Corpand pp. General Manager of the National Airports
247-248 t.s.n., January 10, 1952, of the (Corp.) were appointed. After the creditors
testimony of D. Fitzgerald). No understanding present knew the balance sheet and heard
was reached on this point and it was then the explanations of the officers of the CALI, it
generally agreed that the matter of was their unanimous opinion that it would be
preference be further studied by a working advantageous not to present suits against
committee to be formed (Exhs. MM, par. 3 this corporation but to strive for a fair pro-
Memo of meeting). The creditors present rata division of its assets (Exh. MM, par 6,
agreed to the formation of a working Memo of meeting), although the
committee to continue the discussion of the management of the CALI announced that in
payment of claims and preferences alleged case of non-agreement of the creditors on a
by certain creditors, and it was further agreed pro-rata division of the assets, it would file
that said working committee would supervise insolvency proceedings (p. 70, t.s.n., October
the preservation of the properties of the 22, 1951).
corporation while the creditors attempted to
come to an understanding as to a fair Mr. Fitzgerald did not decline the nomination
distribution of the assets among them (Exhs. to form part of said working committee and
MM and QQQ, Memo of meeting). From the on August 9, 1948, the 3 members thereof
latter exhibit the following is copied: discussed methods of achieving the
objectives of the committee as decided at the
4. Certain specific matters such as the creditors meeting, which were to preserve
amount owing to the Philippine Air Lines, Inc., the assets of the CALI and to study the way
and the claims of Smith, Bell vs. Co., of making a fair division of all the assets
(representing Lloyds of London) that its claim among the creditors. Atty. Sycip made an
should be offset against the payments which offer to Mr. D. Fitzgerald to name a
may be due to CALI from insurance claims representative to oversee the preservation of
were not taken up in detail. It was agreed the assets of the CALI, but Mr. Fitzgerald
that these matters together with the general replied that the creditors could rely on Col.
question of what are preferred claims should Lambert. Atty. Pacifico Agcaoili promised to
be the subject of further discussions, but refer the arguments adduced at the second
shall not interfere with the consummation of meeting to the General Manager of the
the sale in favor of PAL. National Airports Corporations and to obtain
the advice of the Corporate Counsel, so the
5. The creditors present agreed to the negotiation with respect to the division of
formation of the working committee to assets of the CALI among the creditors was
supervise the preservation of the properties left pending or under advice when on that
of the corporation and agreed further that Mr. very day of the meeting of the working
Fitzgerald shall represent the creditors as a committee, August 9, 1948, which Mr.
whole in this committee. It was understood, Fitzgerald attended, Defendant effected a
however, that all questions relating to telegraphic transfer of its credit against the
preference of claims can be decided only by CALI to the American corporation Shell Oil
the creditors assembled. Company, Inc., assigning its credit,
amounting to $79,440.00, which was
6. It was the sense of the persons present subsequently followed by a deed of
that, if possible, the insolvency court be assignment of credit dated August 10, 1948,
avoided but that should the creditors not the credit amounting this time to the sum of
meet in agreement, then all the profits from $85,081.29 (Exh. I).
the sale will be submitted to an insolvency
court for proper division among the On August 12, 1948, the American
creditors. corporation Shell Oil Company, Inc., filed a

47 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
complaint against the CALI in the Superior By order of October 28, 1948, the Court
Court of the State of California, U.S.A. in and confirmed the appointment of Mr. Alfredo M.
for the County of San Bernardino, for the Velayo, who was unanimously elected by the
collection of an assigned credit of $79,440.00 creditors as Assignee in the proceedings, and
Case No. 62576 of said Court (Exhs. A, E, ordered him to qualify as such by taking the
F, G, H, V, and Z) and a writ of attachment oath of office within 5 days from notice and
was applied for and issued on the same date filing a bond in the sum of P30,000.00 to be
against a C-54 plane (Exhs. B, C, D, Y, W, X, approved by the Court conditioned upon the
and X-1). faithful performance of his duties, and
providing further that all funds that the
On September 17, 1948, an amended Assignee may collect or receive from the
complaint was filed to recover an assigned debtors of the corporation, or from any other
credit of $85,081.29 (Exhs. I, K, L, M, Q, R, S, source or sources, be deposited in a local
T, U, DD) and a supplemental attachment for bank (Exh. KK). On November 3, 1948, the
a higher sum was applied for and issued clerk of court executed a deed of conveyance
against the C-54 plane, plus miscellaneous in favor of the Assignee (Alfredo M. Velayo)
personal properties held by Pacific Overseas over all the assets of the CALI (Exh. LL).
Air Lines for the CALI (Exhs. N, O, P, AA, BB,
BB-1 and CC) and on January 5, 1949, a The Case. After properly qualifying as
judgment by default was entered by the Assignee, Alfredo M. Velayo instituted this
American court (Exhs. J, EE, FF, GG, and HH). case (No. 6966 of the Court of First Instance
of Manila) on December 17, 1948, against the
Unaware of Defendants assignments of Shell Company of P. I., Ltd., for the purpose of
credit and attachment suit, the stockholders securing from the Court a writ of injunction
of CALI resolved in a special meeting of restrainingDefendant, its agents, servants,
August 12, 1948, to approve the attorneys and solicitors from prosecuting in
memorandum agreement of sale to the and for the County of San Bernardino in the
Philippine Air Lines, Inc, and noted that the Superior Court of the State of California,
Board had been trying to reach an agreement U.S.A. the aforementioned Civil Case No.
with the creditors of the corporation to 62576 against the insolvent Commercial Air
prevent insolvency proceedings, but so far no Lines, Inc., begun by it in the name of the
definite agreement had been reached (Exh. American corporation Shell Oil Company, Inc.,
OO Minutes of August 12, 1948, and as an alternative remedy, in case the
stockholders meeting). purported assignment of Defendants alleged
credit to the American corporation Shell Oil
By the first week of September, 1948, the Company, Inc., and the attachment issued
National Airports Corporation learned against CALI in the said Superior Court of
ofDefendants action in the United States and California shall have the effect of defeating
hastened to file its own complaint with the procurement by Plaintif as Assignee in
attachment against the CALI in the Court of insolvency of the above- mentioned airplane,
First Instance of Manila (Exhs. KKK, LLL, and which is the property of the insolvent CALI,
MMM). The CALI, also prompted situated in the Ontario International Airport,
by Defendants action in getting the alleged with in the County of San Bernardino, State of
undue preference over the other creditors by California, U.S.A., that judgment for damages
attaching the C-54 plane in the United States, in double the value of the airplane be
beyond the jurisdiction of the Philippines, awarded in favor
filed on October 7, 1948, a petition for of Plaintifagainst Defendant, with costs.
voluntary insolvency. On this date, an order
of insolvency was issued by the court (Exh. JJ) The complaint further prays that upon the
which necessarily stayed the National filing of a bond executed to the Defendant in
Airports Corporations action against the CALI an amount to be fixed by the Court, to the
and dissolved its attachment (Exh. NNN), effect that Plaintif will pay to Defendant all
thus compelling the National Airports damages the latter may sustain by reason of
Corporation to file its claims with the the injunction if the Court should finally
insolvency court (Exh. SS). decide that thePlaintif was not entitled
thereto, the Court issued a writ of preliminary

48 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
injunction enjoining the Defendant, its agent, Shell Union Oil Company of the U.S. and
servants, attorneys and solicitor, from presumably countless American investors
prosecuting the aforementioned case No. inasmuch as its shares of stock are being
62576, the same writ of preliminary traded daily in the New York stock
injunction to issue without notice to market; that Mr. Fitzgerald,Defendants Credit
the Defendant it appearing by verified Manager, was merely invited to a luncheon-
complaint that the great irreparable injury meeting at the Trade and Commerce Building
will result to the Plaintif-Appellant before the in the City of Manila on August 6, 1948,
matter could be on notice. The Plaintif also without knowing the purpose for which it was
prays for such other remedies that the Court called; and that Mr. Fitzgerald could not have
may deem proper in the premises. officially represented the Defendant at that
time because such authority resides on Mr.
On December 20, 1948, the Defendant filed Stephen Crawfurd. Defendant, therefore,
an opposition to the Plaintifs petition for the prays that the complaint be dismissed with
issuance of a writ of the preliminary costs against the Plaintif.
injunction, and on December 22, 1948, the
Court denied the same because whether the Then Alfonso Sycip, Yek Hua Trading
conveyance of Defendants credit was Corporation and Paul Sycip, as well as
fraudulent or not, the Philippine court would Mabasa & Co., filed, with permission of the
not be in position to enforce its orders as Court, their respective complaints in
against the American corporation Shell Oil intervention taking the side of thePlaintif.
Company, Inc., which is outside of the These complaints in intervention were timely
jurisdiction of the Philippines. answered by Defendant which prayed that
they be dismissed.
Plaintif having failed to restrain the progress
of the attachment suit in the United States by After proper proceedings and hearing, the
denial of his application for a writ of Court rendered decision on February 26,
preliminary injunction and the consequences 1954, dismissing the complaint as well as the
on execution of the C-54 plane in the County complaints in intervention, with costs against
of San Bernardino, State of California, U. S. thePlaintif. In view of this
A., he confines his action to the recovery of outcome, Plaintif comes to us praying that
damages against the Defendant. the judgment of the lower court be reversed
and that the Defendant be ordered to pay
On December 28, 1948, Defendant filed its him damages in the sum of P660,000 (being
answer to the complaint, which was amended double the value of the airplane as
on February 3, 1949. In its established by evidence, i.e., P330,000), with
answer, Defendant, besides denying certain costs, and for such other remedy as the Court
averments of the complaint alleged, among may deem just and equitable in the premises.
other reasons, that the assignment of its
credit in favor of the Shell Oil Company, Inc., The Issues. Either admission of the parties,
in the United States was for a valuable or by preponderance of evidence, or by sheer
consideration and made in accordance with weight of the circumstance attending the
the established commercial practices, there transactions herein involved, We find that the
being no law prohibiting a creditor from facts narrated in the preceding statement of
assigning his credit to another; it had no the antecedents have been sufficiently
interest whatsoever in Civil Case No. 62576 established, and the questions at issue
instituted in the Superior Court in the State of submitted to our determination in this
California by the Shell Oil Company, Inc., instance may be boiled down to the following
which is a separate and distinct corporation propositions:
organized and existing in the State of Virginia
and doing business in the State of California,
U. S. A., the Defendant having as its
stockholders the Shell Petroleum Company of
London and other persons residing in that
City, while the Shell Oil Company Inc., of the
United State has its principal stockholders the

49 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
(1) Whether or not under the facts of the than that Defendant, upon learning the
case, the Defendant Shell Company of the P. precarious economic situation of CALI and
I., Ltd., taking advantage of its knowledge of that with all probability, it could not get much
the existence of CALIs airplane C-54 at the of its outstanding credit because of the
Ontario International Airport within the preferred claims of certain other creditors,
Country of San Bernardino, State of forgot that Man does not live by bread
California, U. S. A., alone and entirely disregarded all moral
inhibitory tenets. So, on the very day its
(Which knowledge it acquired: first at the Credit Manager attended the meeting of the
informal luncheon-meeting of the principal Working Committee on August 9, 1948, it
creditors of CALI on August 5, 1948, where its hastily made a telegraphic assignment of its
Credit Manager, Mr. Desmond Fitzgerald, was credit against the CALI to its sister American
selected to form part of the Working Corporation, the Shell Oil Company, Inc., and
Committee to supervise the preservation of by what is stated in the preceding pages
CALIs properties and to study the way of hereof, We know that were the damaging
making a fair division of all the assets among effects of said assignment upon the right of
the creditors and thus avoid the institution of other creditors of the CALI to participate in
insolvency proceedings in court; the proceeds of said CALIs plane C-54.

Subsequently, at the meeting of August 9, Defendants endeavor to extricate itself from


1948, when said Mr. Fitzgerald met the other any liability caused by such evident misdeed
members of the said Working Committee and of its part, alleging that Mr. Fitzgerald had no
heard and discussed the contention of certain authority from his principal to commit the
creditors of CALI on the accounts due the latter on any agreement; that the
employees, the Government and the National assignment of its credit in favor of its sister
Airports Corporation who alleged that their corporation, Shell Oil Company, Inc., was for
claims were preferred), a valuable consideration and in accordance
with the established commercial practices;
acted in bad faith and betrayed the that there is no law prohibiting a creditor
confidence and trust of the other creditors of from assigning his credit to another; and that
CALI present in said meeting by affecting a the Shell Oil Company Inc., of the United
hasty telegraphic transfer of its credit to the States is a corporation different and
American corporation Shell Oil Company, Inc., independent from the Defendant. But all
for the sum of $79,440 which was these defenses are entirely immaterial and
subsequently followed by a deed of have no bearing on the main question at
assignment of credit dated August 10, 1948, issue in this appeal. Moreover, we might say
amounting this time to the sum of that Defendant could not have accomplished
$85,081.28 (Exhs. Z), thus defeating the the transfer of its credit to its sister
purpose of the informal meetings of CALIs corporation if all the Shell companies
principal creditors end depriving the Plaintif, throughout the world would not have a sort of
as its Assignee, of the means of obtaining union, relation or understanding among
said C-54 plane, or the value thereof, to the themselves to come to the aid of each other.
detriment and prejudice of the other CALIs The telegraphic transfer made without
creditors who were consequently deprived of knowledge and at the back of the other
their share in the distribution of said value; creditors of CALI may be a shrewd and
and (2) Whether or not by reason of said surprise move that enabled Defendant to
betrayal of confidence and collect almost all if not the entire amount of
trust, Defendant may be made under the law its credit, but the Court of Justice cannot
to answer for the damages prayed by countenance such attitude at all, and much
the Plaintif; and if so, what should be the less from a foreign corporation to the
amount of such damages. detriment of our Government and local
business.
DISCUSSION OF THE CONTROVERSY
To justify its actions, Defendant may also
I. The mere enunciation of the first claim that Mr. Fitzgerald, based on his feeling
proposition can lead to no other conclusion of distrust and apprehension, entertained the

50 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
conviction that intervenors Alfonso Sycip and not of the creditor, the Shell Company of the
Yek Hua Trading Corporation tried to take P. I. Ltd. But section 70 does not constitute
undue advantage by infiltrating their credits. the only provisions of the law pertinent to the
But even assuming for the sake of argument, matter. The Insolvency Law also provides the
that these intervenors really resorted to such following:
strategem or fraudulent device,
yet Defendants act finds not justification for SEC. 33. The assignee shall have the right
no misdeed on the part of a person is cured to recover all the estate, debt and effects of
by any misdeed of another, and it is to be said insolvent. If at the time of the
noted that neither Alfonso Z. Sycip, nor Yek commencement of the proceedings in
Hua Trading Corporation were the only insolvency, an action is pending in the name
creditors of CALI, nor even preferred ones, of the debtor, for the recovery of a debt or
and that the infiltration of ones credit is of no other thing might or ought to pass to the
sequence if it cannot be proven in the assignee by the assignment, the assignee
insolvency proceedings to the satisfaction of shall be allowed to prosecute the action, in
the court. Under the circumstances of the like manner and with life effect as if it had
case, Defendants transfer of its been originally commenced by him. If there
aforementioned credit would have been are any rights of action in favor of the
justified only if Mr. Fitzgerald had declined to insolvency for damages, on any account, for
take part in the Working Committee and which an action is not pending the assignee
frankly and honestly informed the other shall have the right to prosecute the same
creditors present that he had no authority to with effect as the insolvent might have done
bind his principal and that the latter was to himself if no proceedings in insolvency had
be left free to collect its credit from CALI by been instituted cralaw .
whatever means his principal deemed wise
and were available to it. But then such It must not be forgotten that in accordance
information would have immediately with the spirit of the Insolvency Law and with
dissolved all attempts to come to an the provisions of Chapter V thereof which
amicable conciliation among the creditors deal with the powers and duties of a receiver,
and would have precipitated the filing in the assignee represents the insolvent as well
court of CALIs voluntary insolvency as the creditors in voluntary and involuntary
proceedings and nulified the intended proceedings Intestate of Mariano G.
transfer of Defendants credit to its above- Veloso, etc. vs. Vda. de Veloso S. C. G. R.
mentioned sister corporation. No. 42454; Hunter, Kerr & Co. vs. Samuel
Murray, 48 Phil. 449; Chartered Bank vs.
II. We may agree with the trial judge, that Imperial, 48 Phil. 931; Asia Banking
the assignment of Defendants credit for a Corporation vs. Herridge, 45 Phil. 527 (II
valuable consideration is not violative of the Tolentinos Commercial Laws of the
provisions of sections 32 and 70 of the Philippines, 633). See also Section 36 of the
Insolvency Law (Public Act No. 1956), Insolvency Law.From the foregoing, We see
because the assignment was made since that Plaintif, as Assignee of the Insolvent
August 9, 1948, the original complaint in the CALI, had personality and authority to
United States was filed on August 12, 1948, institute this case for damages, and the only
and the writ of attachment issued on this question that remains determination is
same date, while CALI filed its petition for whether the payment of damages sought to
insolvency on October 7, 1948. At his Honor be recovered from Defendant may be ordered
correctly states, said Sections 32 and 70 only under the Law and the evidence of record.
contemplate acts and transactions occuring
within 30 days prior to the commencement of IF ANY PERSON, before the assignment is
the proceedings in insolvency and, made, having notice of the commencement
consequently, all other acts outside of the 30- of the proceedings in insolvency, or having
day period cannot possibly be considered as reason to believe that insolvency proceedings
coming within the orbit of the operation. In are about to be commenced, embezzles or
addition to this, We may add that Article 70 disposes of any money, goods, chattels, or
of the Insolvency Law refers to acts of the effects of the insolvent, he is chargeable
debtor (in this case the insolvent CALI) and therewith, and liable to an action by the

51 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
assignee for double the value of the property But, it may be asked, would this proposed
sought to be embezzled or disposed of, to be article obliterate the boundary line between
received for the benefit of the insolvent morality and law? The answer is that, in the
estate. last analysis, every good law draws its breath
of life from morals, from those principles
The writer of this decision does not entertain which are written with words of fire in the
any doubt that the Defendant taking conscience of man. If this premises is
advantage of his knowledge that insolvency admitted, then the proposed rule is a prudent
proceedings were to be instituted by CALI if earnest of justice in the face of the
the creditors did not come to an impossibility of enumerating, one by one, all
understanding as to the manner of wrongs which cause damages. When it is
distribution of the insolvent asset among reflected that while codes of law and statutes
them, and believing it most probable that have changed from age to age, the
they would not arrive at such understanding conscience of man has remained fixed to its
as it was really the case schemed and ancient moorings, one cannot but feel that it
effected the transfer of its sister corporation is safe and salutary to transmute, as far as
in the United States, where CALIs plane C-54 may be, moral norms into legal rules, thus
was by that swift and unsuspected operation imparting to every legal system that
efficaciously disposed of said insolvents enduring quality which ought to be one of its
property depriving the latter and the superlative attributes.
Assignee that was latter appointed, of the
opportunity to recover said plane. In addition Furthermore, there is no belief of more
to the aforementioned Section 37, Chapter 2 baneful consequence upon the social order
of the PRELIMINARY TITLE of the Civil Code, than that a person may with impunity cause
dealing on Human Relations, provides the damage to his fellow-men so long as he does
following: not break any law of the State, though he
may be defying the most sacred postulates of
Art 19. Any person must, in the exercise of morality. What is more, the victim loses faith
his rights and in the performances of his in the ability of the government to afford him
duties, act with justice, give everyone his due protection or relief.
and observe honesty and good faith.
A provision similar to the one under
It maybe said that this article only contains a consideration is embodied in article 826 of
mere declarations of principles and while the German Civil Code.
such statement may be is essentially correct,
yet We find that such declaration is The same observations may be made
implemented by Article 21 and sequence of concerning injurious acts that are contrary to
the same Chapter which prescribe the public policy but are not forbidden by statute.
following: There are countless acts of such character,
but have not been foreseen by the
Art. 21. Any person who wilfully causes loss lawmakers. Among these are many business
or injury to another in a manner that is practices that are unfair or oppressive, and
contrary to morals, good customs or public certain acts of landholders and employers
policy shall compensate the latter for the affecting their tenants and employees which
damage. contravene the public policy of social justice.

