THIRD DIVISION

G.R. No. 81262 August 25, 1989

GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, Petitioners,
vs. THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS,Respondents.

Atencia & Arias Law Offices for petitioners.chanrobles virtual law library

Romulo C. Felizmena for private respondent.

CORTES, J.:

Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and
Radio Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and
administrative assistant to the engineering operations manager. In 1972, GLOBE MACKAY
discovered fictitious purchases and other fraudulent transactions for which it lost several
thousands of pesos.chanroblesvirtualawlibrarychanrobles virtual law library

According to private respondent it was he who actually discovered the anomalies and reported
them on November 10, 1972 to his immediate superior Eduardo T. Ferraren and to petitioner
Herbert C. Hendry who was then the Executive Vice-President and General Manager of GLOBE
MACKAY.chanroblesvirtualawlibrary chanrobles virtual law library

On November 11, 1972, one day after private respondent Tobias made the report, petitioner
Hendry confronted him by stating that he was the number one suspect, and ordered him to take
a one week forced leave, not to communicate with the office, to leave his table drawers open,
and to leave the office keys.chanroblesvirtualawlibrary chanrobles virtual law library

On November 20, 1972, when private respondent Tobias returned to work after the forced
leave, petitioner Hendry went up to him and called him a "crook" and a "swindler." Tobias was
then ordered to take a lie detector test. He was also instructed to submit specimen of his
handwriting, signature, and initials for examination by the police investigators to determine his
complicity in the anomalies.chanroblesvirtualawlibrary chanrobles virtual law library

On December 6,1972, the Manila police investigators submitted a laboratory crime report (Exh.
"A") clearing private respondent of participation in the
anomalies.chanroblesvirtualawlibrary chanrobles virtual law library

Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G.
Fernandez, who on December 10, 1972, submitted a report (Exh. "2") finding Tobias guilty. This
report however expressly stated that further investigation was still to be
conducted.chanroblesvirtualawlibrarychanrobles virtual law library
Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending
Tobias from work preparatory to the filing of criminal charges against
him.chanroblesvirtualawlibrarychanrobles virtual law library

On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document Examiner,
after investigating other documents pertaining to the alleged anomalous transactions, submitted
a second laboratory crime report (Exh. "B") reiterating his previous finding that the handwritings,
signatures, and initials appearing in the checks and other documents involved in the fraudulent
transactions were not those of Tobias. The lie detector tests conducted on Tobias also yielded
negative results.chanroblesvirtualawlibrary chanrobles virtual law library

Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact that
the report of the private investigator, was, by its own terms, not yet complete, petitioners filed
with the City Fiscal of Manila a complaint for estafa through falsification of commercial
documents, later amended to just estafa. Subsequently five other criminal complaints were filed
against Tobias, four of which were for estafa through Falsification of commercial document
while the fifth was for of Article 290 of' the Revised Penal Code (Discovering Secrets Through
Seizure of Correspondence). Two of these complaints were refiled with the Judge Advocate
General's Office, which however, remanded them to the fiscal's office. All of the six criminal
complaints were dismissed by the fiscal. Petitioners appealed four of the fiscal's resolutions
dismissing the criminal complaints with the Secretary of Justice, who, however, affirmed their
dismissal.chanroblesvirtualawlibrary chanrobles virtual law library

In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners that
his employment has been terminated effective December 13, 1972. Whereupon, Tobias filed a
complaint for illegal dismissal. The labor arbiter dismissed the complaint. On appeal, the
National Labor Relations Commission (NLRC) reversed the labor arbiter's decision. However,
the Secretary of Labor, acting on petitioners' appeal from the NLRC ruling, reinstated the labor
arbiter's decision. Tobias appealed the Secretary of Labor's order with the Office of the
President. During the pendency of the appeal with said office, petitioners and private
respondent Tobias entered into a compromise agreement regarding the latter's complaint for
illegal dismissal.chanroblesvirtualawlibrary chanrobles virtual law library

Unemployed, Tobias sought employment with the Republic Telephone Company (RETELCO).
However, petitioner Hendry, without being asked by RETELCO, wrote a letter to the latter
stating that Tobias was dismissed by GLOBE MACKAY due to
dishonesty.chanroblesvirtualawlibrary chanrobles virtual law library

Private respondent Tobias filed a civil case for damages anchored on alleged unlawful,
malicious, oppressive, and abusive acts of petitioners. Petitioner Hendry, claiming illness, did
not testify during the hearings. The Regional Trial Court (RTC) of Manila, Branch IX, through
Judge Manuel T. Reyes rendered judgment in favor of private respondent by ordering
petitioners to pay him eighty thousand pesos (P80,000.00) as actual damages, two hundred
thousand pesos (P200,000.00) as moral damages, twenty thousand pesos (P20,000.00) as
exemplary damages, thirty thousand pesos (P30,000.00) as attorney's fees, and costs.
Petitioners appealed the RTC decision to the Court of Appeals. On the other hand, Tobias
appealed as to the amount of damages. However, the Court of Appeals, an a decision dated
August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion for reconsideration
having been denied, the instant petition for review on certiorari was
filed.chanroblesvirtualawlibrary chanrobles virtual law library
The main issue in this case is whether or not petitioners are liable for damages to private
respondent.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioners contend that they could not be made liable for damages in the lawful exercise of their
right to dismiss private respondent.chanroblesvirtualawlibrarychanrobles virtual law library

On the other hand, private respondent contends that because of petitioners' abusive manner in
dismissing him as well as for the inhuman treatment he got from them, the Petitioners must
indemnify him for the damage that he had suffered.chanroblesvirtualawlibrary chanrobles virtual
law library

One of the more notable innovations of the New Civil Code is the codification of "some basic
principles that are to be observed for the rightful relationship between human beings and for the
stability of the social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED
CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the
defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit,
incorporated certain fundamental precepts which were "designed to indicate certain norms that
spring from the fountain of good conscience" and which were also meant to serve as "guides for
human conduct [that] should run as golden threads through society, to the end that law may
approach its supreme ideal, which is the sway and dominance of justice" (Id.) Foremost among
these principles is that pronounced in Article 19 which provides:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.

This article, known to contain what is commonly referred to as the principle of abuse of rights,
sets certain standards which must be observed not only in the exercise of one's rights but also
in the performance of one's duties. These standards are the following: to act with justice; to give
everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a
primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in
Article 19 must be observed. A right, though by itself legal because recognized or granted by
law as such, may nevertheless become the source of some illegality. When a right is exercised
in a manner which does not conform with the norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby committed for which the wrongdoer must be held
responsible. But while Article 19 lays down a rule of conduct for the government of human
relations and for the maintenance of social order, it does not provide a remedy for its violation.
Generally, an action for damages under either Article 20 or Article 21 would be
proper.chanroblesvirtualawlibrary chanrobles virtual law library

Article 20, which pertains to damage arising from a violation of law, provides that:

Art. 20. Every person who contrary to law, wilfully or negligently causes damage to another,
shall indemnify the latter for the same.

However, in the case at bar, petitioners claim that they did not violate any provision of law since
they were merely exercising their legal right to dismiss private respondent. This does not,
however, leave private respondent with no relief because Article 21 of the Civil Code provides
that:
Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.

This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims
of moral wrongs helpless, even though they have actually suffered material and moral injury"
[Id.] should "vouchsafe adequate legal remedy for that untold number of moral wrongs which it
is impossible for human foresight to provide for specifically in the statutes" [Id. it p. 40; See
also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237,
247].chanroblesvirtualawlibrary chanrobles virtual law library

In determining whether or not the principle of abuse of rights may be invoked, there is no rigid
test which can be applied. While the Court has not hesitated to apply Article 19 whether the
legal and factual circumstances called for its application [See for e.g., Velayo v. Shell Co. of the
Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra; Grand Union Supermarket, Inc. v. Espino,
Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L-46558, July
31,1981,106 SCRA 391; United General Industries, Inc, v. Paler G.R. No. L-30205, March
15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21, 1987, 153 SCRA 183] the
question of whether or not the principle of abuse of rights has been violated resulting in
damages under Article 20 or Article 21 or other applicable provision of law, depends on the
circumstances of each case. And in the instant case, the Court, after examining the record and
considering certain significant circumstances, finds that all petitioners have indeed abused the
right that they invoke, causing damage to private respondent and for which the latter must now
be indemnified.chanroblesvirtualawlibrary chanrobles virtual law library

The trial court made a finding that notwithstanding the fact that it was private respondent Tobias
who reported the possible existence of anomalous transactions, petitioner Hendry "showed
belligerence and told plaintiff (private respondent herein) that he was the number one suspect
and to take a one week vacation leave, not to communicate with the office, to leave his table
drawers open, and to leave his keys to said defendant (petitioner Hendry)" [RTC Decision, p. 2;
Rollo, p. 232]. This, petitioners do not dispute. But regardless of whether or not it was private
respondent Tobias who reported the anomalies to petitioners, the latter's reaction towards the
former upon uncovering the anomalies was less than civil. An employer who harbors suspicions
that an employee has committed dishonesty might be justified in taking the appropriate action
such as ordering an investigation and directing the employee to go on a leave. Firmness and
the resolve to uncover the truth would also be expected from such employer. But the high-
handed treatment accorded Tobias by petitioners was certainly uncalled for. And this
reprehensible attitude of petitioners was to continue when private respondent returned to work
on November 20, 1972 after his one week forced leave. Upon reporting for work, Tobias was
confronted by Hendry who said. "Tobby, you are the crook and swindler in this company."
Considering that the first report made by the police investigators was submitted only on
December 10, 1972 [See Exh. A] the statement made by petitioner Hendry was baseless. The
imputation of guilt without basis and the pattern of harassment during the investigations of
Tobias transgress the standards of human conduct set forth in Article 19 of the Civil Code. The
Court has already ruled that the right of the employer to dismiss an employee should not be
confused with the manner in which the right is exercised and the effects flowing therefrom. If the
dismissal is done abusively, then the employer is liable for damages to the employee [Quisaba
v. Sta. Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA
771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L-21871, September 27,1966, 18
SCRA 107] Under the circumstances of the instant case, the petitioners clearly failed to exercise
in a legitimate manner their right to dismiss Tobias, giving the latter the right to recover
damages under Article 19 in relation to Article 21 of the Civil
Code.chanroblesvirtualawlibrary chanrobles virtual law library

But petitioners were not content with just dismissing Tobias. Several other tortious acts were
committed by petitioners against Tobias after the latter's termination from work. Towards the
latter part of January, 1973, after the filing of the first of six criminal complaints against Tobias,
the latter talked to Hendry to protest the actions taken against him. In response, Hendry cut
short Tobias' protestations by telling him to just confess or else the company would file a
hundred more cases against him until he landed in jail. Hendry added that, "You Filipinos
cannot be trusted." The threat unmasked petitioner's bad faith in the various actions taken
against Tobias. On the other hand, the scornful remark about Filipinos as well as Hendry's
earlier statements about Tobias being a "crook" and "swindler" are clear violations of 'Tobias'
personal dignity [See Article 26, Civil Code].chanroblesvirtualawlibrary chanrobles virtual law
library

The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime
in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY due to
dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO and as a
result of which, Tobias remained unemployed for a longer period of time. For this further
damage suffered by Tobias, petitioners must likewise be held liable for damages consistent with
Article 2176 of the Civil Code. Petitioners, however, contend that they have a "moral, if not legal,
duty to forewarn other employers of the kind of employee the plaintiff (private respondent
herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that "it is the accepted moral
and societal obligation of every man to advise or warn his fellowmen of any threat or danger to
the latter's life, honor or property. And this includes warning one's brethren of the possible
dangers involved in dealing with, or accepting into confidence, a man whose honesty and
integrity is suspect" [Id.]. These arguments, rather than justify petitioners' act, reveal a seeming
obsession to prevent Tobias from getting a job, even after almost two years from the time
Tobias was dismissed.chanroblesvirtualawlibrarychanrobles virtual law library

Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias.
Petitioners contend that there is no case against them for malicious prosecution and that they
cannot be "penalized for exercising their right and prerogative of seeking justice by filing criminal
complaints against an employee who was their principal suspect in the commission of forgeries
and in the perpetration of anomalous transactions which defrauded them of substantial sums of
money" [Petition, p. 10, Rollo, p. 11].chanroblesvirtualawlibrarychanrobles virtual law library

While sound principles of justice and public policy dictate that persons shall have free resort to
the courts for redress of wrongs and vindication of their rights [Buenaventura v. Sto. Domingo,
103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be exercised
maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA
5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2 SCRA 337,
the Court held that the right to file criminal complaints should not be used as a weapon to force
an alleged debtor to pay an indebtedness. To do so would be a clear perversion of the function
of the criminal processes and of the courts of justice. And in Hawpia CA, G.R. No. L-20047,
June 30, 1967. 20 SCRA 536 the Court upheld the judgment against the petitioner for actual
and moral damages and attorney's fees after making a finding that petitioner, with persistence,
filed at least six criminal complaints against respondent, all of which were
dismissed.chanroblesvirtualawlibrary chanrobles virtual law library
To constitute malicious prosecution, there must be proof that the prosecution was prompted by
a design to vex and humiliate a person and that it was initiated deliberately by the defendant
knowing that the charges were false and groundless [Manila Gas Corporation v. CA, G.R. No. L-
44190, October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by itself, does not
render a person liable for malicious prosecution [Inhelder Corporation v. CA, G.R. No. 52358,
May 301983122 SCRA 576]. The mere dismissal by the fiscal of the criminal complaint is not a
ground for an award of damages for malicious prosecution if there is no competent evidence to
show that the complainant had acted in bad faith [Sison v. David, G.R. No. L-11268, January
28,1961, 1 SCRA 60].chanroblesvirtualawlibrary chanrobles virtual law library

In the instant case, however, the trial court made a finding that petitioners acted in bad faith in
filing the criminal complaints against Tobias, observing that: chanrobles virtual law library

xxx

Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6) criminal
cases, five (5) of which were for estafa thru falsification of commercial document and one for
violation of Art. 290 of the Revised Penal Code "discovering secrets thru seizure of
correspondence," and all were dismissed for insufficiency or lack of evidence." The dismissal of
four (4) of the cases was appealed to the Ministry of Justice, but said Ministry invariably
sustained the dismissal of the cases. As above adverted to, two of these cases were refiled with
the Judge Advocate General's Office of the Armed Forces of the Philippines to railroad plaintiffs
arrest and detention in the military stockade, but this was frustrated by a presidential decree
transferring criminal cases involving civilians to the civil courts.

xxx

To be sure, when despite the two (2) police reports embodying the findings of Lt. Dioscoro
Tagle, Chief Document Examiner of the Manila Police Department, clearing plaintiff of
participation or involvement in the fraudulent transactions complained of, despite the negative
results of the lie detector tests which defendants compelled plaintiff to undergo, and although
the police investigation was "still under follow-up and a supplementary report will be submitted
after all the evidence has been gathered," defendants hastily filed six (6) criminal cases with the
city Fiscal's Office of Manila, five (5) for estafa thru falsification of commercial document and
one (1) for violation of Art. 290 of the Revised Penal Code, so much so that as was to be
expected, all six (6) cases were dismissed, with one of the investigating fiscals, Asst. Fiscal de
Guia, commenting in one case that, "Indeed, the haphazard way this case was investigated is
evident. Evident likewise is the flurry and haste in the filing of this case against respondent
Tobias," there can be no mistaking that defendants would not but be motivated by malicious and
unlawful intent to harass, oppress, and cause damage to plaintiff.

x x x chanrobles virtual law library

[RTC Decision, pp. 5-6; Rollo, pp. 235-236].chanroblesvirtualawlibrary chanrobles virtual law
library

In addition to the observations made by the trial court, the Court finds it significant that the
criminal complaints were filed during the pendency of the illegal dismissal case filed by Tobias
against petitioners. This explains the haste in which the complaints were filed, which the trial
court earlier noted. But petitioners, to prove their good faith, point to the fact that only six
complaints were filed against Tobias when they could have allegedly filed one hundred cases,
considering the number of anomalous transactions committed against GLOBE MACKAY.
However, petitioners' good faith is belied by the threat made by Hendry after the filing of the first
complaint that one hundred more cases would be filed against Tobias. In effect, the possible
filing of one hundred more cases was made to hang like the sword of Damocles over the head
of Tobias. In fine, considering the haste in which the criminal complaints were filed, the fact that
they were filed during the pendency of the illegal dismissal case against petitioners, the threat
made by Hendry, the fact that the cases were filed notwithstanding the two police reports
exculpating Tobias from involvement in the anomalies committed against GLOBE MACKAY,
coupled by the eventual dismissal of all the cases, the Court is led into no other conclusion than
that petitioners were motivated by malicious intent in filing the six criminal complaints against
Tobias.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioners next contend that the award of damages was excessive. In the complaint filed
against petitioners, Tobias prayed for the following: one hundred thousand pesos (P100,000.00)
as actual damages; fifty thousand pesos (P50,000.00) as exemplary damages; eight hundred
thousand pesos (P800,000.00) as moral damages; fifty thousand pesos (P50,000.00) as
attorney's fees; and costs. The trial court, after making a computation of the damages incurred
by Tobias [See RTC Decision, pp. 7-8; Rollo, pp. 154-1551, awarded him the following: eighty
thousand pesos (P80,000.00) as actual damages; two hundred thousand pesos (P200,000.00)
as moral damages; twenty thousand pesos (P20,000.00) as exemplary damages; thirty
thousand pesos (P30,000.00) as attorney's fees; and, costs. It must be underscored that
petitioners have been guilty of committing several actionable tortious acts, i.e., the abusive
manner in which they dismissed Tobias from work including the baseless imputation of guilt and
the harassment during the investigations; the defamatory language heaped on Tobias as well as
the scornful remark on Filipinos; the poison letter sent to RETELCO which resulted in Tobias'
loss of possible employment; and, the malicious filing of the criminal complaints. Considering
the extent of the damage wrought on Tobias, the Court finds that, contrary to petitioners'
contention, the amount of damages awarded to Tobias was reasonable under the
circumstances.chanroblesvirtualawlibrary chanrobles virtual law library

Yet, petitioners still insist that the award of damages was improper, invoking the principle of
damnum absque injuria. It is argued that "[t]he only probable actual damage that plaintiff
(private respondent herein) could have suffered was a direct result of his having been dismissed
from his employment, which was a valid and legal act of the defendants-appellants (petitioners
herein)." [Petition, p. 17; Rollo, p. 18].chanroblesvirtualawlibrary chanrobles virtual law library

According to the principle of damnum absque injuria, damage or loss which does not constitute
a violation of a legal right or amount to a legal wrong is not actionable [Escano v. CA, G.R. No.
L-47207, September 25, 1980, 100 SCRA 197; See also Gilchrist v. Cuddy 29 Phil, 542 (1915);
The Board of Liquidators v. Kalaw, G.R. No. L-18805, August 14, 1967, 20 SCRA 987]. This
principle finds no application in this case. It bears repeating that even granting that petitioners
might have had the right to dismiss Tobias from work, the abusive manner in which that right
was exercised amounted to a legal wrong for which petitioners must now be held liable.
Moreover, the damage incurred by Tobias was not only in connection with the abusive manner
in which he was dismissed but was also the result of several other quasi-delictual acts
committed by petitioners.chanroblesvirtualawlibrarychanrobles virtual law library

Petitioners next question the award of moral damages. However, the Court has already ruled
in Wassmer v. Velez, G.R. No. L-20089, December 26, 1964, 12 SCRA 648, 653, that [p]er
express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in
the cases mentioned in Article 21 of said Code." Hence, the Court of Appeals committed no
error in awarding moral damages to Tobias.chanroblesvirtualawlibrary chanrobles virtual law
library

Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of
the Civil Code provides that "[i]n quasi-delicts, exemplary damages may be granted if the
defendant acted with gross negligence," the Court, in Zulueta v. Pan American World Airways,
Inc., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled that if gross negligence warrants
the award of exemplary damages, with more reason is its imposition justified when the act
performed is deliberate, malicious and tainted with bad faith. As in the Zulueta case, the nature
of the wrongful acts shown to have been committed by petitioners against Tobias is sufficient
basis for the award of exemplary damages to the latter.chanroblesvirtualawlibrary chanrobles
virtual law library

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in CA-
G.R. CV No. 09055 is AFFIRMED.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.
 FIRST DIVISION

[G.R. No. 132344. February 17, 2000.]

UNIVERSITY OF THE EAST, Petitioner, v. ROMEO A. JADER, Respondent.

DECISION

YNARES-SANTIAGO, J.:

May an educational institution be held liable for damages for misleading a student into believing
that the latter had satisfied all the requirements for graduation when such is not the case? This
is the issue in the instant petition for review premised on the following undisputed facts as
summarized by the trial court and adopted by the Court of Appeals (CA), 1 to
wit:jgc:chanrobles.com.ph

"Plaintiff was enrolled in the defendants’ College of Law from 1984 up to 1988. In the first
semester of his last year (School year 1987-1988), he failed to take the regular final
examination in Practice Court I for which he was given an incomplete grade (Exhibits ‘2’, also
Exhibit ‘H’). He enrolled for the second semester as fourth year law student (Exhibit ‘A’) and on
February 1, 1988 he filed an application for the removal of the incomplete grade given him by
Professor Carlos Ortega (Exhibits ‘H-2’, also Exhibit ‘2’) which was approved by Dean
Celedonio Tiongson after payment of the required fee. He took the examination on March 28,
1988. On May 30, 1988, Professor Carlos Ortega submitted his grade. It was a grade of five (5).
(Exhibits ‘H-4’, also Exhibits ‘2-L’, ‘2-N’).chanrobles virtuallawlibrary:red

"In the meantime, the Dean and the Faculty Members of the College of Law met to deliberate on
who among the fourth year students should be allowed to graduate. The plaintiff’s name
appeared in the Tentative List of Candidates for graduation for the Degree of Bachelor of Laws
(LL.B) as of Second Semester (1987-1988) with the following annotation:jgc:chanrobles.com.ph

"JADER ROMEO A.

Def. Conflict of Laws - x-1-87-88, Practice Court I - Inc., 1-87-88. C-1 to submit transcript with
S.O. (Exhibits ‘3’, ‘3-C-1’, ‘3-C-2’)."cralaw virtua1aw library

"The 35th Investitures & Commencement Ceremonies for the candidates of Bachelor of Laws
was scheduled on the 16th of April 1988 at 3:00 o’clock in the afternoon, and in the invitation for
that occasion the name of the plaintiff appeared as one of the candidates. (Exhibits ‘B’, ‘B-6’, ‘B-
6-A’). At the foot of the list of the names of the candidates there appeared however the following
annotation:chanrob1es virtual 1aw library

‘This is a tentative list. Degrees will be conferred upon these candidates who satisfactorily
complete requirements as stated in the University Bulletin and as approved of the Department
of Education, Culture and Sports (Exhibit ‘B-7-A’).

"The plaintiff attended the investiture ceremonies at F. dela Cruz Quadrangle, U.E., Recto
Campus, during the program of which he went up the stage when his name was called,
escorted by her (sic) mother and his eldest brother who assisted in placing the Hood, and his
Tassel was turned from left to right, and he was thereafter handed by Dean Celedonio a rolled
white sheet of paper symbolical of the Law Diploma. His relatives took pictures of the occasion
(Exhibits ‘C’ to ‘C-6’, ‘D-3’ to ‘D-11’).

"He tendered a blow-out that evening which was attended by neighbors, friends and relatives
who wished him good luck in the forthcoming bar examination. There were pictures taken too
during the blow-out (Exhibits ‘D’ to ‘D-1’).

"He thereafter prepared himself for the bar examination. He took a leave of absence without pay
from his job from April 20, 1988 to September 30, 1988 (Exhibit ‘G’) and enrolled at the pre-bar
review class in Far Eastern University (Exhibits ‘F’ to ‘F-2’). Having learned of the deficiency he
dropped his review class and was not able to take the bar examination." 2

Consequently, respondent sued petitioner for damages alleging that he suffered moral shock,
mental anguish, serious anxiety, besmirched reputation, wounded feelings and sleepless nights
when he was not able to take the 1988 bar examinations arising from the latter’s negligence. He
prayed for an award of moral and exemplary damages, unrealized income, attorney’s fees, and
costs of suit.chanrobles.com : virtual law library

In its answer with counterclaim, petitioner denied liability arguing mainly that it never led
respondent to believe that he completed the requirements for a Bachelor of Laws degree when
his name was included in the tentative list of graduating students. After trial, the lower court
rendered judgment as follows:chanrob1es virtual 1aw library

WHEREFORE, in view of the foregoing judgment is hereby rendered in favor of the plaintiff and
against the defendant ordering the latter to pay plaintiff the sum of THIRTY FIVE THOUSAND
FOUR HUNDRED SEVENTY PESOS (P35,470.00) with legal rate of interest from the filing of
the complaint until fully paid, the amount of FIVE THOUSAND PESOS (P5,000.00) as attorney’s
fees and the cost of suit.

Defendant’s counterclaim is, for lack of merit, hereby dismissed.

SO ORDERED. 3

which on appeal by both parties was affirmed by the Court of Appeals (CA) with modification.
The dispositive portion of the CA decision reads:chanrob1es virtual 1aw library

WHEREFORE, in the light of the foregoing, the lower Court’s Decision is hereby AFFIRMED
with the MODIFICATION that defendant-appellee, in addition to the sum adjudged by the lower
court in favor of plaintiff-appellant, is also ORDERED to pay plaintiff-appellant the amount of
FIFTY THOUSAND (P50,000.00) PESOS for moral damages. Costs against Defendant-
Appellee.

SO ORDERED. 4
Upon the denial of its motion for reconsideration, petitioner UE elevated the case to this Court
on a petition for review under Rule 45 of the Rules of Court, arguing that it has no liability to
respondent Romeo A. Jader, considering that the proximate and immediate cause of the alleged
damages incurred by the latter arose out of his own negligence in not verifying from the
professor concerned the result of his removal exam.chanrobles virtuallawlibrary:red

The petition lacks merit.

When a student is enrolled in any educational or learning institution, a contract of education is

entered into between said institution and the student. The professors, teachers or instructors
hired by the school are considered merely as agents and administrators tasked to perform the
school’s commitment under the contract. Since the contracting parties are the school and the
student, the latter is not duty-bound to deal with the former’s agents, such as the professors with
respect to the status or result of his grades, although nothing prevents either professors or
students from sharing with each other such information. The Court takes judicial notice of the
traditional practice in educational institutions wherein the professor directly furnishes his/her
students their grades. It is the contractual obligation of the school to timely inform and furnish
sufficient notice and information to each and every student as to whether he or she had already
complied with all the requirements for the conferment of a degree or whether they would be
included among those who will graduate. Although commencement exercises are but a formal
ceremony, it nonetheless is not an ordinary occasion, since such ceremony is the educational
institution’s way of announcing to the whole world that the students included in the list of those
who will be conferred a degree during the baccalaureate ceremony have satisfied all the
requirements for such degree. Prior or subsequent to the ceremony, the school has the
obligation to promptly inform the student of any problem involving the latter’s grades and
performance and also most importantly, of the procedures for remedying the same.

Petitioner, in belatedly informing respondent of the result of the removal examination,

particularly at a time when he had already commenced preparing for the bar exams, cannot be
said to have acted in good faith. Absence of good faith must be sufficiently established for a
successful prosecution by the aggrieved party in a suit for abuse of right under Article 19 of the
Civil Code. Good faith connotes an honest intention to abstain from taking undue advantage of
another, even though the forms and technicalities of the law, together with the absence of all
information or belief of facts, would render the transaction unconscientious. 5 It is the school
that has access to those information and it is only the school that can compel its professors to
act and comply with its rules, regulations and policies with respect to the computation and the
prompt submission of grades. Students do not exercise control, much less influence, over the
way an educational institution should run its affairs, particularly in disciplining its professors and
teachers and ensuring their compliance with the school’s rules and orders. Being the party that
hired them, it is the school that exercises general supervision and exclusive control over the
professors with respect to the submission of reports involving the students’ standing. Exclusive
control means that no other person or entity had any control over the instrumentality which
caused the damage or injury. 6

The college dean is the senior officer responsible for the operation of an academic program,
enforcement of rules and regulations, and the supervision of faculty and student services. 7 He
must see to it that his own professors and teachers, regardless of their status or position outside
of the university, must comply with the rules set by the latter. The negligent act of a professor
who fails to observe the rules of the school, for instance by not promptly submitting a student’s
grade, is not only imputable to the professor but is an act of the school, being his employer.
Considering further, that the institution of learning involved herein is a university which is
engaged in legal education, it should have practiced what it inculcates in its students, more
specifically the principle of good dealings enshrined in Articles 19 and 20 of the Civil Code
which states:chanrob1es virtual 1aw library

ARTICLE 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.

ARTICLE 20. Every person who, contrary to law, wilfully or negligently causes damage to
another, shall indemnify the latter for the same.chanrobles.com.ph:red

Article 19 was intended to expand the concept of torts by granting adequate legal remedy for
the untold number of moral wrongs which is impossible for human foresight to provide
specifically in statutory law. 8 In civilized society, men must be able to assume that others will
do them no intended injury – that others will commit no internal aggressions upon them; that
their fellowmen, when they act affirmatively will do so with due care which the ordinary
understanding and moral sense of the community exacts and that those with whom they deal in
the general course of society will act in good faith. The ultimate thing in the theory of liability is
justifiable reliance under conditions of civilized society. 9 Schools and professors cannot just
take students for granted and be indifferent to them, for without the latter, the former are
useless.

Educational institutions are duty-bound to inform the students of their academic status and not
wait for the latter to inquire from the former. The conscious indifference of a person to the rights
or welfare of the person/persons who may be affected by his act or omission can support a
claim for damages. 10 Want of care to the conscious disregard of civil obligations coupled with a
conscious knowledge of the cause naturally calculated to produce them would make the erring
party liable. 11 Petitioner ought to have known that time was of the essence in the performance
of its obligation to inform respondent of his grade. It cannot feign ignorance that respondent will
not prepare himself for the bar exams since that is precisely the immediate concern after
graduation of an LL.B. graduate. It failed to act seasonably. Petitioner cannot just give out its
student’s grades at any time because a student has to comply with certain deadlines set by the
Supreme Court on the submission of requirements for taking the bar. Petitioner’s liability arose
from its failure to promptly inform respondent of the result of an examination and in misleading
the latter into believing that he had satisfied all requirements for the course. Worth quoting is the
following disquisition of the respondent court:jgc:chanrobles.com.ph

"It is apparent from the testimony of Dean Tiongson that defendant-appellee University had
been informed during the deliberation that the professor in Practice Court I gave plaintiff-
appellant a failing grade. Yet, defendant-appellee still did not inform plaintiff-appellant of his
failure to complete the requirements for the degree nor did they remove his name from the
tentative list of candidates for graduation. Worse, defendant-appellee university, despite the
knowledge that plaintiff-appellant failed in Practice Court I, again included plaintiff-appellant’s
name in the "tentative" list of candidates for graduation which was prepared after the
deliberation and which became the basis for the commencement rites program. Dean Tiongson
reasons out that plaintiff-appellant’s name was allowed to remain in the tentative list of
candidates for graduation in the hope that the latter would still be able to remedy the situation in
the remaining few days before graduation day. Dean Tiongson, however, did not explain how
plaintiff-appellant Jader could have done something to complete his deficiency if defendant-
appellee university did not exert any effort to inform plaintiff-appellant of his failing grade in
Practice Court I." 12
Petitioner cannot pass on its blame to the professors to justify its own negligence that led to the
delayed relay of information to Respondent. When one of two innocent parties must suffer, he
through whose agency the loss occurred must bear it. 13 The modern tendency is to grant
indemnity for damages in cases where there is abuse of right, even when the act is not illicit. 14
If mere fault or negligence in one’s acts can make him liable for damages for injury caused
thereby, with more reason should abuse or bad faith make him liable. A person should be
protected only when he acts in the legitimate exercise of his right, that is, when he acts with
prudence and in good faith, but not when he acts with negligence or abuse. 15

However, while petitioner was guilty of negligence and thus liable to respondent for the latter’s
actual damages, we hold that respondent should not have been awarded moral damages. We
do not agree with the Court of Appeals’ findings that respondent suffered shock, trauma and
pain when he was informed that he could not graduate and will not be allowed to take the bar
examinations. At the very least, it behooved on respondent to verify for himself whether he has
completed all necessary requirements to be eligible for the bar examinations. As a senior law
student, respondent should have been responsible enough to ensure that all his affairs,
specifically those pertaining to his academic achievement, are in order. Given these
considerations, we fail to see how respondent could have suffered untold embarrassment in
attending the graduation rites, enrolling in the bar review classes and not being able to take the
bar exams. If respondent was indeed humiliated by his failure to take the bar, he brought this
upon himself by not verifying if he has satisfied all the requirements including his school
records, before preparing himself for the bar examination. Certainly, taking the bar examinations
does not only entail a mental preparation on the subjects thereof; there are also prerequisites of
documentation and submission of requirements which the prospective examinee must
meet.chanrobles.com : virtual law library

WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED with

MODIFICATION. Petitioner is ORDERED to PAY respondent the sum of Thirty-five Thousand
Four Hundred Seventy Pesos (P35,470.00), with legal interest of 6% per annum computed from
the date of filing of the complaint until fully paid; the amount of Five Thousand Pesos
(P5,000.00) as attorney’s fees; and the costs of the suit. The award of moral damages is
DELETED.

SO ORDERED.
 THIRD DIVISION

[G.R. NO. 156841 : June 30, 2005]

GF EQUITY, INC., Petitioner, v. ARTURO VALENZONA,Respondent.

DECISION

CARPIO-MORALES, J.:

On challenge via Petition for Review on Certiorari is the Court of Appeals October 14, 2002
Decision1 reversing that of the Regional Trial Court (RTC) of Manila dated June 28, 19972 which
dismissed the complaint of herein respondent Arturo Valenzona (Valenzona) for breach of
contract with damages against herein petitioner GF Equity, Inc. (GF Equity).

The factual antecedents of the case are as follows:

GF Equity, represented by its Chief Financial Officer W. Steven Uytengsu (Uytengsu), hired
Valenzona as Head Coach of the Alaska basketball team in the Philippine Basketball
Association (PBA) under a Contract of Employment.3

As head coach, the duties of Valenzona were described in the contract to include the following:

xxx

1. . . . coaching at all practices and games scheduled for the CORPORATION's TEAM during
the scheduled season of the ASSOCIATION . . ., coaching all exhibition games scheduled by
the corporation as approved by the PBA during and prior to the scheduled season, coaching (if
invited to participate) in the ASSOCIATION's All Star Game and attending every event
conducted in association with the All Star Game, and coaching the play-off games subsequent
to the scheduled season based on the athletic program of the PBA.

xxx

3. The COACH agrees to observe and comply with all requirements of the CORPORATION
respecting conduct of its TEAM and its players, at all times whether on or off the playing floor.
The CORPORATION may, from time to time during the continuance of this contract, establish
reasonable rules for the government of its players "at home" and "on the road"; and such rules
shall be part of this contract as fully is (sic) if herein written and shall be the responsibility of the
COACH to implement; x x x

4. The COACH agrees (a) to report at the time and place fixed by the CORPORATION in good
physical condition; (b) to keep himself throughout the entire season in good physical condition;
(c) to give his best services, as well as his loyalty to the CORPORATION, and to serve as
basketball coach for the CORPORATION and its assignees; (d) to be neatly and fully attired in
public and always to conduct himself on and off the court according to the highest standards of
honesty, morality, fair play and sportsmanship; (e) not to do anything which is detrimental to the
best interests of the CORPORATION.

xxx

7. The COACH agrees that if so requested by the CORPORATION, he will endorse the
CORPORATION's products in commercial advertising, promotions and the like. The COACH
further agrees to allow the CORPORATION or the ASSOCIATION to take pictures of the
COACHalone or together with others, for still photographs, motion pictures or television, at such
times as the CORPORATION or the ASSOCIATION may designate, and no matter by whom
taken may be used in any manner desired by either of them for publicity or promotional
purposes. (Underscoring supplied).

xxx

Even before the conclusion of the contract, Valenzona had already served GF Equity under a
verbal contract by coaching its team, Hills Brothers, in the 3rd PBA Conference of 1987 where
the team was runner-up.

