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SECOND DIVISION

G.R. No. 146322 December 6, 2006

ERNESTO RAMAS UYPITCHING and RAMAS UYPITCHING SONS, INC., petitioners,


vs.
ERNESTO QUIAMCO, respondent.

DECISION

CORONA, J.:

Honeste vivere, non alterum laedere et jus suum cuique tribuere. To live virtuously, not to injure others and to
give everyone his due. These supreme norms of justice are the underlying principles of law and order in
society. We reaffirm them in this petition for review on certiorari assailing the July 26, 2000 decision1 and
October 18, 2000 resolution of the Court of Appeals (CA) in CA-G.R. CV No. 47571.

In 1982, respondent Ernesto C. Quiamco was approached by Juan Davalan,2 Josefino Gabutero and Raul
Generoso to amicably settle the civil aspect of a criminal case for robbery3 filed by Quiamco against them. They
surrendered to him a red Honda XL-100 motorcycle and a photocopy of its certificate of registration.
Respondent asked for the original certificate of registration but the three accused never came to see him again.
Meanwhile, the motorcycle was parked in an open space inside respondents business establishment, Avesco-
AVNE Enterprises, where it was visible and accessible to the public.

It turned out that, in October 1981, the motorcycle had been sold on installment basis to Gabutero by petitioner
Ramas Uypitching Sons, Inc., a family-owned corporation managed by petitioner Atty. Ernesto Ramas
Uypitching. To secure its payment, the motorcycle was mortgaged to petitioner corporation.4

When Gabutero could no longer pay the installments, Davalan assumed the obligation and continued the
payments. In September 1982, however, Davalan stopped paying the remaining installments and told petitioner
corporations collector, Wilfredo Verao, that the motorcycle had allegedly been "taken by respondents men."

Nine years later, on January 26, 1991, petitioner Uypitching, accompanied by policemen,5 went to Avesco-
AVNE Enterprises to recover the motorcycle. The leader of the police team, P/Lt. Arturo Vendiola, talked to the
clerk in charge and asked for respondent. While P/Lt. Vendiola and the clerk were talking, petitioner Uypitching
paced back and forth inside the establishment uttering "Quiamco is a thief of a motorcycle."

On learning that respondent was not in Avesco-AVNE Enterprises, the policemen left to look for respondent in
his residence while petitioner Uypitching stayed in the establishment to take photographs of the motorcycle.
Unable to find respondent, the policemen went back to Avesco-AVNE Enterprises and, on petitioner
Uypitchings instruction and over the clerks objection, took the motorcycle.

On February 18, 1991, petitioner Uypitching filed a criminal complaint for qualified theft and/or violation of the
Anti-Fencing Law6 against respondent in the Office of the City Prosecutor of Dumaguete City.7 Respondent
moved for dismissal because the complaint did not charge an offense as he had neither stolen nor bought the
motorcycle. The Office of the City Prosecutor dismissed the complaint8 and denied petitioner Uypitchings
subsequent motion for reconsideration.
Respondent filed an action for damages against petitioners in the RTC of Dumaguete City, Negros Oriental,
Branch 37.9 He sought to hold the petitioners liable for the following: (1) unlawful taking of the motorcycle; (2)
utterance of a defamatory remark (that respondent was a thief) and (3) precipitate filing of a baseless and
malicious complaint. These acts humiliated and embarrassed the respondent and injured his reputation and
integrity.

On July 30, 1994, the trial court rendered a decision10 finding that petitioner Uypitching was motivated with
malice and ill will when he called respondent a thief, took the motorcycle in an abusive manner and filed a
baseless complaint for qualified theft and/or violation of the Anti-Fencing Law. Petitioners acts were found to
be contrary to Articles 1911 and 2012 of the Civil Code. Hence, the trial court held petitioners liable to respondent
for P500,000 moral damages, P200,000 exemplary damages and P50,000 attorneys fees plus costs.

Petitioners appealed the RTC decision but the CA affirmed the trial courts decision with modification, reducing
the award of moral and exemplary damages to P300,000 and P100,000, respectively.13 Petitioners sought
reconsideration but it was denied. Thus, this petition.

In their petition and memorandum, petitioners submit that the sole (allegedly) issue to be resolved here is
whether the filing of a complaint for qualified theft and/or violation of the Anti-Fencing Law in the Office of the
City Prosecutor warranted the award of moral damages, exemplary damages, attorneys fees and costs in favor
of respondent.

Petitioners suggestion is misleading. They were held liable for damages not only for instituting a groundless
complaint against respondent but also for making a slanderous remark and for taking the motorcycle from
respondents establishment in an abusive manner.

Correctness of the Findings of the RTC and CA

As they never questioned the findings of the RTC and CA that malice and ill will attended not only the public
imputation of a crime to respondent14 but also the taking of the motorcycle, petitioners were deemed to have
accepted the correctness of such findings. This alone was sufficient to hold petitioners liable for damages to
respondent.

Nevertheless, to address petitioners concern, we also find that the trial and appellate courts correctly ruled that
the filing of the complaint was tainted with malice and bad faith. Petitioners themselves in fact described their
action as a "precipitate act."15 Petitioners were bent on portraying respondent as a thief. In this connection, we
quote with approval the following findings of the RTC, as adopted by the CA:

x x x There was malice or ill-will [in filing the complaint before the City Prosecutors Office] because
Atty. Ernesto Ramas Uypitching knew or ought to have known as he is a lawyer, that there was no
probable cause at all for filing a criminal complaint for qualified theft and fencing activity against
[respondent]. Atty. Uypitching had no personal knowledge that [respondent] stole the motorcycle in
question. He was merely told by his bill collector ([i.e.] the bill collector of Ramas Uypitching Sons,
Inc.)[,] Wilfredo Verao[,] that Juan Dabalan will [no longer] pay the remaining installment(s) for the
motorcycle because the motorcycle was taken by the men of [respondent]. It must be noted that the
term used by Wilfredo Verao in informing Atty. Ernesto Ramas Uypitching of the refusal of Juan
Dabalan to pay for the remaining installment was []taken[], not []unlawfully taken[] or stolen. Yet,
despite the double hearsay, Atty. Ernesto Ramas Uypitching not only executed the [complaint-affidavit]
wherein he named [respondent] as the suspect of the stolen motorcycle but also charged
[respondent] of qualified theft and fencing activity before the City [Prosecutors] Office of Dumaguete.
The absence of probable cause necessarily signifies the presence of malice. What is deplorable in all
these is that Juan Dabalan, the owner of the motorcycle, did not accuse [respondent] or the latters
men of stealing the motorcycle[,] much less bother[ed] to file a case for qualified theft before the
authorities. That Atty. Uypitchings act in charging [respondent] with qualified theft and fencing activity
is tainted with malice is also shown by his answer to the question of Cupid Gonzaga 16 [during one of
their conversations] - "why should you still file a complaint? You have already recovered the
motorcycle"[:] "Aron motagam ang kawatan ug motor." ("To teach a lesson to the thief of
motorcycle.")17
Moreover, the existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of the trial
court, when affirmed by the appellate court, are conclusive on this Court. We see no compelling reason to
reverse the findings of the RTC and the CA.

Petitioners Abused Their Right of Recovery as Mortgagee(s)

Petitioners claim that they should not be held liable for petitioner corporations exercise of its right as seller-
mortgagee to recover the mortgaged vehicle preliminary to the enforcement of its right to foreclose on the
mortgage in case of default. They are clearly mistaken.

True, a mortgagee may take steps to recover the mortgaged property to enable it to enforce or protect its
foreclosure right thereon. There is, however, a well-defined procedure for the recovery of possession of
mortgaged property: if a mortgagee is unable to obtain possession of a mortgaged property for its sale on
foreclosure, he must bring a civil action either to recover such possession as a preliminary step to the sale, or
to obtain judicial foreclosure.18

Petitioner corporation failed to bring the proper civil action necessary to acquire legal possession of the
motorcycle. Instead, petitioner Uypitching descended on respondents establishment with his policemen and
ordered the seizure of the motorcycle without a search warrant or court order. Worse, in the course of the
illegal seizure of the motorcycle, petitioner Uypitching even mouthed a slanderous statement.

No doubt, petitioner corporation, acting through its co-petitioner Uypitching, blatantly disregarded the lawful
procedure for the enforcement of its right, to the prejudice of respondent. Petitioners acts violated the law as
well as public morals, and transgressed the proper norms of human relations.

The basic principle of human relations, embodied in Article 19 of the Civil Code, provides:

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

Article 19, also known as the "principle of abuse of right," prescribes that a person should not use his right
unjustly or contrary to honesty and good faith, otherwise he opens himself to liability. 19 It seeks to preclude the
use of, or the tendency to use, a legal right (or duty) as a means to unjust ends.

There is an abuse of right when it is exercised solely to prejudice or injure another. 20 The exercise of a right
must be in accordance with the purpose for which it was established and must not be excessive or unduly
harsh; there must be no intention to harm another.21 Otherwise, liability for damages to the injured party will
attach.

In this case, the manner by which the motorcycle was taken at petitioners instance was not only attended by
bad faith but also contrary to the procedure laid down by law. Considered in conjunction with the defamatory
statement, petitioners exercise of the right to recover the mortgaged vehicle was utterly prejudicial and
injurious to respondent. On the other hand, the precipitate act of filing an unfounded complaint could not in any
way be considered to be in accordance with the purpose for which the right to prosecute a crime was
established. Thus, the totality of petitioners actions showed a calculated design to embarrass, humiliate and
publicly ridicule respondent. Petitioners acted in an excessively harsh fashion to the prejudice of respondent.
Contrary to law, petitioners willfully caused damage to respondent. Hence, they should indemnify him.22

WHEREFORE, the petition is hereby DENIED. The July 26, 2000 decision and October 18, 2000 resolution of
the Court of Appeals in CA-G.R. CV No. 47571 are AFFIRMED.

Triple costs against petitioners, considering that petitioner Ernesto Ramas Uypitching is a lawyer and an officer
of the court, for his improper behavior.

SO ORDERED.
Puno, J., Chairperson, Sandoval-Gutierrez, Azcuna and Garcia, JJ., concur.

Honeste vivere, non alterum laedere et jus suum cuique tribuere.

To live virtuously, not to injure others and to give everyone his due. These supreme norms of
justice are the underlying principles of law and order in society.

FACTS:

In 1982, respondent Quiamco was approached by Davalan, Gabutero and Generoso to


settle the civil aspect of a criminal case for robbery filed by Quiamco against them.

They surrendered to him a red Honda motorcycle and a photocopy of its certificate of
registration. Respondent asked for the original certificate of registration but the three accused
never came to see him again.

Meanwhile, the motorcycle was parked in an open space inside respondents business
establishment, where it was visible and accessible to the public.

It turned out that, in October 1981, the motorcycle had been sold on installment basis to
Gabutero by Uypitching Sons, Inc. And to secure its payment, the motorcycle was mortgaged to
petitioner corporation.

When Gabutero could no longer pay the installments, Davalan assumed the obligation
and continued the payments.

In September 1982, however, Davalan stopped paying the remaining installments.

Nine years later, petitioner Uypitching, accompanied by policemen, went to Avesco-


AVNE Enterprises to recover the motorcycle.

The leader of the police team talked to the clerk in charge and asked for respondent.
While P/Lt. Vendiola and the clerk were talking, petitioner Uypitching paced back and forth
inside the establishment uttering "Quiamco is a thief of a motorcycle."

Unable to find respondent, the policemen on petitioner Uypitchings instructionand over


the clerks objection, took the motorcycle.

Petitioner Uypitching filed a criminal complaint for qualified theft and/or violation of the
Anti-Fencing Law against respondent but was dismissed.

Respondent filed an action for damages against petitioners in the RTC

The trial court rendered a decision finding that petitioner Uypitching was motivated with
malice and ill will when he called respondent a thief, took the motorcycle in an abusive manner
and filed a baseless complaint for qualified theft and/or violation of the Anti-Fencing Law

Petitioners appealed the RTC decision but the CA affirmed the trial courts decision.
ISSUE:

WON the filing of a complaint for qualified theft and/or violation of the Anti-Fencing Law
warranted the award of moral damages, exemplary damages, attorneys fees and costs in favor
of respondent.

HELD: YES.

They were held liable for damages not only for instituting a groundless complaint against
respondent but also for making a slanderous remark and for taking the motorcycle from
respondents establishment in an abusive manner .Petitioners Abused Their Right of Recovery
as Mortgagee(s)

A mortgagee may take steps to recover the mortgaged property to enable it to enforce or
protect its foreclosure right there on. There is, however, a well-defined procedure for the
recovery of possession of mortgaged property: if a mortgagee is unable to obtain possession of
a mortgaged property for its sale on foreclosure, he must bring a civil action either to recover
such possession as a preliminary step to the sale, or to obtain judicial foreclosure .Petitioner
corporation failed to bring the proper civil action necessary to acquire legal possession of the
motorcycle. Instead, petitioner Uypitching descended on respondents establishment with his
policemen and ordered the seizure of the motorcycle without a search warrant or court order.
Worse, in the course of the illegal seizure of the motorcycle, petitioner Uypitching even mouthed
a slanderous statement.

Petitioners acts violated the law as well as public morals, and transgressed the proper norms
of human relations.

The basic principle of human relations, embodied in Article 19 of the Civil Code .Article 19, also
known as the "principle of abuse of right," prescribes that a person should not use his right
unjustly or contrary to honesty and good faith ,otherwise he opens himself to liability. There is
an abuse of right when it is exercised solely to prejudice or injure another.

The exercise of a right must be in accordance with the purpose for which it was established and
must not be excessive or unduly harsh;

there must be nointention to harm another.

In this case, the manner by which the motorcycle was taken at petitioners instance was not only
attended by bad faith but also contrary to the procedure laid down by law. Considered in
conjunction with the defamatory statement, petitioners exercise of the right to recover the
mortgaged vehicle was utterly prejudicial and injurious to respondent.

Petitioners acted in an excessively harsh fashion to the prejudice of respondent.


SECOND DIVISION

G.R. No. 159590 October 18, 2004

HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, petitioner,


vs.
CECILIA DIEZ CATALAN, respondent.

x----------------------------x

G.R. No. 159591 October 18, 2004

HSBC INTERNATIONAL TRUSTEE LIMITED, petitioner,


vs.
CECILIA DIEZ CATALAN, respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us are two petitions for review on certiorari under Rule 45 of the Rules of Court separately filed by the
Hongkong and Shanghai Banking Corporation Limited (HSBANK) and HSBC International Trustee Limited
(HSBC TRUSTEE). They seek the reversal of the consolidated Decision,1 dated August 14, 2003, of the Court
of Appeals (CA) in CA-G.R. SP Nos. 75756 and 75757, which dismissed the petitions for certiorari of herein
petitioners assailing the Order, dated May 15, 2002, of the Regional Trial Court, Branch 44, Bacolod City (RTC)
in Civil Case No. 01-11372 that denied their respective motions to dismiss the amended complaint of
respondent Cecilia Diez Catalan.

The factual antecedents are as follows:

On January 29, 2001, respondent filed before the RTC, a complaint for a sum of money with damages
against petitioner HSBANK, docketed as Civil Case No. 01-11372, due to HSBANKs alleged wanton
refusal to pay her the value of five HSBANK checks issued by Frederick Arthur Thomson (Thomson)
amounting to HK$3,200,000.00.2

On February 7, 2001, summons was served on HSBANK at the Enterprise Center, Tower I, Ayala Avenue
corner Paseo de Roxas St., Makati City.3 HSBANK filed a Motion for Extension of Time to File Answer or
Motion to Dismiss dated February 21, 2001.4 Then, it filed a Motion to Dismiss, dated March 8, 2001, on the
grounds that (a) the RTC has no jurisdiction over the subject matter of the complaint; (b) the RTC has not
acquired jurisdiction for failure of the plaintiff to pay the correct filing or docket fees; (c) the RTC has no
jurisdiction over the person of HSBANK; (d) the complaint does not state a cause of action against HSBANK;
and (e) plaintiff engages in forum-shopping.5

On September 10, 2001, Catalan filed an Amended Complaint impleading petitioner HSBC TRUSTEE as co-
defendant and invoking Article 19 of the Civil Code as basis for her cause of action. 6

The Amended Complaint alleges:

Defendants HSBANK and HSBC TRUSTEE, doing business in the Philippines, are corporations duly
organized under the laws of the British Virgin Islands with head office at 1 Grenville Street, St. Helier
Jersey, Channel Islands and with branch offices at Level 12, 1 Queens Road Central, Hongkong and
may be served with summons and other court processes through their main office in Manila with
address at HSBC, the Enterprise Center, Tower 1, Ayala Avenue corner Paseo de Roxas Street,
Makati City.
Sometime in March 1997, Thomson issued five HSBANK checks payable to Catalan, to wit:

CHECK NO. DATE AMOUNT


807852 Mar. 15, 1997 $600,000.00
807853 Mar. 17, 1997 800,000.00
807854 Mar. 17, 1997 600,000.00
807855 Mar. 22, 1997 600,000.00
807856 Mar. 23, 1997 600,000.00

TOTAL $3,200,000.00

The checks when deposited were returned by HSBANK purportedly for reason of "payment stopped" pending
confirmation, despite the fact that the checks were duly funded. On March 18, 1997, Thomson wrote a letter to
a certain Ricky Sousa7 of HSBANK confirming the checks he issued to Catalan and requesting that all his
checks be cleared. On March 20, 1997, Thomson wrote another letter to Sousa of HSBANK requesting an
advice in writing to be sent to the Philippine National Bank, through the fastest means, that the checks he
previously issued to Catalan were already cleared. Thereafter, Catalan demanded that HSBANK make good
the checks issued by Thomson. On May 16, 1997, Marilou A. Lozada, personal secretary and attorney-in-fact
of Thomson, wrote a letter to Sousa of HSBANK informing him that HSBANKs failure to clear all the checks
had saddened Thomson and requesting that the clearing of the checks be facilitated. Subsequently, Thomson
died and Catalan forwarded her demand to HSBC TRUSTEE. Catalan sent photocopies of the returned checks
to HSBC TRUSTEE. Not satisfied, HSBC TRUSTEE through deceit and trickery, required Catalan, as a
condition for the acceptance of the checks, to submit the original copies of the returned checks, purportedly, to
hasten payment of her claim. HSBC TRUSTEE succeeded in its calculated deception because on April 21,
1999, Catalan and her former counsel went to Hongkong at their own expense to personally deliver the
originals of the returned checks to the officers of HSBC TRUSTEE, anxious of receiving the money value of the
checks but HSBC TRUSTEE despite receipt of the original checks, refused to pay Catalans claim. Having
seen and received the original of the checks, upon its request, HSBC TRUSTEE is deemed to have impliedly
accepted the checks. Moreover, the refusal of HSBANK and HSBC TRUSTEE to pay the checks is equivalent
to illegal freezing of ones deposit. On the assurance of HSBC TRUSTEE that her claim will soon be paid, as
she was made to believe that payments of the checks shall be made by HSBC TRUSTEE "upon sight," the
unsuspecting Catalan left the originals of the checks with HSBC TRUSTEE and was given only an
acknowledgment receipt. Catalan made several demands and after several more follow ups, on August 16,
1999, Phoenix Lam, Senior Vice President of HSBC TRUSTEE, in obvious disregard of her valid claim,
informed Catalan that her claim is disapproved. No reason or explanation whatsoever was made why her claim
was disapproved, neither were the checks returned to her. Catalan appealed for fairness and understanding, in
the hope that HSBC TRUSTEE would act fairly and justly on her claim but these demands were met by a
stonewall of silence. On June 9, 2000, Catalan through counsel sent a last and final demand to HSBC
TRUSTEE to remit the amount covered by the checks but despite receipt of said letter, no payment was made.
Clearly, the act of the HSBANK and HSBC TRUSTEE in refusing to honor and pay the checks validly issued by
Thomson violates the abuse of rights principle under Article 19 of the Civil Code which requires that everyone
must act with justice, give everyone his due and observe honesty and good faith. The refusal of HSBANK and
HSBC TRUSTEE to pay the checks without any valid reason is intended solely to prejudice and injure Catalan.
When they declined payment of the checks despite instructions of the drawer, Thomson, to honor them,
coupled with the fact that the checks were duly funded, they acted in bad faith, thus causing damage to
Catalan. A person may not exercise his right unjustly or in a manner that is not in keeping with honesty or good
faith, otherwise he opens himself to liability for abuse of right.8

Catalan prays that HSBANK and HSBC TRUSTEE be ordered to pay 20,864,000.00 representing the value of
the five checks at the rate of 6.52 per HK$1 as of January 29, 2001 for the acts of HSBANK and HSBC
TRUSTEE in refusing to pay the amount justly due her, in addition to moral and exemplary damages, attorneys
fees and litigation expenses.9
On October 2, 2001, HSBANK filed a Motion to Dismiss Amended Complaint on the grounds that: (a) the RTC
has no jurisdiction over the subject matter of the complaint since the action is a money claim for a debt
contracted by Thomson before his death which should have been filed in the estate or intestate proceedings of
Thomson; (b) Catalan engages in forum shopping by filing the suit and at the same time filing a claim in the
probate proceeding filed with another branch of the RTC; (c) the amended complaint states no cause of action
against HSBANK since it has no obligation to pay the checks as it has not accepted the checks and Catalan did
not re-deposit the checks or make a formal protest; (d) the RTC has not acquired jurisdiction over the person of
HSBANK for improper service of summons; and, (e) it did not submit to the jurisdiction of the RTC by filing a
motion for extension of time to file a motion to dismiss.10

Meanwhile, on October 17, 2001, summons for HSBC TRUSTEE was tendered to the In House Counsel of
HSBANK (Makati Branch) at the Enterprise Center, Tower 1, Ayala Avenue corner Paseo de Roxas, Makati.
Without submitting itself to the jurisdiction of the RTC, HSBC TRUSTEE filed a Special Appearance for Motion
to Dismiss Amended Complaint, dated October 29, 2001, questioning the jurisdiction of the RTC over
it.11 HSBC TRUSTEE alleges that tender of summons through HSBANK Makati did not confer upon the RTC
jurisdiction over it because: (a) it is a corporation separate and distinct from HSBANK; (b) it does not hold office
at the HSBANK Makati or in any other place in the Philippines; (c) it has not authorized HSBANK Makati to
receive summons for it; and, (d) it has no resident agent upon whom summons may be served because it does
not transact business in the Philippines.

Subsequently, HSBC TRUSTEE filed a Submission, dated November 15, 2001, attaching the Affidavit
executed in Hongkong by Phoenix Lam, Senior Vice-President of HSBC TRUSTEE, attesting to the fact that: 1)
HSBC TRUSTEE has not done nor is it doing business in the Philippines; 2) it does not maintain any office in
Makati or anywhere in the Philippines; 3) it has not appointed any agent in Philippines; and 4) HSBANK Makati
has no authority to receive any summons or court processes for HSBC TRUSTEE.12

On May 15, 2002, the RTC issued an Order denying the two motions to dismiss.13 The RTC held that it has
jurisdiction over the subject matter of the action because it is an action for damages under Article 19 of the Civil
Code for the acts of unjustly refusing to honor the checks issued by Thomson and not a money claim against
the estate of Thomson; that Catalan did not engage in forum-shopping because the elements thereof are not
attendant in the case; that the question of cause of action should be threshed out or ventilated during the
proceedings in the main action and after the plaintiff and defendants have adduced evidence in their favor; that
it acquired jurisdiction over the person of defendants because the question of whether a foreign corporation is
doing business or not in the Philippines cannot be a subject of a Motion to Dismiss but should be ventilated in
the trial on the merits; and defendants voluntarily submitted to the jurisdiction of the RTC setting up in their
Motions to Dismiss other grounds aside from lack of jurisdiction.

HSBANK and HSBC TRUSTEE filed separate motions for reconsideration14 but both proved futile as they were
denied by the RTC in an Order dated December 20, 2002.15

On February 21, 2003, Catalan moved to declare HSBANK and HSBC TRUSTEE in default for failure to file
their answer to the amended complaint.

On March 5, 2003, HSBANK and HSBC TRUSTEE filed separate petitions for certiorari and/or prohibition with
the CA, docketed as CA-G.R. SP Nos. 7575616 and 75757,17 respectively.

Subsequently, HSBANK and HSBC TRUSTEE filed before the RTC separate Answers ad cautelam, both dated
March 18, 2003, as a "precaution against being declared in default and without prejudice to the separate
petitions for certiorari and/or prohibition then pending with the CA."18

Meanwhile, the two petitions for certiorari before the CA were consolidated and after responsive pleadings
were filed, the cases were deemed submitted for decision.

In a consolidated Decision dated August 14, 2003, the CA dismissed the two petitions for certiorari.19 The CA
held that the filing of petitioners answers before the RTC rendered moot and academic the issue of the RTCs
lack of jurisdiction over the person of the petitioners; that the RTC has jurisdiction over the subject matter since
it is one for damages under Article 19 of the Civil Code for the alleged unjust acts of petitioners and not a
money claim against the estate of Thomson; and, that the amended complaint states a cause of action under
Article 19 of the Civil Code which could merit a favorable judgment if found to be true. The CA noted that
Catalan may have prayed for payment of the value of the checks but ratiocinated that she merely used the
value as basis for the computation of the damages.

Hence, the present petitions.

In G.R. No. 159590, HSBANK submits the following assigned errors:

I.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE


COURT A QUO, ACTING AS AN (SIC) REGULAR COURT, HAS JURISDICTION OVER THE
AMENDED COMPLAINT SEEKING TO ORDER HSBC TRUSTEE, THE EXECUTOR OF
THE DECEASED FREDERICK ARTHUR THOMSON, TO PAY SUBJECT CHECKS ISSUED
BY THE LATE FREDERICK ARTHUR THOMSON, ADMITTEDLY IN PAYMENT OF HIS
INDEBTEDNESS TO CATALAN.

II.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE


AMENDED COMPLAINT DOES NOT SEEK TO ORDER HSBANK AND HSBC
INTERNATIONAL TRUSTEE LIMITED TO PAY THE OBLIGATION OF THE (SIC)
FREDERICK ARTHUR THOMSON AS EVIDENCED BY THE CHECKS, BUT PRAYS FOR
DAMAGES EQUIVALENT OR COMPUTED ON THE BASIS OF THE VALUE OF THE
CHECKS BECAUSE THE DEFENDANTS FAILED TO COMPLY WITH THE MANDATES OF
ARTICLE 19 OF THE NEW CIVIL CODE.

III.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT


ALLEGATIONS IN THE AMENDED COMPLAINT MAKE OUT A CAUSE OF ACTION WHICH
COULD MERIT A FAVORABLE JUDGMENT IF FOUND TO BE TRUE, OR IN NOT
HOLDING THAT THE AMENDED COMPLAINT STATES NO CAUSE OF ACTION AGAINST
HSBANK, AS DRAWEE BANK.

IV.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN DISREGARDING THE


FACT THAT CATALAN ENGAGED IN FORUM SHOPPING BY FILING THE AMENDED
COMPLAINT WHILE HER PETITION FOR THE PROBATE OF THE SUPPOSED WILL OF
THE DECEASED FREDERICK ARTHUR THOMSON IS PENDING WITH ANOTHER
BRANCH OF THE COURT A QUO.

V.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT HSBANK


HAD SUBMITTED TO THE JURISDICTION OF THE COURT A QUO BY SUBMITTING AN
ANSWER TO THE AMENDED COMPLAINT.20

In G.R. No. 159591, HSBC TRUSTEE also assigns the foregoing first, second and fifth errors as its own. 21 In
addition, it claims that:
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT ORDERING THE DISMISSAL
OF THE AMENDED COMPLAINT AGAINST HSBC TRUSTEE DESPITE THE FACT IT HAS NOT
BEEN DULY SERVED WITH SUMMONS.22

HSBANK and HSBC TRUSTEE contend in common that Catalan has no cause of action for abuse of rights
under Article 19 of the Civil Code; that her complaint, under the guise of a claim for damages, is actually a
money claim against the estate of Thomson arising from checks issued by the latter in her favor in payment of
indebtedness.

HSBANK claims that the money claim should be dismissed on the ground of forum-shopping since Catalan
also filed a petition for probate of the alleged last will of Thomson before RTC, Branch 48, Bacolod City,
docketed as Spec. Proc No. 00-892. In addition, HSBANK imputes error upon the CA in holding that by filing an
answer to the amended complaint, petitioners are estopped from questioning the jurisdiction of the RTC.

HSBC TRUSTEE maintains that the RTC did not acquire jurisdiction over it for improper service of summons.

In her Comment, Catalan insists that her complaint is one for damages under Article 19 of the Civil Code for the
wanton refusal to honor and pay the value of five checks issued by the Thomson amounting to
HK$3,200,000.00. She argues that the issue of jurisdiction has been rendered moot by petitioners participation
in the proceedings before the RTC.

Succinctly, the issues boil down to the following:

1) Does the complaint state a cause of action?

2) Did Catalan engage in forum-shopping by filing the complaint for damages when she also filed a
petition for probate of the alleged last will of Thomson with another branch of the RTC? and,

3) Did the RTC acquire jurisdiction over HSBANK and HSBC TRUSTEE? Corollary thereto, did the
filing of the answer before the RTC render the issue of lack of jurisdiction moot and academic?

We shall resolve the issue in seriatim.

Does the complaint state a cause of action against HSBANK and HSBC TRUSTEE?

The elementary test for failure to state a cause of action is whether the complaint alleges facts which if true
would justify the relief demanded. Stated otherwise, may the court render a valid judgment upon the facts
alleged therein?23 The inquiry is into the sufficiency, not the veracity of the material allegations.24 If the
allegations in the complaint furnish sufficient basis on which it can be maintained, it should not be dismissed
regardless of the defense that may be presented by the defendants.25

Catalan anchors her complaint for damages on Article 19 of the Civil Code. It speaks of the fundamental
principle of law and human conduct that a person "must, in the exercise of his rights and in the performance of
his duties, act with justice, give every one his due, and observe honesty and good faith." It sets the standards
which may be observed not only in the exercise of ones rights but also in the performance of ones duties.
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.26 But a right, though by itself legal because recognized or granted by law as such, may
nevertheless become the source of some illegality. 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.27 There is an abuse of right when it is exercised for the only purpose of prejudicing or
injuring another. The exercise of a right must be in accordance with the purpose for which it was established,
and must not be excessive or unduly harsh; there must be no intention to injure another. 28
Thus, in order to be liable under the abuse of rights principle, three elements must concur, to wit: (a) that there
is a legal right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring
another.29

In this instance, after carefully examining the amended complaint, we are convinced that the allegations therein
are in the nature of an action based on tort under Article 19 of the Civil Code. It is evident that Catalan is suing
HSBANK and HSBC TRUSTEE for unjustified and willful refusal to pay the value of the checks.

HSBANK is being sued for unwarranted failure to pay the checks notwithstanding the repeated assurance of
the drawer Thomson as to the authenticity of the checks and frequent directives to pay the value thereof to
Catalan. Her allegations in the complaint that the gross inaction of HSBANK on Thomsons instructions, as well
as its evident failure to inform Catalan of the reason for its continued inaction and non-payment of the checks,
smack of insouciance on its part, are sufficient statements of clear abuse of right for which it may be held liable
to Catalan for any damages she incurred resulting therefrom. HSBANKs actions, or lack thereof, prevented
Catalan from seeking further redress with Thomson for the recovery of her claim while the latter was alive.

HSBANK claims that Catalan has no cause of action because under Section 189 of the Negotiable Instruments
Law, "a check of itself does not operate as an assignment of any part of the funds to the credit of the drawer
with the bank, and the bank is not liable to the holder unless and until it accepts or certifies it." However,
HSBANK is not being sued on the value of the check itself but for how it acted in relation to Catalans claim for
payment despite the repeated directives of the drawer Thomson to recognize the check the latter issued.
Catalan may have prayed that she be paid the value of the checks but it is axiomatic that what determines the
nature of an action, as well as which court has jurisdiction over it, are the allegations of the complaint,
irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. 30

Anent HSBC TRUSTEE, it is being sued for the baseless rejection of Catalans claim. When Catalan parted
with the checks as a requirement for the processing of her claim, even going to the extent of traveling to
Hongkong to deliver personally the checks, HSBC TRUSTEE summarily disapproved her claim with nary a
reason. HSBC TRUSTEE gave no heed to Catalans incessant appeals for an explanation. Her pleas fell on
deaf and uncaring corporate ears. Clearly, HSBC TRUSTEEs acts are anathema to the prescription for human
conduct enshrined in Article 19 of the Civil Code.

Did Catalan engage in forum-shopping?

It has been held that forum-shopping exists where a litigant sues the same party against whom another action
or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending,
the defense of litis pendentia in one case is a bar to the others; and, a final judgment in one would constitute
res judicata and thus would cause the dismissal of the rest.31

Thus, there is forum-shopping when there exist: a) identity of parties, or at least such parties as represent the
same interests in both actions, b) identity of rights asserted and relief prayed for, the relief being founded on
the same facts, and c) the identity of the two preceding particulars is such that any judgment rendered in the
pending case, regardless of which party is successful would amount to res judicata in the other.32

Applying the foregoing requisites to the case before us in relation to Spec. Proc No. 00-892, the probate
proceeding brought by Catalan before RTC, Branch 48, Bacolod City, it is obvious that forum-shopping does
not exist.

There is no identity of parties. HSBANK is not a party in the probate proceeding. HSBC TRUSTEE is only a
party in the probate proceeding because it is the executor and trustee named in the Hongkong will of Thomson.
HSBC TRUSTEE is representing the interest of the estate of Thomson and not its own corporate interest.

With respect to the second and third requisites, a scrutiny of the entirety of the allegations of the amended
complaint in this case reveals that the rights asserted and reliefs prayed for therein are different from those
pleaded in the probate proceeding, such that a judgment in one case would not bar the prosecution of the other
case. Verily, there can be no forum-shopping where in one proceeding a party raises a claim for damages
based on tort and, in another proceeding a party seeks the allowance of an alleged last will based on ones
claim as an heir. After all, the merits of the action for damages is not to be determined in the probate
proceeding and vice versa. Undeniably, the facts or evidence as would support and establish the two causes of
action are not the same.33 Consequently, HSBANKs reliance on the principle of forum-shopping is clearly
misplaced.

Did the RTC acquire jurisdiction over HSBANK and HSBC TRUSTEE?

The Rules of Court provides that a court generally acquires jurisdiction over a person through either a valid
service of summons in the manner required by law or the persons voluntary appearance in court. 34

In holding that it acquired jurisdiction over HSBANK and HSBC TRUSTEE, the RTC held that both voluntarily
submitted to the jurisdiction of the court by setting up in their Motions to Dismiss other grounds aside from lack
of jurisdiction. On the other hand, the CA ruled that HSBANK and HSBC TRUSTEE are estopped from
challenging the jurisdiction of the RTC because they filed their respective answers before the RTC.

We find that both lower courts overlooked Section 20 of Rule 14 of the 1997 Rules of Civil Procedure which
provides that "the inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the
person of the defendant shall not be deemed a voluntary appearance." Nonetheless, such omission does not
aid HSBANKs case.

It must be noted that HSBANK initially filed a Motion for Extension of Time to File Answer or Motion to
Dismiss.35HSBANK already invoked the RTCs jurisdiction over it by praying that its motion for extension of time
to file answer or a motion to dismiss be granted. The Court has held that the filing of motions seeking
affirmative relief, such as, to admit answer, for additional time to file answer, for reconsideration of a default
judgment, and to lift order of default with motion for reconsideration, are considered voluntary submission to the
jurisdiction of the court.36 Consequently, HSBANKs expressed reservation in its Answer ad cautelam that it
filed the same "as a mere precaution against being declared in default, and without prejudice to the Petition for
Certiorari and/or Prohibition xxx now pending before the Court of Appeals"37 to assail the jurisdiction of the RTC
over it is of no moment. Having earlier invoked the jurisdiction of the RTC to secure affirmative relief in its
motion for additional time to file answer or motion to dismiss, HSBANK, effectively submitted voluntarily to the
jurisdiction of the RTC and is thereby estopped from asserting otherwise, even before this Court.

In contrast, the filing by HSBC TRUSTEE of a motion to dismiss cannot be considered a voluntary submission
to the jurisdiction of the RTC. It was a conditional appearance, entered precisely to question the regularity of
the service of summons. It is settled that a party who makes a special appearance in court challenging the
jurisdiction of said court, e.g., invalidity of the service of summons, cannot be considered to have submitted
himself to the jurisdiction of the court.38 HSBC TRUSTEE has been consistent in all its pleadings in assailing
the service of summons and the jurisdiction of the RTC over it. Thus, HSBC TRUSTEE cannot be declared in
estoppel when it filed an Answer ad cautelam before the RTC while its petition for certiorari was pending before
the CA. Such answer did not render the petition for certiorari before the CA moot and academic. The Answer of
HSBC TRUSTEE was only filed to prevent any declaration that it had by its inaction waived the right to file
responsive pleadings.

Admittedly, HSBC TRUSTEE is a foreign corporation, organized and existing under the laws of the British
Virgin Islands. For proper service of summons on foreign corporations, Section 12 of Rule 14 of the Revised
Rules of Court provides:

SEC. 12. Service upon foreign private juridical entity. When the defendant is a foreign private
juridical entity which has transacted business in the Philippines, service may be made on its resident
agent designated in accordance with law for that purpose, or if there be no such agent, on the
government official designated by law to that effect, or on any of its officers or agents within the
Philippines.

In French Oil Mill Machinery Co., Inc. vs. Court of Appeals,39 we had occasion to rule that it is not enough to
merely allege in the complaint that a defendant foreign corporation is doing business. For purposes of the rule
on summons, the fact of doing business must first be "established by appropriate allegations in the complaint"
and the court in determining such fact need not go beyond the allegations therein.40

The allegations in the amended complaint subject of the present cases did not sufficiently show the fact of
HSBC TRUSTEEs doing business in the Philippines. It does not appear at all that HSBC TRUSTEE had
performed any act which would give the general public the impression that it had been engaging, or intends to
engage in its ordinary and usual business undertakings in the country. Absent from the amended complaint is
an allegation that HSBC TRUSTEE had performed any act in the country that would place it within the sphere
of the courts jurisdiction.

We have held that a general allegation, standing alone, that a party is doing business in the Philippines does
not make it so; a conclusion of fact or law cannot be derived from the unsubstantiated assertions of parties
notwithstanding the demands of convenience or dispatch in legal actions, otherwise, the Court would be guilty
of sorcery; extracting substance out of nothingness.41

Besides, there is no allegation in the amended complaint that HSBANK is the domestic agent of HSBC
TRUSTEE to warrant service of summons upon it. Thus, the summons tendered to the In House Counsel of
HSBANK (Makati Branch) for HSBC TRUSTEE was clearly improper.

