OCA IPI No.

12204CAJ, March 11, 2014

RE: VERIFIED COMPLAINT FOR DISBARMENT OF AMA LAND, INC. (REPRESENTED BY JOSEPH B.
USITA) AGAINST COURT OF APPEALS ASSOCIATE JUSTICES HON. DANTON Q. BUESER, HON.
SESINANDO E. VILLON AND HON. RICARDO R. ROSARIO.
Antecedents

AMALI is the owner and developer of the 37storey condominium project located along
Epifanio Delos Santos Avenue corner Fordham Street in Wack Wack, Mandaluyong City. 1 Due to
the projects location, AMALI would have to use Fordham Street as an access road and staging
area for the construction activities. In that regard, AMALI needed the consent of the Wack
Wack Residents Association, Inc. (WWRAI). Accordingly, AMALI sent a notice to WWRAI, which
ignored the notice. Left with no option, AMALI set up a field office along Fordham Street that it
enclosed with a temporary fence. WWRAI allegedly tried to demolish the field office and set up
a fence to deny access to AMALIs construction workers, which prompted AMALI to file a
petition for the enforcement of an easement of right of way in the Regional Trial Court (RTC) in
Pasig City. The petition, which included an application for a temporary restraining order (TRO)
and/or writ of preliminary mandatory injunction (WPMI), was docketed as Civil Case No.
65668.2 On July 24, 1997, the RTC granted AMALIs prayer for the WPMI.3

In the meantime, AMALI converted the condominium project into a 34storey building of mixed
use (to be known as the AMA Residences) after AMALIs petition for corporate rehabilitation
was approved.4

On January 26, 2010, WWRAI filed in Civil Case No. 65668 an urgent motion to set for hearing
its prayer for a TRO and/or writ of preliminary injunction (WPI) contained in its answer. The
denial of the prayer for injunction by the RTC impelled WWRAI to bring a petition
for certiorari with an application for a TRO and/or writ of preliminary injunction in the CA to
enjoin the RTC from proceeding in Civil Case No. 65668.5

After hearing, the CA issued a TRO, which prompted AMALI to file an Urgent Motion to Lift
and/or Dissolve Temporary Restraining Order and later on a Compliance and Motion for
Reconsideration.

On July 28, 2011, the CA issued a preliminary injunction and required AMALI to file its
Comment. AMALI complied and filed a Comment which also served as its motion for partial
reconsideration of the July 28, 2011 Resolution. On October 12, 2011, AMALI filed an Urgent
Motion to Resolve and to Approve Counterbond. Allegedly, these motions were left unresolved
when the CA Tenth Division, which included Associate Justices Bueser and Rosario, required the
parties to submit their respective memoranda.6

On June 14, 2012, the Special Former Tenth Division of the CA promulgated a decision granting
the petition of WWRAI.7

AMALI consequently filed a petition for review on certiorari in this Court, docketed as G.R. No.
202342, entitled AMA Land, Inc. v. Wack Wack Residents Association, Inc.8

AMALI then brought this administrative complaint, alleging that respondent Justices had
conspired with the counsels of WWRAI, namely: Atty. Archibald F. de Mata and Atty. Myra
Jennifer D. JaudFetizanan, in rendering an unjust judgment. AMALI stated that the decision of
the CA had been rendered in bad faith and with conscious and deliberate intent to favor
WWRAI, and to cause grave injustice to AMALI. In thereby knowingly rendering an unjust
judgment, respondent Justices were guilty of gross misconduct, and violated Canon 1, Rule 1.01
and Canon 1, Rules 10.01 and 10.03 of the Code of Professional Responsibility, as well as Section
27, Rule 138 of the Rules of Court.

Issue

Are the respondent Justices liable for knowingly rendering an unjust judgment and violating
Canon 1, Rule 1.01; Canon 10, Rules 10.01 and 10.03 of the Code of Professional Responsibility;
and Section 27, Rule 138 of the Rules of Court?

Ruling

The administrative complaint is bereft of merit.

In administrative proceedings, the complainant has the burden of proving the allegations of the
complaint by substantial evidence.9 Failure to do so will lead to the dismissal of the complaint
for its lack of merit. This is because an administrative charge against any official of the Judiciary
must be supported by at least substantial evidence.10 But when the charge equates to a
criminal offense, such that the judicial officer may suffer the heavy sanctions of dismissal from
the service, the showing of culpability on the part of the judicial officer should be nothing short
of proof beyond reasonable doubt, especially because the charge is penal in character. 11

AMALI fell short of the requirements for establishing its charge of knowingly rendering an
unjust judgment against respondent Justices.

Knowingly rendering an unjust judgment constitutes a serious criminal offense. Article

204, Revised Penal Code, provides that any judge who knowingly render[s] an unjust judgment
in any case submitted to him for decision is punished with prision mayor and perpetual
absolute disqualification. To commit the offense, the offender must be a judge who is
adequately shown to have rendered an unjust judgment, not one who merely committed an
error of judgment or taken the unpopular side of a controversial point of law.12 The term
knowingly means sure knowledge, conscious and deliberate intention to do an
injustice.13 Thus, the complainant must not only prove beyond reasonable doubt that the
judgment is patently contrary to law or not supported by the evidence but that it was also
made with deliberate intent to perpetrate an injustice. Good faith and the absence of malice,
corrupt motives or improper consideration are sufficient defenses that will shield a judge from
the charge of rendering an unjust decision.14 In other words, the judge was motivated by
hatred, revenge, greed or some other similar motive in issuing the judgment. 15 Bad faith is,
therefore, the ground for liability.16 The failure of the judge to correctly interpret the law or to
properly appreciate the evidence presented does not necessarily render him administratively
liable.17

But who is to determine and declare that the judgment or final order that the judicial officer
knowingly rendered or issued was unjust? May such determination and declaration be made in
administrative investigations and proceedings like a preliminary investigation by the public
prosecutor? The answers to these queries are obvious only a superior court acting by virtue of
either its appellate or supervisory jurisdiction over the judicial actions involved may make such
determination and declaration. Otherwise, the public prosecutor or administrative hearing
officer may be usurping a basic judicial power of review or supervision lodged by the
Constitution or by law elsewhere in the appellate court.

Moreover, AMALIs allegations directly attacked the validity of the proceedings in the CA
through an administrative complaint. The attack in this manner reflected the pernicious
practice by disgruntled litigants and their lawyers of resorting to administrative charges against
sitting judges instead of exhausting all their available remedies. We do not tolerate the
practice. In Re: Verified Complaint of Engr. Oscar L. Ongjoco, Chairman of the Board/CEO of FH
GYMN MultiPurpose and Transport Service Cooperative, against Hon. Juan Q. Enriquez, Jr.,
Hon. Ramon M. Bato, Jr. and Hon. Florito S. Macalino, Associate Justices, Court of Appeals,18 we
emphatically held that the filing of administrative complaints or even threats of the filing
subverted and undermined the independence of the Judiciary, to wit:
It is evident to us that Ongjocos objective in filing the administrative complaint was to take
respondent Justices to task for the regular performance of their sworn duty of upholding the
rule of law. He would thereby lay the groundwork for getting back at them for not favoring his
unworthy cause. Such actuations cannot be tolerated at all, for even a mere threat of
administrative investigation and prosecution made against a judge to influence or intimidate
him in his regular performance of the judicial office always subverts and undermines the
independence of the Judiciary.

We seize this occasion, therefore, to stress once again that disciplinary proceedings and
criminal actions brought against any judge in relation to the performance of his official
functions are neither complementary to nor suppletory of appropriate judicial remedies, nor
a substitute for such remedies. Any party who may feel aggrieved should resort to these
remedies, and exhaust them, instead of resorting to disciplinary proceedings and criminal
actions.(Bold emphasis supplied)
It appears that AMALI is prone to bringing charges against judicial officers who rule against it in
its cases. That impression is not at all devoid of basis. The complaint herein is actually the
second one that AMALI has brought against respondent Justices in relation to the performance
of their judicial duty in the same case. In its first complaint entitled Re: Verified Complaint of
AMA Land, Inc. against Hon. Danton Q. Bueser, Hon. Sesinando E. Villon and Hon. Ricardo R.
Rosario, Associate Justices of the Court of Appeals,19 AMALI accused respondent Justices of: (a)
dishonesty and violation of Republic Act No. 3019, gross misconduct, and knowingly rendering
an unjust judgment or order, in violation of Section 8, Rule 140 of the Rules of Court; and (b)
violating provisions of the New Code of Judicial Conduct. The Court dismissed the first
complaint upon finding that it centered on the propriety of the interlocutory orders issued by
respondent Justices in C.A.G.R. SP No. 118994. The Court appropriately observed:
A perusal of the records of the case as well as the parties respective allegations disclosed that
the acts complained of relate to the validity of the proceedings before the respondent CA
Justices and the propriety of their orders in CAG.R. SP No. 118994 which were done in the
exercise of their judicial functions. Jurisprudence is replete with cases holding that errors, if
any, committed by a judge in the exercise of his adjudicative functions cannot be corrected
through administrative proceedings, but should instead be assailed through available judicial
remedies. Disciplinary proceedings against justices do not complement, supplement or
substitute judicial remedies and, thus, cannot be pursued simultaneously with the judicial
remedies accorded to parties aggrieved by their erroneous orders or judgments.

In this case, AMALI had already filed a petition for review on certiorarichallenging the
questioned order of the respondent CA justices which is still pending final action by the Court.
Consequently, a decision on the validity of the proceedings and propriety of the orders of the
respondent CA Justices in this administrative proceeding would be premature. Besides, even
if the subject decision or portions thereof turn out to be erroneous, administrative liability
will only attach upon proof that the actions of the respondent CA Justices were motivated by
bad faith, dishonesty or hatred, or attended by fraud or corruption, which were not
sufficiently shown to exist in this case. Neither was bias as well as partiality established. Acts
or conduct of the judge clearly indicative of arbitrariness or prejudice must be clearly shown
before he can be branded the stigma of being biased and partial. In the same vein, bad faith
or malice cannot be inferred simply because the judgment or order is adverse to a
party. Here, other than AMALIs bare and selfserving claim that respondent CA Justices
conspired with WWRAIs counsel in knowingly and in bad faith rendering an unjust judgment
and in committing xxx other misconduct, no act clearly indicative of bias and partiality was
alleged except for the claim that respondent CA Justices misapplied the law and jurisprudence.
Thus, the presumption that the respondent judge has regularly performed his duties shall
prevail. Moreover, the matters raised are best addressed to the evaluation of the Court in the
resolution of AMALIs petition for review on certiorari.