Under the contract, GF Equity would pay Valenzona the sum of Thirty Five Thousand Pesos
(P35,000.00) monthly, net of taxes, and provide him with a service vehicle and gasoline
allowance.

While the employment period agreed upon was for two years commencing on January 1, 1988
and ending on December 31, 1989, the last sentence of paragraph 3 of the contract carried the
following condition:

3. x x x If at any time during the contract, the COACH, in the sole opinion of the
CORPORATION, fails to exhibit sufficient skill or competitive ability to coach the team, the
CORPORATION may terminate this contract. (Emphasis supplied)ςrαlαωlιbrαrÿ

Before affixing his signature on the contract, Valenzona consulted his lawyer who pointed out
the one-sidedness of the above-quoted last sentence of paragraph 3 thereof.
The caveat notwithstanding, Valenzona still acceded to the terms of the contract because he
had trust and confidence in Uytengsu who had recommended him to the management of GF
Equity.

During his stint as Alaska's head coach, the team placed third both in the Open and All-Filipino
PBA Conferences in 1988.

Valenzona was later advised by the management of GF Equity by letter of September 26, 1988
of the termination of his services in this wise:

We regret to inform you that under the contract of employment dated January 1, 1988 we
are invoking our rights specified in paragraph 3.
You will continue to be paid until your outstanding balance which, as of September 25, 1988,
is P75,868.38 has been fully paid.

Please return the service vehicle to my office no later than September 30, 1988.4 (Emphasis
supplied)ςrαlαωlιbrαrÿ

Close to six years after the termination of his services, Valenzona's counsel, by letter of July 30,
1994,5 demanded from GF Equity payment of compensation arising from the arbitrary and
unilateral termination of his employment. GF Equity, however, refused the claim.

Valenzona thus filed on September 26, 1994 before the Regional Trial Court of Manila a
complaint6 against GF Equity for breach of contract with damages, ascribing bad faith, malice
and "disregard to fairness and to the rights of the plaintiff" by unilaterally and arbitrarily pre-
terminating the contract without just cause and legal and factual basis. He prayed for the award
of actual damages in the amount of P560,000.00 representing his unpaid compensation from
September 26, 1988 up to December 31, 1989, at the rate of P35,000.00 a month; moral
damages in the amount of P100,000.00; exemplary damages in the amount of P50,000.00;
attorney's fees in the amount of P100,000.00; and costs of suit.

Before the trial court, Valenzona challenged the condition in paragraph 3 of the contract as
lacking the element of mutuality of contract, a clear transgression of Article 1308 of the New
Civil Code, and reliance thereon, he contended, did not warrant his unjustified and arbitrary
dismissal.

GF Equity maintained, on the other hand, that it merely exercised its right under the contract to
pre-terminate Valenzona's employment due to incompetence. And it posited that he was guilty
of laches and, in any event, his complaint should have been instituted before a labor arbiter.

The trial court, upholding the validity of the assailed provision of the contract, dismissed, by
decision of June 28, 1997,7 the complaint of Valenzona who, it held, was fully aware of entering
into a bad bargain.

The Court of Appeals, before which Valenzona appealed, reversed the trial court's decision, by
decision of October 14, 2002,8 and accordingly ordered GF Equity to pay him damages.

In its decision, the appellate court held that the questioned provision in the contract "merely
confers upon GF Equity the right to fire its coach upon a finding of inefficiency, a valid reason
within the ambit of its management prerogatives, subject to limitations imposed by law, although
not expressly stated in the clause"; and
"the rightgranted in the contract can neither be said to be immoral,unlawful, or contrary to public
policy." It concluded, however, that while "the mutuality of the clause" is evident, GF Equity
"abused its right by arbitrarily terminating . . . Valenzona's employment and opened itself to a
charge of bad faith." Hence, finding that Valenzona's claim for damages is "obviously . . . based
on Art. 19 of the Civil Code" which provides:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.,

the appellate court awarded Valenzona the following damages, furnishing the justification
therefor:
. . . a) Compensatory damages representing his unearned income for 15 months. Actual and
compensatory damages are those recoverable because of a pecuniary loss in business, trade,
property, profession, job or occupation. As testified, his employment contract provided a
monthly income of PhP35,000, which he lost from September 26, 1988 up to December 31,
1989 as a consequence of his arbitrary dismissal; b) Moral damages of PhP20,000. The act
caused wounded feelings on the part of the plaintiff. Moral damages is recoverable under Article
2220 and the chapter on Human Relations of the Civil Code (Articles 1936) when a contract is
breached in bad faith; c) Exemplary damages of PhP20,000, by way of example or correction
for the public good; and d) When exemplary damages are awarded, attorney's fees can also be
given. We deem it just to grant 10% of the actual damages as attorney's fees. (Underscoring
supplied)ςrαlαωlιbrαrÿ

Hence, this petition at bar, GF Equity faulting the appellate court in

. . . CONCLUD[ING] WRONGLY FROM ESTABLISHED FACTS IN A MANNER VIOLATIVE OF

APPLICABLE LAWS AND ESTABLISHED JURISPRUDENCE.9

GF Equity argues that the appellate court committed a non-sequitur when it agreed with the
findings of fact of the lower court but reached an opposite conclusion. It avers that the appellate
court made itself a guardian of an otherwise intelligent individual well-versed in tactical
maneuvers; that the freedom to enter into contracts is protected by law, and the courts will not
interfere therewith unless the contract is contrary to law, morals, good customs, public policy or
public order; that there was absolutely no reason for the appellate court to have found bad faith
on its part; and that, at all events, Valenzona is guilty of laches for his unexplained inaction for
six years.

Central to the resolution of the instant controversy is the determination of whether the
questioned last sentence of paragraph 3 is violative of the principle of mutuality of contracts.

Mutuality is one of the characteristics of a contract, its validity or performance or compliance of

which cannot be left to the will of only one of the parties.10 This is enshrined in Article 1308 of
the New Civil Code, whose underlying principle is explained in Garcia v. Rita Legarda,
Inc.,11 viz:

Article 1308 of the New Civil Code reads as follows:

"The contract must bind both contracting parties; its validity or compliance cannot be left to the
will of one of them."

The above legal provision is a virtual reproduction of Article 1256 of the old Civil Code but it was
so phrased as to emphasize the principle that the contract must bind bothparties. This, of
course is based firstly, on the principle that obligations arising from contracts have the force of
law between the contracting parties and secondly, that there must be mutuality between the
parties based on their essential equality to which is repugnant to have one party bound
by the contract leaving the other free therefrom (8 Manresa 556). Its ultimate purpose
is to render void a contract containing a condition which makes its fulfillment dependent
exclusively upon the uncontrolled will of one of the contracting parties.

x x x (Emphasis, italics and underscoring supplied)

The ultimate purpose of the mutuality principle is thus to nullify a contract containing a
condition which makes its fulfillment or pre-termination
dependent exclusively uponthe uncontrolled will of one of the contracting parties.

Not all contracts though which vest to one party their determination of validity or compliance or
the right to terminate the same are void for being violative of the mutuality principle.
Jurisprudence is replete with instances of cases12 where this Court upheld the legality of
contracts which left their fulfillment or implementation to the will of either of the parties. In these
cases, however, there was a finding of the presence of essential equality of the parties to the
contracts, thus preventing the perpetration of injustice on the weaker party.

In the case at bar, the contract incorporates in paragraph 3 the right of GF Equity to pre-
terminate the contract - that "if the coach, in the sole opinion of the corporation, fails to exhibit
sufficient skill or competitive ability to coach the team, the corporation may terminate the
contract." The assailed condition clearly transgresses the principle of mutuality of contracts. It
leaves the determination of whether Valenzona failed to exhibit sufficient skill or competitive
ability to coach Alaska team solely to the opinion of GF Equity. Whether Valenzona indeed
failed to exhibit the required skill or competitive ability depended exclusively on the judgment of
GF Equity. In other words, GF Equity was given an unbridled prerogative to pre-terminate the
contract irrespective of the soundness, fairness or reasonableness, or even lack of basis of its
opinion.

To sustain the validity of the assailed paragraph would open the gate for arbitrary and illegal
dismissals, for void contractual stipulations would be used as justification therefor.

The assailed stipulation being violative of the mutuality principle underlying Article 1308 of the
Civil Code, it is null and void.

The nullity of the stipulation notwithstanding, GF Equity was not precluded from the right to pre-
terminate the contract. The pre-termination must have legal basis, however, if it is to be
declared justified.

GF Equity failed, however, to advance any ground to justify the pre-termination. It simply
invoked the assailed provision which is null and void.

While GF Equity's act of pre-terminating Valenzona's services cannot be considered willful as it

was based on a stipulation, albeit declared void, it, in doing so, failed to consider the abuse of
rights principle enshrined in Art. 19 of the Civil Code which provides:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.

This provision of law sets standards which must be observed in the exercise of one's
rights as well as in the performance of its duties, to wit: to act with justice; give every one his
due; and observe honesty and good faith.

Since the pre-termination of the contract was anchored on an illegal ground, hence, contrary to
law, and GF Equity negligently failed to provide legal basis for such pre-termination, e.g. that
Valenzona breached the contract by failing to discharge his duties thereunder, GF Equity failed
to exercise in a legitimate manner its right to pre-terminate the contract, thereby abusing the
right of Valenzona to thus entitle him to damages under Art. 19 in relation to Article 20 of the
Civil Code the latter of which provides:

Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another,
shall indemnify the latter for the same.

In De Guzman v. NLRC,13 this Court quoted the following explanation of Tolentino why it is
impermissible to abuse our rights to prejudice others.

The exercise of a right ends when the right disappears, and it disappears when it is abused,
especially to the prejudice of others. The mask of a right without the spirit of justice which gives
it life is repugnant to the modern concept of social law. It cannot be said that a person exercises
a right when he unnecessarily prejudices another or offends morals or good customs. Over and
above the specific precepts of positive law are the supreme norms of justice which the law
develops and which are expressed in three principles: honeste vivere,14 alterum non
laedere15and jus suum quique tribuere;16 and he who violates them violates the law. For this
reason, it is not permissible to abuse our rights to prejudice others.

The disquisition in Globe Mackay Cable and Radio Corporation v. Court of Appeals17 is just as
relevant as it is illuminating on the present case. In that case, this Court declared that even
granting that the therein petitioners might have had the right to dismiss the therein respondent
from work, the abusive manner in which that right was exercised amounted to a legal wrong for
which the petitioners must be held liable.

One of the more notable innovations of the New Civil Code is the codification of "some basic
principles that are to be observed for the rightful relationship between human beings and for the
stability of the social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED
CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the
defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit,
incorporated certain fundamental precepts which were "designed to indicate certain norms that
spring from the fountain of good conscience" and which were also meant to serve as "guides for
human conduct [that] should run as golden threads through society, to the end that law may
approach its supreme ideal, which is the sway and dominance of justice" (Id.) Foremost among
these principles is that pronounced in Article 19 which provides:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.

This article, known to contain what is commonly referred to as the principle of abuse of rights,
sets certain standards which must be observed not only in the exercise of one's rights but also
in the performance of one's duties. These standards are the following: to act with justice; to give
everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a
primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in
Article 19 must be observed. A right, though by itself legal because recognized or granted
by law as such, may nevertheless become the source of some illegality. When a right is
exercised in a manner which does not conform with the norms enshrined in Article 19
and results in damage to another, a legal wrong is thereby committed for which the
wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the
government of human relations and for the maintenance of social order, it does not provide a
remedy for its violation. Generally, an action for damages under either Article 20 or Article 21
would be proper.18 Emphasis and underscoring supplied).

As for GF Equity's defense of laches on account of Valenzona's invocation of his right under the
contract only after the lapse of six years, the same fails.

Laches has been defined as the failure or neglect for an unreasonable and unexplained length
of time to do that which by exercising due diligence, could or should have been done earlier,
thus giving rise to a presumption that the party entitled to assert it either has abandoned or
declined to assert it. It is not concerned with mere lapse of time; the fact of delay, standing
alone, is insufficient to constitute laches.19

Laches applies in equity, whereas prescription applies at law. Our courts are basically courts of
law, not courts of equity. Laches cannot thus be invoked to evade the enforcement of an
existing legal right. Equity, which has been aptly described as a "justice outside legality," is
applied only in the absence of, and never against, statutory law. Aequetas nunquam contravenit
legis. Thus, where the claim was filed within the statutory period of prescription, recovery
therefor cannot be barred by laches. The doctrine of laches should never be applied earlier than
the expiration of time limited for the commencement of actions at law,20 unless, as a general
rule, inexcusable delay in asserting a right and acquiescense in existing conditions are
proven.21 GF Equity has not proven, nay alleged, these.

Under Article 114422 of the New Civil Code, an action upon a written contract must be brought
within 10 years from the time the right of action accrues. Since the action filed by Valenzona is
an action for breach upon a written contract, his filing of the case 6 years from the date his
cause of action arose was well within the prescriptive period, hence, the defense of laches
would not, under the circumstances, lie.

Consequently, Valenzona is entitled to recover actual damages - his salary which he should
have received from the time his services were terminated up to the time the employment
contract expired.23

As for moral damages which the appellate court awarded, Article 2220 of the New Civil Code
allows such award to breaches of contract where the defendant acted fraudulently or in bad
faith. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a
dishonest purpose or moral obliquity. It contemplates a state of mind affirmatively operating with
furtive design or ill-will.24 Bad faith means a breach of a known duty through some motive of
interest or ill will. It must, however, be substantiated by evidence. Bad faith under the law cannot
be presumed, it must be established by clear and convincing evidence.

As earlier stated, however, the pre-termination of the contract was not willful as GF Equity
based it on a provision therein which is void. Malice or bad faith cannot thus be ascribed to GF
Equity.

The unbroken jurisprudence is that in breach of contract cases where a party is not shown to
have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable
consequences of the breach of the obligation which the parties had foreseen or could
reasonably have foreseen. The damages, however, do not include moral damages.25
The award by the appellate court of moral damages must thus be set aside. And so must the
award of exemplary damages, absent a showing that GF Equity acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner.26

The award to Valenzona of attorney's fees must remain, however, GF Equity having refused to
pay the balance of Valenzona's salaries to which he was, under the facts and circumstances of
the case, entitled under the contract, thus compelling him to litigate to protect his interest.27

WHEREFORE, the decision of the Court of Appeals dated October 14, 2002 is hereby SET
ASIDE and another rendered declaring the assailed provision of the contract NULL AND VOID
and ORDERING petitioner, GF Equity, to pay private respondent, Arturo Valenzona, actual
damages in the amount of P525,000.00 and attorney's fees in the amount of P60,000.00.

Costs against petitioner.

SO ORDERED.

23
In Teknika Skills and Trade Services, Inc. v. NLRC, 212 SCRA 132, 139-140 (1992), this
Court held:

"The principal cause of action in private respondent's complaint is breach of contract of

employment for a definite period. Having established her case, which public respondents
correctly sustained, she is entitled to the salary corresponding to the unexpired portion of her
contract. This is not a simple case of illegal dismissal of an employee whose employment is
without a definite period."

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded:

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's
plainly valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen's compensation and employer's liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered.
 FIRST DIVISION

[A.M. NO. HOJ-07-01 : June 12, 2008]

HON. MOISES M. PARDO, Executive Judge, Regional Trial Court, Branch 31,
Cabarroguis, Quirino, Complainant, v. LUGEORGE N. DISCIPULO, Electrician II,
Maintenance Unit, Halls of Justice, Cabarroguis, Quirino, Respondent.

RESOLUTION

CARPIO, J.:

This case involves (1) a complaint for dishonesty against Lugeorge N. Discipulo (Discipulo),
Electrician II, Halls of Justice, Cabarroguis, Quirino (Halls of Justice), filed by Judge Moises M.
Pardo (Judge Pardo), Executive Judge, Regional Trial Court, Judicial Region II, Cabarroguis,
Quirino (RTC); and (2) a counter-complaint for gross misconduct against Judge Pardo filed by
Discipulo.

In his letter-complaint1 dated 20 March 2006 and addressed to the Office of Administrative
Services (OAS), Judge Pardo charged Discipulo with falsifying his February 2006 time card and
the logbook of the security guards at the Halls of Justice. Judge Pardo alleged that:

On February 9, 2006, at around 8:00 a.m., Mr. Discipulo arrived at the Hall[s] of Justice and
[punched] his time card [in] the bundy clock. Immediately thereafter x x x, Mr. Discipulo left the
Hall[s] of Justice and never came back on that day. For this reason, Mr. Discipulo did not
[punch] his time card [in] the bundy clock [after office hours] on that day. For [the same] reason,
Security Guards on duty Rodel de Guzman and Prudencio Ciano did not enter the [time of
departure] of Mr. Discipulo on that date.

xxx

[O]n February 17, 2006, Mr. Discipulo [punched] his time card [in] the bundy clock at 12:30 p.m.
[After punching his time card, he] immediately left the Hall[s] of Justice and never came back on
that day. For this reason, Security Guards on duty Estabillo and Bartido did not indicate
[Discipulo's time of departure] in the attendance logbook on that date.

On March 1, 2006, at around 8:20 in the morning, Mr. Discipulo borrowed the Attendance
Logbook from Security Guards on duty Rodel De Guzman and Prudencio Ciano and brought the
same to the Office of the Clerk of Court. Without asking for the permission of the security
guards, or even just informing them x x x, Mr. Discipulo [wrote "12:00" and "5:00" as his time of
departure on 9 and 17 February 2006, respectively]. x x x
Upon discovering what Mr. Discipulo did, the two (2) security guards [put a note and signed the
pages where Discipulo made insertions]. They also issued to Judge Pardo [a] certification dated
March 1, 2006 narrating the foregoing facts.

Also on March 1, 2006, at around 9:00 a.m., Mr. Discipulo [wrote on his time card "12:00" and
"5:00" as his time of departure on 9 and 17 February 2006, respectively].2

Judge Pardo submitted a photocopy of the time card3 and a photocopy of the certification4 of
security guards Rodel de Guzman (De Guzman) and Prudencio Ciano (Ciano). On his time
card, Discipulo inserted "12:00" and "5:00" as his time of departure from the office on 9 and 17
February 2006, respectively. In their certification, De Guzman and Ciano stated that Discipulo
took the logbook and inserted "12:00" and "5:00" as his time of departure from the office on 9
and 17 February 2006, respectively.

In its Memorandum5 dated 31 May 2006, the OAS directed Discipulo to comment on Judge
Pardo's letter-complaint. In his comment and counter-complaint6 dated 13 June 2006, Discipulo
denied committing falsification of official document. According to him, he made the insertions on
his time card because he forgot to punch it in the bundy clock on 9 and 17 February 2006.
Discipulo submitted the affidavit7 of Atty. Jessie W. Tuldague (Tuldague), clerk of court of the
RTC, and the joint affidavit8 of other court employees Vilma Agustin (Agustin), Naty S. Fernando
(Fernando), George Mateo (Mateo), and Gil Orias (Orias) to vouch that he was present on 9
and 17 February 2006.

Discipulo charged Judge Pardo with gross misconduct: (1) Judge Pardo initiated and allowed
drinking of alcohol during office hours on 6 July 2004; (2) he allowed court employees Luhlu M.
Bugawan (Bugawan) and Lilia Casuple (Casuple) to leave the RTC during office hours without
justifiable reason; (3) he ordered the security guards to consider Bugawan as present on 16 July
2004 when in fact she was absent; (4) he ordered the security guards to punch the time card of
Jaime Calpatura (Calpatura), officer-in-charge at the RTC, in the bundy clock; (5) he declared
an early dismissal on 18 May and 26 August 2004 without any justifiable reason; (6) he
harassed court employees who testified against him in administrative cases pending before the
Court; and (7) he did not observe official working hours.

In its Memorandum9 dated 16 June 2006, the OAS referred the matter to the Office of the Court
Administrator (OCA) for appropriate action. In its 1st Indorsement10 dated 30 June 2006, the
OCA required Judge Pardo to comment on Discipulo's counter-complaint.

In his comment and reply11 dated 9 August 2006, Judge Pardo (1) stated that Discipulo admitted
in his comment and counter-complaint that he falsified the time card and the logbook; (2) stated
that Discipulo falsely accused him of being motivated by bad faith in instituting the instant case;
(3) questioned the credibility of Tuldague, Agustin, Fernando, Mateo, and Orias; (4) denied
condoning drinking of alcohol during office hours; (5) denied allowing Bugawan and Casuple to
leave the RTC during office hours without justifiable reason; (6) denied ordering the security
guards to consider Bugawan as present when in fact she was not; (7) denied ordering the
security guards to punch the time card of Calpatura in the bundy clock; (8) denied declaring an
early dismissal on 18 May and 26 August 2004; (9) denied harassing court employees; and (10)
stated that he observed official working hours.

In its Report12 dated 17 October 2006, the OCA stated that Judge Pardo and Discipulo
presented two contradicting sets of facts. It stated that liability could not be determined based
on the records alone and recommended that the matter be referred to a consultant of the OCA
for investigation, report, and recommendation. In its Resolution dated 13 December 2006, the
Court resolved to refer the matter to a consultant of the OCA.

In his Report dated 19 March 2007, hearing officer-designate and retired Justice Narciso T.
Atienza (Justice Atienza) found that Discipulo is liable for dishonesty and that Discipulo failed to
prove his allegations against Judge Pardo. Justice Atienza recommended that Discipulo be
suspended from office for six months and one day and that the charge against Judge Pardo be
dismissed.

The Court agrees with Justice Atienza's findings and recommendations.

OCA Circular No. 7-2003 states that court personnel should indicate in their bundy cards
the truthful and accurate times of their arrival at, and departure from, the office. In Garcia v.
Bada13 and Servino v. Adolfo,14 the Court held that court employees must follow the clear
mandate of OCA Circular No. 7-2003. Indeed, all judicial employees must devote their official
time to government service and exercise a high degree of professionalism.15

Justice Atienza and Judge Pardo described the procedure followed in keeping time records,
respectively:

In the Regional Trial Court of Cabarroguis, Quirino, a bundy clock is used by the employees to
register their time of arrival [at] the office, and [their time of departure from] the office.
Complementing the bundy clock is [the] logbook where [the security guards on duty write the
names of the employees who report for work, their time of arrival, and their time of departure.] x
x x The names of [the] employees[, their time of arrival, and their time of departure] are all
written by the security guards on duty. x x x [Whether an employee reported for work or not can
be determined - even if that employee forgot to punch his or her time card in the bundy clock -
by checking the records in the logbook.]16

The Security Guards x x x make the entries in the Attendance Logbook. The Security guards on
duty, two (2) at a time, are stationed at the entrance of the Hall[s] of Justice and the Attendance
Logbook [is placed] on top of a table at the entrance of the Hall[s] of Justice. The Security
Guards on duty make all the entries in the attendance logbook except for the signatures of the
employees.17

The surrounding circumstances show that Discipulo is liable for dishonesty: (1) Discipulo
admitted inserting "12:00" and "5:00" on his time card; (2) the security guards did not see
Discipulo punch his time card in the bundy clock at 12:00 p.m. and 5:00 p.m. on 9 and 17
February 2006, respectively; (3) the logbook did not contain Discipulo's time of departure on 9
and 17 February 2006; (4) Discipulo took the logbook and brought it to the Office of the Clerk of
Court; and (5) Discipulo inserted "12:00" and "5:00" on the logbook without informing the
security guards. Justice Atienza observed that:

When [Discipulo borrowed] the logbook from the security guards x x x on March 1,
2006, his intention was not just to compare [the time] appearing [on] his bundy card x x
x with [the time appearing in the logbook,] but to [insert on the logbook the time he typed
on] his bundy card. If Discipulo's intention [were] just to compare [the time
appearing] in the logbook with [the time appearing in] the bundy card x x x, he would
have [checked the logbook right there] on the table of the security guards or asked the
permission of the security guards before writing anything in the logbook.

x x x The testimonies of Tuldague and the other employees of the Office of the Clerk of
Court are not as credible as the testimonies of security guards [D]eGuzman and Ciano
who have no interest whatsoever in the outcome of the[instant] case and [whose
testimonies] are supported by the entries in the logbook. The guards were in good terms
with Discipulo before and after March 1, 2006. On the other hand, Tuldague was a complainant
in an administrative case against Judge Pardo. He was the one who prepared all the pleadings
Discipulo filed in the instant case. Tuldague showed hostility towards [J]udge Pardo.

xxx

The security guards on duty did not see Discipulo [punch his time card in the bundy
clock at 12:00 and 5:00 p.m. on 9 and 17 February 2006, respectively]. The only plausible
explanation why Discipulo's time card was [punched in the bundy clock in the morning
and at noon of 9 and 17 February 2006, respectively, and was not punched in the bundy
clock after office hours on those dates is] that he left the office surreptitiously or without
the knowledge of the security guards x x x, otherwise[thetime he left the office] would have
been entered in the logbook.18(Emphasis ours)

In Duque v. Aspiras,19 the Court held that employees who commit irregularities in the keeping of
time records are administratively liable. Falsification of time records constitutes
dishonesty,20 which is a disposition to lie or deceive.21 In Re: Failure of Jose Dante E. Guerrero
to Register His Time In and Out in Chronolog Time Recorder Machine on Several Dates,22 the
Court imposed the penalty of six months suspension to an employee found guilty of dishonesty
for falsifying his time records.

"In administrative proceedings, the complainant bears the burden of proving, by substantial
evidence, the allegations in the complaint. Substantial evidence means such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion."23 Discipulo failed to
substantiate his charge that Judge Pardo is liable for gross misconduct: (1) he did not mention
the dates when Judge Pardo allegedly committed the acts complained of; (2) he did not mention
the names of those who allegedly drank alcohol during office hours or the names of those whom
Judge Pardo allegedly harassed; and (3) he did not present any witness or any concrete proof
to support his allegations.

Judge Pardo denied committing any misconduct. Judge Pardo asserted that (1) he brought
some court employees when he was out for official business; (2) Bugawan's and Casuple's time
records were true and accurate; (3) court employees were present until 5:00 p.m. on 18 May
and 26 August 2004; (4) he was duty-bound to inspect the logbook and to inquire if there was
any irregularity; and (5) he observed the official working hours. Without any substantial evidence
to prove that Judge Pardo is guilty of gross misconduct, the Court cannot hold him
administratively liable.

WHEREFORE, the Court finds respondent Lugeorge N. Discipulo, Electrician II, Maintenance
Unit, Halls of Justice, Cabarroguis, Quirino, GUILTY of DISHONESTY. Accordingly, the
Court SUSPENDS him for six months and STERNLY WARNS him that a repetition of the same
or similar offense shall be dealt with more severely.
The Court DISMISSES the charge against Judge Moises M. Pardo, Executive Judge, Regional
Trial Court, Judicial Region II, Cabarroguis, Quirino, for lack of merit.
 FIRST DIVISION

[G.R. No. 164703 : May 04, 2010]

ALLAN C. GO, DOING BUSINESS UNDER THE NAME AND STYLE "ACG EXPRESS
LINER," PETITIONER, VS. MORTIMER F. CORDERO, RESPONDENT.
[G.R. No. 164747]
MORTIMER F. CORDERO, PETITIONER, VS. ALLAN C. GO, DOING BUSINESS UNDER
THE NAME AND STYLE "ACG EXPRESS LINER," FELIPE M. LANDICHO AND VINCENT D.
TECSON, RESPONDENTS.

DECISION

VILLARAMA, JR., J.:

For review is the Decision[1] dated March 16, 2004 as modified by the Resolution[2] dated July
22, 2004 of the Court of Appeals (CA) in CA-G.R. CV No. 69113, which affirmed with
modifications the Decision[3]dated May 31, 2000 of the Regional Trial Court (RTC) of Quezon
City, Branch 85 in Civil Case No. 98-35332.

The factual antecedents:

Sometime in 1996, Mortimer F. Cordero, Vice-President of Pamana Marketing Corporation

(Pamana), ventured into the business of marketing inter-island passenger vessels. After
contacting various overseas fast ferry manufacturers from all over the world, he came to meet
Tony Robinson, an Australian national based in Brisbane, Australia, who is the Managing
Director of Aluminium Fast Ferries Australia (AFFA).

Between June and August 1997, Robinson signed documents appointing Cordero as the
exclusive distributor of AFFA catamaran and other fast ferry vessels in the Philippines. As such
exclusive distributor, Cordero offered for sale to prospective buyers the 25-meter Aluminium
Passenger catamaran known as the SEACAT 25.[4]

After negotiations with Felipe Landicho and Vincent Tecson, lawyers of Allan C. Go who is the
owner/operator of ACG Express Liner of Cebu City, a single proprietorship, Cordero was able to
close a deal for the purchase of two (2) SEACAT 25 as evidenced by the Memorandum of
Agreement dated August 7, 1997.[5] Accordingly, the parties executed Shipbuilding Contract No.
7825 for one (1) high-speed catamaran (SEACAT 25) for the price of US$1,465,512.00.[6] Per
agreement between Robinson and Cordero, the latter shall receive commissions totalling
US$328,742.00, or 22.43% of the purchase price, from the sale of each vessel.[7]

Cordero made two (2) trips to the AFFA Shipyard in Brisbane, Australia, and on one (1)
occasion even accompanied Go and his family and Landicho, to monitor the progress of the
building of the vessel. He shouldered all the expenses for airfare, food, hotel accommodations,
transportation and entertainment during these trips. He also spent for long distance telephone
calls to communicate regularly with Robinson, Go, Tecson and Landicho.

However, Cordero later discovered that Go was dealing directly with Robinson when he was
informed by Dennis Padua of Wartsila Philippines that Go was canvassing for a second
catamaran engine from their company which provided the ship engine for the first SEACAT 25.
Padua told Cordero that Go instructed him to fax the requested quotation of the second engine
to the Park Royal Hotel in Brisbane where Go was then staying. Cordero tried to contact Go and
Landicho to confirm the matter but they were nowhere to be found, while Robinson refused to
answer his calls. Cordero immediately flew to Brisbane to clarify matters with Robinson, only to
find out that Go and Landicho were already there in Brisbane negotiating for the sale of the
second SEACAT 25. Despite repeated follow-up calls, no explanation was given by Robinson,
Go, Landicho and Tecson who even made Cordero believe there would be no further sale
between AFFA and ACG Express Liner.

In a handwritten letter dated June 24, 1998, Cordero informed Go that such act of dealing
directly with Robinson violated his exclusive distributorship and demanded that they respect the
same, without prejudice to legal action against him and Robinson should they fail to heed the
same.[8] Cordero's lawyer, Atty. Ernesto A. Tabujara, Jr. of ACCRA law firm, also wrote ACG
Express Liner assailing the fraudulent actuations and misrepresentations committed by Go in
connivance with his lawyers (Landicho and Tecson) in breach of Cordero's exclusive
distributorship appointment.[9]

Having been apprised of Cordero's demand letter, Thyne & Macartney, the lawyer of AFFA and
Robinson, faxed a letter to ACCRA law firm asserting that the appointment of Cordero as
AFFA's distributor was for the purpose of one (1) transaction only, that is, the purchase of a
high-speed catamaran vessel by ACG Express Liner in August 1997. The letter further stated
that Cordero was offered the exclusive distributorship, the terms of which were contained in a
draft agreement which Cordero allegedly failed to return to AFFA within a reasonable time, and
which offer is already being revoked by AFFA.[10]

As to the response of Go, Landicho and Tecson to his demand letter, Cordero testified before
the trial court that on the same day, Landicho, acting on behalf of Go, talked to him over the
telephone and offered to amicably settle their dispute. Tecson and Landicho offered to convince
Go to honor his exclusive distributorship with AFFA and to purchase all vessels for ACG
Express Liner through him for the next three (3) years. In an effort to amicably settle the matter,
Landicho, acting in behalf of Go, set up a meeting with Cordero on June 29, 1998 between 9:30
p.m. to 10:30 p.m. at the Mactan Island Resort Hotel lobby. On said date, however, only
Landicho and Tecson came and no reason was given for Go's absence. Tecson and Landicho
proposed that they will convince Go to pay him US$1,500,000.00 on the condition that they will
get a cut of 20%. And so it was agreed between him, Landicho and Tecson that the latter would
give him a weekly status report and that the matter will be settled in three (3) to four (4) weeks
and neither party will file an action against each other until a final report on the proposed
settlement. No such report was made by either Tecson or Landicho who, it turned out, had no
intention to do so and were just buying time as the catamaran vessel was due to arrive from
Australia. Cordero then filed a complaint with the Bureau of Customs (BOC) to prohibit the entry
of SEACAT 25 from Australia based on misdeclaration and undervaluation. Consequently, an
Alert Order was issued by Acting BOC Commissioner Nelson Tan for the vessel which in fact
arrived on July 17, 1998. Cordero claimed that Go and Robinson had conspired to undervalue
the vessel by around US$500,000.00.[11]

On August 21, 1998, Cordero instituted Civil Case No. 98-35332 seeking to hold Robinson, Go,
Tecson and Landicho liable jointly and solidarily for conniving and conspiring together in
violating his exclusive distributorship in bad faith and wanton disregard of his rights, thus
depriving him of his due commissions (balance of unpaid commission from the sale of the first
vessel in the amount of US$31,522.01 and unpaid commission for the sale of the second vessel
in the amount of US$328,742.00) and causing him actual, moral and exemplary damages,
including P800,000.00 representing expenses for airplane travel to Australia,
telecommunications bills and entertainment, on account of AFFA's untimely cancellation of the
exclusive distributorship agreement. Cordero also prayed for the award of moral and exemplary
damages, as well as attorney's fees and litigation expenses.[12]

Robinson filed a motion to dismiss grounded on lack of jurisdiction over his person and failure to
state a cause of action, asserting that there was no act committed in violation of the
distributorship agreement. Said motion was denied by the trial court on December 20, 1999.
Robinson was likewise declared in default for failure to file his answer within the period granted
by the trial court.[13] As for Go and Tecson, their motion to dismiss based on failure to state a
cause of action was likewise denied by the trial court on February 26, 1999.[14] Subsequently,
they filed their Answer denying that they have anything to do with the termination by AFFA of
Cordero's authority as exclusive distributor in the Philippines. On the contrary, they averred it
was Cordero who stopped communicating with Go in connection with the purchase of the first
vessel from AFFA and was not doing his part in making progress status reports and airing the
client's grievances to his principal, AFFA, such that Go engaged the services of Landicho to fly
to Australia and attend to the documents needed for shipment of the vessel to the Philippines.
As to the inquiry for the Philippine price for a Wartsila ship engine for AFFA's other on-going
vessel construction, this was merely requested by Robinson but which Cordero misinterpreted
as indication that Go was buying a second vessel. Moreover, Landicho and Tecson had no
transaction whatsoever with Cordero who had no document to show any such shipbuilding
contract. As to the supposed meeting to settle their dispute, this was due to the malicious
demand of Cordero to be given US$3,000,000 as otherwise he will expose in the media the
alleged undervaluation of the vessel with the BOC. In any case, Cordero no longer had cause of
action for his commission for the sale of the second vessel under the memorandum of
agreement dated August 7, 1997 considering the termination of his authority by AFFA's lawyers
on June 26, 1998.[15]

Pre-trial was reset twice to afford the parties opportunity to reach a settlement. However, on
motion filed by Cordero through counsel, the trial court reconsidered the resetting of the pre-trial
to another date for the third time as requested by Go, Tecson and Landicho, in view of the
latter's failure to appear at the pre-trial conference on January 7, 2000 despite due notice. The
trial court further confirmed that said defendants misled the trial court in moving for continuance
during the pre-trial conference held on December 10, 1999, purportedly to go abroad for the
holiday season when in truth a Hold-Departure Order had been issued against
them.[16] Accordingly, plaintiff Cordero was allowed to present his evidence ex parte.

