Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. L-18463 October 4, 1922

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee,

vs.

GREGORIO PERFECTOR, defendant-appellant.

Alfonso E. Mendoza and the appellant in behalf of the latter.

Attorney-General Villa-Real for appellee.

MALCOLM, J.:

The important question is here squarely presented of whether article 256 of the Spanish
Penal Code, punishing "Any person who, by . . . writing, shall defame, abuse, or insult any Minister
of the Crown or other person in authority . . .," is still in force.

About August 20, 1920, the Secretary of the Philippine Senate, Fernando M. Guerrero,
discovered that certain documents which constituted the records of testimony given by witnesses
in the investigation of oil companies, had disappeared from his office. Shortly thereafter, the
Philippine Senate, having been called into special session by the Governor-General, the Secretary
for the Senate informed that body of the loss of the documents and of the steps taken by him to
discover the guilty party. The day following the convening of the Senate, September 7, 1920, the
newspaper La Nacion, edited by Mr. Gregorio Perfecto, published an article reading as follows:

Half a month has elapsed since the discovery, for the first time, of the scandalous robbery of
records which were kept and preserved in the iron safe of the Senate, yet up to this time there is
not the slightest indication that the author or authors of the crime will ever be discovered.

To find them, it would not, perhaps, be necessary to go out of the Sente itself, and the
persons in charge of the investigation of the case would not have to display great skill in order to
succeed in their undertaking, unless they should encounter the insuperable obstacle of offical
concealment.

In that case, every investigation to be made would be but a mere comedy and nothing more.

After all, the perpetration of the robbery, especially under the circumstances that have
surrounded it, does not surprise us at all.

The execution of the crime was but the natural effect of the environment of the place in
which it was committed.

How many of the present Senators can say without remorse in their conscience and with
serenity of mind, that they do not owe their victory to electoral robbery? How may?
 The author or authors of the robbery of the records from the said iron safe of the Senate
have, perhaps, but followed the example of certain Senators who secured their election through
fraud and robbery.

The Philippine Senate, in its session of September 9, 1920, adopted a resolution authorizing
its committee on elections and privileges to report as to the action which should be taken with
reference to the article published in La Nacion. On September 15, 1920, the Senate adopted a
resolution authorizing the President of the Senate to indorse to the Attorney-General, for his study
and corresponding action, all the papers referring to the case of the newspaper La Nacion and its
editor, Mr. Gregorio Perfecto. As a result, an information was filed in the municipal court of the City
of Manila by an assistant city fiscal, in which the editorial in question was set out and in which it
was alleged that the same constituted a violation of article 256 of the Penal Code. The defendant
Gregorio Perfecto was found guilty in the municipal court and again in the Court of First Instance of
Manila.

During the course of the trial in the Court of First Instance, after the prosecution had rested,
the defense moved for the dismissal of the case. On the subject of whether or not article 256 of the
Penal Code, under which the information was presented, is in force, the trial judge, the Honorable
George R. Harvey, said:

This antiquated provision was doubtless incorporated into the Penal Code of Spain for the
protection of the Ministers of the Crown and other representatives of the King against free speech
and action by Spanish subjects. A severe punishment was prescribed because it was doubtless
considered a much more serious offense to insult the King's representative than to insult an
ordinary individual. This provision, with almost all the other articles of that Code, was extended to
the Philippine Islands when under the dominion of Spain because the King's subject in the
Philippines might defame, abuse or insult the Ministers of the Crown or other representatives of
His Majesty. We now have no Ministers of the Crown or other persons in authority in the
Philippines representing the King of Spain, and said provision, with other articles of the Penal
Code, had apparently passed into "innocuous desuetude," but the Supreme Corut of the Philippine
Islands has, by a majority decision, held that said article 256 is the law of the land to-day. . . .

The Helbig case is a precedent which, by the rule of stare decisis, is binding upon this court
until otherwise determined by proper authority.