The Code Commission commenting on this Another rule is expressed in Article 24 which
article, says the following: compels the return of a thing acquired
without just or legal grounds. This provision
Thus at one stroke, the legislator, if the embodies the doctrine that no person should
forgoing rule is approved (as it was unjustly enrich himself at the expense of
approved), would vouchsafe adequate legal another, which has been one of the
remedy for that untold numbers of moral mainstays of every legal system for
wrongs which is impossible for human centuries. It is most needful that this ancient
foresight to provide for specifically in the principles be clearly and specifically
statutes. consecrated in the proposed Civil Code to the

52 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
end that in cases not foreseen by the can be given retroactive effect. Moreover,
lawmaker, no one may unjustly benefit Article 2253 of the Civil Code further
himself to the prejudice of another. The provides:
German Civil Code has a similar provision
(art. 812). (Report of the Code Commission cralaw But if a right should be declared for
on the Proposed Civil Code of the Philippines, the first time in this Code, it shall be effective
p. 40- 41). at once, even though the act or event which
may give rise thereto may have been done or
From the Civil Code Annotated by Ambrosio may have occurred under the prior
Padilla, Vol. I, p. 51, 1956 edition, We also legislation, provided said new right does not
copy the following: prejudice or impair any vested or acquired
right, of the same origin.
A moral wrong or injury, even if it does not
constitute a violation of a statute law, should and according to Article 2254, no vested or
be compensated by damages. Moral acquired right can arise from acts or
damages (Art. 2217) may be recovered (Art. omissions which are against the law or which
2219). In Article 20, the liability for damages infringe upon the right of others.
arises from a willful or negligent act contrary
to law. In this article, the act is contrary to In case of Juan Castro vs. Acro Taxicab
morals, good customs or public policy. Company, (82 Phil., 359; chan
roblesvirtualawlibrary47 Off. Gaz., [5] 2023),
Now, if Article 23 of the Civil Code goes as far one of the question at issue was whether or
as to provide that: not the provisions of the New Civil Code of
the Philippines on moral damages should be
Even if an act or event causing damage to applied to an act of negligence which
anothers property was not due to the fault or occurred before the effectivity of said code,
negligence of the Defendant, the latter shall and this Court, through Mr. Justice Briones,
be liable for indemnity if through the act or sustaining the affirmative proposition and
event he was benefited. citing decisions of the Supreme Court of
Spain of February 14, 1941, and November
with mere much more reason 14, 1934, as well as the comment of Mr.
the Defendant should be liable for indemnity Castan, Chief Justice of the Supreme Court of
for acts it committed in bad faith and with Spain, about the revolutionary tendency of
betrayal of confidence. Spanish jurisprudence, said the following:

It may be argued that the aforequoted We conclude, therefore, reaffirming the


provisions of the Civil Code only came into doctrine laid down in the case of Lilius (59 J.
effect on August 30, 1950, and that they F. 800) in the sense that indemnity lies for
cannot be applicable to acts that took place moral and patrimonial damages which
in 1948, prior to its effectivity. But Article include physical and pain sufferings. With this
2252 of the Civil Code, though providing that: (doctrine), We effect in this jurisdiction a real
symbiosis 1 of the Spanish and American
Changes made and new provisions and rules Laws and, at the same time, We act in
laid down by this Code which may be consonance with the spirit and progressive
prejudice or impair vested or acquired rights march of time (translation)
in accordance with the old legislation, shall
have no retroactive effect cralaw . The writer of this decision does not see any
reason for not applying the provisions of
implies that when the new provisions of the Section 37 of the Insolvency Law to the case
Code does nor prejudice or impair vested or at bar, specially if We take into consideration
acquired rights in accordance with the old that the term any person used therein
legislation and it cannot be alleged that in cannot be limited to the officers or employee
the case at bar Defendant had any vested or of the insolvent, as no such limitation exist in
acquired right to betray the confidence of the the wording of the section (See also Sec. 38
insolvent CALI or of its creditors said new of the same Act), and that, as stated before,
provisions, like those on Human Relations, the Defendant schemed and affected the

53 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
transfer of its credits (from which it could Art. 2142. Certain lawful, voluntary and
derive practically nothing) to its sister unilateral acts give rise to the juridical
corporation in the United States where CALIs relation of quasi-contract to the end that no
plane C-54 was then situated, succeeding by one shall be unjustly enriched or benefited at
such swift and unsuspected operation in the expense of another.
disposing of said insolvents property by
removing it from the possession and Art, 2143. The provisions for quasi-contracts
ownership of the insolvent. However, some in this Chapter do not exclude other quasi-
members of this Court entertain doubt as to contracts which may come within the purview
the applicability of said section 37 because in of the preceding article.
their opinion what Defendant in reality
disposed of was its own credit and not the In accordance with these quoted provisions of
insolvents property, although this was the Civil Code, We hold Defendant liable to
practically the effect and result of the pay to the Plaintif, for the benefit of the
scheme. Having in mind this objection and insolvent CALI and its creditors, as
that the provisions of Article 37 making the compensatory damages a sum equivalent to
person coming within its purview liable for the value of the plane at the time
double the value of the property sought to be aforementioned and another equal sum as
disposed of constitute a sort of penal clause exemplary damages.
which shall be strictly construed, and
considering further that the same result may There is no clear proof in the record about the
be obtained, by applying only the provisions real value of CALIs plane C-54 at the time
of the Civil Code, the writer of this decision whenDefendants credit was assigned to its
yields to the objection aforementioned. sister corporation in the United States.

Articles 2229, 2232, 2234, 2142, and 2143 of Judgment


the Civil Code read as
follows:chanroblesvirtuallawlibrary Wherefore, and on the strength of the
foregoing considerations, the decision
Art. 2229. Exemplary or corrective damages appealed from is reversed and Defendant-
are imposed, by way of example or correction Appellee-, Shell Company of the Philippine
for the public good, in addition to the moral, Islands, Ltd., is hereby sentenced to pay
temperate, liquidated or compensatory to Plaintif-Appellant, as Assignee of the
damages. insolvent CALI, damages in a sum double the
amount of the value of the insolvents
Art. 2232. In contracts quasi-contracts, the airplane C-54 at the time Defendants credit
Court may award exemplary damages if against the CALI was assigned to its sister
theDefendant acted in a wanton, fraudulent, corporation in the United States, which value
reckless, oppressive, or malevolent manner. shall be determined in the corresponding
incident in the lower court after this decision
Art. 2234. While the amount of the becomes final. Costs are taxed
exemplary damages need not be proved, against Defendant-Appellee. It is SO
the Plaintifmust show that he is entitled to ORDERED.
moral, temperate, or compensatory damages
before the court may consider the question of Paras, C.J., Padilla, Montemayor,
whether or not exemplary damages should Bautista Angelo, Labrador, Concepcion,
be awarded. In case liquidated damages Reyes, J. B. L., and Endencia, concur.
should be upon, although no proof of loss is
necessary in order that such liquidated RESOLUTION
damages be recovered, nevertheless, before
the court may consider the question of July 30, 1957
granting exemplary in addition to the
liquidated damages, the Plaintif must show FELIX, J.:
that he would be entitled to moral, temperate
or compensatory damages were it not for the Plaintif-Appellant and intervenors on one
stipulation for liquidated damages. hand and Defendant Shell Company of the

54 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
Philippine Islands, Ltd., on the other, have insolvent CALI, under the control of the
filed their respective motions for latters President Alfonso Sycip;
reconsideration of Our decision rendered in
this case. The motion (2) That Appellees transfer of its credit to its
of Plaintif Appellant and the intervenors sister corporation in the United States, did
seeks the reconsideration of said decision in not prejudice the Government, because its
so far as it held claims were fully paid, nor caused any loss or
that:chanroblesvirtuallawlibrary injury to other creditors, except the entities
and groups controlled by Alfonso Z. Sycip;
There is no clear proof in the record about
the real value of CALIs plane C-54, at the (3) That Appellee is not liable for exemplary
time when Defendants credit was assigned damages because the provisions of the new
to its sister corporation in the United States. Civil Code on the matter are not applicable to
this case;
and, upon such holding, it orders that the
value of the C-54 plane (4) That the Plaintif-Appellant has no cause
of action against Defendant-Appellant and is
be determined in the corresponding incident not the real party in interest; and
in the lower Court after this decision becomes
final. (5) That Plaintifs right of action was based
and prosecuted in the lower court under the
The movants maintain that there is evidence provisions of the Insolvency Law and
sufficient to support a finding that CALIs C- consequently that he is stopped from
54 plane had a fair market value of $165,000 pursuing another theory and is not entitled to
at or about the time Defendant credit was damages under the provisions of the New
assigned to its sister corporation in the Civil Code.
United States and the plane attached. This
motion was opposed by Defendant- I. The facts on which this Court based its
Appellee which was replied conclusion that Defendant corporation acted
by Plaintif- Appellant with a supplemental in bad faith are plainly and explicitly narrated
motion for reconsideration, and then retorted in the decision. They are not and cannot be
with a manifestation and motion denied or contradicted by said Defendant. On
ofDefendant-Appellant followed the contrary they are in many respects
by Defendants answer to Plaintifs motion admitted by theDefendant and no amount of
for reconsideration. reasoning can make Us change that
conclusion.
After considering the evidence pointed out by
said parties in support of their respective II. As pointed out by counsel
contentions, we are more convinced that the for Plaintif, Defendant choses to ignore that
proofs relative to the real value of CALI plane besides the claims of intervenors Alfonso Z.
C-54 at the time Defendants credit was Sycip and Yek Hua Trading Corporation, which
assigned to its sister corporation in the counsel for the Shell says to constitute 10/11
United States, is not clear. Hence, Plaintif- of the approved ordinary claims, there is still
Appellants and intervenors motion for 1/11 of the other creditors whose claims have
reconsideration is hereby overruled. been also approved by the insolvency Court,
in addition to the ordinary creditors whose
The main grounds on which Defendant- claims are yet unapproved by the insolvency
Appellee bases its motion for reconsideration, Court, amounting to P560,296,32, and no
as relied upon in its counsels memoranda good reason suggests itself why these
and oral argument, may be reduced to the unapproved but pending claims should be
following:chanroblesvirtuallawlibrary taken into account in considering the
prejudice caused all the creditors of the
(1) That the Defendant Appellee is not guilty insolvent CALI. As long as these claims are
of bad faith, it having done nothing but to pending, the contingency exist, that these
protect legitimately its own interest or credit creditors may recover from the insolvent
against the bad faith of its debtor, the estate and when they do, they will suffer to

55 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
the diminution of CALIs asset resulting from assignee and attorneys fees and
the attachment of the plane
by Appellee Shell. other reserves P138,719.56

Answering Defendants contention that the


transfer of its credit to its sister corporation in
the United States did not prejudice the Amount available for
Government or the other creditors of CALI, distribution P529,885.59
counsel forPlaintif-Appellant has the
following to say:chanroblesvirtuallawlibrary Divident:

So far as the claims of the Government are Amount available for


concerned, it is true that they were preferred distribution P529,885.59
claims and have all been paid. But this
circumstance cannot erase the fact that = 30%
the Appellees action jeopardised the
Governments claims as well as the other Total of all ordinary claims approved
claims. There was doubt as to the preferential
character of the Governments claims. and unapproved P1,746,222.33
Indeed, the preferential character of one of
the Governments claims necessitated a Had Appellee not assigned its credit in 1948,
litigation to establish. Had it been held to be the insolvent CALI would have realized from
an ordinary claim, the Government would the sale of the plane (which was attached
have suffered as other creditors. But that is by Appellee) P330,000 representing the fair
neither here nor there; neither the character market value of the plane at the time of the
of the claim nor the identity of the claimant attachment. Therefore, if this amount of
can possibly affect the application of a P330,000 is added to the distributable
principle that no person may profit from his amount of P529,- 885.59, the share of each
betrayal of a trust. of the ordinary creditos would certainly
amount to approximately 1 1/2 times the
And the Appellant continues thus: dividend each of them has received; in other
words, each ordinary creditors would
Appellee had a credit of P170,000 against received not 30% but approximately 45% of
the insolvent CALI as of August 1948, which his claim, and Appellee would recover
is assigned to its sister corporation in the approximately only 45% and not 70% of its
United States for P120.000. credit.
Hence, Appellee recovered 70% of its credit
and immediately upon making the And even if the sale of CALIs plane would not
assignment in 1948. More than this, the have obtained the sum of P330,000.00, the
stated consideration was fixed by and and proceeds thereof that might be diminished
between two sister companies. The fact though affecting, no doubt, the calculated
remains that Appellees sister company was dividend of each of the ordinary creditors,
enabled to get hold of a C-54 plane worth estimated at 45% by reducing it
about P330,000. proportionately, such diminution would at the
same time increase the difference between
On the other hand, the ordinary creditors the dividend paid CALIs ordinary creditors in
who filed their claims against the insolvent November, 1956, and the dividend of 70%
CALI had to wait until November 1956 to get secured by DefendantShell in 1948.
their dividends and only at the rate of 30%,
computed as follows: III and IV. That Appellee Shell is not liable for
exemplary damages in this case and
Assets as of October 30, 1956 P668,605.15 thatPlaintif-Appellant has no cause of action
against Defendant-Appellee, for he is not the
Less: real party in interest, are matters fully
discussed in Our decision and We find no
Preferred claims still uncollected,

56 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
sensible reason for disturbing the conclusions SEC. 37. IF ANY PERSON, before the
We reached therein. assignment is made, having notice of the
commencement of the proceedings in
V. As to the fifth question raised by counsel insolvency, or having reason to believe that
for Appellee in the course of his oral insolvency proceedings are about to be
argument at the hearing in the City of Baguio commenced, embezzles or disposses of any
of his motion, i.e., that Plaintifs right of of the money, goods, chattels, or effects of
action was based and prosecuted in the lower the insolvent, he is chargeable therewith, and
court under the provisions of the Insolvency liable to an action by the assignee for double
Law and he is, therefore, stopped from the value of the property sought to be
pursuing on appeal another theory under embezzled or disposed of, to be received for
which he might be entitled to damages in the benefit of the insolvent estate.
consonance with the provisions of the new
Civil Code, We may invoke the decision in The writer of the decision was then and still is
the case of Dimaliwat vs. Asuncion, 59 Phil., of the opinion that the provisions of this
396, 401. In that decision We said the section were applicable to the case, and
following: accordingly, that Defendant Shell was liable
in this action instituted by the Assignee for
Vicente Dimaliwat contends that Esperanza double the value of the property disposed of,
Dimaliwat has no right to claim the ownership to be received for the benefit of the Insolvent
of the property in question to the exclusion of estate. However, some of the members of
the children of the third marriage, under the this Court, for the reasons already stated in
foregoing provisions of the Civil Code, the decision, entertained some doubt as to
because the case was not tried on that theory the applicability of said Section 37, and
in the lower court. We find no merit in that yielding to their objections the writer of the
contention. The decision cited are not in decision turned his eyes to the provisions of
point. Articles 968 and 969 of the Civil Code the new Civil Code, inasmuch as the same
are rules of substantive law, and if they are result could be achieved. In the case at bar, it
applicable to the facts of this case they must cannot be denied that:
be given effect.
Defendant taking advantage of his
The same thing can be said in the case at knowledge that insolvency proceedings were
bar. Articles 19, 21, 2229, 2232, 2234, 2142 to be instituted by CALI if the creditors did
and 2143 of the new Civil Code are rules of not come to an understanding as to the
substantive law, and if they are applicable to manner of distribution of the insolvent assets
the facts of this case, which We hold they do, among them, and believing as most probable
they must be made operative and given that they would not arrive at such
effect in this litigation. understanding, as it was really the case-
schemed and effected the transfer of its
xxx xxx xxx credit to its sister corporation in the United
States where CALIs plane C-54 was and by
It maybe seen from the foregoing that the this swift and unsuspected operation
above mentioned grounds on which the efficaciously disposed of said insolvents
motion for reconsideration of property depriving the latter and the
the Defendant Shell stand, are not well taken. Assignee that was later appointed, of the
However, and despite this finding, We insist opportunity to recover said plane.
to delve in the question of whether the
exemplary damages imposed in this Court These acts of Defendant Shell come squarely
upon Defendant Appellee, which the latters within the sanction prescribed by Congress
counsel contends to be inequitable and by similar acts and no reflection can be
unfair, may be modified. reasonably cast on Us if in the measure of the
exemplary damages that were to be imposed
It will be remembered that this case was upon Defendant-Appellee, We were
looked into from the point of view of the influenced by the provisions of Section 37 of
provisions of Section 37 of the Insolvency the Insolvency Law. In this connection it is to
Law, which reads as follows: be noted that, according to the Civil Code,

57 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
exemplary or corrective damages are This case is about the recovery of damages
imposed by way of example or correction for for a wrongful advertisement in the Sunday
the public good, in addition of the moral, Times where Saint Louis Realty Corporation
temperate, liquidated or compensatory misrepresented that the house of Doctor
damages Art. 2229, and that the amount of Conrado J. Aramil belonged to Arcadio S.
the exemplary damages need not be proved Arcadio.
(Art. 2234), for it is left to the sound
discretion of the Court. St. Louis Realty caused to be published with
the permission of Arcadio S. Arcadio (but
Notwithstanding the foregoing, a majority of without permission of Doctor Aramil) in the
this Court was of the belief that the value of issue of the Sunday Times of December 15,
CALIs plane C-54, at the time 1968 an advertisement with the heading
when Defendants credit was assigned to its "WHERE THE HEART IS". Below that heading
sister corporation in the United States, might was the photograph of the residence of
result quite high, and that exemplary Doctor Aramil and theArcadio family and then
damages should not be left to speculation but below the photograph was the following
properly determined by a certain and fixed write-up:
amount. So they voted for the
reconsideration of the decision with regard to Home is where the heart is. And the
the amount of exemplary damages which this hearts of MR. AND MRS. ARCADIO S.
Court fixed at P25,000.00. ARCADIO and their family have been
captured by BROOKSIDE HILLS. They
Because of this attitude of the Court, the used to rent a small 2-bedroom house
dispositive part of our decision rendered in in a cramped neighborhood, sadly
this case is hereby amended to read as inadequate and unwholesome for the
follows: needs of a large family. They
dream(ed) of a more pleasant place
Wherefore, and on the strength of the free from the din and dust of city life
foregoing considerations, the decision yet near all facilities. Plans took shape
appealed from is reversed and Defendant- when they heard of BROOKSIDE HILLS.
Appellee, Shell Company of the Philippine With thrift and determination, they
Islands Ltd., is hereby sentenced to bought a lot and built their dream
pay Plaintif-Appellant, as Assignee of the house ... for P31,000. The Arcadios are
insolvent CALI, compensatory damages in a now part of the friendly, thriving
sum equal to the value of the insolvents community of BROOKSIDE HILLS... a
airplane C-54 at the time Defendants credit beautiful first-class subdivision planned
against CALI was assigned to its sister for wholesome family living.
corporation in the United States - which shall
be determined in the corresponding incident The same advertisement appeared in
in the lower Court after this decision becomes the Sunday Times dated January 5, 1969.
final - and exemplary damages in the sum of Doctor Aramil a neuropsychiatrist and a
P25,000. Costs are taxed against Defendant- member of the faculty of the U. E. Ramon
Appellee. It is SO ORDERED. Magsaysay Memorial Hospital, noticed the
mistake. On that same date, he wrote St.
Louis Realty the following letter of protest:

RIGHT TO PRIVACY (Art. 26) Dear Sirs:

G.R. No. L-46061 November 14, 1984 This is anent to your advertisements
appearing in the December 15, 1968
ST. LOUIS REALTY and January 5, 1969 issues of
CORPORATION, petitioner, vs. COURT OF the Sunday Times which boldly
APPEALS and CONRADO J. depicted my house at the above-
ARAMIL, respondents. mentioned address and implying that it
belonged to another person. I am not
AQUINO, J.: aware of any permission or authority

58 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
on my partfor the use of my house for their real house. But it did not publish any
such publicity. apology to Doctor Aramil and an explanation
of the error.
This unauthorized use of my house for
your promotional gain and much more On March 29, Aramil filed his complaint for
the apparent distortions therein are I damages. St. Louis Realty published in the
believe not only transgression to my issue of the Manila Times of April 15, 1969
private property but also damaging to the following "NOTICE OF RECTIFICATION" in
my prestige in the medical profession I a space 4 by 3 inches:
have had invited in several occasions
numerous medical colleagues, medical This will serve as a notice that our
students and friends to my house and print ad 'Where the Heart is' which
after reading your December 15 appeared in the Manila Timesissue of
advertisement some of them have March 18, 1969 is a rectification of the
uttered some remarks purporting same ad that appeared in the Manila
doubts as to my professional and Times issues rectification of the same
personal integrity. Such sly remarks ad that appeal of December 15, 1968
although in light vein as "it looks like and January 5, 1969 wherein a photo of
your house," "how much are you the house of another Brookside
renting from the Arcadios?", " like your Homeowner (Dr. Aramil-private
wife portrayed in the papers as respondent) was mistakenly used as a
belonging to another husband," etc., background for the featured
have resulted in no little mental homeowner's the Arcadio family.
anguish on my part.
The ad of March 18, 1969 shows the
I have referred this matter to the Legal Arcadio family with their real house in
Panel of the Philippine Medical the background, as was intended all
Association and their final advice is along.
pending upon my submission of
supporting ownership papers. Judge Jose M. Leuterio observed that St. Louis
Realty should have immediately published a
I will therefore be constrained to rectification and apology. He found that as a
pursue court action against your result of St. Louis Realty's mistake, magnified
corporation unless you could by its utter lack of sincerity, Doctor Aramil
satisfactorily explain this matter within suffered mental anguish and his income was
a week upon receipt of this letter. reduced by about P1,000 to P1,500 a month.
Moreover, there was violation of Aramil's
The letter was received by Ernesto Magtoto, right to privacy (Art. 26, Civil Code).
an officer of St. Louis Realty in charge of
advertising. He stopped publication of the The trial court awarded Aramil P8,000 as
advertisement. He contacted Doctor Aramil actual damages, P20,000 as moral damages
and offered his apologies. However, no and P2,000 as attorney's fees. St. Louis
rectification or apology was published. Realty appealed to the Court of Appeals.

On February 20, 1969, Aramil's counsel The Appellate Court affirmed that judgment,
demanded from St. Louis Realty actual, moral with Acting Presiding Justice Magno S.
and exemplary damages of P110,000 (Exh. Gatmaitan as ponente, and Justices Sixto A.
D). In its answer dated March 10, St. Louis Domondon and Samuel F. Reyes concurring.
Realty claimed that there was an honest
mistake and that if Aramil so desired, The Appellate Court reasoned out that St.
rectification would be published in the Manila Louis Realty committed an actionable quasi-
Times (Exh. 3). delict under articles 21 and 26 of the Civil
Code because the questioned advertisements
It published in the issue of the Manila pictured a beautiful house which did not
Times of March 18, 1969 a new belong to Arcadio but to Doctor Aramil who,
advertisement with the Arcadio family and naturally, was annoyed by that contretemps.