Cordero's testimony regarding his transaction with defendants Go, Landicho and Tecson, and
the latter's offer of settlement, was corroborated by his counsel who also took the witness stand.
Further, documentary evidence including photographs taken of the June 29, 1998 meeting with
Landicho, Tecson and Atty. Tabujara at Shangri-la's Mactan Island Resort, photographs taken
in Brisbane showing Cordero, Go with his family, Robinson and Landicho, and also various
documents, communications, vouchers and bank transmittals were presented to prove that: (1)
Cordero was properly authorized and actually transacted in behalf of AFFA as exclusive
distributor in the Philippines; (2) Cordero spent considerable sums of money in pursuance of the
contract with Go and ACG Express Liner; and (3) AFFA through Robinson paid Cordero his
commissions from each scheduled payment made by Go for the first SEACAT 25 purchased
from AFFA pursuant to Shipbuilding Contract No. 7825.[17]

On May 31, 2000, the trial court rendered its decision, the dispositive portion of which reads as
follows:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of Plaintiff
and against defendants Allan C. Go, Tony Robinson, Felipe Landicho, and Vincent Tecson. As
prayed for, defendants are hereby ordered to pay Plaintiff jointly and solidarily, the following:

1. On the First Cause of Action, the sum total of SIXTEEN MILLION TWO HUNDRED
NINETY ONE THOUSAND THREE HUNDRED FIFTY TWO AND FORTY THREE
CENTAVOS (P16,291,352.43) as actual damages with legal interest from 25 June 1998
until fully paid;

2. On the Second Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as
moral damages;

3. On the Third Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as
exemplary damages; and

4. On the Fourth Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as
attorney's fees;

Costs against the defendants.

SO ORDERED.[18]

Go, Robinson, Landicho and Tecson filed a motion for new trial, claiming that they have been
unduly prejudiced by the negligence of their counsel who was allegedly unaware that the pre-
trial conference on January 28, 2000 did not push through for the reason that Cordero was then
allowed to present his evidence ex-parte, as he had assumed that the said ex-parte hearing was
being conducted only against Robinson who was earlier declared in default.[19] In its Order dated
July 28, 2000, the trial court denied the motion for new trial.[20] In the same order, Cordero's
motion for execution pending appeal was granted. Defendants moved to reconsider the said
order insofar as it granted the motion for execution pending appeal.[21] On August 8, 2000, they
filed a notice of appeal.[22]

On August 18, 2000, the trial court denied the motion for reconsideration and on August 21,
2000, the writ of execution pending appeal was issued.[23] Meanwhile, the notice of appeal was
denied for failure to pay the appellate court docket fee within the prescribed
period.[24] Defendants filed a motion for reconsideration and to transmit the case records to the
CA.[25]

On September 29, 2000, the CA issued a temporary restraining order at the instance of
defendants in the certiorari case they filed with said court docketed as CA-G.R. SP No. 60354
questioning the execution orders issued by the trial court. Consequently, as requested by the
defendants, the trial court recalled and set aside its November 6, 2000 Order granting the ex-
parte motion for release of garnished funds, cancelled the scheduled public auction sale of
levied real properties, and denied the ex-parte Motion for Break-Open Order and Ex-
Parte Motion for Encashment of Check filed by Cordero.[26] On November 29, 2000, the trial
court reconsidered its Order dated August 21, 2000 denying due course to the notice of appeal
and forthwith directed the transmittal of the records to the CA.[27]

On January 29, 2001, the CA rendered judgment granting the petition for certiorari in CA-G.R.
SP No. 60354 and setting aside the trial court's orders of execution pending appeal. Cordero
appealed the said judgment in a petition for review filed with this Court which was eventually
denied under our Decision dated September 17, 2002.[28]

On March 16, 2004, the CA in CA-G.R. CV No. 69113 affirmed the trial court (1) in allowing
Cordero to present his evidence ex-parte after the unjustified failure of appellants (Go, Tecson
and Landicho) to appear at the pre-trial conference despite due notice; (2) in finding that it was
Cordero and not Pamana who was appointed by AFFA as the exclusive distributor in the
Philippines of its SEACAT 25 and other fast ferry vessels, which is not limited to the sale of one
(1) such catamaran to Go on August 7, 1997; and (3) in finding that Cordero is entitled to a
commission per vessel sold for AFFA through his efforts in the amount equivalent to 22.43% of
the price of each vessel or US$328,742.00, and with payments of US$297,219.91 having been
made to Cordero, there remained a balance of US$31,522.09 still due to him. The CA sustained
the trial court in ruling that Cordero is entitled to damages for the breach of his exclusive
distributorship agreement with AFFA. However, it held that Cordero is entitled only to
commission for the sale of the first catamaran obtained through his efforts with the remaining
unpaid sum of US$31,522.09 or P1,355,449.90 (on the basis of US$1.00=P43.00 rate) with
interest at 6% per annum from the time of the filing of the complaint until the same is fully paid.
As to the P800,000.00 representing expenses incurred by Cordero for transportation, phone
bills, entertainment, food and lodging, the CA declared there was no basis for such award, the
same being the logical and necessary consequences of the exclusive distributorship agreement
which are normal in the field of sales and distribution, and the expenditures having redounded to
the benefit of the distributor (Cordero).

On the amounts awarded by the trial court as moral and exemplary damages, as well as
attorney's fees, the CA reduced the same to P500,000.00, P300,000.00 and P50,000.00,
respectively. Appellants were held solidarily liable pursuant to the provisions of Article 1207 in
relation to Articles 19, 20, 21 and 22 of the New Civil Code. The CA further ruled that no error
was committed by the trial court in denying their motion for new trial, which said court found to
be pro forma and did not raise any substantial matter as to warrant the conduct of another trial.

By Resolution dated July 22, 2004, the CA denied the motions for reconsideration respectively
filed by the appellants and appellee, and affirmed the Decision dated March 16, 2004 with the
sole modification that the legal interest of 6% per annum shall start to run from June 24, 1998
until the finality of the decision, and the rate of 12% interest per annum shall apply once the
decision becomes final and executory until the judgment has been satisfied.

The case before us is a consolidation of the petitions for review under Rule 45 separately filed
by Go (G.R. No. 164703) and Cordero (G.R. No. 164747) in which petitioners raised the
following arguments:

G.R. No. 164703

(Petitioner Go)

I. THE HONORABLE COURT OF APPEALS DISREGARDED THE RULES OF COURT

AND PERTINENT JURISPRUDENCE AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN NOT RULING THAT THE RESPONDENT IS NOT THE REAL PARTY-
IN-INTEREST AND IN NOT DISMISSING THE INSTANT CASE ON THE GROUND OF
LACK OF CAUSE OF ACTION;

II. THE HONORABLE COURT OF APPEALS IGNORED THE LAW AND

JURISPRUDENCE AND ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING
HEREIN PETITIONER RESPONSIBLE FOR THE BREACH IN THE ALLEGED
 EXCLUSIVE DISTRIBUTORSHIP AGREEMENT WITH ALUMINIUM FAST FERRIES
AUSTRALIA;

III. THE HONORABLE APPELLATE COURT MISAPPLIED THE LAW AND ACTED WITH
GRAVE ABUSE OF DISCRETION IN FINDING PETITIONER LIABLE IN
SOLIDUM WITH THE CO-DEFENDANTS WITH RESPECT TO THE CLAIMS OF
RESPONDENT;

IV. THE HONORABLE COURT OF APPEALS MISAPPLIED LAW AND JURISPRUDENCE

AND GRAVELY ABUSED ITS DISCRETION WHEN IT FOUND PETITIONER LIABLE
FOR UNPAID COMMISSIONS, DAMAGES, ATTORNEY'S FEES, AND LITIGATION
EXPENSES; and

V. THE HONORABLE APPELLATE COURT ACTED CONTRARY TO LAW AND

JURISPRUDENCE AND GRAVELY ABUSED ITS DISCRETION WHEN IT
EFFECTIVELY DEPRIVED HEREIN PETITIONER OF HIS RIGHT TO DUE PROCESS
BY AFFIRMING THE LOWER COURT'S DENIAL OF PETITIONER'S MOTION FOR
NEW TRIAL.[29]

G.R. No. 164747

(Petitioner Cordero)

I.

THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE JUDGMENT OF THE TRIAL
COURT AWARDING PETITIONER ACTUAL DAMAGES FOR HIS COMMISSION FOR THE
SALE OF THE SECOND VESSEL, SINCE THERE IS SUFFICIENT EVIDENCE ON RECORD
WHICH PROVES THAT THERE WAS A SECOND SALE OF A VESSEL.

A. THE MEMORANDUM OF AGREEMENT DATED 7 AUGUST 1997 PROVIDES THAT

RESPONDENT GO WAS CONTRACTUALLY BOUND TO BUY TWO (2) VESSELS FROM
AFFA.

B. RESPONDENT GO'S POSITION PAPER AND COUNTER-AFFIDAVIT/POSITION PAPER

THAT WERE FILED BEFORE THE BUREAU OF CUSTOMS, ADMITS UNDER OATH THAT
HE HAD INDEED PURCHASED A SECOND VESSEL FROM AFFA.

C. RESPONDENTS ADMITTED IN THEIR PRE-TRIAL BRIEF THAT THEY HAD PURCHASED

A SECOND VESSEL.

II.

THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER IS NOT ENTITLED TO

HIS COMMISSIONS FOR THE PURCHASE OF A SECOND VESSEL, SINCE IT WAS
PETITIONER'S EFFORTS WHICH ACTUALLY FACILITATED AND SET-UP THE
TRANSACTION FOR RESPONDENTS.

III.

THE COURT OF APPEALS ERRED IN NOT IMPOSING THE PROPER LEGAL INTEREST
RATE ON RESPONDENTS' UNPAID OBLIGATION WHICH SHOULD BE TWELVE PERCENT
(12%) FROM THE TIME OF THE BREACH OF THE OBLIGATION.

IV.

THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE ORIGINAL AMOUNT OF

CONSEQUENTIAL DAMAGES AWARDED TO PETITIONER BY THE TRIAL COURT
CONSIDERING THE BAD FAITH AND FRAUDULENT CONDUCT OF RESPONDENTS IN
MISAPPROPRIATING THE MONEY OF PETITIONER.[30]

The controversy boils down to two (2) main issues: (1) whether petitioner Cordero has the legal
personality to sue the respondents for breach of contract; and (2) whether the respondents may
be held liable for damages to Cordero for his unpaid commissions and termination of his
exclusive distributorship appointment by the principal, AFFA.

I. Real Party-in-Interest

First, on the issue of whether the case had been filed by the real party-in-interest as required by
Section 2, Rule 3 of the Rules of Court, which defines such party as the one (1) to be benefited
or injured by the judgment in the suit, or the party entitled to the avails of the suit. The purposes
of this provision are: 1) to prevent the prosecution of actions by persons without any right, title or
interest in the case; 2) to require that the actual party entitled to legal relief be the one to
prosecute the action; 3) to avoid a multiplicity of suits; and 4) to discourage litigation and keep it
within certain bounds, pursuant to sound public policy.[31] A case is dismissible for lack of
personality to sue upon proof that the plaintiff is not the real party-in-interest, hence grounded
on failure to state a cause of action.[32]

On this issue, we agree with the CA in ruling that it was Cordero and not Pamana who is the
exclusive distributor of AFFA in the Philippines as shown by the Certification dated June 1, 1997
issued by Tony Robinson.[33] Petitioner Go mentions the following documents also signed by
respondent Robinson which state that "Pamana Marketing Corporation represented by Mr.
Mortimer F. Cordero" was actually the exclusive distributor: (1) letter dated 1 June 1997[34]; (2)
certification dated 5 August 1997[35]; and (3) letter dated 5 August 1997 addressed to petitioner
Cordero concerning "commissions to be paid to Pamana Marketing Corporation."[36] Such
apparent inconsistency in naming AFFA's exclusive distributor in the Philippines is of no
moment. For all intents and purposes, Robinson and AFFA dealt only with Cordero who alone
made decisions in the performance of the exclusive distributorship, as with other clients to
whom he had similarly offered AFFA's fast ferry vessels. Moreover, the stipulated commissions
from each progress payments made by Go were directly paid by Robinson to
Cordero.[37] Respondents Landicho and Tecson were only too aware of Cordero's authority as
the person who was appointed and acted as exclusive distributor of AFFA, which can be
gleaned from their act of immediately furnishing him with copies of bank transmittals everytime
Go remits payment to Robinson, who in turn transfers a portion of funds received to the bank
account of Cordero in the Philippines as his commission. Out of these partial payments of his
commission, Cordero would still give Landicho and Tecson their respective "commission," or
"cuts" from his own commission. Respondents Landicho and Tecson failed to refute the
evidence submitted by Cordero consisting of receipts signed by them. Said amounts were apart
from the earlier expenses shouldered by Cordero for Landicho's airline tickets, transportation,
food and hotel accommodations for the trip to Australia.[38]

Moreover, petitioner Go, Landicho and Tecson never raised petitioner Cordero's lack of
personality to sue on behalf of Pamana,[39] and did so only before the CA when they contended
that it is Pamana and not Cordero, who was appointed and acted as exclusive distributor for
AFFA.[40] It was Robinson who argued in support of his motion to dismiss that as far as said
defendant is concerned, the real party plaintiff appears to be Pamana, against the real party
defendant which is AFFA.[41] As already mentioned, the trial court denied the motion to dismiss
filed by Robinson.

We find no error committed by the trial court in overruling Robinson's objection over the
improper resort to summons by publication upon a foreign national like him and in an action in
personam, notwithstanding that he raised it in a special appearance specifically raising the issue
of lack of jurisdiction over his person. Courts acquire jurisdiction over the plaintiffs upon the filing
of the complaint, while jurisdiction over the defendants in a civil case is acquired either through
the service of summons upon them in the manner required by law or through their voluntary
appearance in court and their submission to its authority.[42] A party who makes a special
appearance in court challenging the jurisdiction of said court based on the ground of invalid
service of summons is not deemed to have submitted himself to the jurisdiction of the court. [43]

In this case, however, although the Motion to Dismiss filed by Robinson specifically stated as
one (1) of the grounds the lack of "personal jurisdiction," it must be noted that he had earlier
filed a Motion for Time to file an appropriate responsive pleading even beyond the time provided
in the summons by publication.[44] Such motion did not state that it was a conditional
appearance entered to question the regularity of the service of summons, but an appearance
submitting to the jurisdiction of the court by acknowledging the summons by publication issued
by the court and praying for additional time to file a responsive pleading. Consequently,
Robinson having acknowledged the summons by publication and also having invoked the
jurisdiction of the trial court to secure affirmative relief in his motion for additional time, he
effectively submitted voluntarily to the trial court's jurisdiction. He is now estopped from
asserting otherwise, even before this Court.[45]

II. Breach of Exclusive Distributorship,

Contractual Interference and
Respondents' Liability for Damages

In Yu v. Court of Appeals,[46] this Court ruled that the right to perform an exclusive distributorship
agreement and to reap the profits resulting from such performance are proprietary rights which
a party may protect. Thus, injunction is the appropriate remedy to prevent a wrongful
interference with contracts by strangers to such contracts where the legal remedy is insufficient
and the resulting injury is irreparable. In that case, the former dealer of the same goods
purchased the merchandise from the manufacturer in England through a trading firm in West
Germany and sold these in the Philippines. We held that the rights granted to the petitioner
under the exclusive distributorship agreement may not be diminished nor rendered illusory by
the expedient act of utilizing or interposing a person or firm to obtain goods for which the
exclusive distributorship was conceptualized, at the expense of the sole authorized
distributor.[47]

In the case at bar, it was established that petitioner Cordero was not paid the balance of his
commission by respondent Robinson. From the time petitioner Go and respondent Landicho
directly dealt with respondent Robinson in Brisbane, and ceased communicating through
petitioner Cordero as the exclusive distributor of AFFA in the Philippines, Cordero was no longer
informed of payments remitted to AFFA in Brisbane. In other words, Cordero had clearly been
cut off from the transaction until the arrival of the first SEACAT 25 which was sold through his
efforts. When Cordero complained to Go, Robinson, Landicho and Tecson about their acts
prejudicial to his rights and demanded that they respect his exclusive distributorship, Go simply
let his lawyers led by Landicho and Tecson handle the matter and tried to settle it by promising
to pay a certain amount and to purchase high-speed catamarans through Cordero. However,
Cordero was not paid anything and worse, AFFA through its lawyer in Australia even terminated
his exclusive dealership insisting that his services were engaged for only one (1) transaction,
that is, the purchase of the first SEACAT 25 in August 1997.

Petitioner Go argues that unlike in Yu v. Court of Appeals[48] there is no conclusive proof

adduced by petitioner Cordero that they actually purchased a second SEACAT 25 directly from
AFFA and hence there was no violation of the exclusive distributorship agreement. Further, he
contends that the CA gravely abused its discretion in holding them solidarily liable to Cordero,
relying on Articles 1207, 19 and 21 of the Civil Code despite absence of evidence, documentary
or testimonial, showing that they conspired to defeat the very purpose of the exclusive
distributorship agreement.[49]

We find that contrary to the claims of petitioner Cordero, there was indeed no sufficient
evidence that respondents actually purchased a second SEACAT 25 directly from AFFA. But
this circumstance will not absolve respondents from liability for invading Cordero's rights under
the exclusive distributorship. Respondents clearly acted in bad faith in bypassing Cordero as
they completed the remaining payments to AFFA without advising him and furnishing him with
copies of the bank transmittals as they previously did, and directly dealt with AFFA through
Robinson regarding arrangements for the arrival of the first SEACAT 25 in Manila and
negotiations for the purchase of the second vessel pursuant to the Memorandum of Agreement
which Cordero signed in behalf of AFFA. As a result of respondents' actuations, Cordero
incurred losses as he was not paid the balance of his commission from the sale of the first
vessel and his exclusive distributorship revoked by AFFA.

Petitioner Go contends that the trial and appellate courts erred in holding them solidarily liable
for Cordero's unpaid commission, which is the sole obligation of the principal AFFA. It was
Robinson on behalf of AFFA who, in the letter dated August 5, 1997 addressed to Cordero,
undertook to pay commission payments to Pamana on a staggered progress payment plan in
the form of percentage of the commission per payment. AFFA explicitly committed that it will,
"upon receipt of progress payments, pay to Pamana their full commission by telegraphic transfer
to an account nominated by Pamana within one to two days of [AFFA] receiving such
payments."[50] Petitioner Go further maintains that he had not in any way violated or caused the
termination of the exclusive distributorship agreement between Cordero and AFFA; he had also
paid in full the first and only vessel he purchased from AFFA.[51]

While it is true that a third person cannot possibly be sued for breach of contract because only
parties can breach contractual provisions, a contracting party may sue a third person not for
breach but for inducing another to commit such breach.

Article 1314 of the Civil Code provides:

Art. 1314. Any third person who induces another to violate his contract shall be liable for
damages to the other contracting party.

The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the part
of the third person of the existence of a contract; and (3) interference of the third person is
without legal justification.[52]
The presence of the first and second elements is not disputed. Through the letters issued by
Robinson attesting that Cordero is the exclusive distributor of AFFA in the Philippines,
respondents were clearly aware of the contract between Cordero and AFFA represented by
Robinson. In fact, evidence on record showed that respondents initially dealt with and
recognized Cordero as such exclusive dealer of AFFA high-speed catamaran vessels in the
Philippines. In that capacity as exclusive distributor, petitioner Go entered into the Memorandum
of Agreement and Shipbuilding Contract No. 7825 with Cordero in behalf of AFFA.

As to the third element, our ruling in the case of So Ping Bun v. Court of Appeals[53] is
instructive, to wit:

A duty which the law of torts is concerned with is respect for the property of others, and a cause
of action ex delicto may be predicated upon an unlawful interference by one person of the
enjoyment by the other of his private property. This may pertain to a situation where a third
person induces a party to renege on or violate his undertaking under a contract. In the case
before us, petitioner's Trendsetter Marketing asked DCCSI to execute lease contracts in its
favor, and as a result petitioner deprived respondent corporation of the latter's property right.
Clearly, and as correctly viewed by the appellate court, the three elements of tort interference
above-mentioned are present in the instant case.

Authorities debate on whether interference may be justified where the defendant acts for the
sole purpose of furthering his own financial or economic interest. One view is that, as a general
rule, justification for interfering with the business relations of another exists where the actor's
motive is to benefit himself. Such justification does not exist where his sole motive is to cause
harm to the other. Added to this, some authorities believe that it is not necessary that the
interferer's interest outweigh that of the party whose rights are invaded, and that an individual
acts under an economic interest that is substantial, not merely de minimis, such that wrongful
and malicious motives are negatived, for he acts in self-protection. Moreover, justification for
protecting one's financial position should not be made to depend on a comparison of his
economic interest in the subject matter with that of others. It is sufficient if the impetus of his
conduct lies in a proper business interest rather than in wrongful motives.

As early as Gilchrist vs. Cuddy, we held that where there was no malice in the
interference of a contract, and the impulse behind one's conduct lies in a proper
business interest rather than in wrongful motives, a party cannot be a malicious
interferer. Where the alleged interferer is financially interested, and such interest motivates his
conduct, it cannot be said that he is an officious or malicious intermeddler.

In the instant case, it is clear that petitioner So Ping Bun prevailed upon DCCSI to lease the
warehouse to his enterprise at the expense of respondent corporation. Though petitioner took
interest in the property of respondent corporation and benefited from it, nothing on
record imputes deliberate wrongful motives or malice in him.

xxx

While we do not encourage tort interferers seeking their economic interest to intrude into
existing contracts at the expense of others, however, we find that the conduct herein
complained of did not transcend the limits forbidding an obligatory award for damages in the
absence of any malice. The business desire is there to make some gain to the detriment of the
contracting parties. Lack of malice, however, precludes damages. But it does not relieve
petitioner of the legal liability for entering into contracts and causing breach of existing
ones. The respondent appellate court correctly confirmed the permanent injunction and
nullification of the lease contracts between DCCSI and Trendsetter Marketing, without awarding
damages. The injunction saved the respondents from further damage or injury caused by
petitioner's interference.[54][emphasis supplied.]

Malice connotes ill will or spite, and speaks not in response to duty. It implies an intention to do
ulterior and unjustifiable harm. Malice is bad faith or bad motive.[55] In the case of Lagon v. Court
of Appeals,[56]we held that to sustain a case for tortuous interference, the defendant must have
acted with malice or must have been driven by purely impure reasons to injure the plaintiff; in
other words, his act of interference cannot be justified. We further explained that the word
"induce" refers to situations where a person causes another to choose one course of conduct by
persuasion or intimidation. As to the allegation of private respondent in said case that petitioner
induced the heirs of the late Bai Tonina Sepi to sell the property to petitioner despite an alleged
renewal of the original lease contract with the deceased landowner, we ruled as follows:

Assuming ex gratia argumenti that petitioner knew of the contract, such knowledge alone was
not sufficient to make him liable for tortuous interference. x x x

Furthermore, the records do not support the allegation of private respondent that
petitioner induced the heirs of Bai Tonina Sepi to sell the property to him. The word "induce"
refers to situations where a person causes another to choose one course of conduct by
persuasion or intimidation. The records show that the decision of the heirs of the late Bai Tonina
Sepi to sell the property was completely of their own volition and that petitioner did absolutely
nothing to influence their judgment. Private respondent himself did not proffer any evidence to
support his claim. In short, even assuming that private respondent was able to prove the
renewal of his lease contract with Bai Tonina Sepi, the fact was that he was unable to prove
malice or bad faith on the part of petitioner in purchasing the property. Therefore, the claim of
tortuous interference was never established.[57]

In their Answer, respondents denied having anything to do with the unpaid balance of the
commission due to Cordero and the eventual termination of his exclusive distributorship by
AFFA. They gave a different version of the events that transpired following the signing of
Shipbuilding Contract No. 7825. According to them, several builder-competitors still entered the
picture after the said contract for the purchase of one (1) SEACAT 25 was sent to Brisbane in
July 1997 for authentication, adding that the contract was to be effective on August 7, 1997, the
time when their funds was to become available. Go admitted he called the attention of AFFA if it
can compete with the prices of other builders, and upon mutual agreement, AFFA agreed to
give them a discounted price under the following terms and conditions: (1) that the contract
price be lowered; (2) that Go will obtain another vessel; (3) that to secure compliance of such
conditions, Go must make an advance payment for the building of the second vessel; and (4)
that the payment scheme formerly agreed upon as stipulated in the first contract shall still be the
basis and used as the guiding factor in remitting money for the building of the first vessel. This
led to the signing of another contract superseding the first one (1), still to be dated 07 August
1997. Attached to the answer were photocopies of the second contract stating a lower purchase
price (US$1,150,000.00) and facsimile transmission of AFFA to Go confirming the
transaction.[58]

As to the cessation of communication with Cordero, Go averred it was Cordero who was
nowhere to be contacted at the time the shipbuilding progress did not turn good as promised,
and it was always Landicho and Tecson who, after several attempts, were able to locate him
only to obtain unsatisfactory reports such that it was Go who would still call up Robinson
regarding any progress status report, lacking documents for MARINA, etc., and go to Australia
for ocular inspection. Hence, in May 1998 on the scheduled launching of the ship in Australia,
Go engaged the services of Landicho who went to Australia to see to it that all documents
needed for the shipment of the vessel to the Philippines would be in order. It was also during
this time that Robinson's request for inquiry on the Philippine price of a Wartsila engine for
AFFA's then on-going vessel construction, was misinterpreted by Cordero as indicating that Go
was buying a second vessel.[59]

We find these allegations unconvincing and a mere afterthought as these were the very same
averments contained in the Position Paper for the Importer dated October 9, 1998, which was
submitted by Go on behalf of ACG Express Liner in connection with the complaint-affidavit filed
by Cordero before the BOC-SGS Appeals Committee relative to the shipment valuation of the
first SEACAT 25 purchased from AFFA.[60] It appears that the purported second contract
superseding the original Shipbuilding Contract No. 7825 and stating a lower price of
US$1,150,000.00 (not US$1,465,512.00) was only presented before the BOC to show that the
vessel imported into the Philippines was not undervalued by almost US$500,000.00. Cordero
vehemently denied there was such modification of the contract and accused respondents of
resorting to falsified documents, including the facsimile transmission of AFFA supposedly
confirming the said sale for only US$1,150,000.00. Incidentally, another document filed in said
BOC case, the Counter-Affidavit/Position Paper for the Importer dated November 16,
1998,[61] states in paragraph 8 under the Antecedent facts thereof, that —

8. As elsewhere stated, the total remittances made by herein Importer to AFFA does not alone
represent the purchase price for Seacat 25. It includes advance payment for the acquisition
of another vessel as part of the deal due to the discounted price.[62]

which even gives credence to the claim of Cordero that respondents negotiated for the sale of
the second vessel and that the nonpayment of the remaining two (2) instalments of his
commission for the sale of the first SEACAT 25 was a result of Go and Landicho's directly
dealing with Robinson, obviously to obtain a lower price for the second vessel at the expense of
Cordero.

The act of Go, Landicho and Tecson in inducing Robinson and AFFA to enter into another
contract directly with ACG Express Liner to obtain a lower price for the second vessel resulted
in AFFA's breach of its contractual obligation to pay in full the commission due to Cordero and
unceremonious termination of Cordero's appointment as exclusive distributor. Following our
pronouncement in Gilchrist v. Cuddy (supra), such act may not be deemed malicious if impelled
by a proper business interest rather than in wrongful motives. The attendant circumstances,
however, demonstrated that respondents transgressed the bounds of permissible financial
interest to benefit themselves at the expense of Cordero. Respondents furtively went directly to
Robinson after Cordero had worked hard to close the deal for them to purchase from AFFA two
(2) SEACAT 25, closely monitored the progress of building the first vessel sold, attended to their
concerns and spent no measly sum for the trip to Australia with Go, Landicho and Go's family
members. But what is appalling is the fact that even as Go, Landicho and Tecson secretly
negotiated with Robinson for the purchase of a second vessel, Landicho and Tecson continued
to demand and receive from Cordero their "commission" or "cut" from Cordero's earned
commission from the sale of the first SEACAT 25.

Cordero was practically excluded from the transaction when Go, Robinson, Tecson and
Landicho suddenly ceased communicating with him, without giving him any explanation. While
there was nothing objectionable in negotiating for a lower price in the second purchase of
SEACAT 25, which is not prohibited by the Memorandum of Agreement, Go, Robinson, Tecson
and Landicho clearly connived not only in ensuring that Cordero would have no participation in
the contract for sale of the second SEACAT 25, but also that Cordero would not be paid the
balance of his commission from the sale of the first SEACAT 25. This, despite their knowledge
that it was commission already earned by and due to Cordero. Thus, the trial and appellate
courts correctly ruled that the actuations of Go, Robinson, Tecson and Landicho were without
legal justification and intended solely to prejudice Cordero.

The existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of the
trial court, when affirmed by the appellate court, are conclusive on this Court.[63] We see no
compelling reason to reverse the findings of the RTC and the CA that respondents acted in bad
faith and in utter disregard of the rights of Cordero under the exclusive distributorship
agreement.

The failure of Robinson, Go, Tecson and Landico to act with fairness, honesty and good faith in
securing better terms for the purchase of high-speed catamarans from AFFA, to the prejudice of
Cordero as the duly appointed exclusive distributor, is further proscribed by Article 19 of
the Civil Code:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.

As we have expounded in another case:

Elsewhere, we explained that when "a right is exercised in a manner which does not conform
with the norms enshrined in Article 19 and results in damage to another, a legal wrong is
thereby committed for which the wrongdoer must be responsible." The object of this article,
therefore, is to set certain standards which must be observed not only in the exercise of one's
rights but also in the performance of one's duties. These standards are the following: act with
justice, give everyone his due and observe honesty and good faith. Its antithesis, necessarily, is
any act evincing bad faith or intent to injure. Its elements are the following: (1) There is a legal
right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring
another. When Article 19 is violated, an action for damages is proper under Articles 20 or 21 of
the Civil Code. Article 20 pertains to damages arising from a violation of law x x x. Article 21, on
the other hand, states:

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.

Article 21 refers to acts contra bonus mores and has the following elements: (1) There is an act
which is legal; (2) but which is contrary to morals, good custom, public order, or public policy;
and (3) it is done with intent to injure.

A common theme runs through Articles 19 and 21, and that is, the act complained of must be
intentional.[64]

Petitioner Go's argument that he, Landicho and Tecson cannot be held liable solidarily with
Robinson for actual, moral and exemplary damages, as well as attorney's fees awarded to
Cordero since no law or contract provided for solidary obligation in these cases, is equally bereft
of merit. Conformably with Article 2194 of the Civil Code, the responsibility of two or more
persons who are liable for the quasi-delict is solidary.[65] In Lafarge Cement Philippines, Inc. v.
Continental Cement Corporation,[66] we held:

[O]bligations arising from tort are, by their nature, always solidary. We have assiduously
maintained this legal principle as early as 1912 in Worcester v. Ocampo, in which we held:

x x x The difficulty in the contention of the appellants is that they fail to recognize that the basis
of the present action is tort. They fail to recognize the universal doctrine that each joint tort
feasor is not only individually liable for the tort in which he participates, but is also jointly liable
with his tort feasors. x x x

It may be stated as a general rule that joint tort feasors are all the persons who command,
instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission
of a tort, or who approve of it after it is done, if done for their benefit. They are each liable as
principals, to the same extent and in the same manner as if they had performed the
wrongful act themselves. x x x

Joint tort feasors are jointly and severally liable for the tort which they commit. The persons
injured may sue all of them or any number less than all. Each is liable for the whole damages
caused by all, and all together are jointly liable for the whole damage. It is no defense for one
sued alone, that the others who participated in the wrongful act are not joined with him as
defendants; nor is it any excuse for him that his participation in the tort was insignificant as
compared to that of the others. x x x

Joint tort feasors are not liable pro rata. The damages can not be apportioned among them,
except among themselves. They cannot insist upon an apportionment, for the purpose of each
paying an aliquot part. They are jointly and severally liable for the whole amount. x x x

A payment in full for the damage done, by one of the joint tort feasors, of course satisfies any
claim which might exist against the others. There can be but satisfaction. The release of one of
the joint tort feasors by agreement generally operates to discharge all. x x x

Of course, the court during trial may find that some of the alleged tort feasors are liable and that
others are not liable. The courts may release some for lack of evidence while condemning
others of the alleged tort feasors. And this is true even though they are charged jointly and
severally.[67] [emphasis supplied.]

The rule is that the defendant found guilty of interference with contractual relations cannot be
held liable for more than the amount for which the party who was inducted to break the contract
can be held liable.[68] Respondents Go, Landicho and Tecson were therefore correctly held
liable for the balance of petitioner Cordero's commission from the sale of the first SEACAT 25,
in the amount of US$31,522.09 or its peso equivalent, which AFFA/Robinson did not pay in
violation of the exclusive distributorship agreement, with interest at the rate of 6% per annum
from June 24, 1998 until the same is fully paid.

Respondents having acted in bad faith, moral damages may be recovered under Article 2219 of
the Civil Code.[69] On the other hand, the requirements of an award of exemplary damages are:
(1) they may be imposed by way of example in addition to compensatory damages, and only
after the claimant's right to them has been established; (2) that they cannot be recovered as a
matter of right, their determination depending upon the amount of compensatory damages that
may be awarded to the claimant; and (3) the act must be accompanied by bad faith or done in a
wanton, fraudulent, oppressive or malevolent manner.[70] The award of exemplary damages is
thus in order. However, we find the sums awarded by the trial court as moral and exemplary
damages as reduced by the CA, still excessive under the circumstances.

Moral damages are meant to compensate and alleviate the physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injuries unjustly caused. Although incapable of pecuniary estimation, the
amount must somehow be proportional to and in approximation of the suffering inflicted. Moral
damages are not punitive in nature and were never intended to enrich the claimant at the
expense of the defendant. There is no hard-and-fast rule in determining what would be a fair
and reasonable amount of moral damages, since each case must be governed by its own
peculiar facts. Trial courts are given discretion in determining the amount, with the limitation that
it "should not be palpably and scandalously excessive." Indeed, it must be commensurate to the
loss or injury suffered.[71]

We believe that the amounts of P300,000.00 and P200,000.00 as moral and exemplary
damages, respectively, would be sufficient and reasonable. Because exemplary damages are
awarded, attorney's fees may also be awarded in consonance with Article 2208 (1).[72] We affirm
the appellate court's award of attorney's fees in the amount of P50,000.00.

WHEREFORE, the petitions are DENIED. The Decision dated March 16, 2004 as modified by
the Resolution dated July 22, 2004 of the Court of Appeals in CA-G.R. CV No. 69113 are
hereby AFFIRMEDwith MODIFICATION in that the awards of moral and exemplary damages
are hereby reduced to P300,000.00 and P200,000.00, respectively.

With costs against the petitioner in G.R. No. 164703.

SO ORDERED.
 SECOND DIVISION

G.R. No. 180764 : January 19, 2010

TITUS B. VILLANUEVA, Petitioner, v. EMMA M. ROSQUETA, Respondent.

