G.R. No.

L-18919, December 29, 1962

ABELARDO JAVELLANA, TOMAS JONCO, RUDICO HABANA, EXEQUIEL
GOLEZ, ALFREDO ANG, AND FILIPINAS SOLEDAD, IN THEIR
CAPACITIES AS COUNCILORS OF THE MUNICIPALITY OF
BUENAVISTA, PROVINCE OF ILOILO, PETITIONERS AND APPELLEES,
VS. SUSANO TAYO, AS MAYOR OF THE MUNICIPALITY OF
BUENAVISTA, ILOILO, RESPONDENT AND APPELLANT.

DECISION

BARRERA, J.:

This is a direct appeal taken by respondent Susano Tayo (Mayor of the Municipality of
Buenavista, Iloilo) from the decision of the Court of First Instance of Iloilo (in Civil Case No.
5558, for mandamus) declaring legal and valid the regular sessions held by petitioners Abelardo
Javellana, Tomas Jonco, Rudico Habana, Exequiel Golez, Alfredo Ang, and Filipinas Soledad,
constituting a majority of the elected councilors of said municipality, and ordering respondent to
give due course to the resolutions and ordinances passed thereat, and to sign the payrolls
corresponding to the session days of June 1, June 15, July 6, July 20, August 3, August 17,
September 7, and September 21, 1960 for payment of the per diems of petitioners as councilors;
to pay said Councilor Golez the sum of P100.00 as moral damages; and to pay P100.00 as
attorney's fees, plus costs.

The case was submitted on the following Stipulation of Facts:

"That the petitioners are duly elected and Qualified as members of the Municipal Council of the
Municipality of Buenavista, Province of Iloilo, Philippines; and that the respondent, at the time
the acts hereinbelow complained of took place, was and still is the duly-elected and qualified
Mayor of the Municipality of Buenavista, Province of Iloilo, Philippines, where he resides and
may be served with summons.

II

"On February 8, 1960, the Municipal Council of the Municipality of Buenavista, Iloilo,
unanimously approved Resolution No. 5, Series of 1960, dated February 8, 1960, a copy of
which is hereto attached to form an integral part hereon as Annex 'A' which set the regular
sessions of the Municipal Council of Buenavista on every first and third Wednesday of every
month, and which resolution was duly approved by the respondent, in his capacity as Mayor of
the Municipality of Buenavista.

III
"That on June 1, 1960, at the time and place set for the regular session of the Municipal Council,
the Mayor, Vice-Mayor, No. 1 and No. 2 Councilors and the Secretary were absent.

IV

"That the six councilors, who are the petitioners in this case, were present and they proceeded to
elect among themselves a temporary presiding officer and Acting Secretary to take notes of the
proceedings. Having thus elected a temporary presiding officer and secretary of the Council, they
proceeded to do business.

"That on June 15, 1960, at the time and place designated in Resolution No. 5, series of 1960,
dated February 8, 1960 above referred to, the petitioners acting as duly elected and qualified
councilors were present and again, in view of the absence of the Mayor, Vice-Mayor, said two
councilors and the Secretary, proceeded to elect a temporary presiding officer and temporary
secretary from among them, and did business as a Municipal Council of Buenavista.

VI

"That again on July 6, and July 20, 1960, on August 3, and August 17, September 7, and on
September 21, 1960, the petitioners met at the place and time designated in Resolution No. 5,
series of 1960, and proceeded to elect a temporary Secretary among themselves, and did business
as the Municipal Council of Buenavista, in view again of the absence of the Mayor, Vice-Mayor,
2 councilors, and the Secretary.

VII

"That when the minutes of the proceedings of June 1, June 15, July 6, July 20, August 17,
September 7, and September 21, 1960 of the Municipal Council were presented to the respondent
for action, the respondent Mayor refused to act upon said minutes, or particularly to approve or
disapprove the resolution as approved by the Municipal Council, the Mayor declaring the session
above referred to as null and void and not in accordance with law.

VIII

"That the petitioners made repeated demands for payment of their per diems for the sessions of
June 1, June 15, July 6, July 20, August 3, August 17, September 7 and September 21, 1960, by
presenting the payrolls; Provincial Forms No. 38 (A) to the respondent Mayor for the latter's
signature, but that the respondent refused to affix his signature to the payrolls thus presented,
covering the per diems of the petitioners, alleging that the proceedings were illegal due to his
absence.

IX
"That the petitioners, acting through Atty. Bartolome T. Tiña, addressed a letter dated August 8,
1960 to the Honorable Provincial Fiscal of the Province of Iloilo, asking of the latter's opinion on
the validity of the acts of the herein petitioners, acting as the Municipal Council in the absence of
the Mayor, Vice-Mayor, said two councilors and the secretary, a copy of which letter is herewith
attached as Annex 'B' and made an integral part of this petition.

"That on August 9, 1960, the Honorable Provincial Fiscal of the Province of Iloilo, in his
indorsement, rendered an opinion upholding the validity of the controverted sessions of the
Municipal Council, a copy of which communication is, likewise, attached herein as Annex 'C'
and made an integral part of this petition.

XI

"That despite the opinion of the Provincial Fiscal, the respondent Mayor refused and still refuses
to act upon the resolutions presented to him and to sign the payrolls covering the per diems of the
herein petitioners.

XII

"That the respondent Mayor brought the matter to the attention of the Provincial Board of the
Province of Iloilo, by means of a letter questioning the legality of the minutes of the regular
session of the Municipal Council without his presence, and that the Provincial Board resolved on
September 23, 1960 to return the minutes of the regular session of the Municipal Council of
Buenavista, Iloilo, informing the Mayor that per the opinion of the Legal Assistant, said minutes
is legal.

XIII

"That despite the resolution of the Provincial Board, the Mayor refused and still refuses to
recognize the validity of the acts of the Municipal Council and the legality of its regular session
held in his absence."

On the basis of the foregoing stipulation of facts (plus the testimony of Councilor Exequiel
Golez), the trial court (on July 26, 1961) rendered the decision above adverted to, partly stating:

"This Court, after perusal of all the records of this case, has reached the conclusion that the
sessions held by the petitioners during the absence of the respondent Mayor were perfectly valid
and legal. The attendance of the Mayor is not essential to the validity of the session as long as
there is quorum constituted in accordance with law. To declare that the proceedings of the
petitioners were null and void, is to encourage recalcitrant public officials who would frustrate
valid sessions for political end or, consideration. Public interest will immensely suffer, if a mayor
who belongs to one political group refuses to call or attend a session, because the Council is
controlled by another political group. In a democracy, the minority should respect the majority
and it is but natural that they could validly hold a valid session, in order to devise means for
public interest.

"The respondent here as Municipal Mayor should have given good example, by calling and
attending regular sessions on the dates fixed by the Council. In the discharge of his official duty,
he should consider the Session Hall of the Municipal Council as the sanctuary and depository of
public interest and public welfare. Any member of the Council should enter the Session Hall, not
as a representative of any political party or group, but as a representative of the people of the
municipality, whose interest and welfare should be safeguarded by the Council. In entering this
Hall, he must lay aside his political affiliation, interest, and consideration, because it is the sworn
duty of every councilor to perform his duty with justice and impartiality. Not to attend a meeting,
constitutes an abandonment of the people's welfare. One may be in the minority group but he can
discharge his duty with honor and prestige as a fiscalizer, to fiscalize the doings and actuations of
the majority. He may be overwhelmed in his plan or project by superior numerical majority, but
if he could adduce good reasons and arguments in favor of the welfare of the people, his task as a
fiscalizer is thereby attained. There is no fear of attending any session because if your project is
not carried out, you may have the remedy, either by administrative or judicial relief, by
questioning any ordinance or resolution passed by the majority, which may be null and void
because they are excessive and unreasonable. So, there is no reason why the respondent in this
case had refused to attend the sessions of the Council.

"Petitioners here claim moral damages pursuant to the provisions of Article 2219, in connection
with Article 21 and Article 27 of the new Civil Code. Said Article 27 provides as follows:

'Any person suffering material or moral loss because, a public servant or employee neglects,
without just cause, to perform his official duty may file an action for damages and other relief
against the latter, without prejudice to any disciplinary administrative action that may be taken.'

"But in support of the allegations in the petition, only petitioner Exequiel Golez was presented as
a witness who proved moral damages he suffered as a consequence of the refusal of the
respondent Susano Tayo to perform his official duty. As such, of all the petitioners, only Exequiel
Golez is entitled to received moral damages in the sum of P100.00.

"IN VIEW OF THE FOREGOING, the petition for a writ of mandamus is herbey granted, and
the respondent is hereby ordered to give due course to the resolutions and ordinances passed by
the petitioners in the regular sessions during the absence of the respondent, to give due course
and sign the payrolls covering the periods of June 1, June 15, July 6, July 20, August 3, August
17, September 7, and September 21, 1960, for the payment of per diems of the petitioners as
Municipal Councilors; to pay to said Exequiel Golez, the sum of P100.00 as moral damages, to
pay the sum of P100.00 as attorney's fees, and to pay the costs of the proceeding.

"SO ORDERED."

Respondent-appellant claims, in this appeal, that the trial court erred in holding that the sessions
held by petitioners-appellees during his absence and during the absence of his Vice-Mayor and
the No. 1 and No. 2 Councilors of the Municipal Council of Buenavista, Iloilo, were valid and
legal.

The claim is untenable. In the first place, there is no question that the sessions at issue were held
on the days set for regular sessions of the council, as authorized and approved in a previous
resolution. Secondly, it is not disputed that a majority of the members of the council (six out of
ten) were present in those sessions. Consequently, pursuant to Section 2221 of the Revised
Administrative Code which provides:

"SEC. 2221. Quorum of council—Enforcing Attendance of absent members.—The majority of

the council elected shall constitute a quorum to do business; * * *."

there was a quorum to do business in all the sessions in question. The term "quorum" has been
defined as "that number of members of the body which, when legally assembled in their proper
places, will enable the body to transact its proper business, or, in other works, that number that
makes a lawful body and gives it power to pass a law or ordinance or do any other valid
corporate act. (4 McQuillin, Municipal Corporation [3rd Ed.] 478; see also State vs. Wilkesville
Tp., 20 Ohio St. 288.)

Appellant, however, asserts that while under Section 2221 of the Revised Administrative Code,
the majority of the members of the council constitutes a quorum to do business, the council
"shall be presided by the Mayor and no one else", inasmuch as it is one of the duties imposed
upon him under Section 2194 (d) of the Revised Administrative Code.[1] The argument would be
correct if the mayor (herein appellant) were present at the sessions in question and was prevented
from (presiding therein, but not where, as in the instant case, be absented himself therefrom.

Appellant likewise invokes Section 7 third paragraph of Republic Act No. 2264[2] in support of
his view that the sessions in question were null and void, as they were not presided by him or by
his Vice-Mayor, or by the councilor who obtained the largest number of votes.

It is true that this section mentions only the vice-mayor, or in his place, the councilor who
obtained the largest number of votes who could perform the duties of the mayor, in the event of
the latter's temporary incapacity to do so, except the power to appoint, suspend, or dismiss
employees. Ordinarily, this enumeration would be interpreted as exclusive, following the general
principle of inclusio unius, est exclusio alterius, but there are cogent reasons to disregard this
rule in this case, since to adopt it would cause inconvenience, hardship, and injury to the public
interest, as it would place in the hands of the mayor, vice-mayor, and the councilor receiving the
highest number of votes an instrument to defeat the law investing the legislative power in the
municipal council, by simply boycotting, as they continuously did for 4 months, the regular
sessions of the council. It is to be noted that the same section 7 of Republic Act No. 2264
invoked by appellant provides, in case of permanent incapacity of the mayor, vice mayor, and the
councilor obtaining the largest number of votes, to assume and perform the duties of the mayor,
the councilor receiving the next largest number of votes, and so on, can assume and perform
such duties. We see no strong reason why the same procedure should not be followed in case of
temporary incapacity, there being no express prohibition against its observance. The legal
provision being therefore susceptible of two interpretations, we adopt the one in consonance with
the presumed intention of the legislature to give its enactments the most reasonable and
beneficial construction, the one that will render them operative and effective and harmonious
with other provisions of law. This is imperative because, as already pointed out heretofore, under
the law "the majority of the council elected shall constitute a quorum to do business," and this
would be defeated if we adopt the literal interpretation of appellant that only the mayor, vice-
mayor, or the councilor receiving the largest number of votes could preside the council's meeting,
to be legal, irrespective of the presence of a quorum or the majority of the councilors elected.
Such an intepretation would, indeed, be fraught with dangerous consequences. For it would, in
effect, deprive the municipal council of its function, namely, the enactment of ordinances
designed for the general welfare of its inhabitants. As the trial court aptly observed, "To declare
that the proceedings of the petitioners (herein appellees) were null and void, is to encourage
recalcitrant public officials who would frustrate valid sessions for political end or consideration.
Public interest will immensely suffer, if a mayor who belongs to one political group refused to
call or attend a session, because the council is controlled by another political group."

Lastly, appellant contests the award of moral damages to appellee councilor Exequiel Golez. We
find said award proper under Article 27 of the new Civil Code,[3] considering that according to
the trial court, he (Golez) was able to prove that he suffered the same, as a consequence of
appellant's refusal to perform his official duty, notwithstanding the action taken by the Provincial
Fiscal and the Provincial Board upholding the validity of the sessions in question.

Wherefore, the decision appealed from is hereby affirmed, with costs against the respondent-
appellant. So ordered.

Bengzon, C. J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Paredes, and
Makalintal, JJ., concur.

[1] "SEC. 2194. Mayor as chief executive of municipality. * * * He shall have the following
duties:

"(d) he shall preside at the meetings of the municipal council and shall recommend to said body
from time to time such measures connected with the public health, cleanliness, or ornament of
the municipality or the improvement of its finances as he shall deem expedient."

[2] "SEC. 7. The city, municipal, and municipal district vice-mayor and succession to the office
of mayor.— * * * In the event of temporary incapacity of the mayor to perform the duties of his
office on account of absence on leave, sickness, or any temporary incapacity, the vice-mayor
shall perform the duties and exercise the powers of the mayor except the power to appoint,
suspend or dismiss employees. In the event the vice-mayor is temporarily incapacitated to
perform the duties of the office of mayor, the councilor who obtained the largest number of votes
among the incumbent councilors in the local elections immediately preceding shall perform the
duties and exercise the powers of the mayor except the power to appoint, suspend or dismiss
employees. * * *."

[3] "ART. 27. Any person suffering material or moral loss because a public servant or employee
refuses or neglects, without just cause, to perform his official duty may file an action for
damages and other relief against the latter, without prejudice to any disciplinary administrative
action that may be taken."
 Supreme Court of the Philippines

THIRD DIVISION
G.R. No. 195549, September 03, 2014
WILLAWARE PRODUCTS CORPORATION, PETITIONER, VS. JESICHRIS
MANUFACTURING CORPORATION, RESPONDENT.

DECISION

PERALTA, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeking to set aside the Decision[1] dated November 24, 2010 and Resolution[2] dated February
10, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 86744.

The facts, as found by the Regional Trial Court (RTC), are as follows:

[Respondent] Jesichris Manufacturing Company ([respondent] for short) filed this present
complaint for damages for unfair competition with prayer for permanent injunction to enjoin
[petitioner] Willaware Products Corporation ([petitioner] for short) from manufacturing and
distributing plastic-made automotive parts similar to those of [respondent].

[Respondent] alleged that it is a duly registered partnership engaged in the manufacture and
distribution of plastic and metal products, with principal office at No. 100 Mithi Street,
Sampalukan, Caloocan City. Since its registration in 1992, [respondent] has been manufacturing
in its Caloocan plant and distributing throughout the Philippines plastic-made automotive parts.
[Petitioner], on the other hand, which is engaged in the manufacture and distribution of
kitchenware items made of plastic and metal has its office near that of [respondent].

[Respondent] further alleged that in view of the physical proximity of [petitioner’s] office to
[respondent’s] office, and in view of the fact that some of the [respondent’s] employees had
transferred to [petitioner], [petitioner] had developed familiarity with [respondent’s] products,
especially its plastic-made automotive parts.

That sometime in November 2000, [respondent] discovered that [petitioner] had been
manufacturing and distributing the same automotive parts with exactly similar design, same
material and colors but was selling these products at a lower price as [respondent’s] plastic-made
automotive parts and to the same customers.
[Respondent] alleged that it had originated the use of plastic in place of rubber in the
manufacture of automotive underchassis parts such as spring eye bushing, stabilizer bushing,
shock absorber bushing, center bearing cushions, among others. [Petitioner’s] manufacture of the
same automotive parts with plastic material was taken from [respondent’s] idea of using plastic
for automotive parts. Also, [petitioner] deliberately copied [respondent’s] products all of which
acts constitute unfair competition, is and are contrary to law, morals, good customs and public
policy and have caused [respondent] damages in terms of lost and unrealized profits in the
amount of TWO MILLION PESOS as of the date of [respondent’s] complaint.

Furthermore, [petitioner’s] tortuous conduct compelled [respondent] to institute this action and
thereby to incur expenses in the way of attorney’s fees and other litigation expenses in the
amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00).

In its Answer, [petitioner] denies all the allegations of the [respondent] except for the following
facts: that it is engaged in the manufacture and distribution of kitchenware items made of plastic
and metal and that there’s physical proximity of [petitioner’s] office to [respondent]’s office, and
that some of [respondent’s] employees had transferred to [petitioner] and that over the years
[petitioner] had developed familiarity with [respondent’s] products, especially its plastic made
automotive parts.

As its Affirmative Defenses, [petitioner] claims that there can be no unfair competition as the
plastic-made automotive parts are mere reproductions of original parts and their construction and
composition merely conforms to the specifications of the original parts of motor vehicles they
intend to replace. Thus, [respondent] cannot claim that it “originated” the use of plastic for these
automotive parts. Even assuming for the sake of argument that [respondent] indeed originated
the use of these plastic automotive parts, it still has no exclusive right to use, manufacture and
sell these as it has no patent over these products. Furthermore, [respondent] is not the only
exclusive manufacturer of these plastic-made automotive parts as there are other establishments
which were already openly selling them to the public.[3]

After trial on the merits, the RTC ruled in favor of respondent. It ruled that petitioner clearly
invaded the rights or interest of respondent by deliberately copying and performing acts
amounting to unfair competition. The RTC further opined that under the circumstances, in order
for respondent’s property rights to be preserved, petitioner’s acts of manufacturing similar
plastic-made automotive parts such as those of respondent’s and the selling of the same products
to respondent’s customers, which it cultivated over the years, will have to be enjoined. The
dispositive portion of the decision reads:
WHEREFORE, premises considered, the court finds the defendant liable to plaintiff Two Million
(P2,000,000.00) Pesos, as actual damages, One Hundred Thousand (P100,000.00) Pesos as
attorney’s fees and One Hundred Thousand (P100,000.00) Pesos for exemplary damages. The
court hereby permanently [enjoins] defendant from manufacturing the plastic-made automotive
parts as those manufactured by plaintiffs.

SO ORDERED.[4]
Thus, petitioner appealed to the CA.

On appeal, petitioner asserts that if there is no intellectual property protecting a good belonging
to another, the copying thereof for production and selling does not add up to unfair competition
as competition is promoted by law to benefit consumers. Petitioner further contends that it did
not lure away respondent’s employees to get trade secrets. It points out that the plastic spare parts
sold by respondent are traded in the market and the copying of these can be done by simply
buying a sample for a mold to be made.

Conversely, respondent averred that copyright and patent registrations are immaterial for an
unfair competition case to prosper under Article 28 of the Civil Code. It stresses that the
characteristics of unfair competition are present in the instant case as the parties are trade rivals
and petitioner’s acts are contrary to good conscience for deliberately copying its products and
employing its former employees.

In a Decision dated November 24, 2010, the CA affirmed with modification the ruling of the
RTC. Relevant portions of said decision read:

Despite the evidence showing that Willaware took dishonest steps in advancing its business
interest against Jesichris, however, the Court finds no basis for the award by the RTC of actual
damages. One is entitled to actual damages as one has duly proven. The testimony of Quejada,
who was engaged by Jesichris in 2001 to audit its business, only revealed that there was a
discrepancy between the sales of Jesichris from 2001 to 2002. No amount was mentioned. As for
Exhibit “Q,” which is a copy of the comparative income statement of Jesichris for 1999-2002, it
shows the decline of the sales in 2002 in comparison with those made in 2001 but it does not
disclose if this pertains to the subject automotive parts or to the other products of Jesichris like
plates.

In any event, it was clearly shown that there was unfair competition on the part of Willaware that
prejudiced Jesichris. It is only proper that nominal damages be awarded in the amount of Two
Hundred Thousand Pesos (P200,000.00) in order to recognize and vindicate Jesichris’ rights. The
RTC’s award of attorney’s fees and exemplary damages is also maintained.

xxxx

WHEREFORE, premises considered, the Decision dated April 15, 2003 of the Regional Trial
Court of Caloocan City, Branch 131, in Civil Case No. C-19771 is hereby MODIFIED. The
award of Two Million Pesos (P2,000,000.00) actual damages is deleted and in its place, Two
Hundred Thousand Pesos nominal damages is awarded.

SO ORDERED.[5]

Dissatisfied, petitioner moved for reconsideration. However, the same was denied for lack of
merit by the CA in a Resolution dated February 10, 2011.
Hence, the present Petition for Review wherein petitioner raises the following issues for our
resolution:

(1) Whether or not there is unfair competition under human relations when the parties are not
competitors and there is actually no damage on the part of Jesichris?
(2) Consequently, if there is no unfair competition, should there be moral damages and
attorney’s fees?
(3) Whether or not the addition of nominal damages is proper although no rights have been
established?
(4) If ever the right of Jesichris refers to its copyright on automotive parts, should it be
considered in the light of the said copyrights were considered to be void by no less than this
Honorable Court in SC GR No. 161295?
(5) If the right involved is “goodwill” then the issue is: whether or not Jesichris has established
“goodwill?”[6]

In essence, the issue for our resolution is: whether or not petitioner committed acts amounting to
unfair competition under Article 28 of the Civil Code.

Prefatorily, we would like to stress that the instant case falls under Article 28 of the Civil Code
on human relations, and not unfair competition under Republic Act No. 8293,[7] as the present
suit is a damage suit and the products are not covered by patent registration. A fortiori, the
existence of patent registration is immaterial in the present case.

The concept of “unfair competition” under Article 28 is very much broader than that covered by
intellectual property laws. Under the present article, which follows the extended concept of
“unfair competition” in American jurisdictions, the term covers even cases of discovery of trade
secrets of a competitor, bribery of his employees, misrepresentation of all kinds, interference
with the fulfillment of a competitor’s contracts, or any malicious interference with the latter’s
business.[8]

With that settled, we now come to the issue of whether or not petitioner committed acts
amounting to unfair competition under Article 28 of the Civil Code.

We find the petition bereft of merit.

Article 28 of the Civil Code provides that “unfair competition in agricultural, commercial or
industrial enterprises or in labor through the use of force, intimidation, deceit, machination or
any other unjust, oppressive or high-handed method shall give rise to a right of action by the
person who thereby suffers damage.”

From the foregoing, it is clear that what is being sought to be prevented is not competition per se
but the use of unjust, oppressive or high- handed methods which may deprive others of a fair
chance to engage in business or to earn a living. Plainly, what the law prohibits is unfair
competition and not competition where the means used are fair and legitimate.

In order to qualify the competition as “unfair,” it must have two characteristics: (1) it must
involve an injury to a competitor or trade rival, and (2) it must involve acts which are
characterized as “contrary to good conscience,” or “shocking to judicial sensibilities,” or
otherwise unlawful; in the language of our law, these include force, intimidation, deceit,
machination or any other unjust, oppressive or high-handed method. The public injury or interest
is a minor factor; the essence of the matter appears to be a private wrong perpetrated by
unconscionable means.[9]

Here, both characteristics are present.

First, both parties are competitors or trade rivals, both being engaged in the manufacture of
plastic-made automotive parts. Second, the acts of the petitioner were clearly “contrary to good
conscience” as petitioner admitted having employed respondent’s former employees, deliberately
copied respondent’s products and even went to the extent of selling these products to
respondent’s customers.[10]

To bolster this point, the CA correctly pointed out that petitioner’s hiring of the former
employees of respondent and petitioner’s act of copying the subject plastic parts of respondent
were tantamount to unfair competition, viz.:

The testimonies of the witnesses indicate that [petitioner] was in bad faith in competing with the
business of [respondent]. [Petitioner’s] acts can be characterized as executed with mischievous
subtle calculation. To illustrate, in addition to the findings of the RTC, the Court observes that
[petitioner] is engaged in the production of plastic kitchenware previous to its manufacturing of
plastic automotive spare parts, it engaged the services of the then mold setter and maintenance
operator of [respondent], De Guzman, while he was employed by the latter. De Guzman was
hired by [petitioner] in order to adjust its machinery since quality plastic automotive spare parts
were not being made. It baffles the Court why [petitioner] cannot rely on its own mold setter and
maintenance operator to remedy its problem. [Petitioner’s] engagement of De Guzman indicates
that it is banking on his experience gained from working for [respondent].

Another point we observe is that Yabut, who used to be a warehouse and delivery man of
[respondent], was fired because he was blamed of spying in favor of [petitioner]. Despite this
accusation, he did not get angry. Later on, he applied for and was hired by [petitioner] for the
same position he occupied with [respondent]. These sequence of events relating to his
employment by [petitioner] is suspect too like the situation with De Guzman.[11]

Thus, it is evident that petitioner is engaged in unfair competition as shown by his act of
suddenly shifting his business from manufacturing kitchenware to plastic-made automotive parts;
his luring the employees of the respondent to transfer to his employ and trying to discover the
trade secrets of the respondent.[12]

Moreover, when a person starts an opposing place of business, not for the sake of profit to
himself, but regardless of loss and for the sole purpose of driving his competitor out of business
so that later on he can take advantage of the effects of his malevolent purpose, he is guilty of
wanton wrong.[13] As aptly observed by the court a quo, the testimony of petitioner’s witnesses
indicate that it acted in bad faith in competing with the business of respondent, to wit:
[Petitioner], thru its General Manager, William Salinas, Jr., admitted that it was never engaged in
the business of plastic-made automotive parts until recently, year 2000:
Atty. Bautista: The business name of Willaware Product Corporation is kitchenware, it is (sic)
not? Manufacturer of kitchenware and distributor of kitchenware, is it not?
Mr. Salinas: Yes, sir.

Atty. Bautista: And you said you have known the [respondent] Jesichris Manufacturing Co., you
have known it to be manufacturing plastic automotive products, is it not?
Mr. Salinas: Yes, sir.

Atty. Bautista: In fact, you have been (sic) physically become familiar with these products,
plastic automotive products of Jesichris?
Mr. Salinas: Yes, sir.
How [petitioner] was able to manufacture the same products, in terms of color, size, shape and
composition as those sold by Jesichris was due largely to the sudden transfer of Jesichris’
employees to Willaware.
Atty. Bautista: Since when have you been familiar with Jesichris Manufacturing Company?
Mr. Salinas: Since they transferred there (sic) our place.

Atty. Bautista: And that was in what year?

Mr. Salinas: Maybe four (4) years. I don’t know the exact date.

Atty. Bautista: And some of the employees of Jesichris Manufacturing Co. have transferred to
your company, is it not?
Mr. Salinas: Yes, sir.

Atty. Bautista: How many, more or less?

Mr. Salinas: More or less, three (3).

Atty. Bautista: And when, in what year or month did they transfer to you?
Mr. Salinas: First, November 1.

Atty. Bautista: Year 2000?

Mr. Salinas: Yes sir. And then the other maybe February, this year. And the other one, just one
month ago.
That [petitioner] was clearly out to take [respondent] out of business was buttressed by the
testimony of [petitioner’s] witness, Joel Torres:
Q: Are you familiar with the [petitioner], Willaware Product Corporation?
A: Yes, sir.

Q: Will you kindly inform this court where is the office of this Willaware Product Corporation
(sic)?
A: At Mithi Street, Caloocan City, sir.

Q: And Mr. Witness, sometime second Saturday of January 2001, will you kindly inform this
court what unusual even (sic) transpired between you and Mr. Salinas on said date?
A: There was, sir.

Q: What is that?
A: Sir, I was walking at that time together with my wife going to the market and then I passed by
the place where they were having a drinking spree, sir.

Q: You mentioned they, who were they who were drinking at that time?
A: I know one Jun Molina, sir.

Q: And who else was there?

A: William Salinas, sir.

Q: And will you kindly inform us what happened when you spotted upon them drinking?
A: Jun Molina called me, sir.

Q: And what happened after that?

A: At that time, he offered me a glass of wine and before I was able to drink the wine, Mr.
Salinas uttered something, sir.

Q: And what were those words uttered by Mr. Salinas to you?

A: “O, ano naapektuhan na kayo sa ginaya (sic) ko sa inyo?”

Q: And what did you do after that, after hearing those words?
A: And he added these words, sir. “sabihin mo sa amo mo, dalawang taon na lang pababagsakin
ko na siya.”

Q: Alright, hearing those words, will you kindly tell this court whom did you gather to be
referred to as your “amo”?
A: Mr. Jessie Ching, sir.[14]

In sum, petitioner is guilty of unfair competition under Article 28 of the Civil Code.

However, since the award of Two Million Pesos (P2,000,000.00) in actual damages had been
deleted and in its place Two Hundred Thousand Pesos (P200,000.00) in nominal damages was
awarded, the attorney’s fees should concomitantly be modified and lowered to Fifty Thousand
Pesos (P50,000.00).

WHEREFORE, the instant petition is DENIED. The Decision dated November 24, 2010 and
Resolution dated February 10, 2011 of the Court of Appeals in CA-G.R. CV No. 86744 are
hereby AFFIRMED with MODIFICATION that the award of attorney’s fees be lowered to
Fifty Thousand Pesos (P50,000.00).

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin,* Villarama, Jr., and Reyes, JJ., concur.
 September 11, 2014

N O T I C E OF J U D G M E N T

Sirs/Mesdames:

Please take notice that on ___September 3, 2014___ a Decision, copy attached herewith, was
rendered by the Supreme Court in the above-entitled case, the original of which was received by
this Office on September 11, 2014 at 8:38 a.m.

