G.R. No. L-27760 May 29, 1974 CRISPIN ABELLANA and FRANCISCO ABELLANA, petitioners, vs.

HONORABLE GERONIMO R. MARAVE, Judge, Court of First Instance of Misamis Occidental, Branch II; and GERONIMO CAMPANER, MARCELO LAMASON, MARIA GURREA, PACIENCIOSA FLORES and ESTELITA NEMEN0, respondents. Prud. V. Villafuerte for petitioners. Hon. Geronimo R. Marave in his own behalf.

FERNANDO, J.:p This petition for certiorari is characterized by a rather vigorous insistence on the part of petitioners Crispin Abellana and Francisco Abellana that an order of respondent Judge was issued with grave abuse of discretion. It is their contention that he ought to have dismissed an independent civil action filed in his court, considering that the plaintiffs, as offended parties, private respondents here, 1 failed to reserve their right to institute it separately in the City Court of Ozamis City, when the criminal case for physical injuries through reckless imprudence was commenced. Such a stand of petitioners was sought to be bolstered by a literal reading of Sections 1 and 2 of Rule 111. 2 It does not take into account, however, the rule as to a trial de novo found in Section 7 of Rule 123. 3What is worse, petitioners appear to be oblivious of the principle that if such an interpretation were to be accorded the applicable Rules of Court provisions, it would give rise to a grave constitutional question in view of the constitutional grant of power to this Court to promulgate rules concerning pleading, practice, and procedure being limited in the sense that they "shall not diminish, increase, or modify substantive rights." 4 It thus appears clear that the petition for certiorari is without merit. The relevant facts were set forth in the petition and admitted in the answer. The dispute had its origins in a prosecution of petitioner Francisco Abellana of the crime of physical injuries through reckless imprudence in driving his cargo truck, hitting a motorized pedicab resulting in injuries to its passengers, namely, private respondents Marcelo Lamason, Maria Gurrea, Pacienciosa Flores, and Estelita Nemeo. The criminal case was filed with the city court of Ozamis City, which found the accused Francisco Abellana guilty as charged, damages in favor of the offended parties likewise being awarded. The accused, now petitioner, Francisco Abellana appealed such decision to the Court of First Instance. 5 At this stage, the private respondents as the offended parties filed with another branch of the Court of First Instance of Misamis Occidental, presided by respondent Judge, a separate and independent civil action for damages allegedly suffered by them from the reckless driving of the aforesaid Francisco Abellana. 6 In such complaint, the other petitioner, Crispin Abellana, as the alleged employer, was included as defendant. Both of them then sought the dismissal of such action principally on the ground that there was no reservation for the filing thereof in the City Court of Ozamis. It was argued by them that it was not allowable at the stage where the criminal case was already on appeal. 7 Respondent Judge was not persuaded. On April 28, 1967, he issued the following order: "This is a motion to dismiss this case on the ground that in Criminal Case No. OZ-342 which was decided by the City Court and appealed to this Court, the offended parties failed to expressly waive the civil action or reserve their right to institute it separately in said City Court, as required in Section 1, Rule 111, Rules of Court. From the Records of Criminal Case No. OZ-342, it appears that the City Court convicted the accused. On appeal to this Court, the judgment of the City Court was vacated and a trial de novo will have to be conducted. This Court has not as yet begun trying said criminal case. In the meantime, the offended parties expressly waived in this Court the civil action impliedly instituted with the criminal action, and reserve their right to institute a separate action as in fact, they did file. The Court is of the opinion that at this stage, the offended parties may still waive the civil action because the judgment of the City Court is vacated and a trial de novo will have to be had. In view of this waiver and reservation, this Court would be precluded from judging civil damages against the accused and in favor of the offended parties. [Wherefore], the motion to dismiss is hereby denied. ..." 8 There was a motion for reconsideration which was denied. Hence this petition. The only basis of petitioners for the imputation that in the issuance of the challenged order there was a grave abuse of discretion, is their reading of the cited Rules of Court provision to the effect that upon the institution of a criminal action "the civil action for recovery of civil liability arising from the offense charge is impliedly instituted with the criminal action, unless the offended party ...reserves his right to institute it separately." 9 Such an interpretation, as noted, ignores the de novo aspect of appealed cases from city courts. 10It does likewise, as mentioned, give rise to a constitutional question to the extent that it could yield a meaning to a rule of court that may trench on a substantive right. Such an interpretation is to be rejected. Certiorari, to repeat, clearly does not lie. 1. In the language of the petition, this is the legal proposition submitted for the consideration of this Court : "That a separate civil action can be legally filed and allowed by the court only at the institution, or the right to file such separate civil action reserved or waived, at such institution of the criminal action, and never on appeal to the next higher court." 11 It admits of no doubt that an independent civil action was filed by private respondents only at the stage of appeal. Nor was there any reservation to that effect when the criminal case was instituted in the city court of Ozamis. Petitioners would then take comfort from the language of the

aforesaid Section 1 of Rule 111 for the unwarranted conclusion that absent such a reservation, an independent civil action is barred. In the first place, such an inference does not per se arise from the wording of the cited rule. It could be looked upon plausibly as anon-sequitur. Moreover, it is vitiated by the grievous fault of ignoring what is so explicitly provided in Section 7 of Rule 123: "An appealed case shall be tried in all respects anew in the Court of First Instance as if it had been originally instituted in that court." 12 Unlike petitioners, respondent Judge was duly mindful of such a norm. This Court has made clear that its observance in appealed criminal cases is mandatory. 13 In a 1962 decision, People v. Carreon, 14 Justice Barrera, as ponente, could trace such a rule to a 1905 decision, Andres v. Wolfe. 15 Another case cited by him is Crisostomo v. Director of Prisons, 16 where Justice Malcolm emphasized how deeply rooted in Anglo-American legal history is such a rule. In the latest case in point, People v. Jamisola, 17 this Court, through Justice Dizon, reiterated such a doctrine in these words: "The rule in this jurisdiction is that upon appeal by the defendant from a judgment of conviction by the municipal court, the appealed decision is vacated and the appealed case 'shall be tried in all respects anew in the court of first instance as if it had been originally instituted in that court.'" 18 So it is in civil cases under Section 9 of Rule 40. 19 Again, there is a host of decisions attesting to its observance. 20 It cannot be said then that there was an error committed by respondent Judge, much less a grave abuse of discretion, which is indispensable if this petition were to prosper. 2. Nor is the above the only ground for rejecting the contention of petitioners. The restrictive interpretation they would place on the applicable rule does not only result in its emasculation but also gives rise to a serious constitutional question. Article 33 of the Civil Code is quite clear: "In cases of ... 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." 21 That is a substantive right, not to be frittered away by a construction that could render it nugatory, if through oversight, the offended parties failed at the initial stage to seek recovery for damages in a civil suit. As referred to earlier, the grant of power to this Court, both in the present Constitution and under the 1935 Charter, does not extend to any diminution, increase or modification of substantive right. 22 It is a wellsettled doctrine that a court is to avoid construing a statute or legal norm in such a manner as would give rise to a constitutional doubt. Unfortunately, petitioners, unlike respondent Judge, appeared to lack awareness of the undesirable consequence of their submission. Thus is discernible another insuperable obstacle to the success of this suit. 3. Nor is this all that needs to be said. It is understandable for any counsel to invoke legal propositions impressed with a certain degree of plausibility if thereby the interest of his client would be served. That is though, merely one aspect of the matter. There is this other consideration. He is not to ignore the basic purpose of a litigation, which is to assure parties justice according to law. He is not to fall prey, as admonished by Justice Frankfurter, to the vice of literalness. The law as an instrument of social control will fail in its function if through an ingenious construction sought to be fastened on a legal norm, particularly a procedural rule, there is placed an impediment to a litigant being given an opportunity of vindicating an alleged right. 23 The commitment of this Court to such a primordial objective has been manifested time and time again. 24 WHEREFORE, this petition for certiorari is dismissed. Costs against petitioners.

G.R. No. 91856 October 5, 1990 YAKULT PHILIPPINES AND LARRY SALVADO, petitioner, vs. COURT OF APPEALS, WENCESLAO M. POLO, in his capacity as Presiding Judge of Br. 19 of the RTC of Manila, and ROY CAMASO, respondents. Tomas R. Leonidas for petitioners. David B. Agoncillo for private respondent.

GANCAYCO, J.: Can a civil action instituted after the criminal action was filed prosper even if there was no reservation to file a separate civil action? This is the issue in this petition. On December 24, 1982, a five-year old boy, Roy Camaso, while standing on the sidewalk of M. de la Fuente Street, Sampaloc, Manila, was sideswiped by a Yamaha motorcycle owned by Yakult Philippines and driven by its employee, Larry Salvado. Salvado was charged with the crime of reckless imprudence resulting to slight physical injuries in an information that was filed on January 6, 1983 with the then City Court of Manila, docketed as Criminal Case No. 027184. On October 19, 1984 a complaint for damages was filed by Roy Camaso represented by his father, David Camaso, against Yakult Philippines and Larry Salvado in the Regional Trial Court of Manila docketed as Civil Case No. 84-27317. In due course a decision was rendered in the civil case on May 26, 1989 ordering defendants to pay jointly and severally the plaintiff the sum of P13,006.30 for actual expenses for medical services and hospital bills; P3,000.00 attorney's fees and the costs of the suit. Although said defendants appealed the judgment, they nevertheless filed a petition for certiorari in the Court of Appeals challenging the jurisdiction of the trial court over said civil case. Petitioners' thesis is that the civil action for damages for injuries arising from alleged criminal negligence of Salvado, being without malice, cannot be filed independently of the criminal action under Article 33 of the Civil Code. Further, it is contended that under Section 1, Rule 111 of the 1985 Rules on Criminal Procedure such a separate civil action may not be filed unless reservation thereof is expressly made. In a decision dated November 3, 1989, the Court of Appeals dismissed the petition. 1 A motion for reconsideration thereof filed by petitioners was denied on January 30, 1990. Hence this petition. The petition is devoid of merit. Section 1, Rule 111 of the 1985 Rules of Criminal Procedure provides as follows:

SEC. 1. Institution of criminal and civil actions. When a criminal action is instituted, the civil action for the recovery of civil liability is impliedly instituted with the criminal action, unless the offended party waives the civil action, reserves his right to institute it separately, or institutes the civil action prior to the criminal action. Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines arising from the same act or omission of the accused. A waiver of any of the civil actions extinguishes the others. The institution of, or the reservation of the right to file, any of said civil actions separately waives the others. The reservation of the right to institute the separate civil actions shall be made before the prosecution starts to present its evidence and under circumstances affording the offended party a reasonable opportunity to make such reservation. In no case may the offended party recover damages twice for the same act or omission of the accused. When the offended party seeks to enforce civil liability against the accused by way of moral, nominal, temperate or exemplary damages, the filing fees for such civil action as provided in these Rules shall constitute a first lien on the judgment except in an award for actual damages. In cases wherein the amount of damages, other than actual, is alleged in the complaint or information, the corresponding filing fees shall be paid by the offended party upon the filing thereof in court for trial. (1a) Although the incident in question and the actions arising therefrom were instituted before the promulgation of the 1985 Rules of Criminal Procedure, its provisions which are procedural may apply retrospectively to the present case. 2 Under the aforecited provisions of the rule, the civil action for the recovery of civil liability is impliedly instituted with the criminal action unless the offended party waives the civil action, reserves his right to institute it separately or institutes the civil action prior to the criminal action. Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines arising from the same act or omission of the accused. It is also provided that the reservation of the right to institute the separate civil action shall be made before the prosecution starts to present its evidence and under circumstances affording the offended party a reasonable opportunity to make such reservation. In this case, the offended party has not waived the civil action, nor reserved the right to institute it separately. Neither has the offended party instituted the civil action prior to the criminal action. However, the civil action in this case was filed in court before the presentation of the evidence for the prosecution in the criminal action of which the judge presiding on the criminal case was duly informed, so that in the disposition of the criminal action no damages was awarded. The civil liability sought arising from the act or omission of the accused in this case is a quasi delict as defined under Article 2176 of the Civil Code as follows: ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. The aforecited revised rule requiring such previous reservation also covers quasi-delict as defined under Article 2176 of the Civil Code arising from the same act or omission of the accused. Although the separate civil action filed in this case was without previous reservation in the criminal case, nevertheless since it was instituted before the prosecution presented evidence in the criminal action, and the judge handling the criminal case was informed thereof, then the actual filing of the civil action is even far better than a compliance with the requirement of an express reservation that should be made by the offended party before the prosecution presents its evidence. The purpose of this rule requiring reservation is to prevent the offended party from recovering damages twice for the same act or omission. Thus, the Court finds and so holds that the trial court had jurisdiction over the separate civil action brought before it.

WHEREFORE, the petition is DENIED. The questioned decision of the Court of Appeals dated November 3, 1989 and its resolution dated January 30, 1990 are hereby AFFIRMED. SO ORDERED.

G.R. No. 74761 November 6, 1990 NATIVIDAD V. ANDAMO and EMMANUEL R. ANDAMO, petitioners, vs. INTERMEDIATE APPELLATE COURT (First Civil Cases Division) and MISSIONARIES OF OUR LADY OF LA SALETTE, INC., respondents. Lope E. Adriano for petitioners. Padilla Law Office for private respondent.

FERNAN, C.J.: The pivotal issue in this petition for certiorari, prohibition and mandamus is whether a corporation, which has built through its agents, waterpaths, water conductors and contrivances within its land, thereby causing inundation and damage to an adjacent land, can be held civilly liable for damages under Articles 2176 and 2177 of the Civil Code on quasi-delicts such that the resulting civil case can proceed independently of the criminal case. The antecedent facts are as follows:

Petitioner spouses Emmanuel and Natividad Andamo are the owners of a parcel of land situated in Biga (Biluso) Silang, Cavite which is adjacent to that of private respondent, Missionaries of Our Lady of La Salette, Inc., a religious corporation. Within the land of respondent corporation, waterpaths and contrivances, including an artificial lake, were constructed, which allegedly inundated and eroded petitioners' land, caused a young man to drown, damaged petitioners' crops and plants, washed away costly fences, endangered the lives of petitioners and their laborers during rainy and stormy seasons, and exposed plants and other improvements to destruction. In July 1982, petitioners instituted a criminal action, docketed as Criminal Case No. TG-907-82, before the Regional Trial Court of Cavite, Branch 4 (Tagaytay City), against Efren Musngi, Orlando Sapuay and Rutillo Mallillin, officers and directors of herein respondent corporation, for destruction by means of inundation under Article 324 of the Revised Penal Code. Subsequently, on February 22, 1983, petitioners filed another action against respondent corporation, this time a civil case, docketed as Civil Case No. TG-748, for damages with prayer for the issuance of a writ of preliminary injunction before the same court. 1 On March 11, 1983, respondent corporation filed its answer to the complaint and opposition to the issuance of a writ of preliminary injunction. Hearings were conducted including ocular inspections on the land. However, on April 26, 1984, the trial court, acting on respondent corporation's motion to dismiss or suspend the civil action, issued an order suspending further hearings in Civil Case No, TG-748 until after judgment in the related Criminal Case No. TG-907-82. Resolving respondent corporation's motion to dismiss filed on June 22, 1984, the trial court issued on August 27, 1984 the disputed order dismissing Civil Case No. TG-748 for lack of jurisdiction, as the criminal case which was instituted ahead of the civil case was still unresolved. Said order was anchored on the provision of Section 3 (a), Rule III of the Rules of Court which provides that "criminal and civil actions arising from the same offense may be instituted separately, but after the criminal action has been commenced the civil action cannot be instituted until final judgment has been rendered in the criminal action." 2 Petitioners appealed from that order to the Intermediate Appellate Court.
3

On February 17, 1986, respondent Appellate Court, First Civil Cases Division, promulgated a decision 4 affirming the questioned order of the trial court. 5 A motion for reconsideration filed by petitioners was denied by the Appellate Court in its resolution dated May 19, 1986. 6 Directly at issue is the propriety of the dismissal of Civil Case No. TG-748 in accordance with Section 3 (a) of Rule 111 of the Rules of Court. Petitioners contend that the trial court and the Appellate Court erred in dismissing Civil Case No. TG-748 since it is predicated on a quasi-delict. Petitioners have raised a valid point. It is axiomatic that the nature of an action filed in court is determined by the facts alleged in the complaint as constituting the cause of action. 7 The purpose of an action or suit and the law to govern it, including the period of prescription, is to be determined not by the claim of the party filing the action, made in his argument or brief, but rather by the complaint itself, its allegations and prayer for relief. 8 The nature of an action is not necessarily determined or controlled by its title or heading but the body of the pleading or complaint itself. To avoid possible denial of substantial justice due to legal technicalities, pleadings as well as remedial laws should be liberally construed so that the litigants may have ample opportunity to prove their respective claims. 9 Quoted hereunder are the pertinent portions of petitioners' complaint in Civil Case No. TG-748: 4) That within defendant's land, likewise located at Biga (Biluso), Silang, Cavite, adjacent on the right side of the aforesaid land of plaintiffs, defendant constructed waterpaths starting from the middle-right portion thereof leading to a big hole or opening, also constructed by defendant, thru the lower portion of its concrete hollow-blocks fence situated on the right side of its cemented gate fronting the provincial highway, and connected by defendant to a man height interconnected cement culverts which were also constructed and lain by defendant cross-wise beneath the tip of the said cemented gate, the left-end of the said inter-connected culverts again connected by defendant to a big hole or opening thru the lower portion of the same concrete hollowblocks fence on the left side of the said cemented gate, which hole or opening is likewise connected by defendant to the cemented mouth of a big canal, also constructed by defendant, which runs northward towards a big hole or opening which was also built by defendant thru the lower portion of its concrete hollow-blocks fence which separates the land of plaintiffs from that of defendant (and which serves as the exit-point of the floodwater coming from the land of defendant, and at the same time, the entrance-point of the same floodwater to the land of plaintiffs, year after year, during rainy or stormy seasons. 5) That moreover, on the middle-left portion of its land just beside the land of plaintiffs, defendant also constructed an artificial lake, the base of which is soil, which utilizes the water being channeled thereto from its water system thru inter-connected galvanized iron pipes (No. 2) and complimented by rain water during rainy or stormy seasons, so much so that the water

below it seeps into, and the excess water above it inundates, portions of the adjoining land of plaintiffs. 6) That as a result of the inundation brought about by defendant's aforementioned water conductors, contrivances and manipulators, a young man was drowned to death, while herein plaintiffs suffered and will continue to suffer, as follows: a) Portions of the land of plaintiffs were eroded and converted to deep, wide and long canals, such that the same can no longer be planted to any crop or plant. b) Costly fences constructed by plaintiffs were, on several occasions, washed away. c) During rainy and stormy seasons the lives of plaintiffs and their laborers are always in danger. d) Plants and other improvements on other portions of the land of plaintiffs are exposed to destruction. ... 10 A careful examination of the aforequoted complaint shows that the civil action is one under Articles 2176 and 2177 of the Civil Code on quasi-delicts. All the elements of a quasi-delict are present, to wit: (a) damages suffered by the plaintiff, (b) fault or negligence of the defendant, or some other person for whose acts he must respond; and (c) the connection of cause and effect between the fault or negligence of the defendant and the damages incurred by the plaintiff. 11 Clearly, from petitioner's complaint, the waterpaths and contrivances built by respondent corporation are alleged to have inundated the land of petitioners. There is therefore, an assertion of a causal connection between the act of building these waterpaths and the damage sustained by petitioners. Such action if proven constitutes fault or negligence which may be the basis for the recovery of damages. In the case of Samson vs. Dionisio, 12 the Court applied Article 1902, now Article 2176 of the Civil Code and held that "any person who without due authority constructs a bank or dike, stopping the flow or communication between a creek or a lake and a river, thereby causing loss and damages to a third party who, like the rest of the residents, is entitled to the use and enjoyment of the stream or lake, shall be liable to the payment of an indemnity for loss and damages to the injured party. While the property involved in the cited case belonged to the public domain and the property subject of the instant case is privately owned, the fact remains that petitioners' complaint sufficiently alleges that petitioners have sustained and will continue to sustain damage due to the waterpaths and contrivances built by respondent corporation. Indeed, the recitals of the complaint, the alleged presence of damage to the petitioners, the act or omission of respondent corporation supposedly constituting fault or negligence, and the causal connection between the act and the damage, with no pre-existing contractual obligation between the parties make a clear case of a quasi delict or culpa aquiliana. It must be stressed that the use of one's property is not without limitations. Article 431 of the Civil Code provides that "the owner of a thing cannot make use thereof in such a manner as to injure the rights of a third person." SIC UTERE TUO UT ALIENUM NON LAEDAS. Moreover, adjoining landowners have mutual and reciprocal duties which require that each must use his own land in a reasonable manner so as not to infringe upon the rights and interests of others. Although we recognize the right of an owner to build structures on his land, such structures must be so constructed and maintained using all reasonable care so that they cannot be dangerous to adjoining landowners and can withstand the usual and expected forces of nature. If the structures cause injury or damage to an adjoining landowner or a third person, the latter can claim indemnification for the injury or damage suffered. Article 2176 of the Civil Code imposes a civil liability on a person for damage caused by his act or omission constituting fault or negligence, thus: Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this chapter. Article 2176, whenever it refers to "fault or negligence", covers not only acts "not punishable by law" but also acts criminal in character, whether intentional and voluntary or negligent. Consequently, a separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, (if the tortfeasor is actually charged also criminally), to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary. 13 The distinctness of quasi-delicta is shown in Article 2177 of the Civil Code, which states:

Article 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant. According to the Report of the Code Commission "the foregoing provision though at first sight startling, is not so novel or extraordinary when we consider the exact nature of criminal and civil negligence. The former is a violation of the criminal law, while the latter is a distinct and independent negligence, which is a "culpa aquiliana" or quasi-delict, of ancient origin, having always had its own foundation and individuality, separate from criminal negligence. Such distinction between criminal negligence and "culpa extra-contractual" or "cuasidelito" has been sustained by decisions of the Supreme Court of Spain ... 14 In the case of Castillo vs. Court of Appeals, 15 this Court held that a quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code with a substantivity all its own, and individuality that is entirely apart and independent from a delict or crime a distinction exists between the civil liability arising from a crime and the responsibility for quasi-delicts or culpa extra-contractual. The same negligence causing damages may produce civil liability arising from a crime under the Penal Code, or create an action for quasi-delicts or culpa extracontractual under the Civil Code. Therefore, the acquittal or conviction in the criminal case is entirely irrelevant in the civil case, unless, of course, in the event of an acquittal where the court has declared that the fact from which the civil action arose did not exist, in which case the extinction of the criminal liability would carry with it the extinction of the civil liability. In Azucena vs. Potenciano, 16 the Court declared that in quasi-delicts, "(t)he civil action is entirely independent of the criminal case according to Articles 33 and 2177 of the Civil Code. There can be no logical conclusion than this, for to subordinate the civil action contemplated in the said articles to the result of the criminal prosecution whether it be conviction or acquittal would render meaningless the independent character of the civil action and the clear injunction in Article 31, that his action may proceed independently of the criminal proceedings and regardless of the result of the latter." WHEREFORE, the assailed decision dated February 17, 1986 of the then Intermediate Appellate Court affirming the order of dismissal of the Regional Trial Court of Cavite, Branch 18 (Tagaytay City) dated August 17, 1984 is hereby REVERSED and SET ASIDE. The trial court is ordered to reinstate Civil Case No. TG-748 entitled "Natividad V. Andamo and Emmanuel R. Andamo vs. Missionaries of Our Lady of La Salette Inc." and to proceed with the hearing of the case with dispatch. This decision is immediately executory. Costs against respondent corporation. SO ORDERED.

G.R. No. 119771 April 24, 1998 SAN ILDEFONSO LINES, INC., and EDUARDO JAVIER, petitioners, vs. COURT OF APPEALS (Thirteenth Division) and PIONEER INSURANCE and SURETY CORPORATION,respondents.

MARTINEZ, J.: At around 3:30 in the afternoon of June 24, 1991, a Toyota Lite Ace Van being driven by its owner Annie U. Jao and a passenger bus of herein petitioner San Ildefonso Lines, Inc. (hereafter, SILI) figured in a vehicular mishap at the intersection of Julia Vargas Avenue and Rodriguez Lanuza Avenue in Pasig, Metro Manila, totally wrecking the Toyota van and injuring Ms. Jao and her two (2) passengers in the process. A criminal case was thereafter filed with the Regional Trial Court of Pasig on September 18, 1991 charging the driver of the bus, herein petitioner Eduardo Javier, with reckless imprudence resulting in damage to property with multiple physical injuries. About four (4) months later, or on January 13, 1992, herein private respondent Pioneer Insurance and Surety Corporation (PISC), as insurer of the van and subrogee, filed a case for damages against petitioner SILI with the Regional Trial Court of Manila, seeking to recover the sums it paid the assured under a motor vehicle insurance policy as well as other damages, totaling P564,500.00 (P454,000.00 as actual/compensatory damages; P50,000.00 as exemplary damages; P50,000.00 as attorney's fees; P10,000.00 as litigation expenses; and P500.00 as appearance fees.) 1 With the issues having been joined upon the filing of the petitioners' answer to the complaint for damages and after submission by the parties of their respective pre-trial briefs, petitioners filed on September 18, 1992 a Manifestation and Motion to Suspend Civil Proceedings grounded on the pendency of the criminal case against petitioner Javier in the Pasig RTC and the failure of respondent PISC to make a reservation to file a separate damage suit in said criminal action. This was denied by the Manila Regional Trial Court in its Order dated July 21, 1993, 2 ruling thus: Answering the first question thus posed, the court holds that plaintiff may legally institute the present civil action even in the absence of a reservation in the criminal action. This is so because it falls among the very exceptions to the rule cited by the movant. It is true that the general rule is that once a criminal action has been instituted, then civil action based thereon is deemed instituted together with the criminal action, such that if the offended party did not reserve the filing of the civil action when the criminal action was filed, then such filing of the civil action is therefore barred; on the other hand, if there was such reservation, still the civil action cannot be instituted until final judgment has been rendered in the criminal action; But, this rule (Section 2, Rule 111, Revised Rules of Court) is subject to exemptions, the same being those provided for in Section 3 of the same rule which states: Sec. 3. When civil action may proceed independently. In the cases provided for in Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent civil action which was been reserved may be brought by the offended party, shall proceed independently of the criminal action, and shall require only a preponderance of evidence.

Besides, the requirement in Section 2 of Rule 111 of the former Rules on Criminal Procedure that there be a reservation in the criminal case of the right to institute an independent civil action has been declared as not in accordance with law. It is regarded as an unauthorized amendment to our substantive law, i.e., the Civil Code which does not require such reservation. In fact, the reservation of the right to file an independent civil action has been deleted from Section 2, Rule 111 of the 1985 Rules on Criminal Procedure, in consonance with the decisions of this Court declaring such requirement of a reservation as ineffective. (Bonite vs. Zosa, 162 SCRA 180). Further, the Court rules that a subrogee-plaintiff may institute and prosecute the civil action, it being allowed by Article 2207 of the Civil Code. After their motion for reconsideration of said July 21, 1993 Order was denied, petitioners elevated the matter to this Court via petition for certiorari which was, however, referred to public respondent Court of Appeals for disposition. On February 24, 1995, a decision adverse to petitioners once again was rendered by respondent court, upholding the assailed Manila Regional Trial Court Order in this wise: A separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed (if the tortfeasor is actually charged also criminally), to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary. To subordinate the civil action contemplated in the said articles to the result of the criminal prosecution whether it be conviction or acquittal would render meaningless the independent character of the civil action and the clear injunction in Art. 31, that this action may proceed independently of the criminal proceedings and regardless of the result of the latter. In Yakult Phil. vs. CA, the Supreme Court said: Even if there was no reservation in the criminal case and that the civil action was not filed before the filing of the criminal action but before the prosecution presented evidence in the criminal action, and the judge handling the criminal case was informed thereof, then the actual filing of the civil action is even far better than a compliance with the requirement of an express reservation that should be made by the offended party before the prosecution presented its evidence. The purpose of this rule requiring reservation is to prevent the offended party from recovering damages twice for the same act or omission. Substantial compliance with the reservation requirement may, therefore, be made by making a manifestation in the criminal case that the private respondent has instituted a separate and independent civil action for damages. Oft-repeated is the dictum that courts should not place undue importance on technicalities when by so doing substantial justice is sacrificed. While the rules of procedure require adherence, it must be remembered that said rules of procedure are intended to promote, not defeat, substantial justice, and therefore, they should not be applied in a very rigid and technical sense. Hence, this petition for review after a motion for reconsideration of said respondent court judgment was denied. The two (2) crucial issues to be resolved, as posited by petitioners, are: 1) If a criminal case was filed, can an independent civil action based on quasi-delict under Article 2176 of the Civil Code be filed if no reservation was made in the said criminal case? 2) Can a subrogee of an offended party maintain an independent civil action during the pendency of a criminal action when no reservation of the right to file an independent civil action was made in the criminal action and despite the fact that the private complainant is actively participating through a private prosecutor in the aforementioned criminal case? We rule for petitioners. On the chief issue of "reservation", at the fore is Section 3, Rule 111 of the Rules of Court which reads: Sec. 3. When civil action may proceed independently. In the cases provided for in Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent civil action which has been reserved may be brought by the offended party, shall proceed independently of the criminal action, and shall require only a preponderance of evidence.

10

There is no dispute that these so-called "independent civil actions" based on the aforementioned Civil Code articles are the exceptions to the primacy of the criminal action over the civil action as set forth in Section 2 of Rule 111. 3However, it is easily deducible from the present wording of Section 3 as brought about by the 1988 amendments to the Rules on Criminal Procedure particularly the phrase ". . . which has been reserved" that the "independent" character of these civil actions does not do away with the reservation requirement. In other words, prior reservation is a condition sine qua non before any of these independent civil actions can be instituted and thereafter have a continuous determination apart from or simultaneous with the criminal action. That this should now be the controlling procedural rule is confirmed by no less than retired Justice Jose Y. Feria, remedial law expert and a member of the committee which drafted the 1988 amendments, whose learned explanation on the matter was aptly pointed out by petitioners, to wit: The 1988 amendment expands the scope of the civil action which his deemed impliedly instituted with the criminal action unless waived, reserved or previously instituted. . . . Under the present Rule as amended, such a civil action includes not only recovery of indemnity under the Revised Penal Code and damages under Articles 32, 33, 34 of the Civil Code of the Philippines, but also damages under Article 2176 of the said code. . . . Objections were raised to the inclusion in this Rule of quasi-delicts under Article 2176 of the Civil Code of the Philippines. However, in view of Article 2177 of the said code which provides that the offended party may not recover twice for the same act or omission of the accused, and in line with the policy of avoiding multiplicity of suits, these objections were overruled. In any event, the offended party is not precluded from filing a civil action to recover damages arising from quasidelict before the institution of the criminal action, or from reserving his right to file such a separate civil action, just as he is not precluded from filing a civil action for damages under Articles 32, 33 and 34 before the institution of the criminal action, or from reserving his right to file such a separate civil action. It is only in those cases where the offended party has not previously filed a civil action or has not reserved his right to file a separate civil action that his civil action is deemed impliedly instituted with the criminal action. It should be noted that while it was ruled in Abella vs. Marave (57 SCRA 106) that a reservation of the right to file an independent civil action is not necessary, such a reservation is necessary under the amended rule. Without such reservation, the civil action is deemed impliedly instituted with the criminal action, unless previously waived or instituted. (Emphasis ours, Justice Jose Y. Feria [Ret.], 1988 Amendments to the 1985 Rules on Criminal Procedure, a pamphlet, published by Central Lawbook Publishing Co., Inc., Philippine Legal Studies, Series No. 3, 5-6). 4 Sharing the same view on the indispensability of a prior reservation is Mr. Justice Florenz D. Regalado, whose analysis of the historical changes in Rule 111 since the 1964 Rules of Court is equally illuminating. Thus, 1. Under Rule 111 of the 1964 Rules of Court, the civil liability arising from the offense charged was impliedly instituted with the criminal action, unless such civil action was expressly waived or reserved. The offended party was authorized to bring an independent civil action in the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code provided such right was reserved. In the 1985 Rules on Criminal Procedure, the same Rule 111 thereof reiterated said provision on the civil liability arising from the offense charged. The independent civil actions, however, were limited to the cases provided for in Articles 32, 33 and 34 of the Civil Code, obviously because the actions contemplated in Articles 31 and 2177 of said Code are not liabilities ex-delicto. Furthermore, no reservation was required in order the civil actions in said Articles 32, 33 and 34 may be pursued separately. 2. The present amendments introduced by the Supreme Court have the following notable features on this particular procedural aspect, viz: a. The civil action which is impliedly instituted with the criminal action, barring a waiver, reservation or prior institution thereof, need not arise from the offense charged, as the phrase "arising from the offense charged" which creates that nexus has been specifically eliminated. b. The independent civil actions contemplated in the present Rule 111 include the quasidelicts provided for in Art. 2176 of the Civil Code, in addition to the cases provided in Arts. 32, 33 and 34 thereof. It is necessary, however, that the civil liability under all the said articles arise "from the same act or omission of the accused." Furthermore, a reservation of the right to institute these separate civil actions is again required otherwise, said civil actions are impliedly instituted with the criminal action, unless the former are waived or filed ahead of the criminal action. (Emphasis supplied.) 5 In fact, a deeper reading of the "Yakult Phils. vs. CA" case 6 relied upon by respondent court reveals an acknowledgment of the reservation requirement. After recognizing that the civil case instituted by private

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respondent therein Roy Camaso (represented by his father David Camaso) against petitioner Yakult Phils. (the owner of the motorcycle that sideswiped Roy Camaso, only five years old at the time of the accident) and Larry Salvado (the driver of the motorcycle) during the pendency of the criminal case against Salvado for reckless imprudence resulting to slight physical injuries, as one based on tort, this Court said: The civil liability sought arising from the act or omission of the accused in this case is a quasidelict as defined under Article 2176 of the Civil Code as follows: xxx xxx xxx The aforecited rule [referring to the amended Section l, Rule 111] requiring, such previous reservation also covers quasi-delict as defined under Article 2176 of the Civil Code arising from the same act or omission of the accused (emphasis supplied). But what prompted the Court to validate the institution and non-suspension of the civil case involved in "Yakult" was the peculiar facts attendant therein. Thus, Although the separate civil action filed in this case was without previous reservation in the criminal case, nevertheless since it was instituted before the prosecution presented evidence in the criminal action, and the judge handling the criminal case was informed thereof, then the actual filing of the civil action is even far better than a compliance with the requirement of an express reservation that should be made by the offended party before the prosecution presents its evidence. The distinct factual scenario in "Yakult" simply does not obtain in this case. No satisfactory proof exists to show that private respondent PISC's damage suit was instituted before the prosecution presented its evidence in the criminal case pending in the Pasig Regional Trial Court. Neither is there any indication that the judge presiding over the criminal action has been made aware of the civil case. It is in this light that reliance on the "Yakult" case is indeed misplaced. Now that the necessity of a prior reservation is the standing rule that shall govern the institution of the independent civil actions referred to in Rule 111 of the Rules of Court, past pronouncements that view the reservation requirement as an "unauthorized amendment" to substantive law i.e., the Civil Code, should no longer be controlling. There must be a renewed adherence to the time-honored dictum that procedural rules are designed, not to defeat, but to safeguard the ends of substantial justice. And for this noble reason, no less than the Constitution itself has mandated this Court to promulgate rules concerning the enforcement of rights with the end in view of providing a simplified and inexpensive procedure for the speedy disposition of cases which should not diminish, increase or modify substantive rights. 7 Far from altering substantive rights, the primary purpose of the reservation is, to borrow the words of the Court in "Caos v. Peralta": 8 . . . to avoid multiplicity of suits, to guard against oppression and abuse, to prevent delays, to clear congested dockets, to simplify the work of the trial court; in short, the attainment of justice with the least expense and vexation to the parties-litigants. Clearly then, private respondent PISC, as subrogee under Article 2207 of the Civil Code, 9 is not exempt from the reservation requirement with respect to its damages suit based on quasi-delict arising from the same act or ommission of petitioner Javier complained of in the criminal case. As private respondent PISC merely stepped into the shoes of Ms. Jao (as owner of the insured Toyota van), then it is bound to observe the procedural requirements which Ms. Jao ought to follow had she herself instituted the civil case. WHEREFORE, premises considered, the assailed decision of the Court of Appeals dated February 24, 1995 and the Resolution dated April 3, 1995 denying the motion for reconsideration thereof are hereby REVERSED and SET ASIDE. The "MANIFESTATION AND MOTION TO SUSPEND CIVIL PROCEEDINGS" filed by petitioners is GRANTED. SO ORDERED.

G.R. No. 80194 March 21, 1989 EDGAR JARANTILLA, petitioner, vs. COURT OF APPEALS and JOSE KUAN SING, respondents. Corazon Miraflores and Vicente P. Billena for petitioner.

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Manuel S. Gemarino for private respondent.

REGALADO, J.: The records show that private respondent Jose Kuan Sing was "side-swiped by a vehicle in the evening of July 7, 1971 in lznart Street, Iloilo City" 1 The respondent Court of Appeals concurred in the findings of the court a quothat the said vehicle which figured in the mishap, a Volkswagen (Beetle type) car, was then driven by petitioner Edgar Jarantilla along said street toward the direction of the provincial capitol, and that private respondent sustained physical injuries as a consequence. 2 Petitioner was accordingly charged before the then City Court of Iloilo for serious physical injuries thru reckless imprudence in Criminal Case No. 47207 thereof. 3 Private respondent, as the complaining witness therein, did not reserve his right to institute a separate civil action and he intervened in the prosecution of said criminal case through a private prosecutor. 4 Petitioner was acquitted in said criminal case "on reasonable doubt".5 On October 30, 1974, private respondent filed a complaint against the petitioner in the former Court of First Instance of Iloilo, Branch IV, 6 docketed therein as Civil Case No. 9976, and which civil action involved the same subject matter and act complained of in Criminal Case No. 47027. 7 In his answer filed therein, the petitioner alleged as special and affirmative detenses that the private respondent had no cause of action and, additionally, that the latter's cause of action, if any, is barred by the prior judgment in Criminal Case No. 47207 inasmuch as when said criminal case was instituted the civil liability was also deemed instituted since therein plaintiff failed to reserve the civil aspect and actively participated in the criminal case. 8 Thereafter, acting on a motion to dismiss of therein defendant, the trial court issued on April 3, 1975 an order of denial, with the suggestion that "(t)o enrich our jurisprudence, it is suggested that the defendant brings (sic) this ruling to the Supreme Court by certiorari or other appropriate remedy, to review the ruling of the court". 9 On June 17, 1975, petitioner filed in this Court a petition for certiorari, prohibition and mandamus, which was docketed as G.R. No. L-40992, 10 assailing the aforesaid order of the trial court. Said petition was dismissed for lack of merit in the Court's resolution of July 23, 1975, and a motion for reconsideration thereof was denied for the same reason in a resolution of October 28, 1975. 11 After trial, the court below rendered judgment on May 23, 1977 in favor of the herein private respondent and ordering herein petitioner to pay the former the sum of P 6,920.00 for hospitalization, medicines and so forth, P2,000.00 for other actual expenses, P25,000.00 for moral damages, P5,000.00 for attorney's fees, and costs. 12 On July 29, 1987, the respondent Court of Appeals 13 affirmed the decision of the lower court except as to the award for moral damages which it reduced from P25,000.00 to P18,000.00. A motion for reconsideration was denied by respondent court on September 18, 1987. 14 The main issue for resolution by Us in the present recourse is whether the private respondent, who was the complainant in the criminal action for physical injuries thru reckless imprudence and who participated in the prosecution thereof without reserving the civil action arising from the act or omission complained of, can file a separate action for civil liability arising from the same act or omission where the herein petitioner was acquitted in the criminal action on reasonable doubt and no civil liability was adjudicated or awarded in the judgment of acquittal. Prefatorily, We note that petitioner raises a collateral issue by faulting the respondent court for refusing to resolve an assignment of error in his appeal therein, said respondent court holding that the main issue had been passed upon by this Court in G.R. No. L-40992 hereinbefore mentioned. It is petitioner's position that the aforesaid two resolutions of the Court in said case, the first dismissing the petition and the second denying the motion for reconsideration, do not constitute the "law of the case' which would control the subsequent proceed ings in this controversy. 1. We incline favorably to petitioner's submission on this score. The "doctrine of the law of the case" has no application at the aforesaid posture of the proceedings when the two resolutions were handed down. While it may be true that G.R. No. L-40992 may have involved some of the issues which were thereafter submitted for resolution on the merits by the two lower courts, the proceedings involved there was one for certiorari, prohibition and mandamus assailing an interlocutory order of the court a quo, specifically, its order denying therein defendants motion to dismiss. This Court, without rendering a specific opinion or explanation as to the legal and factual bases on which its two resolutions were predicated, simply dismissed the special civil action on that incident for lack of merit. It may very well be that such resolution was premised on the fact that the Court, at that stage and on the basis of the facts then presented, did not consider that the denial order of the court a quo was tainted with grave abuse of discretion. 15 To repeat, no rationale for such resolutions having been expounded on the merits of that action, no law of the case may be said to have been laid down in G.R. No. L-40992 to justify the respondent court's refusal to consider petitioner's claim that his former acquittal barred the separate action.

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'Law of the case' has been defined as the opinion delivered on a former appeal. More specifically, it means that whatever is once irrevocably established, as the controlling legal rule of decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court (21 C.J.S. 330). (Emphasis supplied). 16 It need not be stated that the Supreme Court being the court of last resort, is the final arbiter of all legal questions properly brought before it and that its decision in any given case constitutes the law of that particular case . . . (Emphasis supplied). 17 It is a rule of general application that the decision of an appellate court in a case is the law of the case on the points presented throughout all the subsequent proceedings in the case in both the trial and the appellate courts, and no question necessarily involved and decided on that appeal will be considered on a second appeal or writ of error in the same case, provided the facts and issues are substantially the same as those on which the first question rested and, according to some authorities, provided the decision is on the merits . . . 18 2. With the foregoing ancillary issue out of the way, We now consider the principal plaint of petitioner. Apropos to such resolution is the settled rule that the same act or omission (in this case, the negligent sideswiping of private respondent) can create two kinds of liability on the part of the offender, that is, civil liability ex delicto and civil liability ex quasi delicto. Since the same negligence can give rise either to a delict or crime or to a quasi-delict or tort, either of these two types of civil liability may be enforced against the culprit, subject to the caveat under Article 2177 of the Civil Code that the offended party cannot recover damages under both types of liability. 19 We also note the reminder of petitioner that in Roa vs. De la Cruz, et al., 20 it was held that where the offended party elected to claim damages arising from the offense charged in the criminal case through her intervention as a private prosecutor, the final judgment rendered therein constituted a bar to the subsequent civil action based upon the same cause. It is meet, however, not to lose sight of the fact that the criminal action involved therein was for serious oral defamation which, while within the contemplation of an independent civil action under Article 33 of the Civil Code, constitutes only a penal omen and cannot otherwise be considered as a quasi-delict or culpa aquiliana under Articles 2176 and 2177 of the Civil Code. And while petitioner draws attention to the supposed reiteration of the Roa doctrine in the later case of Azucena vs. Potenciano, et al., 21 this time involving damage to property through negligence as to make out a case of quasi-delict under Articles 2176 and 2180 of the Civil Code, such secondary reliance is misplaced since the therein plaintiff Azucena did not intervene in the criminal action against defendant Potenciano. The citation of Roa in the later case of Azucena was, therefore, clearly obiter and affords no comfort to petitioner. These are aside from the fact that there have been doctrinal, and even statutory, 22 changes on the matter of civil actions arising from criminal offenses and quasi-delicts. We will reserve our discussion on the statutory aspects for another case and time and, for the nonce, We will consider the doctrinal developments on this issue. In the case under consideration, private respondent participated and intervened in the prosecution of the criminal suit against petitioner. Under the present jurisprudential milieu, where the trial court acquits the accused on reasonable doubt, it could very well make a pronounce ment on the civil liability of the accused 23 and the complainant could file a petition for mandamus to compel the trial court to include such civil liability in the judgment of acquittal. 24 Private respondent, as already stated, filed a separate civil aciton after such acquittal. This is allowed under Article 29 of the Civil Code. We have ruled in the relatively recent case of Lontoc vs. MD Transit & Taxi Co., Inc., et al. 25that: In view of the fact that the defendant-appellee de la Cruz was acquitted on the ground that 'his guilt was not proven beyond reasonable doubt' the plaintiff-appellant has the right to institute a separate civil action to recover damages from the defendants-appellants (See Mendoza vs. Arrieta, 91 SCRA 113). The well-settled doctrine is that a person, while not criminally liable may still be civilly liable. 'The judgment of acquittal extinguishes the civil liability of the accused only when it includes a declaration that the facts from which the civil liability might arise did not exist'. (Padilla vs. Court of Appeals, 129 SCRA 558 cited in People vs. Rogelio Ligon y Tria, et al., G.R. No. 74041, July 29, 1987; Filomeno Urbano vs. Intermediate Appellate Court, G.R. No. 72964, January 7, 1988). The ruling is based on Article 29 of the Civil Code which provides: When the accused in a criminal prosecution is acquitted on the ground that his guilt has not been proved beyond reasonable doubt, a civil action for damages for the same act or omission may be instituted. Such action requires only a preponderance of evidence ... 26 Another consideration in favor of private respondent is the doctrine that the failure of the court to make any pronouncement, favorable or unfavorable, as to the civil liability of the accused amounts to a reservation of the

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right to have the civil liability litigated and determined in a separate action. The rules nowhere provide that if the court fails to determine the civil liability it becomes no longer enforceable. 27 Furthermore, in the present case the civil liability sought to be recovered through the application of Article 29 is no longer that based on or arising from the criminal offense. There is persuasive logic in the view that, under such circumstances, the acquittal of the accused foreclosed the civil liability based on Article 100 of the Revised Penal Code which presupposes the existence of criminal liability or requires a conviction of the offense charged. Divested of its penal element by such acquittal, the causative act or omission becomes in effect a quasi-delict, hence only a civil action based thereon may be instituted or prosecuted thereafter, which action can be proved by mere preponderance of evidence. 28 Complementary to such considerations, Article 29 enunciates the rule, as already stated, that a civil action for damages is not precluded by an acquittal on reasonable doubt for the same criminal act or omission. The allegations of the complaint filed by the private respondent supports and is constitutive of a case for a quasi-delict committed by the petitioner, thus: 3. That in the evening of July 7, 197l at about 7:00 o'clock, the plaintiff crossed Iznart Street from his restaurant situated at 220 lznart St., Iloilo City, Philippines, on his way to a meeting of the Cantonese Club at Aldeguer Street, Iloilo City and while he was standing on the middle of the street as there were vehicles coming from the Provincial Building towards Plazoleta Gay, Iloilo City, he was bumped and sideswiped by Volkswagen car with plate No. B-2508 W which was on its way from Plazoleta Gay towards the Provincial Capitol, Iloilo City, which car was being driven by the defendant in a reckless and negligent manner, at an excessive rate of speed and in violation of the provisions of the Revised Motor Vehicle (sic) as amended, in relation to the Land Transportation and Traffic Code as well as in violation of existing city ordinances, and by reason of his inexcusable lack of precaution and failure to act with due negligence and by failing to take into consideration (sic) his degree of intelligence, the atmospheric conditions of the place as well as the width, traffic, visibility and other conditions of lznart Street; 29 Since this action is based on a quasi-delict, the failure of the respondent to reserve his right to file a separate civil case and his intervention in the criminal case did not bar him from filing such separate civil action for damages. 30The Court has also heretofore ruled in Elcano vs. Hill 31 that ... a separate civil action lies against the offender in a criminal act whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if he is also actually charged criminally, to recover damages on both scores; and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (c) of Sec. 3 Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised Penal Code; whereas the civil liability for the same act considered as a quasi-delict only and not as a crime is not extinguished even by a declaration in the criminal case that the criminal act charged has not happened or has not been committed by the accused . . . The aforecited case of Lontoc vs. MD Transit & Taxi Co., Inc., et al. involved virtually the same factual situation. The Court, in arriving at the conclusion hereinbefore quoted, expressly declared that the failure of the therein plaintiff to reserve his right to file a separate civil case is not fatal; that his intervention in the criminal case did not bar him from filing a separate civil action for damages, especially considering that the accused therein was acquitted because his guilt was not proved beyond reasonable doubt; that the two cases were anchored on two different causes of action, the criminal case being on a violation of Article 365 of the Revised Penal Code while the subsequent complaint for damages was based on a quasi-delict; and that in the judgment in the criminal case the aspect of civil liability was not passed upon and resolved. Consequently, said civil case may proceed as authorized by Article 29 of the Civil Code. Our initial adverse observation on a portion of the decision of respondent court aside, We hold that on the issues decisive of this case it did not err in sustaining the decision a quo. WHEREFORE, the writ prayed for is hereby DENIED and the decision of the respondent Court of Appeals is AFFIRMED, without costs. SO ORDERED.

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G.R. No. 88582 March 5, 1991 PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. HEINRICH S. RITTER, accused-appellant, The Solicitor General for plaintiff-appellee. Esteban B. Bautista for accused-appellant.

GUTIERREZ, JR., J.:p The appellant challenges his conviction of the crime involving a young girl of about 12 years old who had been allegedly raped and who later died because of a foreign object left inside her vaginal canal. Heinrich Stefan Ritter was charged with the crime of rape with homicide under an information which reads: That on or about the tenth (10th day of October, 1986 in the City of Olongapo, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused with lewd design and with intent to kill one Rosario Baluyot, a woman under twelve (12) years of age, did then and there wilfully, unlawfully and feloniously have carnal knowledge of said Rosario Baluyot and inserted a foreign object into the vaginal canal of said Rosario Baluyot which caused her death shortly thereafter, to the damage and prejudice of her relatives. (66) When arraigned, the accused pleaded "Not Guilty". Thereafter, the case was set for trial on the merits. To prove the guilt of the accused, the prosecutor presented the following witnesses, namely: (1) Jessie Ramirez, (2) Maria Burgos y Turla, (3) P/Cpl. Mariano Victoria, (4) Policarpio Baluyot, (5) Dr. Reino Rosete, (6) Sumulong Daniel, (7) Jessica Herrera, (8) Sister Eva Palencia, (9) Conrado Salonga, (10) Dr. Devonne Loop, (11) Dr. Leo Cruz, (12) Paul Maclor, (13) Aida Sarmiento, (14) Patricia Prollamanta (15) Mel Santos, (16) Lorna Limos, (17)

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Eduard Lee Bungarner, (18) Ronaldo Marquez, (19) Tom Bonte, (20) 2nd Asst. City Fiscal Nini Alcala, (21) lst Asst. City Fiscal Dorentino Z. Floresta, (22) Corazon Caber, (23) Rodolfo Mercurio and (24) Fe Israel. On the other hand, the defense offered in evidence Exhibits "1" to "24" and the testimonies of (1) Heinrich S. Ritter, (2) Father Roque Villanueva, (3) Angelita Amulong (4) Gaspar Alcantara, (5) Dr. Val Barcinal and (6) Dr. Pedro C. Solis. The facts of the case upon which the lower court based its finding of guilt beyond reasonable doubt are summarized in its decision, as follows: The people's evidence show that on October 10, 1986 about midnight, accused Heinrich Stefan Ritter brought a boy and girl namely: Jessie Ramirez and Rosario Baluyot inside his hotel room at MGM Hotel along Magsaysay Drive, Olongapo City. These two (2) children were chosen from among a bunch of street children. Once inside the hotel room accused told them to take a bath. Jessie Ramirez, alias "Egan", was the first to take a bath and when he came out Rosario Baluyot went to the bathroom to do the same. While Rosario Baluyot was inside the bathroom, accused Ritter took out some pictures depicting dressed up young boys, and put them on top of the table. Other things which were taken out and placed on top of a table were three (3) other objects which he described as like that of a vicks inhaler. One of these objects the accused played with his hands and placed it on his palms. The color of which is grayish blue which turned out later to be the foreign object which was inserted inside the vagina of Rosario Baluyot. The other objects were later established to be anti-nasal inhalers against pollution purchased by the accused in Bangkok when he went there as a tourist. While Rosario was in the bathroom, accused told Ramirez to lay down on bed, and so did the accused. He then started masturbating the young boy and also guided the boy's hand for him to be masturbated, so that they masturbated each other, while they were both naked, and he gave Jessie Ramirez an erection. When Rosario Baluyot came out of the bathroom, she was told to remove her clothes by accused and to join him in bed. The accused then placed himself between the two (2) children and accused started fingering Rosario. At this time, Ramirez was already sleepy, but Rosario touched him to call his attention. He looked, and he saw accused placing his penis against the vagina of Rosario and that he was trying to penetrate the vagina but it would not fit. After what he saw, Ramirez did not anymore bother to look because he was sleepy and fell asleep. The following morning, the accused, whom the juveniles described as an "American, paid Ramirez alias "Egan" P200.00 and Rosario P300.00. He then left them in the hotel. After the American left, they went downstairs, and Rosario told Egan that the American inserted something in her vagina. But they could not do anything anymore, because the American had already left, and neither did they report the matter to the police. Sometime the following day, Jessie saw Rosario and he asked her whether the object was already removed from her body and Rosario said "Yes". However, Jessie Ramirez claimed that on the evening of that same date, he saw Rosario and she was complaining of pain in her vagina and when Egan asked her, she said that the foreign object was not yet removed. Then there was another occasion wherein Jessie was summoned and when he came he saw Rosario writhing in pain and when he tried to talk to Rosario she scolded him with defamatory remarks. Thereafter, he did not see Rosario anymore because he already went home to his aunt's house who resided at Barrio Barretto and resumed his studies in the primary grades. On May 14, 1987, Gaspar Alcantara, a defense witness, while garbage scavenging at Lot 21, near the gate of the U.S. Naval Base saw Rosario at Magsaysay Drive near the Happy Bake Shop near Lot 21, being ogled by people because Rosario's skirt was bloodied and she was unconscious and foul smelling. Since nobody helped Rosario, he took pity on her condition and brought her to the Olongapo City General Hospital in an unconscious condition, via jeepney. He went to the Information desk and he was the one who gave the personal circumstances of Rosario as to her name, age, her residence as Nagbakulaw, Lower Kalaklan, and Gaspar Alcantara signed as "guardian" of Rosario, while Rosario was already in the emergency room. Although Gaspar Alcantara denied that he did not know the name of Rosario Baluyot when he brought her to the hospital, this is belied by the testimony of the Information clerk Lorna Limos, who was then on duty. Limos testified that it was Alcantara who supplied the personal circumstances of Rosario. The Court gives more credence to the testimony of Miss Limos as against Gaspar Alcantara who became a defense witness, for the reason that through his own testimony, Gaspar Alcantara claimed that even prior to May 14, 1987, he had already known Rosario Baluyot for more than one (1) year, because he has seen the said girl go to the house of his twin brother, Melchor Alcantara, who is his immediate neighbor. Rosario used to visit a girl by the name of "Nora" who was then in the custody of his brother. His brother Melchor was also living with their mother, brother and sister-in-law and their two (2) children in his house. Rosario as per Gaspar's testimony even stays for one week or a few days at his brother's house when she visits Nora. So the Court can safely assume that of all the more than one (1) year that he had regularly seen Rosario at his brother's house, he must have already did come to know the name of Rosario Baluyot including her age. In his testimony in Court he stated that he even asked Rosario for movie and softdrinks money which can safely be concluded that he knows her very well. It is

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against normal behavior especially to a Filipino who have a characteristic of curiosity not to have found out the real name of the girl he claims to know only as "Tomboy". While Rosario Baluyot was confined at the Olongapo City General Hospital, nobody was attending to her since she is a street child, having stowed away from the custody of her grandmother. Three (3) good samaritans who belong to religious and civic organizations, in the persons of Jessica Herrera, Fe Israel and Sr. Eva Palencia, in one of their missions in the hospital chanced upon Rosario Baluyot who was all alone with no relatives attending to her and after finding out that she was only 12 years old decided to help her. After a short interview with Rosario, regarding her name and age only because she clamped up about her residence and her relatives, they decided to help her by providing her the medicine she needed during her confinement in readiness for an operation. It was Fe Israel who was able to get the name and age of Rosario Baluyot from Rosario Baluyot herself when she saw her for the first time. For Fe Israel, the age of Rosario Baluyot was an important factor because their program assisted only indigent patients from infants up to 13 years old. Rosario's first ailment at the Olongapo City General Hospital was loose bowel movement and vomiting, which was first suspected as gastro-enteritis, but which came out later as symptoms of peritonitis due to a massive infection in the abdominal cavity. Subsequently, on May 17, 1987, after she was examined by the physicians at the hospital, it was found out that there was a foreign object lodged in her vaginal canal and she had vaginal discharge tinged with blood and foul smelling odor emanating from her body. One of the doctors who attended to her was Dr. Barcinal, an OB-GYNE. Dr. Barcinal tried to extract the foreign object by means of a forceps, but several attempts proved futile because said object was deeply embedded in the vaginal canal and was covered by tissues. Her abdomen was enlarged, tender and distended, symptoms of peritonitis. The patient was feverish and incoherent when she was scheduled for operation on May 19, 1987, after the first attempt for an operation on May 17 was aborted allegedly because the consent of Dr. Reino Rosete, the hospital director was not obtained. The surgeon who operated on her was Dr. Rosete himself. He testified that Rosario had to be operated even in that condition in order to save her life. Her condition was guarded. This was corroborated by Dr. Leo Cruz, the anesthesiologist during Rosario's operation. It was in the evening of May 19 at about 7:00 p.m. when Dr. Rosete opened her abdomen by making a 5 inch incision on her stomach. He found out that the fallopian tubes were congested with pus and so with the peritonieum, and the pelvic cavity, and patches of pus in the liver, although the gallbladder and kidney appeared to have septicemia, poisoning of the blood. The peritonitis and septicemia were traced to have been caused through infection by the foreign object which has been lodged in the intra-vaginal canal of Rosario. The foreign object which was already agreed upon by both parties that it is a portion of a sexual vibrator was extracted from the vagina of Rosario while under anesthesia. Said object was coated with tissues, pus and blood. Dr. Rosete gave it to the assisting surgical nurse for safekeeping and gave instructions to release it to the authorized person. This object was shown by the nurse to Dr. Leo Cruz. Dr. Rosete considered the operation successful and the patient was alive when he left her under Dr. Cruz. Dr. Cruz stayed with said patient in the ward for about 30 minutes and thereafter he left. The following day, Rosario got serious and it was Dr. Leo Cruz who pronounced her death at 2:00 to 2:15 in the afternoon of May 20, 1987. Thereafter, a death certificate was prepared under the direction of Dr. Cruz which was indicated therein that the cause of death was cardio-respiratory arrest, secondary to septicemia caused by the foreign object lodged in the intra uteral vaginal canal of Rosario Baluyot. The foreign object was washed by nurse Obedina, then placed it in a transparent small jar and labelled "Rosario Baluyot". Jessica Herrera asked the nurse for the foreign object, and it was given to her under proper receipt. Herrera then showed the same to the persons who helped financially Rosario's case, and afterwards she gave it to Sister Eva Palencia. Sis. Palencia was in custody of the said object until Mr. Salonga came and asked her for the object. After Rosario Baluyot died, Sis. Palencia and a companion went to Gaspar Alcantara to ask him in locating the relatives of Rosario. They were able to trace Rosario's grandmother, Mrs. Maria Burgos Turla, and informed her that her granddaughter was already dead and lying in state at St. Martin Funeral Parlor. Mrs. Turla went there with her son, who shouldered all the burial expenses for Rosario. Subsequently, Sis. Palencia, Fr. Cullens and Mr. Salonga came to her residence at Sta. Rita and asked her if she was interested in filing a case against the person who caused the death of her granddaughter. Of course she agreed. Hence, she was brought to the Fiscal's (City) Office to file the same. After the case was filed against the herein accused, Atty. Edmundo Legaspi with his messenger came to her house and told her that the accused was willing to settle the case, but that accused Ritter had only P15,000.00. The old woman did not accept it because she knows that the accused is liable to pay damages anyway. After that, she received a letter from Atty. Legaspi telling her to get a lawyer for her case. By this time, Mrs. Turla, who wanted to have the case settled once and for all giving the reason that she can no longer bear the situation, sent her nephew, Conrado

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Marcelo to Atty. Legaspi. Her nephew obliged and told her that she will be paid at the office of Atty. Legaspi. On a date not clear in the records, she went with her nephew Conrado Marcelo, and Roberto Sundiam, an assistant barangay tanod of Sta. Rita, and while they were there, she saw Ritter arrive at the law office. Ritter and Atty. Legaspi talked at the office near the bathroom, and thereafter Ritter left. After he left, Atty. Legaspi told Rosario's grandmother that they are willing to settle for P20,000.00, but that Ritter left only P15,000.00, so she received the money with the understanding that there was a balance of P5,000.00 yet. She was made to sign a statement, and she was asked to change the age of her granddaughter Rosario. With the document prepared, she and the lawyer's messenger went to the Fiscal's office to have it subscribed, and was subscribed before an assistant city fiscal. But the balance of P5,000.00 was not paid, because later on Atty. Legaspi became the OIC of Olongapo City and he could no longer attend to it. Atty. Legaspi, during one of the hearings before the Court even apologized to her. As to the case, P/Cpl. Marino Victoria, as criminal investigator of Station "A", was directed by Col. Daos, Station Commander of the Olongapo Police Department to make a follow up of the case of Rosario Baluyot. On the other hand, since the suspect who inserted the foreign object inside Rosario's vagina was said to be an American, the NISRA Subic Naval Base also conducted its investigation headed by criminal investigator Agent Conrado Salonga. Coordinating with the local police and with Sister Eva Palencia, since Rosario was a street child at Magsaysay Drive, they rounded up about 43 street children and from some of them they learned that Rosario Baluyot was with Jessie Ramirez with an American at the MGM Hotel when the foreign object was inserted in her vagina. After finding Jessie Ramirez, they asked him about Rosario Baluyot. They found out that indeed he was with Rosario Baluyot sometime before Christmas of 1986 with an American, who brought them to the said hotel. Jessie Ramirez was taken inside the U.S. Naval Base, Olongapo City and took his statement. Then he was brought to Mr. Edward Lee Bungarner, a cartographer, and out of the description supplied by Ramirez, a composite drawing was photocopied and copies thereof were distributed to the local police and to the sentries at the gate of the U.S. Naval Base. Some American servicemen who had resemblance to the composite drawing were photographed and these were shown to Jessie Ramirez, but the result was negative. Aside from the physical description by Ramirez about the appearance of the suspect, he also described him as having the mannerisms of a homo-sexual. After obtaining information that foreign homo-sexuals frequented Ermita, Manila, and thinking that the so-called American may be European or Australian national, the team composed of Agent Salonga, Mr. Heinsell, P/Cpl. Marino Victoria and P/Cpl. Andres Montaon, Jessie Ramirez and Michael Johnson, another juvenile, proceeded to Manila. They first went to the Manila NISRA Office, and thereafter checked in a hotel. That was on September 23, 1987. On the first night, they went to Luneta Park where foreign homo-sexuals were said to be frequenting, but the result was negative. Then on September 25, at about 11:00 p.m., while they were standing at the corner of A. Mabini and M.H. del Pilar Street, a male caucasian who looked like a homo-sexual stopped by admiringly infront of the two (2) juveniles, Ramirez and Johnson. Jessie Ramirez then reported to Mr. Salonga that this foreigner had a similarity with the American suspect, so the two minors were instructed to follow the foreigner and to strike a conversation. They did, and when they returned, Jessie Ramirez told them that indeed the said foreigner was the one who brought him and Rosario Baluyot to the MGM Hotel. Bobby Salonga told Ramirez that this foreigner had no beard while the one previously described by Ramirez had a beard. Jessie Ramirez told them that maybe he have just shaved it off. The said caucasian then entered a bar, and after several minutes he came out, and Jessie Ramirez upon his signal with his thumbs up, as a signal to confirm that the said foreigner is the suspect, arrested Ritter and brought him to the Manila Western Police District. It could be mentioned at this stage that in this operation they were accompanied by two (2) policemen from the Western Police District. The foreigner was hand cuffed and was told that he was a suspect for Rape with Homicide. After the arrest, they first went to the pension house of the suspect in Ermita, Manila to get his shoulder bag which contained his personal belongings, and from there they brought him to the Western Police Department. At the said police headquarters, they were allowed a permissive search by the foreigner of his clutch bag and his small shoulder bag and confiscated his passport, I.D., 3 inhalers, money in the form of dollars and travellers checks amounting about $1,500.00 and about P100.00, all duly receipted for. From the passport they learned that the suspect's name was Heinrich Stefan Ritter, an Austrian national. During the questioning of Hitter, Salonga and his team already left the headquarters and went to their hotel, because at this time Jessie Ramirez was already shaking with fear after he identified the accused. The following day, they brought the accused to Olongapo and was detained at the Olongapo City Jail. The case for Rape with Homicide was filed against him at the City Fiscal of Olongapo. At the preliminary investigation, accused was assisted by his own counsel. The private complainant was Maria Burgos Turla because it was she who had custody of Rosario Baluyot after her mother Anita Burgos died on January 12, 1982, and their father Policarpio Baluyot had left them under her custody. When this case was filed, the father's whereabouts was unknown, and he only appeared when the trial of this case before the Court was already in progress. And upon his (Policarpio Baluyot) own admission, he only learned about the death of his daughter Rosario Baluyot from the newspaper, long after Rosario was already gone.

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The defense tried to dislodge the case by claiming that there could be no crime of Rape with Homicide because the suspect was described as an American while Ritter is an Austrian. Also advanced by the defense is that, it is a case of mistaken identity. That Rosario Baluyot was at the time of the commission of the offense, already more than 13 years old, she having been born on December 26, 1973 as per baptismal certificate, wherein it appears that Rosario Baluyot was baptized on December 25, 1974 and was born on December 26, 1973 as testified to by Fr. Roque Villanueva of St. James Parish Church who issued the Baptismal Certificate, having custody and possession of the book of baptism for the year 1975, but admitted that he had no personal knowledge about the matters or entries entered therein. Likewise, the defense's stand is that the accused cannot be liable for Homicide because a vibrator is not a weapon of death but it is a thing for the purpose of giving sexual pleasure, and that the death of Rosario Baluyot was due to the incompetence of Dr. Rosete, the surgeon and Director of the Olongapo City General Hospital, who operated on her. (Rollo, pp. 109-116) On March 29, 1989, the trial court rendered its decision. The dispositive portion of the decision reads as follows: WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court holds, that the prosecution has established the GUILT of the accused beyond reasonable doubt for the crime of Rape with Homicide as defined and penalized in Art. 335 No. 3 of the Revised Penal Code, and hereby sentences HEINRICH STEFAN RITTER to a penalty of RECLUSION PERPETUA, to indemnify the heirs of the deceased in the sum of SIXTY THOUSAND PESOS (P60,000.00) Philippine Currency, and TEN THOUSAND PESOS (Pl0,000.00) by way of attorney's fees to the private prosecutors and to pay the costs. (Rollo, p. 126) The accused now comes to this Court on the following assigned errors allegedly committed by the court: I THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN FINDING THAT THE ALLEGED OFFENSE WAS COMMITTED ON OCTOBER 10, 1986 AND THAT IT WAS ACCUSED-APPELLANT WHO COMMITTED IT. II THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN FINDING THAT ROSARIO BALUYOT WAS LESS THAN TWELVE (12) YEARS OLD WHEN THE ALLEGED OFFENSE WAS COMMITTED AND IN HOLDING THAT THERE WAS RAPE WITH HOMICIDE. III THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN GIVING CREDENCE TO AND NOT REJECTING THE PROSECUTION'S EVIDENCE AND IN NOT UPHOLDING THAT OF THE DEFENSE AND ACQUITTING THE ACCUSED. Inasmuch as it is the bounden duty of this Court to affirm a judgment of conviction only if the guilt of the accused has been proved beyond reasonable doubt, it behooves us to exert the most painstaking effort to examine the records in the light of the arguments of both parties if only to satisfy judicial conscience that the appellant indeed committed the criminal act (See People v. Villapaa, 161 SCRA 73 [1988]). The appellant was convicted by the trial court of the crime of rape with homicide of a young girl who died after the rape because of a foreign object, believed to be a sexual vibrator, left inside her vagina. As stated by the trial court one crucial issue in this case is the age of the victimwhether or not Rosario Baluyot was less than twelve (12) years old at the time the alleged incident happened on October 10, 1986. The age is important in determining whether or not there was statutory rape, Article 335 of the Revised Penal Code defines the third type of rape as having carnal knowledge of a woman under 12 years of age, in which case force, intimidation, deprivation of reason or unconscious state do not have to be present. The trial court found that Rosario was below 12 years old when she was sexually abused by the accused and, therefore, rape was committed inspite of the absence of force or intimidation. In resolving the issue, the trial court put great weight on the testimonies of the victim's grandmother and father who testified that she was born on December 22, 1975. These oral declarations were admitted pursuant to then Rule 130, Section 33 of the Rules of Court where, in the absence of a birth certificate, the act or declaration about pedigree may be received in evidence on any notable fact in the life of a member of the family. Since birth is a matter of pedigree within the rule which permits the admission of hearsay evidence, oral declarations are therefore admissible as proof of birth (Decision, p. 54). The grandmother, Maria Burgos Turla, testified that she remembered Rosario's birth date because her brother died in Pampanga and her daughter, Anita (Rosario's mother) was the only one who failed to attend the funeral because the latter has just given birth allegedly to Rosario (T.S.N. p. 8, Jan. 13, 1988).

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The father likewise testified that as far as he could remember, Rosario was born on December 22, 1975 (T.S.N., p. 4, Jan. 27, 1988) and he was certain that Rosario was more than one (1) year old when she was baptized (T.S.N., p. 45, Jan. 27, 1988). The trial court further added that their testimony is supported by the clinical record and the death certificate indicating that she was 12 years old when she was admitted at the Olongapo City General Hospital for treatment. The age was supplied by Rosario's alleged guardian, Gaspar Alcantara to the hospital's clinical record clerk, Lorna Limos. Fe Israel, a social worker who interviewed Rosario Baluyot also testified that she was told by Rosario that she was 12 years old. The trial court accepted this as adequate evidence of the truth. Moreover, Jessie Ramirez, the principal witness in this case declared that he was born on September 5, 1973 and that he was older than Rosario Baluyot. Therefore, since he was 13 years old in 1986, Rosario must have been less than 12 yeas old in 1986. (Decision, p. 55) The trial court concluded that the oral declarations of the grandmother and father supported by other independent evidence such as the clinical record, death certificate and the testimonies of Fe Israel and Jessie Ramirez, rendered the baptismal certificate presented by the defense without any probative or evidentiary value. (Decision, p. 55) The findings of the trial court with respect to Rosario Baluyot's age cannot stand the application of evidentiary rules. The trial court relied on Section 33, Rule 130 (now Section 40 of Rule 130 of the 1989 Revised Rules of Court). For oral evidence to be admissible under this Rule, the requisites are: (1) That the declarant must be dead or outside of the Philippines or unable to testify; (2) That pedigree is in issue; (3) That the person whose pedigree is in question must be related to the declarant by birth or marriage; (4) That the declaration must be made before the controversy occurred or ante litem motam; and (5) That the relationship between the declarant and the person whose pedigree is in question must as a general rule be shown by evidence other than such act or declaration. These requirements were not satisfied by the evidence for the prosecution nor do the declarations fall within the purview of the rule. The victim's grandmother and father whose declarations regarding Rosario's age were admitted by the trial court are both alive, in the Philippines and able to testify as they both did testify in court. Their declarations were made at the trial which is certainly not before the controversy arose. The other witnesses who testified on Rosario's age are not members of the victim's family. The testimonies of Rosario's relatives must be weighed according to their own personal knowledge of what happened and not as hearsay evidence on matters of family history. At this point, we find the evidence regarding Rosario's age of doubtful value. The trial court justified the admissibility of the grandmother's testimony pursuant to the ruling laid down in U.S. v. Bergantino, (3 Phil., 118 [1903]) where the Court accepted the testimony of the mother that her daughter was 14 years old and 4 months old. The mother stated that she knew the age because the child was born about the time of the cholera epidemic of 1889. This was not hearsay, but came from one who had direct knowledge of the child's birth. It is however, equally true that human memory on dates or days is frail and unless the day is an extraordinary or unusual one for the witness, there is no reasonable assurance of its correctness. (People v. Dasig 93 Phil. 618, 632 [1953]) With respect to the grandmother's testimony, the date of the brother's death or funeral was never established, which indicates that the day was rather insignificant to be remembered. The father's declaration is likewise not entirely reliable. His testimony in court does not at all show that he had direct knowledge of his daughter's birth. He was certain though that she was more than one (1) year old at the time she was baptized. The other witnesses are not at all competent to testify on the victim's age, nor was there any basis shown to establish their competence for the purpose. The clinical records were based on Gaspar Alcantara's incompetent information given when he brought the victim to the hospital. Alcantara came to know her only about a year before her death. He had absolutely no knowledge about the circumstances of Rosario's birth. The death certificate relied upon by the trial court was merely based on the clinical records. It is even less reliable as a record of birth.