59 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
In this appeal, St. Louis Realty contends that JEROME CASTRO, Petitioner, vs. PEOPLE
the Appellate Court ignored certain facts and OF THE PHILIPPINES, Respondent.
resorted to surmises and conjectures. This
contention is unwarranted. The Appellate RESOLUTION
Court adopted the facts found by the trial
court. Those factual findings are binding on CORONA, J.:
this Court.
This petition for review on
St. Louis Realty also contends that the 1
certiorari emanated from the complaint for
decision is contrary to law and that the case grave oral defamation2 filed by Albert P. Tan
was decided in a way not in conformity with against petitioner Jerome Castro.
the rulings of this Court. It argues that the
case is not covered by article 26 which The facts follow.
provides that "every person shall respect the
dignity, personality, privacy and peace of On November 11, 2002, Reedley International
mind of his neighbors and other persons". School (RIS) dismissed Tans son, Justin Albert
"Prying into the privacy of another's (then a Grade 12 student), for violating the
residence" and "meddling with or disturbing terms of his disciplinary probation. 3 Upon
the private life or family relations of another" Tans request, RIS reconsidered its decision
and "similar acts", "though they may not but imposed "non-appealable" conditions
constitute a criminal offense, shall produce a such as excluding Justin Albert from
cause of action for damages, prevention and participating in the graduation ceremonies.
other relief".
Aggrieved, Tan filed a complaint in the
The damages fixed by Judge Leuterio are Department of Education (Dep-Ed) for
sanctioned by Articles 2200, 2208 and 2219 violation of the Manual of Regulation of
of the Civil Code. Article 2219 allows moral Private Schools, Education Act of 1982 and
damages for acts and actions mentioned in Article 19 of the Civil Code 4 against RIS. He
Article 26. As lengthily explained by Justice alleged that the dismissal of his son was
Gatmaitan, the acts and omissions of the firm undertaken with malice, bad faith and
fan under Article 26. evident premeditation. After investigation,
the Dep-Ed found that RIS code violation
St. Louis Realty's employee was grossly point system allowed the summary
negligent in mixing up the Aramil and Arcadio imposition of unreasonable sanctions (which
residences in a widely circulated publication had no basis in fact and in law). The system
like the Sunday Times. To suit its purpose, it therefore violated due process. Hence, the
never made any written apology and Dep-Ed nullified it. 5
explanation of the mix-up. It just contented
itself with a cavalier "rectification ". Meanwhile, on November 20, 2002, the Dep-
Ed ordered RIS to readmit Justin Albert
Persons, who know the residence of Doctor without any condition.6 Thus, he was able to
Aramil, were confused by the distorted, graduate from RIS and participate in the
lingering impression that he was renting his commencement ceremonies held on March
residence from Arcadio or that Arcadio had 30, 2003.
leased it from him. Either way, his private life
was mistakenly and unnecessarily exposed. After the graduation ceremonies, Tan met
He suffered diminution of income and mental Bernice C. Ching, a fellow parent at RIS. In
anguish. the course of their conversation, Tan
intimated that he was contemplating a suit
WHEREFORE, the judgment of the Appellate against the officers of RIS in their personal
Court is affirmed. Costs against the capacities, including petitioner who was the
petitioner. SO ORDERED. assistant headmaster.

G.R. No. 180832 July 23, 2008 Ching telephoned petitioner sometime the
first week of April and told him that Tan was
planning to sue the officers of RIS in their

60 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
personal capacities. Before they hung up, For his defense, petitioner denied harboring
petitioner told Ching: ill-feelings against Tan despite the latters
complaint against RIS in the Dep-Ed.
Okay, you too, take care and be careful Although he admitted conversing with Ching
talking to [Tan], thats dangerous. (whom he considered as a close
acquaintance) on the telephone a few days
Ching then called Tan and informed him that after RIS 2003 commencement exercises,
petitioner said "talking to him was petitioner asserted that he never said or
dangerous." insinuated that Tan or talking to Tan was
dangerous. On cross-examination, however,
Insulted, Tan filed a complaint for grave oral he did not categorically deny the veracity of
defamation in the Office of the City Chings statement.
Prosecutor of Mandaluyong City against
petitioner on August 21, 2003. The MeTC found that Chings statements in
her affidavit and in open court were
On November 3, 2003, petitioner was consistent and that she did not have any
charged with grave oral defamation in the motive to fabricate a false statement.
Metropolitan Trial Court (MeTC) of Petitioner, on the other hand, harbored
7
Mandaluyong City, Branch 60 under the personal resentment, aversion and ill-will
following Information: against Tan since the Dep-Ed compelled RIS
to readmit his son. Thus, the MeTC was
That on or about the 13th day of March, 2003 convinced that petitioner told Ching talking to
in the City of Mandaluyong, Philippines, a Tan was dangerous and that he uttered the
place within the jurisdiction of this Honorable statement with the intention to insult Tan and
Court, the above-named [petitioner], with tarnish his social and professional reputation.
deliberate intent of bringing ATTY. ALBERT P.
TAN, into discredit, dishonor, disrepute and In a decision dated December 27, 2005, the
contempt, did then and there, willfully, MeTC found petitioner guilty beyond
unlawfully and feloniously speak and utter reasonable doubt of grave oral defamation: 8
the following words to Ms. Bernice C. Ching:
WHEREFORE, judgment is hereby rendered
"OK, YOU TOO, YOU TAKE CARE AND BE finding accused, Jerome
CAREFUL TALKING TO [TAN], THATS Castro GUILTY beyond reasonable doubt of
DANGEROUS." the crime of Grave Oral Defamation,
sentencing him therefore, in accordance to
and other words of similar import of a serious Article 358(1) of the Revised Penal Code and
and insulting nature. applying the Indeterminate Sentence Law to
suffer the penalty of imprisonment of 1
CONTRARY TO LAW. month and 1 day of arresto mayor as
minimum to 4 months and 1 day of arresto
Petitioner pleaded not guilty during mayor as maximum.
arraignment.
On appeal, the Regional Trial Court (RTC)
The prosecution essentially tried to establish affirmed the factual findings of the MeTC.
that petitioner depicted Tan as a "dangerous However, in view of the animosity between
person." Ching testified that petitioner the parties, it found petitioner guilty only of
warned her that talking to Tan was slight oral defamation. But because Tan filed
dangerous. Tan, on the other hand, testified his complaint in the Office of the City
that petitioners statement shocked him as it Prosecutor of Mandaluyong City only on
portrayed him as "someone capable of August 21, 2003 (or almost five months from
committing undesirable acts." He added that discovery), the RTC ruled that prescription
petitioner probably took offense because of had already set in; it therefore acquitted
the complaint he filed against RIS in the Dep- petitioner on that ground.9
Ed.
On April 19, 2007, the Office of the Solicitor
General (OSG) filed a petition for certiorari in

61 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
the Court of Appeals (CA) assailing the Under this provision, double jeopardy occurs
decision of the RTC.10 It contended that the upon (1) a valid indictment (2) before a
RTC acted with grave abuse of discretion competent court (3) after arraignment (4)
when it downgraded petitioners offense to when a valid plea has been entered and (5)
slight oral defamation. The RTC allegedly when the accused was acquitted or convicted
misappreciated the antecedents which or the case was dismissed or otherwise
provoked petitioner to utter the allegedly terminated without the express consent of
defamatory statement against Tan. the accused.14 Thus, an acquittal, whether
ordered by the trial or appellate court, is final
The CA found that the RTC committed grave and unappealable on the ground of double
abuse of discretion when it misapprehended jeopardy.15
the totality of the circumstances and found
petitioner guilty only of slight oral The only exception is when the trial court
defamation. Thus, the CA reinstated the acted with grave abuse of discretion or, as
MeTC decision.11 we held in Galman v. Sandiganbayan,16 when
there was mistrial. In such instances, the OSG
Petitioner moved for reconsideration but it can assail the said judgment in a petition for
was denied.12 Hence, this recourse. certiorari establishing that the State was
deprived of a fair opportunity to prosecute
Petitioner basically contends that the CA and prove its case.17
erred in taking cognizance of the petition for
certiorari inasmuch as the OSG raised errors The rationale behind this exception is that a
of judgment (i.e., that the RTC judgment rendered by the trial court with
misappreciated the evidence presented by grave abuse of discretion was issued without
the parties) but failed to prove that the RTC jurisdiction. It is, for this reason, void.
committed grave abuse of discretion. Thus, Consequently, there is no double jeopardy.
double jeopardy attached when the RTC
acquitted him. In this case, the OSG merely assailed the
RTCs finding on the nature of petitioners
We grant the petition. statement, that is, whether it constituted
grave or slight oral defamation. The OSG
No person shall be twice put in jeopardy of premised its allegation of grave abuse of
punishment for the same offense. 13 This discretion on the RTCs "erroneous"
constitutional mandate is echoed in Section 7 evaluation and assessment of the evidence
of Rule 117 of the Rules of Court which presented by the parties.1awph!1
provides:
What the OSG therefore questioned were
Section 7. Former conviction or acquittal; errors of judgment (or those involving
double jeopardy. When an accused has misappreciation of evidence or errors of law).
been convicted or acquitted or the case However, a court, in a petition for certiorari,
against him dismissed or otherwise cannot review the public respondents
terminated without his express consent by a evaluation of the evidence and factual
court of competent jurisdiction, upon a valid findings.18 Errors of judgment cannot be
complaint or in information or other formal raised in a Rule 65 petition as a writ of
charge sufficient in form and substance to certiorari can only correct errors of
sustain a conviction and after the accused jurisdiction (or those involving the
had pleaded to the charge, the conviction or commission of grave abuse of discretion).19
acquittal of the accused or the dismissal of
the case shall be a bar to another prosecution Because the OSG did not raise errors of
for the offense charged or for any attempt to jurisdiction, the CA erred in taking cognizance
commit the same or frustration thereof, or for of its petition and, worse, in reviewing the
any offense which necessarily includes or is factual findings of the RTC.20 We therefore
necessarily included in the offense charged in reinstate the RTC decision so as not to offend
the former complaint or information. the constitutional prohibition against double
jeopardy.
xxx xxx xxx

62 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
At most, petitioner could have been liable for HON. JUAN M. BONUS, HON. APOLONIO
damages under Article 26 of the Civil Code 21 : G. ABELLA, HON. ABRAHAM BALAOING,
HON. JAIME ABELLA, HON. LAURENTINO
Article 26. Every person shall respect the BALAOING, HON. MA. LINDA BUSTRIA,
dignity, personality, privacy and peace of HON. CEFERINO QUINITIO, HON. ELIFAS
mind of his neighbors and other persons. The VIDAL, and MR. VICTORIANO BUAGA,
following and similar acts, though they may Municipal Treasurer of Dasol,
not constitute a criminal offense, shall Pangasinan, Respondents.
produce a cause of action for damages,
prevention and other relief:
SYLLABUS
xxx xxx xxx
1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS;
(3) Intriguing to cause another to be MANDAMUS TO COMPEL PAYMENT OF
alienated from his friends; SALARIES; PAYMENT OF SALARIES RENDERS
CASE MOOT AND ACADEMIC BUT PETITIONER
xxx xxx xxx ALLOWED TO RECOVER DAMAGES AND
ATTORNEYS FEES. An original action for
Petitioner is reminded that, as an educator, mandamus to compel the Sanguniang Bayan
he is supposed to be a role model for the and the municipal treasurer to pay the salary
youth. As such, he should always act with due petitioner Hon. Expedito B. Pilar, in his
justice, give everyone his due and observe capacity as the Vice Mayor of Dasol,
honesty and good faith.22 Pangasinan, as provided for by Batas
Pambansa Blg. 51 and as implemented by
WHEREFORE, the petition is Circular 9-A of Joint Commission on Local
hereby GRANTED. The August 29, 2007 Government and Personnel Administration
decision and December 5, 2007 resolution of and to recover actual, moral and exemplary
the Court of Appeals in CA-G.R. SP No. 98649 damages plus attorneys fees, is rendered
are REVERSED and SET ASIDE. The moot and academic where in the meantime
November 20, 2006 decision of the Regional his said salary has been duly paid. We find
Trial Court of Mandaluyong City, Branch 212 and rule, however, that petitioner is entitled
is REINSTATED. Petitioner Jerome Castro to damages and attorneys fees because the
isACQUITTED of slight oral defamation as facts show that petitioner was forced to
defined and penalized in Article 358 of the litigate in order to claim his lawful salary
Revised Penal Code. which was unduly denied him for three (3)
years and that the Mayor acted in gross and
No pronouncement as to costs. SO ORDERED. evident bad faith in refusing to satisfy
petitioners plainly valid, just and
demandable claim (Article 2208, (2) and (5),
New Civil Code).
DERELICTION OF DUTY (Art. 27)
2. CIVIL LAW; DAMAGES; EXEMPLARY
[G.R. No. 63216. March 12, 1984.] DAMAGES; RESPONDENT MAYOR PERSONALLY
RESPONSIBLE THEREFOR ON ACCOUNT OF
THE HON. EXPEDITO B. PILAR, in his ARBITRARY EXERCISE OF AUTHORITY. That
capacity as Vice-Mayor and concurrently respondent Hon. Mayor Lodovico Espinosa
presiding officer protempore of the alone should be held liable and responsible
Sanguniang Bayan of Dasol, for the miserable plight of the petitioner is
Pangasinan, Petitioner, v. THE clear. Respondent Mayor vetoed without just
SANGUNIANG BAYAN OF DASOL, cause on October 26, 1982 the Resolution of
PANGASINAN, composed of the HON. the Sanguniang Bayan appropriating the
LODOVICO ESPINOSA, Municipal Mayor salary of the petitioner. While "to veto or not
and presiding officer of said body and to veto involves the exercise of discretion" as
the following members of that body: contended by respondents, respondent
HON. AVELINO N. NACAR, HON. LUZ B. Mayor, however, exceeded his authority in an
JIMENEZ, HON. GERARDO B. RIVERA, arbitrary manner when he vetoed the

63 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
resolution since there exists sufficient
municipal funds from which the salary of the 3. CIVIL LAW; DAMAGES; ACTUAL DAMAGES;
petitioner could be paid. Respondent Mayors ATTORNEYS FEES AND LITIGATION EXPENSES
refusal, neglect or omission in complying with RECOVERABLE IN CASE AT BAR. Section 4,
the directives of the Provincial Budget Officer Rule 65 of the Rules of Court allows the
and the Director of the Bureau of Local petitioner to recover damages by reason of
Government that the salary of the petitioner the respondent mayors wrongful act. The
be provided for and paid the prescribed attorneys fees and litigation expenses are
salary rate, is reckless and oppressive, justified by article 2208 of the Civil Code.
hence, by way of example or correction for
the public good, respondent Mayor is liable
personally to the petitioner for exemplary or DECISION
corrective damages.
GUERRERO, J.:
3. ID.; ID.; ACTUAL AND MORAL DAMAGES;
PERSONAL LIABILITY OF RESPONDENT IN This is an original action for mandamus to
CASE AT BAR. Petitioner is likewise entitled compel the Sanguniang Bayan and the
to actual damages and costs of litigation municipal treasurer to pay the salary due
which We reduce from P13,643.50 to petitioner Hon. Expedito B. Pilar, in his
P5,000.00 and for mental anguish, serious capacity as the Vice Mayor of Dasol,
anxiety, wounded feelings, moral shock, Pangasinan, as provided for by Batas
social humiliation and similar injury, We hold Pambansa Blg. 51 and as implemented by
that petitioner is entitled to P5,000.00 as Circular 9-A of Joint Commission on Local
moral damages to be paid personally by Government and Personnel Administration
respondent Mayor Lodovico Espinosa from his and to recover actual, moral and exemplary
private funds. damages plus attorneys fees.chanrobles
lawlibrary : rednad
AQUINO, J., concurring:chanrob1es virtual
1aw library Petitioner was elected vice mayor of Dasol,
Pangasinan in 1980 local elections. Elected
1. CIVIL LAW; DAMAGES; MORAL DAMAGES; with him were Lodovico Espinosa as the
RESPONDENT MAYOR IN CASE AT BAR municipal mayor and the following members
PERSONALLY LIABLE THEREFORE; BASIS. of the Sanguniang Bayan, to wit: Avelino
As respondent mayor acted in bad faith in not Nacar, Luz Jimenez, Gerardo Rivera, Juan
performing his legal duty to appropriate the Bonus, Apolonio G. Abella, Jaime Abella,
requisite amount for the payment of Laurentino Balaoing and Elifas Vidal. All of
petitioners salaries, he becomes personally them assumed office on March 1, 1980. Later
liable for damages. The governing law is on, the following also became members of
found in article 27 of the Civil Code which the Sanguniang Bayan: Linda Bustria,
makes a public servant or employee liable for Abraham Balaoing and Ceferino Quinitio.
damages for his refusal or neglect, without
just cause, to perform his official duty On March 4, 1980, the Sanguniang Bayan
(Javellana v. Tayo, 116 Phil. 1342, where a adopted Resolution No. 1 which increased the
municipal mayor was adjudged liable to pay salaries of the mayor and municipal treasurer
P100 as moral damages and P100 as to P18,636.00 and P16,044.00 per annum
attorneys fees for failure to sign the payrolls respectively. The said resolution did not
for the per diems of certain councilors). provide for an increase in salary of the vice
Article 2219(10) of the Civil Code allows mayor despite the fact that such position is
moral damages in an action under article 27. entitled to an annual salary of P16,044.00 1
(Circular No. 9-A).
2. REMEDIAL LAW; SPECIAL CIVIL ACTION;
MANDAMUS; PROPER IN INSTANT CASE. Petitioner questioned the failure of the
The propriety of mandamus, as the remedy Sanguniang Bayan to appropriate an amount
resorted to by the petitioner, was settled in for the payment of his salary. He wrote letters
Guerrero v. Carbonell, 96 Phil. 977 and to the proper authorities complaining about
Bernardo v. Pascual, 93 Phil. 345. the matter and asking that something should

64 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
be done to correct it. The proper provincial 2 administrative remedies because only the
and national officials 3 endorsed compliance writ of mandamus offers him an adequate
with Circular 9-A of the Joint Commission on and speedy remedy to his legal problem, and
Local Government and Personnel the said doctrine can be dispensed with if the
Administration in giving the revised rate of issue involved is a legal one and the issue to
salary for petitioner. In fact, the mayor was be resolved in this case - on whether the
sent a letter by the Executive Secretary of appropriation of a salary of a vice mayor is a
the Commission advising him that the discretionary act or ministerial act - is a legal
Municipality should pay the Vice-Mayor the issue. (2) The only factual issue involved in
salary due him equivalent to that of the this case is the ascertainment of damages
Municipal Treasurer per Circular No. 15. inflicted to the petitioner due to the failure of
the respondents to pay him his lawful salary.
On December 12, 1980, the Sanguniang The existence of municipal funds from which
Bayan enacted a resolution appropriating the the salary of the petitioner could be
amount of P500.00 per month as the salary appropriated is not a factual issue anymore
of the petitioner. This amount was increased due to the certification of the municipal
to P774.00 per month in December, 1981. 4 treasurer as to the existence of such funds,
and (3) The issue has not become moot and
On October 26, 1982, the Sanguniang Bayan academic because there is no guarantee that
enacted a resolution appropriating the even though a resolution appropriating the
amount of P15,144.00 as payment of the salary of the Vice Mayor has been enacted,
unpaid salaries of the petitioner from January actual payment shall be made to the
1, 1981 to December 31, 1982. The petitioner.
resolution was vetoed by the respondent
mayor resulting into the filing by the On June 1, 1983, We gave due course to the
petitioner of this petition for a writ of petition and required the parties to submit
mandamus on February 16, 1983. 5 their respective memoranda.chanrobles
virtual lawlibrary
In their comment, the respondents alleged
that:chanrob1es virtual 1aw library Petitioner admitted that at the time he
submitted his memorandum, he has been
(1) The filing of the petition is premature fully paid of his salaries as provided for by
because the petitioner did not exhaust all Batas Pambansa Blg 51 and implemented by
administrative remedies contending that Circular No. 9-A of the Joint Commission for
petitioner should have lodged his complaint Local Government and Personnel
first with the Ministry of Local Government Administration. 6
and Community Development; (2) that the
petition involves a question of fact and, Since petitioners claim for salaries has
therefore, this Court does not have already been provided for and paid, the case
jurisdiction over the case because the right of has become moot and academic.
the petitioner to receive a salary depends on
the availability of municipal funds and "the Nevertheless, We find and rule that petitioner
availability or non-availability of municipal is entitled to damages and attorneys fees
funds is a factual issue which is not because the facts show that petitioner was
cognizable by the Supreme Court; and (3) forced to litigate in order to claim his lawful
that the petition is now moot and academic salary which was unduly denied him for three
because on April 20, 1983, the Sanguniang (3) years and that the Mayor acted in gross
Bayan enacted an appropriation ordinance and evident bad faith in refusing to satisfy
which among others appropriated an amount petitioners plainly valid, just and
of P29,985.00 as payment of salary demandable claim. (Article 2208, (2) and (5),
differentials of the petitioner pursuant to the New Civil Code).
Supplemental Budget No. 3 Gen. Fund, C.Y.
1983. That respondent Hon. Mayor Lodovico
Espinosa alone should be held liable and
Petitioner in his reply argues that: (1) There is responsible for the miserable plight of the
no violation of the doctrine of exhaustion of petitioner is clear. Respondent Mayor vetoed

65 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
without just cause on October 26, 1982 the AQUINO, J.:
Resolution of the Sanguniang Bayan
appropriating the salary of the petitioner. 7 This case is about the legality of the tax
While "to veto or not to veto involves the collected by the City of Cebu on sales of
exercise of discretion" as contended by matches stored by the Philippine Match Co.,
respondents, respondent Mayor, however, Ltd. in Cebu City but delivered to customers
exceeded his authority in an arbitrary outside of the City.
manner when he vetoed the resolution since
there exists sufficient municipal funds from Ordinance No. 279 of Cebu City (approved by
which the salary of the petitioner could be the mayor on March 10, 1960 and also
paid. 8 Respondent Mayors refusal, neglect approved by the provincial board) is "an
or omission in complying with the directives ordinance imposing a quarterly tax on gross
of the Provincial Budget Officer and the sales or receipts of merchants, dealers,
Director of the Bureau of Local Government importers and manufacturers of any
that the salary of the petitioner be provided commodity doing business" in Cebu City. It
for and paid the prescribed salary rate, is imposes a sales tax of one percent (1%) on
reckless and oppressive, hence, by way of the gross sales, receipts or value of
example or correction for the public good, commodities sold, bartered, exchanged or
respondent Mayor is liable personally to the manufactured in the city in excess of P2,000
petitioner for exemplary or corrective a quarter.
damages.
Section 9 of the ordinance provides that, for
Petitioner is likewise entitled to actual purposes of the tax, "all deliveries of goods or
damages and costs of litigation which We commodities stored in the City of Cebu, or if
reduce from P13,643.50 to P5,000.00 and for not stored are sold" in that city, "shall be
mental anguish, serious anxiety, wounded considered as sales" in the city and shall be
feelings, moral shock, social humiliation and taxable.
similar injury, We hold that petitioner is
entitled to P5,000.00 as moral damages. Thus, it would seem that under the tax
ordinance sales of matches consummated
All the above sums as damages including outside of the city are taxable as long as the
attorneys fees in the amount of P5,000.00 matches sold are taken from the company's
shall be paid personally by respondent Mayor stock stored in Cebu City.
Lodovico Espinosa from his private
funds.chanrobles.com:cralaw:red The Philippine Match Co., Ltd., whose
principal office is in Manila, is engaged in the
WHEREFORE, the petition is hereby manufacture of matches. Its factory is located
considered moot and academic but at Punta, Sta. Ana, Manila. It ships cases or
respondent Mayor is hereby ordered to pay cartons of matches from Manila to its branch
petitioner from his private and personal funds office in Cebu City for storage, sale and
actual damages and costs of litigation the distribution within the territories and districts
amount of P5,000.00; moral damages in the under its Cebu branch or the whole Visayas-
amount of P5,000.00; exemplary or corrective Mindanao region. Cebu City itself is just one
damages in the amount of P5,000.00; and of the eleven districts under the company's
attorneys fees in the amount of P5,000.00. Cebu City branch office.