Finally, resort to administrative disciplinary action prior to the final resolution of the judicial
issues involved constitutes an abuse of court processes that serves to disrupt rather than
promote the orderly administration of justice and further clog the courts dockets. Those who
seek relief from the courts must not be allowed to ignore basic legal rules and abuse of court
processes in their efforts to vindicate their rights. (Bold emphasis supplied)
This administrative case is no different from the first. They are identical, with the complaint
herein containing only a few but insignificant changes in relation to the first. Both were
intended to intimidate or to disparage respondent Justices in the performance of their judicial
functions.
The filing of the meritless administrative complaints by AMALI was not only repulsive, but also
an outright disrespect of the authority of the CA and of this Court. Unfounded administrative
charges against judges truly degrade the judicial office, and interfere with the due performance
of their work for the Judiciary. Although the Court did not then deem fit to hold in the first
administrative case AMALI or its representative personally responsible for the unfounded
charges brought against respondent Justices, it is now time, proper and imperative to do so in
order to uphold the dignity and reputation of respondent Justices, of the CA itself, and of the
rest of the Judiciary. AMALI and its representatives have thereby demonstrated their penchant
for harassment of the judges who did not do its bidding, and they have not stopped doing so
even if the latter were sitting judges. To tolerate the actuations of AMALI and its
representatives would be to reward them with undeserved impunity for an obviously wrong
attitude towards the Court and its judicial officers.

Indeed, no judicial officer should have to fear or apprehend being held to account or to answer
for performing his judicial functions and office because such performance is a matter of public
duty and responsibility. The office and duty to render and administer justice area function of
sovereignty, and should not be simply taken for granted. As a recognized commentator on
public offices and public officers has written:20
It is a general principle, abundantly sustained by authority and reason, that no civil action can
be sustained against a judicial officer for the recovery of damages by one claiming to have been
injured by the officers judicial action within his jurisdiction.From the very nature of the case,
the officer is called upon by law to exercise his judgment in the matter, and the law holds his
duty to the individual to be performed when he has exercised it, however erroneous or
disastrous in its consequences it may appear either to the party or to others.

A number of reasons, any one of them sufficient, have been advanced in support of this rule.
Thus it is said of the judge: His doing justice as between particular individuals, when they
have a controversy before him, is not the end and object which were in view when his court
was created, and he was selected to preside over or sit in it. Courts are created on public
grounds; they are to do justice as between suitors, to the end that peace and order may
prevail in the political society, and that rights may be protected and preserved. The duty is
public, and the end to be accomplished is public; the individual advantage or loss results from
the proper and thorough or improper and imperfect performance of a duty for which his
controversy is only the occasion. The judge performs his duty to the public by doing justice
between individuals, or, if he fails to do justice as between individuals, he may be called to
account by the State in such form and before such tribunal as the law may have provided. But
as the duty neglected is not a duty to the individual, civil redress, as for an individual injury, is
not admissible.21
Accordingly, we now demand that AMALIs authorized representative, Joseph B. Usita, its
Senior Assistant Vice President, and the Members of the Board of Directors of AMALI who had
authorized Usita to file the present complaint, to show cause in writing why they should not be
held in indirect contempt of court for bringing the unfounded and baseless charges against
respondent Justices not only once but twice. To be clear, the filing of unfounded and baseless
administrative charges against sitting judicial officers may constitute indirect contempt under
Section 3(d), Rule 71 of the Rules of Court, to wit:
Section 3. Indirect contempt to be punished after charge and hearing. After a charge in
writing has been filed, and an opportunity given to the respondent to comment thereon within
such period as may be fixed by the court and to be heard by himself or counsel, a person guilty
of any of the following acts may be punished for indirect contempt:chanRoblesvirtualLawlibrary

(a) Misbehavior of an officer of a court in the performance of his official duties or in his official
transactions;

(b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a court,

including the act of a person who, after being dispossessed or ejected from any real property by
the judgment or process of any court of competent jurisdiction, enters or attempts or induces
another to enter into or upon such real property, for the purpose of executing acts of
ownership or possession, or in any manner disturbs the possession given to the person
adjudged to be entitled thereto;

(c) Any abuse of or any unlawful interference with the processes or proceedings of a court not
constituting direct contempt under section 1 of this Rule;

(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the
administration of justice;

(e) Assuming to be an attorney or an officer of a court, and acting as such without authority;

(f) Failure to obey a subpoena duly served;

(g) The rescue, or attempted rescue, of a person or property in the custody of an officer by
virtue of an order or process of a court held by him.

But nothing in this section shall be so construed as to prevent the court from issuing process to
bring the respondent into court, or from holding him in custody pending such proceedings. (3a)
Anent indirect contempt, the Court said in Lorenzo Shipping Corporation v. Distribution
Management Association of the Philippines:22
Contempt of court has been defined as a willful disregard or disobedience of a public authority.
In its broad sense, contempt is a disregard of, or disobedience to, the rules or orders of a
legislative or judicial body or an interruption of its proceedings by disorderly behavior or
insolent language in its presence or so near thereto as to disturb its proceedings or to impair
the respect due to such a body. In its restricted and more usual sense, contempt comprehends
a despising of the authority, justice, or dignity of a court. The phrase contempt of court is
generic, embracing within its legal signification a variety of different acts.

The power to punish for contempt is inherent in all courts, and need not be specifically
granted by statute. It lies at the core of the administration of a judicial system. Indeed, there
ought to be no question that courts have the power by virtue of their very creation to impose
silence, respect, and decorum in their presence, submission to their lawful mandates, and to
preserve themselves and their officers from the approach and insults of pollution. The power
to punish for contempt essentially exists for the preservation of order in judicial proceedings
and for the enforcement of judgments, orders, and mandates of the courts, and,
consequently, for the due administration of justice. The reason behind the power to punish
for contempt is that respect of the courts guarantees the stability of their institution; without
such guarantee, the institution of the courts would be resting on a very shaky
foundation.23(Bold emphasis supplied)
ACCORDINGLY, the Court (a) DISMISSES the administrative complaint against Associate Justice
Danton Q. Bueser, Associate Justice Sesinando E. Villon and Associate Justice Ricardo R. Rosario
for its utter lack of merit; and (b) ORDERS Joseph B. Usita, the Senior Assistant Vice President of
AMA Land, Inc., and all the members of the Board of Directors of AMA Land, Inc. who had
authorized Usita to bring the administrative complaint against respondent Associate Justices to
show cause in writing within 10 days from notice why they should not be punished for indirect
contempt of court for degrading the judicial office of respondent Associate Justices, and for
interfering with the due performance of their work for the Judiciary.

G.R. No. 179736, June 26, 2013, SPOUSES BILL AND VICTORIA HING, PETITIONERS, VS.
ALEXANDER CHOACHUY, SR. AND ALLAN CHOACHUY, RESPONDENTS

In this day and age, video surveillance cameras are installed practically everywhere for the
protection and safety of everyone. The installation of these cameras, however, should not cover
places where there is reasonable expectation of privacy, unless the consent of the individual,
whose right to privacy would be affected, was obtained
Bill and Victoria, spouses, filed a Complaint for Injunction and Damages with prayer for issuance
of a Writ of Preliminary Injunction against Alexander and Allan. According to them, they own
the lot adjacent to the lots owned by Aldo Development and Resources, where Alex and Allan
are stockholders. The corporation built an auto-shop building on Lot 1900-C adjacent to the lot
owned by Bill and Victoria. In April, 2005, Aldo filed a case for injunction and damages against
Bill and Victoria claiming that they were constructing a fence without a valid permit and the
construction would destroy its building. The court denied the application by Aldo for
preliminary injunction for failure to substantiate its allegations. To gather evidence against the
spouses, Aldo illegally set-up on the building of Aldo two video surveillance camera facing
petitioners party and through their employees and without the consent of spouses took
pictures of their on-going construction; thus it violates their right to privacy. The spouses
prayed that Alexander and Allan be ordered to remove their video-cameras and stopped from
conducting illegal surveillance.
Answering, Alexander and Allan claimed that they did not install the cameras, nor ordered their
employees to take pictures of the spouses construction; they also averred that they are mere
stockholders of Aldo;
The Regional Trial Court granted the prayer for temporary restraining order and directed
Alexander and Allan to remove their video cameras and install them elsewhere where the
spouses property will no longer be viewed.
Alexander and Allan filed a petition for certiorari with the Court of Appeals, which granted their
petition.
Bill and Victoria therefore elevated the case to the Supreme Court:
The right to privacy is enshrined in our Constitution and in our laws. It is defined as the right
to be free from unwarranted exploitation of ones person or from intrusion into ones private
activities in such a way as to cause humiliation to a persons ordinary sensibilities. It is the right
of an individual to be free from unwarranted publicity, or to live without unwarranted
interference by the public in matters in which the public is not necessarily concerned. Simply
put, the right to privacy is the right to be let alone.
The Bill of Rights guarantees the peoples right to privacy and protects them against the States
abuse of power. In this regard, the State recognizes the right of the people to be secure in their
houses. No one, not even the State, except in case of overriding social need and then only
under the stringent procedural safeguards, can disturb them in the privacy of their homes.
xxx
Our Code specifically mentions prying into the privacy of anothers residence. This does not
mean, however, that only the residence is entitled to privacy, because the law covers also
similar acts. A business office is entitled to the same privacy when the public is excluded
therefrom and only such individuals as are allowed to enter may come in. x x x[ (Emphasis
supplied)
Thus, an individuals right to privacy under Article 26(1) of the Civil Code should not be confined
to his house or residence as it may extend to places where he has the right to exclude the
public or deny them access. The phrase prying into the privacy of anothers residence,
therefore, covers places, locations, or even situations which an individual considers as
private. And as long as his right is recognized by society, other individuals may not infringe on
his right to privacy. The CA, therefore, erred in limiting the application of Article 26(1) of the
Civil Code only to residences.
xxx
In ascertaining whether there is a violation of the right to privacy, courts use the reasonable
expectation of privacy test. This test determines whether a person has a reasonable
expectation of privacy and whether the expectation has been violated. In Ople v. Torres, we
enunciated that the reasonableness of a persons expectation of privacy depends on a two-
part test: (1) whether, by his conduct, the individual has exhibited an expectation of privacy;
and (2) this expectation is one that society recognizes as reasonable. Customs, community
norms, and practices may, therefore, limit or extend an individuals reasonable expectation of
privacy. Hence, the reasonableness of a persons expectation of privacy must be determined
on a case-to-case basis since it depends on the factual circumstances surrounding the case.
In this day and age, video surveillance cameras are installed practically everywhere for the
protection and safety of everyone. The installation of these cameras, however, should not
cover places where there is reasonable expectation of privacy, unless the consent of the
individual, whose right to privacy would be affected, was obtained. Nor should these cameras
be used to pry into the privacy of anothers residence or business office as it would be no
different from eavesdropping, which is a crime under Republic Act No. 4200 or the Anti-
Wiretapping Law.
The concept of liberty would be emasculated if it does not likewise compel respect for [ones]
personality as a unique individual whose claim to privacy and [non]-interference demands
respect.