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All the evidence presented by the prosecution showing that Rosario Baluyot was less than 12 years old at the time of the alleged incident are not adequate to establish the exact date of birth, much less offset a documentary record showing a different date. The defense presented Rosario Baluyot's baptismal certificate which the trial court rejected as being hearsay and of no value. As against the oral declarations made by interested witnesses establishing Rosario's age to be less than 12 years old, the evidence on record is more convincing and worthy of belief. (See Filinvest Land, Inc. v. Court of Appeals, 183 SCRA 664, 673 [1990]). By virtue of a subpoena duces tecum and ad testificandum, issued by the lower court to the St. James Parish Church, Subic, Zambales, Fr. Roque Villanueva a Roman Catholic priest testified and stated that he is the head of said parish. He brought with him Baptismal Register No. 9 entitled "Liber Baptisnorum", a latin term for baptismal book or record. On page 151, No. 3 of the said Registry Book, there appears the name of Rosario Baluyot who was baptized on December 25, 1974, and born on December 26, 1973. Parents are Policarpio Baluyot and Anita Burgos, residents of Subic, Zambales. Edita R. Milan appears as the only sponsor with Olongapo City as her address. In the case of Macadangdang v. Court of appeals (100 SCRA 73 [1980]), we held that: xxx xxx xxx In our jurisprudence, this Court has been more definite in its pronouncements on the value of baptismal certificates. It thus ruled that while baptismal and marriage certificates may be considered public documents, they are evidence only to prove the administration of the sacraments on the dates therein specifiedbut not the veracity of the status or declarations made therein with respect to his kinsfolk and/or citizenship (Paa v. Chan, L-25945, Oct. 31, 1967). Again, in the case of Fortus v. Novero (L-22378, 23 SCRA 1331 [1968]), this Court held that a baptismal certificate is conclusive proof only of the baptism administered, in conformity with the rites of the Catholic Church by the priest who baptized the child, but it does not prove the veracity of the declarations and statements contained in the certificate that concern the relationship of the person baptized. Such declarations and statements, in order that their truth may be admitted, must indispensably be shown by proof recognized by law. (At pp. 84-85) In the same light, the entries made in the Registry Book may be considered as entries made in the course of business under Section 43 of Rule 130, which is an exception to the hearsay rule. The baptisms administered by the church are one of its transactions in the exercise of ecclesiastical duties and recorded in a book of the church during the course of its business. (U.S. v. de Vera, 28 Phil. 105 [1914] Hence, the certificate (Exhibit "22") presented by the defense that Rosario Baluyot was baptized on December 25, 1974 may be admitted in evidence as proof of baptism. Policarpio Baluyot, the victim's father testified that he had in his possession a baptismal certificate different from the one presented in court. However, no other baptismal record was ever presented to prove a date different from that brought by the official custodian. Since the baptismal certificate states that Rosario was baptized on December 25, 1974, it is therefore highly improbable that Rosario could have been born on December 22, 1975. She could not have been baptized before she was born. Exhibit "22" may be proof only of baptism but it puts a lie to the declaration that Rosario was born in 1975. With the father's assertion that Rosario was more than one (1) year old when she was baptized, we are then more inclined to agree that Rosario was born in 1973 as stated in the Baptismal Registry. In the case of People v. Rebancos (172 SCRA 425 [1989]), the Court stated: xxx xxx xxx . . . Although no birth certificate was presented because her birth had allegedly not been registered, her baptismal certificate, coupled by her mother's testimony, was sufficient to establish that Mary Rose was below twelve years old when she was violated by Rebancos. (At. p. 426) Unfortunately, in the instant case, nobody could corroborate the date on a more reliable document as to Rosario's birth which could serve as sufficient proof that she was born on December 26, 1973. Therefore, she was more than 12 years old at the time of the alleged incident on October 10, 1986. Moreover, it is not incumbent upon the defense to prove Rosario's age. The burden of proof lies on the prosecution to prove that Rosario was less than 12 years old at the time of the alleged incident in a charge of statutory rape. The prosecution failed in this respect. Since Rosario was not established to have been under 12 years of age at the time of the alleged sexual violation, it was necessary to prove that the usual elements of rape were present; i.e. that there was force of intimidation or that she was deprived of reason or otherwise unconscious in accordance with Article 335 of the Revised Penal Code. We agree with the defense that there was no proof of such facts. On the contrary, the evidence shows that Rosario submitted herself to the sexual advances of the appellant. In fact, she appears to have consented to

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the act as she was paid P300.00 the next morning while her companion, Jessie Ramirez was paid P200.00 (T.S.N. p. 50, January 6, 1988). The environmental circumstances coupled with the testimonies and evidence presented in court clearly give the impression that Rosario Baluyot, a poor street child, was a prostitute inspite of her tender age. Circumstances in life may have forced her to submit to sex at such a young age but the circumstances do not come under the purview of force or intimidation needed to convict for rape. In view of these clear facts which the prosecution failed to refute, no rape was committed. But was Ritter guilty of homicide? The trial court justified its ruling by saying that the death of the victim was a consequence of the insertion of the foreign object into the victim's vagina by the appellant. We now ask "Was the appellant responsible for the sexual vibrator left inside Rosario's vagina which led to her death? The trial court convicted the accused based on circumstantial evidence. Unfortunately, the circumstances are capable of varying interpretations and are not enough to justify conviction. Jessie Ramirez, the principal witness did not actually see the object inserted in Rosario's vagina. Neither could he identify the object (Exhibit "C-2") taken from Rosario as the same object which the appellant was holding at that time of the alleged incident. In his sworn statement given to the police investigator on September 4, 1987, he answered that: xxx xxx xxx T Habang kayo ay nasa loob ng kuwarto ng otel, mayroon ka bang napansin na inilabas ng kano sa kanyang daladalahan kung mayroon man? S Ang Amerikano ay may dala-dalang shoulder bag na kulay itim, at napansin ko na may inilabas siya sa kanyang bag na parang vicks inhaler, na kanyang inamoyamoy habang nasa otel kami at pagkatapos niya ay inilapag niya sa lamiseta. T Ilarawan mo nga sa akin ang bagay na nakita mong inilabas ng Amerikano? S Ito ay may habang tatlong pulgada at ang takip nito ay may habang dalawang pulgada. Iyong takip ay bilog na patulis at may tabang mga kalahating pulgada. Hindi ko napansin ang hugis ng dulo ng bagay na may takip dahil natatakpan ng kamay at ilong ng Amerikano. T Ipinakikita ko sa iyo ang isang larawan. Tignan mong mabuti ang larawang ito at sabihin mo nga sa akin kung makikilala mo ang mga bagay na nasa larawang ito, na may kinalaman sa nakita mong kinuha ng Amerikano sa kanyang bag? S Napansin ko na ang kulay asul na bagay sa larawan ay katulad na katulad noong takip ng bagay na inilabas ng Amerikano sa kanyang bag. Kaya lang ay bakit naging kulay asul gayong ng makita ko ito ay kulay puti? (Exhibit "A", p. 2; Emphasis Supplied) Presumably, what Jessie Ramirez saw was merely the Vicks inhaler which the appellant does not deny having possessed at that time. He was certain that the object was white. (T.S.N. p. 91, January 6, 1988) Later, Ramirez retracted and corrected himself. He said that it was grayish in color with color blue (Medyo kulay abo na may kulay na parang blue). (T.S.N. p. 92, January 6, 1988) The inconsistency of the witness' testimony casts doubt as to the veracity of the statements made especially when he answered on additional crossexamination that the reason why he concluded that Exhibit "C-2" was the same object being held by Ritter was because it was the only one shown to him by the prosecution (T.S.N. pp. 109-110, January 6, 1988). Jessie Ramirez was not all certain about the sexual vibrator because he did not actually see it in the possession of the appellant. What he merely remembers is the revelation made by Rosario the next morning that the foreigner inserted something inside her vagina. The trial court admitted such statement as part of the res gestae. In a strained effort to accept such statement as part of res gestae, the trial court focused the test of admissibility on the lapse of time between the event and the utterance. For the average 13 years old, the insertion of a mechanical device or anything for that matter into the vagina of a young girl is undoubtedly startling. For Rosario and Jessie, however, there must be more evidence to show that the statement, given after a night's sleep had intervened, was given instinctively because the event was so startling Res gestae does not apply. (Section 42, Rule 130, Rules of Court)

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Even if it were established that the appellant did insert something inside Rosario's vagina, the evidence is still not adequate to impute the death of Rosario to the appellant's alleged act. Jessie Ramirez testified that Rosario was able to remove the object inserted in her vagina. We quote: Q Now, you also stated on direct examination that later on Rosario even categorically admitted to you that she was already able to remove the object allegedly inserted inside her vagina, is that correct? A Yes, sir. xxx xxx xxx ATTY. CARAAN: Q Will you kindly tell to this Honorable Court the exact words used by Rosario Baluyot later on when you met her when you asked her and when she told you that she was already able to remove that object from her vagina? A "Oy, Jessie, natanggal na, "she told me that. I asked her, "Was it already removed?" And she answered, "Yes, it was removed." But the same night, she again complained of pain of her stomach. She sent one of her friends to call for me. And as a matter of fact, Tomboy was uttering defamatory words against me as she was groaning in pain. (TSN, Jan. 6,1988, pp. 72-73) This encounter happened on the night of the day following the day after both children were invited by the foreigner to the hotel. (T.S.N. p. 73, January 6, 1988). Rosario was said to be groaning in pain so we can just imagine the distress she was undergoing at this point in time. If the device inserted by the appellant caused the pain, it is highly inconceivable how she was able to endure the pain and discomfort until May, 1987, seven (7) months after the alleged incident. Evidence must not only proceed from the mouth of a credible witness but it must be credible in itself such as the common experience and observation of mankind can approve as probable under the circumstances. (People vs. Patog, 144 SCRA 429 [1986]). At this juncture, we find Dr. Pedro Solis' testimony rather significant. Dr. Pedro Solis, a witness for the defense is considered an expert witness. (A Doctor of Medicine and a graduate of the State University in 1940, a degree of Bachelor of Laws and member of the Bar 1949, and a graduate of the Institute of Criminology University. He was awarded Post Graduate Diploma in Criminology in 1963, and also a graduate of United Nations Asia and Far East Asia Institute on the Prevention of Crimes in Tokyo Japan 1965. He was appointed Medico Legal Officer of the National Bureau of Investigation in 1940 until 1944. He became Chief Medico Legal Officer in 1970 and became the Deputy Director of the NBI up to 1984. He is at present a Professorial Lecturer on Legal Medicine at the UP, FEU, UE, and Fatima College of Medicine; a Medico Legal Consultant of the PGH Medical Center, Makati Medical Center, UERM Medical Center, MCU Medical Center. He has been with the NBI for 43 years. He has attended no less than 13 conferences abroad. He is the author of the textbooks entitled "Legal Medicine" and "Medical Jurisprudence".) With his impressive legal and medical background, his testimony is too authoritative to ignore. We quote the pertinent portions of his testimony: Q Now Dr. Solis, would you kindly go over this object marked as Exh. "C-2" which object was described as a part of a sexual vibrator battery operated. Now, given this kind of object, would you kindly tell us what would be the probable effect upon a 12 years old girl when it is inserted into her vagina? A Well, this vibrator must be considered a foreign body placed into a human being and as such be considered a foreign object. As a foreign object, the tendency of the body may be: No. 1expel the foreign bodyNo. 2.The tendency of the body is to react to that foreign body. One of the reactions that maybe manifested by the person wherein such foreign body is concerned is to cover the foreign body with human tissue, in a way to avoid its further injury to the body. Now, the second reaction is irritation thereby producing certain manifest symptoms and changes in the area where the foreign body is located. In severe cases, the symptoms manifestation might not only be localized but may be felt all over the body, we call it systemic reaction. Now, considering the fact that this foreign body as shown to me is already not complete, this shows exposure of its different parts for the body to react. If there is mechanism to cause the foreign body to vibrate, there must be some sort of power from within and that power must be a dry cell battery. [The] composition of the battery are, manganese dioxide ammonium, salts, water and any substance that will cause current flow. All of these substances are irritants including areas of the container and as such, the primary reaction of the body is to cause irritation on the tissues, thereby inflammatory changes develop and in all likelihood, aside from those inflammatory

24

changes would be a supervening infection in a way that the whole generative organ of the woman will suffer from diseased process causing her the systemic reaction like fever, swelling of the area, and other systemic symptoms. . . . . (TSN., pp. 13-15, October 19,1988) xxx xxx xxx Q Now, given this object, how long would it take, Doctor before any reaction such as an infection would set in, how many days after the insertion of this object in the vagina of a 12 year old girl? A In the example given to me, considering that one of the ends is exposed, in a way that vaginal secretion has more chance to get in, well, liberation of this irritant chemicals would be enhanced and therefore in a shorter period of time, there being this vaginal reaction. Q How many days or weeks would you say would that follow after the insertion? A As I said, with my experience at the NBI, insertion of any foreign body in the vaginal canal usually developed within, a period of two (2) weeks . . . xxx xxx xxx Q . . . [T]he subject in this case was allegedly raped, and a sexual vibrator was inserted in her vagina on October 10, 1986 and she was operated on, on May 19, 1987 the following year, so it took more than 7 months before this was extracted, would you say that it will take that long before any adverse infection could set in inside the vagina? A Infection and inflamatory changes will develop in a shorter time. (TSN., Oct. 19,1988, p. 18) xxx xxx xxx Q When you said shorter, how long would that be, Doctor? A As I said, in my personal experience, hair pins, cottonballs and even this lipstick of women usually, there are only about two (2) weeks time that the patient suffer some abnormal symptoms. Q Now, considering that this is a bigger object to the object that you mentioned, this object has a shorter time? A Yes, Sir shorter time. (TSN., Oct. 19. 1988, p. 20) The trial court, however, ruled that "there is no hard and fast rule as to the time frame wherein infection sets in upon insertion of a foreign body in the vagina canal. For Dr. Solis, the time frame is not more than 10 months, and this case is still within the said time frame." A more generous time interval may be allowed in non-criminal cases. But where an accused is facing a penalty of reclusion perpetua, the evidence against him cannot be based on probabilities which are less likely than those probabilities which favor him. It should be clarified that the time frame depends upon the kind of foreign body lodged inside the body. An examination of the object gave the following results: (1) Color: Blue Size: (a) Circumference3.031 inches (b) Lengthapproximately 2.179 inches. Composition: Showed the general characteristics of a styrene-butadiene plastic. (2) The specimen can be electrically operated by means of a battery as per certification dated 01 June 1988, signed by Mr. Rodolfo D. Mercuric, Shipboard Electrical Systems Mechanics, Foreman II, SRF Shop 51, Subic (see attached certification). (3) No comparative examination was made on specimen #1 and vibrator depicted in the catalog because no actual physical dimensions and/or mechanical characteristics were shown in the catalog. (Exhibit "LL")

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The vibrator end was further subjected to a macro-photographic examination on the open end portion which revealed the following: Result of Examination Macro-photographic examination on the open end portion of specimen #1 shows the following inscription: MABUCHI MOTOR JAPAN RE 14 PAT (Exhibit "MM") From the above results, the subject object is certainly not considered as inert and based on Dr. Solis' testimony, it is more likely that infection should set in much earlier. Considering also that the object was inserted inside the vagina which is part of the generative organ of a woman, an organ which is lined with a very thin layer of membrane with plenty of blood supply, this part of the body is more susceptible to infection. (T.S.N. p. 34, October 19, 1988) The truth of Dr. Solis' testimony is more probable under the circumstances of the case. We see no reason why his opinions qualified by training and experience should not be controlling and binding upon the Court in the determination of guilt beyond reasonable doubt. (People v. Tolentino, 166 SCRA 469 [1988]). Dr. Barcinal, another witness for the defense also testified that he examined Rosario Baluyot on May 17, 1986 as a referral patient from the Department of Surgery to give an OB-GYN clearance to the patient prior to operation. (T.S.N. p. 6, September 28, 1988) Q And how many times did you examine this patient Rosario Baluyot on that day? A I examined her twice on that day. Q The first time that you examined her, what is the result of your findings, if any? A My first examination, I examined the patient inside the delivery room. The patient was brought to the delivery room wheel-chaired then from the wheel chair, the patient was ambigatory (sic). She was able to walk from the door to the examining table. On examination, the patient is conscious, she was fairly nourished, fairly developed, she had fever, she was uncooperative at that time and examination deals more on the abdomen which shows slightly distended abdomen with muscle guarding with tenderness all over, with maximum tenderness over the hypogastric area. (T.S.N. p. 5, September 28, 1988) xxx xxx xxx Q What about your second examination to the patient, what was your findings, if any? A In my second examination, I repeated the internal examination wherein I placed my index finger and middle finger inside the vagina of the patient and was able to palpate a hard object. After which, I made a speculum examination wherein I was able to visualize the inner portion of the vaginal canal, there I saw purulent foul smelling, blood tints, discharge in the vaginal canal and a foreign body invaded on the posterior part of the vaginal canal. xxx xxx xxx A I referred back to Dr. Fernandez about my findings and he asked me to try to remove the said foreign object by the use of forceps which I tried to do so also but I failed to extract the same. Q All this time that you were examining the patient Rosario Baluyot both in the first and second instance, Rosario Baluyot was conscious and were you able to talk to her when you were examining her? A Yes, sir. Q And did you ask her why there is a foreign object lodge inside her vagina? A Yes, Sir I asked her. Q And what did she tell you, if any?

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A She said in her own words that "GINAMIT AKO NG NEGRO AT SIYA ANG NAGLAGAY NITO." Q Did she also tell you when, this Negro who used her and who inserted and placed the foreign object on her vagina? A Yes, Sir I asked her and she said he used me three (3) months ago from the time I examined her. Q Now, you said that you referred the patient to the ward, what happened next with your patient? A To my knowledge, the patient is already scheduled on operation on that date. Q Meaning, May 17, 1987? A Yes, Sir I was presuming that the patient would undergo surgery after that? (TSN, Sept. 28,1988, pp. 8-9; Emphasis supplied) The trial court debunked Dr. Barcinals testimony considering Rosario's condition at that time. It ruled that it is inconceivable that she would be striking a normal conversation with the doctors and would be sitting on the examination table since Gaspar Alcantara stated that when he brought Rosario Baluyot to the hospital, she was unconscious and writhing in pain. It was not improbable for Rosario Baluyot to still be conscious and ambulant at that time because there were several instances testified to by different witnesses that she was still able to talk prior to her operation: (1) Fe Israel, a witness for the prosecution and a member of the Olongapo Catholic Charismatic Renewal Movement testified that as a member of this group she visits indigent children in the hospital every Saturday and after office hours on working days. On the Saturday prior to Rosario's death which was May 17, she was still able to talk to Rosario Baluyot. In fact, one of her groupmates helped Rosario go to the comfort room to urinate. (T.S.N., pp. 16-19, May 25, 1988) (2) Angelita Amulong, a witness for the defense is another para social worker who worked at Pope John 23rd Community Center under Sister Eva Palencia. In one of her hospital visits, she encountered Rosario Baluyot in the month of May, 1987. She actually saw a child who happened to be Rosario Baluyot seated on the cement floor and when she asked why she was seated there, she was told that it was too hot in the bed. She saw Rosario Baluyot for about 2 or 3 days successively. (T.S.N. pp. 10-13, September 7, 1988) (3) Gaspar Alcantara, the person who brought Rosario to the hospital actually testified that she was conscious (T.S.N. p. 36, September 14, 1988) but writhing in pain. He took pity on her so he brought her to the hospital (T.S.N. p. 12, September 14, 1988) From the above testimonies, it is clear that Rosario was still conscious and could still answer questions asked of her although she was complaining of stomach pains. Unfortunately, the medical attention given to her failed to halt the aggravation of her condition. The operation on May 19 was too late. Rosario died because of septicemia, which in layman's language is blood poisoning, and peritonitis, which is massive infection, in the abdominal cavity caused by the foreign object or the cut sexual vibrator lodged in the vagina of the victim. This led to the infection from the uterus to the fallopian tubes and into the peritoneum and the abdominal cavity. The trial court convicted the accused citing the rationale of Article 4 of the RPC He who is the cause of the cause is the cause of the evil caused. But before the conviction is affirmed, we must first follow the rule as stated in the case of Urbano vs.Intermediate Appellate Court (157 SCRA 1 [1988]) to wit: The rule is that the death of the victim must be the direct, natural and logical consequence of the wounds inflicted upon him by the accused. And since we are dealing with a criminal conviction, the proof that the accused caused the victim's death must convince a rational mind beyond reasonable doubt. (Emphasis supplied) In People v. Tempongko, Jr., (144 SCRA 583, 592 [1986]), we explained that: xxx xxx xxx

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The basic principle in every criminal prosecution is that accusation is not synonymous with guilt. The accused is presumed innocent until the contrary is proved by the prosecution. If the prosecution fails, it fails utterly, even if the defense is weak or, indeed, even if there is no defense at all. The defendant faces the full panoply of state authority with all "The People of the Philippines" arrayed against him. In a manner of speaking, he goes to bat with all the bases loaded. The odds are heavily against him. It is important, therefore, to equalize the positions of the prosecution and the defense by presuming the innocence of the accused until the state is able to refute the presumption by proof of guilt beyond reasonable doubt. (At. p. 592) The evidence for the accused maybe numerically less as against the number of witnesses and preponderance of evidence presented by the prosecution but there is no direct and convincing proof that the accused was responsible for the vibrator left inside the victim's vagina which caused her death seven (7) months after its insertion. What the prosecution managed to establish were mere circumstances which were not sufficient to overcome the constitutional presumption of innocence. While circumstantial evidence may suffice to support a conviction it is imperative, though, that the following requisites should concur: (a) There is more than one circumstance; (b) The facts from which the inferences are derived are proven; and (c) The combination of all the circumstances is such as to produce a conviction beyond reasonable doubt. (Rule 133, Sec. 4 Revised Rules of Court) For the well-entrenched rule in evidence is that "before conviction can be had upon circumstantial evidence, the circumstances proved should constitute an unbroken chain which leads to one fair and reasonable conclusion pointing to the defendant, to the exclusion of all others, as the author of the crime (People v. Subano, 73 Phil. 692 [1942]; Emphasis supplied). It must fairly exclude every reasonable hypothesis of innocence (Dorado v. Court of Appeals, 153 SCRA 420, 433 [1987]). In this case the circumstantial evidence presented by the prosecution does not conclusively point to the liability of the appellant for the crime charged. (People v. Tolentino, supra) We are aware of the wide publicity given to the plight of Rosario Baluyot and how her death exemplified starkly the daily terrors that most street children encounter as they sell their bodies in order to survive. At an age when innocence and youthful joys should preponderate in their lives, they experience life in its most heartless and inhuman form. Instead of nothing more than gentle disappointments occupying their young minds, they daily cope with tragedies that even adults should never be made to carry. It is with distressing reluctance that we have to seemingly set back the efforts of Government to dramatize the death of Rosario Baluyot as a means of galvanizing the nation to care for its street children. It would have meant a lot to social workers and prosecutors alike if one pedophile-killer could be brought to justice so that his example would arouse public concern, sufficient for the formulation and implementation of meaningful remedies. However, we cannot convict on anything less than proof beyond reasonable doubt. The protections of the Bill of Rights and our criminal justice system are as much, if not more so, for the perverts and outcasts of society as they are for normal, decent, and law-abiding people. The requirement of proof which produces in an unprejudiced mind moral certainty or conviction that the accused did commit the offense has not been satisfied. By way of emphasis, we reiterate some of the factors arousing reasonable doubt: 1. The evidence on Rosario Baluyot's baptism creates reasonable doubt about her being less than 12 years old when the carnal knowledge took place. If the evidence for the prosecution is to be believed, she was not yet born on the date she was baptized. 2. Since the proof of Rosario's being under 12 years of age is not satisfactory, the prosecution has to prove force, intimidation, or deprivation of reason in order to convict for rape. There is no such proof. In fact, the evidence shows a willingness to submit to the sexual act for monetary considerations. 3. The only witness to the fact of Ritter's placing a vibrator inside the vagina of Rosario was Jessie Ramirez. This witness did not see Ritter insert the vibrator. The morning after the insertion, he was only told by Rosario about it. Two days later, he allegedly met Rosario who informed him that she was able to remove the object. And yet, Ramirez testified that on the night of that second encounter, he saw Rosario groaning because of pain in her stomach. She was even hurling invectives. Ramirez' testimony is not only hearsay, it is also contradictory. 4. It was improbable, according to expert medical testimony, for a foreign object with active properties to cause pain, discomfort, and serious infection only after seven months inside a young girl's vaginal canal. Infection would have set in much earlier. Jessie Ramirez recalled that the incident happened in December of 1986. (TSN., January 6, 1988, pp. 15-17) The evidence, however shows that the appellant was not here in the Philippines that December. As per the Commission on Immigration Arrival and Departure Report, Heinrich Ritter arrived in the Philippines on October 7, 1986 and left on October 12, 1986. He never returned until September 23, 1987 (Exhibits "DD" and "EE") The incident could have happened only in October, but then it would have been highly

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improbable for the sexual vibrator to stay inside the vagina for seven (7) months with the kind of serious complications it creates. 5. The gynecologist who attended to Rosario during her hospital confinement testified that she told him "Ginamit ako ng Negro at siya ang naglagay nito." The accused is not a black. Noteworthy is the fact that nothing was mentioned about Rosario's activities after the hotel incident. Considering Dr. Barcinal's testimony indicating that she was "used" by a "Negro" three (3) months prior to admission in the hospital and Rosario's unfortunate profession, there is always the possibility that she could have allowed herself to be violated by this perverse kind of sexual behavior where a vibrator or vibrators were inserted into her vagina between October, 1986 and May, 1987. Moreover, the long delay of seven (7) months after the incident in reporting the alleged crime renders the evidence for the prosecution insufficient to establish appellant's guilty connection with the requisite moral certainty. (See People v. Mula Cruz, 129 SCRA 156 [1984]). The established facts do not entirely rule out the possibility that the appellant could have inserted a foreign object inside Rosario's vagina. This object may have caused her death. It is possible that the appellant could be the guilty person. However, the Court cannot base an affirmance of conviction upon mere possibilities. Suspicions and possibilities are not evidence and therefore should not be taken against the accused. (People v. Tolentino, supra) Well-established is the rule that every circumstance favorable to the accused should be duly taken into account. This rule applies even to hardened criminals or those whose bizarre behaviour violates the mores of civilized society. The evidence against the accused must survive the test of reason. The strongest suspicion must not be allowed to sway judgment. (See Sacay v. Sandiganbayan, 142 SCRA 593 [1986]). As stated in the case of People v. Ng (142 SCRA 615 [1986]): . . . [F]rom the earliest years of this Court, it has emphasized the rule that reasonable doubt in criminal cases must be resolved in favor of the accused. The requirement of proof beyond reasonable doubt calls for moral certainty of guilt. It has been defined as meaning such proof "to the satisfaction of the court, keeping in mind the presumption of innocence, as precludes every reasonable hypothesis except that which it is given to support. It is not sufficient for the proof to establish a probability, even though strong, that the fact charged is more likely to be true than the contrary. It must establish the truth of the fact to a reasonable and moral certaintya certainty that convinces and satisfies the reason and the conscience of those who are to act upon it. (Moreno, Philippine Law Dictionary, 1972 Edition, p. 379, citing U.S. v. Reyes, 3 Phil. 3). . . . In the instant case, since there are circumstances which prevent our being morally certain of the guilt of the appellant, he is, therefore, entitled to an acquittal. This notwithstanding, the Court can not ignore the acts of the appellant on the children, Jessie Ramirez and Rosario Baluyot in October, 1986 at the MGM Hotel. Inspite of his flat denials, we are convinced that he comes to this country not to look at historical sights, enrich his intellect or indulge in legitimate pleasures but in order to satisfy the urgings of a sick mind. With the positive Identification and testimony by Jessie Ramirez that it was the appellant who picked him and Rosario from among the children and invited them to the hotel; and that in the hotel he was shown pictures of young boys like him and the two masturbated each other, such actuations clearly show that the appellant is a pedophile. When apprehended in Ermita, he was sizing up young children. Dr. Solis defined pedophilia in his book entitled Legal Medicine, 1987 edition, as follows: PedophiliaA form of sexual perversion wherein a person has the compulsive desire to have sexual intercourse with a child of either sex. Children of various ages participate in sexual activities, like fellatio, cunnilingus, fondling with sex organs, or anal sexual intercourse. Usually committed by a homosexual between a man and a boy the latter being a passive partner. Ritter was prosecuted for rape with homicide and not pedophilia, assuming this is a crime by itself. Pedophilia is clearly a behavior offensive to public morals and violative of the declared policy of the state to promote and protect the physical, moral, spiritual and social well-being of our youth. (Article II, Section 13, 1987 Constitution) (Harvey v. Defensor Santiago, 162 SCRA 840, 848 [1989]). Pedophiles, especially thrill seeking aliens have no place in our country. In this case, there is reasonable ground to believe that the appellant committed acts injurious not only to Rosario Baluyot but also to the public good and domestic tranquility of the people. The state has expressly committed itself to defend the right of children to assistance and special protection from all forms of neglect, abuse, cruelty, exploitation and other conditions prejudicial to their development. (Art. XV, Section 3 [2] . . . (Harvey v. Santiago, supra). The appellant has abused Filipino children, enticing them with money. The appellant should be expelled from the country.

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Furthermore, it does not necessarily follow that the appellant is also free from civil liability which is impliedly instituted with the criminal action. (Rule III, Section 1) The well-settled doctrine is that a person while not criminally liable, may still be civilly liable. We reiterate what has been stated inUrbano v. IAC, supra. . . . While the guilt of the accused in a criminal prosecution must be established beyond reasonable doubt, only a preponderance of evidence is required in a civil action for damages. (Article 29, Civil Code). The judgment of acquittal extinguishes the civil liability of the accused only when it includes a declaration that the facts from which the civil liability might arise did not exist. (Padilla v. Court of Appeals, 129 SCRA 559). The reason for the provisions of Article 29 of the Civil Code, which provides that the acquittal of the accused on the ground that his guilt has not been proved beyond reasonable doubt does not necessarily exempt him from civil liability for the same act or omission, has been explained by the Code Commission as follows: The old rule that the acquittal of the accused in a criminal case also releases him from civil liability is one of the most serious flaws in the Philippine legal system. It has given rise to numberless instances of miscarriage of justice, where the acquittal was due to a reasonable doubt in the mind of the court as to the guilt of the accused. The reasoning followed is that inasmuch as the civil responsibility is derived from the criminal offense, when the latter is not proved, civil liability cannot be demanded. This is one of those causes where confused thinking leads to unfortunate and deplorable consequences. Such reasoning fails to draw a clear line of demarcation between criminal liability and civil responsibility, and to determine the logical result of the distinction. The two liabilities are separate and distinct from each other. One affects the social order and the other, private rights. One is for the punishment or correction of the offender while the other is for the reparation of damages suffered by the aggrieved party. The two responsibilities are so different from each other that article 1813 of the present (Spanish) Civil Code reads thus: "There may be a compromise upon the civil action arising from a crime; but the public action for the imposition of the legal penalty shall not thereby be extinguished." It is just and proper that, for the purposes of the imprisonment of or fine upon the accused, the offense should be proved beyond reasonable doubt. But for the purpose of indemnifying the complaining party, why should the offense also be proved beyond reasonable doubt? Is not the invasion or violation of every private right to be proved only by a preponderance of evidence? Is the right of the aggrieved person any less private because the wrongful act is also punishable by the criminal law? For these reasons, the Commission recommends the adoption of the reform under discussion. It will correct a serious defect in our law. It will close up an inexhaustible source of injusticea cause for disillusionment on the part of the innumerable persons injured or wronged. Rosario Baluyot is a street child who ran away from her grandmother's house. Circumstances forced her to succumb and enter this unfortunate profession. Nonetheless, she has left behind heirs who have certainly suffered mental anguish, anxiety and moral shock by her sudden and incredulous death as reflected in the records of the case. Though we are acquitting the appellant for the crime of rape with homicide, we emphasize that we are not ruling that he is innocent or blameless. It is only the constitutional presumption of innocence and the failure of the prosecution to build an airtight case for conviction which saved him, not that the facts of unlawful conduct do not exist. As earlier stated, there is the likelihood that he did insert the vibrator whose end was left inside Rosario's vaginal canal and that the vibrator may have caused her death. True, we cannot convict on probabilities or possibilities but civil liability does not require proof beyond reasonable doubt. The Court can order the payment of indemnity on the facts found in the records of this case. The appellant certainly committed acts contrary to morals, good customs, public order or public policy (see Article 21 Civil Code). As earlier mentioned, the appellant has abused Filipino children, enticing them with money. We can not overstress the responsibility for proper behavior of all adults in the Philippines, including the appellant towards young children. The sexual exploitation committed by the appellant should not and can not be condoned. Thus, considering the circumstances of the case, we are awarding damages to the heirs of Rosario Baluyot in the amount of P30,000.00. And finally, the Court deplores the lack of criminal laws which will adequately protect street children from exploitation by pedophiles, pimps, and, perhaps, their own parents or guardians who profit from the sale of young bodies. The provisions on statutory rape and other related offenses were never intended for the relatively recent influx of pedophiles taking advantage of rampant poverty among the forgotten segments of our society. Newspaper and magazine articles, media exposes, college dissertations, and other studies deal at length with this serious social problem but pedophiles like the appellant will continue to enter the Philippines and foreign publications catering to them will continue to advertise the availability of Filipino street children unless the Government acts and acts soon. We have to acquit the appellant because the Bill of Rights

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commands us to do so. We, however, express the Court's concern about the problem of street children and the evils committed against them. Something must be done about it. WHEREFORE, the appealed judgment is REVERSED and SET ASIDE. Appellant HEINRICH STEFAN RITTER is ACQUITTED on grounds of reasonable doubt. The appellant is ordered to pay the amount of P30,000.00 by way of moral and exemplary damages to the heirs of Rosario Baluyot. The Commissioner of Immigration and Deportation is hereby directed to institute proper deportation proceedings against the appellant and to immediately expel him thereafter with prejudice to re-entry into the country. SO ORDERED.

G.R. No. L-14534

February 28, 1962

MERARDO L. ZAPANTA, petitioner, vs. THE HON. AGUSTIN P. MONTESA, ETC., ET AL., respondents. Pedro M. Santos and Jorge C. Salonga for petitioner. Office of the Solicitor General, Romulo L. Chua and Dewey G. Soriano for respondents. DIZON, J.: This is a petition for prohibition filed by Merardo L. Zapanta against the Hon. Agustin P. Montesa, Judge of the Court of First Instance of Bulacan, Fernando A. Cruz, Provincial Fiscal of Bulacan, and Olimpia A. Yco, to enjoin the former from proceeding with the trial of Criminal Case No. 3405 pending the final determination of Civil Case No. 1446 of the Court of First Instance of Pampanga. Upon complaint filed by respondent Olimpia A. Yco on May 20, 1958, an information for Bigamy was filed by respondent Provincial Fiscal against petitioner in the Court of First Instance of Bulacan (Criminal Case No. 3405), alleging that the latter, having previously married one Estrella Guarin, and without said marriage having been dissolved, contracted a second marriage with said complainant. On June 16, 1958, petitioner filed in the Court of First Instance of Pampanga Civil Case No. 1446 against respondent Olimpia A. Yco for the annulment of their marriage on the ground of duress, force and intimidation. On the 30th of the same month respondent Yco, as defendant in said case, filed a motion to dismiss the complaint upon the ground that it stated no cause of action, but the same was denied on July 7 of the same year. 1wph1.t On September 2, 1958, petitioner, in turn, filed a motion in Criminal Case No. 3405 to suspend proceedings therein, on the ground that the determination of the issue involved in Civil Case No. 1446 of the Court of First Instance of Pampanga was a prejudicial question. Respondent judge denied the motion on September 20, 1958 as well as petitioner's motion for reconsideration, and ordered his arraignment. After entering a plea of not guilty, petitioner filed the present action. We have heretofore defined a prejudicial question as that which arises in a case, the resolution of which is a logical antecedent of the issue involved therein, and the cognizance of which pertains to another tribunal (People vs. Aragon, G.R. No. L-5930, February 17, 1954). The prejudicial question we further said must be determinative of the case before the court, and jurisdiction to try the same must be lodged in another court (People vs. Aragon, supra). These requisites are present in the case at bar. Should the question for annulment of the second marriage pending in the Court of First Instance of Pampanga prosper on the ground that, according to the evidence, petitioner's consent thereto was obtained by means of duress, force and intimidation, it is obvious that his act was involuntary and can not be the basis of his conviction for the crime of

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bigamy with which he was charged in the Court of First Instance of Bulacan. Thus, the issue involved in the action for the annulment of the second marriage is determinative of petitioner's guilt or innocence of the crime of bigamy. On the other hand, there can be no question that the annulment of petitioner's marriage with respondent Yco on the grounds relied upon in the complaint filed in the Court of First Instance of Pampanga is within the jurisdiction of said court. In the Aragon case already mentioned (supra) we held that if the defendant in a case for bigamy claims that the first marriage is void and the right to decide such validity is vested in another court, the civil action for annulment must first be decided before the action for bigamy can proceed. There is no reason not to apply the same rule when the contention of the accused is that the second marriage is void on the ground that he entered into it because of duress, force and intimidation. WHEREFORE, the writ prayed for in the petition is hereby granted. Without costs.

G.R. No. L-15315

August 26, 1960

ABUNDIO MERCED, petitioner, vs. HON. CLEMENTINO V. DIEZ, ETC. ET AL., respondents. Pedro A. Bandoquillo for petitioner. Fulvio Pelaez for respondents. LABRADOR, J.: This is a petition for a writ of certiorari with prohibition to prohibit the judge presiding the Court of First Instance of Negros Oriental, Hon. Clementino V. Diez, from proceeding further in the Criminal Case No. V-6520, entitled People of the Philippines vs. Abundio Merced until after final termination of Civil Case No. R-5387, for the annulment of the marriage of petitioner Abundio Merced with Elizabeth Ceasar, also pending in same court. The record disclose the following proceedings in the court a quo: On January 30, 1958, Abundio Merced filed a complaint for annulment of his second marriage with Elizabeth Ceasar. The complaint is docketed as Civil Case No. R-5387. The complaint alleges that defendant Elizabeth Ceasar and her relatives forced, threatened and intimated him into signing an affidavit to the effect that he and defendant had been living together as husband and wife for over five years, which is not true; that this affidavit was used by defendant in securing their marriage of exceptional character, without the need for marriage license; that he was again forced, threatened and intimated by defendant and her relatives into entering the marriage with her on August 21, 1957 before Municipal Judge Medardo A. Conde; that immediately after the celebration of the marriage plaintiff left defendant and never lived with her; that the defendant wrote him on October 29, 1957, admitting that he was forced into the marriage and asking him to go to Cebu to have the marriage annulled, but he refused to go for fear he may be forced into living with the defendant. Merced prays for annulment of the marriage and for moral damages in the amount of P2,000. On March 3, 1958, Elizabeth Ceasar filed her answer to the complaint. In her answer, she denies the material allegations of the complaint and avers as affirmative defenses that neither she nor her relatives know of plaintiff's previous marriage to Eufrocina Tan; that sometime in July, 1957, plaintiff

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asked her mother to intercede on their behalf to secure her father's consent to their marriage as plaintiff could not concentrate on his studies without marrying Elizabeth, but that her mother advised him to finish his studies first; that sometime in April, 1957, defendant learned that plaintiff was engaged to marry Eufrocina Tan, but plaintiff, upon being confronted with such discovery, showed her a letter which he wrote breaking off his engagement with Tan. As a counterclaim defendant asks P50,000 as moral damages for the deceit, fraud and insidious machinations committed upon her by plaintiff. On February 19, 1958, after had filed Civil Case No. R-5387 defendant Elizabeth Ceasar filed a criminal complaint for bigamy 39 3 against plaintiff Abundio Merced with the office of the City Fiscal of Cebu. On April 7, 1958 the Assistant City Fiscal filed Criminal Case No. V-6520, charging Merced with bigamy for the second marriage. The information reads. The undersigned Assistant Fiscal of City of Cebu accuses Abundio Merced of the crime of bigamy, committed as follows: That on or about the 21st day of August, 1957, in the City of Cebu, Philippines, and within the jurisdiction of this Honorable Court, the said accused Abundio Merced, being previously united in lawful marriage with Eufrocina Tan, and without the said marriage having been legally dissolved did then and there wilfully unlawfully, feloniously contract a second marriage with Elizabeth Ceasar. Contrary to Article 349 of the Revised Penal Code. (Annex "2".) Abundio Merced filed a motion to hold to trial of said criminal case in abeyance until final termination of Civil Case No. R- 5387. Reason alleged for the motion is that the Civil Action involves facts which if proved will determine the innocence of the accused. After an opposition thereto was filed by the assistant provincial fiscal, the court granted the motion. However, upon motion for reconsideration filed by the fiscal, the order was set aside and another entered denying the motion of accused for suspension of the criminal proceedings, which last order is the one sough herein to be annulled. The court held in its last order that inasmuch as by virtue of the decision of the Supreme Court in the case of People vs. Mendoza, 95 Phil., 50 Off. Gaz. [10], 4767, judicial declaration of nullity of a second and bigamous marriage is not necessary, there is no need in this case to decide the nullity of the second marriage, or to determine and declare the existence of the grounds for annulling the same, but that said grounds should be used as a defense in the criminal action. A motion to reconsider the second order of the court having been denied, petition herein was filed. When the petition for certiorari with prohibition was filed, the petitioner secured from this Court a writ of preliminary injunction to enjoin respondent judge from proceeding further in the criminal case. Before this Court the sole question raised is whether an action to annul the second marriage is a prejudicial question in a prosecution for bigamy. The definition and the elements of a prejudicial question have been set forth by us as follows: Prejudicial question has been defined to be that which arises in a case, the resolution of which (question) is a logical antecedent of the issue involved in said case, and the cognizance of which pertains to another Tribunal (Cuestion prejudicial, es 3o 3 la que surge en un pleito o causa cuya resolucion sean antecedente logico de la cuestion-objeto del pleito o causa y cuyo conocimiento corresponda a los Tribunales de otro orden o jurisdiccion. Enciclopedia Juridica Espaola, p. 228). The prejudicial question must be determinative of the case before the court; this is its first element. Jurisdiction to try said question must be lodged in another tribunal; this is the second element. In an action for bigamy for example, if the accused claims that the first marriage is null and void and the right to decide such validity is vested in another tribunal, the civil action for nullity must be first decided before the action for bigamy can proceed, hence, the validity of the first marriage is a prejudicial question. (People vs. Aragon, 94 Phil., 357; 50 Off. Gaz., No. 10, 4863). In order that a person may be held guilty of the crime of bigamy, the second and subsequent marriage must have all the essential elements of a valid marriage, were it not for the subsistence of the first marriage. This was the ruling of this Court in People vs. Dumpo, 62 Phil., 246, where we said: It is an essential element of the crime of bigamy that the alleged second marriage, having all the essential requisites, would be valid were it not for the subsistence of the first marriage. It appearing that the marriage alleged to have been contracted by the accused with Sabdapal, her former marriage with Hassan being undissolved, can not be considered as such, according to Mohameddan rites, there is no justification to hold her guilty of the crime charged in the information. (People vs. Dumpo, 62 Phil. 246). One of the essential elements of a valid marriage is that the consent thereto of the contracting parties must be freely and voluntarily given. Without the element of consent a marriage would be illegal and void. (Section 29, Act No. 3613, otherwise known as the Marriage Law.) But the question of invalidity can not ordinarily be decided in the criminal action for bigamy but in a civil action for annulment. Since the validity of the second marriage, subject of the action for bigamy, cannot be determined in the criminal case and since prosecution for bigamy does not lie unless the elements of the second marriage appear to exist, it is necessary that a decision

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in a civil action to the effect that the second marriage contains all the essentials of a marriage must first be secured. We have, therefore, in the case at bar, the issue of the validity of the second marriage, which must be determined before hand in the civil action, before the criminal action can proceed. We have a situation where the issue of the validity of the second marriage can be determined or must be determined in the civil action before the criminal action for bigamy can be prosecuted. The question of the validity of the second marriage is, therefore, a prejudicial question, because determination of the validity of the second marriage is determinable in the civil action and must precede the criminal action for bigamy. Spanish jurisprudence, from which the principle of prejudicial question has been taken, requires that the essential element determinative of the criminal action must be cognizable by another court. This requirement of a different court is demanded in Spanish jurisprudence because Spanish courts are divided according to their jurisdictions, some courts being exclusively of civil jurisdiction, others of criminal jurisdiction. In the Philippines, where our courts are vested with both civil and criminal jurisdiction, the principle of prejudicial question is to be applied even if there is only one court before which the civil action and the criminal action are to be litigated. But in this case the court when exercising its jurisdiction over the civil action for the annulment of marriage is considered as a court distinct and different from itself when trying the criminal action for bigamy. Our conclusion that the determination of the validity of the marriage in the civil action for annulment is a prejudicial question, insofar as the criminal action for bigamy is concerned, is supported by Mr. Justice Moran in his dissenting opinion in De Leon vs. Mabanag, 70 Phil., 207 thus: La regla general es que cuando hay una cuestion civil y otra criminal sobre un mismo delito u ofensa, la segunda debe verse antes que la primera, por la razon de que las formas de un juicio criminal son las mas a proposito para la averiguacion de un delito, y no las de un juicio civil. Esta regla tiene, sin embargo, una excepcion, y es la que se refiere a una cueston civil prejudicial. Una cuestion civil es de caracter prejudicial y debe resolverse antes que una cuestion criminal, cuando versa sonbre un hecho distinto y separado del delito, pero tan intimamente ligado a el que determina la culpabilidad o inocencia del acusado. Por ejemplo, una accion criminal por bigamia. The majority decision in said case of De Leon vs. Mabanag also sustains the theory that when a civil action is pending in court, in which a validity of a document claimed to be false and fictitious is in issue, the fiscal may not prosecute the person who allegedly executed the false document because the issue of the validity of the instrument is sub judice and the prosecuting officer should be ordered to suspend the criminal action until the prejudicial question has been finally determined. Thus the Court said" Hablando en terminos generales la facultad del Fiscal y su deber perseguir los delitos no deben ser controlados ni coartados por los tribunales; pero no hay duda que esa facultad puede ser regulada para que no se abuse de ella. Cuando un miembro del Ministerio Fiscal se desvia de la ley y entorpece la recta administracion de justicia procesando a una persona por hechos constituvos de delito que se encuentran sub-judice y de los cuales se propone una cuestion prejudicial administrativa, es deber de los tribunales llamarle la atencion y obligarle que suspenda toda accion criminal hasta que la cuestion prejudicial administrativa se haya decidido finalmente. (De Leon vs. Mabanag, 70 Phil., 207.) The case of People vs. Mendoza, supra, upon which the trial court and the respondents rely, presents a different sets of facts from the case at bar. So is the ruling therein as contained in the syllabus. In the case of People vs. Mendoza, Mendoza was charged with and convicted of bigamy for a marriage with one Carmencita Panlilio, contracted in August, 1949. Mendoza was married for the first time in 1946 with Josefa de Asis; then married for the second time with Olga Lema; and then married for the third time to Panlilio in 1949. On February 2, 1943, Josefa de Asis died. The court citing the provisions of Article 29 of the marriage law, held that the second marriage of the appellant Mendoza with Lema was operation of law null and void, because at the time of the second marriage in 1941, appellant's former wife Josefa de Asis was still living. This marriage of appellant with Lema being null and void at the time the appellant contracted the said marriage, the impediment of the second marriage did not exist. Hence the appellant was acquitted of bigamy for the 1949 marriage because his previous marriage with Lema in 1941, by operation of law, was void ab initio. In the case at bar, in order that the petitioner be held guilty of the crime of bigamy, the marriage which she contracted for the second time with Elizabeth Ceasar, must first be declared valid. But its validity has been questioned in the civil action. This civil action must be decided before the prosecution for bigamy can proceed. For the foregoing considerations, the petition for the issuance of a writ of certiorari and prohibition is hereby granted. The order of the court denying the petition of the herein petitioner to prohibit the Fiscal from prosecuting the case for bigamy, criminal case no. V-6520, entitled People vs. Abundio Merced, is hereby set aside and the preliminary injunction issued by this court to that effect is hereby made permanent. So Ordered.

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G.R. No. L-10016

February 28, 1957

THE PEOPLE OF THE PHILIPPINES, plaintiff-appelle, vs. PROCESO S. ARAGON, defendant-appellant. Office of the Solicitor General Ambrosio Padilla and Solicitor Adolfo Brillantes for appellee. Prospero V. Manuel, Fernando Moncada and Antonio Abad Tornis for defendant and appellant. LABRADOR, J.: Appeal from a judgment of the Court of First Instance of Cebu finding appellant guilty of bigamy. The facts are not disputed and, as found by the trial court, are as follows: On September 28, 1925, the accused, under the name of Proceso Rosima, contracted marriage with a certain Maria Gorrea in the Philippine Independent Church in Cebu (Exhibits "1" and "1-A"). While his marriage with Maria Gorrea was subsisting, the accused under the name of Proceso Aragon, contracted a canonical marriage with Maria Faicol on August 27, 1934, in the Santa Teresita Church in Iloilo City. The sponsors of the accused and Maria Faicol were Eulogio Giroy, who was then an employee of the Office of the Municipal Treasurer of Iloilo, and a certain Emilio Tomesa, a clerk in the said office (Exhibit "A" and testimonies of Eulogio Giroy and complainant Maria Faicol). After the said marriage, the accused and Maria Faicol established residence in Iloilo. As the accused was then a traveling salesman, he commuted between Iloilo where he maintained Maria Faicol, and Cebu where he maintained his first wife, Maria Gorrea died in Cebu City on August 5, 1939 (Exhibit "2"). After Maria Gorrea's death, and seeing that the coast was dear in Cebu, the accused brought Maria Faicol to Cebu City in 1940, where she worked as a teacher-nurse. It would seem that the accused and Maria Faicol did not live a happy marital life in Cebu, for it appears that in 1949 and 1950, Maria Faicol suffered injuries to her eyes because of physical maltreatment in the hands of the accused. On January 22, 1953, the accused sent Maria Faicol to Iloilo, allegedly for the purpose of undergoing treatment of her eyesight. During her absence, the accused contracted a third marriage with a certain Jesusa C. Maglasang on October 3, 1953, in Sibonga, Cebu. (See Exhibits "C", "D", "E" and "F") The accused admitted having contracted marriage with Jesusa C. Maglasangin Sibonga, Cebu, on October 3, 1953, Although the accused made an attempt to deny his previous marriage with Maria Faicol, the Court, however, believes that the attempt is futile for the fact of the said second marriage was fully established not only by the certificate of the said marriage, but also by the testimony of Maria Faicol and of Eulogio Giroy, one of the sponsors of the wedding, and the identification of the accused made by Maria Faicol. (See Exhibits "A" and "B"; t.s.n. pp. 32-33, 40, 41, hearing of April 27, 1954). The Court of First Instance of Cebu held that even in the absence of an express provision in Act No. 3613 authorizing the filing of an action for judicial declaration of nullity of a marriage void ab initio, defendant could not legally contract marriage with Jesusa C. Maglasang without the dissolution of his marriage to Maria Faicol, either by the death of the latter or by the judicial declaration of the nullity of such marriage, at the instance of the latter. Authorities given for this ruling are 5 Viada, 5th edition, 651; 35 American Jurisprudence, Marriage, Sec. 46, p. 212; Bickford vs. Bickford, 74 N. H. 466, 69 A. 579. Appellant in this Court relies on the case of People vs. Mendoza, (95 Phil., 845; 50 Off. Gaz., [10] 4767). In this case the majority of this Court declared: The statutory provision (section 29 of the Marriage Law or Act No. 3613) plainly makes a subsequent marriage contracted by any person during the lifetime of his first spouse illegal and void from its performance, and no judicial decree is necessary to establish its invalidity, as distinguished from mere annullable marriages. There is here no pretense that appellant's second marriage with Olga Lema was contracted in the belief that the first spouse, Jovita de Asis, had been absent for seven consecutive years or generally considered as dead, so as to render said marriage valid until declared null and void by a subsequent court. We are of the very weighty reasons by Justice Alex Reyes in the dissent in the case above-quoted But this weighty reasons notwithstanding, the very fundamental principle of strict construction of penal laws in favor of the accused, which principle we may not ignore, seems to justify our stand in the above-cited case of People vs. Mendoza. Our Revised Penal Code is of recent enactment and had the rule enunciated in Spain and in America requiring judicial declaration of nullity of ab initio void marriages been within the contemplation of the

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legislature, an express provision to that effect would or should have been inserted in the law. In its absence, we are bound by said rule of strict interpretation already adverted to. It is to be noted that the action was instituted upon complaint of the second wife, whose marriage with the appellant was not renewed after the death of the first wife and before the third marriage was entered into. Hence, the last marriage was a valid one and appellant's prosecution for contracting this marriage can not prosper. For the foregoing considerations, the judgment appealed from is hereby reversed and the defendant-appellant acquitted, with costs de oficio, without prejudice to his prosecution for having contracted the second bigamous marriage. So ordered. Paras, C. J., Bengzon, Bautista Angelo, Reyes, J. B. L., Endencia, and Felix, JJ., concur.

Separate Opinions REYES, A.J., dissenting: I dissent. Dissenting in the case of People vs. Mendoza, replied on by the majority, I there said: Article 349 of the Revised Penal Code punishes with prision mayor "any person who shall contract a second or subsequent marriage before the former marriage has been legally dissolved." Though the logician may say that there were the former marriage was void there would be nothing to dissolve, still it is not for the spouses to judge whether that marriage was void or not. That judgment is reserved to the courts. As Viada says, 'La satidad e importancia del matrimonio no permite que los casados juzguen por si mosmos de su nulidad; esta ha de someterse [precisamente al juicio del Tribunalcompetente, y cuando este declare la nulidad del matrimonio, y solo entonces, se tendra por nulo; mientras no exista esta declaracion, la presuncion esta siempre a favor de la validez del matrimonio, yde consiguiente, el que contrae otro segundo antes de dicha declaracio de nulidad, no puede menos de incurrir la pena de este articulo. (3 Viada, Codigo Penal, p. 275.) "This is a sound opinion," says Mr. Justice Tuason in the case of People vs. Jose Cotas, (CA), 40 Off. Gaz. 3145, "and is in line with the well-known rule established in cases of adultery, that "until by competent authority in a final judgment the marriage contract is set aside, the offense to the vows taken and the attack on the family exists." I may add that the construction placed by the majority upon the law penalizing bigamy would frustrate the legislative intent rather than give effect thereto.

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G.R. No. L-83524 October 13, 1989 ERNESTO KRAMER, JR. and MARIA KRAMER, petitioners, vs. HON. COURT OF APPEALS and TRANS-ASIA SHIPPING LINES, INC., respondents. Rodolfo D. Mapile for petitioners. Jose Al. Perez for private respondent.

GANCAYCO, J.: The principal issue in this Petition for Review is whether or not a Complaint for damages instituted by the petitioners against the private respondent arising from a marine collision is barred by the statute of limitations. The record of the case discloses that in the early morning of April 8, 1976, the F/B Marjolea, a fishing boat owned by the petitioners Ernesto Kramer, Jr. and Marta Kramer, was navigating its way from Marinduque to Manila. Somewhere near Maricabon Island and Cape Santiago, the boat figured in a collision with an inter-island vessel, the M/V Asia Philippines owned by the private respondent Trans-Asia Shipping Lines, Inc. As a consequence of the collision, the F/B Marjolea sank, taking with it its fish catch. After the mishap, the captains of both vessels filed their respective marine protests with the Board of Marine Inquiry of the Philippine Coast Guard. The Board conducted an investigation for the purpose of determining the proximate cause of the maritime collision. On October 19, 1981, the Board concluded that the loss of the F/B Marjolea and its fish catch was attributable to the negligence of the employees of the private respondent who were on board the M/V Asia Philippines during the collision. The findings made by the Board served as the basis of a subsequent Decision of the Commandant of the Philippine Coast Guard dated April 29, 1982 wherein the second mate of the M/V Asia Philippines was suspended from pursuing his profession as a marine officer. 1 On May 30, 1985, the petitioners instituted a Complaint for damages against the private respondent before Branch 117 of the Regional Trial Court in Pasay City. 2 The suit was docketed as Civil Case No. 2907-P. The private respondent filed a Motion seeking the dismissal of the Complaint on the ground of prescription. He argued that under Article 1146 of the Civil Code, 3 the prescriptive period for instituting a Complaint for damages arising from a quasi-delict like a maritime collision is four years. He maintained that the petitioners should have filed their Complaint within four years from the date when their cause of action accrued, i.e., from April 8, 1976 when the maritime collision took place, and that accordingly, the Complaint filed on May 30, 1985 was instituted beyond the four-year prescriptive period.

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For their part, the petitioners contended that maritime collisions have peculiarities and characteristics which only persons with special skill, training and experience like the members of the Board of Marine Inquiry can properly analyze and resolve. The petitioners argued that the running of the prescriptive period was tolled by the filing of the marine protest and that their cause of action accrued only on April 29, 1982, the date when the Decision ascertaining the negligence of the crew of the M/V Asia Philippines had become final, and that the four-year prescriptive period under Article 1146 of the Civil Code should be computed from the said date. The petitioners concluded that inasmuch as the Complaint was filed on May 30, 1985, the same was seasonably filed. In an Order dated September 25, 1986, 4 the trial court denied the Motion filed by the private respondent. The trial court observed that in ascertaining negligence relating to a maritime collision, there is a need to rely on highly technical aspects attendant to such collision, and that the Board of Marine Inquiry was constituted pursuant to the Philippine Merchant Marine Rules and Regulations, which took effect on January 1, 1975 by virtue of Letter of Instruction No. 208 issued on August 12, 1974 by then President Ferdinand E. Marcos, precisely to answer the need. The trial court went on to say that the four-year prescriptive period provided in Article 1146 of the Civil Code should begin to run only from April 29, 1982, the date when the negligence of the crew of the M/V Asia Philippines had been finally ascertained. The pertinent portions of the Order of the trial court are as follows Considering that the action concerns an incident involving a collision at sea of two vehicles and to determine negligence for that incident there is an absolute need to rely on highly technical aspects attendant to such collisions. It is obviously to answer such a need that the Marine Board of Inquiry (Sic) was constituted pursuant to the Philippine Merchant Marine Rules and Regulations which became effective January 1, 1975 under Letter of Instruction(s) No. 208 dated August 12, 1974. The relevant section of that law (Art. XVI/b/ provided as follow(s): 1. Board of Marine Inquiry (BMI) Shall have the jurisdiction to investigate marine accidents or casualties relative to the liability of shipowners and officers, exclusive jurisdiction to investigate cases/complaints against the marine officers; and to review all proceedings or investigation conducted by the Special Boards of Marine Inquiry. 2. Special Board of Marine Inquiry. Shall have original jurisdiction to investigate marine casualties and disasters which occur or are committed within the limits of the Coast Guard District concerned or those referred by the Commandant. The Court finds reason in the argument of the plaintiff that marine incidents have those 'peculiarities which only persons of special skill, training and exposure can rightfully decipher and resolve on the matter of the negligence and liabilities of parties involved and inasmuch as the report of the Board of Inquiry (sic) admittedly came out only on April 29, 1982, the prescriptive period provided x x x under Art. 1146 of the Civil Code should begin to run only from that date. The complaint was filed with this Court on May 10, 1985, hence the statute of limitations can not constitute a bar to the filing of this case. 5 The private respondent elevated the case to the Court of Appeals by way of a special civil action for certiorari and prohibition, alleging therein that the trial court committed a grave abuse of discretion in refusing to dismiss the Complaint filed by the petitioners. The case was assigned to the Second Division of the appellate court and was docketed as Case No. CA-G.R. SP No. 12032. 6 In a Decision dated November 27, 1987, 7 and clarified in a Resolution dated January 12, 1988, 8 the Court of Appeals granted the Petition filed by the private respondent and ordered the trial court to dismiss the Complaint. The pertinent portions of the Decision of the appellate court are as follows It is clear that the cause of action of private respondent (the herein petitioners Ernesto Kramer, Jr. and Marta Kramer) accrued from the occurrence of the mishap because that is the precise time when damages were inflicted upon and sustained by the aggrieved party and from which relief from the court is presently sought. Private respondents should have immediately instituted a complaint for damages based on a quasi-delict within four years from the said marine incident because its cause of action had already definitely ripened at the onset of the collision. For this reason, he (sic) could cite the negligence on the part of the personnel of the petitioner to exercise due care and lack of (sic) diligence to prevent the collision that resulted in the total loss of their x x x boat. We can only extend scant consideration to respondent judge's reasoning that in view of the nature of the marine collision that allegedly involves highly technical aspects, the running of the prescriptive period should only commence from the finality of the investigation conducted by the Marine Board of Inquiry (sic) and the decision of the Commandant, Philippine Coast Guard, who has original jurisdiction over the mishap. For one, while it is true that the findings and recommendation of the Board and the decision of the Commandant may be helpful to the court in ascertaining which of the parties are at fault, still the former (court) is not bound by said

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findings and decision. Indeed, the same findings and decision could be entirely or partially admitted, modified, amended, or disregarded by the court according to its lights and judicial discretion. For another, if the accrual of a cause of action will be made to depend on the action to be taken by certain government agencies, then necessarily, the tolling of the prescriptive period would hinge upon the discretion of such agencies. Said alternative it is easy to foresee would be fraught with hazards. Their investigations might be delayed and lag and then witnesses in the meantime might not be available or disappear, or certain documents may no longer be available or might be mislaid. ... 9 The petitioners filed a Motion for the reconsideration of the said Decision but the same was denied by the Court of Appeals in a Resolution dated May 27, 1988. 10 Hence, the instant Petition wherein the arguments raised by the petitioner before the trial court are reiterated. 11 In addition thereto, the petitioner contends that the Decision of the Court of Appeals 12 The private respondent filed its Comment on the Petition seeking therein the dismissal of the same. 13 It is also contended by the private respondent that the ruling of the Court in Vasquez is not applicable to the case at bar because the said case involves a maritime collision attributable to a fortuitous event. In a subsequent pleading, the private respondent argues that the Philippine Merchant Marine Rules and Regulations cannot have the effect of repealing the provisions of the Civil Code on prescription of actions. 14 On September 19,1988, the Court resolved to give due course to the petition. 15 After the parties filed their respective memoranda, the case was deemed submitted for decision. The petition is devoid of merit. Under Article 1146 of the Civil Code, an action based upon a quasi-delict must be instituted within four (4) years. The prescriptive period begins from the day the quasi-delict is committed. In Paulan vs. Sarabia, 16 this Court ruled that in an action for damages arising from the collision of two (2) trucks, the action being based on a quasi-delict, the four (4) year prescriptive period must be counted from the day of the collision. In Espanol vs. Chairman, Philippine Veterans Administration,
17

this Court held as follows-

The right of action accrues when there exists a cause of action, which consists of 3 elements, namely: a) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; b) an obligation on the part of defendant to respect such right; and c) an act or omission on the part of such defendant violative of the right of the plaintiff ... It is only when the last element occurs or takes place that it can be said in law that a cause of action has arisen ... . From the foregoing ruling, it is clear that the prescriptive period must be counted when the last element occurs or takes place, that is, the time of the commission of an act or omission violative of the right of the plaintiff, which is the time when the cause of action arises. It is therefore clear that in this action for damages arising from the collision of two (2) vessels the four (4) year prescriptive period must be counted from the day of the collision. The aggrieved party need not wait for a determination by an administrative body like a Board of Marine Inquiry, that the collision was caused by the fault or negligence of the other party before he can file an action for damages. The ruling in Vasquez does not apply in this case. Immediately after the collision the aggrieved party can seek relief from the courts by alleging such negligence or fault of the owners, agents or personnel of the other vessel. Thus, the respondent court correctly found that the action of petitioner has prescribed. The collision occurred on April 8, 1976. The complaint for damages was filed iii court only on May 30, 1 985, was beyond the four (4) year prescriptive period. WHEREFORE, the petition is dismissed. No costs. SO ORDERED.

G.R. No. L-47926 August 13, 1990 ROMUALDO F. DUMUK, petitioner, vs. HON. ANGEL A. DAQUIGAN, BERNARDO MIRANDA y JUGAL and THE PHILIPPINE NATIONAL RAILWAYS,respondents. Joaquin Ortega for petitioner. Luis T. Mojica for private respondent.

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GANCAYCO, J.: The center of controversy in this case is whether or not a civil action that was filed arising from the acts or omissions subject of a separate criminal action had already prescribed of is premature. On March 2, 1962, private respondent was charged with the crime of serious physical injuries through reckless imprudence in an information that was filed in the Municipal Court of Bacnotan, La Union. An amended information was filed on October 17, 1969 charging private respondent Miranda with the higher category of serious physical injuries through reckless imprudence. On November 20, 1969, pending trial of said respondent Miranda in the Municipal Court of Bacnotan, La Union, the petitioner who is the offended party in the case filed an express reservation to file a separate action as to the civil liability arising from the offense. In a decision rendered by the Municipal Court dated October 12, 1971 the private respondent was convicted of the offense charged. He appealed his conviction to the Court of First Instance. Before any information could be filed by the provincial fiscal's office, the petitioner wrote the provincial fiscal on February 3, 1972 informing him that on account of the felony committed by the private respondent he suffered P100,000.00 damages and he requested the provincial fiscal to include the said damages in the information. He stated that the reason why he reserved his right to file a separate civil action for damages in the inferior court was because his claim was beyond the jurisdiction of said court. 1 Hence, on February 14, 1972 an information was filed by the fiscal for the same offense alleging therein the claim for actual, moral and exemplary damages in the amount of P100,000.00 of the petitioner. 2 During the trial of said criminal case a private prosecutor appeared in behalf of petitioner who attempted to prove the damages suffered by petitioner but the trial court refused to receive the evidence on the civil aspect. Thus, in the decision of the trial court of October 14, 1977 private respondent was found guilty of the offense charged and sentenced to three months of arresto mayor and to pay the costs. It was also therein stated that the right to file a separate civil action for damages was reserved in favor of petitioner. The said decision was appealed by private respondent to the Court of Appeals. Petitioner earlier filed a complaint for damages against private respondent and the Philippine National Railways (PNR) in the Court of First Instance of La Union on August 17, 1977 arising from the criminal acts of private respondent on January 2, 1962 apparently because of the refusal of the trial court to receive evidence on the civil liability in the criminal case. An amended complaint was filed by petitioner which added as allegation that the defendant corporation failed to exercise care in the selection and supervision of its employees which was clearly manifest in this case. In the answer of the defendants in said case the defense of prescription was interposed. The actual court, acting on the motions of respondents for a hearing on the affirmative defenses and after receiving the memoranda of the parties, issued an order on September 2, 1977 dismissing the complaint on the ground of prescription of action and/or for lack of cause of action. 3 A motion for reconsideration filed by petitioner was denied in an order dated November 28, 1977. Hence, the herein petition for review on certiorari of the said orders of the trial court. The main thrust of the appeal is to the effect that the trial court erred when it held that the filing of the civil action had prescribed and/or was otherwise premature. In the questioned order it was ruled that if the civil liability is based on quasi-delict the period of prescription arises from the date the alleged quasi-delict was committed on January 2, 1962 and it prescribes in four (4) years in accordance with Article 1146 of the Civil Code, so the civil action has prescribed. On the other hand it also held that if the civil action arises from the criminal act which is impliedly instituted with the criminal action, the filing of the civil action is premature because the liability of respondent PNR is subsidiary. Petitioner must await final judgment in the criminal action against respondent Miranda before the civil action impleading respondent PNR may be instituted. On the other hand petitioner contends that prescription has not set in that although he has made a reservation to file a separate civil action in the Municipal Court on November 20, 1969, when the information was filed in the Court of First Instance on February 14, 1972, it included the claim for civil liability of petitioner, thus the filing of the information tolled the running of the period of prescription. As such, only two years, four months and 25 days had expired. Sections 1 and 2 of Rule 111 of the Rules of Court then in force provide as follows SECTION 1. Institution of criminal and civil actions. When a criminal action is instituted, the civil action for recovery of civil liability arising from the offense charged is impliedly instituted with the criminal action, unless the offended party expressly waives the civil action or reserves his right to institute it separately.

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SECTION 2. Independent civil action In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, an independent civil action entirely separate and distinct from the criminal action, may be brought by the injured party during the pendency of the criminal case, provided the right is reserved as required in the preceding section. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence. From the foregoing rules it is clear that once a criminal action is instituted, the civil action for the recovery of civil liability arising from the offense is impliedly instituted with the criminal action. However, for damages arising under Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, an independent civil action entirely separate and distinct from the criminal action, may be brought by the injured party during the pendency of the criminal case, provided the right is reserved in the criminal action. In the present case when an information for the crime of serious physical injuries through reckless imprudence was filed on March 2, 1962 in the Municipal Court of Bacnotan, La Union, the civil action for recovery of civil liability arising from the offense was deemed impliedly instituted with the filing of said information and amended information thereafter. However, on November 20, 1969, the petitioner informed the inferior court in writing that he was making an express reservation to file a separate civil action as to the civil liability arising from the offense. Thus on October 12, 1971 when respondent Miranda was convicted by the municipal court, no damages were awarded to the petitioner. When respondent Miranda appealed to the CFI, petitioner then wrote the provincial fiscal on February 3, 1972 asking that the damages that he suffered in the amount of P100,000.00 be included in the information explaining that he reserved his right to file a separate civil action in the municipal court because his claim exceeded the jurisdiction of the municipal court. Forthwith the provincial fiscal on February 14, 1972 filed an information which included the claim for damages of the petitioner. The period of prescription within which to file a civil action as to the civil liability arising from the offense started to run on November 20, 1969 when the petitioner informed the municipal court in writing that he was reserving his right to file a separate civil action. It was interrupted upon the filing of the information in the CFI on February 14, 1972 alleging the claim for damages. On said date a period of only two (2) years, three (3) months and twenty-three (23) days more or less have lapsed then. Obviously, at the time the information was filed the four-year prescriptive period for the action had not yet lapsed. Because of the refusal of the trial court to accept evidence of damages in the criminal case (perhaps because the express reservation of petitioner was still in the records of the case), a separate civil action was instituted by petitioner on August 17, 1976. Consequently, in the criminal case, the trial court rendered judgment affirming the conviction of private respondent Miranda but recognizing the right of petitioner to file a separate civil action for damages. From the foregoing set of facts, it is clear that the civil action instituted by the petitioner for damages arising from the offense has not prescribed. It was filed well within the period of prescription. However, the civil action based on quasi-delict had prescribed. Petitioner did not reserve the filing of an independent civil action arising therefrom nor did he file the civil action within the four (4) year reglementary period. The acts complained of occurred on February 2, 1962 while the separate civil action for damages was fued by petitioner only on August 17, 1976 which was amended only on January 17, 1977 to include the claim for damages arising from quasi-delict. No doubt the civil action arising from quasi-delict had prescribed. WHEREFORE, the petition is GRANTED. The questioned orders of the trial court dated September 2, 1972 and November 20, 1979 are hereby modified in that the civil action arising from the offense has not prescribed and must take its due course. However, the civil action based on quasi-delict had prescribed. SO ORDERED.