Costs against respondent Mayor. SO The company does not question the tax on
ORDERED. the matches of matches consummated in
Cebu City, meaning matches sold and
G.R. No. L-30745 January 18, 1978 delivered within the city.

PHILIPPINE MATCH CO., LTD., plaintiff- It assails the legality of the tax which the city
appellant, treasurer collected on out-of- town deliveries
vs. THE CITY OF CEBU and JESUS E. of matches, to wit: (1) sales of matches
ZABATE, Acting City booked and paid for in Cebu City but shipped
Treasurer, defendants-appellees. directly to customers outside of the city; (2)

66 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
transfers of matches to newsmen assigned to liability. The matches are used and consumed
different agencies outside of the city and (3) outside of the city.
shipments of matches to provincial
customers pursuant to salesmen's Shipments of matches to provincial
instructions. customers pursuant to newsmens
instructions embrace orders, by letter or
The company paid under protest to the city t telegram sent to the branch office by the
the sum of P12,844.61 as one percent sales company's salesmen assigned outside of the
tax on those three classes of out-of-town city. The matches are shipped from the
deliveries of matches for the second quarter company's bodega in the city to the
of 1961 to the second quarter of 1963. customers residing outside of the city. The
salesmen issue the sales invoices. The
In paying the tax the company accomplished proceeds of the sale, for which the salesmen
the verified forms furnished by the city are accountable are remitted to the branch
treasurers office. It submitted a statement office. As in the first and seconds of
indicating the four kinds of transactions transactions above-mentioned, the matches
enumerated above, the total sales, and a are consumed and used outside of the city.
summary of the deliveries to the different
agencies, as well as the invoice numbers, The company in its letter of April 15, 1961 to
names of customers, the value of the sales, the city treasurer sought the refund of the
the transfers of matches to salesmen outside sales tax paid for out-of-town deliveries of
of Cebu City, and the computation of taxes. matches. It invoked Shell Company of the
Philippines, Ltd. vs. Municipality of Sipocot,
Sales of matches booked and paid for in Cebu Camarines Sur, 105 Phil. 1263. In that case
City but shipped directly to customers sales of oil and petroleum products effected
outside of the city refer to orders for matches outside the territorial limits of Sipocot, were
made in the city by the company's held not to be subject to the tax imposed by
customers, by means of personal or phone an ordinance of that municipality.
calls, for which sales invoices are issued, and
then the matches are shipped from the The city treasurer denied the request. His
bodega in the city, where the matches had stand is that under section 9 of the ordinance
been stored, to the place of business or all out-of-town deliveries of latches stored in
residences of the customers outside of the the city are subject to the sales tax imposed
city, duly covered by bills of lading The by the ordinance.
matches are used and consumed outside of
the city. On August 12, 1963 the company filed the
complaint herein, praying that the ordinance
Transfers of matches to salesmen assigned to be d void insofar as it taxed the deliveries of
different agencies outside of the city matches outside of Cebu City, that the city be
embrace equipments of matches from the ordered to refund to the company the said
branch office in the city to the salesmen sum of P12,844.61 as excess sales tax paid,
(provided with panel cars) assigned within and that the city treasurer be ordered to pay
the province of Cebu and in the different damages.
districts in the Visayas and Mindanao under
the jurisdiction or supervision of the Cebu After hearing, the trial court sustained the tax
City branch office. The shipments are covered on the sales of matches booked and paid for
by bills of lading. No sales invoices whatever in Cebu City although the matches were
are issued. The matches received by the shipped directly to customers outside of the
salesmen constitute their direct cash city. The lower court held that the said sales
accountability to the company. The salesmen were consummated in Cebu City because
sell the matches within their respective delivery to the carrier in the city is deemed to
territories. They issue cash sales invoices and be a delivery to the customers outside of the
remit the proceeds of the sales to the city.
company's Cebu branch office. The value of
the unsold matches constitutes their stock But the trial court invalidated the tax on
transfers of matches to salesmen assigned to

67 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
different agencies outside of the city and on The taxing power validly delegated to cities
shipments of matches to provincial and municipalities is defined in the Local
customers pursuant to the instructions of the Autonomy Act, Republic Act No. 2264 (Pepsi-
newsmen It ordered the defendants to refund Cola Bottling Co. of the Philippines, Inc. vs.
to the plaintiff the sum of P8,923.55 as taxes Municipality of Tanauan, Leyte, L-31156,
paid out the said out-of-town deliveries with February 27, 1976, 69 SCRA 460), which took
legal rate of interest from the respective effect on June 19, 1959 and which provides:
dates of payment.
SEC. 2. Taxation. Any provision of
The trial court characterized the tax on the law to the contrary notwithstanding, all
other two transactions as a "storage tax" and chartered cities, municipalities and
not a sales tax. It assumed that the sales municipal districts shall have authority
were consummated outside of the city and, to impose municipal license taxes or
hence, beyond the city's taxing power. fees upon persons engaged in any
occupation or business, or exercising
The city did not appeal from that decision. privileges in chartered cities,.
The company appealed from that portion of municipalities or municipal districts by
the decision upholding the tax on sales of requiring them to secure licenses at
matches to customers outside of the city but rates fixed by the municipal board or
which sales were booked and paid for in Cebu city council of the city, the municipal
City, and also from the dismissal of its claim council of the municipality, or the
for damages against the city treasurer. municipal district council of the
municipal district; to collect fees and
The issue is whether the City of Cebu can tax charges for services rendered by the
sales of matches which were perfected and city, municipality or municipal district;
paid for in Cebu City but the matches were to regulate and impose reasonable
delivered to customers outside of the City. fees for services rendered in
connection with any business,
We hold that the appeal is devoid of merit profession or occupation being
bemuse the city can validly tax the sales of conducted within the city, municipality
matches to customers outside of the city as or municipal district and otherwise to
long as the orders were booked and paid for levy for public purposes, just and
in the company's branch office in the city. uniform taxes, licenses or fees;
Those matches can be regarded as sold in
the city, as contemplated in the ordinance, Provided, That municipalities and
because the matches were delivered to the municipal districts shall, in no case,
carrier in Cebu City. Generally, delivery to the impose any percentage tax on sales or
carrier is delivery to the buyer (Art. 1523, other taxes in any form based thereon
Civil Code; Behn, Meyer & Co. vs. Yangco, 38 nor impose taxes on articles subject to
Phil. 602). specific tax, except gasoline, under the
provisions of the National International
A different interpretation would defeat the Revenue Code;
tax ordinance in question or encourage tax
evasion through the simple expedient of Provided, however, That no city,
arranging for the delivery of the matches at municipality or municipal districts may
the out. skirts of the city through the levy or impose any of the following:
purchase were effected and paid for in the (here follows an enumeration of
company's branch office in the city. internal revenue taxes)

The municipal board of Cebu City is xxx xxx xxx *


empowered "to provide for the levy and
collection of taxes for general and purposes Note that the prohibition against the
in accordance with law" (Sec. 17[a], imposition of percentage taxes (formerly
Commonwealth Act No. 58; Sec. 31[l], Rep. provided for in section 1 of Commonwealth
Act No. 3857, Revised Charter of Cebu city). Act No. 472) refers to municipalities and
municipal districts but not to chartered cities.

68 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
(See Local Tax Code, P.D. No. 231. business being assigned on by the company
Marinduque Iron Mines Agents, Inc. vs. in the city. In essence, they are the same as
Municipal Council of Hinabangan Samar, 120 sales of matches fully consummated in the
Phil. 413; Ormoc Sugar Co., Inc. vs. Treasurer city.
of Ormoc City, L-23794, February 17, 1968,
22 SCRA 603). Furthermore, because the sellers place of
business is in Cebu City, it cannot be sensibly
Note further that the taxing power of cities, argued that such sales should be considered
municipalities and municipal districts may be as transactions subject to the taxing power of
used (1) "upon any person engaged in any the political subdivisions where the
occupation or business, or exercising any customers resided and accepted delivery of
privilege" therein; (2) for services rendered the matches sold.
by those political subdivisions or rendered in
connection with any business, profession or The company in its second assignment of
occupation being conducted therein, and (3) error contends that the trial court erred in not
to levy, for public purposes, just and uniform ordering defendant acting city treasurer to
taxes, licenses or fees (C. N. Hodges vs. pay exemplary damages of P20,000 and
Municipal Board of the City of Iloilo, 117 Phil. attorney's fees.
164, 167. See sec. 31[251, Revised Charter of
Cebu City). The claim for damages is predicated on
articles 19, 20, 21, 27 and 2229 of the Civil
Applying that jurisdictional test to the instant Code. It is argued that the city treasurer
case, it is at once obvious that sales of refused and neglected without just cause to
matches to customers outside oil Cebu City, perform his duty and to act with justice and
which sales were booked and paid for in the good faith. The company faults the city
company's branch office in the city, are treasurer for not following the opinion of the
subject to the city's taxing power. The instant city fiscals, as legal adviser of the city, that
case is easily distinguishable from the Shell all out-of-town deliveries of matches are not
Company case where the price of the oil sold subject to sales tax because such
was paid outside of the municipality of transactions were effected outside of the
Sipocot, the entity imposing the tax. city's territorial limits.

On the other hand, the ruling in Municipality In reply, it is argued for defendant city
of Jose Panganiban, Province of Camarines treasurer that in enforcing the tax ordinance
Norte vs. Shell Company of the Philippines, in question he was simply complying with his
Ltd., L-18349, July 30, 1966, 17 SCRA 778 duty as collector of taxes (Sec. 50, Revised
that the place of delivery determines the Charter of Cebu City). Moreover, he had no
taxable situs of the property to be taxed choice but to enforce the ordinance because
cannot properly be invoked in this case. according to section 357 of the Revised
Republic Act No. 1435, the law which enabled Manual of Instruction to Treasurer's "a tax
the Municipality of Jose Panganiban to levy ordinance win be enforced in accordance with
the sales tax involved in that case, specifies its provisions" until d illegal or void by a
that the tax may be levied upon oils competent court, or otherwise revoked by the
"distributed within the limits of the city or council or board from which it originated.
municipality", meaning the place where the
oils were delivered. That feature of the Jose Furthermore, the Secretary of Finance had
Panganiban case distinguished it from this reminded the city treasurer that a tax
case. ordinance approved by the provincial board is
operative and must be enforced without
The sales in the instant case were in the city prejudice to the right of any affected
and the matches sold were stored in the city. taxpayer to assail its legality in the judicial
The fact that the matches were delivered to forum. The fiscals opinion on the legality of
customers, whose places of business were an ordinance is merely advisory and has no
outside of the city, would not place those binding effect.
sales beyond the city's taxing power. Those
sales formed part of the merchandising

69 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
Article 27 of the Civil Code provides that "any It has been held that an erroneous
person suffering material or moral lose interpretation of an ordinance does not
because a public servant or employee refuses constitute nor does it amount to bad faith
or neglects, without just cause, to perform his that would entitle an aggrieved party to an
official duty may file an action for damages award for damages (Cabungcal vs. Cordovan
and other relief against the latter, without 120 Phil. 667, 572-3). That salutary in
prejudice to any disciplinary administrative addition to moral temperate, liquidated or
action that may be taken." compensatory damages (Art. 2229, Civil
Code). Attorney's fees are being claimed
Article 27 presupposes that the refuse or herein as actual damages. We find that it
omission of a public official is attributable to would not be just and equitable to award
malice or inexcusable negligence. In this attorney's fees in this case against the City of
case, it cannot be said that the city treasurer Cebu and its (See Art. 2208, Civil Code).
acted wilfully or was grossly t in not
refunding to the plaintiff the taxes which it WHEREFORE, the trial court's judgment is
paid under protest on out-of-town sales of affirmed. No costs. SO ORDERED.
matches.
UNFAIR COMPETITION (Art. 28)
The record clearly reveals that the city
treasurer honestly believed that he was G.R. No. L-7225 August 31, 1912
justified under section 9 of the tax ordinance
in collecting the sales tax on out-of-town THE UNITED STATES, plaintiff-appellee, vs.
deliveries, considering that the company's MANUEL ZABALA, defendant-appellant.
branch office was located in Cebu City and
that all out-of-town purchase order for JOHNSON, J.:
matches were filled up by the branch office
and the sales were duly reported to it. This defendant was charged with the crime
of lesiones graves. He was found guilty. He
The city treasurer acted within the scope of was given the benefit of article 11 of the
his authority and in consonance with his bona Penal Code on account of his age, and
fide interpretation of the tax ordinance. The sentenced by the Honorable P. M. Moir, judge,
fact that his action was not completely to be imprisoned for a period of two years
sustained by the courts would not him liable four months and one day of prision
for We have upheld his act of taxing sales of correccional, to indemnify Santiago Espaa,
matches booked and paid for in the city. the person injured , in the sum of P200, in
case of insolvency to suffer subsidiary
"As a rule, a public officer, whether judicial imprisonment, and to pay the costs.
,quasi-judicial or executive, is not y liable to
one injured in consequence of an act From that sentence the defendant appealed.
performed within the scope of his official
authority, and in the line of his official duty." The only assignments of error made by the
"Where an officer is invested with discretion appellant in this case relate to the sufficiency
and is empowered to exercise his judgment in of the evidence. The appellant undertakes to
matters brought before him. he is sometimes show that what the defendant did was done
called a quasi-judicial officer, and when so in self-defense, by reason of a provocation
acting he is usually given immunity from offered by the injured person.
liability to persons who may be injured as the
result or an erroneous or mistaken decision, The Attorney-General, in a carefully prepared
however erroneous his judgment may be. brief, concludes that the evidence is
provided the acts complained of are done sufficient to show that the defendant is guilty
within the scope of the officer's authority and of the crime charged and recommends that
without malice, or corruption." (63 Am Jur the sentence of the lower court be affirmed,
2nd 798, 799 cited in Philippine Racing Club, with costs.
Inc. vs. Bonifacio, 109 Phil. 233, 240-241).
The defendant and the injured person,
Santiago Espaa, were colaborers in the mine

70 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
"San Mauricio," in the pueblo of Mambulao, from which Santiago Espaa is now suffering.
on the 21st of October, 1909. Santiago It certainly was the duty of Santiago Espaa
Espaa declared as a witness and said that to have taken the precaution possible to have
he, the defendant and one Andres Quebral, avoided any result from the injuries which did
were in the mine on the day in question; that not necessarily and directly flow from the
an American (whose name does not appear) original cause.
ordered him to place certain supports in the
mine and to obtain timbers for that purpose; The defendant testified that Andes Quebral
that he secured the timbers and requested was not present at the time of the fight
the defendant to assist him in putting the between him and Santiago Espaa. Andres
said timbers in place; that the defendant Quebral testified that he was present and
refused to render such assistance and injured that he saw all that took place. His statement
in the manner alleged in the complaint by the of the fight and the cause leading thereto is
defendant. These general facts are supported substantiated practically by the declaration of
by the declaration of Andres Quebral, the both the defendant and the injured person.
only other person present besides the The lower court found that Andres Quebral
defendant. was present and that he was an intelligent
and credible witness. There seems to have
The defendant, in effect, admits most of the been no reason why Andres Quebral should
facts alleged by Santiago Espaa. The have testified to other than truth.
defendant testified that he had been
assigned certain work in the mine on the day It appears that at the time of the trial the
in question; that Santiago Espaa had defendant was 19 years of age. The trial took
requested him to assist him in certain other place eleven months after the facts occurred.
work; that he refused to render such The court found that he was eighteen years
assistance for the reason that he had his own of age at the time the facts complained of
to perform; that Santiago Espaa and occurred. No point is made in the record that
insulted him by the use of certain indecent he was under 18 years of age at the time he
language and had struck him with a club; committed the alleged crime.
that a fight ensued had hold of his throat, the
fingers of Santiago Espaa were thrust into The record shows that Santiago Espaa was
his mouth and that he, in order to protect disabled for a period of about eight months
himself, bit the fingers of Santiago Espaa; as a result of the injuries and that the fingers
that during the fight the said American of his hand have been rendered more or less
arrived and separated them. The fact that the useless.
fingers of Santiago Espaa had been bitten
by the defendant is, therefore, an admitted The lower court, within its discretion, gave
fact. As a result of the injury thus received, the defendant the benefit of article 11 of the
certain of the fingers on the hand of Santiago Penal Code, on account of his age, and
Espaa were rendered useless. thereby reduced the penalty to the minimum
of the medium degree of prision correccional,
The appellant attempts to show that the which is two years four months and one day.
fingers of Santiago Espaa were rendered There were neither aggravating nor
useless by reason of the fact that he failed to extenuating circumstances proved. The lower
promptly secure medical assistance; that the court required the defendant to indemnify
permanent injury was due to the negligence Santiago Espaa in the sum of P200. There
or lack of proper care on the part of Santiago seems to be little proof in the record to
Espaa, and that the injuries in the first support that conclusion, except the fact that
instance were not sufficient of themselves to the defendant was receiving a daily wage
have produced the permanent injury. The while working in the mine, and that he was
evidence does show that Santiago Espaa rendered unable to pursue his usual
delayed for a few days to secure medical occupation for a period of about eight
assistance. There is, however, nothing in the months. There is nothing in the record which
record which shows, more than a mere shows that he had been working each day or
presumption, that prompt medical that he might have had employment had he
attendance would have avoided the result not been injured. However the appellant

71 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
makes no objection to that part of the D-8733 and D-8734. These cases against
sentence of the lower court. petitioner and de Guzman were consolidated
and tried jointly.
Taking into consideration the proof as we find
it in the record and the findings of the lower On 27 December 1989 the court a
court from such record, and the fact that the quo 2 acquitted petitioner of all the charges
lower court saw and heard the witnesses, we of estafa but did not rule on whether she
are of the opinion that the sentence of the could be held civilly liable for the checks she
lower court should be affirmed, with costs. indorsed to private respondent. The trial
court found Arturo de Guzman guilty of
Violation of B.P. Blg. 22 on two (2) counts and
sentenced him to suffer imprisonment of six
ARTICLE 29 (6) months and one (1) day in each of the
cases, and to pay private respondent
G.R. No. 128927 September 14, 1999 P167,150.00 as civil indemnity.