Very truly yours,

(SGD)
WILFREDO V. LAPITAN
Division Clerk of Court

*
Designated as Acting Member in lieu of Associate Justice Francis H. Jardeleza, per Special
Order No. 1777 dated September 1, 2014.
[1]
Penned by Associate Justice Florito S. Macalino, with Associate Justices Juan Q. Enriquez, Jr.
and Ramon M. Bato, Jr., concurring; rollo, pp. 128-135.
[2]
Id. at 145-146.
[3]
Id. at 38-39.
[4]
Id. at 45.
[5]
Id. at 134-135. (Emphasis in the original)
[6]
Id. at 14-15.
[7]
AN ACT PRESCRIBING THE INTELLECTUAL PROPERTY CODE AND
ESTABLISHING THE INTELLECTUAL PROPERTY OFFICE, PROVIDING FOR ITS
POWERS AND FUNCTIONS, AND FOR OTHER PURPOSES.
[8]
Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. 1, p.
117.
[9]
Id. at 116-117.
[10]
Rollo, p. 41.
[11]
Id. at 133-134.
[12]
Id. at 44.
[13]
Supra note 8.
[14]
Rollo, pp. 41-44. (Citations omitted)

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

91 Phil. 28

G.R. No. L-4330, March 24, 1952

MANILA ORIENTAL SAWMILL CO., PETITIONER, VS. NATIONAL
LABOR UNION AND COURT OF INDUSTRIAL RELATIONS,
RESPONDENTS.

DECISION

BAUTISTA ANGELO, J.:

This is a petition for review of an order of the respondent court dated September 8, 1950,
declaring the strike staged by the members of the respondent Union legal and setting the case for
hearing for the determination of the demands presented by said Union to petitioner.

On May 4, 1950, the United Employees Welfare Association, a union duly registered in the
Department of Labor and with members among the employees of the petitioner, entered into an
agreement of working conditions with the petitioner pursuant, to a settlement concluded in case
No. 173-V of the Court of Industrial Relations. The said agreement was to last for one year.

On August 14, 1950, thirty-six of the thirty-seven members of the said United Employees
Welfare Association tendered their resignations from the same union and joined the local chapter
of the respondent National Labor Union. There is no evidence that these resignations were made
with the approval of petitioner.

On August 15, 1950, the president of the respondent union sent a letter to petitioner containing
seven demands, allegedly on behalf of the members of its local chapter who are employed by the
petitioner, to which the latter, through its counsel, answered with another letter stating among
other things that the laborers on whose behalf the letter of August 15, 1950, has been written
were already affiliated with the United Employees Welfare Association.

On August 22, 1950, the respondent union reiterated its demands. In reply, counsel for petitioner
sent a letter stating that petitioner could not recognize the alleged local chapter of the respondent
union until and after the agreement of May 4, 1950, entered into by the same employees
concerned and petitioner is declared null and void by the Court of Industrial Relations.

On August 28, 1950, the members of the respondent union struck.

On August 31, 1950, petitioner filed a petition in the Court of Industrial Relations to declare the
strike illegal.

On September 8, 1950, the Court of Industrial Relations, through its Presiding Judge, Honorable
Arsenio Roldan, issued an order denying petitioner's prayer that said strike be declared illegal
and setting the case for hearing on the demands prayed for by respondent union.

On September 20, 1950, petitioner filed a motion for reconsideration of said order, and on
November 14, 1950, the Court of Industrial Relations en banc denied the motion for
reconsideration. Hence this petition for review.

Petitioner claims that the order of respondent court of September 8, 1950, is null and void
because, in refusing to declare the strike staged by the members of the respondent union illegal
notwithstanding the agreement entered into between the labor union to which the employees who
struck formerly belonged and petitioner which is still valid and subsisting, it violated the
constitutional precept underlying the freedom of contract.

We find merit in this claim. The record shows that the local chapter of the respondent union is
composed entirely, except one, of members who made up the total membership of the United
Employees Welfare Association, a registered union in the petitioner's company. To be exact,
thirty-six of the thirty-seven members of said association tendered their resignations and joined
the local chapter of the respondent union without first securing the approval of their
resignations. The new Union then sought to present a seven-point demand of the very same
employees to petitioner, which in many respects differs from their previous demand. It is evident
that the purpose of their transfer is merely to disregard and circumvent the contract entered into
between the same employees and the petitioner on May 4, 1950, knowing full well that that
contract was effective for one year, and was entered into with the sanction of the Court of
Industrial Relations. If this move were allowed the result would be a subversion of a contract
freely entered into without any valid and justifiable reason. Such act cannot be sanctioned in law
or in equity as it is in derogation of the principle underlying the freedom of contract and the good
faith that should exist in contractual relations.

A labor organization is wholesome if it serves its legitimate purpose of settling labor disputes.
That is why it is given personality and recognition in concluding collective bargaining
agreements. But if it is made use of as a subterfuge, or as a means to subvert valid commitments,
it outlives its purpose for far from being an aid, it tends to undermine the harmonious relations
between management and labor. Such is the move undertaken by the respondent union. Such a
move cannot be considered lawful and cannot receive the sanction of the Court. Hence, the strike
it has staged is illegal.
"The manifest object of the act is to prevent industrial strife, confusion and unrest. Industrial
peace is promoted by collective agreements obtained for employees through the medium of their
bona fide labor organizations or other proper representatives, free from employer interference. *
* * And this is particularly so in the instant case, where the employer is a bus company, operating
a business affected with a public interest, under a public franchise. I cannot conceive it to have
been the intent of the Legislature to permit employees, where a valid, existing contract is
involved and under the circumstances presented here, to substitute one bargaining agency for
another whenever it suits their purpose, or the purpose of a rival tabor organization, during the
life of that contract. If employees are to enjoy actual liberty of contract through their labor
organizations or other bona fide representatives, and their contracts are to be effective, their
obligations may not be repudiated simply by the process of changing their representatives, and in
their own interest they should not seek to do so. The contention that the mere holding of an
election, and certification of now representatives, would not in and of itself affect the contract or
impair its obligations is best answered by the board's own language in its amended decision
following the first representation proceeding herein: 'In practice the result might well be
otherwise under the particular circumstances of this case.' " (Triboro Coach Corp., 3 Labor
Cases, 60,076). (Italics supplied.)
Wherefore, the order appealed from is reversed, without pronouncement as to costs.

Paras, C. J., Pablo, Bengzon, Padilla, Tuason, Montemayor, Reyes, and Jugo, JJ., concur.

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

54 Phil. 224

G. R. No. 31380, January 13, 1930

E. SPINNER & COMPANY, PLAINTIFF AND APPELLANT, VS. NEUSS
HESSLEIN CORPORATION, DEFENDANT AND APPELLEE.

DECISION

STREET, J.:

This action was instituted in the Court of First Instance of Manila on November 23, 1926, by E.
Spinner & Co., of Manchester, England, for the purpose of restraining the defendant, the Neuss
Hesslein Corporation, Organized under the laws of the Philippine Islands, from using the word
"Wigan," as applied to khaki textiles sold by the defendant in the Philippine Islands, and to
recover damages for violation of the plaintiff's trademark right in the word "Wigan" and for
alleged unfair competition committed by the defendant in the use of the same. Upon hearing the
cause the trial court absolved the defendant from the complaint, with costs against the plaintiff,
and the plaintiff appealed.

There is little or no dispute upon the determinative facts of the case which are substantially these:
E. Spinner & Co. is a copartnership with head offices in Manchester, England, and Bombay,
India, being represented in the Philippine Islands by Wise & Co., a domestic corporation with
principal office in the City of Manila; while the defendant is a corporation organized in
December, 1922, under the laws of the Philippine Islands, with its principal office in the City of
Manila. .The defendant is a subsidiary of Neuss Hesslein & Co., Inc., of New York City, U. S. A.,
for whom it acts as selling agent in the Philippine Islands. The plaintiff, E. Spinner & Co., has
long been engaged in the manufacture and sale of textile fabrics, including khaki cloth, with
distributing business connections in different parts of the world. Soon, after the American
occupation of the Philippine Islands, or about 1900, the plaintiff began exporting its khaki into
the Philippine Islands through local firms, notable Holliday, Wise & Co. (now Wise & Co.),
Smith, Bell & Co., Ltd., and others. Because of the superior qualities of its good, such as the
fastness of its color, the consistency of its texture, and its proven durability, the plaintiff's khaki
made favorable impression in the Philippine market, enjoying a popular favor and preference
which resulted in a lucrative trade. Among the brands of khaki enjoying such favor was the grade
indicated by the manufacturer as " Wigan." A higher grade was marketed by the plaintiff under
the brand " Stockport;" while still other grades were put upon the market under the brands
”Jackton" and "Ashford."
All of these different grades of khaki were marketed by the plaintiff under a common trademark,
which was first registered in the Bureau of Patents, Copyrights, and Trade-Marks of the
Philippine Government in the year 1905. This trademark consists of a large label representing the
profiles of two elephant heads placed close to each other in the upper middle center of the label
and looking in opposite directions, with trunks extending respectively to the right and left. This
device has for its rectangular border a garland of leaves while over the point of union between
the two heads appear several flags. Inside the space formed by the trunks of the elephants and the
garland of leaves appears a label consisting of the following words:

LEEMANN & GATTY'S

ORIGINAL

PATENTED FAST

KHAKI DRILL.

Agents: Messrs. E. Spinner & Co.,

Manchester & Bombay Quality:............................ Yds.

REGISTERED

No. 50,275.

This label was pasted on the outside of each bolt of khaki sold by the plaintiff, the different
grades being indicated by the words " Wigan," " Stockport," etc., inserted with stencil in the
blank space following the wbrd "Quality." The trade-mark proper, as thus used, was a general
mark covering various brands. This practice was followed for more than twenty years, but the
plaintiff learned in 1924 that the defendant, the Neuss Hesslein Corporation, was selling a brand
of khaki in the Philippine Islands with the word "Wigan" stenciled on the bolts below" the
defendant's own trade-mark. As thus employed by the defendant, the word " Wigan" purports to
show the color of the defendant's khaki, but the proof shows that the word was thus used by the
defendant upon khaki of different shades. After discovering this fact, the plaintiff, in April, 1925,
caused its trade-mark, consisting of the two elephant heads, to be again registered in the Bureau
of Commerce and Industry, as per certificate No. 4807. In its essential features, this trade-mark is
identical with the trade-mark registered by the plaintiff in 1905, but in the latter trade-mark the
word " Wigan" is inserted after the word "Quality." The purpose of this registration was of course
to incorporate the word " Wigan" as an integral part of the registered trade-mark.

As already stated, the defendant, the Neuss Hesslein Corporation, was organized in the
Philippine Islands in December, 1922, as a subsidiary of Neuss Hesslein & Co., Inc., of New
York; and beginning with 1923, the defendant has been marketing khaki in the Philippine Islands
for the New York house. But before the organization of the defendant the New York house had,
for several years, been selling its khaki in the Philippine Islands, under two different brands.
These were known respectively as the "Five Soldiers" and the "Four Soldiers," the last named
being also known as the "Wide Awake" brand. The "Five Soldiers" trade-mark was registered in
the Bureau of Commerce and Industry in 1916, and the "Four Soldiers' trade-mark in February,
1923. These two grades of khaki are marketed at a much lower price than plaintiff's "Wigan,"
since it appears that the plaintiff's "Wigan" is sold in the Philippine market by Wise & Co. for 71
centavos per yard, and by other firms at 70 centavos a yard, while defendant's "Five Soldiers"
sells at from 54 centavos to 55 centavos, and its "Four Soldiers" from 35 centavos to 40 centavos
a yard.

After the defendant corporation had assumed the agency in the Philippine Islands for the
products of the New York house, the manager of the defendant, at the request of Chinese
customers, began to give orders to the New York house for the printing of the word "Wigan"
conspicuously upon the bolts of khaki intended for sale in the Philippine Islands; and in the latter
part of 1923 or in the early part of the year 1924, the defendant's khaki began to be marketed
here with the word " Wigan" thereon. It appears that the words " Wigan," " Stockport,"
"Jackton," and "Ashford," adopted by the plaintiff to indicate different qualities of khaki, are the
names of manufacturing towns of minor importance in England; but the brand of khaki with
which the defendant associates the name " Wigan" does not appear to be manufactured in the
town of Wigan. It also appears that the term " Wigan" is used in commercial parlance as the
name of a canvass-like cotton fabric used to stiffen parts of garments. But it is clear that in
adopting the word " Wigan" to indicate a brand of khaki, the plaintiff did not use the word "
Wigan" either in its geographical sense or in the trade sense of a material for stiffening. The use
made by the plaintiff of the term " Wigan" is therefore arbitrary and artificial, in that it departs
from any previously accepted sense.

It will be noted that the plaintiff uses the word " Wigan" to indicate quality, while the defendant
purports to use the term to indicate color, though the defendant's practice in this usage is
somewhat loose. There is some proof in the record tending to show that American dealers are
accustomed to use the word " Wigan" to indicate a color or certain shades of color of khaki cloth.
But it is evident that the plaintiff first adopted the word " Wigan" in connection with khaki cloth,
and this was done for the purpose of indicating quality. In this sense the word " Wigan" has
accompanied the plaintiff's khaki for years in the different markets of the world, and the term has
become associated in the minds of merchants who deal in this. material with the standard of
quality maintained by the plaintiff in the " Wigan" brand.

This action involves a question of trade-mark right and a further question of unfair competition,
and the problem is to determine whether, upon the facts above stated, the defendant corporation
has a right to use the word " Wigan" on khaki sold by it in the Philippine Islands. The law
governing trade-mark rights as well as unfair competition in this jurisdiction is found in Act No.
666 of the Philippine Commission, which is a reduction to statutory form of the jurisprudence
developed by the courts of England and the United States in connection with the subjects
mentioned; and to the summary of substantive law expressed in the statute are added the
provisions relative to the registration of trade-marks. Act No. 666 has been from time to time
amended, but none of the amendatory provisions adopted prior to the beginning of this lawsuit
have any bearing on the problem before us.

Though the law concerning infringement of trade-marks and that concerning unfair competition
have a common conception at their root, which is that one person shall not be permitted to
misrepresent that his goods or his business are the goods or the business of another, the law
concerning unfair competition is broader and more inclusive. On the other hand, the law
concerning the infringement of trade- mark is of more limited range, but within its narrower
range recognizes a more exclusive right derived from the adoption and registration of the trade-
mark by the person whose goods or business are first associated therewith. One who has
identified a peculiar symbol or mark with his goods thereby acquires a property right in such
symbol or mark, and if another infringes the trade-mark he thereby invades this property right.
Unfair competition cannot be placed on the plane of invasion of property right. The tort is strictly
one of fraud. It results that the law of trade- marks is specialized subject distinct from the law of
unfair competition, though,, as stated above, the two subjects are entwined with each other and
are dealt with together in Act No. 666. Inasmuch as the principles applicable to trade-marks were
precisely defined at an earlier date than the principles applicable to unfair competition, it is not
surprising that confusion should be found in the earlier decisions between the legal doctrines
relating to the two subjects. Of late years; however, the term "trade-mark" has been restricted to
its proper technical meaning and the term "unfair competition" is used to include wrongful acts
of competition not involving any violation of trade-mark right proper. As the tort of unfair
competition is broader than the wrong involved in the infringement of a trade- mark, one who
fails to establish the exclusive property right which is essential to the validity of a trade-mark,
may yet frequently obtain relief on the ground of his competitor's unfairness or fraud. Any
conduct may be said to constitute unfair competition if the effect is to pass off on the public the
goods of one man as the goods of another. It is not necessary that any particular means should be
used to this end. The most usual devices are the simulation of labels and the reproduction of the
form, color and general appearance of the package used by the pioneer manufacturer or dealer.
But unfair competition is not limited to these forms. The general principle underlying the law of
unfair competition is that a competitor in business cannot be permitted to do acts which have
deceived, or are reasonably designed to deceive, the public into buying his goods as those of
another.

As stated in section 7 of Act No. 666, a person is guilty of unfair competition who "in selling his
goods shall give them the general appearance of goods of another manufacturer or dealer, either
in the wrapping of the packages in which they are contained, or the devices or words thereon, or
in any other feature of their appearance, which would be likely to influence purchasers to believe
that the goods offered are those of a manufacturer or dealer other than the actual manufacturer or
dealer etc. This language is very broad; and as applied to the case before us it is evident that, in
using the word " Wigan" on the khaki cloth sold by it, the defendant has appropriated a word
likely to lead purchasers to believe that the goods sold by the defendant are those of the plaintiff.
The representation that the khaki sold by the defendant is of the kind known to the trade as "
Wigan" directly tends to deceive the purchaser and, therefore, constitutes unfair competition as
against the plaintiff.

It is no doubt true that the adoption of the word " Wigan" by the defendant does not deceive
merchants or tailors buying from the defendant. But the person most to be considered in this
connection is the consumer, and when the word "Wigan" is found upon a bolt of khaki, the
ultimate buyer, or consumer, would naturally be led to suppose that the goods sold under this
name is the goods sold by the plaintiff. In the case before us it is revealed that the word "Wigan"
was first stamped upon the khaki sold by the defendant at the suggestion or request of a Chinese
customer, presumably a tailor or merchant, and the purpose behind the suggestion undoubtedly
was that, if this term were found stamped upon the khaki thus sold it could be represented to the
ultimate purchaser that the khaki thus sold was the plaintiff's "Wigan." In this connection it
should be noted that, in the action to enjoin unfair competition, the fraudulent intention on the
part of the defendant may be inferred from the similarity of the goods offered for sale by him to
the goods of the plaintiff (Act No. 666, sec. 7, end). In the case before us the use of the word "
Wigan," stamped by the defendant upon the bolts of khaki sold by it, sufficiently discloses an
intention to mislead the consumer. Moreover, as was observed by the Court of Appeals of the
Third Circuit in Barton vs. Rex-Oil Co., (40 A. L. R., 424), it makes no difference that dealers in
the article are not deceived. They are informed and usually know what they are buying. The law
concerns itself with the casual purchaser who knows the commodity only by its name. In
obtaining what he asks for he is entitled to protection against unfair dealing. (Citing National;
Biscuit Co. vs. Baker, 95 Fed., 135; Eli Lilly & Co. vs. Wm. R. Warner & Co., 275 Fed., 752;
William R. Warner & Co. vs. Eli Lilly & Co., 265 U. S., 526.)

With respect to the question of infringement of trade- mark right, it is clear that the appropriation
by the defendant of the word "Wigan" for use in the sale of its khaki did not constitute a violation
of trade-mark prior to April, 1925, when the word "Wigan" was first incorporated in the
plaintiff's registered trade-mark; but after that date it was certainly illegal for the defendant to use
the word “Wigan" stamped upon the khaki sold by it; and this act was an infringement of trade-
mark right. It is true that the plaintiff's trade-mark proper consisted of a pictorial representation
of the heads of two elephants, embellished by leaves, and the word " Wigan" was only a part of
said trade-mark. Nevertheless, the misappropriation of this word by the competitor was a
violation of the plaintiffs right. It has been held in the Supreme Court of the United States that
the use of only one of the words constituting a trade-mark may be sufficient to constitute an
infringement, and it is not necessary to this end that all of the words comprising the trade-mark
should be appropriated (Saxlehner vs. Eisner & Mendelson Co., 179 U, S., 20; 45 Law. ed., 60).

In section 2 of Act No. 666 it is declared that a designation or part of a designation which relates
only to the name, quality, or description of the merchandise, or geographical place of its
production or origin, cannot be made the subject of a trade-mark; and it seems to be supposed by
the defendant that this provision disables the plaintiff from complaining of the use made of the
word "Wigan" by the defendant. But it will be noted that the word " Wigan" as applied to quality,
is not an English word in common use for describing quality. The word " Wigan" is here used in
an entirely artificial sense and its association with quality had its origin exclusively in the use
which the plaintiff has made of it. The designation of name, quality, or description, as used in the
statute, has reference to linguistic terms in common use. In words of this character no particular
manufacturer can acquire an exclusive property right. Again, it will be noted that, although "
Wigan," being the name of a town, was an original geographical term, it is not used upon the
plaintiff's khaki to indicate the geographical place of production of the product. Even
geographical terms can be used in an arbitrary and artificial sense, and when so used by one
manufacturer the improper appropriation of the same term by another may be enjoined as an
invasion of trade-mark right. Of course, if the defendant were manufacturing its khaki in the
town of " Wigan," it would be entitled to use that name to indicate the place of manufacture of its
goods. But such is not the case here. From what has been said it follows that the plaintiff is
entitled to an injunction for the purpose of restraining the defendant from using the word
"Wigan" upon the bolts of khaki sold by it, whether the wrongful act of the defendant be
considered as an act of unfair competition or as an infringement of the trade-mark registered by
the plaintiff in April, 1925. But the plaintiff further seeks to recover damages in the estimated
amount of P15,000 for the injury sustained by the plaintiff. As in Forbes, Munn & Co. vs. Ang
San To (43 Phil., 724), the provision in the complaint referring to damages should, we think, be
interpreted as a prayer for an assessment of the compensation to which the plaintiff might be
entitled for the damage done to its business. The proof, however, shows that the plaintiff's
business has shown a healthy growth during the period covered by the wrongful acts which are
the subject of this action, and it is not proved that any assessable damage has been inflicted upon
the plaintiff by the wrongful acts of the defendant, though the infringement of legal right is clear.
We are therefore of the opinion that no damages should be awarded to the plaintiff. It will be
noted that Act No. 666 gives the plaintiff a right to elect between the recovery of damages for the
harm done to the plaintiff's business and the enforcement of an accounting against the defendant
for the profits which may be shown to have accrued to it by reason of the sales made in violation
of the plaintiff's right. But these two remedies are different and, where the plaintiff has elected to
sue for damages and no damages are proved, none can be awarded. This makes it unnecessary to
analyze the proof with a view to discovering the profits which the defendant may have earned by
the illegitimate sales.

The judgment appealed from will therefore be modified, and the defendant and its agents will be
enjoined, as they are hereby enjoined, from using the word " Wigan" upon the khaki sold by it in
the Philippine Islands, and from otherwise representing its khaki to be of the " Wigan" brand. In
absolving the defendant from the claim for damages, the judgment will be affirmed. So ordered,
without costs.

Ostrand, Johns, Romualdez and VIlla-Real, JJ., concur.

DISSENTING
Avanceña, C. J, and Malcolm, J.:

A question of fact was submitted in this case in the lower court for resolution. That question of
fact was resolved not alone by one Judge of First Instance but by two Judges of First Instance
against the pretensions of the plaintiff. The facts which the court found established were "by a
great preponderance of the evidence." The pronouncements of the trial court on this issue of fact
should accordingly be here respected.

In regard to the facts, it is noted that in the year 1905 the plaintiff partnership registered its trade-
mark but without including therein the word " Wigan." Thereafter, American khaki came into the
Philippine market and made use of the word " Wigan" to indicate the particular color of khaki.
This was done openly, and without any attempt at deception. In 1925, the plaintiff partnership
amended its former trade-mark by including in the same, among others, the word "Wigan". In
relation with these undisputed facts, it should further be mentioned that the plaintiff did not
present even one witness to establish that any person had ever been deceived by buying the khaki
cloth of the defendant, believing the same to be the khaki cloth of the plaintiff. On. the contrary,
the purchasing agent of the Government testified that there has never been any confusion
between the khaki cloth of the plaintiff and the khaki cloth of the defendant.

The law does not prohibit every similarity in the manufacture and labeling of merchandise
(Alhambra Cigar & Cigarette Manufacturing Co. vs. Compañia Gral. de Tabacos [1916], 35
Phil., 62). As the word " Wigan" had become common in the khaki trade in the Philippines to
designate a particular color of American manufactured khaki cloth, and had also become
common to designate a certain quality or grade of English manufactured khaki cloth, there was
similarity but not deceitful similarity.

This is a case of competition. It is not a case of unfair competition. Accordingly, the decision of
the trial court, agreeing in all respects with the decision of another branch of the same court,
should be sustained and confirmed by absolving the defendant from the complaint. That is our
vote.

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

160 Phil. 991

FIRST DIVISION
G.R. No. L-22554, August 29, 1975
DELFIN LIM AND JIKIL TAHA, PLAINTIFFS AND APPELLANTS, VS.
FRANCISCO PONCE DE LEON AND ORLANDO MADDELA,
DEFENDANTS AND APPELLEES.

DECISION

MARTIN, J.:

Appeal on a question of law from the decision of the Court of First Instance of Palawan in Civil
Case No. 416, entitled "Delfin Lim and Jikil Taha vs. Francisco Ponce de Leon and Orlando
Maddela", dismissing the complaint of the plaintiffs and ordering them to pay each of the
defendants jointly and severally the sum of P500.00 by way of actual damages; P500.00 by way
of attorney's fees; and P1,000.00 by way of exemplary damages.

On April 29, 1961, plaintiff-appellant Jikil Taha sold to a certain Alberto Timbangcaya of
Brooke's Point, Palawan a motor launch named M/L "SAN RAFAEL". A year later or on April
9, 1962 Alberto Timbangcaya filed a complaint with the Office of the Provincial Fiscal of
Palawan alleging that after the sale Jikil Taha forcibly took away the motor launch from him.

On May 14, 1962, after conducting a preliminary investigation, Fiscal Francisco Ponce de Leon,
in his capacity as Acting Provincial Fiscal of Palawan, filed with the Court of First Instance of
Palawan the corresponding information for Robbery with Force and Intimidation upon Persons
against Jikil Taha. The case was docketed as Criminal Case No. 2719.

On June 15, 1962, Fiscal Francisco Ponce de Leon, upon being informed that the motor launch
was in Balabac, Palawan, wrote the Provincial Commander of Palawan requesting him to direct
the detachment commander in Balabac to impound and take custody of the motor launch.[1]

On June 26, 1962, Fiscal Ponce de Leon reiterated his request to the Provincial Commander to
impound the motor launch, explaining that its subsequent sale to a third party, plaintiff-appellant
Delfin Lim, cannot prevent the court from taking custody of the same.[2] So, on July 6, 1962 upon
order of the Provincial Commander, defendant-appellee Orlando Maddela, Detachment
Commander of Balabac, Palawan, seized the motor launch "SAN RAFAEL" from plaintiff-
appellant Delfin Lim and impounded it.
On July 15, 1962 plaintiff-appellant Delfin Lim pleaded with Orlando Maddela to return the
motor launch but the latter refused. Likewise, on September 20, 1962, kill Taha through his
counsel made representations with Fiscal Ponce de Leon to return the seized property to plaintiff-
appellant Delfin Lim but Fiscal Ponce de Leon refused, on the ground that the same was the
subject of a criminal offense.

All efforts to recover the motor launch going to naught, plaintiffs-appellants Delfin Lim and Jikil
Taha, on November 19, 1962, filed with the Court of First Instance of Palawan a complaint for
damages against defendants-appellees Fiscal Francisco Ponce de Leon and Orlando Maddela,
alleging that on July 6, 1962 Orlando Maddela entered the premises of Delfin Lim without a
search warrant and then and there took away the hull of the motor launch without his consent;
that he effected the seizure upon order of Fiscal Ponce de Leon who knew fully well that his
office was not vested with authority to order the seizure of a private property; that said motor
launch was purchased by Delfin Lim from Jikil Taha in consideration of Three Thousand Pesos
(P3,000.00), Two Thousand Pesos (P2,000.00) of which has been given to Jikil Taha as advance
payment; that as a consequence of the unlawful seizure of the motor launch, its sale did not
materialize; and that since July 6, 1962, the said motor launch had been moored at the Balabac
Bay, Palawan and because of exposure to the elements it had become worthless and beyond
repair. For the alleged violation of their constitutional rights, plaintiffs-appellants prayed that
defendants-appellees be ordered to pay jointly and severally each of them the sum of P5,750.00
representing actual, moral and exemplary damages and attorney's fees.

In their answer, defendants-appellees denied the material allegations of the complaint and as
affirmative defenses alleged that the motor launch in question which was sold by Jikil Taha to
Alberto Timbangcaya on April 29, 1961 was sometime in April 1962, forcibly taken with
violence upon persons and with intent to gain by Jikil Taha from Alfredo Timbangcaya without
the latter's knowledge and consent, thus giving rise to the filing of a criminal charge of robbery
against Jikil Taha; that Fiscal Ponce de Leon, in his capacity as Acting Provincial Fiscal of
Palawan ordered Orlando Maddela to seize and impound the motor launch "SAN RAFAEL", for
being the corpus delicti of the robbery; and that Orlando Maddela merely obeyed the orders of
his superior officer to impound said launch. By way of counterclaim, defendants-appellees
alleged that because of the malicious and groundless filing of the complaint by plaintiffs-
appellants, they were constrained to engage the services of lawyers, each of them paying
P500.00 as attorney's fees; and that they suffered moral damages in the amount of P5,000.00
each and actual damages in the amount of P500.00 each. They also prayed that each of them be
awarded exemplary damages in the amount of P1,000.00.

On September 13, 1965, the trial court rendered its decision, upholding the validity of the seizure
of the motor launch on the ground that "the authority to impound evidences or exhibits or corpus
delicti in a case pending investigation is inherent in the Provincial Fiscal who controls the
prosecution and who introduces those exhibits in the court." Accordingly, the trial court
dismissed the complaint of plaintiffs-appellants and ordered them to pay jointly and severally
each of the defendants-appellees the amount of P500.00 by way of actual damages, another
amount of P500.00 for attorney's fees and P1,000.00 as exemplary damages.
Hence, this appeal.

Two vital issues call for resolution by this Court. First, whether or not defendant-appellee Fiscal
Ponce de Leon had the power to order the seizure of the motor launch in question without a
warrant of search and seizure even if the same was admittedly the corpus delicti of the crime.
Second, whether or not defendants-appellees are civilly liable to plaintiffs-appellants for
damages allegedly suffered by them granting that the seizure of the motor launch was unlawful.