DECISION

ABAD, J.:

This case is about the right to recover damages for alleged abuse of right committed by a
superior public officer in preventing a subordinate from doing her assigned task and being
officially recognized for it.

The Facts and the Case

Respondent Emma M. Rosqueta (Rosqueta), formerly Deputy Commissioner of the Revenue

Collection and Monitoring Group of the Bureau of Customs (the Bureau), tendered her courtesy
resignation from that post on January 23, 2001, shortly after President Gloria Macapagal-Arroyo
assumed office. But five months later on June 5, 2001, she withdrew her resignation, claiming
that she enjoyed security of tenure and that she had resigned against her will on orders of her
superior.1cralaw

Meantime, on July 13, 2001 President Arroyo appointed Gil Valera (Valera) to respondent
Rosquetas position. Challenging such appointment, Rosqueta filed a petition for prohibition, quo
warranto, and injunction against petitioner Titus B. Villanueva (Villanueva), then Commissioner
of Customs, the Secretary of Finance, and Valera with the Regional Trial Court2cralaw (RTC) of
Manila in Civil Case 01-101539. On August 27, 2001 the RTC issued a temporary restraining
order (TRO), enjoining Villanueva and the Finance Secretary3cralaw from implementing Valeras
appointment. On August 28, 2001 the trial court superseded the TRO with a writ of preliminary
injunction.4cralaw

Petitioner Villanueva, Valera, and the Secretary of Finance challenged the injunction order
before the Court of Appeals (CA) in CA-G.R. SP 66070. On September 14, 2001 the CA issued
its own TRO, enjoining the implementation of the RTCs injunction order. But the TRO lapsed
after 60 days and the CA eventually dismissed the petition before it.

On November 22, 2001 while the preliminary injunction in the quo warranto case was again in
force, petitioner Villanueva issued Customs Memorandum Order 40-2001, authorizing Valera to
exercise the powers and functions of the Deputy Commissioner.

During the Bureaus celebration of its centennial anniversary in February 2002, its special
Panorama magazine edition featured all the customs deputy commissioners, except respondent
Rosqueta. The souvenir program, authorized by the Bureaus Steering Committee headed by
petitioner Villanueva to be issued on the occasion, had a space where Rosquetas picture was
supposed to be but it instead stated that her position was "under litigation." Meanwhile, the
commemorative billboard displayed at the Bureaus main gate included Valeras picture but not
Rosquetas.

On February 28, 2002 respondent Rosqueta filed a complaint5cralaw for damages before the
RTC of Quezon City against petitioner Villanueva in Civil Case Q-02-46256, alleging that the
latter maliciously excluded her from the centennial anniversary memorabilia. Further, she
claimed that he prevented her from performing her duties as Deputy Commissioner, withheld
her salaries, and refused to act on her leave applications. Thus, she asked the RTC to award
her P1,000,000.00 in moral damages, P500,000.00 in exemplary damages, and P300,000.00 in
attorneys fees and costs of suit.

But the RTC dismissed6cralaw respondent Rosquetas complaint, stating that petitioner
Villanueva committed no wrong and incurred no omission that entitled her to damages. The
RTC found that Villanueva had validly and legally replaced her as Deputy Commissioner seven
months before the Bureaus centennial anniversary.

But the CA reversed the RTCs decision,7cralaw holding instead that petitioner Villanuevas
refusal to comply with the preliminary injunction order issued in the quo warranto case earned
for Rosqueta the right to recover moral damages from him.8cralaw Citing the abuse of right
principle, the RTC said that Villanueva acted maliciously when he prevented Rosqueta from
performing her duties, deprived her of salaries and leaves, and denied her official recognition as
Deputy Commissioner by excluding her from the centennial anniversary memorabilia. Thus, the
appellate court ordered Villanueva to pay P500,000.00 in moral damages, P200,000.00 in
exemplary damages and P100,000.00 in attorneys fees and litigation expenses. With the denial
of his motion for reconsideration, Villanueva filed this petition for review on certiorari under Rule
45.

The Issue Presented

The key issue presented in this case is whether or not the CA erred in holding petitioner
Villanueva liable in damages to respondent Rosqueta for ignoring the preliminary injunction
order that the RTC issued in the quo warranto case (Civil Case 01-101539), thus denying her of
the right to do her job as Deputy Commissioner of the Bureau and to be officially recognized as
such public officer.

The Courts Ruling

Under the abuse of right principle found in Article 19 of the Civil Code,9cralaw a person must, in
the exercise of his legal right or duty, act in good faith. He would be liable if he instead acts in
bad faith, with intent to prejudice another. Complementing this principle are Articles
2010cralaw and 2111cralaw of the Civil Code which grant the latter indemnity for the injury he
suffers because of such abuse of right or duty.12cräläwvirtualibräry

Petitioner Villanueva claims that he merely acted on advice of the Office of the Solicitor General
(OSG) when he allowed Valera to assume the office as Deputy Commissioner since respondent
Rosqueta held the position merely in a temporary capacity and since she lacked the Career
Executive Service eligibility required for the job.
But petitioner Villanueva cannot seek shelter in the alleged advice that the OSG gave him.
Surely, a government official of his rank must know that a preliminary injunction order issued by
a court of law had to be obeyed, especially since the question of Valeras right to replace
respondent Rosqueta had not yet been properly resolved.

That petitioner Villanueva ignored the injunction shows bad faith and intent to spite Rosqueta
who remained in the eyes of the law the Deputy Commissioner. His exclusion of her from the
centennial anniversary memorabilia was not an honest mistake by any reckoning. Indeed, he
withheld her salary and prevented her from assuming the duties of the position. As the Court
said in Amonoy v. Spouses Gutierrez,13cralaw a partys refusal to abide by a court order
enjoining him from doing an act, otherwise lawful, constitutes an abuse and an unlawful
exercise of right.

That respondent Rosqueta was later appointed Deputy Commissioner for another division of the
Bureau is immaterial. While such appointment, when accepted, rendered the quo warranto case
moot and academic, it did not have the effect of wiping out the injuries she suffered on account
of petitioner Villanuevas treatment of her. The damage suit is an independent action.

The CA correctly awarded moral damages to respondent Rosqueta. Such damages may be
awarded when the defendants transgression is the immediate cause of the plaintiffs
anguish14cralaw in the cases specified in Article 221915cralaw of the Civil
Code.16cräläwvirtualibräry

Here, respondent Rosquetas colleagues and friends testified that she suffered severe anxiety
on account of the speculation over her employment status.17cralawShe had to endure being
referred to as a "squatter" in her workplace. She had to face inquiries from family and friends
about her exclusion from the Bureaus centennial anniversary memorabilia. She did not have to
endure all these affronts and the angst and depression they produced had Villanueva abided in
good faith by the courts order in her favor. Clearly, she is entitled to moral damages.

The Court, however, finds the award of P500,000.00 excessive. As it held in Philippine
Commercial International Bank v. Alejandro,18cralaw moral damages are not a bonanza. They
are given to ease the defendants grief and suffering. Moral damages should reasonably
approximate the extent of hurt caused and the gravity of the wrong done. Here, that would
be P200,000.00.

The Court affirms the grant of exemplary damages by way of example or correction for the
public good but, in line with the same reasoning, reduces it to P50,000.00. Finally, the Court
affirms the award of attorneys fees and litigation expenses but reduces it to P50,000.00.

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

SO ORDERED.

14
cralaw Art. 2217, Civil Code. Moral damages include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury. Though incapable of pecuniary computation, moral damages may be recovered if
they are the proximate result of the defendants wrongful act for omission.

15
cralaw Art. 2219. Moral damages may be recovered in the following and analogous cases:

1) A criminal offense resulting in physical injuries;

2) Quasi-delicts causing physical injuries;

3) Seduction, abduction, rape, or other lascivious acts;

4) Adultery or concubinage;

5) Illegal or arbitrary detention or arrest;

6) Illegal search;

7) Libel, slander or any other form of defamation;

8) Malicious prosecution;

9) Acts mentioned in Article 309;

10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this
Article, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the action
mentioned in No. 9 of this Article, in the order named.
 THIRD DIVISION

G.R. No. 161921, July 17, 2013

JOYCE V. ARDIENTE, Petitioner, v. SPOUSES JAVIER AND MA. THERESA PASTORFIDE,

CAGAYAN DE ORO WATER DISTRICT AND GASPAR GONZALEZ,* JR., Respondents.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to reverse and set aside the Decision1 and Resolution2 of the Court of Appeals (CA),
dated August 28, 2003 and December 17, 2003, respectively, in CA-G.R. CV No. 73000. The
CA Decision affirmed with modification the August 15, 2001 Decision3 of the Regional Trial
Court (RTC) of Cagayan de Oro City, Branch 24, while the CA Resolution denied petitioner's
Motion for Reconsideration.

The facts, as summarized by the CA, are as follows:cralavvonlinelawlibrary

[Herein petitioner] Joyce V. Ardiente and her husband Dr. Roberto S. Ardiente are owners of a
housing unit at Emily Homes, Balulang, Cagayan de Oro City with a lot area of one hundred
fifty-three (153) square meters and covered by Transfer Certificate of Title No. 69905.

On June 2, 1994, Joyce Ardiente entered into a Memorandum of Agreement (Exh. �B�, pp.
470-473, Records) selling, transferring and conveying in favor of [respondent] Ma. Theresa
Pastorfide all their rights and interests in the housing unit at Emily Homes in consideration of
P70,000.00. The Memorandum of Agreement carries a stipulation:cralavvonlinelawlibrary

�4. That the water and power bill of the subject property shall be for the account of the Second
Party (Ma. Theresa Pastorfide) effective June 1, 1994.� (Records, p. 47)

vis-a-vis Ma. Theresa Pastorfide's assumption of the payment of the mortgage loan secured by
Joyce Ardiente from the National Home Mortgage (Records, Exh. �A�, pp. 468-469)

For four (4) years, Ma. Theresa's use of the water connection in the name of Joyce Ardiente
was never questioned nor perturbed (T.S.N., October 31, 2000, pp. 7-8) until on March 12,
1999, without notice, the water connection of Ma. Theresa was cut off. Proceeding to the office
of the Cagayan de Oro Water District (COWD) to complain, a certain Mrs. Madjos told Ma.
Theresa that she was delinquent for three (3) months corresponding to the months of December
1998, January 1999, and February 1999. Ma. Theresa argued that the due date of her payment
was March 18, 1999 yet (T.S.N., October 31, 2000, pp. 11-12). Mrs. Madjos later told her that it
was at the instance of Joyce Ardiente that the water line was cut off (T.S.N., February 5, 2001,
p. 31).

On March 15, 1999, Ma. Theresa paid the delinquent bills (T.S.N., October 31, 2000, p. 12). On
the same date, through her lawyer, Ma. Theresa wrote a letter to the COWD to explain who
authorized the cutting of the water line (Records, p. 160).

On March 18, 1999, COWD, through the general manager, [respondent] Gaspar Gonzalez, Jr.,
answered the letter dated March 15, 1999 and reiterated that it was at the instance of Joyce
Ardiente that the water line was cut off (Records, p. 161).

Aggrieved, on April 14, 1999, Ma. Theresa Pastorfide [and her husband] filed [a] complaint for
damages [against petitioner, COWD and its manager Gaspar Gonzalez] (Records, pp. 2-6).

In the meantime, Ma. Theresa Pastorfide's water line was only restored and reconnected when
the [trial] court issued a writ of preliminary mandatory injunction on December 14, 1999
(Records, p. 237).4

After trial, the RTC rendered judgment holding as follows:cralavvonlinelawlibrary

xxxx

In the exercise of their rights and performance of their duties, defendants did not act with justice,
gave plaintiffs their due and observe honesty and good faith. Before disconnecting the water
supply, defendants COWD and Engr. Gaspar Gonzales did not even send a disconnection
notice to plaintiffs as testified to by Engr. Bienvenido Batar, in-charge of the Commercial
Department of defendant COWD. There was one though, but only three (3) days after the actual
disconnection on March 12, 1999. The due date for payment was yet on March 15. Clearly, they
did not act with justice. Neither did they observe honesty.

They should not have been swayed by the prodding of Joyce V. Ardiente. They should have
investigated first as to the present ownership of the house. For doing the act because Ardiente
told them, they were negligent. Defendant Joyce Ardiente should have requested before the
cutting off of the water supply, plaintiffs to pay. While she attempted to tell plaintiffs but she did
not have the patience of seeing them. She knew that it was plaintiffs who had been using the
water four (4) years ago and not hers. She should have been very careful. x x x5

The dispositive portion of the trial court's Decision reads, thus:cralavvonlinelawlibrary

WHEREFORE, premises considered, judgment is hereby rendered ordering defendants

[Ardiente, COWD and Gonzalez] to pay jointly and severally plaintiffs, the following
sums:cralavvonlinelawlibrary

(a) P200,000.00 for moral damages;chanroblesvirtualawlibrary

(b) 200,000.00 for exemplary damages; and
(c) 50,000.00 for attorney's fee.
The cross-claim of Cagayan de Oro Water District and Engr. Gaspar Gonzales is hereby
dismissed. The Court is not swayed that the cutting off of the water supply of plaintiffs was
because they were influenced by defendant Joyce Ardiente. They were negligent too for which
they should be liable.
SO ORDERED.6

Petitioner, COWD and Gonzalez filed an appeal with the CA.

On August 28, 2003, the CA promulgated its assailed Decision disposing as

follows:cralavvonlinelawlibrary

IN VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED, with

the modification that the awarded damages is reduced to P100,000.00 each for moral and
exemplary damages, while attorney's fees is lowered to P25,000.00. Costs against appellants.

SO ORDERED.7

The CA ruled, with respect to petitioner, that she has a �legal duty to honor the possession and
use of water line by Ma. Theresa Pastorfide pursuant to their Memorandum of Agreement� and
�that when [petitioner] applied for its disconnection, she acted in bad faith causing prejudice
and [injury to] Ma. Theresa Pastorfide.�8

As to COWD and Gonzalez, the CA held that they �failed to give a notice of disconnection and
derelicted in reconnecting the water line despite payment of the unpaid bills by the [respondent
spouses Pastorfide].�9

Petitioner, COWD and Gonzalez filed their respective Motions for Reconsideration, but these
were denied by the CA in its Resolution dated December 17, 2003.

COWD and Gonzalez filed a petition for review on certiorari with this Court, which was docketed
as G.R. No. 161802. However, based on technical grounds and on the finding that the CA did
not commit any reversible error in its assailed Decision, the petition was denied via a
Resolution10 issued by this Court on March 24, 2004. COWD and Gonzalez filed a motion for
reconsideration, but the same was denied with finality through this Court's Resolution11 dated
June 28, 2004.

Petitioner, on the other hand, timely filed the instant petition with the following Assignment of
Errors:cralavvonlinelawlibrary

7.1 HONORABLE COURT OF APPEALS (ALTHOUGH IT HAS REDUCED THE LIABILITY

INTO HALF) HAS STILL COMMITTED GRAVE AND SERIOUS ERROR WHEN IT
UPHELD THE JOINT AND SOLIDARY LIABILITY OF PETITIONER JOYCE V. ARDIENTE
WITH CAGAYAN DE ORO WATER DISTRICT (COWD) AND ENGR. GASPAR D. GONZALES
FOR THE LATTER'S FAILURE TO SERVE NOTICE UPON RESPONDENTS SPOUSES
PASTORFIDE PRIOR TO THE ACTUAL DISCONNECTION DESPITE EVIDENCE ADDUCED
DURING TRIAL THAT EVEN WITHOUT PETITIONER'S REQUEST, COWD WAS ALREADY
SET TO EFFECT DISCONNECTION OF RESPONDENTS' WATER SUPPLY DUE TO NON-
PAYMENT OF ACCOUNT FOR THREE (3) MONTHS.

7.2 THE HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS ERROR
WHEN IT RULED TOTALLY AGAINST PETITIONER AND FAILED TO FIND THAT
RESPONDENTS ARE GUILTY OF CONTRIBUTORY NEGLIGENCE WHEN THEY FAILED TO
PAY THEIR WATER BILLS FOR THREE MONTHS AND TO MOVE FOR THE TRANSFER OF
THE COWD ACCOUNT IN THEIR NAME, WHICH WAS A VIOLATION OF THEIR
MEMORANDUM OF AGREEMENT WITH PETITIONER JOYCE V. ARDIENTE.
RESPONDENTS LIKEWISE DELIBERATELY FAILED TO EXERCISE DILIGENCE OF A
GOOD FATHER OF THE FAMILY TO MINIMIZE THE DAMAGE UNDER ART. 2203 OF THE
NEW CIVIL CODE.

7.3 THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DISREGARDED

THE FACT THAT RESPONDENT SPOUSES PASTORFIDE ARE LIKEWISE BOUND TO
OBSERVE ARTICLE 19 OF THE NEW CIVIL CODE, i.e., IN THE EXERCISE OF THEIR
RIGHTS AND IN THE PERFORMANCE OF THEIR DUTIES TO ACT WITH JUSTICE, GIVE
EVERYONE HIS DUE AND OBSERVE HONESTY AND GOOD FAITH.

7.4 THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT GRANTED AN

AWARD OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES AS AGAINST
PETITIONER ARDIENTE.12

At the outset, the Court noticed that COWD and Gonzalez, who were petitioner's co-defendants
before the RTC and her co-appellants in the CA, were impleaded as respondents in the instant
petition. This cannot be done. Being her co-parties before the RTC and the CA, petitioner
cannot, in the instant petition for review on certiorari, make COWD and Gonzalez, adversary
parties. It is a grave mistake on the part of petitioner's counsel to treat COWD and Gonzalez as
respondents. There is no basis to do so, considering that, in the first place, there is no showing
that petitioner filed a cross-claim against COWD and Gonzalez. Under Section 2, Rule 9 of the
Rules of Court, a cross-claim which is not set up shall be barred. Thus, for failing to set up a
cross-claim against COWD and Gonzalez before the RTC, petitioner is already barred from
doing so in the present petition.

More importantly, as shown above, COWD and Gonzalez's petition for review on certiorari filed
with this Court was already denied with finality on June 28, 2004, making the presently assailed
CA Decision final and executory insofar as COWD and Gonzalez are concerned. Thus, COWD
and Gonzalez are already precluded from participating in the present petition. They cannot
resurrect their lost cause by filing pleadings this time as respondents but, nonetheless,
reiterating the same prayer in their previous pleadings filed with the RTC and the CA.

As to the merits of the instant petition, the Court likewise noticed that the main issues raised by
petitioner are factual and it is settled that the resolution of factual issues is the function of lower
courts, whose findings on these matters are received with respect and considered binding by
the Supreme Court subject only to certain exceptions, none of which is present in this instant
petition.13 This is especially true when the findings of the RTC have been affirmed by the CA as
in this case.14

In any case, a perusal of the records at hand would readily show that the instant petition lacks
merit.

Petitioner insists that she should not be held liable for the disconnection of respondent spouses'
water supply, because she had no participation in the actual disconnection. However, she
admitted in the present petition that it was she who requested COWD to disconnect the
Spouses Pastorfide's water supply. This was confirmed by COWD and Gonzalez in their cross-
claim against petitioner. While it was COWD which actually discontinued respondent spouses'
water supply, it cannot be denied that it was through the instance of petitioner that the Spouses
Pastorfide's water supply was disconnected in the first place.
It is true that it is within petitioner's right to ask and even require the Spouses Pastorfide to
cause the transfer of the former's account with COWD to the latter's name pursuant to their
Memorandum of Agreement. However, the remedy to enforce such right is not to cause the
disconnection of the respondent spouses' water supply. The exercise of a right must be in
accordance with the purpose for which it was established and must not be excessive or unduly
harsh; there must be no intention to harm another.15 Otherwise, liability for damages to the
injured party will attach.16 In the present case, intention to harm was evident on the part of
petitioner when she requested for the disconnection of respondent spouses� water supply
without warning or informing the latter of such request. Petitioner claims that her request for
disconnection was based on the advise of COWD personnel and that her intention was just to
compel the Spouses Pastorfide to comply with their agreement that petitioner's account with
COWD be transferred in respondent spouses' name. If such was petitioner's only intention, then
she should have advised respondent spouses before or immediately after submitting her
request for disconnection, telling them that her request was simply to force them to comply with
their obligation under their Memorandum of Agreement. But she did not. What made matters
worse is the fact that COWD undertook the disconnection also without prior notice and even
failed to reconnect the Spouses Pastorfide�s water supply despite payment of their arrears.
There was clearly an abuse of right on the part of petitioner, COWD and Gonzalez. They are
guilty of bad faith.

The principle of abuse of rights as enshrined in Article 19 of the Civil Code provides that every
person must, in the exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith.

In this regard, the Court's ruling in Yuchengco v. The Manila Chronicle Publishing
Corporation17 is instructive, to wit:cralavvonlinelawlibrary

xxxx

This provision of law sets standards which must be observed in the exercise of one�s rights as
well as in the performance of its duties, to wit: to act with justice; give everyone his due; and
observe honesty and good faith.

In Globe Mackay Cable and Radio Corporation v. Court of Appeals, it was elucidated that while
Article 19 �lays down a rule of conduct for the government of human relations and for the
maintenance of social order, it does not provide a remedy for its violation. Generally, an action
for damages under either Article 20 or Article 21 would be proper.� The Court
said:cralavvonlinelawlibrary

One of the more notable innovations of the New Civil Code is the codification of "some basic
principles that are to be observed for the rightful relationship between human beings and for the
stability of the social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED
CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the
defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit,
incorporated certain fundamental precepts which were "designed to indicate certain norms that
spring from the fountain of good conscience" and which were also meant to serve as "guides for
human conduct [that] should run as golden threads through society, to the end that law may
approach its supreme ideal, which is the sway and dominance of justice." (Id.) Foremost among
these principles is that pronounced in Article 19 x x x.

xxxx
This article, known to contain what is commonly referred to as the principle of abuse of rights,
sets certain standards which must be observed not only in the exercise of one's rights, but also
in the performance of one's duties. These standards are the following: to act with justice; to give
everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a
primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in
Article 19 must be observed. A right, though by itself legal because recognized or granted
by law as such, may nevertheless become the source of some illegality. When a right is
exercised in a manner which does not conform with the norms enshrined in Article 19
and results in damage to another, a legal wrong is thereby committed for which the
wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the
government of human relations and for the maintenance of social order, it does not provide a
remedy for its violation. Generally, an action for damages under either Article 20 or Article 21
would be proper.
Corollarilly, Article 20 provides that �every person who, contrary to law, willfully or negligently
causes damage to another shall indemnify the latter for the same.� It speaks of the general
sanctions of all other provisions of law which do not especially provide for its own sanction.
When a right is exercised in a manner which does not conform to the standards set forth in the
said provision and results in damage to another, a legal wrong is thereby committed for which
the wrongdoer must be responsible. Thus, if the provision does not provide a remedy for its
violation, an action for damages under either Article 20 or Article 21 of the Civil Code would be
proper.

The question of whether or not the principle of abuse of rights has been violated resulting in
damages under Article 20 or other applicable provision of law, depends on the circumstances of
each case. x x x18

To recapitulate, petitioner's acts which violated the abovementioned provisions of law is her
unjustifiable act of having the respondent spouses' water supply disconnected, coupled with her
failure to warn or at least notify respondent spouses of such intention. On the part of COWD and
Gonzalez, it is their failure to give prior notice of the impending disconnection and their
subsequent neglect to reconnect respondent spouses' water supply despite the latter's
settlement of their delinquent account.

On the basis of the foregoing, the Court finds no cogent reason to depart from the ruling of both
the RTC and the CA that petitioner, COWD and Gonzalez are solidarily liable.

The Spouses Pastorfide are entitled to moral damages based on the provisions of Article
2219,19 in connection with Articles 2020 and 2121 of the Civil Code.

As for exemplary damages, Article 2229 provides that exemplary damages may be imposed by
way of example or correction for the public good. Nonetheless, exemplary damages are
imposed not to enrich one party or impoverish another, but to serve as a deterrent against or as
a negative incentive to curb socially deleterious actions.22 In the instant case, the Court agrees
with the CA in sustaining the award of exemplary damages, although it reduced the amount
granted, considering that respondent spouses were deprived of their water supply for more than
nine (9) months, and such deprivation would have continued were it not for the relief granted by
the RTC.

With respect to the award of attorney's fees, Article 2208 of the Civil Code provides, among
others, that such fees may be recovered when exemplary damages are awarded, when the
defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest, and where the defendant acted in gross and evident bad faith
in refusing to satisfy the plaintiffs� plainly valid, just and demandable claim.

WHEREFORE, instant petition for review on certiorari is DENIED. The Decision and Resolution
of the Court of Appeals, dated August 28, 2003 and December 17, 2003, respectively, in CA-
G.R. CV No. 73000 are AFFIRMED.

SO ORDERED.
 SECOND DIVISION

G.R. No. 199601, November 23, 2015

PHILIPPINE COMMERCIAL INTERNATIONAL BANK (NOW BDO UNIBANK,

INC., Petitioner, v.JOSEPHINE D. GOMEZ, Respondent.

DECISION

BRION, J.:

We resolve the petition for review on certiorari under Rule 45 of the Rules of Court1 filed by
Philippine Commercial International Bank (PCIB) assailing the May 23, 2011 decision2 and the
December 7, 2011 resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 68288. The CA
affirmed the May 25, 1999 decision of the Regional Trial Court of Makati City, Branch 145
(RTC) in toto.

FACTUAL ANTECEDENTS

Josephine D. Gomez (Josephine) was a teller at the Domestic Airport Branch of the PCIB when
a certain Colin R. Harrington opened Savings Account No. 373-28010-6 with said branch in
January 1985.

The following day, Harrington presented two (2) genuine bank drafts dated January 3, 1985,
issued by the Bank of New Zealand. The first draft was in the sum of US$724.57 payable to
"C.R. Harrington," while the second draft was in the sum of US$2,004.76 payable to "Servants
C/C.R. Harrington."

The PCIB, on the other hand, alleged that it was a certain Sophia La'O, as a representative of
Harrington, who presented the bank drafts for deposit.

Upon receipt of the bank drafts, Josephine asked her immediate supervisor, Eleanor Flores,
whether the drafts payable to "Servants C/C.R. Harrington" were acceptable for deposit to the
savings account of Harrington. When Flores answered in the affirmative, and after receiving
from the bank's foreign exchange supervision a Philippine Currency conversion of the amounts
reflected in the drafts, Josephine received the deposit slip. Thereafter, the deposits were duly
entered in Harrington's savings account.

On two (2) separate dates, a certain individual representing himself as Harrington withdrew the
sums of P45,000.00 and P5,600.00. Subsequently, the bank discovered that the person who
made the withdrawals was an impostor. Thus, the bank had to pay Harrington P50,600.00
representing the amounts of the bank drafts in his name.

The PCIB issued a memorandum asking Josephine to explain why no disciplinary action should
be taken against her for having accepted the bank drafts for deposits. Josephine reasoned that
being a new teller she was not yet fully oriented with the various aspects of the job. She further
alleged that she had asked the approval of her immediate supervisor prior to receiving the
deposits.

On November 14, 1985, the PCIB deducted the amount of P-423.38 from Josephine's salary.
Josephine wrote the PCIB to ask why the deduction was made.

After due investigation on the matter, the PCIB issued another memorandum finding Josephine
grossly negligent and liable for performing acts in violation of established operating procedures.
The memorandum required Josephine to pay the amount of P-50,600.00 through deductions in
her salary, allowance, bonuses, and profit sharing until the amount is fully paid.

Josephine wrote the PCIB to ask for the basis of its findings that she was grossly negligent and
liable to pay the amount of P50,600.00. During trial, the RTC found that the PCIB did not even
respond to this letter. PCIB, however, alleged that it had replied to Josephine's letter, and
explained that she was afforded due process and the deductions made prior to January 15,
1986, were merely a withholding pending the investigation.

The PCIB also admitted that as early as January 15, 1986, it had started to deduct the amount
of P 200.00 from Josephine's salary as well as 50% of her bonuses and profit sharing.

On February 10, 1986, Josephine filed a complaint for damages with prayer for preliminary
injunction before the RTC of Makati City. She claimed that the PCIB had abused its right by
gradually deducting from her salary the amount the bank had to pay Harrington.

The PCIB filed its answer with counterclaims and a separate complaint with the RTC of Makati
City, which was raffled to Branch 149.

In its May 25, 1999 decision, the RTC rendered judgment in favor of Josephine and ordered the
PCIB to pay her actual damages in the amount of P5,006.00 plus 12% interest from filing of the
complaint; moral damages in the amount of PI 50,000.00; and attorney's fees in the amount of
P-50,000.00.

The RTC considered the PCIB's manner of deducting from the salary and allowance of
Josephine as having been rendered in bad faith and contrary to morals, good custom, and
public policy. This was borne out by the fact that the PCIB had already deducted from her salary
before Josephine received the memorandum finding her liable for the P50,600.00. In addition,
while there were other individuals involved in this incident, it appeared that it was only
Josephine who was made solely responsible.

On appeal, the PCIB argued that the RTC had no jurisdiction over the case because it was a
labor dispute, which the labor tribunals are more competent to resolve. It also maintained that
there was no factual or legal basis for the RTC to make it liable for damages and to pay
Josephine.

In its May 23, 2011 decision, the CA affirmed the May 25, 1999 RTC decision. It held that the
PCIB was estopped from questioning the jurisdiction of the RTC because it had filed an answer
with counterclaims and even initiated a separate case before a different branch of the RTC. It
upheld the RTC's findings and conclusion in awarding damages and attorney's fees to
Josephine because there was no reason to disturb them.
The CA, subsequently, denied the PCIB's motion for reconsideration on December 7, 2011;
hence, the PCIB filed the present petition.

First, the PCIB contends that the CA gravely erred in ruling that its actions were in total and
wanton disregard of Articles 19 and 21 of the Civil Code because the courts a quo summarily
imputed bad faith on how it had treated Josephine.

Second, the PCIB maintains that the CA gravely erred in awarding moral damages and
attorney's fees to Josephine absent any basis for it while averring that bad faith cannot be
presumed and that Josephine had failed to prove it with clear and convincing evidence.

OUR RULING

We DENY the present petition for lack of merit.

The civil courts have jurisdiction

over a case when the cause of action
does not have a reasonable causal
connection from the employer-employee
relationship.

Although the PCIB opted not to raise the issue before this Court, we find it prudent and
imperative to justify why the RTC had jurisdiction to take cognizance of Josephine's complaint
despite the fact that her cause of action arose because her employer arbitrarily deducted from
her salary - an act expressly prohibited by our labor laws.4

Article 224 [217] of the Labor Code provides that the Labor Arbiters have original and exclusive
jurisdiction to hear and decide claims for actual, moral, exemplary, and other forms of damages
arising from employer-employee relations. The legislative intent appears clear to allow Labor
Arbiters to award to an employee not only the reliefs provided by our labor laws, but also moral
and other forms of damages governed by the Civil Code. Specifically, we have mentioned, in
fact, that a complaint for damages under Articles 19, 20, and 21 of the Civil Code would not
suffice to keep the case without the jurisdictional boundaries of our labor courts -especially
when the claim for damages is interwoven with a labor dispute.5

Nevertheless, when the cause of action has no reasonable connection with any of the claims
provided for in Article 224 of the Labor Code, jurisdiction over the action is with the regular
courts. 6 Here, since Josephine's cause of action is based on a quasi-delict or tort under Article
19 in relation to Article 21 of the Civil Code, the civil courts (not the labor tribunals) have
jurisdiction over the subject matter of this case.

To be sure, the case of Singapore Airlines Ltd. v. Ernani Cruz Pa�o is

enlightening:chanRoblesvirtualLawlibrary

Upon the facts and issues involved, jurisdiction over the present controversy must be held to
belong to the civil courts. While seemingly petitioner's claim for damages arises from employer-
employee relations, and the latest amendment to Article 217 of the Labor Code under PD No.
1691 and BP Big. 130 provides that all other claims arising from employer-employee
relationship are cognizable by Labor Arbiters, in essence, petitioner's claim for damages is
grounded on the "wanton failure and refusal" without just cause of private respondent Cruz to
report for duty despite repeated notices served upon him of the disapproval of his application for
leave of absence without pay. This, coupled with the further averment that Cruz "maliciously and
with bad faith" violated the terms and conditions of the conversion training course agreement to
the damage of petitioner removes the present controversy from the coverage of the Labor Code
and brings it within the purview of Civil Law.

Clearly, the complaint was anchored not on the abandonment per se by private respondent
Cruz of his job as the latter was not required in the Complaint to report back to work but
on the manner and consequent effects of such abandonment of work translated in terms
of the damages which petitioner had to suffer.7 [emphasis and underscoring
supplied]cralawlawlibrary

In the present case, Josephine filed a civil complaint for damages against the PCIB based on
how her employer quickly concluded that she was negligent and hence arbitrarily started to
deduct from her salary. Clearly, without having to dwell on the merits of the case, Josephine
opted to invoke the jurisdiction of our civil courts because her right to fair treatment was
violated.

The discussion in Quisaba v. Sta. Ines-Melale Veneer & Plywood, Inc. is just as relevant as it is
illuminating on the present case, to wit:chanRoblesvirtualLawlibrary

Although the acts complained of seemingly appear to constitute "matters involving employee-
employer relations" as Quisaba's dismissal was the severance of a preexisting employee-
employer relation, his complaint is grounded not on his dismissal per se as in fact he does not
ask for reinstatement or backwages, but on the manner of his dismissal and the consequent
effects of such dismissal.

xxx

The "right" of the respondents to dismiss Quisaba should not be confused with the mannerin
which the right was exercised and the effects flowing therefrom. If the dismissal was done anti-
socially or oppressively, as the complaint alleges, then the respondents violated article 1701 of
the Civil Code which prohibits acts of oppression by either capital or labor against the other, and
article 21, which makes a person liable for damages if he willfully causes loss or injury to
another in a manner that is contrary to morals, good customs or public policy, the sanction for
which, by way of moral damages, is provided in article 2219, no. 10. (Cf. Phil. Refining Co. v.
Garcia, L-21962, Sept. 27, 1966, 18 SCRA 107).8cralawlawlibrary

From the foregoing, the case at bar is intrinsically concerned with a civil dispute because it has
something to do with Josephine's right under Article 19 of the Civil Code, and does not involve
an existing employer-employee relation within the meaning of Article 224 of the Labor Code.
Josephine's complaint was, therefore, properly filed with and exclusively cognizable by the RTC.

Questions on whether there was a

preponderance of evidence to justify the
award of damages or whether there was
a causal connection between the given
set of facts and the damage suffered by
the private complainant are questions of fact.

The Court's jurisdiction under a Rule 45 review is limited to reviewing perceived errors of law,
which the lower courts may have committed. The resolution of factual issues is the function of
the lower courts whose findings, when aptly supported by evidence, bind this Court. This is
especially true when the CA affirms the RTC's findings. While this Court, under established
exceptional circumstances, had deviated from the above rule, we do not find this case to be
under any of the exceptions.

Essentially, what the PCIB seeks is a relief from the Court on the issue of the propriety of the
award of damages. On this point alone, the petition must fail, as a Rule 45 petition bars us from
the consideration of factual issues, especially when both the RTC and the CA were consistent
with their rulings.

Nevertheless, we still affirm the assailed CA rulings even if we were to disregard these
established doctrinal rules.

