IX.

INTENTIONAL TORTS

A. ABUSE OF RIGHTS

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.

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.

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

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

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

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

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

Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G.
Fernandez, who on December 10, 1972, submitted a report (Exh. "2") finding Tobias guilty. This
report however expressly stated that further investigation was still to be conducted.

Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending Tobias
from work preparatory to the filing of criminal charges against him.

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

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).lâwphî1.ñèt Two of these complaints were refiled with the Judge Advocate General's
Office, which however, remanded them to the fiscal's office. All of the six criminal complaints were
dismissed by the fiscal. Petitioners appealed four of the fiscal's resolutions dismissing the criminal
complaints with the Secretary of Justice, who, however, affirmed their dismissal.

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

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

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

The main issue in this case is whether or not petitioners are liable for damages to private respondent.

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

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

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

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

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

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

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

However, in the case at bar, petitioners claim that they did not violate any provision of law since they
were merely exercising their legal right to dismiss private respondent. This does not, however, leave
private respondent with no relief because Article 21 of the Civil Code provides that:

Art. 21. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.
This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims of
moral wrongs helpless, even though they have actually suffered material and moral injury" [ Id.]
should "vouchsafe adequate legal remedy for that untold number of moral wrongs which it is
impossible for human foresight to provide for specifically in the statutes" [Id. it p. 40; See also PNB
v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247].

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

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

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

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

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

While sound principles of justice and public policy dictate that persons shall have free resort to the
courts for redress of wrongs and vindication of their rights [Buenaventura v. Sto. Domingo, 103 Phil.
239 (1958)], the right to institute criminal prosecutions can not be exercised maliciously and in bad
faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 5871.] Hence, in Yutuk V.
Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2 SCRA 337, the Court held that the right to file
criminal complaints should not be used as a weapon to force an alleged debtor to pay an
indebtedness. To do so would be a clear perversion of the function of the criminal processes and of
the courts of justice. And in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court
upheld the judgment against the petitioner for actual and moral damages and attorney's fees after
making a finding that petitioner, with persistence, filed at least six criminal complaints against
respondent, all of which were dismissed.

To constitute malicious prosecution, there must be proof that the prosecution was prompted by a
design to vex and humiliate a person and that it was initiated deliberately by the defendant knowing
that the charges were false and groundless [Manila Gas Corporation v. CA, G.R. No. L-44190,
October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by itself, does not render a person
liable for malicious prosecution [Inhelder Corporation v. CA, G.R. No. 52358, May 301983122 SCRA
576]. The mere dismissal by the fiscal of the criminal complaint is not a ground for an award of
damages for malicious prosecution if there is no competent evidence to show that the complainant
had acted in bad faith [Sison v. David, G.R. No. L-11268, January 28,1961, 1 SCRA 60].

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

xxx

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

xxx

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

xxx
[RTC Decision, pp. 5-6; Rollo, pp. 235-236].

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

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

Yet, petitioners still insist that the award of damages was improper, invoking the principle of
damnum 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).lâwphî1.ñèt " [Petition, p. 17; Rollo, p. 18].

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.

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

Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of the
Civil Code provides that "[i]n quasi-delicts, exemplary damages may be granted if the defendant
acted with gross negligence," the Court, in Zulueta v. Pan American World Airways, Inc., G.R. No. 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 Zuluetacase, the nature of the wrongful acts shown to have been
committed by petitioners against Tobias is sufficient basis for the award of exemplary damages to the
latter.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in CA-G.R. CV
No. 09055 is AFFIRMED.

SO ORDERED.

G.R. No. 140420 February 15, 2001

SERGIO AMONOY, petitioner,

vs.
Spouses JOSE GUTIERREZ and ANGELA FORNIDA, respondents.

Damnum absque injuria. Under this principle, the legitimate exercise of a person's rights, even if it
causes loss to another, does not automatically result in an actionable injury. The law does not
prescribe a remedy for the loss. This principle does not, however, apply when there is an abuse of a
person's right, or when the exercise of this right is suspended or extinguished pursuant to a court
order. Indeed, in the availment of one's rights, one must act with justice, give their due, and observe
honesty and good faith

The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the April 21, 1999
Decision1 of the Court of Appeals (CA) in CA-GR CV No. 41451, which set aside the judgment2 of the
Regional Trial Court (RTC) of Tanay, Rizal. The RTC had earlier dismissed the Complaint for damages
filed by herein respondents against petitioner. The dispositive portion of the challenged CA Decision
reads as follows:

"WHEREFORE, the appealed Decision is SET ASIDE, and in its stead judgment is rendered
ordering the defendant-appellee Sergio Amonoy to pay the plaintiffs-appellants bruno and
Bernadina Gutierrez as actual damages the sum of [t]wo [h]undred [f]ifty [t]housand [p]esos
(P250,000.00)."3

Likewise assailed is the October 19, 1999 CA Resolution,4 which denied the Motion for
Reconsideration.

The Facts

The appellate court narrated the factual antecedents of this case as follows:

"This case had its roots in Special Proceedings No. 3103 of Branch I of the CFI of Pasig, Rizal,
for the settlement of the estate of the deceased Julio Cantolos, involving six(6) parcels of land
situated in Tanay Rizal. Amonoy was the counsel of therein Francisca Catolos, Agnes Catolos,
Asuncion Pasamba and Alfonso Formida. On 12 January 1965, the Project of Partition
submitted was approved and xxx two (2) of the said lots were adjudicated to Asuncion
Pasamba and Alfonso Formilda. The Attorney's fees charged by Amonoy was P27,600.00 and
on 20 January 1965 Asuncion Pasamba and Alfonso Formida executed a deed of real estate
mortgage on the said two (2) lots adjudicated to them, in favor of Amonoy to secure the
payment of his attorney's fees. But it was only on 6 August 1969 after the taxes had been
paid, the claims settled and the properties adjudicated, that the estate was declared closed
and terminated.

"Asuncion Pasamba died on 24 February 1969 while Alfonso Fornilda passsed away on 2 July
1969. Among the heirs of the latter was his daughter, plaintiff-appellant Angela Gutierrez.

"Because his Attorney's fess thus secured by the two lots were not paid, on 21 January 1970
Amonoy filed for their foreclosure in Civil Code4 No. 12726 entitled Sergio Amonoy vs. Heirs of
Asuncion Pasamba and Heirs of Alfonso Fornilda before the CFI of Pasig, Rizal, and this was
assigned to Branch VIII. The heirs opposed, contending that the attorney's fees charged
[were] unconscionable and that the attorney's fees charged [were] unconscionable and that
the agreed sum was only P11,695.92. But on 28 September 1972 judgment was rendered in
favor of Amonoy requiring the heirs to pay within 90 days the P27,600.00 secured by the
mortgage, P11,880.00 as value of the harvests, and P9,645.00 as another round of attorney's
fees. Failing in that, the two (2) lots would be sold at public auction.

"They failed to pay. On 6 February 1973, the said lots were foreclosed and on 23 March 1973
the auction sale was held where Amonoy was the highest bidder at P23,760.00. On 2 May
 1973 his bid was judicially confirmed. A deficiency was claimed and to satisfy it another
execution sale was conducted, and again the highest bidder was Amonoy at P12,137.50.

"Included in those sold was the lot on which the Gutierrez spouses had their house.

"More than a year after the Decision in Civil Code No. 12726 was rendered, the said
decedent's heirs filed on 19 December 1973 before the CFI of Pasig, Rixal[,] Civil case No.
18731 entitled Maria Penano, et al vs. Sergio Amonoy, et al, a suit for the annulment thereof.
The case was dismissed by the CFI on 7 November 1977, and this was affirmed by the Court
of Appeals on 22 July 1981.

"Thereafter, the CFI on 25 July 1985 issued a Writ of Possession and pursuant to which a
notice to vacate was made on 26 August 1985. On Amonoy's motion of 24 April 1986, the
Orders of 25 April 1986 and 6 May 1986 were issued for the demolition of structures in the
said lots, including the house of the Gutierrez spouses.

"On 27 September 1985 the petition entitled David Fornilda, et al vs Branch 164 RTC Ivth
Pasig, Deputy Sheriff Joaquin Antonil and Atty. Sergio Amonoy, G.R. No. L-72306, was filed
before the Supreme Court. Among the petitioners was the plaintiff-appellant Angela Gutierrez.
On a twin musiyun (Mahigpit na Musiyon Para Papanagutin Kaugnay ng Paglalapastangan)
with full titles as fanciful and elongated as their Petisyung (Petisyung Makapagsuri Taglay and
Pagpigil ng Utos), a temporary restraining order was granted on 2 June 1986 enjoining the
demolition of the petitioners' houses.

"Then on 5 October 1988 a Decision was rendered in the said G.R. No. L-72306 disposing
that:

"WHEREFORE, Certiorari is granted; the Order of respondent Trial Court, dated 25 July
1985, granting a Writ of Possession, as well as its Orderd, dated 25 April 1986 and 16
May 1986, directing and authorizing respondent Sheriff to demolish the houses of
petitioners Angela and Leocadia Fornilda are hereby ordered returned to petitioners
unless some of them have been conveyed to innocent third persons."5

But by the time the Supreme Court promulgated the abovementioned Decision, respondents' house
had already been destroyed, supposedly in accordance with a Writ of Demolition ordered by the lower
court.

Thus, a Complaint for damages in connection with the destruction of their house was filed by
respondents against petitioner before the RTC on December 15, 1989.

In its January 27, 1993 Decision, the RTC dismissed respondents' suit. On appeal, the CA set aside
the lower court's ruling and ordered petitioner to pay respondents P250,000 as actual damages.
Petitioner then filed a Motion for Reconsideration, which was also denied.

The Issue

In his Memorandum,7 petitioner submits this lone issue for our consideration:

"Whether or not the Court of Appeals was correct was correct in deciding that the petition
[was] liable to the respondents for damages."8

The Court's Ruling

The Petition has no merit.

Main Issue:

Petitioner's Liability

Well-settled is the maxim that damage resulting from the legitimate exercise of a person's rights is a
loss without injury- damnum absque injuria - for which the law gives no remedy.9 In other words,
one who merely exercises one's rights does no actionable injury and cannot be held liable for
damages.
Petitioner invokes this legal precept in arguing that he is not liable for the demolition of respondents'
house. He maintains that he was merely acting in accordance with the Writ of Demolition ordered by
the RTC.

We reject this submission. Damnum absque injuria finds no application to this case.

True, petitioner commenced the demolition of respondents' house on May 30, 1986 under the
authority of a Writ of Demolition issued by the RTC. But the records show that a Temporary
Restraining Order (TRO), enjoining the demolition of respondents' house, was issued by the Supreme
Court on June 2, 1986. The CA also found, based on the Certificate of Service of the Supreme Court
process server, that a copy of the TRO was served on petitioner himself on June 4, 1986.

Petitioner, howeverm, did not heed the TRO of this Court. We agree with the CA that he unlawfully
pursued the demolition of respondents' house well until the middle of 1987. This is clear from
Respondent Angela Gutierrez's testimony. The appellate court quoted the following pertinent portion
thereof:10

"Q. On May 30, 1986, were they able to destroy your house?

"A. Not all, a certain portion only

xxx xxx xxx

"Q. Was your house completely demolished?

"A. No, sir.

xxx xxx xxx

"Q. Until when[,] Mrs. Witness?

"A. Until 1987.

"Q. About what month of 1987?

"A. Middle of the year.

"Q. Can you tell the Honorable Court who completed the demolition?

A. The men of Fiscal Amonoy."11

The foregoing disproves the claim of petitioner that the demolition, which allegedly commenced only
on May 30, 1986, was completed the following day. It likewise belies his allegation that the
demolitions had already ceased when he received notice of the TRO.

Although the acts of petitioner may have been legally justified at the outsset, their continuation after
the issuance of the TRO amounted to an insidious abuse of his right. Indubitably, his actions were
tainted with bad faith. Had he not insisted on completing the demolition, respondents would not have
suffered the loss that engendered the suit before the RTC. Verily, his acts constituted not only an
abuse of a right, but an invalid exercise of a right that had been suspended when he received thae
TRO from this Court on June 4, 1986. By then he was no longer entitled to proceed with the
demolition.

A commentator on this topic explains:

"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 justcie 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 xxx. Over and above the specific
precepts of postive law are the supreme norms of justice xxx; and he who violates them
violates the law. For this reason it is not permissible to abuse our rights to prejudice others."12

Likewise, in Albenson Enterprises Corp. v. CA,13 the Court discussed the concept of abuse of rights as
follows:
 "Artilce 19, known to contain what is commonly referred to as the principle of abuse of rights,
sets certain standards which may be observed not only in the exercise of one's rights but also
in the performance of one's duties.These standards are the following: to act with justice; to
give everyone his due; recognizes the primordial limitation on all rights: that in their exercise,
the norms of human conduct set forth in Article 19 and results in damage to another, a legal
wrong is thereby committed for which the wrongdoer must be held responsible xxx."

Clearly then, the demolition of respondents' house by petitioner, despite his receipt of the TRO, was
not only an abuse but also an unlawful exercise of such right. In insisting on his alleged right, he
wantonly violated this Court's Order and wittingly caused the destruction of respondents;
house.1âwphi1.nêt

Obviously, petitioner cannot invoke damnum absque injuria, a principle premised on the valid
exercise of a right.14Anything less or beyond such exercise will not give rise to the legal protection
that the principle accords. And when damage or prejudice to another is occasioned thereby, liability
cannot be obscured, much less abated.

In the ultimate analysis, petitioner's liability is premised on the obligation to repair or to make whole
the damage caused to another by reason of one's act or omission, whether done intentionally or
negligently and whether or not punishable by law.15

WHEREFORE, the Petition is DENIED and the appealed Decision AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. 132344 February 17, 2000

UNIVERSITY OF THE EAST, petitioner,

vs.
ROMEO A. JADER, respondent.

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:

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").1âwphi1.nêt

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:

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").

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:
 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.

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:

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:

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.

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:

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, wilfully or negligently causes damage to another,
shall indemnify the latter for the same.

Art. 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:
 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.

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 DELEIED.1âwphi1.nêt

SO ORDERED.

G.R. No. 120639 September 25, 1998

BPI EXPRESS CARD CORPORATION, petitioner,

vs.
COURT OF APPEALS and RICARDO J. MARASIGAN, respondents.

KAPUNAN, J.:

The question before this Court is whether private respondent can recover moral damages arising
from the cancellation of his credit card by petitioner credit card corporation.

The facts of the case are as stated in the decision of the respondent court, 1
to wit:

The case arose from the dishonor of the credit card of the plaintiff Atty. Ricardo J.
Marasigan by Café Adriatico, a business establishment accredited with the defendant-
 appellate BPI Express Card Corporation (BECC for brevity), on December 8, 1989 when
the plaintiff entertained some guests thereat.

The records of this case show that plaintiff, who is a lawyer by profession, was a
complimentary member of BECC from February 1988 to February 1989 and was issued
Credit Card No. 100-012-5534 with a credit limit of P3,000.00 and with a monthly
billing every 27th of the month (Exh. N), subject to the terms and conditions stipulated
in the contract (Exh. 1-b). His membership was renewed for another year or until
February 1990 and the credit limit was increased to P5,000.00 (Exh. A). The plaintiffs
oftentimes exceeded his credit limits (Exhs. I, I-1 to I-12) but this was never taken
against him by the defendant and even his mode of paying his monthly bills in check
was tolerated. Their contractual relations went on smoothly until his statement of
account for October 1989 amounting to P8,987.84 was not paid in due time. The
plaintiff admitted having inadvertently failed to pay his account for the said month
because he was in Quezon province attending to some professional and personal
commitments. He was informed by his secretary that defendant was demanding
immediate payment of his outstanding account, was requiring him to issue a check for
P15,000.00 which would include his future bills, and was threatening to suspend his
credit card. Plaintiff issued Far East Bank and Trust Co. Check No. 494675 in the
amount of P15,000.00, postdated December 15, 1989 which was received on November
23, 1989 by Tess Lorenzo, an employee of the defendant (Exhs. J and J-1), who in turn
gave the said check to Jeng Angeles, a co-employee who handles the account of the
plaintiff. The check remained in the custody of Jeng Angeles. Mr. Roberto Maniquiz,
head of the collection department of defendant was formally informed of the postdated
check about a week later. On November 28, 2989, defendant served plaintiff a letter by
ordinary mail informing him of the temporary suspension of the privileges of his credit
card and the inclusion of his account number in their Caution List. He was also told to
refrain from further use of his credit card to avoid any inconvenience/embarrassment
and that unless he settles his outstanding account with the defendant within 5 days
from receipt of the letter, his membership will be permanently cancelled (Exh. 3). There
is no showing that the plaintiff received this letter before December 8, 1989.
Confidential that he had settled his account with the issuance of the postdated check,
plaintiff invited some guests on December 8, 1989 and entertained them at Café
Adriatico. When he presented his credit card to Café Adriatico for the bill amounting to
P735.32, said card was dishonored. One of his guests, Mary Ellen Ringler, paid the bill
by using her own credit card a Unibankard (Exhs. M, M-1 and M-2).

In a letter addressed to the defendant dated December 12, 1989, plaintiff requested
that he be sent the exact billing due him as of December 15, 1989, to withhold the
deposit of his postdated check and that said check be returned to him because he had
already instructed his bank to stop the payment thereof as the defendant violated their
agreement that the plaintiff issue the check to the defendant to cover his account
amounting to only P8,987.84 on the condition that the defendant will not suspend the
effectivity of the card (Exh. D). A letter dated December 16, 1989 was sent by the
plaintiff to the manager of FEBTC, Ramada Branch, Manila requesting the bank to stop
the payment of the check (Exhs. E, E-1). No reply was received by plaintiff from the
defendant to his letter dated December 12, 1989. Plaintiff sent defendant another letter
dated March 12, 1990 reminding the latter that he had long rescinded and cancelled
whatever arrangement he entered into with defendant and requesting for his correct
billing, less the improper charges and penalties, and for an explanation within five (5)
days from receipt thereof why his card was dishonored on December 8, 1989 despite
assurance to the contrary by defendant's personnel-in-charge, otherwise the necessary
court action shall be filed to hold defendant responsible for the humiliation and
embarrassment suffered by him (Exh. F). Plaintiff alleged further that after a few days,
a certain Atty. Albano, representing himself to be working with the office of Atty. Lopez,
called him inquiring as to how the matter can be threshed out extrajudicially but the
latter said that such is a serious matter cannot be discussed over the phone. The
defendant served its final demand to the plaintiff dated March 21, 1990 requiring him to
pay in full his overdue account, including stipulated fees and charges, within 5 days
from receipt thereof or face court action and also to replace the postdated check with
cash within the same period or face criminal suit for violation of Bouncing Check Law
(Exh. G/Exh. 13). The plaintiff in a reply letter dated April 5, 1990 (Exh. H), demanded
defendant's compliance with his request in his first letter dated March 12, 1990 within
three (3) days from receipt, otherwise the plaintiff will file a case against them, . . . .2

Thus, on May 7, 1990 private respondent filed a complaint for damages against petitioner before the
Regional Trial Court of Makati, Branch 150, docketed as Civil Case No. 90-1174.
After trial the trial court ruled for private respondent, finding that herein petitioner abused its right in
contravention of Article 19 of the Civil Code. 3 The dispositive portion of the decision reads:

Wherefore, judgment is hereby rendered ordering the defendant to pay plaintiff the
following:

1. P 100,000.00 as moral damages;

2. P 50,000.00 as exemplary damages; and

3. P 20,000.00 by way of attorney's fees.

On the other hand, plaintiff is ordered to pay defendant its outstanding obligation in the
amount of P14,439.41, amount due as of December 15, 1989.4

The trial court's ruling was based on its findings and conclusions, to wit:

There is no question that plaintiff had been in default in the payment of his billings for
more than two months, prompting defendant to call him and reminded him of his
obligation. Unable to personally talk with him, this Court is convinced that somehow
one or another employee of defendant called him up more that once.

However, while it is true that as indicated in the terms and conditions of the application
for BPI credit card upon failure of the cardholder to pay his outstanding obligation for
more that thirty (30) days, the defendant can automatically suspend or cancel the
credit card, that reserved right should not have been abused as it was in fact abused, in
plaintiff's case. What is more peculiar here is that there have been admitted
communications between plaintiff and defendant prior to the suspension or cancellation
of plaintiff's credit card and his inclusion in the cautions list. However, nowhere in any
of these communications was there ever a hint given to plaintiff that his card had
already been suspended or cancelled. In fact, the Court observed that while defendant
was trying its best to persuade plaintiff to update its account and pay its obligation, it
had already taken steps to suspend/cancel plaintiff's card and include him in the
caution list. While the Court admires defendant's diplomacy in dealing with its clients, it
cannot help but frown upon the backhanded way defendant deal with plaintiff's case.
For despite Tess Lorenzo's denial, there is reason to believe that plaintiff was indeed
assured by defendant of the continued honoring of his credit card so long as he pays his
obligation of P15,000.00. Worst, upon receipt of the postdated check, defendant kept
the same until a few days before it became due and said check was presented to the
head of the collection department, Mr. Maniquiz, to take steps thereon, resulting to the
embarrassing situations plaintiff found himself in on December 8, 1989. Moreover, Mr.
Maniquiz himself admitted that his request for plaintiff to replace the check with cash
was not because it was a postdated check but merely to tally the payment with the
account due.

Likewise, the Court is not persuaded by the sweeping denials made by Tess Lorenzo
and her claim that her only participation was to receive the subject check. Her
immediate superior, Mr. Maniquiz testified that he had instructed Lorenzo to
communicate with plaintiff once or twice to request the latter to replace the questioned
check with cash, thus giving support to the testimony of plaintiff's witness, Dolores
Quizon, that it was one Tess Lorenzo whom she had talked over the phone regarding
plaintiff's account and plaintiff's own statement that it was this woman who assured him
that his card has not yet been and will not be cancelled/suspended if he would pay
defendant the sum of P15,000.00.

Now, on the issue of whether or not upon receipt of the subject check defendant had
agreed that the card shall remain effective the Court takes note of the following:

1. An employee of defendant corporation unconditionally accepted the subject check

upon its delivery despite its being a postdated one; and the amount did not tally with
plaintiff's obligation;

2. Defendant did not deny nor controvert plaintiff's claim that all of his payments were
made in checks;
 3. Defendant's main witness, Mr. Maniquiz, categorically stated that the request for
plaintiff to replace his postdated check with a cash was merely for the purpose of
tallying plaintiff's outstanding obligation with his payment and not to question the
postdated check;

4. That the card was suspended almost a week after receipt of the postdated check;

5. That despite the many instances that defendant could have informed plaintiff over
the phone of the cancellation or suspension of his credit card, it did not do so, which
could have prevented the incident of December 8, 1989, the notice allegedly sent thru
ordinary mail is not only unreliable but takes a long time. Such action as suspension of
credit card must be immediately relayed to the person affected so as to avoid
embarrassing situations.

6. And that the postdated check was deposited on December 20, 1989.

In view of the foregoing observations, it is needless to say that there was indeed an
arrangement between plaintiff and the defendant, as can be inferred from the acts of
the defendant's employees, that the subject credit card is still good and could still be
used by the plaintiff as it would be honored by the duly accredited establishment of
defendant.

Not satisfied with the Regional Trial Court's decision, petitioner appealed to the Court of Appeals,
which in a decision promulgated on March 9, 1995 ruled in its dispositive portion.

WHEREFORE, premises considered the decision appealed from is hereby AFFIRMED with
the MODIFICATION that the defendant-appellant shall pay the plaintiff-appellee the
following: P50,000.00 as moral damages: P25,000.00 as exemplary damages; and
P10,000.00 by way of attorney's fees.

SO ORDERED. 6

Hence, the present petition on the following assignment of errors:

THE LOWER COURT ERRED IN DECLARING THAT THERE WAS INDEED AN AGREEMENT
OR ARRANGEMENT ENTERED INTO BETWEEN THE PARTIES WHEREIN THE DEFENDANT
REQUIRED THE PLAINTIFF TO ISSUE A POSTDATED CHECK IN ITS FAVOR IN THE
AMOUNT OF P15,000.00 AS PAYMENT FOR HIS OVERDUE ACCOUNTS, WITH THE
CONDITION THAT THE PLAINTIFF'S CREDIT CARD WILL NOT BE SUSPENDED OR
CANCELLED.