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G.R. No. L-85868 October 13, 1989 ALLIED BANKING CORPORATION, petitioner, vs. COURT OF APPEALS AND JOSELITO Z. YUJUICO, respondents. Angara, Abello, Concepcion, Regala & Cruz for petitioner. Balgos & Perez Law Offices for respondents.

GANCAYCO, J.: What started as a simple collection suit and which developed into an intricate question of procedure is the focus of this petition for review on certiorari. The present petition seeks the reversal of the decision of the Court of Appeals in CA-G.R. SP No. 14759 dated September 5, 1988 entitled "Joselito Z. Yujuico vs. Hon. Domingo D. Panis, RTC Judge of Manila Branch LXI and Allied Banking Corp. 1 and the resolution dated November 9,1988 denying petitioner's motion for reconsideration of the said decision. 2 The antecedent facts of the case are as follows: On April 1, 1976, private respondent Joselito Z. Yujuico obtained a loan from the General Bank and Trust Company (GENBANK) in the amount of Five Hundred Thousand pesos (P500,000.00), payable on or before April 1, 1977. As evidence thereof, private respondent issued a corresponding promissory note in favor of GENBANK. At the time private respondent incurred the obligation, he was then a ranking officer of GENBANK and a member of the family owning the controlling interest in the said bank. On March 25,1977, the Monetary Board of the Central Bank issued Resolution No. 675 forbidding GENBANK from doing business in the Philippines. This was followed by Resolution No. 677 issued by the Monetary Board on March 29, 1977 ordering the liquidation of GENBANK. It appears that in a Memorandum of Agreement dated May 9, 1977 executed by and between Allied Banking Corporation (ALLIED) and Arnulfo Aurellano as Liquidator of GENBANK, ALLIED acquired all the assets and assumed the liabilities of GENBANK, which includes the receivable due from private respondent under the promissory note. Upon failing to comply with the obligation under the promissory note, petitioner ALLIED, on February 7, 1979, filed a complaint against private respondent for the collection of a sum of money. This case was docketed as Civil Case No. 121474 before the then Court of First Instance of Manila (now Regional Trial Court). Sometime in 1987 and in the course of the proceedings in the court below, private respondent, then defendant in the court below, filed a Motion to Admit Amended/Supplemental Answer and Third-Party Complaint. Private respondent sought to implead the Central Bank and Arnulfo Aurellano as third-party defendants. It was alleged in the third-party complaint that by reason of the tortious interference by the Central Bank with the affairs of GENBANK, private respondent was prevented from performing his obligation under the loan such that he should not now be held liable thereon. Acting on the motion and on the opposition filed thereto, the Regional Trial Court through the Hon. Judge Felix B. Mintu issued an order dated August 13,1987 denying the admission of the third- party complaint but admitting private respondent's amended/supplemental answer.

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When the case was re-raffled to Branch 61 of the Regional Trial Court of Manila, presiding Judge Domingo D. Panis, on February 29, 1 988, reiterated the order denying the admission of private respondent's third-party complaint and admitting the amended/supplemental answer. When both parties filed their respective motions for partial reconsideration, the Hon. Judge Panis issued an order dated April 18, 1988 denying both motions. Thereupon, private respondent filed with the Court of Appeals a petition for certiorari 3 on June 1, 1988 questioning the orders of Hon. Judge Panis dated February 29, 1988 denying private respondent's motion to admit third-party complaint, and April 18, 1988 denying private respondent's motion for partial reconsideration of the February 29,1988 order. On September 5, 1988, the Court of Appeals rendered the assailed decision, the dispositive portion of which reads: WHEREFORE, finding grave abuse of discretion on the part of the respondent Judge, the Order of February 29, 1988 as well as that of April 18, 1988 insofar as it denies petitioner's motion to admit his third party complaint, is hereby declared null and void. Respondent judge is hereby ordered to admit the proposed third-party complaint. Cost de oficio. SO ORDERED. 4 A motion for reconsideration thereof filed by petitioner was denied in a resolution dated November 9, 1988. Petitioner assigns the following errors: I RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT HON. JUDGE PANIS COMMITTED GRAVE ABUSE OF DISCRETION IN DENYING ADMISSION TO PRIVATE RESPONDENTS THIRD-PARTY COMPLAINT, CONSIDERING THAT: A. PRIVATE RESPONDENT'S PROPOSED THIRD-PARTY COMPLAINT DOES NOT STATE A CAUSE OF ACTION IN RESPECT OF PETITIONERS CLAIM. B. THE ALLEGED CAUSE OF ACTION SET FORTH IN PRIVATE RESPONDENTS PROPOSED THIRD-PARTY COMPLAINT HAS ALREADY PRESCRIBED. C. THE ADMISSION OF PRIVATE RESPONDENT'S PROPOSED THIRD-PARTY COMPLAINT WILL ONLY CAUSE FURTHER UNNECESSARY DELAY IN THE DISPOSITION OF THE CASE OF PETITIONER AGAINST PRIVATE RESPONDENT. II CONTRARY TO THE RULING OF RESPONDENT COURT OF APPEALS, THE RULE PRESCRIBING THAT DEFENSES NOT RAISED IN THE COURT BELOW CANNOT BE RAISED FOR THE FIRST TIME ON APPEAL IS NOT APPLICABLE TO SPECIAL CIVIL ACTIONS OF CERTIORARI.5 From the foregoing assignment of errors, petitioner would like Us to resolve the following issues: (a) Is there a proper ground to admit the third-party complaint?; and (b) assuming that there is, has the cause of action under the third-party complaint prescribed? A third-party complaint is a procedural device whereby a "third-party who is neither a party nor privy to the act or deed complained of by the plaintiff, may be brought into the case with leave of court, by the defendant, who acts as third-party plaintiff to enforce against such third-party defendant a right for contribution, indemnity, subrogation or any other relief, in respect of the plaintiff s claim . 6 The third party complaint is actually independent of, separate and distinct from the plaintiffs complaint. Such that, were it not for this provision of the Rules of Court, it would have to be filed separately from the original complaint by the defendant against the third-party. 7 After going through the records of this case, this Court finds that the third-party plaintiffs claim is premised not only on what was alleged as the tortious interference by the third-party defendants with the affairs of GENBANK. More importantly, attention should have been focused on the fact that this allegation is wedded to a decision rendered by the Court of Appeals in CA-G.R. CV No. 03642 which affirmed the decision of the Regional Trial Court in Special Proceedings No. 107812. 8 We quote the pertinent portion of the affirmed decision, to wit: Based on the foregoing facts, the Court finds the liquidation of GBTC as embodied in Annex "A" and Annex "B" of the petition, which merely adopted the bid of the Lucio Tan group as the liquidation plan of GBTC as plainly arbitrary and made in bad faith and therefore the same must be annulled and set aside. ... 9 (Italics supplied). This decision, which declared as null and void the liquidation of GENBANK, prompted private respondent herein to file a third-party complaint against the Central Bank and Arnulfo Aurellano on the theory that he has a right

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to proceed against them in respect of ALLIED's claim. In the words of private respondent, he "[s]eeks to transfer liability for the default imputed against him by the petitioner to the proposed third-party defendants because of their tortious acts which prevented him from performing his obligations. 10 Thus, if at the outset the issue appeared to be a simple maker's liability on a promissory note, it became complex by the rendition of the aforestated decision. As early as Capayas vs. Court of First Instance of Albay, 11 this Court had already outlined the tests to determine whether the claim for indemnity in a third-party claim is "in respect of plaintiff's claim." They are: (a) whether it arises out of the same transaction on which the plaintiffs claim is based, or whether the third-party's claim, although arising out of another or different contract or transaction, is connected with the plaintiffs claim; (b) whether the third-party defendant would be liable to the plaintiff or to the defendant for all or part of the plaintiffs claim against the original defendant, although the third-party defendant's liability arises out of another transaction; or (c) whether the third-party defendant may assert any defense which the third-party plaintiff has, or may have against plaintiff s claim. 12 While the claim of third-party plaintiff, private respondent herein, does not fall under test (c), there is no doubt that such claim can be accommodated under tests (a) and (b) above-mentioned. Whether or not this Court agrees with the petitioner's assertion that the claim does not "arise out of the same transaction on which the plaintiff s claim is based," it cannot be denied that the third-party's claim (although arising out of another or different contract or transaction) is connected with plaintiffs claim. The judgement of the Court of Appeals in CA-G.R. CV No. 03642 is the substantive basis of private respondent's proposed third-party complaint. Put differently, there is merit in private respondent's position that if held liable on the promissory note, they are seeking, by means of the third-party complaint, to transfer unto the third-party defendants liability on the note by reason of the illegal liquidation of GENBANK which, in the first place, was the basis for the assignment of the promissory note. If there was any confusion at all on the ground/s alleged in the third-party complaint, it was the claim of third-party plaintiff for other damages in addition to any amount which he may be called upon to pay under the original complaint. 13 While these allegations in the proposed third-party complaint may cause delay in the disposition of the main suit, it cannot, however, be outrightly asserted that it would not serve any purpose. It is one thing to say that a third-party defendant may be held liable to indemnify or reimburse the third-party plaintiff "in respect of plaintiffs claim," but it is quite another to state that a third-party defendant may be held liable to a third-party plaintiff. The second instance may not carry with it the necessary connection to the main cause of action and, therefore, is not allowed by the Rules for it introduces a controversy that is entirely foreign to and distinct from the main cause. The first instance is allowable and should be allowed if it will help in clarifying in a single proceeding the multifarious issues involved arising from a single transaction. It is this Court's pronouncement that the first instance is applicable in the present situation. As to the issue of prescription, it is the position of petitioner that the cause of action alleged in the third-party complaint has already prescribed. 14 Being founded on what was termed as tortious interference," petitioner asserts that under the applicable provisions of the Civil Code on quasi-delict 15 the action against third-party defendants should have been filed within four (4) years from the date the cause of action accrued. On the theory that the cause of action accrued on March 25, 1977, the date when the Monetary Board ordered GENBANK to desist from doing business in the Philippines, petitioner maintains that the claim should have been filed at the latest on March 25, 1981. 16 On the other hand, private respondent relies on the "Doctrine of Relations" or "Relations Back Doctrine" 17 to support his claim that the cause of action as against the proposed third-party defendant accrued only on December 12,1986 when the decision in CA-G.R. CV No. 03642 became final and executory. Thus, it is contended that while the third party complaint was filed only on June 17,1987, it must be deemed to have been instituted on February 7, 1979 when the complaint in the case was filed. There can be no question in this case that the action for damages instituted by private respondent arising from the quasi-delict or alleged tortious interference" should be filed within four (4) years from the day the cause of action accrued. 18 In the case of Espaol vs. Chairman, Philippine Veterans Administration, 19 this Court ruled that it is from the date of the act or omission violative of the right of a party when the cause of action arises and it is from this date that the prescriptive period must be reckoned. Thus, while technically the third party complaint in this case may be admitted as above discussed, however, since the cause of action accrued on March 25, 1980 when the Monetary Board ordered the General Bank to desist from doing business in the Philippines while the third party complaint was filed only on June 17, 1987, consequently, the action has prescribed. The third party complaint should not be admitted. WHEREFORE, the petition is GRANTED. The decision of the respondent Court of Appeals dated September 5, 1988 and its resolution dated November 9, 1988 denying the motion for reconsideration filed by petitioner are hereby reversed and set aside and declared null and void, and another judgment is hereby rendered sustaining the orders of the trial court of February 29,1988 and April 18,1988, denying the admission of the third party complaint. No pronouncement as to costs. SO ORDERED.

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G.R. No. L-9356

February 18, 1915

C. S. GILCHRIST, plaintiff-appellee, vs. E. A. CUDDY, ET AL., defendants. JOSE FERNANDEZ ESPEJO and MARIANO ZALDARRIAGA, appellants. C. Lozano for appellants. Bruce, Lawrence, Ross and Block for appellee. TRENT, J.: An appeal by the defendants, Jose Fernandez Espejo and Mariano Zaldarriaga, from a judgment of the Court of First Instance of Iloilo, dismissing their cross-complaint upon the merits for damages against the plaintiff for the alleged wrongful issuance of a mandatory and a preliminary injunction. Upon the application of the appellee an ex parte mandatory injunction was issued on the 22d of May, 1913, directing the defendant, E. A. Cuddy, to send to the appellee a certain cinematograph film called "Zigomar" in

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compliance with an alleged contract which had been entered into between these two parties, and at the time an ex parte preliminary injunction was issued restraining the appellants from receiving and exhibiting in their theater the Zigomar until further orders of the court. On the 26th of that month the appellants appeared and moved the court to dissolve the preliminary injunction. When the case was called for trial on August 6, the appellee moved for the dismissal of the complaint "for the reason that there is no further necessity for the maintenance of the injunction." The motion was granted without objection as to Cuddy and denied as to the appellants in order to give them an opportunity to prove that the injunction were wrongfully issued and the amount of damages suffered by reason thereof. The pertinent part of the trial court's findings of fact in this case is as follows: It appears in this case that Cuddy was the owner of the film Zigomar and that on the 24th of April he rented it to C. S. Gilchrist for a week for P125, and it was to be delivered on the 26th of May, the week beginning that day. A few days prior to this Cuddy sent the money back to Gilchrist, which he had forwarded to him in Manila, saying that he had made other arrangements with his film. The other arrangements was the rental to these defendants Espejo and his partner for P350 for the week and the injunction was asked by Gilchrist against these parties from showing it for the week beginning the 26th of May. It appears from the testimony in this case, conclusively, that Cuddy willfully violated his contract, he being the owner of the picture, with Gilchrist because the defendants had offered him more for the same period. Mr. Espejo at the trial on the permanent injunction on the 26th of May admitted that he knew that Cuddy was the owner of the film. He was trying to get it through his agents Pathe Brothers in Manila. He is the agent of the same concern in Iloilo. There is in evidence in this case on the trial today as well as on the 26th of May, letters showing that the Pathe Brothers in Manila advised this man on two different occasions not to contend for this film Zigomar because the rental price was prohibitive and assured him also that he could not get the film for about six weeks. The last of these letters was written on the 26th of April, which showed conclusively that he knew they had to get this film from Cuddy and from this letter that the agent in Manila could not get it, but he made Cuddy an offer himself and Cuddy accepted it because he was paying about three times as much as he had contracted with Gilchrist for. Therefore, in the opinion of this court, the defendants failed signally to show the injunction against the defendant was wrongfully procured. The appellants duly excepted to the order of the court denying their motion for new trial on the ground that the evidence was insufficient to justify the decision rendered. There is lacking from the record before us the deposition of the defendant Cuddy, which apparently throws light upon a contract entered into between him and the plaintiff Gilchrist. The contents of this deposition are discussed at length in the brief of the appellants and an endeavor is made to show that no such contract was entered into. The trial court, which had this deposition before it, found that there was a contract between Cuddy and Gilchrist. Not having the deposition in question before us, it is impossible to say how strongly it militates against this findings of fact. By a series of decisions we have construed section 143 and 497 (2) of the Code of Civil Procedure to require the production of all the evidence in this court. This is the duty of the appellant and, upon his failure to perform it, we decline to proceed with a review of the evidence. In such cases we rely entirely upon the pleadings and the findings of fact of the trial court and examine only such assigned errors as raise questions of law. (Ferrer vs. Neri Abejuela, 9 Phil. Rep., 324; Valle vs. Galera, 10 Phil. Rep., 619; Salvacion vs. Salvacion, 13 Phil. Rep., 366; Breta vs. Smith, Bell & Co., 15 Phil. Rep., 446; Arroyo vs. Yulo, 18 Phil. Rep., 236; Olsen & Co. vs. Matson, Lord & Belser Co., 19 Phil. Rep., 102; Blum vs.Barretto, 19 Phil. Rep., 161; Cuyugan vs. Aguas, 19 Phil. Rep., 379; Mapa vs. Chaves, 20 Phil. Rep., 147; Mansvs. Garry, 20 Phil. Rep., 134.) It is true that some of the more recent of these cases make exceptions to the general rule. Thus, in Olsen & Co. vs. Matson, Lord & Belser Co., (19 Phil. Rep., 102), that portion of the evidence before us tended to show that grave injustice might result from a strict reliance upon the findings of fact contained in the judgment appealed from. We, therefore, gave the appellant an opportunity to explain the omission. But we required that such explanation must show a satisfactory reason for the omission, and that the missing portion of the evidence must be submitted within sixty days or cause shown for failing to do so. The other cases making exceptions to the rule are based upon peculiar circumstances which will seldom arise in practice and need not here be set forth, for the reason that they are wholly inapplicable to the present case. The appellants would be entitled to indulgence only under the doctrine of the Olsen case. But from that portion of the record before us, we are not inclined to believe that the missing deposition would be sufficient to justify us in reversing the findings of fact of the trial court that the contract in question had been made. There is in the record not only the positive and detailed testimony of Gilchrist to this effect, but there is also a letter of apology from Cuddy to Gilchrist in which the former enters into a lengthy explanation of his reasons for leasing the film to another party. The latter could only have been called forth by a broken contract with Gilchrist to lease the film to him. We, therefore, fail to find any reason for overlooking the omission of the defendants to bring up the missing portion of the evidence and, adhering to the general rule above referred to, proceed to examine the questions of law raised by the appellants. From the above-quoted findings of fact it is clear that Cuddy, a resident of Manila, was the owner of the "Zigomar;" that Gilchrist was the owner of a cinematograph theater in Iloilo; that in accordance with the terms of the contract entered into between Cuddy and Gilchrist the former leased to the latter the "Zigomar" for exhibition in his (Gilchrist's) theater for the week beginning May 26, 1913; and that Cuddy willfully violate his contract in order that he might accept the appellant's offer of P350 for the film for the same period. Did the appellants know that they were inducing Cuddy to violate his contract with a third party when they induced him to accept the P350? Espejo admitted that he knew that Cuddy was the owner of the film. He received a letter from his agents in Manila dated April 26, assuring him that he could not get the film for about six weeks. The

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arrangement between Cuddy and the appellants for the exhibition of the film by the latter on the 26th of May were perfected after April 26, so that the six weeks would include and extend beyond May 26. The appellants must necessarily have known at the time they made their offer to Cuddy that the latter had booked or contracted the film for six weeks from April 26. Therefore, the inevitable conclusion is that the appellants knowingly induced Cuddy to violate his contract with another person. But there is no specific finding that the appellants knew the identity of the other party. So we must assume that they did not know that Gilchrist was the person who had contracted for the film. The appellants take the position that if the preliminary injunction had not been issued against them they could have exhibited the film in their theater for a number of days beginning May 26, and could have also subleased it to other theater owners in the nearby towns and, by so doing, could have cleared, during the life of their contract with Cuddy, the amount claimed as damages. Taking this view of the case, it will be unnecessary for us to inquire whether the mandatory injunction against Cuddy was properly issued or not. No question is raised with reference to the issuance of that injunction. The right on the part of Gilchrist to enter into a contract with Cuddy for the lease of the film must be fully recognized and admitted by all. That Cuddy was liable in an action for damages for the breach of that contract, there can be no doubt. Were the appellants likewise liable for interfering with the contract between Gilchrist and Cuddy, they not knowing at the time the identity of one of the contracting parties? The appellants claim that they had a right to do what they did. The ground upon which the appellants base this contention is, that there was no valid and binding contract between Cuddy and Gilchrist and that, therefore, they had a right to compete with Gilchrist for the lease of the film, the right to compete being a justification for their acts. If there had been no contract between Cuddy and Gilchrist this defense would be tenable, but the mere right to compete could not justify the appellants in intentionally inducing Cuddy to take away the appellee's contractual rights. Chief Justice Wells in Walker vs. Cronin (107 Mass., 555), said: "Everyone has a right to enjoy the fruits and advantages of his own enterprise, industry, skill and credit. He has no right to be free from malicious and wanton interference, disturbance or annoyance. If disturbance or loss come as a result of competition, or the exercise of like rights by others, it is damnum absque injuria, unless some superior right by contract or otherwise is interfered with." In Read vs. Friendly Society of Operative Stonemasons ([1902] 2 K. B., 88), Darling, J., said: "I think the plaintiff has a cause of action against the defendants, unless the court is satisfied that, when they interfered with the contractual rights of plaintiff, the defendants had a sufficient justification for their interference; . . . for it is not a justification that `they acted bona fide in the best interests of the society of masons,' i. e., in their own interests. Nor is it enough that `they were not actuated by improper motives.' I think their sufficient justification for interference with plaintiff's right must be an equal or superior right in themselves, and that no one can legally excuse himself to a man, of whose contract he has procured the breach, on the ground that he acted on a wrong understanding of his own rights, or without malice, or bona fide, or in the best interests of himself, or even that he acted as an altruist, seeking only good of another and careless of his own advantage." (Quoted with approval in Beekman vs. Marsters, 195 Mass., 205.) It is said that the ground on which the liability of a third party for interfering with a contract between others rests, is that the interference was malicious. The contrary view, however, is taken by the Supreme Court of the United States in the case of Angle vs. Railway Co. (151 U. S., 1). The only motive for interference by the third party in that case was the desire to make a profit to the injury of one of the parties of the contract. There was no malice in the case beyond the desire to make an unlawful gain to the detriment of one of the contracting parties. In the case at bar the only motive for the interference with the Gilchrist Cuddy contract on the part of the appellants was a desire to make a profit by exhibiting the film in their theater. There was no malice beyond this desire; but this fact does not relieve them of the legal liability for interfering with that contract and causing its breach. It is, therefore, clear, under the above authorities, that they were liable to Gilchrist for the damages caused by their acts, unless they are relieved from such liability by reason of the fact that they did not know at the time the identity of the original lessee (Gilchrist) of the film. The liability of the appellants arises from unlawful acts and not from contractual obligations, as they were under no such obligations to induce Cuddy to violate his contract with Gilchrist. So that if the action of Gilchrist had been one for damages, it would be governed by chapter 2, title 16, book 4 of the Civil Code. Article 1902 of that code provides that a person who, by act or omission, causes damages to another when there is fault or negligence, shall be obliged to repair the damage do done. There is nothing in this article which requires as a condition precedent to the liability of a tort-feasor that he must know the identity of a person to whom he causes damages. In fact, the chapter wherein this article is found clearly shows that no such knowledge is required in order that the injured party may recover for the damage suffered. But the fact that the appellants' interference with the Gilchrist contract was actionable did not of itself entitle Gilchrist to sue out an injunction against them. The allowance of this remedy must be justified under section 164 of the Code of Civil Procedure, which specifies the circumstance under which an injunction may issue. Upon the general doctrine of injunction we said in Devesa vs. Arbes (13 Phil. Rep., 273):

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An injunction is a "special remedy" adopted in that code (Act No. 190) from American practice, and originally borrowed from English legal procedure, which was there issued by the authority and under the seal of a court of equity, and limited, as in order cases where equitable relief is sought, to cases where there is no "plain, adequate, and complete remedy at law," which "will not be granted while the rights between the parties are undetermined, except in extraordinary cases where material and irreparable injury will be done,"which cannot be compensated in damages, and where there will be no adequate remedy, and which will not, as a rule, be granted, to take property out of the possession of one party and put it into that of anotherwhose title has not been established by law. We subsequently affirmed the doctrine of the Devesa case in Palafox vs. Madamba (19 Phil., Rep., 444), and we take this occasion of again affirming it, believing, as we do, that the indiscriminate use of injunctions should be discouraged. Does the fact that the appellants did not know at the time the identity of the original lessee of the film militate against Gilchrist's right to a preliminary injunction, although the appellant's incurred civil liability for damages for such interference? In the examination of the adjudicated cases, where in injunctions have been issued to restrain wrongful interference with contracts by strangers to such contracts, we have been unable to find any case where this precise question was involved, as in all of those cases which we have examined, the identity of both of the contracting parties was known to the tort-feasors. We might say, however, that this fact does not seem to have a controlling feature in those cases. There is nothing in section 164 of the Code of Civil Procedure which indicates, even remotely, that before an injunction may issue restraining the wrongful interference with contrast by strangers, the strangers must know the identity of both parties. It would seem that this is not essential, as injunctions frequently issue against municipal corporations, public service corporations, public officers, and others to restrain the commission of acts which would tend to injuriously affect the rights of person whose identity the respondents could not possibly have known beforehand. This court has held that in a proper case injunction will issue at the instance of a private citizen to restrain ultra vires acts of public officials. (Severino vs. Governor-General, 16 Phil. Rep., 366.) So we proceed to the determination of the main question of whether or not the preliminary injunction ought to have been issued in this case. As a rule, injunctions are denied to those who have an adequate remedy at law. Where the choice is between the ordinary and the extraordinary processes of law, and the former are sufficient, the rule will not permit the use of the latter. (In re Debs, 158 U. S., 564.) If the injury is irreparable, the ordinary process is inadequate. In Wahle vs.Reinbach (76 Ill., 322), the supreme court of Illinois approved a definition of the term "irreparable injury" in the following language: "By `irreparable injury' is not meant such injury as is beyond the possibility of repair, or beyond possible compensation in damages, nor necessarily great injury or great damage, but that species of injury, whether great or small, that ought not to be submitted to on the one hand or inflicted on the other; and, because it is so large on the one hand, or so small on the other, is of such constant and frequent recurrence that no fair or reasonable redress can be had therefor in a court of law." (Quoted with approval in Nashville R. R. Co. vs.McConnell, 82 Fed., 65.) The case at bar is somewhat novel, as the only contract which was broken was that between Cuddy and Gilchrist, and the profits of the appellee depended upon the patronage of the public, for which it is conceded the appellants were at liberty to complete by all fair does not deter the application of remarked in the case of the "ticket scalpers" (82 Fed., 65), the novelty of the facts does not deter the application of equitable principles. This court takes judicial notice of the general character of a cinematograph or motion-picture theater. It is a quite modern form of the play house, wherein, by means of an apparatus known as a cinematograph or cinematograph, a series of views representing closely successive phases of a moving object, are exhibited in rapid sequence, giving a picture which, owing to the persistence of vision, appears to the observer to be in continuous motion. (The Encyclopedia Britanica, vol. 6, p. 374.) The subjects which have lent themselves to the art of the photographer in this manner have increased enormously in recent years, as well as have the places where such exhibition are given. The attendance, and, consequently, the receipts, at one of these cinematograph or motion-picture theaters depends in no small degree upon the excellence of the photographs, and it is quite common for the proprietor of the theater to secure an especially attractive exhibit as his "feature film" and advertise it as such in order to attract the public. This feature film is depended upon to secure a larger attendance that if its place on the program were filled by other films of mediocre quality. It is evident that the failure to exhibit the feature film will reduce the receipts of the theater. Hence, Gilchrist was facing the immediate prospect of diminished profits by reason of the fact that the appellants had induced Cuddy to rent to them the film Gilchrist had counted upon as his feature film. It is quite apparent that to estimate with any decree of accuracy the damages which Gilchrist would likely suffer from such an event would be quite difficult if not impossible. If he allowed the appellants to exhibit the film in Iloilo, it would be useless for him to exhibit it again, as the desire of the public to witness the production would have been already satisfied. In this extremity, the appellee applied for and was granted, as we have indicated, a mandatory injunction against Cuddy requiring him to deliver the Zigomar to Gilchrist, and a preliminary injunction against the appellants restraining them from exhibiting that film in their theater during the weeks he (Gilchrist) had a right to exhibit it. These injunction saved the plaintiff harmless from damages due to the unwarranted interference of the defendants, as well as the difficult task which would have been set for the court of estimating them in case the appellants had been allowed to carry out their illegal plans. As to whether or not the mandatory injunction should have been issued, we are not, as we have said, called upon to determine. So far as the preliminary injunction issued against the appellants is concerned, which prohibited them from exhibiting the Zigomar during the week which Gilchrist desired to exhibit it, we are of the opinion that the circumstances justified the issuance of that injunction in the discretion of the court.

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We are not lacking in authority to support our conclusion that the court was justified in issuing the preliminary injunction against the appellants. Upon the precise question as to whether injunction will issue to restrain wrongful interference with contracts by strangers to such contracts, it may be said that courts in the United States have usually granted such relief where the profits of the injured person are derived from his contractual relations with a large and indefinite number of individuals, thus reducing him to the necessity of proving in an action against the tort-feasor that the latter was responsible in each case for the broken contract, or else obliging him to institute individual suits against each contracting party and so exposing him to a multiplicity of suits. Sperry & Hutchinson Co. vs. Mechanics' Clothing Co. (128 Fed., 800); Sperry & Hutchinson Co. vs. Louis Weber & Co. (161 Fed., 219); Sperry & Hutchinson Co. vs. Pommer (199 Fed., 309); were all cases wherein the respondents were inducing retail merchants to break their contracts with the company for the sale of the latters' trading stamps. Injunction issued in each case restraining the respondents from interfering with such contracts. In the case of the Nashville R. R. Co. vs. McConnell (82 Fed., 65), the court, among other things, said: "One who wrongfully interferes in a contract between others, and, for the purpose of gain to himself induces one of the parties to break it, is liable to the party injured thereby; and his continued interference may be ground for an injunction where the injuries resulting will be irreparable." In Hamby & Toomer vs. Georgia Iron & Coal Co. (127 Ga., 792), it appears that the respondents were interfering in a contract for prison labor, and the result would be, if they were successful, the shutting down of the petitioner's plant for an indefinite time. The court held that although there was no contention that the respondents were insolvent, the trial court did not abuse its discretion in granting a preliminary injunction against the respondents. In Beekman vs. Marsters (195 Mass., 205), the plaintiff had obtained from the Jamestown Hotel Corporation, conducting a hotel within the grounds of the Jamestown Exposition, a contract whereby he was made their exclusive agent for the New England States to solicit patronage for the hotel. The defendant induced the hotel corporation to break their contract with the plaintiff in order to allow him to act also as their agent in the New England States. The court held that an action for damages would not have afforded the plaintiff adequate relief, and that an injunction was proper compelling the defendant to desist from further interference with the plaintiff's exclusive contract with the hotel company. In Citizens' Light, Heat & Power Co. vs. Montgomery Light & Water Power Co. (171 Fed., 553), the court, while admitting that there are some authorities to the contrary, held that the current authority in the United States and England is that: The violation of a legal right committed knowingly is a cause of action, and that it is a violation of a legal right to interfere with contractual relations recognized by law, if there be no sufficient justification for the interference. (Quinn vs. Leatham, supra, 510; Angle vs. Chicago, etc., Ry. Co., 151 U. S., 1; 14 Sup. Ct., 240; 38 L. Ed., 55; Martens vs. Reilly, 109 Wis., 464, 84 N. W., 840; Rice vs. Manley, 66 N. Y., 82; 23 Am. Rep., 30; Bitterman vs. L. & N. R. R. Co., 207 U. S., 205; 28 Sup. Ct., 91; 52 L. Ed., 171; Beekman vs.Marsters, 195 Mass., 205; 80 N. E., 817; 11 L. R. A. [N. S.] 201; 122 Am. St. Rep., 232; South Wales Miners' Fed. vs. Glamorgan Coal Co., Appeal Cases, 1905, p. 239.) See also Nims on Unfair Business Competition, pp. 351- 371. In 3 Elliot on Contracts, section 2511, it is said: "Injunction is the proper remedy to prevent a wrongful interference with contract by strangers to such contracts where the legal remedy is insufficient and the resulting injury is irreparable. And where there is a malicious interference with lawful and valid contracts a permanent injunction will ordinarily issue without proof of express malice. So, an injunction may be issued where the complainant to break their contracts with him by agreeing to indemnify who breaks his contracts of employment may be adjoined from including other employees to break their contracts and enter into new contracts with a new employer of the servant who first broke his contract. But the remedy by injunction cannot be used to restrain a legitimate competition, though such competition would involve the violation of a contract. Nor will equity ordinarily enjoin employees who have quit the service of their employer from attempting by proper argument to persuade others from taking their places so long as they do not resort to force or intimidations on obstruct the public thoroughfares." Beekman vs. Marster, supra, is practically on all fours with the case at bar in that there was only one contract in question and the profits of the injured person depended upon the patronage of the public. Hamby & Toomer vs.Georgia Iron & Coal Co., supra, is also similar to the case at bar in that there was only one contract, the interference of which was stopped by injunction. For the foregoing reasons the judgment is affirmed, with costs, against the appellants. Arellano, C.J., Torres, Carson and Araullo, JJ., concur.

Separate Opinions

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MORELAND, J., concurring: The court seems to be of the opinion that the action is one for a permanent injunction; whereas, under my view of the case, it is one for specific performance. The facts are simple. C. S. Gilchrist, the plaintiff, proprietor of the Eagle Theater of Iloilo, contracted with E. A. Cuddy, one of the defendants, of Manila, for a film entitled "Zigomar or Eelskin, 3d series," to be exhibited in his theater in Iloilo during the week beginning May 26, 1913. Later, the defendants Espejo and Zaldarriaga, who were also operating a theater in Iloilo, representing Pathe Freres, also obtained from Cuddy a contract for the exhibition of the film aforesaid in their theater in Iloilo during the same week. The plaintiff commenced this action against Cuddy and the defendants Espejo and Zaldarriaga for the specific performance of the contract with Cuddy. The complaint prays "that the court, by a mandatory injunction, order Cuddy to deliver, on the 24th of May, 1913, in accordance with the aforesaid contract, the said film 'Zigomar, 3d series, or Eelskin,' to the plaintiff Gilchrist, in accordance with the terms of the agreement, so that plaintiff can exhibit the same during the last week beginning May 26, 1913, in the Eagle Theater, in Iloilo; that the court issue a preliminary injunction against the defendants Espejo and Zaldarriaga prohibiting them from receiving, exhibiting, or using said film in Iloilo during the last week of May, 1913, or at any other time prior to the delivery to the plaintiff ; that, on the trial, said injunction be made perpetual and that Cuddy be ordered and commanded to specifically perform his contract with the plaintiff ." On the filing of the complaint the plaintiff made an application for a mandatory injunction compelling the defendant Cuddy to deliver to plaintiff the film in question by mailing it to him from Manila on the 24th of May so that it would reach Iloilo for exhibition on the 26th; and for a preliminary restraining order against the order two defendants prohibiting them from receiving or exhibiting the said film prior to its exhibition by plaintiff. The court, on this application, entered an order which provided that Cuddy should "not send said film 'Zigomar, 3d series, or Eelskin,' to the defendants Espejo and Zaldarriaga and that he should send it to the plaintiff, Gilchrist, on the 24th day of May, 1913, in the mail for Iloilo," This order was duly served on the defendants, including Cuddy, in whose possession the film still was, and, in compliance therewith Cuddy mailed the film to the plaintiff at Iloilo on the 24th of May. The latter duly received it and exhibited it without molestation during the week beginning the 26th of May in accordance with the contract which he claimed to have made with Cuddy. The defendants Espejo and Zaldarriaga having received due notice of the issuance of the mandatory injunction and restraining order of the 22d of May, appeared before the court on the 26th of May and moved that the court vacate so much of the order as prohibited them from receiving and exhibiting the film. In other words, while the order of the 22d of May was composed of two parts, one a mandatory order for immediate specific performance of the plaintiff's contract with the defendant Cuddy, and the other a preliminary restraining order directed to Espejo and Zaldarriaga prohibiting them from receiving and exhibiting the film during the week beginning the 26th of May, their motion of the 26th of May referred exclusively to the injunction against them and touched in no way that portion of the order which required the immediate performance by Cuddy of his contract with Gilchrist. Indeed, the defendants Espejo and Zaldarriaga did not even except to the order requiring Cuddy to specifically perform his agreement with the plaintiff nor did they in any way make an objection to or show their disapproval of it. It was not excepted to or appealed from and is not before this court for review. The motion of Espejo and Zaldarriaga to vacate the injunction restraining them from receiving the film was denied on the 26th of May. After the termination of the week beginning May 26th, and after the exhibition of the film by the plaintiff in accordance with the alleged contract with Cuddy, the plaintiff came into court and moved that, in view of the fact that he had already obtained all that he desired to obtain or could obtain by his action, namely, the exhibition of the film in question during the week beginning May 26th, there was no reason for continuing it and moved for its dismissal. To this motion Cuddy consented and the action was dismissed as to him. But the other defendants objected to the dismissal of the action on the ground that they desired to present to the court evidence showing the damages which they had suffered by reason of the issuance of the preliminary injunction prohibiting them from receiving and exhibiting the film in question during the week beginning May 26. The court sustained their objection and declined to dismiss the action as to them, and, on the 8th of August, heard the evidence as to damages. He denied defendants the relief asked for and dismissed their claim for damages. They thereupon took an appeal from that order, and that is the appeal which we have now before us and which is the subject of the opinion of the court with which I am concurring. We thus have this strange condition: An action for specific performance of a contract to deliver a film for exhibition during a given time. A preliminary mandatory injunction ordering the delivery of the film in accordance with the contract. The delivery of the film in accordance with the preliminary mandatory injunction. The actual exhibition of the film during the time specified in the contract. No objection to the issuance of the mandatory injunction, to the delivery of the film, or to the ground that the plaintiff had obtained full relief by means of the so-called preliminary remedy by virtue of which the contract was actually specifically performed before the action was tried. No objection or exception to the order requiring the specific performance of the contract. Under such conditions it is possible for the defendant Espejo and Zaldarriaga to secure damages for the wrongful issuance of the preliminary injunction directed against them even though it be admitted that it was

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erroneously issued and that there was no ground therefor whatever? It seems to me that it is not. At the time this action was begun the film, as we have seen, was in the possession of Cuddy and, while in his possession, he complied with a command of the court to deliver it to plaintiff. In pursuance of that command he delivered it to plaintiff, who used it during the time specified in his contract with Cuddy; or, in other words, he made such use of it as he desired and then returned it to Cuddy. This order and the delivery of the film under it were made in an action in which the defendants Espejo and Zaldarriaga were parties, without objection on their part and without objection or exception to the order. The film having been delivered to defendants' competitor, the plaintiff, under a decree of the court to which they made no objection and took no exception and from which they have not appealed, what injury can they show by reason of the injunction restraining them from making use of the film? If they themselves, by their conduct, permitted the plaintiff to make it impossible for them to gain possession of the film and to use it, then the preliminary injunction produced no injury for the reason that no harm can result from restraining a party from doing a thing which, without such restraint, it would be impossible for him to do. Moreover, the order for the delivery of the film to plaintiff was a complete determination of the rights of the parties to the film which, while the court had no right to make, nevertheless, was valid and binding on all the parties, none of them objecting or taking exception thereto. Being a complete determination of the rights of the parties to the action, it should have been the first point attacked by the defendants, as it foreclosed them completely and, if left in force, eliminating every defense. This order was made on May 22d and was not excepted to or appealed from. On the 8th of August following the defendants appealed from the order dismissing their claim to damages but the order for the delivery of the film to plaintiff was final at that time and is now conclusive on this court. Section 143 of the Code of Civil Procedure, providing for appeals by bill of exceptions, provides that "upon the rendition of final judgment disposing of the action, either party shall have the right to perfect a bill of exceptions for a review by the Supreme Court of all rulings, orders, and judgment made in the action, to which the party has duly excepted at the time of making such ruling, order, or judgment." While the order for the delivery of the film to plaintiff was in one sense a preliminary order, it was in reality a final determination of the rights of the parties to the film, as it ordered the delivery thereof to plaintiff for his use. If it had been duly excepted to, its validity could have been attacked in an appeal from the final judgment thereafter entered in the action. Not having been excepted to as required by the section just referred to, it became final and conclusive on all the parties to the action, and when, on the 8th day of August following, the defendants presented their claim for damages based on the alleged wrongful issuance of a temporary restraining order, the whole foundation of their claim had disappeared by virtue of the fact that the execution of the order of the 22d of May had left nothing for them to litigate. The trial court, on the 8th of August, would have been fully justified in refusing to hear the defendants on their claim for damages. Their right thereto had been adjudicated on the 22d of May and that adjudication had been duly put into execution without protest, objection or exception, and was, therefore, final and conclusive on them on the 8th of August. I have presented this concurring opinion in an attempt to prevent confusion, if any, which might arise from the theory on which the court decides this case. It seems to me impossible that the action can be one for a permanentinjunction. The very nature of the case demonstrates that a permanent injunction is out of the question. The only thing that plaintiff desired was to be permitted to use the film for the week beginning the 26th of May. With the termination of that week his rights expired. After that time Cuddy was perfectly free to turn the film over to the defendants Espejo and Zaldarriaga for exhibition at any time. An injunction permanently prohibiting the defendants from exhibiting the film in Iloilo would have been unjustifiable, as it was something that plaintiff did not ask and did not want; and would have been an invasion of the rights of Cuddy as, after the termination of the week beginning May 26, he was at liberty, under his contract with plaintiff, to rent the film to the defendants Espejo and Zaldarriaga and permit its exhibition in Iloilo at any time. The plaintiff never asked to have defendants permanently enjoined from exhibiting the film in Iloilo and no party to the action has suggested such thing. The action is one for specific performance purely; and while the court granted plaintiff rights which should have been granted only after a trial of the action, nevertheless, such right having been granted before trial and none of the defendants having made objection or taken exception thereto, and the order granting them having become final, such order became a final determination of the action, by reason of the nature of the action itself, the rights of the parties became thereby finally determined and the defendants Espejo and Zaldarriaga, being parties to the action, were precluded from further litigation relative to the subject matter of the controversy. No damages are claimed by reason of the issuance of the mandatory injunction under which the film was delivered to plaintiff and used by him during the week beginning the 26th of May. While the opinion says in the first paragraph that the action is "for damages against the plaintiff for the alleged wrongful issuance of a mandatory and preliminary injunction," the opinion also says in a latter portion that "It will be unnecessary for us to inquire whether the mandatory injunction against Cuddy was properly issued or not. No question is raised with reference to the issuance of that injunction;" and still later it is also stated that "as to whether or not the mandatory injunction should have been issued, we are not, as we have said, called upon to determine." I repeat that no objection was made by the defendants to the issuance of the mandatory injunction, no exception was taken to the order on which it was issued and no appeal has been taken therefrom. That order is now final and conclusive and was at the time this appeal was taken. That being so, the rights of the defendants were foreclosed thereby. The defendants Espejo and Zaldarriaga cannot now be heard to say that they were damaged by the issuance of the preliminary restraining injunction issued on the same day as the mandatory injunction. From what has been said it is clear, it seems to me, that the question of a breach of contract by inducement, which is substantially the only question discussed and decided, is not in the case in reality and, in my

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judgment, should not be touched upon. Courts will not proceed with a litigation and discuss and decided question which might possibly be involved in the case when it clearly appears that there remains nothing about which to litigate, the whole subject matter of the original action having been settled and the parties having no real controversy to present. At the time the defendants Espejo and Zaldarriaga offered their claim for damages arising out of the wrongful issuance of the restraining order, there was nothing between them and the plaintiff to litigate, the rightfulness of plaintiff's demand having already been finally adjudicated and determined in the same action.

G.R. No. 120554 September 21, 1999 SO PING BUN, petitioner, vs. COURT OF APPEALS, TEK HUA ENTERPRISES CORP. and MANUEL C. TIONG, respondents.

QUISUMBING, J.: This petition for certiorari challenges the Decision 1 of the Court of Appeals dated October 10, 1994, and the Resolution 2 dated June 5, 1995, in CA-G.R. CV No. 38784. The appellate court affirmed the decision of the Regional Trial Court of Manila, Branch 35, except for the award of attorney's fees, as follows: WHEREFORE, foregoing considered, the appeal of respondent-appellant So Ping Bun for lack of merit is DISMISSED. The appealed decision dated April 20, 1992 of the court a quo is modified by reducing the attorney's fees awarded to plaintiff Tek Hua Enterprising Corporation from P500,000.00 to P200,000.00. 3 The facts are as follows: In 1963, Tek Hua Trading Co, through its managing partner, So Pek Giok, entered into lease agreements with lessor Dee C. Chuan & Sons Inc. (DCCSI). Subjects of four (4) lease contracts were premises located at Nos. 930, 930-Int., 924-B and 924-C, Soler Street, Binondo, Manila. Tek Hua used the areas to store its textiles. The contracts each had a one-year term. They provided that should the lessee continue to occupy the premises after the term, the lease shall be on a month-to-month basis. When the contracts expired, the parties did not renew the contracts, but Tek Hua continued to occupy the premises. In 1976, Tek Hua Trading Co. was dissolved. Later, the original members of Tek Hua Trading Co. including Manuel C. Tiong, formed Tek Hua Enterprising Corp., herein respondent corporation. So Pek Giok, managing partner of Tek Hua Trading, died in 1986. So Pek Giok's grandson, petitioner So Ping Bun, occupied the warehouse for his own textile business, Trendsetter Marketing. On August 1, 1989, lessor DCCSI sent letters addressed to Tek Hua Enterprises, informing the latter of the 25% increase in rent effective September 1, 1989. The rent increase was later on reduced to 20% effective January 1, 1990, upon other lessees' demand. Again on December 1, 1990, the lessor implemented a 30% rent increase. Enclosed in these letters were new lease contracts for signing. DCCSI warned that failure of the lessee to accomplish the contracts shall be deemed as lack of interest on the lessee's part, and agreement to the termination of the lease. Private respondents did not answer any of these letters. Still, the lease contracts were not rescinded. On March 1, 1991, private respondent Tiong sent a letter to petitioner which reads as follows: March 1, 1991 Mr. So Ping Bun

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930 Soler Street Binondo, Manila Dear Mr. So, Due to my closed (sic) business associate (sic) for three decades with your late grandfather Mr. So Pek Giok and late father, Mr. So Chong Bon, I allowed you temporarily to use the warehouse of Tek Hua Enterprising Corp. for several years to generate your personal business. Since I decided to go back into textile business, I need a warehouse immediately for my stocks. Therefore, please be advised to vacate all your stocks in Tek Hua Enterprising Corp. Warehouse. You are hereby given 14 days to vacate the premises unless you have good reasons that you have the right to stay. Otherwise, I will be constrained to take measure to protect my interest. Please give this urgent matter your preferential attention to avoid inconvenience on your part. Very truly yours, (Sgd) Manuel C. Tiong MANUEL C. TIONG President
4

Petitioner refused to vacate. On March 4, 1992, petitioner requested formal contracts of lease with DCCSI in favor Trendsetter Marketing. So Ping Bun claimed that after the death of his grandfather, So Pek Giok, he had been occupying the premises for his textile business and religiously paid rent. DCCSI acceded to petitioner's request. The lease contracts in favor of Trendsetter were executed. In the suit for injunction, private respondents pressed for the nullification of the lease contracts between DCCSI and petitioner. They also claimed damages. After trial, the trial court ruled: WHEREFORE, judgment is rendered: 1. Annulling the four Contracts of Lease (Exhibits A, A-1 to A-3, inclusive) all dated March 11, 1991, between defendant So Ping Bun, doing business under the name and style of "Trendsetter Marketing", and defendant Dee C. Chuan & Sons, Inc. over the premises located at Nos. 924-B, 924-C, 930 and 930, Int., respectively, Soler Street, Binondo Manila; 2. Making permanent the writ of preliminary injunction issued by this Court on June 21, 1991; 3. Ordering defendant So Ping Bun to pay the aggrieved party, plaintiff Tek Hua Enterprising Corporation, the sum of P500,000.00, for attorney's fees; 4. Dismissing the complaint, insofar as plaintiff Manuel C. Tiong is concerned, and the respective counterclaims of the defendant; 5. Ordering defendant So Ping Bun to pay the costs of this lawsuit; This judgment is without prejudice to the rights of plaintiff Tek Hua Enterprising Corporation and defendant Dee C. Chuan & Sons, Inc. to negotiate for the renewal of their lease contracts over the premises located at Nos. 930, 930-Int., 924-B and 924-C Soler Street, Binondo, Manila, under such terms and conditions as they agree upon, provided they are not contrary to law, public policy, public order, and morals. SO ORDERED.
5

Petitioner's motion for reconsideration of the above decision was denied. On appeal by So Ping Bun, the Court of Appeals upheld the trial court. On motion for reconsideration, the appellate court modified the decision by reducing the award of attorney's fees from five hundred thousand (P500,000.00) pesos to two hundred thousand (P200,000.00) pesos.

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Petitioner is now before the Court raising the following issues: I. WHETHER THE APPELLATE COURT ERRED IN AFFIRMING THE TRIAL COURT'S DECISION FINDING SO PING BUN GUILTY OF TORTUOUS INTERFERENCE OF CONTRACT? II. WHETHER THE APPELLATE COURT ERRED IN AWARDING ATTORNEY'S FEES OF P200,000.00 IN FAVOR OF PRIVATE RESPONDENTS. The foregoing issues involve, essentially, the correct interpretation of the applicable law on tortuous conduct, particularly unlawful interference with contract. We have to begin, obviously, with certain fundamental principles on torts and damages. Damage is the loss, hurt, or harm which results from injury, and damages are the recompense or compensation awarded for the damage suffered. 6 One becomes liable in an action for damages for a nontrespassory invasion of another's interest in the private use and enjoyment of asset if (a) the other has property rights and privileges with respect to the use or enjoyment interfered with, (b) the invasion is substantial, (c) the defendant's conduct is a legal cause of the invasion, and (d) the invasion is either intentional and unreasonable or unintentional and actionable under general negligence rules. 7 The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the part of the third person of the existence of contract; and (3) interference of the third person is without legal justification or excuse.8 A duty which the law of torts is concerned with is respect for the property of others, and a cause of action ex delicto may be predicated upon an unlawful interference by one person of the enjoyment by the other of his private property. 9 This may pertain to a situation where a third person induces a party to renege on or violate his undertaking under a contract. In the case before us, petitioner's Trendsetter Marketing asked DCCSI to execute lease contracts in its favor, and as a result petitioner deprived respondent corporation of the latter's property right. Clearly, and as correctly viewed by the appellate court, the three elements of tort interference abovementioned are present in the instant case. Authorities debate on whether interference may be justified where the defendant acts for the sole purpose of furthering his own financial or economic interest. 10 One view is that, as a general rule, justification for interfering with the business relations of another exists where the actor's motive is to benefit himself. Such justification does not exist where his sole motive is to cause harm to the other. Added to this, some authorities believe that it is not necessary that the interferer's interest outweigh that of the party whose rights are invaded, and that an individual acts under an economic interest that is substantial, not merely de minimis, such that wrongful and malicious motives are negatived, for he acts in self-protection. 11 Moreover justification for protecting one's financial position should not be made to depend on a comparison of his economic interest in the subject matter with that of others.12 It is sufficient if the impetus of his conduct lies in a proper business interest rather than in wrongful motives. 13 As early as Gilchrist vs. Cuddy, 14 we held that where there was no malice in the interference of a contract, and the impulse behind one's conduct lies in a proper business interest rather than in wrongful motives, a party cannot be a malicious interferer. Where the alleged interferer is financially interested, and such interest motivates his conduct, it cannot be said that he is an officious or malicious intermeddler. 15 In the instant case, it is clear that petitioner So Ping Bun prevailed upon DCCSI to lease the warehouse to his enterprise at the expense of respondent corporation. Though petitioner took interest in the property of respondent corporation and benefited from it, nothing on record imputes deliberate wrongful motives or malice on him. Sec. 1314 of the Civil Code categorically provides also that, "Any third person who induces another to violate his contract shall be liable for damages to the other contracting party." Petitioner argues that damage is an essential element of tort interference, and since the trial court and the appellate court ruled that private respondents were not entitled to actual, moral or exemplary damages, it follows that he ought to be absolved of any liability, including attorney's fees. It is true that the lower courts did not award damages, but this was only because the extent of damages was not quantifiable. We had a similar situation in Gilchrist, where it was difficult or impossible to determine the extent of damage and there was nothing on record to serve as basis thereof. In that case we refrained from awarding damages. We believe the same conclusion applies in this case. While we do not encourage tort interferers seeking their economic interest to intrude into existing contracts at the expense of others, however, we find that the conduct herein complained of did not transcend the limits forbidding an obligatory award for damages in the absence of any malice. The business desire is there to make some gain to the detriment of the contracting parties. Lack of malice, however, precludes damages. But it does not relieve petitioner of the legal liability for entering into contracts and causing breach of existing ones. The respondent appellate court correctly confirmed the permanent injunction and nullification of the lease contracts

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between DCCSI and Trendsetter Marketing, without awarding damages. The injunction saved the respondents from further damage or injury caused by petitioner's interference. Lastly, the recovery of attorney's fees in the concept of actual or compensatory damages, is allowed under the circumstances provided for in Article 2208 of the Civil Code. 16 One such occasion is when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. 17 But we have consistently held that the award of considerable damages should have clear factual and legal bases. 18In connection with attorney's fees, the award should be commensurate to the benefits that would have been derived from a favorable judgment. Settled is the rule that fairness of the award of damages by the trial court calls for appellate review such that the award if far too excessive can be reduced. 19 This ruling applies with equal force on the award of attorney's fees. In a long line of cases we said, "It is not sound policy to place in penalty on the right to litigate. To compel the defeated party to pay the fees of counsel for his successful opponent would throw wide open the door of temptation to the opposing party and his counsel to swell the fees to undue proportions." 20 Considering that the respondent corporation's lease contract, at the time when the cause of action accrued, ran only on a month-to-month basis whence before it was on a yearly basis, we find even the reduced amount of attorney's fees ordered by the Court of Appeals still exorbitant in the light of prevailing jurisprudence. 21Consequently, the amount of two hundred thousand (P200,000.00) awarded by respondent appellate court should be reduced to one hundred thousand (P100,000.00) pesos as the reasonable award or attorney's fees in favor of private respondent corporation. WHEREFORE, the petition is hereby DENIED. The assailed Decision and Resolution of the Court of Appeals in CAG.R. CV No. 38784 are hereby AFFIRMED, with MODIFICATION that the award of attorney's fees is reduced from two hundred thousand (P200,000.00) to one hundred thousand (P100,000.00) pesos. No pronouncement as to costs.1wphi1.nt SO ORDERED.

G.R. No. 86683 January 21, 1993 PHILIP S. YU, petitioner, vs. THE HONORABLE COURT OF APPEALS, THE HONORABLE PRESIDING JUDGE, RTC OF MANILA, BRANCH XXXIV (34) and UNISIA MERCHANDISING CO., INC., respondents. Oscar M. Manahan for petitioner. Ruben L. Pasamonte collaborating counsel for petitioner. Alfredo G. De Guzman for private respondent.

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MELO, J.: Petitioner, the exclusive distributor of the House of Mayfair wallcovering products in the Philippines, cried foul when his former dealer of the same goods, herein private respondent, purchased the merchandise from the House of Mayfair in England through FNF Trading in West Germany and sold said merchandise in the Philippines. Both the court of origin and the appellate court rejected petitioner's thesis that private respondent was engaged in a sinister form of unfair competition within the context of Article 28 of the New Civil Code (pp. 23 and 64, Rollo). Hence, the petition at bar. There is no dispute that petitioner has had an exclusive sales agency agreement with the House of Mayfair since 1987 to promote and procure orders for Mayfair wallcovering products from customers in the Philippines (Annex "B", Petition; p. 30, Rollo). Even as petitioner was such exclusive distributor, private respondent, which was then petitioner's dealer, imported the some goods via the FNF Trading which eventually sold the merchandise in the domestic market (TSN, September 20, 1988, p. 9; p. 117, Rollo). In the suit for injunction which petitioner filed before the Regional Trial Court of the National Capital Judicial Region stationed at Manila, petitioner pressed the idea that he was practically by-passed and that private respondent acted in concert with the FNF Trading in misleading Mayfair into believing that the goods ordered by the trading firm were intended for shipment to Nigeria although they were actually shipped to and sold in the Philippines (Paragraph 5, Complaint: p. 34, Rollo). Private respondent professed ignorance of the exclusive contract in favor of petitioner. Even then, private respondent responded by asserting that petitioner's understanding with Mayfair is binding only between the parties thereto (Paragraph 5, Answer; p. 50, Rollo). In the course of hearing the arguments for and against the issuance of the requested writ of preliminary injunction, petitioner impressed before the lower court that he is seeking to enjoin the sale and distribution by private respondent of the same goods in the market (TSN, September 20, 1988, p. 35; p. 142, Rollo) but the Honorable Cesar V. Alejandria, Presiding Judge of Branch 34 was unperturbed, thusly: Resolving plaintiff's motion embodied in the complaint for the issuance of a writ of preliminary injunction after hearing, but without prejudging the merits of the case, and finding from the evidences adduced by the plaintiff, that the terms and conditions of the agency agreement, Exhibit "A-inj." between the plaintiff and The House of Mayfair of England for the exclusive distributorship by the plaintiff of the latter's goods, apertain to them; that there is no privity of contract between the plaintiff and the defendant; that the controversy in this case arose from a breach of contract by the FNF Trading of Germany, for having shipped goods it had purchased from The House of Mayfair to the Philippines: that as shown in Exh. "J-inj.", the House of Mayfair was demanding payment of 4,500.00 from the FNF Trading for restitution of plaintiff's alleged loss on account of the shipment of the goods in question here in the Philippines and now in the possession of the defendant; it appears to the Court that to restrain the defendant from selling the goods it has ordered from the FNF Trading of Germany, would be without legal justification. WHEREFORE, the motion for the issuance of a writ of preliminary injunction to restrain the defendant from selling the goods it has ordered from the FNF Trading of Germany is hereby DENIED. (p. 64,Rollo.) The indifference of the trial court towards petitioner's supplication occasioned the filing of a petition for review oncertiorari with the Court of Appeals but Justice Ordoez-Benitez, with whom Justices Bellosillo and Kalalo concurred, reacted in the same nonchalant fashion. According to the appellate court, petitioner was not able to demonstrate the unequivocal right which he sought to protect and that private respondent is a complete strangervis-a-vis the covenant between petitioner and Mayfair. Apart from these considerations, the reviewing authority noted that petitioner could be fully compensated for the prejudice he suffered judging from the tenor of Mayfair's correspondence to FNF Trading wherein Mayfair took the cudgels for petitioner in seeking compensation for the latter's loss as a consequence of private respondent's scheme (p. 79, Rollo; pp. 2329, Rollo). In the petition at hand, petitioner anchors his plea for redress on his perception that private respondent has distributed and continues to sell Mayfair covering products in contravention of petitioner's exclusive right conferred by the covenant with the House of Mayfair. On March 13, 1989, a temporary restraining order was issued to last until further notice from this Court directed against private respondent (p. 188, Rollo). Notwithstanding such proscription, private respondent persisted in the distribution and sole (p. 208; 228-229, Rollo), triggering petitioner's motion to cite private respondent's manager in contempt of court (p. 223, Rollo). Considering that private respondent's manager, Frank Sia, admitted the acts complained of, a fine of P500.00 was imposed on him but he failed to pay the same within the five-day period provided in Our Resolution of June 21, 1989 (p. 236, Rollo). Did respondent appellate court correctly agree with the lower court in disallowing the writ solicited by herein petitioner? That the exclusive sales contract which links petitioner and the House of Mayfair is solely the concern of the privies thereto and cannot thus extend its chain as to bind private respondent herein is, We believe, beside the point. Verily, injunction is the appropriate remedy to prevent a wrongful interference with contracts

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by strangers to such contracts where the legal remedy is insufficient and the resulting injury is irreparable (Gilchrist vs. Cuddy, 29 Phil. 542 [1915]; 4-A Padilla, Civil Code Annotated, 1988 Ed., p. 90). The liability of private respondent, if any, does not emanate from the four corners of the contract for undoubtedly, Unisia Merchandising Co., Inc. is not a party thereto but its accountability is "an independent act generative of civil liability" (Daywalt vs. Corporacion de PP. Agustinos Recoletos, 39 Phil. 587 [1919]; 4 Paras, Civil Code of the Philippines Annotated, 1981 10th Ed., p. 439; 4 Tolentino, Commentaries and Jurisprudence on the Civil Code, 1986 Ed., p. 439). These observations, however, do not in the least convey the message that We have placed the cart ahead of the horse, so to speak, by pronouncing private respondent's liability at this stage in view of the pendency of the main suit for injunction below. We are simply rectifying certain misperceptions entertained by the appellate court as regards the feasibility of requesting a preliminary injunction to enjoin a stranger to an agreement. To Our mind, the right to perform an exclusive distributorship agreement and to reap the profits resulting from such performance are proprietary rights which a party may protect (30 Am. Jur. Section 19, pp. 71-72: Jurado, Comments and Jurisprudence on Obligations and Contracts, 1983 8th Rev. Ed., p. 336) which may otherwise not be diminished, nay, rendered illusory by the expedient act of utilizing or interposing a person or firm to obtain goods from the supplier to defeat the very purpose for which the exclusive distributorship was conceptualized, at the expense of the sole authorized distributor (43 C.J.S. 597). Another circumstance which respondent court overlooked was petitioner's suggestion, which was not disputed by herein private respondent in its comment, that the House of Mayfair in England was duped into believing that the goods ordered through the FNF Trading were to be shipped to Nigeria only, but the goods were actually sent to and sold in the Philippines. A ploy of this character is akin to the scenario of a third person who induces a party to renege on or violate his undertaking under a contract, thereby entitling the other contracting party to relief therefrom (Article 1314, New Civil Code). The breach caused by private respondent was even aggravated by the consequent diversion of trade from the business of petitioner to that of private respondent caused by the latter's species of unfair competition as demonstrated no less by the sales effected inspite of this Court's restraining order. This brings Us to the irreparable mischief which respondent court misappreciated when it refused to grant the relief simply because of the observation that petitioner can be fully compensated for the damage. A contrario, the injury is irreparable where it is continuous and repeated since from its constant and frequent recurrence, no fair and reasonable redress can be had therefor by petitioner insofar as his goodwill and business reputation as sole distributor are concerned. Withal, to expect petitioner to file a complaint for every sale effected by private respondent will certainly court multiplicity of suits (3 Francisco, Revised Rules of Court, 1985 Edition, p. 261). WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated January 13, 1989 in CA-G.R. SP No. 16019 and the Order dated October 16, 1988 issued by the magistrate at the court of origin are hereby REVERSED and SET ASIDE. Let this case be remanded to the court of origin for issuance of a writ of preliminary injunction upon petitioner's posting of a bond in the sum of Fifty Thousand (P50,000.00) Pesos to be approved by said court, to remain effective during the trial on the merits until final determination of the case. The manager of private respondent. Frank Sia, is hereby ordered to pay to the Clerk of Court within five (5) days from notice hereof the fine of P500.00, as previously imposed on him, with a warning that failure to do so will be dealt with more severely. Upon issuance of the writ of preliminary injunction, the restraining order issued on March 13, 1989 by this Court shall be deemed automatically lifted. SO ORDERED.