The gravamen of plaintiffs-appellants' argument is that the taking of the motor launch on July 6,
1962 by Orlando Maddela upon the order of Fiscal Ponce de Leon was in violation of the
constitutional guarantee against unreasonable searches and seizures since it was done without a
search warrant.

The pertinent provision of the Constitution then in force reads:

"(3) The right of the people to be secure in their persons, houses, papers and effects against
unreasonable searches and seizures shall not be violated, and no warrants shall issue but upon
probable cause, to be determined by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the place to be
searched, and the persons or things to be seized."[3]

A cursory reading of the above provision easily brings into focus the unreasonableness of the
seizure of the aforementioned motor launch. A search and seizure to be reasonable, must be
effected by means of a valid search warrant. And for a search warrant to be valid: (1) it must be
issued upon probable cause; (2) the probable cause must be determined by the judge himself and
not by the applicant or any other person; (3) in the determination of probable cause, the judge
must examine, under oath or affirmation, the complainant and such witnesses as the latter may
produce; and (4) the warrant issued must particularly describe the place to be searched and
persons or things to be seized.[4] Thus in a long line of decisions, this Court has declared invalid
search warrants which were issued in utter disregard of the constitutional injunction.[5]

Defendants-appellees admitted that when Orlando Maddela entered the premises of Delfin Lim
and impounded the motor launch he was not armed with a search warrant; that he effected the
seizure of the motor launch in the absence of and without the consent of Delfin Lim. There can
be no question that without the proper search warrant, no public official has the right to enter the
premises of another without his consent for the purpose of search and seizure.[6] And since in the
present case defendants-appellees seized the motor launch without a warrant, they have violated
the constitutional right of plaintiffs-appellants against unreasonable search and seizure.

Defendants-appellees however would want to justify the seizure of the motor launch even
without a warrant because of Fiscal Ponce de Leon's alleged inherent power to order the seizure
of a personal property which is the corpus delicti of a crime, he being a quasi judicial officer
who has the control of the prosecution and the presentation of the evidence in the criminal case.
They argue that inasmuch as the motor launch in question was allegedly stolen by Jikil Taha
from Timbangcaya, Fiscal Ponce de Leon could order its seizure even without a search warrant.
We cannot agree. Under the old Constitution[7] the power to issue a search warrant is vested in a
judge or magistrate and in no other officer and no search and seizure can be made without a
proper warrant. At the time the act complained of was committed, there was no law or rule that
recognized the authority of Provincial Fiscals to issue a search warrant. In his vain attempt to
justify the seizure of the motor launch in question without a warrant Fiscal Ponce de Leon
invoked the provisions of Republic Act No. 732, which amended Sections 1674 and 1687 of the
Revised Administrative Code. But there is nothing in said law which confers upon the provincial
fiscals the authority to issue warrants, much less to order without warrant the seizure of a
personal property even if it is the corpus delicti of a crime. True, Republic Act No. 732 has
broadened the power of provincial fiscals to conduct preliminary investigations, but said law did
not divest the judge or magistrate of its power to determine, before issuing the corresponding
warrant, whether or not probable cause exists therefor.[8]

Moreover, under Sections 2 and 3 of Rule 122 of the Rules of Court[9] which complement the
constitutional provision earlier cited, two principles are made clear, namely: (1) that in the
seizure of a stolen property search warrant is still necessary; and (2) that in issuing a search
warrant the judge alone determines whether or not there is a probable cause. The fact that a thing
is a corpus delicti of a crime does not justify its seizure without a warrant. As held in U.S. vs. de
los Reyes and Esguerra,[10] citing McClurg vs. Brenton:[11]

"The mere fact that a man is an officer, whether of high or low degree, gives him no more right
than is possessed by the ordinary private citizen to break in upon the privacy of a home and
subject its occupant to the indignity of a search for the evidence of crime, without a legal warrant
procured for that purpose. No amount of incriminating evidence, whatever its source, will supply
the place of such warrant. At the closed door of the home be it palace or hovel, even
bloodhounds must wait till the law, by authoritative process, bids it open." (Italics supplied.)

Defendant-appellee Fiscal Ponce de Leon would also invoke lack of time to procure a search
warrant as an excuse for the seizure of the motor launch without one. He claimed that the motor
launch had to be seized immediately in order to preserve it and to prevent its removal out of the
locality, since Balabac, Palawan, where the motor launch was at the time, could only be reached
after three to four days' travel by boat.[12] The claim cannot be sustained. The records show that
on June 15, 1962[13] Fiscal Ponce de Leon made the first request to the Provincial Commander for
the impounding of the motor launch; and on June 26, 1962[14] another request was made. The
seizure was not effected until July 6, 1962. In short, Fiscal Ponce de Leon had all the time to
procure a search warrant had he wanted to and which he could have taken in less than a day, but
he did not. Besides, there is no basis for the apprehension that the motor launch might be moved
out of Balabac because even prior to its seizure the motor launch was already without its engine.
[15]
In sum, the fact that there was no time to secure a search warrant would not legally justify a
search without one.[16]

As to whether or not they are entitled to damages, plaintiffs-appellants anchor their claim for
damages on Articles 32 and 2219 of the New Civil Code which provide in part as follows:

"ART. 32. Any public officer or employee, or any private individual, who directly or indirectly
obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and
liberties of another person shall be liable to the latter for damages.

“xxx xxx xxx

"(9) The rights to be secure in one's person, house, papers, and effects against unreasonable
searches and seizures.

“xxx xxx xxx

"The indemnity shall include moral damages. Exemplary damages may also be adjudicated."

"ART. 2219. Moral damages may be recovered in the following and analogous cases:

“xxx xxx xxx

"(6) Illegal search;

“xxx xxx xxx

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

Pursuant to the foregoing provisions, a person whose constitutional rights have been violated or
impaired is entitled to actual and moral damages from the public officer or employee responsible
therefor. In addition, exemplary damages may also be awarded. In the instant case, plaintiff-
appellant Delfin Lim claimed that he purchased the motor launch from Jikil Taha in
consideration of P3,000.00, having given P2,000.00 as advanced payment; that since its seizure
on July 6, 1962 the motor launch had been moored at Balabac Bay and because of exposure to
the elements it has become worthless at the time of the filing of the present action; that because
of the illegality of the seizure of the motor launch, he suffered moral damages in the sum of
P1,000.00; and that because of the violation of their constitutional rights they were constrained to
engage the services of a lawyer whom they have paid P1,500.00 for attorney's fees. We find
these claims of Delfin Lim amply supported by the evidence and therefore should be awarded the
sum of P3,000.00 as actual damages; P1,000.00 as moral damages and P750.00 for attorney's
fees. However, with respect to plaintiff Jikil Taha, he is not entitled to recover any damage
which he alleged he had suffered from the unlawful seizure of the motor launch inasmuch as he
had already transferred the ownership and possession of the motor launch to Delfin Lim at the
time it was seized and therefore, he has no legal standing to question the validity of the seizure.
Well settled is the rule that the legality of a seizure can be contested only by the party whose
rights have been impaired thereby, and that the objection to an unlawful search and seizure is
purely personal and cannot be availed of by third parties.[17] Consequently, one who is not the
owner, lessee, or lawful occupant of the premises searched cannot raise the question of validity
of the search and seizure.[18] Jikil Taha is not without recourse though. He can still collect from
his co-plaintiff, Delfin Lim the unpaid balance of P1,000.00.

Defendant-appellee Fiscal Ponce de Leon wanted to wash his hands of the incident by claiming
that "he was in good faith, without malice and without the slightest intention of inflicting injury
to plaintiff-appellant, Jikil Taha"[19] when he ordered the seizure of the motor launch. We are not
prepared to sustain his defense of good faith. To be liable under Article 32 of the New Civil
Code it is enough that there was a violation of the constitutional rights of the plaintiffs and it is
not required that defendants should have acted with malice or bad faith. Dr. Jorge Bocobo,
Chairman of the Code Commission, gave the following reasons during the public hearings of the
Joint Senate and House Committees, why good faith on the part of the public officer or employee
is immaterial. Thus:

"DEAN BOCOBO. Article 32, regarding individual rights: Attorney Cirilo Paredes proposes
that Article 32 be so amended as to make a public official liable for violation of another person's
constitutional rights only if the public official acted maliciously or in bad faith. The Code
Commission opposes this suggestion for these reasons:

"The very nature of Article 32 is that the wrong may be civil or criminal. It is not necessary
therefore that there should be malice or bad faith. To make such a requisite would defeat the
main purpose of Article 32 which is the effective protection of individual rights. Public officials
in the past have abused their powers on the pretext of justifiable motives or good faith in the
performance of their duties. Precisely, the object of the Article is to put an end to official abuse
by the plea of good faith. In the United States this remedy is in the nature of a tort.

"Mr. Chairman, this article is firmly one of the fundamental articles introduced in the New Civil
Code to implement democracy. There is no real democracy if a public official is abusing, and we
made the article so strong and so comprehensive that it concludes an abuse of individual rights
even if done in good faith, that official is liable. As a matter of fact, we know that there are very
few public officials who openly and definitely abuse the individual rights of the citizens. In most
cases, the abuse is justified on a plea of desire to enforce the law to comply with one's duty. And
so, if we should limit the scope of this article, that would practically nullify the object of the
article. Precisely, the opening object of the article is to put an end to abuses which are justified
by a plea of good faith, which is in most cases the plea of officials abusing individual rights."[20]

But defendant-appellee Orlando Maddela cannot be held accountable because he impounded the
motor launch upon the order of his superior officer. While a subordinate officer may be held
liable for executing unlawful orders of his superior officer, there are certain circumstances which
would warrant Maddela's exculpation from liability. The records show that after Fiscal Ponce de
Leon made his first request to the Provincial Commander on June 15, 1962 Maddela was
reluctant to impound the motor launch despite repeated orders from his superior officer.[21] It was
only after he was furnished a copy of the reply of Fiscal Ponce de Leon, dated June 26, 1962, to
the letter of the Provincial Commander, justifying the necessity of the seizure of the motor
launch on the ground that the subsequent sale of the launch to Delfin Lim could not prevent the
court from taking custody of the same,[22] that he impounded the motor launch on July 6, 1962.
With said letter coming from the legal officer of the province, Maddela was led to believe that
there was a legal basis and authority to impound the launch. Then came the order of his superior
officer to explain for the delay in the seizure of the motor launch.[23] Faced with a possible
disciplinary action from his commander, Maddela was left with no alternative but to seize the
vessel. In the light of the above circumstances, We are not disposed to hold Maddela answerable
for damages.
IN VIEW OF THE FOREGOING, the decision appealed from is hereby reversed and another
one entered declaring the seizure illegal and ordering defendant-appellee Fiscal Francisco Ponce
de Leon to pay to plaintiff-appellant Delfin Lim the sum of P3,000.00 as actual damages, plus
P1,000.00 moral damages, and, in addition, P750.00 for attorney's fees. With costs against
defendant-appellee Fiscal Ponce de Leon.

SO ORDERED.

Castro, (Chairman), Teehankee, Makasiar, and Esguerra, JJ., concur.

Muñoz Palma, J., is on leave.

[1]
Exhibit 7-C.
[2]
Exhibit 7-F.
[3]
Article III, Section I, 1935 Phil. Constitution.

The pertinent provisions of the Rules of Court, also read as follows:

"Sec. 1. Search warrant defined. — A search warrant is an order in writing issued in the name of
the People of the Philippines, signed by a judge or a justice of the peace and directed to a peace
officer, commanding him to search for personal property and bring it before the court.

"Sec. 2. Personal property to he seized. — A search warrant may be issued for the search and
seizure of the following personal property:

(a) Property subject of the offense;

(b) Property stolen or embezzled and other proceeds or fruits of the offense; and

(c) Property used or intended to be used as the means of committing an offense.

"Sec. 3. Requisites for issuing search warrant. — A search warrant shall not issue but upon
probable cause to be determined by the judge or justice of the peace after examination under oath
or affirmation of the complainant and the witnesses he may produce, and particularly describing
the place to be searched, and the persons or things to be seized.

"Sec. 4. Examinations of the applicant. — The judge or justice of the peace must, before issuing
the warrant examine on oath or affirmation the complainant and any witnesses he may produce
and take their depositions in writing. (Rule 122, Rules of Court; now Rule 126 of the New Rules
of Court).
[4]
Pasion Vda. de Garcia vs. Locsin, et al., 65 Phil. 689, 693.
[5]
Bache & Co. (Phil.), Inc. vs. Ruiz, L-32409, February 27, 1971, 37 SCRA 823, 850; Stonehill
vs. Diokno, L-19550, June 25, 1967, 20 SCRA 383; Rodriguez vs. Villamiel, 65 Phil. 230; Pasion
Vda. de Garcia y Locsin, et al., 65 Phil. 689; and Alvarez vs. Court of First Instance of Tayabas,
64 Phil. 33, 49.
[6]
U.S. vs. de los Reyes and Esguerra, 20 Phil. 467, 469-470.
[7]
Under the New Constitution any lawful officer authorized by law can issue a search warrant or
warrant of arrest.
[8]
Amarga vs. Abbas, 98 Phil. 739, 742.
[9]
Now Rule 126 of the New Rules of Court; see footnote 3.
[10]
20 Phil. 467, 473.
[11]
23 Iowa 368.
[12]
Appellees' Brief, p. 11
[13]
Exhibit 7-C.
[14]
Exhibit 7-F.
[15]
Appellees' Brief, p. 3.
[16]
U.S. vs. Rabinowits, 339 U.S. 56 cited in Sinco, Philippine Constitutional Law, p. 242 (1960).
[17]
Stonehill vs. Diokno, supra, citing US cases.
[18]
47 Am. Jur. 508.
[19]
Appellees' Brief, pp. 14-15.
[20]
XVI The Lawyers' Journal, No. 5, May 31, 1951. Proceedings of the public hearing of the
Joint Senate and House Code Committees, p. 258.
[21]
Exhibits 3, 4 & 5.
[22]
Exhibits 7 & 7-F.
[23]
Exhibit 6.
Copyright 2016 - Batas.org
 Supreme Court of the Philippines

G.R. No. 86720

SECOND DIVISION
G.R. No. 86720, September 02, 1994
MHP GARMENTS, INC., AND LARRY C. DE GUZMAN, PETITIONERS, VS.
THE HONORABLE COURT OF APPEALS, AGNES VILLA CRUZ, MIRASOL
LUGATIMAN, AND GERTRUDES GONZALES, RESPONDENTS.

DECISION

PUNO, J.:

The constitutional protection of our people against unreasonable search and seizure is not merely
a pleasing platitude. It vouchsafes our right to privacy and dignity against undesirable intrusions
committed by any public officer or private individual. An infringement of this right justifies an
award for damages.

On February 22, 1983, petitioner MHP Garments, Inc., was awarded by the Boy Scouts of the
Philippines, the exclusive franchise to sell and distribute official Boy Scouts uniforms, supplies,
badges, and insignias. In their Memorandum Agreement, petitioner corporation was given the
authority to “undertake or cause to be undertaken the prosecution in court of all illegal sources of
scout uniforms and other scouting supplies.” [1]

Sometime in October 1983, petitioner corporation received information that private respondents
Agnes Villa Cruz, Mirasol Lugatiman, and Gertrudes Gonzales were selling Boy Scouts items
and paraphernalia without any authority. Petitioner de Guzman, an employee of petitioner
corporation, was tasked to undertake the necessary surveillance and to make a report to the
Philippine Constabulary (PC).

On October 25, 1983, at about 10:30 A.M., petitioner de Guzman, Captain Renato M. Peñafiel,
and two (2) other constabulary men of the Reaction Force Battalion, Sikatuna Village, Diliman,
Quezon City went to the stores of respondents at the Marikina Public Market. Without any
warrant, they seized the boy and girl scouts pants, dresses, and suits on display at respondents’
stalls. The seizure caused a commotion and embarrassed private respondents. Receipts were
issued for the seized items. The items were then turned over by Captain Peñafiel to petitioner
corporation for safekeeping.
A criminal complaint for unfair competition was then filed against private respondents. During
[2]

its pendency, petitioner de Guzman exacted from private respondent Lugatiman the sum of
THREE THOUSAND ONE HUNDRED PESOS (P3,100.00) in order to be dropped from the
complaint. On December 6, 1983, after a preliminary investigation, the Provincial Fiscal of Rizal
dismissed the complaint against all the private respondents. On February 6, 1984, he also ordered
the return of the seized items. The seized items were not immediately returned despite demands. [3]

Private respondents had to go personally to petitioners’ place of business to recover their goods.
Even then, not all the seized items were returned. The other items returned were of inferior
quality.

Private respondents then filed Civil Case No. 51144 against the petitioners for sums of money
and damages. In its Decision dated January 9, 1987, the trial court ruled for the private
[4]

respondents, thus:

“WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendants,

ordering the latter jointly and severally:
1. To return the amount of P3,100.00 to plaintiff Mirasol Lugatiman with interest at 12% per
annum from January 12, 1984, the date of the last receipt issued, until fully paid;
2. To pay plaintiff Agnes Villa Cruz the sum of P2,000.00 for the 26 pieces of girl scout items
not returned;
3. To pay plaintiffs the amount of P50,000.00 for and as moral damages and P15,000.00 for and
as exemplary damages; and
4. P5,000.00 for and as attorney’s fees and litigation expenses.
Costs against the defendants.
SO ORDERED.”

The decision was appealed to the respondent court. On January 18, 1989, its Fifth Division, [5]

affirmed the Decision with modification, thus:

“WHEREFORE, the decision appealed from is AFFIRMED with MODIFICATION; and, as

modified, the dispositive portion thereof now reads as follows:
Judgment is hereby rendered in favor of plaintiffs (private respondents) and against defendants
(petitioners), ordering the latter jointly and severally;
1. To return the amount of P3,100.00 to plaintiff (respondent) Mirasol Lugatiman and cancel her
application for distributor’s license;
2. To pay plaintiff (respondent) Agnes Villa Cruz the sum of P2,000.00 for the unreturned 26
pieces of girl scouts items with interest at 12% per annum from June 4, 1984 (date the complaint
was filed) until it is fully paid;
3. To pay plaintiffs (respondents) the amount of P10,000.00 each, or a total of P30,000.00, for
and as moral damages; and P5,000.00 each, or a total of P15,000.00, for and as exemplary
damages; and
4. To pay plaintiffs (respondents) P5,000.00 for and as attorney’s fees and litigation expenses.
Costs of the case a quo and the instant appeal are assessed jointly and severally against
defendants-appellants (petitioners) MHP Garments, Inc. and Larry de Guzman.
SO ORDERED.”

In this petition for certiorari, petitioners contend:

FIRST ASSIGNMENT OF ERROR

THE COURT OF APPEALS ERRED IN IMPUTING LIABILITY FOR DAMAGES TO THE

PETITIONERS WHO DID NOT EFFECT THE SEIZURE OF THE SUBJECT
MERCHANDISE.

SECOND ASSIGNMENT OF ERROR

THE COURT OF APPEALS ERRED WHEN IT MADE A FINDING THAT THE MANNER
WITH WHICH THE CONFISCATION OF PRIVATE RESPONDENTS WAS TORTIOUS BUT
PENALIZED INSTEAD THE PETITIONERS WHO DID NOT COMMIT THE ACT OF
CONFISCATION.

THIRD ASSIGNMENT OF ERROR

THE COURT OF APPEALS ERRED WHEN IT FOUND FOR THE PRIVATE

RESPONDENTS AND AGAINST THE PETITIONERS.

We affirm.

Article III, section 2, of the Constitution protects our people from unreasonable search and
seizure. It provides:

“The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature for any purpose shall be inviolable, and
no search warrant or warrant of arrest shall issue except upon probable cause to be determined
personally by the judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched and the persons
or things to be seized.”

This provision protects not only those who appear to be innocent but also those who appear to be
guilty but are nevertheless to be presumed innocent until the contrary is proved. In the case at
[6]

bench, the seizure was made without any warrant. Under the Rules of Court, a warrantless
[7]

search can only be undertaken under the following circumstance:

“SEC. 12. Search incident to a lawful arrest. - A person lawfully arrested may be searched for
dangerous weapons or anything which may be used as proof of the commission of an offense,
without a search warrant.”
We hold that the evidence did not justify the warrantless search and seizure of private
respondents’ goods. Petitioner corporation received information that private respondents were
illegally selling Boy Scouts items and paraphernalia in October 1983. The specific date and time
are not established in the evidence adduced by the parties. Petitioner de Guzman then made a
surveillance of the stores of private respondents. They reported to the Philippine Constabulary
and on October 25, 1983, the raid was made on the stores of private respondents and the
supposed illicit goods were seized. The progression of time between the receipt of the
information and the raid of the stores of private respondents shows there was sufficient time for
petitioners and the PC raiding party to apply for a judicial warrant. Despite the sufficiency of
time, they did not apply for a warrant and seized the goods of private respondents. In doing so,
they took the risk of a suit for damages in case the seizure would be proved to violate the right of
private respondents against unreasonable search and seizure. In the case at bench, the search and
seizure were clearly illegal. There was no probable cause for the seizure. Probable cause for a
search has been defined as “such facts and circumstances which would lead a reasonably discreet
and prudent man to believe that an offense has been committed and that the objects sought in
connection with the offense are in the place sought to be searched.” These facts and
[8]

circumstances were not in any way shown by the petitioners to justify their warrantless search
and seizure. Indeed, after a preliminary investigation, the Provincial Fiscal of Rizal dismissed
their complaint for unfair competition and later ordered the return of the seized goods.

Petitioners would deflect their liability with the argument that it was the Philippine Constabulary
that conducted the raid and their participation was only to report the alleged illegal activity of
private respondents.

While undoubtedly, the members of the PC raiding team should have been included in the
complaint for violation of the private respondents’ constitutional rights, still, the omission will
not exculpate petitioners.

In the case of Lim vs. Ponce de Leon, we ruled for the recovery of damages for violation of
[9]

constitutional rights and liberties from public officer or private individual, thus:

“ART. 32. Any public officer or employee, or any private individual, who directly or indirectly
obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and
liberties of another person shall be liable to the latter for damages.
“x x x x x
“(9) The rights to be secure in one’s person, house, papers, and effects against unreasonable
searches and seizures.
“x x x x x
“The indemnity shall include moral damages. Exemplary damages may also be adjudged.”
“ART. 2219. Moral damages may be recovered in the following and analogous cases:
“x x x x x
“(6) Illegal search;
“(1) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
Pursuant to the foregoing provisions, a person whose constitutional rights have been violated or
impaired is entitled to actual and moral damages from the public officer or employee responsible
therefor. In addition, exemplary damages may also be awarded.”
xxx xxx xxx

“The very nature of Article 32 is that the wrong may be civil or criminal. It is not necessary
therefore that there should be malice or bad faith. To make such a requisite would defeat the
main purpose of Article 32 which is the effective protection of individual rights. Public officials
in the past have abused their powers on the pretext of justifiable motives or good faith in the
performance of their duties. Precisely, the object of the Article is to put an end to official abuse
by plea of the good faith. In the United States this remedy is in the nature of a tort.” (emphasis
supplied)

In the subsequent case of Aberca vs. Ver, the Court En Banc explained the liability of persons
[10]

indirectly responsible, viz:

“[T]he decisive factor in this case, in our view, is the language of Article 32. The law speaks of
an officer or employee or person “directly or indirectly” responsible for the violation of the
constitutional rights and liberties of another. Thus, it is not the actor alone (i.e. the one directly
responsible) who must answer for damages under Article 32; the person indirectly responsible
has also to answer for the damages or injury caused to the aggrieved party.
xxx xxx xxx
While it would certainly be too naive to expect that violators of human rights would easily be
deterred by the prospect of facing damages suits, it should nonetheless be made clear in no
uncertain terms that Article 32 of the Civil Code makes the persons who are directly, as well as
indirectly, responsible for the transgression joint tortfeasors.
xxx xxx xxx
[N]either can it be said that only those shown to have participated “directly” should be held
liable. Article 32 of the Civil Code encompasses within the ambit of its provisions those directly,
as well as indirectly, responsible for its violations.” (emphasis supplied)

Applying the aforecited provisions and leading cases, the respondent court correctly granted
damages to private respondents. Petitioners were indirectly involved in transgressing the right of
private respondents against unreasonable search and seizure. Firstly, they instigated the raid
pursuant to their covenant in the Memorandum Agreement to undertake the prosecution in court
of all illegal sources of scouting supplies. As correctly observed by respondent court:
[11]

“Indeed, the acts committed by the PC soldiers of unlawfully seizing appellees’ (respondents’)
merchandise and of filing the criminal complaint for unfair competition against appellees
(respondents) were for the protection and benefit of appellant (petitioner) corporation. Such
being the case, it is, thus, reasonably fair to infer from those acts that it was upon appellant
(petitioner) corporation’s instance that the PC soldiers conducted the raid and effected the illegal
seizure. These circumstances should answer the trial court’s query -- posed in its decision now
under consideration -- as to why the PC soldiers immediately turned over the seized merchandise
appellant (petitioner) corporation.” [12]
The raid was conducted with the active participation of their employee. Larry de Guzman did not
lift a finger to stop the seizure of the boy and girl scouts items. By standing by and apparently
assenting thereto, he was liable to the same extent as the officers themselves. So with the
[13]

petitioner corporation which even received for safekeeping the goods unreasonably seized by the
PC raiding team and de Guzman, and refused to surrender them for quite a time despite the
dismissal of its complaint for unfair competition.

Secondly, Letter of Instruction No. 1299 was precisely crafted on March 9, 1983 to safeguard not
only the privilege of franchise holder of scouting items but also the citizen’s constitutional rights,
to wit:

“TITLE : APPREHENSION OF UNAUTHORIZED MANUFACTURERS AND

DISTRIBUTORS OF SCOUT PARAPHERNALIA AND IMPOUNDING OF SAID
PARAPHERNALIA.
ABSTRACT:
Directs all law enforcement agencies of the Republic of the Philippines, to apprehend
immediately unauthorized manufacturers and distributors of Scout paraphernalia, upon proper
application by the Boy Scouts of the Philippines and/or Girl Scouts of the Philippines for warrant
of arrest and/or search warrant with a judge, or such other responsible officer as may be
authorized by law; and to impound the said paraphernalia to be used as evidence in court or other
appropriate administrative body. Orders the immediate and strict compliance with the
Instructions.”[14]

Under the above provision and as aforediscussed, petitioners miserably failed to report the
unlawful peddling of scouting goods to the Boy Scouts of the Philippines for the proper
application of a warrant. Private respondents’ rights are immutable and cannot be sacrificed to
transient needs. Petitioners did not have the unbridled license to cause the seizure of
[15]

respondents’ goods without any warrant.

And thirdly, if petitioners did not have a hand in the raid, they should have filed a third-party
complaint against the raiding team for contribution or any other relief, in respect of
[16]

respondents’ claim for Recovery of Sum of Money with Damages. Again, they did not.

We have consistently ruled that moral damages are not awarded to penalize the defendant but to
compensate the plaintiff for the injuries he may have suffered. Conformably with our ruling in
[17]

Lim vs. Ponce de Leon, op. cit., moral damages can be awarded in the case at bench. There can
be no doubt that petitioners must have suffered sleepless nights, serious anxiety, and wounded
feelings due the tortious raid caused by petitioners. Private respondents’ avowals of
embarrassment and humiliation during the seizure of their merchandise were supported by their
testimonies. Respondent Cruz declared:

“I felt very nervous. I was crying to loss (sic) my goods and capital because I am doing business
with borrowed money only, there was commotion created by the raiding team and they even
stepped on some of the pants and dresses on display for sale. All passersby stopped to watch and
stared at me with accusing expressions. I was trembling and terribly ashamed, sir.” [18]
Respondent Lugatiman testified:

“I felt very nervous. I was crying and I was very much ashamed because many people have been
watching the PC soldiers hauling my items, and many/I (sic) heard say ‘nakaw pala ang mga
iyan’ for which I am claiming P25,000.00 for damages.” [19]

While respondent Gonzalez stated thus:

“I do not like the way the raid was conducted by the team sir because it looked like that what I
have been selling were stolen items that they should be confiscated by uniformed soldiers. Many
people were around and the more the confiscation was made in a scandalous manner; every
clothes, T-shirts, pants and dresses even those not wrapped dropped to the ground. I was terribly
shamed in the presence of market goers that morning.” [20]

Needles to state, the wantonness of the wrongful seizure justifies the award of exemplary
damages. It will also serve as a stern reminder to all and sundry that the constitutional
[21]

protection against unreasonable search and seizure is a virile reality and not a mere burst of
rhetoric. The all encompassing protection extends against intrusions directly done both by
government and indirectly by private entities.

IN VIEW WHEREOF, the appealed decision is AFFIRMED WITH MODIFICATION. We

impose a SIX PERCENT (6%) interest from January 9, 1987 on the TWO THOUSAND PESOS
(P2,000.00) for the unreturned twenty-six (26) pieces of girl scouts items and a TWELVE
PERCENT (12%) interest, in lieu of SIX PERCENT (6%), on the said amount upon finality of
this Decision until the payment thereof. Costs against petitioners.
[22]

SO ORDERED.

Narvasa, C.J., (Chairman), Padilla, Regalado, and Mendoza, JJ., concur.

[1]
Exhibit “1”.

[2]
I.S. No. 83-15275 before the Rizal Provincial Fiscal’s Office.

[3]
Demand letters were sent on March 22, 1984 and April 11, 1984.

[4]
RTC, NJCR, Pasig, Branch 151.

Penned by Mr. Justice Jesus M. Elbinias, and concurred by Justices Floreliana C. Bartolome
[5]

and Antonio M. Martinez.

[6]
Bagalihog vs. Fernandez, G.R. No. 96356, June 27, 1991, 198 SCRA 614.
[7]
Section 12, Rule 126 of the Rules of Court.

[8]
Burgos, Sr. vs. Chief of Staff, AFP, No. L-64261, December 26, 1984, 133 SCRA 800.

[9]
No. L-22554, August 29, 1975, 66 SCRA 299.

[10]
No. L-69866, April 15, 1988, 160 SCRA 590.