In the decision rendered by the same judge, he concluded with the following language:

In the United States such publications are usually not punishable as criminal offense, and
little importance is attached to them, because they are generally the result of political controversy
and are usually regarded as more or less colored or exaggerated. Attacks of this character upon a
legislative body are not punishable, under the Libel Law. Although such publications are
reprehensible, yet this court feels some aversion to the application of the provision of law under
which this case was filed. Our Penal Code has come to us from the Spanish regime. Article 256 of
that Code prescribes punishment for persons who use insulting language about Ministers of the
Crown or other "authority." The King of Spain doubtless left the need of such protection to his
ministers and others in authority in the Philippines as well as in Spain. Hence, the article referred
to was made applicable here. Notwithstanding the change of sovereignty, our Supreme Court, in a
majority decision, has held that this provision is still in force, and that one who made an insulting
remark about the President of the United States was punishable under it. (U.S. vs. Helbig, supra.)
If it applicable in that case, it would appear to be applicable in this case. Hence, said article 256
must be enforced, without fear or favor, until it shall be repealed or superseded by other legislation,
or until the Supreme Court shall otherwise determine.

In view of the foregoing considerations, the court finds the defendant guilty as charged in the
information and under article 256 of their Penal Code sentences him to suffer two months and one
day of arresto mayor and the accessory penalties prescribed by law, and to pay the costs of both
instances.

The fifteen errors assigned by the defendant and appellant, reenforced by an extensive brief,
and eloquent oral argument made in his own behalf and by his learned counsel, all reduce
themselves to the pertinent and decisive question which was announced in the beginning of this
decision.

It will be noted in the first place that the trial judge considered himself bound to follow the
rule announced in the case of United States vs. Helbig (R. G. No. 14705, 1 not published). In that
case, the accused was charged with having said, "To hell with the President and his
proclamations, or words to that effect," in violation of article 256 of the Penal Code. He was found
guilty in a judgment rendered by the Court of First Instance of Manila and again on appeal to the
Supreme Court, with the writer of the instant decision dissenting on two principal grounds: (1) That
the accused was deprived of the constitutional right of cross-examination, and (2) that article 256
of the Spanish Penal Code is no longer in force. Subsequently, on a motion of reconsideration, the
court, being of the opinion that the Court of First Instance had committed a prejudicial error in
depriving the accused of his right to cross-examine a principal witness, set aside the judgment
affirming the judgment appealed from and ordered the return of the record to the court of origin for
the celebration of a new trial. Whether such a trial was actually had, is not known, but at least, the
record in the Helbig case has never again been elevated to this court.

There may perchance exist some doubt as to the authority of the decision in the Helbig
case, in view of the circumstances above described. This much, however, is certain: The facts of
the Helbig case and the case before us, which we may term the Perfecto case, are different, for in
the first case there was an oral defamation, while in the second there is a written defamation. Not
only this, but a new point which, under the facts, could not have been considered in the Helbig
case, is, in the Perfecto case, urged upon the court. And, finally, as is apparent to all, the appellate
court is not restrained, as was the trial court, by strict adherence to a former decision. We much
prefer to resolve the question before us unhindered by references to the Helbig decision.

This is one of those cases on which a variety of opinions all leading to the same result can
be had. A majority of the court are of the opinion that the Philippine Libel Law, Act No. 277, has
had the effect of repealing so much of article 256 of the Penal Code as relates to written
defamation, abuse, or insult, and that under the information and the facts, the defendant is neither
guilty of a violation of article 256 of the Penal Code, nor of the Libel Law. The view of the Chief
Justice is that the accused should be acquitted for the reason that the facts alleged in the
information do not constitute a violation of article 156 of the Penal Code. Three members of the
court believe that article 256 was abrogated completely by the change from Spanish to American
sovereignty over the Philippines and is inconsistent with democratic principles of government.

Without prejudice to the right of any member of the court to explain his position, we will
discuss the two main points just mentioned.

1. Effect of the Philippine Libel Law, Act No. 277, on article 256 of the Spanish Penal Code.
— The Libel Law, Act No. 277, was enacted by the Philippine Commission shortly after
organization of this legislative body. Section 1 defines libel as a "malicious defamation, expressed
either in writing, printing, or by signs or pictures, or the like, or public theatrical exhibitions, tending
to blacken the memory of one who is dead or to impeach the honesty, virtue, or reputation, or
publish the alleged or natural deffects of one who is alive, and thereby expose him to public hatred,
contempt or ridicule." Section 13 provides that "All laws and parts of laws now in force, so far as
the same may be in conflict herewith, are hereby repealed. . . ."