There being no proper service of summons, the RTC cannot take cognizance of the case against HSBC
TRUSTEE for lack of jurisdiction over it. Any proceeding undertaken by the RTC is therefore null and
void.42 Accordingly, the complaint against HSBC TRUSTEE should have been dismissed for lack of jurisdiction
over it.

WHEREFORE, the petition in G.R. No. 159590 is DENIED. The Decision of the Court of Appeals, dated August
14, 2003, in CA-G.R. SP No. 75757 dismissing the petition for certiorari of the Hongkong and Shanghai
Banking Corporation Limited is AFFIRMED.

The petition in G.R. No. 159591 is GRANTED. The Decision of the Court of Appeals, dated August 14, 2003, in
CA-G.R. SP No. 75756 dismissing the petition for certiorari of the HSBC International Trustee Limited
is REVERSEDand SET ASIDE. The Regional Trial Court, Branch 44, Bacolod City is declared without
jurisdiction to take cognizance of Civil Case No. 01-11372 against the HSBC International Trustee Limited, and
all its orders and issuances with respect to the latter are hereby ANNULLED and SET ASIDE. The said
Regional Trial Court is hereby ORDERED to DESIST from maintaining further proceedings against the HSBC
International Trustee Limited in the case aforestated.

SO ORDERED.

Puno, Callejo, Sr., Tinga, and Chico-Nazario*, JJ., concur.

FACTS:

Frederick Arthur Thomson drew 5 checks payable to defendant Cecilia. Catalan presented these checks
to Hongkong and Shanghai Banking Corporation Limited (HSBANK). The checks were dishonored for having
insufficient funds. Thomson demanded that the checks be made good because he, in fact, had sufficient funds.
Still, HSBANK did not accept the checks.

Subsequently, Thomson died but Catalan was not paid yet. The account was transferred to HSBC International
Trustee Limited (TRUSTEE). Catalan then requested TRUSTEE to pay her but still refused and even asked her
to submit back to them the original checks for verification.

Catalan and her lawyer went to Hong Kong on their own expense to personally submit the checks. They still
were not honored, leading Catalan to file a suit against HSBC to collect the money.
ISSUE: Whether the check can be encashed.

RULING:

The SC held that the HSBC was being sued becasue of their evident failure to heed the instructions of Thomson.
HSBANK cited Sec. 189 of the NIL but the SC said that what is being sued is how they acted in relation to
Catalan's claim for payment despite repeated requests and not of the check's value.

The reason was likewise the same towards TRUSTEE as Catalan even went to Hong Kong to personally deliver
the checks.

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 158253 March 2, 2007

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS AND


HIGHWAYS, COMMISSION ON AUDIT and THE NATIONAL TREASURER, Petitioner,
vs.
CARLITO LACAP, doing business under the name and style CARWIN CONSTRUCTION AND
CONSTRUCTION SUPPLY, Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court assailing
the Decision1 dated April 28, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 56345 which affirmed with
modification the Decision2 of the Regional Trial Court, Branch 41, San Fernando, Pampanga (RTC) in Civil
Case No. 10538, granting the complaint for Specific Performance and Damages filed by Carlito Lacap
(respondent) against the Republic of the Philippines (petitioner).

The factual background of the case is as follows:

The District Engineer of Pampanga issued and duly published an "Invitation To Bid" dated January 27, 1992.
Respondent, doing business under the name and style Carwin Construction and Construction Supply (Carwin
Construction), was pre-qualified together with two other contractors. Since respondent submitted the lowest
bid, he was awarded the contract for the concreting of Sitio 5 Bahay Pare.3 On November 4, 1992, a Contract
Agreement was executed by respondent and petitioner.4 On September 25, 1992, District Engineer Rafael S.
Ponio issued a Notice to Proceed with the concreting of Sitio 5 Bahay Pare.5 Accordingly, respondent
undertook the works, made advances for the purchase of the materials and payment for labor costs. 6

On October 29, 1992, personnel of the Office of the District Engineer of San Fernando, Pampanga conducted a
final inspection of the project and found it 100% completed in accordance with the approved plans and
specifications. Accordingly, the Office of the District Engineer issued Certificates of Final Inspection and Final
Acceptance.7

Thereafter, respondent sought to collect payment for the completed project.8 The DPWH prepared the
Disbursement Voucher in favor of petitioner.9 However, the DPWH withheld payment from respondent after the
District Auditor of the Commission on Audit (COA) disapproved the final release of funds on the ground that the
contractors license of respondent had expired at the time of the execution of the contract. The District Engineer
sought the opinion of the DPWH Legal Department on whether the contracts of Carwin Construction for various
Mount Pinatubo rehabilitation projects were valid and effective although its contractors license had already
expired when the projects were contracted.10

In a Letter-Reply dated September 1, 1993, Cesar D. Mejia, Director III of the DPWH Legal Department opined
that since Republic Act No. 4566 (R.A. No. 4566), otherwise known as the Contractors License Law, does not
provide that a contract entered into after the license has expired is void and there is no law which expressly
prohibits or declares void such contract, the contract is enforceable and payment may be paid, without
prejudice to any appropriate administrative liability action that may be imposed on the contractor and the
government officials or employees concerned.11

In a Letter dated July 4, 1994, the District Engineer requested clarification from the DPWH Legal Department
on whether Carwin Construction should be paid for works accomplished despite an expired contractors license
at the time the contracts were executed.12

In a First Indorsement dated July 20, 1994, Cesar D. Mejia, Director III of the Legal Department, recommended
that payment should be made to Carwin Construction, reiterating his earlier legal opinion.13 Despite such
recommendation for payment, no payment was made to respondent.

Thus, on July 3, 1995, respondent filed the complaint for Specific Performance and Damages against petitioner
before the RTC.14

On September 14, 1995, petitioner, through the Office of the Solicitor General (OSG), filed a Motion to Dismiss
the complaint on the grounds that the complaint states no cause of action and that the RTC had no jurisdiction
over the nature of the action since respondent did not appeal to the COA the decision of the District Auditor to
disapprove the claim.15

Following the submission of respondents Opposition to Motion to Dismiss, 16 the RTC issued an Order dated
March 11, 1996 denying the Motion to Dismiss.17 The OSG filed a Motion for Reconsideration18 but it was
likewise denied by the RTC in its Order dated May 23, 1996.19

On August 5, 1996, the OSG filed its Answer invoking the defenses of non-exhaustion of administrative
remedies and the doctrine of non-suability of the State.20

Following trial, the RTC rendered on February 19, 1997 its Decision, the dispositive portion of which reads as
follows:

WHEREFORE, in view of all the foregoing consideration, judgment is hereby rendered in favor of the plaintiff
and against the defendant, ordering the latter, thru its District Engineer at Sindalan, San Fernando, Pampanga,
to pay the following:

a) 457,000.00 representing the contract for the concreting project of Sitio 5 road, Bahay Pare, Candaba,
Pampanga plus interest at 12% from demand until fully paid; and

b) The costs of suit.

SO ORDERED.21

The RTC held that petitioner must be required to pay the contract price since it has accepted the completed
project and enjoyed the benefits thereof; to hold otherwise would be to overrun the long standing and
consistent pronouncement against enriching oneself at the expense of another.22

Dissatisfied, petitioner filed an appeal with the CA.23 On April 28, 2003, the CA rendered its Decision sustaining
the Decision of the RTC. It held that since the case involves the application of the principle of estoppel against
the government which is a purely legal question, then the principle of exhaustion of administrative remedies
does not apply; that by its actions the government is estopped from questioning the validity and binding effect
of the Contract Agreement with the respondent; that denial of payment to respondent on purely technical
grounds after successful completion of the project is not countenanced either by justice or equity.

The CA rendered herein the assailed Decision dated April 28, 2003, the dispositive portion of which reads:

WHEREFORE, the decision of the lower court is hereby AFFIRMED with modification in that the interest shall
be six percent (6%) per annum computed from June 21, 1995.

SO ORDERED.24

Hence, the present petition on the following ground:

THE COURT OF APPEALS ERRED IN NOT FINDING THAT RESPONDENT HAS NO CAUSE OF ACTION
AGAINST PETITIONER, CONSIDERING THAT:

(a) RESPONDENT FAILED TO EXHAUST ADMINISTRATIVE REMEDIES; AND

(b) IT IS THE COMMISSION ON AUDIT WHICH HAS THE PRIMARY JURISDICTION TO RESOLVE
RESPONDENTS MONEY CLAIM AGAINST THE GOVERNMENT.25

Petitioner contends that respondents recourse to judicial action was premature since the proper remedy was to
appeal the District Auditors disapproval of payment to the COA, pursuant to Section 48, Presidential Decree
No. 1445 (P.D. No. 1445), otherwise known as the Government Auditing Code of the Philippines; that the COA
has primary jurisdiction to resolve respondents money claim against the government under Section
2(1),26 Article IX of the 1987 Constitution and Section 2627 of P.D. No. 1445; that non-observance of the doctrine
of exhaustion of administrative remedies and the principle of primary jurisdiction results in a lack of cause of
action.

Respondent, on the other hand, in his Memorandum28 limited his discussion to Civil Code provisions relating to
human relations. He submits that equity demands that he be paid for the work performed; otherwise, the
mandate of the Civil Code provisions relating to human relations would be rendered nugatory if the State itself
is allowed to ignore and circumvent the standard of behavior it sets for its inhabitants.

The present petition is bereft of merit.

The general rule is that before a party may seek the intervention of the court, he should first avail of all the
means afforded him by administrative processes.29 The issues which administrative agencies are authorized to
decide should not be summarily taken from them and submitted to a court without first giving such
administrative agency the opportunity to dispose of the same after due deliberation.30

Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of primary jurisdiction; that is,
courts cannot or will not determine a controversy involving a question which is within the jurisdiction of the
administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question
demands the exercise of sound administrative discretion requiring the special knowledge, experience and
services of the administrative tribunal to determine technical and intricate matters of fact. 31

Nonetheless, the doctrine of exhaustion of administrative remedies and the corollary doctrine of primary
jurisdiction, which are based on sound public policy and practical considerations, are not inflexible rules. There
are many accepted exceptions, such as: (a) where there is estoppel on the part of the party invoking the
doctrine; (b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c)
where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d) where
the amount involved is relatively small so as to make the rule impractical and oppressive; (e) where the
question involved is purely legal and will ultimately have to be decided by the courts of justice; 32 (f) where
judicial intervention is urgent; (g) when its application may cause great and irreparable damage; (h) where the
controverted acts violate due process; (i) when the issue of non-exhaustion of administrative remedies has
been rendered moot;33 (j) when there is no other plain, speedy and adequate remedy; (k) when strong public
interest is involved; and, (l) in quo warranto proceedings.34Exceptions (c) and (e) are applicable to the present
case.

Notwithstanding the legal opinions of the DPWH Legal Department rendered in 1993 and 1994 that payment to
a contractor with an expired contractors license is proper, respondent remained unpaid for the completed work
despite repeated demands. Clearly, there was unreasonable delay and official inaction to the great prejudice of
respondent.

Furthermore, whether a contractor with an expired license at the time of the execution of its contract is entitled
to be paid for completed projects, clearly is a pure question of law. It does not involve an examination of the
probative value of the evidence presented by the parties. There is a question of law when the doubt or
difference arises as to what the law is on a certain state of facts, and not as to the truth or the falsehood of
alleged facts.35 Said question at best could be resolved only tentatively by the administrative authorities. The
final decision on the matter rests not with them but with the courts of justice. Exhaustion of administrative
remedies does not apply, because nothing of an administrative nature is to be or can be done. 36 The issue does
not require technical knowledge and experience but one that would involve the interpretation and application of
law.

Thus, while it is undisputed that the District Auditor of the COA disapproved respondents claim against the
Government, and, under Section 4837 of P.D. No. 1445, the administrative remedy available to respondent is an
appeal of the denial of his claim by the District Auditor to the COA itself, the Court holds that, in view of
exceptions (c) and (e) narrated above, the complaint for specific performance and damages was not
prematurely filed and within the jurisdiction of the RTC to resolve, despite the failure to exhaust administrative
remedies. As the Court aptly stated in Rocamora v. RTC-Cebu (Branch VIII):38

The plaintiffs were not supposed to hold their breath and wait until the Commission on Audit and the Ministry of
Public Highways had acted on the claims for compensation for the lands appropriated by the government. The
road had been completed; the Pope had come and gone; but the plaintiffs had yet to be paid for the properties
taken from them. Given this official indifference, which apparently would continue indefinitely, the private
respondents had to act to assert and protect their interests.39

On the question of whether a contractor with an expired license is entitled to be paid for completed projects,
Section 35 of R.A. No. 4566 explicitly provides:

SEC. 35. Penalties. Any contractor who, for a price, commission, fee or wage, submits or attempts to submit a
bid to construct, or contracts to or undertakes to construct, or assumes charge in a supervisory capacity of a
construction work within the purview of this Act, without first securing a license to engage in the business of
contracting in this country; or who shall present or file the license certificate of another, give false evidence of
any kind to the Board, or any member thereof in obtaining a certificate or license, impersonate another, or use
an expired or revoked certificate or license, shall be deemed guilty of misdemeanor, and shall, upon conviction,
be sentenced to pay a fine of not less than five hundred pesos but not more than five thousand pesos.
(Emphasis supplied)

The "plain meaning rule" or verba legis in statutory construction is that if the statute is clear, plain and free from
ambiguity, it must be given its literal meaning and applied without interpretation.40 This rule derived from the
maxim Index animi sermo est (speech is the index of intention) rests on the valid presumption that the words
employed by the legislature in a statute correctly express its intention or will and preclude the court from
construing it differently. The legislature is presumed to know the meaning of the words, to have used words
advisedly, and to have expressed its intent by use of such words as are found in the statute. 41 Verba legis non
est recedendum, or from the words of a statute there should be no departure.42

The wordings of R.A. No. 4566 are clear. It does not declare, expressly or impliedly, as void contracts entered
into by a contractor whose license had already expired. Nonetheless, such contractor is liable for payment of
the fine prescribed therein. Thus, respondent should be paid for the projects he completed. Such payment,
however, is without prejudice to the payment of the fine prescribed under the law.
Besides, Article 22 of the Civil Code which embodies the maxim Nemo ex alterius incommode debet lecupletari
(no man ought to be made rich out of anothers injury) states:

Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes
into possession of something at the expense of the latter without just or legal ground, shall return the same to
him.

This article is part of the chapter of the Civil Code on Human Relations, the provisions of which were
formulated as "basic principles to be observed for the rightful relationship between human beings and for the
stability of the social order, x x x designed to indicate certain norms that spring from the fountain of good
conscience, x x x guides 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."43 The rules thereon apply equally
well to the Government.44 Since respondent had rendered services to the full satisfaction and acceptance by
petitioner, then the former should be compensated for them. To allow petitioner to acquire the finished project
at no cost would undoubtedly constitute unjust enrichment for the petitioner to the prejudice of respondent.
Such unjust enrichment is not allowed by law.

WHEREFORE, the present petition is DENIED for lack of merit. The assailed Decision of the Court of Appeals
dated April 28, 2003 in CA-G.R. CV No. 56345 is AFFIRMED. No pronouncement as to costs.

SO ORDERED.

FACTS Case is a petition for certoriari, assailing the decision of the Court of Appeals which affirmed,
with modifications, ruling by the RTC granting the complaint for Specific Performance and
damages filed by Lacap against RP
Dist. Eng. Of Pampanga issued an invitation to bid dated Jan 27, 1992 where Lacap and two
other contractors were pre-qualified
Being the lowest bidder, Lacap won the bid for concreting of a certain baranggay, and
thereafter undertook the works and purchased materials and labor in connection with
On Oct 29, 1992, Office of the Dist. Eng conducted final investigation of end product and fount
it 100% completed according to specs. Lacap thereafter sought the payment of the DPWH
DPWH withheld payment on the grounds that the CoA disapproved final release of funds due
to Lacaps license as contractor having expired
Dist. Eng sought the opinion of DPWH legal. Legal then responded to Dist. Eng that the
Contractors License Law (RA 4566) does not provide that a contract entered into by a
contractor after expiry of license is void and that there is no law that expressly prohibits or
declares void such a contract
DPWH Legal Dept, through Dir III Cesar Mejia, issued First Indorsement on July 20 1994
recommending that payment be made to Lacap. Despite such recommendation, no payment
was issued
On July 3, 1995, respondent filed the complaint for Specific Performance and Damages
against petitioner before the RTC.14
On September 14, 1995, petitioner, through the Office of the Solicitor General (OSG), filed a
Motion to Dismiss the complaint on the grounds that the complaint states no cause of action
and that the RTC had no jurisdiction over the nature of the action since respondent did not
appeal to the COA the decision of the District Auditor to disapprove the claim.
Following the submission of respondents Opposition to Motion to Dismiss,the RTC issued an
Order dated March 11, 1996 denying the Motion to Dismiss. The OSG filed a Motion for
Reconsideration18 but it was likewise denied by the RTC in its Order dated May 23, 1996.
On August 5, 1996, the OSG filed its Answer invoking the defenses of non-exhaustion of
administrative remedies and the doctrine of non-suability of the State
Following trial, the RTC rendered on February 19, 1997 a decision ordering DPWH to pay
Lacap for the contract of the project, 12% interest from demand until fully paid, and the costs of
the suit
CA affirmed the decision but lowered interest to 6%
ISSUE WON a contractor with an expired license is entitled to be paid for completed projects
RULING A contractor with an expired license is entitled payment for completed projects, but does not
exonerate him from corresponding fines thereof. Section 35 of R.A. No. 4566 explicitly provides:
SEC. 35. Penalties. Any contractor who, for a price, commission, fee or wage, submits or attempts
to submit a bid to construct, or contracts to or undertakes to construct, or assumes charge in a
supervisory capacity of a construction work within the purview of this Act, without first securing a
license to engage in the business of contracting in this country; or who shall present or file the
license certificate of another, give false evidence of any kind to the Board, or any member thereof in
obtaining a certificate or license, impersonate another, or use an expired or revoked certificate or
license, shall be deemed guilty of misdemeanor, and shall, upon conviction, be sentenced to pay a
fine of not less than five hundred pesos but not more than five thousand pesos. The "plain meaning
rule" or verba legis in statutory construction is that if the statute is clear, plain and free from
ambiguity, it must be given its literal meaning and applied without interpretation. The wordings of
R.A. No. 4566 are clear. It does not declare, expressly or impliedly, as void contracts entered into by
a contractor whose license had already expired. Nonetheless, such contractor is liable for payment
of the fine prescribed therein. Thus, respondent should be paid for the projects he completed. Such
payment, however, is without prejudice to the payment of the fine prescribed under the law.

EN BANC

G.R. No. 135306 January 28, 2003

MVRS PUBLICATIONS, INC., MARS C. LACONSAY, MYLA C. AGUJA and AGUSTINO G. BINEGAS,
JR.,petitioners,
vs.
ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES, INC., ABDULRAHMAN R.T. LINZAG, IBRAHIM F.P.
ARCILLA, ABDUL RASHID DE GUZMAN, AL-FARED DA SILVA and IBRAHIM B.A. JUNIO, respondents.

BELLOSILLO, J.:

I may utterly detest what you write, but I shall fight to the death to make it possible for you to continue writing
it.

Voltaire

VOLTAIRE'S PONTIFICAL VERSE bestirs once again the basic liberties to free speech and free press liberties
that belong as well, if not more, to those who question, who do not conform, who differ. For the ultimate good which
we all strive to achieve for ourselves and our posterity can better be reached by a free exchange of ideas, where the
best test of truth is the power of the thought to get itself accepted in the competition of the free market not just the
ideas we desire, but including those thoughts we despise. 1

ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES, INC., a local federation of more than seventy (70) Muslim
religious organizations, and individual Muslims ABDULRAHMAN R.T. LINZAG, IBRAHIM F.P. ARCILLA, ABDUL
RASHID DE GUZMAN, AL-FARED DA SILVA and IBRAHIM B.A. JUNIO, filed in the Regional Trial Court of Manila a
complaint for damages in their own behalf and as a class suit in behalf of the Muslim members nationwide against
MVRS PUBLICATIONS, INC., MARS C. LACONSAY, MYLA C. AGUJA and AGUSTINO G. BINEGAS, JR., arising
from an article published in the 1 August 1992 issue of Bulgar, a daily tabloid. The article reads:

"ALAM BA NINYO?

Na ang mga baboy at kahit anong uri ng hayop sa Mindanao ay hindi kinakain ng mga Muslim?

Para sa kanila ang mga ito ay isang sagradong bagay. Hindi nila ito kailangang kainin kahit na sila pa ay
magutom at mawalan ng ulam sa tuwing sila ay kakain. Ginagawa nila itong Diyos at sinasamba pa nila ito
sa tuwing araw ng kanilang pangingilin lalung-lalo na sa araw na tinatawag nilang 'Ramadan'."

The complaint alleged that the libelous statement was insulting and damaging to the Muslims; that these words
alluding to the pig as the God of the Muslims was not only published out of sheer ignorance but with intent to hurt the
feelings, cast insult and disparage the Muslims and Islam, as a religion in this country, in violation of law, public
policy, good morals and human relations; that on account of these libelous words Bulgar insulted not only the
Muslims in the Philippines but the entire Muslim world, especially every Muslim individual in non-Muslim countries.

MVRS PUBLICATIONS, INC., and AGUSTINO G. BINEGAS, JR., in their defense, contended that the article did not
mention respondents as the object of the article and therefore were not entitled to damages; and, that the article was
merely an expression of belief or opinion and was published without malice nor intention to cause damage, prejudice
or injury to Muslims.2

On 30 June 1995 the trial court dismissed the complaint holding that the plaintiffs failed to establish their cause of
action since the persons allegedly defamed by the article were not specifically identified

It must be noted that the persons allegedly defamed, the herein plaintiffs, were not identified with specificity.
The subject article was directed at the Muslims without mentioning or identifying the herein plaintiffs x x x. It
is thus apparent that the alleged libelous article refers to the larger collectivity of Muslims for which the
readers of the libel could not readily identify the personalities of the persons defamed. Hence, it is difficult for
an individual Muslim member to prove that the defamatory remarks apply to him. The evidence presented in
this case failed to convince this court that, indeed, the defamatory remarks really applied to the herein
plaintiffs.3

On 27 August 1998 the Court of Appeals reversed the decision of the trial court. It opined that it was "clear from the
disputed article that the defamation was directed to all adherents of the Islamic faith. It stated that pigs were sacred
and idolized as god by members of the Muslim religion. This libelous imputation undeniably applied to the plaintiff-
appellants who are Muslims sharing the same religious beliefs." It added that the suit for damages was a "class suit"
and that ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES, INC.'s religious status as a Muslim umbrella
organization gave it the requisite personality to sue and protect the interests of all Muslims.4

Hence, the instant petition for review assailing the findings of the appellate court (a) on the existence of the elements
of libel, (b) the right of respondents to institute the class suit, and, (c) the liability of petitioners for moral damages,
exemplary damages, attorney's fees and costs of suit.

Defamation, which includes libel and slander, means the offense of injuring a person's character, fame or reputation
through false and malicious statements.5 It is that which tends to injure reputation or to diminish the esteem, respect,
good will or confidence in the plaintiff or to excite derogatory feelings or opinions about the plaintiff. 6 It is the
publication of anything which is injurious to the good name or reputation of another or tends to bring him into
disrepute.7 Defamation is an invasion of a relational interest since it involves the opinion which others in the
community may have, or tend to have, of the plaintiff.8

It must be stressed that words which are merely insulting are not actionable as libel or slander per se, and mere
words of general abuse however opprobrious, ill-natured, or vexatious, whether written or spoken, do not constitute a
basis for an action for defamation in the absence of an allegation for special damages.9 The fact that the language is
offensive to the plaintiff does not make it actionable by itself. 10

Declarations made about a large class of people cannot be interpreted to advert to an identified or identifiable
individual. Absent circumstances specifically pointing or alluding to a particular member of a class, no member of
such class has a right of action11 without at all impairing the equally demanding right of free speech and expression,
as well as of the press, under the Bill of Rights.12 Thus, in Newsweek, Inc. v. Intermediate Appellate Court,13 we
dismissed a complaint for libel against Newsweek, Inc., on the ground that private respondents failed to state a cause
of action since they made no allegation in the complaint that anything contained in the article complained of
specifically referred to any of them. Private respondents, incorporated associations of sugarcane planters in Negros
Occidental claiming to have 8,500 members and several individual members, filed a class action suit for damages in
behalf of all sugarcane planters in Negros Occidental. The complaint filed in the Court of First Instance of Bacolod
City alleged that Newsweek, Inc., committed libel against them by the publication of the article "Island of Fear" in its
weekly newsmagazine allegedly depicting Negros Province as a place dominated by wealthy landowners and sugar
planters who not only exploited the impoverished and underpaid sugarcane workers but also brutalized and killed
them with impunity. Private respondents alleged that the article showed a deliberate and malicious use of falsehood,
slanted presentation and/or misrepresentation of facts intended to put the sugarcane planters in a bad light, expose
them to public ridicule, discredit and humiliation in the Philippines and abroad, and make them the objects of hatred,
contempt and hostility of their agricultural workers and of the public in general. We ratiocinated

x x x where the defamation is alleged to have been directed at a group or class, it is essential that the
statement must be so sweeping or all-embracing as to apply to every individual in that group or class, or
sufficiently specific so that each individual in the class or group can prove that the defamatory statement
specifically pointed to him, so that he can bring the action separately, if need be x x x x The case at bar is
not a class suit. It is not a case where one or more may sue for the benefit of all, or where the representation
of class interest affected by the judgment or decree is indispensable to make each member of the class an
actual party. We have here a case where each of the plaintiffs has a separate and distinct reputation in the
community. They do not have a common or general interest in the subject matter of the controversy.

In the present case, there was no fairly identifiable person who was allegedly injured by the Bulgar article. Since the
persons allegedly defamed could not be identifiable, private respondents have no individual causes of action; hence,
they cannot sue for a class allegedly disparaged. Private respondents must have a cause of action in common with
the class to which they belong to in order for the case to prosper.

An individual Muslim has a reputation that is personal, separate and distinct in the community. Each Muslim, as part
of the larger Muslim community in the Philippines of over five (5) million people, belongs to a different trade and
profession; each has a varying interest and a divergent political and religious view some may be conservative,
others liberal. A Muslim may find the article dishonorable, even blasphemous; others may find it as an opportunity to
strengthen their faith and educate the non-believers and the "infidels." There is no injury to the reputation of the
individual Muslims who constitute this community that can give rise to an action for group libel. Each reputation is
personal in character to every person. Together, the Muslims do not have a single common reputation that will give
them a common or general interest in the subject matter of the controversy.

In Arcand v. The Evening Call Publishing Company,14 the United States Court of Appeals held that one guiding
principle of group libel is that defamation of a large group does not give rise to a cause of action on the part of an
individual unless it can be shown that he is the target of the defamatory matter.

The rule on libel has been restrictive. In an American case, 15 a person had allegedly committed libel against all
persons of the Jewish religion. The Court held that there could be no libel against an extensive community in
common law. In an English case, where libel consisted of allegations of immorality in a Catholic nunnery, the Court
considered that if the libel were on the whole Roman Catholic Church generally, then the defendant must be
absolved.16 With regard to the largest sectors in society, including religious groups, it may be generally concluded that
no criminal action at the behest of the state, or civil action on behalf of the individual, will lie.

In another case, the plaintiffs claimed that all Muslims, numbering more than 600 million, were defamed by the airing
of a national television broadcast of a film depicting the public execution of a Saudi Arabian princess accused of
adultery, and alleging that such film was "insulting and defamatory" to the Islamic religion.17 The United States District
Court of the Northern District of California concluded that the plaintiffs' prayer for $20 Billion in damages arising from
"an international conspiracy to insult, ridicule, discredit and abuse followers of Islam throughout the world, Arabs and
the Kingdom of Saudi Arabia" bordered on the "frivolous," ruling that the plaintiffs had failed to demonstrate an
actionable claim for defamation. The California Court stressed that the aim of the law on defamation was to protect
individuals; a group may be sufficiently large that a statement concerning it could not defame individual group
members.18

Philip Wittenberg, in his book "Dangerous Words: A Guide to the Law of Libel,"19 discusses the inappropriateness of
any action for tortious libel involving large groups, and provides a succinct illustration:

There are groupings which may be finite enough so that a description of the body is a description of the
members. Here the problem is merely one of evaluation. Is the description of the member implicit in the
description of the body, or is there a possibility that a description of the body may consist of a variety of
persons, those included within the charge, and those excluded from it?

A general charge that the lawyers in the city are shysters would obviously not be a charge that all of the
lawyers were shysters. A charge that the lawyers in a local point in a great city, such as Times Square in
New York City, were shysters would obviously not include all of the lawyers who practiced in that district; but
a statement that all of the lawyers who practiced in a particular building in that district were shysters would
be a specific charge, so that any lawyer having an office within that building could sue.

If the group is a very large one, then the alleged libelous statement is considered to have no application to anyone in
particular, since one might as well defame all mankind. Not only does the group as such have no action; the plaintiff
does not establish any personal reference to himself.20 At present, modern societal groups are both numerous and
complex. The same principle follows with these groups: as the size of these groups increases, the chances for
members of such groups to recover damages on tortious libel become elusive. This principle is said to embrace two
(2) important public policies: first, where the group referred to is large, the courts presume that no reasonable reader
would take the statements as so literally applying to each individual member; and second, the limitation on liability
would satisfactorily safeguard freedom of speech and expression, as well as of the press, effecting a sound
compromise between the conflicting fundamental interests involved in libel cases. 21

In the instant case, the Muslim community is too vast as to readily ascertain who among the Muslims were
particularly defamed. The size of the group renders the reference as indeterminate and generic as a similar attack on
Catholics, Protestants, Buddhists or Mormons would do. The word "Muslim" is descriptive of those who are believers
of Islam, a religion divided into varying sects, such as the Sunnites, the Shiites, the Kharijites, the Sufis and others
based upon political and theological distinctions. "Muslim" is a name which describes only a general segment of the
Philippine population, comprising a heterogeneous body whose construction is not so well defined as to render it
impossible for any representative identification.

The Christian religion in the Philippines is likewise divided into different sects: Catholic, Baptist, Episcopalian,
Presbyterian, Lutheran, and other groups the essence of which may lie in an inspired charlatan, whose temple may
be a corner house in the fringes of the countryside. As with the Christian religion, so it is with other religions that
represent the nation's culturally diverse people and minister to each one's spiritual needs. The Muslim population
may be divided into smaller groups with varying agenda, from the prayerful conservative to the passionately radical.
These divisions in the Muslim population may still be too large and ambiguous to provide a reasonable inference to
any personality who can bring a case in an action for libel.

The foregoing are in essence the same view scholarly expressed by Mr. Justice Reynato S. Puno in the course of the
deliberations in this case. We extensively reproduce hereunder his comprehensive and penetrating discussion on
group libel

Defamation is made up of the twin torts of libel and slander the one being, in general, written, while the
other in general is oral. In either form, defamation is an invasion of the interest in reputation and good name.
This is a "relational interest" since it involves the opinion others in the community may have, or tend to have
of the plaintiff.

The law of defamation protects the interest in reputation the interest in acquiring, retaining and enjoying
one's reputation as good as one's character and conduct warrant. The mere fact that the plaintiff's feelings
and sensibilities have been offended is not enough to create a cause of action for defamation. Defamation
requires that something be communicated to a third person that may affect the opinion others may have of
the plaintiff. The unprivileged communication must be shown of a statement that would tend to hurt plaintiff's
reputation, to impair plaintiff's standing in the community.

Although the gist of an action for defamation is an injury to reputation, the focus of a defamation action is
upon the allegedly defamatory statement itself and its predictable effect upon third persons. A statement is
ordinarily considered defamatory if it "tend[s] to expose one to public hatred, shame, obloquy, contumely,
odium, contempt, ridicule, aversion, ostracism, degradation or disgracex x x." The Restatement of Torts
defines a defamatory statement as one that "tends to so harm the reputation of another as to lower him in
the estimation of the community or to deter third persons from associating or dealing with him."

Consequently as a prerequisite to recovery, it is necessary for the plaintiff to prove as part of his prima
faciecase that the defendant (1) published a statement that was (2) defamatory (3) of and concerning the
plaintiff.

The rule in libel is that the action must be brought by the person against whom the defamatory charge has
been made. In the American jurisdiction, no action lies by a third person for damages suffered by reason of
defamation of another person, even though the plaintiff suffers some injury therefrom. For recovery in
defamation cases, it is necessary that the publication be "of and concerning the plaintiff." Even when a
publication may be clearly defamatory as to somebody, if the words have no personal application to the
plaintiff, they are not actionable by him. If no one is identified, there can be no libel because no one's
reputation has been injured x x x x

In fine, in order for one to maintain an action for an alleged defamatory statement, it must appear that the
plaintiff is the person with reference to whom the statement was made. This principle is of vital importance in
cases where a group or class is defamed since, usually, the larger the collective, the more difficult it is for an
individual member to show that he was the person at whom the defamation was directed.
If the defamatory statements were directed at a small, restricted group of persons, they applied to any
member of the group, and an individual member could maintain an action for defamation. When the
defamatory language was used toward a small group or class, including every member, it has been held that
the defamatory language referred to each member so that each could maintain an action. This small group
or class may be a jury, persons engaged in certain businesses, professions or employments, a restricted
subdivision of a particular class, a society, a football team, a family, small groups of union officials, a board
of public officers, or engineers of a particular company.

In contrast, if defamatory words are used broadly in respect to a large class or group of persons, and there
is nothing that points, or by proper colloquium or innuendo can be made to apply, to a particular member of
the class or group, no member has a right of action for libel or slander. Where the defamatory matter had no
special, personal application and was so general that no individual damages could be presumed, and where
the class referred to was so numerous that great vexation and oppression might grow out of the multiplicity
of suits, no private action could be maintained. This rule has been applied to defamatory publications
concerning groups or classes of persons engaged in a particular business, profession or employment,
directed at associations or groups of association officials, and to those directed at miscellaneous groups or
classes of persons.

Distinguishing a small group which if defamed entitles all its members to sue from a large group which
if defamed entitles no one to sue is not always so simple. Some authorities have noted that in cases
permitting recovery, the group generally has twenty five (25) or fewer members. However, there is usually
no articulated limit on size. Suits have been permitted by members of fairly large groups when some
distinguishing characteristic of the individual or group increases the likelihood that the statement could be
interpreted to apply individually. For example, a single player on the 60 to 70 man Oklahoma University
football team was permitted to sue when a writer accused the entire team of taking amphetamines to "hop
up" its performance; the individual was a fullback, i.e., a significant position on the team and had played in
all but two of the team's games.

A prime consideration, therefore, is the public perception of the size of the group and whether a statement
will be interpreted to refer to every member. The more organized and cohesive a group, the easier it is to tar
all its members with the same brush and the more likely a court will permit a suit from an individual even if
the group includes more than twenty five (25) members. At some point, however, increasing size may be
seen to dilute the harm to individuals and any resulting injury will fall beneath the threshold for a viable
lawsuit.

x x x x There are many other groupings of men than those that are contained within the foregoing group
classifications. There are all the religions of the world, there are all the political and ideological beliefs; there
are the many colors of the human race. Group defamation has been a fertile and dangerous weapon of
attack on various racial, religious and political minorities. Some states, therefore, have passed statutes to
prevent concerted efforts to harass minority groups in the United States by making it a crime to circulate
insidious rumors against racial and religious groups. Thus far, any civil remedy for such broadside
defamation has been lacking.

There have been numerous attempts by individual members to seek redress in the courts for libel on these
groups, but very few have succeeded because it felt that the groups are too large and poorly defined to
support a finding that the plaintiff was singled out for personal attack x x x x (citations omitted).

Our conclusion therefore is that the statements published by petitioners in the instant case did not specifically identify
nor refer to any particular individuals who were purportedly the subject of the alleged libelous publication.
Respondents can scarcely claim to having been singled out for social censure pointedly resulting in damages.

A contrary view is expressed that what is involved in the present case is an intentional tortious act causing mental
distress and not an action for libel. That opinion invokes Chaplinsky v. New Hampshire22 where the U.S. Supreme
Court held that words heaping extreme profanity, intended merely to incite hostility, hatred or violence, have no social
value and do not enjoy constitutional protection; and Beauharnais v. Illinois23 where it was also ruled that hate speech
which denigrates a group of persons identified by their religion, race or ethnic origin defames that group and the law
may validly prohibit such speech on the same ground as defamation of an individual.
We do not agree to the contrary view articulated in the immediately preceding paragraph. Primarily, an "emotional
distress" tort action is personal in nature, i.e., it is a civil action filed by an individual24 to assuage the injuries to his
emotional tranquility due to personal attacks on his character. It has no application in the instant case since no
particular individual was identified in the disputed article of Bulgar. Also, the purported damage caused by the article,
assuming there was any, falls under the principle of relational harm which includes harm to social relationships in
the community in the form of defamation; as distinguished from the principle of reactive harm which includes
injuries to individual emotional tranquility in the form of an infliction of emotional distress. In their complaint,
respondents clearly asserted an alleged harm to the standing of Muslims in the community, especially to their
activities in propagating their faith in Metro Manila and in other non-Muslim communities in the country.25 It is thus
beyond cavil that the present case falls within the application of the relational harm principle of tort actions for
defamation, rather than the reactive harm principle on which the concept of emotional distress properly belongs.

Moreover, under the Second Restatement of the Law, to recover for the intentional infliction of emotional distress the
plaintiff must show that: (a) The conduct of the defendant was intentional or in reckless disregard of the plaintiff; (b)
The conduct was extreme and outrageous; (c) There was a causal connection between the defendant's conduct and
the plaintiff's mental distress; and, (d) The plaintiff's mental distress was extreme and severe. 26

"Extreme and outrageous conduct" means conduct that is so outrageous in character, and so extreme in degree, as
to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in civilized
society. The defendant's actions must have been so terrifying as naturally to humiliate, embarrass or frighten the
plaintiff.27 Generally, conduct will be found to be actionable where the recitation of the facts to an average member of
the community would arouse his resentment against the actor, and lead him or her to exclaim, "Outrageous!" as his
or her reaction.28

"Emotional distress" means any highly unpleasant mental reaction such as extreme grief, shame, humiliation,
embarrassment, anger, disappointment, worry, nausea, mental suffering and anguish, shock, fright, horror, and
chagrin.29 "Severe emotional distress," in some jurisdictions, refers to any type of severe and disabling emotional or
mental condition which may be generally recognized and diagnosed by professionals trained to do so, including
posttraumatic stress disorder, neurosis, psychosis, chronic depression, or phobia. 30 The plaintiff is required to show,
among other things, that he or she has suffered emotional distress so severe that no reasonable person could be
expected to endure it; severity of the distress is an element of the cause of action, not simply a matter of damages.31

Any party seeking recovery for mental anguish must prove more than mere worry, anxiety, vexation, embarrassment,
or anger. Liability does not arise from mere insults, indignities, threats, annoyances, petty expressions, or other
trivialities. In determining whether the tort of outrage had been committed, a plaintiff is necessarily expected and
required to be hardened to a certain amount of criticism, rough language, and to occasional acts and words that are
definitely inconsiderate and unkind; the mere fact that the actor knows that the other will regard the conduct as
insulting, or will have his feelings hurt, is not enough.32

Hustler Magazine v. Falwell33 illustrates the test case of a civil action for damages on intentional infliction of emotional
distress. A parody appeared in Hustler magazine featuring the American fundamentalist preacher and evangelist
Reverend Jerry Falwell depicting him in an inebriated state having an incestuous, sexual liaison with his mother in an
outhouse. Falwell sued Hustler and its publisher Larry Flynt for damages. The United States District Court for the
Western District of Virginia ruled that the parody was not libelous, because no reasonable reader would have
understood it as a factual assertion that Falwell engaged in the act described. The jury, however, awarded $200,000
in damages on a separate count of "intentional infliction of emotional distress," a cause of action that did not require a
false statement of fact to be made. The United States Supreme Court in a unanimous decision overturned the jury
verdict of the Virginia Court and held that Reverend Falwell may not recover for intentional infliction of emotional
distress. It was argued that the material might be deemed outrageous and may have been intended to cause severe
emotional distress, but these circumstances were not sufficient to overcome the free speech rights guaranteed under
the First Amendment of the United States Constitution. Simply stated, an intentional tort causing emotional distress
must necessarily give way to the fundamental right to free speech.