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G.R. No. 119107

March 18, 2005

JOSE V. LAGON, Petitioner, vs. HONORABLE COURT OF APPEALS and MENANDRO V. LAPUZ, respondents. DECISION CORONA, J.: On June 23, 1982, petitioner Jose Lagon purchased from the estate of Bai Tonina Sepi, through an intestate court,1 two parcels of land located at Tacurong, Sultan Kudarat. A few months after the sale, private respondent Menandro Lapuz filed a complaint for torts and damages against petitioner before the Regional Trial Court (RTC) of Sultan Kudarat. In the complaint, private respondent, as then plaintiff, claimed that he entered into a contract of lease with the late Bai Tonina Sepi Mengelen Guiabar over three parcels of land (the "property") in Sultan Kudarat, Maguindanao beginning 1964. One of the provisions agreed upon was for private respondent to put up commercial buildings which would, in turn, be leased to new tenants. The rentals to be paid by those tenants would answer for the rent private respondent was obligated to pay Bai Tonina Sepi for the lease of the land. In 1974, the lease contract ended but since the construction of the commercial buildings had yet to be completed, the lease contract was allegedly renewed. When Bai Tonina Sepi died, private respondent started remitting his rent to the court-appointed administrator of her estate. But when the administrator advised him to stop collecting rentals from the tenants of the buildings he constructed, he discovered that petitioner, representing himself as the new owner of the property, had been collecting rentals from the tenants. He thus filed a complaint against the latter, accusing petitioner of inducing the heirs of Bai Tonina Sepi to sell the property to him, thereby violating his leasehold rights over it. In his answer to the complaint, petitioner denied that he induced the heirs of Bai Tonina to sell the property to him, contending that the heirs were in dire need of money to pay off the obligations of the deceased. He also denied interfering with private respondent's leasehold rights as there was no lease contract covering the property when he purchased it; that his personal investigation and inquiry revealed no claims or encumbrances on the subject lots. Petitioner claimed that before he bought the property, he went to Atty. Benjamin Fajardo, the lawyer who allegedly notarized the lease contract between private respondent and Bai Tonina Sepi, to verify if the parties indeed renewed the lease contract after it expired in 1974. Petitioner averred that Atty. Fajardo showed him four copies of the lease renewal but these were all unsigned. To refute the existence of a lease contract, petitioner presented in court a certification from the Office of the Clerk of Court confirming that no record of any lease contract notarized by Atty. Fajardo had been entered into their files. Petitioner added that he only learned of the alleged lease contract when he was informed that private respondent was collecting rent from the tenants of the building. Finding the complaint for tortuous interference to be unwarranted, petitioner filed his counterclaim and prayed for the payment of actual and moral damages. On July 29, 1986, the court a quo found for private respondent (plaintiff below): ACCORDINGLY, judgment is hereby rendered in favor of the plaintiff: 1. Declaring the "Contract of Lease" executed by Bai Tonina Sepi Mangelen Guiabar in favor of the plaintiff on November 6, 1974 (Exh. "A" and "A-1") over Lot No. 6395, Pls-73. Lot No 6396. Pls.-73. Lot No. 6399. 3ls-73, and Lot no.9777-A. CSD-11-000076-D (Lot No. 3-A. 40124), all situated along Ledesma St., Tacurong, Sultan Kudarat, which document was notarized by Atty. Benjamin S. Fajardo, Sr. and entered into his notarial register as Doc. No. 619. Page No. 24. Book No. II. Series of 1974, to be authentic and genuine and as such valid and binding for a period of ten (10) years specified thereon from November 1, 1974 up to October 31, 1984;

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2. Declaring the plaintiff as the lawful owner of the commercial buildings found on the aforesaid lots and he is entitled to their possession and the collection (of rentals) of the said commercial buildings within the period covered by this "Contract of Lease" in his favor; 3. Ordering the defendant to pay to the plaintiff the following: a) Rentals of the commercial buildings on the lots covered by the "Contract of Lease" in favor of the plaintiff for the period from October 1, 1978 up to October 31, 1984, including accrued interests in the total amount of Five Hundred Six Thousand Eight Hundred Five Pesos and Fifty Six Centavos (P506, 850.56), the same to continue to bear interest at the legal rate of 12% per annum until the whole amount is fully paid by the defendant to the plaintiff; b) Moral damages in the amount of One Million Sixty Two Thousand Five Hundred Pesos (P1,062,500.00); c) Actual or compensatory damages in the amount of Three Hundred Twelve Thousand Five Hundred Pesos (P312, 500.00); d) Exemplary or corrective damages in the amount of One Hundred Eighty Thousand Five Hundred Pesos (P187,500.00) e) Temperate or moderate damages in the amount of Sixty Two Thousand Five Hundred Pesos (P62,500.00); f) Nominal damages in the amount of Sixty Two Thousand Five Hundred Pesos (P62,500.00); g) Attorney's fees in the amount of One Hundred Twenty Five Thousand Pesos (P125,000.00); h) Expenses of litigation in the amount of Sixty Two Thousand Five Hundred Pesos (P62,500.00); i) Interest on the moral damages, actual or compensatory damages temperate or moderate damages, nominal damages, attorney's fees and expenses of litigation in the amounts as specified hereinabove from May 24, 1982 up to June 27, 1986, in the total amount of Nine Hundred Thousand Pesos (P900,000.00); all of which will continue to bear interests at a legal rate of 12% per annum until the whole amounts are fully paid by the defendants to the plaintiffs; 4. For failure of the defendant to deposit with this Court all the rentals he had collected from the thirteen (13) tenants or occupants of the commercial buildings in question, the plaintiff is hereby restored to the possession of his commercial buildings for a period of seventy-three (73) months which is the equivalent of the total period for which he was prevented from collecting the rentals from the tenants or occupants of his commercial buildings from October 1, 1978 up to October 31, 1984, and for this purpose a Writ of Preliminary Injunction is hereby issued, but the plaintiff is likewise ordered to pay to the defendant the monthly rental of Seven Hundred Pesos (P700.00) every end of the month for the entire period of seventy three (73) months. This portion of the judgment should be considered as a mere alternative should the defendant fail to pay the amount of Five Hundred Five Pesos and Fifty Six Centavos (P506,805.56) hereinabove specified; 5. Dismissing the counterclaim interposed by the defendant for lack of merit; 6. With costs against the defendant.2 Petitioner appealed the judgment to the Court of Appeals.3 In a decision dated January 31, 1995,4 the appellate court modified the assailed judgment of the trial court as follows: a) The award for moral damages, compensatory damages, exemplary damages, temperate or moderate damages, and nominal damages as well as expenses of litigation in the amount of P62,500.00 and interests under paragraph 3-a(a), (b), (c), (d), (e), (f), (g), (h), and (i) are deleted; b) The award for attorney's fees is reduced to P30,000.00; c) Paragraphs 1,2,5 and 6 are AFFIRMED; d) Additionally, the defendant is hereby ordered to pay to the plaintiff by way of actual damages the sum ofP178,425.00 representing the amount of rentals he collected from the period of October 1978 to August 1983, and minus the amount of P42,700.00 representing rentals due the defendant computed at P700.00 per month for the period from August 1978 to August 1983, with interest thereon at the rate until the same is fully paid; e) Paragraph 4 is deleted.5

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Before the appellate court, petitioner disclaimed knowledge of any lease contract between the late Bai Tonina Sepi and private respondent. On the other hand, private respondent insisted that it was impossible for petitioner not to know about the contract since the latter was aware that he was collecting rentals from the tenants of the building. While the appellate court disbelieved the contentions of both parties, it nevertheless held that, for petitioner to become liable for damages, he must have known of the lease contract and must have also acted with malice or bad faith when he bought the subject parcels of land. Via this petition for review, petitioner cites the following reasons why the Court should rule in his favor: 1. The Honorable Court of Appeals seriously erred in holding that petitioner is liable for interference of contractual relation under Article 1314 of the New Civil Code; 2. The Honorable Court of Appeals erred in not holding that private respondent is precluded from recovering, if at all, because of laches; 3. The Honorable Court of Appeals erred in holding petitioner liable for actual damages and attorney's fees, and; 4. The Honorable Court of Appeals erred in dismissing petitioner's counterclaims.6 Article 1314 of the Civil Code provides that any third person who induces another to violate his contract shall be liable for damages to the other contracting party. The tort recognized in that provision is known as interference with contractual relations.7 The interference is penalized because it violates the property rights of a party in a contract to reap the benefits that should result therefrom.8 The core issue here is whether the purchase by petitioner of the subject property, during the supposed existence of private respondent's lease contract with the late Bai Tonina Sepi, constituted tortuous interference for which petitioner should be held liable for damages. The Court, in the case of So Ping Bun v. Court of Appeals,9 laid down the elements of tortuous interference with contractual relations: (a) existence of a valid contract; (b) knowledge on the part of the third person of the existence of the contract and (c) interference of the third person without legal justification or excuse. In that case, petitioner So Ping Bun occupied the premises which the corporation of his grandfather was leasing from private respondent, without the knowledge and permission of the corporation. The corporation, prevented from using the premises for its business, sued So Ping Bun for tortuous interference. As regards the first element, the existence of a valid contract must be duly established. To prove this, private respondent presented in court a notarized copy of the purported lease renewal.10 While the contract appeared as duly notarized, the notarization thereof, however, only proved its due execution and delivery but not the veracity of its contents. Nonetheless, after undergoing the rigid scrutiny of petitioner's counsel and after the trial court declared it to be valid and subsisting, the notarized copy of the lease contract presented in court appeared to be incontestable proof that private respondent and the late Bai Tonina Sepi actually renewed their lease contract. Settled is the rule that until overcome by clear, strong and convincing evidence, a notarized document continues to be prima facie evidence of the facts that gave rise to its execution and delivery.11 The second element, on the other hand, requires that there be knowledge on the part of the interferer that the contract exists. Knowledge of the subsistence of the contract is an essential element to state a cause of action for tortuous interference.12 A defendant in such a case cannot be made liable for interfering with a contract he is unaware of.13 While it is not necessary to prove actual knowledge, he must nonetheless be aware of the facts which, if followed by a reasonable inquiry, will lead to a complete disclosure of the contractual relations and rights of the parties in the contract.14 In this case, petitioner claims that he had no knowledge of the lease contract. His sellers (the heirs of Bai Tonina Sepi) likewise allegedly did not inform him of any existing lease contract. After a careful perusal of the records, we find the contention of petitioner meritorious. He conducted his own personal investigation and inquiry, and unearthed no suspicious circumstance that would have made a cautious man probe deeper and watch out for any conflicting claim over the property. An examination of the entire property's title bore no indication of the leasehold interest of private respondent. Even the registry of property had no record of the same.15 Assuming ex gratia argumenti that petitioner knew of the contract, such knowledge alone was not sufficient to make him liable for tortuous interference. Which brings us to the third element. According to our ruling in So Ping Bun, petitioner may be held liable only when there was no legal justification or excuse for his action16 or when his conduct was stirred by a wrongful motive. To sustain a case for tortuous interference, the defendant must have acted with malice17 or must have been driven by purely impious reasons to injure the plaintiff. In other words, his act of interference cannot be justified.18 Furthermore, the records do not support the allegation of private respondent that petitioner induced the heirs of Bai Tonina Sepi to sell the property to him. The word "induce" refers to situations where a person causes another to choose one course of conduct by persuasion or intimidation.19 The records show that the decision of

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the heirs of the late Bai Tonina Sepi to sell the property was completely of their own volition and that petitioner did absolutely nothing to influence their judgment. Private respondent himself did not proffer any evidence to support his claim. In short, even assuming that private respondent was able to prove the renewal of his lease contract with Bai Tonina Sepi, the fact was that he was unable to prove malice or bad faith on the part of petitioner in purchasing the property. Therefore, the claim of tortuous interference was never established. In So Ping Bun, the Court discussed whether interference can be justified at all if the interferer acts for the sole purpose of furthering a personal financial interest, but without malice or bad faith. As the Court explained it: x x x, as a general rule, justification for interfering with the business relations of another exists where the actor's motive is to benefit himself. Such justification does not exist where the actor's motive is to cause harm to the other. Added to this, some authorities believe that it is not necessary that the interferer's interest outweigh that of the party whose rights are invaded, and that an individual acts under an economic interest that is substantial, not merely de minimis, such that wrongful and malicious motives are negatived, for he acts in self-protection. Moreover, justification for protecting one's financial position should not be made to depend on a comparison of his economic interest in the subject matter with that of the others. It is sufficient if the impetus of his conduct lies in a proper business interest rather than in wrongful motives.20 The foregoing disquisition applies squarely to the case at bar. In our view, petitioner's purchase of the subject property was merely an advancement of his financial or economic interests, absent any proof that he was enthused by improper motives. In the very early case of Gilchrist v. Cuddy,21 the Court declared that a person is not a malicious interferer if his conduct is impelled by a proper business interest. In other words, a financial or profit motivation will not necessarily make a person an officious interferer liable for damages as long as there is no malice or bad faith involved. In sum, we rule that, inasmuch as not all three elements to hold petitioner liable for tortuous interference are present, petitioner cannot be made to answer for private respondent's losses. This case is one of damnun absque injuria or damage without injury. "Injury" is the legal invasion of a legal right while "damage" is the hurt, loss or harm which results from the injury.22 In BPI Express Card Corporation v. Court of Appeals,,23 the Court turned down the claim for damages of a cardholder whose credit card had been cancelled by petitioner corporation after several defaults in payment. We held there that there can be damage without injury where the loss or harm is not the result of a violation of a legal duty. In that instance, the consequences must be borne by the injured person alone since the law affords no remedy for damages resulting from an act which does not amount to legal injury or wrong.24 Indeed, lack of malice in the conduct complained of precludes recovery of damages.25 With respect to the attorney's fees awarded by the appellate court to private respondent, we rule that it cannot be recovered under the circumstances. According to Article 2208 of the Civil Code, attorney's fees may be awarded only when it has been stipulated upon or under the instances provided therein.26 Likewise, being in the concept of actual damages, the award for attorney's fees must have clear, factual and legal bases27 which, in this case, do not exist. Regarding the dismissal of petitioner's counterclaim for actual and moral damages, the appellate court affirmed the assailed order of the trial court because it found no basis to grant the amount of damages prayed for by petitioner. We find no reason to reverse the trial court and the Court of Appeals. Actual damages are those awarded in satisfaction of, or in recompense for, loss or injury sustained. To be recoverable, they must not only be capable of proof but must actually be proved with a reasonable degree of certainty.28 Petitioner was unable to prove that he suffered loss or injury, hence, his claim for actual damages must fail. Moreover, petitioner's prayer for moral damages was not warranted as moral damages should result from the wrongful act of a person. The worries and anxieties suffered by a party hailed to court litigation are not compensable.29 With the foregoing discussion, we no longer deem it necessary to delve into the issue of laches. WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed decision of the Court of Appeals is hereby REVERSED and SET ASIDE. No costs. G.R. No. 134971 March 25, 2004

HERMINIO TAYAG, petitioner, vs. AMANCIA LACSON, ROSENDO LACSON, ANTONIO LACSON, JUAN LACSON, TEODISIA LACSONESPINOSA and THE COURT OF APPEALS, respondents. DECISION CALLEJO, SR., J.:

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Before us is a petition for review on certiorari of the Decision1 and the Resolution2 of respondent Court of Appeals in CA-G.R. SP No. 44883. The Case for the Petitioner Respondents Angelica Tiotuyco Vda. de Lacson,3 and her children Amancia, Antonio, Juan, and Teodosia, all surnamed Lacson, were the registered owners of three parcels of land located in Mabalacat, Pampanga, covered by Transfer Certificates of Title (TCT) Nos. 35922-R, 35923-R, and 35925-R, registered in the Register of Deeds of San Fernando, Pampanga. The properties, which were tenanted agricultural lands,4 were administered by Renato Espinosa for the owner. On March 17, 1996, a group of original farmers/tillers, namely, Julio Tiamson, Renato Gozun, Rosita Hernandez, Bienvenido Tongol, Alfonso Flores, Norma Quiambao, Rosita Tolentino, Jose Sosa, Francisco Tolentino, Sr., Emiliano Laxamana, Ruben Torres, Meliton Allanigue, Dominga Laxamana, Felicencia de Leon, Emiliano Ramos, and another group, namely, Felino G. Tolentino, Rica Gozun, Perla Gozun, Benigno Tolentino, Rodolfo Quiambao, Roman Laxamana, Eddie San Luis, Ricardo Hernandez, Nicenciana Miranda, Jose Gozun, Alfredo Sosa, Jose Tiamson, Augusto Tolentino, Sixto Hernandez, Alex Quiambao, Isidro Tolentino, Ceferino de Leon, Alberto Hernandez, Orlando Flores, and Aurelio Flores,5 individually executed in favor of the petitioner separate Deeds of Assignment6 in which the assignees assigned to the petitioner their respective rights as tenants/tillers of the landholdings possessed and tilled by them for and in consideration of P50.00 per square meter. The said amount was made payable "when the legal impediments to the sale of the property to the petitioner no longer existed." The petitioner was also granted the exclusive right to buy the property if and when the respondents, with the concurrence of the defendants-tenants, agreed to sell the property. In the interim, the petitioner gave varied sums of money to the tenants as partial payments, and the latter issued receipts for the said amounts. On July 24, 1996, the petitioner called a meeting of the defendants-tenants to work out the implementation of the terms of their separate agreements.7 However, on August 8, 1996, the defendants-tenants, through Joven Mariano, wrote the petitioner stating that they were not attending the meeting and instead gave notice of their collective decision to sell all their rights and interests, as tenants/lessees, over the landholding to the respondents.8 Explaining their reasons for their collective decision, they wrote as follows: Kami ay nagtiwala sa inyo, naging tapat at nanindigan sa lahat ng ating napagkasunduan, hindi tumanggap ng ibang buyer o ahente, pero sinira ninyo ang aming pagtitiwala sa pamamagitan ng demanda ninyo at pagbibigay ng problema sa amin na hindi naman nagbenta ng lupa. Kaya kami ay nagpulong at nagpasya na ibenta na lang ang aming karapatan o ang aming lupang sinasaka sa landowner o sa mga pamilyang Lacson, dahil ayaw naming magkaroon ng problema. Kaya kung ang sasabihin ninyong itoy katangahan, lalo sigurong magiging katangahan kung ibebenta pa namin sa inyo ang aming lupang sinasaka, kaya pasensya na lang Mister Tayag. Dahil sinira ninyo ang aming pagtitiwala at katapatan.9 On August 19, 1996, the petitioner filed a complaint with the Regional Trial Court of San Fernando, Pampanga, Branch 44, against the defendants-tenants, as well as the respondents, for the court to fix a period within which to pay the agreed purchase price of P50.00 per square meter to the defendants, as provided for in the Deeds of Assignment. The petitioner also prayed for a writ of preliminary injunction against the defendants and the respondents therein.10 The case was docketed as Civil Case No. 10910. In his complaint, the petitioner alleged, inter alia, the following: 4. That defendants Julio Tiamson, Renato Gozun, Rosita Hernandez, Bienvenido Tongol, Alfonso Flores, Norma Quiambao, Rosita Tolentino, Jose Sosa, Francisco Tolentino, Sr., Emiliano Laxamana, Ruben Torres, Meliton Allanigue, Dominga Laxamana, Felicencia de Leon, Emiliano Ramos are original farmers or direct tillers of landholdings over parcels of lands covered by Transfer Certificate of Title Nos. 35922R, 35923-R and 35925-R which are registered in the names of defendants LACSONS; while defendants Felino G. Tolentino, Rica Gozun, Perla Gozun, Benigno Tolentino, Rodolfo Quiambao, Roman Laxamana, Eddie San Luis, Alfredo Gozun, Jose Tiamson, Augusto Tolentino, Sixto Hernandez, Alex Quiambao, Isidro Tolentino, Ceferino de Leon, Alberto Hernandez, and Aurelio Flores are sub-tenants over the same parcel of land.

5. That on March 17, 1996 the defendants TIAMSON, et al., entered into Deeds of Assignment with the plaintiff by which the defendants assigned all their rights and interests on their landholdings to the plaintiff and that on the same date (March 17, 1996), the defendants received from the plaintiff partial payments in the amounts corresponding to their names. Subsequent payments were also received:
1st PAYMENT 1.Julio Tiamson - - - - - P 20,000 2nd PAYMENT P 10,621.54 CHECK NO. 231281 TOTAL P 30,621.5

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4 2. Renato Gozun - - - - - [son of Felix Gozun (deceased)] 3. Rosita Hernandez - - - 4. Bienvenido Tongol - - [Son of Abundio Tongol (deceased)] 5. Alfonso Flores - - - - - 6. Norma Quiambao - - - 7. Rosita Tolentino - - - - 8. Jose Sosa - - - - - - - - 9. Francisco Tolentino, Sr. 10. Emiliano Laxamana - 11. Ruben Torres - - - - - [Son of Mariano Torres (deceased)] 12. Meliton Allanigue 13. Dominga Laxamana 14. Felicencia de Leon 15. Emiliano Ramos 16. Felino G. Tolentino 17. Rica Gozun 18. Perla Gozun 19. Benigno Tolentino 20. Rodolfo Quiambao 21. Roman Laxamana 22. Eddie San Luis 23. Ricardo Hernandez 24. Nicenciana Miranda 25. Jose Gozun 26. Alfredo Sosa 27. Jose Tiamson 28. Augusto Tolentino 29. Sixto Hernandez 30. Alex Quiambao 31. Isidro Tolentino 32. Ceferino de Leon 33. Alberto Hernandez 34. Orlando Florez P 10,000 96,000 106,000. 00 P 19,374.2 4 24,465.9 0 56,648.4 0 51,501.1 0 32,126.0 8 24,861.3 1 34,237.6 2 -----P 43,587.3 1 P 22,944.7 7 27,269.0 2 -----23,869.6 0 ------------------------------------------------------------------------------------------------

P 5,000 P 10,000

14,374.24 14,465.90

231274 231285

P 30,000 P 10,000 P 10,000 P 10,000 P 10,000 P 10,000 P 10,000

26,648.40 41,501.10 22,126.08 14,861.31 24,237.62 -----P 33,587.31 12,944.77 22,269.02 -----18,869.60 --------------------------------------------------------------------------------11,378.70 -----------

231271 231279 231284 231291 231283 -----------

P 10,000 P 5,000 10,000 5,000 10,000 5,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 5,000 10,000 5,000 10,000 10,000 10,000 -----10,000 10,000

231269 231275 -----231280 --------------------------------------------------------------------------------231270 -----------

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35. Aurelio Flores

10,000

------

------

------

6. That on July 24, 1996, the plaintiff wrote the defendants TIAMSON, et al., inviting them for a meeting regarding the negotiations/implementations of the terms of their Deeds of Assignment; 7. That on August 8, 1996, the defendants TIAMSON, et al., through Joven Mariano, replied that they are no longer willing to pursue with the negotiations, and instead they gave notice to the plaintiff that they will sell all their rights and interests to the registered owners (defendants LACSONS). A copy of the letter is hereto attached as Annex "A" etc.; 8. That the defendants TIAMSON, et. al., have no right to deal with the defendants LACSON or with any third persons while their contracts with the plaintiff are subsisting; defendants LACSONS are inducing or have induced the defendants TIAMSON, et. al., to violate their contracts with the plaintiff; 9. That by reason of the malicious acts of all the defendants, plaintiff suffered moral damages in the forms of mental anguish, mental torture and serious anxiety which in the sum of P500,000.00 for which defendants should be held liable jointly and severally.11 In support of his plea for injunctive relief, the petitioner, as plaintiff, also alleged the following in his complaint: 11. That to maintain the status quo, the defendants TIAMSON, et al., should be restrained from rescinding their contracts with the plaintiff, and the defendants LACSONS should also be restrained from accepting any offer of sale or alienation with the defendants TIAMSON, et al., in whatever form, the latters rights and interests in the properties mentioned in paragraph 4 hereof; further, the LACSONS should be restrained from encumbering/alienating the subject properties covered by TCT No. 35922-R, 35923-R and TCT No. 35925-R, Registry of Deeds of San Fernando, Pampanga; 12. That the defendants TIAMSON, et al., threaten to rescind their contracts with the plaintiff and are also bent on selling/alienating their rights and interests over the subject properties to their codefendants (LACSONS) or any other persons to the damage and prejudice of the plaintiff who already invested much money, efforts and time in the said transactions; 13. That the plaintiff is entitled to the reliefs being demanded in the complaint; 14. That to prevent irreparable damages and prejudice to the plaintiff, as the latter has no speedy and adequate remedy under the ordinary course of law, it is essential that a Writ of Preliminary Injunction be issued enjoining and restraining the defendants TIAMSON, et al., from rescinding their contracts with the plaintiff and from selling/alienating their properties to the LACSONS or other persons; 15. That the plaintiff is willing and able to put up a reasonable bond to answer for the damages which the defendants would suffer should the injunction prayed for and granted be found without basis.12 The petitioner prayed, that after the proceedings, judgment be rendered as follows: 1. Pending the hearing, a Writ of Preliminary Injunction be issued prohibiting, enjoining and restraining defendants Julio Tiamson, Renato Gozun, Rosita Hernandez, Bienvenido Tongol, Alfonso Flores, Norma Quiambao, Rosita Tolentino, Jose Sosa, Francisco Tolentino Sr., Emiliano Laxamana, Ruben Torres, Meliton Allanigue, Dominga Laxamana, Felicencia de Leon, Emiliano Ramos, Felino G. Tolentino, Rica Gozun, Perla Gozun, Benigno Tolentino, Rodolfo Quiambao, Roman Laxamana, Eddie San Luis, Ricardo Hernandez, Nicenciana Miranda, Jose Gozun, Alfredo Sosa, Jose Tiamson, Augusto Tolentino, Ceferino de Leon, Alberto Hernandez, Orlando Flores, and Aurelio Flores from rescinding their contracts with the plaintiff and from alienating their rights and interest over the aforementioned properties in favor of defendants LACSONS or any other third persons; and prohibiting the defendants LACSONS from encumbering/alienating TCT Nos. 35922-R, 35923-R and 35925-R of the Registry of Deeds of San Fernando, Pampanga. 2. And pending the hearing of the Prayer for a Writ of Preliminary Injunction, it is prayed that a restraining order be issued restraining the aforementioned defendants (TIAMSON, et al.) from rescinding their contracts with the plaintiff and from alienating the subject properties to the defendants LACSONS or any third persons; further, restraining and enjoining the defendants LACSONS from encumbering/selling the properties covered by TCT Nos. 35922-R, 35923-R, and 35925-R of the Registry of Deeds of San Fernando, Pampanga. 3. Fixing the period within which plaintiff shall pay the balance of the purchase price to the defendants TIAMSON, et al., after the lapse of legal impediment, if any. 4. Making the Writ of Preliminary Injunction permanent;

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5. Ordering the defendants to pay the plaintiff the sum of P500,000.00 as moral damages; 6. Ordering the defendants to pay the plaintiff attorneys fees in the sum of P100,000.00 plus litigation expenses of P50,000.00; Plaintiff prays for such other relief as may be just and equitable under the premises.13 In their answer to the complaint, the respondents as defendants asserted that (a) the defendant Angelica Vda. de Lacson had died on April 24, 1993; (b) twelve of the defendants were tenants/lessees of respondents, but the tenancy status of the rest of the defendants was uncertain; (c) they never induced the defendants Tiamson to violate their contracts with the petitioner; and, (d) being merely tenants-tillers, the defendants-tenants had no right to enter into any transactions involving their properties without their knowledge and consent. They also averred that the transfers or assignments of leasehold rights made by the defendants-tenants to the petitioner is contrary to Presidential Decree (P.D.) No. 27 and Republic Act No. 6657, the Comprehensive Agrarian Reform Program (CARP).14 The respondents interposed counterclaims for damages against the petitioner as plaintiff. The defendants-tenants Tiamson, et al., alleged in their answer with counterclaim for damages, that the money each of them received from the petitioner were in the form of loans, and that they were deceived into signing the deeds of assignment: a) That all the foregoing allegations in the Answer are hereby repleaded and incorporated in so far as they are material and relevant herein; b) That the defendants Tiamson, et al., in so far as the Deeds of Assignment are concern[ed] never knew that what they did sign is a Deed of Assignment. What they knew was that they were made to sign a document that will serve as a receipt for the loan granted [to] them by the plaintiff; c) That the Deeds of Assignment were signed through the employment of fraud, deceit and false pretenses of plaintiff and made the defendants believe that what they sign[ed] was a mere receipt for amounts received by way of loans; d) That the documents signed in blank were filled up and completed after the defendants Tiamson, et al., signed the documents and their completion and accomplishment was done in the absence of said defendants and, worst of all, defendants were not provided a copy thereof; e) That as completed, the Deeds of Assignment reflected that the defendants Tiamson, et al., did assign all their rights and interests in the properties or landholdings they were tilling in favor of the plaintiff. That if this is so, assuming arguendo that the documents were voluntarily executed, the defendants Tiamson, et al., do not have any right to transfer their interest in the landholdings they are tilling as they have no right whatsoever in the landholdings, the landholdings belong to their co-defendants, Lacson, et al., and therefore, the contract is null and void; f) That while it is admitted that the defendants Tiamson, et al., received sums of money from plaintiffs, the same were received as approved loans granted by plaintiff to the defendants Tiamson, et al., and not as part consideration of the alleged Deeds of Assignment; and by way of:15 At the hearing of the petitioners plea for a writ of preliminary injunction, the respondents counsel failed to appear. In support of his plea for a writ of preliminary injunction, the petitioner adduced in evidence the Deeds of Assignment,16 the receipts17 issued by the defendants-tenants for the amounts they received from him; and the letter18 the petitioner received from the defendants-tenants. The petitioner then rested his case. The respondents, thereafter, filed a Comment/Motion to dismiss/deny the petitioners plea for injunctive relief on the following grounds: (a) the Deeds of Assignment executed by the defendants-tenants were contrary to public policy and P.D. No. 27 and Rep. Act No. 6657; (b) the petitioner failed to prove that the respondents induced the defendants-tenants to renege on their obligations under the "Deeds of Assignment;" (c) not being privy to the said deeds, the respondents are not bound by the said deeds; and, (d) the respondents had the absolute right to sell and dispose of their property and to encumber the same and cannot be enjoined from doing so by the trial court. The petitioner opposed the motion, contending that it was premature for the trial court to resolve his plea for injunctive relief, before the respondents and the defendants-tenants adduced evidence in opposition thereto, to afford the petitioner a chance to adduce rebuttal evidence and prove his entitlement to a writ of preliminary injunction. The respondents replied that it was the burden of the petitioner to establish the requisites of a writ of preliminary injunction without any evidence on their part, and that they were not bound to adduce any evidence in opposition to the petitioners plea for a writ of preliminary injunction. On February 13, 1997, the court issued an Order19 denying the motion of the respondents for being premature. It directed the hearing to proceed for the respondents to adduce their evidence. The court ruled that the petitioner, on the basis of the material allegations of the complaint, was entitled to injunctive relief. It also held that before the court could resolve the petitioners plea for injunctive relief, there was need for a hearing to

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enable the respondents and the defendants-tenants to adduce evidence to controvert that of the petitioner. The respondents filed a motion for reconsideration, which the court denied in its Order dated April 16, 1997. The trial court ruled that on the face of the averments of the complaint, the pleadings of the parties and the evidence adduced by the petitioner, the latter was entitled to injunctive relief unless the respondents and the defendants-tenants adduced controverting evidence. The respondents, the petitioners therein, filed a petition for certiorari in the Court of Appeals for the nullification of the February 13, 1997 and April 16, 1997 Orders of the trial court. The case was docketed as CA-G.R. SP No. 44883. The petitioners therein prayed in their petition that: 1. An order be issued declaring the orders of respondent court dated February 13, 1997 and April 16, 1997 as null and void; 2. An order be issued directing the respondent court to issue an order denying the application of respondent Herminio Tayag for the issuance of a Writ of Preliminary Injunction and/or restraining order. 3. In the meantime, a Writ of Preliminary Injunction be issued against the respondent court, prohibiting it from issuing its own writ of injunction against Petitioners, and thereafter making said injunction to be issued by this Court permanent. Such other orders as may be deemed just & equitable under the premises also prayed for.20 The respondents asserted that the Deeds of Assignment executed by the assignees in favor of the petitioner were contrary to paragraph 13 of P.D. No. 27 and the second paragraph of Section 70 of Rep. Act No. 6657, and, as such, could not be enforced by the petitioner for being null and void. The respondents also claimed that the enforcement of the deeds of assignment was subject to a supervening condition: 3. That this exclusive and absolute right given to the assignee shall be exercised only when no legal impediments exist to the lot to effect the smooth transfer of lawful ownership of the lot/property in the name of the ASSIGNEE.21 The respondents argued that until such condition took place, the petitioner would not acquire any right to enforce the deeds by injunctive relief. Furthermore, the petitioners plea in his complaint before the trial court, to fix a period within which to pay the balance of the amounts due to the tenants under said deeds after the "lapse" of any legal impediment, assumed that the deeds were valid, when, in fact and in law, they were not. According to the respondents, they were not parties to the deeds of assignment; hence, they were not bound by the said deeds. The issuance of a writ of preliminary injunction would restrict and impede the exercise of their right to dispose of their property, as provided for in Article 428 of the New Civil Code. They asserted that the petitioner had no cause of action against them and the defendants-tenants. On April 17, 1998, the Court of Appeals rendered its decision against the petitioner, annulling and setting aside the assailed orders of the trial court; and permanently enjoining the said trial court from proceeding with Civil Case No. 10901. The decretal portion of the decision reads as follows: However, even if private respondent is denied of the injunctive relief he demands in the lower court still he could avail of other course of action in order to protect his interest such as the institution of a simple civil case of collection of money against TIAMSON, et al. For all the foregoing considerations, the orders dated 13 February 1997 and 16 April 1997 are hereby NULLIFIED and ordered SET ASIDE for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Accordingly, public respondent is permanently enjoined from proceeding with the case designated as Civil Case No. 10901.22 The CA ruled that the respondents could not be enjoined from alienating or even encumbering their property, especially so since they were not privies to the deeds of assignment executed by the defendants-tenants. The defendants-tenants were not yet owners of the portions of the landholdings respectively tilled by them; as such, they had nothing to assign to the petitioner. Finally, the CA ruled that the deeds of assignment executed by the defendants-tenants were contrary to P.D. No. 27 and Rep. Act No. 6657. On August 4, 1998, the CA issued a Resolution denying the petitioners motion for reconsideration.23 Hence, the petitioner filed his petition for review on certiorari before this Court, contending as follows: I A MERE ALLEGATION IN THE ANSWER OF THE TENANTS COULD NOT BE USED AS EVIDENCE OR BASIS FOR ANY CONCLUSION, AS THIS ALLEGATION, IS STILL THE SUBJECT OF TRIAL IN THE LOWER COURT (RTC).24 II

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THE COURT OF APPEALS CANNOT ENJOIN THE HEARING OF A PETITION FOR PRELIMINARY INJUNCTION AT A TIME WHEN THE LOWER COURT (RTC) IS STILL RECEIVING EVIDENCE PRECISELY TO DETERMINE WHETHER OR NOT THE WRIT OF PRELIMINARY INJUNCTION BEING PRAYED FOR BY TAYAG SHOULD BE GRANTED OR NOT.25 III THE COURT OF APPEALS CANNOT USE "FACTS" NOT IN EVIDENCE, TO SUPPORT ITS CONCLUSION THAT THE TENANTS ARE NOT YET "AWARDEES OF THE LAND REFORM.26 IV THE COURT OF APPEALS CANNOT CAUSE THE PERMANENT STOPPAGE OF THE ENTIRE PROCEEDINGS BELOW INCLUDING THE TRIAL ON THE MERITS OF THE CASE CONSIDERING THAT THE ISSUE INVOLVED ONLY THE PROPRIETY OF MAINTAINING THE STATUS QUO.27 V THE COURT OF APPEALS CANNOT INCLUDE IN ITS DECISION THE CASE OF THE OTHER 35 TENANTS WHO DO NOT QUESTION THE JURISDICTION OF THE LOWER COURT (RTC) OVER THE CASE AND WHO ARE IN FACT STILL PRESENTING THEIR EVIDENCE TO OPPOSE THE INJUNCTION PRAYED FOR, AND TO PROVE AT THE SAME TIME THE COUNTER-CLAIMS THEY FILED AGAINST THE PETITIONER.28 VI THE LOWER COURT (RTC) HAS JURISDICTION OVER THE CASE FILED BY TAYAG FOR "FIXING OF PERIOD" UNDER ART. 1197 OF THE NEW CIVIL CODE AND FOR "DAMAGES" AGAINST THE LACSONS UNDER ART. 1314 OF THE SAME CODE. THIS CASE CANNOT BE SUPPRESSED OR RENDERED NUGATORY UNCEREMONIOUSLY.29 The petitioner faults the Court of Appeals for permanently enjoining the trial court from proceeding with Civil Case No. 10910. He opines that the same was too drastic, tantamount to a dismissal of the case. He argues that at that stage, it was premature for the appellate court to determine the merits of the case since no evidentiary hearing thereon was conducted by the trial court. This, the Court of Appeals cannot do, since neither party moved for the dismissal of Civil Case No. 10910. The petitioner points out that the Court of Appeals, in making its findings, went beyond the issue raised by the private respondents, namely, whether or not the trial court committed a grave abuse of discretion amounting to excess or lack of jurisdiction when it denied the respondents motion for the denial/dismissal of the petitioners plea for a writ of preliminary injunction. He, likewise, points out that the appellate court erroneously presumed that the leaseholders were not DAR awardees and that the deeds of assignment were contrary to law. He contends that leasehold tenants are not prohibited from conveying or waiving their leasehold rights in his favor. He insists that there is nothing illegal with his contracts with the leaseholders, since the same shall be effected only when there are no more "legal impediments." At bottom, the petitioner contends that, at that stage, it was premature for the appellate court to determine the merits of his case since no evidentiary hearing on the merits of his complaint had yet been conducted by the trial court. The Comment/Motion of the Respondents to Dismiss/Deny Petitioners Plea for a Writ of Preliminary Injunction Was Not Premature. Contrary to the ruling of the trial court, the motion of the respondents to dismiss/deny the petitioners plea for a writ of preliminary injunction after the petitioner had adduced his evidence, testimonial and documentary, and had rested his case on the incident, was proper and timely. It bears stressing that the petitioner had the burden to prove his right to a writ of preliminary injunction. He may rely solely on the material allegations of his complaint or adduce evidence in support thereof. The petitioner adduced his evidence to support his plea for a writ of preliminary injunction against the respondents and the defendants-tenants and rested his case on the said incident. The respondents then had three options: (a) file a motion to deny/dismiss the motion on the ground that the petitioner failed to discharge his burden to prove the factual and legal basis for his plea for a writ of preliminary injunction and, if the trial court denies his motion, for them to adduce evidence in opposition to the petitioners plea; (b) forgo their motion and adduce testimonial and/or documentary evidence in opposition to the petitioners plea for a writ of preliminary injunction; or, (c) waive their right to adduce evidence and submit the incident for consideration on the basis of the pleadings of the parties and the evidence of the petitioner. The respondents opted not to adduce any evidence, and instead filed a motion to deny or dismiss the petitioners plea for a writ of preliminary injunction against them, on their claim that the petitioner failed to prove his entitlement thereto. The trial court cannot compel the respondents to adduce evidence in opposition to the petitioners plea if the respondents opt to waive their right to adduce such evidence. Thus, the trial court should have resolved the respondents motion even without the latters opposition and the presentation of evidence thereon.

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The RTC Committed a Grave Abuse of Discretion Amounting to Excess or Lack of Jurisdiction in Issuing its February 13, 1997 and April 16, 1997 Orders In its February 13, 1997 Order, the trial court ruled that the petitioner was entitled to a writ of preliminary injunction against the respondents on the basis of the material averments of the complaint. In its April 16, 1997 Order, the trial court denied the respondents motion for reconsideration of the previous order, on its finding that the petitioner was entitled to a writ of preliminary injunction based on the material allegations of his complaint, the evidence on record, the pleadings of the parties, as well as the applicable laws: For the record, the Court denied the LACSONS COMMENT/MOTION on the basis of the facts culled from the evidence presented, the pleadings and the law applicable unswayed by the partisan or personal interests, public opinion or fear of criticism (Canon 3, Rule 3.02, Code of Judicial Ethics).30 Section 3, Rule 58 of the Rules of Court, as amended, enumerates the grounds for the issuance of a writ of preliminary injunction, thus: (a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually; (b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or (c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual. A preliminary injunction is an extraordinary event calculated to preserve or maintain the status quo of things ante litem and is generally availed of to prevent actual or threatened acts, until the merits of the case can be heard. Injunction is accepted as the strong arm of equity or a transcendent remedy.31 While generally the grant of a writ of preliminary injunction rests on the sound discretion of the trial court taking cognizance of the case, extreme caution must be observed in the exercise of such discretion.32 Indeed, in Olalia v. Hizon,33 we held: It has been consistently held that there is no power the exercise of which is more delicate, which requires greater caution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of equity that should never be extended unless to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in damages. Every court should remember that an injunction is a limitation upon the freedom of action of the defendant and should not be granted lightly or precipitately. It should be granted only when the court is fully satisfied that the law permits it and the emergency demands it.34 The very foundation of the jurisdiction to issue writ of injunction rests in the existence of a cause of action and in the probability of irreparable injury, inadequacy of pecuniary compensation and the prevention of the multiplicity of suits. Where facts are not shown to bring the case within these conditions, the relief of injunction should be refused.35 For the court to issue a writ of preliminary injunction, the petitioner was burdened to establish the following: (1) a right in esse or a clear and unmistakable right to be protected; (2) a violation of that right; (3) that there is an urgent and permanent act and urgent necessity for the writ to prevent serious damage.36 Thus, in the absence of a clear legal right, the issuance of the injunctive writ constitutes a grave abuse of discretion. Where the complainants right is doubtful or disputed, injunction is not proper. Injunction is a preservative remedy aimed at protecting substantial rights and interests. It is not designed to protect contingent or future rights. The possibility of irreparable damage without proof of adequate existing rights is not a ground for injunction.37 We have reviewed the pleadings of the parties and found that, as contended by the respondents, the petitioner failed to establish the essential requisites for the issuance of a writ of preliminary injunction. Hence, the trial court committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in denying the respondents comment/motion as well as their motion for reconsideration. First. The trial court cannot enjoin the respondents, at the instance of the petitioner, from selling, disposing of and encumbering their property. As the registered owners of the property, the respondents have the right to enjoy and dispose of their property without any other limitations than those established by law, in accordance with Article 428 of the Civil Code. The right to dispose of the property is the power of the owner to sell, encumber, transfer, and even destroy the property. Ownership also includes the right to recover the possession of the property from any other person to whom the owner has not transmitted such property, by the appropriate action for restitution, with the fruits, and for indemnification for damages.38 The right of ownership of the respondents is not, of course, absolute. It is limited by those set forth by law, such as the agrarian reform

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laws. Under Article 1306 of the New Civil Code, the respondents may enter into contracts covering their property with another under such terms and conditions as they may deem beneficial provided they are not contrary to law, morals, good conduct, public order or public policy. The respondents cannot be enjoined from selling or encumbering their property simply and merely because they had executed Deeds of Assignment in favor of the petitioner, obliging themselves to assign and transfer their rights or interests as agricultural farmers/laborers/sub-tenants over the landholding, and granting the petitioner the exclusive right to buy the property subject to the occurrence of certain conditions. The respondents were not parties to the said deeds. There is no evidence that the respondents agreed, expressly or impliedly, to the said deeds or to the terms and conditions set forth therein. Indeed, they assailed the validity of the said deeds on their claim that the same were contrary to the letter and spirit of P.D. No. 27 and Rep. Act No. 6657. The petitioner even admitted when he testified that he did not know any of the respondents, and that he had not met any of them before he filed his complaint in the RTC. He did not even know that one of those whom he had impleaded as defendant, Angelica Vda. de Lacson, was already dead. Q: But you have not met any of these Lacsons? A: Not yet, sir. Q: Do you know that two (2) of the defendants are residents of the United States? A: I do not know, sir. Q: You do not know also that Angela Tiotuvie (sic) Vda. de Lacson had already been dead? A: I am aware of that, sir.39 We are one with the Court of Appeals in its ruling that: We cannot see our way clear on how or why injunction should lie against petitioners. As owners of the lands being tilled by TIAMSON, et al., petitioners, under the law, have the right to enjoy and dispose of the same. Thus, they have the right to possess the lands, as well as the right to encumber or alienate them. This principle of law notwithstanding, private respondent in the lower court sought to restrain the petitioners from encumbering and/or alienating the properties covered by TCT No. 35922-R, 35923-R and TCT No. 35925-R of the Registry of Deeds of San Fernando, Pampanga. This cannot be allowed to prosper since it would constitute a limitation or restriction, not otherwise established by law on their right of ownership, more so considering that petitioners were not even privy to the alleged transaction between private respondent and TIAMSON, et al.40 Second. A reading the averments of the complaint will show that the petitioner clearly has no cause of action against the respondents for the principal relief prayed for therein, for the trial court to fix a period within which to pay to each of the defendants-tenants the balance of the P50.00 per square meter, the consideration under the Deeds of Assignment executed by the defendants-tenants. The respondents are not parties or privies to the deeds of assignment. The matter of the period for the petitioner to pay the balance of the said amount to each of the defendants-tenants is an issue between them, the parties to the deed. Third. On the face of the complaint, the action of the petitioner against the respondents and the defendantstenants has no legal basis. Under the Deeds of Assignment, the obligation of the petitioner to pay to each of the defendants-tenants the balance of the purchase price was conditioned on the occurrence of the following events: (a) the respondents agree to sell their property to the petitioner; (b) the legal impediments to the sale of the landholding to the petitioner no longer exist; and, (c) the petitioner decides to buy the property. When he testified, the petitioner admitted that the legal impediments referred to in the deeds were (a) the respondents refusal to sell their property; and, (b) the lack of approval of the Department of Agrarian Reform: Q : There is no specific agreement prior to the execution of those documents as when they will pay? A : We agreed to that, that I will pay them when there are no legal impediment, sir. Q : Many of the documents are unlattered (sic) and you want to convey to this Honorable Court that prior to the execution of these documents you have those tentative agreement for instance that the amount or the cost of the price is to be paid when there are no legal impediment, you are using the word "legal impediment," do you know the meaning of that? A : When there are (sic) no more legal impediment exist, sir. Q : Did you make how (sic) to the effect that the meaning of that phrase that you used the unlettered defendants? A : We have agreed to that, sir. ATTY. OCAMPO:

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May I ask, Your Honor, that the witness please answer my question not to answer in the way he wanted it. COURT: Just answer the question, Mr. Tayag. WITNESS: Yes, Your Honor. ATTY. OCAMPO: Q : Did you explain to them? A : Yes, sir. Q : What did you tell them? A : I explain[ed] to them, sir, that the legal impediment then especially if the Lacsons will not agree to sell their shares to me or to us it would be hard to (sic) me to pay them in full. And those covered by DAR. I explain[ed] to them and it was clearly stated in the title that there is [a] prohibited period of time before you can sell the property. I explained every detail to them.41 It is only upon the occurrence of the foregoing conditions that the petitioner would be obliged to pay to the defendants-tenants the balance of the P50.00 per square meter under the deeds of assignment. Thus: 2. That in case the ASSIGNOR and LANDOWNER will mutually agree to sell the said lot to the ASSIGNEE, who is given an exclusive and absolute right to buy the lot, the ASSIGNOR shall receive the sum of FIFTY PESOS (P50.00) per square meter as consideration of the total area actually tilled and possessed by the ASSIGNOR, less whatever amount received by the ASSIGNOR including commissions, taxes and all allowable deductions relative to the sale of the subject properties. 3. That this exclusive and absolute right given to the ASSIGNEE shall be exercised only when no legal impediments exist to the lot to effect the smooth transfer of lawful ownership of the lot/property in the name of the ASSIGNEE; 4. That the ASSIGNOR will remain in peaceful possession over the said property and shall enjoy the fruits/earnings and/or harvest of the said lot until such time that full payment of the agreed purchase price had been made by the ASSIGNEE.42 There is no showing in the petitioners complaint that the respondents had agreed to sell their property, and that the legal impediments to the agreement no longer existed. The petitioner and the defendants-tenants had yet to submit the Deeds of Assignment to the Department of Agrarian Reform which, in turn, had to act on and approve or disapprove the same. In fact, as alleged by the petitioner in his complaint, he was yet to meet with the defendants-tenants to discuss the implementation of the deeds of assignment. Unless and until the Department of Agrarian Reform approved the said deeds, if at all, the petitioner had no right to enforce the same in a court of law by asking the trial court to fix a period within which to pay the balance of the purchase price and praying for injunctive relief. We do not agree with the contention of the petitioner that the deeds of assignment executed by the defendants-tenants are perfected option contracts.43 An option is a contract by which the owner of the property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time. It is a condition offered or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a certain time, or under, or in compliance with certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale. It imposes no binding obligation on the person holding the option, aside from the consideration for the offer. Until accepted, it is not, properly speaking, treated as a contract.44 The second party gets in praesenti, not lands, not an agreement that he shall have the lands, but the right to call for and receive lands if he elects.45 An option contract is a separate and distinct contract from which the parties may enter into upon the conjunction of the option.46 In this case, the defendants-tenants-subtenants, under the deeds of assignment, granted to the petitioner not only an option but the exclusive right to buy the landholding. But the grantors were merely the defendantstenants, and not the respondents, the registered owners of the property. Not being the registered owners of the property, the defendants-tenants could not legally grant to the petitioner the option, much less the "exclusive right" to buy the property. As the Latin saying goes, "NEMO DAT QUOD NON HABET."

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Fourth. The petitioner impleaded the respondents as parties-defendants solely on his allegation that the latter induced or are inducing the defendants-tenants to violate the deeds of assignment, contrary to the provisions of Article 1314 of the New Civil Code which reads: Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. In So Ping Bun v. Court of Appeals,47 we held that for the said law to apply, the pleader is burdened to prove the following: (1) the existence of a valid contract; (2) knowledge by the third person of the existence of the contract; and (3) interference by the third person in the contractual relation without legal justification. Where there was no malice in the interference of a contract, and the impulse behind ones conduct lies in a proper business interest rather than in wrongful motives, a party cannot be a malicious interferer. Where the alleged interferer is financially interested, and such interest motivates his conduct, it cannot be said that he is an officious or malicious intermeddler.48 In fine, one who is not a party to a contract and who interferes thereon is not necessarily an officious or malicious intermeddler. The only evidence adduced by the petitioner to prove his claim is the letter from the defendants-tenants informing him that they had decided to sell their rights and interests over the landholding to the respondents, instead of honoring their obligation under the deeds of assignment because, according to them, the petitioner harassed those tenants who did not want to execute deeds of assignment in his favor, and because the said defendants-tenants did not want to have any problem with the respondents who could cause their eviction for executing with the petitioner the deeds of assignment as the said deeds are in violation of P.D. No. 27 and Rep. Act No. 6657.49 The defendants-tenants did not allege therein that the respondents induced them to breach their contracts with the petitioner. The petitioner himself admitted when he testified that his claim that the respondents induced the defendants-assignees to violate contracts with him was based merely on what "he heard," thus: Q: Going to your last statement that the Lacsons induces (sic) the defendants, did you see that the Lacsons were inducing the defendants? A: I heard and sometime in [the] first week of August, sir, they went in the barrio (sic). As a matter of fact, that is the reason why they sent me letter that they will sell it to the Lacsons. Q: Incidentally, do you knew (sic) these Lacsons individually? A: No, sir, it was only Mr. Espinosa who I knew (sic) personally, the alleged negotiator and has the authority to sell the property.50 Even if the respondents received an offer from the defendants-tenants to assign and transfer their rights and interests on the landholding, the respondents cannot be enjoined from entertaining the said offer, or even negotiating with the defendants-tenants. The respondents could not even be expected to warn the defendantstenants for executing the said deeds in violation of P.D. No. 27 and Rep. Act No. 6657. Under Section 22 of the latter law, beneficiaries under P.D. No. 27 who have culpably sold, disposed of, or abandoned their land, are disqualified from becoming beneficiaries. From the pleadings of the petitioner, it is quite evident that his purpose in having the defendants-tenants execute the Deeds of Assignment in his favor was to acquire the landholding without any tenants thereon, in the event that the respondents agreed to sell the property to him. The petitioner knew that under Section 11 of Rep. Act No. 3844, if the respondents agreed to sell the property, the defendants-tenants shall have preferential right to buy the same under reasonable terms and conditions: SECTION 11. Lessees Right of Pre-emption. In case the agricultural lessor desires to sell the landholding, the agricultural lessee shall have the preferential right to buy the same under reasonable terms and conditions: Provided, That the entire landholding offered for sale must be pre-empted by the Land Authority if the landowner so desires, unless the majority of the lessees object to such acquisition: Provided, further, That where there are two or more agricultural lessees, each shall be entitled to said preferential right only to the extent of the area actually cultivated by him. 51 Under Section 12 of the law, if the property was sold to a third person without the knowledge of the tenants thereon, the latter shall have the right to redeem the same at a reasonable price and consideration. By assigning their rights and interests on the landholding under the deeds of assignment in favor of the petitioner, the defendants-tenants thereby waived, in favor of the petitioner, who is not a beneficiary under Section 22 of Rep. Act No. 6657, their rights of preemption or redemption under Rep. Act No. 3844. The defendants-tenants would then have to vacate the property in favor of the petitioner upon full payment of the purchase price. Instead of acquiring ownership of the portions of the landholding respectively tilled by them, the defendantstenants would again become landless for a measly sum of P50.00 per square meter. The petitioners scheme is subversive, not only of public policy, but also of the letter and spirit of the agrarian laws. That the scheme of the petitioner had yet to take effect in the future or ten years hence is not a justification. The respondents may well argue that the agrarian laws had been violated by the defendants-tenants and the petitioner by the mere execution of the deeds of assignment. In fact, the petitioner has implemented the deeds by paying the

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defendants-tenants amounts of money and even sought their immediate implementation by setting a meeting with the defendants-tenants. In fine, the petitioner would not wait for ten years to evict the defendants-tenants. For him, time is of the essence. The Appellate Court Erred In Permanently Enjoining The Regional Trial Court From Continuing with the Proceedings in Civil Case No. 10910. We agree with the petitioners contention that the appellate court erred when it permanently enjoined the RTC from continuing with the proceedings in Civil Case No. 10910. The only issue before the appellate court was whether or not the trial court committed a grave abuse of discretion amounting to excess or lack of jurisdiction in denying the respondents motion to deny or dismiss the petitioners plea for a writ of preliminary injunction. Not one of the parties prayed to permanently enjoin the trial court from further proceeding with Civil Case No. 10910 or to dismiss the complaint. It bears stressing that the petitioner may still amend his complaint, and the respondents and the defendants-tenants may file motions to dismiss the complaint. By permanently enjoining the trial court from proceeding with Civil Case No. 10910, the appellate court acted arbitrarily and effectively dismissed the complaint motu proprio, including the counterclaims of the respondents and that of the defendants-tenants. The defendants-tenants were even deprived of their right to prove their special and affirmative defenses. IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision of the Court of Appeals nullifying the February 13, 1996 and April 16, 1997 Orders of the RTC is AFFIRMED. The writ of injunction issued by the Court of Appeals permanently enjoining the RTC from further proceeding with Civil Case No. 10910 is hereby LIFTED and SET ASIDE. The Regional Trial Court of Mabalacat, Pampanga, Branch 44, is ORDERED to continue with the proceedings in Civil Case No. 10910 as provided for by the Rules of Court, as amended. SO ORDERED.

[G.R. No. L-7817. October 31, 1956.] ALFREDO M. VELAYO, in his capacity as Assignee of the insolvent COMMERCIAL AIR LINES, INC. (CALI), Plaintiff-Appellant, vs. SHELL COMPANY OF THE PHILIPPINE ISLANDS, LTD.,DefendantAppellee, YEK HUA TRADING CORPORATION, PAUL SYCIP and MABASA & CO., intervenors. DECISION FELIX, J.: Antecedents The Commercial Air Lines, Inc., which will be hereinafter referred to as CALI, is a corporation duly organized and existing in accordance with the Philippines laws, with offices in the City of Manila and previously engaged in air transportation business. The Shell Company of the P. I., Ltd., which will be designated as the Defendant, is on the other hand, a corporation organized under the laws of England and duly licensed to do business in the Philippines, with principal offices at the Hongkong and Shanghai Bank building in the City of Manila. Since the start of CALIs operations, its fuel needs were all supplied by the Defendant. Mr. Desmond Fitzgerald, its Credit Manager who extended credit to CALI, was in charge of the collection thereof. However, all matters referring to extensions of the term of payment had to be decided first by Mr. Stephen Crawford and later by Mr.

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Wildred Wooding, who represented in this country Defendants Board of Directors, the residence of which is in London, England (Exhs. 4-B and 4-A). As of August, 1948, the books of the Defendant showed a balance of P170,162.58 in its favor for goods it sold and delivered to CALI. Even before August 6, 1948, Defendant had reasons to believe that the financial condition of the CALI was for from being satisfactory. As a matter of fact, according to Mr. Fitzgerald, CALIs Douglas C-54 plane, then in California, was offered to him by Mr. Alfonso Sycip, CALIs President of the Board of Directors, in partial settlement of their accounts, which offer was, however, declined by Mr. Crawford, probably because upon inquiries made by Mr. Fitzgerald sometime before August 6, 1948, for the purpose of preparing the report for its London office regarding CALIs indebtedness, Col. Lambert, CALIs Vice President and General Manager, answered that the total outstanding liabilities of his corporation was only P550,000, and the management of Defendant probably assumed that the assets of the CALI could very well meet said liabilities and were not included to take charge of the sale of CALIs said Douglas C-54 plane to collect its credit. On August 6, 1948, the management of CALI informally convened its principal creditors (excepting only the insignificant small claims) who were invited to a luncheon that was held between 12:chanroblesvirtuallawlibrary00 and 2:chanroblesvirtuallawlibrary00 oclock in the afternoon of that day in the Trade and Commerce Building at 123 Juan Luna St., Manila, and informed them that CALI was in a state of insolvency and had to stop operation. The creditors present, or represented at the meeting, were:chanroblesvirtuallawlibrary Mr. A. L. Bartolini, representing Firestone Tire & Rubber Co.; chan roblesvirtualawlibraryMr. Quintin Yu, representing Commercial News; chan roblesvirtualawlibraryMr. Mark Pringle, representing Smith, Bell & Co. (Lloyds of London); chan roblesvirtualawlibraryMessrs. Vicente Liwag, C. Dominguez and Pacifico Agcaoili, representing National Airports Corporation; chan roblesvirtualawlibraryMessrs. W. J. Bunnel and Manuel Chan, representing Goodrich International Rubber Co.; chan roblesvirtualawlibraryMr. G. E. Adair, representing Goodyear Tire & Rubber Co.; chan roblesvirtualawlibraryMr. J. T. Chuidian, representing Gibbs, Gibbs, Chuidian & Quasha; chan roblesvirtualawlibraryMr. E. Valera, representing Mabasa & Co.; chan roblesvirtualawlibraryMr. D. Fitzgerald, representing Shell Co. P.I. Ltd.; chan roblesvirtualawlibraryand Mr. Alfonso Z. Sycip, representing himself, Yek Hua Trading Corporation and Paul Sycip (Exhs. NN, JJJ, MM, QQQ, II-4, SS, TT, UU, VV, WW, XX, YY, ZZ, AAA, BBB, CCC, DDD, EEE, FFF, GGG, and HHH). The persons present, including Mr. Desmond Fitzgerald, signed their names and the names of the companies they represented on a memorandum pad of the law firm Quisumbing, Sycip, and Quisumbing (Exhs. VV and VV1). In that meeting at noontime of August 6, 1948, out of the 194 creditors in all (Exh. OO) 15 were listed as principal creditors having big balances (Exh. NN), to wit:chanroblesvirtuallawlibrary 13th Air Force P12,880.00 Civil Aeronautics Administration 98,127.00 Gibbs, Giibs, Chuidian & Quasha 5,544.90 Goodrich Intl Rubber Co. 3,142.47 Goodyear Tire & Rubber Co. 1,727.50 Mabasa & Co. 4,867.72 Manila Intl Airport 55,280.04 Manila Intl Air Terminal (PAL) 36,163.68 Shell Co. of the Phil., Ltd. 152,641.68 Smith, Bell & Co., Ltd. 45,534.00 Paul Sycip 8,189.33 Mrs. Buenaventura 20,000.00 Firestone Tire & Rubber Co. 4,911.72 Alfonso Sycip 575,880.83 Yek Hua Trading Corp. 487,871.20 P1,512,762.87 What occurred in that meeting may be summarized as follows:chanroblesvirtuallawlibrary Mr. Alexander Sycip, Secretary of the Board of Directors of the CALI, informed the creditors present that this corporation was insolvent and had to stop operations. He explained the memorandum agreement executed by the CALI with the Philippine Air Lines, Inc., on August 4, 1948, regarding the proposed sale to the latter of the aviation equipments of the former (Exhs. MM and QQQ, par. 1 memo of meeting; chan roblesvirtualawlibraryExhs. III and PPP P. Agcaoilis memorandum dated August 7, 1948, to the General Manager of the National Airports Corp.). Mr. Alexander Sycip was assisted in the explanation by CPA Alfredo Velayo of Washington, Sycip & Company, Auditors of the CALI, who discussed the balance sheets and distributed copies thereof to the creditors present (Exhs. NN, NN-1 to 7; chan roblesvirtualawlibraryExh. JJ P. Agcaoilis copy of balance sheet p. 229- 230 t.s.n., Nov. 27, 1951, of the testimony of D. Fitzgerald). The said balance sheet made mention of a C-54 plane in the United States, the property now involved in this suit. He was likewise assisted in his explanation by Mr. Curtis L. Lambert, Vice President and General Manager of the CALI, who described in greater detail the assets of the CALI. There was a general understanding among all the creditors present on the

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desirability of consummating the sale in favor of the Philippine Air Lines Inc. (Exhs. MM and QQQ, par. 2 Memo of meeting; chan roblesvirtualawlibraryExhs. III and PPP, par. 5 P. Agcoailis memorandum dated August 7, 1948, to the General Manager of the National Airports Corp.; chan roblesvirtualawlibraryand pp. 299300 t.s.n., January 15, 1952, of the testimony of Desmond Fitzgerald). Then followed a discussion on the payment of claims of creditors and the preferences claimed for the accounts due to the employees, the Government and the National Airports Corporation. The representatives of the latter Messrs. Vicente H. Liwag, C. Dominguez and Pacifico V. Agcaoili, contended that their accounts were preferred. The other creditors disputed such contention of preference (Exhs. MM and QQQ, par. 3 0151 Memo of meeting;chan roblesvirtualawlibraryExhs. III and PPP, par. 3 P. Agcaoilis memorandum dated August 1, 1948, to the General Manager of the National Airports Corp.; chan roblesvirtualawlibraryand pp. 247-248 t.s.n., January 10, 1952, of the testimony of D. Fitzgerald). No understanding was reached on this point and it was then generally agreed that the matter of preference be further studied by a working committee to be formed (Exhs. MM, par. 3 Memo of meeting). The creditors present agreed to the formation of a working committee to continue the discussion of the payment of claims and preferences alleged by certain creditors, and it was further agreed that said working committee would supervise the preservation of the properties of the corporation while the creditors attempted to come to an understanding as to a fair distribution of the assets among them (Exhs. MM and QQQ, Memo of meeting). From the latter exhibit the following is copied:chanroblesvirtuallawlibrary 4. Certain specific matters such as the amount owing to the Philippine Air Lines, Inc., and the claims of Smith, Bell vs. Co., (representing Lloyds of London) that its claim should be offset against the payments which may be due to CALI from insurance claims were not taken up in detail. It was agreed that these matters together with the general question of what are preferred claims should be the subject of further discussions, but shall not interfere with the consummation of the sale in favor of PAL. 5. The creditors present agreed to the formation of the working committee to supervise the preservation of the properties of the corporation and agreed further that Mr. Fitzgerald shall represent the creditors as a whole in this committee. It was understood, however, that all questions relating to preference of claims can be decided only by the creditors assembled. 6. It was the sense of the persons present that, if possible, the insolvency court be avoided but that should the creditors not meet in agreement, then all the profits from the sale will be submitted to an insolvency court for proper division among the creditors. To this working committee, Mr. Desmond Fitzgerald, Credit Manager, of the Defendant, Atty. Agcaoili of the National Airports Corporation and Atty. Alexander Sycip (Exhs. III and PPP, par. 5 P. Agcaoilis memorandum dated August 7, 1948, to the General Manager of the National Airports (Corp.) were appointed. After the creditors present knew the balance sheet and heard the explanations of the officers of the CALI, it was their unanimous opinion that it would be advantageous not to present suits against this corporation but to strive for a fair pro-rata division of its assets (Exh. MM, par 6, Memo of meeting), although the management of the CALI announced that in case of non-agreement of the creditors on a pro-rata division of the assets, it would file insolvency proceedings (p. 70, t.s.n., October 22, 1951). Mr. Fitzgerald did not decline the nomination to form part of said working committee and on August 9, 1948, the 3 members thereof discussed methods of achieving the objectives of the committee as decided at the creditors meeting, which were to preserve the assets of the CALI and to study the way of making a fair division of all the assets among the creditors. Atty. Sycip made an offer to Mr. D. Fitzgerald to name a representative to oversee the preservation of the assets of the CALI, but Mr. Fitzgerald replied that the creditors could rely on Col. Lambert. Atty. Pacifico Agcaoili promised to refer the arguments adduced at the second meeting to the General Manager of the National Airports Corporations and to obtain the advice of the Corporate Counsel, so the negotiation with respect to the division of assets of the CALI among the creditors was left pending or under advice when on that very day of the meeting of the working committee, August 9, 1948, which Mr. Fitzgerald attended, Defendanteffected a telegraphic transfer of its credit against the CALI to the American corporation Shell Oil Company, Inc., assigning its credit, amounting to $79,440.00, which was subsequently followed by a deed of assignment of credit dated August 10, 1948, the credit amounting this time to the sum of $85,081.29 (Exh. I). On August 12, 1948, the American corporation Shell Oil Company, Inc., filed a complaint against the CALI in the Superior Court of the State of California, U.S.A. in and for the County of San Bernardino, for the collection of an assigned credit of $79,440.00 Case No. 62576 of said Court (Exhs. A, E, F, G, H, V, and Z) and a writ of attachment was applied for and issued on the same date against a C-54 plane (Exhs. B, C, D, Y, W, X, and X-1). On September 17, 1948, an amended complaint was filed to recover an assigned credit of $85,081.29 (Exhs. I, K, L, M, Q, R, S, T, U, DD) and a supplemental attachment for a higher sum was applied for and issued against the C-54 plane, plus miscellaneous personal properties held by Pacific Overseas Air Lines for the CALI (Exhs. N, O, P, AA, BB, BB-1 and CC) and on January 5, 1949, a judgment by default was entered by the American court (Exhs. J, EE, FF, GG, and HH). Unaware of Defendants assignments of credit and attachment suit, the stockholders of CALI resolved in a special meeting of August 12, 1948, to approve the memorandum agreement of sale to the Philippine Air Lines, Inc, and noted that the Board had been trying to reach an agreement with the creditors of the corporation to prevent insolvency proceedings, but so far no definite agreement had been reached (Exh. OO Minutes of August 12, 1948, stockholders meeting). By the first week of September, 1948, the National Airports Corporation learned ofDefendants action in the United States and hastened to file its own complaint with attachment against the CALI in the Court of First Instance of Manila (Exhs. KKK, LLL, and MMM). The CALI, also prompted by Defendants action in getting the alleged undue preference over the other creditors by attaching the C-54 plane in the United States, beyond the

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jurisdiction of the Philippines, filed on October 7, 1948, a petition for voluntary insolvency. On this date, an order of insolvency was issued by the court (Exh. JJ) which necessarily stayed the National Airports Corporations action against the CALI and dissolved its attachment (Exh. NNN), thus compelling the National Airports Corporation to file its claims with the insolvency court (Exh. SS). By order of October 28, 1948, the Court confirmed the appointment of Mr. Alfredo M. Velayo, who was unanimously elected by the creditors as Assignee in the proceedings, and ordered him to qualify as such by taking the oath of office within 5 days from notice and filing a bond in the sum of P30,000.00 to be approved by the Court conditioned upon the faithful performance of his duties, and providing further that all funds that the Assignee may collect or receive from the debtors of the corporation, or from any other source or sources, be deposited in a local bank (Exh. KK). On November 3, 1948, the clerk of court executed a deed of conveyance in favor of the Assignee (Alfredo M. Velayo) over all the assets of the CALI (Exh. LL). The Case. After properly qualifying as Assignee, Alfredo M. Velayo instituted this case (No. 6966 of the Court of First Instance of Manila) on December 17, 1948, against the Shell Company of P. I., Ltd., for the purpose of securing from the Court a writ of injunction restraining Defendant, its agents, servants, attorneys and solicitors from prosecuting in and for the County of San Bernardino in the Superior Court of the State of California, U.S.A. the aforementioned Civil Case No. 62576 against the insolvent Commercial Air Lines, Inc., begun by it in the name of the American corporation Shell Oil Company, Inc., and as an alternative remedy, in case the purported assignment of Defendants alleged credit to the American corporation Shell Oil Company, Inc., and the attachment issued against CALI in the said Superior Court of California shall have the effect of defeating the procurement by Plaintiff as Assignee in insolvency of the above- mentioned airplane, which is the property of the insolvent CALI, situated in the Ontario International Airport, with in the County of San Bernardino, State of California, U.S.A., that judgment for damages in double the value of the airplane be awarded in favor of Plaintiff against Defendant, with costs. The complaint further prays that upon the filing of a bond executed to the Defendant in an amount to be fixed by the Court, to the effect that Plaintiff will pay to Defendant all damages the latter may sustain by reason of the injunction if the Court should finally decide that thePlaintiff was not entitled thereto, the Court issued a writ of preliminary injunction enjoining the Defendant, its agent, servants, attorneys and solicitor, from prosecuting the aforementioned case No. 62576, the same writ of preliminary injunction to issue without notice to the Defendant it appearing by verified complaint that the great irreparable injury will result to the PlaintiffAppellant before the matter could be on notice. The Plaintiff also prays for such other remedies that the Court may deem proper in the premises. On December 20, 1948, the Defendant filed an opposition to the Plaintiffs petition for the issuance of a writ of the preliminary injunction, and on December 22, 1948, the Court denied the same because whether the conveyance of Defendants credit was fraudulent or not, the Philippine court would not be in position to enforce its orders as against the American corporation Shell Oil Company, Inc., which is outside of the jurisdiction of the Philippines. Plaintiff having failed to restrain the progress of the attachment suit in the United States by denial of his application for a writ of preliminary injunction and the consequences on execution of the C-54 plane in the County of San Bernardino, State of California, U. S. A., he confines his action to the recovery of damages against the Defendant. On December 28, 1948, Defendant filed its answer to the complaint, which was amended on February 3, 1949. In its answer, Defendant, besides denying certain averments of the complaint alleged, among other reasons, that the assignment of its credit in favor of the Shell Oil Company, Inc., in the United States was for a valuable consideration and made in accordance with the established commercial practices, there being no law prohibiting a creditor from assigning his credit to another; chan roblesvirtualawlibrarythat it had no interest whatsoever in Civil Case No. 62576 instituted in the Superior Court in the State of California by the Shell Oil Company, Inc., which is a separate and distinct corporation organized and existing in the State of Virginia and doing business in the State of California, U. S. A., the Defendant having as its stockholders the Shell Petroleum Company of London and other persons residing in that City, while the Shell Oil Company Inc., of the United State has its principal stockholders the Shell Union Oil Company of the U.S. and presumably countless American investors inasmuch as its shares of stock are being traded daily in the New York stock market; chan roblesvirtualawlibrarythat Mr. Fitzgerald,Defendants Credit Manager, was merely invited to a luncheonmeeting at the Trade and Commerce Building in the City of Manila on August 6, 1948, without knowing the purpose for which it was called; chan roblesvirtualawlibraryand that Mr. Fitzgerald could not have officially represented theDefendant at that time because such authority resides on Mr. Stephen Crawfurd. Defendant, therefore, prays that the complaint be dismissed with costs against the Plaintiff. Then Alfonso Sycip, Yek Hua Trading Corporation and Paul Sycip, as well as Mabasa & Co., filed, with permission of the Court, their respective complaints in intervention taking the side of the Plaintiff. These complaints in intervention were timely answered by Defendantwhich prayed that they be dismissed. After proper proceedings and hearing, the Court rendered decision on February 26, 1954, dismissing the complaint as well as the complaints in intervention, with costs against thePlaintiff. In view of this outcome, Plaintiff comes to us praying that the judgment of the lower court be reversed and that the Defendant be ordered to pay him damages in the sum of P660,000 (being double the value of the airplane as established by evidence, i.e., P330,000), with costs, and for such other remedy as the Court may deem just and equitable in the premises. The Issues. Either admission of the parties, or by preponderance of evidence, or by sheer weight of the circumstance attending the transactions herein involved, We find that the facts narrated in the preceding statement of the antecedents have been sufficiently established, and the questions at issue submitted to our determination in this instance may be boiled down to the following propositions:chanroblesvirtuallawlibrary

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(1) Whether or not under the facts of the case, the Defendant Shell Company of the P. I., Ltd., taking advantage of its knowledge of the existence of CALIs airplane C-54 at the Ontario International Airport within the Country of San Bernardino, State of California, U. S. A., (Which knowledge it acquired:chanroblesvirtuallawlibrary first at the informal luncheon-meeting of the principal creditors of CALI on August 5, 1948, where its Credit Manager, Mr. Desmond Fitzgerald, was selected to form part of the Working Committee to supervise the preservation of CALIs properties and to study the way of making a fair division of all the assets among the creditors and thus avoid the institution of insolvency proceedings in court; chan roblesvirtualawlibraryand Subsequently, at the meeting of August 9, 1948, when said Mr. Fitzgerald met the other members of the said Working Committee and heard and discussed the contention of certain creditors of CALI on the accounts due the employees, the Government and the National Airports Corporation who alleged that their claims were preferred), acted in bad faith and betrayed the confidence and trust of the other creditors of CALI present in said meeting by affecting a hasty telegraphic transfer of its credit to the American corporation Shell Oil Company, Inc., for the sum of $79,440 which was subsequently followed by a deed of assignment of credit dated August 10, 1948, amounting this time to the sum of $85,081.28 (Exhs. Z), thus defeating the purpose of the informal meetings of CALIs principal creditors end depriving the Plaintiff, as its Assignee, of the means of obtaining said C-54 plane, or the value thereof, to the detriment and prejudice of the other CALIs creditors who were consequently deprived of their share in the distribution of said value; chan roblesvirtualawlibraryand (2) Whether or not by reason of said betrayal of confidence and trust, Defendant may be made under the law to answer for the damages prayed by the Plaintiff; chan roblesvirtualawlibraryand if so, what should be the amount of such damages. DISCUSSION OF THE CONTROVERSY I. The mere enunciation of the first proposition can lead to no other conclusion than thatDefendant, upon learning the precarious economic situation of CALI and that with all probability, it could not get much of its outstanding credit because of the preferred claims of certain other creditors, forgot that Man does not live by bread alone and entirely disregarded all moral inhibitory tenets. So, on the very day its Credit Manager attended the meeting of the Working Committee on August 9, 1948, it hastily made a telegraphic assignment of its credit against the CALI to its sister American Corporation, the Shell Oil Company, Inc., and by what is stated in the preceding pages hereof, We know that were the damaging effects of said assignment upon the right of other creditors of the CALI to participate in the proceeds of said CALIs plane C-54. Defendants endeavor to extricate itself from any liability caused by such evident misdeed of its part, alleging that Mr. Fitzgerald had no authority from his principal to commit the latter on any agreement; chan roblesvirtualawlibrarythat the assignment of its credit in favor of its sister corporation, Shell Oil Company, Inc., was for a valuable consideration and in accordance with the established commercial practices; chan roblesvirtualawlibrarythat there is no law prohibiting a creditor from assigning his credit to another; chan roblesvirtualawlibraryand that the Shell Oil Company Inc., of the United States is a corporation different and independent from the Defendant. But all these defenses are entirely immaterial and have no bearing on the main question at issue in this appeal. Moreover, we might say that Defendant could not have accomplished the transfer of its credit to its sister corporation if all the Shell companies throughout the world would not have a sort of union, relation or understanding among themselves to come to the aid of each other. The telegraphic transfer made without knowledge and at the back of the other creditors of CALI may be a shrewd and surprise move that enabled Defendant to collect almost all if not the entire amount of its credit, but the Court of Justice cannot countenance such attitude at all, and much less from a foreign corporation to the detriment of our Government and local business. To justify its actions, Defendant may also claim that Mr. Fitzgerald, based on his feeling of distrust and apprehension, entertained the conviction that intervenors Alfonso Sycip and Yek Hua Trading Corporation tried to take undue advantage by infiltrating their credits. But even assuming for the sake of argument, that these intervenors really resorted to such strategem or fraudulent device, yet Defendants act finds not justification for no misdeed on the part of a person is cured by any misdeed of another, and it is to be noted that neither Alfonso Z. Sycip, nor Yek Hua Trading Corporation were the only creditors of CALI, nor even preferred ones, and that the infiltration of ones credit is of no sequence if it cannot be proven in the insolvency proceedings to the satisfaction of the court. Under the circumstances of the case,Defendants transfer of its aforementioned credit would have been justified only if Mr. Fitzgerald had declined to take part in the Working Committee and frankly and honestly informed the other creditors present that he had no authority to bind his principal and that the latter was to be left free to collect its credit from CALI by whatever means his principal deemed wise and were available to it. But then such information would have immediately dissolved all attempts to come to an amicable conciliation among the creditors and would have precipitated the filing in court of CALIs voluntary insolvency proceedings and nulified the intended transfer of Defendants credit to its above-mentioned sister corporation. II. We may agree with the trial judge, that the assignment of Defendants credit for a valuable consideration is not violative of the provisions of sections 32 and 70 of the Insolvency Law (Public Act No. 1956), because the assignment was made since August 9, 1948, the original complaint in the United States was filed on August 12, 1948, and the writ of attachment issued on this same date, while CALI filed its petition for insolvency on October 7, 1948. At his Honor correctly states, said Sections 32 and 70 only contemplate acts and transactions occuring within 30 days prior to the commencement of the proceedings in insolvency and, consequently, all other acts outside of the 30-day period cannot possibly be considered as coming within the orbit of the operation. In addition to this, We may add that Article 70 of the Insolvency Law refers to acts of the debtor (in this case the insolvent CALI) and not of the creditor, the Shell Company of the P. I. Ltd. But section 70 does not

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constitute the only provisions of the law pertinent to the matter. The Insolvency Law also provides the following:chanroblesvirtuallawlibrary SEC. 33. The assignee shall have the right to recover all the estate, debt and effects of said insolvent. If at the time of the commencement of the proceedings in insolvency, an action is pending in the name of the debtor, for the recovery of a debt or other thing might or ought to pass to the assignee by the assignment, the assignee shall be allowed to prosecute the action, in like manner and with life effect as if it had been originally commenced by him. If there are any rights of action in favor of the insolvency for damages, on any account, for which an action is not pending the assignee shall have the right to prosecute the same with effect as the insolvent might have done himself if no proceedings in insolvency had been instituted cralaw . It must not be forgotten that in accordance with the spirit of the Insolvency Law and with the provisions of Chapter V thereof which deal with the powers and duties of a receiver, the assignee represents the insolvent as well as the creditors in voluntary and involuntary proceedings Intestate of Mariano G. Veloso, etc. vs. Vda. de Veloso S. C. G. R. No. 42454;chan roblesvirtualawlibraryHunter, Kerr & Co. vs. Samuel Murray, 48 Phil. 449; chan roblesvirtualawlibraryChartered Bank vs. Imperial, 48 Phil. 931; chan roblesvirtualawlibraryAsia Banking Corporation vs. Herridge, 45 Phil. 527 (II Tolentinos Commercial Laws of the Philippines, 633). See also Section 36 of the Insolvency Law.From the foregoing, We see that Plaintiff, as Assignee of the Insolvent CALI, had personality and authority to institute this case for damages, and the only question that remains determination is whether the payment of damages sought to be recovered from Defendant may be ordered under the Law and the evidence of record. IF ANY PERSON, before the assignment is made, having notice of the commencement of the proceedings in insolvency, or having reason to believe that insolvency proceedings are about to be commenced, embezzles or disposes of any money, goods, chattels, or effects of the insolvent, he is chargeable therewith, and liable to an action by the assignee for double the value of the property sought to be embezzled or disposed of, to be received for the benefit of the insolvent estate. The writer of this decision does not entertain any doubt that the Defendant taking advantage of his knowledge that insolvency proceedings were to be instituted by CALI if the creditors did not come to an understanding as to the manner of distribution of the insolvent asset among them, and believing it most probable that they would not arrive at such understanding as it was really the case schemed and effected the transfer of its sister corporation in the United States, where CALIs plane C-54 was by that swift and unsuspected operation efficaciously disposed of said insolvents property depriving the latter and the Assignee that was latter appointed, of the opportunity to recover said plane. In addition to the aforementioned Section 37, Chapter 2 of the PRELIMINARY TITLE of the Civil Code, dealing on Human Relations, provides the following:chanroblesvirtuallawlibrary Art 19. Any person must, in the exercise of his rights and in the performances of his duties, act with justice, give everyone his due and observe honesty and good faith. It maybe said that this article only contains a mere declarations of principles and while such statement may be is essentially correct, yet We find that such declaration is implemented by Article 21 and sequence of the same Chapter which prescribe the following:chanroblesvirtuallawlibrary 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. The Code Commission commenting on this article, says the following:chanroblesvirtuallawlibrary Thus at one stroke, the legislator, if the forgoing rule is approved (as it was approved), would vouchsafe adequate legal remedy for that untold numbers of moral wrongs which is impossible for human foresight to provide for specifically in the statutes. But, it may be asked, would this proposed article obliterate the boundary line between morality and law? The answer is that, in the last analysis, every good law draws its breath of life from morals, from those principles which are written with words of fire in the conscience of man. If this premises is admitted, then the proposed rule is a prudent earnest of justice in the face of the impossibility of enumerating, one by one, all wrongs which cause damages. When it is reflected that while codes of law and statutes have changed from age to age, the conscience of man has remained fixed to its ancient moorings, one cannot but feel that it is safe and salutary to transmute, as far as may be, moral norms into legal rules, thus imparting to every legal system that enduring quality which ought to be one of its superlative attributes. Furthermore, there is no belief of more baneful consequence upon the social order than that a person may with impunity cause damage to his fellow-men so long as he does not break any law of the State, though he may be defying the most sacred postulates of morality. What is more, the victim loses faith in the ability of the government to afford him protection or relief. A provision similar to the one under consideration is embodied in article 826 of the German Civil Code. The same observations may be made concerning injurious acts that are contrary to public policy but are not forbidden by statute. There are countless acts of such character, but have not been foreseen by the lawmakers. Among these are many business practices that are unfair or oppressive, and certain acts of landholders and employers affecting their tenants and employees which contravene the public policy of social justice. Another rule is expressed in Article 24 which compels the return of a thing acquired without just or legal grounds. This provision embodies the doctrine that no person should unjustly enrich himself at the expense of another, which has been one of the mainstays of every legal system for centuries. It is most needful that this ancient principles be clearly and specifically consecrated in the proposed Civil Code to the end that in cases not foreseen by the lawmaker, no one may unjustly benefit himself to the prejudice of another. The German Civil

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Code has a similar provision (art. 812). (Report of the Code Commission on the Proposed Civil Code of the Philippines, p. 40- 41). From the Civil Code Annotated by Ambrosio Padilla, Vol. I, p. 51, 1956 edition, We also copy the following:chanroblesvirtuallawlibrary A moral wrong or injury, even if it does not constitute a violation of a statute law, should be compensated by damages. Moral damages (Art. 2217) may be recovered (Art. 2219). In Article 20, the liability for damages arises from a willful or negligent act contrary to law. In this article, the act is contrary to morals, good customs or public policy. Now, if Article 23 of the Civil Code goes as far as to provide that:chanroblesvirtuallawlibrary Even if an act or event causing damage to anothers property was not due to the fault or negligence of the Defendant, the latter shall be liable for indemnity if through the act or event he was benefited. with mere much more reason the Defendant should be liable for indemnity for acts it committed in bad faith and with betrayal of confidence. It may be argued that the aforequoted provisions of the Civil Code only came into effect on August 30, 1950, and that they cannot be applicable to acts that took place in 1948, prior to its effectivity. But Article 2252 of the Civil Code, though providing that:chanroblesvirtuallawlibrary Changes made and new provisions and rules laid down by this Code which may be prejudice or impair vested or acquired rights in accordance with the old legislation, shall have no retroactive effect cralaw . implies that when the new provisions of the Code does nor prejudice or impair vested or acquired rights in accordance with the old legislation and it cannot be alleged that in the case at bar Defendant had any vested or acquired right to betray the confidence of the insolvent CALI or of its creditors said new provisions, like those on Human Relations, can be given retroactive effect. Moreover, Article 2253 of the Civil Code further provides:chanroblesvirtuallawlibrary cralaw But if a right should be declared for the first time in this Code, it shall be effective at once, even though the act or event which may give rise thereto may have been done or may have occurred under the prior legislation, provided said new right does not prejudice or impair any vested or acquired right, of the same origin. and according to Article 2254, no vested or acquired right can arise from acts or omissions which are against the law or which infringe upon the right of others. In case of Juan Castro vs. Acro Taxicab Company, (82 Phil., 359; chan roblesvirtualawlibrary47 Off. Gaz., [5] 2023), one of the question at issue was whether or not the provisions of the New Civil Code of the Philippines on moral damages should be applied to an act of negligence which occurred before the effectivity of said code, and this Court, through Mr. Justice Briones, sustaining the affirmative proposition and citing decisions of the Supreme Court of Spain of February 14, 1941, and November 14, 1934, as well as the comment of Mr. Castan, Chief Justice of the Supreme Court of Spain, about the revolutionary tendency of Spanish jurisprudence, said the following:chanroblesvirtuallawlibrary We conclude, therefore, reaffirming the doctrine laid down in the case of Lilius (59 J. F. 800) in the sense that indemnity lies for moral and patrimonial damages which include physical and pain sufferings. With this (doctrine), We effect in this jurisdiction a real symbiosis 1 of the Spanish and American Laws and, at the same time, We act in consonance with the spirit and progressive march of time (translation) The writer of this decision does not see any reason for not applying the provisions of Section 37 of the Insolvency Law to the case at bar, specially if We take into consideration that the term any person used therein cannot be limited to the officers or employee of the insolvent, as no such limitation exist in the wording of the section (See also Sec. 38 of the same Act), and that, as stated before, the Defendant schemed and affected the transfer of its credits (from which it could derive practically nothing) to its sister corporation in the United States where CALIs plane C-54 was then situated, succeeding by such swift and unsuspected operation in disposing of said insolvents property by removing it from the possession and ownership of the insolvent. However, some members of this Court entertain doubt as to the applicability of said section 37 because in their opinion what Defendant in reality disposed of was its own credit and not the insolvents property, although this was practically the effect and result of the scheme. Having in mind this objection and that the provisions of Article 37 making the person coming within its purview liable for double the value of the property sought to be disposed of constitute a sort of penal clause which shall be strictly construed, and considering further that the same result may be obtained, by applying only the provisions of the Civil Code, the writer of this decision yields to the objection aforementioned. Articles 2229, 2232, 2234, 2142, and 2143 of the Civil Code read as follows:chanroblesvirtuallawlibrary Art. 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. Art. 2232. In contracts quasi-contracts, the Court may award exemplary damages if theDefendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Art. 2234. While the amount of the exemplary damages need not be proved, the Plaintiffmust show that he is entitled to moral, temperate, or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded. In case liquidated damages should be upon, although no proof of loss is necessary in order that such liquidated damages be recovered, nevertheless, before the court may consider the question of granting exemplary in addition to the liquidated damages, the Plaintiff must show that

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he would be entitled to moral, temperate or compensatory damages were it not for the stipulation for liquidated damages. Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another. Art, 2143. The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts which may come within the purview of the preceding article. In accordance with these quoted provisions of the Civil Code, We hold Defendant liable to pay to the Plaintiff, for the benefit of the insolvent CALI and its creditors, as compensatory damages a sum equivalent to the value of the plane at the time aforementioned and another equal sum as exemplary damages. There is no clear proof in the record about the real value of CALIs plane C-54 at the time when Defendants credit was assigned to its sister corporation in the United States. Judgment Wherefore, and on the strength of the foregoing considerations, the decision appealed from is reversed and Defendant-Appellee-, Shell Company of the Philippine Islands, Ltd., is hereby sentenced to pay to PlaintiffAppellant, as Assignee of the insolvent CALI, damages in a sum double the amount of the value of the insolvents airplane C-54 at the time Defendants credit against the CALI was assigned to its sister corporation in the United States, which value shall be determined in the corresponding incident in the lower court after this decision becomes final. Costs are taxed against Defendant-Appellee. It is SO ORDERED. Paras, C.J., Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., and Endencia, concur. RESOLUTION July 30, 1957 FELIX, J.: Plaintiff-Appellant and intervenors on one hand and Defendant Shell Company of the Philippine Islands, Ltd., on the other, have filed their respective motions for reconsideration of Our decision rendered in this case. The motion of Plaintiff Appellant and the intervenors seeks the reconsideration of said decision in so far as it held that:chanroblesvirtuallawlibrary There is no clear proof in the record about the real value of CALIs plane C-54, at the time when Defendants credit was assigned to its sister corporation in the United States. and, upon such holding, it orders that the value of the C-54 plane be determined in the corresponding incident in the lower Court after this decision becomes final. The movants maintain that there is evidence sufficient to support a finding that CALIs C-54 plane had a fair market value of $165,000 at or about the time Defendant credit was assigned to its sister corporation in the United States and the plane attached. This motion was opposed by Defendant-Appellee which was replied by Plaintiff- Appellant with a supplemental motion for reconsideration, and then retorted with a manifestation and motion ofDefendant-Appellant followed by Defendants answer to Plaintiffs motion for reconsideration. After considering the evidence pointed out by said parties in support of their respective contentions, we are more convinced that the proofs relative to the real value of CALI plane C-54 at the time Defendants credit was assigned to its sister corporation in the United States, is not clear. Hence, Plaintiff-Appellants and intervenors motion for reconsideration is hereby overruled. The main grounds on which Defendant-Appellee bases its motion for reconsideration, as relied upon in its counsels memoranda and oral argument, may be reduced to the following:chanroblesvirtuallawlibrary (1) That the Defendant Appellee is not guilty of bad faith, it having done nothing but to protect legitimately its own interest or credit against the bad faith of its debtor, the insolvent CALI, under the control of the latters President Alfonso Sycip; (2) That Appellees transfer of its credit to its sister corporation in the United States, did not prejudice the Government, because its claims were fully paid, nor caused any loss or injury to other creditors, except the entities and groups controlled by Alfonso Z. Sycip; (3) That Appellee is not liable for exemplary damages because the provisions of the new Civil Code on the matter are not applicable to this case; (4) That the Plaintiff-Appellant has no cause of action against Defendant-Appellant and is not the real party in interest; chan roblesvirtualawlibraryand (5) That Plaintiffs right of action was based and prosecuted in the lower court under the provisions of the Insolvency Law and consequently that he is stopped from pursuing another theory and is not entitled to damages under the provisions of the New Civil Code. I. The facts on which this Court based its conclusion that Defendant corporation acted in bad faith are plainly and explicitly narrated in the decision. They are not and cannot be denied or contradicted by said Defendant. On the contrary they are in many respects admitted by theDefendant and no amount of reasoning can make Us change that conclusion.