II

THE LOWER COURT ERRED IN HOLDING DEFENDANT LIABLE FOR DAMAGES AND
ATTORNEY'S FEES ARISING OUT FROM THE DISHONOR OF THE PLAINTIFF'S CREDIT
CARD. 7

We find the petition meritorious.

The first issue to be resolved is whether petitioner had the right to suspend the credit card of the
private respondent.

Under the terms and conditions of the credit card, signed by the private respondent, any card with
outstanding balances after thirty (30) days from original billing/statement shall automatically be
suspended, thus:

PAYMENT OF CHARGES — BECC shall furnish the Cardholder a monthly statement of

account made through the use of the CARD and the Cardholder agrees that all charges
made through the use of the CARD shall be paid by the Cardholder on or before the last
day for payment, which is twenty (20) days from the date of the said statement of
account; and such payment due date may be changed to an earlier date if the
Cardholder's account is considered overdue and/or with balances in excess of the
approved credit limit; or to such other date as may be deemed proper by the CARD
issuer with notice to the Cardholder on the same monthly statement of account. If the
 last day for payment falls on a Saturday, Sunday or Holiday, the last day for payment
automatically becomes the last working day prior to the said payment date. However,
notwithstanding the absence or lack of proof of service of the statement of charges to
the Cardholder, the latter shall pay any or all charges made through the use of the
CARD within thirty (30) days from the date or dates thereof. Failure of Cardholder to
pay any and all charges made through the CARD within the payment period as stated in
the statement of charges or with in thirty (30) days from actual date or dates
whichever occur earlier, shall render him in default without the necessity of demand
from BECC, which the Cardholder expressly waives. These charges or balance thereof
remaining unpaid after the payment due date indicated on the monthly statement of
account shall bear interest of 3% per month and an additional penalty fee equivalent to
another 3% of the amount due for every month or a fraction of a month's
delay. PROVIDED, that if there occurs any changes on the prevailing market rates BECC
shall have the option to adjust the rate of interest and/or penalty fee due on the
outstanding obligation with prior notice to the Cardholder.

xxx xxx xxx

Any CARD with outstanding balances unpaid after thirty (30) days from original
billing/statement date shall automatically be suspended and those with accounts unpaid
after sixty (60) days from said original billing/statement date shall automatically be
cancelled without prejudice to BECC's right to suspend or cancel any CARD any time
and for whatever reason. In case of default in his obligation as provided for in the
preceding paragraph, Cardholder shall surrender his CARD to BECC and shall in addition
to the interest and penalty charges aforementioned, pay the following liquidated
damages and/or fees (a) a collection fee of 25% of the amount due if the account is
referred to a collection agency or attorney; (b) a service fee of P100 for every
dishonored check issued by the Cardholder's in payment of his account, without
prejudice; however to BECC's right of considering Cardholder's obligation unpaid; cable
cost for demanding payment or advising cancellation of membership shall also be for
Cardholder's account; and (c) a final fee equivalent to 25% of the unpaid balance,
exclusive of litigation expenses and judicial costs, if the payment of the account is
enforced through court action. 8

The aforequoted provision of the card cannot be any clearer. By his own admission private
respondent no payment within thirty days for his billing/statement dated 27 September 1989.
Neither did he make payment for his original billing/statement dated 27 October 1989. Consequently
as early as 28 October 1989 thirty days from the non-payment of his billing dated 27 September
1989, petitioner corporation could automatically suspend his credit card.

The next issue is whether prior to the suspension of private respondent's credit card on 28 November
1989 the parties entered into an agreement whereby the card could still be used and would be duly
honored by duly accredited establishments.

We agree with the findings of the respondent court, that there was an arrangement between the
parties, wherein the petitioner required the private respondent to issue a check worth P15,000.00 as
payment for the latter's billings. However we find that the private respondent was not able to comply
with this obligation.

As the testimony of private respondent himself bears out, the agreement was for the immediate
payment of the outstanding account:

Q In said statement of account that you are supposed to pay the

P8,974.84 the charge of interest and penalties, did you note that?

A Yes, sir I noted the date.

Q When?

A When I returned from the Quezon province, sir

Q When?

A I think November 22, sir.

 Q So that before you used again the credit card you were not able to pay
immediately this P8,987.84 in cash?

A I paid P15,000.00, sir.

Q My question Mr. witness is, did you pay this P8,987.84 in charge of
interest and penalties immediately in cash?

A In cash no, but in check, sir.

Q You said that you noted the word "immediately" in bold letters in your
statement of accounts, why did not pay immediately?

A Because I received that late, sir.

Q Yes, on November 22 when you received from the secretary of the

defendant telling you to pay the principal amount of P8,987.84, why did
you not pay?

A There was a communication between me and the defendant, I was

required to pay P8,000.00 but I paid in check for P15,000.00, sir.

Q Do you have any evidence to show that the defendant required you to
pay in check for P15,000.00?

A Yes, sir.

Q Where is it?

A It was telecommunication, sir.

Q So there is no written communication between you and the defendant?

A There was none, sir.

Q There is no written agreement which says that P8,987.84 should be

paid for P15,000.00 in check, there is none?

A Yes, no written agreement, sir.

Q And you as a lawyer you know that a check is not considered as cash
specially when it is postdated sent to the defendant?

A That is correct, sir.

Clearly the purpose of the arrangement between the parties on November 22, 1989, was for the
immediate payment of the private respondent's outstanding account, in order that his credit card
would not be suspended.

As agreed upon by the parties, on the following day, private respondent did issue a check for
P15,000.00. However, the check was postdated 15 December 1989. Settled is the doctrine that a
check is only a substitute for money and not money, the delivery of such an instrument does not, by
itself operate as payment. 9 This is especially true in the case of a postdated check.

Thus, the issuance by the private respondent of the postdated check was not effective payment. It
did not comply with his obligation under the arrangement with Miss Lorenzo. Petitioner corporation
was therefore justified in suspending his credit card.

Finally, we find no legal and factual basis for private respondent's assertion that in canceling the
credit card of the private respondent, petitioner abused its right under the terms and conditions of
the contract.

To find the existence of an abuse of right Article 19 the following elements must be present (1) There
is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or
injuring another. 10
Time and again this Court has held that good faith is presumed and the burden of proving bad faith is
on the party alleging it. 11 This private respondent failed to do. In fact, the action of the petitioner
belies the existence of bad faith. As early as 28 October 1989, petitioner could have suspended
private respondent's card outright. Instead, petitioner allowed private respondent to use his card for
several weeks. Petitioner had even notified private respondent of the impending suspension of his
credit card and made special accommodations for him for setting his outstanding account. As such,
petitioner cannot be said to have capriciously and arbitrarily canceled the private respondent's credit
card.

We do not dispute the findings of the lower court that private respondent suffered damages as a
result of the cancellation of his credit card. However, 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 results 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. 12

In other words, in order that the plaintiff may maintain an action for the injuries of which he
complaints, 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; 13 and the breach of such duty should be
the proximate cause of the injury.

We therefore disagree with the ruling of the respondent court that the dishonor of the credit card of
the private respondent by Café Adriatico is attributable to petitioner for its willful or gross neglect to
inform the private respondent of the suspension of his credit card, the unfortunate consequence of
which brought social humiliation and embarrassment to the private respondent. 14

It was petitioner's failure to settle his obligation which caused the suspension of his credit card and
subsequent dishonor at Café Adriatico. He can not now pass the blame to the petitioner for not
notifying him of the suspension of his card. As quoted earlier, the application contained the
stipulation that the petitioner could automatically suspend a card whose billing has not been paid for
more than thirty days. Nowhere is it stated in the terms and conditions of the application that there
is a need of notice before suspension may be affected as private respondent claims. 15

This notwithstanding on November 28, 1989, the day of the suspension of private respondent's card,
petitioner sent a letter by ordinary mail notifying private respondent that his card had been
temporarily suspended. Under the Rules on Evidence, there is a disputable presumption that letters
duly directed and mailed were received on the regular course of mail. 16 Aside from the private
respondent's bare denial he failed to present evidence to rebut the presumption that he received said
notice. In fact upon cross examination private respondent admitted that he did receive the letter
notifying him of the cancellation:

Q Now you were saying that there was a first letter sent to you by the
defendant?

A Your letter, sir.

Q Was that the first letter that you received?

A Yes, sir.

Q It is that there was a communication first between you and the

defendant?

A There was none, sir. I received a cancellation notice but that was after
November 27. 17

As it was private respondent's own negligence which was the proximate cause of his embarrassing
and humiliating experience, we find the award of damages by the respondent court clearly
unjustified. We take note of the fact that private respondent has not yet paid his outstanding account
with petitioner.
IN VIEW OF THE FOREGOING, the decision of the Court of Appeals ordering petitioner to pay private
respondent P100,000.00 as moral damages P50,000.00 as exemplary damages and P20,000.00 as
attorney's fees, is SET ASIDE. Private respondent is DIRECTED to pay his outstanding obligation with
the petitioner in the amount of P14,439.41.

SO ORDERED.

B. ACTS CONTRA BONUS MORES

1. ELEMENTS

G.R. No. L-15526 December 28, 1963

ENRIQUE J. L. RUIZ and JOSE V. HERRERA, in their behalf and as minority stockholders of the Allied
Technologists, Inc., plaintiffs-appellants,
vs.
THE SECRETARY OF NATIONAL DEFENSE, COL. NICOLAS JIMENEZ, Head of the Engineer Group,
Office of the Secretary of National Defense, THE FINANCE OFFICER of the Department of National
Defense, THE AUDITOR of the Dept. of National Defense, PABLO D. PANLILIO and ALLIED
TECHNOLOGISTS, INC.,defendants-appellees.

Montenegro, Madayag, Viola and Hernandez for plaintiffs-appellants.

Office of the Solicitor General for defendant-appellee Secretary of National Defense.
Rosauro Alvarez for defendant-appellee Allied Technologists, Inc.
L. D. Panlilio for defendant-appellee Pablo Panlilio.

PAREDES, J.:

This is an appeal by plaintiffs Enrique J. L. Ruiz and Jose V. Herrera from an Order of the Court of
First Instance of Manila, in Civil Case No. 26601, dated February 25, 1959, dismissing plaintiffs'
complaint.

On September 11, 1950, a contract was executed between the defendant Allied Technologists, Inc.
(corporation, for short), and the Republic of the Philippines, for the construction of the Veterans
Memorial Hospital. Ruiz and Herrera were stockholders and officers of the corporation. The
construction of the hospital was terminated in 1955. On August 20, 1954, and June 20, 1955, Civil
Cases Nos. 23778 and 26601, respectively, were filed by same plaintiffs herein, making as parties-
defendants in both cases, the same defendants herein, the Secretary of National Defense, Col.
Nicolas Jimenez (Engineer), the Finance Officer, and the Auditor of the Dept. of National Defense,
Pablo D. Panlilio and Allied Technologists, Inc. Civil Case No. 23778 was dismissed by the CFI on
October 12, 1954; and the dismissal was affirmed by this Court on July 7, 1955, in G.R. No. L-8638.
Civil Case No. 26601 was also dismissed on September 13, 1955. On appeal, this Court reversed the
order of dismissal, under the impression that the real controversy was confined merely between
defendant Panlilio and plaintiffs Ruiz and Herrera over the 15% of the contract price, which was
retained by the Department of National Defense. The retention of the 15% of the contract price in
the sum of P34,740.00 was made to answer for any claim or lien that might arise, in the course of
the construction. The last case, however, was remanded to the court of origin, for further
proceedings. Panlilio and the corporation filed their amended answers, stating that the amount
retained by the Department of National Defense was already paid to defendant corporation, as
sought for by the plaintiffs in their complaint. In view of this development, the trial court invited the
parties to a conference, in which the plaintiffs indicated their conformity, to the dismissal of the
complaint with respect to the retention of the 15% of the contract price; but insisted upon the
hearing of the second question, which sought the declaration and recognition of plaintiffs Ruiz and
Herrera, as two of the three architects of the hospital. The trial court, nevertheless, dismissed the
complaint, for being already academic and moot. Hence, this appeal by plaintiffs-appellants, who
alleged in their lone assignment of error that "the lower court grievously erred in ordering the
dismissal of the case, with costs against the plaintiffs".

Plaintiffs-appellants contend that the only ground relied upon by the lower court to dismiss the case
without any trial is the allegation contained in pars. 4 and (e) of the answers of the appellees Panlilio
and Allied Technologists, Inc., respectively; that the amount retained by the Department of National
Defense had already been paid; that except for this bare allegation of the appellees, no evidence was
adduced to prove the truth of the same; that even assuming, for the sake of argument, that the
same is true, nevertheless the first part of the first cause of action still remains, for which they had
insisted upon a hearing in order to establish their right to be recognized as two of the three
architects of the hospital; that because the pleadings do not show any ground which might legally
justify the action taken by the lower court, the latter should not have ordered the dismissal of the
entire case but should have ordered only the striking out of the moot portion of appellants' first cause
of action, citing Pacal v. Ramos, 81 Phil. 30, 33; 27 C.J.S. 209-210; Bush v. Murray, 205 N.Y.S. 21,
26, 209 App. Div. 563; Bearden v. Longino. 190 S.E. 12, 183 Ga. 819. Appellants further argue in
their brief that they base their cause of action on article 21, New Civil Code.

The appeal has no merit. The order appealed from, states —

Considering the manifestation of counsel for plaintiffs that the latter would insist on the
hearing of the above-entitled case for the purpose of establishing their right to be recognized
as the architects of the Veterans Hospital together with defendant Pablo D. Panlilio, and it
appearing that plaintiffs' Amended Complaint with Injunction prays, among others, "That this
Honorable Court order defendants Secretary of National Defense, Col. Nicolas Jimenez, and
the Finance Officer and Auditor of the Department of National Defense to pay the Allied
Technologists, Inc., the balance unpaid by virtue of the contract executed on September 11,
1950 (Annex "C" hereof) for services rendered under Title I and to be rendered under Title II
of said contract; that paragraph 4 of defendant Pablo Panlilio's Amended Answer to said
complaint alleges "That whatever amounts were retained by the Dept. of National Defense on
the contract price, which retention was authorized by the contract, was paid by the Dept. of
National Defense to the Allied Technologists Inc. as sought by the plaintiffs; that paragraph
(e) of the ANSWER TO THE AMENDED COMPLAINT of defendant Allied Technologists, Inc., also
alleges "That whatever amounts were retained by the Department of National Defense, per the
stipulations contained in the contract, have already been paid by the Allied Technologists, Inc.
and, therefore, the present action seeking to compel the aforementioned Department of
National Defense to pay to defendant Allied Technologists, Inc. the amounts retained by the
Department of National Defense is academic, groundless, unfounded and malicious"; that the
said allegations of the separate answers of defendants Pablo Panlilio and Allied Technologists,
Inc., are not and can not be denied by plaintiffs, and that it is this Court's understanding that
defendant has no objection to the dismissal of this case — it is ordered that this case be, as it
is hereby DISMISSED, with costs against plaintiffs.

A cursory reading of pars. 18 and 19 of the amended complaint with injunction and prayers (1) and
(2) thereof, reveals that appellants' first cause of action is composed of two parts, as follows:

(a) A judicial declaration or recognition that appellants Ruiz and Herrera, together with appellee
Panlilio, were the architects of the Veterans Hospital; and

(b) An injunction restraining the appellee government officials paying their co-appellee Panlilio the
sum retained by the former, as per stipulation contained in the contract for the construction of the
hospital because "they will not only be deprived of the monetary value of the services legally due
them, but that their professional prestige and standing will be seriously impaired".lawphil.net

As appellants admitted, they no longer consider the Secretary and other officials of the Department
of National Defense, as parties-defendants in the case, said officials can no longer be compelled to
recognize the appellants, Ruiz and Herrera, as co-architects with appellee Panlilio of the Veterans
Hospital. And, as the amount retained by the Department on the contract price, which retention was
authorized by the contract, was, as sought by the appellants, already paid to the Allied Technologists,
Inc., there is nothing more for the trial court to decide, even without first ruling on the special
defenses of appellees Panlilio and the corporation.

Moreover, by discarding the Secretary and other officials of the Department of National Defense, as
parties-defendants, appellants could not expect the trial court to order them to recognize and declare
appellants as co-architects in the construction of the hospital. And this must be so, because the
construction agreement expressly provides that the architect being contracted by the Government
was appellee Pablo Panlilio. The said agreement states that the same was entered into by the
government, party of the first part and "Allied Technologists, Inc. . . . and Mr. Pablo D. Panlilio,
architect, hereinafter called the party of the second part" and "The Allied Technologists, Inc. for
rendering engineering services and Mr. Pablo D. Panlilio, architect, for rendering architectural
services". And the contract was signed for the Government by "Ramon Magsaysay, Secretary of
National Defense (party of the first part," and "Allied Technologists, Inc., by Enrique J. L. Ruiz,
President, Contractor, Pablo D. Panlilio, Architect".

Appellants maintain that their claim for recognition is divisible and separable from their allegations
regarding the non-payment by the government of a portion of the architectural fees; thereby
concluding that what the lower court should have done, should have been merely to order the
striking out of the moot portion of appellants' cause of action, and should have proceeded with
hearing their claim for recognition. But the allegations in pars. 18 and 19 of the amended complaint,
show otherwise. There is an indivisible and single cause of action which is primarily to prevent
payment exclusively to defendant Panlilio of the amount of P34,740.00, which said appellants
contend should be paid to appellee Allied Technologists, Inc.; the matter recognizing them together
with Pablo Panlilio as architects of the hospital, being merely incidental thereto. The case of Pacal v.
Ramos, 81 Phil. 30, cited by appellants is not applicable. In this case, the grounds for quo
warranto are separable from the grounds for election irregularities which are distinct and separate
causes of action, entitling the petitioner to separate and unrelated reliefs. These two grounds were
alleged under separate paragraphs and they were two independent actions improperly joined in one
proceeding. In the case at bar, in one paragraph (par. 19 of the amended complaint), as first cause
of action, the claim for recognition is inseparably linked with their allegations regarding alleged
threatened payment of P34,740.00 to Panlilio alone, because "they will not only be deprived of the
monetary value of the services legally due them, but that their professional prestige and standing will
be seriously impaired". When the very defendant Allied Technologists, Inc. itself asserted in its
answer the amended complaint, that the amount was paid to it, an assertion which was not at all
denied, plaintiffs-appellants' cause of action under said par. 19 dissipated entirely.

There is a veiled insinuation that appellants, thesis would fall under the provisions of the Rules on
declaratory relief, because appellants wanted merely a declaration of their rights in a contract in
which they were interested. The trial court, however, was correct in refusing to make such
declaration, because it was not necessary and proper under the circumstances (sec. 6, Rule 66).
Appellants were not parties to the construction agreement. The sole object the appeal is only to
secure for them a recognition, that they were allegedly the co-architects of Panlilio, in the
construction of the hospital, so as to enhance their professional prestige and not to impair their
standing. If this is the goal of appellants, a judicial declaration to the effect would seem unnecessary.
Let us ponder over the thought that a brilliant professional enjoys the respect and esteem of his
fellowmen, even without any court declaration of such fact, and that an incompetent one may
summon all the tribunals in the world, to proclaim his genius in vain.

But appellants invoke Article 21 of the Civil Code, which states —

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 damages.

contending that the word "injury" in the said article, refers not only to any indeterminate right or
property, but also to honor or credit (I Tolentino Civil Code, p. 67). It may be added, however, that
this article also envisions a situation where a person has a legal right, and such right is violated by
another in a manner contrary to morals, good customs or public policy; it presupposes losses or
injuries, material or otherwise, which one may suffer as a result of said violation. The pleadings do
not show that damages were ever asked or alleged, in connection with this case, predicated upon the
article aforecited. And under the facts and circumstances obtaining in this case, one cannot plausibly
sustain the contention that the failure or refusal to extend the recognition was an act contrary to
morals, good customs or public policy.

IN VIEW HEREOF, the order appealed from is affirmed, with costs against plaintiffs-appellants.

EXAMPLES:

a. BREACH OF PROMISE TO MARRY; SEDUCTION ; and SEXUAL ASSAULT

G.R. No. L-20089 December 26, 1964

BEATRIZ P. WASSMER, plaintiff-appellee,

vs.
FRANCISCO X. VELEZ, defendant-appellant.

Jalandoni & Jamir for defendant-appellant.

Samson S. Alcantara for plaintiff-appellee.

BENGZON, J.P., J.:

The facts that culminated in this case started with dreams and hopes, followed by appropriate
planning and serious endeavors, but terminated in frustration and, what is worse, complete public
humiliation.
Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love, decided to get
married and set September 4, 1954 as the big day. On September 2, 1954 Velez left this note for his
bride-to-be:

Dear Bet —

Will have to postpone wedding — My mother opposes it. Am leaving on the Convair
today.

Please do not ask too many people about the reason why — That would only create a
scandal.

Paquing

But the next day, September 3, he sent her the following telegram:

NOTHING CHANGED REST ASSURED RETURNING VERY SOON APOLOGIZE MAMA PAPA
LOVE .

PAKING

Thereafter Velez did not appear nor was he heard from again.

Sued by Beatriz for damages, Velez filed no answer and was declared in default. Plaintiff adduced
evidence before the clerk of court as commissioner, and on April 29, 1955, judgment was rendered
ordering defendant to pay plaintiff P2,000.00 as actual damages; P25,000.00 as moral and
exemplary damages; P2,500.00 as attorney's fees; and the costs.

On June 21, 1955 defendant filed a "petition for relief from orders, judgment and proceedings and
motion for new trial and reconsideration." Plaintiff moved to strike it cut. But the court, on August 2,
1955, ordered the parties and their attorneys to appear before it on August 23, 1955 "to explore at
this stage of the proceedings the possibility of arriving at an amicable settlement." It added that
should any of them fail to appear "the petition for relief and the opposition thereto will be deemed
submitted for resolution."

On August 23, 1955 defendant failed to appear before court. Instead, on the following day his
counsel filed a motion to defer for two weeks the resolution on defendants petition for relief. The
counsel stated that he would confer with defendant in Cagayan de Oro City — the latter's residence
— on the possibility of an amicable element. The court granted two weeks counted from August 25,
1955.

Plaintiff manifested on June 15, 1956 that the two weeks given by the court had expired on
September 8, 1955 but that defendant and his counsel had failed to appear.

Another chance for amicable settlement was given by the court in its order of July 6, 1956 calling the
parties and their attorneys to appear on July 13, 1956. This time. however, defendant's counsel
informed the court that chances of settling the case amicably were nil.

On July 20, 1956 the court issued an order denying defendant's aforesaid petition. Defendant has
appealed to this Court. In his petition of June 21, 1955 in the court a quo defendant alleged
excusable negligence as ground to set aside the judgment by default. Specifically, it was stated that
defendant filed no answer in the belief that an amicable settlement was being negotiated.

A petition for relief from judgment on grounds of fraud, accident, mistake or excusable negligence,
must be duly supported by an affidavit of merits stating facts constituting a valid defense. (Sec. 3,
Rule 38, Rules of Court.) Defendant's affidavit of merits attached to his petition of June 21, 1955
stated: "That he has a good and valid defense against plaintiff's cause of action, his failure to marry
the plaintiff as scheduled having been due to fortuitous event and/or circumstances beyond his
control." An affidavit of merits like this stating mere conclusions or opinions instead of facts is not
valid. (Cortes vs. Co Bun Kim, L-3926, Oct. 10, 1951; Vaswani vs. P. Tarrachand Bros., L-15800,
December 29, 1960.)