Article 19 of the Civil Code provides that every person in the exercise of his rights and in the
performance of his duties must act with justice, give everyone his due, and observe honesty and
good faith. The principle embodied in this provision is more commonly known as the "abuse of
right principle." The legal sanctions for violations of this fundamental principle are found in
Articles 209 and 2110 of the Civil Code. We explained how these two provisions correlate with
each other in GF Equity, Inc. v. Valenzona:chanRoblesvirtualLawlibrary

[Article 19], known to contain what is commonly referred to as the principle of abuse of rights,
sets certain standards which must be observed not only in the exercise of one's rights but also
in the performance of one's duties. These standards are the following: to act with justice; to give
everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a
primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in
Article 19 must be observed. A right, though by itself legal because recognized or granted
by law as such, may nevertheless become the source of some illegality. When a right is
exercised in a manner which does not conform with the norms enshrined in Article 19
and results in damage to another, a legal wrong is thereby committed for which the
wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the
government of human' relations and for the maintenance of social order, it does not provide a
remedy for its violation. Generally, an action for damages under either Article 20 or Article 21
would be proper.11 [Emphasis supplied]cralawlawlibrary

Both the RTC and the CA found the acts of the PCIB were in clear violation of Article 19 of the
Civil Code and held the PCIB liable for damages. While the PCIB has a right to penalize
employees for acts of negligence, the right must not be exercised unjustly and illegally. In the
instant case, the PCIB made deductions on Josephine's salary even if the investigation was still
pending. Belatedly, the PCIB issued a memorandum finding Josephine grossly negligent and
requiring her to pay the amount which the bank erroneously paid to Harrington's impostor.
When Josephine asked for legal and factual basis for the finding of negligence, the PCIB
refused to give any. Moreover, the PCIB continued to make deductions on Josephine's salary,
allowances, and bonuses.

The trial court and the CA also noted that while Josephine was penalized, other employees of
the bank involved in the subject transactions were not. It was Josephine who was made solely
responsible for the loss without giving any basis therefor. It was emphasized that the subject
deposit could not have been received by the bank and entered in Harrington's savings account
without the participation of the other bank employees. The PCIB could have exercised prudence
before taking oppressive actions against Josephine.
All told, we find nothing in the record which would warrant the reversal of the position held by
the RTC and the CA. Based on the above discussion, we find the award of moral damages and
attorney's fees in Josephine's favor proper.

WHEREFORE, the petition for review on certiorari is DENIED and consequently, the May 23,
2011 decision and the December 7, 2011 resolution of the Court of Appeals in CA-G.R. CV No.
68288 are AFFIRMED in toto.

SO ORDERED.chanroblesvirtuallawlibrary
 FIRST DIVISION

G.R. No. 171303, January 20, 2016

ELIZABETH L. DIAZ, Petitioner, v. GEORGINA R. ENCANTO, ERNESTO G. TABUJARA,

GEMINO H. ABAD AND UNIVERSITY OF THE PHILIPPINES, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Court, as
amended, which seeks to reverse and set aside the April 28, 2005 Decision1 and January 20,
2006 Resolution2 of the Court of Appeals in CA-G.R. CV No. 55165,3 which reversed the April
17, 1996 Decision4 and September 17, 1996 Order5 of the Regional Trial Court (RTC), Branch
71, Pasig City, in Civil Case No. 58397.

The undisputed facts as narrated by the Court of Appeals are as follows:

Plaintiff-appellant [Elizabeth L. Diaz] has been in the service of [the University of the Philippines]
U.P. since 1963. In 1987, she was an associate professor in the College of Mass
Communication (CMC). During the second semester for Academic Year (AY) 1987-1988, she
was a full time member of the faculty and taught 12 units on full load. After 2 to 3 weeks of
teaching, she applied for sick leave effective November 23, 1987 until March 1, 1988. She
returned on March 2, 1988 and submitted a Report for Duty Form.

On May 3, 1988, Diaz filed a letter-application directly with U.P.'s Office of the President
(Abueva) for sabbatical leave with pay for one (1) year effective June 1988 to May 1989, for
"rest, renewal and study." Cecilia Lazaro, Chair of the Broadcast Department, initially
recommended to CMC Dean Encanto that Diaz's sabbatical application be granted. After they
discussed the options available to the CMC, Lazaro, on May 10, 1988, recommended instead
that Diaz be granted any leave of absence she may be qualified for. In her May 2, 1988 letter,
Diaz indicated her unwillingness to teach. Considering the CMC's experience with Diaz who
dropped her courses in the previous semester, Lazaro deleted Diaz's name in the final schedule
of classes for the 1st semester of AY 1988-89 beginning June 6, 1988. Incidentally, Diaz
received her salary for June 1988, indicating that her sabbatical might be approved.

Thereafter, Encanto referred Diaz's sabbatical application to the Secretary of U.P.,

recommending its denial. When requested by (Chancellor) Tabujara, Encanto transmitted to the
former a Reference Slip together with her comments thereon. Meanwhile, Encanto requested
Ermelina Kalagayan to hold Diaz's salary effective July 1, 1988 until further notice considering
that her sabbatical application has not yet been approved and that she did not teach that
semester. Consequently, Diaz's name was deleted in the payroll from September 1988 to
January 1989.
On July 4, 1988, Tabujara recommended instead that Diaz be granted a leave without pay in
order to enable the CMC to hire a substitute. The next day, the U.P.'s Secretary referred to
Abad, Vice-President (VP) for Academic Affairs, the fact of denial of such sabbatical request, for
his own comment/recommendation to the U.P. President. Meantime, Diaz confessed her
problems to Abad. On July 8, 1988, Abad returned the Reference Slip indicating therein that
Diaz had promised him earlier "to put down in writing, from her point of view, the historical
backdrop as it were to the latest denial of her sabbatical leave." With comments, Abad then
referred the matter to the U.P. President.

Pursuant to Administrative Order No. 42 issued by the U.P. President, the Academic Policy
Coordinating Committee (APCC), on July 21, 1988, reviewed the case of Diaz. When reminded
by Abad, Diaz again promised to give the background information.

On Diaz's request to teach for that semester, AY 1988-89, the Vice Chancellor for Academic
Affairs, Edgardo Pacheco, and the HRDO Director, Atty. Pio Frago, instructed Encanto that
"Until Prof. Diaz officially reports for duty, accomplishes the Certificate of Report for Duty, and
the Dean of CMC confirms her date of actual report for duty, she is considered absent without
official leave (AWOL) for the University."

On November 8, 1988, Abad, then as OIC, issued a Memorandum to Diaz to confirm as valid
Encanto's reason of shortage of teaching staff in denying her sabbatical. Later, he also informed
Diaz of her lack of service during the first semester of AY 1988-89, hence, she is not entitled to
be paid and asked her to clarify her status of being on leave without pay.

[While Diaz was able to teach during the second semester of AY 1988-89, she was not able to
claim her salaries for her refusal to submit the Report for Duty Form.6 She received her salaries
for June to July 15, 1989, but could no longer claim her salary after July 15, 1989, when
Encanto reminded the University Cashier, in a letter dated July 26, 1989,7 that Diaz had to
"accomplish the Report for Duty Form to entitle her to salaries and make official her return to the
service of the University."8 Diaz's name was subsequently included in the payroll starting July
1990, when she submitted a Report for Duty after her return from compulsory summer
leave.9chanroblesvirtuallawlibrary

xxxx

In the meantime, on January 3, 1989, Diaz filed a complaint with the Office of the Ombudsman
(OMB-00-89-0049), against Gemino H. Abad, Ernesto G. Tabujara and Georgina R. Encanto, all
officials of the University of the Philippines, for the alleged violation of Section 3(e) of R.A. 3019,
involving the legality of a Report for Duty Form as a prerequisite to the payment of her salary.

On May 4, 1989, the Ombudsman dismissed the said complaint and ruled, inter alia:

Considering that Prof. Diaz was rightfully considered on leave without pay during the first
semester of AY 1988-1989, to make official her return to the service of the University, it is
advised that she accomplish the Report for Duty Form which will then be the basis to establish
the date of her actual return to the service. However, if possible, the University authorities can
perhaps dispense with the requirement and pay her salaries for actual services rendered from
November 3, 1988.

Diaz's initial Petition for Certiorari in the Supreme Court (G.R. No. 88834) assailing the above-
quoted Ombudsman's ruling was subsequently dismissed. She filed another Petition (G.R. No.
89207) raising exactly the same issued found in G.R. No. 88834.

Meanwhile, on July 18, 1989, Diaz instituted a complaint against the U.P., Abueva, Encanto,
Tabujara and Abad with the Regional Trial Court, Pasig, Metro Manila praying that the latter be
adjudged, jointly and severally to pay her damages. She claimed, among others, that
[respondents] conspired together as joint tortfeasors, in not paying her salaries from July 1,
1988 in the first semester of academic year 1988-89, for the entire period when her sabbatical
application was left unresolved, as well as the salaries she earned from teaching in the second
semester from November 1988 to May 1989. She likewise claimed moral and exemplary
damages and attorney's fees.

On August 31, 1989, the Supreme Court En Banc dismissed Diaz's Petition in G.R. No.
89207, viz.:

It is noted that the Ombudsman found no manifest partiality, evident bad faith, or gross
inexcusable negligence on the part of the private respondents in denying the application for
sabbatical leave of petitioner (Diaz) and in requiring her to fill up a Report for Duty Form as a
requisite for her entitlement to salary.

To the petitioner's contentions, the Ombudsman observed, among others, the following: that,
the denial of her sabbatical leave application was due to the exigencies of the service; that
petitioner was not given a teaching assignment for the first semester of AY 1988-1989, because
she did not want to teach then; that the delay in action on her leave application was due to
petitioner's own fault for not following the usual procedures in the processing of her application;
and that there is no malice on the part of the private respondents in requiring petitioner to
accomplish the Report for Duty Form which is the basis of the date of her actual return to the
service.10 (Citations omitted.)

In a Decision dated April 17, 1996, the RTC ruled in favor of petitioner Diaz, the dispositive
portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants:

1. Ordering defendants, except Abueva, to pay plaintiff, jointly and severally, the amount of
P133,665.50 representing the total unpaid salaries from July 1, 1988 to May 31, 1989 and from
July 16, 1989 to May 31, 1990 to be covered by corresponding certificate of service, with legal
rate of interest from the date of this Decision until its full payment.

2. Ordering defendants, except the University and Abueva, to pay plaintiff, jointly and severally,
the amount of P300,000.00 as moral damages.

3. Ordering defendants, except the University and Abueva, to pay plaintiff, jointly and severally,
the amount of P60,000.00 as exemplary damages.

4. Ordering defendants, except the University and Abueva, to pay plaintiff, jointly and severally,
the reduced amount of P50,000.00 as and by way of attorney's fees.

5. Costs of suit.
The counterclaims filed by defendant Tabujara are DISMISSED.11chanrobleslaw

The RTC, ruling that a sabbatical leave is not a right but a privilege, held that petitioner Diaz
was entitled to such privilege and found that the delay in the_resolution of her application
was unreasonable and unconscionable.

However, on September 17, 1996, the RTC, in denying the Motions for Reconsideration of the
respondents in said case, also amended its earlier decision by absolving respondent Encanto
from any liability, to wit:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants:

1. Ordering defendants, except Abueva and Encanto, to pay plaintiff, jointly and severally, the
amount of P133,665.50 representing the total unpaid salaries from July 1, 1988 to May 31, 1989
and from July 16, 1989 to May 31, 1990 to be covered by corresponding certificate of service,
with legal rate of interest from the date of this Decision until its full payment.

2. Ordering defendants, except the University, Abueva and Encanto, to pay plaintiff, jointly and
severally, the amount of P300,000.00 as moral damages.

3. Ordering defendants, except the University, Abueva and Encanto, to pay plaintiff, jointly and
severally, the amount of P60,000.00 as exemplary damages.

4. Ordering defendants, except University, Abueva and Encanto, to pay plaintiff, jointly and
severally, the reduced amount of P50,000.00 as and by way of attorney's fees.

5. Costs of suit.

The counterclaims filed by defendant Tabujara are DISMISSED.12chanrobleslaw

The RTC dismissed the claim of petitioner Diaz against respondent Encanto on the ground that
her function was purely recommendatory in nature. It held that she was not instrumental in the
unreasonable and unconscionable delay in the resolution of petitioner Diaz's sabbatical
application as she transmitted her recommendation to Abueva within eighteen days from her
receipt of such application.13chanroblesvirtuallawlibrary

Petitioner Diaz14 and respondents Tabujara,15 U.P., Abad16 and even Encanto17 appealed the
RTC's ruling to the Court of Appeals.

As respondent Encanto was absolved of liability by the RTC in its September 17, 1996 Order,
the Court of Appeals admitted her Brief,18 as an incorporation to the other respondents'
Brief,19 and as a comment on petitioner Diaz's appeal.20chanroblesvirtuallawlibrary

The respondents mainly argued that the RTC erred in holding them liable for damages despite
the absence of bad faith on their part, as held by both the Ombudsman in OMB-00-89-0049 and
the Supreme Court in G.R. No. 89207.

Petitioner Diaz, on the other hand, questioned the reversal of the RTC ruling only with respect
to the liability of respondent Encanto, in a lone assignment of error, viz.:
THE LOWER COURT GRAVELY ERRED IN REVERSING ITS ORIGINAL DECISION WITH
REGARD TO PRINCIPAL DEFENDANT GEORGINA R. ENCANTO BY ABSOLVING HER OF
LIABILITY FOR DAMAGES TO PLAINTIFF-APPELLANT ELIZABETH L. DIAZ WITHOUT
ALTERING IN ANY MATERIAL RESPECT WHATSOEVER THE FINDINGS OF FACT IN THE
ORIGINAL DECISION SHOWING CLEARLY THE RESPONSIBILITY OF DEFENDANT
ENCANTO FOR (I) THE WRONGFUL DISAPPROVAL OF PLAINTIFF'S SABBATICAL
APPLICATION; (II) THE UNJUST DEPRIVATION OF SALARIES DUE THE PLAINTIFF FOR
ALMOST ONE WHOLE SEMESTER DURING WHICH HER SABBATICAL APPLICATION
REMAINED UNRESOLVED; AND (III) THE WRONGFUL WITHHOLDING OF PLAINTIFF'S
EARNED SALARIES IN THE THREE SUCCEEDING SEMESTERS DURING WHICH THE
PLAINTIFF TAUGHT WITHOUT BEING PAID.21chanrobleslaw

Ruling of the Court of Appeals

The Court of Appeals trimmed down the issue to whether or not respondents U.P., Tabujara and
Abad were negligent or acted in bad faith in denying petitioner Diaz's application for sabbatical
leave and in withholding her salaries. In its Decision promulgated on April 28, 2005, it effectively
reversed the decision of the RTC, viz.:

WHEREFORE, the appealed Decision is REVERSED and SET ASIDE and a NEW
JUDGMENT is RENDERED, as follows: (1) defendant-appellant University of the Philippines,
through its appropriate officials, is DIRECTED to pay plaintiff-appellant Elizabeth Diaz the sum
of Twenty-One Thousand, Eight Hundred Seventy-Nine and 64/100 (P21,879.64) as unpaid
salaries and allowances, and (2) the sums awarded as moral and exemplary damages and
attorney's fees are hereby DELETED. This is without prejudice to the enforcement of valid rules
and regulations of the University of the Philippines pertaining to Diaz's employment
status.22chanrobleslaw

The Court of Appeals found neither negligence nor bad faith on the part of the respondents in
their denial of petitioner Diaz's sabbatical leave application and in withholding her salaries.

The Court of Appeals emphasized that a sabbatical leave is not a right which could be
demanded at will, even by petitioner Diaz who has been a veteran professor of 24 years at U.P.
Moreover, the Court of Appeals said that the eventual denial of her sabbatical leave application
was not actionable in view of the fact that (i) it would be unfair to impute negligence to
respondents in the regular discharge of their functions; and (ii) assuming that there was delay in
the resolution of her application, she herself caused such delay.23chanroblesvirtuallawlibrary

The Court of Appeals also held that petitioner Diaz's own recalcitrance and defiance to comply
with certain documentary requirements was the reason her salaries were
withheld.24chanroblesvirtuallawlibrary

Petitioner Diaz filed a Motion for Reconsideration to the aforementioned decision, which was
subsequently denied for lack of merit in a Resolution dated January 20,
2006.chanRoblesvirtualLawlibrary

Issues

Undaunted, petitioner Diaz is again before this Court, with the following Assignments of Error:

FIRST ASSIGNMENT OF ERROR

WITHOUT DISTURBING THE FINDINGS OF FACT OF THE TRIAL COURT BASED ON
OVERWHELMING EVIDENCE REVEALING THE COMMISSION BY RESPONDENTS OF THE
TORTIOUS ACTS COMPLAINED OF BY PETITIONER IN DENYING HER SABBATICAL
LEAVE, THE COURT OF APPEALS GRIEVOUSLY ERRED IN IGNORING THOSE FINDINGS
AND ADOPTING AND TREATING AS VALID THE FLIMSY EXCUSES OF RESPONDENTS
TO AVOID THE LEGAL CONSEQUENCES OF THEIR ACTS.

SECOND ASSIGNMENT OF ERROR

THE COURT OF APPEALS ERRED IN HOLDING CONTRARY TO THE EVIDENCE ON

RECORD, THAT "THERE WAS JUDICIOUS EXERCISE" BY RESPONDENTS "OF THEIR
DISCRETIONARY POWER WITH RESPECT TO THE DENIAL OF THE SUBJECT
SABBATICAL LEAVE."

THIRD ASSIGNMENT OF ERROR

THE COURT OF APPEALS ERRED IN TREATING AS LAWFUL THE WITHHOLDING OF

PETITIONER'S SALARIES, CONTRARY TO THE EVIDENCE ON RECORD.

FOURTH ASSIGNMENT OF ERROR

THE COURT OF APPEALS ERRED IN CONCLUDING, CONTRARY TO THE EVIDENCE ON

RECORD, THAT PETITIONER "FAILED TO SHOW BY A PREPONDERANCE OF EVIDENCE
THE NEGLIGENCE OF RESPONDENTS SO AS TO BE ENTITLED TO THE DAMAGES
SOUGHT."

FIFTH ASSIGNMENT OF ERROR

THE COURT OF APPEALS ERRED IN NOT CORRECTLY COMPUTING THE SUM OF

PETITIONER'S UNPAID AND EARNED SALARIES, IN UTTER DISREGARD OF THE
EVIDENCE ON RECORD.

SIXTH ASSIGNMENT OF ERROR

THE COURT OF APPEALS ERRED IN NOT FINDING, CONTRARY TO THE EVIDENCE ON

RECORD, THAT RESPONDENTS ENCANTO, TABUJARA AND ABAD ARE JOINTLY AND
SEVERALLY LIABLE TO PETITIONER FOR ACTUAL, MORAL AND EXEMPLARY DAMAGES
AS JOINT TORTFEASORS UNDER THE LAW.25chanrobleslaw

The issue in this case boils down to whether or not the respondents acted in bad faith when
they resolved petitioner Diaz's application for sabbatical leave and withheld her salaries.

Ruling of the Court

The resolution of this case hinges on the question of bad faith on the part of the respondents in
denying petitioner Diaz's sabbatical leave application and withholding of her salaries. Bad faith,
however, is a question of fact and is evidentiary.26 Thus, contrary to petitioner Diaz's belief that
"[w]hat is involved in this stage of the case is the legal interpretation or the legal consequence of
the material facts of this case," the resolution of the issue at hand involves a question of fact,
which the respondents rightly assert, is not within the province of a Rule 45
petition.27 Nonetheless, the Court makes an exception in this case especially so that both the
RTC and the Court of Appeals have the same findings of fact, but they arrived at different
conclusions.28chanroblesvirtuallawlibrary

Application for Sabbatical Leave

Petitioner Diaz's complaint29 for recovery of damages before the RTC was based on the alleged
bad faith of the respondents in denying her application for sabbatical leave vis-a-vis Articles 19
and 20 of the Civil Code.30chanroblesvirtuallawlibrary

Articles 19 and 20 read as follows:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.

Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another,
shall indemnify the latter for the same.

Article 19 of the Civil Code "prescribes a 'primordial limitation on all rights' by setting certain
standards that must be observed in the exercise thereof."31 Abuse of right under Article 19
exists when the following elements are present: (1) there is a legal right or duty; (2) which is
exercised in bad faith; (3) for the sole intent of prejudicing or injuring
another.32chanroblesvirtuallawlibrary

This Court, expounding on the concept of bad faith under Article 19, held:

Malice or bad faith is at the core of Article 19 of the Civil Code. Good faith refers to the state of
mind which is manifested by the acts of the individual concerned. It consists of the intention to
abstain from taking an unconscionable and unscrupulous advantage of another. It is presumed.
Thus, he who alleges bad faith has the duty to prove the same. Bad faith does not simply
connote bad judgment or simple negligence; it involves a dishonest purpose or some moral
obloquy and conscious doing of a wrong, a breach of known duty due to some motives or
interest or ill will that partakes of the nature of fraud. Malice connotes ill will or spite and speaks
not in response to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad
faith or bad motive.33 (Citations omitted.)

Undoubtedly, the respondents had a duty to resolve petitioner Diaz's sabbatical leave
application. The crucial question is if they did so with the intention of prejudicing or injuring
petitioner Diaz.

We hold in the negative.

There is no dispute, and both the RTC and the Court of Appeals agree, that the grant of a
sabbatical leave is not a matter of right, but a privilege. Moreover, the issue of whether or not
the respondents acted in bad faith when they denied petitioner Diaz's application for sabbatical
leave has been answered several times, in separate jurisdictions.

On May 4, 1989, the Ombudsman issued a Resolution34 in Case No. OMB-0-89-0049 on the
complaint filed by petitioner Diaz against respondents Encanto, Tabujara, and Abad for violation
of Section 3(e) of Republic Act No. 3019, recommending the dismissal of the complaint for lack
of merit. It found no manifest partiality, evident bad faith, or gross inexcusable negligence on the
part of the respondents in their denial of petitioner Diaz's application for sabbatical leave and in
requiring her to accomplish a Report for Duty form as a prerequisite for her entitlement to salary.

Petitioner Diaz protested the outcome of this resolution by filing a special civil action
for certiorari with this Court, on two occasions. When G.R. No. 88834 was dismissed for non-
compliance with Circular No. 1-88,35 petitioner Diaz re-filed her petition, raising exactly the same
issues, and this was docketed as G.R. No. 89207.36chanroblesvirtuallawlibrary

On August 31, 1989, this Court issued a Resolution,37 dismissing petitioner Diaz's petition in
G.R. No. 89207. This Court noted the Ombudsman's findings and observations and found them
to be supported by substantial evidence.

On April 28, 2005, the Court of Appeals had the same findings and held that the denial of
petitioner Diaz's application for sabbatical leave was "a collegial decision based on U.P. 's
established rules, the grant of which is subject to the exigencies of the service, like acute
shortage in teaching staff." It added that "the U.P. officials' eventual denial of [Diaz's] application
is not actionable x x x it is unfair to impute negligence to [respondents] in the regular discharge
of their official functions."38chanroblesvirtuallawlibrary

The Ombudsman and all three courts, starting from the RTC to this Court, have already
established that a sabbatical leave is not a right and therefore petitioner Diaz cannot demand its
grant. It does not matter that there was only one reason for the denial of her application, as the
approving authorities found that such reason was enough. Moreover, not only the Court of
Appeals but also the Ombudsman, and this Court, have ruled that the respondents did not act in
bad faith when petitioner Diaz's sabbatical leave application was denied. Those three separate
rulings verily must be given great weight in the case at bar.

The Court does not find any reason to disregard those findings, especially when our own
perusal of the evidence showed no traces of bad faith or malice in the respondents' denial of
petitioner Diaz's application for sabbatical leave. They processed her application in accordance
with their usual procedure - with more leeway, in fact, since petitioner Diaz was given the
chance to support her application when she was asked to submit a historical background; and
the denial was based on the recommendation of respondent Encanto, who was in the best
position to know whether petitioner Diaz's application should be granted or not.

While the RTC declared that petitioner Diaz should have been granted a sabbatical leave, it is
important to note that the RTC awarded damages to petitioner Diaz merely for the
unreasonable and unconscionable delay in the resolution of her sabbatical leave
application,39 and not its denial per se. Thus, petitioner Diaz's entitlement to a sabbatical leave
should no longer be an issue in this case. This is supported by petitioner Diaz's own action
when she did not move for the reconsideration of the April 17, 1996 Decision of the RTC for
awarding her damages due only to the delay in the resolution of her sabbatical leave application
and not for its denial; and more so by the prayer in her petition to this Court wherein she asked
that the April 17, 1996 Decision of the RTC be "reinstated and affirmed in
toto.40chanroblesvirtuallawlibrary

Nevertheless, on the question of whether or not there was bad faith in the delay of the resolution
of petitioner Diaz's sabbatical leave application, the Court still rules in the negative. "It is an
elementary rule in this jurisdiction that good faith is presumed and that the burden of proving
bad faith rests upon the party alleging the same."41 Petitioner Diaz has failed to prove bad faith
on the part of the respondents. There is nothing in the records to show that the respondents
purposely delayed the resolution of her application to prejudice and injure her. She has not even
shown that the delay of six months in resolving a sabbatical leave application has never
happened prior to her case. On the contrary, any delay that occurred was due to the fact that
petitioner Diaz's application for sabbatical leave did not follow the usual procedure; hence, the
processing of said application took time.42chanroblesvirtuallawlibrary

In petitioner Diaz's petition, she criticized the Court of Appeals for imputing the cause of delay to
her, arguing that as the requirement that a sabbatical leave application be filed at least one
semester before its intended date of effectivity was only imposed in 1990, long after she had
filed hers in 1988.43 But, precisely, this rule may have been imposed by U.P. to address any
untoward delays and to likewise provide a time frame for the approving authorities in resolving
sabbatical leave applications.

This Court understands petitioner Diaz's frustration, but she cannot keep on arguing that the
facts, as established, and which she herself does not dispute, had been misappreciated.in
different occasions.

Petitioner Diaz's Withheld Salaries

Petitioner Diaz is entitled to her withheld salaries from July 1, 1988 to October 31, 1988, and
from November 1, 1988 to May 31, 1989, and July 16, 1989 to May 31, 1990, upon submission
of the required documents.

The denial of petitioner Diaz's salaries during the first semester of Academic Year (AY) 1988-
1989 was due to the fact that she did not teach that semester. But when respondent Lazaro
removed petitioner Diaz's name from the final schedule of teaching assignments in CMC for the
first semester of AY 1988-89, it was without petitioner Diaz's prior knowledge, as admitted by
respondent Lazaro herself, to wit:

ATTY. Now, did Prof. Diaz ask you to remove her from [the] schedule of classes?
DIAZ:

LAZARO: I did it.

Q: Because you said you did it on your own?

A: Yes.

� xxxx

Q: She did not [ask] you?

A: No.44

The Court, however, observes that respondent Lazaro, in so doing, did not act in bad faith as
she expected petitioner Diaz's application for leave, of whatever nature, to be granted. As such,
she did not want Diaz to have to drop the classes she was already handling once her sabbatical
leave was approved, as was the case the semester before, when petitioner Diaz dropped her
classes, three weeks into the start of the semester, when her application for sick leave was
approved, viz.:
ATTY. You mentioned a while ago that you deleted the name of Professor Diaz from this
GUNO: final schedule of classes. Why did you delete it?

LAZARO: I presumed in good faith that based on the letter she sent which was routed to me
where she stated she could no longer be efficient and effective as a teacher and
she was suffering from fatigue and that she could no longer work under those
circumstances, 1 felt, as a gesture of sympathy to her that this should be granted
suggesting that she be given a leave of absence of whatever kind she was
qualified for and based on my previous experience on the second semester where
two to three weeks into the course she dropped her courses, I did not want that to
happen again.[45]

ATTY. You also testified that because of the application for sabbatical leave and the
GUNO: reasons she gave in that letter, you deleted her name in the final list of class
schedule for school year 1988-89 first semester?

LAZARO: Yes.

Q: Why did you delete her name, will you tell the Court?

A: She had applied for sabbatical leave for the whole year of 1988-89 and based on
the experience of her sick leave during the previous semester which was the
second semester of the previous school year where three (3) weeks into classes
she filed for a sick leave and did not teach, based on that experience, I did not
include her name in the class list because the same thing could happen again.46

While petitioner Diaz was not consulted about the removal of her name from the class schedule,
she did not contest such upon the belief that her application for sabbatical leave would be
approved, as in fact, she was given her salary in June 1988. As such, this Court believes, in the
interest of equity and fairness, that petitioner Diaz should be entitled to her salary during the
semester when her name was dropped from the final list of schedule of classes, without her
knowledge and consent, and while action on her application for sabbatical leave was still
pending.47chanroblesvirtuallawlibrary

On the matter of her salaries from the second semester of AY 1988-89 up until AY 1989-1990,
the respondents legally withheld such, as found by the Ombudsman and the Court of Appeals
for petitioner Diaz's own refusal to comply with the documentary requirements of U.P. Even the
RTC, in its Omnibus Order of January 12, 1990, denied petitioner Diaz's petition for mandatory
injunction upon the finding that the Report for Duty Form required of her is a basic and standard
requirement that is asked from all employees of U.P. The RTC held:

It is therefore clear that the acts sought to be enjoined [by Diaz] are in fact pursuant to the
proper observance of administrative or internal rules of the University. This Court sympathizes
with [Diaz] for not being able to receive her salaries after July 15, 1989. However, such
predicament cannot be outrightly attributable to the defendants, as their withholding of her
salaries appears to be in accordance with existing University regulations.

Apart from such reasons, this Court believes that petitioner Diaz failed to show why she should
be spared from the Report for Duty requirement, which remains a standard practice even in
other offices or institutions. To be entitled to an injunctive writ, one must show an
unquestionable right and/or blatant violation of said right to be entitled to its
issuance.48chanrobleslaw

But it cannot be denied that during the periods of November 1, 1988 to May 31, 1988 and July
16, 1989 to May 31, 1990, petitioner Diaz rendered service to U.P. for which she should be
compensated.

Given the foregoing, petitioner Diaz should be paid, as the RTC had computed, her salaries
from July 1, 1988 to October 1988, the semester when petitioner Diaz's name was dropped
from the final list of schedule of classes, without her prior knowledge and consent; and for the
periods of November 1, 1988 to May 31, 1989 and July 16, 1989 to May 31, 1990, for the work
she rendered during said periods, but upon petitioner Diaz's submission of the
documents required by U.P.

No Payment of Other Damages

Given that the respondents have not abused their rights, they should not be held liable for any
damages sustained by petitioner Diaz. "The law affords no remedy for damages resulting from
an act which does not amount to a legal wrong. Situations like this have been appropriately
denominated damnum absque injuria."49 Similarly, the Court cannot grant petitioner Diaz's claim
for attorney's fees as no premium should be placed on the right to litigate. "Even when a
claimant is compelled to litigate or to incur expenses to protect his rights, still attorney's fees
may not be awarded where there is no sufficient showing of bad faith in a party's persistence in
a case other than an erroneous conviction of the righteousness of his
cause.50chanroblesvirtuallawlibrary

Legal Interest Due on the Salaries Withheld

Pursuant to Nacar v. Gallery Frames,51 the applicable rate of legal interest due on petitioner
Diaz's withheld salaries - (/) from July 1, 1988 to October 31, 1988, the period corresponding to
the first semester of AY 1988-89, when her name was removed from the final list of class
schedule without her prior knowledge and consent, less the amount she had received in June
1988 - will be from April 17, 1996, the date of the Decision of the RTC, up to the full satisfaction
thereof, is 6% per annum; and (ii) from November 1, 1988 to May 31, 1989, and July 16, 1989
to May 31, 1990, the periods when she was refused payment of her salaries for not
accomplishing a Report for Duty Form - will be from the time petitioner Diaz submits the
required Report for Duty Form up to the full satisfaction thereof, is 6% per annum.

WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals in
CA-G.R. CV No. 55165 is hereby AFFIRMED with MODIFICATION in that the University of the
Philippines, through its appropriate officials, is directed to pay petitioner Elizabeth L. Diaz her
withheld salaries 1) from July 1, 1988 to October 31, 1988, with legal interest at the rate of six
percent (6%) per annum, computed from the date of the Decision of the RTC on April 17, 1996
until fully paid; and 2) from November 1, 1988 to May 31, 1989 and July 16, 1989 to May 31,
1990, with legal interest at the rate of six percent (6%) per annum computed from the date
petitioner Elizabeth L. Diaz submits the documents required by the University of the Philippines
until fully paid.

SO ORDERED.cralawlawlibrary
 SECOND DIVISION

G.R. No. 217426, December 04, 2017

ST. MARTIN POLYCLINIC, INC., Petitioner, v. LWV CONSTRUCTION

CORPORATION, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated July 11, 2014 and the
Resolution3 dated February 27, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 125451,
which affirmed with modification the Decision4 dated December 15, 2011 and the Order dated
May 25, 2012 of the Regional Trial Court of Mandaluyong City, Branch 211 (RTC) in SCA Case
No. MC11-879 (Civil Case No. 21881), and thereby ordered herein petitioner St. Martin
Polyclinic, Inc. (petitioner) to pay respondent LWV Construction Corporation (respondent)
temperate damages in the amount of P50,000.00.

The Facts

Respondent is engaged in the business of recruiting Filipino workers for deployment to Saudi
Arabia.5 On the other hand, petitioner is an accredited member of the Gulf Cooperative Council
Approved Medical Centers Association (GAMCA) and as such, authorized to conduct medical
examinations of prospective applicants for overseas employment.6

On January 10, 2008, respondent referred prospective applicant Jonathan V. Raguindin

(Raguindin) to petitioner for a pre-deployment medical examination in accordance with the
instructions from GAMCA.7After undergoing the required examinations, petitioner cleared
Raguindin and found him "fit for employment," as evidenced by a Medical Report8 dated
January 11, 2008 (Medical Report).9

Based on the foregoing, respondent deployed Raguindin to Saudi Arabia, allegedly incurring
expenses in the amount of P84,373.41.10 Unfortunately, when Raguindin underwent another
medical examination with the General Care Dispensary of Saudi Arabia (General Care
Dispensary) on March 24, 2008, he purportedly tested positive for HCV or the hepatitis C virus.
The Ministry of Health of the Kingdom of Saudi Arabia (Ministry of Health) required a re-
examination of Raguindin, which the General Care Dispensary conducted on April 28,
2008.11 However, the results of the re-examination remained the same, i.e., Raguindin was
positive for HCV, which results were reflected in a Certification12 dated April 28, 2008
(Certification). An undated HCV Confirmatory Test Report13 likewise conducted by the Ministry
of Health affirmed such finding, thereby leading to Raguindin's repatriation to the Philippines.14
Claiming that petitioner was reckless in issuing its Medical Report stating that Raguindin is "fit
for employment" when a subsequent finding in Saudi Arabia revealed that he was positive for
HCV, respondent filed a Complaint15 for sum of money and damages against petitioner before
the Metropolitan Trial Court of Mandaluyong City, Branch 60 (MeTC). Respondent essentially
averred that it relied on petitioner's declaration and incurred expenses as a consequence. Thus,
respondent prayed for the award of damages in the amount of P84,373.41 representing the
expenses it incurred in deploying Raguindin abroad.16

In its Answer with compulsory counterclaim,17 petitioner denied liability and claimed that: first,
respondent was not a proper party in interest for lack of privity of contract between
them; second, the MeTC had no jurisdiction over the case as it involves the interpretation and
implementation of a contract of employment; third, the action is premature as Raguindin has yet
to undergo a post-employment medical examination following his repatriation; and fourth, the
complaint failed to state a cause of action as the Medical Report issued by petitioner had
already expired on April 11, 2008, or three (3) months after its issuance on January 11, 2008.18

The MeTC Ruling

In a Decision19 dated December 17, 2010, the MeTC rendered judgment in favor of respondent
and ordered petitioner to pay the amount of P84,373.41 as actual damages, P20,000.00 as
attorney's fees, and the costs of suit.20

At the onset, the MeTC held that it had jurisdiction over the case, since respondent was
claiming actual damages incurred in the deployment of Raguindin in the amount of
P84,373.41.21 It further ruled that respondent was a real party in interest, as it would not have
incurred expenses had petitioner not issued the Medical Report certifying that Raguindin was fit
to work.