It must be observed that although Falwell was regarded by the U.S. High Court as a "public figure," he was
an individual particularly singled out or identified in the parody appearing on Hustler magazine. Also, the emotional
distress allegedly suffered by Reverend Falwell involved a reactive interest an emotional response to the parody
which supposedly injured his psychological well-being.
Verily, our position is clear that the conduct of petitioners was not extreme or outrageous. Neither was the emotional
distress allegedly suffered by respondents so severe that no reasonable person could be expected to endure it.
There is no evidence on record that points to that result.

Professor William Prosser, views tort actions on intentional infliction of emotional distress in this manner34

There is virtually unanimous agreement that such ordinary defendants are not liable for mere insult,
indignity, annoyance, or even threats, where the case is lacking in other circumstances of aggravation. The
reasons are not far to seek. Our manners, and with them our law, have not yet progressed to the point
where we are able to afford a remedy in the form of tort damages for all intended mental disturbance.
Liability of course cannot be extended to every trivial indignity x x x x The plaintiff must necessarily be
expected and required to be hardened to a certain amount of rough language, and to acts that are definitely
inconsiderate and unkind x x x The plaintiff cannot recover merely because of hurt feelings.

Professor Calvert Magruder reinforces Prosser with this succinct observation, viz:35

There is no occasion for the law to intervene in every case where someone's feelings are hurt. There must
still be freedom to express an unflattering opinion, and some safety valve must be left through which
irascible tempers may blow off relatively harmless steam.

Thus, it is evident that even American courts are reluctant to adopt a rule of recovery for emotional harm that would
"open up a wide vista of litigation in the field of bad manners," an area in which a "toughening of the mental hide" was
thought to be a more appropriate remedy.36 Perhaps of greater concern were the questions of causation, proof, and
the ability to accurately assess damages for emotional harm, each of which continues to concern courts today.37

In this connection, the doctrines in Chaplinsky and Beauharnais had largely been superseded by subsequent First
Amendment doctrines. Back in simpler times in the history of free expression the Supreme Court appeared to
espouse a theory, known as the Two-Class Theory, that treated certain types of expression as taboo forms of
speech, beneath the dignity of the First Amendment. The most celebrated statement of this view was expressed
in Chaplinsky:

There are certain well-defined and narrowly limited classes of speech, the prevention and punishment of
which have never been thought to raise any Constitutional problem. These include the lewd and obscene,
the profane, the libelous, and the insulting or "fighting" words those which by their very utterance inflict
injury or tend to incite an immediate breach of the peace. It has been well observed that such utterances are
no essential part of any exposition of ideas, and are of such slight social value as a step to truth that any
benefit that may be derived from them is clearly outweighed by the social interest in order and morality.

Today, however, the theory is no longer viable; modern First Amendment principles have passed it by. American
courts no longer accept the view that speech may be proscribed merely because it is "lewd," "profane," "insulting" or
otherwise vulgar or offensive.38 Cohen v. California39 is illustrative: Paul Robert Cohen wore a jacket bearing the
words "Fuck the Draft" in a Los Angeles courthouse in April 1968, which caused his eventual arrest. Cohen was
convicted for violating a California statute prohibiting any person from "disturb[ing] the peace x x x by offensive
conduct." The U.S. Supreme Court conceded that Cohen's expletive contained in his jacket was "vulgar," but it
concluded that his speech was nonetheless protected by the right to free speech. It was neither considered an
"incitement" to illegal action nor "obscenity." It did not constitute insulting or "fighting" words for it had not been
directed at a person who was likely to retaliate or at someone who could not avoid the message. In other words, no
one was present in the Los Angeles courthouse who would have regarded Cohen's speech as a direct personal
insult, nor was there any danger of reactive violence against him.

No specific individual was targeted in the allegedly defamatory words printed on Cohen's jacket. The conviction could
only be justified by California's desire to exercise the broad power in preserving the cleanliness of discourse in the
public sphere, which the U.S. Supreme Court refused to grant to the State, holding that no objective distinctions can
be made between vulgar and nonvulgar speech, and that the emotive elements of speech are just as essential in the
exercise of this right as the purely cognitive. As Mr. Justice Harlan so eloquently wrote: "[O]ne man's vulgarity is
another man's lyric x x x words are often chosen as much for their emotive as their cognitive force." 40 With Cohen, the
U.S. Supreme Court finally laid the Constitutional foundation for judicial protection of provocative and potentially
offensive speech.
Similarly, libelous speech is no longer outside the First Amendment protection. Only one small piece of the Two-
Class Theory in Chaplinsky survives U.S. courts continue to treat "obscene" speech as not within the protection of
the First Amendment at all. With respect to the "fighting words" doctrine, while it remains alive it was modified by the
current rigorous clear and present danger test.41 Thus, in Cohen the U.S. Supreme Court in applying the test held that
there was no showing that Cohen's jacket bearing the words "Fuck the Draft" had threatened to provoke imminent
violence; and that protecting the sensibilities of onlookers was not sufficiently compelling interest to restrain Cohen's
speech.

Beauharnais, which closely followed the Chaplinsky doctrine, suffered the same fate as Chaplinsky. Indeed,
when Beauharnais was decided in 1952, the Two-Class Theory was still flourishing. While concededly the U.S. High
Tribunal did not formally abandon Beauharnais, the seminal shifts in U.S. constitutional jurisprudence substantially
undercut Beauharnais and seriously undermined what is left of its vitality as a precedent. Among the cases that dealt
a crushing impact on Beauharnais and rendered it almost certainly a dead letter case law are Brandenburg v.
Ohio,42 and, again, Cohen v. California.43 These decisions recognize a much narrower set of permissible grounds for
restricting speech than did Beauharnais.44

In Brandenburg, appellant who was a leader of the Ku Klux Klan was convicted under the Ohio Criminal Syndicalism
Statute for advocating the necessity, duty and propriety of crime, sabotage, violence, or unlawful methods of terrorism
as a means of accomplishing industrial or political reforms; and for voluntarily assembling with a group formed to
teach or advocate the doctrines of criminal syndicalism. Appellant challenged the statute and was sustained by the
U.S. Supreme Court, holding that the advocacy of illegal action becomes punishable only if such advocacy is directed
to inciting or producing imminent lawless action and is likely to incite or produce such action.45Except in unusual
instances, Brandenburg protects the advocacy of lawlessness as long as such speech is not translated into action.

The importance of the Brandenburg ruling cannot be overemphasized. Prof. Smolla affirmed that "Brandenburgmust
be understood as overruling Beauharnais and eliminating the possibility of treating group libel under the same First
Amendment standards as individual libel."46 It may well be considered as one of the lynchpins of the modern doctrine
of free speech, which seeks to give special protection to politically relevant speech.

In any case, respondents' lack of cause of action cannot be cured by the filing of a class suit. As correctly pointed out
by Mr. Justice Jose C. Vitug during the deliberations, "an element of a class suit is the adequacy of representation. In
determining the question of fair and adequate representation of members of a class, the court must consider (a)
whether the interest of the named party is coextensive with the interest of the other members of the class; (b) the
proportion of those made parties as it so bears to the total membership of the class; and, (c) any other factor bearing
on the ability of the named party to speak for the rest of the class. 47

The rules require that courts must make sure that the persons intervening should be sufficiently numerous to fully
protect the interests of all concerned. In the present controversy, Islamic Da'wah Council of the Philippines, Inc.,
seeks in effect to assert the interests not only of the Muslims in the Philippines but of the whole Muslim world as well.
Private respondents obviously lack the sufficiency of numbers to represent such a global group; neither have they
been able to demonstrate the identity of their interests with those they seek to represent. Unless it can be shown that
there can be a safe guaranty that those absent will be adequately represented by those present, a class suit, given its
magnitude in this instance, would be unavailing." 48

Likewise on the matter of damages, we agree that "moral damages may be recovered only if the plaintiff is able to
satisfactorily prove the existence of the factual basis for the damages and its causal connection with the acts
complained of,49 and so it must be, as moral damages although incapable of pecuniary estimation are designed not to
impose a penalty but to compensate for injury sustained and actual damages suffered.50 Exemplary damages, on the
other hand, may only be awarded if claimant is able to establish his right to moral, temperate, liquidated or
compensatory damages.51 Unfortunately, neither of the requirements to sustain an award for either of these damages
would appear to have been adequately established by respondents."

In a pluralistic society like the Philippines where misinformation about another individual's religion is as commonplace
as self-appointed critics of government, it would be more appropriate to respect the fair criticism of religious
principles, including those which may be outrageously appalling, immensely erroneous, or those couched as fairly
informative comments. The greater danger in our society is the possibility that it may encourage the frequency of
suits among religious fundamentalists, whether Christian, Muslim, Hindu, Buddhist, Jewish, or others. This would
unnecessarily make the civil courts a battleground to assert their spiritual ideas, and advance their respective
religious agenda.
It need not be stressed that this Court has no power to determine which is proper religious conduct or belief; neither
does it have the authority to rule on the merits of one religion over another, nor declare which belief to uphold or cast
asunder, for the validity of religious beliefs or values are outside the sphere of the judiciary. Such matters are better
left for the religious authorities to address what is rightfully within their doctrine and realm of influence. Courts must
be viewpoint-neutral when it comes to religious matters if only to affirm the neutrality principle of free speech rights
under modern jurisprudence where "[a]ll ideas are treated equal in the eyes of the First Amendment even those
ideas that are universally condemned and run counter to constitutional principles."52 Under the right to free speech,
"there is no such thing as a false idea. However pernicious an opinion may seem, we depend for its correction not on
the conscience of judges and juries but on the competition of other ideas."53 Denying certiorari and affirming the
appellate court decision would surely create a chilling effect on the constitutional guarantees of freedom of speech, of
expression, and of the press.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated 27 August 1998 is
REVERSED and SET ASIDE, and the Decision of the RTC-Br. 4, Manila, dismissing the complaint for lack of merit, is
REINSTATED and AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Davide, Jr., C .J ., Puno, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Corona and Callejo, Sr., JJ ., concur.
Mendoza, J ., in the result.
Vitug, J ., see concurring opinion.
Panganiban, J ., joins the dissenting opinion of Justice A.T. Carpio.
Carpio, J ., see dissenting opinion.
Austria-Martinez, J ., see dissenting opinion.
Carpio-Morales, J ., joins the dissenting opinion of Justice A.T. Carpio.
Azcuna, J ., joins the dissenting opinion of Justice Austria-Martinez.

Separate Opinions

VITUG, J ., concurring:

The innate right of a person to an unimpaired reputation and good name is no less a constitutional imperative than
that which protects his life, liberty or property. Thus, the law imposes upon him who attacks another's reputation, by
slanderous words or libelous publication, a liability to make compensation for the injury done and the damages
sustained.1

Private respondent Islamic Da'wah Council of the Philippines, Inc., a federation of more than 70 Muslim religious
organizations in the country, and the other named respondents all claim, with understandable indignation, that they
have been defamed by an item published by petitioners in Bulgar, a tabloid, circulated in the Metro Manila area. The
article reads:

"ALAM BA NINYO?

"Na ang mga baboy at kahit anong uri ng hayop sa Mindanao ay hindi kinakain ng mga Muslim?

"Para sa kanila ang mga ito ay isang sagradong bagay. Hindi nila ito kailangang kainin kahit na sila pa ay
magutom at mawalan ng ulam sa tuwing sila ay kakain. Ginagawa nila itong Diyos at sinasamba pa nila ito
sa tuwing araw ng kanilang pangingilin lalung-lalo na sa araw na tinatawag nilang 'Ramadan'."

Private respondents, for themselves and in behalf of all Muslims, filed the complaint before the trial court against
petitioners, alleging that the published article was defamatory and an insult to respondents. The trial court dismissed
the complaint. On appeal, the Court of Appeals reversed the decision of the lower court and ordered petitioners to
pay damages to private respondents.
Aggrieved, petitioners are now before the Court to assail the findings of the Court of Appeals on the existence of the
elements of libel, the right of respondents to institute the class suit, and the liability of petitioners for moral damages,
exemplary damages, attorney's fees and costs of suit.

The present controversy stems from a civil action for damages and not from a criminal complaint. The Civil Code
recognizes the possibility of such a civil action either pursuant to Article 26, paragraph (4), to the effect that although
it may not constitute a criminal offense, "vexing or humiliating another on account of his religious beliefs, lowly station
in life, place of birth, physical defect, or other personal condition," can give rise to a cause of action for damages, or
consonantly with Article 33 which provides that in case of defamation, a civil complaint for damages, entirely separate
and distinct from the criminal case, may be brought by the injured party. Both civil actions are based on tort liability
under common law and require the plaintiff to establish that he has suffered personal damage or injury as a direct
consequence of the defendant's wrongful conduct. In fine, it must be shown that the act complained of is vexatious or
defamatory of, and as it pertains to, the claimant, thereby humiliating or besmirching the latter's dignity and honor.

Defined in simple terms, vexation is an act of annoyance or irritation that causes distress or agitation. 2 Early American
cases have refused all remedy for mental injury, such as one caused by vexation, because of the difficulty of proof or
of measurement of damages.3 In comparatively recent times, however, the infliction of mental distress as a basis for
an independent tort action has been recognized. It is said that "one who by extreme and outrageous conduct
intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional
distress."4 Nevertheless, it has also been often held that petty insult or indignity lacks, from its very nature, any
convincing assurance that the asserted emotional or mental distress is genuine, or that if genuine it is
serious.5 Accordingly, it is generally declared that there can be no recovery for insults, 6 indignities or threats7 which
are considered to amount to nothing more than mere annoyances or hurt feelings.8 At all events, it would be essential
to prove that personal damage is directly suffered by the plaintiff on account of the wrongful act of the defendant.

A kindred concept, albeit of greater degree of perversity, defamation, broadly defined, is an attack on the reputation
of another, the unprivileged publication of false statements which naturally and proximately result in injury to
another.9 It is that which tends to diminish the esteem, respect, goodwill or confidence in which a person is held, or to
excite adverse, derogatory or unpleasant feelings or opinions against him. 10 Defamation is an invasion of a "relational
interest" since it involves the opinion which others in the community may have, or tend to have, of the plaintiff.11 The
Revised Penal Code, although not the primary governing law in this instance, provides an instructive definition of libel
as being a form of defamation expressed in writing, print, pictures, or signs,12 to wit: "A libel is a public and malicious
imputation of a crime, or vice or defect, real or imaginary, or any act, omission, condition, status, or circumstance
tending to cause the dishonor, discredit, or contempt of a natural or juridical person, or to blacken the memory of one
who is dead."13

While arguably, the article subject of the complaint could be characterized as vexatious or defamatory and as
imparting an erroneous interpretation of a Muslim practice that tends to ridicule the Islamic faith, it is, however,
impersonal on its face, its language not being directed at any particular person but to a large segment of society. In
order that defamatory words can be actionable in court, it is essential that they are personal to the party maligned, an
ascertained or ascertainable individual.14 It is only then that plaintiff's emotions and/or reputation can be said to have
been injured; thus, the plaintiff, to recover, must show that he or she is the person to whom the statements are
directed.15 Declarations made about a large class of people cannot be interpreted to advert to an identified or
identifiable individual. Absent circumstances specifically pointing or alluding to a particular member of a class, no
member of such class has a right of action16 without at all impairing the equally demanding right of free speech and
expression, as well as of the press, under the bill of rights. 17

If an article, for instance, states that "judges in the Philippines are corrupt," such a general condemnation cannot
reasonably be interpreted to be pointing to each judge or to a certain judge in the Philippines. Thus, no particular
magistrate can claim to have been disgraced or to have sustained an impaired reputation because of that article. If,
on the other hand, the article proclaims that "judges in Metro Manila are corrupt," such statement of derogatory
conduct now refers to a relatively narrow group that might yet warrant its looking into in an appropriate suit. And if the
article accuses the "Justices of the Supreme Court" of corruption, then there is a specific derogatory statement about
a definite number of no more than fifteen persons.

Jurisprudence would appear to suggest that in cases permitting recovery, the group generally has 25 or fewer
members.18 When statements concern groups with larger composition, the individual members of that group would be
hardput to show that the statements are "of and concerning them." 19 Although no precise limits can be set as to the
size of a group or class that would be sufficiently small, increasing size, at some point, would be seen to dilute the
harm to individuals and any resulting injury would fall beneath the threshold for a viable lawsuit. 20 This principle is said
to embrace two important public policies: 1) where the group referred to is large, the courts presume that no
reasonable reader would take the statements as so literally applying to each individual member; and 2) the limitation
on liability would satisfactorily safeguard freedom of speech and expression, as well as of press, effecting a sound
compromise between the conflicting fundamental interests involved in libel cases. 21

Thus, no recovery was allowed where the remarks complained of had been made about correspondence schools,
one school suing;22 or where there was imputation of criminality to a union, one member suing;23 or where an attack
was made on Catholic clergymen, one clergyman suing. 24

In Newsweek, Inc., vs. Intermediate Appellate Court,25 this Court dismissed a class suit for scurrilous remarks filed by
four incorporated associations of sugar planters in Negros Occidental in behalf of all sugar planters in that province,
against Newsweek, Inc., on the ground, among other things, that the plaintiffs were not sufficiently ascribed to in the
article published by the defendant. And so also it was in an older case,26 where the Court ratiocinated that an article
directed at a class or group of persons in broad language would not be actionable by individuals composing the class
or group unless the statements were sweeping but, even then, it would be highly probable, said the Court, that no
action could lie "where the body is composed of so large a number of persons that common sense would tell those to
whom the publication was made that there was room for persons connected with the body to pursue an upright and
law abiding course and that it would be unreasonable and absurd to condemn all because of the actions of a part."

In the present case, the subject article relates to the entire Muslim population and not just to the Islamic Da'wah
Council of the Philippines or to any of the individual respondents. There is no direct reference or allusion to the
federation or any of its members, or to any of the individual complainants. Respondents scarcely can claim having
been singled out for social censure pointedly resulting in damages. Islamic Da'wah Council of the Philippines, Inc.,
itself, much like any other artificial being or juridical entity, having existence only in legal contemplation, would be
devoid of any such real feeling or emotion as ordinarily these terms are understood,27 and it cannot have that kind of
reputation that an individual has that could allow it to sue for damages based on impinged personal reputation. 28

WHEREFORE, I vote to GRANT the petition and to SET ASIDE the assailed decision of the Court of Appeals,
REINSTATING thereby the order of dismissal rendered by the Regional Trial Court.

Dissenting Opinion

CARPIO, J ., dissenting:

I dissent not because the newspaper article in question is libelous, but because it constitutes an intentional tortious
act causing mental distress to those whom private respondent Islamic Da'wah Council of the Philippines; Inc.
represents.

1. Nature of Action: Not a Libel but a Tort Case

Private respondents filed this class suit under Articles 19, 20, 21 and 26 of the Civil Code. Accordingly, private
respondents stated their case as follows:

"Statement of Case

The Civil Code of the Philippines provides:

'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. 19]

'Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the
latter for the same.' [Art. 20]
'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.' [Art. 21]

'Every person shall respect the dignity, personality, privacy and peace of mind of his neighbor and other
persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a
cause of action for damages, prevention and other relief:

(1) Prying into the privacy of another's residence;

(2) Meddling with or disturbing the private life or family relation of another;

(3) Intriguing to cause another to be alienated from his friends;

(4) Vexing or humiliating another on account of his religious belief, lowly station in life, place of
birth, physical defect, or other personal condition.' [Art. 26]

It is on account of the foregoing provisions of our Civil Code that plaintiffs brought to the court 'a quo' a civil
case for damages on account of a published article at the editorial section of the defendant newspaper x x
x."1

Petitioners acknowledge that private respondents' principal cause of action is based on tortious conduct when
petitioners state in their Petition that "[p]laintiffs rely heavily on Article 26 of the Civil Code particularly par. 4 thereof."
Petitioners, however, assert that the newspaper article in question has not caused mental anguish, wounded feelings,
moral shock, social humiliation or similar injury to private respondents. 2

Clearly, the instant case is not about libel which requires the identification of the plaintiff in the libelous statement. If
this were a libel case under Article 303 of the Civil Code, which authorizes a separate civil action to recover civil
liability arising from a criminal offense, I would agree that the instant case could not prosper for want of identification
of the private respondents as the libeled persons. But private respondents do not anchor their action on Article 30 of
the Civil Code.

Private respondents insist that this case is principally about tortious conduct under Article 26 of the Civil Code. Unlike
the action in Article 30 of the Civil Code which must arise from a "criminal offense," the action under Article 26 "may
not constitute a criminal offense." Article 26, adopted from American jurisprudence, covers several kinds of intentional
torts. Paragraph 4 of Article 26, which refers to acts humiliating another for his religious beliefs, is embraced in the
tort known as intentional infliction of mental or emotional distress. This case must be decided on the issue of whether
there was such tortious conduct, and not whether there was defamation that satisfied the elements of the crime of
libel.

II. The Tortious Act in Question

The newspaper article in question published by petitioners states as follows:

"ALAM BA NINYO?

Na ang mga baboy at kahit anong uri ng hayop sa Mindanao ay hindi kinakain ng mga Muslim? Para sa
kanila ang mga ito ay isang sagradong bagay. Hindi nila ito kailangang kainin kahit na sila pa ay magutom at
mawalan ng ulam sa tuwing sila kakain. Ginagawa nila itong Diyos at sinasamba pa nila ito sa tuwing araw
ng kanilang pangingilin lalung-lalo na sa araw na tinatawag nilang 'Ramadan'."

Private respondents claim that the newspaper article, which asserts that Muslims worship the pig as their god, was
published with intent to humiliate and disparage Muslims and cast insult on Islam as a religion in this country. The
publication is not only grossly false, but is also the complete opposite of what Muslims hold dear in their religion.

The trial court found that the newspaper article clearly imputes a disgraceful act on Muslims. However, the trial court
ruled that the article was not libelous because the article did not identify or name the plaintiffs. Declared the trial
court:
"There is no doubt that the subject article contains an imputation of a discreditable 4 act when it portrayed the
Muslims to be worshipping the pig as their god. Likewise, there is no doubt that the subject article was
published, the newspaper 'Bulgar' containing the same having been circulated in Metro Manila and in other
parts of the country.

The defendants did not dispute these facts x x x However, x x x identity of the person is not present.

It must be noted that the persons allegedly defamed, the herein plaintiffs were not identified with specificity.
The subject article was directed at the Muslims without mentioning or identifying the herein plaintiffs. x x x x."

In their appeal to the Court of Appeals, private respondents assailed the trial court for "deciding the case as a libel
case rather than a case for damages for violation of Articles 19, 20, 21 and 26 of the Civil Code." The Court of
Appeals reversed the decision of the trial court not on the basis of Articles 19, 20, 21 and 26, but on the ground that
the newspaper article was libelous. Thus, the Court of Appeals held:

"It is clear from the disputed article that the defamation was directed at all adherents of the Islamic faith. It
stated that pigs were sacred and idolized as god by members of the Muslim religion. This libelous imputation
undeniably applied to the plaintiffs-appellants who are Muslims sharing the same religious beliefs."

Thus, both the trial and appellate courts found the newspaper article in question insulting and humiliating to Muslims,
causing wounded feelings and mental anguish to believers of Islam. This is a finding of fact that the Court is duty
bound to respect.5 This finding of fact establishes that petitioners have inflicted on private respondents an intentional
wrongful act humiliating persons because of their religious beliefs. Like the trial and appellate courts, we find the
newspaper article in question dripping with extreme profanity, grossly offensive and manifestly outrageous, and
devoid of any social value. The article evidently incites religious hatred, discrimination and hostility against Muslims.

Private respondents have certainly suffered humiliation and mental distress because of their religious beliefs. The
only question is whether the wrongful act committed by petitioners, which does not constitute the crime of libel, is a
case of damnum absque injuria or an actionable tort under paragraph 4, Article 26 of the Civil Code.

III. Why Article 26 of the Civil Code was Enacted

The Code Commission explained the inclusion of Article 26 in the Civil Code in this wise:

"The present laws, criminal or civil, do not adequately cope with interferences and vexations mentioned in
Article 26.

The privacy of one's home is an inviolable right. Yet the laws in force do not squarely and effectively protect
this right.

The acts referred to in No. 2 are multifarious, and yet many of them are not within the purview of the law in
force. Alienation of the affection of another's wife or husband, unless it constituted adultery or concubinage,
is not condemned by the law, much as it may shock society. There are numerous acts, short of criminal
unfaithfulness, whereby the husband or the wife breaks the marital vows, thus causing untold moral
suffering to the other spouse. Why should not these acts be the subject matter of a civil action for damages?
In American law, they are.

Again, there is meddling of so-called friends who poison the mind of one or more members of the family
against the other members. In this manner many a happy family is broken up or estranged. Why should not
the law try to stop this by creating a civil action for damages?

Of the same nature is that class of acts specified in No. 3: intriguing to cause another to be alienated from
his friends.

No less serious are the acts mentioned in No. 4: vexing, or humiliating another on account of his religious
beliefs, lowly station in life, place of birth, physical defect or other personal condition. The penal laws against
defamation and unjust vexation are glaringly inadequate.
Religious freedom does not authorize anyone to heap obloquy and disrepute upon another by reason of the
latter's religion.

Not a few of the rich people treat the poor with contempt because of the latter's lowly station in life. To a
certain extent this is inevitable, from the nature of the social make-up, but there ought to be a limit
somewhere, even when the penal laws against defamation and unjust vexation are not transgressed. In a
democracy, such a limit must be established. The courts will recognize it in each case. Social equality is not
sought by the legal provision under consideration, but due regard for decency and propriety.

Place of birth, of physical defect and other personal conditions are too often the pretext of humiliation cast
upon other persons. Such tampering with human personality, even though the penal laws are not violated,
should be the cause of civil action.

The article under study denounces "similar acts" which could readily be named, for they occur with
unpleasant frequency."6 (Emphasis supplied)

The intent of the Code Commission is quite clear: Article 26 specifically applies to intentional acts which fall short of
being criminal offenses. Article 24 itself expressly refers to tortious conduct which "may not constitute criminal
offenses." The purpose is precisely to fill a gap or lacuna in the law where a person who suffers injury because of a
wrongful act not constituting a crime is left without any redress. Under Article 26, the person responsible for such act
becomes liable for "damages, prevention and other relief." In short, to preserve peace and harmony in the family and
in the community, Article 26 seeks to eliminate cases of damnum absque injuria in human relations.

Consequently, the elements that qualify the same acts as criminal offenses do not apply in determining responsibility
for tortious conduct under Article 26. Where the tortious act humiliating another because of his religious beliefs is
published in a newspaper, the elements of the crime of libel need not be satisfied before the aggrieved person can
recover damages under Article 26. In intentional tort under Article 26, the offensive statements may not even be
published or broadcasted but merely hurled privately at the offended party.

In intentional infliction of mental distress, the gravamen of the tort is not the injury to plaintiff's reputation, but the harm
to plaintiff's mental and emotional state. In libel, the gist of the action is the injury to plaintiff's reputation. Reputation is
the community's opinion of what a person is.7 In intentional infliction of mental distress, the opinion of the community
is immaterial to the existence of the action although the court can consider it in awarding damages. What is material
is the disturbance on the-mental or emotional state of the plaintiff who is entitled to peace of mind. The offensive act
or statement need not identify specifically the plaintiff as the object of the humiliation. What is important is that the
plaintiff actually suffers mental or emotional distress because he saw the act or read the statement and it alludes to
an identifiable group to which he clearly belongs.

If one of the petitioners, without specifically naming private respondents, hurled the same statement in private
separately to each of the private respondents, the act would be actionable under Article 26 because it would cause
mental distress to each private respondent. The fact that the statement was made publicly in fact makes matters
worse because the mental or emotional distress caused on private respondents would even be aggravated by the
publicity. This merely illustrates that the requirements of libel have no application in intentional torts under Article 26
where the impression of the public is immaterial while the impact on the mind or emotion of the offended party is all-
important. That is why in American jurisprudence the tort of intentional infliction of mental or emotional distress is
completely separate and distinct8 from the twin torts of libel and slander.9

The majority opinion, however, cites the U.S. Supreme Court decision in Hustler Magazine v. Falwell10 as authority
that a person "may not recover for intentional infliction of emotional distress arising from a publication unless the
publication contained a false statement of fact that was made with actual malice, that is, with a knowledge of falsity or
reckless disregard for the truth." The majority opinion's reliance on Hustler is misplaced. The doctrine
in Hustlerapplies only to public figures, and the U.S. Supreme Court found that "respondent Falwell is a 'public figure'
for purposes of First Amendment law." The U.S. Supreme Court held in Hustler that

"We conclude that public figures and public officials may not recover for the tort of intentional infliction of
emotional distress by reason of publication such as the one here at issue without 'a showing in addition that
the publication contains a false statement of fact which was made with 'actual malice,' i.e., with knowledge
that the statement was false or with reckless disregard as to whether or not it was true. x x x." (Emphasis
supplied)
Evidently, Hustler allows recovery for intentional infliction of emotional distress if the aggrieved party is a private
person and not a public figure even if there is no showing that the false statement was made with actual malice. In
the instant case, private respondents are not public figures or public officials but ordinary private individuals
represented by private respondent Islamic Da'wah Council of the Philippines, Inc.

IV. Constitutional Guarantee of 'Full Respect for Human Rights'

The 1987 Constitution provides that "[t]he State values the dignity of every human person and guarantees full respect
for human rights."11 The Constitution created a Commission on Human Rights with the function, among others, to
"[M]onitor the Philippine Government's compliance with international treaty obligations on human rights."12 The
framers of the Constitution made it clear that the term "human rights" as used in the Constitution referred to the civil
and political rights embodied in the International Covenant on Civil and Political Rights 13 to which the Philippines is a
signatory. This is clear from the following exchange in the deliberations of the Constitutional Commission:

"MR. GARCIA: But it does not mean that we will refer to each and every specific article therein, but only to
those that pertain to the civil and politically related, as we understand it in this Commission on Human
Rights.

MR. GUINGONA: Madam President, I am not clear as to the distinction between social and civil rights.

MR. GARCIA: There are two international covenants: the International Covenant (on) Civil and Political
Rights and the International Covenant on Economic, Social and Cultural Rights. The second covenant
contains all the different rights the rights of labor to organize, the right to education, housing, shelter,
etcetera.

MR. GUINGONA: So we are just limiting at the moment the sense of the committee to those the Gentleman
has specified.

MR. GARCIA: Yes, to civil and political rights.

MR. GUINGONA: Thank you."14 (Emphasis supplied)

Article 20 (2) of the International Covenant on Civil and Political Rights provides that "[a]ny advocacy of x x xreligious
hatred that constitutes incitement to discrimination, hostility or violence shall be prohibited by law." The Human Rights
Committee created under the Covenant, in its 1983 Nineteenth Session, reported to member states that:

"1. x x x In view of the nature of article 20, States parties are obliged to adopt the necessary legislative
measures prohibiting the actions referred to therein. However, the reports have shown that in some States
such actions are neither prohibited by law nor are appropriate efforts intended or made to prohibit them.
Further, many reports failed to give sufficient information concerning the relevant national legislation and
practice.

2. x x x For article 20 to become fully effective there ought to be a law making it clear that propaganda and
advocacy as described therein are contrary to public policy and providing for an appropriate sanction in case
of violation. x x x ."15

The Covenant, being an international treaty to which the Philippines is a signatory, is part of the country's municipal
law.16 The Covenant carries great weight in the interpretation of the scope and meaning of the term "human rights" as
used in the Constitution. Unquestionably, the framers of the Constitution intentionally referred to the civil and political
rights embraced in the Covenant in describing the term "human rights." The Constitution even mandates the
independent Commission on Human Rights to monitor the compliance of the Philippine Government, which includes
the judiciary, with its treaty obligations under the Covenant.

Paragraph 4, Article 26 of the Civil Code makes civilly liable any person who humiliates another because of his
religious beliefs. This is just a soft prohibition of advocacy of religious hatred that incites discrimination, hostility or
violence, the act the Covenant seeks to curb and which the Philippine Government has undertaken to declare
unlawful. Other countries that signed the Covenant have criminalized the acts prohibited under the Covenant. Since
our ratification of the Covenant in 1986, the Philippines has not enacted any special legislation to enforce the
provisions of the Covenant, on the ground that existing laws are adequate to meet the requirements of the Covenant.
There is no other law, except paragraph 4, Article 26 of the Civil Code, that can provide a sanction against intentional
conduct, falling short of a criminal act, advocating religious hatred that incites hostility between Muslims and
Christians in this country.

If we are to comply in good faith with our treaty obligations under the Covenant, as the Constitution expressly
mandates the Philippine Government, we must give redress under Article 26 to the outrageous profanity suffered by
private respondents. Our Constitution adopts the generally accepted principles of international law as part of the law
of the land. Pacta sunt servanda every treaty in force binds the parties who must comply with the treaty in good
faith17 is one such principle. Thus, if we refuse to apply Article 26 to the instant case, then we admit that we have
no law to enforce the Covenant. In effect, we admit non-compliance with the Covenant.

The Supreme Court of Canada, in interpreting Canada's obligation under the Covenant, explained in R. v. Keegstra:18

"C.E.R.D. (Convention on the Elimination of All Forms of Racial Discrimination) and I.C.C.P.R. (International
Covenant on Civil and Political Rights) demonstrate that the prohibition of hate promoting expression is
considered to be not only compatible with a signatory nation's guarantee of human rights, but is as well an
obligatory aspect of this guarantee. Decisions under the European Convention for the Protection of Human
Rights and Fundamental Freedoms are also of aid in illustrating the tenor of the international community's
approach to hate propaganda and free expression. This is not to deny that finding the correct balance
between prohibiting hate propaganda and ensuring freedom of expression has been a source of debate
internationally (see, e.g., Nathan Lerner, The U.N. Convention on the Elimination of All Forms of Racial
Discrimination (1980), at pp. 43-54). But despite debate Canada, along with other members of the
international community, has indicated a commitment to prohibiting hate propaganda, and in my opinion this
court must have regard to that commitment in investigating the nature of the government objective behind s.
319(2) of the Criminal Code. That the international community has collectively acted to condemn hate
propaganda, and to oblige State Parties to C.E.R.D. and I.C.C.P.R. to prohibit such expression, thus
emphasizes the importance of the objective behind s. 319(2) and the principles of equality and the inherent
dignity of all persons that infuse both international human rights and the Charter."

As a signatory to the Covenant, the Philippines is, like, Canada, obligated under international law and the 1987
Constitution to protect the inherent dignity and human rights of all its citizens.

V. Freedom of Expression and Profane Utterances

The blatant profanity contained in the newspaper article in question is not the speech that is protected by the
constitutional guarantee of freedom of expression. Words that heap extreme profanity, intended merely to incite
hostility, hatred or violence, have no social value and do not enjoy constitutional protection. As explained by the
United States Supreme Court in the landmark case of Chaplinsky v. New Hampshire:19

"Allowing the broadest scope to the language and purpose of the Fourteenth Amendment, it is well
understood that the right of free speech is not absolute at all times and under all circumstances. There are
certain well-defined and narrowly limited classes of speech, the prevention and punishment of which has
never been thought to raise any Constitutional problem. These include the lewd and obscene, the profane,
the libelous, and the insulting or 'fighting' words those which by their very utterance inflict injury or tend to
incite an immediate breach of the peace. It has been well observed that such utterances are no essential
part of any exposition of ideas, and are of such slight social value as a step to truth that any benefit that may
be derived from them is clearly outweighed by the social interest in order and morality. Resort to epithets or
personal abuse is not in any proper sense communication of information or opinion safeguarded by the
Constitution, and its punishment as a criminal act would raise no question under that instrument." (Emphasis
supplied)

Chaplinsky expressly includes profane utterances as belonging to the narrowly limited classes of speech that
are not constitutionally protected. Profane utterances, like asserting that Muslims worship the pig as their God, have
no social value meriting constitutional protection. Black's Law Dictionary (6th Ed.) defines the words "profane" and
"profanity" as follows:
"Profane. Irreverence toward God or holy things. Writing, speaking, or acting, in manifest or implied
contempt of sacred things. Town of Torrington v. Taylor, 59 Wyo. 109, 137 P.2d 621, 624; Duncan v. U.S.,
C.C.A. Or., 48 F.2d 128, 133. That which has not been consecrated."

"Profanity. Irreverence towards sacred things; particularly, an irreverent and blasphemous use of the name
of God. Vulgar, irreverent, or coarse language. It is a federal offense to utter an obscene, indecent, or
profane language on radio. 18 U.S.C.A. 1464. See also Obscenity."

The majority opinion states that the doctrine in Chaplinsky "had largely been superseded by subsequent First
Amendment doctrines." The majority opinion then cites the 1971 case of Cohen v. California 20 as an "illustrative"
case that "American courts no longer accept the view that speech may be proscribed merely because it is 'lewd,'
'profane,' 'insulting' or otherwise vulgar or offensive." However, Hustler Magazine v. Falwell,21 a 1988 case which the
majority opinion also cites, clearly explains the state of American law on this matter, thus:

"Admittedly, these oft-repeated First Amendment principles, like other principles, are subject to limitations.
We recognized in Pacifica Foundation that speech that is 'vulgar, offensive, and shocking' is 'not entitled to
absolute constitutional protection under all circumstances.' In Chaplinsky v. New Hampshire, we held that
that a State could lawfully punish an individual for the use of insulting 'fighting words' those which by their
very utterance inflict injury or tend to incite an immediate breach of the peace.' These limitations are but
recognition of the observation in Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc. 472 U.S. 749 (1985)
that this Court has 'long recognized that not all speech is of equal First Amendment importance.' x x x ."
[other citations omitted] x x x."