Defendant, however, would contend that the affidavit of merits was in fact unnecessary, or a mere
surplusage, because the judgment sought to be set aside was null and void, it having been based on
evidence adduced before the clerk of court. In Province of Pangasinan vs. Palisoc, L-16519, October
30, 1962, this Court pointed out that the procedure of designating the clerk of court as commissioner
to receive evidence is sanctioned by Rule 34 (now Rule 33) of the Rules of Court. Now as to
defendant's consent to said procedure, the same did not have to be obtained for he was declared in
default and thus had no standing in court (Velez vs. Ramas, 40 Phil. 787; Alano vs. Court of First
Instance, L-14557, October 30, 1959).

In support of his "motion for new trial and reconsideration," defendant asserts that the judgment is
contrary to law. The reason given is that "there is no provision of the Civil Code authorizing" an
action for breach of promise to marry. Indeed, our ruling in Hermosisima vs. Court of Appeals (L-
14628, Sept. 30, 1960), as reiterated in Estopa vs. Biansay (L-14733, Sept. 30, 1960), is that "mere
breach of a promise to marry" is not an actionable wrong. We pointed out that Congress deliberately
eliminated from the draft of the new Civil Code the provisions that would have it so.

It must not be overlooked, however, that the extent to which acts not contrary to law may be
perpetrated with impunity, is not limitless for Article 21 of said Code provides that "any person who
wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage."

The record reveals that on August 23, 1954 plaintiff and defendant applied for a license to contract
marriage, which was subsequently issued (Exhs. A, A-1). Their wedding was set for September 4,
1954. Invitations were printed and distributed to relatives, friends and acquaintances (Tsn., 5; Exh.
C). The bride-to-be's trousseau, party drsrses and other apparel for the important occasion were
purchased (Tsn., 7-8). Dresses for the maid of honor and the flower girl were prepared. A
matrimonial bed, with accessories, was bought. Bridal showers were given and gifts received (Tsn.,
6; Exh. E). And then, with but two days before the wedding, defendant, who was then 28 years old,:
simply left a note for plaintiff stating: "Will have to postpone wedding — My mother opposes it ... "
He enplaned to his home city in Mindanao, and the next day, the day before the wedding, he wired
plaintiff: "Nothing changed rest assured returning soon." But he never returned and was never heard
from again.

Surely this is not a case of mere breach of promise to marry. As stated, mere breach of promise to
marry is not an actionable wrong. But to formally set a wedding and go through all the above-
described preparation and publicity, only to walk out of it when the matrimony is about to be
solemnized, is quite different. This is palpably and unjustifiably contrary to good customs for which
defendant must be held answerable in damages in accordance with Article 21 aforesaid.

Defendant urges in his afore-stated petition that the damages awarded were excessive. No question
is raised as to the award of actual damages. What defendant would really assert hereunder is that
the award of moral and exemplary damages, in the amount of P25,000.00, should be totally
eliminated.

Per 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. As to exemplary damages, defendant contends that
the same could not be adjudged against him because under Article 2232 of the New Civil Code the
condition precedent is that "the defendant acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner." The argument is devoid of merit as under the above-narrated circumstances of
this case defendant clearly acted in a "wanton ... , reckless [and] oppressive manner." This Court's
opinion, however, is that considering the particular circumstances of this case, P15,000.00 as moral
and exemplary damages is deemed to be a reasonable award.

PREMISES CONSIDERED, with the above-indicated modification, the lower court's judgment is hereby
affirmed, with costs.

G.R. No. L-18630 December 17, 1966

APOLONIO TANJANCO, petitioner,

vs.
HON. COURT OF APPEALS and ARACELI SANTOS, respondents.

P. Carreon and G. O. Veneracion, Jr. for petitioner.

Antonio V. Bonoan for respondents.

REYES, J.B.L., J.:

Appeal from a decision of the Court of Appeals (in its Case No. 27210-R) revoking an order of the
Court of First Instance of Rizal (in Civil Case No. Q-4797) dismissing appellant's action for support
and damages.
The essential allegations of the complaint are to the effect that, from December, 1957, the defendant
(appellee herein), Apolonio Tanjanco, courted the plaintiff, Araceli Santos, both being of adult age;
that "defendant expressed and professed his undying love and affection for plaintiff who also in due
time reciprocated the tender feelings"; that in consideration of defendant's promise of marriage
plaintiff consented and acceded to defendant's pleas for carnal knowledge; that regularly until
December 1959, through his protestations of love and promises of marriage, defendant succeeded in
having carnal access to plaintiff, as a result of which the latter conceived a child; that due to her
pregnant condition, to avoid embarrassment and social humiliation, plaintiff had to resign her job as
secretary in IBM Philippines, Inc., where she was receiving P230.00 a month; that thereby plaintiff
became unable to support herself and her baby; that due to defendant's refusal to marry plaintiff, as
promised, the latter suffered mental anguish, besmirched reputation, wounded feelings, moral shock,
and social humiliation. The prayer was for a decree compelling the defendant to recognize the unborn
child that plaintiff was bearing; to pay her not less than P430.00 a month for her support and that of
her baby, plus P100,000.00 in moral and exemplary damages, plus P10,000.00 attorney's fees.

Upon defendant's motion to dismiss, the court of first instance dismissed the complaint for failure to
state a cause of action.

Plaintiff Santos duly appealed to the Court of Appeals, and the latter ultimately decided the case,
holding with the lower court that no cause of action was shown to compel recognition of a child as
yet unborn, nor for its support, but decreed that the complaint did state a cause of action for
damages, premised on Article 21 of the Civil Code of the Philippines, prescribing as follows:

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.

The Court of Appeals, therefore, entered judgment setting aside the dismissal and directing the court
of origin to proceed with the case.

Defendant, in turn, appealed to this Court, pleading that actions for breach of a promise to marry are
not permissible in this jurisdiction, and invoking the rulings of this Court in Estopa vs. Piansay, L-
14733, September 30, 1960; Hermosisima vs. Court of Appeals, L-14628, January 29, 1962; and De
Jesus vs. SyQuia, 58 Phil. 886.

We find this appeal meritorious.

In holding that the complaint stated a cause of action for damages, under Article 21 above
mentioned, the Court of Appeals relied upon and quoted from the memorandum submitted by the
Code Commission to the Legislature in 1949 to support the original draft of the Civil Code. Referring
to Article 23 of the draft (now Article 21 of the Code), the Commission stated:

But the Code Commission has gone farther than the sphere of wrongs defined or determined
by positive law. Fully sensible that there are countless gaps in the statutes, which leave so
many victims of moral wrongs helpless, even though they have actually suffered material and
moral injury, the Commission has deemed it necessary, in the interest of justice, to
incorporate in the proposed Civil Code the following rule:

"ART. 23. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage."

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

The Court of Appeals seems to have overlooked that the example set forth in the Code Commission's
memorandum refers to a tort upon a minor who has been seduced. The essential feature is
seduction, that in law is more than mere sexual intercourse, or a breach of a promise of marriage; it
connotes essentially the idea of deceit, enticement, superior power or abuse of confidence on the
part of the seducer to which the woman has yielded (U.S. vs. Buenaventura, 27 Phil. 121; U.S. vs.
Arlante, 9 Phil. 595).
It has been ruled in the Buenaventura case (supra) that —

To constitute seduction there must in all cases be some sufficient promise or inducement and
the woman must yield because of the promise or other inducement. If she consents merely
from carnal lust and the intercourse is from mutual desire, there is no seduction (43 Cent. Dig.
tit. Seduction, par. 56). She must be induced to depart from the path of virtue by the use of
some species of arts, persuasions and wiles, which are calculated to have and do have that
effect, and which result in her ultimately submitting her person to the sexual embraces of her
seducer (27 Phil. 123).

And in American Jurisprudence we find:

On the other hand, in an action by the woman, the enticement, persuasion or deception is the
essence of the injury; and a mere proof of intercourse is insufficient to warrant a recover.

Accordingly it is not seduction where the willingness arises out of sexual desire or curiosity of
the female, and the defendant merely affords her the needed opportunity for the commission
of the act. It has been emphasized that to allow a recovery in all such cases would tend to the
demoralization of the female sex, and would be a reward for unchastity by which a class of
adventuresses would be swift to profit." (47 Am. Jur. 662)

Bearing these principles in mind, let us examine the complaint. The material allegations there are as
follows:

I. That the plaintiff is of legal age, single, and residing at 56 South E. Diliman, Quezon City,
while defendant is also of legal age, single and residing at 525 Padre Faura, Manila, where he
may be served with summons;

II. That the plaintiff and the defendant became acquainted with each other sometime in
December, 1957 and soon thereafter, the defendant started visiting and courting the plaintiff;

III. That the defendant's visits were regular and frequent and in due time the defendant
expressed and professed his undying love and affection for the plaintiff who also in due time
reciprocated the tender feelings;

IV. That in the course of their engagement, the plaintiff and the defendant as are wont of
young people in love had frequent outings and dates, became very close and intimate to each
other and sometime in July, 1958, in consideration of the defendant's promises of marriage,
the plaintiff consented and acceded to the former's earnest and repeated pleas to have carnal
knowledge with him;

V. That subsequent thereto and regularly until about July, 1959 except for a short period in
December, 1958 when the defendant was out of the country, the defendant through his
protestations of love and promises of marriage succeeded in having carnal knowledge with the
plaintiff;

VI. That as a result of their intimate relationship, the plaintiff started conceiving which was
confirmed by a doctor sometime in July, 1959;

VII. That upon being certain of her pregnant condition, the plaintiff informed the defendant
and pleaded with him to make good his promises of marriage, but instead of honoring his
promises and righting his wrong, the defendant stopped and refrained from seeing the plaintiff
since about July, 1959 has not visited the plaintiff and to all intents and purposes has broken
their engagement and his promises.

Over and above the partisan allegations, the facts stand out that for one whole year, from 1958 to
1959, the plaintiff-appellee, a woman of adult age, maintained intimate sexual relations with
appellant, with repeated acts of intercourse. Such conduct is incompatible with the idea of seduction.
Plainly there is here voluntariness and mutual passion; for had the appellant been deceived, had she
surrendered exclusively because of the deceit, artful persuasions and wiles of the defendant, she
would not have again yielded to his embraces, much less for one year, without exacting early
fulfillment of the alleged promises of marriage, and would have cut chart all sexual relations upon
finding that defendant did not intend to fulfill his promises. Hence, we conclude that no case is made
under Article 21 of the Civil Code, and no other cause of action being alleged, no error was
committed by the Court of First Instance in dismissing the complaint.
Of course, the dismissal must be understood as without prejudice to whatever actions may
correspond to the child of the plaintiff against the defendant-appellant, if any. On that point, this
Court makes no pronouncement, since the child's own rights are not here involved.

FOR THE FOREGOING REASONS, the decision of the Court of Appeals is reversed, and that of the
Court of First Instance is affirmed. No costs.

G.R. No. 101749 July 10, 1992

CONRADO BUNAG, JR., petitioner,

vs.
HON. COURT OF APPEALS, First Division, and ZENAIDA B. CIRILO, respondents.

REGALADO, J.:

Petitioner appeals for the reversal of the decision 1 of respondent Court of Appeals promulgated on
May 17, 1991 in CA-G.R. CV No. 07054, entitled "Zenaida B. Cirilo vs. Conrado Bunag, Sr. and
Conrado Bunag, Jr.," which affirmed in toto the decision of the Regional Trial Court, Branch XI at
Bacoor, Cavite, and, implicitly, respondent court's resolution of September 3, 1991 2 denying
petitioner's motion for reconsideration.

Respondent court having assiduously discussed the salient antecedents of this case, vis-a-vis the
factual findings of the court below, the evidence of record and the contentions of the parties, it is
appropriate that its findings, which we approve and adopt, be extensively reproduced hereunder:

Based on the evidence on record, the following facts are considered indisputable: On
the afternoon of September 8, 1973, defendant-appellant Bunag, Jr. brought plaintiff-
appellant to a motel or hotel where they had sexual intercourse. Later that evening,
said defendant-appellant brought plaintiff-appellant to the house of his grandmother
Juana de Leon in Pamplona, Las Piñas, Metro Manila, where they lived together as
husband and wife for 21 days, or until September 29, 1973. On September 10, 1973,
defendant-appellant Bunag, Jr. and plaintiff-appellant filed their respective applications
for a marriage license with the Office of the Local Civil Registrar of Bacoor, Cavite. On
October 1, 1973, after leaving plaintiff-appellant, defendant-appellant Bunag, Jr. filed
an affidavit withdrawing his application for a marriage license.

Plaintiff-appellant contends that on the afternoon of September 8, 1973, defendant-

appellant Bunag, Jr., together with an unidentified male companion, abducted her in
the vicinity of the San Juan de Dios Hospital in Pasay City and brought her to a motel
where she was raped. The court a quo, which adopted her evidence, summarized the
same which we paraphrased as follows:

Plaintiff was 26 years old on November 5, 1974 when she testified, single
and had finished a college course in Commerce (t.s.n., p. 4, Nov. 5,
1974). It appears that on September 8, 1973, at about 4:00 o'clock in the
afternoon, while she was walking along Figueras Street, Pasay City on her
way to the San Juan de Dios Canteen to take her snack, defendant,
Conrado Bunag, Jr., came riding in a car driven by a male companion.
Plaintiff and defendant Bunag, Jr. were sweethearts, but two weeks before
September 8, 1973, they had a quarrel, and Bunag, Jr. wanted to talk
matters over with plaintiff, so that he invited her to take their merienda at
the Aristocrat Restaurant in Manila instead of at the San Juan de Dios
Canteen, to which plaintiff obliged, as she believed in his sincerity (t.s.n.,
pp. 8-10, Nov. 5, 1974).

Plaintiff rode in the car and took the front seat beside the driver while
Bunag, Jr. seated himself by her right side. The car travelled north on its
way to the Aristocrat Restaurant but upon reaching San Juan Street in
Pasay City, it turned abruptly to the right, to which plaintiff protested, but
which the duo ignored and instead threatened her not to make any noise
as they were ready to die and would bump the car against the post if she
persisted. Frightened and silenced, the car travelled its course thru F.B.
Harrison Boulevard until they reached a motel. Plaintiff was then pulled
and dragged from the car against her will, and amidst her cries and pleas.
In spite of her struggle she was no match to the joint strength of the two
male combatants because of her natural weakness being a woman and
 her small stature. Eventually, she was brought inside the hotel where the
defendant Bunag, Jr. deflowered her against her will and consent. She
could not fight back and repel the attack because after Bunag, Jr. had
forced her to lie down and embraced her, his companion held her two
feet, removed her panty, after which he left. Bunag, Jr. threatened her
that he would ask his companion to come back and hold her feet if she did
not surrender her womanhood to him, thus he succeeded in feasting on
her virginity. Plaintiff described the pains she felt and how blood came out
of her private parts after her vagina was penetrated by the penis of the
defendant Bunag, Jr. (t.s.n. pp. 17-24, Nov. 5, 1974).

After that outrage on her virginity, plaintiff asked Bunag, Jr. once more to
allow her to go home but the latter would not consent and stated that he
would only let her go after they were married as he intended to marry
her, so much so that she promised not to make any scandal and to marry
him. Thereafter, they took a taxi together after the car that they used had
already gone, and proceeded to the house of Juana de Leon, Bunag, Jr.'s
grandmother in Pamplona, Las Piñas, Metro Manila where they arrived at
9:30 o'clock in the evening (t.s.n., p. 26, Nov. 5, 1974). At about ten (10)
o'clock that same evening, defendant Conrado Bunag, Sr., father of
Bunag, Jr. arrived and assured plaintiff that the following day which was a
Monday, she and Bunag, Jr. would go to Bacoor, to apply for a marriage
license, which they did. They filed their applications for marriage license
(Exhibits "A" and "C") and after that plaintiff and defendant Bunag, Jr.
returned to the house of Juana de Leon and lived there as husband and
wife from September 8, 1973 to September 29, 1973.

On September 29, 1973 defendant Bunag, Jr. left and never returned,
humiliating plaintiff and compelled her to go back to her parents on
October 3, 1973. Plaintiff was ashamed when she went home and could
not sleep and eat because of the deception done against her by
defendants-appellants (t.s.n., p. 35, Nov. 5, 1974).

The testimony of plaintiff was corroborated in toto by her uncle, Vivencio

Bansagan who declared that on September 8, 1973 when plaintiff failed to
arrive home at 9:00 o'clock in the evening, his sister who is the mother of
plaintiff asked him to look for her but his efforts proved futile, and he told
his sister that plaintiff might have married (baka nag-asawa, t.s.n., pp. 5-
6, March 18, 1976). However, in the afternoon of the next day (Sunday),
his sister told him that Francisco Cabrera, accompanied by barrio captain
Jacinto Manalili of Ligas, Bacoor, Cavite, informed her that plaintiff and
Bunag, Jr. were in Cabrera's house, so that her sister requested him to go
and see the plaintiff, which he did, and at the house of Mrs. Juana de Leon
in Pamplona, Las Piñas, Metro Manila he met defendant Conrado Bunag,
Sr., who told him, "Pare, the children are here already. Let us settle the
matter and have them married."

He conferred with plaintiff who told him that as she had already lost her honor, she
would bear her sufferings as Boy Bunag, Jr. and his father promised they would be
married.

Defendants-appellants, on the other hand, deny that defendant-appellant Conrado

Bunag, Jr. abducted and raped plaintiff-appellant on September 8, 1973. On the
contrary, plaintiff-appellant and defendant-appellant Bunag, Jr. eloped on that date
because of the opposition of the latter's father to their relationship.

Defendant-appellants claim that defendant-appellant Bunag, Jr. and plaintiff-appellant

had earlier made plans to elope and get married, and this fact was known to their
friends, among them, Architect Chito Rodriguez. The couple made good their plans to
elope on the afternoon of September 8, 1973, when defendant-appellant Bunag, Jr.,
accompanied by his friend Guillermo Ramos, Jr., met plaintiff-appellant and her
officemate named Lydia in the vicinity of the San Juan de Dios Hospital. The foursome
then proceeded to (the) aforesaid hospital's canteen where they had some snacks.
Later, Guillermo Ramos, Jr. took Lydia to Quirino Avenue where she could get a ride
home, thereby leaving the defendant-appellant Bunag, Jr. and plaintiff-appellant alone.
According to defendant-appellant Bunag, Jr., after Guillermo Ramos, Jr. and Lydia left,
he and plaintiff-appellant took a taxi to the Golden Gate and Flamingo Hotels where
 they tried to get a room, but these were full. They finally got a room at the Holiday
Hotel, where defendant-appellant registered using his real name and residence
certificate number. Three hours later, the couple check out of the hotel and proceeded
to the house of Juana de Leon at Pamplona, Las Piñas, where they stayed until
September 19, 1873. Defendant-appellant claims that bitter disagreements with the
plaintiff-appellant over money and the threats made to his life prompted him to break
off their plan to get married.

During this period, defendant-appellant Bunag, Sr. denied having gone to the house of
Juan de Leon and telling plaintiff-appellant that she would be wed to defendant-
appellant Bunag, Jr. In fact, he phoned Atty. Conrado Adreneda, member of the board
of directors of Mandala Corporation, defendant-appellant Bunag, Jr.'s employer, three
times between the evening of September 8, 1973 and September 9, 1973 inquiring as
to the whereabouts of his son. He came to know about his son's whereabouts when he
was told of the couple's elopement late in the afternoon of September 9, 1973 by his
mother Candida Gawaran. He likewise denied having met relatives and emissaries of
plaintiff-appellant and agreeing to her marriage to his son. 3

A complaint for damages for alleged breach of promise to marry was filed by herein private
respondent Zenaida B. Cirilo against petitioner Conrado Bunag, Jr. and his father, Conrado Bunag,
Sr., as Civil Case No. N-2028 of the Regional Trial Court, Branch XIX at Bacoor, Cavite. On August
20, 1983, on a finding, inter alia, that petitioner had forcibly abducted and raped private respondent,
the trial court rendered a decision 4 ordering petitioner Bunag, Jr. to pay private respondent
P80,000.00 as moral damages, P20,000.00 as exemplary damages, P20,000.00 by way of temperate
damages, and P10,000.00 for and as attorney's fees, as well as the costs of suit. Defendant Conrado
Bunag, Sr. was absolved from any and all liability.

Private respondent appealed that portion of the lower court's decision disculpating Conrado Bunag,
Sr. from civil liability in this case. On the other hand, the Bunags, as defendants-appellants, assigned
in their appeal several errors allegedly committed by trial court, which were summarized by
respondent court as follows: (1) in finding that defendant-appellant Conrado Bunag, Jr. forcibly
abducted and raped plaintiff-appellant; (2) in finding that defendants-appellants promised plaintiff-
appellant that she would be wed to defendant-appellant Conrado Bunag, Jr.; and (3) in awarding
plaintiff-appellant damages for the breach of defendants-appellants' promise of marriage. 5

As stated at the outset, on May 17, 1991 respondent Court of Appeals rendered judgment dismissing
both appeals and affirming in toto the decision of the trial court. His motion for reconsideration
having been denied, petitioner Bunag, Jr. is before us on a petition for review, contending that (1)
respondent court failed to consider vital exhibits, testimonies and incidents for petitioner's defense,
resulting in the misapprehensions of facts and violative of the law on preparation of judgment; and
(2) it erred in the application of the proper law and jurisprudence by holding that there was forcible
abduction with rape, not just a simple elopement and an agreement to marry, and in the award of
excessive damages. 6

Petitioner Bunag, Jr. first contends that both the trial and appellate courts failed to take into
consideration the alleged fact that he and private respondent had agreed to marry, and that there
was no case of forcible abduction with rape, but one of simple elopement and agreement to marry. It
is averred that the agreement to marry has been sufficiently proven by the testimonies of the
witnesses for both parties and the exhibits presented in court.

This submission, therefore, clearly hinges on the credibility of the witnesses and evidence presented
by the parties and the weight accorded thereto in the factual findings of the trial court and the Court
of Appeals. In effect, what petitioner would want this Court to do is to evaluate and analyze anew the
evidence, both testimonial and documentary, presented before and calibrated by the trial court, and
as further meticulously reviewed and discussed by respondent court.

The issue raised primarily and ineluctably involves questions of fact. We are, therefore, once again
constrained to stress the well-entrenched statutory and jurisprudential mandate that findings of fact
of the Court of Appeals are, as a rule, conclusive upon this Court. Only questions of law, distinctly set
forth, may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court, subject
to clearly settled exceptions in case law.

Our jurisdiction in cases brought to us from the Court of Appeals is limited to reviewing and revising
the errors of law imputed to the latter, its findings of fact being conclusive. This Court has
emphatically declared that it is not its function to analyze or weigh such evidence all over again, its
jurisdiction being limited to reviewing errors of law that might have been committed by the lower
court. Barring, therefore, a showing that the findings complained of are totally devoid of support in
the record, or that they are so glaringly erroneous as to constitute serious abuse of discretion, such
findings must stand, for this Court is not expected or required to examine or contrast the oral and
documentary evidence submitted by the parties. 7 Neither does the instant case reveal any feature
falling within, any of the exceptions which under our decisional rules may warrant a review of the
factual findings of the Court of Appeals. On the foregoing considerations and our review of the
records, we sustain the holding of respondent court in favor of private respondent.

Petitioner likewise asserts that since action involves a breach of promise to marry, the trial court
erred in awarding damages.

It is true that in this jurisdiction, we adhere to the time-honored rule that an action for breach of
promise to marry has no standing in the civil law, apart from the right to recover money or property
advanced by the plaintiff upon the faith of such promise. 8 Generally, therefore, a breach of promise
to marry per se is not actionable, except where the plaintiff has actually incurred expenses for the
wedding and the necessary incidents thereof.

However, the award of moral damages is allowed in cases specified in or analogous to those provided
in Article 2219 of the Civil Code. Correlatively, under Article 21 of said Code, in relation to paragraph
10 of said Article 2219, 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 moral
damages. 9 Article 21 was 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, and is intended to vouchsafe adequate legal remedy for that untold number of moral wrongs
which is impossible for human foresight to specifically provide for in the statutes. 10

Under the circumstances obtaining in the case at bar, the acts of petitioner in forcibly abducting
private respondent and having carnal knowledge with her against her will, and thereafter promising
to marry her in order to escape criminal liability, only to thereafter renege on such promise after
cohabiting with her for twenty-one days, irremissibly constitute acts contrary to morals and good
customs. These are grossly insensate and reprehensible transgressions which indisputably warrant
and abundantly justify the award of moral and exemplary damages, pursuant to Article 21 in relation
to paragraphs 3 and 10, Article 2219, and Article 2229 and 2234 of Civil Code.