REMEDIOS NOTA SAPIERA, petitioner, vs. Private respondent filed a notice of appeal
COURT OF APPEALS and RAMON with the trial court with regard to the civil
SUA, respondents. aspect but the court refused to give due
course to the appeal on the ground that the
BELLOSILLO, J.: acquittal of petitioner was absolute. Private
respondent then filed a petition for
REMEDIOS NOTA SAPIERA appeals to us mandamus with the Court of Appeals,
through this petition for review the Decision docketed as CA-GR SP No. 24626, praying
of the Court of Appeals1 which acquitted her that the court a quo be ordered to give due
of the crime of estafa but held her liable course to the appeal on the civil aspect of the
nonetheless for the value of the checks she decision. The Court of Appeals granted the
indorsed in favor of private respondent petition and ruled that private respondent
Ramon Sua. could appeal with respect to the civil aspect
the judgment of acquittal by the trial court.
On several occasions petitioner Remedios
Nota Sapiera, a sari-sari store owner, On 22 January 1996, the Court of Appeals in
purchased from Monrico Mart certain grocery CA-GR CV No. 36376 rendered the assailed
items, mostly cigarettes, and paid for them Decision insofar as it sustained the appeal of
with checks issued by one Arturo de Guzman: private respondent on the civil aspect and
(a) PCIB Check No. 157059 dated 26 February ordering petitioner to pay private respondent
1987 for P140,000.00; (b) PCIB Check No. P335,000.00 representing the aggregate face
157073 dated 26 February 1987 for value of the four (4) checks indorsed by
P28,000.00; (c) PCIB Check No. 157057 dated petitioner plus legal interest from the notice
27 February 1987 for P42,150.00; and, d) of dishonor.
Metrobank Check No. DAG-045104758 PA
dated 2 March 1987 for P125,000.00. These Petitioner filed a motion for reconsideration of
checks were signed at the back by petitioner. the Decision. On 19 March 1997 the Court of
When presented for payment the checks Appeals issued a Resolution noting the
were dishonored because the drawer's admission of both parties that private
account was already closed. Private respondent had already collected the amount
respondent Ramon Sua informed Arturo de of P125,000.00 from Arturo de Guzman with
Guzman and petitioner about the dishonor regard to his civil liability in Crim. Cases Nos.
but both failed to pay the value of the 8733 and 8734. The appellate court noted
checks. Hence, four (4) charges of estafa that private respondent was the same
were filed against petitioner with the offended party in the criminal cases against
Regional Trial Court of Dagupan City, petitioner and against de Guzman. Criminal
docketed as Crim. Cases Nos. D-8728, D- Cases Nos. 8733 and 8734 against De
8729, D-8730 and D-8731. Arturo de Guzman Guzman, and Crim. Cases Nos. 8730 and
was charged with two (2) counts of violation 8729 against petitioner, involved the same
of B.P. Blg. 22, docketed as Crim. Cases Nos. checks, to wit: PCIB Checks Nos. 157057 for

72 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
P42,150.00 and Metrobank Check No. DAG- When the accused in a criminal
045104758 PA for P125,000.00. prosecution is acquitted on the ground
that his guilt has not been proved
Thus, the Court of Appeals ruled that private beyond reasonable doubt, a civil action
respondent could not recover twice on the for damages for the same act or
same checks. Since he had collected omission may be instituted. Such
P125,000.00 as civil indemnity in Crim. Cases action requires only a preponderance
Nos. 8733 and 8734, this amount should be of evidence. Upon motion of the
deducted from the sum total of the civil defendant, the court may require the
indemnity due him arising from the estafa plaintiff to file a bond to answer for
cases against petitioner. The appellate court damages in case the complaint should
then corrected its previous award, which was be found to be malicious.
erroneously placed, at P335,000,00, to
P335,150,00 as the sum total of the amounts In a criminal case where the judgment
of the four (4) checks involved. Deducting the of acquittal is based upon reasonable
amount of P125,000.00 already collected by doubt, the court shall so declare. In the
private respondent, petitioner was adjudged absence of any declaration to that
to pay P210,150.00 as civil liability to private effect, it may be inferred from the text
respondent. Hence, this petition alleging that of the decision whether or not acquittal
respondent Court of Appeals erred in holding is due to that ground.
petitioner civilly liable to private respondent
because her acquittal by the trial court from An examination of the decision in the criminal
charges of estafa in Crim. Cases Nos. D-8728, cases reveals these findings of the trial court
D-8729, D-8730 and D-8731 was absolute,
the trial court having declared in its decision
that the fact from which the civil liability Evidence for the prosecution tends to
might have arisen did not exist. show that on various occasions,
Remedios Nota Sapiera purchased
We cannot sustain petitioner. The issue is from Monrico Mart grocery items
whether respondent Court of Appeals (mostly cigarettes) which purchases
committed reversible error in requiring were paid with checks issued by Arturo
petitioner to pay civil indemnity to private de Guzman: that those purchases and
respondent after the trial court had acquitted payments with checks were as follows:
of her of the criminal charges. Section 2, par.
(b), of Rule 111 of the Rules of Court, as (a) Sales Invoice No. 20104
amended, specifically provides: "Extinction of dated February 26, 1987 in the
the penal action does not carry with it amount of P28,000.00, that said
extinction of the civil, unless the extinction items purchased were paid with
proceed from a declaration in a final PCIBank Check No. 157073
judgment that the fact from which the civil dated February 26, 1987;
might arise did not exist."
(b) Sales Invoice No. 20108
The judgment of acquittal extinguishes the dated February 26, 1987 in the
liability of the accused for damages only amount of P140,000.00; that
when it includes a declaration that the fact said items purchased were paid
from which the civil liability might arise did with PCIBank No. 157059 dated
not exist. Thus, the civil liability is not February 26, 1987;
extinguished by acquittal where: (a) the
acquittal is based on reasonable doubt; (b) (c) Sales Invoice No. 20120
where the court expressly declares that the dated February 27, 1987 in the
liability of the accused is not criminal but only amount of P42,150.00; that said
civil in nature; and, (c) where the civil liability items were paid with PCIBank
is not derived from or based on the criminal Check No. 157057 dated
act of which the accused is acquitted. 3 Thus, February 27, 1987;
under Art. 29 of the Civil Code

73 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
(d) Sales Invoice No. 20148 and other accused Arturo de Guzman in
20149 both dated March 2, 1987 defrauding private respondent. However, by
in the amount of P120,103.75; her own testimony, petitioner admitted
said items were paid with having signed the four (4) checks in question
Metrobank Check No. on the reverse side. The evidence of the
045104758 dated March 2, 1987 prosecution shows that petitioner purchased
in the amount of P125,000.00. goods from the grocery store of private
respondent as shown by the sales invoices
That all these checks were deposited issued by private respondent; that these
with the Consolidated Bank and Trust purchases were paid with the four (4) subject
Company, Dagupan Branch, for checks issued by de Guzman; that petitioner
collection from the drawee bank; signed the same checks on the reverse side;
and when presented for payment, the checks
That when presented for payment by were dishonored by the drawee bank due to
the collecting bank to the drawee the closure of the drawer's account; and,
bank, said checks were dishonored due petitioner was informed of the dishonor.
to account closed, as evidenced by
check return slips; . . . . . We affirm the findings of the Court of Appeals
that despite the conflicting versions of the
From the evidence, the Court finds that parties, it is undisputed that the four (4)
accused Remedios Nota Sapiera is the checks issued by de Guzman were signed by
owner of a sari-sari store inside the petitioner at the back without any indication
public market; that she sells can(ned) as to how she should be bound thereby and,
goods, candies and assorted grocery therefore, she is deemed to be an indorser
items; that she knows accused Arturo thereof. The Negotiable Instruments Law
De Guzman, a customer since February clearly provides
1987; that de Guzman purchases from
her grocery items including cigarettes; Sec. 17. Construction where
that she knows Ramon Sua; that she instrument is ambiguous. Where the
has business dealings with him for 5 language of the instrument is
years; that her purchase orders were in ambiguous, or there are admissions
clean sheets of paper; that she never therein, the following rules of
pays in check; that Ramon Sua asked construction apply: . . . . (f) Where a
her to sign subject checks as signature is so placed upon the
identification of the signature of Arturo instrument that it is not clear in what
de Guzman; that she pays in cash; capacity the person making the same
sometimes delayed by several days; intended to sign, he is deemed an
that she signed the four (4) checks on indorser. . . .
the reverse side; that she did not know
the subject invoices; that de Guzman Sec. 63. When person deemed
made the purchases and he issued the indorser. A person placing his
checks; that the goods were delivered signature upon all instrument
to de Guzman; that she was not otherwise than as maker, drawer or
informed of dishonored checks; and acceptor, is deemed to be an indorser
that counsel for Ramon Sua informed unless he clearly indicates by
de Guzman and told him to pay . . . . appropriate words his intention to be
bound in some other capacity.
In the case of accused Remedios Nota
Sapiera, the prosecution failed to prove Sec. 66. Liability of general indorser.
conspiracy. Every indorser who indorses without
qualification, warrants to all
Based on the above findings of the trial court, subsequent holders in due course: (a)
the exoneration of petitioner of the charges The matters and things mentioned in
of estafa was based on the failure of the subdivisions (a), (b) and (c) of the next
prosecution to present sufficient evidence preceding section; and (b) That the
showing conspiracy between her and the

74 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
instrument is, at the time of the separate and distinct from each other.
indorsement, valid and subsisting; One affects the social order and the
other private rights. One is for
And, in addition, he engages that, on punishment or correction of the
due presentment, it shall be accepted offender while the other is for
or paid or both, as the case may be, reparation of damages suffered by file
according to its tenor, and that if it be aggrieved party . . . . It is just and
dishonored and the necessary proper that for the purposes of
proceedings on dishonor be duly taken, imprisonment of or fine upon the
he will pay the amount thereof to the accused, the offense should be proved
holder or to any subsequent indorser beyond reasonable doubt. But the
who may be compelled to pay it. purpose of indemnifying the
complaining party, why should the
The dismissal of the criminal cases against offense also be proved beyond
petitioner did not erase her civil liability since reasonable doubt? Is not the invasion
the dismissal was due to insufficiency of or violation of every private right to be
evidence and not from a declaration from the proved only by preponderance of
court that the fact from which the civil action evidence? Is the right of the aggrieved
might arise did not exist. 4 An accused person any less private because the
acquitted of estafa may be nevertheless be wrongful acts is also punishable by the
held civilly liable where the facts established criminal law? 6
by the evidence so warrant. The accused
should be adjudged liable for the unpaid Finally, with regard to the computation of the
value of the checks signed by her in favor of civil liability of petitioner, the finding of the
the complainant. 5 Court of Appeals that petitioner is civilly
liable for the aggregate value of the unpaid
The rationale behind the award of civil four (4) checks subject of the criminal cases
indemnity despite a judgment of acquittal in the sum of P335,150.00, less the amount
when evidence is sufficient to sustain the of P125.000.00 already collected by private
award was explained by the Code respondent pending appeal, resulting in the
Commission in connection with Art. 29 of the amount of P210,150.00 still due private
Civil Code, to wit: respondent, is a factual matter which is
binding and conclusive upon this Court.
The old rule that the acquittal of the
accused in a criminal case also WHEREFORE, the petition is DENIED. The
releases him from civil liability is one of Decision of the Court of Appeals dated 22
the most serious flaws in the Philippine January 1996 as amended by its Resolution
legal system. It has given rise to dated 19 March 1997 ordering petitioner
numberless instances of miscarriage of Remedios Nota Sapiera to pay the private
justice, where the acquittal was due to respondent Ramon Sua the remaining
a reasonable doubt in the mind of the amount of P210,150.00 as civil liability, is
court as to the guilt of the accused. AFFIRMED. Costs against petitioners. SO
The reasoning followed is that ORDERED.
inasmuch as the civil responsibility is
derived from the criminal offense, G.R. No. 94143 September 24, 1991
when the latter is not proved, civil
liability cannot be demanded. EDGAR SADIO, petitioner, vs. Hon.
REGIONAL TRIAL COURT OF ANTIQUE,
This is one of those cases where BRANCH 10, SIXTH JUDICIAL REGION,
confused thinking leads to unfortunate San Jose, Antique, and BONIFACIO SANZ
and deplorable consequences. Such MACEDA, respondents.
reasoning fails to draw a clear line of
demarcation between criminal liability CRUZ, J.:p
and civil responsibility, and to
determine the logical result of the Acting on a complaint to enjoin the operation
distinction. The two liabilities are of the small town lottery by the Province of

75 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
Antique, the Philippine Charity Sweepstakes without the counter-affidavit of the
(PCSO), the Molitor Management Corporation accused,
and herein petitioner Edgar Sadio, Judge
Bonifacio Sanz Maceda of the Regional Trial 3. The offended party in a criminal
Court of Antique, after hearing, declared such case has a right to appeal if the case is
lottery illegal and ordered MOLITOR and dismissed; and
Sadio in solidum to pay PCSO and the
Province of Antique damages in the amount 4. An order approving a notice of
of P25,000,000.00. 1 appeal can no longer be withdrawn.

On the basis of this order, Sadio flied before The petition must fail on all counts.
the Municipal TriaI Court of San Jose, Antique,
a criminal complaint against Judge Maceda On the first issue, the pertinent provision is
for issuance of an unjust interlocutory order Section 6, Rule 65 of the Rules of Court,
in violation of Article 206 of the Revised Penal which reads:
Code. 2
Sec. 6. Order to answer. If the
On March 27, Judge Ma. Monina Misajon of petition is sufficient in form and
that court dismissed the complaint, holding substance to justify such process, the
that the challenged order of March 16, 1990, court in which it is filed, or a judge
clearly showed, contrary to the allegations of thereof, shall issue an order requiring
the complainant, that he was accorded every the defendant or defendants to answer
opportunity to present his side before the the petition within ten (10) days from
order was issued. 3 the receipt of a copy thereof. Such
order shall be served on the
His motion for reconsideration having been defendants in such manner as the
denied, Sadio filed a notice of appeal, which court may direct, together with a copy
was approved by Judge Misajon on May 15, of the petition, and to that effect the
1990. 4 On May 16, 1990, however, she petitioner shag file sufficient copies
issued an amendatory order recalling the thereof.
original order and withdrawing her earlier
approval of the notice of appeal. 5 Her reason The very first clause of this section requires
was that the offended party had no standing that the petition be sufficient in form and
to appeal from the dismissal of a criminal substance before further action may be taken
complaint, this being the prerogative of the thereon by the court. Lacking such
prosecutor. sufficiency, as determined by the court itself,
the petition may be dismissed outright. It
Sadio's reaction was to file a petition for cannot be overstressed that the court is not
certiorari and mandamus to reverse Judge obliged to waste its time on inadequate
Misajons order of May 16, 1990. This was pleadings that can only burden its docket and
dismiss by Judge Marvie R. Abraham-Singson impair the orderly administration of justice.
of the Regional Trial Court of Antique, Branch We ourselves have given short shrift to many
10, for insufficiency in form and a petition for non-compliance with the
substance. 6 His motion for reconsideration procedural requisites, for being uninteligible
was also denied. or clearly without legal basis, or for some
other similar shortcoming.
The petitioner now comes to this Court
on certiorari, alleging that: As correctly noted by Judge Abraham-
Singson, a certified true copy of the order of
1. Judge Abraham-Singson could May 16, 1990, was not attached to the
not motu proprio dismiss the petition petition, in disregard of the express
for certiorari and mandamus; requirement of Rule 65, Section 1, of the
Rules of Court. That deficiency was by itself
2. Under the rule on summary alone adequate ground for dismissal.
procedure, Judge Misajon could not Additionally, the petition merely confined
legally dismiss the criminal complaint itself to a recital of the material facts and

76 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
dates, followed by the legal conclusion that his right to file the civil action arising from
Judge Misajon committed grave abuse of the criminal charge, his right to appeal from
discretion in issuing the said order. No the civil aspect of the case was not
argument was adduced, no jurisprudence extinguished with the dismissal of the
cited, no law or Rule of Court invoked to criminal charge. This averment is subject to
support that conclusion. It is clear that the qualification.
petition was also insufficient in substance
and for that additional if no less important The Court has held that acquittal in a criminal
reason deserved to be dismissed. case does not bar continuation of the civil
case connected therewith where: (1) the
On the second issue, the applicable rule is acquittal is based on reasonable doubt; 7 (2)
Section 10 of the Rule on Summary the decision contains a declaration that the
Procedure, reading as follows: liability of the accused is not criminal but only
civil; 8 or (3) the civil liability is not derived
Sec. 10. Duty of the court. On the from or based on the criminal act of which
basis of the complaint or information the accused is acquitted. 9
and the affidavits accompanying the
same, the court shall make a The case at bar does not come under any of
preliminary determination whether to the above exceptions. The petitioner's
dismiss the case outright for being criminal complaint alleged that Judge Maceda
patently without basis or merit, or to had issued the interlocutory order in violation
require further proceeding to be taken. of Sadio's right to due process under Article
In the latter case, the court may set III, Section 1, of the Constitution. Judge
the case for immediate arraignment of Misajon declared in her order dismissing the
an accused under custody, and if he charge that Sadio was in fact given the
pleads, may render judgment opportunity to be heard and offered
forthwith. If he pleads not guilty, and in testimonial and documentary evidence on
all other cases, the court shall issue an February 26 and 28, 1990, "which (Judge
order accompanied by copies of all Maceda) considered in issuing his order of
affidavits submitted by complainant, March 16, 1990." In finding that the petitioner
directing the defendants to appear and had not been denied due process, Judge
submit his counter-affidavits and those Misajon in effect completely exonerated
of his witnesses at a specified date not Judge Maceda and thus also extinguished the
later than ten (10) days from receipt civil action connected with the criminal case.
thereof.
In this situation, the petitioner could not
While it is true that Judge Maceda did not have, as a mere complaining witness,
submit his counter-affidavit as required in the appealed the dismissal of the criminal action
order of Judge Misajon dated March 23, 1990, even on its civil aspect only. The civil action
Judge Misajon declared in her order was deemed dismissed with the criminal
dismissing the criminal complaint that she action. The criminal aspect of the order could
had received and considered the order of have been appealed since double jeopardy
Judge Maceda dated March 23, 1990, in Civil had not yet attached because the accused
Case No. 2405, entitled "Rolly R. Mijares v. had not yet been arraigned. But only the
Province of Antique, et al." She treated this as prosecutor could have done this because he
the respondent judge's counter-affidavit had complete direction and control of the
required in the aforecited rule. We agree that prosecution of the case, as we have held in
this was sufficient compliance with the said several cases. 10 No appeal having been filed
rule. Judge Maceda's defense against the by him, the order of dismissal became final
criminal charge was after all embodied in that and unappealable after the lapse of the
order and it would have been a useless reglementary 15-day period.
formality to simply reproduce it as a counter-
affidavit. The above ruling renders the fourth issue
irrelevant or moot. Not having the right to
On the third issue, the petitioner's contention appeal, the petitioner cannot invoke his
is that since he had not waived or reserved notice of appeal on April 27, 1990, or protest

77 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
the withdrawal of its approval by Judge Company and counterclaimed for P3,500
Misajon on May 16, 1990. The notice of attorney's fees and moral damages.
appeal should not have been approved in the
first place, and the recall of the order of May The case was submitted to the Court of First
16, 1990, was issued only to rectify the error. Instance upon the following stipulation of
The rectification was a valid act. In any event, facts:
neither the notice of appeal nor its initial
approval would have been effectual because 1. That the defendant had been an
of the petitioner's lack of legal standing to accredited agent of the plaintiff in the
prosecute the appeal. sale of the latter's machineries in the
Bicol region and entitled as such to a
We do not deal here with the merits of the five (5%) per cent commission on all
order of Judge Maceda dated March 16, 1990, sales made by him.
declaring the small town lottery conducted in
the Province of Antique illegal and enjoining 2. That while still an agent of the
its continued operation. That order is still plaintiff, the defendant made several
under motions for reconsideration that sales among which was one in favor of
remain unresolved to date. It is not Masculo Calpe. Defendant likewise
challenged in this petition. We here limit purchased for himself a set of engines
ourselves to the issues raised in the and accessories. These two accounts
proceedings at bar as above discussed and are the principal subject-matter of the
resolved, and only to those issues. present action.