Indeed, while democratic societies maintain a deep commitment to the principle that debate on public issues should
be uninhibited, robust and wide open, this free debate has never been meant to include libelous, obscene or profane
utterances against private individuals.22 Clearly, the newspaper article in question, dripping with extreme profanity,
does not enjoy the protection of the constitutional guarantee of freedom of speech.

VI. Court's Duty and Power to Enforce Constitutional Rights

The 1987 Constitution has conferred on the Court the power to "[p]romulgate rules concerning the protection and
enforcement of constitutional rights." This is an innovation in the 1987 Constitution to insure, in the words of former
Chief Justice Roberto R. Concepcion, one of the framers of the Constitution, that "the protection and enforcement of
these constitutional rights is something that the courts have to consider in the exercise of their judicial power. 23 This
provision stresses that constitutional rights, whether found in the Bill of Rights or in other provisions of the
Constitution like in the Declaration of Principles and State Policies, are "not merely declaratory but are also
enforceable."24

One such right, the enforcement and protection of which is expressly guaranteed by the State under the Constitution,
is the right to "full respect for human rights." The trial and appellate courts have found that private respondents'
religious beliefs and practices have been twisted, ridiculed and vilified by petitioners. This is a clear violation of the
human rights of private respondents under the Constitution and the International Covenant on Civil and Political
Rights. It now becomes the duty of the Court, as the guardian of the fundamental rights of the people, to exercise its
power to protect and enforce the constitutional rights of private respondents.

The Court, pursuant to its rule making power, can require that in actions like the instant case, the plaintiffs must bring
a class suit. This will avoid multiplicity of suits considering the numerous potential plaintiffs all over the country. A
judgment in a class suit, whether favorable or unfavorable to the class, is binding under the res judicata principle on
all members of the class whether or not they were before the court.25 This rule will address the fear that cases will
swamp the courts all over the country if profanities against religious groups are made actionable under Article 26.

VII. The Special Circumstance of Muslim Secession in the South

Limitations on freedom of expression have always been rooted on special circumstances confronting a society in its
historical development. In the 1950s, faced with rising racial tension in American society, the U.S Supreme Court
ruled in Beauharnais v. Illinois26 that hate speech which denigrates a group of persons defined by their religion, race
or ethnic origin defames that group and the law may validly prohibit such speech on the same ground as defamation
of an individual. This was the only time that the U.S. Supreme Court upheld group libel, and since then, there has
been a consistent retreat from this doctrine as blacks and other ethnic groups became more assimilated into the
mainstream of American society. Beauharnais expressly acknowledged that race riots and massive immigration of
unassimilated ethnic groups justified the legislature in "punishing x x x libels directed at designated collectives and
flagrantly disseminated."

The majority opinion states also that Beauharnais has been superseded by Brandenburg v. Ohio."27 The majority
opinion explains that Brandenburg, a 1969 decision, ruled that "advocacy of illegal action becomes punishable only if
such advocacy is directed to inciting or producing imminent lawless action and is likely to incite or produce such
action." While Beauharnais has been apparently weakened by subsequent decisions of the U.S. Supreme Court, it
was not overturned in Brandenburg which did not even cite or mention Beauharnais. What Brandenburg overturned
was Whitney v. California,28 thus

"Accordingly, we are here confronted with a statute which, by its own words and as applied, purports to
punish mere advocacy and to forbid, on pain of criminal punishment, assembly with others merely to
advocate the described type of action. Such a statute falls within the condemnation of the First and
Fourteenth Amendments. The contrary teaching of Whitney v. California, supra, cannot be supported, and
that decision is therefore overruled." (Emphasis supplied)

In any event, Brandenburg involved the constitutionality of a criminal statute which sought to punish the mere
advocacy of violence as a means to accomplish industrial or political reform. This is distinctly different from the instant
case, which involves profane utterances that have long been recognized as devoid of social value and outside the
purview of constitutionally protected speech.29

In 1990, the Canadian Supreme Court, in R. v. Keegstra,30 upheld a law criminalizing hate speech toward any section
of the public distinguished by color, race, religion or ethnic origin. The Canadian Supreme Court rejected the clear
and present danger test of the U.S. Supreme Court, stating that it did not address the psychological trauma hate
propaganda causes and the subtle and incremental way hate propaganda works. The Canadian Supreme Court
found the U.S. Supreme Court's Beauharnais decision more reflective of Canadian values rather than later U.S.
decisions that weakened Beauharnais. The Canadian Supreme Court handed down Keegstra at a time when Canada
was becoming a multi-racial society following the influx of immigrants of different color, ethnic origin and religion. The
following passages in Keegstra are instructive:

"A myriad of sources both judicial and academic offer reviews of First Amendment jurisprudence as it
pertains to hate propaganda. Central to most discussions is the 1952 case of Beauharnais v. Illinois, where
the Supreme Court of the United States upheld as constitutional a criminal statute forbidding certain types of
group defamation. Though never overruled, Beauharnais appears to have been weakened by later
pronouncements of the Supreme Court (see, e.g., Garrison v. Louisiana, 379 U.S. 64 (1964); Ashton v.
Kentucky, 384 U.S. 195 (1966); New York Times Co. v. Sullivan, 376 U.S. 254 1964); Brandenburg v. Ohio,
395 U.S. 444 (1969); and Cohen v. California, 403 U.S. 15 (1971)). The trend reflected in many of these
pronouncements is to protect offensive, public invective as long as the speaker has not knowingly lied and
there exists no clear and present danger of violence or insurrection.

xxx xxx xxx

The question that concerns us in this appeal is not, of course, what the law is or should be in the United
States. But it is important to be explicit as to the reasons why or why not American jurisprudence may be
useful in the s. 1 analysis of s. 319(2) of the Criminal Code. In the United States, a collection of fundamental
rights has been constitutionally protected for over 200 years. The resulting practical and theoretical
experience is immense, and should not be overlooked by Canadian courts. On the other hand, we must
examine American constitutional law with a critical eye, and in this respect La Forest J. has noted in R. v.
Rahey, (1987) 1 S.C.R. 588 at 639:

'While it is natural and even desirable for Canadian courts to refer to American constitutional
jurisprudence in seeking to elucidate the meaning of Charter guarantees that have counterparts in
the United States Constitution, they should be wary of drawing too ready a parallel between
constitutions born to different countries in different ages and in very different circumstances. . .'

Canada and the United States are not alike in every way, nor have the documents entrenching human rights
in our two countries arisen in the same context. It is only common sense to recognize that, just as similarities
will justify borrowing from the American experience, differences may require that Canada's constitutional
vision depart from that endorsed in the United States." (Other citations omitted)

xxx xxx xxx

First, it is not entirely clear that Beauharnais must conflict with existing First Amendment doctrine. Credible
arguments have been made that later Supreme Court cases do not necessarily erode its legitimacy (see,
e.g., Kenneth Lasson, "Racial Defamation as Free Speech: Abusing the First Amendment" (1985), 17
Colum. Human Rights L. Rev. 11). Indeed, there exists a growing body of academic writing in the United
States which evinces a stronger focus upon the way in which hate propaganda can undermine the very
values which free speech is said to protect. This body of writing is receptive to the idea that, were the issue
addressed from this new perspective, First Amendment doctrine might be able to accommodate statutes
prohibiting hate propaganda (see, e.g., Richard Delgado, "Words That Wound: A Tort Action for Racial
Insults, Epithets, and Name-Calling" (1982), 17 Harv. C.R.-C.L. Law Rev. 133; Irving Horowitz, "Skokie, the
ACLU and the Endurance of Democratic Theory" (1979), 43 Law & Contemp. Prob. 328; Lasson, op. cit., at
pp. 2030; Mari Matsuda, "Public Response to Racist Speech: Considering the Victim's Story," (1989), 87
Mich. L. Rev. 2320, at p. 2348; "Doe v. University of Michigan: First Amendment Racist and Sexist
Expression on Campus Court Strikes Down University Limits on Hate Speech" (1990), 103 Harv. L. Rev.
1397)."

In deciding Keegstra, the Canadian Supreme Court also relied on Canada's treaty obligations under the United
Nations International Covenant on Civil and Political Rights which requires signatory states to prohibit any "advocacy
of x x x religious hatred that constitutes incitement to discrimination, hostility or violence." During the negotiations of
the Covenant, the United States objected to this provision on free speech grounds. When it finally ratified the
Covenant, the United States made a reservation rejecting this provision insofar as it conflicts with U.S. constitutional
protections.31 The Covenant opened for ratification on December 19, 1966 and entered into force on March 23, 1976.
The Philippines ratified the Covenant in 1986 without any reservation, just like Canada. The 1987 Constitution of the
Philippines even created a Commission on Human Rights to "[M]onitor the Philippine Government's compliance with
international treaty obligations on human rights." Obviously, Canada and the Philippines are alike in their obligations
under the Covenant, but the United States is differently situated. 32

In our country, there has been a long festering and bloody Muslim secessionist movement in the South, fueled not
only by poverty but also by the palpable feeling among Muslims that the Christian majority is not treating Muslims
fairly. Private respondents in the instant case, despite the outrageous profanity hurled at them by petitioners, chose
not to join their secessionist brethren in the armed struggle but instead decided to petition our courts for legal redress
of their grievance. They could have easily retaliated by flinging their own blasphemous invectives against the
Christian religion. They did not, realizing perhaps that answering profanity with more profanity would mean answering
hatred with more hatred, further dividing rather than unifying the Filipino nation.

Just last November of 2002, a Christian newspaper in Nigeria where the Miss World contest was being held opined
that the Prophet Mohammed would have approved of the beauty contest. The newspaper stated: "What would
Mohammed think? In all honesty, he would have probably chosen a wife from one of them." These words provoked
bloody rioting in Nigeria among Muslims who felt insulted by the article. Hundreds died in the religious riots. Yet the
offensive article in the Nigerian newspaper pales in comparison to the utterly profane newspaper article in the instant
case.

Indeed, private respondent Islamic Da'wah Council of the Philippines, a federation of more than 70 Muslim religious
organizations in the Philippines, deserves commendation for bringing this case before our courts for a peaceful and
legal resolution of the issue. Private respondents have placed their trust and faith in our courts, knowing and insisting
that they are entitled to a just remedy under paragraph 4, Article 26 of the Civil Code. It is time to breathe life to this
long dormant provision of the Civil Code, to give even just a token redress to religious minorities who suffer mental
and emotional distress from mindless profanity committed by irresponsible persons belonging to the religious
majority. In the process we will contribute in avoiding a further cleavage in the fabric of our nation, and demonstrate
to our Muslim brothers that their grievances can be redressed under the rule of law.

The instant case does not even call for a re-examination of the clear and present danger test which we have adopted
in this jurisdiction in determining the constitutionality of legislation that impinges on civil liberties. 33 Even under the
clear and present danger test, profane utterances are not constitutionally protected at least with respect to profanities
directed against private individuals. The special circumstance involving the Muslim secessionist movement in the
South should make us more sensitive to the grievances of our Muslim brothers who continue to have faith in the rule
of law in this country.

Since the peace of mind of private respondents has been violated by the publication of the profane article in question,
Article 26 of the Civil Code mandates that the tortious conduct "shall produce a cause of action for damages,
prevention and other relief." Article 2219 of the same Code provides that "[M]oral damages may be recovered in x x x
actions referred to in Articles 21, 26 x x x ." Private respondents are entitled to moral damages because, as duly
established by the testimonies of prominent Muslims,34 private respondents suffered emotional distress which was
evidently the proximate result of the petitioners' wrongful publication of the article in question. 35

VII. Conclusion

Almost thirty years ago, I had occasion to write about Article 26 in this wise:

"At the time Article 26 was lifted by the Code Commission from American jurisprudence, many of the rights
embodied therein were not yet widely accepted by American courts, and in fact even now at least one, the
right to privacy, is still struggling to gain recognition in some states. While we have been quick to leapfrog
American state decisions in recognizing such rights, we have, however, been painfully slow in galvanizing
the same in actual cases. To date Article 26 stands almost as a mere decorative provision in our statutes;
but it may be harnessed fruitfully anytime." 36

Now is the time to apply this provision of law since the instant case falls clearly within paragraph 4 of Article 26.
Applying Article 26 will not undermine freedom of speech since the profane publication in question belongs to the
class of speech that clearly does not enjoy constitutional protection. Applying Article 26 demonstrates good faith
compliance with our treaty obligations under the International Covenant on Civil and Political Rights. Applying Article
26 implements the constitutional policy that the "State values the dignity of every human person and guarantees full
respect for human rights." Applying Article 26 constitutes compliance by the Court of its constitutional duty to protect
and enforce constitutional rights. Applying Article 26 will help bind the wounds that mindless profanities inflict on
religious minorities in violation of their human rights.

Accordingly, I vote to dismiss the petition and affirm the award by the Court of Appeals of P50,000.00 moral
damages, P10,000.00 exemplary damages, and P10,000.00 attorney's fees to respondent Islamic Da'wah Council of
the Philippines, Inc. based on paragraph 4, Article 26 of the Civil Code.

Dissenting Opinion

AUSTRIA-MARTINEZ, J., dissenting:

I vote to affirm the assailed decision of the Court of Appeals with certain modifications.

For a proper perspective of the issues involved in the present petition, it must be emphasized that the portion of the
subject article which alludes to the Muslims as not eating pork because it is dirty is not the bone of contention of
respondents, because admittedly, the Muslims may eat pork if driven by necessity, as expressed in the Quran, to wit:

"Allah has forbidden you only what dies of itself and blood and the flesh of swine and that over which any
other (name) than (that of) Allah has been invoked. Then, whoever is driven by necessity, not desiring, nor
exceeding the limit, no sin is upon him."1

The focal point of private respondents' claim for damages is the insult heaped upon them because of the malicious
publication that the Muslims worship the pig as their God which is absolutely contrary to their basic belief as Muslims
that there is only one God they call Allah, and, that the greatest sin in Islam is to worship things or persons other than
Allah.2
Petitioners are liable for damages both under Articles 33 and 26(4) of the Civil Code. The instances that can be
brought under Article 26 may also be subject to an action for defamation under Article 33. In such a case, the action
brought under Article 26 is an alternative remedy, and the plaintiff can proceed upon either theory, or both, although
he can have but one recovery for a single instance of publicity.3

Article 33 of the Civil Code provides:

"Article 33. In cases of defamation, fraud and physical injuries, a civil action for damages, entirely separate
and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed
independently of the criminal prosecution, and shall require only a preponderance of evidence." (Emphasis
supplied)

Necessarily, Article 353 of the Revised Penal Code comes into play. In the present civil case, it is necessary that
respondents are able to establish by preponderance of evidence the following elements of defamation:

"1. That there must be an imputation of a crime, or of a vice or defect, real or imaginary, or any act,
omission, condition, status, or circumstance.

"2. That the imputation must be made publicly.

"3. That it must be malicious.

"4. That the imputation must be directed at a natural or juridical person, or one who is dead.

"5. That the imputation must tend to cause the dishonor, discredit or contempt of the person defamed."4

An allegation is considered defamatory if it ascribes to a person the commission of a crime, the possession of a vice
or defect, real or imaginary, or any act, omission, condition, status or circumstance which tends to dishonor or
discredit or put him in contempt, or which tends to blacken the memory of one who is dead.5

As a general rule, words, written or printed, are libelous per se if they tend to expose a person to public hatred,
contempt, ridicule, aversion, or disgrace, induce an evil opinion of him in the minds of right thinking persons, and
deprive him of their friendly intercourse in society, regardless of whether they actually produce such
results.6Otherwise stated; words published are libelous if they discredit plaintiff in the minds of any considerable and
respectable class in the community, taking into consideration the emotions, prejudices, and intolerance of mankind. 7It
has been held that it is not necessary that the published statements make all or even a majority of those who read
them think any less of the person defamed, but it is enough if a noticeable part of those who do read the statements
are made to hate, despise, scorn or be contemptuous of the person concerning whom the false statements are
published.8

Thus, in order to be libelous per se, the defamatory words must be of such a nature that the court can presume as a
matter of law that they will tend to disgrace and degrade the person or hold him up to public hatred, contempt, ridicule
or cause him to be shunned and avoided; in other words, they must reflect on his integrity, his character, and his
good name and standing in the community, and tend to expose him to public hatred, contempt, or disgrace. 9 The
imputation must be one which tends to affect plaintiff in a class of society whose standard of opinion the court can
recognize.10 It is not sufficient, standing alone, that the language is unpleasant and annoys or irks plaintiff, and
subjects him to jests or banter, so as to affect his feelings.11

In the present case, it is evident that the subject article attributes a discreditable or dishonorable act or condition to all
Muslims in general, a derision of the religious beliefs of the Muslims and of the objectives of respondent Council to
herald the truth about Islam, in particular. The portion of the assailed article which declares that the Muslims worship
the pigs as God is obnoxiously contrary to the basic belief of the Muslims.

Thus, the article is not only an imputation of irreligious conduct but also a downright misrepresentation of the religious
beliefs of Muslims. It has been held that scandalous matter is not necessary to make a libel; it is enough if the
defendant induces an ill opinion to be held of the plaintiff, or to make him contemptible or ridiculous; 12 or that the
imputation tends to cause dishonor, discredit or contempt of the offended party.13
Petitioners' stance that the article "Alam Ba Ninyo?" is but an expression of belief or opinion does not justify said
publication. It cannot be considered as a mere information being disseminated. Petitioners' defense that the article
itself was merely a contribution of a reader, or that the writer was soliciting opinion from the readers, does not hold
water, since the article did not in any way refer to such circumstance. Verily, the article, read as a whole with the
other paragraphs, calls the attention of the readers to a statement of fact, not fiction, and that the writer speaks with
authority on the subject matter. Bulgar in fact prides itself as being the "Pahayagan Ng Katotohanan".

Significantly, liability for libel does not depend on the intention of the defamer, but on the fact of the defamation. 14 In
matters of libel, the question is not what the writer of an alleged libel means, but what is the meaning of the words he
has used.15 The meaning of the writer is quite immaterial. The question is, not what the writer meant, but what he
conveyed to those who heard or read.16

In other words, it is not the intention of the speaker or writer, or the understanding of the plaintiff or of any particular
hearer or reader, by which the actionable quality of the words is to be determined. It is the meaning that the words in
fact conveyed, rather than the effect which the language complained of was fairly calculated to produce and would
naturally produce on the minds of persons of reasonable understanding, discretion, and candor, taking into
consideration accompanying explanations and surrounding circumstances which were known to the hearer or reader.
The alleged defamatory statement should be construed not only as to the expression used but also with respect to
the whole scope and apparent object of the writer.17

Want of intention to vilify does not render an objectionable publication any the less a libel and a publication is not
excused by the publisher's ignorance that it contains libelous matter. 18 The state of mind of the person who publishes
a libel is immaterial in determining liability. The law looks at the tendency and consequences of the publication rather
than the motive or intention of the writer or publisher.19 It does not signify what the motive of the person publishing the
libel was, or whether he intended it to have a libelous meaning or not. 20 The defendant may not have intended to
injure the plaintiff's reputation at all and he may have published the words by mistake or inadvertence, 21 or in jest, or
without intending to refer, or knowing that he was referring, to the plaintiff, or any existing person, or again he may
have been actuated by the best motives in publishing the words, but such facts will usually afford the defendant no
defense, though they may be urged in mitigation of damages. 22

Tested with the foregoing principles of law, there is no doubt that the article in question is defamatory under Article 33
of the Civil Code. If the imputation is defamatory,23 the Court has held that malice is presumed and the burden of
overcoming the presumption of malice by mere preponderance of evidence rested on the petitioners.

A careful examination of the records of the case does not reveal any cogent reason that would set aside the
presumption of malice. In fact, there is convincing evidence that the publication of the assailed article was malicious,
as more extensively discussed in the latter portion of herein opinion.

Furthermore, there is no showing that the instant case falls under any of the exceptions provided for in Article 354 of
the Revised Penal Code, to wit:

"Art. 354. Requirement of publicity. Every defamatory imputation is presumed to be malicious, even if it
be true, if no good intention and justifiable motive for making it is shown, except in the following cases:

"1. A private communication made by any person to another in the performance of any legal, moral or social
duty; and

"2. A fair and true report, made in good faith, without any comments or remarks, of any judicial, legislative or
other official proceedings which are not of confidential nature, or of any statement, report or speech
delivered in said proceedings, or of any other act performed by public officers in the exercise of their
functions."

Consequently, there is no compelling reason to disregard the findings of the Court of Appeals that no evidence was
presented to overcome said presumption of malice.

On the matter of publication, there is no dispute that the same is present, as the subject article was admittedly
published in the newspaper "Bulgar" which was circulated in Metro Manila and in other parts of the country.
It must be emphasized that not only did both the trial court and the appellate court find that the subject article was
published, they also held that the subject article contains an imputation of a discreditable act when it portrayed the
Muslims to be worshipping the pig as their god.

But the trial court and the appellate court differed as to the presence of the element of the identity of the persons
defamed. While the trial court held that the libelous article does not identify the personalities of the persons defamed
and therefore respondents had no cause of action, the Court of Appeals ruled that the Muslims were the defamed
persons and respondent IDCP has the requisite personality to sue for damages. The appellate court is right.

Specific identity of the person defamed means that the third person who read or learned about the libelous article
must know that it referred to the plaintiff.24 In order to maintain a libel suit, it is essential that the victim is identifiable
although it is not necessary that he be named; it is likewise not sufficient that the offended party recognized himself
as the person attacked or defamed, but it must be shown that at least a third person could identify him as the object
of the libelous publication.25

It cannot be refuted that the obvious victims in the article in question are specifically identified the Muslims. The
principle laid down in Newsweek, Inc. vs. Intermediate Appellate Court,26 that "where the defamation is alleged to
have been directed at a group or class, it is essential that the statement must be so sweeping or all-embracing as to
apply to every individual in that class or group, or sufficiently specific so that each individual in that class or group can
prove that the defamatory statement specifically pointed to him, so that he can bring the action separately, if need
be," obviously applies to the present case. Certainly, the defamatory imputation contained in the subject article is a
sweeping statement affecting a common or general interest of all Muslims, that is, their religious belief in Allah as the
one and only God. The publication was directed against all Muslims without exceptions and it is not necessary to
name each one of them as they could only have one cause of action which is the damage suffered by them caused
by the insult inflicted on their basic religious tenets.

All premises considered, petitioners are indeed liable for damages under Article 33 of the Civil Code.

Significantly, the respondents brought to the attention of the Court of Appeals the failure of the trial court to
appreciate Article 26(4) of the Civil Code, but the appellate court simply delved exclusively on the applicability of libel
and the existence of its elements.

Ordinarily, the Court may only pass upon errors assigned. 27 However, this rule is not without exceptions. The Court
has ruled that an appellate court is accorded a broad discretionary power to consider errors not assigned, involving,
among others, (1) matters not assigned as errors on appeal but consideration of which is necessary in arriving at a
just decision and complete resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal
justice; (2) matters not specifically assigned as errors on appeal but raised in the trial court and are matters of record
having some bearing on the issue submitted which the parties failed to raise or which the lower court ignored; and (3)
matters not assigned as errors on appeal but upon which the determination of a question properly assigned, is
dependent.28 Evidently, all three exceptions apply to the present case.

Necessarily, the Court has to dwell on the applicability of Article 26 (4) of the Civil Code in support of respondents'
claim for damages.

Before proceeding any further, a distinction must first be made between a cause of action based on libel or
defamation, whether in a criminal or civil case, and one based on Article 26. In libel, the gravamen of the claim is
reputational harm; whereas, under Article 26, it can be the embarrassment, emotional harm or mental distress
caused upon a person.29 In libel cases, its four (4) constitutive elements, to wit: (a) defamatory imputation; (b) malice;
(c) publication; and (d) identifiability of the victim,30 must be established, by mere preponderance of evidence in a civil
case which herein petitioners have done in the present case. Said elements, however, are not essential in a cause of
action based on tort under Article 26, wherein one is liable for personal injury, whether administered intentionally,
wantonly or by negligence.31 Personal injury herein refers not only to reputation but also encompasses character,
conduct, manner, and habits of a person.32

American Tort Law, on the basis of which, Philippine Tort Law was patterned, has recognized that if the plaintiff is
shown to have suffered a wrong, the mere paucity of cases or absence of any precedent does not constitute sufficient
reason for refusing relief if a sound principle of law can be found which governs, or which by analogy ought to
govern.33 The fact that a case is novel does not operate to defeat recovery, if it can be brought within the general
rules of law applicable to torts.34 Neither is the fact that a tort action does not fit into a nicely defined or established
"cubbyhole" of the law has been said not to warrant, in itself, the denial of relief to one who is injured. 35 Thus, to
ignore the application of the proper provision of law in the instant case would be an abdication of the judiciary's
primordial objective, which is, the just resolution of disputes.

Article 26 is an integral part of the Chapter in the Civil Code on human relations, "designed to indicate certain norms
that spring from the fountain of good conscience. These guides for human conduct 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."36Article 26, which enhances and preserves human dignity and personality, provides:

"Article 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors
and other persons. The following and similar acts, though they may not constitute a criminal offense, shall
produce a cause of action for damages, prevention and other relief.

"(1) Prying into the privacy of another's residence;

"(2) Meddling with or disturbing the private life or family relations of another;

"(3) Intriguing to cause another to be alienated from his friends;

"(4) Vexing or humiliating another on account of his religious beliefs, lowly station in life, place of
birth, physical defect, or other personal condition." (Emphasis supplied)

The raison d'tre for the foregoing statutory provision, as stated by the Code Commission in its Report, is worth
setting forth verbatim:

"The sacredness of human personality is a concomitant of every plan for human amelioration. The
touchstone of every system of laws, of the culture and civilization of every country, is how far it dignifies
man. If in legislation, inadequate regard is observed for human life and safety; if the laws do not sufficiently
forestall human suffering, or do not try effectively to curb those factors or influences that wound the noblest
sentiments; if the statutes insufficiently protect persons from being unjustly humiliated, in short, if human
personality is not properly exalted then the laws are indeed defective. Sad to say, such is to some
"degree the present state of legislation in the Philippines. To remedy this grave fault in the laws is one of the
principal aims of the Project of Civil Code. Instances will now be specified.

"The present laws, criminal and civil, do not adequately cope with the interferences and vexations mentioned
in Article 26."37 (Emphasis supplied)

Thus, Article 26 provides aggrieved individuals with a legal remedy against violations of human personality, even
though such do not amount to violations of penal laws. Social equality is not sought, but simply due regard for
decency and propriety.38

Among the rights covered by Article 26 are: (a) personal dignity, (b) personal security; (c) family relations, (d) social
intercourse, (e) privacy and (f) peace of mind.39 However, it has been held that the violations mentioned in the Article
26 are not exclusive but are merely examples and do not preclude other similar acts. 40 Thus, disturbing or offensive
utterances, such as threats, false statements, or insulting, humiliating, scandalous, or abusive language, 41may give
rise to an action in tort where such language causes mental or emotional disturbance, as in this case, or bodily injury
or illness resulting therefrom.42

Paragraph 4 of Article 26 which makes one liable for vexing or humiliating another on account of his religious beliefs
finds proper application in the case at bar. The Code Commission stressed in no uncertain terms that religious
freedom does not authorize anyone to heap obloquy and disrepute upon another by reason of the latter's religion. 43

In support of respondents' claim for damages, Professor Abdul Rafih Sayedy, Dean of the Institute of Islamic Affairs
of the University of the Philippines, testified in this wise:

"WITNESS:
"A: First, I understood that this tabloid is the voice of katotohanan but regarding this article it is not
'katotohanan'. To the Muslim it is a blasphemy. It is an abuse and desecration and belief of the Muslims and
the Muslims are commanded by God to worship no other than Him. So how could the publisher publish that
the Muslims are worshipping pigs, that Muslims in his mind do not eat animals while they are also eating
slaughtered chicken, cow and carabao and other non-prohibited animals. So to the Muslims this is an insult,
not only to the Muslims in Mindanao but to the whole Muslim community. This is a blasphemy to the
Muslims.

"Q As a Muslim, Professor Sayedy, how do you feel about this article?

"A I feel insulted and I feel that the beliefs of the Muslims are over abused by the publisher and it is a
defamation and desecration on the religion of the Islam.

"Q What is the concept of God insofar as the religion of Islam is concerned?

"A The concept of God is that God is the only God, He was not begotten and He is to be worshipped
and no other to be worshipped aside from him, He has no beginning and has no end, He is the creator of all
creatures and He should be honored by all creatures." 44

Clearly therefrom, the assailed article is vexatious and humiliating to Muslims as they adore only one God, they call
Allah. Muslims are called Muslims because they sincerely believe in the Quran and the Hadith (the Saying and the
Conduct of the Prophet). It cannot be over-stressed that Muslims do not eat pork because it is forbidden in the Quran
for being unclean not because they hold pigs as sacred and worship them; and that to the Muslims, the greatest sin in
Islam is to worship persons or things other than Allah.45

Petitioner Myla C. Aguja, who testified as Myla Tabora, admitted in open court that she: wrote the subject article; was
a graduate of "Mass Com"; based the said article on her interpretation of what she recalled she had read in Reader's
Digest while she was still in high school; and did not verify if what she recalled was true46 . Such shocking
irresponsible attitude on her part who at that time was an Assistant Editor of Bulgar is utterly malicious, in the same
degree as the failure of the rest of the petitioners (except Binegas, Jr.)47 to verify the truthfulness of the subject article,
for which they should be held liable for damages.

The freedom of expression and the right of speech and of the press are, to be sure, among the most zealously
protected rights in the Constitution. But the constitutional right of freedom of expression may not be availed of to
broadcast lies or half-truths nor may it be used to insult others, for such would be contrary to the plain mandate of the
Civil Code for each person "to respect the dignity, personality, privacy and peace of mind of his neighbors and other
persons." The freedom of speech does not require a journalist to guarantee the truth of what he says or publishes but
it does prohibit publishing or circulating statements in reckless disregard without any bona fide effort to ascertain the
truth thereof.48

By causing the assailed article to be published in reckless disregard of the truth thereof, petitioners publisher MVRS,
Editor-in-Chief Mars C. Laconsay, Assistant Editor and writer Myla C. Aguja (Myla Tabora) exhibited utter
irresponsibility and acted contrary to the Code of Ethics adopted by the journalism profession in the Philippines, for
which they deserve condemnation. The assailed article has falsely portrayed all Muslims as worshippers of pig or
swine and thus, perverted their religious beliefs and demeaned the Muslims as a segment of human society. It
belittled the Muslims by inverting the relative importance of their religious beliefs and practice, thereby disgracing the
ideals and aspirations of the Muslim people. Such amounts to a violation of their personal dignity and peace of mind,
which are the very rights affirmed by Article 26.

Petitioner Binegas should be absolved from liability. It is not refuted that the principal function of petitioner Binegas,
Jr., as Circulation Manager of Bulgar, was to supervise the delivery and the distribution of the paper, monitor the
accounts of the agents and schedule the circulation personnel. It is likewise unrebutted that petitioner Binegas, Jr.
was never consulted on what articles are to be published; that he had no authority to decide whether or not a certain
publication of Bulgar shall be circulated; and that his only duty was to distribute the issue after its printing. 49 As such,
his duty being ministerial in character, petitioner Binegas, Jr., should have been exonerated from liability.

Now, do plaintiffs-respondents IDCP and its officers have the requisite personality to institute the suit? The answer is
in the affirmative. Respondents IDCP and its officers have the requisite personality to institute the suit inasmuch as
the action is properly a class suit.
The concept of a "true" class suit has been elucidated upon in Re: Request of the Heirs of the Passengers of
Doa Paz,50 thus:

"What makes a situation a proper case for a class suit is the circumstance that there is only one right or
cause of action pertaining or belonging in common to many persons, not separately or severally to distinct
individuals.

'The 'true' class action, which is the invention of equity, is one which involves the enforcement of a
right which is joint, common, or secondary or derivative. x x (It) is a suit wherein, but for the class
action device, the joinder of all interested parties would be essential.

'A 'true class action' as distinguished from the so-called hybrid and the spurious class action in
U.S. Federal Practice 'involves principles of compulsory joinder, since x x (were it not) for the
numerosity of the class members all should x x (be) before the court. Included within the true class
suit x x (are) the shareholders' derivative suit and a class action by or against an unincorporated
association x x. A judgment in a true class suit, whether favorable or unfavorable to the class, is
binding under res judicata principles upon all the members of the class, whether or not they were
before the court. It is the nondivisible nature of the right sued on which determines both the
membership of the class and the res judicata effect of the final determination of the right.'

"The object of the suit is to obtain relief for or against numerous persons as a group or as an integral entity,
and not as separate, distinct individuals whose rights or liabilities are separate from and independent of
those affecting the others." (Emphasis supplied)

In order that a class suit may prosper, Section 12, Rule 3 of the Rules of Court requires the concurrence of three (3)
essential elements, namely: (1) that the subject matter of the controversy is one of common or general interest to
many persons; (2) that the parties are so numerous that it is impracticable to bring them all before the court; and (3)
that the action be maintained by parties who will fairly and adequately represent the class.

Under the first requisite, the person who sues must have an interest in the controversy, common with those for whom
he sues, and there must be that unity of interest between him and all such other persons which would entitle them to
maintain the action if suit was brought by them jointly.51

As to what constitutes common interest in the subject matter of the controversy has been explained in Sulo ng Bayan,
Inc. vs. Araneta, Inc.,52 thus:

"The interest that will allow parties to join in a bill of complaint, or that will enable the court to dispense with
the presence of all the parties, when numerous, except a determinate number, is not only an interest in the
question, but one in common in the subject matter of the suit, x x x a community of interest growing out of
the nature and condition of the right in dispute; for, although there may not be any privity between the
numerous parties, there is a common title out of which the question arises, and which lies at the foundation
of the proceedings x x x [here] the only matter in common among the plaintiffs, or between them and the
defendants, is an interest in the question involved, which alone cannot lay a foundation for the joinder of
parties. There is scarcely a suit at law, or in equity, which settles a principle or applies a principle to a given
state of facts or in which a general statute is interpreted, that does not involve a question in which other
parties are interested x x x."

It has further been held that in order to maintain a class action there must be an ascertainable class as well as a
community of interest among the members of that class in questions of law and fact involved. 53 The class must be
cognizable and manageable, and must be defined at the outset of the action. There must be a cognizable class
beyond the general strains which can be conceived to create a class of any superficially resembling parties, but it is
not necessary that the exact number comprising the class be specified or that the members be identified. 54

The first element is present in this case. The class spoken of in the assailed article that segregates them from the
other members of the general populace is the Muslim people, and their common interest, undoubtedly, is their
religious belief in adoring Allah as the one and only God and that the greatest sin is to worship persons or things
other than Allah. The article is an outrageous misrepresentation, inflicting stark insult on the religious beliefs of the
Muslims.
Concerning the second element, i.e., numerosity of parties one must bear in mind that the purpose. of the rule
permitting class actions is to furnish a mode of obtaining a complete determination of the rights of the parties in such
cases, when the number is so great as to preclude involvement by actual service. In this class of cases, one is
allowed to sue for all as a matter of convenience in the administration of justice. A class action is particularly proper in
an action wherein the persons are so multitudinous as vexatiously to prolong and probably altogether prevent a full
hearing.55

Judicial notice may be taken of the fact that Muslims in this country comprise a lot of the population, thus, it is highly
impractical to make them all parties or bring them all before the court. It is beyond contradiction that the Muslims
affected by the assailed article are multitudinous, and therefore, the second element is present in the instant case.

With regards to the third element, that the action be maintained by one who fairly and adequately represents the
class, it is essential that the relief sought must be beneficial to the class members, the party must represent the entire
class asserted, and be a member of the class he claims to represent, in addition to having an interest in the
controversy common with those for whom he sues.56 For adequate representation, it is sufficient that there are
persons before the court who have the same interest as the absent persons and are equally certain to bring forward
the entire merits of the question and thus give such interest effective protection. 57 It has also been held that whether
the class members are adequately represented by the named plaintiffs depends on the quality of representation
rather than on the number of representative parties as compared with the total membership of the class. 58 Thus, even
one member of a large class can provide the kind of representation for all that is contemplated by the class suit. 59

Respondent IDCP, as a religious organization, being a federation or umbrella organization of more than seventy (70)
Muslim religious organizations in the Philippines, and its officers who are individual respondents as well, carry the
requisite personality to file a case for damages in behalf of all Muslims. Unequivocally, they properly represent the
Muslims who are similarly situated and affected by the assailed article.

Respondent officers of IDCP namely, Abdulrahman R.T. Linzag, Ibrahim F. P. Arcilla, Abdul Rashid De Guzman, and
Ibrahim B. A. Junio, as well as their witness, Professor Abdul Rafih Sayedy, not only testified on how the assailed
article emotionally, as well as psychologically, affected each of them, but also as to how the said article received the
condemnation and contempt of other Muslims, further evidenced by the letter dated September 21, 1992 from thirty-
one (31) students of the Islamic University Madinah Al-Mukarramah, K.S.A.,60 and the seething letter of one Abdil T.
Arafat of South Cotabato province, dated September 29, 1992.61

Moreover, an officer may sue in his own behalf if the defamation affects him as well as the corporation 62 , or where
the defamation against the officer has a direct relation to the corporation's trade or business and it causes injury 63 .

Thus, without a shred of doubt, respondents IDCP and the individual respondents, and all Muslims they represent,
have interest so identical that the motive and inducement to protect and preserve may be assumed to be the same in
each.64 By instituting the suit, the respondents necessarily represent all Muslims. 65

Under Article 2217 of the Civil Code, moral damages which include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury, although
incapable of pecuniary computation, may be recovered for acts and actions based on Article 26.66

Individual Muslim plaintiffs-respondents, Abdulrahman R.T. Linzag, Ibrahim F. P. Arcilla, Abdul Rashid De Guzman,
and Ibrahim B. A. Junio, as well as their witness, Professor Abdul Rafih Sayedy, as proper representatives of the
class action testified on the despair, mental anguish, social humiliation and inferior feeling experienced by the
Muslims as a result of the vexatious article.67 Thus, the award of moral damages is justified.

The award of exemplary damages and attorney's fees is likewise warranted and the amount is in accordance with
Articles 222968 and 220869 of the Civil Code.

However, damages awarded to individual respondents should be deleted inasmuch as the instant case is considered
as a class suit and they merely acted as officers and members of the principal plaintiff-respondent IDCP.