[11]
Supra.

[12]
Rollo, p. 22, Court of Appeals Decision, p. 9.

Am. Jur., 47 [1943], see Hebrew vs. Pulis, 73 NJL 621, 64 A 121, 7 LRA(NS) 580, 118 Am St
[13]

Rep 716.

[14]
Court of Appeals Decision, pp. 5-6; Rollo, pp. 18-19.

[15]
See, Aberca vs. Ver, op cit.

[16]
Section 12, Rule 6, Rules of Court.

Simex International (Manila), Inc. vs. Court of Appeals, G.R. No. 88013, March 19, 1990, 183
[17]

SCRA 360.

[18]
Rollo, p. 17.

[19]
Id., pp. 17-18.

[20]
Id., p. 18.

[21]
Article 2229, Civil Code.

Eastern Shipping Lines, Inc., vs. Hon. Court of Appeals and Mercantile Insurance Company,
[22]

Inc., G.R. No. 97412, July 12, 1994.

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

361 Phil. 499

FIRST DIVISION
G.R. No. 128690, January 21, 1999
ABS-CBN BROADCASTING CORPORATION, PETITIONERS, VS.
HONORABLE COURT OF APPEALS, REPUBLIC BROADCASTING CORP.,
VIVA PRODUCTIONS, INC., AND VICENTE DEL ROSARIO,
RESPONDENTS.

DECISION

DAVIDE JR., C.J.:

In this petition for review on certiorari, petitioners ABS-CBN Broadcasting Corp. (hereinafter
ABS-CBN) seeks to reverse and set aside the decision[1] of 31 October 1996 and the resolution[2]
of 10 March 1997 of the Court of Appeals in CA-G.R. CV No. 44125. The former affirmed with
modification the decision[3] of 28 April 1993 of the Regional Trial Court (RTC) of Quezon City,
Branch 80, in Civil Case No. Q-12309. The latter denied the motion to reconsider the decision
of 31 October 1996.

The antecedents, as found by the RTC and adopted by the Court of Appeals, are as follows:
In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement (Exh. “A”) whereby Viva
gave ABS-CBN an exclusive right to exhibit some Viva films. Sometime in December 1991, in
accordance with paragraph 2.4 [sic] of said agreement stating that-
1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) Viva films for TV
telecast under such terms as may be agreed upon by the parties hereto, provided, however, that
such right shall be exercised by ABS-CBN from the actual offer in writing.
Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president Charo
Santos-Concio, a list of three (3) film packages (36 title) from which ABS-CBN may exercise its
right of first refusal under the afore-said agreement (Exhs. “1” par. 2, “2,” “2-A” and “2-B –
Viva). ABS-CBN, however through Mrs. Concio, “can tick off only ten (10) titles” (from the
list) “we can purchase” (Exh. “3” – Viva) and therefore did not accept said list (TSN, June 8,
1992, pp. 9-10). The titles ticked off by Mrs. Concio are not the subject of the case at bar except
the film “Maging Sino Ka Man.”

For further enlightenment, this rejection letter dated January 06, 1992 (Exh “3” – Viva) is hereby
quoted:
6 January 1992

Dear Vic,

This is not a very formal business letter I am writing to you as I would like to express my
difficulty in recommending the purchase of the three film packages you are offering ABS-CBN.

From among the three packages I can only tick off 10 titles we can purchase. Please see
attached. I hope you will understand my position. Most of the action pictures in the list do not
have big action stars in the cast. They are not for primetime. In line with this I wish to mention
that I have not scheduled for telecast several action pictures in our very first contract because of
the cheap production value of these movies as well as the lack of big action stars. As a film
producer, I am sure you understand what I am trying to say as Viva produces only big action
pictures.

In fact, I would like to request two (2) additional runs for these movies as I can only schedule
them in out non-primetime slots. We have to cover the amount that was paid for these movies
because as you very well know that non-primetime advertising rates are very low. These are the
unaired titles in the first contract.
1.
Kontra Persa [sic]

2. Raider Platoon
3. Underground guerillas
4. Tiger Command
5. Boy de Sabog
6. lady Commando
7. Batang Matadero
8. Rebelyon

I hope you will consider this request of mine.

The other dramatic films have been offered to us before and have been rejected because of the
ruling of MTRCB to have them aired at 9:00 p.m. due to their very adult themes.

As for the 10 titles I have choosen [sic] from the 3 packages please consider including all the
other Viva movies produced last year, I have quite an attractive offer to make.

Thanking you and with my warmest regards.

(Signed)

Charo Santos-Concio
On February 27, 1992, defendant Del Rosario approached ABS-CBN’s Ms. Concio, with a list
consisting of 52 original movie titles (i.e., not yet aired on television) including the 14 titles
subject of the present case, as well as 104 re-runs (previously aired on television) from which
ABS-CBN may choose another 52 titles, as a total of 156 titles, proposing to sell to ABS-CBN
airing rights over this package of 52 originals and 52 re-runs for P60,000,000.00 of which
P30,000,000.00 will be in cash and P30,000,000.00 worth of television spots (Exh. “4” to “4-C”
– Viva; “9” – Viva).

On April 2, 1992, defendant Del Rosario and ABS-CBN’s general manager, Eugenio Lopez III,
met at the Tamarind Grill Restaurant in Quezon City to discuss the package proposal of VIVA.
What transpired in that lunch meeting is the subject of conflicting versions. Mr. Lopez testified
that he and Mr. Del Rosario allegedly agreed that ABS-CBN was granted exclusive film rights to
fourteen (14) films for a total consideration of P36 million; that he allegedly put this agreement
as to the price and number of films in a “napkin” and signed it and gave it to Mr. Del Rosario
(Exh. D; TSN, pp. 24-26, 77-78, June 8, 1992). On the other hand. Del Rosario denied having
made any agreement with Lopez regarding the 14 Viva films; denied the existence of a napkin in
which Lopez wrote something; and insisted that what he and Lopez discussed at the lunch
meeting was Viva’s film package offer of 104 films (52 originals and 52 re-runs) for a total price
of P60 million. Mr. Lopez promising [sic]to make a counter proposal which came in the form of
a proposal contract Annex “C” of the complaint (Exh. “1” – Viva; Exh “C” – ABS-CBN).

On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for
Finance discussed the terms and conditions of Viva’s offer to sell the 104 films, after the
rejection of the same package by ABS-CBN.

On April 07, 1992, defendant Del Rosario received through his secretary , a handwritten note
from Ms. Concio, (Exh. “5” – Viva), which reads: “Here’s the draft of the contract. I hope you
find everything in order,” to which was attached a draft exhibition agreement (Exh. “C” – ABS-
CBN; Exh. “9” – Viva p. 3) a counter-proposal covering 53 films, 52 of which came from the list
sent by defendant Del Rosario and one film was added by Ms. Concio, for a consideration of P35
million. Exhibit “C” provides that ABS-CBN is granted film rights to 53 films and contains a
right of first refusal to 1992 Viva Films.” The said counter proposal was however rejected by
Viva’s Board of Directors [in the] evening of the same day, April 7, 1992, as Viva would not sell
anything less than the package of 104 films for P60 million pesos (Exh. “9” – Viva), and such
rejection was relayed to Ms. Concio.

On April 29, 1992, after the rejection of ABS-CBN and following several negotiations and
meetings defendant Del Rosario and Viva’s President Teresita Cruz, in consideration of P60
million, signed a letter of agreement dated April 24, 1992, granting RBS the exclusive right to air
104 Viva-produced and/or acquired films (Exh. “7-A” - RBS; Exh. “4” – RBS) including the
fourteen (14) films subject of the present case.[4]
On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific performance with a
prayer for a writ of preliminary injunction and/or temporary restraining order against private
respondents Republic Broadcasting Corporation[5] (hereafter RBS), Viva Production (hereafter
VIVA), and Vicente del Rosario. The complaint was docketed as Civil Case No. Q-92-12309.

On 28 May 1992, the RTC issued a temporary restraining order[6] enjoining private respondents
from proceeding with the airing, broadcasting, and televising of the fourteen VIVA films subject
of the controversy, starting with the film Maging Sino Ka Man, which was scheduled to be
shown on private respondent RBS’ channel 7 at seven o’clock in the evening of said date.

On 17 June 1992, after appropriate proceedings, the RTC issued an order[7] directing the issuance
of a writ of preliminary injunction upon ABS-CBN’s posting of a P35 million bond. ABS-CBN
moved for the reduction of the bond,[8] while private respondents moved for reconsideration of
the order and offered to put up a counterbond.[9]

In the meantime, private respondents filed separate answer with counterclaim.[10] RBS also set up
a cross-claim against VIVA.

On 3 August 1992, the RTC issued an order[11] dissolving the writ of preliminary injunction upon
the posting by RBS of a P30 million counterbond to answer for whatever damages ABS-CBN
might suffer by virtue of such dissolution. However, it reduced petitioner’s injunction bond to
P15 million as a condition precedent for the reinstatement of the writ of preliminary injunction
should private respondents be unable to post a counterbond.

At the pre-trial[12] on 6 August 1992, the parties upon suggestion of the court, agreed to explore
the possibility of an amicable settlement. In the meantime, RBS prayed for and was granted
reasonable time within which to put up a P30 million counterbond in the event that no settlement
would be reached.

As the parties failed to enter into an amicable settlement, RBS posted on 1 October 1992 a
counterbond, which the RTC approved in its Order of 15 October 1992.[13]

On 19 October 1992, ABS-CBN filed a motion for reconsideration[14] of the 3 August and 15
October 1992 Orders, which RBS opposed.[15]

On 29 October, the RTC conducted a pre-trial.[16]

Pending resolution of its motion for reconsideration, ABS-CBN filed with the Court of Appeals a
petition[17] challenging the RTC’s Order of 3 August and 15 October 1992 and praying for the
issuance of a writ of preliminary injunction to enjoin the RTC from enforcing said orders. The
case was docketed as CA-G.R. SP No. 29300.

On 3 November 1992, the Court of Appeals issued a temporary restraining order[18] to enjoin the
airing, broadcasting, and televising of any or all of the films involved in the controversy.

On 18 December 1992, the Court of Appeals promulgated a decision[19] dismissing the petition in
CA-G.R. SP No. 29300 for being premature. ABS-CBN challenged the dismissal in a petition
for review filed with this Court on 19 January 1993, which was docketed s G.R. No. 108363.

In the meantime the RTC received the evidence for the parties in Civil Case No. Q-92-12309.
Thereafter, on 28 April 1993, it rendered a decision[20] in favor of RBS and VIVA and against
ABS-CBN disposing as follows:
WHEREFORE, under cool reflection and prescinding from the foregoing, judgment is rendered
in favor of defendants and against the plaintiff.
(1) The complaint is hereby dismissed;

(2) Plaintiff ABS-CBN is ordered to pay defendant RBS the following:

P107,727.00 the amount of premium paid by RBS to the surety which issued
a)
defendants RBS’s bond to lift the injunction;

P191,843.00 for the amount of print advertisement for “Maging Sino Ka

b)
Man” in various newspapers;
c) Attorney’s fees in the amount of P1 million;
d) P5 million as and by way of moral damages;
e) P5 million as and by way of exemplary damages;
For the defendant VIVA, plaintiff ABS-CBN is ordered to pay P212,000.00 by way of
(3)
reasonable attorney’s fees.
(4) The cross-claim of defendant RBS against defendant VIVA is dismissed.
(5) Plaintiff to pay the costs.

According to the RTC, there was no meeting of minds on the price and terms of the offer. The
alleged agreement between Lopez III and Del Rosario was subject to the approval of the VIVA
Board of Directors, and said agreement was disapproved during the meeting of the Board on 7
April 1992. Hence, there was no basis for ABS-CBN’s demand that VIVA signed the 1992 Film
Exhibition Agreement. Furthermore, the right of first refusal under the 1990 Film Exhibition
Agreement had previously been exercised per Ms. Concio’s letter to Del Rosario ticking off ten
titles acceptable to them, which would have made the 1992 agreement an entirely new contract.

On 21 June 1993, this Court denied[21] ABS-CBN’s petition for review in G.R. No. 108363, as no
reversible error was committed by the Court of Appeals in its challenged decision and the case
had “become moot and academic in view of the dismissal of the main action by the court a quo
in its decision” of 28 April 1993.

Aggrieved by the RTC’s decision, ABS-CBN appealed to the Court of Appeals claiming that
there was a perfected contract between ABS-CBN and VIVA granting ABS-CBN the exclusive
right to exhibit the subject films. Private respondents VIVA and Del Rosario also appealed
seeking moral and exemplary damages and additional attorney’s fees.

In its decision of 31 October 1996, the Court of Appeals agreed with the RTC that the contract
between ABS-CBN and VIVA had not been perfected, absent the approval by the VIVA Board of
Directors of whatever Del Rosario, it’s agent, might have agreed with Lopez III. The appellate
court did not even believe ABS-CBN’s evidence that Lopez III actually wrote down such an
agreement on a “napkin,” as the same was never produced in court. It likewise rejected ABS-
CBN’s insistence on its right of first refusal and ratiocinated as follows:
As regards the matter of right of first refusal, it may be true that a Film Exhibition Agreement
was entered into between Appellant ABS-CBN and appellant VIVA under Exhibit “A” in 1990
and that parag. 1.4 thereof provides:
1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) VIVA films for
TV telecast under such terms as may be agreed upon by the parties hereto, provided, however,
that such right shall be exercised by ABS-CBN within a period of fifteen (15) days from the
actual offer in writing (Records, p. 14).
[H]owever, it is very clear that said right of first refusal in favor of ABS-CBN shall still be
subjected to such terms as may be agreed upon by the parties thereto, and that the said right shall
be exercised by ABS-CBN within fifteen (15) days from the actual offer in writing.

Said parag. 1.4 of the agreement Exhibit “A” on the right of first refusal did not fix the price of
the film right to the twenty-four (24) films, nor did it specify the terms thereof. The same are
still left to be agreed upon by the parties.

In the instant case, ABS-CBN’s letter of rejection Exhibit 3 (Records, p. 89) stated that it can
only tick off ten (10) films, and the draft contract Exhibit “C” accepted only fourteen (14) films,
while parag. 1.4 of Exhibit “A” speaks of the next twenty-four (24) films.

The offer of VIVA was sometime in December 1991, (Exhibits 2, 2-A, 2-B; Records, pp. 86-88;
Decision, p. 11, Records, p. 1150), when the first list of VIVA films was sent by Mr. Del Rosario
to ABS-CBN. The Vice President of ABS-CBN, Mrs. Charo Santos-Concio, sent a letter dated
January 6, 1992 (Exhibit 3, Records, p. 89) where ABS-CBN exercised its right of refusal by
rejecting the offer of VIVA. As aptly observed by the trial court, with the said letter of Mrs.
Concio of January 6, 1992, ABS-CBN had lost its right of first refusal. And even if We reckon
the fifteen (15) day period from February 27, 1992 (Exhibit 4 to 4-C) when another list was sent
to ABS-CBN after the letter of Mrs. Concio, still the fifteen (15) day period within which ABS-
CBN shall exercise its right of first refusal has already expired.[22]
Accordingly, respondent court sustained the award factual damages consisting in the cost of print
advertisements and the premium payments for the counterbond, there being adequate proof of the
pecuniary loss which RBS has suffered as a result of the filing of the complaint by ABS-CBN.
As to the award of moral damages, the Court of Appeals found reasonable basis therefor, holding
that RBS’s reputation was debased by the filing of the complaint in Civil Case No. Q-92-12309
and by the non-showing of the film “Maging Sino Ka Man.” Respondent court also held that
exemplary damages were correctly imposed by way of example or correction for the public good
in view of the filing of the complaint despite petitioner’s knowledge that the contract with VIVA
had not been perfected. It also upheld the award of attorney’s fees, reasoning that with ABS-
CBN’s act of instituting Civil Case No. Q-92-12309, RBS was “unnecessarily forced to litigate.”
The appellate court, however, reduced the awards of moral damages to P 2 million, exemplary
damages to P2 million, and attorney’s fees to P500,000.00.

On the other hand, respondent Court of Appeals denied VIVA and Del Rosario’s appeal because
it was “RBS and not VIVA which was actually prejudiced when the complaint was filed by ABS-
CBN.”

Its motion for reconsideration having been denied, ABS-CBN filed the petition in this case,
contending that the Court of Appeals gravely erred in
I
… RULING THAT THERE WAS NO PERFECTED CONTRACT BETWEEN PETITIONER
AND PRIVATE RESPONDENT VIVA NOTWITHSTANDING PREPONFERANCE OF
EVIDENCE ADDUCED BY PETITIONER TO THE CONTRARY.

II

… IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN FAVOR OF PRIVATE

RESPONDENT RBS.

III

… IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR OF PRIVATE

RESPONDENT RBS.

IV

… IN AWARDING ATORNEY’S FEES OF RBS.

ABS-CBN claims that it had yet to fully exercise its right of first refusal over twenty-four titles
under the 1990 Film Exhibition Agreement, as it had chosen only ten titles from the first list. It
insists that we give credence to Lopez’s testimony that he and Del Rosario met at the Tamarind
Grill Restaurant, discussed the terms and conditions of the second list (the 1992 Film Exhibition
Agreement) and upon agreement thereon, wrote the same on a paper napkin. It also asserts that
the contract has already been effective, as the elements thereof, namely, consent, object, and
consideration were established. It then concludes that the Court of Appeals’ pronouncements
were not supported by law and jurisprudence, as per our decision of 1 December 1995 in
Limketkai Sons Milling, Inc. v. Court of Appeals,[23] which cited Toyota Shaw, Inc. v. Court of
Appeals;[24] Ang Yu Asuncion v. Court of Appeals,[25] and Villonco Realty Company v.
Bormaheco, Inc.[26]

Anent the actual damages awarded to RBS, ABS-CBN disavows liability therefor. RBS spent for
the premium on the counterbond of its own volition in order to negate the injunction issued by
the trial court after the parties had ventilated their respective positions during the hearings for the
purpose. The filing of the counterbond was an option available to RBS, but it can hardly be
argued that ABS-CBN compelled RBS to incur such expense. Besides, RBS had another
available option, i.e., move for the dissolution of the injunction; or if it was determined to put up
a counterbond, it could have presented a cash bond. Furthermore under Article 2203 of the Civil
Code, the party suffering loss injury is also required to exercise the diligence of a good father of
a family to minimize the damages resulting from the act or omission. As regards the cost of print
advertisements, RBS had not convincingly established that this was a loss attributable to the non-
showing of “Maging Sino Ka Man”; on the contrary, it was brought out during trial that with or
without the case or injunction, RBS would have spent such an amount to generate interest in the
film.

ABS-CBN further contends that there was no other clear basis for the awards of moral and
exemplary damages. The controversy involving ABS-CBN and RBS did not in any way
originate from business transaction between them. The claims for such damages did not arise
from any contractual dealings or from specific acts committed by ABS-CBN against RBS that
may be characterized as wanton, fraudulent, or reckless; they arose by virtue only of the filing of
the complaint. An award of moral and exemplary damages is not warranted where the record is
bereft of any proof that a party acted maliciously or in bad faith in filing an action.[27] In any case,
free resort to courts for redress of wrongs is a matter of public policy. The law recognizes the
right of every one to sue for that which he honestly believes to be his right without fear of
standing trial for damages where by lack of sufficient evidence, legal technicalities, or a
different interpretation of the laws on the matter, the case would lose ground.[28] One who, makes
use of his own legal right does no injury.[29] If damage results from filing of the complaint, it is
damnum absque injuria.[30] Besides, moral damages are generally not awarded in favor of a
juridical person, unless it enjoys a good reputation that was debased by the offending party
resulting in social humiliation.[31]

As regards the award of attorney’s fees, ABS-CBN maintains that the same had no factual, legal,
or equitable justification. In sustaining the trial court’s award, the Court of Appeals acted in
clear disregard of the doctrine laid down in Buan v. Camaganacan[32] that the text of the decision
should state the reason why attorney’s fees are being awarded; otherwise, the award should be
disallowed. Besides, no bad faith has been imputed on, much less proved as having been
committed by, ABS-CBN. It has been held that “where no sufficient showing of bad faith would
be reflected in a party’s persistence in a case other than an erroneous conviction of the
righteousness of his cause, attorney’s fees shall not be recovered as cost.”[33]

On the other hand, RBS asserts that there was no perfected contract between ABS-CBN and
VIVA absent meeting of minds between them regarding the object and consideration of the
alleged contract. It affirms that ABS-CBN’s claim of a right of first refusal was correctly
rejected by the trial court. RBS insists the premium it had paid for the counterbond constituted a
pecuniary loss upon which it may recover. It was obliged to put up the counterbond due to the
injunction procured by ABS-CBN. Since the trial court found that ABS-CBN had no cause of
action or valid claim against RBS and, therefore not entitled to the writ of injunction, RBS could
recover from ABS-CBN the premium paid on the counterbond. Contrary to the claim of ABS-
CBN, the cash bond would prove to be more expensive, as the loss would be equivalent to the
cost of money RBS would forego in case the P30 million came from its funds or was borrowed
from banks.

RBS likewise asserts that it was entitled to the cost of advertisements for the cancelled showing
of the film “Maging Sino Ka Man” because the print advertisements were out to announce the
showing on a particular day and hour on Channel 7, i.e., in its entirety at one time, not as series
to be shown on a periodic basis. Hence, the print advertisements were good and relevant for the
particular date of showing, and since the film could not be shown on that particular date and hour
because of the injunction, the expenses for the advertisements had gone to waste.

As regards moral and exemplary damages, RBS asserts that ABS-CBN filed the case and secured
injunctions purely for the purpose of harassing and prejudicing RBS. Pursuant then to Articles
19 and 21 of the Civil Code, ABS-CBN must be held liable for such damages. Citing Tolentino,
[34]
damages may be awarded in cases of abuse of rights even if the done is not illicit, and there is
abuse of rights where a plaintiff institutes an action purely for the purpose of harassing or
prejudicing the defendant.

In support of its stand that a juridical entity can recover moral and exemplary damages, private
respondent RBS cited People v. Manero,[35] where it was stated that such entity may recover
moral and exemplary damages if it has a good reputation that is debased resulting in social
humiliation. It then ratiocinates; thus:

There can be no doubt that RBS’ reputation has been debased by ABS-CBN’s acts in this case.
When RBS was not able to fulfill its commitment to the viewing public to show the film
“Maging Sino Ka Man” on the scheduled dates and times (and on two occasions that RBS
advertised), it suffered serious embarrassment and social humiliation. When the showing was
cancelled, irate viewers called up RBS’ offices and subjected RBS to verbal abuse (“Announce
kayo ng announce, hindi ninyo naman ilalabas”, “nanloloko yata kayo”) (Exh. 3-RBS, par.3).
This alone was not something RBS brought upon itself. It was exactly what ABS-CBN had
planted to happen.

The amount of moral and exemplary damages cannot be said to be excessive. Two reasons
justify the amount of the award.

The first is that the humiliation suffered by RBS, is national in extent. RBS’ operations as a
broadcasting company is [sic] nationwide. Its clientele, like that of ABS-CBN, consists of those
who own and watch television. It is not an exaggeration to state, and it is a matter of judicial
notice that almost every other person in the country watches television. The humiliation suffered
by RBS is multiplied by the number of televiewers who had anticipated the showing of the film,
“Maging Sino Ka Man” on May 28 and November 3, 1992 but did not see it owing to the
cancellation. Added to this are the advertisers who had placed commercial spots for the telecast
and to whom RBS had a commitment in consideration of the placement to show the film in the
dates and times specified.

The second is that it is a competitor that caused RBS suffer the humiliation. The humiliation and
injury are far greater in degree when caused by an entity whose ultimate business objective is to
lure customers (viewers in this case) away from the competition.[36]
For their part, VIVA and Vicente del Rosario contend that the findings of fact of the trial court
and the Court of Appeals do not support ABS-CBN’s claim that there was a perfected contract.
Such factual findings can no longer be disturbed in this petition for review under Rule 45, as
only questions of law can be raised, not questions of fact. On the issue of damages and attorneys
fees, they adopted the arguments of RBS.

The key issues for our consideration are (1) whether there was a perfected contract between
VIVA and ABS-CBN, and (2) whether RBS is entitled to damages and attorney’s fees. It may be
noted that that award of attorney’s fees of P212,000 in favor of VIVA is not assigned as another
error.

The first issue should be resolved against ABS-CBN. A contract is a meeting of minds between
two persons whereby one binds himself to give something or render some service to another[37]
for a consideration. There is no contract unless the following requisites concur: (1) consent of
the contracting parties; (2) object certain which is the subject of the contract; and (3) cause of the
obligation, which is established.[38] A contract undergoes three stages:
(a)
preparation, conception, or generation, which is the period of negotiation and
bargaining, ending at the moment of agreement of the parties;

(b) perfection or birth of the contract, which is the moment when the parties come to agree
on the terms of the contract; and
(c) consummation or death, which is the fulfillment or performance of the terms agreed
upon in the contract.[39]

Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once
there is concurrence between the offer and the acceptance upon the subject matter, consideration,
and terms of payment a contract is produced. The offer must be certain. To convert the offer
into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it
must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A
qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a
rejection of the original offer. Consequently, when something is desired which is not exactly
what is proposed in the offer, such acceptance is not sufficient to generate consent because any
modification or variation from the terms of the offer annuls the offer.[40]

When Mr. Del Rosario of Viva met Mr. Lopez of ABS-CBN at the Tamarind Grill on 2 April
1992 to discuss the package of films, said package of 104 VIVA films was VIVA’s offer to ABS-
CBN to enter into a new Film Exhibition Agreement. But ABS-CBN, sent through Ms. Concio,
counter-proposal in the form a draft contract proposing exhibition of 53 films for a consideration
of P35 million. This counter-proposal could be nothing less than the counter-offer of Mr. Lopez
during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly, there was no
acceptance of VIVA’s offer, for it was met by a counter-offer which substantially varied the terms
of the offer.

ABS-CBN’s reliance in Limketkai Sons Milling, Inc. v. Court of Appeals[41] and Villonco Realty
Company v. Bormaheco, Inc.,[42] is misplaced. In these cases, it was held that an acceptance may
contain a request for certain changes in the terms of the offer and yet be a binding acceptance as
long as “it is clear that the meaning of the acceptance is positively and unequivocally to accept
the offer, whether such request is granted or not.” This ruling was, however, reversed in the
resolution of 29 March 1996,[43] which ruled that the acceptance of an offer must be unqualified
and absolute, i.e., it “must be identical in all respects with that of the offer so as to produce
consent or meetings of the minds.”

On the other hand, in Villonco, cited in Limketkai, the alleged changes in the revised counter-
offer were not material but merely clarificatory of what had previously been agreed upon. It
cited the statement in Stuart v. Franklin Life Insurance Co.[44] that “a vendor’s change in a phrase
of the offer to purchase, which change does not essentially change the terms of the offer, does not
amount to a rejection of the offer and the tender of a counter-offer.”[45] However, when any of the
elements of the contract is modified upon acceptance, such alteration amounts to a counter-offer.
In the case at bar, ABS-CBN made no unqualified acceptance of VIVA’s offer hence, they
underwent period of bargaining. ABS-CBN then formalized its counter-proposals or counter-
offer in a draft contract. VIVA through its Board of Directors, rejected such counter-offer. Even
if it be conceded arguendo that Del Rosario had accepted the counter-offer, the acceptance did
not bind VIVA, as there was no proof whatsoever that Del Rosario had the specific authority to
do so.

Under the Corporation Code,[46] unless otherwise provided by said Code, corporate powers, such
as the power to enter into contracts, are exercised by the Board of Directors. However, the Board
may delegate such powers to either an executive committee or officials or contracted managers.
The delegation, except for the executive committee, must be for specific purposes.[47] Delegation
to officers makes the latter agents of the corporation; accordingly, the general rules of agency as
to the binding effects of their acts would apply.[48] For such officers to be deemed fully clothed by
the corporation to exercise a power of the Board, the latter must specially authorize them to do
so. that Del Rosario did not have the authority to accept ABS-CBN’s counter-offer was best
evidenced by his submission of the draft contract to VIVA’s Board of Directors for the latter’s
approval. In any event, there was between Del Rosario and Lopez III no meeting of minds. The
following findings of the trial court are instructive:

A number of considerations militate against ABS-CBN’s claim that a contract was

perfected at that lunch meeting on April 02, 1992 at the Tamarind Grill.

FIRST, Mr. Lopez claimed that what was agreed upon at the Tamarind Grill referred to the
price and the number of films, which he wrote on a napkin. However, Exhibit “C” contains
numerous provisions which were not discussed at the Tamarind Grill, if Lopez testimony
was to be believed nor could they have been physically written on a napkin. There was
even doubt as to whether it was a paper napkin or cloth napkin. In short what were
written in Exhibit “C” were not discussed, and therefore could not have been agreed upon,
by the parties. How then could this court compel the parties to sign Exhibit “C” when the
provisions thereof were not previously agreed upon?

SECOND, Mr. Lopez claimed that what was agreed upon as the subject matter of the
contract was 14 films. The complaint in fact prays for delivery of 14 films. But Exhibit
“C” mentions 53 films as its subject matter. Which is which? If Exhibit “C” reflected the
true intent of the parties, then ABS-CBN’s claim for 14 films in its complaint is false or if
what it alleged in the complaint is true, then Exhibit “C” did not reflect what was agreed
upon by the parties. This underscores the fact that there was no meeting of the minds as to
the subject matter of the contract, so as to preclude perfection thereof. For settled is the
rule that there can be no contract where there is no object certain which is its subject
matter (Art. 1318, NCC).

THIRD, Mr. Lopez [sic] answer to question 29 of his affidavit testimony (Exh. “D”) States:

“We were able to reach an agreement. VIVA gave us the exclusive license to show these
fourteen (14) films, and we agreed to pay Viva the amount of P16,050,000.00 as well as
grant Viva commercial slots worth P19,950,000.00. We had already earmarked this
P16,050,000.00.”

which gives a total consideration of P36 million (P19,951,000.00 plus P16,050,000.00 equals
P36,000,000.00).