Petitioner would, however, belabor the fact that said damages were awarded by the trial court on the
basis of a finding that he is guilty of forcible abduction with rape, despite the prior dismissal of the
complaint therefor filed by private respondent with the Pasay City Fiscal's Office.

Generally, the basis of civil liability from crime is the fundamental postulate of our law that every
person criminally liable for a felony is also civilly liable. In other words, criminal liability will give rise
to civil liability ex delicto only if the same felonious act or omission results in damage or injury to
another and is the direct and proximate cause thereof. 11 Hence, extinction of the penal action does
not carry with it the extinction of civil liability unless the extinction proceeds from a declaration in a
final judgment that the fact from which the civil might arise did not exist. 12

In the instant case, the dismissal of the complaint for forcible abduction with rape was by mere
resolution of the fiscal at the preliminary investigation stage. There is no declaration in a final
judgment that the fact from which the civil case might arise did not exist. Consequently, the
dismissal did not in any way affect the right of herein private respondent to institute a civil action
arising from the offense because such preliminary dismissal of the penal action did not carry with it
the extinction of the civil action.

The reason most often given for this holding is that the two proceedings involved are not between
the same parties. Furthermore, it has long been emphasized, with continuing validity up to now, that
there are different rules as to the competency of witnesses and the quantum of evidence in criminal
and civil proceedings. In a criminal action, the State must prove its case by evidence which shows
the guilt of the accused beyond reasonable doubt, while in a civil action it is sufficient for the plaintiff
to sustain his cause by preponderance of evidence only. 13 Thus, in Rillon, et al. vs. Rillon, 14 we
stressed that it is not now necessary that a criminal prosecution for rape be first instituted and
prosecuted to final judgment before a civil action based on said offense in favor of the offended
woman can likewise be instituted and prosecuted to final judgment.

WHEREFORE, the petition is hereby DENIED for lack of merit, and the assailed judgment and
resolution are hereby AFFIRMED.

SO ORDERED.
G.R. No. 57227 May 14, 1992

AMELITA CONSTANTINO and MICHAEL CONSTANTINO, the latter represented herein by the former,
his mother and natural guardian, petitioners,
vs.
IVAN MENDEZ and the HONORABLE COURT OF APPEALS, respondents.

Roberto M. Sarenas for petitioners.

Bienvinido D. Cariaga for private respondent.

BIDIN, J.:

This is a petition for review on certiorari questioning the decision1 dated April 30, 1981 of the Court
of Appeals in CA-G.R. No. 61552-R which dismissed petitioner's complaint and set aside the
resolution2 dated October 21, 1976 of the then Court of First Instance of Davao, 16th Judicial
District, amending the dispositive portion of its decision dated June 21, 1976 and ordering private
respondent Ivan Mendez: (1) to acknowledge the minor Michael Constantino as his illegitimate child;
(2) to give a monthly support of P300.00 to the minor child; (3) to pay complainant Amelita
Constantino the sum of P8,200.00 as actual and moral damages; and (4) to pay attorney's fees in
the sum of P5,000 plus costs.

It appears on record that on June 5, 1975, petitioner Amelita Constantino filed an action for
acknowledgment, support and damages against private respondent Ivan Mendez. The case was filed
with the then CFI of Davao, 10th Judicial District and docketed as Civil Case No. 8881. In her
complaint, Amelita Constantino alleges, among others, that sometime in the month of August, 1974,
she met Ivan Mendez at Tony's Restaurant located at Sta. Cruz, Manila, where she worked as a
waitress; that the day following their first meeting, Ivan invited Amelita to dine with him at Hotel
Enrico where he was billeted; that while dining, Ivan professed his love and courted Amelita; that
Amelita asked for time to think about Ivan's proposal; that at about 11:00 o'clock in the evening,
Amelita asked Ivan to bring her home to which the latter agreed, that on the pretext of getting
something, Ivan brought Amelita inside his hotel room and through a promise of marriage succeeded
in having sexual intercourse with the latter; that after the sexual contact, Ivan confessed to Amelita
that he is a married man; that they repeated their sexual contact in the months of September and
November, 1974, whenever Ivan is in Manila, as a result of which Amelita got pregnant; that her
pleas for help and support fell on deaf ears; that Amelita had no sexual relations with any other man
except Ivan who is the father of the child yet to be born at the time of the filing of the complaint;
that because of her pregnancy, Amelita was forced to leave her work as a waitress; that Ivan is a
prosperous businessman of Davao City with a monthly income of P5,000 to P8,000. As relief, Amelita
prayed for the recognition of the unborn child, the payment of actual, moral and exemplary
damages, attorney's fees plus costs.

In his answer dated August 5, 1975, Ivan admitted that he met Amelita at Tony's Cocktail Lounge
but denied having sexual knowledge or illicit relations with her. He prayed for the dismissal of the
complaint for lack of cause of action. By way of counterclaim, he further prayed for the payment of
exemplary damages and litigation expense including attorney's fees for the filing of the malicious
complaint.

On September 1, 1975, Amelita Constantino filed a motion for leave to amend the complaint
impleading as co-plaintiff her son Michael Constantino who was born on August 3, 1975. In its order
dated September 4, 1975, the trial court admitted the amended complaint.

On September 11, 1975, Ivan Mendez filed his answer to the amended complaint reiterating his
previous answer denying that Michael Constantino is his illegitimate son.

After hearing, the trial court rendered a decision dated June 21, 1976, the dispositive portion of
which reads, viz:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of plaintiff

Amelita Constantino and against defendant Ivan Mendez, ordering the latter to pay
Amelita Constantino the sum of P8,000.00 by way of actual and moral damages; and,
the sum of P3,000.00, as and by way of attorney's fees. The defendant shall pay the
costs of this suit.
 SO ORDERED.

From the above decision, both parties filed their separate motion for reconsideration. Ivan Mendez
anchored his motion on the ground that the award of damages was not supported by evidence.
Amelita Constantino, on the other hand, sought the recognition and support of her son Michael
Constantino as the illegitimate son of Ivan Mendez.

In its resolution dated October 21, 1976, the trial court granted Amelita Constantino's motion for
reconsideration, and amended the dispositive portion of its decision dated June 21, 1976 to read as
follows, viz:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of plaintiff

Amelita Constantino and plaintiff-minor Michael Constantino, and against defendant
Ivan Mendez ordering the latter to pay Amelita Constantino the sum of P8,000.00 by
way of actual and moral damages and the sum of P200.00 as and by way of payment of
the hospital and medical bills incurred during the delivery of plaintiff-minor Michael
Constantino; to recognize as his own illegitimate child the plaintiff-minor Michael
Constantino who shall be entitled to all the rights, privileges and benefits appertaining
to a child of such status; to give a permanent monthly support in favor of plaintiff
Michael Constantino the amount of P300.00; and the sum of P5,000.00 as and by way
of attorney's fees. The defendant shall pay the costs of this suit.

Let this Order form part of the decision dated June 21, 1976.

SO ORDERED.

On appeal to the Court of Appeals, the above amended decision was set aside and the complaint was
dismissed. Hence, this petition for review.

Basically, the issue to be resolved in the case at bar is whether or not the Court of Appeals
committed a reversible error in setting aside the decision of the trial court and in dismissing the
complaint.

Petitioners contend that the Court of Appeals erred in reversing the factual findings of the trial and in
not affirming the decision of the trial court. They also pointed out that the appellate court committed
a misapprehension of facts when it concluded that Ivan did not have sexual access with Amelita
during the first or second week of November, 1976 (should be 1974), the time of the conception of
the child.

It must be stressed at the outset that factual findings of the trial court have only a persuasive and
not a conclusive effect on the Court of Appeals. In the exercise of its appellate jurisdiction, it is the
duty of the Court of Appeals to review the factual findings of the trial court and rectify the errors it
committed as may have been properly assigned and as could be established by a re-examination of
the evidence on record. It is the factual findings of the Court of Appeals, not those of the trial court,
that as a rule are considered final and conclusive even on this Court (Hermo v. Hon. Court of
Appeals, et al., 155 SCRA 24 [1987]). This being a petition for certiorari under Rule 45 of the Rules
of Court, this Court will review only errors of law committed by the Court of Appeals. It is not the
function of this Court to re-examine all over again the oral and documentary evidence submitted by
the parties unless the findings of facts of the Court of Appeals is not supported by the evidence on
record or the judgment is based on misapprehension of facts (Remalante v. Tibe, et al., 158 SCRA
138 [1988]; Hernandez v. Court of Appeals, et al., 149 SCRA 97 [1987]).

It is the conclusion of the Court of Appeals, based on the evidence on record, that Amelita
Constantino has not proved by clear and convincing evidence her claim that Ivan Mendez is the
father of her son Michael Constantino. Such conclusion based on the evaluation of the evidence on
record is controlling on this Court as the same is supported by the evidence on record. Even the trial
court initially entertained such posture. It ordered the recognition of Michael as the illegitimate son of
Ivan only when acting on the motions for reconsideration, it reconsidered, on October 21, 1976, its
earlier decision dated June 21, 1976. Amelita's testimony on cross-examination that she had sexual
contact with Ivan in Manila in the first or second week of November, 1974 (TSN, December 8, 1975,
p. 108) is inconsistent with her response that she could not remember the date of their last sexual
intercourse in November, 1974 (Ibid, p. 106). Sexual contact of Ivan and Amelita in the first or
second week of November, 1974 is the crucial point that was not even established on direct
examination as she merely testified that she had sexual intercourse with Ivan in the months of
September, October and November, 1974.
Michael Constantino is a full-term baby born on August 3, 1975 (Exhibit 6) so that as correctly
pointed out by private respondent's counsel, citing medical science (Williams Obstetrics, Tenth Ed., p.
198) to the effect that "the mean duration of actual pregnancy, counting from the day of conception
must be close to 267 days", the conception of the child (Michael) must have taken place about 267
days before August 3, 1975 or sometime in the second week of November, 1974. While Amelita
testified that she had sexual contact with Ivan in November, 1974, nevertheless said testimony is
contradicted by her own evidence (Exh. F), the letter dated February 11, 1975, addressed to Ivan
Mendez requesting for a conference, prepared by her own counsel Atty. Roberto Sarenas to whom
she must have confided the attendant circumstances of her pregnancy while still fresh in her
memory, informing Ivan that Amelita is four (4) months pregnant so that applying the period of the
duration of actual pregnancy, the child was conceived on or about October 11, 1974.

Petitioner's assertion that Ivan is her first and only boyfriend (TSN, December 8, 1975, p. 65) is
belied by Exhibit 2, her own letter addressed to Mrs. Mendez where she revealed the reason for her
attachment to Ivan who possessed certain traits not possessed by her boyfriend. She also confided
that she had a quarrel with her boyfriend because of gossips so she left her work. An order for
recognition and support may create an unwholesome atmosphere or may be an irritant in the family
or lives of the parties so that it must be issued only if paternity or filiation is established by clear and
convincing evidence. The burden of proof is on Amelita to establish her affirmative allegations that
Ivan is the father of her son. Consequently, in the absence of clear and convincing evidence
establishing paternity or filiation, the complaint must be dismissed.

As regards Amelita's claim for damages which is based on Articles 193 & 214 of the Civil Code on the
theory that through Ivan's promise of marriage, she surrendered her virginity, we cannot but agree
with the Court of Appeals that more sexual intercourse is not by itself a basis for recovery. Damages
could only be awarded if sexual intercourse is not a product of voluntariness and mutual desire. At
the time she met Ivan at Tony's Restaurant, Amelita was already 28 years old and she admitted that
she was attracted to Ivan (TSN, December 3, 1975, p. 83). Her attraction to Ivan is the reason why
she surrendered her womanhood. Had she been induced or deceived because of a promise of
marriage, she could have immediately severed her relation with Ivan when she was informed after
their first sexual contact sometime in August, 1974, that he was a married man. Her declaration that
in the months of September, October and November, 1974, they repeated their sexual intercourse
only indicates that passion and not the alleged promise of marriage was the moving force that made
her submit herself to Ivan.

WHEREFORE, the instant petition is Dismissed for lack of merit.

SO ORDERED.

b. MALICIOUS PROSECUTION

Article 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.

G.R. No. 47013 February 17, 2000

ANDRES LAO, petitioner,

vs.
COURT OF APPEALS, THE ASSOCIATED ANGLO-AMERICAN TOBACCO CORPORATION and ESTEBAN
CO,respondents.

-----------------------------

G.R. No. 60647 February 17, 2000

ESTEBAN CO, petitioner,

vs.
COURT OF APPEALS and ANDRES LAO, respondents.

-----------------------------

G.R. No. 60958-59 February 17, 2000

THE ASSOCIATED ANGLO-AMERICAN TOBACCO CORPORATION, petitioner,

vs.
COURT OF APPEALS, ANDRES LAO, JOSE LAO, and TOMAS LAO, respondents.

PURISIMA, J.:

These consolidated petitions for review on certiorari under Rule 45 of the Rules of Court revolve around discrepant
statements of accountability between a principal and its agent in the sale of cigarettes.

The common factual background at bar follows:

On April 6, 1965, The Associated Anglo-American Tobacco Corporation (Corporation for brevity) entered into a
"Contract of Sales Agent" with Andres Lao. Under the contract, Lao agreed to sell cigarettes manufactured and
shipped by the Corporation to his business address in Tacloban City. Lao would in turn remit the sales proceeds to
the Corporation. For his services, Lao would receive commission depending on the kind of cigarettes sold, fixed
monthly salary, and operational allowance. As a guarantee to Lao's compliance with his contractual obligations, his
brother Jose and his father Tomas executed a deed of mortgage1 in favor of the Corporation in the amount of
P200,000.00.

In compliance with the contract, Lao regularly remitted the proceeds of his sales to the Corporation, generating, in
the process, a great deal of business. Thus, the Corporation awarded him trophies and plaques in recognition of his
outstanding performance from 1966 to 1968. However, in February 1968 and until about seven (7) months later, Lao
failed to accomplish his monthly sales report. In a conference in Cebu, Ching Kiat Kam, the President of the
Corporation, reminded Lao of his enormous accounts and the difficulty of obtaining a tally thereon despite Lao's
avowal of regular remittances of his collections.

Sometime in August and September 1969, Esteban Co, the vice-president and general manager of the Corporation,
summoned Lao to Pasay City for an accounting. It was then and there established that Lao's liability amounted to
P525,053.47. And so, Lao and his brother Lao Y Ka, enlisted the services of the Sycip Gorres and Velayo
Accounting Firm (SGV) to check and reconcile the accounts.

Ching Kiat Kam allowed Lao to continue with the sales agency provided Lao would reduce his accountability to
P200,000.00, the amount secured by the mortgage. The Corporation thereafter credited in favor of Lao the amount
of P325,053.47 representing partial payments he had made but without prejudice to the result of the audit of
accounts. However, the SGV personnel Lao had employed failed to conclude their services because the
Corporation did not honor its commitment to assign two of its accountants to assist them. Neither did the
Corporation allow the SGV men access to its records.

Subsequently, the Corporation discovered that Lao was engaging in the construction business so much so that it
suspected that Lao was diverting the proceeds of his sales to finance his business. In the demand letter of April 15,
1979,2 counsel for the Corporation sought payment of the obligations of Lao, warning him of the intention of the
Corporation to foreclose the mortgage. Attached to said letter was a statement of account indicating that Lao's total
obligations duly supported by receipts amounted to P248,990.82.

Since Lao appeared to encounter difficulties in complying with his obligations under the contract of agency, the
Corporation sent Ngo Kheng to supervise Lao's sales operations in Leyte and Samar. Ngo Kheng discovered that,
contrary to Lao's allegation that he still had huge collectibles from his customers, nothing was due the Corporation
from Lao's clients. From then on, Lao no longer received shipments from the Corporation which transferred its
vehicles to another compound controlled by Ngo Kheng. Shipments of cigarettes and the corresponding invoices
were also placed in the name of Ngo Kheng.

On May 21, 1970, Andres, Jose and Tomas Lao brought a complaint for accounting and damages with writ of
preliminary injunction3 against the Corporation, docketed as Civil Case No. 4452 before the then Court of First
Instance of Leyte, Branch I in Tacloban City, which court4 came out with its decision5 on March 26, 1975, disposing
as follows:

IN VIEW OF ALL THE FOREGOING PREMISES, and upon a clear preponderance of evidence in favor of
the plaintiffs, the court hereby renders judgment as follows:

1. Ordering both the plaintiffs and defendant corporation to undergo a Court supervised accounting
of their respective account with the view of establishing once and for all, by a reconciliation of their
respective books of accounts, the true and correct accountability of Andres Lao to the defendant
corporation. Pursuant thereto, both plaintiff Andres Lao and the defendant The Associated Anglo-
American Tobacco Corporation are directed to make available all their records pertainting [sic] to
their business transactions with each other under the contract of sales agent, from 1965 up to the
time Andres Lao ceased being the agent of the defendant. A Committee on Audit is hereby formed
to be composed of three (3) members, one member to be nominated by the plaintiffs, another to be
nominated by the defendant corporation and the third member who shall act as the Committee
Chairman to be appointed by this Court. As Committee Chairman, the Court hereby appoints the
Branch Clerk of Court of this Court, Atty. Victorio Galapon, who shall immediately convene the
Committee upon appointment of the other two members, and undertake to finish their assigned task
under his decision within two (2) months.

2. Ordering the defendant corporation to pay Plaintiffs the amount of P180,000 representing actual
loss of earnings.

3. Ordering the defendant to pay plaintiffs moral damages in the amount of P130,000.00.

4. Ordering the defendant to pay to the plaintiffs, exemplary damages in the amount of P50,000.00.

5. Ordering the defendant to pay to the plaintiffs, attorney's fees in the amount of P40,000.00.

6. Ordering the plaintiffs and the defendant to pay the compensation of the commissioners pro-rata.

7. Finally ordering the defendant to pay the cost of this suit.

SO ORDERED.

The Committee of Audit that was eventually constituted was composed of Atty. Victorio L. Galapon, Jr., as
chairman, Wilfredo Madarang, Jr. and Cesar F.P. Corcuera, as representatives of the Corporation, and Lao himself.
On September 16, 1976, said committee submitted a report6 with the following findings:

Total remittances made by Mr. Andres Lao in favor of Associated

from April 10, 1965 to November 1969 which are substantially
supported by official receipt P13,686,148.80

Shipments by Associated to Mr. Andres Lao duly supported by bills of

lading, factory consignment invoices and delivery receipts 9,110,777.00

Shipments by Associated to Mr. Andres Lao, covered by bills of

lading and factory consignment invoices but with no supporting
delivery receipts purported to have been delivered to Mr. Lao on the
basis of sales made by him as reported in his monthly sales reports
(except for sales in December, 1968 and November and December
1968 where the sales reports were not available to the Audit
Committee) 4,018,927.60

Shipments covered by bills of lading and factory consignment

invoices but with no supporting delivery receipts 597,239.40

Shipments with covering factory consignment invoices but not

covered by bills of lading and delivery receipts 126,950.00

On February 28, 1977, the trial court7 promulgated a supplemental decision wherein it dismissed Lao's claim that he
had made an overpayment of P556,444.20. The alleged overpayment was arrived at after deducting the total
payment made by Lao in the amount of P13,686,148.80 from the total volume of shipments made by the
Corporation in the amount of P13,129,704.60, without including the amount of P597,239.40, representing alleged
shipments covered by bills of lading and factory consignment invoices but with no supporting delivery receipts, and
the amount of P126,950.00, representing shipments with factory consignment invoices but not covered by bills of
lading and delivery receipts. The trial court, in rejecting the claim of overpayment, held that "when he (referring to
Lao) made partial payments amounting to P325,053.47 subsequent to the demand in September, 1969, he is
deemed to have admitted his liability and his claim of overpayment is not only preposterous but devoid of logic."
Therefore, with the sums of P597,239.40 and P126,950.00 included in the total volume of shipments made by the
Corporation in the amount of P13,129,704.60, Lao's total remittances of P13,686,248.80 were short of P167,745.20.
Thus, the trial court held:

WHEREFORE, judgment is hereby rendered declaring plaintiff Andres Lao's accountability to defendant
Corporation in the amount of P167,745.20 and ordering him to pay said amount of P167,745.20 to
defendant The Associated Anglo-American Tobacco Corporation.

The Corporation appealed the decision, dated March 26, 1975, just as Lao appealed the supplemental decision,
dated February 28, 1977, to the Court of Appeals. Docketed as CA-G.R. No. 62532-R, the appeal was resolved in
the Decision of the Court of Appeals dated October 26, 1981,8 disposing thus:

WHEREFORE, in connection with the decision of March 26, 1975, defendant corporation is hereby ordered
to pay plaintiffs P150,000.00 actual damages for loss of earnings, P30,000.00 by way of moral damages and
P10,000.00 for exemplary damages. As modified, the decision is AFFIRMED in all other respects.

As for the supplemental decision of February 28, 1977, the same is hereby reversed and set aside, and
defendant-appellant corporation sentenced to reimburse Andres Lao's overpayment in the amount of
P556,444.20. Costs against defendant-appellant corporation.

The Corporation presented a motion for reconsideration9 of the said Decision but the same was denied in a
Resolution dated May 18, 1982.10 A motion for leave to file a second motion for reconsideration was likewise
denied.11

Meanwhile, on June 24, 1974 and during the pendency of Civil Case No. 4452, Esteban Co, representing the
Corporation as its new vice-president, filed an affidavit of complaint12 with the Pasay City Fiscal's Office under I.S.
No. 90994; alleging that Lao failed to remit the amount of P224,585.82 which he allegedly misappropriated and
converted to his personal use. Although the amount supposedly defalcated was put up as a counterclaim in Civil
Case No. 4452 for accounting, the Corporation averted that it reserved the right to institute a criminal case against
Lao.

On July 31, 1974, after finding a prima facie case against Lao, the Pasay City Fiscal filed an information13 for estafa
against Lao, docketed as Criminal Case No. 2650-P before the then Court of First Instance of Rizal, Branch XXVII.
Lao sought a reinvestigation14 of the case, contending that he was never served a subpoena or notice of preliminary
investigation that was considered mandatory in cases cognizable by Court of First Instance, now Regional Trial
Court. Apparently, the preliminary investigation proceeded ex-parte because Esteban Co made it appear that Lao
could not be located.

On December 17, 1974, without awaiting the termination of the criminal case, Lao lodged a complaint15 for malicious
prosecution against the Corporation and Esteban Co, praying for an award of damages for violation of Articles 20
and 21 of the Civil Code. The case was docketed as Civil Case No. 5528 before Branch I of the then Court of First
Instance in Cotabato City.

In his resolution dated January 3, 1975,16 then Pasay City Fiscal Jose Flaminiano found merit in the petition for
reinvestigation of the estafa case. He opined that Lao had not committed estafa as his liability was essentially civil in
nature. The Fiscal entertained doubts about the motive of the Corporation in instituting the criminal case against Lao
because of the undue delay in its filing, aside from the fact that the estafa case involved the same subject matter the
Corporation sued upon by way of counterclaim in Civil Case No. 4452. Eventually, on May 13, 1976, the Court of
First Instance of Rizal, Branch XXVII, in Pasay City, promulgated a decision17 acquitting Lao of the crime charged
and adopting in toto the said Resolution of Fiscal Flaminiano.

On March 18, 1977, the Court of First Instance of Samar18 handed down a decision in Civil Case No. 5528, the
action for damages arising from malicious prosecution, disposing thus:

WHEREFORE, the Court declares that the defendants filed Criminal Case No. 2650-P against the plaintiff
for estafa before the Court of First Instance of Rizal, Branch XXVII, Pasay City, without probable cause and
with malice and therefore orders the defendants Associated Anglo-American Tobacco Corporation and
Esteban Co to jointly and severally pay the plaintiff:

a. P30,000 as actual damages;

b. P150,000.00 as moral damages;

 c. P100,000.00 as exemplary damages;

d. P50,000.00 as attorney's fees and costs.

