Alfredo Velayo vs Shell Company

Prior to 1948, Commercial Airlines (CALI) owed P170k (abt. $79k) to Shell
Company. CAL offered its C-54 plane as payment to Shell Company (the plane was
in California) but Shell at that time declined as it thought CALI had sufficient money
to pay its debt. In 1948 however, CALI was going bankrupt so it called upon an
informal meeting of its creditors. In that meeting, the creditors agreed to appoint
representatives to a working committee that would determine the order of
preference as to how each creditor should be paid. They also agreed not to file suit
against CALI but CALI did reserve that it will file insolvency proceedings should its
assets be not enough to pay them up. Shell Company was represented by a certain
Fitzgerald to the three man working committee. Later, the working committee
convened to discuss how CALIs asset should be divided amongst the creditors but
while such was pending, Fitzgerald sent a telegraph message to Shell USA advising
the latter that Shell Philippines is assigning its credit to Shell USA in the amount of
$79k, thereby effectively collecting almost all if not the entire indebtedness of CALI
to Shell Philippines. Shell USA got wind of the fact that CALI has a C-54 plane is
California and so Shell USA petitioned before a California court to have the plane be
the subject of a writ of attachment which was granted.
Meanwhile, the stockholders of CALI were unaware of the assignment of credit made
by Shell Philippines to Shell USA and they went on to approve the sale of CALIs
asset to the Philippine Airlines. In September 1948, the other creditors learned of
the assignment made by Shell. This prompted these other creditors to file their own
complaint of attachment against CALIs assets. CALI then filed for insolvency
proceedings to protect its assets in the Philippines from being attached. Alfredo
Velayos appointment as CALIs assignee was approved in lieu of the insolvency
proceeding. In order for him to recover the C-54 plane in California, it filed for a writ
of injunction against Shell Philippines in order for the latter to restrain Shell USA
from proceeding with the attachment and in the alternative that judgment be
awarded in favor of CALI for damages double the amount of the C-54 plane. The C54 plane was not recovered. Shell Company argued it is not liable for damages
because there is nothing in the law which prohibits a company from assigning its
credit, it being a common practice.
ISSUE: Whether or not Shell is liable for damages considering that it did not violate
any law.
HELD: Yes. The basis of such liability, in the absence of law, is Article 21 of the Civil
Code which states:
Art. 21. Any person who willfully causes loss or injury to another in a manner that
is contrary to morals, good customs or public policy shall compensate the latter for
the damage.

Thus at one stroke, the legislator, if the forgoing rule is approved (as it was
approved), would vouchsafe adequate legal remedy for that untold numbers of
moral wrongs which is impossible for human foresight to provide for specifically in
the statutes. A moral wrong or injury, even if it does not constitute a violation of a
statute law, should be compensated by damages. Moral damages (Art. 2217) may
be recovered (Art. 2219). In Article 20, the liability for damages arises from a willful
or negligent act contrary to law. In this article, the act is contrary to morals, good
customs or public policy.

Saudi Arabian Airlines vs Court of Appeals

Milagros Morada was working as a stewardess for Saudia Arabian Airlines. In 1990,
while she and some co-workers were in a lay-over in Jakarta, Indonesia, an Arab coworker tried to rape her in a hotel room. Fortunately, a roomboy heard her cry for
help and two of her Arab co-workers were arrested and detained in Indonesia. Later,
Saudia Airlines re-assigned her to work in their Manila office. While working in
Manila, Saudia Airlines advised her to meet with a Saudia Airlines officer in Saudi.
She did but to her surprise, she was brought to a Saudi court where she was
interrogated and eventually sentenced to 5 months imprisonment and 289 lashes;
she allegedly violated Muslim customs by partying with males. The Prince of Makkah
got wind of her conviction and the Prince determined that she was wrongfully
convicted hence the Prince absolved her and sent her back to the Philippines.
Saudia Airlines later on dismissed Morada. Morada then sued Saudia Airlines for
damages under Article 19 and 21 of the Civil Code. Saudia Airlines filed a motion to
dismiss on the ground that the RTC has no jurisdiction over the case because the
applicable law should be the law of Saudi Arabia. Saudia Airlines also prayed for
other reliefs under the premises.
ISSUE: Whether or not Saudia Airlines contention is correct.
HELD: No. Firstly, the RTC has acquired jurisdiction over Saudia Airlines when the
latter filed a motion to dismiss with petition for other reliefs. The asking for other
reliefs effectively asked the court to make a determination of Saudia Airliness rights
hence a submission to the courts jurisdiction.
Secondly, the RTC has acquired jurisdiction over the case because as alleged in the
complaint of Morada, she is bringing the suit for damages under the provisions of
our Civil Law and not of the Arabian Law. Morada then has the right to file it in the
QC RTC because under the Rules of Court, a plaintiff may elect whether to file an
action in personam (case at bar) in the place where she resides or where the
defendant resides. Obviously, it is well within her right to file the case here because
if shell file it in Saudi Arabia, it will be very disadvantageous for her (and of course,
again, Philippine Civil Law is the law invoked).