On cross-examination Mr. Lopez testified:

Q
What was written in this napkin?

A The total price, the breakdown the known Viva movies, the 7 blockbuster movies and
the other 7 Viva movies because the price was broken down accordingly. The none
[sic] Viva and the seven other Viva movies and the sharing between the cash portion
and the concerned spot portion in the total amount of P35 million pesos.
Now, which is which? P36 million or P35 million? This weakens ABS-CBN’s claim.

FOURTH. Mrs. Concio, testifying for ABS-CBN stated that she transmitted Exhibit “C” to
Mr. Del Rosario with a handwritten note, describing said Exhibit “C” as a draft.” (Exh.
“5” – Viva; tsn pp. 23-24, June 08, 1992). The said draft has a well defined meaning.

Since Exhibit “C” is only a draft, or a tentative, provisional or preparatory writing

prepared for discussion, the terms and conditions thereof could not have been previously
agreed upon by ABS-CBN and Viva. Exhibit “C” could not therefore legally bind Viva, not
having agreed thereto. In fact, Ms. Concio admitted that the terms and conditions
embodied in Exhibit “C” were prepared by ABS-CBN’s lawyers and there was no
discussion on said terms and conditions….

As the parties had not yet discussed the proposed terms and conditions in Exhibit “C,” and
there was no evidence whatsoever that Viva agreed to the terms and conditions thereof,
said document cannot be a binding contract. The fact that Viva refused to sign Exhibit “C”
reveals only two [sic] well that it did not agree on its terms and conditions, and this court
has no authority to compel Viva to agree thereto.

FIFTH. Mr. Lopez understand [sic] that what he and Mr. Del Rosario agreed upon at the
Tamarind Grill was only provisional, in the sense that it was subject to approval by the
Board of Directors of Viva. He testified:

Now, Mr. Witness, and after that Tamarinf meeting … the second meeting wherein you
Q claimed that you have the meeting of the minds between you and Mr. Vic del Rosario,
what happened?

Vic Del Rosario was supposed to call us up and tell us specifically the result of the
A
discussion with the Board of Directors.
 And you are referring to the so-called agreement which you wrote in [sic] a piece of
Q
paper?
A Yes, sir.
Q So, he was going to forward that to the board of Directors for approval?
A Yes, sir (Tsn, pp. 42-43, June 8, 1992)
…
Q Did Mr. Del Rosario tell you that he will submit it to his Board for approval?
A Yes, sir. (Tsn, p. 69, June 8, 1992).

The above testimony of Mr. Lopez shows beyond doubt that he knew Mr. Del Rosario had
no authority to bind Viva to a contract with ABS-CBN until and unless its Board of
Directors approved it. The complaint, in fact, alleges that Mr. Del Rosario “is the
Executive Producer of defendant Viva” which “is a corporation.” (par. 2, complaint). As a
mere agent of Viva, Del Rosario could not bind Viva unless what he did is ratified by its
Directors. (Vicente vs.Geraldez, 52 SCRA 210; Arnold vs. Willets and Paterson, 44 Phil.
634). As a mere agent, recognized as such by plaintiff, Del Rosario could not be held liable
jointly and severally with Viva and his inclusion as party defendant has no legal basis.
(Salonga vs. Warner Barnes [sic],COLTA, 88 Phil. 125; Salmon vs. Tan, 36 Phil. 556).

The testimony of Mr. Lopez and the allegations in the complaint are clear admissions that
what was supposed to have been agreed upon at the Tamarind Grill between Mr. Lopez
and Del Rosario was not a binding agreement. It is as it should be because corporate
power to enter into a contract is lodged in the Board of Directors. (Sec. 23, Corporation
Code). Without such board approval by the Viva board, whatever agreement Lopez and
Del Rosario arrived at could not ripen into a valid binding upon Viva (Yao Ka Sin Trading
vs. Court of Appeals, 209 SCRA 763). The evidence adduced shows that the Board of
Directors of Viva rejected Exhibit “C” and insisted that the film package for 104 films be
maintained (Exh. “7-1 – Viva).[49]

The contention that ABS-CBN had yet to fully exercise its right of first refusal over twenty-four
films under the 1990 Film Exhibition Agreement and that the meeting between Lopez and Del
Rosario was a continuation of said previous contract is untenable. As observed by the trial court,
ABS-CBN’s right of first refusal had already been exercised when Ms. Concio wrote to Viva
ticking off ten films. Thus:

[T]he subsequent negotiation with ABS-CBN two (2) months after this letter was sent, was for an
entirely different package. Ms. Concio herself admitted on cross-examination to having used or
exercised the right of first refusal. She stated that the list was not acceptable and was indeed not
accepted by ABS-CBN, (Tsn, June 8, 1992, pp. 8-10). Even Mr. Lopez himself admitted that the
right of first refusal may have been already exercised by Ms. Concio (as she had). (TSN, June 8,
1992, pp. 71-75). Del Rosario himself knew and understand [sic] that ABS-CBN has lost its
right of first refusal when his list of 36 titles were rejected (Tsn, June 9, 1992, pp. 10-11).[50]
II

However, we find for ABS-CBN on the issue of damages. We shall first take up actual damages.
Chapter 2, Title XVIII, Book IV of the Civil Code is the specific law on actual or compensatory
damages. Except as provided by law or by stipulation, one is entitled to compensation for actual
damages only for such pecuniary loss suffered by him as he has duly proved.[51] The
indemnification shall comprehend not only the value of the loss suffered, but also that of the
profits that the obligee failed to obtain.[52] In contracts and quasi-contracts the damages which
may be awarded are dependent on whether the obligor acted with good faith or otherwise. In
case of good faith, the damages recoverable are those which are the natural and probable
consequences of the breach of the obligation and which the parties have foreseen or could have
reasonably foreseen at the time of the constitution of the obligation. If the obligor acted with
fraud, bad faith, malice, or wanton attitude, he shall be responsible for all damages which may be
reasonably attributed to the non-performance of the obligation.[53] In crimes and quasi-delicts, the
defendants shall be liable for all damages which are the natural and probable consequences of the
act or omission complained of, whether or not such damages have been foreseen or could have
reasonably been foreseen by the defendant.[54]

Actual damages may likewise be recovered for loss or impairment of earning capacity in cases of
temporary or permanent personal injury, or for injury to the plaintiff’s business standing or
commercial credit.[55]

The claim of RBS for actual damages did not arise from contract, quasi-contract, delict, or quasi-
delict. It arose from the fact of filing of the complaint despite ABS-CBN’s alleged knowledge of
lack of cause of action. Thus paragraph 12 of RBS’s Answer with Counterclaim and Cross-claim
under the heading COUNTERCLAIM specifically alleges:
12. ABS-CBN filed the complaint knowing fully well that it has no cause of action against
RBS. As a result thereof, RBS suffered actual damages in the amount of
P6,621,195.32.[56]

Needless to state the award of actual damages cannot be comprehended under the above law on
actual damages. RBS could only probably take refuge under Articles 19, 20, and 21 of the Civil
Code, which read as follows:
ART. 19. Every person must, in the exercise of hid rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith.

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

ART. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.
It may further be observed that in cases where a writ of preliminary injunction is issued, the
damages which the defendant may suffer by reason of the writ are recoverable from the
injunctive bond.[57] In this case, ABS-CBN had not yet filed the required bond; as a matter of
fact, it asked for reduction of the bond and even went to the Court of Appeals to challenge the
order on the matter. Clearly then, it was not necessary for RBS to file a counterbond. Hence,
ABS-CBN cannot be held responsible for the premium RBS paid for the counterbond.

Neither could ABS-CBN be liable for the print advertisements for “Maging Sino Ka Man” for
lack of sufficient legal basis. The RTC issued a temporary restraining order and later, a writ of
preliminary injunction on the basis of its determination that there existed sufficient ground for
the issuance thereof. Notably, the RTC did not dissolve the injunction on the ground of lack of
legal and factual basis, but because of the plea of RBS that it be allowed to put up a counterbond.

As regards attorney’s fees, the law is clear that in the absence of stipulation, attorney’s fees may
be recovered as actual or compensatory damages under any of the circumstances provided for in
Article 2208 of the Civil Code.[58]

The general rule is that attorney’s fees cannot be recovered as part of damages because of the
policy that no premium should be placed on the right to litigate.[59] They are not to be awarded
every time a party wins a suit. The power of the court t award attorney’s fees under Article 2208
demands factual, legal, and equitable justification.[60] Even when a claimant is compelled to
litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not
be awarded where no sufficient showing of bad faith could be reflected in a party’s persistence in
a case other than an erroneous conviction of the righteousness of his cause.[61]

As to moral damages the law is Section 1, Chapter 3, Title XVIII, Book IV of the Civil Code.
Article 2217 thereof defines what are included in moral damages, while Article 2219 enumerates
the cases where they may be recovered. Article 2220 provides that moral damages may be
recovered in breaches of contract where the defendant acted fraudulently or in bad faith. RBS’s
claim for moral damages could possibly fall only under item (10) of Article 2219, thereof which
reads:
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.

Moral damages are in the category of an award designed to compensate the claimant for actual
injury suffered and not to impose a penalty on the wrongdoer.[62] The award is not meant to
enrich the complainant at the expense of the defendant, but to enable the injured party to obtain
means, diversion, or amusements that will serve to obviate the moral suffering he has
undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual status
quo ante, and should be proportionate to the suffering inflicted.[63] Trial courts must then guard
against the award of exorbitant damages; they should exercise balanced restrained and measured
objectivity to avoid suspicion that it was due to passion, prejudice, or corruption or the part of
the trial court.[64]

The award of moral damages cannot be granted in favor of a corporation because, being an
artificial person and having existence only in legal contemplation, it has no feelings, no
emotions, no senses. It cannot, therefore, experience physical suffering and mental anguish,
which can be experienced only by one having a nervous system.[65] The statement in People v.
Manero[66] and Mambulao Lumber Co. v. PNB[67] that a corporation may recover moral damages
if it “has a good reputation that is debased, resulting in social humiliation” is an obiter dictum.
On this score alone the award for damages must be set aside, since RBS is a corporation.

The basic law on exemplary damages is Section 5 Chapter 3, Title XVIII, Book IV of the Civil
Code. These are imposed by way of example or correction for the public good, in addition to
moral, temperate, liquidated, or compensatory damages.[68] They are recoverable in criminal
cases as part of the civil liability when the crime was committed with one or more aggravating
circumstances;[69] in quasi-delicts, if the defendant acted with gross negligence;[70] and in
contracts and quasi-contracts, if the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.[71]

It may be reiterated that the claim of RBS against ABS-CBN is not based on contract, quasi-
contract, delict, or quasi-delict. Hence, the claims for moral and exemplary damages can only be
based on Articles 19, 20, and 21 of the Civil Code.

The elements of abuse of right under Article 19 are the following: (1) the existence of a legal
right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or
injuring another. Article 20 speaks of the general sanction for all provisions of law which do not
especially provide for their own sanction; while Article 21 deals with acts contra bonus mores,
and has the following elements: (1) there is an act which is legal, (2) but which is contrary to
morals, good custom, public order, or public policy, and (3) and it is done with intent to injure.[72]

Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith
implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity.[73] Such must be substantiated by evidence.[74]

There is no adequate proof that ABS-CBN was inspired by malice or bad faith. It was honestly
convinced of the merits of its cause after it had undergone serious negotiations culminating in its
formal submission of a draft contract. Settled is the rule that the adverse result of an action does
not per se make the action wrongful and subject the actor to damages, for the law could not have
meant impose a penalty on the right to litigate. If damages result from a person’s exercise of a
right, it is damnum absque injuria.[75]

WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of
Appeals in CA-G.R. CV No. 44125 is hereby REVERSED except as to unappealed award of
attorney’s fees in favor of VIVA Productions, Inc.

No pronouncement as to costs.

SO ORDERED.

Melo, Kapunan, Martinez, and Pardo, JJ., concur.

[1]
Per Adefuin-De la Cruz, J., with Lantin and Tamayo-Jaguros, JJ., concurring; Rollo, 49-60.
[2]
Rollo, 62
[3]
Per Judge Efren N. Ambrosio; Rollo, 134-161.
[4]
RTC Decision, Rollo, 146-149.
[5]
This should be Republic Broadcasting System, now GMA Network Inc., upon approval by the
Securities and Exchange Commission of the change in corporate name on 20 February 1996.
[6]
Vol 1. Original Rrecord (OR), Civil Case No. Q-92-12309, 27-28. Hereafter, OR shall refer to
the record of this case.
[7]
Vol. 1, OR, 170-173.
[8]
Vol. 1, OR, 217-220.
[9]
Id., 184-216.
[10]
Id., 177-183 (VIVA and Del Rosario); 222-228 (RBS).
[11]
Id., 331-332.
[12]
Id., 369.
[13]
Id., 397.
[14]
Id., 398-402, 403-404.
[15]
Id., 406-409.
[16]
Id., 453-454.
[17]
Vol. 2, OR, 465-484.
[18]
Id.,464.
[19]
Id., 913-928.
[20]
Id., 1140-1166; Rollo, 134-161.
[21]
Vol. 2, OR, 2030-2035.
[22]
Rollo, 55.
[23]
250 SCRA 523 [1995].
[24]
244 SCRA 320 [1995].
[25]
238 SCRA 602 [1994].
[26]
65 SCRA 352 [1975].
[27]
Citing Francel Realty Corp. v. Court of Appeals, 252 SCRA 127, 134 [1996].
[28]
Citing Tan. v. Court of Appeals, 131 SCRA 197, 404 [1984].
[29]
Citing Auyong Hian v. Court of Tax Appeals, 59 SCRA 110, 134 [1974].
[30]
Citing Ilocos Norte Electric Company v. Court of Appeals, 179 SCRA 5 [1989].
[31]
Citing People v. Manero, 218 SCRA 85, 96-97 [1993]; citing Simex International (Manila)
Inc. v. Court of Appeals, 183 SCRA 360 [1990].
[32]
16 SCRA 321 [1966].
[33]
See Gonzales v. National Housing Corp. 94 SCRA 786 [1979]; Servicewide Specialist, Inc. v.
Court of Appeals, 256 SCRA 649 [1996].
[34]
I ARTURO M. TOLENTINO, COMMENTARIES AND JURISPRUDENCE ON THE
CIVIL CODE OF THE PHILIPPINES 63, 66 (1983 ed.).
[35]
Supra note 31.
[36]
Rollo, 191.
[37]
Art. 1305, Civil Code.
[38]
Art. 1318, Civil Code.
[39]
Toyota Shaw, Inc. v. Court of Appeals, Supra note 24, at 329.
[40]
See IV ARTURO M. TOLENTINO, COMMENTARIES AND JURISPRUDENCE ON THE
CIVIL CODE OF THE PHILIPPINES 450 (6th ed., 1996).
[41]
Supra note 23.
[42]
Supra note 26.
[43]
255 SCRA 626, 639 [1996].
[44]
165 Fed. 2nd 965, citing Sec. 79 Wilhston on Contracts.
[45]
Villonco Realty Company v. Bormaheco, Inc. Supra note 25, at 365-366.
[46]
B.P. Blg. 68, Sec. 23.
[47]
JOSE C. Vitug, PANDECT OF COMMERCIAL LAW AND JURISPRUDENCE 356
(Revised ed. 1990).
[48]
I JOSE C. CAMPOS, Jr., and MARIA CLARA LOPEZ-CAMPOS, THE CORPORATION
CODE 384-385(1990 ed.).
[49]
RTC Decision, Rollo, 153-156.
[50]
Id., 158.
[51]
Article 2199, Civil Code.
[52]
Article 2200, id.,
[53]
Article 2201, id.
[54]
Article 2202, id.
[55]
Article 2205, id.
[56]
Vol. 1, OR, 225.
[57]
Section 4 in relation to Section 8, Rule 58, 1997 Rules of Civil Procedure.
[58]
It reads as follows:

ART. 2208. In the absence of stipulation, attorney’s fees and expense of litigation, other than
judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third
person or to incur expense to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) in case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy
the plaintiff’s plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;
(8) In actions for indemnity under workmen’s compensation and employer’s liability
laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney’s fees and
expenses of litigation should be recovered.

In all cases, the attorney’s fees and expenses of litigation must be reasonable.
[59]
Firestone Tire & Rubber Company of the Philippines v. Ines Chaves & Co. Ltd., 18 SCRA
356, 358 [1966]; Philippine Air Lines v. Miano, 242 SCRA 235, 240 [1995].
[60]
Scott Consultants & Resource Development Corporation, Inc. v. Court of Appeals, 242
SCRA 393, 406 [1995].
[61]
Gonzales v. National Housing Corp., 94 SCRA 786, 792 [1979]; Servicewide Specialist, Inc.
v. Court of Appeals, supra note 33, at 655.
[62]
Pagsuyuin v. Intermediate Appellate Court, 193 SCRA 547, 555 [1991].
[63]
Visayan Sawmil Company v. Court of Appeals, 219 SCRA 378, 392 [1993]. Citing R & B
Security. Insurance Co., Inc. v. Intermediate Appellate Court, 129 SCRA 736 [1984]; De la
Serna v. Court of Appeals, 233 SCRA 325, 329-330 [1994].
[64]
People v. Wenceslao, 212 SCRA 560, 569 [1992], citing Filinvest Credit Corp. v.
Intermediate Appellate Court, 166 SCRA 155 [1988].
[65]
Prime White Cement Corp. v. Intermediate Appellate Court, 220 SCRA 103, 113-114 [1993];
LBC Express Inc. v. Court of Appeals, 236 SCRA 602 [1994]; Acme Shoe, Rubber and Plastic
Corp. v. Court of Appeals, 260 SCRA 714, 722 [1996].
[66]
Supra note 31.
[67]
130 Phil. 366 [1968].
[68]
Article 2229, Civil Code.
[69]
Article 2230, Id.
[70]
Article 2231, Id.
[71]
Article 2232, Id.
[72]
Albenson Enterprises Corp. v. Court of Appeals, 217 SCRA 16, 25 [1993].
[73]
Far East Bank and Trust Company, v. Court of Appeals, 241 SCRA 671, 675 [1995].
[74]
Philippine Air Lines v. Miano, supra note 59.
[75]
Tierra International Construction Corp. v. NLRC, 211 SCRA 73, 81 [1992], citing Saba v.
Court of Appeals, 189 SCRA 50, 55 [1990].
Copyright 2016 - Batas.org
 Supreme Court of the Philippines

G.R. No. 112182

THIRD DIVISION
G.R. No. 112182, December 12, 1994
BRICKTOWN DEVELOPMENT CORP. (ITS NEW CORPORATE NAME
MULTINATIONAL REALTY DEVELOPMENT CORPORATION) AND
MARIANO Z. VERALDE, PETITIONERS, VS. AMOR TIERRA
DEVELOPMENT CORPORATION AND THE HON. COURT OF APPEALS,
RESPONDENTS.

DECISION

VITUG, J.:

A contract, once perfected, has the force of law between the parties with which they are bound to
comply in good faith and from which neither one may renege without the consent of the other.
The autonomy of contracts allows the parties to establish such stipulations, clauses, terms and
conditions as they may deem appropriate provided only that they are not contrary to law, morals,
good customs, public order or public policy. The standard norm in the performance of their
respective covenants in the contract, as well as in the exercise of their rights thereunder, is
expressed in the cardinal principle that the parties in that juridical relation must act with justice,
honesty and good faith.

These basic tenets, once again, take the lead in the instant controversy.

Private respondent reminds us that the factual findings of the trial court, sustained by the Court
of Appeals, should be considered binding on this Court in this petition. We concede to this
reminder since, indeed, there appears to be no valid justification in the case at bench for us to
take an exception from the rule. We shall, therefore, momentarily paraphrase these findings.

On 31 March 1981, Bricktown Development Corporation (herein petitioner corporation),

represented by its President and co-petitioner Mariano Z. Velarde, executed two Contracts to Sell
(Exhs. "A" and "B") in favor of Amor Tierra Development Corporation (herein private
respondent), represented in these acts by its Vice-President, Moises G. Petilla, covering a total of
96 residential lots, situated at the Multinational Village Subdivision, La Huerta, Parañaque,
Metro Manila, with an aggregate area of 82,888 square meters. The total price of P21,639,875.00
was stipulated to be paid by private respondent in such amounts and maturity dates, as follows:
P2,200,000.00 on 31 March 1981; P3,209,968.75 on 30 June 1981; P4,729,906.25 on 31
December 1981; and the balance of P11,500,000.00 to be paid by means of an assumption by
private respondent of petitioner corporation's mortgage liability to the Philippine Savings Bank
or, alternatively, to be made payable in cash. On even date, 31 March 1981, the parties executed
a Supplemental Agreement (Exh. "C"), providing that private respondent would additionally pay
to petitioner corporation the amounts of P55,364.68, or 21% interest on the balance of
downpayment for the period from 31 March to 30 June 1981, and of P390,369.37 representing
interest paid by petitioner corporation to the Philippine Savings Bank in updating the bank loan
for the period from 01 February to 31 March 1981.

Private respondent was only able to pay petitioner corporation the sum of P1,334,443.21 (Exhs.
"A" to "K"). In the meanwhile, however, the parties continued to negotiate for a possible
modification of their agreement, although nothing conclusive would appear to have ultimately
been arrived at.

Finally, on 12 October 1981, petitioner corporation, through its legal counsel, sent private
respondent a "Notice of Cancellation of Contract" (Exh. "D") on account of the latter's continued
failure to pay the installment due 30 June 1981 and the interest on the unpaid balance of the
stipulated initial payment. Petitioner corporation advised private respondent, however, that it
(private respondent) still had the right to pay its arrearages within 30 days from receipt of the
notice "otherwise the actual cancellation of the contract (would) take place."

Several months later, or on 26 September 1983, private respondent, through counsel, demanded
(Exh. “E”) the refund of private respondent's various payments to petitioner corporation,
allegedly “amounting to P2,455,497.71,” with interest within fifteen days from receipt of said
letter, or, in lieu of a cash payment, to assign to private respondent an equivalent number of
unencumbered lots at the same price fixed in the contracts. The demand, not having been heeded,
private respondent commenced, on 18 November 1983, its action with the court a quo. [1]

Following the reception of evidence, the trial court rendered its decision, the dispositive portion
of which read:

"In view of all the foregoing, judgment is hereby rendered as follows:

“1. Declaring the Contracts to Sell and the Supplemental Agreement (Exhibits 'A', 'B' and 'C')
rescinded;
“2. Ordering the [petitioner] corporation, Bricktown Development Corporation, also known as
Multinational Realty Development Corporation, to return to the [private respondent] the amount
of One Million Three Hundred Thirty Four Thousand Four Hundred Forty-Three Pesos and
Twenty-One Centavos (P1,334,443.21) with interest at the rate of Twelve (12%) percent per
annum, starting November 18, 1983, the date when the complaint was filed, until the amount is
fully paid;
“3. Ordering the [petitioner] corporation to pay the [private respondent] the amount of Twenty-
Five Thousand (P25,000.00) Pesos, representing attorney's fees;
“4. Dismissing [petitioners'] counterclaim for lack of merit; and
“5. With costs against the [petitioner] corporation.
SO ORDERED." [2]

On appeal, the appellate court affirmed in toto the trial court's findings and judgment.

In their instant petition, petitioners contend that the Court of Appeals has erred in ruling that -

(1) By petitioners' acts, conduct and representation, they themselves delayed or prevented the
performance of the contracts to sell and the supplemental agreement and were thus estopped
from cancelling the same.
(2) Petitioners were not justified in resolving the contracts to sell and the supplemental
agreement.
(3) The cancellation of the contract required a positive act on the part of petitioners giving
private respondent the sixty (60) day grace period provided in the contracts to sell; and
(4) In not holding that the forfeiture of the P1,378,197.48 was warranted under the liquidated
damages provisions of the contracts to sell and the supplemental agreement and was not
iniquitous nor unconscionable.

The core issues would really come down to (a) whether or not the contracts to sell were validly
rescinded or cancelled by petitioner corporation and, in the affirmative, (b) whether or not the
amounts already remitted by private respondent under said contracts were rightly forfeited by
petitioner corporation.

Admittedly, the terms of payment agreed upon by the parties were not met by private respondent.
Of a total selling price of P21,639,875.00, private respondent was only able to remit the sum of
P1,334,443.21 which was even short of the stipulated initial payment of P2,200,000.00. No
additional payments, it would seem, were made. A notice of cancellation was ultimately made
months after the lapse of the contracted grace period. Paragraph 15 of the Contracts to Sell
provided thusly:

“15. Should the PURCHASER fail to pay when due any of the installments mentioned in
stipulation No. 1 above, the OWNER shall grant the purchaser a sixty (60)-day grace period
within which to pay the amount/s due, and should the PURCHASER still fail to pay the due
amount/s within the 60-day grace period, the PURCHASER shall have the right to ex-parte
cancel or rescind this contract, provided, however, that the actual cancellation or rescission shall
take effect only after the lapse of thirty (30) days from the date of receipt by the PURCHASER
of the notice of cancellation of this contract or the demand for its rescission by a notarial act, and
thereafter, the OWNER shall have the right to resell the lot/s subject hereof to another buyer and
all payments made, together with all improvements introduced on the aforementioned lot/s shall
be forfeited in favor of the OWNER as liquidated damages, and in this connection, the
PURCHASER obligates itself to peacefully vacate the aforesaid lot/s without necessity of notice
or demand by the OWNER." [3]

A grace period is a right, not an obligation, of the debtor. When unconditionally conferred, such
as in this case, the grace period is effective without further need of demand either calling for the
payment of the obligation or for honoring the right. The grace period must not be likened to an
obligation, the non-payment of which, under Article 1169 of the Civil Code, would generally still
require judicial or extrajudicial demand before “default” can be said to arise. [4]

Verily, in the case at bench, the sixty-day grace period under the terms of the contracts to sell
became ipso-facto operative from the moment the due payments were not met at their stated
maturities. On this score, the provisions of Article 1169 of the Civil Code would find no
relevance whatsoever.

The cancellation of the contracts to sell by petitioner corporation accords with the contractual
covenants of the parties, and such cancellation must be respected. It may be noteworthy to add
that in a contract to sell, the non-payment of the purchase price (which is normally the condition
for the final sale) can prevent the obligation to convey title from acquiring any obligatory force
(Roque vs. Lapuz, 96 SCRA 741; Agustin vs. Court of Appeals, 186 SCRA 375).

The forfeiture of the payments thus far remitted under the cancelled contracts in question, given
the factual findings of both the trial court and the appellate court, must be viewed differently.
While clearly insufficient to justify a foreclosure of the right of petitioner corporation to rescind
or cancel its contracts with private respondent, the series of events and circumstances described
by said courts to have prevailed in the interim between the parties, however, warrant some
favorable consideration by this Court.

Petitioners do not deny the fact that there has indeed been a constant dialogue between the
parties during the period of their juridical relation. Concededly, the negotiations that they have
pursued strictly did not result in the novation, either extinctive or modificatory, of the contracts
to sell; nevertheless, this Court is unable to completely disregard the following findings of both
the trial court and the appellate court. Said the trial court:

"It has been duly established through the testimony of plaintiff's witnesses Marcosa Sanchez and
Vicente Casas that there were negotiations to enter into another agreement between the parties,
after March 31, 1981. The first negotiation took place before June 30, 1981, when Moises Petilla
and Renato Dragon, Vice-President and president, respectively, of the plaintiff corporation,
together with Marcosa Sanchez, went to the office of the defendant corporation and made some
proposals to the latter, thru its president, the defendant Mariano Velarde. They told the defendant
Velarde of the plaintiff's request for the division of the lots to be purchased into smaller lots and
the building of town houses or smaller houses therein as these kinds of houses can be sold easily
than big ones. Velarde replied that subdivision owners would not consent to the building of small
houses. He, however, made two counter-proposals, to wit: that the defendant corporation would
assign to the plaintiff a number of lots corresponding to the amounts the latter had already paid,
or that the defendant corporation may sell the corporation itself, together with the Multinational
Village Subdivision, and its other properties, to the plaintiff and the latter's sister companies
engaged in the real estate business. The negotiations between the parties went on for sometime
but nothing definite was accomplished." [5]

For its part, the Court of Appeals observed:

"We agree with the court a quo that there is, therefore, reasonable ground to believe that because
of the negotiations between the parties, coupled with the fact that the plaintiff never took actual
possession of the properties and the defendants did not also dispose of the same during the
pendency of said negotiations, the plaintiff was led to believe that the parties may ultimately
enter into another agreement in place of the 'contracts to sell.' There was, evidently, no malice or
bad faith on the part of the plaintiff in suspending payments. On the contrary, the defendants not
only contributed, but had consented to the delay or suspension of payments. They did not give
the plaintiff a categorical answer that their counter-proposals will not materialize."[6]

In fine, while we must conclude that petitioner corporation still acted within its legal right to
declare the contracts to sell rescinded or cancelled, considering, nevertheless, the peculiar
circumstances found to be extant by the trial court, confirmed by the Court of Appeals, it would
be unconscionable, in our view, to likewise sanction the forfeiture by petitioner corporation of
payments made to it by private respondent. Indeed, in the opening statement of this ponencia, we
have intimated that the relationship between parties in any contract must always be characterized
and punctuated by good faith and fair dealing. Judging from what the courts below have said,
petitioners did fall well behind that standard. We do not find it equitable, however, to adjudge
any interest payment by petitioners on the amount to be thus refunded, computed from judicial
demand, for, indeed, private respondent should not be allowed to totally free itself from its own
breach.

WHEREFORE, the appealed decision is AFFIRMED insofar as it declares valid the

cancellation of the contracts in question but MODIFIED by ordering the refund by petitioner
corporation of P1,334,443.21 with 12% interest per annum to commence only, however, from the
date of finality of this decision until such refund is effected. No costs.

SO ORDERED.

Bidin, Romero, and Melo, JJ., concur.

Feliciano, J.,(Chairman)., on leave.

[1]
Rollo, pp. 39-41.

[2]
Rollo, p. 41.

[3]
Rollo, p. 82.

Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee
[4]

judicially or extrajudicially demands from them the fulfillment of their obligation.