WHEREFORE, the petition is DENIED, with 3. That on March 3, 1949, the


costs against the petitioner. It is so ordered. defendant commenced an action
(Exhibit "1") against herein plaintiff
G.R. No. L-8142 April 27, 1956 with the Municipal Court of Legaspi
City (Civil Case No. 8) for the recovery
MACHINERY & ENGINEERING SUPPLIES, of unpaid commission from sales made
INC., plaintiff-appellant, vs. MAXIMINO A. by him to his various customers,
QUINTANO, defendant-appellee. including that in favor the Masculo
Calpe, heretofore mentioned, and that
REYES, J. B. L., J.: in his own favor likewise adverted to in
the preceding paragraph.
This appeal taken from a decision of the
Court of First Instance of Manila, in its Civil 4. That herein plaintiff, as defendant in
Case No. 21049, dismissing the action upon the said Civil Case an answer dated
plea of res judicata. March 14, 1949 (Exhibit "2") setting up
therein affirmative defenses and
By complaint of October 27, 1953, plaintiff counterclaims which had something to
sought to recover from defendant, a former do with the various collections
selling agent, (1) the sum of P700 allegedly allegedly made by herein defendant
misappropriated by said defendant; (2) from the different customers
P3,033.53 as the total amount corresponding enumerated in the answer as already
to the face value of and interests on a mentioned among which was that
promissory note in plaintiff's favor, secured supposedly paid by Masculo Calpe and
by a chattel mortgage; and (3) P2,000 by way the obligation personally incurred by
of damages. Defendant pleaded res herein defendant himself-the same
judicata on the basis of a prior final judgment accounts made the subject-matter of
rendered in 1949 by the Municipal Court of the claims set forth in the complaint in
Legaspi City (Case No. 8) in favor of this case, particularly in paragraph (3)
defendant and against plaintiff; and another to (6) thereof.
judgment rendered in 1952 by the Court of
First Instance of Manila (Case No. 9991) 5. That instead of personally appearing
acquitting defendant of the charge of estafa during the trial of the case, herein
by misappropriation brought by the plaintiff plaintiff, thru counsel, filed a

78 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
constancia (Exhibit "3") waiving 9, 1951, and, in the same order, for the
appearance and submitting the case failure to prosecute its appeal, the
on the answer filed. same was dismissed and the judgment
of the Municipal Court in Case No. 8
6. That after receiving the evidence was thereby revived.
adduced by herein defendant as
plaintiff, the trial court rendered 11. That a motion for reconsideration
judgment (Exhibit "4") granting the of the order of dismissal was denied by
principal demand on the herein the same Judge (Exhibit "10").
plaintiff and dismissing the
counterclaims pleaded by therein 12. That a petition for certiorari, later
defendant for lack of evidence. amended (Exhibit "11") was filed with
the Supreme Court assailing the
7. That herein plaintiff failed to perfect validity of the order of dismissal. Said
an appeal on time from the said case was docketed as G. R. No. L-5135
decision but a petition to set aside of the Supreme Court.
judgment (Exhibit "5"), later amended,
(Exhibit "6") was filed by herein 13. That respective memorandum by
plaintiff with the Court of First Instance the parties (Exhibit "12"-herein
of Albay, docketed as case No. 584, on defendant) and (Exhibit "13"- herein
the grounds therein plaintiff stated plaintiff) together with a reply
namely among others, (a) that a memorandum by herein defendant
criminal case for estafa filed against (Exhibit "14") were filed with the
herein defendant involving the same Supreme Court, after which the latter
claims set up as affirmative defenses resolved to deny the writ applied for
and counterclaims was then pending (Exhibit "15").
before this Court in Criminal Case No.
9991, (b) if given a chance to be heard 14. That judgment was rendered in
on the merits, herein plaintiff can Criminal Case No. 9991 (Exhibit "16")
prove its good in substantial defenses acquitting the herein defendant from
and its counterclaim, and (c) the the offense of estafa charged in the
Municipal Court of Legaspi City had no information (Exhibit "17"). (Rec. App.,
jurisdiction over its counterclaims and pp. 19-23.).
it had always been the intention of said
plaintiff to have the case elevated to The lower Court dismissed the complaint
the Court of First Instance of Albay. stating:

8. That the said petition was granted De los hechos arriba por las partes
by the Honorable Hermogenes Caluag salta a la vista el hecho de que esta
of the Court of First Instance of Albay causa es res judicata y, por
in his order dated October 3, 1949 tanto,impide la incoacion de la
(Exhibit "7") . Thus, the case was presente causa, porque las sentencias
elevated to the Court of First Instance arriba referidas son finales y han sido
of Albay and bore docket number 584 ya ejecutadas; porque los tribunales
of said Court. que habian rendido las citadas
sentencias, tenian jurisdiccion sobre la
9. That having been set for trial, herein materia y las partes; porque las
plaintiff filed a motion for continuance citadas sentencias se habian basado
(Exhibit "8") insisting on a suspension en los meritos, y porque hubo
of said proceedings in view of the indentidad de partes, causa de accion
pendency of Criminal Case No. 9991 y la misma materia litigiosa.
heretofore referred to.
Por tanto, el Juzgado sobresee esta
10. That said motion was denied in an causa con las costas a la parte
order (Exhibit "9") issued by the demandante. (Rec. App., pp. 23-24.).
Honorable Juan R. Liwag dated August

79 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
The plaintiff then appealed to this Court upon (2) that there is no question also that
questions of law, assigning the following the accused has retained certain sums
errors: of money as appearing in the
documentary evidence presented.
I (Exhibit "16", p. 4.).

THE TRIAL COURT ERRED IN HOLDING It follows that the right of the principal to
THAT THE DOCTRINE OF RES recover in a civil action the moneys retained
ADJUDICATA OBTAINS IN THE ABOVE by the agent has not been barred by the
ENTITLED CASE. acquittal in the criminal case, since the latter
was acquitted upon reasonable doubt (New
II Civil Code, Article 29), and the judgment does
not declare that the basis of the civil action
THE TRIAL COURT ERRED IN NOT (retention by the agent of the moneys
AWARDING TO HEREIN APPELLANT, AS belonging to the principal) does not exist
PLAINTIFF IN THE APPEALED CASE NO. (Rule 107, section 1, paragraph d). Precisely,
21049, THE AMOUNT OF P5,733.33 the existence of such basis for the civil action
WITH INTEREST THEREON FROM was expressly recognized.
OCTOBER 27, 1953. (Appellant's Brief,
p. 1). Nor is the action of the plaintiff-appellant
precluded by the 1949 judgment of the
We agree that the court below erred in Municipal Court of Legaspi City in its Civil
holding that plaintiff's action herein was Case No. 8 (Exhibit 4), for the reason that the
barred by res judicata. With regard to the counterclaim filed by the appellant in said
judgment of acquittal in the criminal case No. case was to recover the sums allegedly
9991 of the Court of First Instance of Manila, retained by defendant Quintano as its agent
the decision (Exhibit "16") clearly expresses totalling P6,178.98 plus P8,500 as damages
that the acquittal was for the reason that "the (Exhibit 2). Award of that amount was clearly
evidence presented is not sufficient to beyond the jurisdiction of the Municipal
establish his guilt beyond reasonable doubt," Court; hence, its dismissal of the
and because counterclaim was inoperative to bar a
subsequent suit to enforce the same.
this court is inclined to sustain the (Pamintuan vs. Tiglao, 53 Phil. 1; Yu Lay vs.
theory laid down by the accused, to Calmes, 40 Phil. 660; Bernardo vs. Getano, 11
the effect that the complainant should Phil. 603.) The want of jurisdiction was not
have first required of him a liquidation cured by the dismissal of plaintiff's appeal by
of the accounts under his control in the Court of First Instance, since the latter
order to determine the amount due the merely revived the appealed judgment of the
complainant and that of the accused Legaspi Municipal Court. The revival could
as agent. The Court believes and so not validate that portion of the appealed
holds that in the absence of such an judgment which was void for want of
accounting and the demand thereafter, jurisdiction.
the crime of estafa does not lie.
(Exhibit "16", pp. 6-7.). It can not be contended that by submitting
the counterclaim of P14,678.98 to the
As can be seen, the decision of acquittal does Municipal Court, plaintiff conferred upon its
not negate the fact alleged in the present jurisdiction over the claim, or that plaintiff
complaint, that defendant , as agent of the become stopped from contesting such
plaintiff, withheld part of the moneys that jurisdiction, since it is elementary that
received for his principal. On the contrary, jurisdiction over the subject matter is only
the decision, Exhibit 16, expressly finds . conferred by law.

For the above reasons, we hold that the


dismissal of the present action by the trial
court on the ground of res judicata was
improper and erroneous. As defendant relied

80 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
solely on the defense of res judicata and driver and three (3) of its passengers,
submitted the case for decision on that issue, including a two-month old baby, and caused
he is deemed to have admitted all the physical injuries to five (5) of the vans
material allegations of the complaint. passengers. After trial, Sibayan was
Consequently, judgment may be rendered, as convicted and sentenced to suffer the
it is hereby rendered, in favor of plaintiff- penalty of imprisonment for two (2) years,
appellant for all amounts claimed in its four (4) months and one (1) day to four (4)
complaint, i.e., P3,733.53 under its first cause years and two (2) months. However, as there
of action, and P2,000 under its second cause was a reservation to file a separate civil
of action, plus interests. action, no pronouncement of civil liability was
made by the municipal circuit trial court in its
WHEREFORE, the decision appealed from is decision promulgated on December 17, 1998.
[2]
reversed and defendant-appellee is hereby
ordered to pay plaintiff-appellant the total of
P5,733.53, with legal interest from the time On October 20, 2000, petitioners filed a
of the filing of the complaint up to full complaint for damages against Sibayan, Viron
payment. Costs against defendant-appellee. Transit and its President/Chairman, Virgilio Q.
Rondaris, with the Regional Trial Court of
[G.R. No. 151452. July 29, 2005] Quezon City, pursuant to their reservation to
file a separate civil action. [3] They cited
SPS. ANTONIO C. SANTOS and therein the judgment convicting Sibayan.
ESPERANZA C. SANTOS, NORA BARNALO,
BELINDA LUMACTAD, MARIENELA DY, Viron Transit moved to dismiss the complaint
NIKKA SANTOS and LEONARDO on the grounds of improper service of
FERRER, petitioners, vs. HON. summons, prescription and laches, and
NORMANDIE B. PIZARDO, as Presiding defective certification of non-forum shopping.
Judge, RTC of Quezon City, Branch 101, It also sought the dropping of Virgilio Q.
DIONISIO M SIBAYAN, and VIRON Rondaris as defendant in view of the separate
TRANSPORTATION COMPANY, INC., personality of Viron Transit from its officers.[4]
represented by VIRGILIO Q. RONDARIS,
President/Chairman, respondents. Petitioners opposed the motion to dismiss
contending, among others, that the right to
DECISION file a separate action in this case prescribes
in ten (10) years reckoned from the finality of
TINGA, J.: the judgment in the criminal action. As there
was no appeal of the decision convicting
In this Petition for Review on Sibayan, the complaint which was filed barely
[1]
Certiorari dated March 1, 2002, petitioners two (2) years thence was clearly filed within
assail the Resolutions of the Court of Appeals the prescriptive period.
dated September 10, 2001 and January 9,
2002, respectively dismissing their petition The trial court dismissed the complaint on
for certiorari and denying their motion for the principal ground that the cause of action
reconsideration, arising from the dismissal of had already prescribed. According to the trial
their complaint to recover civil indemnity for court, actions based on quasi delict, as it
the death and physical injuries of their kin. construed petitioners cause of action to be,
prescribe four (4) years from the accrual of
The following facts are matters of record. the cause of action. Hence, notwithstanding
the fact that petitioners reserved the right to
In an Information dated April 25, 1994, file a separate civil action, the complaint
Dionisio M. Sibayan (Sibayan) was charged ought to be dismissed on the ground of
with Reckless Imprudence Resulting to prescription.[5]
Multiple Homicide and Multiple Physical
Injuries in connection with a vehicle collision Improper service of summons was likewise
between a southbound Viron Transit bus cited as a ground for dismissal of the
driven by Sibayan and a northbound Lite Ace complaint as summons was served through a
Van, which claimed the lives of the vans certain Jessica Ubalde of the legal

81 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
department without mentioning her they allegedly have a legitimate grievance to
designation or position. vindicate, i.e., damages for the deaths and
physical injuries caused by private
Petitioners filed a motion for reconsideration respondents for which no civil liability had
pointing out yet again that the complaint is been adjudged by reason of their reservation
not based on quasi delict but on the final of the right to file a separate civil action.
judgment of conviction in the criminal case
which prescribes ten (10) years from the In their Comment[10] dated June 13, 2002,
finality of the judgment. [6] The trial court private respondents insist that the dismissal
denied petitioners motion for reconsideration of the complaint on the ground of
reiterating that petitioners cause of action prescription was in order. They point out that
was based on quasi delict and had prescribed the averments in the complaint make out a
under Article 1146 of the Civil Code because cause of action for quasi delict under Articles
the complaint was filed more than four (4) 2176 and 2180 of the Civil Code. As such, the
years after the vehicular accident. [7] As prescriptive period of four (4) years should be
regards the improper service of summons, reckoned from the time the accident took
the trial court reconsidered its ruling that the place.
complaint ought to be dismissed on this
ground. Viron Transit also alleges that its subsidiary
liability cannot be enforced since Sibayan
Petitioners filed a petition for certiorari with was not ordered to pay damages in the
the Court of Appeals which dismissed the criminal case. It is Viron Transits contention
same for error in the choice or mode of that the subsidiary liability of the employer
appeal.[8] The appellate court also denied contemplated in Article 103 of the Revised
petitioners motion for reconsideration Penal Code presupposes a situation where
reasoning that even if the respondent trial the civil aspect of the case was instituted in
court judge committed grave abuse of the criminal case and no reservation to file a
discretion in issuing the order of separate civil case was made.
dismissal, certiorariis still not the permissible
remedy as appeal was available to petitioners Private respondents likewise allege that the
and they failed to allege that the petition was recourse to the Court of Appeals viacertiorari
brought within the recognized exceptions for was improper as petitioners should have
the allowance of certiorari in lieu of appeal. [9] appealed the adverse order of the trial court.
Moreover, they point out several other
In this petition, petitioners argue that a rigid procedural lapses allegedly committed by
application of the rule that certiorari cannot petitioners, such as lack of certification
be a substitute for appeal will result in a against forum-shopping; lack of duplicate
judicial rejection of an existing obligation original or certified true copy of the assailed
arising from the criminal liability of private order of the trial court; and non-indication of
respondents. Petitioners insist that the the full names and addresses of petitioners in
liability sought to be enforced in the the petition.
complaint arose ex delicto and is not based
on quasi delict. The trial court allegedly Petitioners filed a Reply[11] dated September
committed grave abuse of discretion when it 14, 2002, while private respondents filed
insisted that the cause of action invoked by a Rejoinder[12] dated October 14, 2002, both
petitioners is based on quasi delictand in reiteration of their arguments.
concluded that the action had prescribed.
Since the action is based on the criminal We grant the petition.
liability of private respondents, the cause of
action accrued from the finality of the Our Revised Penal Code provides that every
judgment of conviction. person criminally liable for a felony is also
civilly liable.[13] Such civil liability may consist
Assuming that their petition with the of restitution, reparation of the damage
appellate court was procedurally flawed, caused and indemnification of consequential
petitioners implore the Court to exempt this damages.[14] When a criminal action is
case from the rigid operation of the rules as instituted, the civil liability arising from the

82 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
offense is impliedly instituted with the damages, the filing fees for such action as
criminal action, subject to three notable provided in these Rules shall constitute a first
exceptions: first, when the injured party lien on the judgment except in an award for
expressly waives the right to recover actual damages.
damages from the accused; second, when
the offended party reserves his right to have In cases wherein the amount of damages,
the civil damages determined in a separate other than actual, is alleged in the complaint
action in order to take full control and or information, the corresponding filing fees
direction of the prosecution of his cause; shall be paid by the offended party upon
andthird, when the injured party actually filing thereof in court for trial.
exercises the right to maintain a private suit
against the offender by instituting a civil Petitioners expressly made a reservation of
action prior to the filing of the criminal case. their right to file a separate civil action as a
result of the crime committed by Sibayan. On
Notably, it was the 1985 Rules on Criminal account of this reservation, the municipal
Procedure, as amended in 1988, which circuit trial court, in its decision convicting
governed the institution of the criminal Sibayan, did not make any pronouncement as
action, as well as the reservation of the right to the latters civil liability.
to file a separate civil action. Section 1, Rule
111 thereof states: Predicating their claim on the judgment of
conviction and their reservation to file a
Section 1. Institution of criminal and civil separate civil action made in the criminal
actions.When a criminal action is instituted, case, petitioners filed a complaint for
the civil action for the recovery of civil damages against Sibayan, Viron Transit and
liability is impliedly instituted with the its President/Chairman. Petitioners assert that
criminal action, unless the offended party by the institution of the complaint, they seek
waives the civil action, reserves his right to to recover private respondents civil liability
institute it separately, or institutes the civil arising from crime. Unfortunately, based on
action prior to the criminal action. its misreading of the allegations in the
complaint, the trial court dismissed the same,
Such civil action includes recovery of declaring that petitioners cause of action was
indemnity under the Revised Penal Code, and based on quasi delict and should have been
damages under Articles 32, 33, 34 and 2176 brought within four (4) years from the time
of the Civil Code of the Philippines arising the cause of action accrued, i.e., from the
from the same act or omission of the time of the accident.
accused.
A reading of the complaint reveals that the
A waiver of any of the civil actions allegations therein are consistent with
extinguishes the others. The institution of, or petitioners claim that the action was brought
the reservation of the right to file, any of said to recover civil liability arising from crime.
civil actions separately waives the others. Although there are allegations of negligence
on the part of Sibayan and Viron Transit, such
The reservation of the right to institute the does not necessarily mean that petitioners
separate civil actions shall be made before were pursuing a cause of action based
the prosecution starts to present its evidence on quasi delict, considering that at the time
and under circumstances affording the of the filing of the complaint, the cause of
offended party a reasonable opportunity to action ex quasi delicto had already
make such reservation. prescribed. Besides, in cases of negligence,
the offended party has the choice between
In no case may the offended party recover an action to enforce civil liability arising from
damages twice for the same act or omission crime under the Revised Penal Code and an
of the accused. action for quasi delict under the Civil Code.

When the offended party seeks to enforce An act or omission causing damage to
civil liability against the accused by way of another may give rise to two separate civil
moral, nominal, temperate or exemplary liabilities on the part of the offender, i.e., (1)

83 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
civil liability ex delicto, under Article 100 of We held that the dismissal of the action
the Revised Penal Code; and (2) independent based on culpa aquiliana is not a bar to the
civil liabilities, such as those (a) not arising enforcement of the subsidiary liability of the
from an act or omission complained of as a employer. Once there is a conviction for a
felony, e.g., culpa contractual or obligations felony, final in character, the employer
arising from law under Article 31 of the Civil becomes subsidiarily liable if the commission
Code, intentional torts under Articles 32 and of the crime was in the discharge of the
34, and culpa aquiliana under Article 2176 of duties of the employees. This is so because
the Civil Code; or (b) where the injured party Article 103 of the Revised Penal Code
is granted a right to file an action operates with controlling force to obviate the
independent and distinct from the criminal possibility of the aggrieved party being
action under Article 33 of the Civil Code. deprived of indemnity even after the
[15]
Either of these liabilities may be enforced rendition of a final judgment convicting the
against the offender subject to the caveat employee.
under Article 2177 of the Civil Code that the
plaintiff cannot recover damages twice for Seen in this light, the trial court should not
the same act or omission of the defendant have dismissed the complaint on the ground
and the similar proscription against double of prescription, but instead allowed the
recovery under the Rules above-quoted. complaint for damages ex delicto to be
prosecuted on the merits, considering
At the time of the filing of the complaint for petitioners allegations in their complaint,
damages in this case, the cause of action ex opposition to the motion to dismiss[17] and
quasi delicto had already prescribed. motion for reconsideration[18] of the order of
Nonetheless, petitioners can pursue the dismissal, insisting that the action was to
remaining avenue opened for them by their recover civil liability arising from crime.
reservation, i.e., the surviving cause of
action ex delicto. This is so because the This does not offend the policy that the
prescription of the action ex quasi reservation or institution of a separate civil
delictodoes not operate as a bar to an action action waives the other civil actions. The
to enforce the civil liability arising from crime rationale behind this rule is the avoidance of
especially as the latter action had been multiple suits between the same litigants
expressly reserved. arising out of the same act or omission of the
offender.[19] However, since the stale action
The case of Mendoza v. La Mallorca Bus for damages based on quasi delict should be
Company[16] was decided upon a similar set of considered waived, there is no more occasion
facts. Therein, the driver of La Mallorca Bus for petitioners to file multiple suits against
Company was charged with reckless private respondents as the only recourse
imprudence resulting to damage to property. available to them is to pursue damages ex
The plaintiff made an express reservation for delicto. This interpretation is also consistent
the filing of a separate civil action. The driver with the bar against double recovery for
was convicted which conviction was affirmed obvious reasons.
by this Court. Later, plaintiff filed a separate
civil action for damages based on quasi Now the procedural issue. Admittedly,
delict which was ordered dismissed by the petitioners should have appealed the order of
trial court upon finding that the action was dismissal of the trial court instead of filing a
instituted more than six (6) years from the petition for certiorari with the Court of
date of the accident and thus, had already Appeals. Such procedural misstep, however,
prescribed. Subsequently, plaintiff instituted should be exempted from the strict
another action, this time based on the application of the rules in order to promote
subsidiary liability of the bus company. The their fundamental objective of securing
trial court dismissed the action holding that substantial justice.[20] We are loathe to
the dismissal of the earlier civil case operated deprive petitioners of the indemnity to which
as a bar to the filing of the action to enforce they are entitled by law and by a final
the bus companys subsidiary liability. judgment of conviction based solely on a
technicality. It is our duty to prevent such an
injustice.[21]