Thirdly, one important test factor to determine where to file a case, if there is a
foreign element involved, is the so called locus actus or where an act has been
done. In the case at bar, Morada was already working in Manila when she was
summoned by her superior to go to Saudi Arabia to meet with a Saudia Airlines
officer. She was not informed that she was going to appear in a court trial. Clearly,
she was defrauded into appearing before a court trial which led to her wrongful
conviction. The act of defrauding, which is tortuous, was committed in Manila and
this led to her humiliation, misery, and suffering. And applying the torts principle in
a conflicts case, the SC finds that the Philippines could be said as a situs of the tort
(the place where the alleged tortious conduct took place).

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

FACTS: Private respondent Restituto M. Tobias was employed by petitioner Globe

Mackay in dual capacity as purchasing agent and administrative assistant to the
engineering operations manager. In 1972, the respondent discovered fraudulent
anomalies and transactions in the said corporation for which it lost several hundred
thousands of pesos. The private respondent reported to his superiors including
Henry, the petitioner. However, he was confronted by Hendry stating that Tobias
was the number one suspect. He was ordered to take a one week forced leave.
When he returned to work, Hendry called him crook and swindler, and left a
scornful remark to the Filipinos. The petitioners also charged six criminal cases
against the respondentfive cases of estafa and one for violating Article 290 of the
RPC (Discovering Secrets through Seizure of Correspondence). The petitioner also
sent a poison letter to RETELCO causing the respondent to be unemployed.

ISSUE: Whether or not the petitioners are liable for damages to the respondent.

HELD: Petitioners invoked the right of damnun absque injuria or the damage or loss
which does not constitute a violation of legal right or amount to a legal wrong is not
actionable. However, this is not applicable 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 be held liable.

The court awarded Tobias the following: Php 80, 000 as actual damages, Php 200,
000 as moral damages, Php 20, 0000 as exemplary damages; Php 30, 000 as
attorneys fees; and, costs. Petition was denied and the decision of CA is AFFIRMED.

ALBENSON vs. COURT OF APPEALSFACTS:

Albenson Ent. delivered mild steel plates to Guaranteed Industries Inc. A Pacific
BankingCorporation Check was paid and drawn against the account of EL
Woodworks. Check waslater dishonored for the reason Account Closed. Company
traced source of check and
laterdiscovered that the signature belonged to one Eugenio Baltao. Albenson made
anextrajudical demand upon Baltao but latter denied that he issued the check or
that thesignature was his. Company filed a complaint against Baltao for violation of
BP 22. It waslater discovered that private respondent had son: Eugene Baltao III,
who manages thebusiness establishment, EL Woodworks. No effort from the father
to inform Albenson of suchinformation. Rather the father filed complaint
for damages against Albenson.
ISSUE:
Whether there is indeed cause for the damages against Albenson Enterprise.
RULING:
Based on Art 19, 20, 21 of the civil code, petitioners didnt have the intent to cause
damageto the respondent or enrich themselves but just to collect what was due to
them. There wasno abuse of right on the part of Albenson on accusing Baltao of BP
22.Albenson Corp. honestly believed that it was private respondent who issued
check based onff inquiries:

SEC records showed that president to Guaranteed was Eugene Baltao

Bank said signature belonged to EB
EB did not do his part in clarifying that there were in fact 3 Ebs, Jr., Sr. and
theIII.
There was no malicious prosecution on the part of Albenson: there must be
proof that:
the prosecution was prompted by a sinister design to vex and humiliate
aperson and
that damages was initiated deliberately by defendant knowing that his
chargeswere false and groundless

Elements of abuse of right under Article 19:

1. there is a legal right or duty

2. exercised in bad faith
3. for the sole intent of prejudicing or injuring another
Elements under Article 21: contra bonus mores:
1. there is an act which is legal
2. but which is contrary to morals, good custom, public order or public policy
3. it is done with intent to injure
A person who has not been paid an obligation owed to him will naturally seek ways
tocompel the debtor to pay him. It was normal for petitioners to find means to make
the issuerof the check pay the amount thereof. In the absence of a wrongful act or
omission or of fraud or bad faith, moral damages cannot be awarded and that the
adverse result of anaction does not per se make the action wrongful and subject the
actor to the payment of damages, for the law could not have meant to impose a
penalty on the right to litigate
WHEREFORE, the petition is GRANTED and the decision of the Court of Appeals in
C.A. G.R.C.V. No. 14948 dated May 13, 1989, is hereby REVERSED and SET ASIDE.
Costs againstrespondent Baltao.