However, the demand by the creditor shall not be necessary in order that delay may exist:

(1) When the obligation or the law expressly so declares; or

 (2) When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be rendered was a
controlling motive for the establishment of the contract; or

(3) When demand would be useless, as when the obligor has rendered it beyond his
power to perform.

In reciprocal obligations, neither party incurs in delay if the other does not comply or is
not ready to comply in a proper manner with what is incumbent upon him. From the moment
one of the parties fulfills his obligation, delay by the other begins.

[5]
Rollo, pp. 43-44.

[6]
Rollo, p. 44.

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

226 Phil. 99

EN BANC
G.R. No. 63559, May 30, 1986
NEWSWEEK, INC., PETITIONER, VS. THE INTERMEDIATE APPELLATE
COURT, AND NATIONAL FEDERATION OF SUGARCANE PLANTERS
INC., BINALBAGAN-ISABELA PLANTERS ASSOCIATION, INC.,
ASOCIACION DE AGRICULTORES DE LA CARLOTA, LA CASTELLANA Y
PONTEVEDRA, INC., DONEDCO PLANTERS ASSOCIATION INC.,
ARMANDO GUSTILO, ENRIQUE ROJAS, ALFREDO MONTELIBANO, JR.,
PABLO SOLA, JOSE MONTALVO, VICENTE GUSTILO, JOSEPH
MARANON, ROBERTO CUENCA, JOSE SICANGCO, FLORENCIO
ALONSO, MIGUEL GATUSLAO, PEDRO YULO, MARINO RUBIN AND
BENJAMIN BAUTISTA, RESPONDENTS.

DECISION

FERIA, J.:

Petitioner, Newsweek, Inc., a foreign corporation licensed to do business in the Philippines, in

this special action for certiorari, prohibition with preliminary injunction, seeks to annul the
decision of the Intermediate Appellate Court dated December 17, 1982 sustaining the Order of
the then Court of First Instance of Bacolod City which denied petitioner's Motion to Dismiss the
complaint for libel filed by private respondents (Civil Case No. 15812), and the Resolution dated
March 10, 1983 which denied its Motion for Reconsideration.

It appears that on March 5, 1981, private respondents, incorporated associations of sugarcane

planters in Negros Occidental claiming to have 8,500 members and several individual sugar
planters, filed Civil Case No. 15812 in their own behalf and/or as a class suit in behalf of all
sugarcane planters in the province of Negros Occidental, against petitioner and two of
petitioners' non-resident correspondents/reporters Fred Bruning and Barry Came. The complaint
alleged that petitioner and the other defendants committed libel against them by the publication
of the article "An Island of Fear" in the February 23, 1981 issue of petitioner's weekly news
magazine Newsweek. The article supposedly portrayed the island province of Negros Occidental
as a place dominated by big landowners or sugarcane planters who not only exploited the
impoverished and underpaid sugarcane workers/laborers, but also brutalized and killed them with
impunity. Complainants therein alleged that said article, taken as a whole, showed a deliberate
and malicious use of falsehood, slanted presentation and/or misrepresentation of facts intended to
put them (sugarcane planters) in bad light, expose them to public ridicule, discredit and
humiliation here in the Philippines and abroad, and make them objects of hatred, contempt and
hostility of their agricultural workers and of the public in general. They prayed that defendants
be ordered to pay them P1M as actual and compensatory damages, and such amounts for moral,
exemplary and corrective damages as the court may determine, plus expenses of litigation,
attorney's fees and costs of suit. A photo copy of the article was attached to the complaint.

On November 5, 1981, petitioner filed a motion to dismiss on the grounds that (1) the printed
article sued upon is not actionable in fact and in law; and (2) the complaint is bereft of
allegations that state, much less support a cause of action. It pointed out the non-libelous nature
of the article and, consequently, the failure of the complaint to state a cause of action. Private
respondents filed an Opposition to the motion to dismiss and petitioner filed a reply.

On March 17, 1982, the trial court denied the motion to dismiss, stating that the grounds on
which the motion to dismiss are predicated are not indubitable as the complaint on its face states
a valid cause of action; and the question as to whether the printed article sued upon is actionable
or not is a matter of evidence. Petitioner's motion for reconsideration was denied on May 28,
1982.

On June 18, 1982, petitioner filed a petition for certiorari with respondent Court (CA-G.R. No.
14406) seeking the annulment of the aforecited trial court's Orders for having been issued with
such a grave abuse of discretion as amounting to lack of jurisdiction and praying for the
dismissal of the complaint for failure to state a cause of action.

As earlier stated, respondent Court affirmed the trial court's Orders in a Decision dated
December 17, 1982 and ordered the case to be tried on the merits on the grounds that - (1) the
complaint contains allegations of fact which called for the presentation of evidence; and (2)
certiorari under Rule 65 cannot be made to substitute for an appeal where an appeal would lie at
a proper time. Subsequently, on March 10, 1983, the respondent Court denied petitioner's
Motion for Reconsideration of the aforesaid decision, hence this petition.

The proper remedy which petitioner should have taken from the decision of respondent Court is
an appeal by certiorari under Rule 45 of the Rules of Court and not the special civil action of
certiorari and prohibition under Rule 65 of said Rules. However, since the petition was filed on
time within fifteen days from notice of the Resolution denying the motion for reconsideration,
we shall treat the same as a petition for review on certiorari.

The two (2) issues raised in the petition are: (1) whether or not the private respondents'
complaint failed to state a cause of action; and (2) whether or not the petition for certiorari and
prohibition is proper to question the denial of a motion to dismiss for failure to state a cause of
action.

First, petitioner argues that private respondents' complaint failed to state a cause of action
because the complaint made no allegation that anything contained in the article complained of
regarding sugarcane planters referred specifically to any one of the private respondents; that libel
can be committed only against individual reputation; and that in cases where libel is claimed to
have been directed at a group, there is actionable defamation only if the libel can be said to reach
beyond the mere collectivity to do damage to a specific, individual group member's reputation.

We agree with petitioner.

In the case of Corpus vs. Cuaderno, Sr. (16 SCRA 807) this Court ruled that "in order to maintain
a libel suit, it is essential that the victim be identifiable (People vs. Monton, L-16772, November
30, 1962), although it is not necessary that he be named (19 A.L.R. 116)." In an earlier case, this
Court declared that "x x x defamatory matter which does not reveal the identity of the person
upon whom the imputation is cast, affords no ground of action unless it be shown that the readers
of the libel could have identified the personality of the individual defamed." (Kunkle vs.
Cablenews-American and Lyons, 42 Phil. 760).

This principle has been recognized to be of vital importance, especially where a group or class of
persons, as in the case at bar, claim to have been defamed, for it is evident that the larger the
collectivity, the more difficult it is for the individual member to prove that the defamatory
remarks apply to him. (Cf. 70 ALR 2d. 1384).

In the case of Uy Tioco vs. Yang Shu Wen, 32 Phil. 624, this Court held as follows:
"Defamatory remarks directed at a class or group of persons in general language only, are not
actionable by individuals composing the class or group unless the statements are sweeping; and it
is very probable that even then no action would 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."
(supra, p. 628).
It is evident from the above ruling 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 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.

We note that private respondents filed a "class suit" in representation of all the 8,500 sugarcane
planters of Negros Occidental. Petitioner disagrees and argues that the absence of any actionable
basis in the complaint cannot be cured by the filing of a class suit on behalf of the aforesaid
sugar planters.

We find petitioner's contention meritorious.

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 (Mathay vs. Consolidated Bank and Trust Company, 58 SCRA 559) 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 (Borlaza vs. Polistico, 47 Phil. 348). 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.
The disputed portion of the article which refers to plaintiff Sola and which was claimed to be
libelous never singled out plaintiff Sola as a sugar planter. The news report merely stated that
the victim had been arrested by members of a special police unit brought into the area by Pablo
Sola, the mayor of Kabankalan. Hence, the report, referring as it does to an official act
performed by an elective public official, is within the realm of privilege and protected by the
constitutional guarantees of free speech and press.

The article further stated that Sola and the commander of the special police unit were arrested.
The Court takes judicial notice of this fact. (People vs. Sola, 103 SCRA 393).

The second issue to be resolved here is whether or not the special civil action of certiorari or
prohibition is available to petitioner whose motion to dismiss the complaint and subsequent
motion for reconsideration were denied.

As a general rule, an order denying a motion to dismiss is merely interlocutory and cannot be
subject of appeal until final judgment or order is rendered. (Sec. 2 of Rule 41). The ordinary
procedure to be followed in such a case is to file an answer, go to trial and if the decision is
adverse, reiterate the issue on appeal from the final judgment. The same rule applies to an order
denying a motion to quash, except that instead of filing an answer a plea is entered and no appeal
lies from a judgment of acquittal.

This general rule is subject to certain exceptions. If the court, in denying the motion to dismiss
or motion to quash, acts without or in excess of jurisdiction or with grave abuse of discretion,
then certiorari or prohibition lies. The reason is that it would be unfair to require the defendant
or accused to undergo the ordeal and expense of a trial if the court has no jurisdiction over the
subject matter or offense, or is not the court of proper venue, or if the denial of the motion to
dismiss or motion to quash is made with grave abuse of discretion or a whimsical and capricious
exercise of judgment. In such cases, the ordinary remedy of appeal cannot be plain and
adequate. The following are a few examples of the exceptions to the general rule.

In De Jesus vs. Garcia (19 SCRA 554), upon the denial of a motion to dismiss based on lack of
jurisdiction over the subject matter, this Court granted the petition for certiorari and prohibition
against the City Court of Manila and directed the respondent court to dismiss the case.

In Lopez vs. City Judge (18 SCRA 616), upon the denial of a motion to quash based on lack of
jurisdiction over the offense, this Court granted the petition for prohibition and enjoined the
respondent court from further proceeding in the case.

In Enriquez vs. Macadaeg (84 Phil. 674), upon the denial of a motion to dismiss based on
improper venue, this Court granted the petition for prohibition and enjoined the respondent judge
from taking cognizance of the case except to dismiss the same.

In Manalo vs. Mariano (69 SCRA 80), upon the denial of a motion to dismiss based on bar by
prior judgment, this Court granted the petition for certiorari and directed the respondent judge to
dismiss the case.
In Yuviengco vs. Dacuycuy (104 SCRA 668), upon the denial of a motion to dismiss based on the
Statute of Frauds, this Court granted the petition for certiorari and dismissed the amended
complaint.

In Tacas vs. Cariaso (72 SCRA 527), this Court granted the petition for certiorari after the
motion to quash based on double jeopardy was denied by respondent judge and ordered him to
desist from further action in the criminal case except to dismiss the same.

In People vs. Ramos (83 SCRA 11), the order denying the motion to quash based on prescription
was set aside on certiorari and the criminal case was dismissed by this Court.

Respondent Court correctly stated the general rule and its exceptions. However, it ruled that
none of the exceptions is present in the case at bar and that the case appears complex and
complicated, necessitating a full-blown trial to get to the bottom of the controversy.

Petitioner's motion to dismiss is based on the ground that the complaint states no cause of action
against it by pointing out the non-libelous nature of the article sued upon. There is no need of a
trial in view of the conclusion of this Court that the article in question is not libelous. The
specific allegation in the complaint, to the effect that the article attributed to the sugarcane
planters the deaths and brutalization of sugarcane workers, is not borne out by a perusal of the
actual text.

The complaint contains a recital of the favorable working conditions of the agricultural workers
in the sugar industry and the various foundations and programs supported by planters'
associations for the benefit of their workers. Undoubtedly, the statements in the article in
question are sweeping and exaggerated; but, paraphrasing the ruling in the Uy Tioco case above
quoted, it would be unreasonable and absurd to condemn the majority of the sugarcane planters,
who have at heart the welfare of their workers, because of the actions of a part. Nonetheless,
articles such as the one in question may also serve to prick the consciences of those who have but
are not doing anything or enough for those who do not have.

On the other hand, petitioner would do well to heed the admonition of the President to media that
they should check the sources of their information to ensure the publication of the truth.
Freedom of the press, like all freedoms, should be exercised with responsibility.

WHEREFORE, the decision of the Intermediate Appellate Court is reversed and the complaint
in Civil Case No. 15812 of the Court of First Instance of Negros Occidental is dismissed, without
pronouncement as to costs.

SO ORDERED.

Teehankee, C.J., Abad Santos, Yap, Fernan, Narvasa, Melencio-Herrrera, Alampay, Gutierrez,
Jr., Cruz, and Paras, JJ., concur.
Copyright 2016 - Batas.org
 Supreme Court of the Philippines

444 Phil. 230

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., ABDUL-RAHMAN R.T. LINZAG,
IBRAHIM F.P. ARCILLA, ABDUL RASHID DE GUZMAN, AL-FARED DA
SILVA AND IBRAHIM B.A. JUNIO, RESPONDENTS.

DECISION

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 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 action[11] 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 disgrace…” 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 facie case 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
Hampshire[22] 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. Illinois[23] 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 preceeding paragraph.
Primarily, an "emotional distress" tort action is personal in nature, i.e., it is a civil action filed by
an individual[24] 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. Falwell[33] 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
manner[34] -
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.
California[38] 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.[45] Except 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
"Brandenburg must 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.
Vitug, J., see concurring opinion.
Mendoza, J., in the result.
Carpio, and Austria-Martinez, JJ., see dissenting opinion.
Panganiban, and Carpio-Morales, JJ., joins the dissent of J. Carpio.
Azcuna, J., joins the dissent of Justice Austria-Martinez.
[1]
Cf. Holmes, J., dissenting in Abrams v. United States, 250 U.S. 630.
[2]
Petitioners Mars C. Laconsay and Myla C. Aguja failed to file their Answer and were declared
in default.
[3]
Decision penned by Judge Vetino E. Reyes, RTC-Br. 4, Manila, Civil Case No. 92-62441,
"Islamic Da'wah Council of the Philippines, Inc. v. MVRS Publications, Inc."
[4]
Decision penned by Justice Teodoro P. Regino, concurred in by Justices Quirino D. Abad
Santos, Jr., and Conrado M. Vasquez, Jr.
[5]
Black’s Law Dictionary (4th ed. 1951), 505.
[6]
Words and Phrases, "Defamation,” citing Local 15 of Independent Workers of Noble County,
Inc. v. International Broth. of Elec. Workers, D.C., Ind., 273 F. Supp. 313, 320.
[7]
Id., citing Whitby v. Associates Discount Corp., 207 N.E. 2d 482, 484, 591 Ill. App. 2d 337.
[8]
Prosser and Keeton on Torts, (5th ed. 1984).
[9]
50 Am. Jur. 2d, "Libel and Slander," 705 (1995).
[10]
Ibid.
[11]
50 Am Jur 2d, “Libel and Slander,” 674 (1995).
[12]
Art. III, Sec. 4, 1987 Constitution.
[13]
G.R. No. 63559, 30 May 1986, 142 SCRA 171, 176-177.
[14]
567 F. 2d 1163, 1164 (1977).
[15]
P. Wittenberg, "Dangerous Words: A Guide to the Law of Libel," 226-227, citing People v.
Edmondson, 168 N.Y. Misc. 141.
[16]
Id., 227, citing Rex v. Gathercole, 2 Lewin 237.
[17]
Khalid Abdullah Tariq Al Mansour Faissal Fahd Al Talal v. Fanning, Civ. No. C 80-1869
RPA, 25 September 1980, 506 F.Supp. 186.
[18]
Id., 187.
[19]
Ibid.
[20]
See note 8, 767-768.
[21]
50 Am Jur 2d, 675 (1995).
[22]
315 U.S. 568 (1942).
[23]
343 U.S. 250 (1952).
[24]
Not a group, unless the attack is directed against identifiable individuals within the group.
[25]
Rollo, 55.
[26]
See SECOND RESTATEMENT OF THE LAW, TORTS 2D § 46.
§ 46. Outrageous Conduct Causing Severe Emotional Distress

(1) One who by extreme and outrageous conduct intentionally x x x causes severe emotional
distress to another is subject to liability for such emotional distress, and if bodily harm to the
other results from it, for such bodily harm. x x x
[27]
See 38 Am. Jur. 2d § 15 citing cases. See also D. Givelber, The Right to Minimum Social
Decency and the Limits of Evenhandedness: Intentional Infliction of Emotional Distress by
Outrageous Conduct, 82 Col. L. Rev. 42 (1982).
[28]
Ibid.
[29]
Ibid.
[30]
Ibid.
[31]
Ibid.
[32]
See 38 Am. Jur 2d § 7 citing cases.
[33]
485 U.S. 46 (1988). Mr. Justice Anthony Kennedy did not take part.
[34]
See note 8, § 12, p. 59 citing Magruder, Mental and Emotional Disturbance in the Law of
Torts, 49 Harv. L. Rev. 1033, 1035. See also SECOND RESTATEMENT OF THE LAW, TORTS
2D § 46.
[35]
49 Harv. L. Rev. 1053. See also SECOND RESTATEMENT OF THE LAW, TORTS 2D § 46
citing Magruder.
[36]
S. Olsen, White v. Monsanto: Louisiana Adopts the Restatement Approach to Intentional
Infliction of Emotional Distress, 66 Tulane L. Rev. 2096 (1992) citing Magruder.
[37]
Ibid. citing 38 Am. Jur. 2d §§ 8-12.
[38]
Smolla, Free Speech in an Open Society, 1993 Ed., at pp. 160-162.
[39]
403 U.S. 15 (1971).
[40]
Id. at 25-26.
[41]
See note 38.
[42]
395 U.S. 444 (1969).
[43]
403 U.S. 15 (1971).
[44]
See Harvard Law Review, Vol. 101: 682 1988, at p. 684-687.
[45]
Ibid. at 447.
[46]
See note 38 at p. 165.
[47]
59 Am Jur 2d, 456 (1977).
[48]
Citing Industrial Generating Co. v. Jenkins 410 SW 2d 658; Los Angeles County Winans, 109
P 640; Weberpals v. Jenny, 133 NE 62.
[49]
Art. 2217, New Civil Code.
[50]
Simex International, Inc. v. Court of Appeals, G.R. No. 88013, 19 March 1990, 183 SCRA
360.
[51]
See Art. 2234, New Civil Code.
[52]
See note 38 at p. 46.
[53]
Id., citing Gertz v. Robert Welch, Inc., 418 U.S. 323, 339-340 (1974).

SEPARATE CONCURRING OPINION

VITUG, J.:

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 threats[7] 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 plaintiffs 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
action[16] 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.

[1]
See Worcester vs. Ocampo, 22 Phil 42.
[2]
Black’s Law Dictionary, 6th Ed. p. 1565.
[3]
Prosser and Keeton on Torts, 5th Ed., p. 55.
[4]
Restatement (Second) of Torts § 46(1965)
[5]
Prosser and Keeton, supra., p. 59.
[6]
Slocum vs. Food Fair Stores of Florida, Inc., Fla. 1958, 100 So. 2d 396; Wallace vs. Shoreham
Hotel Corp., Mun. App. D.C. 1946,49 A2d 81; Stavnezar vs. Sage-Allen & Co., 1959, 146 Conn.
460, 152 A. 2d. 312.
[7]
Taft vs. Taft, 1867,40 Vt. 229; Stratton vs. Posse Normal School of Gymnastics, 1928 163 N.
E. 905; State National Bank of Iowa Park vs. Rogers, Tex. Civ. App. 1935, S. W. 2d 825.
[8]
Wallace vs. Shoreham Hotel Corp., supra.
[9]
53 C.J.S., Libel and Slander § 2.
[10]
Blacks’ Law dictionary, 6th Ed., p. 417.
[11]
Prosser and Kecton, supra., p. 771.
[12]
See Article 355, Revised Penal Code.
[13]
Article 353, Revised Penal Code.
[14]
Corpus vs. Cuaderno, Sr., 16 SCR.A 807; Kunkle vs. Cablenews American, et al., 42 Phil 757;
Borjal vs. Court of Appeals, 301 SCRA 1.
[15]
50 Am Jur 2d (1995), p. 674.
[16]
Id.
[17]
Sec. 4, Art. III, 1987 Constitution.
[18]
Restatement (Second) of Torts §564A comment b (1977).
[19]
50 Am Jur 2d, (1995), p. 675.
[20]
Neil J. Rosini, The Practical Guide to Libel, supra, citing Brady v. Ottaway Newspapers, Inc.,
84 A.D. 2d 229.
[21]
50 Am Jur 2d, (1995), p. 675.
[22]
189 F. 86, as cited by Ella Cooper Thomas in The Law of Libel and Slander (New York,
1973), p. 21.
[23]
131 N.Y.S. 680, as cited in The Law of Libel and Slander, supra.
[24]
81 N.E. 459, as cited in The Law of Libel and Slander. supra.
[25]
142 SCRA 171
[26]
Uy Tioco vs. Yang Shu Wen, 32 Phil 624.
[27]
ABS-CBN Broadcasting Corporation vs. Court of Appeals, 301 SCRA 572.
[28]
50 Am Jur 2d (1995), p. 678.

DISSENTING OPINION

CARPIO, J.:

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 30[3] 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.

2. 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 discretable[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.”
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 distinct[8] from the twin torts
of libel and slander.[9]

The majority opinion, however, cites the U.S. Supreme Court decision in Hustler Magazine v.
Falwell[10] 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 Hustler applies
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 x religious 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
faith[17]- 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. Illinois[26] 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

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

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 Column. 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. 20-30; 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]

VIII. 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.

[1]
Brief for Plaintiffs-Appellants, pp. 4-5.
[2]
Pages 16 -17, Petition.
[3]
Article 30 of the Civil Code provides as follows: “When a separate civil action is brought to
demand civil liability arising from a criminal offense, and no criminal proceedings are instituted
during the pendency of the civil case, a preponderance of evidence shall likewise be sufficient to
prove the act complained of.”
[4]
Should be discreditable.
[5]
International Corporate Bank v. Gueco, 351 SCRA 516 (2001); French Oil Mill Machinery
Co., Inc. v. Court of Appeals, 295 SCRA 462 (1998); Lagandaon v. Court of Appeals, 290 SCRA
330 (1998); Sandoval v. Court of Appeals, 260 SCRA 283 (1996).
[6]
Report of the Code Commission, pp. 32-33.
[7]
In People v. Silvela, 103 Phil. 773, the Court, citing American jurisprudence, stated: “If the
defamatory matter is not seen or heard by anyone except the defamer and the defamed, damages
to character reputation can not result since a man’s reputation is the estimate in which others hold
him, and not what he himself thinks.” Black’s Law Dictionary (6th Ed.) defines “reputation” thus:
“Estimation in which one is held; the character imputed to a person by those acquainted with
him. That by which we are known and is the total sum of how we are seen by others. x x x
General opinion, good or bad, held of a person by those of the community in which he resides.”
[8]
M.B.M. Co. v. Counce, 268 Ark. 269, 596 S.W. 2d 681 (1980); Section 46, Restatement
(Second) of Torts.
[9]
New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710 (1964).
[10]
485 U.S. 46 (1988).
[11 ]
Section 11, 1987 Constitution.
[12]
Section 18 (7), Article XIII, 1987 Constitution.
[13]
Entered into force on March 23, 1976.
[14]
Simon, Jr. v. Commission on Human Rights, 229 SCRA 117 (1994).
[15]
CCPR General Comment 11, 19th Session (1983), Office of the High Commissioner for
Human Rights.
[16]
La Chemise Lacoste, S. A. v. Fernandez, 129 SCRA 373 (1984); Ram Singh v. Insular
Collector of Customs, 38 Phil. 862 (1918).
[17]
Vienna Convention on the Law of Treaties, Art. 26.
[18]
3 S.C.R. 697 (1990).
[19]
315 U.S. 568, 62 S. Ct. 766 (1942).
[20]
403 U.S. 15 (1971).
[21]
Supra, note 10.
[22]
New York Times v. Sullivan, 376 U.S. 254 (1964). Prior to New York Times, the prevailing
view in the U.S. was that lewd, obscene and profane speech was not constitutionally protected,
whether directed at private individuals or public officials. New York Times imposed, with respect
to public officials, a qualified constitutional privilege. The U.S. Supreme Court stated that “the
constitutional protections for speech and press require a federal rule that prohibits a public
official from recovering damages for a defamatory falsehood relating to his official conduct
unless he proves that the statement was made with ‘actual malice,’ that is, with knowledge that it
was false or made with reckless disregard of whether it was false or not.”
[23]
Record of the Constitutional Commission, Vol. 1, pp. 491-492.
[24]
Ibid.
[25]
Re: Request of the Heirs of the Passengers of Doña Paz, 159 SCRA 623 (1988).
[26]
343 U.S. 250 (1952).
[27]
395 U.S. 444 (1969).
[28]
274 U.S. 357.
[29]
Chaplinsky v. New Hampshire, supra, note 18; Hustler Magazine v. Falwell, supra, note 10.
[30]
Supra, note 18.
[31]
Hate Speech in the Constitutional Law of the United States, William B. Fisch, American
Journal of Comparative Law, Fall 2002.
[32]
“American constitutional law generally protects hate speech of various kinds, including
religious and racial. In this area, the law of the United States is precisely contrary to international
human rights norms. Artilce 20(2) of the International Covenant on Civil and Political Rights
states, ‘Any advocacy of national, racial or religious hatred that constitutes incitement to
discrimination, hostility or violence shall be prohibited by law.’” David M. Smolin, Exporting
the First Amendment?: Evangelism, Proselytism, and the International Religious Freedom Act,
31 Cumberland Law Review, 2000-2001.
[33]
ABS-CBN Broadcasting Corp. v. Commission on Elections, 323 SCRA 811 (2000).
[34]
Decision of Judge Vetino E. Reyes dated June 31, 1995, pp. 4-6.
[35]
Article 2217, Civil Code.
[36]
Antonio T. Carpio, Intentional Torts in Philippine Law, Philippine Law Journal, Vol. 47, No. 5
(December 1972).