SO ORDERED.

The Corporation and Esteban Co both appealed the aforesaid decision to the Court of Appeals under CA-G.R. No.
61925-R.

On April 18, 1977, Lao presented a motion for execution pending appeal19 before the trial court. The opposition of
the Corporation notwithstanding, on June 8, 1977 the trial court issued a special order granting the motion for
execution pending appeal,20 and on the following day, the corresponding writ of execution issued.21

On June 10, 1977, the Court of Appeals issued a Restraining Order enjoining the execution of subject
judgment.22The said order was issued on account of a petition for certiorari, prohibition and mandamus with
preliminary injunction23 filed by the Corporation and Esteban Co with the said appellate court. Docketed as CA-G.R.
No. 06761, the petition was received by the Court of Appeals on June 9, 1977. A supplemental to the petition and a
"compliance" were also received on the same time and date.24 On June 21, 1977, Lao moved to lift the restraining
order.

On September 14, 1977, the Court of Appeals resolved in CA-G.R. No. 06761 thus:

WHEREFORE, the petition for certiorari is hereby granted, the special order granting execution pending
appeal is annulled and the restraining order heretofore issued is made permanent.

No pronouncement as to costs.

On October 21, 1981, the Court of Appeals likewise rendered a Decision25 in CA-G.R. No. 62532-R, affirming the
trial court's finding that Criminal Case No. 2650-P was filed without probable cause and with malice; and held the
Corporation and Esteban Co solidarily liable for damages, attorney's fees and costs.

The Corporation and Esteban Co moved to reconsider26 the said decision in CA-G.R. No. 61925-R but to no avail.
The motion for reconsideration was denied in a Resolution promulgated on May 18, 1992. A motion for leave of
court to file a second motion for reconsideration27 met the same fate. It was likewise denied in a Resolution28dated
June 23, 1982.

From the said cases sprung the present petitions which were ordered consolidated in the Resolutions of December
15, 1982 and November 11, 1985.29 Subject petitions are to be passed upon in the order they were filed.

G.R. No. 47013

A petition for review on certiorari of the Decision of the Court of Appeals in CA-G.R. No. 06761 that Lao filed,
contending that:

1. The Court of Appeals cannot validly give due course to an original action for certiorari, prohibition
and mandamus where the petition is fatally defective for not being accompanied by a copy of the trial court's
questioned process/order.

2. The Court of Appeals, cannot, in a petition for certiorari, prohibition and mandamus, disregard, disturb and
substitute its own judgment for the findings of facts of the trial court, particularly as in the present case,
where the trial court did not exceed nor abuse its discretion.

3. The Court of Appeals did not act in accordance with established jurisprudence when it overruled the trial
court's holding that the posting of a good and solvent bond is a good or special reason for execution pending
appeal.

For clarity, the petition for review on certiorari questioning the Decision of the Court of Appeals that nullified the
special order granting execution pending appeal is anchored on the antecedent facts as follows:

After the Court of First Instance of Samar had decided in favor of Lao in the action for damages by reason of
malicious prosecution, Lao filed a motion for execution pending appeal30 even as the Corporation and Co had
interposed an appeal from the said decision. In that motion, Lao theorized that the appeal had no merit and the
judgment in his favor would be rendered ineffectual on account of losses incurred by the Corporation in the 1972
floods in Luzon and in a fire that cost the Corporation P5 million, as well as the fact that the properties of the
Corporation were heavily encumbered as it had even incurred an overdraft with a bank; for which reasons, Lao
evinced his willingness to post a bond although Section 2, Rule 39 of the Rules of Court does not require such bond.
Lao thereafter sent in a supplemental motion31 asserting that the Corporation's properties were mortgaged in the
total amount of Seven Million (P7,000,000.00) Pesos. The Corporation and Co opposed both motions.
On June 8, 1977, after hearing and presentation of evidence by both parties, the Court of First Instance of Samar
issued a special order granting the motion for execution pending appeal.32 The following day, June 9, 1977, the
corresponding writ of execution pending appeal issued.33 At 8:00 a.m. on the same day, the Corporation and Co
filed a petition for certiorari, prohibition and mandamus with preliminary injunction with the Court of Appeals, the
filling of which petition was followed by the filing of a supplement to the petition and a "compliance" with each
pleading bearing the docket stamp showing that the Court of Appeals also received the same at 8:00 a.m.34

In the petition under consideration, petitioner Lao contends that the supplemental petition and "compliance" could
not have been filed with the Court of Appeals at the same time as the original petition; pointing out that the
supplemental petition contains an allegation to the effect that the special order granting execution pending appeal
was then still "being flown to Manila" and would be attached to the petition "as soon as it arrives in Manila which is
expected tomorrow, June 10, 1977 or Saturday."35 Petitioner Lao thus expressed incredulity on the fact that both the
supplemental petition and the "compliance" submitted to the appellate court a copy of the special order bearing the
same time of receipt. He theorized that the writ of execution could have been issued by the Court of First Instance of
Samar at the earliest, at 8:30 a.m. on July 9, 1977. Petitioner Lao then noted that, the restraining order enjoining
execution pending appeal did not mention the date of issuance of the writ subsequently issued and the names of the
special sheriffs tasked to execute it simply because when the restraining order was issued the copy of the writ of
execution was not yet filed with the Court of Appeals. Petitioner Lao also averred that because his counsel was
furnished a copy of the restraining order through the mail, he was deprived of the opportunity to take immediate
"remedial steps in connection with the improvident issuance of the restraining order."36

In their comment on the petition, respondent Corporation and Co assail petitioner Lao's insinuation of irregularity in
the filing of their pleadings. They aver that in view of petitioner Lao's allegation, they, made inquiries in the Docket
Section of the Court of Appeals, and they were informed that the receiving machine of said section was out of order
when the pleadings were received "as the time of receipt appearing therein is always 8:00 a.m."37

This Court cannot gloss over, as it has never glossed over allegations of irregularity in the handling of pleadings filed
in the Court. However, in the absence of concrete proof that there was malicious intent to derail the propriety of
procedure, this Court has no basis on which to arrive at a conclusion thereon. The documentary evidence of
simultaneous receipt of pleadings that should ordinarily be received one after another is simply insufficient to
warrant any conclusion on irregularity of procedure.

All court personnel are enjoined to do their jobs properly and according to law. Should they notice anything in the
performance of their duties that may generate even a mere suspicion of irregularity, they are duty-bound to correct
the same. In this case, more diligence on the part of the personnel handling the receiving machine could have
prevented the stamping on the pleadings with erroneous date and time of receipt and would have averted suspicion
of an anomaly in the filing of pleadings. Persons responsible for the negligence should be taken to task. However,
since this is not the proper forum for whatever administrative measures may be taken under the premises, the Court
opts to discuss the merits of the petition for review on certiorari at bar rather than tarry more on an administrative
matter that is fundamentally extraneous to the petition.

Petitioner Lao maintains that the Court of Appeals should not have been given due course to the petition
for certiorari, prohibition and mandamus considering that it was fatally defective for failure of the petitioners to attach
thereto a copy of the questioned writ of execution. On their part, private respondents concede the mandatory
character of the requirement of Section 1, Rule 65 of the Rules of Court — that the petition "shall be accompanied
by a certified true copy of the judgment or order subject thereof, together with copies of all pleadings and documents
relevant and pertinent thereto." However, private respondents asked that their submission of a certified true copy of
the special order granting execution pending appeal attached to their "compliance" dated June 9, 197738 be taken
as substantial compliance with the rule.

The Court gives due consideration to private respondents' stance. Strict adherence to procedural rules must at all
times be observed. However, it is not the end-all and be-all of litigation. As this Court said:

. . . adjective law is not to be taken lightly for, without it, the enforcement of substantive law may not remain
assured. The Court must add, nevertheless, that technical rules of procedure are not ends in themselves but
primarily devised and designed to help in the proper and expedient dispensation of justice. In appropriate
cases, therefore, the rules may have to be so construed liberally as to meet and advance the cause of
substantial justice.39

Thus, in holding that the Court of Appeals may entertain a second motion for reconsideration of its decision although
the filing of such motion violates a prohibition thereof, the Court said:

. . . (I)t is within the power of this Court to temper rigid rules in favor of substantial justice. While it is
desirable that the Rules of Court be faithfully and even meticulously observed, courts should not be so strict
about procedural lapses that do not really impair the proper administration of justice. If the rules are intended
to ensure the orderly conduct of litigation, it is because of the higher objective they seek which is the
protection of substantive rights of the parties.40
In the case under consideration, private respondents substantially complied with the Rules of Court when they
submitted a copy of the writ of execution sought to be enjoined on the same day they filed the petition for certiorari,
prohibition and mandamus. Petitioner Co's allegation of irregularity as to the time of receipt of the "compliance" to
which copy of the writ was attached being unsubstantiated, the presumption of regularity of its receipt on the day the
original petition was filed should prevail.

Petitioner Co argues that the Court of Appeals cannot disturb the factual findings of the trial court and substitute its
own in a petition for certiorari, prohibition and mandamus where the basic issue is one of jurisdiction or grave abuse
of discretion. It is well-settled, however, that in a petition for certiorari and mandamus, the Court of Appeals, when
inevitable, may examine the factual merits of the case.41 In the present case, it was necessary and inevitable for the
Court of Appeals to look into the diverse factual allegations of the parties. It is worthy to note that petitioner's motion
for execution pending appeal was premised on his contention that the award of damages in his favor would be
meaningless on account of respondent Corporation's precarious financial status. On the other hand, respondent
Corporation countered that it was operating at a profit, an assurance that at the time, it was a stable business entity
that could answer for its obligations. In the face of these contradictory allegations, the appellate court correctly opted
to make its own finding of facts on the issue of the propriety of the issuance of the writ of execution pending appeal.
It should be stressed that what was at issue was not the award of damages itself but the issuance of said writ.

Petitioner Lao's position that the posting of a good and solvent bond is a special reason for the issuance of the writ
of execution pending appeal is utterly barren of merit. Mere posting of a bond to answer for damages does not
suffice as a good reason for the granting of execution pending appeal, within the context of "good reasons" under
Section 2, Rule 39 of the Rules of Court.42 In Roxas v. Court of Appeals,43 the Court held:

It is not intended obviously that execution pending appeal shall issue as a matter of course. "Good reasons,
special, important, pressing reasons must exist to justify it; otherwise, instead of an instrument of solicitude
and justice, it may well become a tool of oppression and inequity. But to consider the mere posting of a bond
a "good reason" would precisely make immediate execution of a judgment pending appeal routinary, the rule
rather than the exception. Judgments would be executed immediately, as a matter of course, once rendered,
if all that the prevailing party needed to do was to post a bond to answer for damages that might result
therefrom. This is a situation, to repeat, neither contemplated nor intended by law.44

G.R. No. 60647

From the decision of the Court of First Instance of Samar in Civil Case No. 5528, finding that they are liable for
malicious prosecution and therefore, they must pay Lao damages, the Corporation and Co appealed to the Court of
Appeals. In affirming the lower court's decision, the Court of Appeals deduced from the facts established that the
Corporation knew all along that Lao's liability was civil in nature. However, after around four (4) years had elapsed
and sensing that Civil Case No. 4452 would result in a decision against them, they instituted the criminal case for
estafa. In awarding damages in the total amount of P330,000, the Court of Appeals took into account Lao's social
and business standing.45

From the Decision of the Court of Appeals in CA-G.R. No. 61925-R, Co filed the instant petition for review
on certiorari; contending that the Court of Appeals erred in affirming the decision of the Samar Court of First
Instance because when the case for malicious prosecution was commenced there was as yet no cause of action as
the criminal case was still pending decision. Co also asserted that he should not be held jointly and severally liable
with the Corporation because in filing the affidavit-complaint against respondent Lao, he was acting as the executive
vice-president of the Corporation and his action was within the scope of his authority as such corporate officer.

The issue of whether the Court of Appeals correctly ruled that the Corporation and petitioner Co should be held
liable for damages on account of malicious prosecution shall be ratiocinated upon and resolved with the issues
submitted for resolution in G.R. Nos. 60958-59. What should concern the Court here is whether petitioner Co should
be held solidarily liable with the Corporation for whatever damages would be imposed upon them for filing the
complaint for malicious prosecution.

Petitioner Co argues that following the dictum in agency, the suit should be against his principal unless he acted on
his own or exceeded the limits of his agency.

A perusal of his affidavit-complaint reveals that at the time he filed the same on June 24, 1974, petitioner Co was
the vice-president of the Corporation. As a corporate officer, his power to bind the Corporation as its agent must be
sought from statute, charter, by-laws, a delegation of authority to a corporate officer, or from the acts of the board of
directors formally expressed or implied from a habit or custom of doing business.46 In this case, no such sources of
petitioner's authority from which to deduce whether or not he was acting beyond the scope of his responsibilities as
corporate vice-president are mentioned, much less proven. It is thus logical to conclude that the board of directors or
by laws- of the corporation vested petitioner Co with certain executive duties47 one of which is a case for the
Corporation.

That petitioner Co was authorized to institute the estafa case is buttressed by the fact that the Corporation failed to
make an issue out of his authority to file said case. Upon well-established principles of pleading, lack of authority of
an officer of a corporation to bind it by contract executed by him in its name, is a defense which should have been
specially pleaded by the Corporation.48 The Corporation's failure to interpose such a defense could only mean that
the filing of the affidavit-complaint by petitioner Co was with the consent and authority of the Corporation. In the
same vein, petitioner Co may not be held personally liable for acts performed in pursuance of an authority and
therefore, holding him solidarily liable with the Corporation for the damages awarded to respondent Lao does accord
with law and jurisprudence.

G.R. No. 606958-59

In this petition for review on certiorari of the Decisions of the Court of Appeals in CA-G.R. No. 61925-R, regarding
Lao's claim for damages on account of malicious prosecution, and in CA-G.R. No. 62532-R that arose from Lao's
complaint for accounting and damages, petitioner Corporation assigns as errors, that:

1. The respondent Court of Appeals erred and/or committed a grave abuse of discretion in affirming the
erroneous decision of the lower court. The civil case for malicious prosecution was filed during the pendency
of the criminal case upon which the civil suit was based. There is as yet no cause of action. . . . .

2. The respondent Court of Appeals erred and/or committed a grave abuse of discretion when it reversed or
set aside the supplemental decision of the lower court in Civil Case No. 4452, which reversal was merely
based on surmises and conjectures. . . . .

3. The respondent Court of Appeals erred and/or committed grave abuse of discretion when it awarded
moral damages in Civil Case No. 4452 which was not prayed for because Andres Lao prayed for moral
damages and was already awarded in Civil Case No. 5528. Moral damages must be specifically prayed for. .
. . .49

Petitioner Corporation contends that the complaint for malicious prosecution brought by Lao during the pendency of
subject criminal case for estafa, states no cause of action as it was prematurely filed when the criminal case that
resulted in the acquittal of Lao was not yet terminated. On the other hand, respondent Lao countered that the
elements supportive of an action for malicious prosecution are evidentiary in nature and their existence or non-
existence cannot be the subject of evaluation and conclusion upon the filing of the complaint. For Lao, those
elements must be determined at the time the plaintiff has offered all his evidence and rested his case.

Malicious prosecution has been defined as an action for damages brought by one against whom a criminal
prosecution, civil suit or other legal proceeding has been instituted maliciously and without probable cause, after the
termination of such prosecution, suit or other proceeding in favor of the defendant therein.50 As thus defined, the fact
of termination of the criminal prosecution, civil suit or legal proceeding maliciously filed and without probable cause,
should precede the complaint for malicious prosecution. Such a complaint states a cause of action if it alleges: (a)
that the defendant was himself the prosecutor or at least instigated the prosecution; (b) that the prosecution finally
terminated in the acquittal of the plaintiff; (c) that in bringing the action the prosecutor acted without probable cause,
and (d) that the prosecutor was actuated by malice, i.e., by improper and sinister motives.51

Ocamp v. Buenaventura52 demonstrates the importance of the requirement that the case maliciously commenced
should be terminated before a claim for damages arising from the filing of such case should be presented. In that
case, a complaint for damages arising from the alleged malicious filing of an administrative case for serious
misconduct, grave abuse of authority and commission of a felony, was held to be premature during the pendency of
said administrative case before the then Police Commission (POLCOM). Observing that the complaint for damages
was based on the claim that the administrative case brought before the POLCOM was malicious, unfounded and
aimed to harass the respondents, the Court there held:

. . . . The veracity of this allegation is not for us to determine, for if We rule and allow the civil case for
damages to proceed on that ground, there is the possibility that the court a quo in deciding said case might
declare the respondents victims of harassment and thereby indirectly interfere with the proceedings before
the POLCOM. The respondents' case for damages before the lower court is, therefore, premature as it was
filed during the pendency of the administrative case against the respondents before the POLCOM. The
possibility cannot be overlooked that the POLCOM may hand down a decision adverse to the respondents,
in which case the damage suit will become unfounded and baseless for wanting in cause of action. Of
persuasive force is the ruling in William H. Brown vs. Bank of the Philippine Islands and Santiago Freixas,
101 Phil. 309, 312, where this Court said:

. . . . In effect, plaintiff herein seeks to recover damages upon the ground that the detainer case has
been filed, and is being maintained, maliciously and without justification; but this pretense affects the
merits of said detainer case. Should final judgment be eventually rendered in that case in favor of
the plaintiffs therein, such as the one rendered in the municipal court, the validity of the cause of
action of said lessors against Brown, would thereby be conclusively established, and necessarily, his
contention in the present case would have to be rejected. Similarly, we cannot sustain the theory of
Brown in the case at bar, without prejudging the issue in the detainer case, which is still pending.
Until final determination of said case, plaintiff herein cannot, and does not, have, therefore, a cause
of action — if any, on which we do not express our opinion — against the herein defendants. In
 short, the lower court has correctly held that the present action is premature, and, that,
consequently, the complain herein does not set forth a cause of action against the defendants.53

A similar ruling was laid down in Cabacungan v. Corrales54 where the Court sustained the dismissal of an action for
damages on the ground of prematurity. The records disclosed that the alleged false and malicious complaint
charging plaintiffs with malicious mischief was still pending trial when the action for damages based on the subject
complaint was brought.

Premises studiedly viewed in proper perspective, the contention of Lao that the elements of an action for malicious
prosecution are evidentiary in nature and should be determined at the time the plaintiff offers evidence and rests his
case, is untenable. To rule otherwise would, in effect, sanction the filing of actions without a cause of action. The
existence of a cause of action is determined solely by the facts alleged in the complaint. Consideration of other facts
is proscribed and any attempt to prove extraneous circumstances is not allowed.55 As this Court said in Surigao
Mine Exploration Co., Inc. v. Harris,56 "unless the plaintiff has a valid and subsisting cause of action at the time his
action is commenced, the defect cannot be cured or remedied by the acquisition or accrual of one while the action is
pending, and a supplemental complaint or an amendment setting up such after-accrued cause of action is not
permissible."57 Thus, the circumstance that the estafa case concluded in respondent Lao's acquittal during the
pendency of the complaint for malicious prosecution did not cure the defect of lack of cause of action at the time of
filing of the complaint.

Neither does the Court find merit in respondent Lao's submission that the complaint for malicious prosecution is
viable inasmuch as it is also anchored on Articles 20 and 21 of the Civil Code. This may appear to be a persuasive
argument since there is no hard and fast rule which can be applied in the determination of whether or not the
principle of abuse of rights has been violated, resulting in damages under the said articles of the Civil Code on
Human Relations. Indeed, a party injured by the filing of a court case against him, even if he is later on absolved,
may file a case for damages grounded either on the principle of abuse of rights or on malicious
prosecution.58However, whether based on the principle of abuse of rights or malicious prosecution, a reading of the
complaint here reveals that it is founded on the mere filing of the estafa charge against respondent Lao. As such, it
was prematurely filed and it failed to allege a cause of action. Should the action for malicious prosecution be
entertained and the estafa charge would result in respondent Lao's conviction during the pendency of the damage
suit, even if it is based on Articles 20 and 21, such suit would nonetheless become groundless and unfounded. To
repeat; that the estafa case, in fact, resulted in respondent Lao's acquittal would not infuse a cause of action on the
malicious prosecution case already commenced and pending resolution.

The complaint for damages based on malicious prosecution and/or on Articles 20 and 21 should have been
dismissed for lack of cause of action and therefore, the Court of Appeals erred in affirming the decision of the trial
court of origin. It should be stressed, however, that the dismissal of subject complaint should not be taken as an
adjudication on the merits, the same being merely grounded on the failure of the complaint to state a cause of
action.59

As regards the Decision in CA-G.R. No. 62532-R which was spawned by respondent Lao's complaint for
accounting, petitioner contends that the appellate court erred when it reversed and set aside the supplemental
decision in Civil Case No. 4452 and directed the corporation to reimburse the amount of P556,444.20, representing
Lao's overpayment to the Corporation. The Court would normally have restricted itself to questions of law and
shunned away from questions of fact were it not for the conflicting findings of fact by the trial court and appellate
court on the matter. The Court is therefore constrained to relax the rule on conclusiveness of factual findings of the
Court of Appeals and, on the basis of the facts on record, make its own findings.60

It is significant to note that as per decision of the trial court dated March 26, 1975, a court-supervised accounting
was directed so as to ascertain the true and correct accountability of Andres Lao to the defendant corporation. Thus,
a three-man audit committee was formed with the branch of clerk of court, Atty. Victorio Galapon, as chairman, and
two other certified public accountants respectively nominated by the parties, as members.

On September 16, 1976, the said Audit Committee submitted its report61 and in the hearing of November 25, 1976,
the parties interposed no objection thereto and unanimously accepted the Audit Committee Report. The Committee
found that Andres Lao has made a total overpayment to defendant corporation in the amount of P556 ,444.20.

Trial by commissioners is allowed by the Rules of Court when a) the trial of an issue of fact requires the examination
of a long account on either side, in which case the commissioner may be directed to hear and report upon the whole
issue or any specific question involved therein; b) when the taking of an account is necessary for the information of
the court before judgment, or for carrying a judgment or order into effect; and c) when a question of fact, other than
upon the pleadings, arises upon motion or otherwise, at any stage of a case, or for carrying a judgment or order into
effect.62 Ultimately, the trial court, in the exercise of its sound discretion, may either adopt, modify, or reject in whole
or in part, the commissioners' report or it may recommit the same with instructions, or require the parties to present
additional evidence before the commissioners or before the court.63

In the case under consideration, it is thus within the power of the trial court to refer the accounting to court-appointed
commissioners because a true and correct accounting is necessary for the information of the court before it can
render judgment. Moreover, the technical nature of the audit procedure necessitates the assistance of a certified
public accountant. And since both parties offered no objection to the commissioners' report, they are deemed to
have accepted and admitted the findings therein contained.

There is no discernible cause for veering from the findings of the Audit Committee. In arriving at its conclusion, the
Audit Committee subtracted the total remittances of Lao in the amount of P13,686,148.80 from the entire volume of
shipments made by the corporation. In determining the total volume of shipments made by the corporation, the Audit
Committee did not include the shipments covered by bills of lading and factory consignment invoices but without the
corresponding delivery receipts. These included shipments in the amount of P597,239.40 covered by bills of lading
and factory consignment invoices but with no supporting delivery receipts, and shipments worth P126,950.00 with
factory consignment invoices but not covered by bills of lading and delivery receipts. However, the Audit Committee
considered shipments made by the corporation to Lao in the amount of P9,110,777.00 covered by bills of lading and
factory invoices but without the corresponding delivery receipts because subject shipments were duly reported in
Lao's monthly sales report.