That parts of laws in force in 1901 when the Libel Law took effect, were in conflict therewith,
and that the Libel Law abrogated certain portion of the Spanish Penal Code, cannot be gainsaid.
Title X of Book II of the Penal Code, covering the subjects of calumny and insults, must have been
particularly affected by the Libel Law. Indeed, in the early case of Pardo de Tavera vs. Garcia
Valdez ([1902], 1. Phil., 468), the Supreme Court spoke of the Libel Law as "reforming the
preexisting Spanish law on the subject of calumnia and injuria." Recently, specific attention was
given to the effect of the Libel Law on the provisions of the Penal Code, dealing with calumny and
insults, and it was found that those provisions of the Penal Code on the subject of calumny and
insults in which the elements of writing an publicity entered, were abrogated by the Libel Law.
(People vs. Castro [1922], p. 842, ante.)

The Libel Law must have had the same result on other provisions of the Penal Code, as for
instance article 256.

The facts here are that the editor of a newspaper published an article, naturally in writing,
which may have had the tendency to impeach the honesty, virtue, or reputation of members of the
Philippine Senate, thereby possibly exposing them to public hatred, contempt, or ridicule, which is
exactly libel, as defined by the Libel Law. Sir J. F. Stephen is authority for the statement that a libel
is indictable when defaming a "body of persons definite and small enough for individual members
to be recognized as such, in or by means of anything capable of being a libel." (Digest of Criminal
Law, art. 267.) But in the United States, while it may be proper to prosecute criminally the author of
a libel charging a legislator with corruption, criticisms, no matter how severe, on a legislature, are
within the range of the liberty of the press, unless the intention and effect be seditious. (3
Wharton's Criminal Law, p. 2131.) With these facts and legal principles in mind, recall that article
256 begins: Any person who, by . . . writing, shall defame, abuse, or insult any Minister of the
Crown or other person in authority," etc.

The Libel Law is a complete and comprehensive law on the subject of libel. The well-known
rule of statutory construction is, that where the later statute clearly covers the old subject-matter of
antecedent acts, and it plainly appears to have been the purpose of the legislature to give
expression in it to the whole law on the subject, previous laws are held to be repealed by
necessary implication. (1 Lewis' Sutherland Statutory Construction, p. 465.) For identical reasons,
it is evident that Act No. 277 had the effect so much of this article as punishes defamation, abuse,
or insults by writing.

Act No. 292 of the Philippine Commission, the Treason and Sedition Law, may also have
affected article 256, but as to this point, it is not necessary to make a pronouncement.

2. Effect of the change from Spanish to Amercian sevoreignty over the Philippine son article
256 of the Spanish Penal Code. — Appellant's main proposition in the lower court and again
energetically pressed in the appellate court was that article 256 of the Spanish Penal Code is not
now in force because abrogated by the change from Spanish to American sovereignty over the
Philippines and because inconsistent with democratic principles of government. This view was
indirectly favored by the trial judge, and, as before stated, is the opinion of three members of this
court.

Article 256 is found in Chapter V of title III of Book II of the Spanish Penal Code. Title I of
Book II punishes the crimes of treason, crimes that endanger the peace or independence of the
state, crimes against international law, and the crime of piracy. Title II of the same book punishes
the crimes of lese majeste, crimes against the Cortes and its members and against the council of
ministers, crimes against the form of government, and crimes committed on the occasion of the
exercise of rights guaranteed by the fundamental laws of the state, including crime against religion
and worship. Title III of the same Book, in which article 256 is found, punishes the crimes of
rebellion, sedition, assaults upon persons in authority, and their agents, and contempts, insults,
injurias, and threats against persons in authority, and insults, injurias, and threats against their
agents and other public officers, the last being the title to Chapter V. The first two articles in
Chapter V define and punish the offense of contempt committed by any one who shall be word or
deed defame, abuse, insult, or threathen a minister of the crown, or any person in authority. The
with an article condemning challenges to fight duels intervening, comes article 256, now being
weighed in the balance. It reads as follows: "Any person who, by word, deed, or writing, shall
defame, abuse, or insult any Minister of the Crown or other person in authority, while engaged in
the performance of official duties, or by reason of such performance, provided that the offensive
minister or person, or the offensive writing be not addressed to him, shall suffer the penalty of
arresto mayor," — that is, the defamation, abuse, or insult of any Minister of the Crown of the
Monarchy of Spain (for there could not be a Minister of the Crown in the United States of America),
or other person in authority in the Monarchy of Spain.