DISSENTING OPINION

AUSTRIA-MARTINEZ, J.:

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.[6] Otherwise 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.[7] It 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
discretable 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, if 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.”[36] Article 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’être 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,[41] may 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 true[46]. 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 Doña 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 xx (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, xxx 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 xxx [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. xxx”
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, nameIy, 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 lbrahim 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 2229[68] and 2208[69] 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
MRVS 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.
[1]
Quran, Chapter 16:115. See also Chapter 7:145.
[2]
Michael J. Diamond and Peter G. Gowing, “Islam and Muslim: Some Basic Information”.
1981 New Day Publishing, Quezon City, pp. 29-30. (Michael J. Diamond is Vicar General of the
Prelature of Marawi, Marawi City, Lanao del Sur; Peter G. Gowing was a Doctor of Theology in
Ecumenics and Church History).
[3]
R.A. Epstein, C. O. Gregory, and H. Kalven, Jr., Cases and Materials on Torts, 1984 Ed., p.
1271 citing Restatement (Second) of the Law of Torts, Section 652E.
[4]
Luis B. Reyes, “The Revised Penal Code”, Book II, Fourteenth Edition, Revised 1998, p. 921.
[5]
Vasquez vs. Court of Appeals, 314 SCRA 460, 471 (1999).
[6]
53 C.J.S., Libel and Slander, § 13.
[7]
Ibid.
[8]
Ibid.
[9]
53 C.J.S., Libel and Slander, § 13. See also 50 Am. Jur. 2d, Libel and Slander, § 82.
[10]
Ibid.
[11]
Ibid.
[12]
25 Words and Phrases, Libel, p. 119 citing Cooper vs. Greeley, N.Y., 1 Denio, 347, 359.
[13]
Article 353, Revised Penal Code.
[14]
R. L. McEwen and P. S. C. Lewis, Gatley on Libel and Slander, § 89(1967), citing Russell L.
J. in Cassidy vs. Daily Mirror, 2 K.B. 354 (1929); Newstead vs. London Express, 1 K.B. 377,
396 (C.A.) (1940). See also 50 Am. Jur., Libel and Slander, § 25.
[15]
People vs. Encarnacion (CA), 48 Official Gazette 1817, 1820 (1952), citing Lord Bramwell in
Henty’s Case, 52 L.J.Q.B. 232 (1882).
[16]
Ibid.
[17]
People vs. Encarnacion (CA), supra citing 53 C.J.S. 48-50.
[18]
M.H. Newell, The Law on Slander and Libel in Civil and Criminal Cases, § 6, (1924), citing
Curtis vs. Mussey, 6 Gray (Mass.) 261.
[19]
R.L. McEwen and P.S.C. Lewis, Gatley on Libel and Slander, § 8, (1967).
[20]
Ibid., citing Nevill vs. Fine Arts Co., 2 Q.B. 163 (1895).
[21]
Ibid., citing Blake vs. Stevens 11 L.T. 543 (1864); Fox vs. Broderick, 14 Ir. C.L.R. 453
(1864); Shepheard vs. Whitaker, L.R.L. 10 C.P. 502 (1875); Tompson vs. Dashwood, 11 Q.B.D.
43 (1883); Morrison vs. Ritchie, 4 F. 645 (Ct. Of Sess.) (1902); Van Wiginton vs. Pulitzer, 218
Fed. R. 795 (1914).
[22]
Ibid., citing Cook vs. Ward, 6 Bing. 409 (1830); R. vs. Hicklin, L.R. 3 Q.B. 360.(1868);
Bowen vs. Hall, 6 Q.B.D. 343 (1881); Jones vs. Hulton, 2 K.B. 279 (1909).
[23]
Vicario vs. Court of Appeals, 308 SCRA 25, 34 (1999).
[24]
50 Am. Jur. 3d, Libel and Slander § 493.
[25]
Borjal vs. Court of Appeals, 301 SCRA 1, 18 (1999), citing Kunkle vs. Cablenews-American,
42 Phil. 757 (1922), Corpus vs. Cuaderno, Sr., 16 SCRA 807 (1966), and People vs. Monton, 6
SCRA 801 (1962).
[26]
142 SCRA 171 (1986).
[27]
Jimenez vs. Patricia, Inc., 340 SCRA 525 (2000); Philippine Basketball Association vs. Court
of Appeals, 337 SCRA 358 (2000); Victorias Milling Co., Inc. vs. Court of Appeals, 333 SCRA
663 (2000); Roman Catholic Archbishop of Manila vs. Court of Appeals, 269 SCRA 145, 153
(1997).
[28]
Catholic Bishop of Balanga vs. Court of Appeals, 264 SCRA 181, 191-192 (1996). See also
Sy vs. Court of Appeals, 330 SCRA 550, 555-556 (2000); Logronio vs. Taleseo, 312 SCRA 52,
61-62 (1999); Dando vs. Frazer 227 SCRA 126, 133 (1993); Espina vs. Court of Appeals, 215
SCRA 484, 488 (1992); Carillo vs. De Paz, 18 SCRA 467, 471(1966); Hemandez vs. Andal, 78
Phil 196, 209-210 (1947).
[29]
T.B. Aquino, Torts and Damages, 2001 Ed., p. 470, citing Watkins, p. 145.
[30]
Vasquez vs. Court of Appeals, 314 SCRA 460, 471(1999); Alonzo vs. Court of Appeals, 241
SCRA 51, 59(1995); Daez vs. Vasquez, 191 SCRA 61,67(1990).
[31]
74 Am Jur2d Torts § 2, citing Fisher vs. Toler, 194 Kan 701, 401 P2d 1012.
[32]
74 Am Jur 2d Torts § 2, citing Tisdale vs. Eubanks, 180 NC 153, 104 SE 339, 11 ALR 374;
Smith vs. Buck, 119 Ohio St 101, J62 NE 383,61 ALR 1343.
[33]
74 Am Jur 2d Torts § 4; 1 Am Jur 2d, Actions § 49.
[34]
74 Am Jur 2d Torts § 4, citing Miller vs. Monsen, 228 Minn 400, 37 NW2d 543, Harris vs.
Nashville Trust Co., 128 Tenn 573, 162 SW 584.
[35]
74 Am Jur 2d Torts § 4, citing Seidel vs. Greenberg, 108 NJ Super 248, 260 A2d 863, 40 ALR
3d 987.
[36]
Report of the Code Commission, p. 39.
[37]
Report of the Code Commission, pp. 33-34.
[38]
Ibid.
[39]
Tolentino, supra at 89.
[40]
Concepcion vs. Court of Appeals, 324 SCRA 85, 94 (2000) citing E.P. Caguioa, Comments
and Cases on Civil Law, 1959 Ed., Vol. I, p. 41.
[41]
Ibid.
[42]
74 Am Jur 2d Torts § 32. 38 Am Jur 2d Fright, Shock and Mental Disturbance.
[43]
Report of the Code Commission, p. 33.
[44]
TSN, My 10, 1993, pp. 8-9.
[45]
Michael J. Diamond and Peter G. Gowing, supra, Note 24.
[46]
TSN, Hearing of November 18, 1990, pp. 8-9 and 19.
[47]
See next page.
[48]
In Re: Emil P. Jurado, 243 SCRA299, 327 (1995), citing Ayer Productions Pty. Ltd. vs.
Capulong, 160 SCRA 861 (1988).
[49]
Ibid., pp. 6, 11-12.
[50]
159 SCRA 623, 627 (1988), citing 59 Am. Jur. 2d Parties § 415, Moore, Federal Practice, 2d.,
Vol. 3B, pp. 23-257, 23-258.
[51]
Certia vs. Notre Dame du Lac University, 141 N.E. 318.
[52]
72 SCRA 347, 357 (1976) citing Scott vs. Donald, 165 U.S. 107, 41 Law. Ed. 447, 52 S. Ct.
217.
[53]
67A C.J.S. Parties, § 24.
[54]
Ibid.
[55]
Ibid. Also 59 Am. Jur. 2d Parties §§ 46, 55 and 62; 67A C.J.S. Parties, § 698.
[56]
Ibid.
[57]
59 Am. Jur. 2d Parties § 63.
[58]
Ibid.
[59]
Ibid.
[60]
Exhibit “B”.
[61]
Exhibit “C”.
[62]
53 C.J.S., Libel and Slander, § 146 citing Stidham vs. State Bank of Ebson, 270 p. 594, 126
Kan 600 (1928), Rusciano & Son Corporation vs. Mihalyfi, 1 N.Y.S. 2d 787, 165 Misc. 932;
R.G. Dun & Co. vs. Shepp, 91 S.W. 2d 330, 127 Tex. 80.
[63]
Brayton vs. Cleveland Special Police Co., 63 Ohio St 83, 57 N.E. 1085 (1900).
[64]
59 Am. Jur. 2d Parties § 62, p. 473 citing Maxwell vs. Brougher, 222 P2d 910, 99 C.A. 2d
824.
[65]
59 Am. Jur. 2d Parties § 62, p. 473 citing Nunelly vs. First Federal Building & Loan
Association of Agden, 154 P.2d 620, 107 Utah 347.
[66]
Article 2219. Moral damages may be recovered in the following and analogous cases:

xxx xxx xxx;

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

xxx xxx xxx.

[67]
TSNs, April 26, 1993, pp. 23, 25; July 30, 1993, pp. 13-14, 16-17; November 12, 1993, pp, 7,
9, 20-21; April 18, 1994, pp. 7, 10-12.
[68]
Article 2229. Exemplary or corrective damages are imposed, by way of example or correction
for the public good, in addition to the moral, temperate, liquidated or compensatory damages.
[69]
Article 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

xxx xxx xxx

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

In all cases, the attorney’s fees and expenses of litigation must be reasonable.
[70]
67A C.J.S. Parties § 30.
[71]
59 Am. Jur. 2d Parties § 90, citing Williams v. State (La), 350 So. 2d 131; Schlosser v. Allis-
Chalmers Corp., 86 Wis. 2d 226, 271 N.W. 2d 879; Drainage Dist. Of Lincoln County v.
Kirkpatrick-Pettis Co., 140 Neb 530, 300 NW 582.
[72]
46 Am. Jur. 2d Judgments § 108.

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

518 Phil. 90

THIRD DIVISION
G.R. NO. 163087, February 20, 2006
SILAHIS INTERNATIONAL HOTEL, INC. AND JOSE MARCEL PANLILIO,
PETITIONERS, VS. ROGELIO S. SOLUTA, JOSELITO SANTOS, EDNA
BERNATE, VICENTA DELOLA, FLORENTINO MATILLA, AND
GLOWHRAIN-SILAHIS UNION CHAPTER, RESPONDENTS.

DECISION

CARPIO MORALES, J.:

The present Petition for Review on Certiorari partially assails the Court of Appeals Decision[1] of
March 26, 2004 holding herein petitioners Silahis International Hotel, Inc. and Jose Marcel
Panlilio, along with Floro Maniego and Steve Villanueva, civilly liable for damages under Article
32 of the Civil Code, for violation of respondents’ constitutional right against unreasonable
search of their office.

Petitioner Jose Marcel Panlilio (Panlilio) was the Vice President for Finance of his co-petitioner
Silahis International Hotel, Inc. (hotel), while respondents Rogelio Soluta (Soluta), Joselito
Santos, Edna Bernate (Edna), Vicenta Delola (Vicenta), and Florentino Matilla (Matilla) were
employees of the hotel and officers of the Glowhrain-Silahis Union Chapter, the hotel employees
union (the union).

Petitioners’ version of the antecedents of the case are as follows:

In late 1987, as Coronel Floro Maniego (Maniego), General Manager of the Rapier Enforcement
Professional Investigation and Security Agency, Inc. (REPISA) which the hotel contracted to
provide its security force, had been receiving reports that sale and/or use of marijuana, dollar
smuggling, and prostitution were going on in the union office at the hotel and that there existed a
theft syndicate, he conducted a surveillance, with the approval of Panlilio, of suspected members
and officers of the union.[2]

In the morning of January 11, 1988, Panlilio, his personal secretary Andy Dizon, Maniego,
Bulletin reporter Nonoy Rosales, and REPISA security guard Steve Villanueva (Villanueva)
entered the union office located at the hotel basement, with the permission of union officer
Henry Babay (Babay) who was apprised about the suspected illegal activities, and searched the
premises in the course of which Villanueva found a plastic bag under a table. When opened, the
plastic bag yielded dry leaves of marijuana.[3] Panlilio thereupon ordered Maniego to investigate
and report the matter to the authorities.

On the other hand, respondents’ version follows:

On January 10, 1988, Loida Somacera (Loida), a laundrywoman of the hotel, stayed overnight at
the female locker room at the basement of the hotel. At dawn of January 11, 1988, she heard
pounding sounds outside, prompting her to open the door of the locker room upon which she saw
five men in barong tagalog whom she failed to recognize but she was sure were not employees of
the hotel,[4] forcibly opening the door of the union office.[5] She even saw one of the men hid
something behind his back. She then closed the door and went back to bed. Soon after she heard
the door of the union office opened.

In the morning of January 11, 1988, as union officer Soluta was trying in vain to open the door of
the union office, Loida narrated to him what she had witnessed at dawn.

Soluta thus immediately lodged a complaint before the Security Officer. And he fetched a
locksmith, Efren Guevarra, who tried to assist him, Edna, Arnold Ilustrisimo and Ed Bautista
open the door. At that instant, men in barong tagalog armed with clubs arrived and started hitting
Soluta and his companions, drawing them to run to the female locker room, and to thereafter
proceed to the Engineering Office where they called for police assistance.[6]

While awaiting the arrival of the police, Babay and Panlilio, on the latter’s request, met. At the
meeting, Panlilio told Babay that they proceed to the union office where they would settle the
mauling incident, to which Babay replied that the door of the office could not be opened.
Panlilio thereupon instructed Villanueva to force open the door, and the latter did. Once inside,
Panlilio and his companions began searching the office, over the objection of Babay who even
asked them if they had a search warrant.[7] A plastic bag was found containing marijuana
flowering tops.

As a result of the discovery of the presence of marijuana in the union office and after the police
conducted an investigation of the incident, a complaint against the 13 union officers,[8] namely:
Babay, Isaac Asuncion, Jr., Soluta, Teodoro Gimpayan, Vicenta, Edna, Arnulfo Ilustrisimo, Irene
Velarde, Joselito Santos, Renato Lina, Avelino Meneses, Matilla, and Norman Agtani[9] was filed
before the Fiscal’s Office of Manila, for violation of Republic Act (R.A.) No. 6425, as amended
by Batas Pambansa Bilang 179 (The Dangerous Drugs Act).

An Information[10] indicting the union officers was subsequently filed by the Fiscal’s Office
before the Regional Trial Court (RTC) of Manila.

After trial, Branch 5 of the RTC acquitted the accused. The trial court disposed:
WHEREFORE, with the specimen and/or the marijuana flowering tops allegedly found
inside the Union Office occupied by the accused not admissible in evidence, coupled by the
suspicious circumstance of confiscation, for lack of sufficient evidence, accused Henry
Babay, Isaac Asuncion, Jr., Rogelio Soluta, Teodoro F. Gimpayan, Vicente Delola, Edna Bernate,
Arnulfo Ilustrisimo, Irene Velarde, Joselito Santos, Avelino Meneses, Florentino Matilla and
Norman Agtani, are ACQUITTED of the charge. The bonds they put up for their provisional
liberty are cancelled.

The Branch Clerk is directed to turn over the custody of the seized plastic bag containing
flowering tops of marijuana to the NBI Director as Permanent Custodian of the seized Dangerous
Drugs.

SO ORDERED.[11] (Emphasis and underscoring supplied)

Soluta and his fellow union officers, together with the union, thereafter filed before the Manila
RTC a Complaint[12] against petitioners et al. including prosecuting Fiscal Jose Bautista and Atty.
Eduardo Tutaan who assisted in the prosecution of the case against them, for malicious
prosecution and violation of their constitutional right against illegal search.

After trial, Branch 55 of the Manila RTC, by Decision[13] dated June 2, 1994, held the hotel,
Panlilio, Maniego and Villanueva jointly and severally liable for damages as a result of malicious
prosecution and illegal search of the union office. The dispositive portion of the trial court’s
decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering the defendants
Silahis International Hotel, Inc., Jose Marcel Panlilio, Floro Maniego and Steve Villanueva,
individually and collectively, jointly and severally, to pay to:

1. Plaintiffs Union, Rogelio S. Soluta, Joselito Santos, Florentino Matilla, Vicenta Delola
and Edna Bernate-Dacanay, jointly, the sum of P70,900.00 as actual damages, and the
further sum of P1,000.00 each for the same plaintiffs, except the Union, in the same
concept and nature.

2. Plaintiffs Rogelio Soluta, Joselito Santos, Florentino Matilla, Vicenta Delola and Edna
Bernate-Dacanay the sum of P100,000.00 each for moral damages.

3. Plaintiffs Joselito Santos, Florentino Matilla, Vicenta Delola and Edna-Bernate-Dacanay

the sum of P30,000.00 each as exemplary damages.

4. To all the plaintiffs, jointly and severally, the sum of P30,000.00 for and as attorney’s
fees.

The complaint, insofar as plaintiff Erlisa Ilustrisimo and defendants Ramos, Bautista and Tutaan
are concerned, is DISMISSED for lack of merit.

All the counterclaims of the defendants are likewise dismissed for lack of factual and legal basis.

Costs against the remaining defendants.

SO ORDERED.[14] (Emphasis and underscoring supplied)

On appeal, the Court of Appeals affirmed with modification the trial court’s decision. It found
herein petitioners et al. civilly liable for damages for violation of individual respondents’
constitutional right against illegal search, not for malicious prosecution, set aside the award of
actual damages to respondent union, and reduced the award of actual damages to individual
respondents to P50,000. The dispositive portion of the appellate court’s decision reads:

WHEREFORE, the Decision of the Regional Trial Court of Manila, Branch 55, is hereby
AFFIRMED with the modification that the first paragraph of the dispositive portion should
read:

“1. Plaintiffs Rogelio Soluta, Joselito Santos, Florentino Matilla, Vicenta Delola and Edna
Bernate-Dacanay, jointly, the sum of P50,000.00 as actual damages, and the further sum of
P1,000.00 each for the same plaintiffs in the same concept and nature.”

The Decision is hereby AFFIRMED in all other respects.

SO ORDERED.[15]

Hence, the present petition of Panlilio and the hotel, they contending that:

THE COURT OF APPEALS GRAVELY ERRED IN ITS CONCLUSION THAT PETITIONERS

ARE LIABLE FOR DAMAGES UNDER ARTICLE 32 OF THE CIVIL CODE IN THAT:

1. THE COURT OF APPEALS’ APPLICATION OF PEOPLE V. ARUTA (288 SCRA

626[1998]) AND SECTION 13, RULE 126 OF THE RULES OF CRIMINAL
PROCEDURE IN THE INSTANT CASE IS LEGALLY FLAWED.

2. PETITIONERS’ SEARCH OF THE UNION OFFICE IN THE INSTANT CASE WAS

ENTIRELY REASONABLE UNDER THE CIRCUMSTANCES.[16]

While petitioners concede that the appellate court correctly cited the principles enunciated in
People v. Aruta[17] and Section 13, Rule 126[18] of the Rules of Criminal Procedure, it gravely
erred when it applied Aruta to justify petitioners’ alleged liability under Article 32 of the New
Civil Code. They argue that Aruta does not involve Article 32 as nowhere in the decision is there
any reference to Article 32.[19]

Similarly, petitioners argue that being private persons, they are not covered by the standards set
forth in Aruta as the constitutional protection against illegal searches and seizures is not meant to
be invoked against private individuals.[20]

Petitioners further argue that the search of the union office was reasonable under the
circumstances,[21] given that the hotel owns the room where the union holds office; the search
was not without probable cause as it was conducted precisely due to reports received by
petitioners that the union office was being used as a venue for illegal activities, particularly the
sale and/or use of prohibited drugs;[22] and the search was conducted with the consent and in the
presence of union officer Babay.[23]
The petition fails.

Article 32 of the New Civil Code provides:

ART. 32. Any public officer or employee, or any private individual, who directly or indirectly
obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and
liberties of another person shall be liable to the latter for damages:

xxxx

(9) The right to be secure in one’s person, house, papers, and effects against unreasonable
searches and seizures;

xxxx

The indemnity shall include moral damages. Exemplary damages may also be adjudicated.
(Emphasis and underscoring supplied)
As constitutional rights, like the right to be secure in one’s person, house, papers, and effects
against unreasonable search and seizures, occupy a lofty position in every civilized and
democratic community and not infrequently susceptible to abuse, their violation, whether
constituting a penal offense or not, must be guarded against. As the Code Commission noted,
xxxx

(3) Direct and open violations of the Penal Code trampling upon the freedoms named are not so
frequent as those subtle, clever and indirect ways which do not come within the pale of the penal
law. It is in these cunning devices of suppressing or curtailing freedom, which are not criminally
punishable, where the greatest danger to democracy lies. The injured citizen will always have,
under the new Civil Code, adequate civil remedies before the courts because of the independent
civil action, even in those instances where the act or omission complained of does not constitute
a criminal offense.[24]
The Code Commission thus deemed it necessary to hold not only public officers but also private
individuals civilly liable for violation of rights enumerated in Article 32 of the Civil Code. That
is why it is not even necessary that the defendant under this Article should have acted with
malice or bad faith, otherwise, it would defeat its main purpose, which is the effective protection
of individual rights.[25] It suffices that there is a violation of the constitutional right of the
plaintiff.

In the present case, as priorly stated, petitioners had, by their own claim, already received reports
in late 1987 of illegal activities allegedly undertaken in the union office and Maniego conducted
surveillance of the union officers. Yet, in the morning of January 11, 1988, petitioners and their
companions barged into and searched the union office without a search warrant, despite ample
time for them to obtain one, and notwithstanding the objection of Babay.

The course taken by petitioners and company stinks in illegality, it not falling under any of the
exceptional instances when a warrantless search is allowed by law. Petitioners’ violation of
individual respondents’ constitutional right against unreasonable search thus furnishes the basis
for the award of damages under Article 32 of the Civil Code.
In MHP Garments, Inc. v. Court of Appeals,[26] a case for unfair competition, the progression of
time between the receipt of the information and the raid of the stores of the therein private
respondents’ premises showed that there was sufficient time for the therein petitioners and the
raiding party to apply for a judicial warrant. Yet they did not apply for one. They went on with
the raid and seized the goods of the therein private respondents. Under the circumstances, this
court upheld the grant of damages by the trial court to the therein private respondents for
violation of their right against unreasonable search and seizure.

As for petitioners’ contention that property rights justified the search of the union office, the
same does not lie. For respondents, being the lawful occupants of the office, had the right to
raise the question of validity of the search and seizure.[27]

Neither does petitioners’ claim that they were allowed by union officer Babay to enter the union
office lie. Babay’s account of why petitioners and company went to the union office – to
consider Panlilio’s suggestion to settle the mauling incident is more credible, as is his claim that
he protested the search, and even asked if they were armed with a search warrant.

While it is doctrinal that the right against unreasonable searches and seizures is a personal right
which may be waived expressly or impliedly, a waiver by implication cannot be presumed. There
must be clear and convincing evidence of an actual intention to relinquish it to constitute a
waiver thereof.[28] There must be proof of the following: (a) that the right exists; (b) that the
person involved had knowledge, either actual or constructive, of the existence of such right; and,
(c) that the said person had an actual intention to relinquish the right. In other words, the waiver
must be voluntarily, knowingly and intelligently made. The evidence shows otherwise,
however.

That a violation of one’s constitutional right against illegal search and seizure can be the basis for
the recovery of damages under Article 32 in relation to Article 2219(6) and (10) of the New Civil
Code, there is no doubt. Since the complaint[29] filed before the trial court was for damages due
to malicious prosecution and violation of constitutional right against illegal search and seizure,
the award by the trial court of actual damages to respondent union was correctly set aside by the
appellate court.

Article 32 speaks of an officer or employee or person “directly or indirectly” responsible for the
violation of the constitutional rights and liberties of another. Hence, it is not the actor alone who
must answer for damages under Article 32; the person indirectly responsible has also to answer
for the damages or injury caused to the aggrieved party.[30] Such being the case, petitioners,
together with Maniego and Villanueva, the ones who orchestrated the illegal search, are jointly
and severally liable for actual, moral and exemplary damages to herein individual respondents in
accordance with the earlier-quoted pertinent provision of Article 32, in relation to Article 2219(6)
and (10) of the Civil Code which provides:
Art. 2219. Moral damages may be recovered in the following and analogous cases:

xxxx

(6) Illegal search;

 xxxx

(10) Acts and action referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35. (Emphasis
supplied)
Petitioners magnify the citation by the appellate court of Aruta allegedly “to justify [their]
liability” under Article 32 of the Civil Code, which petitioners allege is erroneous as said case
did not involve Article 32.

Aruta was, however, cited by the appellate court, not to justify petitioners’ liability but to rule out
the legality of the search in the union office as the search was not done as an incident of a lawful
arrest.

Petitioners cite People v. Marti[31] to support their thesis that the determinants in the validity of
the constitutional right against searches and seizure cannot be invoked against private
individuals.

But the ruling of this Court in Marti, a criminal case, bears on the issue of whether “an act of a
private individual, allegedly in violation of [one’s] constitutional rights, [may] be invoked
against the State.” In other words, the issue in that case was whether the evidence obtained by a
private person, acting in a private capacity without the participation of the State, is admissible.

The issue in the present civil case, however, is whether respondent individual can recover
damages for violation of constitutional rights. As reflected above, Article 32, in relation to
Article 2219(6) and (10) of the Civil Code, allows so.

WHEREFORE, in light of the foregoing ratiocinations, the petition is DENIED.

Costs against petitioners.

SO ORDERED.

Quisumbing, (Chairman), Carpio and Tinga, JJ., concur.

[1]
Rollo, p. 34, penned by Justice Jose C. Reyes, Jr. with Justices Romeo A. Brawner and
Rebecca De Guia-Salvador concurring.
[2]
Id. at 71.
[3]
Id. at 72.
[4]
Ibid.
[5]
Ibid.
[6]
Id. at 73.
[7]
Ibid.
[8]
Id. at 124.
[9]
Records, p. 12.
[10]
Id. at 30.
[11]
Id. at 23.
[12]
Id. at 1.
[13]
Rollo, pp. 68-88.
[14]
Id. at 87-88.
[15]
Id. at 47-48.
[16]
Id. at 20.
[17]
G.R. No. 120915, April 3, 1998, 288 SCRA 626.
[18]
Rules of Court, Rule 126, Sec.13. Search incident to lawful arrest. – A person lawfully
arrested may be searched for dangerous weapons or anything which may have been used or
constitute proof in the commission of an offense without a search warrant.
[19]
Rollo, p. 22.
[20]
Id. at 23.
[21]
Id. at 24.
[22]
Id. at 25.
[23]
Id. at 26.
[24]
Report, Code Commission, 31 (January 26, 1948).
[25]
I Tolentino, Civil Code of the Philippines, 1990 at 129-130. See Lim v. Ponce de Leon, No. L-
22554 August 29, 1975, 66 SCRA 299, 309.
[26]
G.R. No. 86720, September 2, 1994, 236 SCRA 227, 233. Vide People v. Aruta, supra Note
17.
[27]
47 Am Jur. 508, cited in Lim v. Ponce de Leon, No. L-22554, August 29, 1975, 66 SCRA 299,
308.
[28]
Pasion Vda. de Garcia v. Locsin, 65 Phil. 689, 695 (1938); People vs. Aruta, Supra Note 17,
p. 648.
[29]
Records, pp. 1-11.
[30]
Aberca v. Ver, No. L-69866, April 15, 1988, 160 SCRA, 590, 606.
[31]
G.R. No. 81561, January 18, 1991, 193 SCRA 57.

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

516 Phil. 725

THIRD DIVISION
G.R. NO. 164349, January 31, 2006
RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI),
PETITIONER, VS. ALFONSO VERCHEZ, GRACE VERCHEZ-INFANTE,
MARDONIO INFANTE, ZENAIDA VERCHEZ-CATIBOG, AND
FORTUNATO CATIBOG, RESPONDENTS.

DECISION

CARPIO MORALES, J.:

On January 21, 1991, Editha Hebron Verchez (Editha) was confined at the Sorsogon Provincial
Hospital due to an ailment. On even date, her daughter Grace Verchez-Infante (Grace)
immediately hied to the Sorsogon Branch of the Radio Communications of the Philippines, Inc.
(RCPI) whose services she engaged to send a telegram to her sister Zenaida Verchez-Catibog
(Zenaida) who was residing at 18 Legal St., GSIS Village, Quezon City[1] reading: "Send check
money Mommy hospital." For RCPI's services, Grace paid P10.50[2] for which she was issued a
receipt.[3]

As three days after RCPI was engaged to send the telegram to Zenaida no response was received
from her, Grace sent a letter to Zenaida, this time thru JRS Delivery Service, reprimanding her
for not sending any financial aid.

Immediately after she received Grace's letter, Zenaida, along with her husband Fortunato
Catibog, left on January 26, 1991 for Sorsogon. On her arrival at Sorsogon, she disclaimed
having received any telegram.

In the meantime, Zenaida and her husband, together with her mother Editha left for Quezon City
on January 28, 1991 and brought Editha to the Veterans Memorial Hospital in Quezon City
where she was confined from January 30, 1991 to March 21, 1991.

The telegram was finally delivered to Zenaida 25 days later or on February 15, 1991.[4] On
inquiry from RCPI why it took that long to deliver it, a messenger of RCPI replied that he had
nothing to do with the delivery thereof as it was another messenger who previously was assigned
to deliver the same but the address could not be located, hence, the telegram was resent on
February 2, 1991, and the second messenger finally found the address on February 15, 1991.

Editha's husband Alfonso Verchez (Verchez), by letter of March 5, 1991,[5] demanded an

explanation from the manager of the Service Quality Control Department of the RCPI, Mrs.
Lorna D. Fabian, who replied, by letter of March 13, 1991,[6] as follows:
Our investigation on this matter disclosed that subject telegram was duly processed in
accordance with our standard operating procedure. However, delivery was not immediately
effected due to the occurrence of circumstances which were beyond the control and foresight of
RCPI. Among others, during the transmission process, the radio link connecting the points of
communication involved encountered radio noise and interferences such that subject telegram
did not initially registered (sic) in the receiving teleprinter machine.

Our internal message monitoring led to the discovery of the above. Thus, a repeat transmission
was made and subsequent delivery was effected. (Underscoring supplied)
Verchez's lawyer thereupon wrote RCPI's manager Fabian, by letter of July 23, 1991,[7]
requesting for a conference on a specified date and time, but no representative of RCPI showed
up at said date and time.

On April 17, 1992, Editha died.

On September 8, 1993, Verchez, along with his daughters Grace and Zenaida and their respective
spouses, filed a complaint against RCPI before the Regional Trial Court (RTC) of Sorsogon for
damages. In their complaint, the plaintiffs alleged that, inter alia, the delay in delivering the
telegram contributed to the early demise of the late Editha to their damage and prejudice,[8] for
which they prayed for the award of moral and exemplary damages[9] and attorney's fees.[10]

After its motion to dismiss the complaint for improper venue[11] was denied[12] by Branch 5 of the
RTC of Sorsogon, RCPI filed its answer, alleging that except with respect to Grace,[13] the other
plaintiffs had no privity of contract with it; any delay in the sending of the telegram was due to
force majeure, "specifically, but not limited to, radio noise and interferences which adversely
affected the transmission and/or reception of the telegraphic message";[14] the clause in the
Telegram Transmission Form signed by Grace absolved it from liability for any damage arising
from the transmission other than the refund of telegram tolls;[15] it observed due diligence in the
selection and supervision of its employees; and at all events, any cause of action had been barred
by laches.[16]

The trial court, observing that "although the delayed delivery of the questioned telegram was not
apparently the proximate cause of the death of Editha," ruled out the presence of force majeure.
Respecting the clause in the telegram relied upon by RCPI, the trial court held that it partakes of
the nature of a contract of adhesion.

Finding that the nature of RCPI's business obligated it to dispatch the telegram to the addressee
at the earliest possible time but that it did not in view of the negligence of its employees to repair
its radio transmitter and the concomitant delay in delivering the telegram on time, the trial court,
upon the following provisions of the Civil Code, to wit:
Article 2176 – Whoever by act or omission causes damage to another, there being at 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 quasi-delict and is governed by the
provisions of this Chapter.

Article 1173 defines the fault of (sic) negligence of the obligor as the "omission of the diligence
which is required by the nature of the obligation and corresponds with the circumstances of the
person, of the time, or the place."

In the instant case, the obligation of the defendant to deliver the telegram to the addressee is of
an urgent nature. Its essence is the early delivery of the telegram to the concerned person. Yet,
due to the negligence of its employees, the defendant failed to discharge of its obligation on time
making it liable for damages under Article 2176.

The negligence on the part of the employees gives rise to the presumption of negligence on the
part of the employer.[17] (Underscoring supplied),
rendered judgment against RCPI. Accordingly, it disposed:
WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered in favor of
the plaintiffs and against the defendant, to wit:

Ordering the defendant to pay the plaintiffs the following amount:

1. The amount of One Hundred Thousand (P100,000.00) Pesos as moral damages;

2. The amount of Twenty Thousand (P20,000.00) Pesos as attorney's fees; and

3. To pay the costs.

SO ORDERED.[18]

On appeal, the Court of Appeals, by Decision of February 27, 2004,[19] affirmed the trial court's
decision.

Hence, RCPI's present petition for review on certiorari, it raising the following questions: (1) "Is
the award of moral damages proper even if the trial court found that there was no direct
connection between the injury and the alleged negligent acts?"[20] and (2) "Are the stipulations in
the 'Telegram Transmission Form,' in the nature "contracts of adhesion" (sic)? [21]

RCPI insists that respondents failed to prove any causal connection between its delay in
transmitting the telegram and Editha's death.[22]

RCPI's stand fails. It bears noting that its liability is anchored on culpa contractual or breach of
contract with regard to Grace, and on tort with regard to her co-plaintiffs-herein-co-respondents.