One last point. There should be no room for apprehension on future litigations relating to the assailed article in view
of the fact that the instant suit is a class suit. In a class suit, each member of the class for whose benefit the action is
brought is a party plaintiff; the persons represented are quasi parties or parties by representation. A suit brought in
behalf of others in a class gives the court jurisdiction of the whole subject matter, and of all the parties, such that the
judgment will be binding on all persons belonging to the class represented. 70

In other words, a judgment in a class action concludes upon all members of the class, whether formally joined as
parties or not. 71 The class action has preclusive effect against one who was not named representative of the class,
as long as he was a member of the class which was a party to the judgment.72

Thus, in the case at bar, the Muslims, who are parties represented by respondent IDCP and its officers, are thereby
precluded from instituting separate or individual suits for damages against MVRS Publications, Inc., et al., as they are
bound by the judgment in this class action, which amounts to res judicata.

In the light of all the foregoing, I am constrained to dissent from the majority opinion.

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


Bellosillo, J.

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

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

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

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

CASES/AUTHORITY CITED:
i.) Newsweek, Inc. v. Intermediate Appellate Court: associations of sugarcane planters in Negros Occidental filed
against Newsweek over an article "Island of Fear" allegedly depicting Negros Province as a place dominated by
exploitative wealthy landowners and sugar planters who also brutalized and killed underpaid planters. SC
dismissed complaint on the ground that no allegation in the complaint that the article complained of specifically
referred to any of them. Where the defamation is alleged to have been directed at a group or class, it is essential
that the statement must be so sweeping or all-embracing as to apply to every individual in that group or class, or
sufficiently specific so that each individual in the class or group can prove that the defamatory statement
specifically pointed to him, so that he can bring the action separately, if need be.
ii.) Arcand v. The Evening Call Publishing Company: US CA held that the one guiding principle of group libel is that
defamation of a large group does not give rise to a cause of action on the part of an individual unless it can be
shown that he is the target of the defamatory matter.
iii.) Mr. Justice Reynato S. Punos opinion :
Defamation is made up of the twin torts of libel (written) and slander (oral). In either form, defamation is an
invasion of the interest in reputation and good name. This is a "relational interest" since it involves the opinion
others in the community may have, or tend to have of the plaintiff.
The law of defamation protects the interest in reputation the interest in acquiring, retaining and enjoying
one's reputation as good as one's character and conduct warrant. Defamation requires that something be
communicated to a third person that may affect the opinion others may have of the plaintiff. It must be shown
that this communication would tend to hurt plaintiff's reputation, to impair plaintiff's standing in the
community.
Although the gist of an action for defamation is an injury to reputation, the focus of a defamation action is
upon the allegedly defamatory statement itself and its predictable effect upon third persons.
The Restatement of Torts defines a defamatory statement as one that "tends to so harm the reputation of
another as to lower him in the estimation of the community or to deter third persons from associating or dealing
with him."
Consequently as a prerequisite to recovery, it is necessary for the plaintiff to prove: (1) published a statement
that was (2) defamatory (3) of and concerning the plaintiff. The rule in libel is that the action must be brought by
the person against whom the defamatory charge has been made. Plaintiff must be the person with reference to
whom the statement was made.
If the defamatory statements were directed at a small, restricted group of persons, they applied to any
member of the group, and an individual member could maintain an action for defamation. In contrast, if
defamatory words are used broadly in respect to a large class or group of persons, and there is nothing that
points, or by proper colloquium or innuendo can be made to apply, to a particular member of the class or group,
no member has a right of action for libel or slander. A prime consideration, therefore, is the public perception of
the size of the group and whether a statement will be interpreted to refer to every member.

2. Regarding the argument that the present case is an intentional tortious act causing mental distress and not an
action for libel. Invoking Chaplinsky v. New Hampshire where the U.S. SC held that profanity, intended merely to
incite hostility, have no social value and do not enjoy protection; and Beauharnais v. Illinois where it was also ruled
that hate speech against a group (based on religion, ethnicity, etc.) may validly be prohibited.
COURT: NO. "Emotional distress" tort action is personal in nature; it is a civil action filed by an individual to assuage
the injuries to his emotional tranquility due to personal attacks on his character.
APPLICATION: no particular individual was identified in the disputed article of Bulgar. Here, it is relational harm
which includes harm to social relationships in the community in the form of defamation; as distinguished from the
principle of reactive harm which includes injuries to individual emotional tranquility in the form of an infliction
of emotional distress.

DOCTRINES:
Second Restatement of the Law, to recover for the intentional infliction of emotional distress the plaintiff must
show that: (a) The conduct of the defendant was intentional or in reckless disregard of the plaintiff; (b) The
conduct was extreme and outrageous; (c) There was a causal connection between the defendant's conduct and the
plaintiff's mental distress; and, (d) The plaintiff's mental distress was extreme and severe.
"Extreme and outrageous conduct" means conduct that is so outrageous in character, and so extreme in degree,
as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in civilized
society.
"Emotional distress" means any highly unpleasant mental reaction such as extreme grief, shame, humiliation,
embarrassment, anger, disappointment, worry, nausea, mental suffering and anguish, shock, fright, horror, and
chagrin.
"Severe emotional distress," - he or she has suffered emotional distress so severe that no reasonable person
could be expected to endure it; severity of the distress is an element of the cause of action, not simply a matter of
damages.31
Hustler Magazine v. Falwell: A parody appeared in Hustler magazine featuring Reverend Falwell depicting him in
an inebriated state having an incestuous, sexual liaison with his mother. US Court held that it was not libelous,
because no reasonable reader would have understood it as a factual assertion. But still $200,000 awarded on a
separate count of "intentional infliction of emotional distress," a cause of action that did not require a false
statement of fact to be made. Here, an intentional tort causing emotional distress gives way to the fundamental
right to free speech.
APPLICATION: the conduct of petitioners was not extreme or outrageous. Neither was the emotional distress
allegedly suffered by respondents so severe that no reasonable person could be expected to endure it. There is no
evidence on record that points to that result.

CASES/AUTHORITY CITED:
i.) Professor William Prosser: Liability of course cannot be extended to every trivial indignity. One must
necessarily be expected and required to be hardened to a certain amount of rough language, and to acts that are
definitely inconsiderate and unkind. One cannot recover merely because of hurt feelings.
ii.) Professor Calvert Magruder: There is no occasion for the law to intervene in every case where someone's
feelings are hurt. There must still be freedom to express an unflattering opinion.
iii.) Chaplinsky and Beauharnais had largely been superseded by Cohen and Branderburg. American courts no
longer accept the view that speech may be proscribed merely because it is "lewd," "profane," "insulting" or
otherwise vulgar or offensive.
iv.) Cohen v. California: Cohen wore a jacket bearing the words "Fuck the Draft". No one present in the courthouse
would have regarded Cohen's speech as a direct personal insult, nor was there any danger of reactive violence
against him. No specific individual was targeted in the allegedly defamatory words printed on Cohen's jacket. There
was no showing that Cohen's jacket bearing the words "Fuck the Draft" had threatened to provoke imminent
violence.
v.) Brandenburg v. Ohio: a leader of the Ku Klux Klan was convicted for advocating unlawful methods of terrorism
as a means of accomplishing reforms; U.S. Supreme Court, held that the advocacy of illegal action becomes
punishable only if such advocacy is directed to inciting or producing imminent lawless action and is likely to incite or
produce such action.

3. NO, it is not a valid class suit.


DOCTRINE: Mr. Justice Jose C. Vitug: class suit elements: (a) whether the interest of the named party is
coextensive with the interest of the other members of the class; (b) the proportion of those made parties as it so
bears to the total membership of the class; and, (c) any other factor bearing on the ability of the named party to
speak for the rest of the class.
APPLICATION: Islamic Da'wah Council of the Philippines, Inc., seeks in effect to assert the interests not only of the
Muslims in the Philippines but of the whole Muslim world as well. But they obviously lack the sufficiency of
numbers to represent such a global group and were not able to demonstrate they have the same interests with the
rest of Muslims.

THIRD DIVISION

[G.R. No. 156841. June 30, 2005]


GF EQUITY, INC., petitioner, vs. ARTURO VALENZONA, respondent.

DECISION
CARPIO-MORALES, J.:

On challenge via Petition for Review on Certiorari is the Court of Appeals


October 14, 2002 Decision[1] reversing that of the Regional Trial Court (RTC)
of Manila dated June 28, 1997[2] which dismissed the complaint of herein
respondent Arturo Valenzona (Valenzona) for breach of contract with
damages against herein petitioner GF Equity, Inc. (GF Equity).
The factual antecedents of the case are as follows:
GF Equity, represented by its Chief Financial Officer W. Steven Uytengsu
(Uytengsu), hired Valenzona as Head Coach of the Alaska basketball team in
the Philippine Basketball Association (PBA) under a Contract of
Employment.[3]
As head coach, the duties of Valenzona were described in the contract to
include the following:
xxx

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

xxx

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

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

xxx

7. The COACH agrees that if so requested by the CORPORATION, he will endorse


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

xxx
Even before the conclusion of the contract, Valenzona had already served
GF Equity under a verbal contract by coaching its team, Hills Brothers, in the
3rd PBA Conference of 1987 where the team was runner-up.
Under the contract, GF Equity would pay Valenzona the sum of Thirty Five
Thousand Pesos (P35,000.00) monthly, net of taxes, and provide him with a
service vehicle and gasoline allowance.
While the employment period agreed upon was for two years commencing
on January 1, 1988 and ending on December 31, 1989, the last sentence of
paragraph 3 of the contract carried the following condition:

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

Before affixing his signature on the contract, Valenzona consulted his


lawyer who pointed out the one-sidedness of the above-quoted last sentence
of paragraph 3 thereof. The caveat notwithstanding, Valenzona still acceded
to the terms of the contract because he had trust and confidence in Uytengsu
who had recommended him to the management of GF Equity.
During his stint as Alaskas head coach, the team placed third both in the
Open and All-Filipino PBA Conferences in 1988.
Valenzona was later advised by the management of GF Equity by letter of
September 26, 1988 of the termination of his services in this wise:

We regret to inform you that under the contract of employment dated


January 1, 1988 we are invoking our rights specified in paragraph 3.

You will continue to be paid until your outstanding balance which, as of


September 25, 1988, is P75,868.38 has been fully paid.

Please return the service vehicle to my office no later than September 30,
1988.[4] (Emphasis supplied)

Close to six years after the termination of his services, Valenzonas


counsel, by letter of July 30, 1994,[5] demanded from GF Equity payment of
compensation arising from the arbitrary and unilateral termination of his
employment. GF Equity, however, refused the claim.
Valenzona thus filed on September 26, 1994 before the Regional Trial
Court of Manila a complaint[6] against GF Equity for breach of contract with
damages, ascribing bad faith, malice and disregard to fairness and to the
rights of the plaintiff by unilaterally and arbitrarily pre-terminating the contract
without just cause and legal and factual basis. He prayed for the award of
actual damages in the amount of P560,000.00 representing his unpaid
compensation from September 26, 1988 up to December 31, 1989, at the rate
of P35,000.00 a month; moral damages in the amount of P100,000.00;
exemplary damages in the amount of P50,000.00; attorneys fees in the
amount of P100,000.00; and costs of suit.
Before the trial court, Valenzona challenged the condition in paragraph 3
of the contract as lacking the element of mutuality of contract, a clear
transgression of Article 1308 of the New Civil Code, and reliance thereon, he
contended, did not warrant his unjustified and arbitrary dismissal.
GF Equity maintained, on the other hand, that it merely exercised its right
under the contract to pre-terminate Valenzonas employment due to
incompetence. And it posited that he was guilty of laches and, in any event,
his complaint should have been instituted before a labor arbiter.
The trial court, upholding the validity of the assailed provision of the
contract, dismissed, by decision of June 28, 1997,[7] the complaint of
Valenzona who, it held, was fully aware of entering into a bad bargain.
The Court of Appeals, before which Valenzona appealed, reversed the
trial courts decision, by decision of October 14, 2002,[8] and accordingly
ordered GF Equity to pay him damages.
In its decision, the appellate court held that the questioned provision in the
contract merely confers upon GF Equity the right to fire its coach upon a
finding of inefficiency, a valid reason within the ambit of its management
prerogatives, subject to limitations imposed by law, although not expressly
stated in the clause;
and the right granted in the contract can neither be saidto be immoral, unlawfu
l, or contrary to public policy. It concluded, however, that while the mutuality of
the clause is evident, GF Equity abused its right by arbitrarily terminating . . .
Valenzonas employment and opened itself to a charge of bad faith. Hence,
finding that Valenzonas claim for damages is obviously . . . based on Art. 19
of the Civil Code which provides:

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

the appellate court awarded Valenzona the following damages, furnishing the
justification therefor:

. . . a) Compensatory damages representing his unearned income for 15 months.


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

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

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


VIOLATIVE OF APPLICABLE LAWS AND ESTABLISHED
JURISPRUDENCE.[9]
GF Equity argues that the appellate court committed a non-sequitur when
it agreed with the findings of fact of the lower court but reached an opposite
conclusion. It avers that the appellate court made itself a guardian of an
otherwise intelligent individual well-versed in tactical maneuvers; that the
freedom to enter into contracts is protected by law, and the courts will not
interfere therewith unless the contract is contrary to law, morals, good
customs, public policy or public order; that there was absolutely no reason for
the appellate court to have found bad faith on its part; and that, at all events,
Valenzona is guilty of laches for his unexplained inaction for six years.
Central to the resolution of the instant controversy is the determination of
whether the questioned last sentence of paragraph 3 is violative of the
principle of mutuality of contracts.
Mutuality is one of the characteristics of a contract, its validity or
performance or compliance of which cannot be left to the will of only one of
the parties.[10] This is enshrined in Article 1308 of the New Civil
Code, whose underlying principle is explained in Garcia v. Rita Legarda,
Inc.,[11] viz:

Article 1308 of the New Civil Code reads as follows:

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

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

x x x (Emphasis, italics and underscoring supplied)

The ultimate purpose of the mutuality principle is thus to nullify a


contract containing a condition which makes its fulfillment or pre-termination
dependent exclusively upon theuncontrolled will of one of the contracting
parties.
Not all contracts though which vest to one party their determination of
validity or compliance or the right to terminate the same are void for being
violative of the mutuality principle. Jurisprudence is replete with instances of
cases[12] where this Court upheld the legality of contracts which left their
fulfillment or implementation to the will of either of the parties. In these cases,
however, there was a finding of the presence of essential equality of the
parties to the contracts, thus preventing the perpetration of injustice on the
weaker party.
In the case at bar, the contract incorporates in paragraph 3 the right of GF
Equity to pre-terminate the contract that if the coach, in the sole opinion of the
corporation, fails to exhibit sufficient skill or competitive ability to coach the
team, the corporation may terminate the contract. The assailed condition
clearly transgresses the principle of mutuality of contracts. It leaves the
determination of whether Valenzona failed to exhibit sufficient skill or
competitive ability to coach Alaska team solely to the opinion of GF Equity.
Whether Valenzona indeed failed to exhibit the required skill or competitive
ability depended exclusively on the judgment of GF Equity. In other words, GF
Equity was given an unbridled prerogative to pre-terminate the contract
irrespective of the soundness, fairness or reasonableness, or even lack of
basis of its opinion.
To sustain the validity of the assailed paragraph would open the gate for
arbitrary and illegal dismissals, for void contractual stipulations would be used
as justification therefor.
The assailed stipulation being violative of the mutuality principle underlying
Article 1308 of the Civil Code, it is null and void.
The nullity of the stipulation notwithstanding, GF Equity was not precluded
from the right to pre-terminate the contract. The pre-termination must have
legal basis, however, if it is to be declared justified.
GF Equity failed, however, to advance any ground to justify the pre-
termination. It simply invoked the assailed provision which is null and void.
While GF Equitys act of pre-terminating Valenzonas services cannot be
considered willful as it was based on a stipulation, albeit declared void, it, in
doing so, failed to consider the abuse of rights principle enshrined in Art. 19
of the Civil Code which provides:

Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
This provision of law sets standards which must be observed in the exercise
of ones rights as well as in the performance of its duties, to wit: to act with
justice; give every one his due; and observe honesty and good faith.
Since the pre-termination of the contract was anchored on an illegal
ground, hence, contrary to law, and GF Equity negligently failed to provide
legal basis for such pre-termination, e.g. that Valenzona breached the
contract by failing to discharge his duties thereunder, GF Equity failed to
exercise in a legitimate manner its right to pre-terminate the contract, thereby
abusing the right of Valenzona to thus entitle him to damages under Art. 19 in
relation to Article 20 of the Civil Code the latter of which provides:

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

In De Guzman v. NLRC,[13] this Court quoted the following explanation of


Tolentino why it is impermissible to abuse our rights to prejudice others.

The exercise of a right ends when the right disappears, and it disappears when it is
abused, especially to the prejudice of others. The mask of a right without the spirit of
justice which gives it life is repugnant to the modern concept of social law. It cannot
be said that a person exercises a right when he unnecessarily prejudices another or
offends morals or good customs. Over and above the specific precepts of positive law
are the supreme norms of justice which the law develops and which are expressed in
three principles: honeste vivere,[14] alterum non laedere[15] and jus suum quique
tribuere;[16] and he who violates them violates the law. For this reason, it is not
permissible to abuse our rights to prejudice others.

The disquisition in Globe Mackay Cable and Radio Corporation v. Court of


Appeals[17] is just as relevant as it is illuminating on the present case. In that
case, this Court declared that even granting that the therein petitioners might
have had the right to dismiss the therein respondent from work, the abusive
manner in which that right was exercised amounted to a legal wrong for which
the petitioners must be held liable.

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

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

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

As for GF Equitys defense of laches on account of Valenzonas invocation


of his right under the contract only after the lapse of six years, the same fails.
Laches has been defined as the failure or neglect for an unreasonable and
unexplained length of time to do that which by exercising due diligence, could
or should have been done earlier, thus giving rise to a presumption that the
party entitled to assert it either has abandoned or declined to assert it. It is not
concerned with mere lapse of time; the fact of delay, standing alone, is
insufficient to constitute laches.[19]
Laches applies in equity, whereas prescription applies at law. Our courts
are basically courts of law, not courts of equity. Laches cannot thus be
invoked to evade the enforcement of an existing legal right. Equity, which has
been aptly described as a justice outside legality, is applied only in the
absence of, and never against, statutory law. Aequetas nunquam contravenit
legis. Thus, where the claim was filed within the statutory period of
prescription, recovery therefor cannot be barred by laches. The doctrine of
laches should never be applied earlier than the expiration of time limited for
the commencement of actions at law,[20] unless, as a general rule, inexcusable
delay in asserting a right and acquiescense in existing conditions are
proven.[21] GF Equity has not proven, nay alleged, these.
Under Article 1144[22] of the New Civil Code, an action upon a written
contract must be brought within 10 years from the time the right of action
accrues. Since the action filed by Valenzona is an action for breach upon a
written contract, his filing of the case 6 years from the date his cause of action
arose was well within the prescriptive period, hence, the defense of laches
would not, under the circumstances, lie.
Consequently, Valenzona is entitled to recover actual damages his salary
which he should have received from the time his services were terminated up
to the time the employment contract expired.[23]
As for moral damages which the appellate court awarded, Article 2220 of
the New Civil Code allows such award to breaches of contract where the
defendant acted fraudulently or in bad faith. Malice or bad faith implies a
conscious and intentional design to do a wrongful act for a dishonest purpose
or moral obliquity. It contemplates a state of mind affirmatively operating with
furtive design or ill-will.[24] Bad faith means a breach of a known duty through
some motive of interest or ill will. It must, however, be substantiated by
evidence. Bad faith under the law cannot be presumed, it must be established
by clear and convincing evidence.
As earlier stated, however, the pre-termination of the contract was not
willful as GF Equity based it on a provision therein which is void. Malice or bad
faith cannot thus be ascribed to GF Equity.
The unbroken jurisprudence is that in breach of contract cases where a
party is not shown to have acted fraudulently or in bad faith, liability for
damages is limited to the natural and probable consequences of the breach of
the obligation which the parties had foreseen or could reasonably have
foreseen. The damages, however, do not include moral damages.[25]
The award by the appellate court of moral damages must thus be set
aside. And so must the award of exemplary damages, absent a showing that
GF Equity acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner.[26]
The award to Valenzona of attorneys fees must remain, however, GF
Equity having refused to pay the balance of Valenzonas salaries to which he
was, under the facts and circumstances of the case, entitled under the
contract, thus compelling him to litigate to protect his interest.[27]
WHEREFORE, the decision of the Court of Appeals dated October 14,
2002 is hereby SET ASIDE and another rendered declaring the assailed
provision of the contract NULL AND VOID and ORDERING petitioner, GF
Equity, to pay private respondent, Arturo Valenzona, actual damages in the
amount of P525,000.00 and attorneys fees in the amount of P60,000.00.
Costs against petitioner.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Garcia,
JJ., concur.
Facts: GF Equity hired Valenzona as Head Coach of the Alaska basketball team in the Philippine Basketball Association under a
Contract of Employment where GF Equity would pay Valenzona the sum of P35,000.00 monthly. While the employment period
agreed upon was for two years commencing, the last sentence of paragraph 3 of the contract carried the following condition: 3. x x x
If at any time during the contract, the COACH, in the sole opinion of the CORPORATION, fails to exhibit sufficient skill or
competitive ability to coach the team, the CORPORATION may terminate this contract. The caveat notwithstanding, Valenzona still
acceded to the terms of the contract. Thereafter, Valenzona was terminated as coach of the Alaska team. Valenzona demanded from
GF Equity payment of compensation arising from the arbitrary and unilateral termination of his employment. GF Equity, however,
refused the claim. Valenzona thus filed before the RTC Manila a complaint against GF Equity for breach of contract with damages.
The trial court, upholding the validity of the assailed provision of the contract, dismissed the complaint.

Issue: Whether the questioned last sentence of paragraph 3 is violative of the principle of mutuality of contracts.

Held: Mutuality is one of the characteristics of a contract, its validity or performance or compliance of which cannot be left to the
will of only one of the parties. The ultimate purpose of the mutuality principle is thus to nullify a contract containing a condition
which makes its fulfillment or pre-termination dependent exclusively upon the uncontrolled will of one of the contracting parties. In
the case at bar, the contract incorporates in paragraph 3 the right of GF Equity to pre-terminate the contract. The assailed condition
clearly transgresses the principle of mutuality of contracts. GF Equity was given an unbridled prerogative to pre-terminate the
contract irrespective of the soundness, fairness or reasonableness, or even lack of basis of its opinion. The assailed stipulation being
violative of the mutuality principle underlying Article 1308 of the Civil Code, it is null and void.

THIRD DIVISION

[G.R. No. 145391. August 26, 2002]

AVELINO CASUPANAN and ROBERTO CAPITULO, petitioners, vs.


MARIO LLAVORE LAROYA, respondent.

DECISION
CARPIO, J.:

The Case

This is a petition for review on certiorari to set aside the Resolution [1] dated
December 28, 1999 dismissing the petition for certiorari and the Resolution[2] dated
August 24, 2000 denying the motion for reconsideration, both issued by the Regional
Trial Court of Capas, Tarlac, Branch 66, in Special Civil Action No. 17-C (99).

The Facts

Two vehicles, one driven by respondent Mario Llavore Laroya (Laroya for brevity)
and the other owned by petitioner Roberto Capitulo (Capitulo for brevity) and driven by
petitioner Avelino Casupanan (Casupanan for brevity), figured in an accident. As a
result, two cases were filed with the Municipal Circuit Trial Court (MCTC for brevity) of
Capas, Tarlac. Laroya filed a criminal case against Casupanan for reckless imprudence
resulting in damage to property, docketed as Criminal Case No. 002-99. On the other
hand, Casupanan and Capitulo filed a civil case against Laroya for quasi-delict,
docketed as Civil Case No. 2089.
When the civil case was filed, the criminal case was then at its preliminary
investigation stage. Laroya, defendant in the civil case, filed a motion to dismiss the civil
case on the ground of forum-shopping considering the pendency of the criminal case.
The MCTC granted the motion in the Order of March 26, 1999 and dismissed the civil
case.
On Motion for Reconsideration, Casupanan and Capitulo insisted that the civil case
is a separate civil action which can proceed independently of the criminal case. The
MCTC denied the motion for reconsideration in the Order of May 7, 1999. Casupanan
and Capitulo filed a petition for certiorari under Rule 65 before the Regional Trial Court
(Capas RTC for brevity) of Capas, Tarlac, Branch 66,[3] assailing the MCTCs Order of
dismissal.

The Trial Courts Ruling

The Capas RTC rendered judgment on December 28, 1999 dismissing the petition
for certiorari for lack of merit. The Capas RTC ruled that the order of dismissal issued by
the MCTC is a final order which disposes of the case and therefore the proper remedy
should have been an appeal. The Capas RTC further held that a special civil action for
certiorari is not a substitute for a lost appeal. Finally, the Capas RTC declared that even
on the premise that the MCTC erred in dismissing the civil case, such error is a pure
error of judgment and not an abuse of discretion.
Casupanan and Capitulo filed a Motion for Reconsideration but the Capas RTC
denied the same in the Resolution of August 24, 2000.
Hence, this petition.

The Issue
The petition premises the legal issue in this wise:

In a certain vehicular accident involving two parties, each one of them may think and
believe that the accident was caused by the fault of the other. x x x [T]he first party,
believing himself to be the aggrieved party, opted to file a criminal case for reckless
imprudence against the second party. On the other hand, the second party, together
with his operator, believing themselves to be the real aggrieved parties, opted in turn
to file a civil case for quasi-delict against the first party who is the very private
complainant in the criminal case. [4]

Thus, the issue raised is whether an accused in a pending criminal case for
reckless imprudence can validly file, simultaneously and independently, a separate civil
action for quasi-delict against the private complainant in the criminal case.

The Courts Ruling

Casupanan and Capitulo assert that Civil Case No. 2089, which the MCTC
dismissed on the ground of forum-shopping, constitutes a counterclaim in the criminal
case. Casupanan and Capitulo argue that if the accused in a criminal case has a
counterclaim against the private complainant, he may file the counterclaim in a separate
civil action at the proper time. They contend that an action on quasi-delict is different
from an action resulting from the crime of reckless imprudence, and an accused in a
criminal case can be an aggrieved party in a civil case arising from the same incident.
They maintain that under Articles 31 and 2176 of the Civil Code, the civil case can
proceed independently of the criminal action. Finally, they point out that Casupanan was
not the only one who filed the independent civil action based on quasi-delict but also
Capitulo, the owner-operator of the vehicle, who was not a party in the criminal case.
In his Comment, Laroya claims that the petition is fatally defective as it does not
state the real antecedents. Laroya further alleges that Casupanan and Capitulo forfeited
their right to question the order of dismissal when they failed to avail of the proper
remedy of appeal. Laroya argues that there is no question of law to be resolved as the
order of dismissal is already final and a petition for certiorari is not a substitute for a
lapsed appeal.
In their Reply, Casupanan and Capitulo contend that the petition raises the legal
question of whether there is forum-shopping since they filed only one action - the
independent civil action for quasi-delict against Laroya.
Nature of the Order of Dismissal
The MCTC dismissed the civil action for quasi-delict on the ground of forum-
shopping under Supreme Court Administrative Circular No. 04-94. The MCTC did not
state in its order of dismissal[5] that the dismissal was with prejudice. Under the
Administrative Circular, the order of dismissal is without prejudice to refiling the
complaint, unless the order of dismissal expressly states it is with prejudice. [6] Absent a
declaration that the dismissal is with prejudice, the same is deemed without
prejudice. Thus, the MCTCs dismissal, being silent on the matter, is a dismissal without
prejudice.
Section 1 of Rule 41[7] provides that an order dismissing an action without prejudice
is not appealable. The remedy of the aggrieved party is to file a special civil action
under Rule 65.Section 1 of Rule 41 expressly states that where the judgment or final
order is not appealable, the aggrieved party may file an appropriate special civil action
under Rule 65. Clearly, the Capas RTCs order dismissing the petition for certiorari, on
the ground that the proper remedy is an ordinary appeal, is erroneous.
Forum-Shopping
The essence of forum-shopping is the filing of multiple suits involving the same
parties for the same cause of action, either simultaneously or successively, to secure a
favorable judgment.[8] Forum-shopping is present when in the two or more cases
pending, there is identity of parties, rights of action and reliefs sought. [9] However, there
is no forum-shopping in the instant case because the law and the rules expressly allow
the filing of a separate civil action which can proceed independently of the criminal
action.
Laroya filed the criminal case for reckless imprudence resulting in damage to
property based on the Revised Penal Code while Casupanan and Capitulo filed the civil
action for damages based on Article 2176 of the Civil Code. Although these two actions
arose from the same act or omission, they have different causes of action. The criminal
case is based on culpa criminal punishable under the Revised Penal Code while the
civil case is based on culpa aquiliana actionable under Articles 2176 and 2177 of the
Civil Code. These articles on culpa aquiliana read:

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

Art. 2177. Responsibility for fault or negligence under the preceding article is entirely
separate and distinct from the civil liability arising from negligence under the Penal
Code. But the plaintiff cannot recover damages twice for the same act or omission of
the defendant.

Any aggrieved person can invoke these articles provided he proves, by


preponderance of evidence, that he has suffered damage because of the fault or
negligence of another. Either the private complainant or the accused can file a separate
civil action under these articles. There is nothing in the law or rules that state only the
private complainant in a criminal case may invoke these articles.
Moreover, paragraph 6, Section 1, Rule 111 of the 2000 Rules on Criminal
Procedure (2000 Rules for brevity) expressly requires the accused to litigate his
counterclaim in a separate civil action, to wit:
SECTION 1. Institution of criminal and civil actions. (a) x x x.

No counterclaim, cross-claim or third-party complaint may be filed by the accused in


the criminal case, but any cause of action which could have been the subject thereof
may be litigated in a separate civil action. (Emphasis supplied)

Since the present Rules require the accused in a criminal action to file his counterclaim
in a separate civil action, there can be no forum-shopping if the accused files such
separate civil action.
Filing of a separate civil action
Section 1, Rule 111 of the 1985 Rules on Criminal Procedure (1985 Rules for
brevity), as amended in 1988, allowed the filing of a separate civil action independently
of the criminal action provided the offended party reserved the right to file such civil
action. Unless the offended party reserved the civil action before the presentation of the
evidence for the prosecution, all civil actions arising from the same act or omission were
deemed impliedly instituted in the criminal case. These civil actions referred to the
recovery of civil liability ex-delicto, the recovery of damages for quasi-delict, and the
recovery of damages for violation of Articles 32, 33 and 34 of the Civil Code on Human
Relations.
Thus, to file a separate and independent civil action for quasi-delict under the 1985
Rules, the offended party had to reserve in the criminal action the right to bring such
action.Otherwise, such civil action was deemed impliedly instituted in the criminal
action. Section 1, Rule 111 of the 1985 Rules provided as follows:

Section 1. Institution of criminal and civil actions. When a criminal action is


instituted, the civil action for the recovery of civil liability is impliedly instituted with
the criminal action, unless the offended party waives the action, reserves his right to
institute it separately, or institutes the civil action prior to the criminal action.

Such civil action includes recovery of indemnity under the Revised Penal Code, and
damages under Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines
arising from the same act or omission of the accused.

A waiver of any of the civil actions extinguishes the others. The institution of, or the
reservation of the right to file, any of said civil actions separately waives the others.

The reservation of the right to institute the separate civil actions shall be made before
the prosecution starts to present its evidence and under circumstances affording the
offended party a reasonable opportunity to make such reservation.

In no case may the offended party recover damages twice for the same act or omission
of the accused.
x x x. (Emphasis supplied)

Section 1, Rule 111 of the 1985 Rules was amended on December 1, 2000 and
now provides as follows:

SECTION 1. Institution of criminal and civil actions. (a) When a criminal action is
instituted, the civil action for the recovery of civil liability arising from the offense
charged shall be deemed instituted with the criminal action unless the offended party
waives the civil action, reserves the right to institute it separately or institutes the civil
action prior to the criminal action.

The reservation of the right to institute separately the civil action shall be made before
the prosecution starts presenting its evidence and under circumstances affording the
offended party a reasonable opportunity to make such reservation.

xxx

(b) x x x

Where the civil action has been filed separately and trial thereof has not yet
commenced, it may be consolidated with the criminal action upon application with the
court trying the latter case. If the application is granted, the trial of both actions shall
proceed in accordance with section 2 of this rule governing consolidation of the civil
and criminal actions. (Emphasis supplied)

Under Section 1 of the present Rule 111, what is deemed instituted with the criminal
action is only the action to recover civil liability arising from the crime or ex-delicto. All
the other civil actions under Articles 32, 33, 34 and 2176 of the Civil Code are no longer
deemed instituted, and may be filed separately and prosecuted independently even
without any reservation in the criminal action. The failure to make a reservation in the
criminal action is not a waiver of the right to file a separate and independent civil action
based on these articles of the Civil Code.The prescriptive period on the civil actions
based on these articles of the Civil Code continues to run even with the filing of the
criminal action. Verily, the civil actions based on these articles of the Civil Code are
separate, distinct and independent of the civil action deemed instituted in the criminal
action.[10]
Under the present Rule 111, the offended party is still given the option to file a
separate civil action to recover civil liability ex-delicto by reserving such right in the
criminal action before the prosecution presents its evidence. Also, the offended party is
deemed to make such reservation if he files a separate civil action before filing the
criminal action. If the civil action to recover civil liability ex-delicto is filed separately but
its trial has not yet commenced, the civil action may be consolidated with the criminal
action. The consolidation under this Rule does not apply to separate civil actions arising
from the same act or omission filed under Articles 32, 33, 34 and 2176 of the Civil
Code.[11]
Suspension of the Separate Civil Action
Under Section 2, Rule 111 of the amended 1985 Rules, a separate civil action, if
reserved in the criminal action, could not be filed until after final judgment was rendered
in the criminal action. If the separate civil action was filed before the commencement of
the criminal action, the civil action, if still pending, was suspended upon the filing of the
criminal action until final judgment was rendered in the criminal action. This rule applied
only to the separate civil action filed to recover liability ex-delicto. The rule did not apply
to independent civil actions based on Articles 32, 33, 34 and 2176 of the Civil Code,
which could proceed independently regardless of the filing of the criminal action.
The amended provision of Section 2, Rule 111 of the 2000 Rules continues this
procedure, to wit:

SEC. 2. When separate civil action is suspended. After the criminal action has been
commenced, the separate civil action arising therefrom cannot be instituted until final
judgment has been entered in the criminal action.

If the criminal action is filed after the said civil action has already been instituted,
the latter shall be suspended in whatever stage it may be found before judgment on
the merits. The suspension shall last until final judgment is rendered in the
criminal action. Nevertheless, before judgment on the merits is rendered in the civil
action, the same may, upon motion of the offended party, be consolidated with the
criminal action in the court trying the criminal action. In case of consolidation, the
evidence already adduced in the civil action shall be deemed automatically
reproduced in the criminal action without prejudice to the right of the prosecution to
cross-examine the witnesses presented by the offended party in the criminal case and
of the parties to present additional evidence. The consolidated criminal and civil
actions shall be tried and decided jointly.

During the pendency of the criminal action, the running of the period of prescription
of the civil action which cannot be instituted separately or whose proceeding has been
suspended shall be tolled.

x x x. (Emphasis supplied)

Thus, Section 2, Rule 111 of the present Rules did not change the rule that the separate
civil action, filed to recover damages ex-delicto, is suspended upon the filing of the
criminal action.Section 2 of the present Rule 111 also prohibits the filing, after
commencement of the criminal action, of a separate civil action to recover damages ex-
delicto.
When civil action may proceed independently
The crucial question now is whether Casupanan and Capitulo, who are not the
offended parties in the criminal case, can file a separate civil action against the offended
party in the criminal case. Section 3, Rule 111 of the 2000 Rules provides as follows:

SEC 3. When civil action may proceed independently. - In the cases provided in
Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent
civil action may be brought by the offendedparty. It shall proceed independently of
the criminal action and shall require only a preponderance of evidence. In no case,
however, may the offended party recover damages twice for the same act or omission
charged in the criminal action. (Emphasis supplied)

Section 3 of the present Rule 111, like its counterpart in the amended 1985 Rules,
expressly allows the offended party to bring an independent civil action under Articles
32, 33, 34 and 2176 of the Civil Code. As stated in Section 3 of the present Rule 111,
this civil action shall proceed independently of the criminal action and shall require only
a preponderance of evidence.In no case, however, may the offended party recover
damages twice for the same act or omission charged in the criminal action.
There is no question that the offended party in the criminal action can file an
independent civil action for quasi-delict against the accused. Section 3 of the present
Rule 111 expressly states that the offended party may bring such an action but the
offended party may not recover damages twice for the same act or omission charged in
the criminal action. Clearly, Section 3 of Rule 111 refers to the offended party in the
criminal action, not to the accused.
Casupanan and Capitulo, however, invoke the ruling in Cabaero vs.
Cantos[12] where the Court held that the accused therein could validly institute a
separate civil action for quasi-delict against the private complainant in the criminal
case. In Cabaero, the accused in the criminal case filed his Answer with Counterclaim
for malicious prosecution. At that time the Court noted the absence of clear-cut rules
governing the prosecution on impliedly instituted civil actions and the necessary
consequences and implications thereof. Thus, the Court ruled that the trial court
should confine itself to the criminal aspect of the case and disregard any counterclaim
for civil liability. The Court further ruled that the accused may file a separate civil case
against the offended party after the criminal case is terminated and/or in accordance
with the new Rules which may be promulgated. The Court explained that a cross-claim,
counterclaim or third-party complaint on the civil aspect will only unnecessarily
complicate the proceedings and delay the resolution of the criminal case.
Paragraph 6, Section 1 of the present Rule 111 was incorporated in the 2000 Rules
precisely to address the lacuna mentioned in Cabaero. Under this provision, the
accused is barred from filing a counterclaim, cross-claim or third-party complaint in the
criminal case. However, the same provision states that any cause of action which could
have been the subject (of the counterclaim, cross-claim or third-party complaint) may be
litigated in a separate civil action. The present Rule 111 mandates the accused to file
his counterclaim in a separate civil action which shall proceed independently of the
criminal action, even as the civil action of the offended party is litigated in the criminal
action.
Conclusion
Under Section 1 of the present Rule 111, the independent civil action in Articles 32,
33, 34 and 2176 of the Civil Code is not deemed instituted with the criminal action but
may be filed separately by the offended party even without reservation. The
commencement of the criminal action does not suspend the prosecution of the
independent civil action under these articles of the Civil Code. The suspension in
Section 2 of the present Rule 111 refers only to the civil action arising from the crime, if
such civil action is reserved or filed before the commencement of the criminal action.
Thus, the offended party can file two separate suits for the same act or
omission. The first a criminal case where the civil action to recover civil liability ex-
delicto is deemed instituted, and the other a civil case for quasi-delict - without violating
the rule on non-forum shopping. The two cases can proceed simultaneously and
independently of each other. The commencement or prosecution of the criminal action
will not suspend the civil action for quasi-delict. The only limitation is that the offended
party cannot recover damages twice for the same act or omission of the defendant. In
most cases, the offended party will have no reason to file a second civil action since he
cannot recover damages twice for the same act or omission of the accused. In some
instances, the accused may be insolvent, necessitating the filing of another case
against his employer or guardians.
Similarly, the accused can file a civil action for quasi-delict for the same act or
omission he is accused of in the criminal case. This is expressly allowed in paragraph 6,
Section 1 of the present Rule 111 which states that the counterclaim of the
accused may be litigated in a separate civil action. This is only fair for two
reasons. First, the accused is prohibited from setting up any counterclaim in the civil
aspect that is deemed instituted in the criminal case. The accused is therefore forced to
litigate separately his counterclaim against the offended party. If the accused does not
file a separate civil action for quasi-delict, the prescriptive period may set in since the
period continues to run until the civil action for quasi-delict is filed.
Second, the accused, who is presumed innocent, has a right to invoke Article 2177
of the Civil Code, in the same way that the offended party can avail of this remedy
which is independent of the criminal action. To disallow the accused from filing a
separate civil action for quasi-delict, while refusing to recognize his counterclaim in the
criminal case, is to deny him due process of law, access to the courts, and equal
protection of the law.
Thus, the civil action based on quasi-delict filed separately by Casupanan and
Capitulo is proper. The order of dismissal by the MCTC of Civil Case No. 2089 on the
ground of forum-shopping is erroneous.
We make this ruling aware of the possibility that the decision of the trial court in the
criminal case may vary with the decision of the trial court in the independent civil
action. This possibility has always been recognized ever since the Civil Code introduced
in 1950 the concept of an independent civil action under Articles 32, 33, 34 and 2176 of
the Code. But the law itself, in Article 31 of the Code, expressly provides that the
independent civil action may proceed independently of the criminal proceedings and
regardless of the result of the latter. In Azucena vs. Potenciano,[13] the Court declared:

x x x. There can indeed be no other logical conclusion than this, for to subordinate the
civil action contemplated in the said articles to the result of the criminal prosecution
whether it be conviction or acquittal would render meaningless the independent
character of the civil action and the clear injunction in Article 31 that this action 'may
proceed independently of the criminal proceedings and regardless of the result of the
latter.