G.R. No. 211356, September 29, 2014 CRISOSTOMO B. AQUINO v. MUNICIPALITY OF MALAY,
AKLAN
NATURE:

This is a Petition for Review on Certiorari challenging the Decision1 and the Resolution of the
Court of Appeals. The assailed rulings denied Crisostomo Aquinos Petition for Certiorari for not
being the proper remedy to question the issuance and implementation of Executive Order No.
10, Series of 2011 (EO 10), ordering the demolition of his hotel establishment.

FACTS:

Boracay Island West Cove Management Philippines, Inc. applied for a building permit covering
the construction of a three-storey hotel over a parcel of land in Malay, Aklan, which is covered
by a Forest Land Use Agreement for Tourism Purposes (FLAgT) issued by the Department of
Environment and Natural Resources (DENR). The Municipal Zoning Administrator denied
petitioners application on the ground that the proposed construction site was within the no
build zone demarcated in Municipal Ordinance 2000-131.

Petitioner appealed the denial action to the Office of the Mayor but despite follow up, no
action was ever taken by the respondent mayor.

A Cease and Desist Order was issued by the municipal government, enjoining the expansion of
the resort, and on June 7, 2011, the Office of the Mayor of Malay, Aklan issued the assailed EO
10, ordering the closure and demolition of Boracay West Coves hotel.
EO 10 was partially implemented on June 10, 2011. Thereafter, two more instances followed
wherein respondents demolished the improvements introduced by Boracay West Cove.

Petitioner filed a Petition for Certiorari with prayer for injunctive relief with the CA Alleging that
the order was issued and executed with grave abuse of discretion

Contentions of West Cove:

1) The hotel cannot summarily be abated because it is not a nuisance per se, given the hundred
million peso-worth of capital infused in the venture.

2) Municipality of Malay, Aklan should have first secured a court order before proceeding with
the demolition.
Contention of the Mayor: The demolition needed no court order because the municipal mayor
has the express power under the Local Government Code (LGC) to order the removal of illegally
constructed buildings

The CA dismissed the petition solely on procedural ground, i.e., the special writ of certiorari can
only be directed against a tribunal, board, or officer exercising judicial or quasi-judicial
functions and since the issuance of EO 10 was done in the exercise of executive functions, and
not of judicial or quasi-judicial functions, certiorari will not lie.

ISSUE:

Whether the judicial proceedings should first be conducted before the LGU can order the
closure and demolition of the property in question.\

HELD:

The Court ruled that the property involved cannot be classified as a nuisance per sewhich can
therefore be summarily abated. Here, it is merely the hotels particular incident, its location and
not its inherent qualities that rendered it a nuisance. Otherwise stated, had it not been
constructed in the no build zone, Boracay West Cove could have secured the necessary permits
without issue. As such, even if the hotel is not a nuisance per se, it is still a nuisance per
accidens

Generally, LGUs have no power to declare a particular thing as a nuisance unless such a thing is
a nuisance per se. Despite the hotels classification as a nuisance per accidens, however, the LGU
may nevertheless properly order the hotels demolition. This is because, in the exercise
ofpolice power and the general welfare clause,
property rights of individuals may be subjected to restraints and burdens in order to fulfill the
objectives of the government. Moreover, the Local Government Code authorizes city and
municipal governments, acting through their local chief executives, to issue demolition
orders. The office of the mayor has quasi-judicial powers to order the closing and demolition of
establishments.

Huang v. Philippine Hoteliers Inc.,

G.R. No. 180440, December 5, 2012

Facts:
On June 1995, Delia Goldberg (Delia), a registered guest of Dusit Hotel, invited her friend, Dr.
Genevieve L. Huang, for a swim at the hotels pool. At around 7:00 p.m., the hotels pool attendant informed
them that the swimming pool area was about to be closed. The 2 went to the shower room
adjacent to the swimming pool to take a shower and dress up. When they came out of the bathroom,
the entire swimming pool area was already pitch black and there were the only ones there. The doors were also
locked. After some time, Huang saw a phone behind the lifeguards counter. As she went inside, the
wooden countertop fell on her head and knocked her down almost unconscious. Delia immediately notified the
hotel phone operator of the
incident. Not long after, the hotel staff arrived at the main entrance door of the swimming pool a
rea and gave her an icepack.Huang demanded the services of the hotel physician. Hotel
physician, Dr. Dalumpines, instead of immediately providing the needed medical assistance, a
Waiver and demanded that it be signed by Huang, otherwise, the hotel management will not render
her any assistance. Huang refused to do so and left the hotel. Thereupon, Huang consulted
several doctors (7 neuro, 1 optha) because she began experiencing on and off severe
headaches that caused her three sleepless nights. They all said she had a serious brain injury. In
defense, PHI and Dusit denied all the material allegations. According to them, a sufficient notice on the glass door
of the hotel leading to the swimming pool area to apprise the people, especially the hotel
guests, that the swimming pool area is open only from 7am to 7pm. Nevertheless, the lights
thereon are kept on until 10:00 p.m. for, (1) security reasons; (2) housekeeping personnel to do the
cleaning of the swimming pool surroundings; and (3) people doing their exercise routine at the Slimmers World
Gym, which was open until 10pm. Even granting that the lights in the hotels swimming pool area were turned
off, it would not render the area completely dark as the Slimmers World Gym near it was well-
illuminated. Around 7:40pm, Ms. Pearlie (hotel nurse) was informed that there was a guest requiring medical
assistance. She hurriedly went to the pool area. Although Huang looked normal as there was no indication of any
blood or bruise on her head, Ms.Pearlie still asked her if she needed any medical attention to which she replied
that she is a doctor, she was fine and she did not need any medical attention. Instead, requested for a hirudoid
cream to which Ms. Pearlie acceded. Dr. Dalumpines came to check Huang

s condition. Huang insisted that she was fine and that the hirudoid cream was enough. Dr.Dalumpines requested
Huang to execute a handwritten certification regarding the incident that occurred that night. An X-Ray test was
also suggested to Huang but she replied that it was not necessary. She also refused further
medical attention. On Aug 1996, Huang filed a complaint for damages against respondents. The
trial court dismissed the Complaint for lack of merit. On appeal, Huang belatedly raises the
defense on breach of contract. She maintains that that an implied contract existed between them
in view of the fact that the hotel guest status extends to all those who avail of its services its patrons and
invitees. The CA affirmed the TCs decision. MR denied. Hence, this Petition for certiorari under Rule 45.
She also avows that the doctrines of res ipsa loquitur and respondeat superior are applicable in this
case. It was an accident caused by the fact that the hotel staff was not present to lift the heavy counter top for
Huang as is normally expected of them because they negligently locked the main entrance door of the hotels
swimming pool area.

Issue:
Whether respondents PHI and Dusit are liable to Dr. Huang.