Article 1170 of the Civil Code provides:

Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof, are liable for damages. (Underscoring
supplied)
Passing on this codal provision, this Court explained:
In culpa contractual x x x the mere proof of the existence of the contract and the failure of its
compliance justify, prima facie, a corresponding right of relief. The law, recognizing the
obligatory force of contracts, will not permit a party to be set free from liability for any kind of
misperformance of the contractual undertaking or a contravention of the tenor thereof. A breach
upon the contract confers upon the injured party a valid cause for recovering that which may
have been lost or suffered. The remedy serves to preserve the interests of the promissee that may
include his "expectation interest," which is his interest in having the benefit of his bargain by
being put in as good a position as he would have been in had the contract been performed, or his
"reliance interest," which is his interest in being reimbursed for loss caused by reliance on the
contract by being put in as good a position as he would have been in had the contract not been
made; or his "restitution interest," which is his interest in having restored to him any benefit
that he has conferred on the other party. Indeed, agreements can accomplish little, either for their
makers or for society, unless they are made the basis for action. The effect of every infraction is
to create a new duty, that is, to make recompense to the one who has been injured by the failure
of another to observe his contractual obligation unless he can show extenuating circumstances,
like proof of his exercise of due diligence x x x or of the attendance of fortuitous event, to
excuse him from his ensuing liability.[23] (Emphasis and underscoring supplied)
In the case at bar, RCPI bound itself to deliver the telegram within the shortest possible time. It
took 25 days, however, for RCPI to deliver it.

RCPI invokes force majeure, specifically, the alleged radio noise and interferences which
adversely affected the transmission and/or reception of the telegraphic message. Additionally, its
messenger claimed he could not locate the address of Zenaida and it was only on the third
attempt that he was able to deliver the telegram.

For the defense of force majeure to prosper,

x x x it is necessary that one has committed no negligence or misconduct that may have
occasioned the loss. An act of God cannot be invoked to protect a person who has failed to take
steps to forestall the possible adverse consequences of such a loss. One's negligence may have
concurred with an act of God in producing damage and injury to another; nonetheless, showing
that the immediate or proximate cause of the damage or injury was a fortuitous event would not
exempt one from liability. When the effect is found to be partly the result of a person's
participation – whether by active intervention, neglect or failure to act – the whole
occurrence is humanized and removed from the rules applicable to acts of God.

xxxx

Article 1174 of the Civil Code states that no person shall be responsible for a fortuitous event
that could not be foreseen or, though foreseen, was inevitable. In other words, there must be an
exclusion of human intervention from the cause of injury or loss.[24] (Emphasis and
underscoring supplied)
Assuming arguendo that fortuitous circumstances prevented RCPI from delivering the telegram
at the soonest possible time, it should have at least informed Grace of the non-transmission and
the non-delivery so that she could have taken steps to remedy the situation. But it did not. There
lies the fault or negligence.

In an earlier case also involving RCPI, this Court held:

Considering the public utility of RCPI's business and its contractual obligation to transmit
messages, it should exercise due diligence to ascertain that messages are delivered to the persons
at the given address and should provide a system whereby in cases of undelivered messages the
sender is given notice of non-delivery. Messages sent by cable or wireless means are usually
more important and urgent than those which can wait for the mail.[25]

xxxx

People depend on telecommunications companies in times of deep emotional stress or

pressing financial needs. Knowing that messages about the illnesses or deaths of loved ones,
births or marriages in a family, important business transactions, and notices of conferences or
meetings as in this case, are coursed through the petitioner and similar corporations, it is
incumbent upon them to exercise a greater amount of care and concern than that shown in this
case. Every reasonable effort to inform senders of the non-delivery of messages should be
undertaken.[26]
(Emphasis and underscoring supplied)

RCPI argues, however, against the presence of urgency in the delivery of the telegram, as well as
the basis for the award of moral damages, thus:[27]
The request to send check as written in the telegraphic text negates the existence of urgency that
private respondents' allegations that "time was of the essence" imports. A check drawn against a
Manila Bank and transmitted to Sorsogon, Sorsogon will have to be deposited in a bank in
Sorsogon and pass thru a minimum clearing period of 5 days before it may be encashed or
withdrawn. If the transmittal of the requested check to Sorsogon took 1 day – private respondents
could therefore still wait for 6 days before the same may be withdrawn. Requesting a check that
would take 6 days before it could be withdrawn therefore contradicts plaintiff's claim of urgency
or need.[28]

At any rate, any sense of urgency of the situation was met when Grace Verchez was able to
communicate to Manila via a letter that she sent to the same addressee in Manila thru JRS.[29]

xxxx

As far as the respondent court's award for moral damages is concerned, the same has no basis
whatsoever since private respondent Alfonso Verchez did not accompany his late wife when the
latter went to Manila by bus. He stayed behind in Sorsogon for almost 1 week before he
proceeded to Manila. [30]

When pressed on cross-examination, private respondent Alfonso Verchez could not give any
plausible reason as to the reason why he did not accompany his ailing wife to Manila.[31]
 xxxx

It is also important to consider in resolving private respondents' claim for moral damages that
private respondent Grace Verchez did not accompany her ailing mother to Manila.[32]

xxxx

It is the common reaction of a husband to be at his ailing wife's side as much as possible. The
fact that private respondent Alfonso Verchez stayed behind in Sorsogon for almost 1 week
convincingly demonstrates that he himself knew that his wife was not in critical condition.[33]

(Emphasis and underscoring supplied)

RCPI's arguments fail. For it is its breach of contract upon which its liability is, it bears
repeating, anchored. Since RCPI breached its contract, the presumption is that it was at fault or
negligent. It, however, failed to rebut this presumption.

For breach of contract then, RCPI is liable to Grace for damages.

And for quasi-delict, RCPI is liable to Grace's co-respondents following Article 2176 of the Civil
Code which provides:
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. (Underscoring supplied)
RCPI's liability as an employer could of course be avoided if it could prove that it observed the
diligence of a good father of a family to prevent damage. Article 2180 of the Civil Code so
provides:
The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions,
but also for those of persons for whom one is responsible.

xxxx

The owners and managers of an establishment or enterprise are likewise responsible for damages
caused by their employees in the service of the branches in which the latter are employed or on
the occasion of their functions.

Employers shall be liable for the damages caused by their employees and household helpers
acting within the scope of their assigned tasks, even though the former are not engaged in any
business or industry.

xxxx

The responsibility treated of in this article shall cease when the persons herein mentioned prove
that they observed all the diligence of a good father of a family to prevent damage.
(Underscoring supplied)
RCPI failed, however, to prove that it observed all the diligence of a good father of a family to
prevent damage.

Respecting the assailed award of moral damages, a determination of the presence of the
following requisites to justify the award is in order:
x x x firstly, evidence of besmirched reputation or physical, mental or psychological suffering
sustained by the claimant; secondly, a culpable act or omission factually established; thirdly,
proof that the wrongful act or omission of the defendant is the proximate cause of damages
sustained by the claimant; and fourthly, that the case is predicated on any of the instances
expressed or envisioned by Article 2219 and Article 2220 of the Civil Code.[34]
Respecting the first requisite, evidence of suffering by the plaintiffs-herein respondents was
correctly appreciated by the CA in this wise:
The failure of RCPI to deliver the telegram containing the message of appellees on time,
disturbed their filial tranquillity. Family members blamed each other for failing to respond
swiftly to an emergency that involved the life of the late Mrs. Verchez, who suffered from
diabetes.[35]
As reflected in the foregoing discussions, the second and third requisites are present.

On the fourth requisite, Article 2220 of the Civil Code provides:

Willful injury to property may be a legal ground for awarding moral damages if the court should
find that, under the circumstances, such damages are justly due. The same rule applies to
breaches of contract where the defendant acted fraudulently or in bad faith. (Emphasis and
underscoring supplied)
After RCPI's first attempt to deliver the telegram failed, it did not inform Grace of the non-
delivery thereof and waited for 12 days before trying to deliver it again, knowing – as it should
know – that time is of the essence in the delivery of telegrams. When its second long-delayed
attempt to deliver the telegram again failed, it, again, waited for another 12 days before making a
third attempt. Such nonchalance in performing its urgent obligation indicates gross negligence
amounting to bad faith. The fourth requisite is thus also present.

In applying the above-quoted Article 2220, this Court has awarded moral damages in cases of
breach of contract where the defendant was guilty of gross negligence amounting to bad faith, or
in wanton disregard of his contractual obligation.[36]

As for RCPI's tort-based liability, Article 2219 of the Civil Code provides:
Moral damages may be recovered in the following and analogous cases:

xxxx

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. (Emphasis
supplied)
Article 26 of the Civil Code, in turn, provides:
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:

xxxx
(2) Meddling with or disturbing the private life or family relations of another. (Emphasis
supplied)
RCPI's negligence in not promptly performing its obligation undoubtedly disturbed the peace of
mind not only of Grace but also her co-respondents. As observed by the appellate court, it
disrupted the "filial tranquillity" among them as they blamed each other "for failing to respond
swiftly to an emergency." The tortious acts and/or omissions complained of in this case are,
therefore, analogous to acts mentioned under Article 26 of the Civil Code, which are among the
instances of quasi-delict when courts may award moral damages under Article 2219 of the Civil
Code.

In fine, the award to the plaintiffs-herein respondents of moral damages is in order, as is the
award of attorney's fees, respondents having been compelled to litigate to protect their rights.

Clutching at straws, RCPI insists that the limited liability clause in the "Telegram Transmission
Form" is not a contract of adhesion. Thus it argues:
Neither can the Telegram Transmission Form be considered a contract of adhesion as held by the
respondent court. The said stipulations were all written in bold letters right in front of the
Telegram Transmission Form. As a matter of fact they were beside the space where the telegram
senders write their telegraphic messages. It would have been different if the stipulations were
written at the back for surely there is no way the sender will easily notice them. The fact that the
stipulations were located in a particular space where they can easily be seen, is sufficient notice
to any sender (like Grace Verchez-Infante) where she could manifest her disapproval, leave the
RCPI station and avail of the services of the other telegram operators.[37] (Underscoring supplied)
RCPI misunderstands the nature of a contract of adhesion. Neither the readability of the
stipulations nor their physical location in the contract determines whether it is one of adhesion.
A contract of adhesion is defined as one in which one of the parties imposes a ready-made form
of contract, which the other party may accept or reject, but which the latter cannot modify. One
party prepares the stipulation in the contract, while the other party merely affixes his signature or
his "adhesion" thereto, giving no room for negotiation and depriving the latter of the
opportunity to bargain on equal footing.[38] (Emphasis and underscoring supplied)
While a contract of adhesion is not necessarily void and unenforceable, since it is construed
strictly against the party who drafted it or gave rise to any ambiguity therein, it is stricken down
as void and unenforceable or subversive of public policy when the weaker party is imposed upon
in dealing with the dominant bargaining party and is reduced to the alternative of taking it or
leaving it, completely deprived of the opportunity to bargain on equal footing.[39]

This Court holds that the Court of Appeals' finding that the parties' contract is one of adhesion
which is void is, given the facts and circumstances of the case, thus well-taken.

WHEREFORE, the petition is DENIED, and the challenged decision of the Court of Appeals is
AFFIRMED.

Costs against petitioner.

SO ORDERED.
Quisumbing, (Chairperson), Carpio, and Tinga, JJ., concur.

[1]
RTC records, p. 2.
[2]
Exhibit "A," RTC records, p. 7; Exhibit "C," records, p. 9.
[3]
Exhibit "A," supra note 2.
[4]
Supra note 1.
[5]
Exhibit "D," RTC records, pp. 10-11.
[6]
Exhibit "E," RTC records p. 12.
[7]
Exhibit "F," RTC records, p. 13.
[8]
RTC records, p. 4.
[9]
Id.
[10]
Id. at 4-5.
[11]
Id. at 19-30.
[12]
Id. at 42.
[13]
Id. at 60-61.
[14]
Id. at 61.
[15]
Id. at 61-62. See also p. 30.
[16]
Id. at p. 62.
[17]
Id. at 393 (citations omitted).
[18]
Id. at 394.
[19]
Penned by Justice Mariano C. Del Castillo, with the concurrence of Justices Rodrigo V.
Cosico and Vicente Q. Roxas.
[20]
Rollo, p. 9.
[21]
Ibid.
[22]
Id. at 12.
[23]
FGU Insurance Corporation v. G.P. Sarmiento Trucking Corporation, 435 Phil. 333, 341-342
(2002) (citations omitted).
[24]
Mindex Resources Development v. Morillo, 428 Phil. 934, 944-945 (2002) (citations omitted).
[25]
Radio Communications of the Philippines, Inc. v. Rodriguez, G.R. No. 83768, February 28,
1990, 182 SCRA 899, 905 (citations omitted).
[26]
Id. at 908 (citations omitted).
[27]
Rollo, pp. 12-15.
[28]
Id. at 13.
[29]
Id.
[30]
Id. at 14 (citations omitted).
[31]
Id. (citations omitted).
[32]
Id.
[33]
Id. at 15.
[34]
Philippine Telegraph & Telephone Corporation v. Court of Appeals, 437 Phil. 76, 84 (2002);
see also Gamboa, Rodriguez, Rivera & Co., Inc. v. Court of Appeals, G.R. No. 117456, May 6,
2005, 458 SCRA 68 (citations omitted).
[35]
CA rollo, p. 97 (citations omitted).
[36]
See Sarmiento v. Sun-Cabrido, 449 Phil. 108, 116-117 (2003).
[37]
Rollo, p. 55.
[38]
Philippine Commercial International Bank v. Court of Appeals, 325 Phil. 588, 597 (1996).
[39]
Saludo, Jr. v. Court of Appeals, G.R. No. 95536, March 23, 1992, 207 SCRA 498, 528;
Philippine Commercial International Bank v. Court of Appeals, supra; Sweet Lines, Inc. v. Teves,
G.R. No. L-37750, May 19, 1978, 83 SCRA 361 (citations omitted).
Copyright 2016 - Batas.org
 Supreme Court of the Philippines

507 Phil. 472

SECOND DIVISION
G.R. NO. 145291, September 21, 2005
PUBLIC ESTATES AUTHORITY, PETITIONER, VS. ROSARIO GANAC
CHU, RESPONDENT.

DECISION

AUSTRIA-MARTINEZ, J.

Petitioner Public Estates Authority seeks a review of the decision[1] of the Court of Appeals (CA)
in CA-G.R. CV No. 52944 dated June 4, 1999, which affirmed in toto the trial court's award of
P2,000,000.00 as actual and compensatory damages, P100,000.00 as attorney's fees and costs of
suit, in favor of respondent in its Partial Decision dated July 3, 1995 in Civil Case No. 781-93.[2]

Petitioner filed a motion for reconsideration but this was denied by the CA in its Resolution
dated September 26, 2000.[3]

This case originated from a complaint for damages with prayer for the issuance of a writ of
injunction and temporary restraining order filed by respondent against petitioner and the National
Housing Authority (NHA). The complaint was lodged in the Regional Trial Court of Imus,
Cavite (Branch 20). In her complaint, respondent alleged that she is the owner of a parcel of
land situated in Paliparan, Dasmariñas, Cavite covered by Transfer Certificate of Title (TCT)
Nos. T-231966, T-231967, T-231968, T-231969, and T-231970, measuring 70,410 square meters.
According to respondent, some time in June 1993, without notice and due process, petitioner
entered her property and bulldozed the land, destroying her black pepper plantation, causing
damage to her operations and depriving her of her means of livelihood. Thus, she asked for the
following amounts: (1) P5,000,000.00 as actual damages; (2) P200,000.00 as moral damages; (3)
P100,000.00 as exemplary damages; (4) P50,000.00 as attorney's fees; and (5) P30,000.00 for
litigation expenses.[4]

Petitioner filed its Answer alleging lack of cause of action. It contended that: it is the owner of a
property covered by TCT Nos. 277070, 277071 and 277072, located in Paliparan, Dasmariñas,
Cavite, and measuring 51 hectares; under a Memorandum of Agreement dated March 12, 1991,
petitioner and the NHA undertook to relocate the squatters of the reclaimed land in the Financial
Center District of Manila Bay, to the Paliparan site; during the relocation and site development,
respondent appeared claiming that petitioner is encroaching upon her property; respondent failed
to prove her ownership thereof; way back in 1990, respondent had already sold 65,410 square
meters out of the 70,410 square meters of her property to one Renato Ignacio. Thus, petitioner
prayed for the dismissal of the complaint.[5]

In a Partial Decision rendered by the trial court on July 3, 1995, petitioner, together with the
NHA, was adjudged jointly and severally liable to pay respondent actual and compensatory
damages, attorney's fees and the costs of suit. The dispositive portion of the Partial Decision
reads:
WHEREFORE, in view of the foregoing, partial judgment is hereby rendered in favor of the
plaintiff and against the defendants, ordering jointly and severally to pay plaintiff the sum of P2
million by way of actual and compensatory damages and the additional amount of P100,000.00
as attorney's fees, plus costs of suit.

SO ORDERED.[6]
Both petitioner and the NHA filed a motion for reconsideration with the trial court but these were
denied per Resolution dated January 22, 1996.[7]

Aggrieved, petitioner appealed to the CA. The appellate court, however, sustained the partial
judgment of the trial court in the assailed Decision dated June 4, 1999 and denied petitioner's
motion for reconsideration. Petitioner then filed the present petition for review on certiorari
under Rule 45 of the Rules of Court, on the following grounds:
The Court of Appeals erred in:

I. AFFIRMING THE FINDINGS OF FACT BY THE LOWER COURT WHICH HAVE

NOT BEEN PROVEN WITH REASONABLE DEGREE OF CERTAINTY.

II. AFFIRMING THE GRANT OF ACTUAL DAMAGES IN THE AMOUNT OF P2

MILLION AND P100,000.00 AS ATTORNEY'S FEES PLUS COSTS OF SUIT. [8]

The sole issue in this petition is whether there is a valid basis for the award of damages in favor
of respondent.

The trial court based its award of the sum of P2,000,000.00 as actual and compensatory
damages in favor of respondent on the following findings:
Admittedly, there were pepper trees on the property of plaintiff which were bulldozed by the
defendants, although the parties differ as to their exact numbers. Defendants' witness, Engr. de
Gracia, admitted that he did not make a physical counting. He merely estimated the number of
pepper plants, though admitting that there were 3,000 kakawati trees planted on the one (1)
hectare property of plaintiff upon which the pepper trees clung.

In the same manner, the other witness Engr. Fundabela also made a rough estimate as to the
number of pepper trees that were bulldozed (TSN, pp. 16-17, 29, Sept. 2, 1994). But when
queried, he retorted that the one (1) hectare property of plaintiff is fully planted with black
pepper trees whose distance with each other is only one (1) meter.

...
As against their testimonies, this Court gives more credence to the straightforward statement of
plaintiff that she planted about 3,000 pepper trees on her property with the help of 25 farmers.
She bought the 3,000 seedlings at a cost of P350.00 each. Adding the labor cost and the cost of
the water system she installed to maintain the pepper plantation plus expenses for insecticides,
plaintiff invested a capital of P1.3 million, more or less. Because the pepper trees were already
about to be harvested, plaintiff claimed that she lost an estimated income of P700,000.00 (TSN,
pp. 6-8, May 27, 1994).[9]
The appellate court sustained the factual findings of the trial court and concluded that the same
were based on the evidence presented by the parties.[10]

Petitioner argues that the appellate court erred in affirming the findings of fact of the trial court
considering that respondent failed to prove her ownership over the property on which the pepper
trees stand, particularly that covered by TCT No. T-231966. Petitioner also contends that
respondent failed to quantify or show any proof of the actual damage she allegedly suffered; and
that the amount of attorney's fees awarded in favor of respondent was double the amount than
what was specifically prayed for in her complaint.[11]

In her Comment, respondent stated that the Court can only entertain questions of law in a
petition for review on certiorari and cannot now reassess the findings of facts of the trial court,
especially since it was affirmed by the CA.[12]

While respondent is correct in stating that only questions of law may be raised in a petition for
review on certiorari under Rule 45 of the Rules of Court, as "the Supreme Court is not a trier of
facts"; and that it is not the Court's function to review, examine and evaluate or weigh the
probative value of the evidence presented,[13] said rules, however, admit certain exceptions such
as:
(a) where there is grave abuse of discretion; (b) when the finding is grounded entirely on
speculations, surmises or conjectures; (c) when the inference made is manifestly mistaken,
absurd or impossible; (d) when the judgment of the Court of Appeals was based on a
misapprehension of facts; (e) when the factual findings are conflicting; (f) when the Court of
Appeals, in making its findings, went beyond the issues of the case and the same are contrary to
the admissions of both appellant and appellee; (g) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion; and, (h) where the findings of fact of the Court of Appeals
are contrary to those of the trial court, or are mere conclusions without citation of specific
evidence, or where the facts set forth by the petitioner are not disputed by the respondent, or
where the findings of fact of the Court of Appeals are premised on the absence of evidence
and are contradicted by the evidence on record.[14] (Emphasis supplied).
In this case, the CA sustained the factual findings of the trial court as follows:
...

Being aware of the existence of pepper trees on the lot under controversy and knowing that
plaintiff is the one in possession thereof, defendants should have notified her before they
bulldozed the same. Their claim that the area in question belongs to PEA, even if true, is no
excuse for defendants to bulldoze it summarily knowing fully well that there were improvements
or crops standing thereon.

Defendants evidently took the law into their hands. They should have acted with caution and
prudence before trespassing on other's property. Even squatters are entitled to due process and
cannot just be evicted by the owner without resorting to the court of law.[15]
Such factual findings of the CA are conclusive on the parties and carry even more weight when
the CA affirmed the factual findings of the trial court.[16]

Nevertheless, the Court finds that both the trial court and the CA seriously erred in awarding in
favor of respondent the colossal sum of P2,000,000.00 as actual and compensatory damages, and
the amount of P100,000.00 as attorney's fees and costs of suit, as the evidence on record does not
support the award of such amount.

Chapter 2, Title XVIII, Book IV of the Civil Code governs the award of actual or compensatory
damages.[17] Except as provided by law or by stipulation, one is entitled to compensation for
actual damages only for such pecuniary loss suffered by him as he has duly proved.[18] The
indemnification shall comprehend not only the value of the loss suffered, but also that of the
profits that the obligee failed to obtain.[19] In contracts and quasi-contracts, the damages which
may be awarded are dependent on whether the obligor acted with good faith or otherwise.[20] In
case of good faith, the damages recoverable are those which are the natural and probable
consequences of the breach of the obligation and which the parties have foreseen or could have
reasonably foreseen at the time of the constitution of the obligation. If the obligor acted with
fraud, bad faith, malice, or wanton attitude, he shall be responsible for all damages which may be
reasonably attributed to the non-performance of the obligation. In crimes and quasi-delicts, the
defendants shall be liable for all damages which are the natural and probable consequences of the
act or omission complained of, whether or not such damages have been foreseen or could have
reasonably been foreseen by the defendant.[21]

There is no question that respondent is entitled to damages. However, respondent's cause of

action before the trial court is not premised on any contract, quasi-contract, delict or quasi-
delict. At best, her demand for damages can be anchored on the "abuse of rights" principle under
Article 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 foregoing provision sets standards which must be observed in the exercise of one's rights as
well as in the performance of its duties, to wit: to act with justice; give everyone his due; and
observe honesty and good faith.[22] When a right is exercised in a manner which discards these
norms resulting in damage to another, a legal wrong is committed for which the actor can be held
accountable.[23]

Respondent's ownership of the property on which the pepper trees stand is immaterial in this
petition. There is no dispute that respondent owned the pepper trees that were destroyed by
petitioner. Even assuming that petitioner owns the property or that it bulldozed the land within
its boundaries, still, as the trial court aptly reasoned, there was no excuse for petitioner to
disregard respondent's rights over her trees. The exercise of one's rights is not without
limitations. Having the right should not be confused with the manner by which such right is to
be exercised.[24]

Property rights must be considered, for many purposes, not as absolute, unrestricted dominions
but as an aggregation of qualified privileges, the limits of which are prescribed by the equality of
rights, and the correlation of rights and obligations necessary for the highest enjoyment of
property by the entire community of proprietors.[25] In Rellosa vs. Pellosis,[26] the Court ruled
that:
Petitioner might verily be the owner of the land, with the right to enjoy and to exclude any
person from the enjoyment and disposal thereof, but the exercise of these rights is not without
limitations. The abuse of rights rule established in Article 19 of the Civil Code requires every
person to act with justice, to give everyone his due; and to observe honesty and good faith.
When a right is exercised in a manner which discards these norms resulting in damage to
another, a legal wrong is committed for which the actor can be held accountable. In this
instance, the issue is not so much about the existence of the right or validity of the order of
demolition as the question of whether or not petitioners have acted in conformity with, and not in
disregard of, the standard set by Article 19 of the Civil Code.[27]
Actual or compensatory damages are those awarded in order to compensate a party for an injury
or loss he suffered. They arise out of a sense of natural justice and are aimed at repairing the
wrong done.[28] To be recoverable, actual and compensatory damages must be duly proved with
reasonable degree of certainty. A court cannot rely on speculation, conjecture or guesswork as to
the fact and amount of damages, but must depend upon competent proof that they have suffered
and on evidence of the actual amount thereof. The party alleging a fact has the burden of
proving it and a mere allegation is not evidence.[29]

There is nothing in the records of this case that will support the finding that respondent suffered
actual damages in the amount of P2,000,000.00. There must be competent proof of the actual
amount of loss, and credence can be given only to claims that are duly supported by receipts.[30]
Save for respondent's bare testimony and the pictures taken on the property, she did not present
any other competent and independent proof to corroborate her claim. No receipt was ever
proffered by respondent proving her claims for compensation for the following items: (1) the
3,000 pepper seedlings, which were allegedly bought at P350.00 each; (2) the cost of labor and
water system installed to maintain the farm; (3) her alleged capital investment of P1,300,000.00;
and (4) the supposed unrealized income of P700,000.00.[31] Given the dearth of evidence,
respondent�s claim for actual and compensatory damages should have been denied by the trial
court and the award thereof corrected by the CA.

In lieu of actual damages, temperate damages, which are more than nominal but less than
compensatory damages, should have been awarded by the trial court considering that respondent,
indeed, had suffered some pecuniary loss but its amount cannot be proved with certainty.[32] The
amount of P250,000.00 is sufficient and reasonable under the circumstances of this case.

With regard to the award of attorney's fees and costs of suit, the same was correctly awarded
since petitioner has compelled respondent to incur expenses to protect her interest.[33] The Court
deems, however, that the award cannot be more than what was prayed for in respondent's
complaint,[34] which in this case is P50,000.00 for attorney's fees and P30,000.00 for litigation
expenses.[35] Thus, the award of attorney's fees and costs of suit is reduced in accord with
respondent's prayer in her Complaint.

WHEREFORE, the Decision dated June 4, 1999 and Resolution dated September 26, 2000
rendered by the Court of Appeals in CA-G.R. CV

No. 52944 are hereby MODIFIED as follows:

1) The award of Two Million Pesos (P2,000,000.00) as actual and compensatory damages is
DELETED; and

2) Petitioner Public Estates Authority and the National Housing Authority are held jointly and
severally liable to pay respondent the following amounts:
(a) Two Hundred Fifty Thousand Pesos (P250,000.00) as temperate damages;

(b) Fifty Thousand Pesos (P50,000.00) as attorney's fees; and

(c) Thirty Thousand Pesos (P30,000.00) for costs of suit.

SO ORDERED.

Puno (chairman), Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.

[1]
Rollo, p. 48. Penned by Associate Justice Omar U. Amin (now retired) with Associate Justices
Hector L. Hofileña (now retired) and Presbitero J. Velasco, Jr. (now Court Administrator)
concurring.
[2]
Entitled, "Rosario Gañac Chu, Plaintiff, versus, Public Estates Authority and NHA,
Defendants."; Rollo, p. 123.
[3]
Id., p. 52.
[4]
Records, pp. 2-4.
[5]
Id., pp. 51-53.
[6]
Id., p. 324.
[7]
Id., p. 363.
[8]
Id., p. 29.
[9]
Id., pp. 320-321.
[10]
Id., p. 48.
[11]
Id., pp. 29-37.
[12]
Id., pp. 310-312.
[13]
Permanent Savings and Loan Bank vs. Velarde, G.R. No. 140608, September 23, 2004, 439
SCRA 1.
[14]
Twin Towers Condominium Corp. vs. Court of Appeals, G.R. No. 123552, February 27, 2003,
398 SCRA 203.
[15]
Rollo, pp. 47-48.
[16]
Langkaan Realty Development, Inc. vs. United Coconut Planters Bank, G.R. No. 139437,
December 8, 2000, 347 SCRA 542.
[17]
ABS-CBN Broadcasting Corp. vs. Court of Appeals, G.R. No. 128690, January 21, 1999, 301
SCRA 572.
[18]
Article 2199, Civil Code.
[19]
Article 2200, Civil Code.
[20]
Article 2201, Civil Code.
[21]
Article 2202, Civil Code.
[22]
GF Equity, Inc. vs. Valenzona, G.R. No. 156841, June 30, 2005.
[23]
MWSS vs. Act Theater, Inc., G.R. No. 147076, June 17, 2004, 432 SCRA 418, 422.
[24]
Ibid., p. 422.
[25]
United Coconut Planters Bank vs. Basco, G.R. No. 142668, August 31, 2004, 437 SCRA 325.
[26]
G.R. No. 138964, August 9, 2001, 362 SCRA 486.
[27]
Id., p. 490.
[28]
Villafuerte vs. Court of Appeals, G.R. No. 134239, May 26, 2005.
[29]
LBC Express, Inc. vs. Ado, G.R. No. 161760, August 25, 2005.
[30]
Viron Transportation Corp., Inc. vs. Delos Santos, G.R. No. 138296, November 22, 2000, 345
SCRA 509.
[31]
TSN, May 27, 1994, p. 6.
[32]
Villafuerte case, supra.
[33]
Air Philippines Corp. vs. International Business Aviation Services, Phils., Inc., G.R. No.
151963, September 9, 2004, 438 SCRA 51.
[34]
Makabali vs. Court of Appeals, G.R. No. L-46877, January 22, 1988, 157 SCRA 253.
[35]
Records, p. 6.

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