The Audit Committee correctly excluded the shipments not supported by delivery receipts, albeit covered by bills of
lading and factory consignment invoices. Under Article 1497 of the Civil Code, a thing sold shall be understood as
delivered when it is placed in the control or possession of the vendee. Unless possession or control has been
transferred to the vendee, the thing or goods sold cannot be considered as delivered. Thus, in the present case, the
Audit Committee was correct when it adopted as guideline that accountability over the goods shipped was
transferred from the corporation to Andres Lao only upon actual delivery of the goods to him. For it is only when the
goods were actually delivered to and received by Lao, did Lao have control and possession over subject goods, and
only when he had control and possession over said goods could he sell the same.

Delivery is generally evidenced by a written acknowledgement of a person that he or she has actually received the
thing or the goods, as in delivery receipts. A bill of lading cannot substitute for a delivery receipt. This is because it is
a written acknowledgement of the receipt of the goods by the carrier and an agreement to transport and deliver
them at a specific place to a person named or upon his order.64 It does not evidence receipt of the goods by the
consignee or the person named in the bill of lading; rather, it is evidence of receipt by the carrier of the goods from
the shipper for transportation and delivery.

Likewise, a factory consignment invoice is not evidence of actual delivery of the goods. An invoice is nothing more
than a detailed statement of the nature, quantity and cost of the thing sold.65 It is not proof that the thing or goods
were actually delivered to the vendee or the consignee. As admitted by the witness for the corporation:

A: Factory consignment invoices represents what the company billed the plaintiff Mr. Lao and the bill
of lading represents the goods which were supposed to have been shipped.

xxx xxx xxx

A: Shipments covered by factory consignment invoices simply meant these are billings made again by
the Associated Anglo-American Tobacco Corporation to plaintiff Andres Lao. (t.s.n., November 25, 1976, pp.
45-47 as cited in Respondent Lao's Comment, Rollo, p. 259)

Thus, in the absence of proof that the goods were actually received by Lao as evidenced by delivery receipts, the
shipments allegedly made by the corporation in the amount of P597,239.40 and P126,950.00 covered only by bills
of lading and factory consignment invoices cannot be included in Lao's accountability.

However, as to the shipments worth P4,018,927.60 likewise covered only by bills of lading and factory consignment
invoices, the Audit Committee correctly considered them in Lao's account because such shipments were reported in
the latter's sales reports. The fact that Lao included them in his sales reports is an implied admission that subject
goods were actually delivered to him, and that he received the said goods for resale.

As regards the award of moral damages, petitioner Corporation faults the Court of Appeals for awarding such
damages not specifically prayed for in the complaint for accounting and damages in Civil Case No. 4452. Petitioner
Corporation argues that moral damages were prayed for and duly awarded in Civil Case No. 5528 and therefore, it
would be unfair and unjust to allow once again, recovery of moral damages on similar grounds.

Contrary to the allegation of the petitioner Corporation, the award of moral damages was specifically prayed for in
the complaint albeit it left the amount of the same to the discretion of the court.66 Moreover, Civil Case Nos. 4452
and 5528 were on varied causes of action. While the award for moral damages in Civil Case No. 4452 was based
on the evident bad faith of the petitioner Corporation in unilaterally rescinding respondent Lao's sales agency
through his immediate replacement by Ngo Kheng, the claim for moral damages in Civil Case No. 5528 was
anchored on the supposed malice that attended the filing of the criminal case for estafa.

Petitioner Corporation also opposes for being conjectural, the award of P150,000.00 in Civil Case No. 4452,
representing actual damages for loss of earnings. True, damages cannot be presumed or premised on conjecture or
even logic. A party is entitled to adequate compensation only for duly substantiated pecuniary loss actually suffered
by him or her.67 In this case, however, the trial court correctly found that an award for actual damages was justified
because several months before their contract of agency was due to expire in 1969, the petitioner Corporation
replaced Lao with Ngo Kheng as sales agent for the areas of Leyte and Samar. This, despite the fact that they had
already agreed that Lao would continue to act as the corporation's sales agent provided that he would reduce his
accountability to P200,000.00, the amount covered by his bond, and engaged the services of an independent
accounting firm to do an audit to establish Lao's true liability. Due to his ouster as sales agent, Lao failed to realize a
net income from his sales agency in the amount of P30,000,00 a year.

However, the amount of actual damages should be reduced to P30,000.00 only instead of the P150,000.00 awarded
by the appellate court. Since the contract of sales agency was on a yearly basis, the actual damages Lao suffered
should be limited to the annual net income he failed to realize due to his unjust termination as sales agent prior to
the expiration of his contract in 1969. Unrealized income for the succeeding years cannot be awarded to Lao
because the corporation is deemed to have opted not to renew the contract with Lao for the succeeding years.

As to the award of exemplary damages, suffice it to state that in contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.68 In
the case under scrutiny, the Court finds the award of exemplary damages unjustified or unwarranted in the absence
of any proof that the petitioner Corporation acted in a wanton, fraudulent, reckless, oppressive, and malevolent
manner. For the same reasons, the award for attorney's fees should be deleted.1âwphi1.nêt

WHEREFORE,

In G.R. No. L-47013, the petition for review on certiorari is DENIED for lack of merit;

In G.R. No. 60647, the petition is GRANTED and the assailed decision is SET ASIDE; and the Decision of the Court
of Appeals in CA-G.R. No. 61925-R, finding Esteban Co solidarity liable with the respondent Associated Anglo-
American Tobacco Corporation for damages, is REVERSED AND SET ASIDE. As above ratiocinated, the
respondent corporation cannot be held liable for damages.

In G.R. Nos. 60958-59, the Decision in CA-G.R. No. 61925-R is REVERSED AND SET ASIDE; the respondent
corporation is adjudged not liable for malicious prosecution due to the prematurity of the action; while the Decision in
CA-G.R. No. 62532-R is AFFIRMED, insofar as it ordered respondent corporation to reimburse Andres Lao's
overpayment in the amount of P556,444.20, but MODIFIED, in that only an award of P30,000.00 for actual damages
is GRANTED, and all the other monetary awards are deleted. No pronouncement as to costs.

SO ORDERED.

G.R. No. 106922 April 20, 2001

FRANKLIN M. DRILON, AURELIO C. TRAMPE, FERDINAND R. ABESAMIS and EULOGIO

MANANQUIL, petitioners,
vs.
COURT OF APPEALS, HON. ERIBERTO U. ROSARIO, JR., in his capacity as Presiding Judge of Branch 66,
Regional Trial Court of Makati and JUAN PONCE ENRILE, respondents.

DE LEON, JR., J.:

Before us is a petition for review of the Decision1 of the Court of Appeals and Resolution2 dated June 29, 1992 and
August 27, 1992 respectively which affirmed the Order3 dated October 8, 1991 of the Regional Trial Court of Makati
City, Branch 66, in Civil Case No. 90-2327 denying petitioners' motion to dismiss as well as the Order4dated
January 6, 1992 denying petitioners' motion for reconsideration.

The facts are as follows:

After the unsuccessful December 1989 coup d' etat, the Department of Justice, then headed by petitioner Franklin
Drilon, referred to the Special Composite Team of Prosecutors (Team of Prosecutors, for brevity), composed of co-
petitioners Aurelio C. Trampe, Ferdinand R. Abesamis and Eulogio Mananquil, a letter-complaint from the National
Bureau of Investigation (NBI, for brevity) requesting for the investigation of private respondent Juan Ponce Enrile for
his alleged participation in the said coup attempt.

Finding sufficient basis to continue the inquiry, the Team of Prosecutors issued a subpoena to private respondent
with an order to submit his counter-affidavit to the letter-complaint. Instead of filing his counter-affidavit, private
respondent filed a Petition for Summary Dismissal of the charge against him. He also filed an urgent motion praying
that he be given a notice of at least five (5) days before the filing of any information against him to enable him to
take the appropriate legal action. At the same time, private respondent sent "cautionary letters" to all judges in
Quezon City, Manila, Makati and Pasay City requesting that he be apprised of any information which may be filed
against him and that he be given the opportunity to personally witness the raffle of the case against him. Said notice
also appeared in several newspapers of general circulation.

On February 27, 1990, the Team of Prosecutors filed before the Regional Trial Court of Quezon City on Information
charging private respondent with the complex crime of rebellion with murder and frustrated murder. The Team of
Prosecutors likewise filed before the Regional Trial Court of Makati City an Information charging, among others,
private respondent with the offense of obstruction of justice for harboring an alleged felon under Presidential Decree
No. 1829. Private respondent was later arrested and detained overnight at the NBI headquarters in Taft Avenue,
Manila, and, on the following day, transferred to a detention room at Camp Karingal in Quezon City. The lawyers of
private respondent also discovered that the information against the latter was first filed on February 21, 1990, but
was subsequently withdrawn for re-filing on February 27, 1990. After a petition for writ of habeas corpus was filed
before this Court entitled Enrile v. Salazar5, we granted private respondent's provisional liberty upon posting of a
cash bond.

On June 5, 1990, in the same case of Enrile v. Salazar, we ordered the modification of the Information before the
RTC of Quezon City to simple rebellion only in consonance with our ruling in People v. Hernandez6. On September
13, 1990, in Enrile v. Amin,7 this Court ruled that the filing of a separate information for obstruction of justice also
violated the Hernandez doctrine and accordingly ordered the quashal of the said information.

As a consequence of our said Order dated September 13, 1990, private respondent on August 20, 1990 filed a
Complaint for damages, docketed as Civil Case No. 90-2327, before the Regional Trial Court of Makati City while
the rebellion case was still pending litigation. Private respondent's complaint impleaded as defendants herein
petitioners, then Solicitor General Francisco Chavez and Judge Jaime Salazar. The complaint basically accuses the
petitioners of bad faith in filing the information for rebellion complexed with murder and frustrated murder. Thus, the
complaint alleges:

2.5 The so-called "preliminary investigation" of the charge against plaintiff was railroaded from the very start.
Plaintiff's pleas and motions asking for strict compliance with the rules of procedure and the norms of
fairness and justice were either ignored or summarily denied by the investigating panel. Plaintiff, in utter
frustration, filed a petition for summary dismissal of the charge and, anticipating the denial of that as well,
also filed an urgent motion to be given at least five (5) days notice to enable him to take the appropriate
legal action, before the filing of any information against him.

xxx

3.1 All of the defendants, in and by all their actuations in connection with the information for rebellion
"complexed" … individually, collectively, and with unity of purposes and intentions, illegally and unjustly
caused, directed and prolonged plaintiff's arrest and detention without bail, through the expediency of
disregarding the Hernandez doctrine prohibiting the complexing of rebellion with other crimes.

In and by all their aforementioned actuations, all of the defendants individually, collectively and with unity of
purposes and intentions–

(a) wilfully, manifestly and maliciously obstructed, defeated, violated, impeded and impaired
plaintiff's constitutional and legal right to due process, right to be secure in his person against
unreasonable and unwarranted arrest, and right to bail, as enshrined in Sections 1, 2 and 13 of
Article 14(1) of the Bill of Rights of the Constitution;

(b) grossly abused their rights and violated their duties as citizens, as members of the legal
profession, and as public officers;

(c) willfully acted in contravention of the basic standards of good faith and justice; and

(d) willfully acted in a manner contrary to law, morals and public policy

- all causing great suffering and injury to plaintiff.

3.2 Defendants Chavez, Drilon, Trampe, Abesamis and Mananquil knowingly, manifestly and maliciously
abused and exceeded their duties and authority as public officials in charge of the enforcement and
prosecution of laws, as well as violated the tenets of good faith and justice in human relations, by directly
and actively advocating and indulging in what these defendants had publicly admitted and described to be a
"legal experimentation" consisting in the knowing disregard and defiance of the well-established Hernandez
doctrine.

Defendant Drilon and his co-defendants Trampe, Abesamis and Mananquil, being the head and members,
respectively, of the Department of Justice, by their above-alleged actuations, violated their principal
responsibility, as legal counsel and prosecutors, to administer the criminal justice system in accordance with
the established and accepted laws and processes.

Defendant Drilon, being the Secretary of Justice having supervision, control and direction over the
actuations of co-defendants Trampe, Abesamis and Mananquil violated the tenets of good faith and justice
in human relations and abused his official duties and authority, by, among others, expressly instigating,
authorizing, ordering and causing the filing of the information for rebellion "complexed" against the plaintiff.
 xxx

3.3. Defendants Drilon, Trampe, Abesamis and Mananquil filed or cased the filing of the information for
rebellion "complexed" with manifest bad faith, deception and duplicity, all in violation of the tenets of good
faith and justice in human relations and in gross abuse of their duties and authority as public prosecutors "to
see that justice is done." (Canon 6, Rule 6.01, Lawyers' Code of Professional Responsibility).

More particularly, these defendants originally filed or caused the filing of the information … on 21 February
1990 but, for some mysterious reason, the information was subsequently withdrawn. The initial filing and
withdrawal of the information – defendant Chavez admitted these facts during the Supreme Court hearing on
6 March 1990 – were done in total secrecy and without the knowledge of plaintiff who learned of this incident
only after his arrest on 27 February 1990.

Likewise, on or about 27 February 1990, these defendants deliberately misled plaintiff and his lawyers and
induced them to believe that the charge of rebellion "complexed" was set to be filed against the plaintiff in
the Regional Trial Court of Makati. While plaintiff's attention was diverted to the Regional Trial Court of
Makati, these defendants surreptitiously filed or caused the filing of main information for rebellion
"complexed" in the Regional Trial Court of Quezon City.

All of the above-named defendants' actuations were meant to conceal from the public in general and the
plaintiff and his counsel in particular, the filing of the information and to prevent plaintiff and his lawyers from
witnessing the raffle and from questioning the irregularity of the assignment, the validity of the information,
the authority of the court to issue the warrant of arrest, the obvious lack of probable cause, and, finally, to
prevent plaintiff from posting bail.

xxx

3.5 The defendants' unfounded and malicious persecution of plaintiff, calculated to malign the person and
reputation of the plaintiff, a duly elected Senator of the country, has caused and continues to cause plaintiff
extreme suffering, mental anguish, moral shock and social humiliation, …

3.6 The reckless and wanton conduct of the defendants who, as public officials, are supposed to be the
guardians of the democratic institutions and civil liberties of citizens, in charging, taking cognizance of, and
defending a non-existing crime, and in causing the harassment and persecution of the plaintiff, should be
strongly condemned…8

xxx

On October 9, 1990, the petitioners filed a Motion to Dismiss for failure of the Complaint to state a cause of action.
They claimed that there was no allegation of any actionable wrong constituting a violation of any of the legal rights of
private respondent. In addition, they put up the defense of good faith and immunity from suit, to wit:

THE COMPLAINT FAILS TO STATE A CAUSE OF ACTION AGAINST DEFENDANTS IN THAT:

(A) THE FILING OF THE INFORMATION AGAINST PLAINTIFF FOR THE CRIME OF REBELLION WITH
MURDER AND FRUSTRATED MURDER WAS INITIATED IN THE HONEST BELIEF THAT IT COULD BE
SUSTAINED UNDER THE FIRST PART OF ARTICLE 48 OF THE REVISED PENAL CODE; and

(B) DEFENDANTS, ACTING IN GOOD FAITH, WITHOUT MALICE AND WITHIN THE SCOPE OF THEIR
AUTHORITY, CANNOT BE HELD PERSONALLY LIABLE BY WAY OF DAMAGES FOR ANY ALLEGED
INURY SUFFERED BY PLAINTIFF.9

On October 8, 1991, respondent trial court issued an Order denying the Motion to Dismiss and requiring petitioners
to file their answer and to present evidence in support of their defenses in a full-blown trial inasmuch as the defense
of good faith and immunity from suit does not appear to be indubitable.10 Petitioners' motion for reconsideration was
likewise denied.

Before the Court of Appeals, petitioner Trampe, in his own behalf and in his own behalf and in behalf of his co-
petitioners, filed a petition for certiorari under Rule 65 of the Revised Rules of Court alleging that the respondent
court committed grave abuse of discretion in denying their motion to dismiss. On June 29, 1992, respondent
appellate court dismissed the petition and the subsequent motion for reconsideration ruling, thus:

We cannot perceive how respondent court could have acted with grave abuse of discretion in denying the
motion to dismiss. Before respondent court were two diametrically opposed contentions. Which to believe,
respondent court is at a loss. Hence, respondent court had no alternative but to be circumspect in acting
upon the motion to dismiss. This respondent court accomplished by requiring petitioners to file their answer
where they can raise the failure of the complaint to state a cause of action as an affirmative defense. Indeed
the better alternative would be to conduct a full blown trial during which the parties could present their
respective evidences to prove their respective cause of action/defense.11
Hence, this instant petition.

In view of the appointment of petitioner Trampe to the judiciary, petitioner Abesamis filed a manifestation stating that
he would act as counsel for his own behalf and in behalf of his co-petitioners. In a Resolution dated March 8, 1993,
we granted the Manifestation of petitioner Abesamis to substitute for petitioner Trampe as counsel for himself and
his co-petitioners. Respondent did not file a motion for reconsideration.

Meanwhile, on February 12, 1993, or almost three (3) years after the filing of the complaint for damages against
petitioners, the Regional Trial Court of Makati dismissed with finality the rebellion charges against private
respondent12 .

In their Memorandum,13 petitioners raise the following assignment of errors:

THE RESPONDENT COURT HAS DECIDED A QUESTION OF SUBSTANCE IN A MANNER NOT IN

ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT BY
HOLDING THAT THE RESPONDENT JUDGE DID NOT ACT WITH GRAVE ABUSE OF DISCRETION IN
DENYING THE MOTION TO DISMISS FILED BY THE PETITIONERS AND THAT IN ANY EVENT, THE
DENIAL OF A MOTION TO DISMISS IS NOT SUBJECT TO REVIEW BY CERTIORARI.

II

PETITIONER TRAMPE ACTED CORRECTLY IN REPRESENTING AND APPEARING ON BEHALF OF

THE OTHER PETITIONERS IN THE INSTANT PETITION. MOREOVER, BY HIS LONG SILENCE AND
INACTION, PRIVATE RESPONDENT CANNOT NOW QUESTION THE PERSONALITY OF PETITIONER
TRAMPE TO REPRESENT AND APPEAR ON BEHALF OF THE OTHER PETITIONERS HEREIN.

Before ruling on the substance of the petition, let us first deal with the legal personalities of petitioners Trampe and
Abesamis to represent themselves and the rest of the petitioners in the case at bar. Private respondent avers that
Trampe's representation is a nullity for the reason that under the Revised Administrative Code, it is not the function
of the Office of the Chief State Prosecutor to represent its prosecutors in suits that may be filed against them.
Private respondent likewise argues that Trampe and Abesamis are prohibited from acting as private counsels for
their co-petitioners inasmuch as it violates Republic Act No. 6713, the "Code of Conduct and Ethical Standards for
Public Officials and Employees."

It must be noted that petitioner Abesamis filed a Manifestation14 before this Court asking that he be permitted to
replace petitioner Trampe as counsel for the petitioners in view of Trampe's appointment to the judiciary. No
opposition thereto was filed by private respondent. Thus, we granted the manifestation of petitioner Abesamis to
substitute for Trampe as counsel for and in behalf of himself and his co-petitioners. There being no motion for
reconsideration filed by private respondent, said resolution has become final. Private respondent did not dispute the
legal personality of petitioner Trampe to represent himself and his co-petitioners in his Comment15 filed before the
Court of Appeals. Private respondent belatedly raised this contention in his opposition16 to the motion for
reconsideration of the appellate court's decision. Accordingly, private respondent is estopped and legally barred
from questioning the representation of petitioners Trampe and later, Abesamis to act as counsel for themselves and
their co-petitioners in this case.

Going now to the crux of the petition, petitioners contend that the complaint sets forth no cause of action against
them. They allege good faith, regularity in the performance of official duties and lack of ultimate facts constituting an
actionable wrong. On the other hand, private respondent argues that a cause of action has been sufficiently pleaded
and that the defenses of good faith and performance of official duties are best disposed in a judicial hearing.
Private respondent likewise maintains that the defense of good faith is irrelevant for the reason that the petitioners
are sued under Article 32 of the New Civil Code where the defense of good faith is irrelevant.

We find merit in the petition.1âwphi1.nêt

A cause of action is the act or omission by which a party violates a right of another.17 A cause of action exists if the
following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it
arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and
(3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of
the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages.18

The remedy of a party whenever the complaint does not allege a cause of action is to set up this defense in a
motion to dismiss or in the answer. A motion to dismiss on the ground of failure to state a cause of action in the
complaint hypothetically admits the truth of the facts alleged therein. However, the hypothetical admission is limited
to the "relevant and material facts well pleaded in the complaint and inferences fairly deductible therefrom. The
admission does not extend to conclusion or interpretations of law; nor does it cover allegations of fact the falsity of
which is subject to judicial notice."19 In De Dios v. Bristol Laboratories (Phils.), Inc., 20 this Court was more particular
in explaining that:
 xxx. For the purpose, the motion to dismiss must hypothetically admit the truth of the facts alleged in the
complaint. The admission, however, is limited only to all material and relevant facts which are well pleaded
in the complaint. Thus, it had been ruled that a demurrer admits only such matters of fact as are sufficiently
pleaded; that the demurrer does not admit the truth of mere epithets charging fraud; nor allegations of legal
conclusions; nor an erroneous statement of law. The admission of the truth of material and relevant facts
well pleaded does not extend to render a demurrer an admission of inferences or conclusions drawn
therefrom, even if alleged in the pleading ; nor mere influences or conclusions from facts not stated; nor
conclusions of law; nor matters of evidence; nor surplusage and irrelevant matter. xxx.

The main question in the instant petition is whether the allegations in the complaint sufficiently plead a cause of
action to hold the petitioners liable for damages. According to the complaint, the petitioners violated private
respondent's constitutional rights for knowingly and maliciously filing a legally non-existent offense and for depriving
him of his right to be notified of the filing of the case against him. Inasmuch as private respondent seeks to hold the
petitioners accountable for the damage he has suffered as a result of the case filed against him, his suit against the
petitioners is one for malicious prosecution. In Drilon v. Court of Appeals,21 where the facts in said case are basically
the same as in the instant case,22 we also labeled the complaint filed by complainant Homobono Adaza as one for
malicious prosecution. It is defined as an action for damages brought by one against whom a criminal prosecution,
civil suit, or other legal proceeding has been instituted maliciously and without probable cause, after the termination
of such prosecution, suit, or other proceeding in favor of the defendant therein. The gist of the action is the putting of
legal process in force, regularly, for the mere purpose of vexation or injury.23 The statutory bases for a civil action for
damages for malicious prosecution are found in the provisions of the New Civil Code on Human Relations and on
damages particularly Articles 19, 20, 21, 26, 29, 32, 33, 35, 2217 and 2219(8).24 A

Complaint for malicious prosecution states a cause of action if it alleges: 1) that the defendant was himself the
prosecutor or that at least he instigated the prosecution; 2) that the prosecution finally terminated in the plaintiff's
acquittal; 3) that in bringing the action the prosecutor acted without probable cause; and, 4) that the prosecutor was
actuated by malice, i.e., by improper and sinister motives.25

We have no reason to depart from our ruling in the said Drilon case. It is our view and we hold that private
respondent's complaint fails to state a cause of action to hold the petitioners liable for malicious prosecution.

First, the complaint for damages was filed long before private respondent's acquittal in the rebellion charge thereby
rendering the subject action premature. At the time the complaint was filed, the criminal action against private
respondent has not yet ended. That the criminal case eventually resulted in private respondent's acquittal during the
pendency of the civil case for damages is of no moment inasmuch as the latter should be filed only after the
accused is acquitted in the criminal case. To allow private respondent to file a complaint, for damages based on
malicious prosecution, before his acquittal would stifle the prosecution of criminal cases by the mere expediency of
filing damage suits against the prosecutors.

The complaint for damages cannot be based on the dismissal of the separate charge for violation of P.D. No. 1829
inasmuch as the complaint does not contain any allegation to that effect. The complaint actually limits the claim for
damages based on the filing of the rebellion charge against the petitioners. Hence, it cannot be sustained based on
the dismissal of the case for violation of P.D. No. 1829.