More than half a century has passed since the Civil Code introduced the concept of
a civil action separate and independent from the criminal action although arising from
the same act or omission. The Court, however, has yet to encounter a case of
conflicting and irreconcilable decisions of trial courts, one hearing the criminal case and
the other the civil action for quasi-delict. The fear of conflicting and irreconcilable
decisions may be more apparent than real. In any event, there are sufficient remedies
under the Rules of Court to deal with such remote possibilities.
One final point. The Revised Rules on Criminal Procedure took effect on December
1, 2000 while the MCTC issued the order of dismissal on December 28, 1999 or before
the amendment of the rules. The Revised Rules on Criminal Procedure must be given
retroactive effect considering the well-settled rule that -

x x x statutes regulating the procedure of the court will be construed as applicable to


actions pending and undetermined at the time of their passage. Procedural laws are
retroactive in that sense and to that extent. [14]

WHEREFORE, the petition for review on certiorari is hereby GRANTED. The


Resolutions dated December 28, 1999 and August 24, 2000 in Special Civil Action No.
17-C (99) are ANNULLED and Civil Case No. 2089 is REINSTATED.
SO ORDERED.
Puno, (Chairman), Panganiban, JJ., concur.
Sandoval-Gutierrez, J., on leave.
Facts :

The two vehicle, driven by the respondent Laroya and the petitioner Capitulo and Avelino had
an accident. As a result two cases were filed with the Municipal Circuit Trial Court, Laroya filed a
criminal case against Casupanan for reckless imprudence resulting in damage to property. On
the other hand, Casupanan and Capitulo filed a civil case against Laroya for quasi-delict.

ISSUE:
Whether an accused in a pending criminal case for reckless imprudence can validly file,
simultaneously and independently, a separate civil action for quasi-delict against the private
complainant in the criminal case.

Ruling:

Under Section 1 of the present Rule 111, the independent civil action in Articles 32, 33, 34 and
2176 of the Civil Code is not deemed instituted with the criminal action but may be filed
separately by the offended party even without reservation. Thus, the offended party can file two
separate suits for the same act or omission. The first a criminal case where the civil action to
recover civil liability ex-delicto is deemed instituted, and the other a civil case for quasi-delict -
without violating the rule on non-forum shopping. The two cases can proceed simultaneously
and independently of each other.

Similarly, the accused can file a civil action for quasi-delict for the same act or omission he is
accused of in the criminal case.

To disallow the accused from filing a separate civil action for quasi-delict, while refusing to
recognize his counterclaim in the criminal case, is to deny him due process of law, access to the
courts, and equal protection of the law.

Thus, the civil action based on quasi-delict filed separately by Casupanan and Capitulo is
proper. The order of dismissal on the ground of forum-shopping is erroneous.

Related to : Art. 33

SECOND DIVISION

[G.R. No. 119771. April 24, 1998]


SAN ILDEFONSO LINES, INC., and EDUARDO JAVIER, petitioners,
vs. COURT OF APPEALS (Thirteenth Division) and PIONEER
INSURANCE and SURETY CORPORATION, respondents.

DECISION
MARTINEZ, J.:

At around 3:30 in the afternoon of June 24, 1991, a Toyota Lite Ace Van being
driven by its owner Annie U. Jao and a passenger bus of herein petitioner San Ildefonso
Lines, Inc. (hereafter, SILI) figured in a vehicular mishap at the intersection of Julia
Vargas Avenue and Rodriguez Lanuza Avenue in Pasig, Metro Manila, totally wrecking
the Toyota van and injuring Ms. Jao and her two (2) passengers in the process.
A criminal case was thereafter filed with the Regional Trial Court of Pasig on
September 18, 1991 charging the driver of the bus, herein petitioner Eduardo Javier,
with reckless imprudence resulting in damage to property with multiple physical injuries.
About four (4) months later, or on January 13, 1992, herein private respondent
Pioneer Insurance and Surety Corporation (PISC), as insurer of the van and subrogee,
filed a case for damages against petitioner SILI with the Regional Trial Court of Manila,
seeking to recover the sums it paid the assured under a motor vehicle insurance policy
as well as other damages, totaling P564,500.00 (P454,000.00 as actual/compensatory
damages; P50,000.00 as exemplary damages; P50,000.00 as attorney's
fees; P10,000.00 as litigation expenses; and P500.00 as appearance fees.)[1]
With the issues having been joined upon the filing of the petitioners' answer to the
complaint for damages and after submission by the parties of their respective pre-trial
briefs, petitioners filed on September 18, 1992 a Manifestation and Motion to Suspend
Civil Proceedings grounded on the pendency of the criminal case against petitioner
Javier in the Pasig RTC and the failure of respondent PISC to make a reservation to file
a separate damage suit in said criminal action. This was denied by the Manila Regional
Trial Court in its Order dated July 21, 1993,[2] ruling thus:

"Answering the first question thus posed, the court holds that plaintiff may legally
institute the present civil action even in the absence of a reservation in the criminal
action. This is so because it falls among the very exceptions to the rule cited by the
movant.

"It is true that the general rule is that once a criminal action has been instituted, then
civil action based thereon is deemed instituted together with the criminal action, such
that if the offended party did not reserve the filing of the civil action when the
criminal action was filed, then such filing of the civil action is therefore barred; on the
other hand, if there was such reservation, still the civil action cannot be instituted until
final judgment has been rendered in the criminal action;
"But, this rule (Section 2, Rule 111, Revised Rules of Court) is subject to exemptions,
the same being those provided for in Section 3 of the same rule which states:

'Section 3. When civil action may proceed independently. - In the cases provided for
in Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent
civil action which was been reserved may be brought by the offended party, shall
proceed independently of the criminal action, and shall require only a preponderance
of evidence.'

"Besides, the requirement in Section 2 of Rule 111 of the former Rules on Criminal
Procedure that there be a reservation in the criminal case of the right to institute an
independent civil action has been declared as not in accordance with law. It is
regarded as an unauthorized amendment to our substantive law, i.e., the Civil Code
which does not require such reservation. In fact, the reservation of the right to file an
independent civil action has been deleted from Section 2, Rule 111 of the 1985 Rules
on Criminal Procedure, in consonance with the decisions of this Court declaring such
requirement of a reservation as ineffective. (Bonite vs. Zosa, 162 SCRA 180)

"Further, the Court rules that a subrogee-plaintiff may institute and prosecute the civil
action, it being allowed by Article 2207 of the Civil Code."

After their motion for reconsideration of said July 21, 1993 Order was denied,
petitioners elevated the matter to this Court via petition for certiorari which was,
however, referred to public respondent Court of Appeals for disposition. On February
24, 1995, a decision adverse to petitioners once again was rendered by respondent
court, upholding the assailed Manila Regional Trial Court Order in this wise:

"A separate civil action lies against the offender in a criminal act, whether or not he is
criminally prosecuted and found guilty or acquitted, provided that the offended party
is not allowed (if the tortfeasor is actually charged also criminally), to recover
damages on both scores, and would be entitled in such eventuality only to the bigger
award of the two, assuming the awards made in the two cases vary.

"To subordinate the civil action contemplated in the said articles to the result of the
criminal prosecution - whether it be conviction or acquittal - would render
meaningless the independent character of the civil action and the clear injunction in
Art. 31, that this action may proceed independently of the criminal proceedings and
regardless of the result of the latter.

"In Yakult Phil. vs. CA, the Supreme Court said:

'Even if there was no reservation in the criminal case and that the civil action was not
filed before the filing of the criminal action but before the prosecution presented
evidence in the criminal action, and the judge handling the criminal case was
informed thereof, then the actual filing of the civil action is even far better than a
compliance with the requirement of an express reservation that should be made by the
offended party before the prosecution presented its evidence.'

"The purpose of this rule requiring reservation is to prevent the offended party from
recovering damages twice for the same act or omission.

"Substantial compliance with the reservation requirement may, therefore, be made by


making a manifestation in the criminal case that the private respondent has instituted a
separate and independent civil action for damages.

"Oft-repeated is the dictum that courts should not place undue importance on
technicalities when by so doing, substantial justice is sacrificed. While the rules of
procedure require adherence, it must be remembered that said rules of procedure are
intended to promote, not defeat, substantial justice, and therefore, they should not be
applied in a very rigid and technical sense."

Hence, this petition for review after a motion for reconsideration of said respondent
court judgment was denied.
The two (2) crucial issues to be resolved, as posited by petitioners, are:
1) If a criminal case was filed, can an independent civil action based on quasi-delict
under Article 2176 of the Civil Code be filed if no reservation was made in the said
criminal case?
2) Can a subrogee of an offended party maintain an independent civil action during
the pendency of a criminal action when no reservation of the right to file an independent
civil action was made in the criminal action and despite the fact that the private
complainant is actively participating through a private prosecutor in the aforementioned
criminal case?
We rule for petitioners.
On the chief issue of "reservation", at the fore is Section 3, Rule 111 of the Rules of
Court which reads:

"Sec. 3. When civil action may proceed independently. -- In the cases provided for in
Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent
civil action which has been reserved may be brought by the offended party, shall
proceed independently of the criminal action, and shall require only a preponderance
of evidence."

There is no dispute that these so-called "independent civil actions" based on the
aforementioned Civil Code articles are the exceptions to the primacy of the criminal
action over the civil action as set forth in Section 2 of Rule 111. [3] However, it is easily
deducible from the present wording of Section 3 as brought about by the 1988
amendments to the Rules on Criminal Procedure -- particularly the phrase " which has
been reserved" -- that the "independent" character of these civil actions does not do
away with the reservation requirement. In other words, prior reservation is a
condition sine qua non before any of these independent civil actions can be instituted
and thereafter have a continuous determination apart from or simultaneous with the
criminal action. That this should now be the controlling procedural rule is confirmed by
no less than retired Justice Jose Y. Feria, remedial law expert and a member of the
committee which drafted the 1988 amendments, whose learned explanation on the
matter was aptly pointed out by petitioners, to wit:

"The 1988 amendment expands the scope of the civil action which is deemed
impliedly instituted with the criminal action unless waived, reserved or previously
instituted xxx.

Under the present Rule as amended, such a civil action includes not only recovery of
indemnity under the Revised Penal Code and damages under Articles 32, 33, 34 of the
Civil Code of the Philippines, but also damages under Article 2176 of the said code.
xxx

Objections were raised to the inclusion in this Rule of quasi-delicts under Article
2176 of the Civil Code of the Philippines. However, in view of Article 2177 of the
said code which provides that the offended party may not recover twice for the same
act or omission of the accused, and in line with the policy of avoiding multiplicity of
suits, these objections were overruled. In any event, the offended party is not
precluded from filing a civil action to recover damages arising from quasi-delict
before the institution of the criminal action, or from reserving his right to file such a
separate civil action, just as he is not precluded from filing a civil action for damages
under Articles 32, 33 and 34 before the institution of the criminal action, or from
reserving his right to file such a separate civil action. It is only in those cases where
the offended party has not previously filed a civil action or has not reserved his right
to file a separate civil action that his civil action is deemed impliedly instituted with
the criminal action.

It should be noted that while it was ruled in Abella vs. Marave (57 SCRA 106) that a
reservation of the right to file an independent civil action is not necessary, such a
reservation is necessary under the amended rule. Without such reservation, the civil
action is deemed impliedly instituted with the criminal action, unless previously
waived or instituted. (Underscoring ours. Justice Jose Y. Feria [Ret.], 1988
Amendments to the 1985 Rules on Criminal Procedure, a pamphlet, published by
Central Lawbook Publishing Co., Inc., Philippine Legal Studies, Series No. 3, 5-6). [4]
Sharing the same view on the indispensability of a prior reservation is Mr. Justice
Florenz D. Regalado, whose analysis of the historical changes in Rule 111 since the
1964 Rules of Court is equally illuminating. Thus,

"1. Under Rule 111 of the 1964 Rules of Court, the civil liability arising from the
offense charged was impliedly instituted with the criminal action, unless such civil
action was expressly waived or reserved. The offended party was authorized to bring
an independent civil action in the cases provided for in Articles 31, 32, 33, 34 and
2177 of the Civil Code provided such right was reserved.

In the 1985 Rules on Criminal Procedure, the same Rule 111 thereof reiterated said
provision on the civil liability arising from the offense charged. The independent civil
actions, however, were limited to the cases provided for in Articles 32, 33 and 34 of
the Civil Code, obviously because the actions contemplated in Articles 31 and 2177 of
said Code are not liabilities ex delicto. Furthermore, no reservation was required in
order the civil actions in said Articles 32, 33 and 34 may be pursued separately.

2. The present amendments introduced by the Supreme Court have the following
notable features on this particular procedural aspect, viz:

a. The civil action which is impliedly instituted with the criminal action,
barring a waiver, reservation or prior institution thereof, need not
arise from the offense charged, as the phrase 'arising from the
offense charged' which creates that nexus has been specifically
eliminated.

b. The independent civil actions contemplated in the present Rule 111


include the quasi-delicts provided for in Art. 2176 of the Civil
Code, in addition to the cases provided in Arts. 32, 33 and 34
thereof. It is necessary, however, that the civil liability under all
the said articles arise 'from the same act or omission of the
accused.' Furthermore, a reservation of the right to institute these
separate civil actions is again required, otherwise, said civil
actions are impliedly instituted with the criminal action, unless the
former are waived or filed ahead of the criminal
action." (Emphasis supplied.) [5]

In fact, a deeper reading of the "Yakult Phils. vs. CA" case[6] relied upon by
respondent court reveals an acknowledgement of the reservation requirement. After
recognizing that the civil case instituted by private respondent therein Roy Camaso
(represented by his father David Camaso) against petitioner Yakult Phils. (the owner of
the motorcycle that sideswiped Roy Camaso, only five years old at the time of the
accident) and Larry Salvado (the driver of the motorcycle) during the pendency of the
criminal case against Salvado for reckless imprudence resulting to slight physical
injuries, as one based on tort, this Court said:

"The civil liability sought arising from the act or omission of the accused in this case
is a quasi-delict as defined under Article 2176 of the Civil Code as follows:

xxxxxxxxx

"The aforecited rule [referring to the amended Section 1, Rule111] requiring such
previous reservation also covers quasi-delict as defined under Article 2176 of the
Civil Code arising from the same act or omission of the accused"(Underscoring
supplied).

But what prompted the Court to validate the institution and non-suspension of the civil
case involved in "Yakult" was the peculiar facts attendant therein. Thus,

"Although the separate civil action filed in this case was without previous reservation
in the criminal case, nevertheless since it was instituted before the prosecution
presented evidence in the criminal action, and the judge handling the criminal case
was informed thereof, then the actual filing of the civil action is even far better than a
compliance with the requirement of an express reservation that should be made by the
offended party before the prosecution presents its evidence"

The distinct factual scenario in "Yakult" simply does not obtain in this case. No
satisfactory proof exists to show that private respondent PISC's damage suit was
instituted before the prosecution presented its evidence in the criminal case pending in
the Pasig Regional Trial Court. Neither is there any indication that the judge presiding
over the criminal action has been made aware of the civil case. It is in this light that
reliance on the "Yakult" case is indeed misplaced.
Now that the necessity of a prior reservation is the standing rule that shall govern
the institution of the independent civil actions referred to in Rule 111 of the Rules of
Court, past pronouncements that view the reservation requirement as an "unauthorized
amendment" to substantive law - i.e., the Civil Code, should no longer be controlling.
There must be a renewed adherence to the time-honored dictum that procedural rules
are designed, not to defeat, but to safeguard the ends of substantial justice. And for this
noble reason, no less than the Constitution itself has mandated this Court to promulgate
rules concerning the enforcement of rights with the end in view of providing a simplified
and inexpensive procedure for the speedy disposition of cases which should not
diminish, increase or modify substantive rights.[7] Far from altering substantive rights, the
primary purpose of the reservation is, to borrow the words of the Court in "Caos v.
Peralta":[8]
" to avoid multiplicity of suits, to guard against oppression and abuse, to prevent
delays, to clear congested dockets, to simplify the work of the trial court; in short, the
attainment of justice with the least expense and vexation to the parties-litigants."

Clearly then, private respondent PISC, as subrogee under Article 2207 of the Civil
Code,[9] is not exempt from the reservation requirement with respect to its damages suit
based on quasi-delict arising from the same act or omission of petitioner Javier
complained of in the criminal case. As private respondent PISC merely stepped into the
shoes of Ms. Jao (as owner of the insured Toyota van), then it is bound to observe the
procedural requirements which Ms. Jao ought to follow had she herself instituted the
civil case.
WHEREFORE, premises considered, the assailed decision of the Court of Appeals
dated February 24, 1995 and the Resolution dated April 3, 1995 denying the motion for
reconsideration thereof are hereby REVERSED and SET ASIDE. The
"MANIFESTATION AND MOTION TO SUSPEND CIVIL PROCEEDINGS" filed by
petitioners is GRANTED.
SO ORDERED.
Regalado, (Chairman), Melo, Puno, and Mendoza, JJ., concur.

FACTS: At around 3:30 in the afternoon of June 24, 1991, a Toyota Lite Ace Van being driven by its owner Annie U. Jao and a
passenger bus of herein petitioner San Ildefonso Lines, Inc. (hereafter, SILI) figured in a vehicular mishap at the intersection of
Julia Vargas Avenue and Rodriguez Lanuza Avenue in Pasig, Metro Manila, totally wrecking the Toyota van and injuring Ms. Jao
and her two (2) passengers in the process.
A criminal case was thereafter filed with the Regional Trial Court of Pasig on September 18, 1991 charging the driver of the bus,
herein petitioner Eduardo Javier, with reckless imprudence resulting in damage to property with multiple physical injuries.
About four (4) months later, or on January 13, 1992, herein private respondent Pioneer Insurance and Surety Corporation (PISC), as
insurer of the van and subrogee, filed a case for damages against petitioner SILI with the Regional Trial Court of Manila, seeking to
recover the sums it paid the assured under a motor vehicle insurance policy as well as other damages, totaling P564,500.00
(P454,000.00 as actual/compensatory damages; P50,000.00 as exemplary damages; P50,000.00 as attorney's fees; P10,000.00 as
litigation expenses; and P500.00 as appearance fees.)

ISSUEs: 1) If a criminal case was filed, can an independent civil action based on quasi-delict under Article 2176 of the Civil Code be
filed if no reservation was made in the said criminal case?
2) Can a subrogee of an offended party maintain an independent civil action during the pendency of a criminal action when no
reservation of the right to file an independent civil action was made in the criminal action and despite the fact that the private
complainant is actively participating through a private prosecutor in the aforementioned criminal case?

RULING: WHEREFORE, premises considered, the assailed decision of the Court of Appeals dated February 24, 1995 and the
Resolution dated April 3, 1995 denying the motion for reconsideration thereof are hereby REVERSED and SET ASIDE. The
"MANIFESTATION AND MOTION TO SUSPEND CIVIL PROCEEDINGS" filed by petitioners is GRANTED.

RATIO: Now that the necessity of a prior reservation is the standing rule that shall govern the institution of the independent civil
actions referred to in Rule 111 of the Rules of Court, past pronouncements that view the reservation requirement as an "unauthorized
amendment" to substantive law - i.e., the Civil Code, should no longer be controlling. There must be a renewed adherence to the
time-honored dictum that procedural rules are designed, not to defeat, but to safeguard the ends of substantial justice. And for this
noble reason, no less than the Constitution itself has mandated this Court to promulgate rules concerning the enforcement of rights
with the end in view of providing a simplified and inexpensive procedure for the speedy disposition of cases which should not
diminish, increase or modify substantive rights. Far from altering substantive rights, the primary purpose of the reservation is, to
borrow the words of the Court in "Caos v. Peralta"
Clearly then, private respondent PISC, as subrogee under Article 2207 of the Civil Code, is not exempt from the reservation
requirement with respect to its damages suit based on quasi-delict arising from the same act or omission of petitioner Javier
complained of in the criminal case. As private respondent PISC merely stepped into the shoes of Ms. Jao (as owner of the insured
Toyota van), then it is bound to observe the procedural requirements which Ms. Jao ought to follow had she herself instituted the
civil case.

Republic of the Philippines


Supreme Court
Manila
THIRD DIVISION

HEIRS OF EDUARDO G.R. No. 157547


SIMON,
Petitioners, Present:

BRION, Acting Chairperson,**


BERSAMIN,
-versus - ABAD,***
VILLARAMA, JR., and
SERENO, JJ.

ELVIN* CHAN AND THE Promulgated:


COURT OF APPEALS,
Respondent. February 23, 2011
x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:

There is no independent civil action to recover the civil liability arising from
the issuance of an unfunded check prohibited and punished under Batas Pambansa
Bilang 22(BP 22).

Antecedents

On July 11, 1997, the Office of the City Prosecutor of Manila filed in the
Metropolitan Trial Court of Manila (MeTC) an information charging the late
Eduardo Simon (Simon) with a violation of BP 22, docketed as Criminal Case No.
275381 entitled People v. Eduardo Simon. The accusatory portion reads:

That sometime in December 1996 in the City of Manila,


Philippines, the said accused, did then and there willfully, unlawfully
and feloniously make or draw and issue to Elvin Chan to apply on
account or for value Landbank Check No. 0007280 dated December 26,
1996 payable to cash in the amount of P336,000.00 said accused well
knowing that at the time of issue she/he/they did not have sufficient
funds in or credit with the drawee bank for payment of such check in full
upon its presentment, which check when presented for payment within
ninety (90) days from the date thereof was subsequently dishonored by
the drawee bank for Account Closed and despite receipt of notice of such
dishonor, said accused failed to pay said Elvin Chan the amount of the
check or to make arrangement for full payment of the same within five
(5) banking days after receiving said notice.

CONTRARY TO LAW. [1]

More than three years later, or on August 3, 2000, respondent Elvin Chan
commenced in the MeTC in Pasay City a civil action for the collection of the
principal amount of P336,000.00, coupled with an application for a writ
of preliminary attachment (docketed as Civil Case No. 915-00).[2] He alleged in his
complaint the following:

xxx
2. Sometime in December 1996 defendant employing fraud, deceit,
and misrepresentation encashed a check dated December 26, 1996 in the
amount of P336,000.00 to the plaintiff assuring the latter that the check
is duly funded and that he had an existing account with the Land Bank of
the Philippines, xerox copy of the said check is hereto attached as Annex
A;

3. However, when said check was presented for payment the same
was dishonored on the ground that the account of the defendant with the
Land Bank of the Philippines has been closed contrary to his
representation that he has an existing account with the said bank and that
the said check was duly funded and will be honored when presented for
payment;

4. Demands had been made to the defendant for him to make good
the payment of the value of the check, xerox copy of the letter of
demand is hereto attached as Annex B, but despite such demand
defendant refused and continues to refuse to comply with plaintiffs valid
demand;
5. Due to the unlawful failure of the defendant to comply with the
plaintiffs valid demands, plaintiff has been compelled to retain the
services of counsel for which he agreed to pay as reasonable attorneys
fees the amount of P50,000.00 plus additional amount of P2,000.00 per
appearance.

ALLEGATION IN SUPPORT OF PRAYER


FOR PRELIMINARY ATTACHMENT

6. The defendant as previously alleged has been guilty of fraud in


contracting the obligation upon which this action is brought and that
there is no sufficient security for the claims sought in this action which
fraud consist in the misrepresentation by the defendant that he has an
existing account and sufficient funds to cover the check when in fact his
account was already closed at the time he issued a check;

7. That the plaintiff has a sufficient cause of action and this action
is one which falls under Section 1, sub-paragraph (d), Rule 57 of the
Revised Rules of Court of the Philippines and the amount due the
plaintiff is as much as the sum for which the plaintiff seeks the writ of
preliminary attachment;

8. That the plaintiff is willing and able to post a bond conditioned


upon the payment of damages should it be finally found out that the
plaintiff is not entitled to the issuance of a writ of preliminary
attachment.[3]

On August 9, 2000, the MeTC in Pasay City issued a writ of preliminary


attachment, which was implemented on August 17, 2000 through the sheriff
attaching a Nissan vehicle of Simon.[4]

On August 17, 2000, Simon filed an urgent motion to dismiss with


application to charge plaintiffs attachment bond for damages,[5] pertinently
averring:

xxx
On the ground of litis pendentia, that is, as a consequence of the
pendency of another action between the instant parties for the same
cause before the Metropolitan Trial Court of Manila, Branch X (10)
entitled People of the Philippines vs. Eduardo Simon, docketed thereat as
Criminal Case No. 275381-CR, the instant action is dismissable under
Section 1, (e), Rule 16, 1997 Rules of Civil Procedure, xxx
xxx
While the instant case is civil in nature and character as
contradistinguished from the said Criminal Case No. 915-00 in the
Metropolitan Trial Court of Manila, Branch X (10), the basis of the
instant civil action is the herein plaintiffs criminal complaint against
defendant arising from a charge of violation of Batas Pambansa Blg. 22
as a consequence of the alleged dishonor in plaintiffs hands upon
presentment for payment with drawee bank a Land Bank Check No.
0007280 dated December 26, 1996 in the amount of P336,000- drawn
allegedly issued to plaintiff by defendant who is the accused in said case,
a photocopy of the Criminal information filed by the Assistant City
Prosecutor of Manila on June 11, 1997 hereto attached and made integral
part hereof as Annex 1.

It is our understanding of the law and the rules, that, when a


criminal action is instituted, the civil action for recovery of civil liability
arising from the offense charged is impliedly instituted with the criminal
action, unless the offended party expressly waives the civil action or
reserves his right to institute it separately xxx.

On August 29, 2000, Chan opposed Simons urgent motion to dismiss with
application to charge plaintiffs attachment bond for damages, stating:

1. The sole ground upon which defendant seeks to dismiss plaintiffs


complaint is the alleged pendency of another action between the same
parties for the same cause, contending among others that the pendency of
Criminal Case No. 275381-CR entitled People of the Philippines vs.
Eduardo Simon renders this case dismissable;

2. The defendant further contends that under Section 1, Rule 111 of


the Revised Rules of Court, the filing of the criminal action, the civil
action for recovery of civil liability arising from the offense charged is
impliedly instituted with the criminal action which the plaintiff does not
contest; however, it is the submission of the plaintiff that an implied
reservation of the right to file a civil action has already been made, first,
by the fact that the information for violation of B.P. 22 in Criminal Case
No. 2753841 does not at all make any allegation of damages suffered by
the plaintiff nor is there any claim for recovery of damages; on top of
this the plaintiff as private complainant in the criminal case, during the
presentation of the prosecution evidence was not represented at all by a
private prosecutor such that no evidence has been adduced by the
prosecution on the criminal case to prove damages; all of these we
respectfully submit demonstrate an effective implied reservation of the
right of the plaintiff to file a separate civil action for damages;

3. The defendant relies on Section 3 sub-paragraph (a) Rule 111 of


the Revised Rules of Court which mandates that after a criminal action
has been commenced the civil action cannot be instituted until final
judgment has been rendered in the criminal action; however, the
defendant overlooks and conveniently failed to consider that under
Section 2, Rule 111 which provides as follows:

In the cases provided for in Articles 31, 32, 33, 34 and 2177
of the Civil Code of the Philippines, an independent civil action
entirely separate and distinct from the criminal action, may be
brought by the injured party during the pendency of criminal
case provided the right is reserved as required in the preceding
section. Such civil action shall proceed independently of the
criminal prosecution, and shall require only a preponderance of
evidence.

In as much as the case is one that falls under Art. 33 of the Civil Code of
the Philippines as it is based on fraud, this action therefore may be
prosecuted independently of the criminal action;

4. In fact we would even venture to state that even without any


reservation at all of the right to file a separate civil action still the
plaintiff is authorized to file this instant case because the plaintiff seeks
to enforce an obligation which the defendant owes to the plaintiff by
virtue of the negotiable instruments law. The plaintiff in this case sued
the defendant to enforce his liability as drawer in favor of the plaintiff as
payee of the check. Assuming the allegation of the defendant of the
alleged circumstances relative to the issuance of the check, still when he
delivered the check payable to bearer to that certain Pedro Domingo, as
it was payable to cash, the same may be negotiated by delivery by who
ever was the bearer of the check and such negotiation was valid and
effective against the drawer;
5. Indeed, assuming as true the allegations of the defendant
regarding the circumstances relative to the issuance of the check it would
be entirely impossible for the plaintiff to have been aware that such
check was intended only for a definite person and was not negotiable
considering that the said check was payable to bearer and was not even
crossed;

6. We contend that what cannot be prosecuted separate and apart


from the criminal case without a reservation is a civil action arising from
the criminal offense charged. However, in this instant case since the
liability of the defendant are imposed and the rights of the plaintiff are
created by the negotiable instruments law, even without any reservation
at all this instant action may still be prosecuted;

7. Having this shown, the merits of plaintiffs complaint the


application for damages against the bond is totally without any legal
support and perforce should be dismissed outright.[6]

On October 23, 2000, the MeTC in Pasay City granted Simons urgent
motion to dismiss with application to charge plaintiffs attachment bond for
damages,[7] dismissing the complaint of Chan because:

xxx
After study of the arguments of the parties, the court resolves to
GRANT the Motion to Dismiss and the application to charge plaintiffs
bond for damages.

For litis pendentia to be a ground for the dismissal of an action, the


following requisites must concur: (a) identity of parties or at least such
as to represent the same interest in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded on the same acts;
and (c) the identity in the two (2) cases should be such that the judgment,
which may be rendered in one would, regardless of which party is
successful, amount to res judicata in the other. xxx

A close perusal of the herein complaint denominated as Sum of


Money and the criminal case for violation of BP Blg. 22 would readily
show that the parties are not only identical but also the cause of action
being asserted, which is the recovery of the value of Landbank Check
No. 0007280 in the amount of P336,000.00. In both civil and criminal
cases, the rights asserted and relief prayed for, the reliefs being founded
on the same facts, are identical.

Plaintiffs claim that there is an effective implied waiver of his right


to pursue this civil case owing to the fact that there was no allegation of
damages in BP Blg. 22 case and that there was no private prosecutor
during the presentation of prosecution evidence is unmeritorious. It is
basic that when a complaint or criminal Information is filed, even
without any allegation of damages and the intention to prove and claim
them, the offended party has the right to prove and claim for them,
unless a waiver or reservation is made or unless in the meantime, the
offended party has instituted a separate civil action. xxx The over-all
import of the said provision conveys that the waiver which includes
indemnity under the Revised Penal Code, and damages arising under
Articles 32, 33, and 34 of the Civil Code must be both clear and express.
And this must be logically so as the primordial objective of the Rule is to
prevent the offended party from recovering damages twice for the same
act or omission of the accused.

Indeed, the evidence discloses that the plaintiff did not waive or
made a reservation as to his right to pursue the civil branch of the
criminal case for violation of BP Blg. 22 against the defendant herein.
To the considered view of this court, the filing of the instant complaint
for sum of money is indeed legally barred. The right to institute a
separate civil action shall be made before the prosecution starts to
present its evidence and under circumstances affording the offended
party a reasonable opportunity to make such reservation. xxx

Even assuming the correctness of the plaintiffs submission that the


herein case for sum of money is one based on fraud and hence falling
under Article 33 of the Civil Code, still prior reservation is required by
the Rules, to wit:

In the cases provided for in Articles 31, 32, 33, 34 and 2177
of the Civil Code of the Philippines, an independent civil action
entirely separate and distinct from the criminal action, may be
brought by the injured party during the pendency of criminal
case provided the right is reserved as required in the preceding
section. Such civil action shall proceed independently of the
criminal prosecution, and shall require only a preponderance of
evidence.
xxx
WHEREFORE, premises considered, the court resolves to:

1. Dismiss the instant complaint on the ground of litis pendentia;

2. Dissolve/Lift the Writ of Attachment issued by this court


on August 14, 2000;

3. Charge the plaintiffs bond the amount of P336,000.00 in favor


of the defendant for the damages sustained by the latter by virtue
of the implementation of the writ of attachment;

4. Direct the Branch Sheriff of this Court to RESTORE with


utmost dispatch to the defendants physical possession the
vehicle seized from him on August 16, 2000; and

5. Direct the plaintiff to pay the defendant the sum of P5,000.00


by way of attorneys fees.

SO ORDERED.

Chans motion for reconsideration was denied on December 20, 2000,[8] viz:

Considering that the plaintiffs arguments appear to be a mere


repetition of his previous submissions, and which submissions this court
have already passed upon; and taking into account the inapplicability of
the ratio decidendi in the Tactaquin vs. Palileo case which the plaintiff
cited as clearly in that case, the plaintiff therein expressly made a
reservation to file a separate civil action, the Motion for Reconsideration
is DENIED for lack of merit.

SO ORDERED.

On July 31, 2001, the Regional Trial Court (RTC) in Pasay City upheld the
dismissal of Chans complaint, disposing:[9]

WHEREFORE, finding no error in the appealed decision, the same


is hereby AFFIRMED in toto.

SO ORDERED.
On September 26, 2001, Chan appealed to the Court of Appeals (CA)
by petition for review,[10] challenging the propriety of the dismissal of his
complaint on the ground of litis pendentia.

In his comment, [11] Simon countered that Chan was guilty of bad faith and
malice in prosecuting his alleged civil claim twice in a manner that caused him
(Simon) utter embarrassment and emotional sufferings; and that the dismissal of
the civil case because of the valid ground of litis pendentia based on Section 1 (e),
Rule 16 of the 1997 Rules of Civil Procedure was warranted.

On June 25, 2002, the CA promulgated its assailed decision,[12] overturning


the RTC, viz:

xxx
As a general rule, an offense causes two (2) classes of injuries. The
first is the social injury produced by the criminal act which is sought to
be repaired through the imposition of the corresponding penalty, and the
second is the personal injury caused to the victim of the crime which
injury is sought to be compensated through indemnity which is also civil
in nature. Thus, every person criminally liable for a felony is also civilly
liable.

The offended party may prove the civil liability of an accused


arising from the commission of the offense in the criminal case since the
civil action is either deemed instituted with the criminal action or is
separately instituted.

Rule 111, Section 1 of the Revised Rules of Criminal Procedure,


which became effective on December 1, 2000, provides that:

(a) When a criminal action is instituted, the civil action for the
recovery of civil liability arising from the offense charged
shall be deemed instituted with the criminal action unless
the offended party waives the civil action, reserves the right
to institute it separately or institute the civil action prior to
the criminal action.

Rule 111, Section 2 further states:


After the criminal action has been commenced, the separate
civil action arising therefrom cannot be instituted until final
judgment has been entered in the criminal action.

However, with respect to civil actions for recovery of civil liability


under Articles 32, 33, 34 and 2176 of the Civil Code arising from the
same act or omission, the rule has been changed.

In DMPI Employees Credit Association vs. Velez, the Supreme


Court pronounced that only the civil liability arising from the offense
charged is deemed instituted with the criminal action unless the offended
party waives the civil action, reserves his right to institute it separately,
or institutes the civil action prior to the criminal action. Speaking
through Justice Pardo, the Supreme Court held:

There is no more need for a reservation of the right to file


the independent civil action under Articles 32, 33, 34 and
2176 of the Civil Code of the Philippines. The reservation
and waiver referred to refers only to the civil action for the
recovery of the civil liability arising from the offense
charged. This does not include recovery of civil liability
under Articles 32, 33, 34, and 2176 of the Civil Code of
the Philippines arising from the same act or omission which
may be prosecuted separately without a reservation.

Rule 111, Section 3 reads:

Sec. 3. When civil action may proceed independently.


In the cases provided in Articles 32, 33, 34, and 2176 of
the Civil Code of the Philippines, the independent civil
action may be brought by the offended party. It shall
proceed independently of the criminal action and shall
require only a preponderance of evidence. In no case,
however, may the offended party recover damages twice
for the same act or omission charged in the criminal
action.

The changes in the Revised Rules on Criminal Procedure


pertaining to independent civil actions which became
effective on December 1, 2000 are applicable to this case.
Procedural laws may be given retroactive effect to actions
pending and undetermined at the time of their passage. There
are no vested rights in the rules of procedure. xxx

Thus, Civil Case No. CV-94-124, an independent civil


action for damages on account of the fraud committed
against respondent Villegas under Article 33 of the Civil
Code, may proceed independently even if there was no
reservation as to its filing.

It must be pointed that the abovecited case is similar with the


instant suit. The complaint was also brought on allegation of fraud under
Article 33 of the Civil Code and committed by the respondent in the
issuance of the check which later bounced. It was filed before the trial
court, despite the pendency of the criminal case for violation of BP 22
against the respondent. While it may be true that the changes in the
Revised Rules on Criminal Procedure pertaining to independent civil
action became effective on December 1, 2000, the same may be given
retroactive application and may be made to apply to the case at bench,
since procedural rules may be given retroactive application. There are no
vested rights in the rules of procedure.