84 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
WHEREFORE, judgment is hereby rendered the accused benefited personally from
SETTING ASIDE the resolutions of the Court of his disbursements nor has it been
Appeals dated September 10, 2001 and shown that he was inexcusably
January 9, 2002, respectively dismissing the negligent in the administration of
present action and denying petitioners public funds and properties entrusted
motion for reconsideration, as well as the to his care; nor has it been shown and
orders of the lower court dated February 26, proven that the government suffered
2001 and July 16, 2001. Let the case be damage or prejudice as the accused's
REMANDED to the trial court for further disbursements were for the benefit of
proceedings. SO ORDERED. the Capiz Agricultural and Fishery
School; that the funds claimed to be
missing in the amount of P6,619.34 is
not really missing for the accused
ARTICLE 31 demonstrated that said amounts were
spent for and in the interest of the
G.R. No. L-34906 January 27, 1983 Capiz Agricultural and Fishery School
as shown by the numerous chits,
THE REPUBLIC OF THE PHILIPPINES vouchers, vales, etc., presented in
(CAPIZ AGRICULTURAL AND FISHERY Court.
SCHOOL), petitioner,
vs. WHEREFORE, finding the evidence of
HON. SILVESTRE BR. BELLO, Presiding the prosecution not sufficient to
Judge of Branch II, Court of First establish the guilt of the accused
Instance of Capiz and ROMEO A. beyond reasonable doubt, the court
ARCEO, respondents. hereby acquits Romeo Arceo from the
charge of malversation on grounds of
VASQUEZ, J.: Reasonable Doubt, with costs de
officio and the cancellation of the bail
The Republic of the Philippines, in behalf of bond posted by him for his provisional
the Capiz Agricultural and Fishery School, liberty.
takes his appeal from an order of the
respondent Court of First Instance of Capiz SO ORDERED. (pp. 119-120, Rollo; pp.
dismissing Civil Case No. V-3339 which it filed 2-3, Appellant's Brief, p. 239, Rollo.)
against private respondent Romeo A. Arceo
for the recovery of the amount representing After the acquittal of Arceo the Provincial
his alleged liability to the government in Fiscal filed Civil Case No. V-3339 for the
connection with his employment as Cashier recovery of the total sum of P13,790.71
and Disbursing Officer of the said school. which represented the accountability of
Arceo due to his failure to issue official
Private respondent Arceo in his receipts and to immediately deposit said
aforementioned capacity, was charged in funds with the National Treasury, and instead
Criminal Case No. CCC-XI-39 for malversation spent the said funds or disbursed them
of public funds in the amount of P6,619.34 without complying with the requirements
which he supposedly failed to produce or to applicable to disbursements of public funds,
make proper accounting thereof after with intent to defraud the government.
repeated demands. After due trial, the Arceo through counsel, filed a motion to
respondent court rendered a decision dismiss the complaint in the said civil case
acquitting Arceo a portion of which reads as alleging, among others, that the petitioner,
follows: as plaintiff therein, had no cause of action
against him inasmuch as "the cause of action
To briefly summarizethe undisputed had been decided in a prior judgment." a The
facts spread before the court clearly opposition filed by the Provincial Fiscal to the
and unmistakably show lack of criminal motion to dismiss was not adhered to by the
intent on accused's part in not issuing respondent court which issued an order dated
official receipts for his collections and June 10, 1971 dismissing the complaint in
disbursements; absence of proof that Civil Case No. V-3339. A motion for

85 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
reconsideration from the dismissal was to section 17 of Republic Act 992. This
denied. Hence, this appeal. Republic Act, Exhibit 'S' was presented
by the prosecuting Provincial Fiscal,
The only issue raised in this appeal is perhaps to bolster Exhibit-'Q'.
whether or not the acquittal of Arceo in the
criminal case bars the filing of the civil action The Court, as it has already intimated
against him. Arceo relies on the provision of anteriorly, believes that the accused's
Section 3(c) of Rule 111 of the Rules of Court, acts offended the Republic Act above-
which reads as follows: mentioned and every other auditing
rule or regulation in the country, ...
(c) Extinction of the penal action does (pp. 104-105, Rollo.)
not carry with it extinction of the
civil, unless the extinction proceeds From what has been shown by the
from a declaration in a final judgment accused, his failure to record his
that the fact from which the civil might collections, was for a good purpose
arise did not exist. In other cases, the and not to defraud the government. He
person entitled to the civil action may kept the cash collections in his
institute it in the jurisdiction and in the possession in order that he may have
manner provided by law against the the ready amount to spend for
person who may be liable for emergency needs of the school This
restitution of the thing and reparation might be against the instructions to
or indemnity for the damage suffered. him or offensive to rules and
(Emphasis supplied) regulations of the General Auditing
Office but it is patent that criminal
The petitioner, on the other hand, disputes intent cannot be inferred from such
the contention of Arceo and maintains that actuation. (pp. 110-111, Rollo.)
the decision in the criminal case does not
contain any declaration that the facts from ... As the prosecution evidence stands,
which the civil liability might arise did not same considered void all the acts of
exist. the accused but the vales, chits, cash
slips, vouchers, travel expenses
We uphold the stand of the petitioner. An showing that funds represented by
examination of the decision in the criminal them have been expended for the use,
case reveals these findings of the respondent operation,' improvement, maintenance
court: of the school's projects, like the
fishpond, piggery, sugar cane
All the foregoing expenses and plantation, school construction
disbursements were never overthrown materials, spare parts for the school's
by the prosecution. All that the machines, representation expenses for
government prosecutor tried to show visiting bureau officials, etc., etc.,
was this the whole of what the accused makes open to doubt the contention
did in disbursing the funds covered by that simply because they were not
the vales, chits, cash invoices, etc., covered with official receipts they are
etc., were not in accordance with illegal and cannot be validated. The
auditing rules and regulations. There is Court doubts that that contention
no doubt about this. The accused closes all avenues to validate and
practically brushed aside and ignored legalize the questioned private
all guidelines enunciated by the documents presented by the accused.
General Auditing Office regarding As the Court looks at the matter before
disbursement of government funds. In it, the evidence of the prosecution is
Exhibit 'Q' (prosecution) Regional not enough to establish the guilt of the
Supervising Auditor Brodit in a report accused as it opens an avenue leading
to the Director of the Bureau of to a belief that the accused might be
Vocational Education, Manila, innocent. The evidence presented by
mentioned the illegality of the the State did not remove the possibility
accused's disbursements as contrary that Romeo Arceo might not be guilty

86 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
of the offense charged. ... (pp. 117- Capiz Agricultural and Fishery School and not
118, Rollo; pp. 9-11, Appellant's Brief, for his personal benefit is not a declaration
p. 239, Rollo.) that the fact upon which Civil Case No. V-
3339 is based does not exist. The civil action
According to the respondent court itself, it barred by such a declaration is the civil
was admitted by Arceo that he did not post liability arising from the offense charged,
his collections in his books of account nor which is the one impliedly instituted with the
deposited them with the National Treasury as criminal action. (Section 1, Rule 111, Rules of
required by the rules and regulations. Worse, Court.) Such a declaration would not bar a
he disbursed them without prior approval of civil action filed against an accused who had
the Auditor. The decision did not absolve been acquitted in the criminal case if the
Arceo or free him from responsibility insofar criminal action is predicated on factual or
as his accountability as Cashier and legal considerations other than the
Disbursing Officer is concerned. The commission of the offense charged. A person
acquittal, in the words of the trial court, was may be acquitted of malversation where, as
because "The evidence of the prosecution is in the case at bar, he could show that he did
not enough to establish the guilt of the not misappropriate the public funds in his
accused as it opens an avenue leading to a possession, but he could be rendered liable to
belief that the accused might be innocent." restore said funds or at least to make a
Indeed, the dispositive portion of the decision proper accounting thereof if he shall spend
in the criminal case did not state that the the same for purposes which are not
facts upon which his responsibility as an authorized nor intended, and in a manner not
accountable officer is based were non- permitted by applicable rules and
existent. Instead it expressly and regulations.
categorically declares that his acquittal was
upon the finding that "the evidence of the WHEREFORE, the order of the respondent
prosecution was not sufficient to establish the court dismissing Civil Case No.V-3339 is
guilt of the accused beyond reasonable hereby REVERSED and SET ASIDE. The
doubt. motion to dismiss filed by the private
respondent shall be deemed DENIED. Costs
It is also to be noted that while the subject- against the private respondent, SO
matter of the malversation case was the ORDERED.
amount of P6,619.34, the sum sought to be
recovered in the civil action totalled G.R. No. L-50959 July 23, 1980
P13,790.70.
HEIRS OF PEDRO TAYAG, SR., petitioners,
The latter amount included the five items vs.
involved in the criminal action, as well as the HONORABLE FERNANDO S. ALCANTARA,
additional sum of P7,170.31 representing the PHILIPPINE RABBIT BUS LINES, INC. and
income of the school from its various projects ROMEO VILLA Y CUNANAN, respondents.
for which the accused failed to issue official
receipts, (pp. 4647, Rollo.) At least insofar as CONCEPCION JR., J.:
the recovery of the aforesaid amount is
concerned, therefore, the private respondent This is a petition for certiorari, premised upon
cannot place in defense his acquittal in the the following facts:
criminal action which did not involve said
amount. On September 25, 1974, the petitioners, heirs
of Pedro Tayag, Sr., namely: Crisanta Salazar,
Even insofar as the amount of P6,619.34 Pedro Tayag, Jr., Renato Tayag, Gabriel Tayag,
which constituted the subject-matter of the Corazon Tayag and Rodolfo Tayag, filed with
criminal charge of malversation is concerned, the Court of First Instance of Tarlac, Branch I,
the acquittal of the private respondent in the presided over by the respondent Judge, a
criminal case would not constitute an complaint 1 for damages against the private
obstacle to the filing of Civil Case No. V-3339. respondents Philippine Rabbit Bus Lines, Inc.
The finding by the respondent court that he and Romeo Villa y Cunanan docketed
spent said sum for and in the interest of the therein as Civil Case No. 5114 alleging

87 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
among others that in the afternoon of acted without or in excess of his jurisdiction
September 2, 1974, while Pedro Tayag Sr. and for with grave abuse of discretion in
was riding on a bicycle along MacArthur issuing the disputed order, and that there is
Highway at Bo. San Rafael, Tarlac, Tarlac on no plain, speedy and adequate remedy in the
his way home, he was bumped and hit by a ordinary course of law except thru the
Philippine Rabbit Bus bearing Body No. 1107 present petition.
and Plate No. YL 604 PUB '74, driven by
Romeo Villa, as a result of which he sustained After the private respondents had filed their
injuries which caused his instantaneous comment, 12 this Court Resolved to consider
death. In due time, the private respondents the said comment as answer to the petition,
filed their answer, 2 admitting some and the case was deemed submitted for
allegations and denying the other allegations decision on September 3, 1979.
of the complaint
The only issue to be resolved in the instant
Thereafter, the private respondents filed a case is whether or not the respondent Judge
motion to suspend the trial 3 dated April 30, acted without or in excess of his jurisdiction
1975, on the ground that the criminal and/or with grave abuse of discretion in
case 4 against the driver of the bus Romeo dismissing Civil Case No. 5114.
Villa was still pending in said court, and that
Section 3, Rule Ill of the Revised Rules of The petition is meritorious. Article 31 of the
Court enjoins the suspension of the civil Civil Code provides as follows:
action until the criminal action is terminated.
The respondent Judge granted the motion, Art. 31. When the civil action is based
and consequently, suspended the hearing of on an obligation not arising from the
Civil Case No. 5114. 5 act or commission complained of as a
felony. such civil action may proceed
On October 25, 1977, the respondent Judge independently of the criminal
rendered a decision 6 in Criminal Case No. proceedings and regardless of the
836, acquitting the accused Romeo Villa of result of the latter.
the crime of homicide on the ground of
reasonable doubt. Evidently, the above quoted provision of the
Civil Code refers to a civil action based, not
Thereafter, the private respondents filed a on the act or omission charged as a felony in
motion to dismiss 7 Civil Case No. 5114 on a criminal case, but one based on an
the ground that the petitioners have no cause obligation arising from other
of action against them the driver of the bus sources, 13 like quasi delict. 14
having been acquitted in the criminal action.
The petitioners opposed the In the case at bar, the allegations of the
motions 8 alleging that their cause of action is complaint clearly show that petitioners' cause
not based on crime but on quasi-delict. of action was based upon aquasi
delict. 15 Thus, the complaint alleged among
Acting upon the said motion as well as the others:
opposition thereto, the respondent Judge
issued an order 9 dated April 13, 1978, xxxxxxxxx
dismissing the complaint in Civil Case No.
5114. 4. That on September 2, 1974, at
about 6:00 o'clock in the afternoon at
The petitioners moved to Sitio Pag-asa, Bo. San Rafael Tarlac,
reconsider; 10 however, the same was denied Tarlac, along MacArthur Highway and
by respondent Judge in his order 11 dated May while riding on a bicycle on his way
30, 1979. home to Bo. San Sebastian, Tarlac,
Tarlac, Pedro Tayag, Sr. was bumped
Hence, the petitioners interposed the present and hit by a Philippine Rabbit Bus
petition for certiorari, to annul and set aside bearing Body No. 1107 and Plate No.
the order of respondent Judge dated April 13, YL 604 PUB '74 and as result of which
1977, claiming that the respondent Judge he sustained physical injuries which

88 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
cause his instantaneous death and the whereas the civil liability for the same
bicycle he was riding on was damaged act considered as a quasi-delict only
and destroyed; and not as a crime is not extinguished
even by a declaration in the criminal
5. That the Philippine Rabbit Bus ... case that the criminal act charged has
was at the time of the accident being not happened or has not been
driven by defendant Romeo Villa y committed by the accused. Briefly
Cunanan in a faster and greater speed stated, We here hold, in reiteration of
than what was reasonable and proper Garcia that culpa aquiliana includes
and in a gray negligent, careless, voluntary and negligent acts which
reckless and imprudent manner, may be punishable by law.
without due regards to injuries to
persons and damage to properties and The petitioners' cause of action being based
in violation of traffic rules and on a quasi delict the acquittal of the driver,
regulations; private respondent Romeo Villa, of the crime
charged in Criminal Case No. 836 is not a bar
6. That defendant Philippine Rabbit Bus to the prosecution of Civil Case No. 5114 for
Lines Inc. has failed to exercise the damages based on quasi-delict. 17
diligence of a good father of a family in
the selection and supervision of its In the light of the foregoing, We hold that
employees, particularly defendant respondent Judge acted with grave abuse of
Romeo Villa y Cunanan otherwise the discretion amounting to lack of jurisdiction in
accident in question which resulted in dismissing Civil Case No. 5114.
the death of Pedro Tayag, Sr. and
damage to his property would not have WHEREFORE, the order of dismissal should
occurred. be, as it is hereby set aside, and the case is
remanded to the lower court for further
xxxxxxxxx proceedings, with costs against the private
respondents. SO ORDERED.
All the essential averments for a quasi
delictual action are present, namely: (1) an
act or omission constituting fault or
negligence on the part of private respondent; VIOLATION OF CONSTITUTIONAL RIGHTS
(2) damage caused by the said act or (Art. 32)
commission; (3) direct causal relation
between the damage and the act or G.R. No. L-69866 April 15, 1988
commission; and (4) no pre-existing
contractual relation between the parties. In ROGELIO ABERCA, RODOLFO BENOSA,
the case of Elcano vs. Hill, 16 this Court held NESTOR BODINO NOEL ETABAG DANILO
that: DE LA FUENTE, BELEN DIAZ-FLORES,
MANUEL MARIO GUZMAN, ALAN
... a separate civil action lies against JAZMINEZ, EDWIN LOPEZ, ALFREDO
the offender in a criminal act, whether MANSOS, ALEX MARCELINO, ELIZABETH
or not he is criminality prosecuted and PROTACIO-MARCELINO, JOSEPH OLAYER,
found guilty or acquitted, provided that CARLOS PALMA, MARCO PALO, ROLANDO
the offended party is not snowed, if he SALUTIN, BENJAMIN SESGUNDO, ARTURO
is actually charged also criminally, to TABARA, EDWIN TULALIAN and REBECCA
receiver damages on both scores, and TULALIANpetitioners,
would be entitled in such eventuality vs.
only to the bigger award of the two, MAJ. GEN. FABIAN VER, COL. FIDEL
assuming the awards made in the two SINGSON, COL. ROLANDO ABADILLA,
cases vary. In other words, the COL. GERARDO B. LANTORIA, COL.
extinction of civil liability referred to in GALILEO KINTANAR, 1ST LT. COL.
Par. (e), Section 3, Rule III, refers PANFILO M. LACSON, MAJ. RODOLFO
exclusively to civil liability founded on AGUINALDO, CAPT. DANILO PIZARRO,
Article 100 of the Revised Penal Code, 1ST LT. PEDRO TANGO, 1ST LT. ROMEO

89 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
RICARDO, 1ST LT. RAUL BACALSO, MSGT Plaintiffs sought actual/compensatory
BIENVENIDO BALABA and REGIONAL damages amounting to P39,030.00; moral
TRIAL COURT, National Capital Judicial damages in the amount of at least
Region, Branch XCV (95), Quezon P150,000.00 each or a total of
City,respondents. P3,000,000.00; exemplary damages in the
amount of at least P150,000.00 each or a
YAP, J.: total of P3,000,000.00; and attorney's fees
amounting to not less than P200,000.00.
This petition for certiorari presents vital
issues not heretofore passed upon by this A motion to dismiss was filed by defendants,
Court. It poses the question whether the through their counsel, then Solicitor-General
suspension of the privilege of the writ of Estelito Mendoza, alleging that (1) plaintiffs
habeas corpus bars a civil action for damages may not cause a judicial inquiry into the
for illegal searches conducted by military circumstances of their detention in the guise
personnel and other violations of rights and of a damage suit because, as to them, the
liberties guaranteed under the Constitution. If privilege of the writ of habeas corpus is
such action for damages may be maintained, suspended; (2) assuming that the courts can
who can be held liable for such violations: entertain the present action, defendants are
only the military personnel directly involved immune from liability for acts done in the
and/or their superiors as well. performance of their official duties; and (3)
the complaint states no cause of action
This case stems from alleged illegal searches against the defendants. Opposition to said
and seizures and other violations of the rights motion to dismiss was filed by plaintiffs
and liberties of plaintiffs by various Marco Palo, Danilo de la Fuente, Benjamin
intelligence units of the Armed Forces of the Sesgundo, Nel Etabag, Alfredo Mansos and
Philippines, known as Task Force Makabansa Rolando Salutin on July 8, 1983, and by
(TFM) ordered by General Fabian Ver "to plaintiffs Edwin Lopez, Manuel Mario Guzman,
conduct pre-emptive strikes against known Alan Jasminez, Nestor Bodino, Carlos Palma,
communist-terrorist (CT) underground houses Arturo Tabara, Joseph Olayer, Rodolfo Benosa,
in view of increasing reports about CT plans Belen Diaz, Flores, Rogelio Aberca, Alex
to sow disturbances in Metro Manila," Marcelino and Elizabeth Marcelino on July 21,
Plaintiffs allege, among others, that 1983. On November 7, 1983, a Consolidated
complying with said order, elements of the Reply was filed by defendants' counsel.
TFM raided several places, employing in most
cases defectively issued judicial search Then, on November 8, 1983, the Regional
warrants; that during these raids, certain Trial Court, National Capital Region, Branch
members of the raiding party confiscated a 95, Judge Willelmo C. Fortun,
1
number of purely personal items belonging to Presiding, issued a resolution granting the
plaintiffs; that plaintiffs were arrested without motion to dismiss. I sustained, lock, stock and
proper warrants issued by the courts; that for barrel, the defendants' contention (1) the
some period after their arrest, they were plaintiffs may not cause a judicial inquiry into
denied visits of relatives and lawyers; that the circumstances of their detention in the
plaintiffs were interrogated in violation of guise of a damage suit because, as to them,
their rights to silence and counsel; that the privilege of the writ of habeas corpus is
military men who interrogated them suspended; (2) that assuming that the court
employed threats, tortures and other forms of can entertain the present action, defendants
violence on them in order to obtain are immune from liability for acts done in the
incriminatory information or confessions and performance of their official duties; and (3)
in order to punish them; that all violations of that the complaint states no cause of action
plaintiffs constitutional rights were part of a against defendants, since there is no
concerted and deliberate plan to forcibly allegation that the defendants named in the
extract information and incriminatory complaint confiscated plaintiffs' purely
statements from plaintiffs and to terrorize, personal properties in violation of their
harass and punish them, said plans being constitutional rights, and with the possible
previously known to and sanctioned by exception of Major Rodolfo Aguinaldo and
defendants. Sergeant Bienvenido Balabo committed acts

90 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
of torture and maltreatment, or that the Aberca, Danilo de la Fuente and Marco
defendants had the duty to exercise direct Palo, represented by counsel, Atty. Jose
supervision and control of their subordinates W. Diokno, Alan Jasminez represented
or that they had vicarious liability as by counsel, Atty. Augusta Sanchez,
employers under Article 2180 of the Civil Spouses Alex Marcelino and Elizabeth
Code. The lower court stated, "After a careful Protacio-Marcelino, represented by
study of defendants' arguments, the court counsel, Atty. Procopio Beltran, Alfredo
finds the same to be meritorious and must, Mansos represented by counsel, Atty.
therefore, be granted. On the other hand, Rene Sarmiento, and Rolando Salutin,
plaintiffs' arguments in their opposition are represented by counsel, Atty. Efren
lacking in merit." Mercado, failed to file a motion to
reconsider the Order of November 8,
A motion to set aside the order dismissing 1983, dismissing the complaint, nor
the complaint and a supplemental motion for interposed an appeal therefrom within
reconsideration was filed by the plaintiffs on the reglementary period, as prayed for
November 18, 1983, and November 24, 1983, by the defendants, said Order is now
respectively. On December 9, 1983, the final against said plaintiffs.
defendants filed a comment on the aforesaid
motion of plaintiffs, furnishing a copy thereof Assailing the said order of May 11, 1984, the
to the attorneys of all the plaintiffs, namely, plaintiffs filed a motion for reconsideration on
Attys. Jose W. Diokno, Procopio Beltran, Rene May 28,1984, alleging that it was not true
Sarmiento, Efren Mercado, Auguso Sanchez, that plaintiffs Rogelio Aberca, Danilo de la
Antonio L. Rosales, Pedro B. Ella Jr., Arno V. Fuente, Marco Palo, Alan Jasminez, Alex
Sanidad, Alexander Padilla, Joker Arroyo, Marcelino, Elizabeth Protacio-Marcelino,
Rene Saguisag, Ramon Esguerra and Felicitas Alfredo Mansos and Rolando Salutin failed to
Aquino. file a motion to reconsider the order of
November 8, 1983 dismissing the complaint,
On December 15, 1983, Judge Fortun issued within the reglementary period. Plaintiffs
an order voluntarily inhibiting himself from claimed that the motion to set aside the
further proceeding in the case and leaving order of November 8, 1983 and the
the resolution of the motion to set aside the amplificatory motion for reconsideration was
order of dismissal to Judge Lising, "to filed for all the plaintiffs, although signed by
preclude any suspicion that he (Judge Fortun) only some of the lawyers.
cannot resolve [the] aforesaid pending
motion with the cold neutrality of an impartial In its resolution of September 21, 1984, the
judge and to put an end to plaintiffs assertion respondent court dealt with both motions (1)
that the undersigned has no authority or to reconsider its order of May 11, 1984
jurisdiction to resolve said pending motion." declaring that with respect to certain
This order prompted plaintiffs to reesolve an plaintiffs, the resolution of November 8, 1983
amplificatory motion for reconsideration had already become final, and (2) to set aside
signed in the name of the Free Legal its resolution of November 8, 1983 granting
Assistance Group (FLAG) of Mabini Legal Aid the defendants' motion to dismiss. In the
Committee, by Attys. Joker P. Arroyo, Felicitas dispositive portion of the order of September
Aquino and Arno Sanidad on April 12, 1984. 21, 1984, the respondent court resolved:
On May 2,1984, the defendants filed a
comment on said amplificatory motion for (1) That the motion to set aside the
reconsideration. order of finality, dated May 11, 1984,
of the Resolution of dismissal of the
In an order dated May 11, 1984, the trial complaint of plaintiffs Rogelio Aberca,
court, Judge Esteban Lising, Presiding, Danilo de la Fuente, Marco Palo, Alan
without acting on the motion to set aside Jasminez Alex Marcelino, Elizabeth
order of November 8, 1983, issued an order, Protacio-Marcelino, Alfredo Mansos and
as follows: Rolando Salutin is deed for lack of
merit;
It appearing from the records that,
indeed, the following plaintiffs, Rogelio