It cannot admit of doubt that all those provisions of the Spanish Penal Code having to do
with such subjects as treason, lese majeste, religion and worship, rebellion, sedition, and
contempts of ministers of the crown, are not longer in force. Our present task, therefore, is a
determination of whether article 256 has met the same fate, or, more specifically stated, whether it
is in the nature of a municipal law or political law, and is consistent with the Constitution and laws
of the United States and the characteristics and institutions of the American Government.

It is a general principle of the public law that on acquisition of territory the previous political
relations of the ceded region are totally abrogated. "Political" is here used to denominate the laws
regulating the relations sustained by the inhabitants to the sovereign. (American Insurance Co. vs.
Canter [1828], 1 Pet., 511; Chicago, Rock Island and Pacific Railway Co. vs. McGlinn [1885], 114
U.S., 542; Roa vs. Collector of Customs [1912], 23 Phil., 315.) Mr. Justice Field of the United
States Supreme Court stated the obvious when in the course of his opinion in the case of Chicago,
Rock Island and Pacific Railway Co. vs. McGlinn, supra, he said: "As a matter of course, all laws,
ordinances and regulations in conflict with the political character, institutions and Constitution of
the new government are at once displaced. Thus, upon a cession of political jurisdiction and
legislative power — and the latter is involved in the former — to the United States, the laws of the
country in support of an established religion or abridging the freedom of the press, or authorizing
cruel and unusual punishments, and he like, would at once cease to be of obligatory force without
any declaration to that effect." To quote again from the United States Supreme Court: "It cannot be
admitted that the King of Spain could, by treaty or otherwise, impart to the United States any of his
royal prerogatives; and much less can it be admitted that they have capacity to receive or power to
exercise them. Every nation acquiring territory, by treaty or otherwise, must hold it subject to the
Constitution and laws of its own government, and not according to those of the government ceding
it." (Pollard vs. Hagan [1845], 3 Hos., 210.)

On American occupation of the Philippines, by instructions of the President to the Military

Commander dated May 28, 1898, and by proclamation of the latter, the municipal laws of the
conquered territory affecting private rights of person and property and providing for the punishment
of crime were nominally continued in force in so far as they were compatible with the new order of
things. But President McKinley, in his instructions to General Merritt, was careful to say: "The first
effect of the military occupation of the enemy's territory is the severance of the former political
relation of the inhabitants and the establishment of a new political power." From that day to this,
the ordinarily it has been taken for granted that the provisions under consideration were still
effective. To paraphrase the language of the United States Supreme Court in Weems vs. United
States ([1910], 217 U. S., 349), there was not and could not be, except as precise questions were
presented, a careful consideration of the codal provisions and a determination of the extent to
which they accorded with or were repugnant to the "'great principles of liberty and law' which had
been 'made the basis of our governmental system.' " But when the question has been squarely
raised, the appellate court has been forced on occasion to hold certain portions of the Spanish
codes repugnant t democratic institutions and American constitutional principles. (U.S. vs. Sweet
[1901], 1 Phil., 18; U.S. vs. Balcorta [1913], 25 Phil., 273; U.S. vs. Balcorta [1913], 25 Phil., 533;
Weems vs. U.S., supra.)