Sergio Amonoy vs Spouses Gutierrez

In 1965, Atty. Sergio Amonoy represented Alfonso Fornilda (Formida in some
records) in a partition case. Since Fornilda had no money to pay, he agreed to make
use of whatever property he acquires as a security for the payment of Amonoys
attorneys fees which amounts to P27k. In July 1969, Fornilda died. A month later,
the property was finally adjudicated and Fornilda, through his heirs, got his just
share from the property in dispute. Fornilda was however unable to pay Amonoy.
Hence, Amonoy sought to foreclose the property in 1970. The heirs of Fornilda, the
spouses Jose Gutierrez and Angela Fornilda then sued Amonoy questioning the
validity of his mortgage agreement with Fornilda. It was their claim that the
attorneys fees he was collecting was unconscionable and that the same was based
on an invalid mortgage due to the existing att0rney-client relationship between him
and Fornilda at the time the mortgage was executed.
The spouses lost in the trial court as well as in the Court of Appeals but they
appealed to the Supreme Court, docketed as G.R.No. L-72306. Meanwhile, in 1973,
Amonoy was able to foreclose the property. Amonoy was also the highest bidder in
the public sale conducted in view of the foreclosure. He was able to buy the
property of Fornilda for P23k. But constructed on said property was the house of the
spouses Gutierrez.

Pending the spousess appeal with the Supreme Court, Amonoy was able to secure a
demolition order and so on May 30, 1986, Amonoy started demolishing the houses
of the spouses. But on June 2, 1986, the Supreme Court issued a Temporary
Restraining Order (TRO) against the demolition order. On June 4, 1986, Amonoy
received a copy of the TRO. Finally, on June 24, 1989, the Supreme Court
promulgated a decision on G.R.No. L-72306 where it ruled that the mortgage
between Amonoy and Fornilda is void, hence, Amonoy has no right over the
property. But by this time, the house of the spouses was already demolished
because it appears that despite the TRO, Amonoy continued demolishing the house
until it was fully demolished in the middle of 1987.
The spouses then sued Amonoy for damages. It is now the contention of Amonoy
that he incurred no liability because he was merely exercising his right to demolish
(pursuant to the demolition order) hence what happened was a case of damnum
absque injuria (injury without damage).
ISSUE: Whether or not Amonoy is correct.
HELD: No. Amonoy initially had the right to demolish but when he received the TRO
that right had already ceased. Hence, his continued exercise of said right after the
TRO was already unjustified. As quoted by the Supreme Court: The exercise of a
right ends when the right disappears, and it disappears when it is abused, especially
to the prejudice of others.
What Amonoy did is an abuse of right. Article 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 ones rights but also in the
performance of ones 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.
Clearly then, the demolition of the spousess house by Amonoy, despite his receipt
of the TRO, was not only an abuse but also an unlawful exercise of such right.

University of the East vs. Jader

GR No. 132344, February 7, 2000
FACTS:
Romeo Jader graduated at UE College of law from 1984-88. During his last year,
1stsemester, he failed to take the regular final examination in Practical Court 1where
he was given an incomplete grade remarks. He filed an application for removal of

the incomplete grade given by Prof. Carlos Ortega on February 1, 1988 which was
approved by Dean Celedonio Tiongson after the payment of required fees. He took
the exam on March 28 and on May 30, the professor gave him a grade of 5.
The commencement exercise of UE College of law was held April 16, 1988, 3PM. In
the invitation, his name appeared. In preparation for the bar exam, he took a leave
of absence from work from April 20- Sept 30, 1988. He had his pre-bar class review
in FEU. Upon learning of such deficiency, he dropped his review classes and was
not able to take the bar exam.
Jader sued UE for damages resulting to moral shock, mental anguish, serious
anxiety, besmirched reputation, wounded feelings, sleepless nights due to UEs
negligence.
ISSUE: Whether UE should be held liable for misleading a student into believing
JADER satisfied all the requirements for graduation when such is not the case. Can
he claim moral damages?
HELD:
SC held that petitioner was guilty of negligence and this liable to respondent for the
latters actual damages. Educational institutions are duty-bound to inform the
students of their academic status and not wait for the latter to inquire from the
former. However, respondent should not have been awarded moral damages
though JADER suffered shock, trauma, and pain when he was informed that he could
not graduate and will not be allowed to take the bar examinations as what CA held
because its also respondents duty to verify for himself whether he has completed
all necessary requirements to be eligible for the bar examinations. As a senior law
student, he should have been responsible in ensuring that all his affairs specifically
those in relation with his academic achievement are in order. Before taking the bar
examinations, it doesnt only entail a mental preparation on the subjects but there
are other prerequisites such as documentation and submission of requirements
which prospective examinee must meet.
HEREFORE, the assailed decision of the Court of Appeals is AFFIRMED with
MODIFICATION. Petitioner is ORDERED to PAY respondent the sum of Thirty-five
Thousand Four Hundred Seventy Pesos (P35,470.00), with legal interest of 6% per
annum computed from the date of filing of the complaint until fully paid; the
amount of Five Thousand Pesos (P5,000.00) as attorney's fees; and the costs of the
suit. The award of moral damages is DELETED.

