GR 47013

325 SCRA 694

Andres Lao v. CA, The Associated Anglo American Tobacco Corporation, and Esteban Co

FACTS:

On April 6, 1965, the respondent corporation entered into a “Contract of Sales Agent” with Andres
Lao. Under the contract, Lao would sell different kinds of cigarettes manufactured and shipped by
the corporation to his business address in Tacloban City. In their agreement, Lao would remit the
sales proceeds to the corporation. In exchange of his services, he would receive commissions
differing on the kind of cigarettes he was able to sell; he also received fixed monthly salaries and
operational allowances. To secure his obligation, his brother Jose and his father Thomas executed
a deed of mortgage amounting to 200,000 in favor of the corporation.

Lao made a great deal of business for the corporation. He was awarded plaques and trophies for
his outstanding performance for the years 1966-1968. However, 7 months after, he failed to report
the monthly sales. The President of the corporation Chiang Kiat Kam directed Lao to settle the
difficulty of obtaining a tally between Lao’s account and of the corporation. Esteban Co, one of the
respondents in this case was the Vice President and General Manager of the Corporation
summoned Lao to Pasay City for an accounting. According to the corporation, Lao should pay 525,
053.47 representing the sales allegedly not remitted to the corporation. Lao on the other hand
claims that he should rather be reimbursed for his overpayment amounting to 556, 444.20. To settle
the difference, Lao enlisted the services of SGV Accounting Firm, however, the Corporation denied
SGV to have access to their records. The Corp. accused Lao that he was diverting the proceeds to
finance his construction business. The Corp. sent another agent to supervise Lao’s operation. This
agent was Ngo Kheng. He took all the vehicles and trucks used for delivering and shipping of
cigarettes to a different compound under Ngo Kheng’s control. Lao no longer received further
shipments of cigarettes. For these reasons, Lao filed a civil action for accounting and damages with
preliminary injunction before the CFI of Leyte.

The CFI ordered Lao to pay the corporation 167,745.20.

The Corporation appealed the decision praying for re-computation of the obligation of Lao.

The CA however reversed the CFI decision ordering the corp. to pay Lao 150,000 actual damages,
30, 000 moral damages, and 10,000 exemplary damages as well as to reimburse Lao’s
overpayment.

During the pendency of the civil action, the corporation filed a criminal case for estafa against Lao.

Subsequently, before the acquittal of Lao or before the termination of the case, Lao filed a tort
action for malicious prosecution against the Corp.

ISSUE:

Whether the Corp. is liable for malicious prosecution?

RULING:

No. The corporation is not liable for malicious prosecution because Lao’s tort action was premature
thus no cause of action. A tort action for malicious prosecution is defined as an action brought by
one against another, whose criminal prosecution, civil suit, or other legal proceedings has been
instituted maliciously or without probable cause, after the termination of the action or legal
proceeding in favor of the defendant therein. The gist of the action for malicious prosecution is
merely for the purpose of vexing or causing injury to another. Furthermore, the SC enumerated the
elements that must be present for an action for malicious prosecution to prosper, these are:

(1) The defendant is the prosecutor himself, and is filed after termination of the case with
acquittal in favor of the defendant;
(2) That the prosecutor in bringing the action, acted without probable cause;
(3) The prosecutor was actuated with malice.

These elements were not present in this case. Lao prematurely filed the case and he was not a
prosecutor that may have acted without probable cause in bringing the action and was actuated with
malice. Malice means the “Inexcusable intent to injure, oppress, vex, annoy or humiliate another.”
The presence of probable cause signifies as a legal consequence the absence of malice.

In summary, Corp is not liable for malicious prosecution. SC ordered Corp. to reimburse Lao’s
overpayment of 556,444.20. Only 30,000 actual damages was granted and the other monetary
awards were deleted.