91 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
(2) For lack of cause of action as ART. 32. Any public officer or
against the following defendants, to employee, or any private individual
wit: who directly or indirectly obstructs,
defeats, violates or in any manner
1. Gen Fabian Ver impedes or impairs any of the following
rights and liberties of another person
2. Col. Fidel Singson shall be liable to the latter for
damages:
3. Col. Rolando Abadilla
(1) Freedom of religion;
4. Lt. Col. Conrado Lantoria, Jr.
(2) Freedom of speech;
5. Col. Galileo Montanar
(3) Freedom to write for the press or to
6. Col. Panfilo Lacson maintain a periodical publication;

7. Capt. Danilo Pizaro (4) Freedom from arbitrary or illegal


detention;
8. 1 Lt Pedro Tango
(5) Freedom of suffrage;
9. Lt. Romeo Ricardo
(6) The right against deprivation of
10. Lt. Raul Bacalso property without due process

the motion to set aside and reconsider (7) of law;


the Resolution of dismissal of the
present action or complaint, dated (8) The right to a just compensation
November 8, 1983, is also denied but when private property is taken for
in so far as it affects and refers to public use;
defendants, to wit:
(9) The right to the equal protection of
1. Major Rodolfo Aguinaldo, and the laws;

2. Master Sgt. Bienvenido Balaba (10) The right to be secure in one's


person, house, papers, and effects
the motion to reconsider and set aside against unreasonable searches and
the Resolution of dismissal dated seizures;
November 3, 1983 is granted and the
Resolution of dismissal is, in this (11) The liberty of abode and of
respect, reconsidered and modified. changing the same;

Hence, petitioners filed the instant petition (12) The privacy of cmmunication and
for certiorari on March 15, 1985 seeking to correspondence;
annul and set aside the respondent court's
resolution of November 8, 1983, its order of (13) The right to become a member of
May 11, 1984, and its resolution dated associations or societies for purposes
September 21, 1984. Respondents were not contrary to law;
required to comment on the petition, which it
did on November 9, 1985. A reply was filed (14) The right to take part in a
by petitioners on August 26, 1986. peaceable assembly to petition the
Government for redress of grievances;
We find the petition meritorious and decide to
give it due course. (15) The right to be free from
involuntary servitude in any form;
At the heart of petitioners' complaint is
Article 32 of the Civil Code which provides:

92 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
(16) The rigth of the accused against clear; no man may seek to violate those
excessive bail; sacred rights with impunity. In times of great
upheaval or of social and political stress,
(17) The rigth of the aaccused to be when the temptation is strongest to yield
heard by himself and counsel, to be borrowing the words of Chief Justice Claudio
informed of the nature and cause of Teehankee to the law of force rather than
the accusation against him, to have a the force of law, it is necessary to remind
speedy and public trial, to meet the ourselves that certain basic rights and
witnesses face to face, and to have liberties are immutable and cannot be
compulsory process to secure the sacrificed to the transient needs or imperious
attendance of witness in behalf; demands of the ruling power. The rule of law
must prevail, or else liberty will perish. Our
(18) Freedom from being compelled to commitment to democratic principles and to
be a witness against ones self, or from the rule of law compels us to reject the view
being forced to confess guilt, or from which reduces law to nothing but the
being induced by a promise of expression of the will of the predominant
immunity or reward to make such power in the community. "Democracy cannot
confession, except when the person be a reign of progress, of liberty, of justice,
confessing becomes a State witness; unless the law is respected by him who
makes it and by him for whom it is made.
(19) Freedom from excessive fines or Now this respect implies a maximum of faith,
cruel and unusual punishment, unless a minimum of Idealism. On going to the
the same is imposed or inflicted in bottom of the matter, we discover that life
accordance with a statute which has demands of us a certain residuum of
not been judicially declared sentiment which is not derived from reason,
unconstitutional; and but which reason nevertheless controls. 2

(20) Freedom of access to the courts. Seeking to justify the dismissal of plaintiffs'
complaint, the respondents postulate the
In any of the cases referred to in this view that as public officers they are covered
article, whether or not the defendant's by the mantle of state immunity from suit for
act or omission constitutes a criminal acts done in the performance of official duties
offense, the against grieved party has or function In support of said contention,
a right to commence an entirely respondents maintain that
separate and distinct civil action for
damages, and for other relief. Such Respondents are members of the
civil action shall proceed Armed Forces of the Philippines. Their
independently of any criminal primary duty is to safeguard public
prosecution (if the latter be instituted), safety and order. The Constitution no
and may be proved by a less provides that the President may
preponderance of evidence. call them "to prevent or supress
lawless violence, invasion, insurrection
The indemnity shall include moral or rebellion, or imminent danger
damages. Exemplary damages may thereof." (Constitution, Article VII,
also be adjudicated. Section 9).

The responsibility herein set forth is On January 17, 1981, the President
not demandable from a judge unless issued Proclamation No. 2045 lifting
his act or omission constitutes a martial law but providing for the
violation of the Penal Code or other continued suspension of the privilege
penal statute. of the writ of habeas corpus in view of
the remaining dangers to the security
It is obvious that the purpose of the above of the nation. The proclamation also
codal provision is to provide a sanction to the provided "that the call to the Armed
deeply cherished rights and freedoms Forces of the Philippines to prevent or
enshrined in the Constitution. Its message is suppress lawless violence, insuitection

93 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
rebellion and subversion shall continue Tiaco, supra; Miller v. de Leune, 602 F.
to be in force and effect." 2d 198; Sami v. US, 617 F. 2d 755).

Petitioners allege in their complaint Respondents-defendants who merely


that their causes of action proceed obeyed the lawful orders of the
from respondent General Ver's order to President and his call for the
Task Force Makabansa to launch pre- suppression of the rebellion involving
emptive strikes against communist petitioners enjoy such immunity from
terrorist underground houses in Metro Suit. 3
Manila. Petitioners claim that this order
and its subsequent implementation by We find respondents' invocation of the
elements of the task force resulted in doctrine of state immunity from suit totally
the violation of their constitutional misplaced. The cases invoked by respondents
rights against unlawful searches, actually involved acts done by officers in the
seizures and arrest, rights to counsel performance of official duties written the
and to silence, and the right to ambit of their powers. As held in Forbes, etc.
property and that, therefore, vs. Chuoco Tiaco and Crossfield: 4
respondents Ver and the named
members of the task force should be No one can be held legally responsible
held liable for damages. in damages or otherwise for doing in a
legal manner what he had authority,
But, by launching a pre-emptive strike under the law, to do. Therefore, if the
against communist terrorists, Governor-General had authority, under
respondent members of the armed the law to deport or expel the
forces merely performed their official defendants, and circumstances
and constitutional duties. To allow justifying the deportation and the
petitioners to recover from method of carrying it out are left to
respondents by way of damages for him, then he cannot be held liable in
acts performed in the exercise of such damages for the exercise of this power.
duties run contrary to the policy Moreover, if the courts are without
considerations to shield respondents authority to interfere in any manner,
as public officers from undue for the purpose of controlling or
interference with their duties and from interferring with the exercise of the
potentially disabling threats of hability political powers vested in the chief
(Aarlon v. Fitzgerald 102 S. Ct. 2731-1 executive authority of the Government,
Forbes v. Chuoco Tiaco, 16 Phil. 634), then it must follow that the courts
and upon the necessity of protecting cannot intervene for the purpose of
the performance of governmental and declaring that he is liable in damages
public functions from being harassed for the exeercise of this authority.
unduly or constantly interrupted by
private suits (McCallan v. State, 35 Cal. It may be that the respondents, as members
App. 605; Metran v. Paredes, 79 Phil. of the Armed Forces of the Philippines, were
819). merely responding to their duty, as they
claim, "to prevent or suppress lawless
xxx xxx xxx violence, insurrection, rebellion and
subversion" in accordance with Proclamation
The immunity of public officers from No. 2054 of President Marcos, despite the
liability arising from the performance lifting of martial law on January 27, 1981, and
of their duties is now a settled in pursuance of such objective, to launch pre-
jurisprudence Alzua v. Johnson, 21 Phil. emptive strikes against alleged communist
308; Zulueta v. Nicolas, 102 Phil. 944; terrorist underground houses. But this cannot
Spalding v. Vilas, 161 US 483; 40 L. Ed. be construed as a blanket license or a roving
780, 16 S. Ct. 631; Barr v. Mateo, 360; commission untramelled by any
Butz v. Economon, 438 US 478; 57 L. constitutional restraint, to disregard or
Ed. 2d 895, 98 S. Ct. 2894; Scheuer v. transgress upon the rights and liberties of the
Rhodes, 416 US 232; Forbes v. Chuoco individual citizen enshrined in and protected

94 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
by the Constitution. The Constitution remains i.e. override the suspension ordered by the
the supreme law of the land to which all President, petitioners will be able to do by the
officials, high or low, civilian or military, owe mere expedient of altering the title of their
obedience and allegiance at all times. action."

Article 32 of the Civil Code which renders any We do not agree. We find merit in petitioners'
public officer or employee or any private contention that the suspension of the
individual liable in damages for violating the privilege of the writ of habeas corpus does
Constitutional rights and liberties of another, not destroy petitioners' right and cause of
as enumerated therein, does not exempt the action for damages for illegal arrest and
respondents from responsibility. Only judges detention and other violations of their
are excluded from liability under the said constitutional rights. The suspension does not
article, provided their acts or omissions do render valid an otherwise illegal arrest or
not constitute a violation of the Penal Code or detention. What is suspended is merely the
other penal statute. right of the individual to seek release from
detention through the writ of habeas corpus
This is not to say that military authorities are as a speedy means of obtaining his liberty.
restrained from pursuing their assigned task
or carrying out their mission with vigor. We Moreover, as pointed out by petitioners, their
have no quarrel with their duty to protect the right and cause of action for damages are
Republic from its enemies, whether of the left explicitly recognized in P.D. No. 1755 which
or of the right, or from within or without, amended Article 1146 of the Civil Code by
seeking to destroy or subvert our democratic adding the following to its text:
institutions and imperil their very existence.
What we are merely trying to say is that in However, when the action (for injury to
carrying out this task and mission, the rights of the plaintiff or for a quasi-
constitutional and legal safeguards must be delict) arises from or out of any act,
observed, otherwise, the very fabric of our activity or conduct of any public officer
faith will start to unravel. In the battle of involving the exercise of powers or
competing Ideologies, the struggle for the authority arising from Martial Law
mind is just as vital as the struggle of arms. including the arrest, detention and/or
The linchpin in that psychological struggle is trial of the plaintiff, the same must be
faith in the rule of law. Once that faith is lost brought within one (1) year.
or compromised, the struggle may well be
abandoned. Petitioners have a point in contending that
even assuming that the suspension of the
We do not find merit in respondents' privilege of the writ of habeas corpus
suggestion that plaintiffs' cause of action is suspends petitioners' right of action for
barred by the suspension of the privilege of damages for illegal arrest and detention, it
the writ of habeas corpus. Respondents does not and cannot suspend their rights and
contend that "Petitioners cannot circumvent causes of action for injuries suffered because
the suspension of the privilege of the writ by of respondents' confiscation of their private
resorting to a damage suit aimed at the same belongings, the violation of their right to
purpose-judicial inquiry into the alleged remain silent and to counsel and their right to
illegality of their detention. While the main protection against unreasonable searches
relief they ask by the present action is and seizures and against torture and other
indemnification for alleged damages they cruel and inhuman treatment.
suffered, their causes of action are
inextricably based on the same claim of However, we find it unnecessary to address
violations of their constitutional rights that the constitutional issue pressed upon us. On
they invoked in the habeas corpus case as March 25, 1986, President Corazon C. Aquino
grounds for release from detention. Were the issued Proclamation No. 2, revoking
petitioners allowed the present suit, the Proclamation Nos. 2045 and 2045-A and
judicial inquiry barred by the suspension of lifting the suspension of the privilege of the
the privilege of the writ will take place. The writ of habeas corpus. The question therefore
net result is that what the courts cannot do, has become moot and academic.

95 | S P E C I A L T O R T S I N H U M A N R E L A T I O N S
This brings us to the crucial issue raised in In the case at bar, the trial court dropped
this petition. May a superior officer under the defendants General Fabian Ver, Col. Fidel
notion of respondent superior be answerable Singson, Col. Rolando Abadilla, Col. Gerardo
for damages, jointly and severally with his Lantoria, Jr., Col. Galileo Kintanar, Col. Panfilo
subordinates, to the person whose Lacson, Capt. Danilo Pizarro, lst Lt. Pedro
constitutional rights and liberties have been Tango, Lt. Romeo Ricardo and Lt. Ricardo
violated? Bacalso from the acts of their subordinates.
Only Major Rodolfo Aguinaldo and Master Sgt.
Respondents contend that the doctrine Bienvenido Balaba were kept as defendants
of respondent superior is applicable to the on the ground that they alone 'have been
case. We agree. The doctrine of respondent specifically mentioned and Identified to have
superior has been generally limited in its allegedly caused injuries on the persons of
application to principal and agent or to some of the plaintiff which acts of alleged
master and servant (i.e. employer and physical violence constitute a delict or wrong
employee) relationship. No such relationship that gave rise to a cause of action. But such
exists between superior officers of the finding is not supported by the record, nor is
military and their subordinates. it in accord with law and jurisprudence.

Be that as it may, however, the decisive Firstly, it is wrong to at the plaintiffs' action
factor in this case, in our view, is the for damages 5 Section 1, Article 19. to 'acts
language of Article 32. The law speaks of an of alleged physical violence" which
officer or employee or person 'directly' or constituted delict or wrong. Article 32 clearly
"indirectly" responsible for the violation of the specifies as actionable the act of violating or
constitutional rights and liberties of another. in any manner impeding or impairing any of
Thus, it is not the actor alone (i.e. the one the constitutional rights and liberties
directly responsible) who must answer for enumerated therein, among others
damages under Article 32; the person
indirectly responsible has also to answer for 1. Freedom from arbitrary arrest or
the damages or injury caused to the illegal detention;
aggrieved party.
2. The right against deprivation of
By this provision, the principle of property without due process of law;
accountability of public officials under the
Constitution 5 acquires added meaning and 3. The right to be secure in one's
asgilrnes a larger dimension. No longer may a person, house, papers and effects
superior official relax his vigilance or abdicate against unreasonable searches and
his duty to supervise his subordinates, secure seizures;
in the thought that he does not have to
answer for the transgressions committed by 4. The privacy of communication and
the latter against the constitutionally correspondence;
protected rights and liberties of the citizen.
Part of the factors that propelled people 5. Freedom from being compelled to be
power in February 1986 was the widely held a witness against one's self, or from
perception that the government was callous being forced to confess guilt, or from
or indifferent to, if not actually responsible being induced by a promise of
for, the rampant violations of human rights. immunity or reward to make a
While it would certainly be go naive to expect confession, except when the person
that violators of human rights would easily be confessing becomes a state witness.
deterred by the prospect of facing damage
suits, it should nonetheless be made clear in The complaint in this litigation alleges facts
no ones terms that Article 32 of the Civil showing with abundant clarity and details,
Code makes the persons who are directly, as how plaintiffs' constitutional rights and
well as indirectly, responsible for the liberties mentioned in Article 32 of the Civil
transgression joint tortfeasors. Code were violated and impaired by
defendants. The complaint speaks of, among
others, searches made without search

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warrants or based on irregularly issued or Marcelino, Elizabeth Protacio-Marcelino,
substantially defective warrants; seizures and Alfredo Mansos and Rolando Salutin, on the
confiscation, without proper receipts, of cash basis of the alleged failure of said plaintiffs to
and personal effects belonging to plaintiffs file a motion for reconsideration of the court's
and other items of property which were not resolution of November 8, 1983, granting the
subversive and illegal nor covered by the respondent's motion to dismiss?
search warrants; arrest and detention of
plaintiffs without warrant or under irregular, It is undisputed that a timely motion to set
improper and illegal circumstances; detention aside said order of November 8, 1983 was
of plaintiffs at several undisclosed places of filed by 'plaintiffs, through counsel. True, the
'safehouses" where they were kept motion was signed only by Atty. Joker P.
incommunicado and subjected to physical Arroyo, counsel for Benjamin Sesgulido; Atty.
and psychological torture and other inhuman, Antonio Rosales, counsel for Edwin Lopez and
degrading and brutal treatment for the Manuel Martin Guzman; Atty. Pedro B. Ella, Jr.,
purpose of extracting incriminatory counsel for Nestor Bodino and Carlos Palma;
statements. The complaint contains a Atty. Arno V. Sanidad, counsel for Arturo
detailed recital of abuses perpetrated upon Tabara; Atty. Felicitas S. Aquino, counsel for
the plaintiffs violative of their constitutional Joseph Olayer; and Atty. Alexander Padilla,
rights. counsel for Rodolfo Benosa.

Secondly, neither can it be said that only But the body of the motion itself clearly
those shown to have participated "directly" indicated that the motion was filed on behalf
should be held liable. Article 32 of the Civil of all the plaintiffs. And this must have been
Code encompasses within the ambit of its also the understanding of defendants'
provisions those directly, as well as indirectly, counsel himself for when he filed his
responsible for its violation. comment on the motion, he furnished copies
thereof, not just to the lawyers who signed
The responsibility of the defendants, whether the motion, but to all the lawyers of plaintiffs,
direct or indirect, is amply set forth in the to wit: Attys. Jose Diokno, Procopio Beltran,
complaint. It is well established in our law Rene Sarmiento, Efren Mercado, Augusto
and jurisprudence that a motion to dismiss on Sanchez, Antonio Rosales, Pedro Efla Jr., Arno
the ground that the complaint states no Sanidad, Alexander Padilla, Joker Arroyo,
cause of action must be based on what Rene Saguisag, Ramon Esguerra and Felicitas
appears on the face of the complaint. 6 To S. Aquino.
determine the sufficiency of the cause of
action, only the facts alleged in the In filing the motion to set aside the resolution
complaint, and no others, should be of November 8, 1983, the signing attorneys
considered. 7 For this purpose, the motion to did so on behalf of all the plaintiff. They
dismiss must hypothetically admit the truth needed no specific authority to do that. The
of the facts alleged in the complaint. 8 authority of an attorney to appear for and in
behalf of a party can be assumed, unless
Applying this test, it is difficult to justify the questioned or challenged by the adverse
trial court's ruling, dismissing for lack of party or the party concerned, which was
cause of action the complaint against all the never done in this case. Thus, it was grave
defendants, except Major Rodolfo Aguinaldo abuse on the part of respondent judge to take
and Master Sgt. Bienvenido Balaba. The it upon himself to rule that the motion to set
complaint contained allegations against all aside the order of November 8, 1953
the defendants which, if admitted dismissing the complaint was filed only by
hypothetically, would be sufficient to some of the plaintiffs, when by its very
establish a cause or causes of action against language it was clearly intended to be filed
all of them under Article 32 of the Civil Code. by and for the benefit of all of them. It is
obvious that the respondent judge took
This brings us to the last issue. Was the trial umbrage under a contrived technicality to
court correct in dismissing the complaint with declare that the dismissal of the complaint
respect to plaintiffs Rogelio Aberca, Danilo de had already become final with respect to
la Puente, Marco Palo, Alan Jazminez, Alex some of the plaintiffs whose lawyers did not

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sign the motion for reconsideration. Such case be remanded to the respondent court
action tainted with legal infirmity cannot be for further proceedings. With costs against
sanctioned. private respondents.

Accordingly, we grant the petition and annul SO ORDERED.


and set aside the resolution of the
respondent court, dated November 8, 1983,
its order dated May 11, 1984 and its
resolution dated September 21, 1984. Let the

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