The nature of the government which has been set up in the Philippines under American
sovereignty was outlined by President McKinley in that Magna Charta of Philippine liberty, his
instructions to the Commission, of April 7, 1900. In part, the President said:
 In all the forms of government and administrative provisions which they are authorized to
prescribe, the Commission should bear in mind that he government which they are establishing is
designed not for our satisfaction or for the expression of our theoretical views, but for the
happiness, peace, and prosperity of the people of the Philippine Islands, and the measures
adopted should be made to conform to their customs, their habits, and even their prejudices, to the
fullest extent consistent with the accomplishment of the indispensable requisites of just and
effective government. At the same time the Commission should bear in mind, and the people of
the Islands should be made plainly to understand, that there are certain great principles of
government which have been made the basis of our governmental system, which we deem
essential to the rule of law and the maintenance of individual freedom, and of which they have,
unfortunately, been denied the experience possessed by us; that there are also certain practical
rules of government which we have found to be essential to the preservation of these great
principles of liberty and law, and that these principles and these rules of government must be
established and maintained in their islands for the sake of their liberty and happiness, however
much they may conflict with the customs or laws of procedure with which they are familiar. It is
evident that the most enligthened thought of the Philippine Islands fully appreciates the importance
of these principles and rules, and they will inevitably within a short time command universal assent.

The courts have naturally taken the same view. Mr. Justice Elliott, speaking for our Supreme
Court, in the case of United States vs. Bull ([1910], 15 Phil., 7), said: "The President and Congress
framed the government on the model with which American are familiar, and which has proven best
adapted for the advancement of the public interests and the protection of individual rights and
privileges."

Therefore, it has come with somewhat of a shock to hear the statement made that the
happiness, peace, and prosperity of the people of the Philippine Islands and their customs, habits,
and prejudices, to follow the language of President McKinley, demand obeisance to authority, and
royal protection for that authority.

According to our view, article 256 of the Spanish Penal Code was enacted by the
Government of Spain to protect Spanish officials who were the representatives of the King. With
the change of sovereignty, a new government, and a new theory of government, as set up in the
Philippines. It was in no sense a continuation of the old, although merely for convenience certain of
the existing institutions and laws were continued. The demands which the new government made,
and makes, on the individual citizen are likewise different. No longer is there a Minister of the
Crown or a person in authority of such exalted position that the citizen must speak of him only with
bated breath. "In the eye of our Constitution and laws, every man is a sovereign, a ruler and a
freeman, and has equal rights with every other man. We have no rank or station, except that of
respectability and intelligence as opposed to indecency and ignorance, and the door to this rank
stands open to every man to freely enter and abide therein, if he is qualified, and whether he is
qualified or not depends upon the life and character and attainments and conduct of each person
for himself. Every man may lawfully do what he will, so long as it is not malum in se or malum
prohibitum or does not infringe upon the qually sacred rights of others." (State vs. Shepherd
[1903], 177 Mo., 205; 99 A. S. R., 624.)

It is true that in England, from which so many of the laws and institutions of the United
States are derived, there were once statutes of scandalum magnatum, under which words which
would not be actionable if spoken of an ordinary subject were made actionable if spoken of a peer
of the realm or of any of the great officers of the Crown, without proof of any special damage. The
Crown of England, unfortunately, took a view less tolerant that that of other sovereigns, as for
instance, the Emperors Augustus, Caesar, and Tiberius. These English statutes have, however,
long since, become obsolete, while in the United States, the offense of scandalum magnatum is
not known. In the early days of the American Republic, a sedition law was enacted, making it an
offense to libel the Government, the Congress, or the President of the United States, but the law
met with so much popular disapproval, that it was soon repealed. "In this country no distinction as
to persons is recognized, and in practice a person holding a high office is regarded as a target at
whom any person may let fly his poisonous words. High official position, instead of affording
immunity from slanderous and libelous charges, seems rather to be regarded as making his
character free plunder for any one who desires to create a senation by attacking it." (Newell,
Slander and Libel, 3d ed., p. 245; Sillars vs. Collier [1890], 151 Mass., 50; 6 L.R.A., 680.)