Garciano v. CA, et al.

G.R. No. 96126 (1992)

Facts: Esteria Garciano was hired to teach during the 1981-82 school year in the
Immaculate Concepcion Institute in the Island of Camotes. Before the school year
ended, she applied for an indefinite LOA because her daughter was taking her to
Austria, her daughters place of employment. The application was recommended for
approval by the school principal, Emerito O. Labajo, and approved by the President
of the school's Board of Directors. On June 1, 1982, Emerito Labajo addressed a
letter to the Garciano, stating that by way of the decision of school founder, Fr.
Joseph Wiertz, the president of the PTA and the school faculty, they have decided to
terminate her services due to: a) absence of a written contract of employment due
to Garcianos refusal to sign one, and b) the difficulty of getting a substitute for her
on a temporary basis as no one would accept the position without a written
contract. Upon Garcianos arrival from Austria, and after several inquiries about the
matter, the Board of Directors without the consent of the school founder signed a
letter, reinstating Garciano to her former position, with a statement declaring the
previous communication received had been declared null and void for not bearing
the sanction or authority of the Board. Subsequently, the president, vice president,
secretary, and three members of the Board of Directors resigned from their
positions "for the reason that the ICI Faculty, has reacted acidly to the Board's
deliberations for the reinstatement of Garciano.
A complaint for damages was filed in the RTC-Cebu against Fr. Wiertz, Emerito
Labajo, and some members of the faculty of the school for discrimination and unjust
and illegal dismissal. After trial, the lower court ruled in favor of Garciano, ordering
Wiertz and Co. to pay 200,000 as moral damages, 50,000 exemplary damages,
32,400 as lost earnings for 9 years and 10,000 as litigation and attorneys fees. On
appeal, the Appellate Court reversed the ruling of the lower court, dismissing the
complaint and absolving Wiertz and Co. Following the denial of their motion for
reconsideration, Garciano seeks redress in the High Court.
Issues: Did the CA err in absolving Wiertz and Co. from liability by faulting Esteria
Garciano for her failure to report back to work? Should they be held liable for
damages?
Held: The High Court ruled in the negative. It held that the board of directors of the
Immaculate Concepcion Institute, which possesses the authority to hire and fire
teachers and other employees of the school, did not dismiss the Garciano, but
merely directed her to report for work. While the Wiertz and Co. sent her a letter of
termination through her husband, as discovered by the CA, Wiertz and Co. were
aware of their lack of authority to do so. The letter of termination they sent to
Garciano through her husband had no legal effect, and did not prevent her from
reporting for work. There was no reason why she could not continue with her
teaching in the school.

No evidence had been presented to show that defendants-appellants prevented her

from reporting for work. An acidic reaction made by Wiertz and Co. can be seen as
nothing more than a reaction to what they perceived as an affront to their collective
prestige. It would appear, therefore, that plaintiff-appellee voluntarily desisted from
her teaching job in the school and has no right to recover damages from
defendants-appellants. They actually did nothing to physically prevent her from
reassuming her post, as ordered by the school's Board of Directors
With regard to damages, liability under Articles 19, 20 and 21 of the Civil Code
arises only from unlawful, willful or negligent acts that are contrary to law, or
morals, good customs or public policy.
Given that Garciano's discontinuance from teaching was her own choice, whatever
loss she may have incurred in the form of lost earnings was self-inflicted. Volenti
non fit injuria. With respect to Garciano's claim for moral damages, since the right
to recover them under Article 21 is based on equity, he who comes to court to
demand equity must come with clean hands. In this case, Garciano is not without
fault. Her indefinite leave of absence, followed by her failure to report in time for the
opening of classes, as well as her refusal to sign a written contract of employment
and her ignorance of the Boards order to return to work are reflections of her fault.