On the merits, the MeTC found that respondent was entitled to be informed accurately of the
precise condition of Raguindin before deploying the latter abroad and consequently, had
sustained damage as a result of the erroneous certification.22 In this relation, it rejected
petitioner's contention that Raguindin may have contracted the disease after his medical
examination in the Philippines up to the time of his deployment, there being no evidence offered
to corroborate the same.23

Aggrieved, petitioner appealed to the RTC, contending,24 among others, that respondent failed
to comply with the requirements on the authentication and proof of documents under Section
24,25 Rule 132 of the Rules of Court, considering that respondent's evidence, particularly the
April 28, 2008 Certification issued by the General Care Dispensary and the HCV Confirmatory
Test Report issued by the Ministry of Health, are foreign documents issued in Saudi Arabia.

The RTC Ruling

In a Decision26 dated December 15, 2011, the RTC dismissed petitioner's appeal and affirmed
the MeTC Decision in its entirety.27 Additionally, the RTC pointed out that petitioner can no
longer change the theory of the case or raise new issues on appeal, referring to the latter's
argument on the authentication of respondent's documentary evidence.28

Petitioner's motion for reconsideration29 was denied in an Order30 dated May 25, 2012.
Dissatisfied, petitioner elevated the case to the CA.31
 The CA Ruling

In a Decision32 dated July 11, 2014, the CA affirmed the RTC Decision, with the modification
deleting the award of actual damages and instead, awarding temperate damages in the amount
of P50,000.00.33

The CA held that petitioner failed to perform its duty to accurately diagnose Raguindin when it
issued its Medical Report declaring the latter "fit for employment", considering that he was
subsequently found positive for HCV in Saudi Arabia.34 Further, the CA opined that the
Certification issued by the General Care Dispensary is not a public document and in such
regard, rejected petitioner's argument that the same is inadmissible in evidence for not having
been authenticated. Moreover, it remarked that petitioner's own Medical Report does not enjoy
the presumption of regularity as petitioner is merely an accredited clinic.35 Finally, the CA ruled
that petitioner could not disclaim liability on the ground that Raguindin tested positive for HCV in
Saudi Arabia after the expiration of the Medical Report on April 11, 2008, noting that the
General Care Dispensary issued its Certification on April 28, 2008, or a mere seventeen (17)
days from the expiration of petitioner's Medical Report.36 Hence, the CA concluded that "it is
contrary to human experience that a newly-deployed overseas worker, such as Raguindin,
would immediately contract a serious virus at the very beginning of a deployment."37

However, as the records are bereft of evidence to show that respondent actually incurred the
amount of P84,373.41 as expenses for Raguindin's deployment, the CA deleted the award of
actual damages and instead, awarded temperate damages in the amount of P50,000.00.38

Aggrieved, petitioner filed a motion for partial reconsideration,39 which the CA denied in a
Resolution40dated February 27, 2015; hence, this petition.

The Issue Before the Court

The essential issue advanced for the Court's resolution is whether or not petitioner was
negligent in issuing the Medical Report declaring Raguindin "fit for employment" and hence,
should be held liable for damages.

The Court's Ruling

The petition is granted.

I.

At the outset, it should be pointed out that a re-examination of factual findings cannot be done
acting on a petition for review on certiorari because the Court is not a trier of facts but reviews
only questions of law.41 Thus, in petitions for review on certiorari, only questions of law may
generally be put into issue. This rule, however, admits of certain exceptions, such as "when the
inference made is manifestly mistaken, absurd or impossible"; or "when the findings are
conclusions without citation of specific evidence on which they are based."42 Finding a
confluence of certain exceptions in this case, the general rule that only legal issues may be
raised in a petition for review on certiorari under Rule 45 of the Rules of Court would not apply,
and the Court retains the authority to pass upon the evidence presented and draw conclusions
therefrom.43
 II.

An action for damages due to the negligence of another may be instituted on the basis of Article
2176 of the Civil Code, which defines a quasi-delict:

Article 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no
pre-existing contractual relation between the parties, is called a quasi-delict and is governed by
the provisions of this Chapter.

The elements of a quasi-delict are: (1) an act or omission; (2) the presence of fault
or negligencein the performance or non-performance of the act; (3) injury; (4) a causal
connection between the negligent act and the injury; and (5) no pre-existing contractual
relation.44

As a general rule, any act or omission coming under the purview of Article 2176 gives rise to a
cause of action under quasi-delict. This, in turn, gives the basis for a claim of
damages.45 Notably, quasi-delict is one among several sources of obligation. Article 1157 of the
Civil Code states:

Article 1157. Obligations arise from:

(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.

However, as explained by Associate Justice Marvic M.V.F. Leonen (Justice Leonen) in his
opinion in Alano v. Magud-Logmao46 (Alano), "Article 2176 is not an all-encompassing
enumeration of all actionable wrongs which can give rise to the liability for damages.
Under the Civil Code, acts done in violation of Articles 19, 20, and 21 will also give rise to
damages."47 These provisions - which were cited as bases by the MTC, RTC and CA in their
respective rulings in this case - read as follows:

Article 19. Every person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith.

Article 20. Every person who, contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.

Article 21. Any person who willfully causes loss or injury to another in a manner that is contrary
to morals, good customs, or public policy shall compensate the latter for the damage.

"[Article 19], known to contain what is commonly referred to as the principle of abuse of rights,
sets certain standards which must be observed not only in the exercise of one's rights, but also
in the performance of one's duties."48 Case law states that "[w]hen a right is exercised in a
manner which does not conform with the norms enshrined in Article 19 and results in damage to
another, a legal wrong is thereby committed for which the wrongdoer must be held responsible.
But while Article 19 lays down a rule of conduct for the government of human relations and for
the maintenance of social order, it does not provide a remedy for its violation. Generally, an
action for damages under either Article 20 or Article 21 would [then] be proper." 49 Between
these two provisions as worded, it is Article 20 which applies to both willful and negligent acts
that are done contrary to law. On the other hand, Article 21 applies only to willful acts
done contra bonos mores.50

In the Alano case, Justice Leonen aptly elaborated on the distinctive applications of Articles 19,
20 and 21, which are general provisions on human relations, vis-a-vis Article 2176, which
particularly governs quasi-delicts:

Article 19 is the general rule which governs the conduct of human relations. By itself, it is not the
basis of an actionable tort. Article 19 describes the degree of care required so that an actionable
tort may arise when it is alleged together with Article 20 or Article 21.

Article 20 concerns violations of existing law as basis for an injury. It allows recovery
should the act have been willful or negligent. Willful may refer to the intention to do the act and
the desire to achieve the outcome which is considered by the plaintiff in tort action as injurious.
Negligence may refer to a situation where the act was consciously done but without intending
the result which the plaintiff considers as injurious.

Article 21, on the other hand, concerns injuries that may be caused by acts which are not
necessarily proscribed by law. This article requires that the act be willful, that is, that there was
an intention to do the act and a desire to achieve the outcome. In cases under Article 21, the
legal issues revolve around whether such outcome should be considered a legal injury on the
part of the plaintiff or whether the commission of the act was done in violation of the standards
of care required in Article 19.

Article 2176 covers situations where an injury happens through an act or omission of the
defendant. When it involves a positive act, the intention to commit the outcome is irrelevant. The
act itself must not be a breach of an existing law or a pre-existing contractual obligation.
What will be considered is whether there is "fault or negligence� attending the commission of
the act which necessarily leads to the outcome considered as injurious by the plaintiff. The
required degree of diligence will then be assessed in relation to the circumstances of each and
every case.51 (Emphases and underscoring supplied)

Thus, with respect to negligent acts or omissions, it should therefore be discerned that Article
20 of the Civil Code concerns "violations of existing law as basis for an injury", whereas
Article 2176 applies when the negligent act causing damage to another does not
constitute "a breach of an existing law or a pre-existing contractual obligation."

In this case, the courts a quo erroneously anchored their respective rulings on the provisions of
Articles 19, 20, and 21 of the Civil Code. This is because respondent did not proffer (nor have
these courts mentioned) any law as basis for which damages may be recovered due to
petitioner's alleged negligent act. In its amended complaint, respondent mainly avers that had
petitioner not issue a "fit for employment" Medical Report to Raguindin, respondent would not
have processed his documents, deployed him to Saudi Arabia, and later on - in view of the
subsequent findings that Raguindin was positive for HCV and hence, unfit to work - suffered
actual damages in the amount of P84,373.41.52Thus, as the claimed negligent act of petitioner
was not premised on the breach of any law, and not to mention the incontestable fact that no
pre-existing contractual relation was averred to exist between the parties, Article 2176 - instead
of Articles 19, 20 and 21 - of the Civil Code should govern.

III.

Negligence is defined as the failure to observe for the protection of the interests of another
person, that degree of care, precaution and vigilance which the circumstances justly demand,
whereby such other person suffers injury.53

As early as the case of Picart v. Smith,54 the Court elucidated that "the test by which to
determine the existence of negligence in a particular case is: Did the defendant in doing the
alleged negligent act use that reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, then he is guilty of
negligence."55 Corollary thereto, the Court stated that "[t]he question as to what would constitute
the conduct of a prudent man in a given situation must of course be always determined in the
light of human experience and in view of the facts involved in the particular case. Abstract
speculation cannot here be of much value x x x: Reasonable men govern their conduct by
the circumstances which are before them or known to them. They are not, and are not
supposed to be, omniscient of the future. Hence[,] they can be expected to take care only
when there is something before them to suggest or warn of danger."56

Under our Rules of Evidence, it is disputably presumed that a person takes ordinary care of his
concerns and that private transactions have been fair and regular.57 In effect, negligence
cannot be presumed, and thus, must be proven by him who alleges it.58 In Huang v.
Philippine Hoteliers, Inc.:59

[T]he negligence or fault should be clearly established as it is the basis of her action. The
burden of proof is upon [the plaintiff]. Section 1, Rule 131 of the Rules of Court provides that
"burden of proof is the duty of a party to present evidence on the facts in issue necessary to
establish his claim or defense by the amount of evidence required by law." It is then up for the
plaintiff to establish his cause of action or the defendant to establish his defense. Therefore, if
the plaintiff alleged in his complaint that he was damaged because of the negligent acts
of the defendant, he has the burden of proving such negligence. It is even presumed that
a person takes ordinary care of his concerns. The quantum of proof required is
preponderance of evidence.60 (Emphasis and underscoring supplied)

The records of this case show that the pieces of evidence mainly relied upon by respondent to
establish petitioner's negligence are: (a) the Certification61 dated April 28, 2008; and (b) the
HCV Confirmatory Test Report.62 However, these issuances only indicate the results of the
General Care Dispensary and Ministry of Health's own medical examination of Raguindin
finding him to be positive for HCV. Notably, the examination conducted by the General Care
Dispensary, which was later affirmed by the Ministry of Health, was conducted only on March
24, 2008, or at least two (2) months after petitioner issued its Medical Report on January
11, 2008. Hence, even assuming that Raguindin's diagnosis for HCV was correct, the fact that
he later tested positive for the same does not convincingly prove that he was already under the
same medical state at the time petitioner issued the Medical Report on January 11, 2008. In this
regard, it was therefore incumbent upon respondent to show that there was already
negligence at the time the Medical Report was issued, may it be through evidence that show
that standard medical procedures were not carefully observed or that there were already
palpable signs that exhibited Raguindin's unfitness for deployment at that time. This is hardly
the case when respondent only proffered evidence which demonstrate that months after
petitioner's Medical Report was issued, Raguindin, who had already been deployed to Saudi
Arabia, tested positive for HCV and as such, was no longer "fit for employment".

In fact, there is a reasonable possibility that Raguindin became exposed to the HCV
only after his medical examination with petitioner on January 11, 2008. Based on published
reports from the World Health Organization, HCV or the hepatitis C virus causes both acute and
chronic infection. Acute HCV infection is usually asymptomatic,63 and is only very rarely
associated with life-threatening diseases. The incubation period64 for HCV is two (2) weeks to
six (6) months, and following initial infection, approximately 80% of people do not exhibit any
symptoms.65 Indisputably, Raguindin was not deployed to Saudi Arabia immediately after
petitioner's medical examination and hence, could have possibly contracted the same only
when he arrived thereat. In light of the foregoing, the CA therefore erred in holding that "[h]ad
petitioner more thoroughly and diligently examined Raguindin, it would likely have discovered
the existence of the HCV because it was contrary to human experience that a newly-deployed
overseas worker, such as Raguindin, would immediately have contracted the disease at the
beginning of his deployment"66

While petitioner's Medical Report indicates an expiration of April 11, 2008, the Court finds it
fitting to clarify that the same could not be construed as a certified guarantee coming from
petitioner that Raguindin's medical status at the time the report was issued on January 11, 2008
(i.e., that he was fit for employment) would remain the same up until that date (i.e., April 11,
2008). As earlier intimated, the intervening period could very well account for a number of
variables that could have led to a change in Raguindin's condition, such as his deployment to a
different environment in Saudi Arabia. If at all, the expiration date only means that the Medical
Report is valid - and as such, could be submitted - as a formal requirement for overseas
employment up until April 11, 2008; it does not, by any means, create legal basis to hold the
issuer accountable for any intervening change of condition from the time of issuance up until
expiration. Truly, petitioner could not be reasonably expected to predict, much less assure, that
Raguindin's medical status of being fit for employment would remain unchanged. Thus, the fact
that the Medical Report's expiration date of April 11, 2008 was only seventeen (17) days away
from the issuance of the General Care Dispensary's April 28, 2008 Certification finding
Raguindin positive for HCV should not - as it does not - establish petitioner's negligence.

IV.

At any rate, the fact that Raguindin tested positive for HCV could not have been properly
established since the courts a quo, in the first place, erred in admitting and giving probative
weight to the Certification of the General Care Dispensary, which was written in an unofficial
language. Section 33, Rule 132 ofthe Rules of Court states that:

Section 33. Documentary evidence in an unofficial language. - Documents written in an

unofficial language shall not be admitted as evidence, unless accompanied with a
translation into English or Filipino. To avoid interruption of proceedings, parties or their
attorneys are directed to have such translation prepared before trial.67

A cursory examination of the subject document would reveal that while it contains English
words, the majority of it is in an unofficial language. Sans any translation in English or Filipino
provided by respondent, the same should not have been admitted in evidence; thus their
contents could not be given probative value, and deemed to constitute proof of the facts stated
therein.

Moreover, the due execution and authenticity of the said certification were not proven in
accordance with Section 20, Rule 132 of the Rules of Court:

Section 20. Proof of private document. - Before any private document offered as authentic is
received in evidence, its due execution and authenticity must be proved either:

(a) By anyone who saw the document executed or written; or

(b) By evidence of the genuineness of the signature or handwriting of the maker.

(c) Any other private document need only be identified as that which it is claimed to be.

Notably, the foregoing provision applies since the Certification does not fall within the classes of
public documents under Section 19, Rule 132 of the Rules of Court68 - and hence, must be
considered as private. It has been settled that an unverified and unidentified private
document cannot be accorded probative value.69 In addition, case law states that "since a
medical certificate involves an opinion of one who must first be established as an expert
witness, it cannot be given weight or credit unless the doctor who issued it is presented
in court to show his qualifications. It is precluded because the party against whom it is
presented is deprived of the right and opportunity to cross-examine the person to whom the
statements or writings are attributed. Its executor or author should be presented as a witness to
provide the other party to the litigation the opportunity to question its contents. Being mere
hearsay evidence, failure to present the author of the medical certificate renders its contents
suspect and of no probative value,"70 as in this case.

Similarly, the HCV Confirmatory Test Report issued by the Ministry of Health of Saudi Arabia
should have also been excluded as evidence. Although the same may be considered a public
document, being an alleged written official act of an official body of a foreign country,71 the same
was not duly authenticated in accordance with Section 24,72 Rule 132 of the Rules of Court.
While respondent provided a translation73 thereof from the National Commission on Muslim
Filipinos, Bureau of External Relations, Office of the President, the same was not accompanied
by a certificate of the secretary of the embassy or legation, consul-general, consul, vice-consul,
or consular agent or any officer in the foreign service of the Philippines stationed in Saudi
Arabia, where the record is kept, and authenticated by the seal of his office.74

To be sure, petitioner - contrary to respondent's contention75 - has not changed its theory of the
case by questioning the foregoing documents. As petitioner correctly argued, it merely amplified
its defense76that it is not liable for negligence when it further questioned the validity of the
issuances of the General Care Dispensary and Ministry of Health. In Limpangco Sons v.
Yangco77, the Court explained that "[t]here is a difference x x x between a change in the theory
of the case and a shifting of the incidence of the emphasis placed during the trial or in the
briefs." "Where x x x the theory of the case as set out in the pleadings remains the theory
throughout the progress of the cause, the change of emphasis from one phase of the case as
presented by one set of facts to another phase made prominent by another set of facts x x x
does not result in a change of theory x x x".78 In any case, petitioner had already questioned the
validity of these documents in its Position Paper79 before the MeTC.80 Hence, there is no
change of theory that would preclude petitioner's arguments on this score.

All told, there being no negligence proven by respondent through credible and admissible
evidence, petitioner cannot be held liable for damages under Article 2176 of the Civil Code as
above-discussed.

WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated July 11, 2014 and
the Resolution dated February 27, 2015 of the Court of Appeals in CA-G.R. SP No. 125451
are REVERSEDand SET ASIDE, and a NEW ONE is entered, DISMISSING the complaint of
respondent LWV Construction Corporation for lack of merit.

SO ORDERED.

25
Section 24. Proof of official record. - The record of public documents referred to in paragraph
(a) of section 19, when admissible for any purpose, may be evidenced by an official publication
thereof or by a copy attested by the officer having the legal custody of the record, or by his
deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such
officer has the custody. If the office in which the record is kept is in a foreign country, the
certificate may be made by a secretary of the embassy or legation, consul-general, consul, vice-
consul, or consular agent or by any officer in the foreign service of the Philippines stationed in
the foreign country in which the record is kept, and authenticated by the seal of his office.
 SECOND DIVISION

[G.R. No. 116100. February 9, 1996.]

SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and MARIA CRISTINA
SANTOS, Petitioners, v. COURT OF APPEALS, HEIRS OF PACIFICO C. MABASA and
REGIONAL TRIAL COURT OF PASIG, METRO MANILA, BRANCH 181, Respondents.

Maria T . M. Leviste, for Petitioners.

Roberto B. Arca for Private Respondents.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; APPEALS; PARTY WHO DID NOT APPEAL FROM THE
DECISION OF THE COURT A QUO GRANTING PRIVATE RESPONDENT THE RIGHT OF
WAY, BARRED FROM RAISING THE SAME. — With respect to the first issue, herein
petitioners are already barred from raising the same. Petitioners did not appeal from the
decision of the court a quo granting private respondents the right of way, hence they are
presumed to be satisfied with the adjudication therein. With the finality of the judgment of the
trial court as to petitioners, the issue of propriety of the grant of right of way has already been
laid to rest. For failure to appeal the decision of the trial court to the Court of Appeals, petitioners
cannot obtain any affirmative relief other than those granted in the decision of the trial court.
That decision of the court below has become final as against them and can no longer be
reviewed, much less reversed, by this Court. The rule in this jurisdiction is that whenever an
appeal is taken in a civil case, an appellee who has not himself appealed may not obtain from
the appellate court any affirmative relief other than what was granted in the decision of the lower
court. The appellee can only advance an argument that he may deem necessary to defeat the
appellant’s claim or to uphold the decision that is being disputed, and he can assign errors in his
brief if such is required to strengthen the views expressed by the court a quo. These assigned
errors, in turn, may be considered by the appellate court solely to maintain the appealed
decision on other grounds, but not for the purpose of reversing or modifying the judgment in the
appellee’s favor and giving him other affirmative reliefs.

2. CIVIL LAW DAMAGES; RECOVERY OF DAMAGES; REQUISITES. — The mere fact that
the plaintiff suffered losses does not give rise to a right to recover damages. To warrant the
recovery of damages, there must be both a right of action for a legal wrong inflicted by the
defendant, and damage resulting to the plaintiff therefrom. Wrong without damage, or damage
without wrong, does not constitute a cause of action, since damages are merely part of the
remedy allowed for the injury caused by a breach or wrong. In order that a plaintiff may maintain
an action for the injuries of which he complains, he must establish that such injuries resulted
from a breach of duty which the defendant owned to the plaintiff — a concurrence of injury to
the plaintiff and legal responsibility by the person causing it. The underlying basis for the award
of tort damages is the premise that an individual was injured in contemplation of law. Thus,
there must first be the breach of some duty and the imposition of liability for that breach before
damages may be awarded, it is not sufficient to state that there should be tort liability merely
because the plaintiff suffered some pain and suffering. In other words, in order that the law will
give redress for an act causing damage, that act must be not only hurtful, but wrongful. There
must be damnum et injuria. If, as may happen in many cases, a person sustains actual damage,
that is, harm or loss to his person or property, without sustaining any legal injury, that is, an act
or omission which the law does not deem an injury, the damage is regarded as damnum absque
injuria.

3. ID.; ID.; DAMAGES DISTINGUISHED FROM INJURY. — There is a material distinction

between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss,
hurt, or harm which results from the injury; and damages are the recompense or compensation
awarded for the damage suffered. Thus, there can be damage without injury in those instances
in which the loss or harm was not the result of a violation of a legal duty. These situations are
often called damnum absque injuries.

4. ID.; ID.; DAMAGE OR LOSS WHICH VIOLATE NO LEGAL DUTY TO OTHER PERSON,
BORNE BY THE INJURED PERSON. — Many accidents occur and many injuries are inflicted
by acts or omissions which cause damage or loss to another but which violate no legal duty to
such other person, and consequently create no cause of action in his favor. In such cases, the
consequences must be borne by the injured person alone. The law affords no remedy for
damages resulting from an act which does not amount to a legal injury or wrong.

5. ID.; PRINCIPLE OF ABUSE OF RIGHTS; REQUISITES. — Contrary to the claim of private

respondents, petitioners could not be said to have violated the principle of abuse of right. In
order that the principle of abuse of right provided in Article 21 of the Civil Code can be applied, it
is essential that the following requisites concur: (1) The defendant should have acted in a
manner that is contrary to morals, good customs or public policy, (2) The acts should be willful;
and (3) There was damage or injury to the plaintiff.

6. ID.; ID.; RIGHT NOT VIOLATED WHERE OWNERS ENCLOSE AND FENCE THEIR
PROPERTY. — The act of petitioners in constructing a fence within their lot is a valid exercise
of their right as owners, hence not contrary to morals, good customs or public policy. The law
recognizes in the owner the right to enjoy and dispose of a thing, without other limitations than
those established by law. It is within the right of petitioners, as owners, to enclose and fence
their property. Article 430 of the Civil Code provides that" (e)very owner may enclose or fence
his land or tenements by means of walls, ditches, live or dead hedges, or by any other means
without detriment to servitudes constituted thereon."cralaw virtua1aw library

7. REMEDIAL LAW; ACTIONS; NO CAUSE OF ACTION FOR LAWFUL ACTS DONE BY

PERSON ON HIS PROPERTY. — At the time by of the construction of the fence, the lot was
not subject to any servitudes. It was only that decision which gave private respondents the right
to use the said passageway after payment of the compensation and imposed a corresponding
duty on petitioners not to interfere in the exercise of said right. Hence, prior to said decision,
petitioners had an absolute right over their property and their act of fencing and enclosing the
same was an act which they may lawfully perform in the employment and exercise of said right.
To repeat, whatever injury or damage may have been sustained by private respondents by
reason of the rightful use of the said land by petitioners is damnum absque injuria. A person has
a right to the natural use and enjoyment of his own property, according to his pleasure, for all
the purposes to which such property is usually applied. As a general rule, therefore, there is no
cause of action for acts done by one person upon his own property in a lawful and proper
manner, although such acts incidentally cause damage or an unavoidable loss to another, as
such damage or loss is damnum absque injuria. When the owner of property makes use thereof
in the general and ordinary manner in which the property is used, such as fencing or enclosing
the same as in this case, nobody can complain of having been injured, because the
inconvenience arising from said use can be considered as a mere consequence of community
life. The proper exercise of a lawful right cannot constitute a legal wrong for which an action will
lie, although the act may result in damage to another, for no legal right has been invaded. One
may use any lawful means to accomplish a lawful purpose and though the means adopted may
cause damage to another, no cause of action arises in the latter’s favor. Any injury or damage
occasioned thereby is damnum absque injuria. The courts can give no redress for hardship to
an individual resulting from action reasonably calculated to achieve a lawful end by lawful
means.

DECISION

REGALADO, J.:

This petition for review on certiorari assails the decision of respondent Court of Appeals in CA-
G.R. CV No. 29115, promulgated on November 10, 1993, which affirmed with modification the
decision of the trial court, as well as its resolution dated July 8, 1994 denying petitioner’s motion
for reconsideration. 1

On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right of way was filed
by Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio, Rosalina R. Morato, Lito
Santos and Maria Cristina C. Santos before the Regional Trial Court of Pasig and assigned to
Branch 22 thereof. 2

The generative facts of the case, as synthesized by the trial court and adopted by the Court of
Appeals, are as follows:chanrob1es virtual 1aw library

Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died during the
pendency of this case and was substituted by Ofelia Mabasa, his surviving spouse [and
children].

The plaintiff owns a parcel of land with a two-door apartment erected thereon situated at Interior
P. Burgos St., Palingon, Tipas, Tagig, Metro Manila. The plaintiff was able to acquire said
property through a contract of sale with spouses Mamerto Rayos and Teodora Quintero as
vendors last September 1981. Said property may be described to be surrounded by other
immovables pertaining to defendants herein. Taking P. Burgos Street as the point of reference,
on the left side, going to plaintiff’s property, the row of houses will be as follows: That of
defendants Cristino and Brigido Custodio, then that of Lito and Maria Cristina Santos and then
that of Ofelia Mabasa. On the right side (is) that of defendant Rosalina Morato and then a Septic
Tank (Exhibit "D"). As an access to P. Burgos Street from plaintiff’s property, there are two
possible passageways. The first passageway is approximately one meter wide and is about 20
meters distan(t) from Mabasa’s residence to P. Burgos Street. Such path is passing in between
the previously mentioned row of houses. The second passageway is about 3 meters in width
and length from plaintiff Mabasa’s residence to P. Burgos Street; it is about 26 meters. In
passing thru said passageway, a less than a meter wide path through the septic tank and with
5-6 meters in length has to be traversed.

When said property was purchased by Mabasa, there were tenants occupying the premises and
who were acknowledged by plaintiff Mabasa as tenants. However, sometime in February, 1982.
one of said tenants vacated the apartment and when plaintiff Mabasa went to see the premises.
he saw that there had been built an adobe fence in the first passageway making it narrower in
width. Said adobe fence was first constructed by defendants Santoses along their property
which is also along the first passageway. Defendant Morato constructed her adobe fence and
even extended said fence in such a way that the entire passageway was enclosed (Exhibit "I-
Santoses and Custodios, Exh. "D" for plaintiff, Exhs. "1-C", "1-D" and "1-E") And it was then that
the remaining tenants of said apartment vacated the area. Defendant Ma. Cristina Santos
testified that she constructed said fence because there was an incident when her daughter was
dragged by a bicycle pedalled by a son of one of the tenants in said apartment along the first
passageway. She also mentioned some other inconveniences of having (at) the front of her
house a pathway such as when some of the tenants were drunk and would bang their doors and
windows. Some of their footwear were even lost. . . . 3 (Underscoring in original text; corrections
in parentheses supplied)

On February 27, 1990, a decision was rendered by the trial court, with this dispositive
part:chanrob1es virtual 1aw library

Accordingly, judgment is hereby rendered as follows:chanrob1es virtual 1aw library

1) Ordering defendants Custodios and Santoses to give plaintiff permanent access — ingress
and egress, to the public street;

2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight Thousand
Pesos (P8,000) as indemnity for the permanent use of the passageway.

The parties to shoulder their respective litigation expenses. 4

Not satisfied therewith, therein plaintiff represented by his heirs, herein private respondents,
went to the Court of Appeals raising the sole issue of whether or not the lower court erred in not
awarding damages in their favor. On November 10, 1993, as earlier stated, the Court of Appeals
rendered its decision affirming the judgment of the trial court with modification, the decretal
portion of which disposes as follows:chanrob1es virtual 1aw library

WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH
MODIFICATION only insofar as the herein grant of damages to plaintiffs-appellants. The Court
hereby orders defendants-appellees to pay plaintiffs-appellants the sum of Sixty Five Thousand
(P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000) Pesos as Moral Damages,
and Ten Thousand (P10,000) Pesos as Exemplary Damages. The rest of the appealed decision
is affirmed to all respects. 5

On July 8, 1994, the Court of Appeals denied petitioner’s motion for reconsideration. 6
Petitioners then took the present recourse to us, raising two issues, namely, whether or not the
grant of right of way to herein private respondents is proper, and whether or not the award of
damages is in order.

With respect to the first issue, herein petitioners are already barred from raising the same.
Petitioners did not appeal from the decision of the court a quo granting private respondents the
right of way, hence they are presumed to be satisfied with the adjudication therein. With the
finality of the judgment of the trial court as to petitioners, the issue of propriety of the grant of
right of way has already been laid to rest.

For failure to appeal the decision of the trial court to the Court of Appeals, petitioners cannot
obtain any affirmative relief other than those granted in the decision of the trial court. That
decision of the court below has become final as against them and can no longer be reviewed,
much less reversed, by this Court. The rule in this jurisdiction is that whenever an appeal is
taken in a civil case, an appellee who has not himself appealed may not obtain from the
appellate court any affirmative relief other than what was granted in the decision of the lower
court. The appellee can only advance any argument that he may deem necessary to defeat the
appellant’s claim or to uphold the decision that is being disputed, and he can assign errors in his
brief if such is required to strengthen the views expressed by the court a quo. These assigned
errors, in turn, may be considered by the appellate court solely to maintain the appealed
decision on other grounds, but not for the purpose of reversing or modifying the judgment in the
appellee’s favor and giving him other affirmative reliefs. 7

However, with respect to the second issue, we agree with petitioners that the Court of Appeals
erred in awarding damages in favor of private respondents. The award of damages has no
substantial legal basis. A reading of the decision of the Court of Appeals will show that the
award of damages was based solely on the fact that the original plaintiff, Pacifico Mabasa,
incurred losses in the form of unrealized rentals when the tenants vacated the leased premises
by reason of the closure of the passageway.

However, the mere fact that the plaintiff suffered losses does not give rise to a right to recover
damages. To warrant the recovery of damages, there must be both a right of action for a legal
wrong inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong without
damage, or damage without wrong, does not constitute a cause of action, since damages are
merely part of the remedy allowed for the injury caused by a breach or wrong. 8

There is a material distinction between damages and injury. Injury is the illegal invasion of a
legal right; damage is the loss, hurt, or harm which results from the injury, and damages are the
recompense or compensation awarded for the damage suffered. Thus, there can be damage
without injury in those instances in which the loss or harm was not the result of a violation of a
legal duty. These situations are often called damnum absque injuria. 9

In order that a plaintiff may maintain an action for the injuries of which he complains, he must
establish that such injuries resulted from a breach of duty which the defendant owed to the
plaintiff — a concurrence of injury to the plaintiff and legal responsibility by the person causing
it. 10 The underlying basis for the award of tort damages is the premise that an individual was
injured in contemplation of law. Thus, there must first be the breach of some duty and the
imposition of liability for that breach before damages may be awarded, it is not sufficient to state
that there should be tort liability merely because the plaintiff suffered some pain and suffering.
11

Many accidents occur and many injuries are inflicted by acts or omissions which cause damage
or loss to another but which violate no legal duty to such other person, and consequently create
no cause of action in his favor. In such cases, the consequences must be borne by the injured
person alone. The law affords. no remedy for damages resulting from an act which does not
amount to a legal injury or wrong. 12
In other words, in order that the law will give redress for an act causing damage, that act must
be not only hurtful, but wrongful. There must be damnum et injuria. 13 If, as may happen in
many cases, a person sustains actual damage, that is, harm or loss to his person or property,
without sustaining any legal injury, that is, an act or omission which the law does not deem an
injury, the damage is regarded as damnum absque injuria. 14

In the case at bar, although there was damage, there was no legal injury. Contrary to the claim
of private respondents, petitioners could not be said to have violated the principle of abuse of
right. In order that the principle of abuse of right provided in Article 21 of the Civil Code can be
applied, it is essential that the following requisites concur: (1) The defendant should have acted
in a manner that is contrary to morals, good customs or public policy, (2) The acts should be
willful; and (3) There was damage or injury to the plaintiff. 15 The act of petitioners in
constructing a fence within their lot is a valid exercise of their right as owners, hence not
contrary to morals, good customs or public policy. The law recognizes in the owner the right to
enjoy and dispose of a thing, without other limitations than those established by law. 16 It is
within the right of petitioners, as owners, to enclose and fence their property. Article 430 of the
Civil Code provides that" (e)very owner may enclose or fence his land or tenements by means
of walls, ditches, live or dead hedges, or by any other means without detriment to servitudes
constituted thereon."cralaw virtua1aw library

At the time of the construction of the fence, the lot was not subject to any servitudes. There was
no easement of way existing in favor of private respondents, either by law or by contract. The
fact that private respondents had no existing right over the said passageway is confirmed by the
very decision of the trial court granting a compulsory right of way in their favor after payment of
just compensation. It was only that decision which gave private respondents the right to use the
said passageway after payment of the compensation and imposed a corresponding duty on
petitioners not to interfere in the exercise of said right.

Hence, prior to said decision, petitioners had an absolute right over their property and their act
of fencing and enclosing the same was an act which they may lawfully perform in the
employment and exercise of said right. To repeat, whatever injury or damage may have been
sustained by private respondents by reason of the rightful use of the said land by petitioners is
damnum absque injuria. 17

A person has a right to the natural use and enjoyment of his own property, according to his
pleasure, for all the purposes to which such property is usually applied. As a general rule,
therefore, there is no cause of action for acts done by one person upon his own property in a
lawful and proper manner, although such acts incidentally cause damage or an unavoidable
loss to another, as such damage or loss is damnum absque injuria. 18 When the owner of
property makes use thereof in the general and ordinary manner in which the property is used,
such as fencing or enclosing the same as in this case, nobody can complain of having been
injured, because the inconvenience arising from said use can be considered as a mere
consequence of community life. 19

The proper exercise of a lawful right cannot constitute a legal wrong for which an action will lie,
20 although the act may result in damage to another, for no legal right has been invaded. 21
One may use any lawful means to accomplish a lawful purpose and though the means adopted
may cause damage to another, no cause of action arises in the latter’s favor. Any injury or
damage occasioned thereby is damnum absque Injuria. The courts can give no redress for
hardship to an individual resulting from action reasonably calculated to achieve a lawful end by
lawful means. 22

WHEREFORE, under the compulsion of the foregoing premises, the appealed decision of
respondent Court of Appeals is hereby REVERSED and SET ASIDE and the judgment of the
trial court is correspondingly REINSTATED.

SO ORDERED.
 THIRD DIVISION

[G.R. No. 156168. December 14, 2004]

EQUITABLE BANKING CORPORATION, petitioner, vs. JOSE T. CALDERON, respondent.