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II. As pointed out by counsel for Plaintiff, Defendant choses to ignore that besides the claims of intervenors Alfonso Z. Sycip and Yek Hua Trading Corporation, which counsel for the Shell says to constitute 10/11 of the approved ordinary claims, there is still 1/11 of the other creditors whose claims have been also approved by the insolvency Court, in addition to the ordinary creditors whose claims are yet unapproved by the insolvency Court, amounting to P560,296,32, and no good reason suggests itself why these unapproved but pending claims should be taken into account in considering the prejudice caused all the creditors of the insolvent CALI. As long as these claims are pending, the contingency exist, that these creditors may recover from the insolvent estate and when they do, they will suffer to the diminution of CALIs asset resulting from the attachment of the plane by Appellee Shell. Answering Defendants contention that the transfer of its credit to its sister corporation in the United States did not prejudice the Government or the other creditors of CALI, counsel forPlaintiff-Appellant has the following to say:chanroblesvirtuallawlibrary So far as the claims of the Government are concerned, it is true that they were preferred claims and have all been paid. But this circumstance cannot erase the fact that the Appellees action jeopardised the Governments claims as well as the other claims. There was doubt as to the preferential character of the Governments claims. Indeed, the preferential character of one of the Governments claims necessitated a litigation to establish. Had it been held to be an ordinary claim, the Government would have suffered as other creditors. But that is neither here nor there; chan roblesvirtualawlibraryneither the character of the claim nor the identity of the claimant can possibly affect the application of a principle that no person may profit from his betrayal of a trust. And the Appellant continues thus:chanroblesvirtuallawlibrary Appellee had a credit of P170,000 against the insolvent CALI as of August 1948, which is assigned to its sister corporation in the United States for P120.000. Hence, Appellee recovered 70% of its credit and immediately upon making the assignment in 1948. More than this, the stated consideration was fixed by and and between two sister companies. The fact remains that Appellees sister company was enabled to get hold of a C-54 plane worth about P330,000. On the other hand, the ordinary creditors who filed their claims against the insolvent CALI had to wait until November 1956 to get their dividends and only at the rate of 30%, computed as follows:chanroblesvirtuallawlibrary Assets as of October 30, 1956 P668,605.15 Less:chanroblesvirtuallawlibrary Preferred claims still uncollected, assignee and attorneys fees and other reserves P138,719.56 Amount available for distribution P529,885.59 Divident:chanroblesvirtuallawlibrary Amount available for distribution P529,885.59 = 30% Total of all ordinary claims approved and unapproved P1,746,222.33 Had Appellee not assigned its credit in 1948, the insolvent CALI would have realized from the sale of the plane (which was attached by Appellee) P330,000 representing the fair market value of the plane at the time of the attachment. Therefore, if this amount of P330,000 is added to the distributable amount of P529,- 885.59, the share of each of the ordinary creditos would certainly amount to approximately 1 1/2 times the dividend each of them has received;chan roblesvirtualawlibraryin other words, each ordinary creditors would received not 30% but approximately 45% of his claim, and Appellee would recover approximately only 45% and not 70% of its credit. And even if the sale of CALIs plane would not have obtained the sum of P330,000.00, the proceeds thereof that might be diminished though affecting, no doubt, the calculated dividend of each of the ordinary creditors, estimated at 45% by reducing it proportionately, such diminution would at the same time increase the difference between the dividend paid CALIs ordinary creditors in November, 1956, and the dividend of 70% secured by DefendantShell in 1948. III and IV. That Appellee Shell is not liable for exemplary damages in this case and thatPlaintiff-Appellant has no cause of action against Defendant-Appellee, for he is not the real party in interest, are matters fully discussed in Our decision and We find no sensible reason for disturbing the conclusions We reached therein. V. As to the fifth question raised by counsel for Appellee in the course of his oral argument at the hearing in the City of Baguio of his motion, i.e., that Plaintiffs right of action was based and prosecuted in the lower court under the provisions of the Insolvency Law and he is, therefore, stopped from pursuing on appeal another theory under which he might be entitled to damages in consonance with the provisions of the new Civil Code, We may invoke the decision in the case of Dimaliwat vs. Asuncion, 59 Phil., 396, 401. In that decision We said the following:chanroblesvirtuallawlibrary

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Vicente Dimaliwat contends that Esperanza Dimaliwat has no right to claim the ownership of the property in question to the exclusion of the children of the third marriage, under the foregoing provisions of the Civil Code, because the case was not tried on that theory in the lower court. We find no merit in that contention. The decision cited are not in point. Articles 968 and 969 of the Civil Code are rules of substantive law, and if they are applicable to the facts of this case they must be given effect. The same thing can be said in the case at bar. Articles 19, 21, 2229, 2232, 2234, 2142 and 2143 of the new Civil Code are rules of substantive law, and if they are applicable to the facts of this case, which We hold they do, they must be made operative and given effect in this litigation. xxx xxx xxx It maybe seen from the foregoing that the above mentioned grounds on which the motion for reconsideration of the Defendant Shell stand, are not well taken. However, and despite this finding, We insist to delve in the question of whether the exemplary damages imposed in this Court upon Defendant Appellee, which the latters counsel contends to be inequitable and unfair, may be modified. It will be remembered that this case was looked into from the point of view of the provisions of Section 37 of the Insolvency Law, which reads as follows:chanroblesvirtuallawlibrary SEC. 37. IF ANY PERSON, before the assignment is made, having notice of the commencement of the proceedings in insolvency, or having reason to believe that insolvency proceedings are about to be commenced, embezzles or disposses of any of the money, goods, chattels, or effects of the insolvent, he is chargeable therewith, and liable to an action by the assignee for double the value of the property sought to be embezzled or disposed of, to be received for the benefit of the insolvent estate. The writer of the decision was then and still is of the opinion that the provisions of this section were applicable to the case, and accordingly, that Defendant Shell was liable in this action instituted by the Assignee for double the value of the property disposed of, to be received for the benefit of the Insolvent estate. However, some of the members of this Court, for the reasons already stated in the decision, entertained some doubt as to the applicability of said Section 37, and yielding to their objections the writer of the decision turned his eyes to the provisions of the new Civil Code, inasmuch as the same result could be achieved. In the case at bar, it cannot be denied that:chanroblesvirtuallawlibrary Defendant taking advantage of his knowledge that insolvency proceedings were to be instituted by CALI if the creditors did not come to an understanding as to the manner of distribution of the insolvent assets among them, and believing as most probable that they would not arrive at such understanding, as it was really the case- schemed and effected the transfer of its credit to its sister corporation in the United States where CALIs plane C-54 was and by this swift and unsuspected operation efficaciously disposed of said insolvents property depriving the latter and the Assignee that was later appointed, of the opportunity to recover said plane. These acts of Defendant Shell come squarely within the sanction prescribed by Congress by similar acts and no reflection can be reasonably cast on Us if in the measure of the exemplary damages that were to be imposed upon Defendant-Appellee, We were influenced by the provisions of Section 37 of the Insolvency Law. In this connection it is to be noted that, according to the Civil Code, exemplary or corrective damages are imposed by way of example or correction for the public good, in addition of the moral, temperate, liquidated or compensatory damages Art. 2229, and that the amount of the exemplary damages need not be proved (Art. 2234), for it is left to the sound discretion of the Court. Notwithstanding the foregoing, a majority of this Court was of the belief that the value of CALIs plane C-54, at the time when Defendants credit was assigned to its sister corporation in the United States, might result quite high, and that exemplary damages should not be left to speculation but properly determined by a certain and fixed amount. So they voted for the reconsideration of the decision with regard to the amount of exemplary damages which this Court fixed at P25,000.00. Because of this attitude of the Court, the dispositive part of our decision rendered in this case is hereby amended to read as follows:chanroblesvirtuallawlibrary Wherefore, and on the strength of the foregoing considerations, the decision appealed from is reversed and Defendant-Appellee, Shell Company of the Philippine Islands Ltd., is hereby sentenced to pay PlaintiffAppellant, as Assignee of the insolvent CALI, compensatory damages in a sum equal to the value of the insolvents airplane C-54 at the time Defendants credit against CALI was assigned to its sister corporation in the United States - which shall be determined in the corresponding incident in the lower Court after this decision becomes final - and exemplary damages in the sum of P25,000. Costs are taxed against DefendantAppellee. It is SO ORDERED.

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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.

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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).lwph1.t Two of these complaints were 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.

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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. L30205, 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

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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.

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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 absqueinjuria. 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).lwph1.t " [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. L18805, 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

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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 Zuluetacase, 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.

G.R. No. 88694 January 11, 1993 ALBENSON ENTERPRISES CORP., JESSE YAP, AND BENJAMIN MENDIONA, petitioners, vs. THE COURT OF APPEALS AND EUGENIO S. BALTAO, respondents. Puruganan, Chato, Chato & Tan for petitioners. Lino M. Patajo, Francisco Ma. Chanco, Ananiano Desierto and Segundo Mangohig for private respondent.

BIDIN, J.: This petition assails the decision of respondent Court of Appeals in CA-GR CV No. 14948 entitled "Eugenio S. Baltao, plaintiff-appellee vs. Albenson Enterprises Corporation, et al, defendants-appellants", which modified the judgment of the Regional Trial Court of Quezon City, Branch XCVIII

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in Civil Case No. Q-40920 and ordered petitioner to pay private respondent, among others, the sum of P500,000.00 as moral damages and attorney's fees in the amount of P50,000.00. The facts are not disputed. In September, October, and November 1980, petitioner Albenson Enterprises Corporation (Albenson for short) delivered to Guaranteed Industries, Inc. (Guaranteed for short) located at 3267 V. Mapa Street, Sta. Mesa, Manila, the mild steel plates which the latter ordered. As part payment thereof, Albenson was given Pacific Banking Corporation Check No. 136361 in the amount of P2,575.00 and drawn against the account of E.L. Woodworks (Rollo, p. 148). When presented for payment, the check was dishonored for the reason "Account Closed." Thereafter, petitioner Albenson, through counsel, traced the origin of the dishonored check. From the records of the Securities and Exchange Commission (SEC), Albenson discovered that the president of Guaranteed, the recipient of the unpaid mild steel plates, was one "Eugenio S. Baltao." Upon further inquiry, Albenson was informed by the Ministry of Trade and Industry that E.L. Woodworks, a single proprietorship business, was registered in the name of one "Eugenio Baltao". In addition, upon verification with the drawee bank, Pacific Banking Corporation, Albenson was advised that the signature appearing on the subject check belonged to one "Eugenio Baltao." After obtaining the foregoing information, Albenson, through counsel, made an extrajudicial demand upon private respondent Eugenio S. Baltao, president of Guaranteed, to replace and/or make good the dishonored check. Respondent Baltao, through counsel, denied that he issued the check, or that the signature appearing thereon is his. He further alleged that Guaranteed was a defunct entity and hence, could not have transacted business with Albenson. On February 14, 1983, Albenson filed with the Office of the Provincial Fiscal of Rizal a complaint against Eugenio S. Baltao for violation of Batas Pambansa Bilang 22. Submitted to support said charges was an affidavit of petitioner Benjamin Mendiona, an employee of Albenson. In said affidavit, the above-mentioned circumstances were stated. It appears, however, that private respondent has a namesake, his son Eugenio Baltao III, who manages a business establishment, E.L. Woodworks, on the ground floor of the Baltao Building, 3267 V. Mapa Street, Sta. Mesa, Manila, the very same business address of Guaranteed. On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an information against Eugenio S. Baltao for Violation of Batas Pambansa Bilang 22. In filing said information, Fiscal Sumaway claimed that he had given Eugenio S. Baltao opportunity to submit controverting evidence, but the latter failed to do so and therefore, was deemed to have waived his right. Respondent Baltao, claiming ignorance of the complaint against him, immediately filed with the Provincial Fiscal of Rizal a motion for reinvestigation, alleging that it was not true that he had been given an opportunity to be heard in the preliminary investigation conducted by Fiscal Sumaway, and that he never had any dealings with Albenson or Benjamin Mendiona, consequently, the check for which he has been accused of having issued without funds was not issued by him and the signature in said check was not his. On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal reversed the finding of Fiscal Sumaway and exonerated respondent Baltao. He also instructed the Trial Fiscal to move for dismissal of the information filed against Eugenio S. Baltao. Fiscal Castro found that the signature in PBC Check No. 136361 is not the signature of Eugenio S. Baltao. He also found that there is no showing in the records of the preliminary investigation that Eugenio S. Baltao actually received notice of the said investigation. Fiscal Castro then castigated Fiscal Sumaway for failing to exercise care and prudence in the performance of his duties, thereby causing injustice to respondent who was not properly notified of the complaint against him and of the requirement to submit his counter evidence. Because of the alleged unjust filing of a criminal case against him for allegedly issuing a check which bounced in violation of Batas Pambansa Bilang 22 for a measly amount of P2,575.00, respondent Baltao filed before the Regional Trial Court of Quezon City a complaint for damages against herein petitioners Albenson Enterprises, Jesse Yap, its owner, and Benjamin Mendiona, its employee. In its decision, the lower court observed that "the check is drawn against the account of "E.L. Woodworks," not of Guaranteed Industries of which plaintiff used to be President. Guaranteed Industries had been inactive and had ceased to exist as a corporation since 1975. . . . . The possibility is that it was with Gene Baltao or Eugenio Baltao III, a son of plaintiff who had a business on the ground floor of Baltao Building located on V. Mapa Street, that the defendants may have been dealing with . . . ." (Rollo, pp. 41-42). The dispositive portion of the trial court 's decision reads: WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants ordering the latter to pay plaintiff jointly and severally:

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1. actual or compensatory damages of P133,350.00; 2. moral damages of P1,000,000.00 (1 million pesos); 3. exemplary damages of P200,000.00; 4. attorney's fees of P100,000.00; 5 costs. Defendants' counterclaim against plaintiff and claim for damages against Mercantile Insurance Co. on the bond for the issuance of the writ of attachment at the instance of plaintiff are hereby dismissed for lack of merit. (Rollo, pp. 38-39). On appeal, respondent court modified the trial court's decision as follows: WHEREFORE, the decision appealed from is MODIFIED by reducing the moral damages awarded therein from P1,000,000.00 to P500,000.00 and the attorney's fees from P100,000.00 to P50,000.00, said decision being hereby affirmed in all its other aspects. With costs against appellants. (Rollo, pp. 50-51) Dissatisfied with the above ruling, petitioners Albenson Enterprises Corp., Jesse Yap, and Benjamin Mendiona filed the instant Petition, alleging that the appellate court erred in: 1. Concluding that private respondent's cause of action is not one based on malicious prosecution but one for abuse of rights under Article 21 of the Civil Code notwithstanding the fact that the basis of a civil action for malicious prosecution is Article 2219 in relation to Article 21 or Article 2176 of the Civil Code . . . . 2. Concluding that "hitting at and in effect maligning (private respondent) with an unjust criminal case was, without more, a plain case of abuse of rights by misdirection" and "was therefore, actionable by itself," and which "became inordinately blatant and grossly aggravated when . . . (private respondent) was deprived of his basic right to notice and a fair hearing in the so-called preliminary investigation . . . . " 3. Concluding that petitioner's "actuations in this case were coldly deliberate and calculated", no evidence having been adduced to support such a sweeping statement. 4. Holding the petitioner corporation, petitioner Yap and petitioner Mendiona jointly and severally liable without sufficient basis in law and in fact. 5. Awarding respondents 5.1. P133,350.00 as actual or compensatory damages, even in the absence of sufficient evidence to show that such was actually suffered. 5.2. P500,000.00 as moral damages considering that the evidence in this connection merely involved private respondent's alleged celebrated status as a businessman, there being no showing that the act complained of adversely affected private respondent's reputation or that it resulted to material loss. 5.3. P200,000.00 as exemplary damages despite the fact that petitioners were duly advised by counsel of their legal recourse. 5.4. P50,000.00 as attorney's fees, no evidence having been adduced to justify such an award (Rollo, pp. 4-6). Petitioners contend that the civil case filed in the lower court was one for malicious prosecution. Citing the case ofMadera vs. Lopez (102 SCRA 700 [1981]), they assert that the absence of malice on their part absolves them from any liability for malicious prosecution. Private respondent, on the other hand, anchored his complaint for Damages on Articles 19, 20, and 21 ** of the Civil Code. Article 19, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which may be observed not only in the exercise of 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 the 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. Although the

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requirements of each provision is different, these three (3) articles are all related to each other. As the eminent Civilist Senator Arturo Tolentino puts it: "With this article (Article 21), combined with articles 19 and 20, the scope of our law on civil wrongs has been very greatly broadened; it has become much more supple and adaptable than the Anglo-American law on torts. It is now difficult to conceive of any malevolent exercise of a right which could not be checked by the application of these articles" (Tolentino, 1 Civil Code of the Philippines 72). There is however, no hard and fast rule which can be applied to determine whether or not the principle of abuse of rights may be invoked. The question of whether or not the principle of abuse of rights has been violated, resulting in damages under Articles 20 and 21 or other applicable provision of law, depends on the circumstances of each case. (Globe Mackay Cable and Radio Corporation vs. Court of Appeals, 176 SCRA 778 [1989]). The elements of an abuse of right under Article 19 are the following: (1) There is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another. Article 20 speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction (Tolentino, supra, p. 71). Thus, anyone who, whether willfully or negligently, in the exercise of his legal right or duty, causes damage to another, shall indemnify his victim for injuries suffered thereby. 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; 3) and it is done with intent to injure. Thus, under any of these three (3) provisions of law, an act which causes injury to another may be made the basis for an award of damages. There is a common element under Articles 19 and 21, and that is, the act must be intentional. However, Article 20 does not distinguish: the act may be done either "willfully", or "negligently". The trial court as well as the respondent appellate court mistakenly lumped these three (3) articles together, and cited the same as the bases for the award of damages in the civil complaint filed against petitioners, thus: With the foregoing legal provisions (Articles 19, 20, and 21) in focus, there is not much difficulty in ascertaining the means by which appellants' first assigned error should be resolved, given the admitted fact that when there was an attempt to collect the amount of P2,575.00, the defendants were explicitly warned that plaintiff Eugenio S. Baltao is not the Eugenio Baltao defendants had been dealing with (supra, p. 5). When the defendants nevertheless insisted and persisted in filing a case a criminal case no less against plaintiff, said defendants ran afoul of the legal provisions (Articles 19, 20, and 21 of the Civil Code) cited by the lower court and heretofore quoted (supra). Defendants, not having been paid the amount of P2,575.00, certainly had the right to complain. But that right is limited by certain constraints. Beyond that limit is the area of excess, of abuse of rights. (Rollo, pp. 44-45). Assuming, arguendo, that all the three (3) articles, together and not independently of each one, could be validly made the bases for an award of damages based on the principle of "abuse of right", under the circumstances, We see no cogent reason for such an award of damages to be made in favor of private respondent. Certainly, petitioners could not be said to have violated the aforestated principle of abuse of right. What prompted petitioners to file the case for violation of Batas Pambansa Bilang 22 against private respondent was their failure to collect the amount of P2,575.00 due on a bounced check which they honestly believed was issued to them by private respondent. Petitioners had conducted inquiries regarding the origin of the check, and yielded the following results: from the records of the Securities and Exchange Commission, it was discovered that the President of Guaranteed (the recipient of the unpaid mild steel plates), was one "Eugenio S. Baltao"; an inquiry with the Ministry of Trade and Industry revealed that E.L. Woodworks, against whose account the check was drawn, was registered in the name of one "Eugenio Baltao"; verification with the drawee bank, the Pacific Banking Corporation, revealed that the signature appearing on the check belonged to one "Eugenio Baltao". In a letter dated December 16, 1983, counsel for petitioners wrote private respondent demanding that he make good the amount of the check. Counsel for private respondent wrote back and denied, among others, that private respondent ever transacted business with Albenson Enterprises Corporation; that he ever issued the check in question. Private respondent's counsel even went further: he made a warning to defendants to check the veracity of their claim. It is pivotal to note at this juncture that in this same letter, if indeed private respondent wanted to clear himself from the baseless accusation made against his person, he should have made mention of the fact that there are three (3) persons with the same name, i.e.: Eugenio Baltao, Sr., Eugenio S. Baltao, Jr. (private respondent), and Eugenio Baltao III (private respondent's son, who as it turned out later, was the issuer of the check). He, however, failed to do this. The last two Baltaos were doing business in the same building Baltao Building located at 3267 V. Mapa Street, Sta. Mesa, Manila. The mild steel plates were ordered in the name of Guaranteed of which respondent Eugenio S. Baltao is the president and delivered to Guaranteed at Baltao building. Thus, petitioners had every reason to believe that the Eugenio

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Baltao who issued the bouncing check is respondent Eugenio S. Baltao when their counsel wrote respondent to make good the amount of the check and upon refusal, filed the complaint for violation of BP Blg. 22. Private respondent, however, did nothing to clarify the case of mistaken identity at first hand. Instead, private respondent waited in ambush and thereafter pounced on the hapless petitioners at a time he thought was propitious by filing an action for damages. The Court will not countenance this devious scheme. The criminal complaint filed against private respondent after the latter refused to make good the amount of the bouncing check despite demand was a sincere attempt on the part of petitioners to find the best possible means by which they could collect the sum of money due them. A person who has not been paid an obligation owed to him will naturally seek ways to compel the debtor to pay him. It was normal for petitioners to find means to make the issuer of the check pay the amount thereof. In the absence of a wrongful act or omission or of fraud or bad faith, moral damages cannot be awarded and that the adverse result of an action does not per se make the action wrongful and subject the actor to the payment of damages, for the law could not have meant to impose a penalty on the right to litigate (Rubio vs. Court of Appeals, 141 SCRA 488 [1986]). In the case at bar, private respondent does not deny that the mild steel plates were ordered by and delivered to Guaranteed at Baltao building and as part payment thereof, the bouncing check was issued by one Eugenio Baltao. Neither had private respondent conveyed to petitioner that there are two Eugenio Baltaos conducting business in the same building he and his son Eugenio Baltao III. Considering that Guaranteed, which received the goods in payment of which the bouncing check was issued is owned by respondent, petitioner acted in good faith and probable cause in filing the complaint before the provincial fiscal. To constitute malicious prosecution, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person, and that it was initiated deliberately by the defendant knowing that his charges were false and groundless. Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution. (Manila Gas Corporation vs. Court of Appeals, 100 SCRA 602 [1980]). Still, private respondent argues that liability under Articles 19, 20, and 21 of the Civil Code is so encompassing that it likewise includes liability for damages for malicious prosecution under Article 2219 (8). True, a civil action for damages for malicious prosecution is allowed under the New Civil Code, more specifically Articles 19, 20, 26, 29, 32, 33, 35, and 2219 (8) thereof. In order that such a case can prosper, however, the following three (3) elements must be present, to wit: (1) The fact of the prosecution and the further fact that the defendant was himself the prosecutor, and that the action was finally terminated with an acquittal; (2) That in bringing the action, the prosecutor acted without probable cause; (3) The prosecutor was actuated or impelled by legal malice (Lao vs. Court of Appeals, 199 SCRA 58, [1991]). Thus, a party injured by the filing of a court case against him, even if he is later on absolved, may file a case for damages grounded either on the principle of abuse of rights, or on malicious prosecution. As earlier stated, a complaint for damages based on malicious prosecution will prosper only if the three (3) elements aforecited are shown to exist. In the case at bar, the second and third elements were not shown to exist. It is well-settled that one cannot be held liable for maliciously instituting a prosecution where one has acted with probable cause. "Probable cause is the existence of such facts and circumstances as would excite the belief, in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. In other words, a suit will lie only in cases where a legal prosecution has been carried on without probable cause. The reason for this rule is that it would be a very great discouragement to public justice, if prosecutors, who had tolerable ground of suspicion, were liable to be sued at law when their indictment miscarried" (Que vs. Intermediate Appellate Court, 169 SCRA 137 [1989]). The presence of probable cause signifies, as a legal consequence, the absence of malice. In the instant case, it is evident that petitioners were not motivated by malicious intent or by sinister design to unduly harass private respondent, but only by a well-founded anxiety to protect their rights when they filed the criminal complaint against private respondent. To constitute malicious prosecution, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person, that it was initiated deliberately by the defendant knowing that his charges were false and groundless. Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution. Proof and motive that the institution of the action was prompted by a sinister design to vex and humiliate a person must be clearly and preponderantly established to entitle the victims to damages (Ibid.). In the case at bar, there is no proof of a sinister design on the part of petitioners to vex or humiliate private respondent by instituting the criminal case against him. While petitioners may have been negligent to some extent in determining the liability of private respondent for the dishonored check, the same is not so gross or reckless as to amount to bad faith warranting an award of damages. The root of the controversy in this case is founded on a case of mistaken identity. It is possible that with a more assiduous investigation, petitioners would have eventually discovered that private respondent Eugenio S. Baltao is not the "Eugenio Baltao" responsible for the dishonored check. However, the record shows that petitioners did exert considerable effort in order to determine the liability of private respondent. Their investigation pointed to private respondent as the "Eugenio Baltao" who issued and signed the dishonored check as the president of the debtor-corporation Guaranteed Enterprises. Their error in proceeding against the

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wrong individual was obviously in the nature of an innocent mistake, and cannot be characterized as having been committed in bad faith. This error could have been discovered if respondent had submitted his counteraffidavit before investigating fiscal Sumaway and was immediately rectified by Provincial Fiscal Mauro Castro upon discovery thereof, i.e., during the reinvestigation resulting in the dismissal of the complaint. Furthermore, the adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages. The law could not have meant to impose a penalty on the right to litigate, such right is so precious that moral damages may not be charged on those who may even exercise it erroneously. And an adverse decision does not ipso facto justify the award of attorney's fees to the winning party (Garcia vs. Gonzales, 183 SCRA 72 [1990]). Thus, an award of damages and attorney's fees is unwarranted where the action was filed in good faith. If damage results from a person's exercising his legal rights, it is damnum absque injuria (Ilocos Norte Electric Company vs. Court of Appeals, 179 SCRA 5 [1989]). Coming now to the claim of private respondent for actual or compensatory damages, the records show that the same was based solely on his allegations without proof to substantiate the same. He did not present proof of the cost of the medical treatment which he claimed to have undergone as a result of the nervous breakdown he suffered, nor did he present proof of the actual loss to his business caused by the unjust litigation against him. In determining actual damages, the court cannot rely on speculation, conjectures or guesswork as to the amount. Without the actual proof of loss, the award of actual damages becomes erroneous (Guilatco vs. City of Dagupan, 171 SCRA 382 [1989]). Actual and compensatory damages are those recoverable because of pecuniary loss in business, trade, property, profession, job or occupation and the same must be proved, otherwise, if the proof is flimsy and unsubstantiated, no damages will be given (Rubio vs. Court of Appeals, 141 SCRA 488 [1986]). For these reasons, it was gravely erroneous for respondent court to have affirmed the award of actual damages in favor of private respondent in the absence of proof thereof. Where there is no evidence of the other party having acted in wanton, fraudulent or reckless, or oppressive manner, neither may exemplary damages be awarded (Dee Hua Liong Electrical Equipment Corporation vs. Reyes, 145 SCRA 488 [1986]). As to the award of attorney's fees, it is well-settled that the same is the exception rather than the general rule. Needless to say, the award of attorney's fees must be disallowed where the award of exemplary damages is eliminated (Article 2208, Civil Code; Agustin vs. Court of Appeals, 186 SCRA 375 [1990]). Moreover, in view of the fact that there was no malicious prosecution against private respondent, attorney's fees cannot be awarded him on that ground. In the final analysis, there is no proof or showing that petitioners acted maliciously or in bad faith in the filing of the case against private respondent. Consequently, in the absence of proof of fraud and bad faith committed by petitioners, they cannot be held liable for damages (Escritor, Jr. vs. Intermediate Appellate Court, 155 SCRA 577 [1987]). No damages can be awarded in the instant case, whether based on the principle of abuse of rights, or for malicious prosecution. The questioned judgment in the instant case attests to the propensity of trial judges to award damages without basis. Lower courts are hereby cautioned anew against awarding unconscionable sums as damages without bases therefor. WHEREFORE, the petition is GRANTED and the decision of the Court of Appeals in C.A. G.R. C.V. No. 14948 dated May 13, 1989, is hereby REVERSED and SET ASIDE. Costs against respondent Baltao. G.R. No. 140420 February 15, 2001

SERGIO AMONOY, petitioner, vs. Spouses JOSE GUTIERREZ and ANGELA FORNIDA, respondents. PANGANIBAN, J.: Damnum absque injuria. Under this principle, the legitimate exercise of a person's rights, even if it causes loss to another, does not automatically result in an actionable injury. The law does not prescribe a remedy for the loss. This principle does not, however, apply when there is an abuse of a person's right, or when the exercise of this right is suspended or extinguished pursuant to a court order. Indeed, in the availment of one's rights, one must act with justice, give their due, and observe honesty and good faith The Case Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the April 21, 1999 Decision1 of the Court of Appeals (CA) in CA-GR CV No. 41451, which set aside the judgment2 of the Regional Trial Court (RTC) of Tanay, Rizal. The RTC had earlier dismissed the Complaint for damages filed by herein respondents against petitioner. The dispositive portion of the challenged CA Decision reads as follows:

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"WHEREFORE, the appealed Decision is SET ASIDE, and in its stead judgment is rendered ordering the defendant-appellee Sergio Amonoy to pay the plaintiffs-appellants bruno and Bernadina Gutierrez as actual damages the sum of [t]wo [h]undred [f]ifty [t]housand [p]esos (P250,000.00)."3 Likewise assailed is the October 19, 1999 CA Resolution,4 which denied the Motion for Reconsideration. The Facts The appellate court narrated the factual antecedents of this case as follows: "This case had its roots in Special Proceedings No. 3103 of Branch I of the CFI of Pasig, Rizal, for the settlement of the estate of the deceased Julio Cantolos, involving six(6) parcels of land situated in Tanay Rizal. Amonoy was the counsel of therein Francisca Catolos, Agnes Catolos, Asuncion Pasamba and Alfonso Formida. On 12 January 1965, the Project of Partition submitted was approved and xxx two (2) of the said lots were adjudicated to Asuncion Pasamba and Alfonso Formilda. The Attorney's fees charged by Amonoy was P27,600.00 and on 20 January 1965 Asuncion Pasamba and Alfonso Formida executed a deed of real estate mortgage on the said two (2) lots adjudicated to them, in favor of Amonoy to secure the payment of his attorney's fees. But it was only on 6 August 1969 after the taxes had been paid, the claims settled and the properties adjudicated, that the estate was declared closed and terminated. "Asuncion Pasamba died on 24 February 1969 while Alfonso Fornilda passsed away on 2 July 1969. Among the heirs of the latter was his daughter, plaintiff-appellant Angela Gutierrez. "Because his Attorney's fess thus secured by the two lots were not paid, on 21 January 1970 Amonoy filed for their foreclosure in Civil Code4 No. 12726 entitled Sergio Amonoy vs. Heirs of Asuncion Pasamba and Heirs of Alfonso Fornilda before the CFI of Pasig, Rizal, and this was assigned to Branch VIII. The heirs opposed, contending that the attorney's fees charged [were] unconscionable and that the attorney's fees charged [were] unconscionable and that the agreed sum was only P11,695.92. But on 28 September 1972 judgment was rendered in favor of Amonoy requiring the heirs to pay within 90 days the P27,600.00 secured by the mortgage, P11,880.00 as value of the harvests, and P9,645.00 as another round of attorney's fees. Failing in that, the two (2) lots would be sold at public auction. "They failed to pay. On 6 February 1973, the said lots were foreclosed and on 23 March 1973 the auction sale was held where Amonoy was the highest bidder at P23,760.00. On 2 May 1973 his bid was judicially confirmed. A deficiency was claimed and to satisfy it another execution sale was conducted, and again the highest bidder was Amonoy at P12,137.50. "Included in those sold was the lot on which the Gutierrez spouses had their house. "More than a year after the Decision in Civil Code No. 12726 was rendered, the said decedent's heirs filed on 19 December 1973 before the CFI of Pasig, Rixal[,] Civil case No. 18731 entitled Maria Penano, et al vs. Sergio Amonoy, et al, a suit for the annulment thereof. The case was dismissed by the CFI on 7 November 1977, and this was affirmed by the Court of Appeals on 22 July 1981. "Thereafter, the CFI on 25 July 1985 issued a Writ of Possession and pursuant to which a notice to vacate was made on 26 August 1985. On Amonoy's motion of 24 April 1986, the Orders of 25 April 1986 and 6 May 1986 were issued for the demolition of structures in the said lots, including the house of the Gutierrez spouses. "On 27 September 1985 the petition entitled David Fornilda, et al vs Branch 164 RTC Ivth Pasig, Deputy Sheriff Joaquin Antonil and Atty. Sergio Amonoy, G.R. No. L-72306, was filed before the Supreme Court. Among the petitioners was the plaintiff-appellant Angela Gutierrez. On a twin musiyun (Mahigpit na Musiyon Para Papanagutin Kaugnay ng Paglalapastangan) with full titles as fanciful and elongated as their Petisyung(Petisyung Makapagsuri Taglay and Pagpigil ng Utos), a temporary restraining order was granted on 2 June 1986 enjoining the demolition of the petitioners' houses. "Then on 5 October 1988 a Decision was rendered in the said G.R. No. L-72306 disposing that: "WHEREFORE, Certiorari is granted; the Order of respondent Trial Court, dated 25 July 1985, granting a Writ of Possession, as well as its Orderd, dated 25 April 1986 and 16 May 1986, directing and authorizing respondent Sheriff to demolish the houses of petitioners Angela and Leocadia Fornilda are hereby ordered returned to petitioners unless some of them have been conveyed to innocent third persons."5 But by the time the Supreme Court promulgated the abovementioned Decision, respondents' house had already been destroyed, supposedly in accordance with a Writ of Demolition ordered by the lower court. Thus, a Complaint for damages in connection with the destruction of their house was filed by respondents against petitioner before the RTC on December 15, 1989.

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In its January 27, 1993 Decision, the RTC dismissed respondents' suit. On appeal, the CA set aside the lower court's ruling and ordered petitioner to pay respondents P250,000 as actual damages. Petitioner then filed a Motion for Reconsideration, which was also denied. The Issue In his Memorandum,7 petitioner submits this lone issue for our consideration: "Whether or not the Court of Appeals was correct was correct in deciding that the petition [was] liable to the respondents for damages."8 The Court's Ruling The Petition has no merit. Main Issue: Petitioner's Liability Well-settled is the maxim that damage resulting from the legitimate exercise of a person's rights is a loss without injury- damnum absque injuria - for which the law gives no remedy.9 In other words, one who merely exercises one's rights does no actionable injury and cannot be held liable for damages. Petitioner invokes this legal precept in arguing that he is not liable for the demolition of respondents' house. He maintains that he was merely acting in accordance with the Writ of Demolition ordered by the RTC. We reject this submission. Damnum absque injuria finds no application to this case. True, petitioner commenced the demolition of respondents' house on May 30, 1986 under the authority of a Writ of Demolition issued by the RTC. But the records show that a Temporary Restraining Order (TRO), enjoining the demolition of respondents' house, was issued by the Supreme Court on June 2, 1986. The CA also found, based on the Certificate of Service of the Supreme Court process server, that a copy of the TRO was served on petitioner himself on June 4, 1986. Petitioner, howeverm, did not heed the TRO of this Court. We agree with the CA that he unlawfully pursued the demolition of respondents' house well until the middle of 1987. This is clear from Respondent Angela Gutierrez's testimony. The appellate court quoted the following pertinent portion thereof:10 "Q. "A. On May 30, 1986, were they able to destroy your house? Not all, a certain portion only xxx "Q. "A. Was your house completely demolished? No, sir. xxx "Q. "A. "Q. "A. "Q. A. Until when[,] Mrs. Witness? Until 1987. About what month of 1987? Middle of the year. Can you tell the Honorable Court who completed the demolition? The men of Fiscal Amonoy."11 xxx xxx xxx xxx

The foregoing disproves the claim of petitioner that the demolition, which allegedly commenced only on May 30, 1986, was completed the following day. It likewise belies his allegation that the demolitions had already ceased when he received notice of the TRO. Although the acts of petitioner may have been legally justified at the outsset, their continuation after the issuance of the TRO amounted to an insidious abuse of his right. Indubitably, his actions were tainted with bad

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faith. Had he not insisted on completing the demolition, respondents would not have suffered the loss that engendered the suit before the RTC. Verily, his acts constituted not only an abuse of a right, but an invalid exercise of a right that had been suspended when he received thae TRO from this Court on June 4, 1986. By then he was no longer entitled to proceed with the demolition. A commentator on this topic explains: "The exercise of a right ends when the right disappears, and it disappears when it is abused, especially to the prejudice of others. The mask of a right without the spirit of justcie which gives it life, is repugnant to the modern concept of social law. It cannot be said that a person exercises a right when he unnecessarily prejudices another xxx. Over and above the specific precepts of postive law are the supreme norms of justice xxx; and he who violates them violates the law. For this reason it is not permissible to abuse our rights to prejudice others."12 Likewise, in Albenson Enterprises Corp. v. CA,13 the Court discussed the concept of abuse of rights as follows: "Artilce 19, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which may be observed not only in the exercise of 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; recognizes the primordial limitation on all rights: that in their exercise, the norms of human conduct set forth in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible xxx." Clearly then, the demolition of respondents' house by petitioner, despite his receipt of the TRO, was not only an abuse but also an unlawful exercise of such right. In insisting on his alleged right, he wantonly violated this Court's Order and wittingly caused the destruction of respondents; house.1wphi1.nt Obviously, petitioner cannot invoke damnum absque injuria, a principle premised on the valid exercise of a right.14Anything less or beyond such exercise will not give rise to the legal protection that the principle accords. And when damage or prejudice to another is occasioned thereby, liability cannot be obscured, much less abated. In the ultimate analysis, petitioner's liability is premised on the obligation to repair or to make whole the damage caused to another by reason of one's act or omission, whether done intentionally or negligently and whether or not punishable by law.15 WHEREFORE, the Petition is DENIED and the appealed Decision AFFIRMED. Costs against petitioner. SO ORDERED.

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G.R. No. 97336 February 19, 1993 GASHEM SHOOKAT BAKSH, petitioner, vs. HON. COURT OF APPEALS and MARILOU T. GONZALES, respondents. Public Attorney's Office for petitioner. Corleto R. Castro for private respondent.

DAVIDE, JR., J.: This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to review and set aside the Decision 1of the respondent Court of Appeals in CA-G.R. CV No. 24256 which affirmed in toto the 16 October 1939 Decision of Branch 38 (Lingayen) of the Regional Trial Court (RTC) of Pangasinan in Civil Case No. 16503. Presented is the issue of whether or not damages may be recovered for a breach of promise to marry on the basis of Article 21 of the Civil Code of the Philippines. The antecedents of this case are not complicated: On 27 October 1987, private respondent, without the assistance of counsel, filed with the aforesaid trial court a complaint 2 for damages against the petitioner for the alleged violation of their agreement to get married. She alleges in said complaint that: she is twenty-two (22) years old, single, Filipino and a pretty lass of good moral character and reputation duly respected in her community; petitioner, on the other hand, is an Iranian citizen residing at the Lozano Apartments, Guilig, Dagupan City, and is an exchange student taking a medical course at the Lyceum Northwestern Colleges in Dagupan City; before 20 August 1987, the latter courted and proposed to marry her; she accepted his love on the condition that they would get married; they therefore agreed to get married after the end of the school semester, which was in October of that year; petitioner then visited the private respondent's parents in Baaga, Bugallon, Pangasinan to secure their approval to the marriage; sometime in 20 August 1987, the petitioner forced her to live with him in the Lozano Apartments; she was a virgin before she began living with him; a week before the filing of the complaint, petitioner's attitude towards her started to change; he maltreated and threatened to kill her; as a result of such maltreatment, she sustained injuries; during a confrontation with a representative of the barangay captain of Guilig a day before the filing of the complaint, petitioner repudiated their marriage agreement and asked her not to live with him anymore and; the petitioner is already married to someone living in Bacolod City. Private respondent then prayed for judgment ordering the petitioner to pay her damages in the amount of not less than P45,000.00, reimbursement for actual expenses amounting to P600.00, attorney's fees and costs, and granting her such other relief and remedies as may be just and equitable. The complaint was docketed as Civil Case No. 16503. In his Answer with Counterclaim, 3 petitioner admitted only the personal circumstances of the parties as averred in the complaint and denied the rest of the allegations either for lack of knowledge or information sufficient to form a belief as to the truth thereof or because the true facts are those alleged as his Special and Affirmative Defenses. He thus claimed that he never proposed marriage to or agreed to be married with the private respondent; he neither sought the consent and approval of her parents nor forced her to live in his apartment; he did not maltreat her, but only told her to stop coming to his place because he discovered that she had deceived him by stealing his money and passport; and finally, no confrontation took place with a representative of the barangay captain. Insisting, in his Counterclaim, that the complaint is baseless and unfounded and that as a result thereof, he was unnecessarily dragged into court and compelled to incur expenses, and has suffered mental anxiety and a besmirched reputation, he prayed for an award of P5,000.00 for miscellaneous expenses and P25,000.00 as moral damages. After conducting a pre-trial on 25 January 1988, the trial court issued a Pre-Trial Order 4 embodying the stipulated facts which the parties had agreed upon, to wit: 1. That the plaintiff is single and resident (sic) of Baaga, Bugallon, Pangasinan, while the defendant is single, Iranian citizen and resident (sic) of Lozano Apartment, Guilig, Dagupan City since September 1, 1987 up to the present; 2. That the defendant is presently studying at Lyceum Northwestern, Dagupan City, College of Medicine, second year medicine proper;

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3. That the plaintiff is (sic) an employee at Mabuhay Luncheonette , Fernandez Avenue, Dagupan City since July, 1986 up to the present and a (sic) high school graduate; 4. That the parties happened to know each other when the manager of the Mabuhay Luncheonette, Johhny Rabino introduced the defendant to the plaintiff on August 3, 1986. After trial on the merits, the lower court, applying Article 21 of the Civil Code, rendered on 16 October 1989 a decision 5 favoring the private respondent. The petitioner was thus ordered to pay the latter damages and attorney's fees; the dispositive portion of the decision reads: IN THE LIGHT of the foregoing consideration, judgment is hereby rendered in favor of the plaintiff and against the defendant. 1. Condemning (sic) the defendant to pay the plaintiff the sum of twenty thousand (P20,000.00) pesos as moral damages. 2. Condemning further the defendant to play the plaintiff the sum of three thousand (P3,000.00) pesos as atty's fees and two thousand (P2,000.00) pesos at (sic) litigation expenses and to pay the costs. 3. All other claims are denied. 6 The decision is anchored on the trial court's findings and conclusions that (a) petitioner and private respondent were lovers, (b) private respondent is not a woman of loose morals or questionable virtue who readily submits to sexual advances, (c) petitioner, through machinations, deceit and false pretenses, promised to marry private respondent, d) because of his persuasive promise to marry her, she allowed herself to be deflowered by him, (e) by reason of that deceitful promise, private respondent and her parents in accordance with Filipino customs and traditions made some preparations for the wedding that was to be held at the end of October 1987 by looking for pigs and chickens, inviting friends and relatives and contracting sponsors, (f) petitioner did not fulfill his promise to marry her and (g) such acts of the petitioner, who is a foreigner and who has abused Philippine hospitality, have offended our sense of morality, good customs, culture and traditions. The trial court gave full credit to the private respondent's testimony because, inter alia, she would not have had the temerity and courage to come to court and expose her honor and reputation to public scrutiny and ridicule if her claim was false. 7 The above findings and conclusions were culled from the detailed summary of the evidence for the private respondent in the foregoing decision, digested by the respondent Court as follows: According to plaintiff, who claimed that she was a virgin at the time and that she never had a boyfriend before, defendant started courting her just a few days after they first met. He later proposed marriage to her several times and she accepted his love as well as his proposal of marriage on August 20, 1987, on which same day he went with her to her hometown of Baaga, Bugallon, Pangasinan, as he wanted to meet her parents and inform them of their relationship and their intention to get married. The photographs Exhs. "A" to "E" (and their submarkings) of defendant with members of plaintiff's family or with plaintiff, were taken that day. Also on that occasion, defendant told plaintiffs parents and brothers and sisters that he intended to marry her during the semestral break in October, 1987, and because plaintiff's parents thought he was good and trusted him, they agreed to his proposal for him to marry their daughter, and they likewise allowed him to stay in their house and sleep with plaintiff during the few days that they were in Bugallon. When plaintiff and defendant later returned to Dagupan City, they continued to live together in defendant's apartment. However, in the early days of October, 1987, defendant would tie plaintiff's hands and feet while he went to school, and he even gave her medicine at 4 o'clock in the morning that made her sleep the whole day and night until the following day. As a result of this live-in relationship, plaintiff became pregnant, but defendant gave her some medicine to abort the fetus. Still plaintiff continued to live with defendant and kept reminding him of his promise to marry her until he told her that he could not do so because he was already married to a girl in Bacolod City. That was the time plaintiff left defendant, went home to her parents, and thereafter consulted a lawyer who accompanied her to the barangay captain in Dagupan City. Plaintiff, her lawyer, her godmother, and a barangay tanod sent by the barangay captain went to talk to defendant to still convince him to marry plaintiff, but defendant insisted that he could not do so because he was already married to a girl in Bacolod City, although the truth, as stipulated by the parties at the pre-trial, is that defendant is still single. Plaintiff's father, a tricycle driver, also claimed that after defendant had informed them of his desire to marry Marilou, he already looked for sponsors for the wedding, started preparing for the reception by looking for pigs and chickens, and even already invited many relatives and friends to the forthcoming wedding. 8 Petitioner appealed the trial court's decision to the respondent Court of Appeals which docketed the case as CA-G.R. CV No. 24256. In his Brief, 9 he contended that the trial court erred (a) in not dismissing the case for

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lack of factual and legal basis and (b) in ordering him to pay moral damages, attorney's fees, litigation expenses and costs. On 18 February 1991, respondent Court promulgated the challenged decision 10 affirming in toto the trial court's ruling of 16 October 1989. In sustaining the trial court's findings of fact, respondent Court made the following analysis: First of all, plaintiff, then only 21 years old when she met defendant who was already 29 years old at the time, does not appear to be a girl of loose morals. It is uncontradicted that she was a virgin prior to her unfortunate experience with defendant and never had boyfriend. She is, as described by the lower court, a barrio lass "not used and accustomed to trend of modern urban life", and certainly would (sic) not have allowed "herself to be deflowered by the defendant if there was no persuasive promise made by the defendant to marry her." In fact, we agree with the lower court that plaintiff and defendant must have been sweethearts or so the plaintiff must have thought because of the deception of defendant, for otherwise, she would not have allowed herself to be photographed with defendant in public in so (sic) loving and tender poses as those depicted in the pictures Exhs. "D" and "E". We cannot believe, therefore, defendant's pretense that plaintiff was a nobody to him except a waitress at the restaurant where he usually ate. Defendant in fact admitted that he went to plaintiff's hometown of Baaga, Bugallon, Pangasinan, at least thrice; at (sic) the town fiesta on February 27, 1987 (p. 54, tsn May 18, 1988), at (sic) a beach party together with the manager and employees of the Mabuhay Luncheonette on March 3, 1987 (p. 50, tsn id.), and on April 1, 1987 when he allegedly talked to plaintiff's mother who told him to marry her daughter (pp. 5556, tsn id.). Would defendant have left Dagupan City where he was involved in the serious study of medicine to go to plaintiff's hometown in Baaga, Bugallon, unless there was (sic) some kind of special relationship between them? And this special relationship must indeed have led to defendant's insincere proposal of marriage to plaintiff, communicated not only to her but also to her parents, and (sic) Marites Rabino, the owner of the restaurant where plaintiff was working and where defendant first proposed marriage to her, also knew of this love affair and defendant's proposal of marriage to plaintiff, which she declared was the reason why plaintiff resigned from her job at the restaurant after she had accepted defendant's proposal (pp. 6-7, tsn March 7, 1988). Upon the other hand, appellant does not appear to be a man of good moral character and must think so low and have so little respect and regard for Filipino women that he openly admitted that when he studied in Bacolod City for several years where he finished his B.S. Biology before he came to Dagupan City to study medicine, he had a common-law wife in Bacolod City. In other words, he also lived with another woman in Bacolod City but did not marry that woman, just like what he did to plaintiff. It is not surprising, then, that he felt so little compunction or remorse in pretending to love and promising to marry plaintiff, a young, innocent, trustful country girl, in order to satisfy his lust on her. 11 and then concluded: In sum, we are strongly convinced and so hold that it was defendant-appellant's fraudulent and deceptive protestations of love for and promise to marry plaintiff that made her surrender her virtue and womanhood to him and to live with him on the honest and sincere belief that he would keep said promise, and it was likewise these (sic) fraud and deception on appellant's part that made plaintiff's parents agree to their daughter's living-in with him preparatory to their supposed marriage. And as these acts of appellant are palpably and undoubtedly against morals, good customs, and public policy, and are even gravely and deeply derogatory and insulting to our women, coming as they do from a foreigner who has been enjoying the hospitality of our people and taking advantage of the opportunity to study in one of our institutions of learning, defendantappellant should indeed be made, under Art. 21 of the Civil Code of the Philippines, to compensate for the moral damages and injury that he had caused plaintiff, as the lower court ordered him to do in its decision in this case. 12 Unfazed by his second defeat, petitioner filed the instant petition on 26 March 1991; he raises therein the single issue of whether or not Article 21 of the Civil Code applies to the case at bar. 13 It is petitioner's thesis that said Article 21 is not applicable because he had not committed any moral wrong or injury or violated any good custom or public policy; he has not professed love or proposed marriage to the private respondent; and he has never maltreated her. He criticizes the trial court for liberally invoking Filipino customs, traditions and culture, and ignoring the fact that since he is a foreigner, he is not conversant with such Filipino customs, traditions and culture. As an Iranian Moslem, he is not familiar with Catholic and Christian ways. He stresses that even if he had made a promise to marry, the subsequent failure to fulfill the same is excusable or tolerable because of his Moslem upbringing; he then alludes to the Muslim Code which purportedly allows a Muslim to take four (4) wives and concludes that on the basis thereof, the trial court erred in ruling that he does not posses good moral character. Moreover, his controversial "common law life" is now his legal wife as their marriage had been solemnized in civil ceremonies in the Iranian Embassy. As to his unlawful cohabitation with the private respondent, petitioner claims that even if responsibility could be pinned on him for the live-in relationship, the private respondent should also be faulted for consenting to an illicit

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arrangement. Finally, petitioner asseverates that even if it was to be assumed arguendo that he had professed his love to the private respondent and had also promised to marry her, such acts would not be actionable in view of the special circumstances of the case. The mere breach of promise is not actionable. 14 On 26 August 1991, after the private respondent had filed her Comment to the petition and the petitioner had filed his Reply thereto, this Court gave due course to the petition and required the parties to submit their respective Memoranda, which they subsequently complied with. As may be gleaned from the foregoing summation of the petitioner's arguments in support of his thesis, it is clear that questions of fact, which boil down to the issue of the credibility of witnesses, are also raised. It is the rule in this jurisdiction that appellate courts will not disturb the trial court's findings as to the credibility of witnesses, the latter court having heard the witnesses and having had the opportunity to observe closely their deportment and manner of testifying, unless the trial court had plainly overlooked facts of substance or value which, if considered, might affect the result of the case. 15 Petitioner has miserably failed to convince Us that both the appellate and trial courts had overlooked any fact of substance or values which could alter the result of the case. Equally settled is the rule that only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court. It is not the function of this Court to analyze or weigh all over again the evidence introduced by the parties before the lower court. There are, however, recognized exceptions to this rule. Thus, inMedina vs. Asistio, Jr., 16 this Court took the time, again, to enumerate these exceptions: xxx xxx xxx (1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures (Joaquin v. Navarro, 93 Phil. 257 [1953]); (2) When the inference made is manifestly mistaken, absurb or impossible (Luna v. Linatok, 74 Phil. 15 [1942]); (3) Where there is a grave abuse of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4) When the judgment is based on a misapprehension of facts (Cruz v. Sosing, L-4875, Nov. 27, 1953); (5) When the findings of fact are conflicting (Casica v. Villaseca, L-9590 Ap. 30, 1957; unrep.) (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellate and appellee (Evangelista v. Alto Surety and Insurance Co., 103 Phil. 401 [1958]); (7) The findings of the Court of Appeals are contrary to those of the trial court (Garcia v. Court of Appeals, 33 SCRA 622 [1970]; Sacay v. Sandiganbayan, 142 SCRA 593 [1986]); (8) When the findings of fact are conclusions without citation of specific evidence on which they are based (Ibid.,); (9) When the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the respondents (Ibid.,); and (10) The finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence on record (Salazar v. Gutierrez, 33 SCRA 242 [1970]). Petitioner has not endeavored to joint out to Us the existence of any of the above quoted exceptions in this case. Consequently, the factual findings of the trial and appellate courts must be respected. And now to the legal issue. The existing rule is that a breach of promise to marry per se is not an actionable wrong. 17 Congress deliberately eliminated from the draft of the New Civil Code the provisions that would have made it so. The reason therefor is set forth in the report of the Senate Committees on the Proposed Civil Code, from which We quote: The elimination of this chapter is proposed. That breach of promise to marry is not actionable has been definitely decided in the case of De Jesus vs. Syquia. 18 The history of breach of promise suits in the United States and in England has shown that no other action lends itself more readily to abuse by designing women and unscrupulous men. It is this experience which has led to the abolition of rights of action in the so-called Heart Balm suits in many of the American states. . . . 19 This notwithstanding, the said Code contains a provision, Article 21, which is designed to expand the concept of torts or quasi-delict in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to specifically enumerate and punish in the statute books. 20 As the Code Commission itself stated in its Report: But the Code Commission had gone farther than the sphere of wrongs defined or determined by positive law. Fully sensible that there are countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they have actually suffered material and moral injury, the Commission has deemed it necessary, in the interest of justice, to incorporate in the proposed Civil Code the following rule:

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Art. 23. 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. An example will illustrate the purview of the foregoing norm: "A" seduces the nineteen-year old daughter of "X". A promise of marriage either has not been made, or can not be proved. The girl becomes pregnant. Under the present laws, there is no crime, as the girl is above nineteen years of age. Neither can any civil action for breach of promise of marriage be filed. Therefore, though the grievous moral wrong has been committed, and though the girl and family have suffered incalculable moral damage, she and her parents cannot bring action for damages. But under the proposed article, she and her parents would have such a right of action. Thus at one stroke, the legislator, if the forgoing rule is approved, would 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. 21 Article 2176 of the Civil Code, which defines a quasi-delict thus: 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. is limited to negligent acts or omissions and excludes the notion of willfulness or intent. Quasi-delict, known in Spanish legal treatises as culpa aquiliana, is a civil law concept while torts is an AngloAmerican or common law concept. Torts is much broader than culpa aquiliana because it includes not only negligence, but international criminal acts as well such as assault and battery, false imprisonment and deceit. In the general scheme of the Philippine legal system envisioned by the Commission responsible for drafting the New Civil Code, intentional and malicious acts, with certain exceptions, are to be governed by the Revised Penal Code while negligent acts or omissions are to be covered by Article 2176 of the Civil Code. 22 In between these opposite spectrums are injurious acts which, in the absence of Article 21, would have been beyond redress. Thus, Article 21 fills that vacuum. It is even postulated that together with Articles 19 and 20 of the Civil Code, Article 21 has greatly broadened the scope of the law on civil wrongs; it has become much more supple and adaptable than the Anglo-American law on torts. 23 In the light of the above laudable purpose of Article 21, We are of the opinion, and so hold, that where a man's promise to marry is in fact the proximate cause of the acceptance of his love by a woman and his representation to fulfill that promise thereafter becomes the proximate cause of the giving of herself unto him in a sexual congress, proof that he had, in reality, no intention of marrying her and that the promise was only a subtle scheme or deceptive device to entice or inveigle her to accept him and to obtain her consent to the sexual act, could justify the award of damages pursuant to Article 21 not because of such promise to marry but because of the fraud and deceit behind it and the willful injury to her honor and reputation which followed thereafter. It is essential, however, that such injury should have been committed in a manner contrary to morals, good customs or public policy. In the instant case, respondent Court found that it was the petitioner's "fraudulent and deceptive protestations of love for and promise to marry plaintiff that made her surrender her virtue and womanhood to him and to live with him on the honest and sincere belief that he would keep said promise, and it was likewise these fraud and deception on appellant's part that made plaintiff's parents agree to their daughter's living-in with him preparatory to their supposed marriage." 24 In short, the private respondent surrendered her virginity, the cherished possession of every single Filipina, not because of lust but because of moral seduction the kind illustrated by the Code Commission in its example earlier adverted to. The petitioner could not be held liable for criminal seduction punished under either Article 337 or Article 338 of the Revised Penal Code because the private respondent was above eighteen (18) years of age at the time of the seduction. Prior decisions of this Court clearly suggest that Article 21 may be applied in a breach of promise to marry where the woman is a victim of moral seduction. Thus, in Hermosisima vs. Court of Appeals, 25 this Court denied recovery of damages to the woman because: . . . we find ourselves unable to say that petitioner is morally guilty of seduction, not only because he is approximately ten (10) years younger than the complainant who was around thirty-six (36) years of age, and as highly enlightened as a former high school teacher and a life insurance agent are supposed to be when she became intimate with petitioner, then a mere apprentice pilot, but, also, because the court of first instance found that, complainant "surrendered herself" to petitioner because, "overwhelmed by her love" for him, she "wanted to bind" him by having a fruit of their engagement even before they had the benefit of clergy. In Tanjanco vs. Court of Appeals, 26 while this Court likewise hinted at possible recovery if there had been moral seduction, recovery was eventually denied because We were not convinced that such seduction existed. The following enlightening disquisition and conclusion were made in the said case:

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The Court of Appeals seem to have overlooked that the example set forth in the Code Commission's memorandum refers to a tort upon a minor who had been seduced. The essential feature is seduction, that in law is more than mere sexual intercourse, or a breach of a promise of marriage; it connotes essentially the idea of deceit, enticement, superior power or abuse of confidence on the part of the seducer to which the woman has yielded (U.S. vs. Buenaventura, 27 Phil. 121; U.S. vs. Arlante, 9 Phil. 595). It has been ruled in the Buenaventura case (supra) that To constitute seduction there must in all cases be some sufficient promise or inducementand the woman must yield because of the promise or other inducement. If she consents merely from carnal lust and the intercourse is from mutual desire, there is no seduction (43 Cent. Dig. tit. Seduction, par. 56) She must be induced to depart from the path of virtue by the use of some species of arts, persuasions and wiles, which are calculated to have and do have that effect, and which result in her person to ultimately submitting her person to the sexual embraces of her seducer (27 Phil. 123). And in American Jurisprudence we find: On the other hand, in an action by the woman, the enticement, persuasion or deception is the essence of the injury; and a mere proof of intercourse is insufficient to warrant a recovery. Accordingly it is not seduction where the willingness arises out of sexual desire of curiosity of the female, and the defendant merely affords her the needed opportunity for the commission of the act. It has been emphasized that to allow a recovery in all such cases would tend to the demoralization of the female sex, and would be a reward for unchastity by which a class of adventuresses would be swift to profit. (47 Am. Jur. 662) xxx xxx xxx Over and above the partisan allegations, the fact stand out that for one whole year, from 1958 to 1959, the plaintiff-appellee, a woman of adult age, maintain intimate sexual relations with appellant, with repeated acts of intercourse. Such conduct is incompatible with the idea of seduction. Plainly there is here voluntariness and mutual passion; for had the appellant been deceived, had she surrendered exclusively because of the deceit, artful persuasions and wiles of the defendant, she would not have again yielded to his embraces, much less for one year, without exacting early fulfillment of the alleged promises of marriage, and would have cut short all sexual relations upon finding that defendant did not intend to fulfill his defendant did not intend to fulfill his promise. Hence, we conclude that no case is made under article 21 of the Civil Code, and no other cause of action being alleged, no error was committed by the Court of First Instance in dismissing the complaint. 27 In his annotations on the Civil Code, 28 Associate Justice Edgardo L. Paras, who recently retired from this Court, opined that in a breach of promise to marry where there had been carnal knowledge, moral damages may be recovered: . . . if there be criminal or moral seduction, but not if the intercourse was due to mutual lust. (Hermosisima vs. Court of Appeals, L-14628, Sept. 30, 1960; Estopa vs. Piansay, Jr., L-14733, Sept. 30, 1960; Batarra vs. Marcos, 7 Phil. 56 (sic); Beatriz Galang vs. Court of Appeals, et al., L-17248, Jan. 29, 1962). (In other words, if the CAUSE be the promise to marry, and the EFFECT be the carnal knowledge, there is a chance that there was criminal or moral seduction, hence recovery of moral damages will prosper. If it be the other way around, there can be no recovery of moral damages, because here mutual lust has intervened). . . . together with "ACTUAL damages, should there be any, such as the expenses for the wedding presentations (See Domalagon v. Bolifer, 33 Phil. 471). Senator Arturo M. Tolentino
29

is also of the same persuasion:

It is submitted that the rule in Batarra vs. Marcos, 30 still subsists, notwithstanding the incorporation of the present article 31 in the Code. The example given by the Code Commission is correct, if there was seduction, not necessarily in the legal sense, but in the vulgar sense of deception. But when the sexual act is accomplished without any deceit or qualifying circumstance of abuse of authority or influence, but the woman, already of age, has knowingly given herself to a man, it cannot be said that there is an injury which can be the basis for indemnity.