Held:
NO. Initially, Huang sued respondents mainly on account of their negligence but not on any
breach of contract. Presently, she claims that her cause of action can be based both on quasi-
delict and breach of contract. A perusal of the complaint evidently shows that her cause of action was
based solely on quasi-delict (negligence). It is evident from the complaint and from her open court testimony
that the reliance was on the alleged tortious acts committed against her by respondents, through
their management and staff. In quasi-delict, there is no presumption of negligence and it is incumbent upon
the injured party to prove the negligence of the defendant, otherwise, the formers complaint will be dismissed.
In a breach of contract, negligence is presumed so as it can be proved that there was breach of the contract and
the burden is on the defendant to prove that there was no negligence in the carrying out of the terms of the
contract; the rule of respondeat superior is followed. It is now too late to raise the said argument for the first time
before the SC without causing injustice.
As Huangs cause of action is based on quasi-delict, it is incumbent upon her to prove the presence of the
following requisites before respondents PHI and Dusit can be held liable, to wit: (a) damages suffered by the
plaintiff; (b)fault or negligence of the defendant, or some other person for whose acts he must respond; and
(c) the connection of cause and effect between the fault or negligence of the defendant and the damages
incurred by the plaintiff.
Further, since her case is for quasi-delict, the negligence or fault should be clearly established
as it is the basis of her action. The burden of proof is upon her.
Second element Absent : In this case, Huang utterly failed to prove the alleged negligence of respondents.
Other than her self-serving testimony that all the lights in the hotels swimming pool area were shut off and the
door was locked, which allegedly prompted her to find a way out and in doing so a folding wooden counter top
fell on her head causing her injury, no other evidence was presented to substantiate the same. Even her own
companion during the night of the accident inside the hotels swimming pool area was never presented
to corroborate her allegations.
On the other hand, the witnesses presented by the respondents positively declared that it has been
a normal practice of the hotel management not to put off the lights until 10pm. to allow the
housekeepers to do the cleaning of the swimming pool surroundings, including the toilets and counters.
There is a remote possibility that the hotels swimming pool area was in complete darkness as
the aforesaid gym was then open until 10pm, and the lights radiate to the hotels swimming pool area.
Ergo, she cannot fault the Hotel for the injury she allegedly suffered because she herself did not
heed the warning at the pool to the effect that it was only open from 7:00 to 7:00 P.M. Thus,
when her own negligence was the immediate and proximate cause of his injury, she then
cannot recover damages.
Even Huangs assertion of negligence on the part of respondents in not rendering medical
assistance to her is preposterous. Her own Complaint affirmed that respondents afforded
medical assistance to her after she met the unfortunate accident inside the hotels swimming pool
facility. Moreover, the Hotel shouldered the expenses for the MRI services at the Makati Med.
R e s I p s a L o q u i t u r & Respondeat Superior:
With regard to Huangs contention that the principles of res ipsa loquitur and respondeat superior are
applicable in this case, this Court holds otherwise. Res ipsa loquitur is a Latin phrase which literally means
the thing or the transaction speaks for itself. it relates to the fact of an injury that sets out an inference to
the cause thereof or establishes the plaintiffs prima facie case. The doctrine finds no application if there is direct
proof of absence or presence of negligence. In the case at bench, even granting that respondents staff
negligently turned off the lights and locked the door, the folding wooden counter top would still not fall on
Huangs head had she not lifted the same. Records showed that she lifted the said folding wooden
counter top that eventually fell and hit her head. Doctrine of respondeat superior finds no application in the
absence of any showing that the employees of respondents were negligent. Since in this case, the trial court and
the CA found no negligence on the part of the employees of respondents, thus, the latter cannot also be held
liable for negligence. With the foregoing, the following were clearly established, to wit: (1) petitioner stayed in
the hotels swimming pool facility beyond its closing hours; (2) she lifted the folding wooden counter top that
eventually hit her head; and (3) respondents extended medical assistance to her. As such,no
negligence can be attributed either to or to their staff and/or management.
T h i r d e l e m e n t : On the issue on whether Huangs debilitating and permanent injuries were the
result of the accident she suffered at the hotels swimming pool area, the Court holds that there is no
cogent reason to depart from the lower courtsfindings. (1) Huang had a past medical history which might
have been the cause of her recurring brain injury. (2) The findings of Dr. Perez did not prove a causal
relation between the 11 June 1995 accident and the brain damage suffered by Huang. Dr. Perez
himself testified that the symptoms being experienced might have been due to factors other
than the head trauma she allegedly suffered. (3) Dr. Sanchezs testimony was hearsay.
(4) Medical reports/evaluations/certifications issued by myriads of doctors whom petitioner
sought for examination or treatment were neither identified nor testified to by those who issued them.
Being deemed as hearsay, they cannot be given probative value. All told, in the absence of negligence on
the part of respondents as well as their management and staff, they cannot be made liable to pay for the
millions of damages prayed for. Since respondents arc not liable, it necessarily follows that First
Lepanto cannot also be made liable under the contract of Insurance

ALLIED BANKING CORPORATION vs. BANK OF THE PHILIPPINE ISLANDS

G.R. No. 188363, February 27, 2013

FACTS: On October 10, 2002, a check in the amount of P1,000,000.00 payable to "Mateo
Mgt. Group International" (MMGI) was presented for deposit and accepted at
petitioner's (Allied Bank) Kawit Branch. The check, post-dated "Oct. 9, 2003", was drawn
against the account of Marciano Silva, Jr. (Silva) with respondent BPI Bel-Air Branch.
Upon receipt, petitioner sent the check for clearing to respondent through the
Philippine Clearing House Corporation (PCHC).

The check was cleared by respondent and petitioner credited the account of MMGI with
P1,000,000.00. On October 22, 2002, MMGIs account was closed and all the funds
therein were withdrawn. A month later, Silva discovered the debit of P1,000,000.00
from his account. In response to Silvas complaint, respondent credited his account with
the aforesaid sum.

Petitioner filed a complaint before the Arbitration Committee, asserting that

respondent should solely bear the entire face value of the check due to its negligence in
failing to return the check to petitioner within the 24-hour reglementary period as
provided in Section 20.1of the Clearing House Rules and Regulations (CHRR) 2000. In its
Answer with Counterclaims, respondent charged petitioner with gross negligence for
accepting the post-dated check in the first place. It contended that petitioners admitted
negligence was the sole and proximate cause of the loss.
 ISSUE: What does the Doctrine of Last Clear Chance enunciate?

RULING: The doctrine of last clear chance, stated broadly, is that the negligence of the
plaintiff does not preclude a recovery for the negligence of the defendant where it
appears that the defendant, by exercising reasonable care and prudence, might have
avoided injurious consequences to the plaintiff notwithstanding the plaintiffs
negligence. The doctrine necessarily assumes negligence on the part of the defendant
and contributory negligence on the part of the plaintiff, and does not apply except upon
that assumption. Stated differently, the antecedent negligence of the plaintiff does not
preclude him from recovering damages caused by the supervening negligence of the
defendant, who had the last fair chance to prevent the impending harm by the exercise
of due diligence. Moreover, in situations where the doctrine has been applied, it was
defendants failure to exercise such ordinary care, having the last clear chance to avoid
loss or injury, which was the proximate cause of the occurrence of such loss or injury.

ISSUE: Does the Doctrine of Last Clear Chance apply in this case?

RULING: YES. In this case, the evidence clearly shows that the proximate cause of the
unwarranted encashment of the subject check was the negligence of respondent who
cleared a post-dated check sent to it thru the PCHC clearing facility without observing its
own verification procedure. As correctly found by the PCHC and upheld by the RTC, if
only respondent exercised ordinary care in the clearing process, it could have easily
noticed the glaring defect upon seeing the date written on the face of the check "Oct. 9,
2003". Respondent could have then promptly returned the check and with the check
thus dishonored, petitioner would have not credited the amount thereof to the payees
account. Thus, notwithstanding the antecedent negligence of the petitioner in accepting
the post-dated check for deposit, it can seek reimbursement from respondent the
amount credited to the payees account covering the check.

OCEAN BUILDERS CONSTRUCTION CORP., and/or DENNIS HAO, Petitioners, v. SPOUSES

ANTONIO and ANICIA CUBACUB, Respondents.

CARPIO MORALES, J.:

FACTS:

Bladimir Cubacub (Bladimir) was employed as maintenance man by petitioner company Ocean
Builders Construction Corp. at its office in Caloocan City. Bladimir was afflicted with chicken
pox. Thus, he was advised by petitioner Dennis Hao (Hao), the companys general manager, to
rest for three days which he did at the companys barracks where he lives free of charge.

Three days later, Bladimir went about his usual chores of manning the gate of the company
premises and even cleaned the company vehicles. Later in the afternoon, Hao gave Bladimir
P1,000.00 and ordered Silangga, a co-worker, to bring Bladimir to the nearest hospital.

Bladimir was brought to the Caybiga Community Hospital (Caybiga Hospital), a primary-care
hospital around one kilometer away from the office of the company. He was then confined and
was not permitted to leave the hospital. He was then transferred to the Quezon City General
Hospital (QCGH) by his parents where he was placed in the intensive care unit and died the
following day.

The death certificate issued by the QCGH recorded Bladimirs immediate cause of death as
cardio-respiratory arrest and the antecedent cause as pneumonia. On the other hand, the
death certificate issued by Dr. Frias recorded the causes of death as cardiac arrest, multiple
organ system failure, septicemia and chicken pox.

Bladimirs parents filed before the RTC complaint for damages against petitioners, alleging that
Hao was guilty of negligence which resulted in the deterioration of Bladimirs condition leading
to his death. The court dismissed the complaint and ruled that Hao was not negligent.

On appeal, the CA reversed the decision of the lower court and ruled that Haos failure to bring
Bladimir to a better-equipped hospital constituted a violation of Article 161 of the Labor Code.
Thus, making them liable for damages.

ISSUE: Whether or not Hao exercised the diligence more than what the law requires, hence,
they are not liable for damages.

HELD:

The petition is meritorious.

CIVIL LAW: Damages

To successfully prosecute an action anchored on torts, three elements must be present, viz: (1)
duty (2) breach (3) injury and proximate causation. The assailed decision of the appellate court
held that it was the duty of petitioners to provide adequate medical assistance to the
employees under Art. 161 of the Labor Code, failing which a breach is committed.
The Implementing Rules of the Code do not enlighten what the phrase adequate and
immediate medical attendance means in relation to an emergency. It would thus appear
that the determination of what it means is left to the employer, except when a full-time
registered nurse or physician are available on-site as required, also under the Labor Code.

The Court determined that the actions taken by petitioners when Bladimir became ill, to take a
3-day rest and to later have him brought to the nearest hospital, amounted to the necessary
assistance to ensure adequate and immediate medical attendance to Bladimir as required
under Art. 161 of the Labor Code, to provide to a sick employee in an emergency.

Chicken pox is self-limiting. Hao does not appear to have a medical background. He may not be
thus expected to have known that Bladimir needed to be brought to a hospital with better
facilities than the Caybiga Hospital, contrary to appellate courts ruling.

Moreover, the alleged negligence of Hao cannot be considered as the proximate cause of the
death of Bladimir. Proximate cause is that which, in natural and continuous sequence,
unbroken by an efficient intervening cause, produces injury, and without which, the result
would not have occurred. An injury or damage is proximately caused by an act or failure to act,
whenever it appears from the evidence in the case that the act or omission played a substantial
part in bringing about or actually causing the injury or damage, and that the injury or damage
was either a direct result or a reasonably probable consequence of the act or omission. Thus,
the petitioners are not guilty of negligence.

Therefore, the petition is granted and the Decision of the CA is reversed.

MVRS vs Islamic DaWah Council of the Phils. (2003)

FACTS:
a. Islamic Da'wah Council of the Philippines, Inc., a local federation of more than seventy (70)
Muslim religious organizations, and individual Muslims (Linzag, Arcilla, de Guzman, da Silva,
Junio) filed in the RTC a complaint for damages in their own behalf and as a class suit in behalf
of the Muslim members nationwide against MVRS Publications, Inc., arising from an article
published in the 1 August 1992 issue of Bulgar, a daily tabloid. The article reads:
"ALAM BA NINYO?
Na ang mga baboy at kahit anong uri ng hayop sa Mindanao ay hindi kinakain ng mga Muslim?
Para sa kanila ang mga ito ay isang sagradong bagay. Hindi nila ito kailangang kainin kahit na
sila pa ay magutom at mawalan ng ulam sa tuwing sila ay kakain. Ginagawa nila itong Diyos at
sinasamba pa nila ito sa tuwing araw ng kanilang pangingilin lalung-lalo na sa araw na
tinatawag nilang 'Ramadan'."
b. Islamic DaWah: the libelous statement was insulting and damaging to the Muslims; not only
published out of sheer ignorance but with intent to hurt the feelings, cast insult and disparage
the Muslims and Islam,; that on account of these libelous words Bulgar insulted not only the
Muslims in the Philippines but the entire Muslim world
c. MVRS Publications, Inc.,: the article did not mention respondents as the object of the article
and therefore were not entitled to damages; and, that the article was merely an expression of
belief or opinion and was published without malice nor intention to cause damage
d. RTC: dismissed the complaint; persons allegedly defamed by the article were not specifically
identified
e. CA: reversed RTC decision. The defamation was directed to all adherents of the Islamic faith.
The suit for damages was a "class suit" and that ISLAMIC DA'WAH COUNCIL OF THE
PHILIPPINES, INC.'s religious status as a Muslim umbrella organization gave it the requisite
personality to sue and protect the interests of all Muslims.