In view of the ruling on the first assigned error, it is therefore an


error to adjudge damages in favor of the petitioner.

WHEREFORE, the petition is hereby GRANTED. The Decision


dated July 13, 2001 rendered by the Regional Trial Court of Pasay City,
Branch 108 affirming the dismissal of the complaint filed by petitioner is
hereby REVERSED and SET ASIDE. The case is hereby REMANDED
to the trial court for further proceedings.

SO ORDERED.

On March 14, 2003, the CA denied Simons motion for reconsideration.[13]

Hence, this appeal, in which the petitioners submit that the CA erroneously
premised its decision on the assessment that the civil case was an independent civil
action under Articles 32, 33, 34, and 2176 of the Civil Code; that the CAs reliance
on the ruling in DMPI Employees Credit Cooperative Inc. v. Velez [14] stretched the
meaning and intent of the ruling, and was contrary to Sections 1 and 2 of Rule 111
of the Rules of Criminal Procedure; that this case was a simple collection suit for a
sum of money, precluding the application of Section 3 of Rule 111 of the Rules of
Criminal Procedure.[15]
In his comment,[16] Chan counters that the petition for review should be denied
because the petitioners used the wrong mode of appeal; that his cause of action,
being based on fraud, was an independent civil action; and that the appearance of a
private prosecutor in the criminal case did not preclude the filing of his separate
civil action.

Issue

The lone issue is whether or not Chans civil action to recover the amount of the
unfunded check (Civil Case No. 915-00) was an independent civil action.

Ruling

The petition is meritorious.

A
Applicable Law and Jurisprudence on the
Propriety of filing a separate civil action based on BP 22

The Supreme Court has settled the issue of whether or not a violation of BP
22 can give rise to civil liability in Banal v. Judge Tadeo, Jr.,[17] holding:

xxx
Article 20 of the New Civil Code provides:

Every person who, contrary to law, wilfully or negligently


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

Regardless, therefore, of whether or not a special law so provides,


indemnification of the offended party may be had on account of the
damage, loss or injury directly suffered as a consequence of the
wrongful act of another. The indemnity which a person is sentenced to
pay forms an integral part of the penalty imposed by law for the
commission of a crime (Quemel v. Court of Appeals, 22 SCRA 44,
citing Bagtas v. Director of Prisons, 84 Phil 692). Every crime gives
rise to a penal or criminal action for the punishment of the guilty party,
and also to civil action for the restitution of the thing, repair of the
damage, and indemnification for the losses (United States v. Bernardo,
19 Phil 265).
xxx
Civil liability to the offended party cannot thus be denied. The payee of
the check is entitled to receive the payment of money for which the
worthless check was issued. Having been caused the damage, she is
entitled to recompense.

Surely, it could not have been the intendment of the framers of Batas
Pambansa Blg. 22 to leave the offended private party defrauded and
empty-handed by excluding the civil liability of the offender, giving her
only the remedy, which in many cases results in a Pyrrhic victory, of
having to file a separate civil suit. To do so may leave the offended
party unable to recover even the face value of the check due her,
thereby unjustly enriching the errant drawer at the expense of the
payee. The protection which the law seeks to provide would, therefore,
be brought to naught.
xxx

However, there is no independent civil action to recover the value of a bouncing


check issued in contravention of BP 22. This is clear from Rule 111 of the Rules of
Court, effective December 1, 2000, which relevantly provides:

Section 1. Institution of criminal and civil actions. - (a) When a


criminal action is instituted, the civil action for the recovery of civil
liability arising from the offense charged shall be deemed instituted with
the criminal action unless the offended party waives the civil action,
reserves the right to institute it separately or institutes the civil action
prior to the criminal action.

The reservation of the right to institute separately the civil action


shall be made before the prosecution starts presenting its evidence and
under circumstances affording the offended party a reasonable
opportunity to make such reservation.
When the offended party seeks to enforce civil liability against the
accused by way of moral, nominal, temperate, or exemplary damages
without specifying the amount thereof in the complaint or information,
the filing fees therefor shall constitute a first lien on the judgment
awarding such damages.

Where the amount of damages, other than actual, is specified in the


complaint or information, the corresponding filing fees shall be paid by
the offended party upon the filing thereof in court.

Except as otherwise provided in these Rules, no filing fees shall be


required for actual damages.

No counterclaim, cross-claim or third-party complaint may be filed


by the accused in the criminal case, but any cause of action which could
have been the subject thereof may be litigated in a separate civil action.
(1a)

(b) The criminal action for violation of Batas Pambansa Blg. 22


shall be deemed to include the corresponding civil action. No
reservation to file such civil action separately shall be allowed.[18]

Upon filing of the aforesaid joint criminal and civil actions, the
offended party shall pay in full the filing fees based on the amount of the
check involved, which shall be considered as the actual damages
claimed. Where the complaint or information also seeks to recover
liquidated, moral, nominal, temperate or exemplary damages, the
offended party shall pay the filing fees based on the amounts alleged
therein. If the amounts are not so alleged but any of these damages are
subsequently awarded by the court, the filing fees based on the amount
awarded shall constitute a first lien on the judgment.

Where the civil action has been filed separately and trial thereof has
not yet commenced, it may be consolidated with the criminal action
upon application with the court trying the latter case. If the application is
granted, the trial of both actions shall proceed in accordance with section
2 of the Rule governing consolidation of the civil and criminal actions.

Section 3. When civil action may proceed independently. In the


cases provided in Articles 32, 33, 34 and 2176 of the Civil Code of
the Philippines, the independent civil action may be brought by the
offended party. It shall proceed independently of the criminal action and
shall require only a preponderance of evidence. In no case, however,
may the offended party recover damages twice for the same act or
omission charged in the criminal action.

The aforequoted provisions of the Rules of Court, even if not yet in effect
when Chan commenced Civil Case No. 915-00 on August 3, 2000, are nonetheless
applicable. It is axiomatic that the retroactive application of procedural laws does
not violate any right of a person who may feel adversely affected, nor is it
constitutionally objectionable. The reason is simply that, as a general rule, no
vested right may attach to, or arise from, procedural laws.[19] Any new rules may
validly be made to apply to cases pending at the time of their promulgation,
considering that no party to an action has a vested right in the rules of
procedure,[20] except that in criminal cases, the changes do not retroactively apply if
they permit or require a lesser quantum of evidence to convict than what is
required at the time of the commission of the offenses, because such retroactivity
would be unconstitutional for being ex post facto under the Constitution.[21]
Moreover, the application of the rule would not be precluded by the
violation of any assumed vested right, because the new rule was adopted from
Supreme Court Circular 57-97 that took effect on November 1, 1997.

Supreme Court Circular 57-97 states:

Any provision of law or Rules of Court to the contrary


notwithstanding, the following rules and guidelines shall henceforth be
observed in the filing and prosecution of all criminal cases under Batas
Pambansa Blg. 22 which penalizes the making or drawing and issuance
of a check without funds or credit:

1. The criminal action for violation of Batas Pambansa Blg. 22


shall be deemed to necessarily include the corresponding civil action,
and no reservation to file such civil action separately shall be
allowed or recognized.[22]

2. Upon the filing of the aforesaid joint criminal and civil actions,
the offended party shall pay in full the filing fees based upon the amount
of the check involved which shall be considered as the actual damages
claimed, in accordance with the schedule of fees in Section 7 (a) and
Section 8 (a), Rule 141 of the Rules of Court as last amended by
Administrative Circular No. 11-94 effective August 1, 1994. Where the
offended party further seeks to enforce against the accused civil liability
by way of liquidated, moral, nominal, temperate or exemplary damages,
he shall pay the corresponding filing fees therefor based on the amounts
thereof as alleged either in the complaint or information. If not so
alleged but any of these damages are subsequently awarded by the court,
the amount of such fees shall constitute a first lien on the judgment.

3. Where the civil action has heretofore been filed separately and
trial thereof has not yet commenced, it may be consolidated with the
criminal action upon application with the court trying the latter case. If
the application is granted, the trial of both actions shall proceed in
accordance with the pertinent procedure outlined in Section 2 (a) of Rule
111 governing the proceedings in the actions as thus consolidated.

4. This Circular shall be published in two (2) newspapers of general


circulation and shall take effect on November 1, 1997.

The reasons for issuing Circular 57-97 were amply explained in Hyatt
Industrial Manufacturing Corporation v. Asia Dynamic Electrix
[23]
Corporation, thus:

xxx
We agree with the ruling of the Court of Appeals that upon filing of
the criminal cases for violation of B.P. 22, the civil action for the
recovery of the amount of the checks was also impliedly instituted under
Section 1(b) of Rule 111 of the 2000 Rules on Criminal Procedure.
Under the present revised Rules, the criminal action for violation of B.P.
22 shall be deemed to include the corresponding civil action. The
reservation to file a separate civil action is no longer needed. The Rules
provide:

Section 1. Institution of criminal and civil actions.

(a) xxx

(b) The criminal action for violation of Batas Pambansa


Blg. 22 shall be deemed to include the corresponding civil
action. No reservation to file such civil action separately shall
be allowed.
Upon filing of the aforesaid joint criminal and civil actions,
the offended party shall pay in full the filing fees based on the
amount of the check involved, which shall be considered as the
actual damages claimed. Where the complaint or information
also seeks to recover liquidated, moral, nominal, temperate or
exemplary damages, the offended party shall pay additional
filing fees based on the amounts alleged therein. If the amounts
are not so alleged but any of these damages are subsequently
awarded by the court, the filing fees based on the amount
awarded shall constitute a first lien on the judgment.

Where the civil action has been filed separately and trial
thereof has not yet commenced, it may be consolidated with the
criminal action upon application with the court trying the latter
case. If the application is granted, the trial of both actions shall
proceed in accordance with section 2 of this Rule governing
consolidation of the civil and criminal actions.

The foregoing rule was adopted from Circular No. 57-97 of this
Court. It specifically states that the criminal action for violation of B.P.
22 shall be deemed to include the corresponding civil action. It also
requires the complainant to pay in full the filing fees based on the
amount of the check involved. Generally, no filing fees are required for
criminal cases, but because of the inclusion of the civil action in
complaints for violation of B.P. 22, the Rules require the payment of
docket fees upon the filing of the complaint. This rule was enacted to
help declog court dockets which are filled with B.P. 22 cases as
creditors actually use the courts as collectors. Because ordinarily no
filing fee is charged in criminal cases for actual damages, the payee
uses the intimidating effect of a criminal charge to collect his credit
gratis and sometimes, upon being paid, the trial court is not even
informed thereof. The inclusion of the civil action in the criminal
case is expected to significantly lower the number of cases filed
before the courts for collection based on dishonored checks. It is
also expected to expedite the disposition of these cases. Instead of
instituting two separate cases, one for criminal and another for civil,
only a single suit shall be filed and tried. It should be stressed that
the policy laid down by the Rules is to discourage the separate filing
of the civil action. The Rules even prohibit the reservation of a
separate civil action, which means that one can no longer file a
separate civil case after the criminal complaint is filed in court. The
only instance when separate proceedings are allowed is when the
civil action is filed ahead of the criminal case. Even then, the Rules
encourage the consolidation of the civil and criminal cases. We have
previously observed that a separate civil action for the purpose of
recovering the amount of the dishonored checks would only prove to
be costly, burdensome and time-consuming for both parties and
would further delay the final disposition of the case. This
multiplicity of suits must be avoided. Where petitioners rights may
be fully adjudicated in the proceedings before the trial court, resort
to a separate action to recover civil liability is clearly unwarranted.
In view of this special rule governing actions for violation of B.P. 22,
Article 31 of the Civil Code cited by the trial court will not apply to
the case at bar.[24]

The CAs reliance on DMPI Employees Credit Association v. Velez[25] to give


due course to the civil action of Chan independently and separately of Criminal
Case No. 275381 was unwarranted. DMPI Employees, which involved a
prosecution for estafa, is not on all fours with this case, which is a prosecution for
a violation of BP 22. Although the Court has ruled that the issuance of a bouncing
check may result in two separate and distinct crimes of estafa and violation of BP
22,[26] the procedures for the recovery of the civil liabilities arising from these two
distinct crimes are different and non-interchangeable. In prosecutions of estafa, the
offended party may opt to reserve his right to file a separate civil action, or may
institute an independent action based on fraud pursuant to Article 33 of the Civil
Code,[27] as DMPI Employees has allowed. In prosecutions of violations of BP 22,
however, the Court has adopted a policy to prohibit the reservation or institution of
a separate civil action to claim the civil liability arising from the issuance of the
bouncing check upon the reasons delineated in Hyatt Industrial Manufacturing
Corporation, supra.

To repeat, Chans separate civil action to recover the amount of the check involved
in the prosecution for the violation of BP 22 could not be independently
maintained under both Supreme Court Circular 57-97 and the aforequoted
provisions of Rule 111 of the Rules of Court, notwithstanding the allegations of
fraud and deceit.

B
Aptness of the dismissal of the civil action
on the ground of litis pendentia
Did the pendency of the civil action in the MeTC in Manila (as the civil
aspect in Criminal Case No. 275381) bar the filing of Civil Case No. 915-00 in the
MeTC in PasayCity on the ground of litis pendentia?

For litis pendentia to be successfully invoked as a bar to an action, the


concurrence of the following requisites is necessary, namely: (a) there must be
identity of parties or at least such as represent the same interest in both actions; (b)
there must be identity of rights asserted and reliefs prayed for, the reliefs being
founded on the same facts; and, (c) the identity in the two cases should be such that
the judgment that may be rendered in one would, regardless of which party is
successful, amount to res judicata in respect of the other. Absent the first two
requisites, the possibility of the existence of the third becomes nil.[28]

A perusal of Civil Case No. 01-0033 and Criminal Case No. 275381
ineluctably shows that all the elements of litis pendentia are attendant. First of all,
the parties in the civil action involved in Criminal Case No. 275381 and in Civil
Case No. 915-00, that is, Chan and Simon, are the same. Secondly, the information
in Criminal Case No. 275381 and the complaint in Civil Case No. 915-00 both
alleged that Simon had issued Landbank Check No. 0007280 worth P336,000.00
payable to cash, thereby indicating that the rights asserted and the reliefs prayed
for, as well as the facts upon which the reliefs sought were founded, were identical
in all respects. And, thirdly, any judgment rendered in one case would necessarily
bar the other by res judicata; otherwise, Chan would be recovering twice upon the
same claim.

It is clear, therefore, that the MeTC in Pasay City properly dismissed Civil
Case No. 915-00 on the ground of litis pendentia through its decision
dated October 23, 2000; and that the RTC in Pasay City did not err in affirming the
MeTC.

WHEREFORE, we grant the petition for review on certiorari, and, accordingly,


we reverse and set aside the decision promulgated by the Court of Appeals on June
25, 2002. We reinstate the decision rendered on October 23, 2000 by the
Metropolitan Trial Court, Branch 45, in Pasay City.

Costs of suit to be paid by the respondent.

SO ORDERED.
FACTS:

On July 11, 1997, the Office of the City Prosecutor of Manila filed in the Metropolitan Trial Court of Manila (MeTC) an
information charging the late Eduardo Simon (Simon) with a violation of BP 22, docketed as Criminal Case No.
275381 entitled People v. Eduardo Simon.

More than three years later, or on August 3, 2000, respondent Elvin Chan commenced in the MeTC in Pasay City a
civil action for the collection of the principal amount of P336,000.00, coupled with an application for a writ of
preliminary attachment (docketed as Civil Case No. 915-00).

On August 9, 2000, the MeTC in Pasay City issued a writ of preliminary attachment, which was implemented on
August 17, 2000 through the sheriff attaching a Nissan vehicle of Simon.

On August 17, 2000, Simon filed an urgent motion to dismiss with application to charge plaintiffs attachment bond
for damages

On August 29, 2000, Chan opposed Simons urgent motion to dismiss with application to charge plaintiffs attachment
bond for damages,

On October 23, 2000, the MeTC in Pasay City granted Simon the urgent motion to dismiss with application to charge
plaintiffs attachment bond for damages. The MTC cites the grounds of litis pendentia and that the case for sum of
money is one based on fraud and hence falling under Article 33 of the Civil Code, still prior reservation is required

Chans motion for reconsideration was denied as well as his appeal with the RTC. On the CA, Chan's appeal was
granted.

ISSUE: Whether or not Chan's civil action to recover the amount of the unfunded check (Civil Case No. 915-00) was
an independent civil action.

RULING:

NO. There is no independent civil action to recover the civil liability arising from the issuance of an unfunded check
prohibited and punished under Batas Pambansa Bilang 22 (BP 22).

This is clear from Rule 111 of the Rules of Court which relevantly provides: "The criminal action for violation of Batas
Pambansa Blg. 22 shall be deemed to include the corresponding civil action. No reservation to file such civil action
separately shall be allowed."

Supreme Court Circular 57-97 also provides that: "1. The criminal action for violation of Batas Pambansa Blg. 22 shall
be deemed to necessarily include the corresponding civil action, and no reservation to file such civil action separately
shall be allowed or recognized."

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 170071 March 9, 2011

HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA, MICAELA B. OCHOA and JOMAR B.
OCHOA, Petitioners,
vs.
G & S TRANSPORT CORPORATION, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 170125

G & S TRANSPORT CORPORATION, Petitioner,


vs.
HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA, MICAELA B. OCHOA and JOMAR B.
OCHOA, Respondents.

DECISION

DEL CASTILLO, J.:

An accident which claimed the life of a passenger is the root of these two petitions - one brought before us by the
common carrier and the other by the heirs of the deceased.

These consolidated Petitions for Review on Certiorari assail the Court of Appeals (CA) Decision1 dated June 29,
2005 in CA-G.R. CV No. 75602 which affirmed with modification the December 21, 2001 Decision and March 5, 2002
Order of the trial court. Likewise assailed is the Resolution 2 dated October 12, 2005 denying the parties respective
Motions for Reconsideration thereto.

Factual Antecedents

Jose Marcial K. Ochoa (Jose Marcial) died on the night of March 10, 1995 while on board an Avis taxicab owned and
operated by G & S Transport Corporation (G & S), a common carrier. As narrated by the trial court, the circumstances
attending Jose Marcials death are as follows:

It appears that sometime in the evening of March 10, 1995, at the Manila Domestic Airport, the late Jose Marcial K.
Ochoa boarded and rode a taxicab with Plate No. PKR-534, a passenger vehicle for hire owned and operated by
defendant corporation under the business name "Avis Coupon Taxi" (Avis) and driven by its employee and authorized
driver Bibiano Padilla, Jr. on his way home to Teachers Village, Diliman, Quezon City.

At about 11:00 p.m., the taxicab was cruising along Epifanio delos Santos Avenue [EDSA], in front of Camp
Aguinaldo in Quezon City at high speed. While going up the Boni Serrano (Santolan) fly-over, it overtook another cab
driven by Pablo Clave and tried to pass another vehicle, a ten-wheeler cargo truck. Because of the narrow space
between the left side railing of the fly-over and the ten-wheeler truck, the Avis cab was unable to pass and because of
its speed, its driver (Padilla) was unable to control it. To avoid colliding with the truck, Padilla turned the wheel to the
left causing his taxicab to ram the railing throwing itself off the fly-over and fell on the middle surface of EDSA below.
The forceful drop of the vehicle on the floor of the road broke and split it into two parts. Both driver Padilla and
passenger Jose Marcial K. Ochoa were injured and rushed to the hospital. At the East Avenue Medical Center,
Ochoa was not as lucky as Padilla who was alive. He was declared dead on arrival from the accident. The death
certificate issued by the Office of the Civil Registrar of Quezon City cited the cause of his death as vehicular
accident.3

On May 13, 1999, Jose Marcials wife, Ruby Bueno Ochoa, and his two minor children, Micaela B. Ochoa and Jomar
B. Ochoa (the heirs), through counsel, sent G & S a letter 4 demanding that the latter indemnify them for Jose
Marcials death, his loss of earning capacity, and funeral expenses in the total amount of 15,000,000.00. As G & S
failed to heed the same, the heirs filed a Complaint5 for Damages before the Regional Trial Court (RTC) of Pasig City
which was raffled to Branch 164 of said court.

The heirs alleged that G & S, as a common carrier, is under legal obligation to observe and exercise extraordinary
diligence in transporting its passengers to their destination safely and securely. However, G & S failed to observe and
exercise this extraordinary diligence because its employee failed to transport Jose Marcial to his destination safely.
They averred that G & S is liable to them for having breached the contract of common carriage. As an alternative
cause of action, they asserted that G & S is likewise liable for damages based on quasi-delict pursuant to Article
21806 in relation to Article 21767 of the Civil Code. The heirs thus prayed for G & S to pay them actual damages,
moral damages, exemplary damages, and attorneys fees and expenses of litigation.

In its Answer With Compulsory Counterclaims,8 G & S claimed that Jose Marcial boarded an Avis taxicab driven by its
employee, Bibiano Padilla (Padilla), at the Domestic Airport to bring him to Teachers Village in Quezon City. While
passing the Santolan fly-over, however, the Avis taxicab was bumped by an on-rushing delivery van at the right
portion causing the taxicab to veer to the left, ram through the left side of the railings of the fly-over and fall to the
center of the island below. The taxicab was split into two and Jose Marcial was thrown 10 meters away. G & S
posited that the proximate cause of Jose Marcials death is a

fortuitous event and/or the fault or negligence of the driver of the delivery van that hit the taxicab. It likewise claimed
that it exercised the diligence required of a good father of a family in the selection and supervision of its employees
including Padilla. By way of compulsory counterclaim, G & S sought to recover from the heirs the amount of
300,000.00 as attorneys fees and costs of suit.

Ruling of the Regional Trial Court

On December 27, 2001, the trial court rendered a Decision 9 finding the vehicular mishap not caused by a fortuitous
event but by the negligence of Padilla. It likewise found the evidence adduced by G & S to show that it exercised the
diligence of a good father of a family in the selection and supervision of its employees as insufficient. Hence, the trial
court declared G & S civilly liable to the heirs. However, for lack of receipts or any proof of funeral expenses and
other actual damages, the trial court denied the heirs claim for actual damages. It also denied them moral and
exemplary damages for lack of legal basis. The dispositive portion of said Decision reads:

WHEREFORE, defendant is hereby adjudged guilty of breach of contract of carriage and is ordered to pay plaintiffs
the following amounts:

1. 50,000.00 as civil indemnity for the death of deceased Jose Marcial K. Ochoa;

2. 6,537,244.96 for the loss of earning capacity of the deceased;

3. 100,00.00 for attorneys fees;

4. And the cost of litigation.

SO ORDERED.10

G & S filed a Notice of Appeal11 while the heirs filed a Motion for Partial Reconsideration. 12 The heirs averred that they
are entitled to moral damages pursuant to Article 1764 13 in relation to Article 2206(3)14 of the Civil Code. They also
cited applicable jurisprudence providing that moral damages are recoverable in a damage suit predicated upon a
breach of contract of carriage where the mishap results in the death of the passenger. With respect to their claim for
exemplary damages, the heirs relied upon Article 2232 of the Civil Code which provides 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. And, since Padilla was declared by the trial court to have been grossly negligent in
driving the taxicab, the heirs claimed that they are likewise entitled to exemplary damages.

After G & S filed its Opposition (To Plaintiffs Motion for Partial Reconsideration),15 the trial court issued an Order16on
March 5, 2002. It found merit in the heirs Motion for Partial Reconsideration and thus declared them entitled to moral
and exemplary damages, viz:

WHEREFORE, the decision dated December 27, 2001 is hereby modified so as to order defendant Corporation to
pay plaintiffs the amount of P300,000.00 as moral damages and P50,000.00 as exemplary damages. The dispositive
portion of said decision is hereby amended to read as follows:

WHEREFORE, defendant is hereby adjudged guilty of breach of contract of carriage and is ordered to pay plaintiffs
the following amounts:

1. 50,000.00 as civil indemnity for the death of the deceased Jose Marcial K. Ochoa;

2. 6,537,244.96 for the loss of earning capacity of the deceased.


3. 300,000.00 as moral damages;

4. 50,000.00 as exemplary damages;

5. 100,000.00 for attorneys fees;

6. And the costs of litigation.

SO ORDERED.17

Because of this, G & S filed another Notice of Appeal18 and same was given due course by the trial court in an
Order19 dated April 23, 2002.

Ruling of the Court of Appeals

Before the CA, G & S continued to insist that it exercised the diligence of a good father of the family in the selection
and supervision of its employees. It averred that it has been carrying out not only seminars for its drivers even before
they were made to work, but also periodic evaluations for their performance. Aside from these, it has also been
conducting monthly check-up of its automobiles and has regularly issued rules regarding the conduct of its drivers. G
& S claimed that it was able to establish a good name in the industry and maintain a clientele.

In an effort to build up Padillas character as an experienced and careful driver, G & S averred that: (1) before G & S
employed Padilla, he was a delivery truck driver of Inter Island Gas Service for 11 years; (2) Padilla has been an
employee of G & S from 1989 to 1996 and during said period, there was no recorded incident of his being a negligent
driver; (3) despite his qualifications, G & S still required Padilla to submit an NBI clearance, drivers license and police
clearance; (4) Padillas being a good driver-employee was manifest in his years of service with G & S, as in fact, he
has received congratulatory messages from the latter as shown by the inter-office memos dated August 23, 1990 and
February 1, 1993; and that (5) Padilla attended a seminar at the Pope Pius Center sometime in December 1999 as
part of the NAIA Taxi Operation Program.

G & S also argued that the proximate cause of Jose Marcials death is a fortuitous event and/or the fault or
negligence of another and not of its employee. According to G & S, the collision was totally unforeseen since Padilla
had every right to expect that the delivery van would just overtake him and not hit the right side of the taxicab.
Therefore, what transpired was beyond Padillas control. There was no negligence on his part but on the part of the
driver of the delivery van. For this reason, G & S opined that it was not liable to the heirs.

On the other hand, the heirs maintained that Padilla was grossly negligent in driving the Avis taxicab on the night of
March 10, 1995. They claimed that Padilla, while running at a very high speed, acted negligently when he tried to
overtake a ten-wheeler truck at the foot of the fly-over. This forced him to swerve to the left and as a consequence,
the Avis taxicab hit the center of the railing and was split into two upon hitting the ground. The manner by which
Padilla drove the taxicab clearly showed that he acted without regard to the safety of his passenger.

The heirs also averred that in order for a fortuitous event to exempt one from liability, it is necessary that he has
committed no negligence or conduct that may have occasioned the loss. Thus, to be exempt from liability for the
death of Jose Marcial on this ground, G & S must clearly show that the proximate cause of the casualty was entirely
independent of human will and that it was impossible to avoid. And since in the case at bar it was Padillas
inexcusable poor judgment, utter lack of foresight and extreme negligence which were the immediate and proximate
causes of the accident, same cannot be considered to be due to a fortuitous event. This is bolstered by the fact that
the court trying the case for criminal negligence arising from the same incident convicted Padilla for said charge. 20

At any rate, the heirs contended that regardless of whether G & S observed due diligence in the selection of its
employees, it should nonetheless be held liable for the death of Jose Marcial pursuant to Article 1759 of the Civil
Code which provides:

ART. 1759 Common carriers are liable for the death of or injuries to passengers through the negligence or willful
acts of the formers employees, although such employees may have acted beyond the scope of their authority or in
violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father
of a family in the selection and supervision of their employees.

In sum, the heirs prayed that the appeal be dismissed for lack of merit and the assailed Decision and Order of the trial
court be affirmed in toto.

In a Decision21 dated June 29, 2005, the CA ruled in favor of the heirs. The appellate court gave weight to their
argument that in order for a fortuitous event to exempt one from liability, it is necessary that he committed no
negligence or misconduct that may have occasioned the loss. In this case, the CA noted that Padilla failed to employ
reasonable foresight, diligence and care needed to exempt G & S from liability for Jose Marcials death. Said court
also quoted pertinent portions of the MTC decision convicting Padilla of reckless imprudence resulting in homicide to
negate G & S claim that the proximate cause of the accident was the fault of the driver of the delivery van who
allegedly hit the right side of the taxicab. And just like the trial court, the CA found insufficient the evidence adduced
by G & S to support its claim that it exercised due diligence in the selection and supervision of its employees.

With respect to the award of 6,537,244.96 for Jose Marcials loss of earning capacity, the CA declared the same
unwarranted. It found the Certification22 issued by Jose Marcials employer, the United States Agency for International
Development (USAID) through its Chief of Human Resources Division Jonas Cruz (Cruz), as self-serving, unreliable,
and biased. While said certification states that Jose Marcial was earning an annual salary of 450,844.49 at the time
of his untimely demise, the CA noted that same is unsupported by competent evidence such as income tax returns or
receipts. This is in view of the ruling in People v. Ereo23 where it was held that "there must be unbiased proof of the
deceaseds average income." Anent moral damages, the CA found the award of 300,000.00 excessive and thus
reduced the same to 200,000.00 as to make it proportionate to the award of exemplary damages which is
50,000.00. The dispositive portion of said Decision reads:

WHEREFORE, the assailed Decision dated December 27, 2001 and Order dated March 5, 2002 are AFFIRMED with
the following MODIFICATION: appellant is ordered to pay appellees the sum of 50,000.00 as civil indemnity for the
death of the deceased Jose Marcial K. Ochoa, 200,000.00 as moral damages, 50,000.00 as exemplary damages,
100,000.00 for attorneys fees and the costs of litigation. The trial courts award of 6,537,244.96 for the loss of
earning capacity of the deceased is DELETED for lack of basis.

SO ORDERED.

Both parties moved for reconsideration24 but the CA denied their respective motions for reconsideration in a
Resolution25 dated October 12, 2005.

Hence, G & S and the heirs filed their respective Petitions for Review on Certiorari before this Court. The heirs
petition was docketed as G.R. No. 170071 and that of G & S as G.R. No. 170125. These petitions were later
consolidated pursuant to this Courts Resolution of November 21, 2005. 26

G.R. No. 170125

G & S anchors its petition on the following grounds:

I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT THE PROXIMATE CAUSE
OF DEATH OF MR. JOSE MARCIAL K. OCHOA WAS A FORTUITOUS EVENT AND/OR WAS DUE TO THE
FAULT OR NEGLIGENCE OF ANOTHER AND SHOULD THUS EXEMPT THE PETITIONER FROM LIABILITY.

II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT TAKING NOTE OF THE FACT THAT THE
PETITIONERS EMPLOYEE HAD BEEN ACQUITTED OF THE CRIME OF RECKLESS IMPRUDENCE RESULTING
(IN) HOMICIDE.

III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE TESTIMONY OF A
WITNESS WHO SURFACED MONTHS AFTER THE INCIDENT WHILE DISREGARDING THAT OF AN
EYEWITNESS WHO WAS PRESENT AT THE TIME AND PLACE OF THE ACCIDENT.
IV. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT THE PETITIONER
EXERCISED THE DILIGENCE OF A GOOD FATHER OF A FAMILY IN THE SELECTION AND SUPERVISION OF
ITS EMPLOYEES PARTICULARLY MR. BIBIANO PADILLA.27

G & S reiterates its arguments that the proximate cause of the accident is a fortuitous event and/or the negligence of
the driver of the delivery van which bumped the right portion of its taxicab and, that it exercised the diligence of a
good father of a family in the selection and supervision of its employees. It faults the CA when it overlooked the fact
that the MTC Decision convicting Padilla of reckless imprudence has already been reversed on appeal by the RTC
with Padilla having been accordingly acquitted of the crime charged. Moreover, it claims that the appellate court erred
in according respect to the testimony of the lone prosecution witness, Pablo Clave (Clave), when it concluded that
Padilla was driving negligently at the time of the accident. It asserts that Clave is not a credible witness and so is his
testimony. Thus, G & S prays that the assailed CA Decision and Resolution be reversed and set aside.

On the other hand, the heirs posit that the determination of the issues raised by G & S necessarily entails a re-
examination of the factual findings which this Court cannot do in this petition for review on certiorari. At any rate, they
maintain that the trial court itself is convinced of Claves credibility. They stress the settled rule that the evaluation of
the credibility of witnesses is a matter that particularly falls within the authority of the trial court because it had the
opportunity to observe the demeanor of the witnesses on the stand.

The heirs assert that fortuitous event was not the proximate cause of the mishap. They point out that as correctly
found by the trial court, Padilla was running at an extremely high speed. This was why the impact was so strong when
the taxicab rammed the fly-over railings and was split into two when it hit the ground. Also, while it is true that the
MTC Decision in the criminal case for reckless imprudence has been reversed by the RTC, this does not excuse G &
S from its liability to the heirs because its liability arises from its breach of contract of carriage and from its negligence
in the selection and supervision of its employees. Also, since the acquittal of Padilla is based on reasonable doubt,
same does not in any way rule out his negligence as this may merely mean that the prosecution failed to meet the
requisite quantum of evidence to sustain his conviction. Therefore, G & S cannot bank on said acquittal to disprove its
liability.

G.R. No. 170071

The heirs, on the other hand, advance the following grounds in support of their petition:

THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN COMPLETELY DELETING THE TRIAL
COURTS AWARD FOR THE LOSS OF EARNING CAPACITY OF THE DECEASED.

THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN REDUCING THE TRIAL COURTS AWARD
FOR MORAL DAMAGES.28

The focal point of the heirs petition is the CAs deletion of the award of 6,537,244.96 for Jose Marcials loss of
earning capacity as well as the reduction of the award of moral damages from 300,000.00 to 200,000.00.

The heirs aver that the appellate court gravely erred in relying upon Ereo as said case is not on all fours with the
present case. They contend that in Ereo, this Court disallowed the award for loss of income because the only proof
presented was a handwritten statement of the victims spouse stating the daily income of the deceased as a self-
employed fish vendor. The heirs argue that the reason why this Court declared said handwritten statement as self-
serving is because the one who prepared it, the deceaseds wife, was also the one who would directly and personally
benefit from such an award.29 This cannot be said in the case at bar since the same bias and personal interest cannot
be attributed to Jose Marcials employer, the USAID. Unlike in Ereo, USAID here does not stand to be benefited by
an award for Jose Marcials loss of earning capacity. Clearly, the Certification issued by it is far from being self-
serving. At any rate, the heirs contend that Ereo has already been superseded by Pleyto v. Lomboy30where this
Court held that in awarding damages for loss of earning capacity, "mere testimonial evidence suffices to establish a
basis for which the court can make a fair and reasonable estimate of the loss of earning capacity". In addition, the
heirs point out that the authenticity and accuracy of said Certification was neither questioned by G & S nor discredited
by any controverting evidence. In fact, its admission by the trial court was not even assigned by G & S as an error in
their appeal before the CA.

As to the reduction of moral damages, the heirs claim that since the CA agreed with the factual circumstances of the
case as found by the trial court, there is therefore no reason for it to alter the award of damages arising from such
factual circumstances. They aver that the CA may only modify the damages awarded by the trial court when it is
excessive and scandalous as held in Meneses v. Court of Appeals.31 Here, they claim that the award of moral
damages in the amount of 300,000.00 cannot be considered as excessive and unreasonable but only
commensurate to the sufferings caused by the incident to a wife who became a young widow at the age of 33 and to
two minor children who lost a father. Moreover, the heirs aver that the CA should not have reduced the award of
moral damages just to make said amount proportionate to the exemplary damages awarded. This is because there is
no such rule which dictates that the amount of moral damages should be proportionate to that of the exemplary
damages. The heirs pray that the assailed CA Decision and Resolution be reversed and set aside insofar as they
deleted the award for loss of earning capacity and reduced the award for moral damages.

For its part, G & S avers that the Certification issued by USAID is self-serving because the USAID officer who issued
it has not been put on the witness stand to validate the contents thereof. Moreover, said Certification was not
supported by competent evidence such as income tax returns and receipts. G & S likewise finds the reduction of the
award of moral damages appropriate in view of the settled rule that moral damages are not meant to enrich the
complainant at the expense of the defendant. Hence, it prays that the petition be dismissed for lack of merit.

Our Ruling

We shall first tackle the issues raised by G & S in its petition.

The first, third and fourth issues raised by G & S involve questions of fact

We have reviewed said issues and we find that the determination of the first, third and fourth issues raised entails re-
examination of the evidence presented because they all involve questions of fact. In Microsoft Corporation v.
Maxicorp, Inc.,32 we held that:

Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. If the
query requires a re-evaluation of the credibility of witnesses, or the existence or relevance of surrounding
circumstances and their relation to each other, the issue in that query is factual. Our ruling in Paterno v. Paterno is
illustrative on this point:

Such questions as whether certain items of evidence should be accorded probative value or weight, or rejected as
feeble or spurious, or whether or not the proof on one side or the other are clear and convincing and adequate to
establish a proposition in issue, are without doubt questions of fact. Whether or not the body of proofs presented by a
party, weighed and analyzed in relation to contrary evidence submitted by adverse party, may be said to be strong,
clear and convincing; whether or not certain documents presented by one side should be accorded full faith and
credit in the face of protests as to their spurious character by the other side; whether or not inconsistencies in the
body of proofs of a party are of such a gravity as to justify refusing to give said proofs weight all these are issues of
fact. (Citations omitted)

In this case, the said three issues boil down to the determination of the following questions: What is the proximate
cause of the death of Jose Marcial? Is the testimony of prosecution witness Clave credible? Did G & S exercise the
diligence of a good father of a family in the selection and supervision of its employees? Suffice it to say that these are
all questions of fact which require this Court to inquire into the probative value of the evidence presented before the
trial court. As we have consistently held, "[t]his Court is not a trier of facts. It is not a function of this court to analyze
or weigh evidence. When we give due course to such situations, it is solely by way of exception. Such exceptions
apply only in the presence of extremely meritorious circumstances." 33 Here, we note that although G & S enumerated
in its Consolidated Memorandum34 the exceptions35 to the rule that a petition for review on certiorarishould only raise
questions of law, it nevertheless did not point out under what exception its case falls. And, upon review of the records
of the case, we are convinced that it does not fall under any. Hence, we cannot proceed to resolve said issues and
disturb the findings and conclusions of the CA with respect thereto. As we declared in Diokno v. Cacdac:36

It is aphoristic that a re-examination of factual findings cannot be done through a petition for review on certiorariunder
Rule 45 of the Rules of Court because as earlier stated, this Court is not a trier of facts; it reviews only questions of
law. The Supreme Court is not duty-bound to analyze and weigh again the evidence considered in the proceedings
below. This is already outside the province of the instant Petition for Certiorari. [Citations omitted.]