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But so long as there is fraud, which is characterized by willfulness (sic), the action lies. The court, however, must weigh the degree of fraud, if it is sufficient to deceive the woman under the circumstances, because an act which would deceive a girl sixteen years of age may not constitute deceit as to an experienced woman thirty years of age. But so long as there is a wrongful act and a resulting injury, there should be civil liability, even if the act is not punishable under the criminal law and there should have been an acquittal or dismissal of the criminal case for that reason. We are unable to agree with the petitioner's alternative proposition to the effect that granting, for argument's sake, that he did promise to marry the private respondent, the latter is nevertheless also at fault. According to him, both parties are in pari delicto; hence, pursuant to Article 1412(1) of the Civil Code and the doctrine laid down inBatarra vs. Marcos, 32 the private respondent cannot recover damages from the petitioner. The latter even goes as far as stating that if the private respondent had "sustained any injury or damage in their relationship, it is primarily because of her own doing, 33 for: . . . She is also interested in the petitioner as the latter will become a doctor sooner or later. Take notice that she is a plain high school graduate and a mere employee . . . (Annex "C") or a waitress (TSN, p. 51, January 25, 1988) in a luncheonette and without doubt, is in need of a man who can give her economic security. Her family is in dire need of financial assistance. (TSN, pp. 51-53, May 18, 1988). And this predicament prompted her to accept a proposition that may have been offered by the petitioner. 34 These statements reveal the true character and motive of the petitioner. It is clear that he harbors a condescending, if not sarcastic, regard for the private respondent on account of the latter's ignoble birth, inferior educational background, poverty and, as perceived by him, dishonorable employment. Obviously then, from the very beginning, he was not at all moved by good faith and an honest motive. Marrying with a woman so circumstances could not have even remotely occurred to him. Thus, his profession of love and promise to marry were empty words directly intended to fool, dupe, entice, beguile and deceive the poor woman into believing that indeed, he loved her and would want her to be his life's partner. His was nothing but pure lust which he wanted satisfied by a Filipina who honestly believed that by accepting his proffer of love and proposal of marriage, she would be able to enjoy a life of ease and security. Petitioner clearly violated the Filipino's concept of morality and brazenly defied the traditional respect Filipinos have for their women. It can even be said that the petitioner committed such deplorable acts in blatant disregard of Article 19 of the Civil Code which directs every person to act with justice, give everyone his due and observe honesty and good faith in the exercise of his rights and in the performance of his obligations. No foreigner must be allowed to make a mockery of our laws, customs and traditions. The pari delicto rule does not apply in this case for while indeed, the private respondent may not have been impelled by the purest of intentions, she eventually submitted to the petitioner in sexual congress not out of lust, but because of moral seduction. In fact, it is apparent that she had qualms of conscience about the entire episode for as soon as she found out that the petitioner was not going to marry her after all, she left him. She is not, therefore, in pari delicto with the petitioner. Pari delicto means "in equal fault; in a similar offense or crime; equal in guilt or in legal fault." 35 At most, it could be conceded that she is merely in delicto. Equity often interferes for the relief of the less guilty of the parties, where his transgression has been brought about by the imposition of undue influence of the party on whom the burden of the original wrong principally rests, or where his consent to the transaction was itself procured by fraud. 36 In Mangayao vs. Lasud,
37

We declared:

Appellants likewise stress that both parties being at fault, there should be no action by one against the other (Art. 1412, New Civil Code). This rule, however, has been interpreted as applicable only where the fault on both sides is, more or less, equivalent. It does not apply where one party is literate or intelligent and the other one is not. (c.f. Bough vs. Cantiveros, 40 Phil. 209). We should stress, however, that while We find for the private respondent, let it not be said that this Court condones the deplorable behavior of her parents in letting her and the petitioner stay together in the same room in their house after giving approval to their marriage. It is the solemn duty of parents to protect the honor of their daughters and infuse upon them the higher values of morality and dignity. WHEREFORE, finding no reversible error in the challenged decision, the instant petition is hereby DENIED, with costs against the petitioner. SO ORDERED.

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G.R. No. 132344

February 17, 2000

UNIVERSITY OF THE EAST, petitioner, vs. ROMEO A. JADER, respondent. YNARES-SANTIAGO, J.: May an educational institution be held liable for damages for misleading a student into believing that the latter had satisfied all the requirements for graduation when such is not the case? This is the issue in the instant petition for review premised on the following undisputed facts as summarized by the trial court and adopted by the Court of Appeals (CA),1 to wit: Plaintiff was enrolled in the defendants' College of Law from 1984 up to 1988. In the first semester of his last year (School year 1987-1988), he failed to take the regular final examination in Practice Court I for which he was given an incomplete grade (Exhibits "2", also Exhibit "H"). He enrolled for the second semester as fourth year law student (Exhibit "A") and on February 1, 1988 he filed an application for the removal of the incomplete grade given him by Professor Carlos Ortega (Exhibits "H-2", also Exhibit "2") which was approved by Dean Celedonio Tiongson after payment of the required fee. He took the examination on March 28, 1988. On May 30, 1988, Professor Carlos Ortega submitted his grade. It was a grade of five (5). (Exhibits "H-4", also Exhibits "2-L", "2-N").1wphi1.nt

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In the meantime, the Dean and the Faculty Members of the College of Law met to deliberate on who among the fourth year students should be allowed to graduate. The plaintiff's name appeared in the Tentative List of Candidates for graduation for the Degree of Bachelor of Laws (LL.B) as of Second Semester (1987-1988) with the following annotation: JADER ROMEO A. Def. Conflict of Laws x-1-87-88, Practice Court I Inc., 1-87-88 C-1 to submit transcript with S.O. (Exhibits "3", "3-C-1", "3-C-2"). The 35th Investitures & Commencement Ceremonies for the candidates of Bachelor of Laws was scheduled on the 16th of April 1988 at 3:00 o'clock in the afternoon, and in the invitation for that occasion the name of the plaintiff appeared as one of the candidates. (Exhibits "B", "B-6", "B-6-A"). At the foot of the list of the names of the candidates there appeared however the following annotation: This is a tentative list Degrees will be conferred upon these candidates who satisfactorily complete requirements as stated in the University Bulletin and as approved of the Department of Education, Culture and Sports (Exhibit "B-7-A"). The plaintiff attended the investiture ceremonies at F. dela Cruz Quadrangle, U.E., Recto Campus, during the program of which he went up the stage when his name was called, escorted by her (sic) mother and his eldest brother who assisted in placing the Hood, and his Tassel was turned from left to right, and he was thereafter handed by Dean Celedonio a rolled white sheet of paper symbolical of the Law Diploma. His relatives took pictures of the occasion (Exhibits "C" to "C-6", "D-3" to "D-11"). He tendered a blow-out that evening which was attended by neighbors, friends and relatives who wished him good luck in the forthcoming bar examination. There were pictures taken too during the blow-out (Exhibits "D" to "D-1"). He thereafter prepared himself for the bar examination. He took a leave of absence without pay from his job from April 20, 1988 to September 30, 1988 (Exhibit "G") and enrolled at the pre-bar review class in Far Eastern University. (Exhibits "F" to "F-2"). Having learned of the deficiency he dropped his review class and was not able to take the bar examination.2 Consequently, respondent sued petitioner for damages alleging that he suffered moral shock, mental anguish, serious anxiety, besmirched reputation, wounded feelings and sleepless nights when he was not able to take the 1988 bar examinations arising from the latter's negligence. He prayed for an award of moral and exemplary damages, unrealized income, attorney's fees, and costs of suit. In its answer with counterclaim, petitioner denied liability arguing mainly that it never led respondent to believe that he completed the requirements for a Bachelor of Laws degree when his name was included in the tentative list of graduating students. After trial, the lower court rendered judgment as follows: WHEREFORE, in view of the foregoing judgment is hereby rendered in favor of the plaintiff and against the defendant ordering the latter to pay plaintiff the sum of THIRTY FIVE THOUSAND FOUR HUNDRED SEVENTY PESOS (P35,470.00) with legal rate of interest from the filing of the complaint until fully paid, the amount of FIVE THOUSAND PESOS (P5,000.00) as attorney's fees and the cost of suit. Defendant's counterclaim is, for lack of merit, hereby dismissed. SO ORDERED.3 which on appeal by both parties was affirmed by the Court of Appeals (CA) with modification. The dispositive portion of the CA decision reads: WHEREFORE, in the light of the foregoing, the lower Court's Decision is hereby AFFIRMED with the MODIFICATION that defendant-appellee, in addition to the sum adjudged by the lower court in favor of plaintiff-appellant, is also ORDERED to pay plaintiff-appellant the amount of FIFTY THOUSAND (P50,000.00) PESOS for moral damages. Costs against defendant-appellee. SO ORDERED.4 Upon the denial of its motion for reconsideration, petitioner UE elevated the case to this Court on a petition for review under Rule 45 of the Rules of Court, arguing that it has no liability to respondent Romeo A. Jader, considering that the proximate and immediate cause of the alleged damages incurred by the latter arose out of his own negligence in not verifying from the professor concerned the result of his removal exam. The petition lacks merit.

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When a student is enrolled in any educational or learning institution, a contract of education is entered into between said institution and the student. The professors, teachers or instructors hired by the school are considered merely as agents and administrators tasked to perform the school's commitment under the contract. Since the contracting parties are the school and the student, the latter is not duty-bound to deal with the former's agents, such as the professors with respect to the status or result of his grades, although nothing prevents either professors or students from sharing with each other such information. The Court takes judicial notice of the traditional practice in educational institutions wherein the professor directly furnishes his/her students their grades. It is the contractual obligation of the school to timely inform and furnish sufficient notice and information to each and every student as to whether he or she had already complied with all the requirements for the conferment of a degree or whether they would be included among those who will graduate. Although commencement exercises are but a formal ceremony, it nonetheless is not an ordinary occasion, since such ceremony is the educational institution's way of announcing to the whole world that the students included in the list of those who will be conferred a degree during the baccalaureate ceremony have satisfied all the requirements for such degree. Prior or subsequent to the ceremony, the school has the obligation to promptly inform the student of any problem involving the latter's grades and performance and also most importantly, of the procedures for remedying the same. Petitioner, in belatedly informing respondent of the result of the removal examination, particularly at a time when he had already commenced preparing for the bar exams, cannot be said to have acted in good faith. Absence of good faith must be sufficiently established for a successful prosecution by the aggrieved party in a suit for abuse of right under Article 19 of the Civil Code. Good faith connotes an honest intention to abstain from taking undue advantage of another, even though the forms and technicalities of the law, together with the absence of all information or belief of facts, would render the transaction unconscientious.5 It is the school that has access to those information and it is only the school that can compel its professors to act and comply with its rules, regulations and policies with respect to the computation and the prompt submission of grades. Students do not exercise control, much less influence, over the way an educational institution should run its affairs, particularly in disciplining its professors and teachers and ensuring their compliance with the school's rules and orders. Being the party that hired them, it is the school that exercises general supervision and exclusive control over the professors with respect to the submission of reports involving the students' standing. Exclusive control means that no other person or entity had any control over the instrumentality which caused the damage or injury.6 The college dean is the senior officer responsible for the operation of an academic program, enforcement of rules and regulations, and the supervision of faculty and student services.7 He must see to it that his own professors and teachers, regardless of their status or position outside of the university, must comply with the rules set by the latter. The negligent act of a professor who fails to observe the rules of the school, for instance by not promptly submitting a student's grade, is not only imputable to the professor but is an act of the school, being his employer. Considering further, that the institution of learning involved herein is a university which is engaged in legal education, it should have practiced what it inculcates in its students, more specifically the principle of good dealings enshrined in Articles 19 and 20 of the Civil Code which states: 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. Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. Art. 19 was intended to expand the concept of torts by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to provide specifically in statutory law.8 In civilized society, men must be able to assume that others will do them no intended injury that others will commit no internal aggressions upon them; that their fellowmen, when they act affirmatively will do so with due care which the ordinary understanding and moral sense of the community exacts and that those with whom they deal in the general course of society will act in good faith. The ultimate thing in the theory of liability is justifiable reliance under conditions of civilized society.9 Schools and professors cannot just take students for granted and be indifferent to them, for without the latter, the former are useless. Educational institutions are duty-bound to inform the students of their academic status and not wait for the latter to inquire from the former. The conscious indifference of a person to the rights or welfare of the person/persons who may be affected by his act or omission can support a claim for damages.10 Want of care to the conscious disregard of civil obligations coupled with a conscious knowledge of the cause naturally calculated to produce them would make the erring party liable.11 Petitioner ought to have known that time was of the essence in the performance of its obligation to inform respondent of his grade. It cannot feign ignorance that respondent will not prepare himself for the bar exams since that is precisely the immediate concern after graduation of an LL.B. graduate. It failed to act seasonably. Petitioner cannot just give out its student's grades at any time because a student has to comply with certain deadlines set by the Supreme Court on the submission of requirements for taking the bar. Petitioner's liability arose from its failure to promptly inform respondent of the result of an examination and in misleading the latter into believing that he had satisfied all requirements for the course. Worth quoting is the following disquisition of the respondent court:

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It is apparent from the testimony of Dean Tiongson that defendant-appellee University had been informed during the deliberation that the professor in Practice Court I gave plaintiff-appellant a failing grade. Yet, defendant-appellee still did not inform plaintiff-appellant of his failure to complete the requirements for the degree nor did they remove his name from the tentative list of candidates for graduation. Worse, defendant-appellee university, despite the knowledge that plaintiff-appellant failed in Practice Court I, again included plaintiff-appellant's name in the "tentative list of candidates for graduation which was prepared after the deliberation and which became the basis for the commencement rites program. Dean Tiongson reasons out that plaintiff-appellant's name was allowed to remain in the tentative list of candidates for graduation in the hope that the latter would still be able to remedy the situation in the remaining few days before graduation day. Dean Tiongson, however, did not explain how plaintiff appellant Jader could have done something to complete his deficiency if defendant-appellee university did not exert any effort to inform plaintiff-appellant of his failing grade in Practice Court I.12 Petitioner cannot pass on its blame to the professors to justify its own negligence that led to the delayed relay of information to respondent. When one of two innocent parties must suffer, he through whose agency the loss occurred must bear it.13 The modern tendency is to grant indemnity for damages in cases where there is abuse of right, even when the act is not illicit.14 If mere fault or negligence in one's acts can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable. A person should be protected only when he acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith, but not when he acts with negligence or abuse.15 However, while petitioner was guilty of negligence and thus liable to respondent for the latter's actual damages, we hold that respondent should not have been awarded moral damages. We do not agree with the Court of Appeals' findings that respondent suffered shock, trauma and pain when he was informed that he could not graduate and will not be allowed to take the bar examinations. At the very least, it behooved on respondent to verify for himself whether he has completed all necessary requirements to be eligible for the bar examinations. As a senior law student, respondent should have been responsible enough to ensure that all his affairs, specifically those pertaining to his academic achievement, are in order. Given these considerations, we fail to see how respondent could have suffered untold embarrassment in attending the graduation rites, enrolling in the bar review classes and not being able to take the bar exams. If respondent was indeed humiliated by his failure to take the bar, he brought this upon himself by not verifying if he has satisfied all the requirements including his school records, before preparing himself for the bar examination. Certainly, taking the bar examinations does not only entail a mental preparation on the subjects thereof; there are also prerequisites of documentation and submission of requirements which the prospective examinee must meet. WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED with MODIFICATION. Petitioner is ORDERED to PAY respondent the sum of Thirty-five Thousand Four Hundred Seventy Pesos (P35,470.00), with legal interest of 6% per annum computed from the date of filing of the complaint until fully paid; the amount of Five Thousand Pesos (P5,000.00) as attorney's fees; and the costs of the suit. The award of moral damages is DELEIED.1wphi1.nt SO ORDERED.

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G.R. No. 126486 February 9, 1998 BARONS MARKETING CORP., petitioner, vs. COURT OF APPEALS and PHELPS DODGE PHILS., INC. respondents.

KAPUNAN, J.: The instant petition raises two issues: (1) whether or not private respondent is guilty of abuse of right; and (2) whether or not private respondent is entitled to interest and attorney's fees. The facts are undisputed: On August 31, 1973, plaintiff [Phelps Dodge, Philippines, Inc. private respondent herein] appointed defendant [petitioner Barons Marketing, Corporation] as one of its dealers of electrical wires and cables effective September 1, 1973 (Exh. A). As such dealer, defendant was given by plaintiff 60 days credit for its purchases of plaintiff's electrical products. This credit term was to be reckoned from the date of delivery by plaintiff of its products to defendant (Exh. 1). During the period covering December 1986 to August 17, 1987, defendant purchased, on credit, from plaintiff various electrical wires and cables in the total amount of P4,102,438.30 (Exh. B to K). These wires and cables were in turn sold, pursuant to previous arrangements, by defendant to MERALCO, the former being the accredited supplier of the electrical requirements of the latter. Under the sales invoices issued by plaintiff to defendant for the subject purchases, it is stipulated that interest at 12% on the amount due for attorney's fees and collection (Exh. BB). 1 On September 7, 1987, defendant paid plaintiff the amount of P300,000.00 out of its total purchases as above-stated (Exh. S), thereby leaving an unpaid account on the aforesaid deliveries of P3,802,478.20. On several occasions, plaintiff wrote defendant demanding payment of its outstanding obligations due plaintiff (Exhs. L, M, N, and P). In response, defendant wrote plaintiff on October 5, 1987 requesting the latter if it could pay its outstanding account in monthly installments of P500,000.00 plus 1% interest per month commencing on October 15, 1987 until full payment (Exh. O and O-4). Plaintiff, however, rejected defendant's offer and accordingly reiterated its demand for the full payment of defendant's account (Exh. P). 2 On 29 October 1987, private respondent Phelps Dodge Phils., Inc. filed a complaint before the Pasig Regional Trial Court against petitioner Barons Marketing Corporation for the recovery of P3,802,478.20 representing the value of the wires and cables the former had delivered to the latter, including interest. Phelps Dodge likewise prayed that it be awarded attorney's fees at the rate of 25% of the amount demanded, exemplary damages amounting to at least P100,000.00, the expenses of litigation and the costs of suit. Petitioner, in its answer, admitted purchasing the wires and cables from private respondent but disputed the amount claimed by the latter. Petitioner likewise interposed a counterclaim against private respondent, alleging that it suffered injury to its reputation due to Phelps Dodge's acts. Such acts were purportedly calculated to humiliate petitioner and constituted an abuse of rights. After hearing, the trial court on 17 June 1991 rendered its decision, the dispositive portion of which reads:

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WHEREFORE, from all the foregoing considerations, the Court finds Phelps Dodge Phils., Inc. to have preponderantly proven its case and hereby orders Barons Marketing, Inc. to pay Phelps Dodge the following: 1. P3,108,000.00 constituting the unpaid balance of defendant's purchases from plaintiff and interest thereon at 12% per annum computed from the respective expiration of the 60 day credit term, vis-avis the various sales invoices and/or delivery receipts; 2. 25% of the preceding obligation for and as attorney's fees; 3. P10,000.00 as exemplary damages; 4. Costs of suit. 3 Both parties appealed to respondent court. Private respondent claimed that the trial court should have awarded it the sum of P3,802,478.20, the amount which appeared in the body of the complaint and proven during the trial rather than P3,1081000.00 The latter amount appears in petitioner's prayer supposedly as a result of a typographical error. On the other hand, petitioner reiterated its claims for damages as a result of "creditor's abuse." It also alleged that private respondent failed to prove its cause of action against it. On 25 June 1996, the Court of Appeals rendered a decision modifying the decision of the trial court, thus: WHEREFORE, from all the foregoing considerations, the Court finds Phelps Dodge Phils., Inc. to have preponderantly proven its case and hereby orders Barons Marketing, Inc. to pay Phelps Dodge the following: 1. P3,802,478.20 constituting the unpaid balance of defendant's purchases from plaintiff and interest thereon at 12% per annum computed from the respective expiration of the 60 day credit term, vis-avis the various sales invoices and/or delivery receipts; and 2. 5% of the preceding obligation for and as attorney's fees. No costs. 4 Petitioner Barons Marketing is now before this Court alleging that respondent court erred when it held (1) private respondent Phelps Dodge not guilty of "creditor's abuse," and (2) petitioner liable to private respondent for interest and attorney's fees. I Petitioner does not deny private respondent's rights to institute an action for collection and to claim full payment. Indeed, petitioner's right to file an action for collection is beyond cavil. 5 Likewise, private respondent's right to reject petitioner's offer to pay in installments is guaranteed by Article 1248 of the Civil Code which states: Art. 1248. Unless there is an express stipulation to that effect, the creditor cannot be compelled partially to receive the prestations in which the obligation consists. Neither may the debtor be required to make partial payments. However, when the debt is in part liquidated and in part unliquidated, the creditor may demand and the debtor may effect the payment of the former without waiting for the liquidation of the latter. Under this provision, the prestation, i.e., the object of the obligation, must be performed in one act, not in parts. Tolentino concedes that the right has its limitations: Partial Prestations. Since the creditor cannot be compelled to accept partial performance, unless otherwise stipulated, the creditor who refuses to accept partial prestations does not incur in delay or mora accipiendi, except when there is abuse of right or if good faith requires acceptance. 6 Indeed, the law, as set forth in Article 19 of the Civil Code, prescribes a "primordial limitation on all rights" by setting certain standards that must be observed in the exercise thereof. 7 Thus: 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.

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Petitioner now invokes Article 19 and Article 21 8 of the Civil Code, claiming that private respondent abused its rights when it rejected petitioner's offer of settlement and subsequently filed the action for collection considering: . . . that the relationship between the parties started in 1973 spanning more than 13 years before the complaint was filed, that the petitioner had been a good and reliable dealer enjoying a good credit standing during the period before it became delinquent in 1987, that the relationship between the parties had been a fruitful one especially for the private respondent, that the petitioner exerted its outmost efforts to settle its obligations and avoid a suit, that the petitioner did not evade in the payment of its obligation to the private respondent, and that the petitioner was just asking a small concession that it be allowed to liquidate its obligation to eight (8) monthly installments of P500,000.00 plus 1% interest per month on the balance which proposal was supported by post-dated checks. 9 Expounding on its theory, petitioner states: In the ordinary course of events, a suit for collection of a sum of money filed in court is done for the primary purpose of collecting a debt or obligation. If there is an offer by the debtor to pay its debt or obligation supported by post-dated checks and with provision for interests, the normal response of a creditor would be to accept the offer of compromise and not file the suit for collection. It is of common knowledge that proceedings in our courts would normally take years before an action is finally settled. It is always wiser and more prudent to accept an offer of payment in installment rather than file an action in court to compel the debtor to settle his obligation in full in a single payment. xxx xxx xxx . . . Why then did private respondent elect to file a suit for collection rather than accept petitioner's offer of settlement, supported by post-dated checks, by paying monthly installments of P500,000.00 plus 1% per month commencing on October 15, 1987 until full payment? The answer is obvious. The action of private respondent in filling a suit for collection was an abuse of right and exercised for the sole purpose of prejudicing and injuring the petitioner. 10 Petitioner prays that the Court order private respondent to pay petitioner moral and exemplary damages, attorney's fees, as well as the costs of suit. It likewise asks that it be allowed to liquidate its obligation to private respondent, without interests, in eight equal monthly installments. Petitioner's theory is untenable. Both parties agree that to constitute an abuse of rights under Article 19 the defendant must act with bad faith or intent to prejudice the plaintiff. They cite the following comments of Tolentino as their authority: Test of Abuse of Right. Modern jurisprudence does not permit acts which, although not unlawful, are anti-social.There is undoubtedly an abuse of right when it is exercised for the only purpose of prejudicing or injuring another. When the objective of the actor is illegitimate, the illicit act cannot be concealed under the guise of exercising a right. The principle does not permit acts which, without utility or legitimate purpose cause damage to another, because they violate the concept of social solidarity which considers law as rational and just. Hence, every abnormal exercise of a right, contrary to its socioeconomic purpose, is an abuse that will give rise to liability. The exercise of a right must be in accordance with the purpose for which it was established, and must not be excessive or unduly harsh; there must be no intention to injure another. Ultimately, however, and in practice, courts, in the sound exercise of their discretion, will have to determine all the facts and circumstances when the exercise of a right is unjust, or when there has been an abuse of right. 11 The question, therefore, is whether private respondent intended to prejudice or injure petitioner when it rejected petitioner's offer and filed the action for collection. We hold in the negative. It is an elementary rule in this jurisdiction that good faith is presumed and that the burden of proving bad faith rests upon the party alleging the same. 12 In the case at bar, petitioner has failed to prove bad faith on the part of private respondent. Petitioner's allegation that private respondent was motivated by a desire to terminate its agency relationship with petitioner so that private respondent itself may deal directly with Meralco is simply not supported by the evidence. At most, such supposition is merely speculative. Moreover, we find that private respondent was driven by very legitimate reasons for rejecting petitioner's offer and instituting the action for collection before the trial court. As pointed out by private respondent, the corporation had its own "cash position to protect in order for it to pay its own obligations." This is not such "a lame and poor rationalization" as petitioner purports it to be. For if private respondent were to be required to accept petitioner's offer, there would be no reason for the latter to reject similar offers from its other debtors. Clearly, this would be inimical to the interests of any enterprise, especially a profit-oriented one like private respondent. It is plain to see that what we have here is a mere exercise of rights, not an abuse thereof Under these circumstances, we do not deem private respondent to have acted in a manner contrary to morals, good customs or public policy as to violate the provisions of Article 21 of the Civil Code.

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Consequently, petitioner's prayer for moral and exemplary damages must thus be rejected. Petitioner's claim for moral damages is anchored on Article 2219 (10) of the Civil Code which states: Art. 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 Having ruled that private respondent's acts did not transgress the provisions of Article 21, petitioner cannot be entitled to moral damages or, for that matter, exemplary damages. While the amount of exemplary damages need not be proved, petitioner must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded. 13 As we have observed above; petitioner has failed to discharge this burden. It may not be amiss to state that petitioner's contract with private respondent has the force of law between them. 14Petitioner is thus bound to fulfill what has been expressly stipulated therein. 15 In the absence of any abuse of right, private respondent cannot be allowed to perform its obligation under such contract in parts. Otherwise, private respondent's right under Article 1248 will be negated, the sanctity of its contract with petitioner defiled. The principle of autonomy of contracts 16 must be respected. II Under said contract, petitioner is liable to private respondent for the unpaid balance of its purchases from private respondent plus 12% interest. Private respondent's sales invoices expressly provide that: . . . Interest at 12% per annum will be charged on all overdue account plus 25% on said amount for attorney's fees and collection. . . . 17 It may also be noted that the above stipulation, insofar as it provides for the payment of "25% on said amount for attorney's fees and collection (sic)," constitutes what is known as a penal clause. 18 Petitioner is thus obliged to pay such penalty in addition to the 12% annual interest, there being an express stipulation to that effect. Petitioner nevertheless urges this Court to reduce the attorney's fees for being "grossly excessive," "considering the nature of the case which is a mere action for collection of a sum of money." It may be pointed out however that the above penalty is supposed to answer not only for attorney's fees but for collection fees as well. Moreover: . . . the attorneys' fees here provided is not, strictly speaking, the attorneys' fees recoverable as between attorney and client spoken of and regulated by the Rules of Court. Rather, the attorneys' fees here are in the nature of liquidated damages and the stipulation therefor is aptly called a penal clause. It has been said that so long as such stipulation does not contravene law, morals, or public order, it is strictly binding upon defendant. The attorneys' fees so provided are awarded in favor of the litigant, not his counsel. It is the litigant, not counsel, who is the judgment creditor entitled to enforce the judgment by execution. 19 Nonetheless, courts are empowered to reduce such penalty if the same is "iniquitous or unconscionable." Article 1229 of the Civil Code states thus: Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or been irregularly complied with by the debtor. Even if there has no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable. (Emphasis supplied.) The sentiments of the law are echoed in Article 2227 of the same Code: Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable. It is true that we have upheld the reasonableness of penalties in the form of attorney's fees consisting of twenty-five percent (25%) of the principal debt plus interest. 20 In the case at bar, however, the interest alone runs to some four and a half million pesos (P4.5M), even exceeding the principal debt amounting to almost four million pesos (P4.0M). Twenty five percent (25%) of the principal and interest amounts to roughly two million pesos (P2M). In real terms, therefore, the attorney's fees and collection fees are manifestly exorbitant. Accordingly, we reduce the same to ten percent (10%) of the principal. Private respondent, however, argues that petitioner failed to question the award of attorney's fees on appeal before respondent court and raised the issue only in its motion for reconsideration. Consequently, petitioner should be deemed to have waived its right to question such award.

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Private respondent's attempts to dissuade us from reducing the penalty are futile. The Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. 21 WHEREFORE, the decision of the Court of Appeals is hereby MODIFIED in that the attorney's and collection fees are reduced to ten percent (10%) of the principal but is AFFIRMED in all other respects. SO ORDERED.

G.R. No. 160959

April 3, 2007

ANTONIO DIAZ, Petitioner, vs. DAVAO LIGHT AND POWER CO., INC., MANUEL M. ORIG and ELISEO R. BRAGANZA, JR., Respondents. DECISION CALLEJO, SR., J.:

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This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 68709, which affirmed the Decision2 of the Regional Trial Court (RTC) of Davao City, Branch 11, in Civil Case No. 21,655-92. Antecedents Antonio G. Diaz was the president of Diaz and Co., Inc. He was also vice-president of Diaz Realty Inc. which, in turn, owned the Doa Segunda Hotel,3 formerly known as the Davao Imperial Hotel (Imperial Hotel Building),4located along C.M. Recto Avenue, Davao City. Davao Light and Power Co., Inc. (DLPC), on the other hand, is a public utility duly franchised to provide light, heat and power to its customers in Davao City and the municipalities of Panabo, Santo Tomas and Carmen, in Davao del Norte.5 Manuel Orig was the resident manager/vice-president for Administration of DLPC,6 while Eliseo R. Braganza was its in-house lawyer.7 DLPC supplied the Doa Segunda Building (Imperial Hotel Building) with electricity service8 under Account No. 08710669 and with Meter No. 36510.9 On July 25, 1983, DLPC sent a Notice of Disconnection10 to Diaz and Co., Inc. informing it that, as of June 13, 1983, the hotels unpaid electric consumption bill amounted to P190,111.02.11 It also warned that if the amount was not paid, DLPC would be impelled to discontinue its service. Since Diaz and Co., Inc. ignored the letter, Meter No. 36510 was disconnected on July 29, 1983.12 DLPC then filed a complaint for collection before the RTC, Cebu City, which case was docketed as Civil Case No. CEB-1049. Meanwhile, in 1984, the National Food Authority (NFA) established its KADIWA13 store at C.M. Recto Avenue, Davao City.14 It leased a portion of the ground floor of the Imperial Hotel Building from Diaz and Co., Inc.15NFA/KADIWA also applied for electricity service with DLPC, and a contract16 was later executed between the parties. On March 15, 1984, DLPC connected the area leased by NFA/KADIWA to its electric grid17 under Account No. 091-12643,18 and installed Meter No. 8473819 to measure NFA/KADIWAs monthly electric consumption. In August 1986, the Kadiwa Center IV closed, and NFA/KADIWA vacated the Doa Segunda Building.20 In a letter21 dated August 11, 1986, NFA/KADIWA Provincial Manager, Roberta R. Melendres, informed DLPC that the light and power connection of NFA/KADIWA would be left behind; its right to the connection would be transferred to Diaz.22 She also informed DLPC that the P1,020.00 deposit of NFA/KADIWA for the power connection had been refunded to it by Diaz.23 In a letter24 dated September 2, 1986, Diaz informed respondent Manuel Orig that he had leased the untenanted portions of the Doa Segunda Building from Diaz and Co., Inc., and requested that a new electrical connection for the building in his name be installed, separate from the one assigned to him by NFA.25 On September 15, 1986, DLPC denied the request on the ground that since Diaz and Co., Inc. is a closed family corporation whose stockholders are the immediate members of the Diaz family, the lease in favor of Diaz could be simulated.26 DLPC, however, reminded Diaz that it would be too happy to grant his request "if he and/or Diaz and Co., Inc. would pay what is due and owing to it."27 Diaz and Co., Inc. sent a letter28 to DLPC dated September 17, 1986 declaring that it had assumed the electrical bills of NFA/KADIWA under Account No. 091-12643, and requested that the monthly bills/statements be sent to it. In its reply, DLPC rejected the request and declared that it was not aware that Diaz and Co., Inc. had refunded the NFA/KADIWA its P1,020.00 deposit.29 On September 26, 1986, Diaz filed a petition for mandamus30 before the RTC, Davao City. He alleged that as a holder of a certificate of public convenience, DLPC is mandated by law to provide him with electric service; the grounds relied upon by respondent Orig in denying his application are anchored on bias and prejudice, since he (Diaz) is one of the stockholders of Diaz and Co. Inc., the owner of the Davao Imperial Hotel; and the civil case filed by DLPC is against Diaz and Co., Inc. and not personally against him.31 The complaint was docketed as Civil Case No. 18,288. Meanwhile, on September 23, 1986, the portion of the building formerly leased by NFA/KADIWA was leased to Matias Mendiola.32 Because he needed more electricity than what could be provided by the existing electrical wirings, Mendiola opted to change the electrical installation from a one-phase meter to a three-phase meter connection.33 Mendiolas application was approved by DLPC. On December 19, 1986, DLPC and Mendiola executed a service Contract34 for electricity service. On January 7, 1987, Diaz filed an application for preliminary injunction in Sp. Civil Case No. 18,28835 to enjoin DLPC from disconnecting the electric connections to Meter No. 84738 under Account No. 091-12643. Also, an Inter-Office Memo36 dated January 7, 1987, signed by Officer-in-Charge, Rebecca Madrid, was issued to all security guards of the Doa Segunda Building who were ordered to prevent anyone from disturbing Meter No. 84738.37 Because of this, DLPC failed to substitute its single-phase meter with a three-phase meter. DLPCs linemen thus installed the three-phase meter without removing the single-phase meter.381a\^/phi1.net

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On March 12, 1987, the RTC in Sp. Civil Case No. 18,288, denied the motion for issuance of a writ of preliminary injunction39 filed by Diaz. He moved for a reconsideration, which was, however, denied in the Order40 dated August 20, 1987. DLPC then removed its single-phase meter on November 20, 1987, which rendered almost half of the building without power.41 That same day, Diaz went to the DLPC building and threw stones at it, breaking four glass windows in the process.42 He then bought his own electric meter, Meter No. 86673509,43 had it calibrated by the Board of Energy, and unilaterally replaced Meter No. 84738. The electricity in the building was then restored.44 On November 24, 1987, Diaz filed a Complaint for Damages with Prayer for Preliminary Prohibitory and Mandatory Injunction and Restraining Order45 before the RTC, Davao City, docketed as Civil Case No. 18,85587. In the said complaint, Diaz claimed that DLPC arbitrarily and illegally removed Meter No. 84738 in violation of their business franchise and Article 19 of the New Civil Code, and had threatened to remove Meter No. 86673509.46 DLPC, for its part, filed a counter-application for preliminary mandatory injunction47 in the same case to compel the removal of Meter No. 86673509 which Diaz had installed without DLPCs consent and authority.48 The RTC issued an Order49 dated March 30, 1988 denying Diazs application for prohibitory and mandatory injunction, and granting DLPCs counter-application for preliminary mandatory injunction. The RTC ordered Diaz to immediately remove Meter No. 86673509 and disconnect the electrical wirings he had unilaterally connected to the upper floor rooms. Diaz filed a motion for reconsideration but was denied.1a\^/phi1.net On June 13, 1998, the sheriff, with the aid of DLPC personnel, caused the removal of Meter No. 86673509.50 Aggrieved, Diaz assailed the orders via petition for certiorari before the CA. The petition was docketed as CAG.R. SP No. 14909. On October 19, 1988, the CA rendered a Decision51 granting Diazs petition, to wit: Wherefore, in view of the foregoing, the petition is hereby granted and the orders of the lower court dated March 30, 1988 and June 1, 1988 are set aside. Private respondents are thus ordered to maintain the status quo ante which existed before the issuance of the orders complained against, or else to connect its own electric meter to the premises, on the understanding, of course, that petitioner pays his electric bills and without prejudice to the continuance of the collection case against Diaz and Company.52 DLPC elevated the decision before this Court, via petition for review on certiorari. The petition was docketed as G.R. No. 85445.53 Meanwhile, on December 19, 1998, the parties in Civil Case No. CEB-104954 executed a Compromise Agreement,55 wherein they stipulated the following: 1. Plaintiff-appellee hereby reduces its total claims in the complaint to only P385,000.00 and further waives any claim in excess of said amount in the same case, and the defendant-appellant shall pay said amount in full immediately upon the execution of this agreement. The latter also waives its counterclaims against the former in the above-entitled case. 2. Upon receipt of the payment of the aforesaid sum, plaintiff-appellee shall immediately grant and install in favor of defendant-appellant or Antonio G. Diaz electric service for the Doa Segunda Building, popularly known as Imperial Hotel Building, or for portions thereof designated by either including the tenants or lessees occupying the same, upon proper application therefor and the presentation of the requisite electrical permit. 3. the parties agree to the dismissal of Civil Case No. 18,288 of the Regional Trial Court of Davao City, pending in Branch XVI thereof, entitled "Diaz vs. Davao Light & Power Co., Inc. and Manuel Orig." for Mandamus inclusive of the counter-claim therein, the same having become moot and academic. WHEREFORE, it is most respectfully prayed that this Honorable Court approves the foregoing compromise agreement and render judgment based thereon, and enjoin the parties to comply strictly with the terms thereof. The RTC, in Civil Case No. CEB-1049, rendered a Decision56 approving the compromise on January 5, 1989. In Sp. Civil Case No. 18,288, the parties also filed a Joint Motion to Dismiss57 based on the Compromise Agreement, and the RTC thereafter ordered the dismissal of the case.58 On April 17, 1989, this Court in G.R. No. 85445, issued a Resolution,59 denying the petition for review on certiorari questioning the CA decision in CA-G.R. SP No. 14909 for being moot and academic. The resolution reads: After deliberating on the allegations made, the issues raised, and the arguments advanced in the Petition, the Comment and the Reply, and it appearing that petitioner is now providing electrical service to private respondents entire building, the Court RESOLVED to DENY the petition for having become moot and academic. The Court makes the admonition, however, that connections of electrical service and installations of electric meters should always be upon mutual contract of the parties, and that payments for electrical consumption

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should also be made promptly whenever due. Contracts lay down the law between the parties and obligations arising therefrom should be complied with. Meanwhile, on June 30, 1997, the RTC rendered a Decision60 in Civil Case No. 18,855-87 dismissing the case filed by Diaz.61 Diaz appealed the decision with the CA in CA-G.R. CV No. 63236,62 which appeal is still pending before the appellate court. Based on the aforestated facts, on July 11, 1988, DLPC filed a complaint for theft of electricity against Diaz with the City Prosecutors Office, Davao City; respondent Braganza submitted an Affidavit63 to support the charge. In defense, Diaz alleged the following: (1) that the complaint was intended to harass him; (2) he was entitled to electric service by virtue of his subrogation to the right of NFA/KADIWA; (3) the installation of Meter No. 86673509 was made with the knowledge and consent of DLPC; (4) there is a pending case between the parties regarding Meter Nos. 84738 and 86673509; and (5) the filing of the action is premature. The complaint was docketed as I.S. No. 593. On March 21, 1989, Lolito O. Evangelino, 4th Asst. City Prosecutor, City Prosecutors Office of Davao City, issued a Resolution64 recommending the dismissal of the charge. He opined that the correspondence to DLPC Manager Orig negated DLPCs claim of lack of consent and knowledge, and since the issue is still pending litigation in court, the determination of whether there is theft of electricity is premature (Sp. Civil Case No. 18288 and Civil Case No. 18,855-87). DLPC filed a Motion for Reconsideration65 which the City Prosecutor denied on the ground that DLPC failed to establish the elements of unlawful taking and intent to gain. DLPC appealed the dismissal to the Secretary of Justice,66 who, however, dismissed the appeal in a letter67 dated August 2, 1990. The Motion for Reconsideration68 filed by DLPC was likewise denied in the letter69 dated September 6, 1990. Undaunted, DLPC filed a criminal complaint70 against Diaz for Violation of P.D. 401,71 as amended by B.P. Blg. 87672 with the City Prosecutors Office, Davao City.73 The complaint was docketed as I.S. No. 92-4590. In his counter-affidavit dated September 19, 1992, Diaz alleged that a similar complaint (I.S. No. 593) had been filed by DLPC against him.74 In a Resolution75 dated October 23, 1992, Calixto A. Esparagoza, 2nd Asst. City Prosecutor, dismissed the case. The Public Prosecutor likewise denied the motion for reconsideration of DLPC on November 26, 1992. Meanwhile Diaz, Ramos, and Arguellas, as complainants, filed a criminal complaint with the Office of the Provincial Fiscal of Davao del Norte charging the officers of DLPC with estafa through falsification of public documents. They also alleged that the officers of DLPC exacted additional and illegal profits from its consumers by devising a deceptive Varying Discount Formula; based on the alleged misrepresentation of said officers, the Board of Energy (BOE) granted DLPC provisional authority to apply the formula, thereby resulting in losses of more or lessP300,000.00 to Diaz, Ramos, and Arguelles.76 As regards the charge of falsification, the complainants alleged that DLPC had its properties appraised by the Technical Management Services, Philippines, Inc. (TAMSPHIL), and included non-existent properties that did not belong to it; it also recorded the TAMSPHIL appraisal in its books of account even before it had been approved by the BOE; and submitted financial statements containing the appraisal to the Securities and Exchange Commission and the BOE.77 The Investigating Prosecutor found probable cause against the respondents. An Information was filed before the then Court of First Instance (CFI) of Tagum, Davao del Norte, docketed as Crim. Case No. 5800. Respondents appealed the resolution of the public prosecutor finding probable cause against them. The appeal was granted. On motion of the Prosecutor, the RTC dismissed the case in an Order dated July 13, 1983.78 On August 9, 1983, the officers of DLPC, Eduardo J. Aboitiz, Luis Aboitiz, Jr., Roberto E. Aboitiz, Jon R. Aboitiz, and Edson H. Canova, as plaintiffs, filed a Complaint against Diaz, Isagani T. Fuentes (Provincial Fiscal of Davao del Norte), Petronilo D. Ramos (Municipal Mayor of Carmen, Davao del Norte), Gabriel Arguelles (Municipal Attorney of Panabo, Davao del Norte) before the RTC, Cebu City, for damages and attorneys fees against the defendants for malicious prosecution.79 The case was docketed as CEB Case No. 1055. After trial on the merits, the RTC rendered a Decision80 on April 30, 1992, dismissing the complaint. The fallo of the decision reads: WHEREFORE, premises considered, plaintiffs complaint and defendants counterclaim are hereby DISMISSED for lack of cause of action with costs de oficio. SO ORDERED.81 Both parties appealed the decision before the CA, docketed as CA-G.R. CV No. 41399.1vvphi1.nt Diaz, et al. relied on the following grounds: I

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TRIAL COURT ERRED IN IGNORING PLAINTIFF-APPELLANTS (SIC) EVIDENCE OF CONSPIRACY AMONG ALL DEFENDANT-APPELLANTS (SIC) AND IN MAKING NO FINDING THAT THERE WAS A CONSPIRACY TO PROSECUTE PLAINTIFF-APPELLANTS (SIC) CRIMINALLY FOR USE AS LEVERAGE IN ORDER TO OBTAIN CONCESSIONS FROM DAVAO LIGHT & POWER CO. II TRIAL COURT ERRED IN HOLDING THAT PLAINTIFF-APPELLANTS (SIC) HAVE NO CAUSE OF ACTION BY COMMITTING THE FOLLOWING ERRORS: (a) IN FINDING THAT THERE WAS NO PROSECUTION AND NO ACQUITTAL; (b) IN FINDING THAT THERE WAS PROBABLE CAUSE FOR DEFENDANT-APPELLANTS (SIC) CHARGE OF ESTAFA THROUGH FALSIFICATION; (c) BY IGNORING THE FACT THAT THERE WAS NO EVIDENCE LINKING PLAINTIFF-APPELLANTS (SIC) TO THE CRIME CHARGED; (d) BY IGNORING THE CIRCUMSTANCES THAT MANY ALLEGATIONS IN THE JOINT AFFIDAVIT OF DEFENDANT-APPELLANTS (SIC) ARE INADMISSIBLE; (e) BY IGNORING THE FACT THAT DAVAO LIGHTS USE OF THE VARYING DISCOUNT FORMULA WAS ADMITTEDLY PROVISIONALLY AUTHORIZED BY THE BOE WHICH AUTHORITY WAS IN FORCE DURING THE FILING AND PENDENCY OF THE CHARGE; (f) BY IGNORING THE FACT THAT THE VARYING DISCOUNT FORMULA WAS A FORMULA TO DETERMINE THE AMOUNT OF DISCOUNT DEDUCTIBLE FROM THE RATES EARLIER FIXED BY THE BOE RESULTING FROM THE COST SAVINGS REALIZABLE FROM THE CHEAPER COST OF ELECTRIC POWER SOLD BY NPC TO DAVAO LIGHT, AND ITS NEGATIVE ASPECT WAS MERELY AN INCORPORATION INTO SAID FORMULA OF THE FUEL CLAUSE ADJUSTMENT ALREADY AUTHORIZED IN THE DECISION OF SAID BOARD IN CASE NO. 73-146; (g) BY BEING OBLIVIOUS OF THE CIRCUMSTANCE THAT THERE WAS NO FRAUD OR DECEIT IN SECURING SAID PROVISIONAL AUTHORITY, AND THE BOARD MADE NO SUCH FINDING; (h) BY IGNORING THE UNREBUTTED EVIDENCE THAT APPELLANT FUENTES DISOBEYED THE DIRECTIVE OF HIS SUPERIOR, THE CHIEF STATE PROSECUTOR TO HOLD IN ABEYANCE FURTHER PROCEEDINGS IN I.S. NO. 82-115, AND THAT HE FILED AN INFORMATION CHARGING PLAINTIFF-APPELLANTS (SIC) WITH AN OFFENSE DIFFERENT FROM THAT SUBJECT OF HIS PRELIMINARY INVESTIGATION; (i) IN FINDING THAT DEFENDANT-APPELLANTS (SIC) DID NOT ACT WITH MALICE AND HAD ACTED IN GOOD FAITH IN FILING SAID CHARGE. III TRIAL COURT ERRED IN NOT AWARDING DAMAGES TO PLAINTIFF-APPELLANTS (SIC).82 For their part, DLPC, et al. alleged the following: I THAT THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANTS APPELLANTS COUNTERCLAIMS HAVE NO CAUSE OF ACTION. II THAT THE TRIAL COURT ERRED IN NOT AWARDING DAMAGES AND ATTORNEYS FEES.83 On October 30, 2001, the CA rendered a Decision84 affirming the decision of the RTC. Diaz, et al. appealed the decision before this Court, docketed as G.R. No. 154378. On November 13, 2002, this Court resolved to dismiss the petition for lack of merit.85 On April 15, 2003, as per Entry of Judgment,86 the resolution of this Court became final and executory. On June 10, 1992, DLPC instituted a civil action for Damages,87 before the RTC, Cebu City, against Diaz for defamatory and libelous remarks and for abuse of rights. The plaintiff alleged that Diaz, motivated by malice and ill-will, had taken it upon himself to find fault in DLPCs acts and oppose all its application with the BOE, using the media to assault its good name by circulating or publishing libelous and false statements in the newspapers. The case was docketed as Civil Case No. CEB-11843.

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DLPC further alleged that Diaz published and disseminated a handbill claiming that there was something irregular and anomalous regarding the Energy Regulation Boards approval of the appraisal of the properties and equipment of DLPC, because of which the customers of DLPC could expect a P5.00 per kilowatt charge in the future. Diaz allegedly gave identical interviews with the Mindanao Daily Mirror and the Ang Peryodiko Dabaw reiterating what he said in the handbill.88 In addition, Diaz, in an interview with the Peoples Daily Forum, claimed that the National Power Corporation sold two (2) generating sets to DLPC for only P1.00 each.89 Consequently, DLPC suffered besmirched reputation and public humiliation, and damage to its business standing. The complaint contained the following prayer: 1) Immediately issue a temporary restraining order ex-parte precluding defendant from committing further acts of tort or libel against plaintiff, and after the hearing of plaintiffs application for preliminary injunction, issue such writ after posting of the required injunction bond; 2) After trial, render judgment in favor of plaintiff and against defendant Antonio Diaz making the injunction permanent, and ordering the latter to pay the former a) The sum of P10,000,000.00 as moral damages anddamages to its business standing; b) The sum of P300,000.00 as exemplary damages; c) The sum of P500,000.00 as attorneys fees and expenses of litigation; d) The cost of suit.90 After trial, the RTC in Civil Case No. CEB-11843 rendered a Decision91 in favor of DLPC and against Diaz, awarding more than P1,500,000.00 in damages to DLPC and dismissing the counterclaim of Diaz. The decretal portion reads: WHEREFORE, premises above set-forth, the Court hereby renders judgment in favor of plaintiff Davao Light & Power Co., Inc. and against defendant Antonio Diaz ordering said defendant: 1. To pay plaintiff the amount of P1,500,000.00 by way of moral damages for besmirched reputation, loss of business standing and goodwill; 2. To pay plaintiff the amount of P300,000.00 in exemplary damages by way of example or correction for the public good; and 3. To pay plaintiff the amount of P500,000.00 in attorneys fees and litigation expenses and to pay the costs. Defendant takes nothing from his counterclaim. SO ORDERED.92 Both parties appealed the decision to the CA in CA-G.R. CV No. 65082, which appeal is still pending. On October 30, 1992, Diaz, as plaintiff, filed a complaint for Damages, Injunction with Writ of Preliminary Injunction and Temporary Restraining Order, Plus Attorneys Fee93 against DLPC before the RTC, Davao City; the case was docketed as Civil Case No. 21,655-92. Diaz alleged that DLPCs filing of criminal cases, I. S. No. 593 for theft of electricity and I.S. No. 92-4590 for violation of P.D. 401, as amended by B.P. Blg. 876), were intended to harass and humiliate him before the public and government authorities and ruin his image;94 he was seriously prejudiced by the filing of an P11.6 Million damage suit in Civil Case No. CEB-1055 and a P10.8 Million damage suit in Civil Case No. CEB-11843;95 defendants, by their common and joint acts, were motivated by evident bad faith and intentionally caused injustice to his person in violation of Article 19 of the New Civil Code.96 Diaz thus prayed: WHEREFORE, and in view of the foregoing, it is most respectfully prayed of the Honorable Court: a) Before notice and hearing to issue a temporary restraining order enjoining defendants from committing any unlawful, illegal, tortiuous (sic) and inequitable act which may affect the individual rights of plaintiff, and after hearing to issue writ of preliminary injunction for the same purpose upon posting of the bond; b) After trial on the merits, to make the writ of injunction as permanent; c) To order defendants to pay plaintiff, jointly and severally, moral damages in the amount ofP10,000,000.00, attorneys fee in the amount of P500,000.00, litigation expenses in the amount ofP100,000.00 and exemplary damage in the amount of P100,000.00; and,

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d) To grant to plaintiff such other relief proper and equitable under the premises.97 On November 4, 1992, the RTC issued a TRO98 in favor of Diaz, directing DLPC or any person acting for and in its behalf, to desist and refrain from committing any unlawful, tortuous and inequitable conduct which may affect the former for a period of twenty (20) days. During the pre-trial, the parties limited the issue to "whether or not the plaintiff is entitled to damages by virtue of the filing of the criminal cases against him for theft of electricity and violation of P.D. 401, both of which were already dismissed." Due to the pendency of various actions before several courts, the trial court opted to segregate the issues. It focused only on the alleged malicious prosecution with regard to the filing of the criminal action for theft, I. S. No. 593, and for Violation of P.D. 401, as amended by B.P. Blg. 876, I.S. No. 924590. The RTC reasoned in this wise: The records show that plaintiffs first cause of action, which is damages for defendants refusal to grant him electric service, has become moot and academic by virtue of the compromise agreement executed by the plaintiff and the defendant in the mandamus case docketed as Civil Case No. 18288 of this Court. The parties filed a Joint Motion to Dismiss based on the Compromise Agreement which was granted by this Court and which led to the eventual dismissal of the case with prejudice. In summary, plaintiff asks for damages for defendants alleged malicious prosecution of a criminal case of theft of electricity against him, for plaintiffs filing of a charge of violation of P.D. 401 as amended after dismissal of the theft case, the filing of a damage suit against him before the RTC of Cebu City which was dismissed and the filing of another damage suit before the same Cebu RTC which is still pending. Damages are also being sought for defendants removal of Electric Meter No. 847328 (sic). But this is a subject matter of a case pending before Branch 13 of this Court and therefore said court retains jurisdiction over the said cause of action. x x x99 On May 22, 2000, the RTC rendered a Decision100 dismissing the complaint. The fallo reads: In view of all the foregoing, finding no merit in plaintiffs complaint, judgment is hereby rendered dismissing said complaint with costs de oficio. SO ORDERED.101 The RTC held that while the City Prosecutor, and later the Secretary of Justice, concluded that there was no probable cause for the crime of theft, this did not change the fact that plaintiff made an illegal connection for electricity.102 A persons right to litigate should not be penalized by holding him liable for damages. Diaz appealed the decision to the CA, alleging that: I THE TRIAL COURT ERRED IN HOLDING THAT WHEN THE DEFENDANTS FILED THE CASES OF THEFT, THEY DID SO IN HONEST BELIEF THAT PLAINTIFF IS CRIMINALLY LIABLE. II THE TRIAL COURT ERRED IN DISMISSING THE CASE AT BAR AND WITHOUT GRANTING THE AWARD OF DAMAGES.103 On October 1, 2003, the CA affirmed the decision of the RTC.104 It concluded that the evidence on hand showed good faith on the part of DLPC in filing the subject complaints. It pointed out that Diaz had been using the electrical services of DLPC without its consent. As to the effect of the compromise agreement, the CA ruled that it did not bar the filing of the criminal action. Thus, under the principle of damnum absque injuria, the legitimate exercise of a persons right, even if it causes loss to another, does not automatically result in an actionable injury.105 Diaz, now petitioner, comes before this Court in this petition for review on certiorari, raising the following errors: a) "Proof of moral suffering must be introduced, otherwise the award of moral damage is not proper. In this case, the evidence presented by the appellant is insufficient to overcome the presumption of good faith." (Decision, p. 10) b) "In view of the foregoing, it is clear that the subject complaints were filed so as to protect appellee DLPCs interest. In this regard, it must be borne in mind that no person should be penalized for the exercise of the right to litigate." (Decision, p. 12)106 The issues raised in the present action can be summarized as follows: (1) whether or not the compromise agreement entered into between DLPC and Diaz barred the former from instituting further actions involving electric Meter No. 84736 or 86673509; (2) whether or not DLPC acted in bad faith in instituting the criminal cases against Diaz; and (3) whether or not Diaz is entitled to damages. The petition is without merit.

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Petitioner insists that the compromise agreement as well as the decision of the CA in CA-G.R. SP No. 14909 already settled the controversies between them; yet, DLPC instituted the theft case against Diaz, and worse, instituted another action for violation of P.D. 401, as amended by B.P. Blg. 876. Thus, the only conclusion that can be inferred from the acts of DLPC is that they were designed to harass, embarrass, prejudice, and ruin him. He further avers that the compromise agreement in Civil Case No. CEB-1049 completely erased litigious matters that could necessarily arise out of either Electric Meter No. 84736 or 86673509.107 Moreover, Diaz asserts that the evidence he presented is sufficient to prove the damages he suffered by reason of the malicious institution of the criminal cases. We do not agree. Article 2028 of the Civil Code defines a compromise as a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. The purpose of compromise is to settle the claims of the parties and bar all future disputes and controversies. However, criminal liability is not affected by compromise for it is a public offense which must be prosecuted and punished by the Government on its own motion, though complete reparation should have been made of the damages suffered by the offended party. A criminal case is committed against the People, and the offended party may not waive or extinguish the criminal liability that the law imposes for the commission of the offense.108 Moreover, a compromise is not one of the grounds prescribed by the Revised Penal Code for the extinction of criminal liability.109 As can be inferred from the compromise agreement, Diaz and DLPC merely agreed to (1) reduce the latters total claims to only P385,000.00; (2) for DLPC to waive its counterclaims against Diaz; and (3) upon receipt of the amount, for DLPC to immediately install the necessary electric service to the building. The parties likewise agreed to the dismissal of Sp. Civil Case No. 18,288 for being moot and academic. Nowhere in said agreement did the parties agree that DLPC was barred from instituting any further action involving electric Meter No. 84736 or 86673509. We find that petitioner is not entitled to damages under Articles 19,110 20[111 and 21,112 and Articles 2217113and 2219(8)114 of the New Civil Code. The elements of abuse of rights are the following: (a) the existence of a legal right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another.115 Thus, malice or bad faith is at the core of the above provisions.116 Good faith refers to the state of the mind which is manifested by the acts of the individual concerned. It consists of the intention to abstain from taking an unconscionable and unscrupulous advantage of another.117 Good faith is presumed and he who alleges bad faith has the duty to prove the same.118 Bad faith, on the other hand, does not simply connote bad judgment to simple negligence, dishonest purpose or some moral obloquy and conscious doing of a wrong, a breach of known duty due to some motives or interest or ill-will that partakes of the nature of fraud. Malice connotes ill-will or spite and speaks not in response to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad motive. 119 The evidence presented by respondents negates malice or bad faith. Petitioner himself alleged in his complaint that he unilaterally installed Meter No. 86673509 to replace Meter No. 84738 after it was removed by DLPC. No less than this Court, in G.R. No. 85445, admonished petitioner and reminded him that connections of electrical service and installations of electric meters should always be upon mutual contract of the parties, and that payments for electrical consumption should also be made promptly whenever due.120 Based on these established facts, petitioner has not shown that the acts of respondent were done with the sole intent of prejudicing and injuring him. Petitioner may have suffered damages as a result of the filing of the complaints. However, there is a material distinction between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from the injury; and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. In such cases, the consequences must be borne by the injured person alone; the law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong. These situations are often called damnum absque injuria.121 Whatever damages Diaz may have suffered would have to be borne by him alone since it was his acts which led to the filing of the complaints against him. On the other hand, malicious prosecution has been defined as an action for damages brought by or against whom a criminal prosecution, civil suit or other legal proceeding has been instituted maliciously and without probable cause, after the termination of such prosecution, suit, or other proceeding in favor of the defendant therein.122 It is an established rule that in order for malicious prosecution to prosper, the following requisites must be proven by petitioner: (1) the fact of prosecution and the further fact that the defendant (respondent) was himself the prosecutor, and that the action finally terminated with an acquittal; (2) that in bringing the action, the prosecutor acted without probable cause; and (3) that the prosecutor was actuated or impelled by legal malice, that is, by improper or sinister motive.123 The foregoing are necessary to preserve a persons right to litigate which may be emasculated by the undue filing of malicious prosecution cases.124 From the foregoing requirements, it can be inferred that malice and want of probable cause must both be clearly established to justify an award of damages based on malicious prosecution.125

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The Court notes that respondents initiated two separate criminal actions, one for theft of electricity, Inv. Sheet No. 593 July/1988, and the other, for Violation of P.D. 401, as amended by B.P. Blg. 876, I.S. No. 92-4590. It must be stressed that theft of electricity is a felony defined and penalized under the Revised Penal Code, while Violation of P.D. 401, as amended by B.P. Blg. 876, is an offense punished by a special law. What generally makes the former a felony is criminal intent (dolo) or negligence (culpa); what makes the latter a crime is the special law enacting it.126 In addition, the elements of the two (2) offenses are different from one another. In theft, the elements are: (1) intent to gain; (2) unlawful taking; (3) personal property belonging to another; (4) and absence of violence or intimidation against persons or force upon things.127 On the other hand, the crime of Violation of P.D. 401, as amended by B.P. Blg. 876, is mala prohibita. The criminal act is not inherently immoral but becomes punishable only because the law says it is forbidden. With these crimes, the sole issue is whether the law has been violated. Criminal intent is not necessary.128 While the institution of separate criminal actions under the provisions of P.D. 401, as amended by B.P. Blg. 876, and under the provisions of the Revised Penal Code on theft may refer to identical acts committed by petitioner, the prosecution thereof cannot be limited to one offense because a single criminal act may give rise to a multiplicity of offenses; and where there is variance or difference between the elements of an offense in one law and another law, as in the case at bar, there will be no double jeopardy because what the rule on double jeopardy prohibits refers to identity of elements in the two (2) offenses. Otherwise stated, prosecution for the same act is not prohibited; what is forbidden is prosecution for the same offense.129 Hence, no fault could be attributed to respondent DLPC when it instituted the two separate actions. As earlier stated, a claim for damages based on malicious prosecution will prosper only if the three elements aforecited are shown to exist. We find that none of the requisites are attendant here. First. Although respondent DLPC initiated before the prosecutors office Inv. Sheet No. 593 July/1988 for theft of electricity, and I.S. No. 92-4590 for Violation of P.D. 401, as amended by B.P. Blg. 876, no information was ever filed in court. The cases were eventually dropped or dismissed before they could be filed in court. Ultimately, both actions could not end in an acquittal. Second. It cannot be concluded that respondent DLPC acted without probable cause when it instituted the actions. The events which led to the filing of the complaints are undisputed, and respondent DLPC cannot be faulted for filing them. In the early case of Buchanan v. Esteban,130 this Court had already stressed that "one cannot be held liable in damages for maliciously instituting a prosecution where he acted with probable cause." As Justice Moreland explained in that case: Probable cause is the existence of such facts and circumstances as would excite the belief, in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. The general rule is well settled that one cannot be held liable in damages for maliciously instituting a prosecution where he acted with probable cause. In other words, a suit will lie only in cases where a legal prosecution has been carried on without probable cause. And the reason for the rule as stated by Blackstone, is that it would be a very great discouragement to public justice if prosecutors, who had a tolerable ground of suspicion, were liable to be sued at law when their indictments miscarried. Thus, the element of malice and the absence of probable cause must be proved.131 There must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person, and that it was initiated deliberately knowing that the charge was false and baseless to entitle the victims to damages.132 The two elements must simultaneously exist; otherwise, the presence of probable cause signifies, as a legal consequence, the absence of malice.133 In the instant case, it is evident that respondent DLPC was not motivated by malicious intent or by a sinister design to unduly harass petitioner, but only by a well-founded anxiety to protect its rights. Respondent DLPC cannot therefore be faulted in availing of the remedies provided for by law. In a free society, controversies are heard and settled under the rule of law in the forum of the courts of justice. It is one of the virtues of our system of government that a person who feels aggrieved does not have to take the law into his or her hands or resort to the use of force for the vindication of injury. The courts are there to hear and act on the complaint. The right to litigate is an escape valve to relieve the pressures of personal disagreements that might otherwise explode in physical confrontation. It is necessary not only for upholding ones claims when they are unjustly denied but also for the maintenance of peace, if not goodwill, among incipient antagonists. Without the right to litigate, conflicting claims cannot be examined and resolved in accordance with one of the primary purposes of government, which is to provide for a just and orderly society.134 Hence, the mere act of submitting a case to the authorities for prosecution does not render a person liable for malicious prosecution should he or she be unsuccessful, for the law could not have meant to impose a penalty on the right to litigate.135 IN LIGHT OF THE FOREGOING, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 68709 is AFFIRMED. SO ORDERED.

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BEATRIZ P. WASSMER, plaintiff-appellee, vs. FRANCISCO X. VELEZ, defendant-appellant. Jalandoni & Jamir for defendant-appellant. Samson S. Alcantara for plaintiff-appellee. BENGZON, J.P., J.: The facts that culminated in this case started with dreams and hopes, followed by appropriate planning and serious endeavors, but terminated in frustration and, what is worse, complete public humiliation. Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love, decided to get married and set September 4, 1954 as the big day. On September 2, 1954 Velez left this note for his bride-to-be: Dear Bet Will have to postpone wedding My mother opposes it. Am leaving on the Convair today. Please do not ask too many people about the reason why That would only create a scandal. Paquing But the next day, September 3, he sent her the following telegram: NOTHING CHANGED REST ASSURED RETURNING VERY SOON APOLOGIZE MAMA PAPA LOVE . PAKING Thereafter Velez did not appear nor was he heard from again. Sued by Beatriz for damages, Velez filed no answer and was declared in default. Plaintiff adduced evidence before the clerk of court as commissioner, and on April 29, 1955, judgment was rendered ordering defendant to pay plaintiff P2,000.00 as actual damages; P25,000.00 as moral and exemplary damages; P2,500.00 as attorney's fees; and the costs. On June 21, 1955 defendant filed a "petition for relief from orders, judgment and proceedings and motion for new trial and reconsideration." Plaintiff moved to strike it cut. But the court, on August 2, 1955, ordered the parties and their attorneys to appear before it on August 23, 1955 "to explore at this stage of the proceedings the possibility of arriving at an amicable settlement." It added that should any of them fail to appear "the petition for relief and the opposition thereto will be deemed submitted for resolution."

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On August 23, 1955 defendant failed to appear before court. Instead, on the following day his counsel filed a motion to defer for two weeks the resolution on defendants petition for relief. The counsel stated that he would confer with defendant in Cagayan de Oro City the latter's residence on the possibility of an amicable element. The court granted two weeks counted from August 25, 1955. Plaintiff manifested on June 15, 1956 that the two weeks given by the court had expired on September 8, 1955 but that defendant and his counsel had failed to appear. Another chance for amicable settlement was given by the court in its order of July 6, 1956 calling the parties and their attorneys to appear on July 13, 1956. This time. however, defendant's counsel informed the court that chances of settling the case amicably were nil. On July 20, 1956 the court issued an order denying defendant's aforesaid petition. Defendant has appealed to this Court. In his petition of June 21, 1955 in the court a quo defendant alleged excusable negligence as ground to set aside the judgment by default. Specifically, it was stated that defendant filed no answer in the belief that an amicable settlement was being negotiated. A petition for relief from judgment on grounds of fraud, accident, mistake or excusable negligence, must be duly supported by an affidavit of merits stating facts constituting a valid defense. (Sec. 3, Rule 38, Rules of Court.) Defendant's affidavit of merits attached to his petition of June 21, 1955 stated: "That he has a good and valid defense against plaintiff's cause of action, his failure to marry the plaintiff as scheduled having been due to fortuitous event and/or circumstances beyond his control." An affidavit of merits like this stating mere conclusions or opinions instead of facts is not valid. (Cortes vs. Co Bun Kim, L-3926, Oct. 10, 1951; Vaswani vs. P. Tarrachand Bros., L-15800, December 29, 1960.) Defendant, however, would contend that the affidavit of merits was in fact unnecessary, or a mere surplusage, because the judgment sought to be set aside was null and void, it having been based on evidence adduced before the clerk of court. In Province of Pangasinan vs. Palisoc, L-16519, October 30, 1962, this Court pointed out that the procedure of designating the clerk of court as commissioner to receive evidence is sanctioned by Rule 34 (now Rule 33) of the Rules of Court. Now as to defendant's consent to said procedure, the same did not have to be obtained for he was declared in default and thus had no standing in court (Velez vs. Ramas, 40 Phil. 787; Alano vs. Court of First Instance, L-14557, October 30, 1959). In support of his "motion for new trial and reconsideration," defendant asserts that the judgment is contrary to law. The reason given is that "there is no provision of the Civil Code authorizing" an action for breach of promise to marry. Indeed, our ruling in Hermosisima vs. Court of Appeals (L-14628, Sept. 30, 1960), as reiterated in Estopa vs. Biansay (L-14733, Sept. 30, 1960), is that "mere breach of a promise to marry" is not an actionable wrong. We pointed out that Congress deliberately eliminated from the draft of the new Civil Code the provisions that would have it so. It must not be overlooked, however, that the extent to which acts not contrary to law may be perpetrated with impunity, is not limitless for Article 21 of said Code provides that "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." The record reveals that on August 23, 1954 plaintiff and defendant applied for a license to contract marriage, which was subsequently issued (Exhs. A, A-1). Their wedding was set for September 4, 1954. Invitations were printed and distributed to relatives, friends and acquaintances (Tsn., 5; Exh. C). The bride-to-be's trousseau, party drsrses and other apparel for the important occasion were purchased (Tsn., 7-8). Dresses for the maid of honor and the flower girl were prepared. A matrimonial bed, with accessories, was bought. Bridal showers were given and gifts received (Tsn., 6; Exh. E). And then, with but two days before the wedding, defendant, who was then 28 years old,: simply left a note for plaintiff stating: "Will have to postpone wedding My mother opposes it ... " He enplaned to his home city in Mindanao, and the next day, the day before the wedding, he wired plaintiff: "Nothing changed rest assured returning soon." But he never returned and was never heard from again. Surely this is not a case of mere breach of promise to marry. As stated, mere breach of promise to marry is not an actionable wrong. But to formally set a wedding and go through all the above-described preparation and publicity, only to walk out of it when the matrimony is about to be solemnized, is quite different. This is palpably and unjustifiably contrary to good customs for which defendant must be held answerable in damages in accordance with Article 21 aforesaid. Defendant urges in his afore-stated petition that the damages awarded were excessive. No question is raised as to the award of actual damages. What defendant would really assert hereunder is that the award of moral and exemplary damages, in the amount of P25,000.00, should be totally eliminated. Per 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. As to exemplary damages, defendant contends that the same could not be adjudged against him because under Article 2232 of the New Civil Code the condition precedent is that "the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." The argument is devoid of merit as under the above-narrated circumstances of this case defendant clearly acted in a "wanton ... ,

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reckless [and] oppressive manner." This Court's opinion, however, is that considering the particular circumstances of this case, P15,000.00 as moral and exemplary damages is deemed to be a reasonable award. PREMISES CONSIDERED, with the above-indicated modification, the lower court's judgment is hereby affirmed, with costs.

G.R. No. L-18630

December 17, 1966

APOLONIO TANJANCO, petitioner, vs. HON. COURT OF APPEALS and ARACELI SANTOS, respondents. P. Carreon and G. O. Veneracion, Jr. for petitioner. Antonio V. Bonoan for respondents. REYES, J.B.L., J.: Appeal from a decision of the Court of Appeals (in its Case No. 27210-R) revoking an order of the Court of First Instance of Rizal (in Civil Case No. Q-4797) dismissing appellant's action for support and damages. The essential allegations of the complaint are to the effect that, from December, 1957, the defendant (appellee herein), Apolonio Tanjanco, courted the plaintiff, Araceli Santos, both being of adult age; that "defendant expressed and professed his undying love and affection for plaintiff who also in due time reciprocated the tender feelings"; that in consideration of defendant's promise of marriage plaintiff consented and acceded to defendant's pleas for carnal knowledge; that regularly until December 1959, through his protestations of love and promises of marriage, defendant succeeded in having carnal access to plaintiff, as a result of which the

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latter conceived a child; that due to her pregnant condition, to avoid embarrassment and social humiliation, plaintiff had to resign her job as secretary in IBM Philippines, Inc., where she was receiving P230.00 a month; that thereby plaintiff became unable to support herself and her baby; that due to defendant's refusal to marry plaintiff, as promised, the latter suffered mental anguish, besmirched reputation, wounded feelings, moral shock, and social humiliation. The prayer was for a decree compelling the defendant to recognize the unborn child that plaintiff was bearing; to pay her not less than P430.00 a month for her support and that of her baby, plus P100,000.00 in moral and exemplary damages, plus P10,000.00 attorney's fees. Upon defendant's motion to dismiss, the court of first instance dismissed the complaint for failure to state a cause of action. Plaintiff Santos duly appealed to the Court of Appeals, and the latter ultimately decided the case, holding with the lower court that no cause of action was shown to compel recognition of a child as yet unborn, nor for its support, but decreed that the complaint did state a cause of action for damages, premised on Article 21 of the Civil Code of the Philippines, prescribing as follows: 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. The Court of Appeals, therefore, entered judgment setting aside the dismissal and directing the court of origin to proceed with the case. Defendant, in turn, appealed to this Court, pleading that actions for breach of a promise to marry are not permissible in this jurisdiction, and invoking the rulings of this Court in Estopa vs. Piansay, L-14733, September 30, 1960; Hermosisima vs. Court of Appeals, L-14628, January 29, 1962; and De Jesus vs. SyQuia, 58 Phil. 886. We find this appeal meritorious. In holding that the complaint stated a cause of action for damages, under Article 21 above mentioned, the Court of Appeals relied upon and quoted from the memorandum submitted by the Code Commission to the Legislature in 1949 to support the original draft of the Civil Code. Referring to Article 23 of the draft (now Article 21 of the Code), the Commission stated: But the Code Commission has gone farther than the sphere of wrongs defined or determined by positive law. Fully sensible that there are countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they have actually suffered material and moral injury, the Commission has deemed it necessary, in the interest of justice, to incorporate in the proposed Civil Code the following rule: "ART. 23. 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." An example will illustrate the purview of the foregoing norm: "A" seduces the nineteen-year old daughter of "X". A promise of marriage either has not been made, or can not be proved. The girl becomes pregnant. Under the present laws, there is no crime, as the girl is above eighteen years of age. Neither can any civil action for breach of promise of marriage be filed. Therefore, though the grievous moral wrong has been committed, and though the girl and her family have suffered incalculable moral damage, she and her parents cannot bring any action for damages. But under the proposed article, she and her parents would have such a right of action. The Court of Appeals seems to have overlooked that the example set forth in the Code Commission's memorandum refers to a tort upon a minor who has been seduced. The essential feature is seduction, that in law is more than mere sexual intercourse, or a breach of a promise of marriage; it connotes essentially the idea of deceit, enticement, superior power or abuse of confidence on the part of the seducer to which the woman has yielded (U.S. vs. Buenaventura, 27 Phil. 121; U.S. vs. Arlante, 9 Phil. 595). It has been ruled in the Buenaventura case (supra) that To constitute seduction there must in all cases be some sufficient promise or inducement and the woman must yield because of the promise or other inducement. If she consents merely from carnal lust and the intercourse is from mutual desire, there is no seduction (43 Cent. Dig. tit. Seduction, par. 56). She must be induced to depart from the path of virtue by the use of some species of arts, persuasions and wiles, which are calculated to have and do have that effect, and which result in her ultimately submitting her person to the sexual embraces of her seducer (27 Phil. 123). And in American Jurisprudence we find: On the other hand, in an action by the woman, the enticement, persuasion or deception is the essence of the injury; and a mere proof of intercourse is insufficient to warrant a recover.