Second, there are no factual allegations in the complaint that can support a finding that malice and bad faith
motivated the petitioners in filing the information against private respondent. Allegations of bad faith, malice and
other related words without ultimate facts to support the same are mere conclusions of law that are not deemed
admitted in a motion to dismiss for lack of cause of action. From our reading of the complaint, we find no ultimate
facts to buttress these conclusions of law. In Drilon, this Court held that;

xxx xxx xxx

Lack of cause of action, as a ground for a motion to dismiss…must appear on the face of the complaint
itself, meaning that it must be determined from the allegations of the complaint and from none other. The
infirmity of the complaint in this regard is only too obvious to have escaped respondent judge's attention.
Paragraph 14 of the complaint which states:

xxx xxx xxx

14. The malicious prosecution, nay persecution, of plaintiff for a non-existent crime had severely
injured and besmirched plaintiff's name and reputation and forever stigmatized his stature as a
public figure, thereby causing him extreme physical suffering, serious anxiety, mental anguish, moral
shock and social humiliation."

is a mere conclusion of law and is not an averment or allegation of ultimate facts. It does not, therefore, aid
in any wise the complaint in setting forth a valid cause of action against the petitioners.

xxx xxx xxx

The allegations of bad faith and malice in the complaint are based on the ground that the petitioners knowingly and
allegedly maliciously filed the information for an offense that does not exist in the statute books. But as we have
ruled in Drilon:

In the case under consideration, the decision of the Special Team of Prosecutors to file the information for
rebellion with murder and frustrated murder against respondent Adaza, among others, cannot be dismissed
as the mere product of whim or caprice on the part of the prosecutors who conducted the preliminary
investigation… While it is true that the petitioners were fully aware of the prevailing jurisprudence enunciated
in People v. Hernandez, which proscribes the complexing of murder and other common crimes with
rebellion, petitioners were of the honest conviction that the Hernandez Case can be differentiated from the
present case. The petitioners thus argued:

"Of course we are aware of the ruling in People v. Hernandez, 99 Phil 515, which held that common
crimes like murder, arson, etc., are absorbed by rebellion. However, the Hernandez case is different
from the present case before us. In the Hernandez case, the common crimes of murder, arson, etc.
were found by the fiscal to have been committed as a necessary means to commit rebellion, or in
furtherance thereof. Thus, the fiscal filed an information for rebellion alleging those common crimes
as a necessary means of committing the offense charged under the second part of Article 48, RPC.

We, however, find no occasion to apply the Hernandez ruling since as intimated above, the crimes of
murder and frustrated murder in this case were absolutely unnecessary to commit rebellion although
they were the natural consequences of the unlawful bombing. Hence, the applicable provision is the
first part of Article 48 of the RPC."

While the Supreme Court in the case of Enrile v. Salazar, addressing the issue of whether or not the
Hernandez doctrine is still good law, in a 10-3 vote, did not sustain the position espoused by the herein
petitioners on the matter, three justices felt the need to re-study the Hernandez ruling in light of present-day
developments, among whom was then Chief Justice Marcelo Fernan…

xxx

Apparently, not even the Supreme Court then was of one mind in debunking the theory being advanced by
the petitioners in this case, some of whom were also the petitioners in the Enrile case.

xxx

A doubtful or difficult question of law may become the basis of good faith and, in this regard, the law always
accords to public officials the presumption of good faith and regularity in the performance of official duties.
[Tatad v. Garcia, Jr., 243 SCRA 436, 463 (1995)] Any person who seeks to establish otherwise has the
burden of proving bad faith or ill-motive. Here, since the petitioners were of the honest conviction that there
was probable cause to hold respondent Adaza for trial for the crime of rebellion with murder and frustrated
murder, and since Adaza himself, through counsel, did not allege in his complaint lack of probable cause,
we find that the petitioners cannot be held liable for malicious prosecution. Needless to say, probable cause
was not wanting in the institution of Criminal Case No. Q-90-11855 against Adaza.

As to the requirement that the prosecutor must be impelled by malice in bringing the unfounded action,
suffice it to state that the presence of probable cause signifies, as a legal consequence, the absence of
malice. (Albenson Enterprises Corp., supra.) At the risk of being repetitious, it is evident in this case that
petitioners were not motivated by malicious intent or by a sinister design to unduly harass private
respondent, but only by a well-founded belief that respondent Adaza can be held for trial for the crime
alleged in the information.

All told, the complaint, dated July 11, 1990, filed by Adaza before Branch 100 of the Regional Trial Court
against the petitioners does not allege facts sufficient to constitute a cause of action for malicious
prosecution. xxx

xxx

As a result, these general allegations do not help private respondent's action against petitioners. It is well settled
that one cannot be held liable for allegedly maliciously instituting a prosecution where there is probable cause.
Otherwise stated, a suit for malicious prosecution will lie only in cases where a legal prosecution has been carried
on without probable cause. The reason for this rule is that it would be a very great discouragement to public justice,
if prosecutors, who had tolerable ground of suspicion, were liable to be sued at law when their indictment
miscarried.26

On the issue of whether the petitioners should be held accountable for knowingly filing a non-existent offense, this
Court has definitely ruled in Enrile v. Salazar that:
 The plaint of petitioner's (herein private respondent) counsel that he is charged with a crime that does not
exist in the statute books, while technically correct in so far as the Court has ruled that rebellion may not be
complexed with other offenses committed on the occasion thereon, must therefore be dismissed as a mere
flight of rhetoric. Read in the context of Hernandez, the information does indeed charge the petitioner with a
crime defined and punished by the Revised Penal code: simple rebellion.27

Accordingly, despite its defect, the information filed by petitioners remained valid inasmuch as it nevertheless
charges an offense against the herein private respondent.

With respect to private respondent's second basis for the charge of malicious prosecution, that is, he was denied by
the petitioners the right to be notified before the criminal information against him, his complaint alleges that:

xxx

More particularly, these defendants originally filed or caused the filing of the information …on 21 February
1990 but, for some mysterious reason, the information was subsequently withdrawn. The initial filing and
withdrawal of the information – defendant Chavez admitted these facts during the Supreme Court hearing on
6 March 1990 – were done in total secrecy and without the knowledge of plaintiff who learned of this incident
only after his arrest on 27 February 1990.

Likewise, on or about 27 February 1990, these defendants deliberately misled plaintiff and his lawyers and
induced them to believe that the charge of rebellion "complexed" was set to be filed against the plaintiff in
the Regional Trial Court of Makati. While plaintiff's attention was diverted to the Regional Trial Court of
Makati, these defendants surreptitiously filed or caused the filing of the main information for rebellion
"complexed" in the Regional Trial Court of Quezon City.28

xxx

However, we hold that the said allegations still fail to maintain a cause of action against the petitioners. To reiterate,
a cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means
and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not
to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or
constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for
recovery of damages.29 In the case at bar, we fail to see any right of the private respondent supposedly violated by
the petitioners. Nowhere in the statute books is a prospective accused given the right to be notified beforehand of
the filing of an information against him. Likewise, the withdrawal of the information and the subsequent re-filing of
the same do not constitute an actionable wrong inasmuch as the filing or re-filing of an information lies within the
discretion of the prosecutor who must act independently of the affected parties.

Private respondent claims that an appeal or an original action for certiorari is not the proper remedy for a defendant
whose motion to dismiss has been denied by the trial court for the reason that the order does not terminate the
proceedings, nor finally dispose of the contentions of the parties. In its decision affirming the trial court's denial of
the motion to dismiss, the appellate court sustained this contention. However, as correctly pointed out by the
petitioners, the rule admits of an exception. Thus, where the denial of the motion to dismiss by the trial court was
tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, as in the case at bar, the
aggrieved party may assail the order of denial on certiorari.30 A wide breadth of discretion is granted in certiorari
proceedings in the interest of substantial justice and to prevent a substantial wrong.31 In the Drilon case, we also
held that the denial by the trial court of the motion to dismiss of herein petitioners based on the same grounds as in
the instant petition constituted grave abuse of discretion for the reason that "this (private respondent's baseless
action) would unjustly compel the petitioners to needlessly go through a protracted trial and thereby unduly burden
the court with one more futile and inconsequential case."32 The appellate court therefore erred in not ruling that the
trial court committed a grave abuse of discretion when the latter refused to dismiss the case as against herein
petitioners, notwithstanding the obvious insufficiency of the complaint against them.

WHEREFORE, the petition is GRANTED. The Decision dated June 29, 1992 of respondent Court of Appeals and its
Resolution dated August 27, 1992 which affirmed the Orders of the Respondent Regional trial Court of Makati City,
dated October 8, 1991 and January 6, 1992 are hereby NULLIFIED AND SET ASIDE. The respondent Regional
Trial Court of Makati is hereby ordered to take no further action in Civil Case No. 90-2327 except to dismiss the
same.

SO ORDERED.

Bellosillo, Mendoza, Quisumbing, and Buena, JJ., concur.

c. PUBLIC HUMILIATION

G.R. No. L-51832 April 26, 1989

RAFAEL PATRICIO, petitioner,
vs.
THE HONORABLE OSCAR LEVISTE, JUDGE, CFI CAPIZ, BRANCH II and BIENVENIDO
BACALOCOS, respondents.

Petition for review on certiorari of the Order 1 of the Court of First Instance of Capiz, Branch II, on the motion for
reconsideration flied by private respondent Bienvenido Bacalocos, dismissing the complaint for damages against the
latter, docketed as Civil Case No. V-3937.

Petitioner Rafael Patricio, an ordained Catholic priest, and actively engaged in social and civic affairs in Pilar, Capiz,
where he is residing, was appointed Director General of the 1976 Religious and Municipal Town Fiesta of Pilar,
Capiz.

On 16 May 1976 at about 10:00 o'clock in the evening, while a benefit dance was on-going in connection with the
celebration of the town fiesta, petitioner together with two (2) policemen were posted near the gate of the public
auditorium to check on the assigned watchers of the gate. Private respondent Bienvenido Bacalocos, President of
the Association of Barangay Captains of Pilar, Capiz and a member of the Sangguniang Bayan, who was in a state
of drunkenness and standing near the same gate together with his companions, struck a bottle of beer on the table
causing an injury on his hand which started to bleed. Then, he approached petitioner in a hostile manner and asked
the latter if he had seen his wounded hand, and before petitioner could respond, private respondent, without
provocation, hit petitioner's face with his bloodied hand. As a consequence, a commotion ensued and private
respondent was brought by the policemen to the municipal building. 2

As a result of the incident, a criminal complaint for "Slander by Deed was flied by petitioner with the Municipal Trial
Court of Pilar, Capiz, docketed as Criminal Case No. 2228, but the same was dismissed. 3 Subsequently, a
complaint for damages was filed by petitioner with the court a quo. In a decision 4 dated 18 April 1978, the court
ruled in favor of herein petitioner (as complainant), holding private respondent liable to the former for moral
damages as a result of the physical suffering, moral shock and social humiliation caused by private respondent's act
of hitting petitioner on the face in public. The dispositive part of the decision reads as follows:

WHEREFORE, the Court orders defendant to pay plaintiff the damages as follows:

a) Moral damages of P10,000.00

b) Exemplary damages, P1,000.00 and

c) Attorney's fees, P2,000.00.

SO ORDERED. 5

On 9 June 1978, petitioner filed a motion for execution of judgment, alleging that the 18 April 1978 decision had
become final and executory after the lapse of thirty (30) days from receipt thereof by private respondent, without any
motion for reconsideration or appeal having been filed. 6 However, said motion was denied by the court a quo on
the ground that there was a pending motion for reconsideration filed by private respondent. 7 Subsequently, private
respondent filed a supplemental motion for reconsideration 8 and the court ordered petitioner to file a reply
(opposition) thereto. 9 In compliance, petitioner flied a reply (opposition) to the motion for reconsideration, alleging
that the filing of said motion and supplement thereto was without notice to the adverse party and proof of service,
hence, the decision sought to be reconsidered had already become final and unappealable. 10

Private respondent filed a rejoinder (reply) and a manifestation stating that petitioner was duly served with a copy of
said motion for reconsideration by ordinary mail, attaching thereto the affidavit of Godofredo Almazol who stated that
he mailed the envelope to counsel for herein petitioner. 11 The court a quo then scheduled the motion for oral
argument and the parties were allowed to extensively argue their respective causes.

On 3 August 1979, an order 12 of dismissal of the petitioner's complaint was issued by the trial court, thus —

ORDER

This is a motion for reconsideration of the decision of this Court dated April 18, 1978, filed by
counsel for defendant on May 18, 1978.

In view of the recent trend in the Supreme Court to liberally construe the Rules, and in view of
Section 2, Rule 1, the Court resolves to give due course to the motion.

Upon review of the facts of the case, it appears and the Court finds merit in the motion for
reconsideration, particularly noting that there is indeed no showing of compensatory damages being
proved.
 WHEREFORE, tills Court reconsiders its decision to conform to the facts and the law, namely, that
moral and exemplary damages, in order to merit, the plaintiff ought to have proven actual or
compensatory damages.

WHEREFORE, this case is ordered dismissed.

SO ORDERED.

Not satisfied with said order, petitioner filed the petition at bar contending that no copy of the Motion for
consideration was served upon petitioner and no proof of service as well as notice of hearing were attached to said
motion when filed with the court a quo; thus, the motion for reconsideration did not interrupt the running of the period
to appeal. The alleged mailing of a copy of said motion by ordinary mail did not, according to petitioner, cure the
defect. Petitioner further argues that respondent's admission that he slapped herein petitioner in public causing him
physical suffering and social humiliation, entitles the latter to moral damages. Actual and compensatory damages
need not be proven before an award of moral damages can be granted, so petitioner contends.

On the other hand, private respondent claims that the order of the court a quo apprising petitioner of the motion for
reconsideration filed by private respondent and requiring the former to file a reply (opposition) thereto, had cured the
defect of lack of proof of service and notice of hearing of said motion for reconsideration; and that the award of
moral damages to petitioner is without basis for lack of proof of bad faith on the part of private respondent.

With respect to the alleged lack of service on petitioner of a copy of the motion and notice of hearing and failure to
attach to the motion proof of service thereof, the general rule is that notice of motion is required where a party has a
right to resist the relief sought by the motion and principles of natural justice demand that his rights be not affected
without an opportunity to be heard. 13

In the case at bar, a copy of the motion for reconsideration was served upon petitioner, although service was
effected through ordinary mail and not by registered mail as reqired by the rules. But, petitioner was duly given the
full opportunity to be heard and to argue his case when the court a quo required him to file a reply (opposition) to the
motion for reconsideration and subsequently set the motion for oral argument.

What the law really eschews is not the lack of previous notice of hearing but the lack of opportunity to be heard. It
has been held that parties should not rely on mere technicalities which, in the interest of justice, may be
relaxed. 14The rifles of procedure should be viewed as mere tools designed to facilitate the attainment of justice.
Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote
substantial justice, must be avoided. 15 Moreover, the case should, as much as possible, be decided on the merits
and not merely on technicalities.

As to the petitioner's claim for moral damages, we find the same to be meritorious. There is no question that moral
damages may be recovered in cases where a defendant's wrongful act or omission has caused the complainant
physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation and similar injury. 16 An award of moral damages is allowed in cases specified or analogous to
those provided in Article 2219 of the Civil Code, to wit:

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.

xxx xxx xxx

Private respondent's contention that there was no bad faith on his part in slapping petitioner on the face and that the
incident was merely accidental is not tenable. It was established before the court a quo that there was an existing
feud between the families of both petitioner and private respondent and that private respondent slapped the
petitioner without provocation in the presence of several persons.

The act of private respondent in hitting petitioner on the face is contrary to morals and good customs and caused
the petitioner mental anguish, moral shock, wounded feelings and social humiliation. Private respondent has to take
full responsibility for his act and his claim that he was unaware of what he had done to petitioner because of
drunkenness is definitely no excuse and does not relieve him of his liability to the latter.

Pursuant to Art. 21 of the Civil Code in relation to par. (10) of Art. 2219 of the same Code, "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."

The fact that no actual or compensatory damage was proven before the trial court, does not adversely affect
petitioner's right to recover moral damages. Moral damages may be awarded in appropriate cases referred to in the
chapter on human relations of the Civil Code (Articles 19 to 36), without need of proof that the wrongful act
complained of had caused any physical injury upon the complainant. 17 It is clear from the report of the Code
Commission that the reason underlying an award of damages under Art. 21 of the Civil Code is to compensate the
injured party for the moral injury caused upon his person, thus —

... . Fully sensible that there are countless gaps in the statutes, which leave so many victims of moral
wrongs helpless, even though they have actually suffered material and moral injury, the Commission
has deemed it necessary, in the interest of justice, to incorporate in the proposed Civil Code the
following rule:

ART. 23. Any person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.

xxx xxx xxx 18

In addition to the award of moral damages, exemplary or corrective damages may be imposed upon herein private
respondent by way of example or correction for the public good. 19 Exemplary damages are required by public
policy to suppress the wanton acts of the offender. They are an antidote so that the poison of wickedness may not
run through the body politic. 20 The amount of exemplary damages need not be proved where it is shown that
plaintiff is entitled to either moral, temperate or compensatory damages, as the case may be, 21although such
award cannot be recovered as a matter of right. 22

In cases where exemplary damages are awarded to the injured party, attorney's fees are also recoverable. 23

WHEREFORE, the petition is GRANTED. The order appealed from, dated 3 August 1979, is REVERSED and the
decision of the court a quo dated 18 April 1978 is hereby REINSTATED. With costs against private respondent.

SO ORDERED.

G.R. No. L-48250 December 28, 1979

GRAND UNION SUPERMARKET, INC. and NELIA SANTOS FANDINO, petitioners,

vs.
JOSE J. ESPINO JR., and THE HONORABLE COURT OF APPEALS, respondents.

GUERRERO, J.

This is a petition tor certiorari by way of appeal from the decision of the Court of Appeals 1 dated September 26,
1977 rendered in CA-G.R. No. 55186-R entitled "Jose J. Espino, Jr., plaintiff-appellant. versus Grand Union
Supermarket, Inc. and Nelia Santos-Fandino, defendants-appellees," the dispositive portion of which states;

WHEREFORE, the appealed judgment is hereby reversed and set aside. Defendants are ordered to
pay plaintiff-jointly and severally, the sum of Seventy-Five Thousand Pesos (P75,000.00) by way of
moral damages. Twenty-Five Thousand Pesos (P25,000.00) as exemplary damages, and Five
Thousand Pesos (P5,000.00) as attorney's fee, Costs of both instances shall be taxed against the
defendant defendants.

The facts of the case are as stated in the decision of the respondent court to wit:
"Upon the evidence, and from the findings of the lower court, it appears that in the morning of August 22, 1970,
plaintiff Jose J. Espino. Jr., a civil engineer and an executive of Procter and Gamble Philippines, Inc., and his wife
and their two daughters went to shop at the defendants' South Supermarket in Makati. While his wife was shopping
at the groceries section, plaintiff browsed around the other parts of the market. Finding a cylindrical "rat tail" file
which he needed in his hobby and had been wanting to buy, plaintiff picked up that item from one of the shelves. He
held it in his hand thinking that it might be lost, because of its tiny size, if he put it in his wife's grocery cart. In the
course of their shopping, plaintiff and his wife saw the maid of plaintiff's aunt. While talking to this maid, plaintiff
stuck the file into the front breast pocket of his shirt with a good part of the merchandise exposed.

"At the check-out counter, the plaintiff paid for his wife's purchases which amounted to P77.00, but he forgot to pay
for the file. As he was leaving by the exit of the supermarket on his way to his car, carrying two bags of groceries
and accompanied by his wife and two daughter, plaintiff was approached by a uniformed guard of the supermarket
who said: "Excuse me, Mr., I think you have something in your pocket which you have not paid for." (p. 5, tsn, Aug.
13, 1971), pointing to his left front breast pocket. Suddenly reminded of the file, plaintiff apologized thus: "I am
sorry," and he turned back toward the cashier to pay for the file. But the guard stopped him and led him instead
toward the rear of the supermarket. The plaintiff protested but the guard was firm saying: "No, Mr., please come with
me. It is the procedure of the supermarket to bring people that we apprehend to the back of the supermarket" (p. 8,
Ibid). The time was between 9 and 10 o'clock. A crowd of customers on their way into the supermarket saw the
plaintiff being stopped and led by a uniformed guard toward the rear of the supermarket. Plaintiff acquiesced and
signaled to his wife and daughters to wait.

"Into a cubicle which was immediately adjacent to the area where deliveries to the supermarket were being made,
the plaintiff was ushered. The guard directed him to a table and gave the file to the man seated at the desk. Another
man stood beside the plaintiff. The man at the desk looked at the plaintiff and the latter immediately explained the
circumstances that led to the finding of the file in his possession. The man at the desk pulled out a sheet of paper
and began to ask plaintiff's name, age, residence and other personal data. Plaintiff was asked to make a brief
statement, and on the sheet of paper or "Incident Report" he wrote down the following: "While talking to my aunt's
maid with my wife, I put this item in my shirt pocket. I forgot to check it out with my wife's items" (Exhibit A).
Meanwhile, the plaintiff's wife joined him and asked what had taken him so long.

"The guard who had accosted plaintiff took him back inside the supermarket in the company of his wife. Plaintiff and
his wife were directed across the main entrance to the shopping area, down the line of check-out counters, to a desk
beside the first checkout counter. To the woman seated at the desk, who turned out to be defendant Nelia Santos-
Fandino, the guard presented the incident report and the file, Exhibit B. Defendant Fandino read the report and
addressing the guard remarked: "Ano, nakaw na naman ito" (p. 22, Id.). Plaintiff explained and narrated the incident
that led to the finding of the file in his pocket, telling Fandino that he was going to pay for the file because he needed
it. But this defendant replied: "That is all they say, the people whom we cause not paying for the goods say... They
all intended to pay for the things that are found to them." (p. 23, Id). Plaintiff objected and said that he was a regular
customer of the supermarket.

"Extracting a P5.00 bill from his pocket, plaintiff told Fandino that he was paying for the file whose cost was P3.85.
Fandino reached over and took the P5.00 bill from plaintiff with these words: "We are fining you P5.00. That is your
the fine." Plaintiff was shocked. He and his wife objected vigorously that he was not a common criminal, and they
wanted to get back the P5.00. But Fandino told them that the money would be given as an incentive to the guards
who apprehend pilferers. People were milling around them and staring at the plaintiff. Plaintiff gave up the
discussion. He drew a P50.00 bill and took back the file. Fandino directed him to the nearest check-out counter
where he had to fall in line. The people who heard the exchange of words between Fandino and plaintiff continued
to stare at him. At the trial, plaintiff expressed his embarrassment and humiliation thus: " I felt as though I wanted to
disappear into a hole on the ground" (p. 34, Id.). After paying for the file, plaintiff and his wife walked as fast as they
could out of the supermarket. His first impulse was to go back to the supermarket that night to throw rocks at its
glass windows. But reason prevailed over passion and he thought that justice should take its due course.

"Plaintiff was certain during the trial that when he signed the incident report, Exhibit A, inside the cubicle at the back
of the supermarket only his brief statement of the facts (Exhibit A-2), aside from his name and personal
circumstances, was written thereon. He swore that the following were not in the incident report at, the time he
signed it:

Exhibit A-I which says opposite the stenciled word SUBJECT "Shoplifting"

Exhibit A-3 which says opposite the stenciled words Action Taken: Released by Mrs. Fandino after
paying the item.

Exhibit A-4 which says opposite the stenciled words Remarks Noted: "Grd. Ebreo requested Grd.
Paunil to apprehend subject shoplifter.