Article 256 of the Penal Code is contrary to the genius and fundamental principles of the
American character and system of government. The gulf which separates this article from the spirit
which inspires all penal legislation of American origin, is as wide as that which separates a
monarchy from a democratic Republic like that of the United States. This article was crowded out
by implication as soon as the United States established its authority in the Philippine Islands.
Penalties out of all proportion to the gravity of the offense, grounded in a distorted monarchical
conception of the nature of political authority, as opposed to the American conception of the
protection of the interests of the public, have been obliterated by the present system of
government in the Islands. 1awph!l.net

From an entirely different point of view, it must be noted that this article punishes contempts
against executive officials, although its terms are broad enough to cover the entire official class.
Punishment for contempt of non-judicial officers has no place in a government based upon
American principles. Our official class is not, as in monarchies, an agent of some authority greater
than the people but it is an agent and servant of the people themselves. These officials are only
entitled to respect and obedience when they are acting within the scope of their authority and
jurisdiction. The American system of government is calculated to enforce respect and obedience
where such respect and obedience is due, but never does it place around the individual who
happens to occupy an official position by mandate of the people any official halo, which calls for
drastic punishment for contemptuous remarks.

The crime of lese majeste disappeared in the Philippines with the ratification of the Treaty of
Paris. Ministers of the Crown have no place under the American flag.

To summarize, the result is, that all the members of the court are of the opinion, although for
different reasons, that the judgment should be reversed and the defendant and appellant acquitted,
with costs de officio. So ordered.

Ostrand and Johns, JJ., concur.

 Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 81262 August 25, 1989

GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C.

HENDRY, petitioners,

vs.

THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS,

respondents.

Atencia & Arias Law Offices for petitioners.

Romulo C. Felizmena for private respondent.

CORTES, J.:

Private respondent Restituto M. Tobias was employed by petitioner Globe

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

According to private respondent it was he who actually discovered the

anomalies and reported them on November 10, 1972 to his immediate
superior Eduardo T. Ferraren and to petitioner Herbert C. Hendry who was
then the Executive Vice-President and General Manager of GLOBE
MACKAY.
On November 11, 1972, one day after private respondent Tobias made the
report, petitioner Hendry confronted him by stating that he was the number
one suspect, and ordered him to take a one week forced leave, not to
communicate with the office, to leave his table drawers open, and to leave
the office keys.

On November 20, 1972, when private respondent Tobias returned to work

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

On December 6,1972, the Manila police investigators submitted a laboratory

crime report (Exh. "A") clearing private respondent of participation in the
anomalies.

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

Nevertheless, on December 12, 1972, petitioner Hendry issued a

memorandum suspending Tobias from work preparatory to the filing of
criminal charges against him.

On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief

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

Notwithstanding the two police reports exculpating Tobias from the anomalies
and the fact that the report of the private investigator, was, by its own terms,
not yet complete, petitioners filed with the City Fiscal of Manila a complaint for
estafa through falsification of commercial documents, later amended to just
estafa. Subsequently five other criminal complaints were filed against Tobias,
four of which were for estafa through Falsification of commercial document
while the fifth was for of Article 290 of' the Revised Penal Code (Discovering
Secrets Through Seizure of Correspondence). Two of these complaints were
lâwphî1.ñèt

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

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

Unemployed, Tobias sought employment with the Republic Telephone

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

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

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

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

On the other hand, private respondent contends that because of petitioners'

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

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

This article, known to contain what is commonly referred to as the principle of

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

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

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

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

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

In determining whether or not the principle of abuse of rights may be invoked,

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

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

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

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

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

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

To constitute malicious prosecution, there must be proof that the prosecution

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

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

xxx

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

xxx

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

xxx

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

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

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

Yet, petitioners still insist that the award of damages was improper, invoking
the principle of damnum absque injuria. It is argued that "[t]he only probable
actual damage that plaintiff (private respondent herein) could have suffered
was a direct result of his having been dismissed from his employment, which
was a valid and legal act of the defendants-appellants (petitioners herein). "
lâwphî1.ñèt

[Petition, p. 17; Rollo, p. 18].

According to the principle of damnum absque injuria, damage or loss which

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

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

Lastly, the award of exemplary damages is impugned by petitioners. Although

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

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

SO ORDERED.

Fernan, C.J., Gutierrez, Jr. and Bidin, JJ., concur.

Feliciano, J., took no part.