DECISION
GARCIA, J.:

Thru this petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner Equitable Banking Corporation (EBC), seeks the reversal and setting aside of the
decision dated November 25, 2002[1] of the Court of Appeals in CA-G.R. CV No. 60016, which
partially affirmed an earlier decision of the Regional Trial Court at Makati City, Branch 61,
insofar as it grants moral damages and costs of suit to herein respondent, Jose T. Calderon.
The decision under review recites the factual background of the case, as follows:

Plaintiff-appellee [now respondent] Jose T. Calderon (Calderon for brevity), is a businessman

engaged in several business activities here and abroad, either in his capacity as President or
Chairman of the Board thereon. In addition thereto, he is a stockholder of PLDT and a member
of the Manila Polo Club, among others. He is a seasoned traveler, who travels at least seven
times a year in the U.S., Europe and Asia. On the other hand, the defendant-appellant [now
petitioner] Equitable Banking Corporation (EBC for brevity), is one of the leading commercial
banking institutions in the Philippines, engaged in commercial banking, such as acceptance of
deposits, extension of loans and credit card facilities, among others.

xxx xxx xxx

Sometime in September 1984, Calderon applied and was issued an Equitable International Visa
card (Visa card for brevity). The said Visa card can be used for both peso and dollar
transactions within and outside the Philippines. The credit limit for the peso transaction is
TWENTY THOUSAND (P20,000.00) PESOS; while in the dollar transactions, Calderon is
required to maintain a dollar account with a minimum deposit of $3,000.00, the balance of dollar
account shall serve as the credit limit.

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

Deeply embarrassed and humiliated, and in order to avoid further indignities, Calderon paid
cash for the Gucci goods and items that he bought.

Upon his return to the Philippines, and claiming that he suffered much torment and
embarrassment on account of EBCs wrongful act of blacklisting/suspending his VISA credit card
while at the Gucci store in Hongkong, Calderon filed with the Regional Trial Court at Makati City
a complaint for damages[2] against EBC.
In its Answer,[3] EBC denied any liability to Calderon, alleging that the latters credit card
privileges for dollar transactions were earlier placed under suspension on account of Calderons
prior use of the same card in excess of his credit limit, adding that Calderon failed to settle said
prior credit purchase on due date, thereby causing his obligation to become past due.
Corollarily, EBC asserts that Calderon also failed to maintain the required minimum deposit of
$3,000.00.
To expedite the direct examination of witnesses, the trial court required the parties to
submit affidavits, in question-and-answer form, of their respective witnesses, to be sworn to in
court, with cross examination to be made in open court.
Eventually, in a decision dated October 10, 1997,[4] the trial court, concluding that defendant
bank was negligent if not in bad faith, in suspending, or blacklisting plaintiffs credit card without
notice or basis, rendered judgment in favor of Calderon, thus:

WHEREFORE PREMISES ABOVE CONSIDERED, judgment is hereby rendered in favor of

plaintiff as against defendant EQUITABLE BANKING CORPORATION, which is hereby
ORDERED to pay plaintiff as follows:

1. the sum of US$150.00 as actual damages;

2. the sum of P200,000.00 as and by way of moral damages;

3. the amount of P100,000.00 as exemplary damages;

4. the sum of P100,000.00 as attorneys fees plus P500.00 per court hearing and

5. costs of suit.

SO ORDERED.

Therefrom, EBC went to the Court of Appeals (CA), whereat its recourse was docketed
as CA G.R. CV No. 60016.
After due proceedings, the CA, in a decision dated November 25, 2002,[5] affirmed that of
the trial court but only insofar as the awards of moral damages, the amount of which was even
reduced, and the costs of suits are concerned. More specifically, the CA decision dispositively
reads:[6]
WHEREFORE, in consideration of the foregoing disquisitions, the decision of the court a
quo dated 10 October 1997 is AFFIRMED insofar as the awards of moral damages and costs of
suit are concerned. However, anent the award of moral damages, the same is reduced to One
Hundred Thousand (P100,000.00) Pesos.

The rest of the awards are deleted.

SO ORDERED.

Evidently unwilling to accept a judgment short of complete exemption from any liability to
Calderon, EBC is now with us via the instant petition on its lone submission that THE COURT
OF APPEALS ERRED IN HOLDING THAT THE RESPONDENT IS ENTITLED TO MORAL
DAMAGES NOTWITHSTANDING ITS FINDING THAT PETITIONERS ACTIONS HAVE NOT
BEEN ATTENDED WITH ANY MALICE OR BAD FAITH.[7]
The petition is impressed with merit.
In law, moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation and similar
injury.[8]However, to be entitled to the award thereof, it is not enough that one merely suffered
sleepless nights, mental anguish or serious anxiety as a result of the actuations of the other
party.[9] In Philippine Telegraph & Telephone Corporation vs. Court of Appeals,[10] we have had
the occasion to reiterate the conditions to be met in order that moral damages may be
recovered, viz:

An award of moral damages would require, firstly, evidence of besmirched reputation, or

physical, mental or psychological suffering sustained by the claimant; secondly, a culpable act
or omission factually established; thirdly, proof that the wrongful act or omission of the
defendant is the proximate cause of the damages sustained by the claimant; and fourthly, that
the case is predicated on any of the instances expressed or envisioned by Articles 2219 and
2220 of the Civil Code.

Particularly, in culpa contractual or breach of contract, as here, moral damages are

recoverable only if the defendant has acted fraudulently or in bad faith, [11] or is found guilty of
gross negligence amounting to bad faith, or in wanton disregard of his contractual
obligations.[12] Verily, the breach must be wanton, reckless, malicious or in bad faith, oppressive
or abusive.[13]
Here, the CA ruled, and rightly so, that no malice or bad faith attended petitioners dishonor
of respondents credit card. For, as found no less by the same court, petitioner was justified in
doing so under the provisions of its Credit Card Agreement[14] with respondent, paragraph 3 of
which states:

xxx the CARDHOLDER agrees not to exceed his/her approved credit limit, otherwise, all
charges incurred including charges incurred through the use of the extension CARD/S, if any in
excess of credit limit shall become due and demandable and the credit privileges shall be
automatically suspended without notice to the CARDHOLDER in accordance with Section 11
hereof.
 We are thus at a loss to understand why, despite its very own finding of absence of bad
faith or malice on the part of the petitioner, the CA nonetheless adjudged it liable for moral
damages to respondent.
Quite evidently, in holding petitioner liable for moral damages, the CA justified the award on
its assessment that EBC was negligent in not informing Calderon that his credit card was
already suspended even before he left for Hongkong, ratiocinating that petitioners right to
automatically suspend a cardholders privileges without notice should not have been
indiscriminately used in the case of respondent because the latter has already paid his past
obligations and has an existing dollar deposit in an amount more than the required minimum for
credit card at the time he made his purchases in Hongkong. But, as explained by the petitioner
in the memorandum it filed with this Court,[15] which explanations were never controverted by
respondent:

xxx prior to the incident in question (i.e., April 30, 1986 when the purchases at the Gucci store in
Hongkong were made), respondent made credit purchases in Japan and Hongkong from
August to September 1985 amounting to US$14,226.12, while only having a deposit of
US$3,639.00 in his dollar account as evidenced by the pertinent monthly statement of
respondents credit card transactions and his bank passbook, thus exceeding his credit limit;
these purchases were accommodated by the petitioner on the condition that the amount needed
to cover the same will be deposited in a few days as represented by respondents secretary and
his companys general manager a certain Mrs. Zamora and Mr. F.R. Oliquiano; respondent
however failed to make good on his commitment; later, respondent likewise failed to make the
required deposit on the due date of the purchases as stated in the pertinent monthly statement
of account; as a consequence thereof, his card privileges for dollar transactions were
suspended; it was only four months later on 31 January 1986, that respondent deposited the
sum of P14,501.89 in his dollar account to cover his purchases; the said amount however was
not sufficient to maintain the required minimum dollar deposit of $3,000.00 as the respondents
dollar deposit stood at only US$2,704.94 after satisfaction of his outstanding accounts; a day
before he left for Hongkong, respondent made another deposit of US$14,000.00 in his dollar
account but did not bother to request the petitioner for the reinstatement of his credit card
privileges for dollar transactions, thus the same remained under suspension.[16]

The foregoing are based on the sworn affidavit of petitioners Collection Manager, a certain
Lourdes Canlas, who was never cross examined by the respondent nor did the latter present
any evidence to refute its veracity.
Given the above, and with the express provision on automatic suspension without notice
under paragraph 3, supra, of the parties Credit Card Agreement, there is simply no basis for
holding petitioner negligent for not notifying respondent of the suspended status of his credit
card privileges.
It may be so that respondent, a day before he left for Hongkong, made a deposit of
US$14,000.00 to his dollar account with petitioner. The sad reality, however, is that he never
verified the status of his card before departing for Hongkong, much less requested petitioner to
reinstate the same.[17]
And, certainly, respondent could not have justifiably assumed that petitioner must have
reinstated his card by reason alone of his having deposited US$14,000.00 a day before he left
for Hongkong. As issuer of the card, petitioner has the option to decide whether to reinstate or
altogether terminate a credit card previously suspended on considerations which the petitioner
deemed proper, not the least of which are the cardholders payment record, capacity to pay and
compliance with any additional requirements imposed by it. That option, after all, is expressly
embodied in the same Credit Card Agreement, paragraph 12 of which unmistakably states:

The issuer shall likewise have the option of reinstating the card holders privileges which have
been terminated for any reason whatsoever upon submission of a new accomplished
application form if required by the issuer and upon payment of an additional processing fee
equivalent to annual fee.[18]

Even on the aspect of negligence, therefore, petitioner could not have been properly
adjudged liable for moral damages.
Unquestionably, respondent suffered damages as a result of the dishonor of his card. There
is, however, a material distinction between damages and injury. To quote from our decision
in BPI Express Card Corporation vs. Court of Appeals:[19]

Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from
the injury; and damages are the recompense or compensation awarded for the damage
suffered. Thus, there can be damage without injury in those instances in which the loss or
harm was not the result of a violation of a legal duty. In such cases the consequences must
be borne by the injured person alone, the law affords no remedy for damages resulting from an
act which does not amount to a legal injury or wrong. These situations are often called damnum
absque injuria.

In other words, in order that a plaintiff may maintain an action for the injuries of which he
complains, he must establish that such injuries resulted from a breach of duty which the
defendant owed to the plaintiff- a concurrence of injury to the plaintiff and legal responsibility by
the person causing it. The underlying basis for the award of tort damages is the premise that an
individual was injured in contemplation of law. Thus, there must first be a breach of some
duty and the imposition of liability for that breach before damages may be awarded; and the
breach of such duty should be the proximate cause of the injury. (Emphasis supplied).

In the situation in which respondent finds himself, his is a case of damnum absque injuria.
We do not take issue with the appellate court in its observation that the Credit Card
Agreement herein involved is a contract of adhesion, with the stipulations therein contained
unilaterally prepared and imposed by the petitioner to prospective credit card holders on a take-
it-or-leave-it basis. As said by us in Polotan, Sr. vs. Court of Appeals:[20]

A contract of adhesion is one in which one of the contracting parties imposes a ready-made
form of contract which the other party may accept or reject, but cannot modify. One party
prepares the stipulation in the contract, while the other party merely affixes his signature or his
adhesion thereto giving no room for negotiation and depriving the latter of the opportunity to
bargain on equal footing.

On the same breath, however, we have equally ruled that such a contract is as binding as
ordinary contracts, the reason being that the party who adheres to the contract is free to reject it
entirely.[21]
Moreover, the provision on automatic suspension without notice embodied in the same
Credit Card Agreement is couched in clear and unambiguous term, not to say that the
agreement itself was entered into by respondent who, by his own account, is a reputable
businessman engaged in business activities here and abroad.
On a final note, we emphasize that moral damages are in the category of an award
designed to compensate the claim for actual injury suffered and not to impose a penalty on the
wrongdoer.[22]
WHEREFORE, the instant petition is hereby GRANTED and the decision under review
REVERSED and SET ASIDE.
SO ORDERED.
 THIRD DIVISION

G.R. No. 191033, January 11, 2016

THE ORCHARD GOLF & COUNTRY CLUB, INC., EXEQUIEL D. ROBLES, CARLO R.H.
MAGNO, CONRADO L. BENITEZ II, VICENTE R. SANTOS, HENRY CUA LOPING, MARIZA
SANTOS-TAN, TOMAS B. CLEMENTE III, AND FRANCIS C.
MONTALLANA, Petitioners, v. ERNESTO V. YU AND MANUEL C. YUHICO, Respondents.

DECISION

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court (Rules) seeks to
reverse the Resolutions dated September 16, 20091 and January 21, 20102 of the Court of
Appeals (CA) in CA-G.R. SP No. 106918, which reconsidered and set aside its Resolution
dated January 15, 20093 granting petitioners a 15-day period within which to file a petition for
review under Rule 43 of the Rules.

The present case is a continuation of Yu v. The Orchard Gold & Country Club, Inc.4 decided by
this Court on March 1, 2007. For brevity, the relevant facts narrated therein are quoted as
follows:ChanRoblesVirtualawlibrary

On May 28, 2000, a Sunday, [respondents] Ernesto Yu and Manuel Yuhico went to the Orchard
Golf & Country Club to play a round of golf with another member of the club. At the last minute,
however, that other member informed them that he could not play with them. Due to the "no
twosome" policy of the Orchard contained in the membership handbook prohibiting groups of
less than three players from teeing off on weekends and public holidays before 1:00 p.m.,
[respondents] requested management to look for another player to join them.

Because [Orchard] were unable to find their third player, [respondent] Yu tried to convince
Francis Montallana, Orchard's assistant golf director, to allow them to play twosome, even if
they had to tee off from hole no. 10 of the Palmer golf course. Montallana refused, stating that
the flights which started from the first nine holes might be disrupted. [Respondent] Yu then
shouted invectives at Montallana, at which point he told [respondent] Yuhico that they should
just tee off anyway, regardless of what management's reaction would be. [Respondents] then
teed off without permission from Montallana. They were thus able to play, although they did so
without securing a tee time control slip before teeing off, again in disregard of a rule in the
handbook. As a result of [respondents'] actions, Montallana filed a report on the same day with
the board of directors (the board).

In separate letters dated May 31, 2000, the board, through [petitioner] Clemente, requested
[respondents] to submit their written comments on Montallana's incident report dated May 28,
2000. The report was submitted for the consideration of the board.
Subsequently, on June 29, 2000, the board resolved to suspend [respondents] from July 16 to
October 15, 2000, and served notice thereof on them.

On July 11, 2000, [respondents] filed separate petitions for injunction with application for
temporary restraining order (TRO) and/or preliminary injunction with the Securities Investigation
and Clearing Department (SICD) of the Securities and Exchange Commission (SEC), at that
time the tribunal vested by law with jurisdiction to hear and decide intra-corporate controversies.
The cases, in which [respondents] assailed the validity of their suspension, were docketed as
SEC Case Nos. 07-00-6680 and 07-00-6681. They were eventually consolidated.

After a joint summary hearing on the aforesaid petitions, the SEC-SICD, on July 14, 2000,
issued a TRO effective for 20 days from issuance, restraining and enjoining [petitioners], their
agents or representatives from implementing or executing the suspension of [respondents].

On August 1, 2000, the SEC en banc issued its "Guidelines on Intra-Corporate Cases Pending
Before the SICD and the Commission En Banc of the Securities and Exchange Commission"
(guidelines). Sections 1 and 2 of these guidelines provided:ChanRoblesVirtualawlibrary
Section 1. Intra-corporate and suspension of payments or rehabilitation cases may still be filed
with the Securities and Exchange Commission on or before August 8, 2000. However, the
parties-litigants or their counsels or representatives shall be advised that the jurisdiction of the
Commission over these cases shall be eventually transferred to the Regional Trial Courts upon
effectivity of The Securities Regulation Code by August 9, 2000.

Section 2. Prayers for temporary restraining order or injunction or suspension of payment order
contained in cases filed under the preceding section may be acted upon favorably provided that
the effectivity of the corresponding order shall only be up to August 8, 2000. Prayers for other
provisional remedies shall no longer be acted upon by the Commission. In all these cases, the
parties-litigants or their counsels or representatives shall be advised that the said cases will
eventually be transferred to the regular courts by August 9, 2000. (Emphasis ours)
After hearing [respondents'] applications for preliminary injunction, the SEC-SICD issued an
order dated August 2, 2000 directing the issuance of a writ of preliminary injunction enjoining
the individual [petitioners], their agents and representatives from suspending [respondents],
upon the latter's posting of separate bonds of P40,000. This [respondents] did on August 4,
2000.

On August 7, 2000, the SEC-SICD issued a writ of preliminary injunction against [petitioners]
directing them to strictly observe the order dated August 2, 2000.

On October 31, 2000, the board held a special meeting in which it resolved to implement the
June 29, 2000 order for the suspension of [respondents] in view of the fact that the writs of
injunction issued by the SICD in their respective cases had already [elapsed] on August 8, 2000
under the SEC guidelines.

In separate letters dated December 4, 2000 addressed to each [respondent], [petitioner]

Clemente informed them that the board was implementing their suspensions.

On December 12, 2000, [respondents] filed a petition for indirect contempt against [petitioners]
in the Regional Trial Court (RTC) of Dasmarinas, Cavite, docketed as Civil Case No. 2228-00.

In an order dated December 13, 2000, the Dasmarinas, Cavite RTC, Branch 90, through Judge
Dolores [L.] Espa�ol, directed the parties to maintain the "last, actual, peaceable and
uncontested state of things," effectively restoring the writ of preliminary injunction, and also
ordered [petitioners] to file their answer to the petition. [Petitioners] did not file a motion for
reconsideration but filed a petition for certiorari and prohibition with the CA, docketed as CA-
G.R. SP No. 62309, contesting the propriety of the December 13, 2000 order of Judge
Espa�ol. They also prayed for the issuance of a TRO and writ of preliminary injunction.

The CA reversed the Dasmarinas, Cavite RTC in the x x x decision dated August 27, 2001.

In view of the CA's decision in CA-G.R. SP No. 62309, [petitioners] finally implemented
[respondents'] suspension.

In the meantime, [respondents] filed a motion ad cautelam dated August 30, 2001 in the RTC of
Imus, Cavite, Branch 21, praying for the issuance of a TRO and/or writ of injunction to enjoin
[petitioners] from implementing the suspension orders. They alleged that neither the CA nor this
Court could afford them speedy and adequate relief, hence[,] the case in the RTC of Imus,
Cavite. The case was docketed as SEC Case Nos. 001-01 and 002-01.

On September 7, 2001, the Imus, Cavite RTC issued a TRO. [Petitioners] filed a motion for
reconsideration on September [11,] 2001.

It was after the issuance of this TRO that [respondents] filed, on September 12, 2001, a motion
for reconsideration of the CA's decision in CA-G.R. SP No. 62309. In a resolution dated October
10, 2001, the CA denied [respondents'] motion, prompting them to elevate the matter to this
Court via petition for review on certiorari, docketed as G.R. No. 150335.

In an order dated September 21, 2001, the Imus, Cavite RTC denied [petitioners'] motion for
reconsideration and directed the issuance of a writ of preliminary injunction. This prompted
[petitioners] to file another petition for certiorari in the Court of Appeals [docketed as CA-G.R.
SP No. 67664] which x x x issued [on March 26, 2002] a TRO against the Imus, Cavite RTC,
enjoining it from implementing the writ of preliminary injunction.

At this point, [respondents] filed their second petition in this Court, this time a special civil action
for certiorari, docketed as G.R. No. 152687, which included a prayer for the issuance of a TRO
and/or the issuance of a writ of preliminary injunction to restrain the enforcement of the CA-
issued TRO.

On May 6, 2002, the Court issued a resolution consolidating G.R. No. 152687 and G.R. No.
150335.

In G.R. No. 150335, the issue for consideration [was] whether Sections 1 and 2 of the SEC
guidelines dated August 1, 2000 shortened the life span of the writs of preliminary injunction
issued on August 7, 2000 by the SEC-SICD in SEC Case Nos. 07-00-6680 and 07-00-6681,
thereby making them effective only until August 8, 2000.

At issue in G.R. No. 152687, on the other hand, [was] whether or not the CA committed grave
abuse of discretion amounting to lack of jurisdiction by issuing a TRO against the Imus, Cavite
RTC and enjoining the implementation of its writ of preliminary injunction against
[petitioners].5chanroblesvirtuallawlibrary
On March 1, 2007, the Court denied the petitions in G.R. Nos. 150335 and 152687. In G.R. No.
150335, it was held that the parties were allowed to file their cases before August 8, 2000 but
any provisional remedies the SEC granted them were to be effective only until that date. Given
that the SEC Order and Writ of Injunction were issued on August 2 and 7, 2000, respectively,
both were covered by the guidelines and the stated cut-off date. As to G.R. No. 152687, We
ruled that the petition became moot and academic because the TRO issued by the CA on
March 26, 2002 already expired, its lifetime under Rule 58 of the Rules being only 60 days, and
petitioners themselves admitted that the CA allowed its TRO to elapse.

Meanwhile, per Order dated September 24, 2002 of the Imus RTC, SEC Case Nos. 001-01 and
002-01 were set for pre-trial conference.6 Trial on the merits thereafter ensued.

On December 4, 2008, the Imus RTC ruled in favor of respondents. The dispositive portion of
the Decision7 ordered:ChanRoblesVirtualawlibrary
WHEREFORE, premises considered, the decision of the Club's Board of Directors suspending
[respondents] Ernesto V. Yu and Manuel C. Yuhico is hereby declared void and of no effect,
and its' (sic) enforcement permanently enjoined. The writ of preliminary injunction is hereby
declared permanent.

[Petitioners] are hereby directed to jointly and severally pay each of the [respondents] the
following amounts:

(a) P2,000,000.00 as moral damages;

(b) P2,000,000.00 as exemplary damages;
(c) P500,000.00 as attorney's fees[;] and
(d) P100,000.00 as costs of litigation.

SO ORDERED.8chanroblesvirtuallawlibrary
Upon receiving a copy of the Imus RTC Decision on December 22, 2008, petitioners filed a
Notice of Appeal accompanied by the payment of docket fees on January 5,
2009.9 Respondents then filed an Opposition to Notice of Appeal with Motion for Issuance of
Writ of Execution,10 arguing that the December 4, 2008 Decision already became final and
executory since no petition for review under Rule 43 of the Rules was filed before the CA
pursuant to Administrative Matter No. 04-9-07-SC.

Realizing the mistake, petitioners filed on January 13, 2009 an Urgent Motion for Extension of
Time to File a Petition.11 Before the Imus RTC, they also filed a Motion to Withdraw the Notice
of Appeal.12chanroblesvirtuallawlibrary

On January 15, 2009, the CA resolved to give petitioners a 15-day period within which to file the
petition, but "[s]ubject to the timeliness of the filing of petitioners' Urgent Motion for Extension of
Time to File 'Petition for Review' Under Rule 43 of the Rules of Court dated January 13,
2009."13 Afterwards, on January 21, 2009, petitioners filed a Petition for
Review.14chanroblesvirtuallawlibrary

In the meantime, respondents filed an Opposition to Petitioners' Urgent Motion.15 Subsequently,

they also filed a motion for reconsideration of the CA's Resolution dated January 15,
2009.16chanroblesvirtuallawlibrary

Before the Imus RTC, respondents' motion for execution was granted on February 17, 2009.
The trial court opined that the proper appellate mode of review was not filed within the period
prescribed by the Rules and that the CA issued no restraining order.17 On March 2, 2009, the
Writ of Execution was issued.18 Eventually, on March 30, 2009, the Sheriff received the total
amount of P9,200,000.00, as evidenced by two manager's check payable to respondents in the
amount of P4,600,000.00 each, which were turned over to respondents'
counsel.19chanroblesvirtuallawlibrary

On September 16, 2009, the CA granted respondents' motion for reconsideration, setting aside
its January 15, 2009 Resolution. It relied on Atty. Abrenica v. Law Firm of Abrenica, Tungol &
Tibayan (Atty. Abrenica)20 and Land Bank of the Philippines v. Ascot Holdings and Equities,
Inc., (LBP),21 which respondents cited in their Opposition to the Urgent Motion and Motion for
Reconsideration. Petitioners moved to reconsider,22 but it was denied on January 21, 2010;
hence, this petition.

The Court initially denied the petition, but reinstated the same on October 6,
2010.23chanroblesvirtuallawlibrary

We grant the petition.

The cases of LBP and Atty. Abrenica are inapplicable. In LBP, the Court affirmed the CA's
denial of the bank's motion for extension of time to file a petition for review. Examination of said
case revealed that the bank filed a motion for reconsideration of the trial court's adverse
judgment dated March 15, 2006, in violation of Section 8(3), Rule 1 of the Interim Rules of
Procedure Governing Intra-Corporate Controversies under Republic Act No. 8799. It was held
that the filing of such prohibited pleading did not toll the reglementary period to appeal the
judgment via a petition for review under Rule 43 of the Rules. Thus, the CA already lacked
jurisdiction to entertain the petition which the bank intended to file, much less to grant the
motion for extension of time that was belatedly filed on July 25, 2006.

Also, in Atty. Abrenica, We found no compelling reasons to relax the stringent application of the
rules on the grounds as follows:ChanRoblesVirtualawlibrary
First, when petitioner received the trial court's consolidated decision on December 16, 2004,
A.M. No. 04-9-07-SC was already in effect for more than two months.

Second, petitioner had known about the new rules on the second week of January, 2005 when
he received a copy of respondents' Opposition (To Defendant's Notice of Appeal) dated January
6, 2005. In their opposition, respondents specifically pointed to the applicability of A.M. No. 04-
9-07-SC to the instant case.

Third, petitioner originally insisted in his Reply with Manifestation (To the Opposition to
Defendant's Notice of Appeal) that the correct mode of appeal was a "notice of appeal."

Petitioner reiterated in his Opposition to respondents' motion for execution dated January 14,
2005 that a notice of appeal was the correct remedy.

Finally, petitioner filed his Motion to Admit Attached Petition for Review only on June 10, 2005,
or almost eight months from the effectivity of A.M. No. 04-9-07-SC on October 15, 2004, after
he received the trial court's Order of May 11, 2005.24chanroblesvirtuallawlibrary
Unlike LBP and Atty. Abrenica, petitioners in this case committed an excusable delay of merely
seven (7) days. When they received a copy of the Imus RTC Decision on December 22, 2008,
they filed before the CA an Urgent Motion for Extension of Time to File a Petition on January
13, 2009. Meantime, they exhibited their desire to appeal the case by filing a Notice of Appeal
before the Imus RTC. Upon realizing their procedural faux pax, petitioners exerted honest and
earnest effort to file the proper pleading despite the expiration of the reglementary period. In
their urgent motion, they candidly admitted that a petition for review under Rule 43 and not a
notice of appeal under Rule 41 ought to have been filed. The material dates were also indicated.
Hence, the CA was fully aware that the 15-day reglementary period already elapsed when it
granted the time to file the petition.

In general, procedural rules setting the period for perfecting an appeal or filing a petition for
review are inviolable considering that appeal is not a constitutional right but merely a statutory
privilege and that perfection of an appeal in the manner and within the period permitted by law is
not only mandatory but jurisdictional.25 However, procedural rules may be waived or dispensed
with in order to serve and achieve substantial justice.26 Relaxation of the rules may be had when
the appeal, on its face, appears to be absolutely meritorious or when there are persuasive or
compelling reasons to relieve a litigant of an injustice not commensurate with the degree of
thoughtlessness in not complying with the prescribed procedure.27chanroblesvirtuallawlibrary

Notably, under A.M. No. 04-9-07-SC (Re: Mode of Appeal in Cases Formerly Cognizable by the
Securities and Exchange Commission),28 while the petition for review under Rule 43 of the
Rules should be filed within fifteen (15) clays from notice of the decision or final order of the
RTC, the CA may actually grant an additional period of fifteen (15) days within which to file the
petition and a further extension of time not exceeding fifteen (15) days for the most compelling
reasons. This implies that the reglementary period is neither an impregnable nor an unyielding
rule.

Here, there is also no material prejudice to respondents had the CA allowed the filing of a
petition for review. When the Imus RTC declared as permanent the writ of preliminary injunction,
the injunction became immediately executory. Respondents' suspension as Club members was
effectively lifted; in effect, it restored their rights and privileges unless curtailed by a temporary
restraining order or preliminary injunction.

More importantly, the substantive merits of the case deserve Our utmost consideration.

In the present case, Yu acknowledged that there was an offense committed.29 Similarly, Yuhico
admitted that he was aware or had prior knowledge of the Club's "no twosome" policy as
contained in the Club's Membership Handbook and that they teed off without the required tee
time slip.30 Also, while Yu recognized telling Montallana "kamote ka," Yuhico heard him also say
that he (Montallana) is "gago."31chanroblesvirtuallawlibrary

Respondents assert that the "no twosome" policy was relaxed by the management when a
member or player would not be prejudiced or, in the words of Yu, allowed when
"maluwag."32 Yet a thorough reading of the transcript of stenographic records (TSN) disclosed
that such claim is based not on concrete examples. No specific instance as to when and under
what circumstance the supposed relaxation took place was cited. Yuhico roughly recollected
two incidents but, assuming them to be true, these happened only after May 28, 2000.33 Further,
the tee pass or control slip and the Club's Palmer Course Card,34which was identified by
respondents' witness, Pepito Dimabuyo, to prove that he and another member were allowed to
play twosome on June 13, 2004, a Sunday, indicated that they were allowed to tee off only at
1:45 p.m.35 Lastly, granting, for the sake of argument, that the "no twosome" policy had been
relaxed in the past, Montallana cannot be faulted in exercising his prerogative to disallow
respondents from playing since they made no prior reservation and that there were standing
flights waiting for tee time. Per Cipriano Santos' Report, May 28, 2000 was a relatively busy day
as it had 200 registered players to accommodate as of 8:00 a.m.

It was averred that respondents teed off without the required tee time slip based on the thinking
that it was no longer necessary since Santos, the Club's Manager, allowed them by waving his
hands when Yuhico's caddie tried to pick up the slip in the registration office. Such excuse is
flimsy because it ignored the reality that Santos, a mere subordinate of Montallana who already
earned the ire of Yu, was practically more helpless to contain the stubborn insistence of
respondents.

Definitely, the contentions that respondents were not stopped by the management when they
teed off and that they did not cause harm to other members playing golf at the time for absence
of any complaints are completely immaterial to the fact that transgressions to existing Club rules
and regulations were committed. It is highly probable that they were tolerated so as to restore
the peace and avoid further confrontation and inconvenience to the parties involved as well as
to the Club members in general.

With regard to the purported damages they incurred, respondents testified during the trial to
support their respective allegations. Yuhico stated that he distanced himself from his usual
group (the "Alabang Boys") and that he became the butt of jokes of fellow golfers.36 On the
other hand, Yu represented that some of his friends in the business like Freddy Lim, a certain
Atty. Benjie, and Jun Ramos started to evade or refuse to have dealings with him after his
suspension.37 Apart from these self-serving declarations, respondents presented neither
testimonial nor documentary evidence to bolster their claims. Worse, Yu even admitted that
Freddy Lim and Atty. Benjie did not tell him that his suspension was the reason why they did not
want to transact with him.38chanroblesvirtuallawlibrary

Records reveal that respondents were given due notice and opportunity to be heard before the
Board of Directors imposed the penalty of suspension as Club members. Respondent Yu was
served with the May 31, 2000 letter39 signed by then Acting General Manager Tomas B.
Clemente III informing that he violated the "no twosome" policy, teed off without the required tee
time slip, and uttered derogatory remarks to Montallana in front of another member and the
caddies. In response, Yu's counsel asked for a copy of Montallana's report and a formal hearing
to confront the complainant and all the witnesses.40Subsequently, on June 13, 2000, Yu,
through counsel, submitted his explanation that included an admission of the "no twosome"
policy.41 Finally, on September 15, 2000, Yu was advised of the Board resolution to give him
another opportunity to present his side in a meeting supposed to be held on September 20,
2000.42 It appears, however, that Yu refused to attend.43chanroblesvirtuallawlibrary

Likewise, respondent Yuhico was given by Clemente a letter dated May 31, 2000 informing him
of violating the "no twosome" policy and teeing, off without the required tee time slip.44 After
receiving the same, Yuhico called up Clemente to hear his side.45 Like Yu, however, Yuhico
later refused to attend a meeting with the Board.46chanroblesvirtuallawlibrary

Respondents were suspended in accordance with the procedure set forth in the Club's By-laws.
There is no merit on their insistence that their suspension is invalid on the ground that the
affirmative vote of eight (8) members is required to support a decision suspending or expelling a
Club member. Both the provisions of Articles of Incorporation47 and By-Laws48 of the Club
expressly limit the number of directors to seven (7); hence, the provision on suspension and
expulsion of a member which requires the affirmative vote of eight (8) members is obviously a
result of an oversight. Former Senator Helena Z. Benitez, the Honorary Chairperson named in
the Membership Handbook, could not be included as a regular Board member since there was
no evidence adduced by respondents that she was elected as such pursuant to the Corporation
Code and the By-laws of the Club or that she had the right and authority to attend and vote in
Board meetings. In addition, at the time the Board resolved to suspend respondents, the
affirmative votes of only six (6) Board members already sufficed. The testimony of Jesus A.
Liganor, who served as Assistant Corporate Secretary, that Rodrigo Francisco had not attended
a single Board meeting since 1997 remains uncontroverted.49 The Court agrees with petitioners
that the Club should not be powerless to discipline its members and be helpless against acts
inimical to its interest just because one director had been suspended and refused to take part in
the management affairs.

Lastly, contrary to respondents' position, the recommendation of the House Committee50 to

suspend a Club member is not a pre-requisite. Section 1, Article XIV,51 not Section 2 (b), Article
XI,52 of the By-Laws governs as it outlines the procedure for the suspension of a member. Even
assuming that the recommendation of the House Committee is mandatory, respondents failed to
prove, as a matter of fact, that petitioners acted in bad faith in relying on the subject provision,
which employs the permissive word "may" in reference to the power of the House Committee to
recommend anytime the suspension of a Club member.

Way different from the trial court's findings, there is, therefore, no factual and legal basis to
grant moral and exemplary damages, attorney's fees and costs of suit in favor of respondents.
The damages suffered, if there are any, partake of the nature of a damnum absque injuria. As
elaborated in Spouses Custodio v. CA:53chanroblesvirtuallawlibrary
xxx [T]he mere fact that the plaintiff suffered losses does not give rise to a right to recover
damages. To warrant the recovery of damages, there must be both a right of action for a legal
wrong inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong without
damage, or damage without wrong, does not constitute a cause of action, since damages are
merely part of the remedy allowed for the injury caused by a breach or wrong.

There is a material distinction between damages and injury. Injury is the illegal invasion of a
legal right; damage is the loss, hurt, or harm which results from the injury; and damages are the
recompense or compensation awarded for the damage suffered. Thus, there can be damage
without injury in those instances in which the loss or harm was not the result of a violation of a
legal duty. These situations are often called damnum absque injuria.

In order that a plaintiff may maintain an action for the injuries of which he complains, he must
establish that such injuries resulted from a breach of duty which the defendant owed to the
plaintiff - a concurrence of injury to the plaintiff and legal responsibility by the person causing it.
The underlying basis for the award of tort damages is the premise that an individual was injured
in contemplation of law. Thus, there must first be the breach of some duty and the imposition of
liability for that breach before damages may be awarded; it is not sufficient to state that there
should be tort liability merely because the plaintiff suffered some pain and suffering.