ISSUES:
1. WON Islamic DaWah has a cause of action for libel. NO.
2. WON in the alternative, the action can be considered as one is for intentional tort and not
libel. NO.
3. WON this is a valid class suit. NO.

HELD:
1. NO, there is no cause of action for libel.
DOCTRINES:
Defamation - which includes libel and slander, means the offense of injuring a person's
character, fame or reputation through false and malicious statements. It is that which tends to
injure reputation or to diminish the esteem, respect, good will or confidence in the plaintiff or
to excite derogatory feelings or opinions about the plaintiff.6 It is the publication of anything
which is injurious to the good name or reputation of another or tends to bring him into
disrepute.7 Defamation is an invasion of a relational interest since it involves the opinion which
others in the community may have, or tend to have, of the plaintiff.
Words which are merely insulting are not actionable as libel or slander per se, and mere
words of general abuse however ill-natured, whether written or spoken, do not constitute a
basis for an action for defamation in the absence of an allegation for special damages. The fact
that the language is offensive to the plaintiff does not make it actionable by itself.10
Declarations made about a large class of people cannot be interpreted to advert to an
identified or identifiable individual. Absent circumstances specifically pointing or alluding to a
particular member of a class, no member of such class has a right of action without at all
impairing the equally demanding right of free speech and expression, as well as of the press.
APPLICATION: there was no fairly identifiable person who was allegedly injured by the Bulgar
article. Since the persons allegedly defamed could not be identifiable, private respondents have
no individual causes of action; hence, they cannot sue for a class allegedly disparaged.
An individual Muslim has a reputation that is personal, separate and distinct in the community.
A Muslim may find the article dishonorable, even blasphemous; others may find it as an
opportunity to strengthen their faith and educate the non-believers and the "infidels." There is
no injury to the reputation of the individual Muslims who constitute this community that can
give rise to an action for group libel. Each reputation is personal in character to every person.
Together, the Muslims do not have a single common reputation that will give them a common
or general interest in the subject matter of the controversy.

DOCTRINE: If the group is a very large one, then the alleged libelous statement is considered to
have no application to anyone in particular, since one might as well defame all mankind. As the
size of these groups increases, the chances for members of such groups to recover damages on
tortious libel become elusive.
This principle is said to embrace two (2) important public policies:
first, where the group referred to is large, the courts presume that no reasonable reader would
take the statements as so literally applying to each individual member.
second, the limitation on liability would satisfactorily safeguard freedom of speech and
expression, as well as of the press, effecting a sound compromise between the conflicting
fundamental interests involved in libel cases.
APPLICATION: The Muslim community is too vast as to readily ascertain who among the
Muslims were particularly defamed.

THIRD DIVISION, G.R. No. 175540, April 14, 2014, DR. FILOTEO A. ALANO, PETITIONER, VS.
ZENAIDA MAGUD-LOGMAO, RESPONDENT.

Amelito Logmao was brought to the East Avenue Medical Center by sidewalk vendors who
allegedly saw him fall from the overpass in Cubao, Quezon City. There, his patients data sheet
identified him as Angelito Lugmoso. The clinical abstract prepared by the surgical resident
identified him as Angelito (Logmao), however. Considering that his deterioration progressively
deteriorated, and no vacancy was available at the ICU of East Avenue Medical Center, and upon
recommendation by a resident physician of the National Kidney Institute who also does the
rounds at EAMC, Logmao/Lugmoso was transferred to NKI. His name was recorded as Angelito
Lugmose at the NKI. There being no relatives around, Jennifer, the transplant coordinator, was
instructed to locate his family by enlisting the assistance of the police and the media. Dr. Ona,
the chairman of the Department of Surgery, observing the severity of the brain injury of
Angelito Lugmoso/Logmao, requested the Laboratory Section to conduct cross-matching and
tissue typing, so that if Angelito expires despite the necessary medical care and management,
and found a suitable organ donor, provided his family would consent to it, his organs could be
detached and transplanted promptly to a compatible beneficiary. Jennifer secured the patient
data of Agelito from EAMC, where he was identified as Angelito Lugmoso of Boni Avenue,
Mandaluyong and contacted several television and radio stations for the purpose of locating
the family of Lugmoso. She also sought the assistance of the Philippine National Police to locate
the whereabouts of Angelitos family. As proof, the radio and tv stations she contacted, as well
as the pertinent police station, issued Certifications attesting to her effort to locate Angelitos
family.
Angelito was eventually pronounced dead, hence Dr. Ona set in motion the removal of organs
of Angelito for organ transplantation. He sought permission from the Executive Director, Dr.
Filoteo Alano, who issued a Memorandum approving the transplant as long as all the requisite
requirements had been complied with and the NBI had been informed of the planned
transplant. The NBI thru Dr. Maximo Reyes gave verbal approval to the planned transplant.
Thus, a medical performed a series of surgeries to remove Angelitps heart, spleen, pancreas,
and liver. One kidney and the pancreas was transplanted to Lee Tan Hoc, while the other kidney
was transplanted to Alexis Ambustan. A doctor then made arrangements with Funerario Oro for
the embalmment of the remains of Angelito for a period of 15 days to afford more time for the
relative of Angelito to locate his remains. The NBI also conducted an autopsy on Angelitos
cadaver where his cause of death was listed as intracranial haemorrhage secondary to skull
fracture.
On March 11, 1988, the NKI issued a press release announcing the successful organ transplant.
A cousin of Angelito heard on the radio that the donor was a certain Angelitlo Lugmoso who is
now at Funeraria Oro. Sensing a vague resemblance to Angelito Logmao;s name, she reported it
to his mother, Zenaida Logmao. When they went to the Furearia Oro to see the remains, it was
there that they discovered the remains of Angelito in a cheap casket. Previously, Arnelitos
sister Arlen reported on March 3, 1988 that her brother, Arnelito did not return home after
seeing a movie in Cubao.
Because of this discovery, Zenaida filed a complaint for damages against Dr. Emmanuel Lenon,
Taurean Protectors Agency, represented by its Proprietor, Celso Santiago, National Kidney
Institute, represented by its Director, Dr. Filoteo A. Alano, Jennifer Misa, Dr. Maximo Reyes, Dr.
Enrique T. Ona, Dr. Manuel Chua-Chiaco, Jr., Dr. Rose Marie O. Rosete-Liquete, Dr. Aurea Z.
Ambrosio, Dr. Ludivino de Guzman, Dr. Mary Litonjua, Dr. Jaime Velasquez, Dr. Ricardo
Fernando, Dr. Myrna Mendoza, Lee Tan Koc, Alexis Ambustan, Dr. Antonio R. Paraiso, La
Funeraria Oro, Inc., represented by its President, German E. Ortega, Roberto Ortega alias Bobby
Ortega, Dr. Mariano B. Cueva, Jr., John Doe, Peter Doe, and Alex Doe in connection with the
death of her son Arnelito. Plaintiff alleged that defendants conspired to remove the organs
of Arnelito while the latter was still alive and that they concealed his true identity.
Only Dr. Filoteo Albano was held liable for damages by the RTC. On appeal, the Court of Appeals
affirmed the decision with modification, by reducing the award of moral and exemplary
damages, as well as attorneys fees.
Dr. Alano then filed his appeal before the Supreme Court. In his brief, he argued that he when
he gave authorization for the removal of the organs, he gave so only in accordance with the
letter of the law, Republic Act 349, and after instructions had been made to locate the
deceaseds relatives, even to the extent of disseminating the information to the media and the
police..
The Supreme Court:
Dr. Alano cannot be held liable for damages.
The Memorandum dated March 3, 1988 issued by petitioner, stated thus:
As shown by the medical records, the said patient died on March 3, 1988 at 9:10 in the morning
due to craniocerebral injury. Please make certain that your Department has exerted all
reasonable efforts to locate the relatives or next-of-kin of the said deceased patient, such as
appeal through the radios and television, as well as through police and other government
agencies and that the NBI [Medico-Legal] Section has been notified and is aware of the case.
If all the above has been complied with, in accordance with the provisions of Republic Act No.
349 as amended and P.D. 856, permission and/or authority is hereby given to the Department
of Surgery to retrieve and remove the kidneys, pancreas, liver and heart of the said deceased
patient and to transplant the said organs to any compatible patient who maybe in need of said
organs to live and survive.
A careful reading of the above shows that petitioner instructed his subordinates to make
certain that all reasonable efforts are exerted to locate the patients next of kin, even
enumerating ways in which to ensure that notices of the death of the patient would reach said
relatives. It also clearly stated that permission or authorization to retrieve and remove the
internal organs of the deceased was being given ONLY IF the provisions of the applicable law
had been complied with. Such instructions reveal that petitioner acted prudently by directing
his subordinates to exhaust all reasonable means of locating the relatives of the deceased. He
could not have made his directives any clearer. He even specifically mentioned that permission
is only being granted IF the Department of Surgery has complied with all the requirements of
the law. Verily, petitioner could not have been faulted for having full confidence in the ability
of the doctors in the Department of Surgery to comprehend the instructions, obeying all his
directives, and acting only in accordance with the requirements of the law.
Furthermore, as found by the lower courts from the records of the case, the doctors
and personnel of NKI disseminated notices of the death of respondents son to the media and
sought the assistance of the appropriate police authorities as early as March 2, 1988, even
before petitioner issued the Memorandum. Prior to performing the procedure for retrieval of
the deceaseds internal organs, the doctors concerned also the sought the opinion and approval
of the Medico-Legal Officer of the NBI.
Thus, there can be no cavil that petitioner employed reasonable means to disseminate
notifications intended to reach the relatives of the deceased. The only question that remains
pertains to the sufficiency of time allowed for notices to reach the relatives of the deceased.
If respondent failed to immediately receive notice of her sons death because the notices did
not properly state the name or identity of the deceased, fault cannot be laid at petitioners
door. The trial and appellate courts found that it was the EAMC, who had the opportunity to
ascertain the name of the deceased, who recorded the wrong information regarding the
deceaseds identity to NKI. The NKI could not have obtained the information about his name
from the patient, because as found by the lower courts, the deceased was already unconscious
by the time he was brought to the NKI.
 Ultimately, it is respondents failure to adduce adequate evidence that doomed this case. As
stated in Otero v. Tan, [i]n civil cases, it is a basic rule that the party making allegations has the
burden of proving them by a preponderance of evidence. The parties must rely on the strength
of their own evidence and not upon the weakness of the defense offered by their
opponent. Here, there is to proof that, indeed, the period of around 24 hours from the time
notices were disseminated, cannot be considered as reasonable under the circumstances. They
failed to present any expert witness to prove that given the medical technology and knowledge
at that time in the 1980s, the doctors could or should have waited longer before harvesting the
internal organs for transplantation.
Verily, the Court cannot, in conscience, agree with the lower court. Finding petitioner liable for
damages is improper. It should be emphasized that the internal organs of the deceased were
removed only after he had been declared brain dead; thus, the emotional pain suffered by
respondent due to the death of her son cannot in any way be attributed to petitioner. Neither
can the Court find evidence on record to show that respondents emotional suffering at the
sight of the pitiful state in which she found her sons lifeless body be categorically attributed to
petitioners conduct.