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Accordingly it is not seduction where the willingness arises out of sexual desire or curiosity of the female, and the defendant merely affords her the needed opportunity for the commission of the act. It has been emphasized that to allow a recovery in all such cases would tend to the demoralization of the female sex, and would be a reward for unchastity by which a class of adventuresses would be swift to profit." (47 Am. Jur. 662) Bearing these principles in mind, let us examine the complaint. The material allegations there are as follows: I. That the plaintiff is of legal age, single, and residing at 56 South E. Diliman, Quezon City, while defendant is also of legal age, single and residing at 525 Padre Faura, Manila, where he may be served with summons; II. That the plaintiff and the defendant became acquainted with each other sometime in December, 1957 and soon thereafter, the defendant started visiting and courting the plaintiff; III. That the defendant's visits were regular and frequent and in due time the defendant expressed and professed his undying love and affection for the plaintiff who also in due time reciprocated the tender feelings; IV. That in the course of their engagement, the plaintiff and the defendant as are wont of young people in love had frequent outings and dates, became very close and intimate to each other and sometime in July, 1958, in consideration of the defendant's promises of marriage, the plaintiff consented and acceded to the former's earnest and repeated pleas to have carnal knowledge with him; V. That subsequent thereto and regularly until about July, 1959 except for a short period in December, 1958 when the defendant was out of the country, the defendant through his protestations of love and promises of marriage succeeded in having carnal knowledge with the plaintiff; VI. That as a result of their intimate relationship, the plaintiff started conceiving which was confirmed by a doctor sometime in July, 1959; VII. That upon being certain of her pregnant condition, the plaintiff informed the defendant and pleaded with him to make good his promises of marriage, but instead of honoring his promises and righting his wrong, the defendant stopped and refrained from seeing the plaintiff since about July, 1959 has not visited the plaintiff and to all intents and purposes has broken their engagement and his promises. Over and above the partisan allegations, the facts stand out that for one whole year, from 1958 to 1959, the plaintiff-appellee, a woman of adult age, maintained intimate sexual relations with appellant, with repeated acts of intercourse. Such conduct is incompatible with the idea of seduction. Plainly there is here voluntariness and mutual passion; for had the appellant been deceived, had she surrendered exclusively because of the deceit, artful persuasions and wiles of the defendant, she would not have again yielded to his embraces, much less for one year, without exacting early fulfillment of the alleged promises of marriage, and would have cut chart all sexual relations upon finding that defendant did not intend to fulfill his promises. Hence, we conclude that no case is made under Article 21 of the Civil Code, and no other cause of action being alleged, no error was committed by the Court of First Instance in dismissing the complaint. Of course, the dismissal must be understood as without prejudice to whatever actions may correspond to the child of the plaintiff against the defendant-appellant, if any. On that point, this Court makes no pronouncement, since the child's own rights are not here involved. FOR THE FOREGOING REASONS, the decision of the Court of Appeals is reversed, and that of the Court of First Instance is affirmed. No costs.

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G.R. No. L-66865 January 13, 1989 MAGTANGGOL QUE, petitioner, vs. THE HON. INTERMEDIATE APPELLATE COURT and NICOLAS, respondents. Manuel O. Chan Law Offices for petitioner. Jose M. Castillo for respondents.

CRUZ, J.: Both procedural and substantive issues are involved in this petition for review by certiorari of a decision of the respondent court reinstating the original decision of the trial court in favor of the appellant, the private respondent herein. The petitioner claims that the respondent court committed reversible error in holding that his second motion for reconsideration was pro forma and therefore null and void. It is also his contention that the revived original decision of the trial court, which had been reversed on his motion for reconsideration, was not in accordance with law and jurisprudence and should itself be annulled. The case arose when Magtanggol Que, the herein petitioner, filed a complaint for estafa against private respondent Antonio Nicolas in the office of the city fiscal of Caloocan City for issuance of several checks which were subsequently dishonored when presented for encashment. 1 The charge was dismissed for lack of merit, the investigating fiscal holding that the controversy was an accounting matter that did not necessarily involve deceit on the part of Nicolas. 2 Subsequently, Nicolas filed his own complaint for damages against Que, this time in the Court of First Instance of Bulacan, for what he claimed was his malicious prosecution by the latter. 3 It was now Que's turn to claim harassment. In his counterclaim, he averred that Nicolas had maliciously filed the complaint in Bulacan although he was a resident of Caloocan City; that the private respondent was really indebted to him in any 4 case; and that it was he who had suffered damages as a result of the unwarranted suit. The dispute goes back to several previous business transactions between the protagonists when they were still on amicable terms. In July and August of 1975, the private respondent ordered from the petitioner certain amounts of canvass strollers which were delivered to and accepted by Nicolas, who issued five checks therefore to Que. The total face value of the cheeks was P7,600.00. Payment thereof was subsequently stopped by Nicolas and Que was unable to encash them. Nicolas explained later that he had ordered the "stop payment" because of defects in the articles sold which despite his requests Que had not corrected. Que for his part argued that the allegedly defective articles were never returned to him until after he had filed the charge for estafa and that Nicolas had earlier merely ignored his complaints about the dishonored checks. The original decision written by the late Judge Benigno M. Puno held in favor of the plaintiff and awarded him the total amount of P80,500.00 in moral, exemplary, and nominal damages plus a P4,000.00 attorney's fee and the costs of the suit. 5 The finding was that the defendant had acted maliciously in filing the estafa charge and in alleging that the plaintiff had issued the dishonored checks with deceit aforethought. The decision was served on the petitioner on November 8, 1977. 6 He filed a motion for reconsideration, which was denied on November 3, 1978, by Judge Oscar C. Fernandez, who had succeeded Judge Puno. 7 On November 15, 1978, the petitioner filed his notice of appeal and appeal bond, followed two days later by his record on appeal, which was opposed by the private respondent. 8 On November 29, 1978, Nicolas filed a motion for execution pending appeal. 9 On December 29, 1978, Que filed a motion to stay the running of the period for appeal and leave to file a second motion for reconsideration within a period of thirty days. The trial court granted an extension up to January 29, 1978. 10 The second motion for reconsideration was filed on that date and on the basis thereof the trial court rendered its amended decision dated February 21, 1978, 11 which reversed the original decision penned by Judge Puno. It also awarded P10,000.00 moral damages to Que on his counterclaim. Thus it was that Nicolas, the would-be-appellee, became himself the appellant in the respondent court. In his appeal, the private respondent contended that the amended decision rendered by Judge Fernandez was null and void because the trial court lost jurisdiction over the case when the petitioner filed his notice of appeal, appeal bond and record on appeal. Assuming the appeal had not yet been perfected, the trial judge nevertheless could not have acted on the second motion for reconsideration because it did not contain any notice of hearing and was also filed beyond the thirty-day extension prayed for by the petitioner himself. There

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was the further contention that the second motion for reconsideration was pro forma and as "a mere scrap of paper" did not suspend the running of the reglementary period for appeal . 12 The first objection is clearly without merit as it is not disputed that the record on appeal had not yet been approved by the trial court and in fact had been opposed by the private respondent himself. The trial court had not yet lost jurisdiction over the case because Rule 41, Section 9, of the Rules of Court provides: Sec. 9. When appeal deemed perfected, effect thereof If the notice of appeal bond and the record on appeal, the appeal bond and the record on appeal have been filed in due time, the appeal is deemed perfected upon the approval of the record on appeal and of the appeal bond other than a cash bond, and thereafter the trial court loses its jurisdiction over the case... While it is conceded that the motion for reconsideration did not contain any notice of hearing, it is also true that the private respondent was notified of such hearing by the trial court and that his counsel appeared thereat, to reiterate his position that the second 13 motion was null and void. It seems to us that in opting not to oppose the same on the merits, the private respondent was relying too much on a technicality. As for the claimed tardiness, the respondent court correctly ruled that although the petitioner had asked for an extension of thirty days, which would have ended on January 28, 1979, the recorded fact was that the extension granted was up to January 29, 1979. The motion was filed on this date and so it could not be faulted for tardiness. On the last ground, however, the respondent court 14 sustained the private respondent. It held that the second motion for reconsideration should have been denied for being pro forma as it was a mere reiteration of the issues previously raised and already decided by the trial court. Accordingly, it annulled the amended decision based on the second motion for reconsideration and reinstated the original decision of Judge Puno. The Court has carefully gone over the first and the second motions for reconsideration and cannot agree with the respondent court that the latter simply reproduces the issues already raised and resolved in the first motion. We find that the second motion not only restates and reargues the first motion but also amplifies the same; and more than that, it also invokes and supports other substantial grounds not earlier raised in the first motion. In the first motion, 15 the petitioner argued that there was probable cause to justify his filing of the complaint for estafa and that he had not been motivated by malice; that the filing of the complaint for malicious prosecution in Bulacan was intended to harass him because the plaintiff was a resident of Caloocan City; and that there was no basis for the award of damages. In the second motion, 16 the petitioner augmented his claim that he had not filed the estafa charge with malice; that he had probable cause because the defendant had not gone beyond his own self-serving statements to prove that he had stopped payment of the checks because the goods delivered to him were defective; that the mere dismissal of the charge in the fiscal's office was not a ground for damages nor did it constitute an actionable wrong; and that the award of damages was not justified. While some of the grounds raised in the first motion were admittedly also invoked in the second motion, the purpose was evidently to reinforce the arguments thereon; and, no less significantly, the additional issues raised were seriously argued and supported with authorities. It is therefore incorrect to say that the second motion for reconsideration was a mere repetition of the first motion and so should not have been accepted by the trial court. Coming now to the substantive issues, we observe that the declared nullity of the second motion for reconsideration was the sole basis of the respondent court in setting aside the amended decision of Judge Fernandez and reinstating the original decision of Judge Puno. The more important question of whether or not the petitioner had instituted a malicious prosecution of the private respondent was not resolved as it was felt no longer necessary to do so. But as we have here ruled that the second motion for reconsideration was not merely pro forma it should follow that that important substantive question raised by the appellant must still be addressed and decided. Normally, the resolution of this question should be undertaken by the respondent court, to which this case ought to be remanded for further proceedings on the matter. However, considering the time this case has been pending since it was commenced in 1976 with the filing of the complaint for damages, and the pertinent records being available for direct examination and study by the Court, we deem it necessary and expedient to resolve the question ourselves, that this case may be decided once and for all without further delay. In the amended decision that reversed the original decision awarding damages to the private respondent, Judge Fernandez declared: 'In awarding plaintiff damages and attorney's fees in the total amount of P80,900.00, by way of moral, nominal and exemplary damages and attorney's fees, the Court overlooked the ruling that failure in suit is not per se an actionable wrong, that adverse result of an action does not per se make the act wrongful and subject the actor to payment of moral damages, for the law could not have meant to impose a penalty of a right to litigate, the right so precious that moral damages may be charged to those who exercise it erroneously; that reliance in good faith to counsel's advice given after a full and fair statement of all the facts to the attorney, does not render the party liable for damages and that it is immaterial that the attorney's advice is

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unsound or erroneous; and that where there is no clear showing of malice on the part of petitioner in filing the action, the worries and anxiety suffered by respondent are usually caused to the party haled into a court as a defendant, and there is no sufficient justification for awarding of damages. The resolution of dismissal by the Fiscal's office of Caloocan City is not tantamount to a decision in the sense that the proceedings had therein were merely summary in nature as the title of the proceeding 'preliminary investigation' so connotes. As a preliminary proceeding, it lacks the thoroughness and rigidity of an ordinary trial. The investigating fiscal was merely called upon to determine at first instance whether or not there exists a prima facie case to justify the filing of an infromation in court. 'Viewed in the light of the foregoing, the Court so believes that the lone self-serving testimony of plaintiff is insufficient to justify the award of the fabulous sum of P80,900.00 by way of moral, nominal and exemplary damages and attorney's fees. On the other hand, the Court is convinced that defendant had proven that of the sum of P7,600.00 covered by the five bouncing checks issued to him by plaintiff, at least P4,600.00 remains unpaid up to now. The defense of plaintiff that 198 pieces of canvass strollers which he received from defendant were defective, is in reality a lame and shallow excuse for plaintiff's non payment of his truly, just, valid, legal and moral obligation to defendant.** We take note at this point of the jurisprudence cited by the private respondent regarding the inhibitions that ought to be observed by a judge in reviewing the decision of his predecessor who conducted the trial and had the opportunity to observe the demeanor of the witnesses and to test their credibility firsthand. We affirm the rule announced in Miranda v. Court of Appeals 17 that the original decision should not be lightly revised. Nevertheless, the rule is not inflexible and ought not to be applied where an objective re- examination of the facts and the applicable laws dictates a reversal of the former judgment in the interest of justice. Decisions are after all not infallible, and much less are they immutable, more so if, as in the present case, they have not yet become final and executory. The question is not really whether or not Judge Fernandez had the authority to reverse the decision of Judge Puno but whether or not the reversal was correct. A study of the appealed amended decision shows that it was not arbitrarily reached by Judge Fernandez. On the contrary, the detailed assessment of the facts in light of the pertinent laws shows that the conclusions of the trial court were the result of a careful study of the record, as befitted a judge who was in effect reviewing the verdict of a colleague. In our view, the private respondent has not shown that Judge Fernandez committed any reversible error when on the basis of his own appraisal of the case he found for the petitioner and reversed the original decision of Judge Puno. As early as in 1932, in Buchanan v. Esteban, 18 this Court had already stressed that "one cannot be held liable in damages for maliciously instituting a prosecution where he acted with probable cause." As Justice Moreland explained in that case: Probable cause is the existence of such facts and circumstances as would excite the belief, in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which be was prosecuted. The general rule is well settled that one cannot be held liable in damages for maliciously instituting a prosecution where he acted with probable cause. In other words, a suit will lie only in cases where a legal prosecution has been carried on without probable cause. And the reason for the rule as stated by Blackstone, is that it would be a very great discouragement to public justice if prosecutors, who had a tolerable ground of suspicion, were liable to be sued at law when their indictments miscarried. xxx xxx xxx 'Under the Spanish Law, the element of probable cause was not treated separately from that of malice, as under the American Law. When a complaint was laid and there was probable cause to believe that the person charged had committed the acts complained of, although, as a matter of fact, he had not, the complainant was fully protected, but not so much on the theory of probable cause as on the ground that, under such circumstances, there was no intent to accuse falsely. If the charge, although false, was made with an honest belief in its truth and justice, and there were reasonable grounds on which such a belief could be founded, the accusation could not be held to have been false in the legal sense.' (Italics supplied.) In the case at bar, it is indisputable that the five checks issued by the private respondent had been dishonored and that the drawer had failed to make them good despite the protests of the petitioner. Nicolas had merely ignored him. It is also a matter of record that the checks were post-dated, which made the petitioner assume that at the time they were issued the private respondent did not really have sufficient funds for their

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encashment. It could be, as the original decision assumed, that the checks were in the nature of promissory notes, to be made good when the articles delivered met with the drawer's approval. However, considering that the checks could not be encashed and the supposedly defective goods had not been returned by the drawer, the petitioner had reason to believe when he filed his complaint that the buyer had at the outset intended to deceive him. The record shows the the criminal charge for estafa was filed by the petitioner with the fiscal's office on October 8, 1975, 19 and that the supposedly defective articles were returned by the private respondent to the former's driver only on October 13, 1975. 20 The only evidence that the articles were defective was the testimony of the private respondent himself, who claimed that the buttons on the canvass strollers were misplaced. Considering that Nicolas and Que had apparently been cordial until then and that they were businessmen involved in a symbiotic relationship, the Court feels that what Nicolas would or should have done was request the petitioner to correct the claimed defects instead of arbitrarily stopping payment on the checks in question. Strangely, what the private respondent did instead was simply cut short a mutually profitable association with this hostile act. The petitioner had to find out for himself that the checks had been dishonored on orders of the drawer. Except for his own allegations, there is no evidence that Nicolas asked or, if necessary, demanded the repair of the strollers. Neither is there any evidence that he had warned Que that payment on the checks would be stopped unless the repairs were undertaken. The private respondent says that he did all this by telephone. 21 but this self-serving statement is denied by the petitioner. 22 As the Court itself sees it, Nicolas, while retaining the strollers which had been delivered to him on the strength of his post-dated checks, simply issued the stop payment order without even previous notice to the petitioner. The petitioner alleged that he complained about the dishonored checks-also verbally, over the telephone but the private respondent simply ignored him. 23 It is noteworthy that, by contrast, this averment of the petitioner was not denied by the private respondent. The presence of probable cause signifies as a legal consequence the absence of malice. It is evident that the petitioner was not motivated by ill feeling but only by an anxiety to protect his his rights when he filed the criminal complaint for estafa with the fiscal's office. If he averred that the private respondent had no funds in the bank when he issued the postdated checks and intended to cheat the payee, it was because the circumstances of the case as Que saw them led him to this conclusion. Even if the fiscal found that no deceit was involved and that the petitioner's claim was unfounded, the mistaken charge was nonetheless, in the legal sense, not malicious. As the Court has held: To constitute malicious prosecution, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person that it was initiated deliberately by the defendant knowing that his charges were false and groundless. Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution 24 (Italics supplied.) We agree with the petitioner that the mere dismissal of the criminal complaint by the fiscal's office did not create a cause of action because the proceedings therein did not involve an exhaustive examination of the elements of malicious prosecution. What was inquired into in that preliminary investigation was whether or not there was aprima facie showing of estafa that would justify the filing of the corresponding information. Nowhere in the fiscal's investigation report is there any statement imputing malice to the complainant nor could it have as this was not the matter in issue. The Court is not unaware of the common tactic of filing complaints for estafa in the fiscal's office in hopes that fear of criminal prosecution will compel the debtor to settle his civil obligation. Fortunately, the fiscal has often seen through this maneuver and resisted this none-too-clever effort to make his office a collection agency for the complainant. In view of the antecedents of the case at bar, however, we are satisfied that the criminal complaint filed by the petitioner was not a mere ploy to enforce the payment of his account by Nicolas. There was here a genuine protest over the abrupt and suspicious order to stop the encashment of the checks issued to him by the private respondent. In a free society, controversies are heard and settled under the rule of law in the forum of the courts of justice. It is one of the virtues of our system of government that if a person feels he has been aggrieved, he does not have to take the law into his hands or resort to the use of force for the vindication of his injury. The courts are there to hear and act on his complaint. The right to litigate is an escape valve to relieve the pressures of personal disagreements that might otherwise explode in physical confrontation, It is necessary not only for upholding one's claims when they are unjustly denied but also for the maintenance of peace if not goodwill among incipient antagonists. Without the right to litigate, conflicting claims cannot be examined and resolved in accordance with one of the primary purposes of government, which is to provide for a just and orderly society. As the Court has held: While we must look upon the plight of hapless victims of unfounded and malicious prosecutions with tolerance and sympathy, sound principles of justice and public policy dictate that persons shall have free resort to the

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courts for redress of wrongs and vindications of their rights without fear of later on standing trial for damages whereby lack of sufficient evidence, legal technicalities or a different interpretation of the laws on the matter the case would lose ground and therein defendants acquitted. Proof and motive that the prosecution or institution of the action was prompted by a sinister design to vex and humiliate a person and to cast dishonor and disgrace must be clearly and preponderantly established to entitle the victims to damages and other rights granted by law; otherwise, there would always be a civil action for damages after every prosecution's failure to prove its cause resulting in the consequent acquittal of the accused therein. 25 Furthermore: The adverse result of an action does not per se make the wrongful and subject the actor to the payment of moral damages. The law could not have meant to impose a penalty on the right to litigate, such right is so precious that moral damages may not be charged on those who may exercise it erroneously. 26 There is in fact a stronger suggestion of malice in the circumstance that the private respondent filed his complaint for damages in Valenzuela, Bulacan, as his alleged residence, notwithstanding that his place of business, in which he had dealings with the petitioner, was Caloocan City. The Court finds the petitioner's claim of harassment more plausible. However, inasmuch as good faith is presumed, and applying this presumption both to the petitioner and the private respondent, we hereby rule that, absent sufficient rebuttable evidence, neither of them is guilty of malice in their mutual relations. There remains the issue of the actual damages, which the amended decision awarded in the sum of P4,600.00, representing the cost of the strollers not yet paid for by the private respondent. The evidence shows that these items were returned, albeit belatedly, for which the petitioner's driver had issued a receipt to Nicolas. The private respondent questioned this award in his appeal and argued his challenge in his appellant's brief, but the petitioner for his part offered no rebuttal and did not even file the appellee's brief. 27 In view of this, we hold that the said award should for lack of basis be, as it is hereby, disallowed. The acts of the petitioner and the private respondent have in the view of the Court been far from exemplary. The petitioner could have exercised a little more diligence in ascertaining the facts before filing the criminal complaint in the fiscal's office and provoking all this legal conflict. The private respondent, on the other hand, exhibited an undue belligerence that naturally excited the suspicions of the petitioner and later exacerbated their relations when he filed bis own complaint in Bulacan instead of Caloocan City. In the exercise of its discretion, the Court denies both parties their respective claims for damages and holds that each of them must bear the financial consequences of bis own acts, including the litigation expenses. The damages awarded in the original and amended decisions are all disallowed. WHEREFORE, the decision of the respondent court dated March 12, 1984, is SET ASIDE and the amended decision of the trial court dated February 21, 1979, is REINSTATED as above modified. This decision is immediately executory. Narvasa (Chairman), Gancayco, Grio-Aquino and Medialdea, JJ., concur.

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G.R. No. 106922

April 20, 2001

FRANKLIN M. DRILON, AURELIO C. TRAMPE, FERDINAND R. ABESAMIS and EULOGIO MANANQUIL,petitioners, vs. COURT OF APPEALS, HON. ERIBERTO U. ROSARIO, JR., in his capacity as Presiding Judge of Branch 66, Regional Trial Court of Makati and JUAN PONCE ENRILE, respondents. DE LEON, JR., J.: Before us is a petition for review of the Decision1 of the Court of Appeals and Resolution2 dated June 29, 1992 and August 27, 1992 respectively which affirmed the Order3 dated October 8, 1991 of the Regional Trial Court of Makati City, Branch 66, in Civil Case No. 90-2327 denying petitioners' motion to dismiss as well as the Order4dated January 6, 1992 denying petitioners' motion for reconsideration. The facts are as follows: After the unsuccessful December 1989 coup d' etat, the Department of Justice, then headed by petitioner Franklin Drilon, referred to the Special Composite Team of Prosecutors (Team of Prosecutors, for brevity), composed of co-petitioners Aurelio C. Trampe, Ferdinand R. Abesamis and Eulogio Mananquil, a lettercomplaint from the National Bureau of Investigation (NBI, for brevity) requesting for the investigation of private respondent Juan Ponce Enrile for his alleged participation in the said coup attempt. Finding sufficient basis to continue the inquiry, the Team of Prosecutors issued a subpoena to private respondent with an order to submit his counter-affidavit to the letter-complaint. Instead of filing his counteraffidavit, private respondent filed a Petition for Summary Dismissal of the charge against him. He also filed an urgent motion praying that he be given a notice of at least five (5) days before the filing of any information against him to enable him to take the appropriate legal action. At the same time, private respondent sent "cautionary letters" to all judges in Quezon City, Manila, Makati and Pasay City requesting that he be apprised of any information which may be filed against him and that he be given the opportunity to personally witness the raffle of the case against him. Said notice also appeared in several newspapers of general circulation. On February 27, 1990, the Team of Prosecutors filed before the Regional Trial Court of Quezon City on Information charging private respondent with the complex crime of rebellion with murder and frustrated murder. The Team of Prosecutors likewise filed before the Regional Trial Court of Makati City an Information charging, among others, private respondent with the offense of obstruction of justice for harboring an alleged felon under Presidential Decree No. 1829. Private respondent was later arrested and detained overnight at the NBI headquarters in Taft Avenue, Manila, and, on the following day, transferred to a detention room at Camp Karingal in Quezon City. The lawyers of private respondent also discovered that the information against the latter was first filed on February 21, 1990, but was subsequently withdrawn for re-filing on February 27, 1990. After a petition for writ of habeas corpus was filed before this Court entitled Enrile v. Salazar5, we granted private respondent's provisional liberty upon posting of a cash bond. On June 5, 1990, in the same case of Enrile v. Salazar, we ordered the modification of the Information before the RTC of Quezon City to simple rebellion only in consonance with our ruling in People v. Hernandez6. On September 13, 1990, in Enrile v. Amin,7 this Court ruled that the filing of a separate information for obstruction of justice also violated the Hernandez doctrine and accordingly ordered the quashal of the said information. As a consequence of our said Order dated September 13, 1990, private respondent on August 20, 1990 filed a Complaint for damages, docketed as Civil Case No. 90-2327, before the Regional Trial Court of Makati City while the rebellion case was still pending litigation. Private respondent's complaint impleaded as defendants herein petitioners, then Solicitor General Francisco Chavez and Judge Jaime Salazar. The complaint basically accuses the petitioners of bad faith in filing the information for rebellion complexed with murder and frustrated murder. Thus, the complaint alleges: 2.5 The so-called "preliminary investigation" of the charge against plaintiff was railroaded from the very start. Plaintiff's pleas and motions asking for strict compliance with the rules of procedure and the norms of fairness and justice were either ignored or summarily denied by the investigating panel. Plaintiff, in utter frustration, filed a petition for summary dismissal of the charge and, anticipating the denial of that as well, also filed an urgent motion to be given at least five (5) days notice to enable him to take the appropriate legal action, before the filing of any information against him. xxx

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3.1 All of the defendants, in and by all their actuations in connection with the information for rebellion "complexed" individually, collectively, and with unity of purposes and intentions, illegally and unjustly caused, directed and prolonged plaintiff's arrest and detention without bail, through the expediency of disregarding the Hernandez doctrine prohibiting the complexing of rebellion with other crimes. In and by all their aforementioned actuations, all of the defendants individually, collectively and with unity of purposes and intentions (a) wilfully, manifestly and maliciously obstructed, defeated, violated, impeded and impaired plaintiff's constitutional and legal right to due process, right to be secure in his person against unreasonable and unwarranted arrest, and right to bail, as enshrined in Sections 1, 2 and 13 of Article 14(1) of the Bill of Rights of the Constitution; (b) grossly abused their rights and violated their duties as citizens, as members of the legal profession, and as public officers; (c) willfully acted in contravention of the basic standards of good faith and justice; and (d) willfully acted in a manner contrary to law, morals and public policy - all causing great suffering and injury to plaintiff. 3.2 Defendants Chavez, Drilon, Trampe, Abesamis and Mananquil knowingly, manifestly and maliciously abused and exceeded their duties and authority as public officials in charge of the enforcement and prosecution of laws, as well as violated the tenets of good faith and justice in human relations, by directly and actively advocating and indulging in what these defendants had publicly admitted and described to be a "legal experimentation" consisting in the knowing disregard and defiance of the wellestablished Hernandez doctrine. Defendant Drilon and his co-defendants Trampe, Abesamis and Mananquil, being the head and members, respectively, of the Department of Justice, by their above-alleged actuations, violated their principal responsibility, as legal counsel and prosecutors, to administer the criminal justice system in accordance with the established and accepted laws and processes. Defendant Drilon, being the Secretary of Justice having supervision, control and direction over the actuations of co-defendants Trampe, Abesamis and Mananquil violated the tenets of good faith and justice in human relations and abused his official duties and authority, by, among others, expressly instigating, authorizing, ordering and causing the filing of the information for rebellion "complexed" against the plaintiff. xxx 3.3. Defendants Drilon, Trampe, Abesamis and Mananquil filed or cased the filing of the information for rebellion "complexed" with manifest bad faith, deception and duplicity, all in violation of the tenets of good faith and justice in human relations and in gross abuse of their duties and authority as public prosecutors "to see that justice is done." (Canon 6, Rule 6.01, Lawyers' Code of Professional Responsibility). More particularly, these defendants originally filed or caused the filing of the information on 21 February 1990 but, for some mysterious reason, the information was subsequently withdrawn. The initial filing and withdrawal of the information defendant Chavez admitted these facts during the Supreme Court hearing on 6 March 1990 were done in total secrecy and without the knowledge of plaintiff who learned of this incident only after his arrest on 27 February 1990. Likewise, on or about 27 February 1990, these defendants deliberately misled plaintiff and his lawyers and induced them to believe that the charge of rebellion "complexed" was set to be filed against the plaintiff in the Regional Trial Court of Makati. While plaintiff's attention was diverted to the Regional Trial Court of Makati, these defendants surreptitiously filed or caused the filing of main information for rebellion "complexed" in the Regional Trial Court of Quezon City. All of the above-named defendants' actuations were meant to conceal from the public in general and the plaintiff and his counsel in particular, the filing of the information and to prevent plaintiff and his lawyers from witnessing the raffle and from questioning the irregularity of the assignment, the validity of the information, the authority of the court to issue the warrant of arrest, the obvious lack of probable cause, and, finally, to prevent plaintiff from posting bail. xxx

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3.5 The defendants' unfounded and malicious persecution of plaintiff, calculated to malign the person and reputation of the plaintiff, a duly elected Senator of the country, has caused and continues to cause plaintiff extreme suffering, mental anguish, moral shock and social humiliation, 3.6 The reckless and wanton conduct of the defendants who, as public officials, are supposed to be the guardians of the democratic institutions and civil liberties of citizens, in charging, taking cognizance of, and defending a non-existing crime, and in causing the harassment and persecution of the plaintiff, should be strongly condemned8 xxx On October 9, 1990, the petitioners filed a Motion to Dismiss for failure of the Complaint to state a cause of action. They claimed that there was no allegation of any actionable wrong constituting a violation of any of the legal rights of private respondent. In addition, they put up the defense of good faith and immunity from suit, to wit: THE COMPLAINT FAILS TO STATE A CAUSE OF ACTION AGAINST DEFENDANTS IN THAT: (A) THE FILING OF THE INFORMATION AGAINST PLAINTIFF FOR THE CRIME OF REBELLION WITH MURDER AND FRUSTRATED MURDER WAS INITIATED IN THE HONEST BELIEF THAT IT COULD BE SUSTAINED UNDER THE FIRST PART OF ARTICLE 48 OF THE REVISED PENAL CODE; and (B) DEFENDANTS, ACTING IN GOOD FAITH, WITHOUT MALICE AND WITHIN THE SCOPE OF THEIR AUTHORITY, CANNOT BE HELD PERSONALLY LIABLE BY WAY OF DAMAGES FOR ANY ALLEGED INURY SUFFERED BY PLAINTIFF.9 On October 8, 1991, respondent trial court issued an Order denying the Motion to Dismiss and requiring petitioners to file their answer and to present evidence in support of their defenses in a full-blown trial inasmuch as the defense of good faith and immunity from suit does not appear to be indubitable.10 Petitioners' motion for reconsideration was likewise denied. Before the Court of Appeals, petitioner Trampe, in his own behalf and in his own behalf and in behalf of his copetitioners, filed a petition for certiorari under Rule 65 of the Revised Rules of Court alleging that the respondent court committed grave abuse of discretion in denying their motion to dismiss. On June 29, 1992, respondent appellate court dismissed the petition and the subsequent motion for reconsideration ruling, thus: We cannot perceive how respondent court could have acted with grave abuse of discretion in denying the motion to dismiss. Before respondent court were two diametrically opposed contentions. Which to believe, respondent court is at a loss. Hence, respondent court had no alternative but to be circumspect in acting upon the motion to dismiss. This respondent court accomplished by requiring petitioners to file their answer where they can raise the failure of the complaint to state a cause of action as an affirmative defense. Indeed the better alternative would be to conduct a full blown trial during which the parties could present their respective evidences to prove their respective cause of action/defense.11 Hence, this instant petition. In view of the appointment of petitioner Trampe to the judiciary, petitioner Abesamis filed a manifestation stating that he would act as counsel for his own behalf and in behalf of his co-petitioners. In a Resolution dated March 8, 1993, we granted the Manifestation of petitioner Abesamis to substitute for petitioner Trampe as counsel for himself and his co-petitioners. Respondent did not file a motion for reconsideration. Meanwhile, on February 12, 1993, or almost three (3) years after the filing of the complaint for damages against petitioners, the Regional Trial Court of Makati dismissed with finality the rebellion charges against private respondent12. In their Memorandum,13 petitioners raise the following assignment of errors: I THE RESPONDENT COURT HAS DECIDED A QUESTION OF SUBSTANCE IN A MANNER NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT BY HOLDING THAT THE RESPONDENT JUDGE DID NOT ACT WITH GRAVE ABUSE OF DISCRETION IN DENYING THE MOTION TO DISMISS FILED BY THE PETITIONERS AND THAT IN ANY EVENT, THE DENIAL OF A MOTION TO DISMISS IS NOT SUBJECT TO REVIEW BY CERTIORARI. II PETITIONER TRAMPE ACTED CORRECTLY IN REPRESENTING AND APPEARING ON BEHALF OF THE OTHER PETITIONERS IN THE INSTANT PETITION. MOREOVER, BY HIS LONG SILENCE AND INACTION, PRIVATE

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RESPONDENT CANNOT NOW QUESTION THE PERSONALITY OF PETITIONER TRAMPE TO REPRESENT AND APPEAR ON BEHALF OF THE OTHER PETITIONERS HEREIN. Before ruling on the substance of the petition, let us first deal with the legal personalities of petitioners Trampe and Abesamis to represent themselves and the rest of the petitioners in the case at bar. Private respondent avers that Trampe's representation is a nullity for the reason that under the Revised Administrative Code, it is not the function of the Office of the Chief State Prosecutor to represent its prosecutors in suits that may be filed against them. Private respondent likewise argues that Trampe and Abesamis are prohibited from acting as private counsels for their co-petitioners inasmuch as it violates Republic Act No. 6713, the "Code of Conduct and Ethical Standards for Public Officials and Employees." It must be noted that petitioner Abesamis filed a Manifestation14 before this Court asking that he be permitted to replace petitioner Trampe as counsel for the petitioners in view of Trampe's appointment to the judiciary. No opposition thereto was filed by private respondent. Thus, we granted the manifestation of petitioner Abesamis to substitute for Trampe as counsel for and in behalf of himself and his co-petitioners. There being no motion for reconsideration filed by private respondent, said resolution has become final. Private respondent did not dispute the legal personality of petitioner Trampe to represent himself and his co-petitioners in his Comment15 filed before the Court of Appeals. Private respondent belatedly raised this contention in his opposition16 to the motion for reconsideration of the appellate court's decision. Accordingly, private respondent is estopped and legally barred from questioning the representation of petitioners Trampe and later, Abesamis to act as counsel for themselves and their co-petitioners in this case. Going now to the crux of the petition, petitioners contend that the complaint sets forth no cause of action against them. They allege good faith, regularity in the performance of official duties and lack of ultimate facts constituting an actionable wrong. On the other hand, private respondent argues that a cause of action has been sufficiently pleaded and that the defenses of good faith and performance of official duties are best disposed in a judicial hearing. Private respondent likewise maintains that the defense of good faith is irrelevant for the reason that the petitioners are sued under Article 32 of the New Civil Code where the defense of good faith is irrelevant. We find merit in the petition.1wphi1.nt A cause of action is the act or omission by which a party violates a right of another.17 A cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages.18 The remedy of a party whenever the complaint does not allege a cause of action is to set up this defense in a motion to dismiss or in the answer. A motion to dismiss on the ground of failure to state a cause of action in the complaint hypothetically admits the truth of the facts alleged therein. However, the hypothetical admission is limited to the "relevant and material facts well pleaded in the complaint and inferences fairly deductible therefrom. The admission does not extend to conclusion or interpretations of law; nor does it cover allegations of fact the falsity of which is subject to judicial notice."19 In De Dios v. Bristol Laboratories (Phils.), Inc., 20 this Court was more particular in explaining that: xxx. For the purpose, the motion to dismiss must hypothetically admit the truth of the facts alleged in the complaint. The admission, however, is limited only to all material and relevant facts which are well pleaded in the complaint. Thus, it had been ruled that a demurrer admits only such matters of fact as are sufficiently pleaded; that the demurrer does not admit the truth of mere epithets charging fraud; nor allegations of legal conclusions; nor an erroneous statement of law. The admission of the truth of material and relevant facts well pleaded does not extend to render a demurrer an admission of inferences or conclusions drawn therefrom, even if alleged in the pleading ; nor mere influences or conclusions from facts not stated; nor conclusions of law; nor matters of evidence; nor surplusage and irrelevant matter. xxx. The main question in the instant petition is whether the allegations in the complaint sufficiently plead a cause of action to hold the petitioners liable for damages. According to the complaint, the petitioners violated private respondent's constitutional rights for knowingly and maliciously filing a legally non-existent offense and for depriving him of his right to be notified of the filing of the case against him. Inasmuch as private respondent seeks to hold the petitioners accountable for the damage he has suffered as a result of the case filed against him, his suit against the petitioners is one for malicious prosecution. In Drilon v. Court of Appeals,21 where the facts in said case are basically the same as in the instant case,22 we also labeled the complaint filed by complainant Homobono Adaza as one for malicious prosecution. It is defined as an action for damages brought by one against whom a criminal prosecution, civil suit, or other legal proceeding has been instituted maliciously and without probable cause, after the termination of such prosecution, suit, or other proceeding in favor of the defendant therein. The gist of the action is the putting of legal process in force, regularly, for the mere purpose of vexation or injury.23 The statutory bases for a civil action for damages for malicious prosecution are found in the provisions of the New Civil Code on Human Relations and on damages particularly Articles 19, 20, 21, 26, 29, 32, 33, 35, 2217 and 2219(8).24 A

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Complaint for malicious prosecution states a cause of action if it alleges: 1) that the defendant was himself the prosecutor or that at least he instigated the prosecution; 2) that the prosecution finally terminated in the plaintiff's acquittal; 3) that in bringing the action the prosecutor acted without probable cause; and, 4) that the prosecutor was actuated by malice, i.e., by improper and sinister motives.25 We have no reason to depart from our ruling in the said Drilon case. It is our view and we hold that private respondent's complaint fails to state a cause of action to hold the petitioners liable for malicious prosecution. First, the complaint for damages was filed long before private respondent's acquittal in the rebellion charge thereby rendering the subject action premature. At the time the complaint was filed, the criminal action against private respondent has not yet ended. That the criminal case eventually resulted in private respondent's acquittal during the pendency of the civil case for damages is of no moment inasmuch as the latter should be filed only after the accused is acquitted in the criminal case. To allow private respondent to file a complaint, for damages based on malicious prosecution, before his acquittal would stifle the prosecution of criminal cases by the mere expediency of filing damage suits against the prosecutors. The complaint for damages cannot be based on the dismissal of the separate charge for violation of P.D. No. 1829 inasmuch as the complaint does not contain any allegation to that effect. The complaint actually limits the claim for damages based on the filing of the rebellion charge against the petitioners. Hence, it cannot be sustained based on the dismissal of the case for violation of P.D. No. 1829. Second, there are no factual allegations in the complaint that can support a finding that malice and bad faith motivated the petitioners in filing the information against private respondent. Allegations of bad faith, malice and other related words without ultimate facts to support the same are mere conclusions of law that are not deemed admitted in a motion to dismiss for lack of cause of action. From our reading of the complaint, we find no ultimate facts to buttress these conclusions of law. In Drilon, this Court held that; xxx xxx xxx

Lack of cause of action, as a ground for a motion to dismissmust appear on the face of the complaint itself, meaning that it must be determined from the allegations of the complaint and from none other. The infirmity of the complaint in this regard is only too obvious to have escaped respondent judge's attention. Paragraph 14 of the complaint which states: xxx xxx xxx

14. The malicious prosecution, nay persecution, of plaintiff for a non-existent crime had severely injured and besmirched plaintiff's name and reputation and forever stigmatized his stature as a public figure, thereby causing him extreme physical suffering, serious anxiety, mental anguish, moral shock and social humiliation." is a mere conclusion of law and is not an averment or allegation of ultimate facts. It does not, therefore, aid in any wise the complaint in setting forth a valid cause of action against the petitioners. xxx xxx xxx

The allegations of bad faith and malice in the complaint are based on the ground that the petitioners knowingly and allegedly maliciously filed the information for an offense that does not exist in the statute books. But as we have ruled in Drilon: In the case under consideration, the decision of the Special Team of Prosecutors to file the information for rebellion with murder and frustrated murder against respondent Adaza, among others, cannot be dismissed as the mere product of whim or caprice on the part of the prosecutors who conducted the preliminary investigation While it is true that the petitioners were fully aware of the prevailing jurisprudence enunciated in People v. Hernandez, which proscribes the complexing of murder and other common crimes with rebellion, petitioners were of the honest conviction that the Hernandez Case can be differentiated from the present case. The petitioners thus argued: "Of course we are aware of the ruling in People v. Hernandez, 99 Phil 515, which held that common crimes like murder, arson, etc., are absorbed by rebellion. However, the Hernandez case is different from the present case before us. In the Hernandez case, the common crimes of murder, arson, etc. were found by the fiscal to have been committed as a necessary means to commit rebellion, or in furtherance thereof. Thus, the fiscal filed an information for rebellion alleging those common crimes as a necessary means of committing the offense charged under the second part of Article 48, RPC. We, however, find no occasion to apply the Hernandez ruling since as intimated above, the crimes of murder and frustrated murder in this case were absolutely unnecessary to commit rebellion although they were the natural consequences of the unlawful bombing. Hence, the applicable provision is the first part of Article 48 of the RPC."

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While the Supreme Court in the case of Enrile v. Salazar, addressing the issue of whether or not the Hernandez doctrine is still good law, in a 10-3 vote, did not sustain the position espoused by the herein petitioners on the matter, three justices felt the need to re-study the Hernandez ruling in light of present-day developments, among whom was then Chief Justice Marcelo Fernan xxx Apparently, not even the Supreme Court then was of one mind in debunking the theory being advanced by the petitioners in this case, some of whom were also the petitioners in the Enrile case. xxx A doubtful or difficult question of law may become the basis of good faith and, in this regard, the law always accords to public officials the presumption of good faith and regularity in the performance of official duties. [Tatad v. Garcia, Jr., 243 SCRA 436, 463 (1995)] Any person who seeks to establish otherwise has the burden of proving bad faith or ill-motive. Here, since the petitioners were of the honest conviction that there was probable cause to hold respondent Adaza for trial for the crime of rebellion with murder and frustrated murder, and since Adaza himself, through counsel, did not allege in his complaint lack of probable cause, we find that the petitioners cannot be held liable for malicious prosecution. Needless to say, probable cause was not wanting in the institution of Criminal Case No. Q90-11855 against Adaza. As to the requirement that the prosecutor must be impelled by malice in bringing the unfounded action, suffice it to state that the presence of probable cause signifies, as a legal consequence, the absence of malice. (Albenson Enterprises Corp., supra.) At the risk of being repetitious, it is evident in this case that petitioners were not motivated by malicious intent or by a sinister design to unduly harass private respondent, but only by a well-founded belief that respondent Adaza can be held for trial for the crime alleged in the information. All told, the complaint, dated July 11, 1990, filed by Adaza before Branch 100 of the Regional Trial Court against the petitioners does not allege facts sufficient to constitute a cause of action for malicious prosecution. xxx xxx As a result, these general allegations do not help private respondent's action against petitioners. It is well settled that one cannot be held liable for allegedly maliciously instituting a prosecution where there is probable cause. Otherwise stated, a suit for malicious prosecution will lie only in cases where a legal prosecution has been carried on without probable cause. The reason for this rule is that it would be a very great discouragement to public justice, if prosecutors, who had tolerable ground of suspicion, were liable to be sued at law when their indictment miscarried.26 On the issue of whether the petitioners should be held accountable for knowingly filing a non-existent offense, this Court has definitely ruled in Enrile v. Salazar that: The plaint of petitioner's (herein private respondent) counsel that he is charged with a crime that does not exist in the statute books, while technically correct in so far as the Court has ruled that rebellion may not be complexed with other offenses committed on the occasion thereon, must therefore be dismissed as a mere flight of rhetoric. Read in the context of Hernandez, the information does indeed charge the petitioner with a crime defined and punished by the Revised Penal code: simple rebellion.27 Accordingly, despite its defect, the information filed by petitioners remained valid inasmuch as it nevertheless charges an offense against the herein private respondent. With respect to private respondent's second basis for the charge of malicious prosecution, that is, he was denied by the petitioners the right to be notified before the criminal information against him, his complaint alleges that: xxx More particularly, these defendants originally filed or caused the filing of the information on 21 February 1990 but, for some mysterious reason, the information was subsequently withdrawn. The initial filing and withdrawal of the information defendant Chavez admitted these facts during the Supreme Court hearing on 6 March 1990 were done in total secrecy and without the knowledge of plaintiff who learned of this incident only after his arrest on 27 February 1990. Likewise, on or about 27 February 1990, these defendants deliberately misled plaintiff and his lawyers and induced them to believe that the charge of rebellion "complexed" was set to be filed against the plaintiff in the Regional Trial Court of Makati. While plaintiff's attention was diverted to the Regional Trial Court of Makati, these defendants surreptitiously filed or caused the filing of the main information for rebellion "complexed" in the Regional Trial Court of Quezon City.28

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xxx However, we hold that the said allegations still fail to maintain a cause of action against the petitioners. To reiterate, a cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages.29 In the case at bar, we fail to see any right of the private respondent supposedly violated by the petitioners. Nowhere in the statute books is a prospective accused given the right to be notified beforehand of the filing of an information against him. Likewise, the withdrawal of the information and the subsequent re-filing of the same do not constitute an actionable wrong inasmuch as the filing or re-filing of an information lies within the discretion of the prosecutor who must act independently of the affected parties. Private respondent claims that an appeal or an original action for certiorari is not the proper remedy for a defendant whose motion to dismiss has been denied by the trial court for the reason that the order does not terminate the proceedings, nor finally dispose of the contentions of the parties. In its decision affirming the trial court's denial of the motion to dismiss, the appellate court sustained this contention. However, as correctly pointed out by the petitioners, the rule admits of an exception. Thus, where the denial of the motion to dismiss by the trial court was tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, as in the case at bar, the aggrieved party may assail the order of denial on certiorari.30 A wide breadth of discretion is granted in certiorari proceedings in the interest of substantial justice and to prevent a substantial wrong.31 In the Drilon case, we also held that the denial by the trial court of the motion to dismiss of herein petitioners based on the same grounds as in the instant petition constituted grave abuse of discretion for the reason that "this (private respondent's baseless action) would unjustly compel the petitioners to needlessly go through a protracted trial and thereby unduly burden the court with one more futile and inconsequential case."32 The appellate court therefore erred in not ruling that the trial court committed a grave abuse of discretion when the latter refused to dismiss the case as against herein petitioners, notwithstanding the obvious insufficiency of the complaint against them. WHEREFORE, the petition is GRANTED. The Decision dated June 29, 1992 of respondent Court of Appeals and its Resolution dated August 27, 1992 which affirmed the Orders of the Respondent Regional trial Court of Makati City, dated October 8, 1991 and January 6, 1992 are hereby NULLIFIED AND SET ASIDE. The respondent Regional Trial Court of Makati is hereby ordered to take no further action in Civil Case No. 90-2327 except to dismiss the same. SO ORDERED.

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G.R. No. 132659

February 12, 2007

CONRADO MAGBANUA and ROSEMARIE MAGBANUA-TABORADA, the latter assisted by her husband ARTEMIO TABORADA,Petitioners, vs. PILAR S. JUNSAY, asssisted by her husband VICENTE JUNSAY, IBARRA LOPEZ, and JUANITO JACELA,Respondents. DECISION CHICO-NAZARIO, J.: This is an Appeal by Certiorari from the Decision,1 dated 26 January 1998, of the Court of Appeals in CA-G.R. CV No. 51750, which affirmed in toto the Decision,2 dated 25 July 1995, of the Regional Trial Court (RTC), Branch 51, Bacolod City, in Civil Case No. 4361, dismissing the Complaint for Damages for malicious prosecution, filed by petitioners against respondents. The RTC rendered judgment declaring that the prosecution was not prompted by sinister design to vex and humiliate petitioner Rosemarie Magbanua. The Court of Appeals similarly found the appeal without merit. The following are the antecedent facts: Petitioner Rosemarie Magbanua, who worked as a housemaid in the residence of complainant and herein respondent Pilar S. Junsay was charged as a co-accused with the crime of Robbery before the RTC, Branch XLI of Bacolod City in Criminal Case No. 28 entitled, People of the Philippines v. Rosemarie Magbanua, et al., by virtue of an Information, which recites, thus: That on or about the 18th day of July, 1982, in the City of Bacolod, Philippines, and within the jurisdiction of this Honorable Court, the herein accused, conspiring, confederating and mutually helping one another, with intent to gain and with the use of force upon things by then and there making a hole on the lower portion of the kitchens door of the house of the herein offended party, Dra. Pilar S. Junsay, situated at Bata Subdivision, Bacolod City, through which opening made (sic) them, said accused gained entrance thereto and once inside the said house, did, then and there willfully, unlawfully and feloniously take, rob and carry away with them, assorted jewelries and cash, valued all in all in the amount of P29,624.00, Pesos, Philippine Currency, to the damage and prejudice of the herein offended party in the aforementioned amount.3 The records show that only petitioner Rosemarie was tried in Criminal Case No. 28. Her co-accused, Ernesto Fernandez and a certain Gudo, remain at large.

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The case for the prosecution relied on an alleged confession made by petitioner Rosemarie, admitting her participation in the crime of Robbery. The defense contested the admissibility of the confession, and averred that the same was made under duress. On 20 December 1985, the RTC, Branch XLI of Bacolod City, rendered a Decision,4 acquitting petitioner Rosemarie of the crime of Robbery. The RTC held: The evidence for accused [herein petitioner Rosemarie] more particularly the Medical Certificate and the testimony of the attending physician as well as the Decision of the NAPOLCOM finding the investigating officers guilty has clearly establish (sic) the fact that accused was physically maltreated by the investigating officers in an attempt to force her to confess her participation in the robbery. Whatever declaration of accused therefore against her interest is inadmissible in evidence against her, hence, the alleged admission of the accused that she participated in the commission of the Robbery made to the police investigator and complainant [complainant respondent Pilar] even if it is true cannot be used against her. Notwithstanding however, accused could still be found guilty if the evidence for the prosecution is sufficient to establish her participation in the crime without said alleged admission by the accused. Record, however, shows that other than the alleged admission of the accused made to the police investigator and the complainant, the only evidence to establish the participation of the accused in the robbery is the testimony of the complaining witness that after accused informed her that part of the jewelry stolen was inside her bag at her room, the complaining witness searched the room of accused and found one (1) piece of gold necklace. On this point, the evidence adduced shows that the police authorities went at (sic) the scene of the robbery and thoroughly investigated the incident including dusting for fingerprints, tending to show that the investigation of the police authorities was extensive, hence, it was quite improbable and difficult to believe that the police investigator would fail to search the bag nor the room of accused. This Court[,] therefore[,] find said testimony of the complaining witness on this point discredited.5 The decretal portion of the 20 December 1985 RTC Decision pronounced: IN VIEW OF THE FOREGOING THEREFORE, this Court finds the evidence for the prosecution not only insufficient to prove the guilt of the accused beyond reasonable doubt but even insufficient to establish a prima facie case against her for having participated in the robbery subject of the above entitled case and therefore ACQUITS accused on the ground of insufficiency of evidence. The bailbond of the accused for her provisional liberty is hereby ordered cancelled.6 On 9 March 1987, petitioner Rosemarie, assisted by Artemio Taborada, and together with co-petitioner Conrado Magbanua (Rosemaries father) filed with the RTC, Branch 51, Bacolod City, a Complaint for Damages7 against respondent Pilar, assisted by her husband Vicente Junsay, Ibarra Lopez, and Juanito Jacela. Respondent Pilar was the employer of petitioner Rosemarie, while respondents Ibarra and Juanito were members of the police force of Bacolod City, and assigned at the Police Station in Taculing, Bacolod City. The Complaint, alleged, inter alia, that by reason of respondents false, malicious, and illegal actuations in filing Criminal Case No. 28 for Robbery against petitioner Rosemarie, the latter suffered untold pain, shame, humiliation, worry, and mental anguish, which if assessed in monetary terms will not be less than P200,000.00.8 It was further alleged therein that Conrado, Rosemaries father, lost his job and his entire family suffered.9 Petitioners maintained that Rosemarie suffered physical pain and mental torture due to the filing of the false criminal charge against her.10 They sought moral and exemplary damages, including attorneys fees and litigation expenses, as well as loss of earnings and expenses incurred in connection with Rosemaries defense in Criminal Case No. 28 for Robbery.11 They similarly prayed for payment of the expenses incurred in the prosecution of the instant case. Subsequently, petitioners filed a Petition to litigate as pauper which the RTC granted in its Order dated 9 March 1987, it appearing that they had no means to prosecute their action.12 Respondent Pilar filed a Motion to Dismiss,13 on the ground that the cause of action is barred by the Statute of Limitations, as crystallized in Article 114614 of the Civil Code. From the time the cause of action arose to the filing of the Complaint, four years and eight months had already lapsed. Petitioners filed an Opposition to the Motion to Dismiss,15 contending that their cause of action is not for damages based on the physical injuries suffered by Rosemarie during the investigation of the criminal case nor the violation of her rights for the indignities foisted upon her by the respondents from 18 July 1982, and several days thereafter.16 They posited that the damages sought are for the malicious prosecution of Rosemarie. They reasoned that the baseless filing of the criminal case for Robbery against Rosemarie, despite her protestations of innocence and the lack of evidence against her, caused her family to incur expenses and subjected her to untold shame and humiliation.17 Petitioners clarified that the allegations about the violation of Rosemaries rights as a person were included only to demonstrate respondents palpable malice in the filing of the said criminal case against her. Petitioners postulated that as the Complaint for Damages is for malicious prosecution, the prescriptive period should be counted from the date of Rosemaries acquittal in Criminal Case No. 28, or on 20 December 1985, and not from 18 July 1982, the date when respondents injured the rights of Rosemarie. From the time judgment in Criminal Case No. 28 was rendered to the filing of the Complaint in the instant case, not more than one year and three months had passed.18

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On 24 March 1988, the RTC issued an Order19 denying respondents Motion to Dismiss for lack of merit. It found that the cause of action of petitioners Complaint was based on malicious prosecution; hence, the prescriptive period shall be counted from the date of petitioner Rosemaries acquittal. According to the RTC, the allegations about the wanton violation of the rights of Rosemarie as a person were to show the pattern of respondents malice. Respondent Pilar filed before the RTC an Answer,20 dated 18 May 1988, disclaiming petitioners allegation that she maltreated petitioner Rosemarie while the latter was being investigated by the police authorities. She posited, inter alia: that she was not present during the investigation, and was subsequently informed of petitioner Rosemaries participation in the robbery by the investigators, the same being reflected in the Joint Affidavit of the police investigators; that she never laid a hand on petitioner Rosemarie before, during, or after the investigation, as, in fact, she had no inkling of her participation in the crime; that she had no hand in the filing of the case except to execute an affidavit regarding her ownership of the lost jewelry; and that she has no liability whatsoever to petitioner Rosemarie, much less, to her father, petitioner Conrado, who does not appear to have any involvement in the matter.21 By way of counterclaim, she sought damages, including attorneys fees, and costs of suit from the petitioners. Petitioners filed a Reply and Answer to Counterclaim,22 reiterating the allegation in the Complaint, that respondent Pilar actually participated in the maltreatment of petitioner Rosemarie, and she cannot deny her participation as she was always present in the police station during the investigation. Petitioners alleged that respondent Pilar cannot claim lack of knowledge of the maltreatment and indignities suffered by petitioner Rosemarie because she herself participated in such maltreatment. Petitioners further contended, inter alia, that they have a proper and valid cause of action against the respondents, including petitioner Conrado who suffered and incurred expenses to defend his daughter, Rosemarie, who was then a minor against unjust accusation, maltreatment and torture. On 9 September 1988, at the pre-trial, the parties entered into a stipulation of facts. Counsel for the petitioners manifested that they were claiming damages not for physical injuries which petitioner Rosemarie allegedly suffered in the hands of respondents during her investigation, but for her malicious prosecution.23 In concurrence thereto, counsel for respondents declared that the main issue was whether Rosemarie was maliciously prosecuted with the filing of the criminal case for Robbery.24 Following the stipulations and counterstipulation of facts, pre-trial was terminated. Meanwhile, respondents Ibarra and Juanito, members of the police force of Bacolod City, filed an Answer and Manifestation,25 adopting the Answer filed by their co-respondent Pilar, dated 18 May 1988, insofar as the allegations therein were applicable to them, and further adopting the counterclaim interposed in the aforesaid action. Trial, thereafter, ensued. Seeking to fortify their case, petitioners offered the following exhibits, to wit: Exhibit "A" The medical certificate issued by Dr. Teodoro S. Lavasa, Medico-legal officer and Chief, Crime Laboratory, Bacolod Metro Police District, dated July 27, 1982. This exhibit is offered to show the many injuries sustained by [herein petitioner] Rosemarie Magbanua at the hands of the [herein respondents] in their joint effort to make her admit the crime in the absence of proof that she participated therein and despite her protestations of innocence. Exhibit "B" The note of Dr. Teodoro S. Lavada to the jail warden. This exhibit is offered to show the result of the maltreatment and/or physical injuries inflicted by the [respondents] on the person of [petitioner] Rosemarie Magbanua hemoptysis, fever, and body pains which made the medico-legal officer recommend hospitalization for her. Exhibit "C" The information filed by Fiscal Ricardo F. Tornilla, 2nd Asst. City Fiscal, Bacolod City, dated July 20, 1982. This exhibit is offered to show the result of the [respondents] confederated efforts for Rosemarie Magbanua to be prosecuted for the crime she did not commit, including untrue affidavits, a biased and false investigation report mentioning Rosemarie Magbanuas alleged confession of her participation in the robbery when she never did, despite the injuries and indignities to which she was subjected, all of which made the Asst. City Fiscal Ricardo F. Tornilla file the information against said plaintiff Rosemarie Magbanua. Exhibit "D" The Decision rendered by Hon. Quirino D. Abad Santos, Jr., Judge, Regional Trial Court of Negros Occidental, Branch XLI Bacolod City, in Criminal Case No. 28 entitled, "People of the Philippines vs. Rosemarie Magbanua, et al." dated December 20, 1985. Exhibit "D-1" The portion appearing on page 4 of said decision stating that, "IN VIEW OF THE FOREGOING THEREFORE, this Court finds the evidence for the prosecution not only insufficient to prove

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the guilt of the accused beyond reasonable doubt but even insufficient to establish a prima facie case against her for having participated in the robbery subject of the above entitled case and therefore ACQUITS accused on the ground of insufficiency of evidence. The bailbond of the accused for her provisional liberty is hereby ordered cancelled." This exhibit with its sub-marking is offered to show that the [petitioner] Rosemarie Magbanua was acquitted of the crime charged because the evidence for the prosecution was not only insufficient to prove the guilt of the accused beyond reasonable doubt but even insufficient to establish a prima facie evidence against her for having participated in the robbery, thus glaringly exposing the utter lack of basis for charging and/or prosecuting Rosemarie Magbanua for the crime of robbery which was nevertheless filed at the behest of the [respondents] who knowing fully the bereftness of their stand even tried to concoct additional evidence of having found still more jewelry in [petitioner] Rosemarie Magbanuas handbag, a maneuver which was debunked by the honorable Court in its decision. Exhibit "E" The decision of the National Police Commission Adjudication Board No. 11 in Adm. Case No. 83-0888 finding the respondent PFC Ibarra Lopez and respondent Patrolman Juanito Jacela, two of the defendants, guilty of grave misconduct and ordering their suspension for two (2) months without pay. Exhibit "E-1" The bracketed dispositive portion of the decision appearing on page 3 thereof which is as follows: "IN VIEW OF THE FOREGOING, this Board finds respondents PFC IBARRA LOPEZ AND PAT JUANITO JACELA guilty of Misconduct and they are hereby ordered SUSPENDED FOR TWO (2) MONTHS WITHOUT PAY WITH WARNING THAT A REPETITION OF THE SAME OFFENSE SHALL BE PENALIZED MORE SEVERELY." This exhibit with its submarking is offered to show that the two (2) [respondents], PFC Ibarra Lopez and Patrolman Juanito Jacela, employed unnecessary force on the person of the [petitioner] Rosemarie Magbanua just to make her admit and/or confess to a crime she did not commit, thus contributing to and even making possible the unnecessary, baseless, and malicious prosecution of the [petitioner].26 On 25 January 1991, the RTC issued an Order,27 admitting Exhibits "A" to "E," including the sub-markings thereon for the purposes for which they had been offered and for such purpose as may serve the court a quo in the resolution of the case.28 On 25 July 1995, the RTC rendered a Decision dismissing the Complaint. The RTC applied the established rule that for a malicious prosecution suit to succeed, two indispensable elements must be shown to exist, to wit: (a) malice and (b) absence of probable cause. It found that the elements were not successfully shown by petitioners. It held that the mere filing of a suit does not render a person liable for malicious prosecution should he be unsuccessful for the law could not have meant to impose a penalty on the right to litigate.29 In sustaining the respondents, the RTC said that the filing of the criminal complaint against petitioner Rosemarie was not prompted with a sinister design to vex, or humiliate her. It reasoned that respondent Pilar reported the robbery which occurred on 17 July 1982 to the Bacolod Police Station; consequently, police investigators, including respondents Ibarra and Juanito, proceeded to the residence of respondent Pilar. It ratiocinated that there was no legal malice on the part of the latter as victim of the crime of robbery for bringing the same to the attention of the police authorities. The RTC similarly did not find legal malice on the part of her co-respondents, Ibarra and Juanito, as they were merely performing their duties when they conducted the investigation; and subsequently filed the case against petitioner Rosemarie and her co-accused pursuant thereto. In denying petitioners prayer for damages arising from malicious prosecution, the RTC ruled that: In the course of the investigation, Rosemarie Magbanua admitted her participation in the robbery together with a certain Ernesto Fernandez and a person named "Gudo." The necklace given to her as her share was recovered in her shoulder bag. After the police authorities had completed their investigation, they filed a case for robbery with the office of the City Fiscal of Bacolod City (now City Prosecutor) against Rosemarie Magbanua, Ernesto Fernandez and a certain "Gudo." The Office of the City Fiscal after conducting a preliminary investigation filed a case for robbery against the three suspects. After trial, as against then accused now [herein petitioner] Rosemarie Magbanua, the Court acquitted her. [Herein respondent] Dra. Pilar Junsay, cannot be faulted for reporting to the police. She was robbed of valuables worth P29,974.00. Besides, she did not tell the police that she was robbed by herein [petitioner] Rosemarie Magbanua. And, there is no legal malice for a victim of a crime to report the matter to the police. Furthermore, the mere filing of a suit does not render a person liable for malicious prosecution should he be unsuccessful for the law could not have meant to impose a penalty on the right to litigate (Albenson Enterprises Corp. vs. Court of Appeals, 217 SCRA 16). Neither can [respondents] police investigator Ibarra Lopez and Juanito Jacela be faulted for filing a complaint of robbery with the Office of the City Fiscal, against herein plaintiff Rosemarie Magbanua, Ernesto Fernandez and

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a certain "Gudo." It is part of their duties to conduct an investigation of a case reported to their office. And Rosemarie Magbanua admitted to them her participation to the commission of the crime together with her coaccused Ernesto Fernandez and Gudo. Thus, there was probable cause of the crime of robbery against said accused. Their finding of a probable cause against the accused was shared by the City Fiscals Office when an Information for robbery against said accused was filed after conducting a preliminary investigation. [Respondents] police investigators Ibarra Lopez and Juanito Jacela do not know [respondent] Dra.Pilar Junsay nor [petitioner] Rosemarie Magbanua, prior to July 18, 1982, when the crime was reported by the former to their office. And, the criminal complaint filed by them was not only against Rosemarie Magbanua, but also against Ernesto Fernandez and a certain "Gudo." Hence, it cannot be said that they were prompted by a sinister design to vex, and humiliate [petitioner] Rosemarie Magbanua.30 Petitioners filed a Notice of Appeal on the 25 July 1995 Decision of the RTC. Thus, the records of the case were subsequently forwarded to the Court of Appeals. The Court of Appeals affirmed the RTC in toto. The appellate court declared that the design to vex and humiliate petitioner Rosemarie in the prosecution of Criminal Case No. 28 was wanting. It held that respondent Pilar as complaining witness merely reported the matter to the police authorities; while respondents Ibarra and Juanito were merely performing their duties as investigating police officers. Thus: In the present case, there was no proof that the prosecution was prompted by a design to vex and humiliate the [herein petitioner] Rosemarie Magbanua. The crime of robbery was actually committed and [petitioner] Rosemarie Magbanua admitted her participation therein. There was nothing illegal, sinister or malicious in prosecuting her on the part of [herein respondent] Dra. Junsay who, as a victim of the crime of robbery, reported the incident to the police authorities. In fact, the [respondent] did not suspect that the [petitioner] was one of those who committed the crime. On the part of the police investigators, they were only performing their duties in accordance with the standard procedure of their office. They came to know the victim Dra. Junsay and [petitioner] Rosemarie Magbanua only during the investigation. The fact was that Rosemarie Magbanua admitted participation in the commission of the crime. Finding that there was a prima facie case, the City Fiscal who investigated the case filed a case for robbery in the then Court of First Instance of Bacolod (now RTC).31 The Court of Appeals was also convinced that there was probable cause to believe that the robbery was committed by petitioner Rosemarie and her co-accused. The finding of probable cause, according to the appellate court, was confirmed by the filing of the Information for Robbery by the City Fiscals Office after the preliminary investigation.32 The Court of Appeals disposed: WHEREFORE, the Decision of the trial court dated July 25, 1995 is hereby AFFIRMED IN TOTO. Costs against the [herein petitioners].33 Hence, petitioners come to the succor of this Court via the instant Appeal by Certiorari to assail the Decision of the Court of Appeals, which affirmed the Decision of the RTC, that there was no malicious prosecution. For our resolution is the issue of whether petitioners are entitled to damages for malicious prosecution. However, before we could resolve said issue, we should first determine whether the filing of a criminal case for Robbery against petitioner Rosemarie constituted malicious prosecution. It is petitioners submission that the prosecution of petitioner Rosemarie was founded upon baseless accusations.34 Petitioners posit that the charges were based on false affidavits and false police reports, without which the criminal case against petitioner Rosemarie would not have been filed.35 Petitioners further decry the maltreatment which petitioner Rosemarie allegedly suffered from the hands of respondents. According to petitioners, Rosemarie was maltreated to extract a confession from her, and to make her admit to a crime she did not commit. They reasoned that petitioner Rosemarie, who was then a minor, an uneducated farm girl, and a stranger in Bacolod City, was subjected to torture and inhumane treatment.36 Petitioners contend further that respondent Pilar employed her privileged status in the society as a medical doctor; and her co-respondents Ibarra and Juanito utilized their positions as members of the Bacolod City Police to secure an admission from petitioner Rosemarie.37 In this jurisdiction, the term "malicious prosecution" has been defined as "an action for damages brought by one against whom a criminal prosecution, civil suit, or other legal proceeding has been instituted maliciously and without probable cause, after the termination of such prosecution, suit, or other proceeding in favor of the defendant therein."38 While generally associated with unfounded criminal actions, the term has been expanded to include unfounded civil suits instituted just to vex and humiliate the defendant despite the absence of a cause of action or probable cause.39 This Court, in Drilon v. Court of Appeals,40 elucidated, viz:

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The term malicious prosecution has been defined in various ways. In American jurisdiction, it is defined as: "One begun in malice without probable cause to believe the charges can be sustained (Eustace v. Dechter, 28 Cal. App. 2d. 706, 83 P. 2d. 525). Instituted with intention of injuring defendant and without probable cause, and which terminates in favor of the person prosecuted. For this injury an action on the case lies, called the action of malicious prosecution (Hicks v. Brantley, 29 S.E. 459, 102 Ga. 264; Eggett v. Allen, 96 N.W. 803, 119 Wis. 625)." In Philippine jurisdiction, it has been defined as: "An action for damages brought by one against whom a criminal prosecution, civil suit, or other legal proceeding has been instituted maliciously and without probable cause, after the termination of such prosecution, suit, or other proceeding in favor of the defendant therein. The gist of the action is the putting of legal process in force, regularly, for the mere purpose of vexation or injury (Cabasaan v. Anota, 14169-R, November 19, 1956)." The statutory basis for a civil action for damages for malicious prosecution are found in the provisions of the New Civil Code on Human Relations and on damages particularly Articles 19, 20, 21, 26, 29, 32, 33, 35, 2217 and 2219 (8). To constitute malicious prosecution, however, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person, and that it was initiated deliberately by the defendant knowing that his charges were false and groundless. Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution. This Court has drawn the four elements that must be shown to concur to recover damages for malicious prosecution. Therefore, for a malicious prosecution suit to prosper, the plaintiff must prove the following: (1) the prosecution did occur, and the defendant was himself the prosecutor or that he instigated its commencement; (2) the criminal action finally ended with an acquittal; (3) in bringing the action, the prosecutor acted without probable cause; and (4) the prosecution was impelled by legal malice -- an improper or a sinister motive.41 The gravamen of malicious prosecution is not the filing of a complaint based on the wrong provision of law, but the deliberate initiation of an action with the knowledge that the charges were false and groundless.42 We shall proceed to determine whether in the prosecution of petitioner Rosemarie for the crime of Robbery, all four elements were in attendance. It is not disputed that the first and second elements are present. The prosecution of petitioner Rosemarie for the crime of robbery did occur, and respondents Pilar, Ibarra and Juanito instigated its commencement. On 20 December 1985, the RTC, Branch XLI, Bacolod City, rendered a Decision acquitting Rosemarie Magbanua on the ground of insufficiency of evidence. On the question of probable cause, this Court has ruled that for purposes of malicious prosecution, "probable cause" means "such facts and circumstances as would excite the belief, in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted."43 It is merely based on opinion and reasonable belief.44 Thus, a finding of probable cause does not require an inquiry into whether there is sufficient evidence to procure a conviction.45 Anent the question of whether the prosecutor acted without probable cause in bringing the action against petitioner Rosemarie, we find no reason to depart from the conclusions reached by the RTC and the Court of Appeals. The filing of Criminal Case No. 28 for Robbery was not without probable cause. Indeed, during the investigation petitioner Rosemarie admitted her participation in the commission of the incident complained of. The investigation report, which prompted the filing of the Information for Robbery against petitioner Rosemarie showed that she admitted to receiving instruction from her co-accused Ernesto Fernandez and a certain Gudo to leave the barrel belt of the kitchen door unlocked,46 so her co-accused can gain entry to the house of respondent Pilar.1avvphi1.net Moreover, she admitted that after her co-accused had taken the pieces of jewelry owned by respondent Pilar, they gave her a necklace which she kept in a shoulder bag. During the investigation, she was shown the said necklace, and she positively identified the same to be the necklace her co-accused had given her.47 On the basis of the said admission, the Office of the Prosecutor found basis and probable cause to file the appropriate Information with the RTC against petitioner Rosemarie and her co-accused Ernesto Fernandez and a certain Gudo. The inadmissibility of the aforesaid admission on the ground that the same was extracted under duress was an evidentiary matter, which does not detract from the fact that based on petitioner Rosemaries admission, there was reason for the respondents to believe that the suit was not unfounded, and that the crime was committed. Finally, in an action to recover damages based on malicious prosecution, it must be established that the prosecution was impelled by legal malice. There is necessity of proof that the suit was so patently malicious as to warrant the award of damages under Articles 19 to 21,48 of the Civil Code, or that the suit was grounded on malice or bad faith.49 Moreover, it is a doctrine well-entrenched in jurisprudence that the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution, for the law would not have meant to impose a penalty on the right to litigate.50 1awphi1.net

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Applying the rule to the case at bar, we affirm the findings of the RTC and the Court of Appeals that there was no proof of a sinister design on the part of the respondents to vex or humiliate petitioner Rosemarie by instituting the criminal case against her and her co-accused. Respondent Pilar who was robbed of her valuable belongings can only be expected to bring the matter to the authorities. There can be no evil motive that should be attributed to one, who, as victim of a crime institutes the necessary legal proceedings. At the risk of redundancy, we stress that the proscription against the imposition of penalty on the right to litigate must not be violated. Mere filing of a suit does not render a person liable for malicious prosecution should he be unsuccessful, for the law could not have meant to impose a penalty on the right to litigate.51 There was no other explanation or motive as to why respondents would institute baseless prosecution of petitioner Rosemarie. No evidence was shown that there was bad blood between respondent Pilar and petitioner Rosemarie prior to the supposed robbery. We also do not find the actuations of respondents Ibarra and Juanito to be impelled by legal malice. Their commencement of the action against petitioner Rosemarie and her co-accused was pursuant to their duties as police officers. The same was made subsequent to the report of respondent Pilar of the commission of the crime, and the investigation on the person of petitioner Rosemarie. Even then, mistakes committed by a public officer are not actionable absent any clear showing that they were motivated by malice or gross negligence amounting to bad faith,52 which was not established in the case at bar. Moreover, as was clear from the outset, the instant case is a suit seeking damages for malicious prosecution, and not for the violations and maltreatment that respondents allegedly committed against petitioner Rosemarie in extracting the admission from her. At any rate, the RTC had ruled that the instant case is not an action on the injuries allegedly suffered by petitioner Rosemarie, but rather for malicious prosecution. Otherwise, an action seeking damages for her injuries should have been deemed prescribed.53 WHEREFORE, the Appeal is DENIED. The Decision, dated 26 January 1998, of the Court of Appeals in CA-G.R. CV No. 51750, which affirmed in toto the Decision, dated 25 July 1995, of the RTC, Branch 51, Bacolod City, in Civil Case No. 4361, is AFFIRMED. Costs against petitioners. SO ORDERED.