Many accidents occur and many injuries are inflicted by acts or omissions which cause damage
or loss to another but which violate no legal duty to such other person, and consequently create
no cause of action in his favor. In such cases, the consequences must be borne by the injured
person alone. The law affords no remedy for damages resulting from an act which does not
amount to a legal injury or wrong.

In other words, in order that the law will give redress for an act causing damage, that act must
be not only hurtful, but wrongful. There must be damnum et injuria. If, as may happen in many
cases, a person sustains actual damage, that is, harm or loss to his person or property, without
sustaining any legal injury, that is, an act or omission which the law does not deem an injury, the
damage is regarded as damnum absque injuria.

xxxx

The proper exercise of a lawful right cannot constitute a legal wrong for which an action will lie,
although the act may result in damage to another, for no legal right has been invaded. One may
use any lawful means to accomplish a lawful purpose and though the means adopted may
cause damage to another, no cause of action arises in the latter's favor. Any injury or damage
occasioned thereby is damnum absque injuria. The courts can give no redress for hardship to
an individual resulting from action reasonably calculated to achieve a lawful end by lawful
means.54chanroblesvirtuallawlibrary
"One who makes use of his own legal right does no injury. Qui jure suo utitur nullum damnum
facit. If damage results from a person's exercising his legal rights, it is damnum absque
injuria."55 In this case, respondents failed to prove by preponderance of evidence that there is
fault or negligence on the part of petitioners in order to oblige them to pay for the alleged
damage sustained as a result of their suspension as Club members. Certainly, membership in
the Club is a privilege.56 Regular members are entitled to use all the facilities and privileges of
the Club, subject to its rules and regulations.57 As correctly pointed out by petitioners, the
mental anguish respondents experienced, assuming to be true, was brought upon them by
themselves for deliberately and consciously violating the rules and regulations of the Club.
Considering that respondents were validly suspended, there is no reason for the Club to
compensate them. Indeed, the penalty of suspension provided for in Section 1, Article XIV of the
By-Laws is a means to protect and preserve the interest and purposes of the Club. This being
so, the suspension of respondents does not fell under any of the provisions of the Civil Code
pertaining to the grant of moral and exemplary damages, attorney's fees, and litigation costs.

WHEREFORE, premises considered, the petition is GRANTED. The Resolutions dated

September 16, 2009 and January 21, 2010 of the Court of Appeals in CA-G.R. SP No. 106918,
which reconsidered and set aside its Resolution dated January 15, 2009, granting petitioners a
fifteen-day period within which to file a petition for review under Rule 43 of the Rules,
is ANNULLED AND SET ASIDE. SEC Case Nos. 001-01 and 002-01 filed and raffled before
the Regional Trial Court, Branch 21 of Imus, Cavite are hereby DISMISSED for lack of merit.
Respondents are ORDERED TO RETURN to petitioners the total amount of P9,200,000.00 or
P4,600,000.00 each, within THIRTY (30) DAYS from the time this decision becomes final and
executory. Thereafter, said amount shall earn legal interest of six percent (6%) per annum until
fully paid.

SO ORDERED.
 THIRD DIVISION

G.R. No. 178467, April 26, 2017

SPS. CRISTINO & EDNA CARBONELL, Petitioners, v. METROPOLITAN BANK AND TRUST
COMPANY, Respondent.

DECISION

BERSAMIN, J.:

The petitioners assail the decision promulgated on December 7, 2006,1 whereby the Court of
Appeals (CA) affirmed with modification the decision rendered on May 22, 19982 by the
Regional Trial Court, Branch 157, in Pasig City (RTC) dismissing the petitioners' complaint in
Civil Case No. 65725 for its lack of merit, and awarded attorney's fees under the respondent's
counterclaim.

Antecedents

The petitioners initiated against the respondent Civil Case No. 65725, an action for damages,
alleging that they had experienced emotional shock, mental anguish, public ridicule, humiliation,
insults and embarrassment during their trip to Thailand because of the respondent's release to
them of five US$100 bills that later on turned out to be counterfeit. They claimed that they had
travelled to Bangkok, Thailand after withdrawing US$1,000.00 in US$100 notes from their dollar
account at the respondent's Pateros branch; that while in Bangkok, they had exchanged five
US$100 bills into Baht, but only four of the US$100 bills had been accepted by the foreign
exchange dealer because the fifth one was "no good;" that unconvinced by the reason for the
rejection, they had asked a companion to exchange the same bill at Norkthon Bank in Bangkok;
that the bank teller thereat had then informed them and their companion that the dollar bill was
fake; that the teller had then confiscated the US$100 bill and had threatened to report them to
the police if they insisted in getting the fake dollar bill back; and that they had to settle for a
Foreign Exchange Note receipt.3

The petitioners claimed that later on, they had bought jewelry from a shop owner by using four
of the remaining US$100 bills as payment; that on the next day, however, they had been
confronted by the shop owner at the hotel lobby because their four US$100 bills had turned out
to be counterfeit; that the shop owner had shouted at them: "You Filipinos, you are all
cheaters!;" and that the incident had occurred within the hearing distance of tel low travelers
and several foreigners.

The petitioners continued that upon their return to the Philippines, they had confronted the
manager of the respondent's Pateros branch on the fake dollar bills, but the latter had insisted
that the dollar bills she had released to them were genuine inasmuch as the bills had come from
the head office; that in order to put the issue to rest, the counsel of the petitioners had submitted
the subject US$100 bills to the Bangko Sentral ng Pilipinas (BSP) for examination; that the BSP
had certified that the four US$100 bills were near perfect genuine notes;4 and that their counsel
had explained by letter their unfortunate experience caused by the respondent's release of the
fake US dollar bills to them, and had demanded moral damages of P10 Million and exemplary
damages.5

The petitioners then sent a written notice to the respondent, attaching the BSP certification and
informing the latter that they were giving it five days within which to comply with their demand,
or face court action.6 In response, the respondent's counsel wrote to the petitioners on March
1996 expressing sympathy with them on their experience but stressing that the respondent
could not absolutely guarantee the genuineness of each and every foreign currency note that
passed through its system; that it had also been a victim like them; and that it had exercised the
diligence required in dealing with foreign currency notes and in the selection and supervision of
its employees.7

Prior to the filing of the suit in the RTC, the petitioners had two meetings with the respondent's
representatives. In the course of the two meetings, the latter's representatives reiterated their
sympathy and regret over the troublesome experience that the petitioners had encountered, and
offered to reinstate US$500 in their dollar account, and, in addition, to underwrite a round-trip
all-expense-paid trip to Hong Kong, but they were adamant and staged a walk-out.8

In its judgment rendered on May 22, 1998,9 the RTC ruled in favor of the respondent, disposing
as follows:

WHEREFORE, in the light of all the foregoing, judgment is hereby rendered:

1. Dismissing plaintiffs complaint for lack of merit;

2. On the counterclaim, awarding Metrobank the amount of P20,000.00 as attorney's fees.

SO ORDERED.10

The petitioners appealed, but the CA ultimately promulgated its assailed decision on December
7, 2006 affirming the judgment of the RTC with the modification of deleting the award of
attorney's fees,11 to wit:

As to the award of attorneys fees, we agree with appellants that there is simply no factual and
legal basis thereto. Unquestionably, appellants filed the present case for the humiliation and
embarrassment they suffered in Bangkok. They instituted the complaint in their honest belief
that they were entitled to damages as a result of appellee's issuance of counterfeit dollar notes.
Such being the case, they should not be made answerable to attorney's fees. It is not good
public policy to put a premium on the right to litigate where such right is exercised in good faith,
albeit erroneously.

WHEREFORE, the appealed decision is AFFIRMED with modification that the award of
attorney's tees is deleted.

SO ORDERED.
 Issues

Hence, this appeal, with the petitioners contending that the CA gravely erred in affirming the
judgment of the RTC. They insist that inasmuch as the business of banking was imbued with
public interest, the respondent's failure to exercise the degree of diligence required in handling
the affairs of its clients showed that it was liable not just for simple negligence but for
misrepresentation and bad faith amounting to fraud; that the CA erred in giving weight and
relying on the news clippings allegedly showing that the "supernotes" had deceived even the
U.S. Secret Service and Central Intelligence Agency, for such news were not based on facts.12

Ruling of the Court

The appeal is partly meritorious.

The General Banking Act of 2000 demands of banks the highest standards of integrity and
performance. As such, the banks are under obligation to treat the accounts of their depositors
with meticulous care.13However, the banks' compliance with this degree of diligence is to be
determined in accordance with the particular circumstances of each case.

The petitioners argue that the respondent was liable for failing to observe the diligence required
from it by not doing an act from which the material damage had resulted by reason of
inexcusable lack of precaution in the performance of its duties.14 Hence, the respondent was
guilty of gross negligence, misrepresentation and bad faith amounting to fraud.

The petitioners' argument is unfounded.

Gross negligence connotes want of care in the performance of one's duties; it is a negligence
characterized by the want of even slight care, acting or omitting to act in a situation where there
is duty to act, not inadvertently but wilfully and intentionally, with a conscious indifference to
consequences insofar as other persons may be affected. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them.15

In order for gross negligence to exist as to warrant holding the respondent liable therefor, the
petitioners must establish that the latter did not exert any effort at all to avoid unpleasant
consequences, or that it wilfully and intentionally disregarded the proper protocols or procedure
in the handling of US dollar notes and in selecting and supervising its employees.

The CA and the RTC both found that the respondent had exercised the diligence required by
law in observing the standard operating procedure, in taking the necessary precautions for
handling the US dollar bills in question, and in selecting and supervising its employees.16 Such
factual findings by the trial court are entitled to great weight and respect especially after being
affirmed by the appellate court, and could be overturned only upon a showing of a very good
reason to warrant deviating from them.

In this connection, it is significant that the BSP certified that the falsity of the US dollar notes in
question, which were "near perfect genuine notes," could be detected only with extreme
difficulty even with the exercise of due diligence. Ms. Nanette Malabrigo, BSP's Senior Currency
Analyst, testified that the subject dollar notes were "highly deceptive" inasmuch as the paper
used for them were similar to that used in the printing of the genuine notes. She observed that
the security fibers and the printing were perfect except for some microscopic defects, and that
all lines were clear, sharp and well defined.17

Nonetheless, the petitioners contend that the respondent should be liable for moral and
exemplary damages18 on account of their suffering the unfortunate experience abroad brought
about by their use of the take US dollar bills withdrawn from the latter.

The contention cannot be upheld.

The relationship existing between the petitioners and the respondent that resulted from a
contract of loan was that of a creditor-debtor.19 Even if the law imposed a high standard on the
latter as a bank by virtue of the fiduciary nature of its banking business, bad faith or gross
negligence amounting to bad faith was absent. Hence, there simply was no legal basis for
holding the respondent liable for moral and exemplary damages. In breach of contract, moral
damages may be awarded only where the defendant acted fraudulently or in bad faith. That was
not true herein because the respondent was not shown to have acted fraudulently or in bad
faith. This is pursuant to Article 2220 of the Civil Code, to wit:

Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the
court should find that, under the circumstances, such damages are justly due. The same rule
applies to breaches of contract where defendant acted fraudulently or in bad faith.

With the respondent having established that the characteristics of the subject dollar notes had
made it difficult even for the BSP itself as the country's own currency note expert to identify the
counterfeiting with ease despite adhering to all the properly laid out standard operating
procedure and precautions in the handling of US dollar bills, holding it liable for damages in
favor of the petitioners would be highly unwarranted in the absence of proof of bad faith, malice
or fraud on its part. That it formally apologized to them and even offered to reinstate the
USD$500.00 in their account as well as to give them the all-expense-paid round trip ticket to
Hong Kong as means to assuage their inconvenience did not necessarily mean it was liable. In
civil cases, an offer of compromise is not an admission of liability, and is inadmissible as
evidence against the offeror.20

Even without taking into consideration the news clippings to the effect that the US Secret
Service and Central Intelligence Agency had themselves been deceived by the 1990 series of
the US dollar notes infamously known as the "supernotes," the record had enough to show in
that regard, not the least of which was the testimony of Ms. Malabrigo as BSP's Senior Currency
Analyst about the highly deceptive nature of the subject US dollar notes and the possibility for
them to pass undetected.

Also, the petitioners' allegation of misrepresentation on the part of the respondent was factually
unsupported. They had been satisfied with the services of the respondent for about three years
prior to the incident in question.21 The incident was but an isolated one. Under the law, moral
damages for culpa contractual or breach of contract are recoverable only if the defendant acted
fraudulently or in bad faith, or is found guilty of gross negligence amounting to bad faith, or in
wanton disregard of his contractual obligations.22 The breach must be wanton, reckless,
malicious or in bad faith, oppressive or abusive.23 In order to maintain their action for damages,
the petitioners must establish that their injury resulted from a breach of duty that the respondent
had owed to them, that is, there must be the concurrence of injury caused to them as the
plaintiffs and legal responsibility on the part of the respondent. Underlying the award of
damages is the premise that an individual was injured in contemplation of law. In this regard,
there must first be a breach of some duty and the imposition of liability for that breach before
damages may be awarded; and the breach of such duty should be the proximate cause of the
injury.24 That was not so in this case.

It is true that the petitioners suffered embarrassment and humiliation in Bangkok. Yet, we should
distinguish between damage and injury. In The Orchard Golf & Country Club, Inc. v. Yu25 the
Court has fittingly pointed out the distinction, viz.:

x x x Injury is the illegal invasion of a legal right, damage is the loss, hurt, or harm which results
from the injury; and damages are the recompense or compensation awarded for the damage
suffered. Thus, there can be damage without injury in those instances in which the loss or harm
was not the result of a violation of a legal duty. These situations are often called damnum
absque injuria. 26

In every situation of damnum absque injuria, therefore, the injured person alone bears the
consequences because the law affords no remedy for damages resulting from an act that does
not amount to a legal injury or wrong. For instance, in BPI Express Card Corporation v. Court of
Appeals,27 the Court turned down the claim for damages of a cardholder whose credit card had
been cancelled after several defaults in payment, holding therein that there could be
damage without injury where the loss or harm was not the result of a violation of a legal duty
towards the plaintiff. In such situation, the injured person alone should bear the consequences
because the law afforded no remedy for damages resulting from an act that did not amount to a
legal injury or wrong.28 Indeed, the lack of malice in the conduct complained of precluded the
recovery of damages.29

Here, although the petitioners suffered humiliation resulting from their unwitting use of the
counterfeit US dollar bills, the respondent, by virtue of its having observed the proper protocols
and procedure in handling the US dollar bills involved, did not violate any legal duty towards
them. Being neither guilty of negligence nor remiss in its exercise of the degree of diligence
required by law or the nature of its obligation as a banking institution, the latter was not liable for
damages. Given the situation being one of damnum absque injuria, they could not be
compensated for the damage sustained.

WHEREFORE, the Court AFFIRMS the decision promulgated on December 7, 2006;

and ORDERS the petitioners to pay the costs of suit.

SO ORDERED.
 SECOND DIVISION

[G.R. NO. 154259 : February 28, 2005]

NIKKO HOTEL MANILA GARDEN and RUBY LIM, Petitioners, v. ROBERTO REYES, a.k.a.
"AMAY BISAYA," Respondent.

DECISION

CHICO-NAZARIO, J.:

In this Petition for Review on Certiorari, petitioners Nikko Hotel Manila Garden (Hotel
Nikko)1 and Ruby Lim assail the Decision2 of the Court of Appeals dated 26 November 2001
reversing the Decision3 of the Regional Trial Court (RTC) of Quezon City, Branch 104, as well
as the Resolution4 of the Court of Appeals dated 09 July 2002 which denied petitioners' motion
for reconsideration.

The cause of action before the trial court was one for damages brought under the human
relations provisions of the New Civil Code. Plaintiff thereat (respondent herein) Roberto Reyes,
more popularly known by the screen name "Amay Bisaya," alleged that at around 6:00 o'clock in
the evening of 13 October 1994, while he was having coffee at the lobby of Hotel Nikko,5 he
was spotted by his friend of several years, Dr. Violeta Filart, who then approached him.6 Mrs.
Filart invited him to join her in a party at the hotel's penthouse in celebration of the natal day of
the hotel's manager, Mr. Masakazu Tsuruoka.7Mr. Reyes asked if she could vouch for him for
which she replied: "of course."8 Mr. Reyes then went up with the party of Dr. Filart carrying the
basket of fruits which was the latter's present for the celebrant.9At the penthouse, they first had
their picture taken with the celebrant after which Mr. Reyes sat with the party of Dr. Filart. 10 After
a couple of hours, when the buffet dinner was ready, Mr. Reyes lined-up at the buffet table but,
to his great shock, shame and embarrassment, he was stopped by petitioner herein, Ruby Lim,
who claimed to speak for Hotel Nikko as Executive Secretary thereof.11 In a loud voice and
within the presence and hearing of the other guests who were making a queue at the buffet
table, Ruby Lim told him to leave the party ("huwag ka nang kumain, hindi ka imbitado, bumaba
ka na lang").12 Mr. Reyes tried to explain that he was invited by Dr. Filart.13 Dr. Filart, who was
within hearing distance, however, completely ignored him thus adding to his shame and
humiliation.14 Not long after, while he was still recovering from the traumatic experience, a
Makati policeman approached and asked him to step out of the hotel.15 Like a common criminal,
he was escorted out of the party by the policeman.16Claiming damages, Mr. Reyes asked for
One Million Pesos actual damages, One Million Pesos moral and/or exemplary damages and
Two Hundred Thousand Pesos attorney's fees.17

Ruby Lim, for her part, admitted having asked Mr. Reyes to leave the party but not under the
ignominious circumstance painted by the latter. Ms. Lim narrated that she was the Hotel's
Executive Secretary for the past twenty (20) years.18 One of her functions included organizing
the birthday party of the hotel's former General Manager, Mr. Tsuruoka.19 The year 1994 was no
different. For Mr. Tsuruoka's party, Ms. Lim generated an exclusive guest list and extended
invitations accordingly.20 The guest list was limited to approximately sixty (60) of Mr. Tsuruoka's
closest friends and some hotel employees and that Mr. Reyes was not one of those invited. 21 At
the party, Ms. Lim first noticed Mr. Reyes at the bar counter ordering a drink.22 Mindful of Mr.
Tsuruoka's wishes to keep the party intimate, Ms. Lim approached Mr. Boy Miller, the "captain
waiter," to inquire as to the presence of Mr. Reyes who was not invited.23 Mr. Miller replied that
he saw Mr. Reyes with the group of Dr. Filart.24 As Dr. Filart was engaged in conversation with
another guest and as Ms. Lim did not want to interrupt, she inquired instead from the sister of
Dr. Filart, Ms. Zenaida Fruto, who told her that Dr. Filart did not invite Mr. Reyes.25 Ms. Lim then
requested Ms. Fruto to tell Mr. Reyes to leave the party as he was not invited.26 Mr. Reyes,
however, lingered prompting Ms. Lim to inquire from Ms. Fruto who said that Mr. Reyes did not
want to leave.27 When Ms. Lim turned around, she saw Mr. Reyes conversing with a Captain
Batung whom she later approached.28 Believing that Captain Batung and Mr. Reyes knew each
other, Ms. Lim requested from him the same favor from Ms. Fruto, i.e., for Captain Batung to tell
Mr. Reyes to leave the party as he was not invited.29 Still, Mr. Reyes lingered. When Ms. Lim
spotted Mr. Reyes by the buffet table, she decided to speak to him herself as there were no
other guests in the immediate vicinity.30 However, as Mr. Reyes was already helping himself to
the food, she decided to wait.31 When Mr. Reyes went to a corner and started to eat, Ms. Lim
approached him and said: "alam ninyo, hindo ho kayo dapat nandito. Pero total nakakuha na ho
kayo ng pagkain, ubusin na lang ninyo at pagkatapos kung pwede lang po umalis na
kayo."32 She then turned around trusting that Mr. Reyes would show enough decency to leave,
but to her surprise, he began screaming and making a big scene, and even threatened to dump
food on her.33 ςηαñrοblεš �νιr†υαl �lαω �lιbrαrÿ

Dr. Violeta Filart, the third defendant in the complaint before the lower court, also gave her
version of the story to the effect that she never invited Mr. Reyes to the party.34 According to
her, it was Mr. Reyes who volunteered to carry the basket of fruits intended for the celebrant as
he was likewise going to take the elevator, not to the penthouse but to Altitude 49.35 When they
reached the penthouse, she reminded Mr. Reyes to go down as he was not properly dressed
and was not invited.36 All the while, she thought that Mr. Reyes already left the place, but she
later saw him at the bar talking to Col. Batung.37 Then there was a commotion and she saw Mr.
Reyes shouting.38 She ignored Mr. Reyes.39 She was embarrassed and did not want the
celebrant to think that she invited him.40

After trial on the merits, the court a quo dismissed the complaint,41 giving more credence to the
testimony of Ms. Lim that she was discreet in asking Mr. Reyes to leave the party. The trial court
likewise ratiocinated that Mr. Reyes assumed the risk of being thrown out of the party as he was
uninvited:

Plaintiff had no business being at the party because he was not a guest of Mr. Tsuruoka, the
birthday celebrant. He assumed the risk of being asked to leave for attending a party to which
he was not invited by the host. Damages are pecuniary consequences which the law imposes
for the breach of some duty or the violation of some right. Thus, no recovery can be had against
defendants Nikko Hotel and Ruby Lim because he himself was at fault (Garciano v. Court of
Appeals, 212 SCRA 436). He knew that it was not the party of defendant Violeta Filart even if
she allowed him to join her and took responsibility for his attendance at the party. His action
against defendants Nikko Hotel and Ruby Lim must therefore fail.42
On appeal, the Court of Appeals reversed the ruling of the trial court as it found more
commanding of belief the testimony of Mr. Reyes that Ms. Lim ordered him to leave in a loud
voice within hearing distance of several guests:

In putting appellant in a very embarrassing situation, telling him that he should not finish his food
and to leave the place within the hearing distance of other guests is an act which is contrary to
morals, good customs . . ., for which appellees should compensate the appellant for the damage
suffered by the latter as a consequence therefore (Art. 21, New Civil Code). The liability arises
from the acts which are in themselves legal or not prohibited, but contrary to morals or good
customs. Conversely, even in the exercise of a formal right, [one] cannot with impunity
intentionally cause damage to another in a manner contrary to morals or good customs. 43

The Court of Appeals likewise ruled that the actuation of Ms. Lim in approaching several people
to inquire into the presence of Mr. Reyes exposed the latter to ridicule and was uncalled for as
she should have approached Dr. Filart first and both of them should have talked to Mr. Reyes in
private:

Said acts of appellee Lim are uncalled for. What should have been done by appellee Lim was to
approach appellee Mrs. Filart and together they should have told appellant Reyes in private that
the latter should leave the party as the celebrant only wanted close friends around. It is
necessary that Mrs. Filart be the one to approach appellant because it was she who invited
appellant in that occasion. Were it not for Mrs. Filart's invitation, appellant could not have
suffered such humiliation. For that, appellee Filart is equally liable.

...

The acts of [appellee] Lim are causes of action which are predicated upon mere rudeness or
lack of consideration of one person, which calls not only protection of human dignity but respect
of such dignity. Under Article 20 of the Civil Code, every person who violates this duty becomes
liable for damages, especially if said acts were attended by malice or bad faith. Bad faith does
not simply connote bad judgment or simple negligence. It imports a dishonest purpose or some
moral obliquity and conscious doing of a wrong, a breach of a known duty to some motive or
interest or ill-will that partakes of the nature of fraud (Cojuangco, Jr. v. CA, et al., 309 SCRA
603).44

Consequently, the Court of Appeals imposed upon Hotel Nikko, Ruby Lim and Dr. Violeta Filart
the solidary obligation to pay Mr. Reyes (1) exemplary damages in the amount of Two Hundred
Thousand Pesos (P200,000); (2) moral damages in the amount of Two Hundred Thousand
Pesos (P200,000); and (3) attorney's fees in the amount of Ten Thousand Pesos
(P10,000).45 On motion for reconsideration, the Court of Appeals affirmed its earlier decision as
the argument raised in the motion had "been amply discussed and passed upon in the decision
sought to be reconsidered."46

Thus, the instant Petition for Review . Hotel Nikko and Ruby Lim contend that the Court of
Appeals seriously erred in '

I.

'NOT APPLYING THE DOCTRINE OF VOLENTI NON FIT INJURIA CONSIDERING THAT BY
ITS OWN FINDINGS, AMAY BISAYA WAS A GATE-CRASHER
 II.

'HOLDING HOTEL NIKKO AND RUBY LIM JOINTLY AND SEVERALLY LIABLE WITH DR.
FILART FOR DAMAGES SINCE BY ITS OWN RULING, AMAY BISAYA "COULD NOT HAVE
SUFFERED SUCH HUMILIATION," "WERE IT NOT FOR DR. FILART'S INVITATION"

III.

'DEPARTING FROM THE FINDINGS OF FACT OF THE TRIAL COURT AS REGARDS THE
CIRCUMSTANCES THAT ALLEGEDLY CAUSED THE HUMILIATION OF AMAY BISAYA

IV.

'IN CONCLUDING THAT AMAY BISAYA WAS TREATED UNJUSTLY BECAUSE OF HIS
POVERTY, CONSIDERING THAT THIS WAS NEVER AN ISSUE AND NO EVIDENCE WAS
PRESENTED IN THIS REGARD

V.

'IN FAILING TO PASS UPON THE ISSUE ON THE DEFECTS OF THE APPELLANT'S BRIEF,
THEREBY DEPARTING FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS

Petitioners Lim and Hotel Nikko contend that pursuant to the doctrine of volenti non fit injuria,
they cannot be made liable for damages as respondent Reyes assumed the risk of being asked
to leave (and being embarrassed and humiliated in the process) as he was a "gate-crasher."

The doctrine of volenti non fit injuria ("to which a person assents is not esteemed in law as
injury"47) refers to self-inflicted injury48 or to the consent to injury49 which precludes the recovery
of damages by one who has knowingly and voluntarily exposed himself to danger, even if he is
not negligent in doing so.50 As formulated by petitioners, however, this doctrine does not find
application to the case at bar because even if respondent Reyes assumed the risk of being
asked to leave the party, petitioners, under Articles 19 and 21 of the New Civil Code, were still
under obligation to treat him fairly in order not to expose him to unnecessary ridicule and
shame.

Thus, the threshold issue is whether or not Ruby Lim acted abusively in asking Roberto Reyes,
a.k.a. "Amay Bisaya," to leave the party where he was not invited by the celebrant thereof
thereby becoming liable under Articles 19 and 21 of the Civil Code. Parenthetically, and if Ruby
Lim were so liable, whether or not Hotel Nikko, as her employer, is solidarily liable with her.

As the trial court and the appellate court reached divergent and irreconcilable conclusions
concerning the same facts and evidence of the case, this Court is left without choice but to use
its latent power to review such findings of facts. Indeed, the general rule is that we are not a trier
of facts as our jurisdiction is limited to reviewing and revising errors of law. 51 One of the
exceptions to this general rule, however, obtains herein as the findings of the Court of Appeals
are contrary to those of the trial court.52 The lower court ruled that Ms. Lim did not abuse her
right to ask Mr. Reyes to leave the party as she talked to him politely and discreetly. The
appellate court, on the other hand, held that Ms. Lim is liable for damages as she needlessly
embarrassed Mr. Reyes by telling him not to finish his food and to leave the place within hearing
distance of the other guests. Both courts, however, were in agreement that it was Dr. Filart's
invitation that brought Mr. Reyes to the party.

The consequential question then is: Which version is credible?chanroblesvirtualawlibrary

From an in depth review of the evidence, we find more credible the lower court's findings of fact.

First, let us put things in the proper perspective.

We are dealing with a formal party in a posh, five-star hotel,53 for-invitation-only, thrown for the
hotel's former Manager, a Japanese national. Then came a person who was clearly uninvited
(by the celebrant)54and who could not just disappear into the crowd as his face is known by
many, being an actor. While he was already spotted by the organizer of the party, Ms. Lim, the
very person who generated the guest list, it did not yet appear that the celebrant was aware of
his presence. Ms. Lim, mindful of the celebrant's instruction to keep the party intimate, would
naturally want to get rid of the "gate-crasher" in the most hush-hush manner in order not to call
attention to a glitch in an otherwise seamless affair and, in the process, risk the displeasure of
the celebrant, her former boss. To unnecessarily call attention to the presence of Mr. Reyes
would certainly reflect badly on Ms. Lim's ability to follow the instructions of the celebrant to
invite only his close friends and some of the hotel's personnel. Mr. Reyes, upon whom the
burden rests to prove that indeed Ms. Lim loudly and rudely ordered him to leave, could not
offer any satisfactory explanation why Ms. Lim would do that and risk ruining a formal and
intimate affair. On the contrary, Mr. Reyes, on cross-examination, had unwittingly sealed his fate
by admitting that when Ms. Lim talked to him, she was very close. Close enough for him to kiss:

Q: And, Mr. Reyes, you testified that Miss Lim approached you while you were at the buffet
table? How close was she when she approached you?chanroblesvirtualawlibrary

A: Very close because we nearly kissed each other.

Q: And yet, she shouted for you to go down? She was that close and she
shouted?chanroblesvirtualawlibrary

A: Yes. She said, "wag kang kumain, hindi ka imbitado dito, bumaba ka na lang."

Q: So, you are testifying that she did this in a loud voice?

...

A: Yes. If it is not loud, it will not be heard by many.55

In the absence of any proof of motive on the part of Ms. Lim to humiliate Mr. Reyes and expose
him to ridicule and shame, it is highly unlikely that she would shout at him from a very close
distance. Ms. Lim having been in the hotel business for twenty years wherein being polite and
discreet are virtues to be emulated, the testimony of Mr. Reyes that she acted to the contrary
does not inspire belief and is indeed incredible. Thus, the lower court was correct in observing
that -
Considering the closeness of defendant Lim to plaintiff when the request for the latter to leave
the party was made such that they nearly kissed each other, the request was meant to be heard
by him only and there could have been no intention on her part to cause embarrassment to him.
It was plaintiff's reaction to the request that must have made the other guests aware of what
transpired between them. . .

Had plaintiff simply left the party as requested, there was no need for the police to take him
out.56

Moreover, another problem with Mr. Reyes's version of the story is that it is unsupported. It is a
basic rule in civil cases that he who alleges proves. Mr. Reyes, however, had not presented any
witness to back his story up. All his witnesses - Danny Rodinas, Pepito Guerrero and Alexander
Silva - proved only that it was Dr. Filart who invited him to the party.57

Ms. Lim, not having abused her right to ask Mr. Reyes to leave the party to which he was not
invited, cannot be made liable to pay for damages under Articles 19 and 21 of the Civil Code.
Necessarily, neither can her employer, Hotel Nikko, be held liable as its liability springs from that
of its employee.58

Article 19, known to contain what is commonly referred to as the principle of abuse of rights, 59 is
not a panacea for all human hurts and social grievances. Article 19 states:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.ςηαñrοblεš �νιr†υαl
�lαω �lιbrαrÿ

Elsewhere, we explained that when "a right is exercised in a manner which does not conform
with the norms enshrined in Article 19 and results in damage to another, a legal wrong is
thereby committed for which the wrongdoer must be responsible."60 The object of this article,
therefore, is to set certain standards which must be observed not only in the exercise of one's
rights but also in the performance of one's duties.61 These standards are the following: act with
justice, give everyone his due and observe honesty and good faith.62 Its antithesis, necessarily,
is any act evincing bad faith or intent to injure. Its elements are the following: (1) There is a legal
right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring
another.63 When Article 19 is violated, an action for damages is proper under Articles 20 or 21 of
the Civil Code. Article 20 pertains to damages arising from a violation of law64 which does not
obtain herein as Ms. Lim was perfectly within her right to ask Mr. Reyes to leave. Article 21, on
the other hand, states:

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.

Article 2165 refers to acts contra bonus mores and has the following elements: (1) There is an
act which is legal; (2) but which is contrary to morals, good custom, public order, or public
policy; and (3) it is done with intent to injure.66

A common theme runs through Articles 19 and 21,67 and that is, the act complained of must be
intentional.68
As applied to herein case and as earlier discussed, Mr. Reyes has not shown that Ms. Lim was
driven by animosity against him. These two people did not know each other personally before
the evening of 13 October 1994, thus, Mr. Reyes had nothing to offer for an explanation for Ms.
Lim's alleged abusive conduct except the statement that Ms. Lim, being "single at 44 years old,"
had a "very strong bias and prejudice against (Mr. Reyes) possibly influenced by her associates
in her work at the hotel with foreign businessmen."69 The lameness of this argument need not
be belabored. Suffice it to say that a complaint based on Articles 19 and 21 of the Civil Code
must necessarily fail if it has nothing to recommend it but innuendos and conjectures.

Parenthetically, the manner by which Ms. Lim asked Mr. Reyes to leave was likewise
acceptable and humane under the circumstances. In this regard, we cannot put our imprimatur
on the appellate court's declaration that Ms. Lim's act of personally approaching Mr. Reyes
(without first verifying from Mrs. Filart if indeed she invited Mr. Reyes) gave rise to a cause of
action "predicated upon mere rudeness or lack of consideration of one person, which calls not
only protection of human dignity but respect of such dignity."70 Without proof of any ill-motive on
her part, Ms. Lim's act of by-passing Mrs. Filart cannot amount to abusive conduct especially
because she did inquire from Mrs. Filart's companion who told her that Mrs. Filart did not invite
Mr. Reyes.71 If at all, Ms. Lim is guilty only of bad judgment which, if done with good intentions,
cannot amount to bad faith.

Not being liable for both actual and moral damages, neither can petitioners Lim and Hotel Nikko
be made answerable for exemplary damages72 especially for the reason stated by the Court of
Appeals. The Court of Appeals held'

Not a few of the rich people treat the poor with contempt because of the latter's lowly station in
life.ςηαñrοblεš �νιr†υαl �lαω �lιbrαrÿ

This has to be limited somewhere. In a democracy, such a limit must be established. Social
equality is not sought by the legal provisions under consideration, but due regard for decency
and propriety (Code Commission, pp. 33-34). And by way of example or correction for public
good and to avert further commission of such acts, exemplary damages should be imposed
upon appellees.73

The fundamental fallacy in the above-quoted findings is that it runs counter with the very facts of
the case and the evidence on hand.ςηαñrοblεš �νιr†υαl �lαω �lιbrαrÿ

It is not disputed that at the time of the incident in question, Mr. Reyes was "an actor of long
standing; a co-host of a radio program over DZRH; a Board Member of the Music Singer
Composer (MUSICO) chaired by popular singer Imelda Papin; a showbiz Coordinator of Citizen
Crime Watch; and 1992 official candidate of the KBL Party for Governor of Bohol; and an
awardee of a number of humanitarian organizations of the Philippines."74 During his direct
examination on rebuttal, Mr. Reyes stressed that he had income75 and nowhere did he say
otherwise. On the other hand, the records are bereft of any information as to the social and
economic standing of petitioner Ruby Lim. Consequently, the conclusion reached by the
appellate court cannot withstand scrutiny as it is without basis.

All told, and as far as Ms. Lim and Hotel Nikko are concerned, any damage which Mr. Reyes
might have suffered through Ms. Lim's exercise of a legitimate right done within the bounds of
propriety and good faith, must be his to bear alone.
WHEREFORE, premises considered, the petition filed by Ruby Lim and Nikko Hotel Manila
Garden is GRANTED. The Decision of the Court of Appeals dated 26 November 2001 and its
Resolution dated 09 July 2002 are hereby REVERSED and SET ASIDE. The Decision of the
Regional Trial Court of Quezon City, Branch 104, dated 26 April 1999 is hereby AFFIRMED. No
costs.

SO ORDERED.