MOST REV. PEDRO ARIGO, et. al., Petitioners, vs. SCOTT H. SWIFT, et. al., Respondents.G.R.
No. 206510 September 16, 2014

FACTS:

The USS Guardian is an Avenger-class mine countermeasures ship of the US Navy. In

December 2012, the US Embassy in the Philippines requested diplomaticclearance for the said
vessel to enter and exit the territorial waters of the Philippines and to arrive at the port of
Subic Bay for the purpose of routine ship replenishment, maintenance, and crew liberty. On
January 6, 2013, the ship left Sasebo, Japan for Subic Bay, arriving on January 13, 2013 after a
brief stop for fuel in Okinawa, Japan.

On January 15, 2013, the USS Guardian departed Subic Bay for its next port of call in
Makassar, Indonesia. On January 17, 2013 at 2:20 a.m. while transiting the Sulu Sea, the ship
ran aground on the northwest side of South Shoal of the Tubbataha Reefs, about 80 miles east-
southeast of Palawan. No one was injured in the incident, and there have been no reports of
leaking fuel or oil.

Petitioners claim that the grounding, salvaging and post-salvaging operations of the
USS Guardian cause and continue to cause environmental damage of such magnitude as to
affect the provinces of Palawan, Antique, Aklan, Guimaras, Iloilo, Negros Occidental, Negros
Oriental, Zamboanga del Norte, Basilan, Sulu, and Tawi-Tawi, which events violate their
constitutional rights to a balanced and healthful ecology.

ISSUES:
1. Whether or not petitioners have legal standing.
2. Whether or not US respondents may be held liable for damages caused by USS Guardian.

HELD:
First issue: YES.

Petitioners have legal standing

Locus standi is a right of appearance in a court of justice on a given question.
Specifically, it is a partys personal and substantial interest in a case where he has sustained or
will sustain direct injury as a result of the act being challenged, and calls for more than just a
generalized grievance. However, the rule on standing is a procedural matter which this Court
has relaxed for non-traditional plaintiffs like ordinary citizens, taxpayers and legislators when
the public interest so requires, such as when the subject matter of the controversy is of
transcendental importance, of overreaching significance to society, or of paramount public
interest.
In the landmark case of Oposa v. Factoran, Jr., we recognized the public right of
citizens to a balanced and healthful ecology which, for the first time in our constitutional
history, is solemnly incorporated in the fundamental law. We declared that the right to a
balanced and healthful ecology need not be written in the Constitution for it is assumed, like
other civil and polittcal rights guaranteed in the Bill of Rights, to exist from the inception of
mankind and it is an issue of transcendental importance withintergenerational implications.
Such right carries with it the correlative duty to refrain from impairing the environment.
On the novel element in the class suit filed by the petitioners minors in Oposa, this
Court ruled that not only do ordinary citizens have legal standing to sue for the enforcement
of environmental rights, they can do so in representation of their own and future generations.

Second issue: YES.

The US respondents were sued in their official capacity as commanding officers of the
US Navy who had control and supervision over the USS Guardian and its crew. The alleged act
or omission resulting in the unfortunate grounding of the USS Guardian on the TRNP was
committed while they were performing official military duties. Considering that the satisfaction
of a judgment against said officials will require remedial actions and appropriation of funds by
the US government, the suit is deemed to be one against the US itself. The principle of State
immunity therefore bars the exercise of jurisdiction by this Court over the persons of
respondents Swift, Rice and Robling.
During the deliberations, Senior Associate Justice Antonio T. Carpio took the position
that the conduct of the US in this case, when its warship entered a restricted area in violation of
R.A. No. 10067 and caused damage to the TRNP reef system, bringsthe matter within
the ambit of Article 31 of the United Nations Convention on the Law of the Sea (UNCLOS). He
explained that while historically, warships enjoy sovereign immunity from suit as extensions
of their flag State, Art. 31 of the UNCLOS creates an exception to this rule in cases where they
fail to comply with the rules and regulations of the coastal State regarding passage through
the latters internal waters and the territorial sea.
 In the case of warships, as pointed out by Justice Carpio, they continue to enjoy
sovereign immunity subject to the following exceptions:
Article 30: Non-compliance by warships with the laws and regulations of the coastal State
If any warship does not comply with the laws and regulations of the coastal State concerning
passage through the territorial sea and disregards any request for compliance therewith which
is made to it, the coastal State may require it to leave the territorial sea immediately.
Article 31: Responsibility of the flag State for damage caused by a warship or other government
ship operated for non-commercial purposes
The flag State shall bear international responsibility for any loss or damage to the coastal State
resulting from the non-compliance by a warship or other government ship operated for non-
commercial purposes with the laws and regulations of the coastal State concerning passage
through the territorial sea or with the provisions of this Convention or other rules of
international law.
Article 32: Immunities of warships and other government ships operated for non-commercial
purposes
With such exceptions as are contained in subsection A and in articles 30 and 31,
nothing in this Convention affects the immunities of warships and other government ships
operated for non-commercial purposes. A foreign warships unauthorized entry into our
internal waters with resulting damage to marine resources is one situation in which the
above provisions may apply.
But what if the offending warship is a non-party to the UNCLOS, as in this case, the US?
According to Justice Carpio, although the US to date has not ratified the UNCLOS, as a matter of
long-standing policy the US considers itself bound by customary international rules on the
traditional uses of the oceans as codified in UNCLOS.
Moreover, Justice Carpio emphasizes that the US refusal to join the UNCLOS was centered on
its disagreement with UNCLOS regime of deep seabed mining (Part XI) which considers the
oceans and deep seabed commonly owned by mankind, pointing out that such has nothing to
do with its the US acceptance of customary international rules on navigation.
The Court also fully concurred with Justice Carpios view that non-membership in the UNCLOS
does not mean that the US will disregard the rights of the Philippines as a Coastal State over its
internal waters and territorial sea. We thus expect the US to bear international responsibility
under Art. 31 in connection with the USS Guardian grounding which adversely affected the
Tubbataha reefs. Indeed, it is difficult to imagine that our long-time ally and trading partner,
which has been actively supporting the countrys efforts to preserve our vital marine resources,
would shirk from its obligation to compensate the damage caused by its warship while
transiting our internal waters. Much less can we comprehend a Government exercising
leadership in international affairs, unwilling to comply with the UNCLOS directive for all nations
to cooperate in the global task to protect and preserve the marine environment as provided in
Article 197 of UNCLOS
Article 197: Cooperation on a global or regional basis
States shall cooperate on a global basis and, as appropriate, on a regional basis, directly or
through competent international organizations, in formulating and elaborating international
rules, standards and recommended practices and procedures consistent with this Convention,
for the protection and preservation of the marine environment, taking into account
characteristic regional features.
In fine, the relevance of UNCLOS provisions to the present controversy is beyond dispute.
Although the said treaty upholds the immunity of warships from the jurisdiction of Coastal
States while navigating the latters territorial sea, the flag States shall be required to leave
the territorial sea immediately if they flout the laws and regulations of the Coastal State, and
they will be liable for damages caused by their warships or any other government vessel
operated for non-commercial purposes under Article 31.

BJDC CONSTRUCTION v. LANUZOG.R. No. 161151; March 24, 2014

FACTS:
This case involves a claim for damages arising from the death of a motorcycle rider in a night
time accident due to the supposed negligence of a construction company then
undertaking reblocking work on a national
highway. The plaintiffs insisted that the accident happened because the construction
company did not provide adequate lighting on the site, but the latter countered that the fatal
accident was caused by the
negligenceo f t h e m o t o r c y c l e r i d e r h i m s e l f . T h e t r i a l c o u r t d e c i d e d i n f a v o r
o f t h e c o n s t r u c t i o n company, but the Court of Appeals (CA) reversed the decision
and ruled for the plaintiffs. Hence, this appeal.