Private respondent's complaint filed on October 8, 1970 is founded on Article 21 in relation to Article 2219 of the
New Civil Code and prays for moral damages, exemplary damages, attorney s fees and 'expenses of litigation,
costs of the suit and the return of the P5.00 fine. After trial, the Court of First Instance of Pasig, Rizal, Branch XIX
dismissed the complaint, Interposing the appeal to the Court of Appeals, the latter reversed and set aside the
appealed judgment, granting and damages as earlier stated.
Not satisfied with the decision of the respondent court, petitioners instituted the present petition and submits the
following grounds and/or assignment of errors, to wit:

Respondent Court of Appeals erred in awarding moral and exemplary damages to the respondent
Espino under Articles 19 and 21 in relation to Article 2219 of the Civil Code, considering that —

A. Respondent Espino was guilty of theft;

B. Petitioners legitimately exercised their right of defense of property within the context of Article 429
of the Civil Code negating the application of Articles 19 and 21 of the same Code;

C. Petitioners acted upon probable cause in stopping and investigating respondent Espino for
shoplifting and as held in various decisions in the United States on shoplifting, a merchant who acts
upon probable cause should not be held liable in damages by the suspected shoplifter;

D. Petitioners did not exercise their right maliciously, wilfully or in bad faith; and/or

E. The proximate cause of respondent Espino's alleged injury or suffering was his own negligence or
forgetfulness; petitioners acted in good faith.

II

Assuming arguendo that petitioners are hable for moral and exemplary damages, the award of
P75,000.00 for moral damages and P25,000.00 for exemplary damages by the respondent Court of
Appeals is not legally justified and/or is grossly excessive in the premises.

III

The award of P5,000.00 for attorney's fees by the respondent Court of Appeals is unjustified and
unwarranted under Article 2199 of the Civil Code.

We agree with the holding of the respondent appellate court that "the evidence sustains the court's finding that the
plaintiff had absolutely no intention to steal the file." The totality of the facts and circumstances as found by the
Court of Appeals unerringly points to the conclusion that private respondent did not intend to steal the file and that is
act of picking up the file from the open shelf was not criminal nor done with malice or criminal intent for on the
contrary, he took the item with the intention of buying and paying for it.

This Court needs only to stress the following undisputed facts which strongly and convincingly uphold the conclusion
that private respondent was not "shoplifting." Thus, the facts that private respondent after picking the cylindrical "rat-
tail" file costing P3.85 had placed it inside his left front breast pocket with a good portion of the item exposed to view
and that he did not conceal it in his person or hid it from sight as well as the fact that he paid the purchases of his
wife amounting to P77.00 at the checkout counter of the Supermarket, owed that he was not acting suspiciously or
furtively. And the circumstance that he was with his family consisting of his wife Mrs. Caridad Jayme Espino, and
their two daughters at the time negated any criminal intent on his part to steal. Moreover, when private respondent
was approached by the guard of the Supermarket as he was leaving by the exit to his car who told him, "Excuse me,
Mr., I think you have something in your pocket which you have not paid for," Espino, immediately apologized and
answered, "I am sorry," which indicated his sincere apology or regrets. He turned back towards the cashier to pay
for the file which proved his honesty sincerity and good faith in buying the item, and not to shoplift the same. His
brief statement on the sheet of paper called the Incident Report where private respondent wrote the following:
"While talking to my aunt's maid with my wife, I put this item in in my shirt pocket. I forgot to check it out with my
wife's item," was an instant and contemporaneous explanation of the incident.

Considering further the personal circumstances of the private respondent. his education, position and character
showing that he is a graduate Mechanical Engineer from U.P. Class 1950, employed as an executive of Proctor &
Gamble Phils., Inc., a corporate manager incharge of motoring and warehousing therein; honorably discharged from
the Philippine Army in 1946; a Philippine government pensionado of the United States for six months; member of
the Philippine veterans Legion; author of articles published in the Manila Sunday Times and Philippines Free Press;
member of the Knights of Columbus, Council No. 3713; son of the late Jose Maria Espino, retired Minister,
Department of Foreign Affairs at the Philippine Embassy Washington, We are fully convinced, as the trial and
appellate courts were, that private respondent did not intend to steal the article costing P3.85. Nothing in the records
intimates or hints whatsoever that private respondent has had any police record of any sort much less suspicion of
stealing or shoplifting.

We do not lay down here any hard-and-fast rule as to what act or combination of acts constitute the crime of
shoplifting for it must be stressed that each case must be considered and adjudged on a case-to-case basis and
that in the determination of whether a person suspected of shoplifting has in truth and in fact committed the same,
all the attendant facts and circumstances should be considered in their entirety and not from any single fact or
circumstance from which to impute the stigma of shoplifting on any person suspected and apprehended therefor.

We likewise concur with the Court of Appeals that "(u)pon the facts and under the law, plaintiff has clearly made the
cause of action for damages against the defendants. Defendants wilfully caused loss or injury to plaintiff in a manner
that was contrary to morals, good customs or public policy, making them amenable to damages under Articles 19
and 21 in relation to Article 2219 of the Civil Code." 2

That private respondent was falsely accused of shoplifting is evident. The Incident Report (Exhibit A) with the entries
thereon under Exhibit A-1 which says opposite the stenciled word SUBJECT: "Shoplifting," Exhibit A-3 which says
opposite the stenciled words Action Taken: Relesed by Mrs. Fandino after paying the item," Exhibit A-4 which says
opposite the stenciled words Remarks Noted: Grd. Ebreo requested Grd. Paunil to apprehend subject shoplifter,"
established the opinion, judgment or thinking of the management of petitioner's supermarket upon private
respondent's act of picking up the file. ln plain words, private respondent was regarded and pronounced a shoplifter
and had committed "shoplifting."

We also affirm the Court of Appeals' finding that petitioner Nelia Santos Fandino, after reading the incident report,
remarked the following: "Ano, nakaw na naman ito". Such a remark made in the presence of private respondent and
with reference to the incident report with its entries, was offensive to private respondent's dignity and defamatory to
his character and honesty. When Espino explained that he was going to pay the file but simply forgot to do so,
Fandino doubted the explanation. saying: "That is all what they say, the people whom we caught not paying for the
goods say... they all intended to pay for the things that are found to them." Private respondent objected and said
that he was a regular customer of the Supermarket.

The admission of Fandino that she required private respondent to pay a fine of P5.00 and did in fact take the P5.00
bill of private respondent tendered by the latter to pay for the file, as a fine which would be given as an incentive to
the guards who apprehend pilferers clearly proved that Fandino branded private respondent as a thief which was
not right nor justified.

The testimony of the guard that management instructed them to bring the suspected customers to the public area
for the people to see those kind of customers in order that they may be embarassed (p. 26, tsn, Sept. 30, 1971); that
management wanted "the customers to be embarrassed in public so that they will not repeat the stealing again" (p.
2, tsn, Dec. 10, 1971); that the management asked the guards "to bring these customers to different cashiers in
order that they will know that they are pilferers" (p. 2, Ibid.) may indicate the manner or pattern whereby a confirmed
or self-confessed shoplifter is treated by the Supermarket management but in the case at bar, there is no showing
that such procedure was taken in the case of the private respondent who denied strongly and vehemently the
charge of shoplifting.

Nonetheless, the false accusation charged against the private respondent after detaining and interrogating him by
the uniformed guards and the mode and manner in which he was subjected, shouting at him, imposing upon him a
fine, threatening to call the police and in the presence and hearing of many people at the Supermarket which
brought and caused him humiliation and embarrassment, sufficiently rendered the petitioners liable for damages
under Articles 19 and 21 in relation to Article 2219 of the Civil Code. We rule that under the facts of the case at bar,
petitioners wilfully caused loss or injury to private respondent in a manner that was contrary to morals, good
customs or public policy. It is against morals, good customs and public policy to humiliate, embarrass and degrade
the dignity of a person. Everyone must respect the dignity, personality, privacy and peace of mind of his neighbors
and other persons (Article 26, Civil Code). And one must act with justice, give everyone his due and observe
honesty and good faith (Article 19, Civil Code).

Private respondent is entitled to damages but We hold that the award of Seventy-Five Thousand Pesos
(P75,000.00) for moral damages and Twenty-Five Thousand Pesos (P25,000.00, for exemplary damages is
unconscionable and excessive.

While no proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary
damages may be adjudicated, the assessment of such damages, except liquidated ones, is left to the discretion of
the court, according to the circumstances of each case (Art. 2216, New Civil Code). In the case at bar, there is no
question that the whole incident that befell respondent had arisen in such a manner that was created unwittingly by
his own act of forgetting to pay for the file. It was his forgetfullness in checking out the item and paying for it that
started the chain of events which led to his embarassment and humiliation thereby causing him mental anguish,
wounded feelings and serious anxiety. Yet, private respondent's act of omission contributed to the occurrence of his
injury or loss and such contributory negligence is a factor which may reduce the damages that private respondent
may recover (Art. 2214, New Civil Code). Moreover, that many people were present and they saw and heard the
ensuing interrogation and altercation appears to be simply a matter of coincidence in a supermarket which is a
public place and the crowd of onlookers, hearers or bystanders was not deliberately sought or called by
management to witness private respondent's predicament. We do not believe that private respondent was
intentionally paraded in order to humiliate or embarrass him because petitioner's business depended for its success
and patronage the good will of the buying public which can only be preserved and promoted by good public
relations.
As succinctly expressed by Mr. Justice J. B. L. Reyes in his concurring and dissenting opinion in Pangasinan
Transportation Company, Inc, vs. Legaspi, 12 SCRA 598, the purpose of moral damages is essentially indemnity or
reparation, both punishment or correction. Moral damages are emphatically not intended to enrich a complainant at
the expense of a defendant; they are awarded only to enable the injured party to obtain means, diversion or
amusements that will serve to alleviate the moral suffering he has undergone, by reason of the defendant's culpable
action. In other words, the award of moral damages is aimed at a restoration, within the limits of the possible, of the
spiritual status quo ante and, it must be proportionate to the suffering inflicted.

In Our considered estimation and assessment, moral damages in the amount of Five Thousand Pesos (P5,000.00)
is reasonable and just to award to private respondent.

The grant of Twenty-Five Thousand Pesos (P25,000.00) as exemplary damages is unjustified. Exemplary or
corrective damages are imposed by way of example or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages (Art. 2229, New Civil Code). Exemplary damages cannot be
recovered as a matter of right; the court will decide whether or not they could be adjudicated (Art. 2223, New Civil
Code). Considering that exemplary damages are awarded for wanton acts, that they are penal in character granted
not by way of compensation but as a punishment to the offender and as a warning to others as a sort of deterrent,
We hold that the facts and circumstances of the case at bar do not warrant the grant of exemplary damages.

Petitioners acted in good faith in trying to protect and recover their property, a right which the law accords to them.
Under Article 429, New Civil Code, the owner or lawful possessor of a thing has a right to exclude any person from
the enjoyment and disposal thereof and for this purpose, he may use such force as may be reasonably necessary to
repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property. And since a person
who acts in the fulfillment of a duty or in the lawful exercise of a right or office exempts him from civil or criminal
liability, petitioner may not be punished by imposing exemplary damages against him. We agree that petitioners
acted upon probable cause in stopping and investigating private respondent for taking the file without paying for it,
hence, the imposition of exemplary damages as a warning to others by way of a deterrent is without legal basis. We,
therefore, eliminate the grant of exemplary damages to the private respondent.

In the light of the reduction of the damages, We hereby likewise reduce the original award of Five Thousand Pesos
(P5,000.00) as attorney's fees to Two Thousand Pesos (P2,000.00).

WHEREFORE, IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is hereby modified.
Petitioners are hereby ordered to pay, jointly and severally, to private respondent moral damages in the sum of Five
Thousand Pesos (P5,000.00) and the amount of Two Thousand Pesos (P2,000.00) as and for attorney's fees; and
further, to return the P5.00 fine to private respondent. No costs.

SO ORDERED.

d. UNJUST DISMISSAL

G.R. No. L-59825 September 11, 1982

ERNESTO MEDINA and JOSE G. ONG, petitioners,

vs.
HON. FLORELIANA CASTRO-BARTOLOME in her capacity as Presiding Judge of the Court of First Instance
Cf Rizal, Branch XV, Makati, Metro Manila, COSME DE ABOITIZ and PEPSI-COLA BOTTLING COMPANY OF
THE PHILIPPINES, INC., respondents.

ABAD SANTOS, J.:

Civil Case No. 33150 of the Court of First Instance of Rizal Branch XV, was filed in May, 1979, by Ernesto Medina
and Jose G. Ong against Cosme de Aboitiz and Pepsi-Cola Bottling Co. of the Philippines, Inc. Medina was the
former Plant General Manager and Ong was the former Plant Comptroller of the company. Among the averments in
the complaint are the following:

3. That on or about 1:00 o'clock in the afternoon of December 20, 1977, defendant Cosme de
Aboitiz, acting in his capacity as President and Chief Executive Officer of the defendant Pepsi-Cola
Bottling Company of the Philippines, Inc., went to the Pepsi-Cola Plant in Muntinlupa, Metro Manila,
and without any provocation, shouted and maliciously humiliated the plaintiffs with the use of the
following slanderous language and other words of similar import uttered in the presence of the
plaintiffs' subordinate employees, thus-

GOD DAMN IT. YOU FUCKED ME UP ... YOU SHUT UP! FUCK YOU! YOU ARE BOTH SHIT TO
ME! YOU ARE FIRED (referring to Ernesto Medina). YOU TOO ARE FIRED! '(referring to Jose Ong
)
 4. That on January 9, 1978, the herein plaintiffs filed a joint criminal complaint for oral defamation
against the defendant Cosme de Aboitiz duly supported with respective affidavits and corroborated
by the affidavits of two (2) witnesses: Isagani Hernandez and Jose Ganseco II, but after conducting
a preliminary investigation, Hon. Jose B. Castillo, dismissed the complaint allegedly because the
expression "Fuck you and "You are both shit to me" were uttered not to slander but to express anger
and displeasure;

5. That on February 8, 1978, plaintiffs filed a Petition for Review with the office of the Secretary of
Justice (now Ministry of Justice) and on June 13, 1978, the Deputy Minister of Justice, Catalino
Macaraig, Jr., issued a resolution sustaining the plaintiff's complaint, reversing the resolution of the
Provincial Fiscal and directing him to file against defendant Cosme de Aboitiz an information for
Grave Slander. ... ;

6. That the employment records of plaintiffs show their track performance and impeccable
qualifications, not to mention their long years of service to the Company which undoubtedly caused
their promotion to the two highest positions in Muntinlupa Plant having about 700 employees under
them with Ernesto Medina as the Plant General Manager receiving a monthly salary of P6,600.00
excluding other perquisites accorded only to top executives and having under his direct supervision
other professionals like himself, including the plaintiff Jose G. Ong, who was the Plant Comptroller
with a basic monthly salary of P4,855.00;

7. That far from taking these matters into consideration, the defendant corporation, acting through its
President, Cosme de Aboitiz, dismissed and slandered the plaintiffs in the presence of their
subordinate employees although this could have been done in private;

8. That the defendants have evidently enjoyed the act of dismissing the plaintiffs and such dismissal
was planned to make it as humiliating as possible because instead of allowing a lesser official like
the Regional Vice President to take whatever action was necessary under the circumstances,
Cosme de Aboitiz himself went to the Muntinlupa Plant in order to publicly upbraid and dismiss the
plaintiffs;

9. That the defendants dismissed the plaintiffs because of an alleged delay in the use of promotional
crowns when such delay was true with respect to the other Plants, which is therefore demonstrative
of the fact that Cosme de Aboitiz did not really have a strong reason for publicly humiliating the
plaintiffs by dismissing them on the spot;

10. That the defendants were moved by evil motives and an anti-social attitude in dismissing the
plaintiffs because the dismissal was effected on the very day that plaintiffs were awarded rings of
loyalty to the Company, five days before Christmas and on the day when the employees' Christmas
party was held in the Muntinlupa Plant, so that when plaintiffs went home that day and found their
wives and children already dressed up for the party, they didn't know what to do and so they cried
unashamedly;

xxx xxx xxx

20. That because of the anti-social manner by which the plaintiffs were dismissed from their
employment and the embarrassment and degradation they experience in the hands of the
defendants, the plaintiffs have suffered and will continue to suffer wounded feelings, sleepless
nights, mental torture, besmirched reputation and other similar injuries, for which the sum of
P150,000.00 for each plaintiff, or the total amount. of P300,000.00 should be awarded as moral
damages;

21. That the defendants have demonstrated their lack of concern for the rights and dignity of the
Filipino worker and their callous disregard of Philippine labor and social legislation, and to prevent
other persons from following the footsteps of defendants, the amount of P50,000.00 for each
plaintiff, or the total sum of P100,000.00, should be awarded as exemplary damages;

22. That plaintiffs likewise expect to spend no less than P5,000.00 as litigation expenses and were
constrained to secure the services of counsel for the protection and enforcement of their rights for
which they agreed to pay the sum of P10,000.00 and P200.00 per appearance as and for attorney's
fees.

The complaint contains the following:

PRAYER

WHEREFORE, in view of all the foregoing. it is most respectfully that after proper notice and
hearing, judgment be rendered for the plaintiffs and against the defendants ordering them, jointly
and solidarily, to pay the plaintiffs the sums of:
 1. Unrealized income in such sum as will be established during the trial;

2. P300,000.00 as moral damages;

3. P100,000.00 by way of exemplary damages:

4. P5,000.00 as litigation expenses;

5. P10,000.00 and P200.00 per appearance as and for attorney's fees; and

6. Costs of this suit.

Plaintiffs also pray for such further reliefs and remedies as may be in keeping with justice and equity.

On June 4, 1979, a motion to dismiss the complaint on the ground of lack of jurisdiction was filed by
the defendants. The trial court denied the motion on September 6, 1979, in an order which reads as
follows:

Up for resolution by the Court is the defendants' Motion to Dismiss dated June 4, 1979, which is
basically anchored on whether or not this Court has jurisdiction over the instant petition.

The complaint alleges that the plaintiffs' dismissal was without any provocation and that defendant
Aboitiz shouted and maliciously humiliated plaintiffs and used the words quoted in paragraph 3
thereof. The plaintiffs further allege that they were receiving salaries of P6,600.00 and P4,855.00 a
month. So the complaint for civil damages is clearly not based on an employer-employee
relationship but on the manner of plaintiffs' dismissal and the effects flowing therefrom. (Jovito N.
Quisaba vs, Sta. Ines-Melale Veneer & Plywood Co., Inc., et al., No. L-38088, Aug. 30,1974.)

This case was filed on May 10, 1979. The amendatory decree, P.D. 1367, which took effect on May
1, 1978 and which provides that Regional Directors shall not indorse and Labor Arbiters shall not
entertain claims for moral or other forms of damages, now expressly confers jurisdiction on the
courts in these cases, specifically under the plaintiff's causes of action.

Because of the letter dated January 4, 1978 and the statement of plaintiff Medina that his receipt of
the amount from defendant company was done "under strong protest," it cannot be said that the
demands set forth in the complaint have been paid, waived or other extinguished. In fact, in
defendants' Motion to Dismiss, it is stated that 'in the absence of a showing that there was fraud,
duress or violence attending said transactions, such Release and Quitclaim Deeds are valid and
binding contracts between them, which in effect admits that plaintiffs can prove fraud, violence,
duress or violence. Hence a cause of action for plaintiffs exist.

It is noticed that the defamatory remarks standing alone per se had been made the sole cause under
the first cause of action, but it is alleged in connection with the manner in which the plaintiffs had
been dismissed, and whether the statute of limitations would apply or not would be a matter of
evidence.

IT has been alreadly settled by jurisprudence that mere asking for reinstatement does not remove
from the CFI jurisdiction over the damages. The case must involve unfair labor practices to bring it
within the jurisdiction of the CIR (now NLRC).

WHEREFORE, the defendants' Motion to Dismiss dated June 4, 1979 is hereby denied.

The defendants are hereby directed to interpose their answer within ten (10) days from receipt
hereof.

While the trial was underway, the defendants filed a second motion to dismiss the complaint dated January 23,
1981, because of amendments to the Labor Code immediately prior thereto. Acting on the motion, the trial court
issued on May 23, 1981, the following order:

Up for resolution by the Court is the defendants' Motion to Dismiss dated January 23, 1981, on
grounds not existing when the first Motion to Dismiss dated June 4, 1979 was interposed. The
ground relied upon is the promulgation of P.D. No. 1691 amending Art. 217 of the Labor Code of the
Philippines and Batasan Pambansa Bldg. 70 which took effect on May 1, 1980, amending Art. 248 of
the Labor Code.

The Court agrees with defendants that the complaint alleges unfair labor practices which under Art.
217 of the Labor Code, as amended by P.D. 1691, has vested original and exclusive jurisdiction to
Labor Arbiters, and Art. 248, thereof ... "which may include claims for damages and other affirmative
 reliefs." Under the amendment, therefore, jurisdiction over employee-employer relations and claims
of workers have been removed from the Courts of First Instance. If it is argued that this case did not
arise from employer-employee relation, but it cannot be denied that this case would not have arisen
if the plaintiffs had not been employees of defendant Pepsi-Cola. Even the alleged defamatory
remarks made by defendant Cosme de Aboitiz were said to plaintiffs in the course of their
employment, and the latter were dismissed from such employment. Hence, the case arose from
such employer-employee relationship which under the new Presidential Decree 1691 are under the
exclusive, original jurisdiction of the labor arbiters. The ruling of this Court with respect to the
defendants' first motion to dismiss, therefore, no longer holds as the positive law has been
subsequently issued and being a curative law, can be applied retroactively (Garcia v. Martinez, et
al., L-47629, May 28, 1979; 90 SCRA 331-333).

It will also logically follow that plaintiffs can reinterpose the same complaint with the Ministry of
Labor.

WHEREFORE, let this case be, as it is hereby ordered, dismissed, without pronouncement as to
costs.

A motion to reconsider the above order was filed on July 7, 1981, but it was only on February 8, 1982, or after a
lapse of around seven (7) months when the motion was denied.

Plaintiffs have filed the instant petition pursuant to R. A. No. 5440 alleging that the respondent court committed the
following errors:

IN DIVESTING ITSELF OF ITS JURISDICTION TO HEAR AND DECIDE CIVIL CASE NO. 33150
DESPITE THE FACT THAT JURISDICTION HAD ALREADY ATTACHED WHICH WAS NOT
OUSTED BY THE SUBSEQUENT ENACTMENT OF PRESIDENTIAL DECREE 1691;

IN HOLDING THAT PRESIDENTIAL DECREE 1691 SHOULD BE GIVEN A RETROSPECTIVE

EFFECT WHEN PRESIDENTIAL DECREE 1367 WHICH WAS IN FORCE WHEN CIVIL CASE NO.
33150 WAS FILED AND TRIAL THEREOF HAD COMMENCED, WAS NEVER EXPRESSLY
REPEALED BY PRESIDENTIAL DECREE 1691, AND IF EVER THERE WAS AN IMPLIED
REPEAL, THE SAME IS NOT FAVORED UNDER PREVAILED JURISPRUDENCE;

IN HOLDING THAT WITH THE REMOVAL BY PRESIDENTIAL DECREE 1691 OF THE PROVISO
INSERTED IN ARTICLE 217 OF THE LABOR CODE BY PRESIDENTIAL DECREE 1367, THE
LABOR ARBITERS HAVE ACQUIRED JURISDICTION OVER CLAIMS FOR DAMAGES ARISING
FROM EMPLOYER-EMPLOYEE RELATIONS TO THE EXCLUSION OF THE REGULAR COURTS,
WHEN A READING OF ARTICLE 217 WITHOUT THE PROVISO IN QUESTION READILY
REVEALS THAT JURISDICTION OVER DAMAGE CLAIMS IS STILL VESTED WITH THE
REGULAR COURTS;

IN DISMISSING FOR LACK OF JURISDICTION CIVIL CASE NO. 33150 THEREBY VIOLATING
THE CONSTITUTIONAL RIGHTS OF THE PETITIONERS NOTABLY THEIR RIGHT TO DUE
PROCESS.

The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the
plaintiffs. For if the Labor Code has no relevance, any discussion concerning the statutes amending it and whether
or not they have retroactive effect is unnecessary.

It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action
for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is
the Civil Code and not the Labor Code. It results that the orders under review are based on a wrong premise.

WHEREFORE, the petition is granted; the respondent judge is hereby ordered to reinstate Civil Case No. 33150
and render a decision on the merits. Costs against the private respondents.

SO ORDERED.