There is a contract of carriage between G & S and Jose Marcial


What is clear from the records is that there existed a contract of carriage between G & S, as the owner and operator
of the Avis taxicab, and Jose Marcial, as the passenger of said vehicle. As a common carrier, G & S "is bound to
carry [Jose Marcial] safely as far as human care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances."37 However, Jose Marcial was not able to reach his
destination safely as he died during the course of the travel. "In a contract of carriage, it is presumed that the
common carrier is at fault or is negligent when a passenger dies or is injured. In fact, there is even no need for the
court to make an express finding of fault or negligence on the part of the common carrier. This statutory presumption
may only be overcome by evidence that the carrier exercised extraordinary diligence." 38 Unfortunately, G & S
miserably failed to overcome this presumption. Both the trial court and the CA found that the accident which led to
Jose Marcials death was due to the reckless driving and gross negligence of G & S driver, Padilla, thereby holding G
& S liable to the heirs of Jose Marcial for breach of contract of carriage.

The acquittal of Padilla in the criminal case is immaterial to the instant case for breach of contract

This thus now leaves us with the remaining issue raised by G & S, that is, whether the CA gravely erred in not taking
note of the fact that Padilla has already been acquitted of the crime of reckless imprudence resulting in homicide, a
charge which arose from the same incident subject of this case.

Article 31 of the Civil Code provides, viz:

When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such
civil action may proceed independently of the criminal proceedings and regardless of the result of the latter.

Thus, in Cancio, Jr. v. Isip,39 we declared:

In the instant case, it must be stressed that the action filed by petitioner is an independent civil action, which remains
separate and distinct from any criminal prosecution based on the same act. Not being deemed instituted in the
criminal action based on culpa criminal, a ruling on the culpability of the offender will have no bearing on said
independent civil action based on an entirely different cause of action, i.e., culpa contractual." (Emphasis
supplied; Citations omitted.)

In this case, the action filed by the heirs is primarily for the recovery of damages arising from breach of contract of
carriage allegedly committed by G & S. Clearly, it is an independent civil action arising from contract which is
separate and distinct from the criminal action for reckless imprudence resulting in homicide filed by the heirs against
Padilla by reason of the same incident. Hence, regardless of Padillas acquittal or conviction in said criminal case,
same has no bearing in the resolution of the present case. There was therefore no error on the part of the CA when it
resolved this case without regard to the fact that Padilla has already been acquitted by the RTC in the criminal case.
Moreover, while the CA quoted some portions of the MTC Decision in said criminal case, we however find that those
quoted portions were only meant to belie G & S claim that the proximate cause of the accident was the negligence of
the driver of the delivery van which allegedly hit the Avis taxicab. Even without those quoted portions, the appellate
courts ultimate finding that it was Padillas negligence which was the proximate cause of the mishap would still be the
same. This is because the CA has, in fact, already made this declaration in the earlier part of its assailed Decision.
The fact that the MTC Decision from which the subject quoted portions were lifted has already been reversed by the
RTC is therefore immaterial.

In view of the foregoing, we deny G & S petition for lack of merit.

The denial by the CA of the heirs claim for lost earnings is unwarranted

Going now to the petition filed by the heirs, we note at the outset that the issues of whether the CA erred in deleting
the award for loss of earning capacity and in reducing the award for moral damages made by the trial court likewise
raise questions of fact as they "involve an examination of the probative value of the evidence presented by the
parties".40 However, we find that the heirs case falls under one of the exceptions because the findings of the CA
conflict with the findings of the RTC.41 Since the heirs properly raised the conflicting findings of the lower courts, it is
proper for this Court to resolve such contradiction.42

In Ereo, we denied the claim for loss of income because the handwritten estimate of the deceaseds daily income as
a self-employed vendor was not supported by competent evidence like income tax returns or receipts. This was in
view of the rule that compensation for lost income is in the nature of damages and as such requires due proof of
damages suffered. We reiterated this rule in People v. Yrat43 where we likewise denied the same claim because the
only evidence presented to show that the deceased was earning 50,000.00 a month was the testimony of the wife.
There we stated that for lost income due to death, there must be unbiased proof of the deceaseds average income.
Self-serving, hence, unreliable statement is not enough. In People v. Caraig,44 we declared that "documentary
evidence should be presented to substantiate the claim for damages for loss of earning capacity. By way of
exception, damages therefor may be awarded despite the absence of documentary evidence, provided that there is
testimony that the victim was either (1) self-employed earning less than the minimum wage under current labor laws,
and judicial notice may be taken of the fact that in the victims line of work no documentary evidence is available; or
(2) employed as a daily-wage worker earning less than the minimum wage under current labor laws". However, we
subsequently ruled in Pleyto v. Lomboy45 that "failure to present documentary evidence to support a claim for loss of
earning capacity of the deceased need not be fatal to its cause. Testimonial evidence suffices to establish a basis for
which the court can make a fair and reasonable estimate of the loss of earning capacity". Hence, we held as sufficient
to establish a basis for an estimate of damages for loss of earning capacity the testimony of the victims widow that
her husband was earning a monthly income of 8,000.00. Later, in Victory Liner, Inc. v. Gammad,46 after finding that
the deceaseds earnings does not fall within the exceptions laid down in Caraig, we deleted the award for
compensatory damages for loss of earning capacity as same was awarded by the lower courts only on the basis of
the husbands testimony that the deceased was 39 years of age and a Section Chief of the Bureau of Internal
Revenue with a salary of 83,088.00 per annum at the time of her death. This same rule was also applied in the 2008
case of Licyayo v. People.47

In all of the cases mentioned except for Ereo, the sole basis for the claim for loss of earning capacity were the
testimonies of the claimants. This is not the case here. Just like in Ereo where the testimony of the mother of the
deceased was accompanied by a handwritten estimate of her daughters alleged income as a fish vendor, the
testimony of Jose Marcials wife that he was earning around 450,000.00 a year was corroborated by a Certification
issued by the USAID. However in Ereo, we declared as self-serving the handwritten estimate submitted by the
mother hence we denied the claim for such award. Based on said ruling, the CA in this case deleted the award for
lost income after it found the USAID Certification to be self-serving and unreliable.

We disagree. The CA sweepingly concluded that the USAID Certification is self-serving and unreliable without
elaborating on how it was able to arrive at such a conclusion. A research on USAID reveals that it is the "principal
[United States] agency to extend assistance to countries recovering from disaster, trying to escape poverty, and
engaging in democratic reforms."48 It is an "independent federal government agency that receives over-all foreign
policy guidance from the Secretary of the State [of the United States]." 49 Given this background, it is highly
improbable that such an agency will issue a certification containing unreliable information regarding an employees
income. Besides, there exists a presumption that official duty has been regularly performed.50 Absent any showing to
the contrary, it is presumed that Cruz, as Chief of Human Resources Division of USAID, has regularly performed his
duty relative to the issuance of said certification and therefore, the correctness of its contents can be relied upon. This
presumption remains especially so where the authenticity, due execution and correctness of said certification have
not been put in issue either before the trial court or the CA. As to its being self-serving, our discussion on "self-serving
evidence" in Heirs of Pedro Clemea y Zurbano v. Heirs of Irene B. Bien 51 is enlightening, viz:

Self-serving evidence, perhaps owing to its descriptive formulation, is a concept much misunderstood. Not
infrequently, the term is employed as a weapon to devalue and discredit a party's testimony favorable to his cause.
That, it seems, is the sense in which petitioners are using it now. This is a grave error. "Self-serving evidence" is not
to be taken literally to mean any evidence that serves its proponent's interest. The term, if used with any legal
sense, refers only to acts or declarations made by a party in his own interest at some place and time out of
court x x x. (Citations omitted; emphasis supplied.)

Verily, the USAID certification cannot be said to be self-serving because it does not refer to an act or declaration
made out of court by the heirs themselves as parties to this case. 1awphi 1

Clearly, the CA erred in deleting the award for lost income on the ground that the USAID Certification supporting such
claim is self-serving and unreliable. On the contrary, we find said certification sufficient basis for the court to make a
fair and reasonable estimate of Jose Marcials loss of earning capacity just like in Tamayo v. Seora52where we
based the victims gross annual income on his pay slip from the Philippine National Police. Hence, we uphold the trial
courts award for Jose Marcials loss of earning capacity.

While the trial court applied the formula generally used by the courts to determine net earning capacity which is, to
wit:
Net Earning Capacity = life expectancy* x (gross annual income - reasonable living expenses),53

Life expectancy = 2/3 (80 age of the deceased)


*

we, however, find incorrect the amount of 6,537, 244.96 arrived at. The award should be 6,611,634.59 as borne
out by the following computation:

2 (80-3654)
Net earning capacity = x 450,844.4955-50%56
3
88
= x 225,422.25
3
= 29.33 x 225,422.25
= 6, 611,634.59

The award of moral damages should be modified

While we deemed it proper to modify the amount of moral damages awarded by the trial court as discussed below,
we nevertheless agree with the heirs that the CA should not have pegged said award in proportion to the award of
exemplary damages. Moral and exemplary damages are based on different jural foundations.57 They are different in
nature and require separate determination.58 The amount of one cannot be made to depend on the other.

In Victory Liner Inc. v. Gammad59 we awarded 100,000.00 by way of moral damages to the husband and three
children of the deceased, a 39-year old Section Chief of the Bureau of Internal Revenue, to compensate said heirs for
the grief caused by her death. This is pursuant to the provisions of Articles 1764 and 2206(3) which provide:

Art. 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book,
concerning Damages. Articles 2206 shall also apply to the death of a passenger caused by the breach of contract by
a common carrier.

Art. 2206. x x x

(3) The spouse, legitimate and illegitimate descendants and the ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of the deceased.

Here, there is no question that the heirs are likewise entitled to moral damages pursuant to the above provisions,
considering the mental anguish suffered by them by reason of Jose Marcials untimely death, as can be deduced
from the following testimony of his wife Ruby:

Atty. Suarez:

Q: How would you describe Jose Marcial Ochoa?

(Ruby) A: My husband was a very loving husband, faithful husband, a very [good] provider[.] I depended on
him so much financially [and] emotionally[.] He was practically my life then.

Q: How is he as a father?

A: A very good father, he is very committed to Micaela[. H]e has always time for her[. H]e is a family man, so
its really a great [loss] to me and to Micaela.

Q: What was your reaction upon learning of your husbands death?


A: Immediately after I learned of his death, I tried very hard to keep a clear mind for my little girl, she was 3
and she could not grasp what death is, so I found [it] so hard to explain to her [at] that time what
happened [e]specially [because] she just talked to her father from the airport telling her that he is coming
home, tapos hindi na pala.

Q: How did it affect you?

A: It was a painful struggle everyday just to get up and move on when someone who [you] really really love
and [who] is important to you it is very hard to move on and [it is even] harder to move on [when] I found
out that I was pregnant with my second child, parang tinabunan ka [ng] lahat eh[. I]ts [too] hard to find
happiness, youre pregnant, when you know wala naman talagang father yung bata later on x x x

xxxx

Q: How did this affect your family?

A: Yung effect kay Micaela, she [used] to be a gregarious child, yung happy ganyan, but nung wala na yong
father niya that time, [during] graduation ng nursery that time naging very very [quiet] siya, so a lot of
emotional support from my own family was given to her at the time para makacope-up siya sa loss kasi she
is very close to the father.

Q: Financially, how did it affect you?

A: I had to make do of what was left by my husband, I couldnt also work so much at the time because I
was.and hirap eh, I cannot find enthusiasm in what I do, tapos pregnant pa ako, and hirap talaga.

Q: How else did it affect you?

A: We had to move houses like we used to live in Quezon City at (the) time of his death, tapos kinuha kami
ni Gorjie my brother-in-law sa compound nila para hindi [to] support us emotionally (at that time) kasi nga I
was pregnant and then I also decided to move (to make it easy for me) to adjust yung lifestyle ng mga bata,
because I cannot cope [here] financially on my own[. N]ahihirapan na ako dito because the living expenses
here are quite high compared sa probinsiya so I decided to move.

Q: If you would assign that pain and suffering that you suffered as a result of the death of your husband,
what will be the monetary consideration?

A: I struggled with that kasi.I can honestly say no amount of money can ever repay the [loss] that my
children suffered, future nila yan eh, and my son was not given a chance to get to know his father, so I
cannot imagine kung ano yung sinasabi nyong amount that will compensate the suffering that I have to go
through and my children will go through, yon and mahirap bayaran. 60

Under this circumstance, we thus find as sufficient and "somehow proportional to and in approximation of the
suffering inflicted"61 an award of moral damages in an amount similar to that awarded in Victory which is 100,000.00.

From the above discussion, we, thus, partly grant the heirs petition.

WHEREFORE, the petition for review on certiorari in G.R. No. 170071 is PARTLY GRANTED while the petition in
G.R. No. 170125 is DENIED. The assailed Decision and Resolution dated June 29, 2005 and October 12, 2005 of the
Court of Appeals in CA-G.R. CV No. 75602 are AFFIRMED with the MODIFICATIONS that G & S is ordered to pay
the heirs of Jose Marcial K. Ochoa the sum of 6,611,634.59 for loss of earning capacity of the deceased and
100,000.00 as moral damages.

SO ORDERED.

FIRST DIVISION
[G. R. No. 124498. October 5, 2001]

EDDIE B. SABANDAL, petitioner, vs. HON. FELIPE S. TONGCO, Presiding


Judge, Regional Trial Court, Manila, Branch 42, and PHILIPPINES
TODAY, respondents.

DECISION
PARDO, J.:

The Case

The case is a petition to suspend the criminal proceedings in the Regional Trial Court,
Manila, Branch 42,[1] where petitioner Eddie B. Sabandal is charged with eleven counts of
violation of Batas Pambansa Bilang 22.[2]

The Facts

On February 18, 1989, Eddie B. Sabandal entered into a memorandum of agreement on


dealership with respondent Philippines Today, Inc. for the distribution of the newspaper
Philippines Today, (now Philippine Star) in Bacolod City and in designated towns in Negros
Occidental.[3]
Under the agreement, petitioner shall pay for an equivalent amount of one month of
deliveries in advance within the first seven days of the succeeding month. Petitioners allowable
percentage of return shall be 10% and be entitled to a rebate of P0.15 per copy sold.
After execution of the agreement, respondent Philippines Today, Inc. made regular
deliveries of the agreed copies of the newspaper to petitioner.
In order to make partial payments for the deliveries, on December 18, 1990 to April 15,
1991, petitioner issued to respondent several checks amounting to ninety thousand (P90,000.00)
pesos.
When respondent presented petitioners checks to the drawee banks for payment, the bank
dishonored the checks for insufficiency of funds and/or account closed. Consequently,
respondent made oral and written demands for petitioner to make good the checks. However,
petitioner failed to pay despite demands.
In December 1992, on the basis of a complaint-affidavit filed by respondent Philippines
Today, Inc., assistant city prosecutor of Manila Jacinto A. de los Reyes, Jr. filed with the
Regional Trial Court, Manila eleven informations for violation of Batas Pambansa Bilang 22
against petitioner.[4]
Three years later, or on October 11, 1995, petitioner filed with the Regional Trial Court,
Negros Occidental at Himamaylan, a complaint against Philippines Today, Inc. for specific
performance, recovery of overpayment and damages.[5]
On October 11, 1995, petitioner also filed with the Regional Trial Court, Manila, Branch 42,
a motion to suspend trial in the criminal cases against him based on a prejudicial question.[6]
On November 27, 1995, the trial court denied petitioners motion to suspend trial based on a
prejudicial question.[7]
On December 20, 1995, petitioner filed with the trial court a motion for reconsideration of
the denial.[8]
On January 9, 1996, the trial court denied the motion for reconsideration.[9]
Hence, this petition.[10]

The Issue

The issue raised is whether a prejudicial question exists to warrant the suspension of the trial
of the criminal cases for violation of Batas Pambansa Bilang 22 against petitioner until after the
resolution of the civil action for specific performance, recovery of overpayment, and damages.

The Courts Ruling

The petition has no merit.


The two (2) essential elements of a prejudicial question are: (a) the civil action involves an
issue similar or intimately related to the issue raised in the criminal action; and (b) the resolution
of such issue determines whether or not the criminal action may proceed.[11]
A prejudicial question is defined as that which arises in a case the resolution of which is a
logical antecedent of the issue involved therein, and the cognizance of which pertains to another
tribunal. The prejudicial question must be determinative of the case before the court but the
jurisdiction to try and resolve the question must be lodged in another court or tribunal. It is a
question based on a fact distinct and separate from the crime but so intimately connected with it
that it determines the guilt or innocence of the accused.[12]
For a civil action to be considered prejudicial to a criminal case as to cause the suspension of
the criminal proceedings until the final resolution of the civil, the following requisites must be
present: (1) the civil case involves facts intimately related to those upon which the criminal
prosecution would be based; (2) in the resolution of the issue or issues raised in the civil action,
the guilt or innocence of the accused would necessarily be determined; and (3) jurisdiction to try
said question must be lodged in another tribunal.[13]
If both civil and criminal cases have similar issues or the issue in one is intimately related to
the issues raised in the other, then a prejudicial question would likely exist, provided the other
element or characteristic is satisfied.[14] It must appear not only that the civil case involves the
same facts upon which the criminal prosecution would be based, but also that the resolution of
the issues raised in the civil action would be necessarily determinative of the guilt or innocence
of the accused.[15] If the resolution of the issue in the civil action will not determine the criminal
responsibility of the accused in the criminal action based on the same facts, or there is no
necessity that the civil case be determined first before taking up the criminal case, therefore, the
civil case does not involve a prejudicial question.[16]Neither is there a prejudicial question if the
civil and the criminal action can, according to law, proceed independently of each other.[17]
In this case, the issue in the criminal cases for violation of Batas Pambansa Bilang 22 is
whether the accused knowingly issued worthless checks. The issue in the civil action for specific
performance, overpayment, and damages is whether complainant Sabandal overpaid his
obligations to Philippines Today, Inc. If, after trial in the civil case, petitioner is shown to have
overpaid respondent, it does not follow that he cannot be held liable for the bouncing checks he
issued, for the mere issuance of worthless checks with knowledge of the insufficiency of funds to
support the checks is itself an offense.[18]
The lower court, therefore, did not err in ruling that the pendency of a civil action for
specific performance, overpayment, and damages did not pose a prejudicial question in the
criminal cases for violation of Batas Pambansa Bilang 22.
Furthermore, the peculiar circumstances of the case clearly indicate that the filing of the
civil case was a ploy to delay the resolution of the criminal cases. Petitioner filed the civil case
three years after the institution of the criminal charges against him. Apparently, the civil action
was instituted as an afterthought to delay the proceedings in the criminal cases.
Petitioners claim of overpayment to respondent may be raised as a defense during the trial of
the cases for violation of Batas Pambansa Bilang 22 charged against him. The civil action for
recovery of civil liability is impliedly instituted with the filing of the criminal action. [19] Hence,
petitioner may invoke all defenses pertaining to his civil liability in the criminal action.[20]

The Fallo

WHEREFORE, the Court hereby DISMISSES the petition for lack of merit. The Court
directs the Regional Trial Court, Manila to proceed with the trial of the criminal cases against
petitioner with all judicious dispatch in accordance with the Speedy Trial Act of 1998.[21]
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Ynares-Santiago, JJ., concur.
Kapunan, J., (on official leave).
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

DREAMWORK G.R. No. 184861


CONSTRUCTION, INC.,
Petitioner, Present:
YNARES-SANTIAGO, J.,
Chairperson,
- versus - CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.
CLEOFE S. JANIOLA and Promulgated:
HON. ARTHUR A. FAMINI,
Respondents. June 30, 2009
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The Case

Petitioner Dreamwork Construction, Inc. seeks the reversal of the August 26,
2008 Decision[1] in SCA No. 08-0005 of the Regional Trial Court (RTC), Branch
253 in Las Pias City. The Decision affirmed the Orders dated October 16,
2007[2] and March 12, 2008[3] in Criminal Case Nos. 55554-61 issued by the
Metropolitan Trial Court (MTC), Branch 79 in Las Pias City.

The Facts

On October 18, 2004, petitioner, through its President, Roberto S.


Concepcion, and Vice-President for Finance and Marketing, Normandy P. Amora,
filed a Complaint Affidavit dated October 5, 2004[4] for violation of Batas
Pambansa Bilang 22 (BP 22) against private respondent Cleofe S. Janiola with the
Office of the City Prosecutor of Las Pias City. The case was docketed as I.S. No.
04-2526-33. Correspondingly, petitioner filed a criminal information for violation
of BP 22 against private respondent with the MTC on February 2, 2005 docketed
as Criminal Case Nos. 55554-61, entitled People of the Philippines v. Cleofe S.
Janiola.

On September 20, 2006, private respondent, joined by her husband,


instituted a civil complaint against petitioner by filing a Complaint dated August
2006[5] for the rescission of an alleged construction agreement between the parties,
as well as for damages. The case was filed with the RTC, Branch 197 in Las Pias
City and docketed as Civil Case No. LP-06-0197. Notably, the checks, subject of
the criminal cases before the MTC, were issued in consideration of the
construction agreement.

Thereafter, on July 25, 2007, private respondent filed a Motion to Suspend


Proceedings dated July 24, 2007[6] in Criminal Case Nos. 55554-61, alleging that
the civil and criminal cases involved facts and issues similar or intimately related
such that in the resolution of the issues in the civil case, the guilt or innocence of
the accused would necessarily be determined. In other words, private respondent
claimed that the civil case posed a prejudicial question as against the criminal
cases.

Petitioner opposed the suspension of the proceedings in the criminal cases in


an undated Comment/Opposition to Accuseds Motion to Suspend Proceedings
based on Prejudicial Question[7] on the grounds that: (1) there is no prejudicial
question in this case as the rescission of the contract upon which the bouncing
checks were issued is a separate and distinct issue from the issue of whether
private respondent violated BP 22; and (2) Section 7, Rule 111 of the Rules of
Court states that one of the elements of a prejudicial question is that
the previously instituted civil action involves an issue similar or intimately related
to the issue raised in the subsequent criminal action; thus, this element is missing
in this case, the criminal case having preceded the civil case.

Later, the MTC issued its Order dated October 16, 2007, granting the
Motion to Suspend Proceedings, and reasoned that:

Should the trial court declare the rescission of contract and the
nullification of the checks issued as the same are without consideration,
then the instant criminal cases for alleged violation of BP 22 must be
dismissed. The belated filing of the civil case by the herein accused did
not detract from the correctness of her cause, since a motion for
suspension of a criminal action may be filed at any time before the
prosecution rests (Section 6, Rule 111, Revised Rules of Court).[8]

In an Order dated March 12, 2008,[9] the MTC denied petitioners Motion for
Reconsideration dated November 29, 2007.

Petitioner appealed the Orders to the RTC with a Petition dated May 13,
2008. Thereafter, the RTC issued the assailed decision dated August 26, 2008,
denying the petition. On the issue of the existence of a prejudicial question, the
RTC ruled:

Additionally, it must be stressed that the requirement of a


previously filed civil case is intended merely to obviate delays in the
conduct of the criminal proceedings. Incidentally, no clear evidence of
any intent to delay by private respondent was shown. The criminal
proceedings are still in their initial stages when the civil action was
instituted. And, the fact that the civil action was filed after the criminal
action was instituted does not render the issues in the civil action any
less prejudicial in character.[10]

Hence, we have this petition under Rule 45.

The Issue

WHETHER OR NOT THE COURT A QUO SERIOUSLY ERRED IN


NOT PERCEIVING GRAVE ABUSE OF DISCRETION ON THE
PART OF THE INFERIOR COURT, WHEN THE LATTER RULED
TO SUSPEND PROCEEDINGS IN CRIM. CASE NOS. 55554-61 ON
THE BASIS OF PREJUDICIAL QUESTION IN CIVIL CASE NO. LP-
06-0197.[11]

The Courts Ruling

This petition must be granted.


The Civil Action Must Precede the Filing of the
Criminal Action for a Prejudicial Question to Exist

Under the 1985 Rules on Criminal Procedure, as amended by Supreme


Court Resolutions dated June 17, 1988 and July 7, 1988, the elements of a
prejudicial question are contained in Rule 111, Sec. 5, which states:

SEC. 5. Elements of prejudicial question. The two (2) essential


elements of a prejudicial question are: (a) the civil action involves an
issue similar or intimately related to the issue raised in the criminal
action; and (b) the resolution of such issue determines whether or not the
criminal action may proceed.

Thus, the Court has held in numerous cases[12] that the elements of a
prejudicial question, as stated in the above-quoted provision and in Beltran v.
People,[13] are:

The rationale behind the principle of prejudicial question is to


avoid two conflicting decisions. It has two essential elements: (a) the
civil action involves an issue similar or intimately related to the issue
raised in the criminal action; and (b) the resolution of such issue
determines whether or not the criminal action may proceed.

On December 1, 2000, the 2000 Rules on Criminal Procedure, however,


became effective and the above provision was amended by Sec. 7 of Rule 111,
which applies here and now provides:

SEC. 7. Elements of prejudicial question.The elements of a


prejudicial question are: (a) the previously instituted civil
action involves an issue similar or intimately related to the issue raised
in the subsequent criminal action, and (b) the resolution of such issue
determines whether or not the criminal action may proceed. (Emphasis
supplied.)

Petitioner interprets Sec. 7(a) to mean that in order for a civil case to create a
prejudicial question and, thus, suspend a criminal case, it must first be established
that the civil case was filed previous to the filing of the criminal case. This,
petitioner argues, is specifically to guard against the situation wherein a party
would belatedly file a civil action that is related to a pending criminal action in
order to delay the proceedings in the latter.

On the other hand, private respondent cites Article 36 of the Civil Code which
provides:

Art. 36. Pre-judicial questions which must be decided before any


criminal prosecution may be instituted or may proceed, shall be
governed by rules of court which the Supreme Court shall promulgate
and which shall not be in conflict with the provisions of this Code.
(Emphasis supplied.)

Private respondent argues that the phrase before any criminal prosecution
may be instituted or may proceed must be interpreted to mean that a prejudicial
question exists when the civil action is filed either before the institution of the
criminal action or during the pendency of the criminal action. Private respondent
concludes that there is an apparent conflict in the provisions of the Rules of Court
and the Civil Code in that the latter considers a civil case to have presented a
prejudicial question even if the criminal case preceded the filing of the civil case.

We cannot agree with private respondent.

First off, it is a basic precept in statutory construction that a change in


phraseology by amendment of a provision of law indicates a legislative intent to
change the meaning of the provision from that it originally had.[14] In the instant
case, the phrase, previously instituted, was inserted to qualify the nature of the civil
action involved in a prejudicial question in relation to the criminal action. This
interpretation is further buttressed by the insertion of subsequent directly before the
term criminal action. There is no other logical explanation for the amendments
except to qualify the relationship of the civil and criminal actions, that the civil
action must precede the criminal action.

Thus, this Court ruled in Torres v. Garchitorena[15] that:

Even if we ignored petitioners procedural lapse and resolved their


petition on the merits, we hold that Sandiganbayan did not abuse its
discretion amounting to excess or lack of jurisdiction in denying their
omnibus motion for the suspension of the proceedings pending final
judgment in Civil Case No. 7160. Section 6, Rule lll of the Rules of
Criminal Procedure, as amended, reads:

Sec. 6. Suspension by reason of prejudicial question. - A


petition for suspension of the criminal action based upon the
pendency of a prejudicial question in a civil action may be filed in
the office of the prosecutor or the court conducting the
preliminary investigation. When the criminal action has been filed
in court for trial, the petition to suspend shall be filed in the same
criminal action at any time before the prosecution rests.

Sec. 7. Elements of prejudicial question. - The elements of


a prejudicial question are: (a) the previously instituted civil action
involves an issue similar or intimately related to the issue raised in
the subsequent criminal action, and (b) the resolution of such
issue determines whether or not the criminal action may proceed.

Under the amendment, a prejudicial question is understood in


law as that which must precede the criminal action and which
requires a decision before a final judgment can be rendered in the
criminal action with which said question is closely connected. The
civil action must be instituted prior to the institution of the criminal
action. In this case, the Information was filed with the Sandiganbayan
ahead of the complaint in Civil Case No. 7160 filed by the State with the
RTC in Civil Case No. 7160. Thus, no prejudicial question exists.
(Emphasis supplied.)

Additionally, it is a principle in statutory construction that a statute should


be construed not only to be consistent with itself but also to harmonize with other
laws on the same subject matter, as to form a complete, coherent and intelligible
system.[16] This principle is consistent with the maxim, interpretare et concordare
leges legibus est optimus interpretandi modus or every statute must be so
construed and harmonized with other statutes as to form a uniform system of
jurisprudence.[17]
In other words, every effort must be made to harmonize seemingly
conflicting laws. It is only when harmonization is impossible that resort must be
made to choosing which law to apply.

In the instant case, Art. 36 of the Civil Code and Sec. 7 of Rule 111 of the
Rules of Court are susceptible of an interpretation that would harmonize both
provisions of law. The phrase previously instituted civil action in Sec. 7 of Rule
111 is plainly worded and is not susceptible of alternative interpretations. The
clause before any criminal prosecution may be instituted or may proceed in Art. 36
of the Civil Code may, however, be interpreted to mean that the motion to suspend
the criminal action may be filed during the preliminary investigation with the
public prosecutor or court conducting the investigation, or during the trial with the
court hearing the case.

This interpretation would harmonize Art. 36 of the Civil Code with Sec. 7 of
Rule 111 of the Rules of Court but also with Sec. 6 of Rule 111 of the Civil Code,
which provides for the situations when the motion to suspend the criminal action
during the preliminary investigation or during the trial may be filed. Sec. 6
provides:

SEC. 6. Suspension by reason of prejudicial question.A petition


for suspension of the criminal action based upon the pendency of a
prejudicial question in a civil action may be filed in the office of the
prosecutor or the court conducting the preliminary investigation. When
the criminal action has been filed in court for trial, the petition to
suspend shall be filed in the same criminal action at any time before the
prosecution rests.
Thus, under the principles of statutory construction, it is this interpretation of
Art. 36 of the Civil Code that should govern in order to give effect to all the
relevant provisions of law.

It bears pointing out that the circumstances present in the instant case
indicate that the filing of the civil action and the subsequent move to suspend the
criminal proceedings by reason of the presence of a prejudicial question were a
mere afterthought and instituted to delay the criminal proceedings.
In Sabandal v. Tongco,[18] we found no prejudicial question existed
involving a civil action for specific performance, overpayment, and damages, and a
criminal complaint for BP 22, as the resolution of the civil action would not
determine the guilt or innocence of the accused in the criminal case. In resolving
the case, we said:

Furthermore, the peculiar circumstances of the case clearly indicate that


the filing of the civil case was a ploy to delay the resolution of the
criminal cases. Petitioner filed the civil case three years after the
institution of the criminal charges against him. Apparently, the civil
action was instituted as an afterthought to delay the proceedings in the
criminal cases.[19]

Here, the civil case was filed two (2) years after the institution of the criminal
complaint and from the time that private respondent allegedly withdrew its
equipment from the job site. Also, it is worth noting that the civil case was
instituted more than two and a half (2 ) years from the time that private respondent
allegedly stopped construction of the proposed building for no valid reason. More
importantly, the civil case praying for the rescission of the construction agreement
for lack of consideration was filed more than three (3) years from the execution of
the construction agreement.

Evidently, as in Sabandal, the circumstances surrounding the filing of the cases


involved here show that the filing of the civil action was a mere afterthought on the
part of private respondent and interposed for delay. And as correctly argued by
petitioner, it is this scenario that Sec. 7 of Rule 111 of the Rules of Court seeks to
prevent. Thus, private respondents positions cannot be left to stand.

The Resolution of the Civil Case Is Not


Determinative of the Prosecution of the Criminal Action

In any event, even if the civil case here was instituted prior to the criminal
action, there is, still, no prejudicial question to speak of that would justify the
suspension of the proceedings in the criminal case.

To reiterate, the elements of a prejudicial question under Sec. 7 of Rule 111


of the Rules of Court are: (1) the previously instituted civil action involves an issue
similar or intimately related to the issue raised in the subsequent criminal action;
and (2) the resolution of such issue determines whether or not the criminal action
may proceed.

Petitioner argues that the second element of a prejudicial question, as


provided in Sec. 7 of Rule 111 of the Rules, is absent in this case. Thus, such rule
cannot apply to the present controversy.

Private respondent, on the other hand, claims that if the construction


agreement between the parties is declared null and void for want of consideration,
the checks issued in consideration of such contract would become mere scraps of
paper and cannot be the basis of a criminal prosecution.
We find for petitioner.

It must be remembered that the elements of the crime punishable under BP


22 are as follows:

(1) the making, drawing, and issuance of any check to apply for
account or for value;

(2) the knowledge of the maker, drawer, or issuer that at the time
of issue there are no sufficient funds in or credit with the drawee bank
for the payment of such check in full upon its presentment; and

(3) the subsequent dishonor of the check by the drawee bank for
insufficiency of funds or credit, or dishonor for the same reason had not
the drawer, without any valid cause, ordered the bank to stop payment.[20]

Undeniably, the fact that there exists a valid contract or agreement to support
the issuance of the check/s or that the checks were issued for valuable
consideration does not make up the elements of the crime. Thus, this Court has
held in a long line of cases[21] that the agreement surrounding the issuance of
dishonored checks is irrelevant to the prosecution for violation of BP 22. In Mejia
v. People,[22] we ruled:

It must be emphasized that the gravamen of the offense charge is


the issuance of a bad check. The purpose for which the check was
issued, the terms and conditions relating to its issuance, or any
agreement surrounding such issuance are irrelevant to the prosecution
and conviction of petitioner. To determine the reason for which checks
are issued, or the terms and conditions for their issuance, will greatly
erode the faith the public reposes in the stability and commercial value
of checks as currency substitutes, and bring havoc in trade and in
banking communities. The clear intention of the framers of B.P. 22 is to
make the mere act of issuing a worthless check malum prohibitum.

Lee v. Court of Appeals[23] is even more poignant. In that case, we ruled that
the issue of lack of valuable consideration for the issuance of checks which were
later on dishonored for insufficient funds is immaterial to the success of a
prosecution for violation of BP 22, to wit:
Third issue. Whether or not the check was issued on account or
for value.

Petitioners claim is not feasible. We have held that upon issuance


of a check, in the absence of evidence to the contrary, it is presumed that
the same was issued for valuable consideration. Valuable consideration,
in turn, may consist either in some right, interest, profit or benefit
accruing to the party who makes the contract, or some forbearance,
detriment, loss or some responsibility, to act, or labor, or service given,
suffered or undertaken by the other side. It is an obligation to do, or not
to do in favor of the party who makes the contract, such as the maker or
indorser.

In this case, petitioner himself testified that he signed several


checks in blank, the subject check included, in exchange for 2.5%
interest from the proceeds of loans that will be made from said account.
This is a valuable consideration for which the check was issued. That
there was neither a pre-existing obligation nor an obligation incurred on
the part of petitioner when the subject check was given by Bautista to
private complainant on July 24, 1993 because petitioner was no longer
connected with Unlad or Bautista starting July 1989, cannot be given
merit since, as earlier discussed, petitioner failed to adequately prove
that he has severed his relationship with Bautista or Unlad.

At any rate, we have held that what the law punishes is the
mere act of issuing a bouncing check, not the purpose for which it
was issued nor the terms and conditions relating to its issuance. This
is because the thrust of the law is to prohibit the making of worthless
checks and putting them into circulation.[24] (Emphasis supplied.)

Verily, even if the trial court in the civil case declares that the construction
agreement between the parties is void for lack of consideration, this would not
affect the prosecution of private respondent in the criminal case. The fact of the
matter is that private respondent indeed issued checks which were subsequently
dishonored for insufficient funds. It is this fact that is subject of prosecution under
BP 22.
Therefore, it is clear that the second element required for the existence of a
prejudicial question, that the resolution of the issue in the civil action would
determine whether the criminal action may proceed, is absent in the instant case.
Thus, no prejudicial question exists and the rules on it are inapplicable to the case
before us.

WHEREFORE, we GRANT this petition. We hereby REVERSE and SET


ASIDE the August 26, 2008 Decision in SCA No. 08-0005 of the RTC, Branch
253 in Las Pias City and the Orders dated October 16, 2007 and March 12, 2008 in
Criminal Case Nos. 55554-61 of the MTC, Branch 79 in Las Pias City. We order
the MTC to continue with the proceedings in Criminal Case Nos. 55554-61 with
dispatch.

No costs.

SO ORDERED.
Facts:

This case is a petition for the reversal of the decision on the suspension of the criminal proceeding filed
by the petitioner in the MTC for the ground that there is a presence of prejudicial question with respect
to the civil case belatedly filed by the respondent. The petitioner appealed to RTC but denied
Dreamwork, through its President, and Vice-President, filed a Complaint Affidavit against Janiola for
violation of BP 22 at the Office of the City Prosecutor of Las Pias City. Correspondingly, the former also
filed a criminal information for violation of BP 22 against private respondent with the MTC, entitled
People of the Philippines v. Cleofe S. Janiola. On September 20, 2006, Janiola, instituted a civil complaint
against petitioner for the rescission of an alleged construction agreement between the parties, as well
as for damages. Thereafter respondent filed a Motion to Suspend Proceedings in the Criminal Case for
the ground that private respondent claim that the civil case posed a prejudicial question against the
criminal case. Petitioner opposed the Respondents Motion to Suspend criminal proceeding based on
juridical question for the following grounds; (1) there is no prejudicial question in this case as the
rescission of the contract upon which the bouncing checks were issued is a separate and distinct issue
from the issue of whether private respondent violated BP 22; and (2) Section 7, Rule 111 of the Rules of
Court states that one of the elements of a prejudicial question is that the previously instituted civil
action involves an issue similar or intimately related to the issue raised in the subsequent criminal
action; thus, this element is missing in this case, the criminal case having preceded the civil case. The
MTC granted the Respondents Motion to Suspend Proceedings. Petitioner appealed the Orders to the
RTC but denied the petition. Hence, this petition raised.

ISSUE
Whether or not the MTC or RTC Court erred in its discretion to suspend proceedings in Criminal Case on
the basis of Prejudicial Question , with respect to the Civil Case belatedly filed.

Held This petition must be granted, pursuant to SEC. 7. Elements of prejudicial question. The elements
of a prejudicial question are: (a) the previously instituted civil action involves an issue similar or
intimately related to the issue raised in the subsequent criminal action, and (b) the resolution of such
issue determines whether or not the criminal action may proceed. Under the amendment, a prejudicial
question is understood in law as that which must precede the criminal action and which requires a
decision before a final judgment can be rendered in the criminal action. The civil action must be
instituted prior to the institution of the criminal action. In this case, the Information was filed with the
Sandiganbayan ahead of the complaint in Civil Case filed by the State with the RTC. Thus, no prejudicial
question exists. The Resolution of the Civil Case Is Not Determinative of the Prosecution of the Criminal
Action. Even if the trial court in the civil case declares that the construction agreement between the
parties is void for lack of consideration, this would not affect the prosecution of private respondent in
the criminal case. The fact of the matter is that private respondent issued checks which were
subsequently dishonored for insufficient funds. It is this fact that is subject of prosecution under BP 22.
Therefore, it is clear that the second element required for the existence of a prejudicial question, is
absent. Thus, no prejudicial question exists