ISSUE:
Whose negligence was the proximate cause of the death of Balbino

HELD:
The party alleging the negligence of the other as the cause of injury has the burden to
establish the allegation with competent evidence. If the action based on
negligence is civil in nature, the proof required is preponderance of evidence. Based on the evidence
adduced by the Lanuzo heirs, negligence cannot be fairly ascribed to the company
considering that it has shown its installation of the necessary warning signs and
lights in the project site. In that context, the fatal accident was not caused by any
instrumentality within the exclusive control of the company. (n contrast, %albino hadt he
exclusive control of how he operated and managed his motorcycle. The records
disclose that he himself did not take the necessary precautions. All the established circumstances showed
that the proximate and immediate cause of the death of %albino was his own negligence.
Hence, the Lanuzo heirs could not recover damages.
 Alejandro V. Tankeh v. Development Bank of the Philippines, Sterling Shipping Lines, Inc.,
Ruperto V. Tankeh, Vicente Arenas, and Asset Privatization Trust G.R. No. 171428, November
11, 2013

Facts:
Private respondent Ruperto V. Tankeh was the president of Sterling Shipping Lines, which was
incorporated way back in 1979. In 1980, petitioner Dr. Alejandro V. Tankeh, the older brother of
Ruperto Tankeh, alleged that the latter approached him wherein the former informed the latter
that he was operating a new shipping line business and offered petitioner one thousand (1,000)
shares worth P1,000,000.00 to be a director of the business. Petitioner accepted his brothers
offer and he became a member of the corporations board. In 1981, petitioner signed the
Assignment of Shares of Stock with Voting Rights and promissory note where he bound himself
solidarily liable with the other corporate officers as regards the loan obtained by Ruperto for
the purchase of a vessel in order to commence their business. However, the corporation failed
to meet their obligations sometime in 1987, the DBP sold the vessel to a Singaporean
enterprise. DBP then informed petitioner that it would still pursue its claim over the unpaid
liabilities of the corporation. Hence, petitioner filed a Complaint for the annulment of the
contracts he signed in 1981 on the ground that he was fraudulently deceived by Ruperto, the
other corporate officers and DBP into signing the said contracts.

Issue: Whether or not the fraud perpetrated by respondents is serious enough to warrant
annulment of the contract.

Held:
No. Only incidental fraud exists in this case. Therefore it is not sufficient to warrant the
annulment of the contracts petitioner entered into but respondent Ruperto is liable to pay him
damages. The distinction between fraud as a ground for rendering a contract voidable or as
basis for an award of damages is provided in Article 1344:

In order that fraud may make a contract voidable, it should be serious and should

not have been employed by both contracting parties. Incidental fraud only obliges the person
employing it to pay damages. There are two types of fraud contemplated in the performance of
contracts: dolo incidente or incidental fraud and dolo causante or fraud serious enough to
render a contract voidable. If there is fraud in the performance of the contract, then this fraud
will give rise to damages. If the fraud did not compel the imputing party to give his or her
consent, it may not serve as the basis to annul the contract, which exhibits dolo causante.
However, the party alleging the existence of fraud may prove the existence of dolo incidente.
This may make the party against whom fraud is alleged liable for damages. Jurisprudence has
shown that in order to constitute fraud that provides basis to annul contracts, it must fulfill two
conditions. First, the fraud must be dolo causante or it must be fraud in obtaining the consent
of the party. Second, this fraud must be proven by clear and convincing evidence. In this case, it
cannot be said that fraud was serious enough to warrant the annulment of the contract
because petitioner knew of the contents of the contracts that he signed. The required standard
of proof clear and convincing evidence was not met. There was no dolo causante or fraud
used to obtain the petitioners consent to enter into the contract. Petitioner had the
opportunity to become aware of the facts that attended the signing of the promissory note. He
even admitted that he has a lawyer-son who the petitioner had hoped would assist him in the
administration of Sterling Shipping Lines, Inc. The totality of the facts on record belies
petitioners claim that fraud was used to obtain his consent to the contract given his personal
circumstances and the applicable law.

However, in refusing to allow petitioner to participate in the management of the business,

respondent Ruperto V. Tankeh was liable for the commission of incidental fraud. The

Court, in a previous case, defined incidental fraud as &those which are not serious in character
and without which the other party would still have entered into the contract; Although there
was no fraud that had been undertaken to obtain petitioners consent,

there was fraud in the performance of the contract. The records showed that petitioner had
been unjustly excluded from participating in the management of the affairs of the corporation.
This exclusion from the management in the affairs of Sterling Shipping Lines, Inc. constituted
fraud incidental to the performance of the obligation. Respondent Ruperto V. Tankehs bare
assertion that petitioner had access to the records cannot discredit the fact that the petitioner
had been effectively deprived of the opportunity to actually engage in the operations of Sterling
Shipping Lines, Inc. Petitioner had a reasonable expectation that the same level of engagement
would be present for the duration of their working relationship. This would include an
undertaking in good faith by respondent Ruperto V. Tankeh to be transparent with his brother
that he would not automatically be made part of the companys administration.

G.R. No. 200942, June 16, 2015

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. JORIE WAHIMAN Y RAYOS, Accused-
Appellant.

FACTS:
Appellant Jorie Wahiman y Rayos (appellant) was charged with the crime of murder for the
death of Jose Buensuceso (Buensuceso). During his arraignment, appellant pleaded not
guilty.1 Trial on the merits ensued.

The prosecution established that on April 2, 2003, at around 10 o'clock in the evening,
Buensuceso, the manager of Stanfilco-Dole, Phils, in Malaybalay City, was on his way back to
the company staff house on board his Isuzu pick-up after attending a despedida for one of his
employees.

While he was about to enter the gate of the staff house, he was gunned down by persons riding
in tandem on a black motorcycle. The guard on duty, David Azucena (Azucena), who was then
opening the gate, identified one of the assailants as herein appellant.

During trial, the prosecution submitted in evidence the extrajudicial confession of appellant
taken during the preliminary investigation of the case, admitting to the killing of Buensuceso.

However, when it was appellant's turn to testify, he narrated that at the time of the killing, he
was at Landing Casisang, Malaybalay City attending the birthday celebration of his brother-in-
law.

HELD:
We totally agree with the RTC and the CA in finding that the guilt of appellant for the crime of
murder was proved beyond reasonable doubt. There is no doubt that on April 2, 2003, at
around 10 o'clock in the evening, appellant shot Buensuceso while the latter was about to enter
the gate of the staff house of Stanfilco-Dole in Malaybalay City, Bukidnon. Moreover, we agree
with the findings of the RTC and the CA that appellant's extrajudicial confession 6 was voluntarily
and duly executed and replete with details that only appellant could supply.
The RTC and the CA thus properly found appellant guilty of murder and sentenced him to suffer
the penalty of reclusion perpetua. However, it must be stated that appellant is not eligible for
parole pursuant to Section 3 of Republic Act No. 9346 or the Act Prohibiting the Imposition of
Death Penalty in the Philippines.

Anent the damages awarded, we find that modification is in order.

Regarding the award for lost earnings, the general rule is that there must be documentary
proof to support indemnity for loss of earning capacity. Admittedly, there are exceptions to this
rule, viz.:chanroblesvirtuallawlibrary

By way of exception, damages for loss of earning capacity may be awarded despite the absence
of documentary evidence when (1) the deceased is self-employed earning less than the
minimum wage under current labor laws, and judicial notice may be taken of the fact that in
the deceased's line of work no documentary evidence is available; or (2) the deceased is
employed as a daily wage worker earning less than the minimum wage under current labor
laws.10cralawlawlibrary

Notably, this case does not fall under any of the exceptions. The deceased victim could not be
considered as a self-employed earning less than the minimum wage; neither could he be
considered employed as a daily wage worker. However, we are inclined to award lost earnings
considering that the deceased, as testified by his widow, was the manager of Stanfilco-Dole,
Phils, in Malaybalay City and was receiving a monthly salary of P95,000.00. He was 54 years of
age when gunned down by appellant. This testimony was not objected to by appellant or
questioned during cross-examination or on appeal. Clearly, the existence of factual basis of the
award has been satisfactorily established. However, the amount of the award for lost earnings
must be modified following the formula [2/3 x 80 - age] x [gross annual income - necessary
expenses equivalent to 50% of the gross annual income]. Thus: [2/3 x (80-54)] [(P95,000 x 12) -
50% (P95,000 x 12)] = P9,878,100.00.

In addition, the awards of actual damages in the amount of P25,000.00 must be deleted for lack
of proof; in lieu thereof, temperate damages in the amount of P25,000.00 is awarded. The
awards of civil indemnity in the amount of P75,000.00, and moral damages in the amount of
P75,000.00, are in line with prevailing jurisprudence. In addition, the heirs of the victim are
entitled to exemplary damages in the amount of P30,000.00. Finally, all damages awarded shall
earn interest at the rate of 6% per annum from date of finality of this resolution until full
payment

G.R. No. 195166, July 08, 2015

SPOUSES SALVADOR ABELLA AND ALMA ABELLA, Petitioners, v. SPOUSES ROMEO ABELLA
AND ANNIE ABELLA, Respondents

FACTS:

On July 31, 2002, petitioners Spouses Salvador and Alma Abella filed a Complaint for sum of
money and damages with prayer for preliminary attachment against respondents Spouses
Romeo and Annie Abella before the Regional Trial Court, Branch 8, Kalibo, Aklan. The case was
docketed as Civil Case No. 6627.
In their Complaint, petitioners alleged that respondents obtained a loan from them in the
amount of P500,000.00. The loan was evidenced by an acknowledgment receipt dated March
22, 1999 and was payable within one (1) year. Petitioners added that respondents were able to
pay a total of P200,000.00P100,000.00 paid on two separate occasionsleaving an unpaid
balance of P300,000.00.

In their Answer (with counterclaim and motion to dismiss), respondents alleged that the
amount involved did not pertain to a loan they obtained from petitioners but was part of the
capital for a joint venture involving the lending of money. claw

Specifically, respondents claimed that they were approached by petitioners, who proposed that
if respondents were to "undertake the management of whatever money [petitioners] would
give them, [petitioners] would get 2.5% a month with a 2.5% service fee to
[respondents]."10 The 2.5% that each party would be receiving represented their sharing of the
5% interest that the joint venture was supposedly going to charge against its debtors.
Respondents further alleged that the one year averred by petitioners was not a deadline for
payment but the term within which they were to return the money placed by petitioners
should the joint venture prove to be not lucrative. Moreover, they claimed that the entire
amount of P500,000.00 was disposed of in accordance with their agreed terms and conditions
and that petitioners terminated the joint venture, prompting them to collect from the joint
venture's borrowers. They were, however, able to collect only to the extent of P200,000.00;
hence, the P300,000.00 balance remained unpaid. In the Decision dated December 28, 2005,
the Regional Trial Court ruled in favor of petitioners.

HELD:

Although we have settled the nature of the contractual relation between petitioners and
respondents, controversy persists over respondents' duty to pay conventional interest, i.e.,
interest as the cost of borrowing money.

Article 1956 of the Civil Code spells out the basic rule that "[n]o interest shall be due unless it
has been expressly stipulated in writing."

On the matter of interest, the text of the acknowledgment receipt is simple, plain, and
unequivocal. It attests to the contracting parties' intent to subject to interest the loan extended
by petitioners to respondents. The controversy, however, stems from the acknowledgment
receipt's failure to state the exact rate of interest.

Jurisprudence is clear about the applicable interest rate if a written instrument fails to specify a
rate. In Spouses Toring v. Spouses Olan,35 this court clarified the effect of Article 1956 of the
Civil Code and noted that the legal rate of interest (then at 12%) is to apply: "In a loan or
forbearance of money, according to the Civil Code, the interest due should be that stipulated in
writing, and in the absence thereof, the rate shall be 12% per annum."

Spouses Toring cites and restates (practically verbatim) what this court settled in Security Bank
and Trust Company v. Regional Trial Court of Makati, Branch 61: "In a loan or forbearance of
money, the interest due should be that stipulated in writing, and in the absence thereof the
rate shall be 12% per annum."37redarclaw

Security Bank also refers to Eastern Shipping Lines, Inc. v. Court of Appeals, which, in turn,
stated:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been stipulated
in writing. Furthermore, the interest due shall itself earn legal interest from the time it is
judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per
annum to be computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.39 (Emphasis supplied)
The rule is not only definite; it is cast in mandatory language. From Eastern Shipping to Security
Bankto Spouses Toring, jurisprudence has repeatedly used the word "shall," a term that has
long been settled to denote something imperative or operating to impose a duty.40 Thus, the
rule leaves no room for alternatives or otherwise does not allow for discretion. It requires the
application of the legal rate of interest.

Our intervening Decision in Nacar v. Gallery Frames41 recognized that the legal rate of interest
has been reduced to 6% per annum:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Recently, however, the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its Resolution
No. 796 dated May 16, 2013, approved the amendment of Section 2 of Circular No. 905, Series
of 1982 and, accordingly, issued Circular No. 799, Series of 2013, effective July 1, 2013, the
pertinent portion of which reads:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following
revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby
amending Section 2 of Circular No. 905, Series of 1982:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and
the rate allowed in judgments, in the absence of an express contract as to such rate of
interest, shall be six percent (6%) per annum.

Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and
Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial
Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Thus, from the foregoing, in the absence of an express stipulation as to the rate of interest that
would govern the parties, the rate of legal interest for loans or forbearance of any money,
goods or credits and the rate allowed in judgments shall no longer be twelve percent (12%) per
annum as reflected in the case of Eastern Shipping Lines and Subsection X305.1 of the
Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of
Regulations for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular No.
799 but will now be six percent (6%) per annum effective July 1, 2013. It should be noted,
nonetheless, that the new rate could only be applied prospectively and not retroactively.
Consequently, the twelve percent (12%) per annum legal interest shall apply only until June 30,
2013. Come July 1, 2013 the new rate of six percent (6%) per annum shall be the prevailing rate
of interest when applicable.42 (Emphasis supplied, citations omitted)
Nevertheless, both Bangko Sentral ng Pilipinas Circular No. 799, Series of 2013 and Nacar retain
the definite and mandatory framing of the rule articulated in Eastern Shipping, Security Bank,
andSpouses Toring. Nacar even restates Eastern Shipping:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping
Lines are accordingly modified to embody BSP-MB Circular No. 799, as
follows:LawlibraryofCRAlaw

....

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e.,
a Joan or forbearance of money, the interest due should be that which may have been
stipulated in writing. Furthermore, the interest due shall itself earn legal interest from
the time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 6% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil
Code.43 (Emphasis supplied, citations omitted)

Thus, it remains that where interest was stipulated in writing by the debtor and creditor in a
simple loan or mutuum, but no exact interest rate was mentioned, the legal rate of interest
shall apply. At present, this is 6% per annum, subject to Nacar's qualification on prospective
application.

Applying this, the loan obtained by respondents from petitioners is deemed subjected to
conventional interest at the rate of 12% per annum, the legal rate of interest at the time the
parties executed their agreement. Moreover, should conventional interest still be due as of July
1, 2013, the rate of 12% per annum shall persist as the rate of conventional interest.

This is so because interest in this respect is used as a surrogate for the parties' intent, as
expressed as of the time of the execution of their contract. In this sense, the legal rate of
interest is an affirmation of the contracting parties' intent; that is, by their contract's silence on
a specific rate, the then prevailing legal rate of interest shall be the cost of borrowing money.
This rate, which by their contract the parties have settled on, is deemed to persist regardless of
shifts in the legal rate of interest. Stated otherwise, the legal rate of interest, when applied as
conventional interest, shall always be the legal rate at the time the agreement was executed
and shall not be susceptible to shifts in rate.

Petitioners, however, insist on conventional interest at the rate of 2.5% per month or 30% per
annum. They argue that the acknowledgment receipt fails to show the complete and accurate
intention of the contracting parties. They rely on Article 1371 of the Civil Code, which provides
that the contemporaneous and subsequent acts of the contracting parties shall be considered
should there be a need to ascertain their intent.44 In addition, they claim that this case falls
under the exceptions to the Parol Evidence Rule, as spelled out in Rule 130, Section 9 of the
Revised Rules on Evidence.45redarclaw

It is a basic precept in legal interpretation and construction that a rule or provision that treats a
subject with specificity prevails over a rule or provision that treats a subject in general
terms.46redarclaw
The rule spelled out in Security Bank and Spouses Toring is anchored on Article 1956 of the Civil
Code and specifically governs simple loans or mutuum. Mutuum is a type of nominate contract
that is specifically recognized by the Civil Code and for which the Civil Code provides a specific
set of governing rules: Articles 1953 to 1961. In contrast, Article 11371 is among the Civil Code
provisions generally dealing with contracts. As this case particularly involves a simple loan, the
specific rule spelled out in Security Bank and Spouses Toring finds preferential application as
against Article 1371.

Contrary to petitioners' assertions, there is no room for entertaining extraneous (or parol)
evidence. In Spouses Bonifacio and Lucia Paras v. Kimwa Construction and Development
Corporation,47 we spelled out the requisites for the admission of parol
evidence:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
In sum, two (2) things must be established for parol evidence to be admitted: first, that the
existence of any of the four (4) exceptions has been put in issue in a party's pleading or has not
been objected to by the adverse party; and second, that the parol evidence sought to be
presented serves to form the basis of the conclusion proposed by the presenting party.48
The issue of admitting parol evidence is a matter that is proper to the trial, not the appellate,
stage of a case. Petitioners raised the issue of applying the exceptions to the Parol Evidence
Rule only in the Reply they filed before this court. This is the last pleading that either of the
parties has filed in the entire string of proceedings culminating in this Decision. It is, therefore,
too late for petitioners to harp on this rule. In any case, what is at issue is not admission of
evidence per se, but the appreciation given to the evidence adduced by the parties. In the
Petition they filed before this court, petitioners themselves acknowledged that checks
supposedly attesting to payment of monthly interest at the rate of 2.5% were admitted by the
trial court (and marked as Exhibits "2," "3," "4," "5," "6," "7," and "8").49 What petitioners have
an issue with is not the admission of these pieces of evidence but how these have not been
appreciated in a manner consistent with the conclusions they advance.

Even if it can be shown that the parties have agreed to monthly interest at the rate of 2.5%, this
is unconscionable. As emphasized in Castro v. Tan,50 the willingness of the parties to enter into
a relation involving an unconscionable interest rate is inconsequential to the validity of the
stipulated rate:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
The imposition of an unconscionable rate of interest on a money debt, even if knowingly and
voluntarily assumed, is immoral and unjust. It is tantamount to a repugnant spoliation and an
iniquitous deprivation of property, repulsive to the common sense of man. It has no support in
law, in principles of justice, or in the human conscience nor is there any reason whatsoever
which may justify such imposition as righteous and as one that may be sustained within the
sphere of public or private morals.51
The imposition of an unconscionable interest rate is void ab initio for being "contrary to morals,
and the law."52redarclaw
In determining whether the rate of interest is unconscionable, the mechanical application of
pre-established floors would be wanting. The lowest rates that have previously been
considered unconscionable need not be an impenetrable minimum. What is more crucial is a
consideration of the parties' contexts. Moreover, interest rates must be appreciated in light of
the fundamental nature of interest as compensation to the creditor for money lent to another,
which he or she could otherwise have used for his or her own purposes at the time it was lent.
It is not the default vehicle for predatory gain. As such, interest need only be reasonable. It
ought not be a supine mechanism for the creditor's unjust enrichment at the expense of
another.

Petitioners here insist upon the imposition of 2.5% monthly or 30% annual interest.
Compounded at this rate, respondents' obligation would have more than doubledincreased
to 219.7% of the principalby the end of the third year after which the loan was contracted if
the entire principal remained unpaid. By the end of the ninth year, it would have multiplied
more than tenfold (or increased to 1,060.45%). In 2015, this would have multiplied by more
than 66 times (or increased to 6,654.17%). Thus, from an initial loan of only P500,000.00,
respondents would be obliged to pay more than P33 million. This is grossly unfair, especially
since up to the fourth year from when the loan was obtained, respondents had been
assiduously delivering payment. This reduces their best efforts to satisfy their obligation into a
protracted servicing of a rapacious loan.

The legal rate of interest is the presumptive reasonable compensation for borrowed money.
While parties are free to deviate from this, any deviation must be reasonable and fair. Any
deviation that is far-removed is suspect. Thus, in cases where stipulated interest is more than
twice the prevailing legal rate of interest, it is for the creditor to prove that this rate is required
by prevailing market conditions. Here, petitioners have articulated no such justification.

In sum, Article 1956 of the Civil Code, read in light of established jurisprudence, prevents the
application of any interest rate other than that specifically provided for by the parties in their
loan document or, in lieu of it, the legal rate. Here, as the contracting parties failed to make a
specific stipulation, the legal rate must apply. Moreover, the rate that petitioners adverted to is
unconscionable. The conventional interest due on the principal amount loaned by respondents
from petitioners is held to be 12% per annum.