G.R. No. 151866

September 9, 2004

SOLEDAD CARPIO, petitioner, vs. LEONORA A. VALMONTE, respondent. DECISION TINGA, J.: Assailed in the instant petition for review is the Decision of the Court of Appeals in C.A.-G.R. CV No. 69537,1promulgated on 17 January 2002.2 The appellate court reversed the trial courts decision denying respondents claim for damages against petitioner and ordered the latter to pay moral damages to the former in the amount ofP100,000.00. Respondent Leonora Valmonte is a wedding coordinator. Michelle del Rosario and Jon Sierra engaged her services for their church wedding on 10 October 1996. At about 4:30 p.m. on that day, Valmonte went to the Manila Hotel where the bride and her family were billeted. When she arrived at Suite 326-A, several persons were already there including the bride, the brides parents and relatives, the make-up artist and his assistant,

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the official photographers, and the fashion designer. Among those present was petitioner Soledad Carpio, an aunt of the bride who was preparing to dress up for the occasion. After reporting to the bride, Valmonte went out of the suite carrying the items needed for the wedding rites and the gifts from the principal sponsors. She proceeded to the Maynila Restaurant where the reception was to be held. She paid the suppliers, gave the meal allowance to the band, and went back to the suite. Upon entering the suite, Valmonte noticed the people staring at her. It was at this juncture that petitioner allegedly uttered the following words to Valmonte: "Ikaw lang ang lumabas ng kwarto, nasaan ang dala mong bag? Saan ka pumunta? Ikaw lang and lumabas ng kwarto, ikaw ang kumuha." Petitioner then ordered one of the ladies to search Valmontes bag. It turned out that after Valmonte left the room to attend to her duties, petitioner discovered that the pieces of jewelry which she placed inside the comfort room in a paper bag were lost. The jewelry pieces consist of two (2) diamond rings, one (1) set of diamond earrings, bracelet and necklace with a total value of about one million pesos. The hotel security was called in to help in the search. The bags and personal belongings of all the people inside the room were searched. Valmonte was allegedly bodily searched, interrogated and trailed by a security guard throughout the evening. Later, police officers arrived and interviewed all persons who had access to the suite and fingerprinted them including Valmonte. During all the time Valmonte was being interrogated by the police officers, petitioner kept on saying the words "Siya lang ang lumabas ng kwarto." Valmontes car which was parked at the hotel premises was also searched but the search yielded nothing. A few days after the incident, petitioner received a letter from Valmonte demanding a formal letter of apology which she wanted to be circulated to the newlyweds relatives and guests to redeem her smeared reputation as a result of petitioners imputations against her. Petitioner did not respond to the letter. Thus, on 20 February 1997, Valmonte filed a suit for damages against her before the Regional Trial Court (RTC) of Pasig City, Branch 268. In her complaint, Valmonte prayed that petitioner be ordered to pay actual, moral and exemplary damages, as well as attorneys fees. Responding to the complaint, petitioner denied having uttered words or done any act to confront or single out Valmonte during the investigation and claimed that everything that transpired after the theft incident was purely a police matter in which she had no participation. Petitioner prayed for the dismissal of the complaint and for the court to adjudge Valmonte liable on her counterclaim. The trial court rendered its Decision on 21 August 2000, dismissing Valmontes complaint for damages. It ruled that when petitioner sought investigation for the loss of her jewelry, she was merely exercising her right and if damage results from a person exercising his legal right, it is damnum absque injuria. It added that no proof was presented by Valmonte to show that petitioner acted maliciously and in bad faith in pointing to her as the culprit. The court said that Valmonte failed to show that she suffered serious anxiety, moral shock, social humiliation, or that her reputation was besmirched due to petitioners wrongful act. Respondent appealed to the Court of Appeals alleging that the trial court erred in finding that petitioner did not slander her good name and reputation and in disregarding the evidence she presented. The Court of Appeals ruled differently. It opined that Valmonte has clearly established that she was singled out by petitioner as the one responsible for the loss of her jewelry. It cited the testimony of Serena Manding, corroborating Valmontes claim that petitioner confronted her and uttered words to the effect that she was the only one who went out of the room and that she was the one who took the jewelry. The appellate court held that Valmontes claim for damages is not predicated on the fact that she was subjected to body search and interrogation by the police but rather petitioners act of publicly accusing her of taking the missing jewelry. It categorized petitioners utterance defamatory considering that it imputed upon Valmonte the crime of theft. The court concluded that petitioners verbal assault upon Valmonte was done with malice and in bad faith since it was made in the presence of many people without any solid proof except petitioners suspicion. Such unfounded accusation entitles Valmonte to an award of moral damages in the amount of P100,000.00 for she was publicly humiliated, deeply insulted, and embarrassed. However, the court found no sufficient evidence to justify the award of actual damages. Hence, this petition. Petitioner contends that the appellate courts conclusion that she publicly humiliated respondent does not conform to the evidence presented. She adds that even on the assumption that she uttered the words complained of, it was not shown that she did so with malice and in bad faith. In essence, petitioner would want this Court to review the factual conclusions reached by the appellate court. The cardinal rule adhered to in this jurisdiction is that a petition for review must raise only questions of law,3 and judicial review under Rule 45 does not extend to an evaluation of the sufficiency of evidence unless there is a showing that the findings complained of are totally devoid of support in the record or that they are so glaringly erroneous as to constitute serious abuse of discretion.4 This Court, while not a trier of facts, may review the evidence in order to arrive at the correct factual conclusion based on the record especially so when the findings of fact of the Court of Appeals are at variance with those of the trial court, or when the inference drawn by the Court of Appeals from the facts is manifestly mistaken.5 Contrary to the trial courts finding, we find sufficient evidence on record tending to prove that petitioners imputations against respondent was made with malice and in bad faith.

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Petitioners testimony was shorn of substance and consists mainly of denials. She claimed not to have uttered the words imputing the crime of theft to respondent or to have mentioned the latters name to the authorities as the one responsible for the loss of her jewelry. Well-settled is the rule that denials, if unsubstantiated by clear and convincing evidence, are negative and self-serving which merit no weight in law and cannot be given greater evidentiary value over the testimony of credible witnesses who testify on affirmative matters.6 Respondent, however, has successfully refuted petitioners testimony. Quite credibly, she has narrated in great detail her distressing experience on that fateful day. She testified as to how rudely she was treated by petitioner right after she returned to the room. Petitioner immediately confronted her and uttered the words "Ikaw lang ang lumabas ng kwarto. Nasaan ang dala mong bag? Saan ka pumunta? Ikaw ang kumuha." Thereafter, her body was searched including her bag and her car. Worse, during the reception, she was once more asked by the hotel security to go to the ladies room and she was again bodily searched.7 Serea Manding, a make-up artist, corroborated respondents testimony. She testified that petitioner confronted respondent in the presence of all the people inside the suite accusing her of being the only one who went out of the comfort room before the loss of the jewelry. Manding added that respondent was embarrassed because everybody else in the room thought she was a thief.8 If only to debunk petitioners assertion that she did not utter the accusatory remarks in question publicly and with malice, Mandings testimony on the point deserves to be reproduced. Thus, Q After that what did she do? A Then Leo came out from the other room she said, she is (sic) the one I only saw from the comfort room. Q Now, what exact word (sic) were said by Mrs. Carpio on that matter? A She said "siya lang yung nakita kong galing sa C.R." Q And who was Mrs. Carpio or the defendant referring to? A Leo Valmonte. Q Did she say anything else, the defendant? A Her jewelry were lost and Leo was the only one she saw in the C.R. After that she get (sic) the paper bag then the jewelry were already gone. Q Did she confront the plaintiff Mrs. Valmonte regarding that fact? A Yes. Q What did the defendant Mrs. Carpio tell the plaintiff, Mrs. Valmonte? A "Ikaw yung nakita ko sa C.R. nawawala yung alahas ko." Q When the defendant Mrs. Carpio said that to plaintiff Mrs. Valmonte were there other people inside the room? A Yes, sir. Q Were they able to hear what Mrs. Carpio said to Mrs. Valmonte? A Yes, sir. Q What was your thinking at that time that Mrs. Carpio said that to Mrs. Valmonte? A "Nakakahiya kasi akala ng iba doon na talagang magnanakaw siya. Kasi marami na kaming nandodoon, dumating na yung couturier pati yung video man and we sir. Q Who was the person you [were] alleging "na nakakahiya" whose (sic) being accused or being somebody who stole those item of jewelry? A "Nakakahiya para kay Leo kasi pinagbibintangan siya. Sa dami namin doon siya yung napagbintangan." Q And who is Leo, what is her full name? A Leo Valmonte.

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Q Did the defendant tell this matter to other people inside the room? A Yes, the mother of the bride. Q And who else did she talk to? A The father of the bride also. Q And what did the defendant tell the mother regarding this matter? A "Nawawala yung alahas ko." Sabi naman nung mother baka naman hindi mo dala tignan mo munang mabuti. Q Who was that other person that she talked to? A Father of the bride.9 Significantly, petitioners counsel elected not to pursue her cross-examination of the witness on this point following her terse and firm declaration that she remembered petitioners exact defamatory words in answer to the counsels question.10 Jaime Papio, Security Supervisor at Manila Hotel, likewise contradicted petitioners allegation that she did not suspect or mention the name of respondent as her suspect in the loss of the jewelry.11 To warrant recovery of damages, there must be both a right of action, for a wrong inflicted by the defendant, and the damage resulting therefrom to the plaintiff. Wrong without damage, or damage without wrong, does not constitute a cause of action.12 In the sphere of our law on human relations, the victim of a wrongful act or omission, whether done willfully or negligently, is not left without any remedy or recourse to obtain relief for the damage or injury he sustained. Incorporated into our civil law are not only principles of equity but also universal moral precepts which are designed to indicate certain norms that spring from the fountain of good conscience and which are meant to serve as guides for human conduct.13 First of these fundamental precepts is the principle commonly known as "abuse of rights" under Article 19 of the Civil Code. It provides that "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." To find the existence of an abuse of right, the following elements must be present: (1) there is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent or prejudicing or injuring another.14 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.15 One is not allowed to exercise his right in a manner which would cause unnecessary prejudice to another or if he would thereby offend morals or good customs. Thus, a person should be protected only when he acts in the legitimate exercise of his right, that is when he acts with prudence and good faith; but not when he acts with negligence or abuse.16 Complementing the principle of abuse of rights are the provisions of Articles 20 and 21 of the Civil Code which read, thus: Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same. Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals or good customs or public policy shall compensate the latter for the damage. The foregoing rules provide the legal bedrock for the award of damages to a party who suffers damage whenever one commits an act in violation of some legal provision, or an act which though not constituting a transgression of positive law, nevertheless violates certain rudimentary rights of the party aggrieved. In the case at bar, petitioners verbal reproach against respondent was certainly uncalled for considering that by her own account nobody knew that she brought such kind and amount of jewelry inside the paper bag.17 This being the case, she had no right to attack respondent with her innuendos which were not merely inquisitive but outrightly accusatory. By openly accusing respondent as the only person who went out of the room before the loss of the jewelry in the presence of all the guests therein, and ordering that she be immediately bodily searched, petitioner virtually branded respondent as the thief. True, petitioner had the right to ascertain the identity of the malefactor, but to malign respondent without an iota of proof that she was the one who actually stole the jewelry is an act which, by any standard or principle of law is impermissible. Petitioner had willfully caused injury to respondent in a manner which is contrary to morals and good customs. Her firmness and resolve to find her missing jewelry cannot justify her acts toward respondent. She did not act with justice and good faith for apparently, she had no other purpose in mind but to prejudice respondent. Certainly, petitioner transgressed the provisions of Article 19 in relation to Article 21 for which she should be held accountable.

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Owing to the rule that great weight and even finality is given to factual conclusions of the Court of Appeals which affirm those of the trial court,18 we sustain the findings of the trial court and the appellate court that respondents claim for actual damages has not been substantiated with satisfactory evidence during the trial and must therefore be denied. To be recoverable, actual damages must be duly proved with reasonable degree of certainty and the courts cannot rely on speculation, conjecture or guesswork.19 Respondent, however, is clearly entitled to an award of moral damages. Moral damages may be awarded whenever the defendants wrongful act or omission is the proximate cause of the plaintiffs physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury20 in the cases specified or analogous to those provided in Article 2219 of the Civil Code.21Though no proof of pecuniary loss is necessary in order that moral damages may be adjudicated, courts are mandated to take into account all the circumstances obtaining in the case and assess damages according to their discretion.22 Worthy of note is that moral damages are not awarded to penalize the defendant,23 or to enrich a complainant, but to enable the latter to obtain means, diversions or amusements that will serve to alleviate the moral suffering he has undergone, by reason of defendants culpable action. In any case, award of moral damages must be proportionate to the sufferings inflicted.24 Based on the foregoing jurisprudential pronouncements, we rule that the appellate court did not err in awarding moral damages. Considering respondents social standing, and the fact that her profession is based primarily on trust reposed in her by her clients, the seriousness of the imputations made by petitioner has greatly tarnished her reputation and will in one way or the other, affect her future dealings with her clients, the award of P100,000.00 as moral damages appears to be a fair and reasonable assessment of respondents damages. WHEREFORE, the instant Petition is DENIED. Costs against petitioner. SO ORDERED. G.R. No. L-19671 November 29, 1965

PASTOR B. TENCHAVEZ, plaintiff-appellant, vs. VICENTA F. ESCAO, ET AL., defendants-appellees. I. V. Binamira & F. B. Barria for plaintiff-appellant. Jalandoni & Jarnir for defendants-appellees. REYES, J.B.L., J.: Direct appeal, on factual and legal questions, from the judgment of the Court of First Instance of Cebu, in its Civil Case No. R-4177, denying the claim of the plaintiff-appellant, Pastor B. Tenchavez, for legal separation and one million pesos in damages against his wife and parents-in-law, the defendants-appellees, Vicente, Mamerto and Mena,1 all surnamed "Escao," respectively.2 The facts, supported by the evidence of record, are the following: Missing her late afternoon classes on 24 February 1948 in the University of San Carlos, Cebu City, where she was then enrolled as a second year student of commerce, Vicenta Escao, 27 years of age (scion of a well-to-do and socially prominent Filipino family of Spanish ancestry and a "sheltered colegiala"), exchanged marriage vows with Pastor Tenchavez, 32 years of age, an engineer, ex-army officer and of undistinguished stock, without the knowledge of her parents, before a Catholic chaplain, Lt. Moises Lavares, in the house of one Juan Alburo in the said city. The marriage was the culmination of a previous love affair and was duly registered with the local civil register. Vicenta's letters to Pastor, and his to her, before the marriage, indicate that the couple were deeply in love. Together with a friend, Pacita Noel, their matchmaker and go-between, they had planned out their marital future whereby Pacita would be the governess of their first-born; they started saving money in a piggy bank. A few weeks before their secret marriage, their engagement was broken; Vicenta returned the engagement ring and accepted another suitor, Joseling Lao. Her love for Pastor beckoned; she pleaded for his return, and they reconciled. This time they planned to get married and then elope. To facilitate the elopement, Vicenta had brought some of her clothes to the room of Pacita Noel in St. Mary's Hall, which was their usual trysting place. Although planned for the midnight following their marriage, the elopement did not, however, materialize because when Vicente went back to her classes after the marriage, her mother, who got wind of the intended nuptials, was already waiting for her at the college. Vicenta was taken home where she admitted that she had already married Pastor. Mamerto and Mena Escao were surprised, because Pastor never asked for the hand of Vicente, and were disgusted because of the great scandal that the clandestine marriage would provoke (t.s.n., vol. III, pp. 1105-06). The following morning, the Escao spouses sought priestly advice. Father Reynes suggested a recelebration to validate what he believed to be an invalid marriage, from the standpoint of the Church, due to the lack of authority from the Archbishop or the parish priest for the officiating chaplain to celebrate the marriage. The recelebration did not take place, because on 26 February 1948 Mamerto Escao was handed by a maid, whose name he claims he does not remember, a letter purportedly coming from San

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Carlos college students and disclosing an amorous relationship between Pastor Tenchavez and Pacita Noel; Vicenta translated the letter to her father, and thereafter would not agree to a new marriage. Vicenta and Pastor met that day in the house of Mrs. Pilar Mendezona. Thereafter, Vicenta continued living with her parents while Pastor returned to his job in Manila. Her letter of 22 March 1948 (Exh. "M"), while still solicitous of her husband's welfare, was not as endearing as her previous letters when their love was aflame. Vicenta was bred in Catholic ways but is of a changeable disposition, and Pastor knew it. She fondly accepted her being called a "jellyfish." She was not prevented by her parents from communicating with Pastor (Exh. "1Escao"), but her letters became less frequent as the days passed. As of June, 1948 the newlyweds were already estranged (Exh. "2-Escao"). Vicenta had gone to Jimenez, Misamis Occidental, to escape from the scandal that her marriage stirred in Cebu society. There, a lawyer filed for her a petition, drafted by then Senator Emmanuel Pelaez, to annul her marriage. She did not sign the petition (Exh. "B-5"). The case was dismissed without prejudice because of her non-appearance at the hearing (Exh. "B-4"). On 24 June 1950, without informing her husband, she applied for a passport, indicating in her application that she was single, that her purpose was to study, and she was domiciled in Cebu City, and that she intended to return after two years. The application was approved, and she left for the United States. On 22 August 1950, she filed a verified complaint for divorce against the herein plaintiff in the Second Judicial District Court of the State of Nevada in and for the County of Washoe, on the ground of "extreme cruelty, entirely mental in character." On 21 October 1950, a decree of divorce, "final and absolute", was issued in open court by the said tribunal. In 1951 Mamerto and Mena Escao filed a petition with the Archbishop of Cebu to annul their daughter's marriage to Pastor (Exh. "D"). On 10 September 1954, Vicenta sought papal dispensation of her marriage (Exh. "D"-2). On 13 September 1954, Vicenta married an American, Russell Leo Moran, in Nevada. She now lives with him in California, and, by him, has begotten children. She acquired American citizenship on 8 August 1958. But on 30 July 1955, Tenchavez had initiated the proceedings at bar by a complaint in the Court of First Instance of Cebu, and amended on 31 May 1956, against Vicenta F. Escao, her parents, Mamerto and Mena Escao, whom he charged with having dissuaded and discouraged Vicenta from joining her husband, and alienating her affections, and against the Roman Catholic Church, for having, through its Diocesan Tribunal, decreed the annulment of the marriage, and asked for legal separation and one million pesos in damages. Vicenta claimed a valid divorce from plaintiff and an equally valid marriage to her present husband, Russell Leo Moran; while her parents denied that they had in any way influenced their daughter's acts, and counterclaimed for moral damages. The appealed judgment did not decree a legal separation, but freed the plaintiff from supporting his wife and to acquire property to the exclusion of his wife. It allowed the counterclaim of Mamerto Escao and Mena Escao for moral and exemplary damages and attorney's fees against the plaintiff-appellant, to the extent of P45,000.00, and plaintiff resorted directly to this Court. The appellant ascribes, as errors of the trial court, the following: 1. In not declaring legal separation; in not holding defendant Vicenta F. Escao liable for damages and in dismissing the complaint;. 2. In not holding the defendant parents Mamerto Escano and the heirs of Doa Mena Escao liable for damages;. 3 In holding the plaintiff liable for and requiring him to pay the damages to the defendant parents on their counterclaims; and. 4. In dismissing the complaint and in denying the relief sought by the plaintiff. That on 24 February 1948 the plaintiff-appellant, Pastor Tenchavez, and the defendant-appellee, Vicenta Escao, were validly married to each other, from the standpoint of our civil law, is clearly established by the record before us. Both parties were then above the age of majority, and otherwise qualified; and both consented to the marriage, which was performed by a Catholic priest (army chaplain Lavares) in the presence of competent witnesses. It is nowhere shown that said priest was not duly authorized under civil law to solemnize marriages. The chaplain's alleged lack of ecclesiastical authorization from the parish priest and the Ordinary, as required by Canon law, is irrelevant in our civil law, not only because of the separation of Church and State but also because Act 3613 of the Philippine Legislature (which was the marriage law in force at the time) expressly provided that SEC. 1. Essential requisites. Essential requisites for marriage are the legal capacity of the contracting parties and consent. (Emphasis supplied)

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The actual authority of the solemnizing officer was thus only a formal requirement, and, therefore, not essential to give the marriage civil effects,3 and this is emphasized by section 27 of said marriage act, which provided the following: SEC. 27. Failure to comply with formal requirements. No marriage shall be declared invalid because of the absence of one or several of the formal requirements of this Act if, when it was performed, the spouses or one of them believed in good faith that the person who solemnized the marriage was actually empowered to do so, and that the marriage was perfectly legal. The good faith of all the parties to the marriage (and hence the validity of their marriage) will be presumed until the contrary is positively proved (Lao vs. Dee Tim, 45 Phil. 739, 745; Francisco vs. Jason, 60 Phil. 442, 448). It is well to note here that in the case at bar, doubts as to the authority of the solemnizing priest arose only after the marriage, when Vicenta's parents consulted Father Reynes and the archbishop of Cebu. Moreover, the very act of Vicenta in abandoning her original action for annulment and subsequently suing for divorce implies an admission that her marriage to plaintiff was valid and binding. Defendant Vicenta Escao argues that when she contracted the marriage she was under the undue influence of Pacita Noel, whom she charges to have been in conspiracy with appellant Tenchavez. Even granting, for argument's sake, the truth of that contention, and assuming that Vicenta's consent was vitiated by fraud and undue influence, such vices did not render her marriage ab initio void, but merely voidable, and the marriage remained valid until annulled by a competent civil court. This was never done, and admittedly, Vicenta's suit for annulment in the Court of First Instance of Misamis was dismissed for non-prosecution. It is equally clear from the record that the valid marriage between Pastor Tenchavez and Vicenta Escao remained subsisting and undissolved under Philippine law, notwithstanding the decree of absolute divorce that the wife sought and obtained on 21 October 1950 from the Second Judicial District Court of Washoe County, State of Nevada, on grounds of "extreme cruelty, entirely mental in character." At the time the divorce decree was issued, Vicenta Escao, like her husband, was still a Filipino citizen.4 She was then subject to Philippine law, and Article 15 of the Civil Code of the Philippines (Rep. Act No. 386), already in force at the time, expressly provided: Laws relating to family rights and duties or to the status, condition and legal capacity of persons are binding upon the citizens of the Philippines, even though living abroad. The Civil Code of the Philippines, now in force, does not admit absolute divorce, quo ad vinculo matrimonii; and in fact does not even use that term, to further emphasize its restrictive policy on the matter, in contrast to the preceding legislation that admitted absolute divorce on grounds of adultery of the wife or concubinage of the husband (Act 2710). Instead of divorce, the present Civil Code only provides for legal separation (Title IV, Book 1, Arts. 97 to 108), and, even in that case, it expressly prescribes that "the marriage bonds shall not be severed" (Art. 106, subpar. 1). For the Philippine courts to recognize and give recognition or effect to a foreign decree of absolute divorce betiveen Filipino citizens could be a patent violation of the declared public policy of the state, specially in view of the third paragraph of Article 17 of the Civil Code that prescribes the following: Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, policy and good customs, shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country. Even more, the grant of effectivity in this jurisdiction to such foreign divorce decrees would, in effect, give rise to an irritating and scandalous discrimination in favor of wealthy citizens, to the detriment of those members of our polity whose means do not permit them to sojourn abroad and obtain absolute divorces outside the Philippines. From this point of view, it is irrelevant that appellant Pastor Tenchavez should have appeared in the Nevada divorce court. Primarily because the policy of our law cannot be nullified by acts of private parties (Civil Code,Art. 17, jam quot.); and additionally, because the mere appearance of a non-resident consort cannot confer jurisdiction where the court originally had none (Area vs. Javier, 95 Phil. 579). From the preceding facts and considerations, there flows as a necessary consequence that in this jurisdiction Vicenta Escao's divorce and second marriage are not entitled to recognition as valid; for her previous union to plaintiff Tenchavez must be declared to be existent and undissolved. It follows, likewise, that her refusal to perform her wifely duties, and her denial of consortium and her desertion of her husband constitute in law a wrong caused through her fault, for which the husband is entitled to the corresponding indemnity (Civil Code, Art. 2176). Neither an unsubstantiated charge of deceit nor an anonymous letter charging immorality against the husband constitute, contrary to her claim, adequate excuse. Wherefore, her marriage and cohabitation with Russell Leo Moran is technically "intercourse with a person not her husband" from the standpoint of Philippine Law, and entitles plaintiff-appellant Tenchavez to a decree of "legal separation under our law, on the basis of adultery" (Revised Penal Code, Art. 333).

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The foregoing conclusions as to the untoward effect of a marriage after an invalid divorce are in accord with the previous doctrines and rulings of this court on the subject, particularly those that were rendered under our laws prior to the approval of the absolute divorce act (Act 2710 of the Philippine Legislature). As a matter of legal history, our statutes did not recognize divorces a vinculo before 1917, when Act 2710 became effective; and the present Civil Code of the Philippines, in disregarding absolute divorces, in effect merely reverted to the policies on the subject prevailing before Act 2710. The rulings, therefore, under the Civil Code of 1889, prior to the Act above-mentioned, are now, fully applicable. Of these, the decision in Ramirez vs. Gmur, 42 Phil. 855, is of particular interest. Said this Court in that case: As the divorce granted by the French Court must be ignored, it results that the marriage of Dr. Mory and Leona Castro, celebrated in London in 1905, could not legalize their relations; and the circumstance that they afterwards passed for husband and wife in Switzerland until her death is wholly without legal significance. The claims of the very children to participate in the estate of Samuel Bishop must therefore be rejected. The right to inherit is limited to legitimate, legitimated and acknowledged natural children. The children of adulterous relations are wholly excluded. The word "descendants" as used in Article 941 of the Civil Code cannot be interpreted to include illegitimates born of adulterous relations. (Emphasis supplied) Except for the fact that the successional rights of the children, begotten from Vicenta's marriage to Leo Moran after the invalid divorce, are not involved in the case at bar, the Gmur case is authority for the proposition that such union is adulterous in this jurisdiction, and, therefore, justifies an action for legal separation on the part of the innocent consort of the first marriage, that stands undissolved in Philippine law. In not so declaring, the trial court committed error. True it is that our ruling gives rise to anomalous situations where the status of a person (whether divorced or not) would depend on the territory where the question arises. Anomalies of this kind are not new in the Philippines, and the answer to them was given in Barretto vs. Gonzales, 58 Phil. 667: The hardship of the existing divorce laws in the Philippine Islands are well known to the members of the Legislature. It is the duty of the Courts to enforce the laws of divorce as written by Legislature if they are constitutional. Courts have no right to say that such laws are too strict or too liberal. (p. 72) The appellant's first assignment of error is, therefore, sustained. However, the plaintiff-appellant's charge that his wife's parents, Dr. Mamerto Escao and his wife, the late Doa Mena Escao, alienated the affections of their daughter and influenced her conduct toward her husband are not supported by credible evidence. The testimony of Pastor Tenchavez about the Escao's animosity toward him strikes us to be merely conjecture and exaggeration, and are belied by Pastor's own letters written before this suit was begun (Exh. "2-Escao" and "Vicenta," Rec. on App., pp. 270-274). In these letters he expressly apologized to the defendants for "misjudging them" and for the "great unhappiness" caused by his "impulsive blunders" and "sinful pride," "effrontery and audacity" [sic]. Plaintiff was admitted to the Escao house to visit and court Vicenta, and the record shows nothing to prove that he would not have been accepted to marry Vicente had he openly asked for her hand, as good manners and breeding demanded. Even after learning of the clandestine marriage, and despite their shock at such unexpected event, the parents of Vicenta proposed and arranged that the marriage be recelebrated in strict conformity with the canons of their religion upon advice that the previous one was canonically defective. If no recelebration of the marriage ceremony was had it was not due to defendants Mamerto Escao and his wife, but to the refusal of Vicenta to proceed with it. That the spouses Escao did not seek to compel or induce their daughter to assent to the recelebration but respected her decision, or that they abided by her resolve, does not constitute in law an alienation of affections. Neither does the fact that Vicenta's parents sent her money while she was in the United States; for it was natural that they should not wish their daughter to live in penury even if they did not concur in her decision to divorce Tenchavez (27 Am. Jur. 130-132). There is no evidence that the parents of Vicenta, out of improper motives, aided and abetted her original suit for annulment, or her subsequent divorce; she appears to have acted independently, and being of age, she was entitled to judge what was best for her and ask that her decisions be respected. Her parents, in so doing, certainly cannot be charged with alienation of affections in the absence of malice or unworthy motives, which have not been shown, good faith being always presumed until the contrary is proved. SEC. 529. Liability of Parents, Guardians or Kin. The law distinguishes between the right of a parent to interest himself in the marital affairs of his child and the absence of rights in a stranger to intermeddle in such affairs. However, such distinction between the liability of parents and that of strangers is only in regard to what will justify interference. A parent isliable for alienation of affections resulting from his own malicious conduct, as where he wrongfully entices his son or daughter to leave his or her spouse, but he is not liable unless he acts maliciously, without justification and from unworthy motives. He is not liable where he acts and advises his child in good faith with respect to his child's marital relations in the interest of his child as he sees it, the marriage of his child not terminating his right and liberty to interest himself in, and be extremely solicitous for, his child's welfare and happiness, even where his conduct and advice suggest or result in the separation of the spouses or the obtaining of a divorce or annulment, or where he acts under mistake or misinformation, or where his advice or interference are indiscreet or unfortunate, although it has been held that the parent is liable for consequences resulting from recklessness. He may in good faith take his child into his home and afford him or her protection

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and support, so long as he has not maliciously enticed his child away, or does not maliciously entice or cause him or her to stay away, from his or her spouse. This rule has more frequently been applied in the case of advice given to a married daughter, but it is equally applicable in the case of advice given to a son. Plaintiff Tenchavez, in falsely charging Vicenta's aged parents with racial or social discrimination and with having exerted efforts and pressured her to seek annulment and divorce, unquestionably caused them unrest and anxiety, entitling them to recover damages. While this suit may not have been impelled by actual malice, the charges were certainly reckless in the face of the proven facts and circumstances. Court actions are not established for parties to give vent to their prejudices or spleen. In the assessment of the moral damages recoverable by appellant Pastor Tenchavez from defendant Vicente Escao, it is proper to take into account, against his patently unreasonable claim for a million pesos in damages, that (a) the marriage was celebrated in secret, and its failure was not characterized by publicity or undue humiliation on appellant's part; (b) that the parties never lived together; and (c) that there is evidence that appellant had originally agreed to the annulment of the marriage, although such a promise was legally invalid, being against public policy (cf. Art. 88, Civ. Code). While appellant is unable to remarry under our law, this fact is a consequence of the indissoluble character of the union that appellant entered into voluntarily and with open eyes rather than of her divorce and her second marriage. All told, we are of the opinion that appellant should recover P25,000 only by way of moral damages and attorney's fees. With regard to the P45,000 damages awarded to the defendants, Dr. Mamerto Escao and Mena Escao, by the court below, we opine that the same are excessive. While the filing of this unfounded suit must have wounded said defendants' feelings and caused them anxiety, the same could in no way have seriously injured their reputation, or otherwise prejudiced them, lawsuits having become a common occurrence in present society. What is important, and has been correctly established in the decision of the court below, is that said defendants were not guilty of any improper conduct in the whole deplorable affair. This Court, therefore, reduces the damages awarded to P5,000 only. Summing up, the Court rules: (1) That a foreign divorce between Filipino citizens, sought and decreed after the effectivity of the present Civil Code (Rep. Act 386), is not entitled to recognition as valid in this jurisdiction; and neither is the marriage contracted with another party by the divorced consort, subsequently to the foreign decree of divorce, entitled to validity in the country; (2) That the remarriage of divorced wife and her co-habitation with a person other than the lawful husband entitle the latter to a decree of legal separation conformably to Philippine law; (3) That the desertion and securing of an invalid divorce decree by one consort entitles the other to recover damages; (4) That an action for alienation of affections against the parents of one consort does not lie in the absence of proof of malice or unworthy motives on their part. WHEREFORE, the decision under appeal is hereby modified as follows; (1) Adjudging plaintiff-appellant Pastor Tenchavez entitled to a decree of legal separation from defendant Vicenta F. Escao; (2) Sentencing defendant-appellee Vicenta Escao to pay plaintiff-appellant Tenchavez the amount of P25,000 for damages and attorneys' fees; (3) Sentencing appellant Pastor Tenchavez to pay the appellee, Mamerto Escao and the estate of his wife, the deceased Mena Escao, P5,000 by way of damages and attorneys' fees. Neither party to recover costs.

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G.R. No. 82380 April 29, 1988 AYER PRODUCTIONS PTY. LTD. and McELROY & McELROY FILM PRODUCTIONS, petitioners, vs. HON.IGNACIO M. CAPULONG and JUAN PONCE ENRILE, respondents. G.R. No. 82398 April 29, 1988 HAL MCELROY petitioner, vs. HON. IGNACIO M. CAPULONG, in his capacity as Presiding Judge of the Regional Trial Court of Makati, Branch 134 and JUAN PONCE ENRILE, respondents.

FELICIANO, J.: Petitioner Hal McElroy an Australian film maker, and his movie production company, Petitioner Ayer Productions pty Ltd. (Ayer Productions), 1 envisioned, sometime in 1987, the for commercial viewing and for Philippine and international release, the histolic peaceful struggle of the Filipinos at EDSA (Epifanio de los Santos Avenue). Petitioners discussed this Project with local movie producer Lope V. Juban who suggested th they consult with the appropriate government agencies and also with General Fidel V. Ramos and Senator Juan Ponce Enrile, who had played major roles in the events proposed to be filmed. The proposed motion picture entitled "The Four Day Revolution" was endorsed by the Movie Television Review and Classification Board as wel as the other government agencies consulted. General Fidel Ramos also signified his approval of the intended film production. In a letter dated 16 December 1987, petitioner Hal McElroy informed private respondent Juan Ponce Enrile about the projected motion picture enclosing a synopsis of it, the full text of which is set out below: The Four Day Revolution is a six hour mini-series about People Powera unique event in modern history that-made possible the Peaceful revolution in the Philippines in 1986. Faced with the task of dramatising these rerkble events, screenwriter David Williamson and history Prof Al McCoy have chosen a "docu-drama" style and created [four] fictitious characters to trace the revolution from the death of Senator Aquino, to the Feb revolution and the fleeing of Marcos from the country. These character stories have been woven through the real events to help our huge international audience understand this ordinary period inFilipino history. First, there's Tony O'Neil, an American television journalist working for major network. Tony reflects the average American attitude to the Phihppinence once a colony, now the home of crucially important military bases. Although Tony is aware of the corruption and of Marcos' megalomania, for him, there appears to be no alternative to Marcos except the Communists.

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Next, Angie Fox a fiery Australian photo-journalist. A 'new girl in town,' she is quickly caught up in the events as it becomes dear that the time has come for a change. Through Angle and her relationship with one of the Reform Army Movement Colonels (a fictitious character), we follow the developing discontent in the armed forces. Their dislike for General Ver, their strong loyalty to Defense Minister Enrile, and ultimately their defection from Marcos. The fourth fictitious character is Ben Balano, a middle-aged editor of a Manila newspaper who despises the Marcos regime and is a supporter an promoter of Cory Aquino. Ben has two daughters, Cehea left wing lawyer who is a secret member of the New People's Army, and Eva--a -P.R. girl, politically moderate and very much in love with Tony. Ultimately, she must choose between her love and the revolution. Through the interviews and experiences of these central characters, we show the complex nature of Filipino society, and thintertwining series of events and characters that triggered these remarkable changes. Through them also, we meet all of the principal characters and experience directly dramatic recreation of the revolution. The story incorporates actual documentary footage filmed during the period which we hope will capture the unique atmosphere and forces that combined to overthrow President Marcos. David Williamson is Australia's leading playwright with some 14 hugely successful plays to his credit(Don's Party,' 'The Club,' Travelling North) and 11 feature films (The Year of Living Dangerously,' Gallipoli,' 'Phar Lap'). Professor McCoy (University of New South Wales) is an American historian with a deep understanding of the Philippines, who has worked on the research for this project for some 18 months. Together with Davi Wilhamgon they have developed a script we believe accurately depicts the complex issues and events that occurred during th period . The six hour series is a McElroy and McElroy co-production with Home Box Office in American, the Australian Broadcast Corporation in Australia and Zenith Productions in the United Kingdom The proposed motion picture would be essentially a re-enact. ment of the events that made possible the EDSA revolution; it is designed to be viewed in a six-hour mini-series television play, presented in a "docu-drama" style, creating four (4) fictional characters interwoven with real events, and utilizing actual documentary footage as background. On 21 December 1987, private respondent Enrile replied that "[he] would not and will not approve of the use, appropriation, reproduction and/or exhibition of his name, or picture, or that of any member of his family in any cinema or television production, film or other medium for advertising or commercial exploitation" and further advised petitioners that 'in the production, airing, showing, distribution or exhibition of said or similar film, no reference whatsoever (whether written, verbal or visual) should not be made to [him] or any member of his family, much less to any matter purely personal to them. It appears that petitioners acceded to this demand and the name of private respondent Enrile was deleted from the movie script, and petitioners proceeded to film the projected motion picture. On 23 February 1988, private respondent filed a Complaint with application for Temporary Restraining Order and Wilt of Pretion with the Regional Trial Court of Makati, docketed as Civil Case No. 88-151 in Branch 134 thereof, seeking to enjoin petitioners from producing the movie "The Four Day Revolution". The complaint alleged that petitioners' production of the mini-series without private respondent's consent and over his objection, constitutes an obvious violation of his right of privacy. On 24 February 1988, the trial court issued ex-parte a Temporary Restraining Order and set for hearing the application for preliminary injunction. On 9 March 1988, Hal McElroy flied a Motion to Dismiss with Opposition to the Petition for Preliminary Injunction contending that the mini-series fim would not involve the private life of Juan Ponce Enrile nor that of his family and that a preliminary injunction would amount to a prior restraint on their right of free expression. Petitioner Ayer Productions also filed its own Motion to Dismiss alleging lack of cause of action as the mini-series had not yet been completed. In an Order 2 dated 16 March 1988, respondent court issued a writ of Preliminary Injunction against the petitioners, the dispositive portion of which reads thus: WHEREFORE, let a writ of preliminary injunction be issued, ordering defendants, and all persons and entities employed or under contract with them, including actors, actresses and members of the production staff and crew as well as all persons and entities acting on defendants' behalf, to cease and desist from producing and filming the mini-series entitled 'The Four Day Revolution" and from making any reference whatsoever to plaintiff or his family and from creating any fictitious character in lieu of plaintiff which nevertheless is based on, or bears rent substantial or marked resemblance or similarity to, or is otherwise Identifiable with, plaintiff in the production and any similar film or photoplay, until further orders from this Court, upon plaintiff's filing of a bond in the amount of P 2,000,000.00, to answer for whatever damages defendants may suffer

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by reason of the injunction if the Court should finally decide that plaintiff was not entitled thereto. xxx xxx xxx (Emphasis supplied) On 22 March 1988, petitioner Ayer Productions came to this Court by a Petition for certiorari dated 21 March 1988 with an urgent prayer for Preliminary Injunction or Restraining Order, which petition was docketed as G.R. No. L-82380. A day later, or on 23 March 1988, petitiioner Hal McElroy also filed separate Petition for certiorari with Urgent Prayer for a Restraining Order or Preliminary Injunction, dated 22 March 1988, docketed as G.R. No. L-82398. By a Resolution dated 24 March 1988, the petitions were consolidated and private respondent was required to file a consolidated Answer. Further, in the same Resolution, the Court granted a Temporary Restraining Order partially enjoining the implementation of the respondent Judge's Order of 16 March 1988 and the Writ of Preliminary Injunction issued therein, and allowing the petitioners to resume producing and filming those portions of the projected mini-series which do not make any reference to private respondent or his family or to any fictitious character based on or respondent. Private respondent seasonably filed his Consolidated Answer on 6 April 1988 invoking in the main a right of privacy. I The constitutional and legal issues raised by the present Petitions are sharply drawn. Petitioners' claim that in producing and "The Four Day Revolution," they are exercising their freedom of speech and of expression protected under our Constitution. Private respondent, upon the other hand, asserts a right of privacy and claims that the production and filming of the projected mini-series would constitute an unlawful intrusion into his privacy which he is entitled to enjoy. Considering first petitioners' claim to freedom of speech and of expression the Court would once more stress that this freedom includes the freedom to film and produce motion pictures and to exhibit such motion pictures in theaters or to diffuse them through television. In our day and age, motion pictures are a univesally utilized vehicle of communication and medium Of expression. Along with the press, radio and television, motion pictures constitute a principal medium of mass communication for information, education and entertainment. In Gonzales v. Katigbak,3 former Chief Justice Fernando, speaking for the Court, explained: 1. Motion pictures are important both as a medium for the communication of Ideas and the expression of the artistic impulse. Their effect on the perception by our people of issues and public officials or public figures as well as the pre cultural traits is considerable. Nor as pointed out in Burstyn v. Wilson (343 US 495 [19421) is the Importance of motion pictures as an organ of public opinion lessened by the fact that they are designed to entertain as well as to inform' (Ibid, 501). There is no clear dividing line between what involves knowledge and what affords pleasure. If such a distinction were sustained, there is a diminution of the basic right to free expression. ... 4 This freedom is available in our country both to locally-owned and to foreign-owned motion picture companies. Furthermore the circumstance that the production of motion picture films is a commercial activity expected to yield monetary profit, is not a disqualification for availing of freedom of speech and of expression. In our community as in many other countries, media facilities are owned either by the government or the private sector but the private sector-owned media facilities commonly require to be sustained by being devoted in whole or in pailt to revenue producing activities. Indeed, commercial media constitute the bulk of such facilities available in our country and hence to exclude commercially owned and operated media from the exerciseof constitutionally protected om of speech and of expression can only result in the drastic contraction of such constitutional liberties in our country. The counter-balancing of private respondent is to a right of privacy. It was demonstrated sometime ago by the then Dean Irene R. Cortes that our law, constitutional and statutory, does include a right of privacy. 5 It is left to case law, however, to mark out the precise scope and content of this right in differing types of particular situations. The right of privacy or "the right to be let alone," 6 like the right of free expression, is not an absolute right. A limited intrusion into a person's privacy has long been regarded as permissible where that person is a public figure and the information sought to be elicited from him or to be published about him constitute of apublic character. 7Succinctly put, the right of privacy cannot be invoked resist publication and dissemination of matters of public interest. 8 The interest sought to be protected by the right of privacy is the right to be free from unwarrantedpublicity, from the wrongful publicizing of the private affairs and activities of an individual which are outside the realm of legitimate public concern. 9 Lagunzad v. Vda. de Gonzales, 10 on which private respondent relies heavily, recognized a right to privacy in a context which included a claim to freedom of speech and of expression. Lagunzad involved a suit fortion picture producer as licensee and the widow and family of the late Moises Padilla as licensors. This agreement gave the

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licensee the right to produce a motion Picture Portraying the life of Moises Padilla, a mayoralty candidate of the Nacionalista Party for the Municipality of Magallon, Negros Occidental during the November 1951 elections and for whose murder, Governor Rafael Lacson, a member of the Liberal Party then in power and his men were tried and convicted. 11 In the judgment of the lower court enforcing the licensing agreement against the licensee who had produced the motion picture and exhibited it but refused to pay the stipulated royalties, the Court, through Justice Melencio-Herrera, said: Neither do we agree with petitioner's subon that the Licensing Agreement is null and void for lack of, or for having an illegal cause or consideration, while it is true that petitioner bad pled the rights to the book entitled "The Moises Padilla Story," that did not dispense with the need for prior consent and authority from the deceased heirs to portray publicly episodes in said deceased's life and in that of his mother and the member of his family. As held in Schuyler v. Curtis, ([1895],147 NY 434,42 NE 31 LRA 286.49 Am St Rep 671), 'a privilege may be given the surviving relatives of a deperson to protect his memory, but the privilege wts for the benefit of the living, to protect their feelings and to preventa violation of their own rights in the character and memory of the deceased.' Petitioners averment that private respondent did not have any property right over the life of Moises Padilla since the latter was a public figure, is neither well taken. Being a public figure ipso facto does not automatically destroy in toto a person's right to privacy. The right to invade a person's privacy to disseminate public information does not extend to a fictional or novelized representation of a person, no matter how public a he or she may be (Garner v. Triangle Publications, DCNY 97 F. Supp., SU 549 [1951]). In the case at bar, while it is true that petitioner exerted efforts to present a true-to-life Story Of Moises Padilla, petitioner admits that he included a little romance in the film because without it, it would be a drab story of torture and brutality. 12 In Lagunzad, the Court had need, as we have in the instant case, to deal with contraposed claims to freedom of speech and of expression and to privacy. Lagunzad the licensee in effect claimed, in the name of freedom of speech and expression, a right to produce a motion picture biography at least partly "fictionalized" of Moises Padilla without the consent of and without paying pre-agreed royalties to the widow and family of Padilla. In rejecting the licensee's claim, the Court said: Lastly, neither do we find merit in petitioners contention that the Licensing Agreement infringes on the constitutional right of freedom of speech and of the press, in that, as a citizen and as a newspaperman, he had the right to express his thoughts in film on the public life of Moises Padilla without prior restraint.The right freedom of expression, indeed, occupies a preferred position in the "hierarchy of civil liberties" (Philippine Blooming Mills Employees Organization v. Philippine Blooming Mills Co., Inc., 51 SCRA 191 [1963]). It is not, however, without limitations. As held in Gonzales v. Commission on Elections, 27 SCRA 835, 858 [1960]: xxx xxx xxx The prevailing doctine is that the clear and present danger rule is such a limitation. Another criterion for permissible limitation on freedom of speech and the press, which includes such vehicles of the mass media as radio, television and the movies, is the "balancing of interest test" (Chief Justice Enrique M. Fernando on the Bill of Rights, 1970 ed. p. 79). The principle "requires a court to take conscious and detailed consideration of the interplay of interests observable in given situation or type of situation" (Separation Opinion of the late Chief Justice Castro in Gonzales v. Commission on Elections, supra, p. 899). In the case at bar, the interests observable are the right to privacy asserted by respondent and the right of freedom of expression invoked by petitioner. taking into account the interplay of those interests, we hold thatunder the particular circumstances presented, and considering the obligations assumed in the Licensing Agreement entered into by petitioner, the validity of such agreement will have to be upheld particularly because the limits of freedom of expression are reached when expression touches upon matters of essentially private concern." 13 Whether the "balancing of interests test" or the clear and present danger test" be applied in respect of the instant Petitions, the Court believes that a different conclusion must here be reached: The production and filming by petitioners of the projected motion picture "The Four Day Revolution" does not, in the circumstances of this case, constitute an unlawful intrusion upon private respondent's "right of privacy." 1. It may be observed at the outset that what is involved in the instant case is a prior and direct restraint on the part of the respondent Judge upon the exercise of speech and of expression by petitioners. The respondent Judge has restrained petitioners from filming and producing the entire proposed motion picture. It is important to note that in Lagunzad, there was no prior restrain of any kind imposed upon the movie producer who in fact completed and exhibited the film biography of Moises Padilla. Because of the speech and of expression, a weighty presumption of invalidity vitiates. 14 The invalidity of a measure of prior restraint doesnot, of course, mean that no subsequent liability may lawfully be imposed upon a person claiming to exercise such constitutional freedoms. The respondent Judge should have stayed his hand, instead of issuing an ex-parte Temporary Restraining Order one day after filing of a complaint by the private respondent and issuing a Preliminary Injunction twenty (20) days later; for the projected motion picture was as yet uncompleted and

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hence not exhibited to any audience. Neither private respondent nor the respondent trial Judge knew what the completed film would precisely look like. There was, in other words, no "clear and present danger" of any violation of any right to privacy that private respondent could lawfully assert. 2. The subject matter of "The Four Day Revolution" relates to the non-bloody change of government that took place at Epifanio de los Santos Avenue in February 1986, and the trian of events which led up to that denouement. Clearly, such subject matter is one of public interest and concern. Indeed, it is, petitioners' argue, of international interest. The subject thus relates to a highly critical stage in the history of this countryand as such, must be regarded as having passed into the public domain and as an appropriate subject for speech and expression and coverage by any form of mass media. The subject mater, as set out in the synopsis provided by the petitioners and quoted above, does not relate to the individual life and certainly not to the private life of private respondent Ponce Enrile. Unlike in Lagunzad, which concerned the life story of Moises Padilla necessarily including at least his immediate family, what we have here is not a film biography, more or less fictionalized, of private respondent Ponce Enrile. "The Four Day Revolution" is not principally about, nor is it focused upon, the man Juan Ponce Enrile' but it is compelled, if it is to be historical, to refer to the role played by Juan Ponce Enrile in the precipitating and the constituent events of the change of government in February 1986. 3. The extent of the instrusion upon the life of private respondent Juan Ponce Enrile that would be entailed by the production and exhibition of "The Four Day Revolution" would, therefore, be limited in character. The extent of that intrusion, as this Court understands the synopsis of the proposed film, may be generally described as such intrusion as is reasonably necessary to keep that film a truthful historical account. Private respondent does not claim that petitioners threatened to depict in "The Four Day Revolution" any part of the private life of private respondent or that of any member of his family. 4. At all relevant times, during which the momentous events, clearly of public concern, that petitioners propose to film were taking place, private respondent was what Profs. Prosser and Keeton have referred to as a "public figure:" A public figure has been defined as a person who, by his accomplishments, fame, or mode of living, or by adopting a profession or calling which gives the public a legitimate interest in his doings, his affairs, and his character, has become a 'public personage.' He is, in other words, a celebrity. Obviously to be included in this category are those who have achieved some degree of reputation by appearing before the public, as in the case of an actor, a professional baseball player, a pugilist, or any other entertainment. The list is, however, broader than this. It includes public officers, famous inventors and explorers, war heroes and even ordinary soldiers, an infant prodigy, and no less a personage than the Grand Exalted Ruler of a lodge. It includes, in short, anyone who has arrived at a position where public attention is focused upon him as a person. Such public figures were held to have lost, to some extent at least, their tight to privacy. Three reasons were given, more or less indiscrimately, in the decisions" that they had sought publicity and consented to it, and so could not complaint when they received it; that their personalities and their affairs has already public, and could no longer be regarded as their own private business; and that the press had a privilege, under the Constitution, to inform the public about those who have become legitimate matters of public interest. On one or another of these grounds, and sometimes all, it was held that there was no liability when they were given additional publicity, as to matters legitimately within the scope of the public interest they had aroused. The privilege of giving publicity to news, and other matters of public interest, was held to arise out of the desire and the right of the public to know what is going on in the world, and the freedom of the press and other agencies of information to tell it. "News" includes all events and items of information which are out of the ordinary hum-drum routine, and which have 'that indefinable quality of information which arouses public attention.' To a very great extent the press, with its experience or instinct as to what its readers will want, has succeeded in making its own definination of news, as a glance at any morning newspaper will sufficiently indicate. It includes homicide and othe crimes, arrests and police raides, suicides, marriages and divorces, accidents, a death from the use of narcotics, a woman with a rare disease, the birth of a child to a twelve year old girl, the reappearance of one supposed to have been murdered years ago, and undoubtedly many other similar matters of genuine, if more or less deplorable, popular appeal. The privilege of enlightening the public was not, however, limited, to the dissemination of news in the scene of current events. It extended also to information or education, or even entertainment and amusement, by books, articles, pictures, films and broadcasts concerning interesting phases of human activity in general, as well as the reproduction of the public scene in newsreels and travelogues. In determining where to draw the line, the courts were invited to exercise a species of censorship over what the public may be permitted to read; and they were understandably liberal in allowing the benefit of the doubt. 15 Private respondent is a "public figure" precisely because, inter alia, of his participation as a principal actor in the culminating events of the change of government in February 1986. Because his participation therein was major in character, a film reenactment of the peaceful revolution that fails to make reference to the role played

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by private respondent would be grossly unhistorical. The right of privacy of a "public figure" is necessarily narrower than that of an ordinary citizen. Private respondent has not retired into the seclusion of simple private citizenship. he continues to be a "public figure." After a successful political campaign during which his participation in the EDSA Revolution was directly or indirectly referred to in the press, radio and television, he sits in a very public place, the Senate of the Philippines. 5. The line of equilibrium in the specific context of the instant case between the constitutional freedom of speech and of expression and the right of privacy, may be marked out in terms of a requirement that the proposed motion picture must be fairly truthful and historical in its presentation of events. There must, in other words, be no knowing or reckless disregard of truth in depicting the participation of private respondent in the EDSA Revolution. 16 There must, further, be no presentation of the private life of the unwilling private respondent and certainly no revelation of intimate or embarrassing personal facts. 17 The proposed motion picture should not enter into what Mme. Justice Melencio-Herrera in Lagunzad referred to as "matters of essentially private concern." 18 To the extent that "The Four Day Revolution" limits itself in portraying the participation of private respondent in the EDSA Revolution to those events which are directly and reasonably related to the public facts of the EDSA Revolution, the intrusion into private respondent's privacy cannot be regarded as unreasonable and actionable. Such portrayal may be carried out even without a license from private respondent. II In a Manifestation dated 30 March 1988, petitioner Hal McElroy informed this Court that a Temporary Restraining Order dated 25 March 1988, was issued by Judge Teofilo Guadiz of the Regional Trial Court of Makati, Branch 147, in Civil Case No. 88-413, entitled "Gregorio B. Honasan vs. Ayer Productions Pty. Ltd., McElroy Film Productions, Hal McElroy, Lope Juban and PMP Motion for Pictures Production" enjoining him and his production company from further filimg any scene of the projected mini-series film. Petitioner alleged that Honasan's complaint was a "scissors and paste" pleading, cut out straight grom the complaint of private respondent Ponce Enrile in Civil Case No. 88-151. Petitioner Ayer Productions, in a separate Manifestation dated 4 April 1988, brought to the attention of the Court the same information given by petitoner Hal McElroy, reiterating that the complaint of Gregorio B. Honasan was substantially identical to that filed by private respondent herein and stating that in refusing to join Honasan in Civil Case No. 88-151, counsel for private respondent, with whom counsel for Gregorio Honasan are apparently associated, deliberately engaged in "forum shopping." Private respondent filed a Counter-Manifestation on 13 April 1988 stating that the "slight similarity" between private respondent's complaint and that on Honasan in the construction of their legal basis of the right to privacy as a component of the cause of action is understandable considering that court pleadings are public records; that private respondent's cause of action for invasion of privacy is separate and distinct from that of Honasan's although they arose from the same tortious act of petitioners' that the rule on permissive joinder of parties is not mandatory and that, the cited cases on "forum shopping" were not in point because the parties here and those in Civil Case No. 88-413 are not identical. For reasons that by now have become clear, it is not necessary for the Court to deal with the question of whether or not the lawyers of private respondent Ponce Enrile have engaged in "forum shopping." It is, however, important to dispose to the complaint filed by former Colonel Honasan who, having refused to subject himself to the legal processes of the Republic and having become once again in fugitive from justice, must be deemed to have forfeited any right the might have had to protect his privacy through court processes. WHEREFORE, a) the Petitions for Certiorari are GRANTED DUE COURSE, and the Order dated 16 March 1988 of respondent trial court granting a Writ of Preliminary Injunction is hereby SET ASIDE. The limited Temporary Restraining Order granted by this Court on 24 March 1988 is hereby MODIFIED by enjoining unqualifiedly the implementation of respondent Judge's Order of 16 March 1988 and made PERMANENT, and b) Treating the Manifestations of petitioners dated 30 March 1988 and 4 April 1988 as separate Petitions for Certiorari with Prayer for Preliminary Injunction or Restraining Order, the Court, in the exercise of its plenary and supervisory jurisdiction, hereby REQUIRES Judge Teofilo Guadiz of the Regional Trial Court of Makati, Branch 147, forthwith to DISMISS Civil Case No. 88-413 and accordingly to SET ASIDE and DISSOLVE his Temporary Restraining Order dated 25 March 1988 and any Preliminary Injunction that may have been issued by him. No pronouncement as to costs. SO ORDERED.

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G.R. No. L-46061 November 14, 1984 ST. LOUIS REALTY CORPORATION, petitioner, vs. COURT OF APPEALS and CONRADO J. ARAMIL, respondents. Romeo Z. Comia for petitioner. Roman R. Bersamin for private respondent.

AQUINO, J.: This case is about the recovery of damages for a wrongful advertisement in the Sunday Times where Saint Louis Realty Corporation misrepresented that the house of Doctor Conrado J. Aramil belonged to Arcadio S. Arcadio. St. Louis Realty caused to be published with the permission of Arcadio S. Arcadio (but without permission of Doctor Aramil) in the issue of the Sunday Times of December 15, 1968 an advertisement with the heading "WHERE THE HEART IS". Below that heading was the photograph of the residence of Doctor Aramil and theArcadio family and then below the photograph was the following write-up: Home is where the heart is. And the hearts of MR. AND MRS. ARCADIO S. ARCADIO and their family have been captured by BROOKSIDE HILLS. They used to rent a small 2-bedroom house in a cramped neighborhood, sadly inadequate and unwholesome for the needs of a large family. They dream(ed) of a more pleasant place free from the din and dust of city life yet near all facilities. Plans took shape when they heard of BROOKSIDE HILLS. With thrift and determination, they bought a lot and built their dream house ... for P31,000. The Arcadios are now part of the friendly, thriving community of BROOKSIDE HILLS... a beautiful first-class subdivision planned for wholesome family living.

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The same advertisement appeared in the Sunday Times dated January 5, 1969. Doctor Aramil a neuropsychiatrist and a member of the faculty of the U. E. Ramon Magsaysay Memorial Hospital, noticed the mistake. On that same date, he wrote St. Louis Realty the following letter of protest: Dear Sirs: This is anent to your advertisements appearing in the December 15, 1968 and January 5, 1969 issues of the Sunday Times which boldly depicted my house at the above-mentioned address and implying that it belonged to another person. I am not aware of any permission or authority on my partfor the use of my house for such publicity. This unauthorized use of my house for your promotional gain and much more the apparent distortions therein are I believe not only transgression to my private property but also damaging to my prestige in the medical profession I have had invited in several occasions numerous medical colleagues, medical students and friends to my house and after reading your December 15 advertisement some of them have uttered some remarks purporting doubts as to my professional and personal integrity. Such sly remarks although in light vein as "it looks like your house," "how much are you renting from the Arcadios?", " like your wife portrayed in the papers as belonging to another husband," etc., have resulted in no little mental anguish on my part. I have referred this matter to the Legal Panel of the Philippine Medical Association and their final advice is pending upon my submission of supporting ownership papers. I will therefore be constrained to pursue court action against your corporation unless you could satisfactorily explain this matter within a week upon receipt of this letter. The letter was received by Ernesto Magtoto, an officer of St. Louis Realty in charge of advertising. He stopped publication of the advertisement. He contacted Doctor Aramil and offered his apologies. However, no rectification or apology was published. On February 20, 1969, Aramil's counsel demanded from St. Louis Realty actual, moral and exemplary damages of P110,000 (Exh. D). In its answer dated March 10, St. Louis Realty claimed that there was an honest mistake and that if Aramil so desired, rectification would be published in the Manila Times (Exh. 3). It published in the issue of the Manila Times of March 18, 1969 a new advertisement with the Arcadio family and their real house. But it did not publish any apology to Doctor Aramil and an explanation of the error. On March 29, Aramil filed his complaint for damages. St. Louis Realty published in the issue of the Manila Times of April 15, 1969 the following "NOTICE OF RECTIFICATION" in a space 4 by 3 inches: This will serve as a notice that our print ad 'Where the Heart is' which appeared in the Manila Timesissue of March 18, 1969 is a rectification of the same ad that appeared in the Manila Times issues rectification of the same ad that appeal of December 15, 1968 and January 5, 1969 wherein a photo of the house of another Brookside Homeowner (Dr. Aramil-private respondent) was mistakenly used as a background for the featured homeowner's the Arcadio family. The ad of March 18, 1969 shows the Arcadio family with their real house in the background, as was intended all along. Judge Jose M. Leuterio observed that St. Louis Realty should have immediately published a rectification and apology. He found that as a result of St. Louis Realty's mistake, magnified by its utter lack of sincerity, Doctor Aramil suffered mental anguish and his income was reduced by about P1,000 to P1,500 a month. Moreover, there was violation of Aramil's right to privacy (Art. 26, Civil Code). The trial court awarded Aramil P8,000 as actual damages, P20,000 as moral damages and P2,000 as attorney's fees. St. Louis Realty appealed to the Court of Appeals. The Appellate Court affirmed that judgment, with Acting Presiding Justice Magno S. Gatmaitan as ponente, and Justices Sixto A. Domondon and Samuel F. Reyes concurring. The Appellate Court reasoned out that St. Louis Realty committed an actionable quasi-delict under articles 21 and 26 of the Civil Code because the questioned advertisements pictured a beautiful house which did not belong to Arcadio but to Doctor Aramil who, naturally, was annoyed by that contretemps. In this appeal, St. Louis Realty contends that the Appellate Court ignored certain facts and resorted to surmises and conjectures. This contention is unwarranted. The Appellate Court adopted the facts found by the trial court. Those factual findings are binding on this Court. St. Louis Realty also contends that the decision is contrary to law and that the case was decided in a way not in conformity with the rulings of this Court. It argues that the case is not covered by article 26 which provides that

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"every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons". "Prying into the privacy of another's residence" and "meddling with or disturbing the private life or family relations of another" and "similar acts", "though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief". The damages fixed by Judge Leuterio are sanctioned by Articles 2200, 2208 and 2219 of the Civil Code. Article 2219 allows moral damages for acts and actions mentioned in Article 26. As lengthily explained by Justice Gatmaitan, the acts and omissions of the firm fan under Article 26. St. Louis Realty's employee was grossly negligent in mixing up the Aramil and Arcadio residences in a widely circulated publication like the Sunday Times. To suit its purpose, it never made any written apology and explanation of the mix-up. It just contented itself with a cavalier "rectification ". Persons, who know the residence of Doctor Aramil, were confused by the distorted, lingering impression that he was renting his residence from Arcadio or that Arcadio had leased it from him. Either way, his private life was mistakenly and unnecessarily exposed. He suffered diminution of income and mental anguish. WHEREFORE, the judgment of the Appellate Court is affirmed. Costs against the petitioner. SO ORDERED.

[G.R. No. 120706. January 31, 2000] RODRIGO CONCEPCION, petitioner, vs. COURT OF APPEALS and SPS. NESTOR NICOLAS and ALLEM NICOLAS, respondents. DECISION BELLOSILLO, J.: Petitioner Rodrigo Concepcion assails in this petition for review on certiorari the Decision of the Court of Appeals dated 12 December 1994 which affirmed the decision of the Regional Trial Court of Pasig City ordering him to pay respondent spouses Nestor Nicolas and Allem Nicolas the sums of P50,000.00 for moral damages, P25,000.00 for exemplary damages and P10,000.00 for attorneys fees, plus the costs of suit.* Petitioner claims absence of factual and legal basis for the award of damages.

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The courts a quo found that sometime in 1985 the spouses Nestor Nicolas and Allem Nicolas resided at No. 51 M. Concepcion St., San Joaquin, Pasig City, in an apartment leased to them by the owner thereof, Florence "Bing" Concepcion, who also resided in the same compound where the apartment was located. Nestor Nicolas was then engaged in the business of supplying government agencies and private entities with office equipment, appliances and other fixtures on a cash purchase or credit basis. Florence Concepcion joined this venture by contributing capital on condition that after her capital investment was returned to her, any profit earned would be divided equally between her and Nestor. Jksm Sometime in the second week of July 1985 Rodrigo Concepcion, brother of the deceased husband of Florence, angrily accosted Nestor at the latters apartment and accused him of conducting an adulterous relationship with Florence. He shouted, "Hoy Nestor, kabit ka ni Bing! x x x Binigyan ka pa pala ni Bing Concepcion ng P100,000.00 para umakyat ng Baguio. Pagkaakyat mo at ng asawa mo doon ay bababa ka uli para magkasarilinan kayo ni Bing."[1] To clarify matters, Nestor went with Rodrigo, upon the latters dare, to see some relatives of the Concepcion family who allegedly knew about the relationship. However, those whom they were able to see denied knowledge of the alleged affair. The same accusation was hurled by Rodrigo against Nestor when the two (2) confronted Florence at the terrace of her residence. Florence denied the imputations and Rodrigo backtracked saying that he just heard the rumor from a relative. Thereafter, however, Rodrigo called Florence over the telephone reiterating his accusation and threatening her that should something happen to his sick mother, in case the latter learned about the affair, he would kill Florence. Chief As a result of this incident, Nestor Nicolas felt extreme embarrassment and shame to the extent that he could no longer face his neighbors. Florence Concepcion also ceased to do business with him by not contributing capital anymore so much so that the business venture of the Nicolas spouses declined as they could no longer cope with their commitments to their clients and customers. To make matters worse, Allem Nicolas started to doubt Nestors fidelity resulting in frequent bickerings and quarrels during which Allem even expressed her desire to leave her husband. Consequently, Nestor was forced to write Rodrigo demanding public apology and payment of damages. Rodrigo pointedly ignored the demand, for which reason the Nicolas spouses filed a civil suit against him for damages. In his defense, Rodrigo denied that he maligned Nestor by accusing him publicly of being Florence's lover. He reasoned out that he only desired to protect the name and reputation of the Concepcion family which was why he sought an appointment with Nestor through Florence's son Roncali to ventilate his feelings about the matter. Initially, he discussed with Nestor certain aspects of the joint venture in a friendly and amiable manner, and then only casually asked the latter about his rumored affair with his sister-in-law. In contesting the decision of the appellate court, petitioner Rodrigo Concepcion raises the following issues: (a) whether there is basis in law for the award of damages to private respondents, the Nicolas spouses; and, (b) whether there is basis to review the facts which are of weight and influence but which were overlooked and misapplied by the respondent appellate court. Esm Petitioner argues that in awarding damages to private respondents, the Court of Appeals was without legal basis to justify its verdict. The alleged act imputed to him by respondent spouses does not fall under Arts. 26[2] and 2219[3] of the Civil Code since it does not constitute libel, slander, or any other form of defamation. Neither does it involve prying into the privacy of anothers residence or meddling with or disturbing the private life or family relation of another. Petitioner also insists that certain facts and circumstances of the case were manifestly overlooked, misunderstood or glossed over by respondent court which, if considered, would change the verdict. Impugning the credibility of the witnesses for private respondents and the manner by which the testimonial evidence was analyzed and evaluated by the trial court, petitioner criticized the appellate court for not taking into account the fact that the trial judge who penned the decision was in no position to observe firsthand the demeanor of the witnesses of respondent spouses as he was not the original judge who heard the case. Thus, his decision rendered was flawed. Esmsc The Court has ruled often enough that its jurisdiction in a petition for review on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless the factual findings complained of are devoid of support by the evidence on record or the assailed judgment is based on misapprehension of facts.[4] The reason behind this is that the Supreme Court respects the findings of the trial court on the issue of credibility of witnesses, considering that it is in a better position to decide the question, having heard the witnesses themselves and observed their deportment and manner of testifying during the trial.[5] Thus it accords the highest respect, even finality, to the evaluation made by the lower court of the testimonies of the witnesses presented before it. Esmmis The Court is also aware of the long settled rule that when the issue is on the credibility of witnesses, appellate courts will not generally disturb the findings of the trial court; however, its factual findings may nonetheless be reversed if by the evidence on record or lack of it, it appears that the trial court erred.[6] In this respect, the Court is not generally inclined to review the findings of fact of the Court of Appeals unless its findings are erroneous, absurd, speculative, conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the findings culled by the trial court of origin.[7] This rule of course cannot be unqualifiedly applied to a case where the judge who penned the decision was not the one who heard the case, because not having heard the testimonies himself, the judge would not be in a better position than the appellate courts to make such determination.[8]

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However, it is also axiomatic that the fact alone that the judge who heard the evidence was not the one who rendered the judgment but merely relied on the record of the case does not render his judgment erroneous or irregular. This is so even if the judge did not have the fullest opportunity to weigh the testimonies not having heard all the witnesses speak nor observed their deportment and manner of testifying. Thus the Court generally will not find any misapprehension of facts as it can be fairly assumed under the principle of regularity of performance of duties of public officers that the transcripts of stenographic notes were thoroughly scrutinized and evaluated by the judge himself. Has sufficient reason then been laid before us by petitioner to engender doubt as to the factual findings of the court a quo? We find none. A painstaking review of the evidence on record convinces us not to disturb the judgment appealed from. The fact that the case was handled by different judges brooks no consideration at all, for preponderant evidence consistent with their claim for damages has been adduced by private respondents as to foreclose a reversal. Otherwise, everytime a Judge who heard a case, wholly or partially, dies or lives the service, the case cannot be decided and a new trial will have to be conducted. That would be absurb; inconceivable. Esmso According to petitioner, private respondents evidence is inconsistent as to time, place and persons who heard the alleged defamatory statement. We find this to be a gratuitous observation, for the testimonies of all the witnesses for the respondents are unanimous that the defamatory incident happened in the afternoon at the front door of the apartment of the Nicolas spouses in the presence of some friends and neighbors, and later on, with the accusation being repeated in the presence of Florence, at the terrace of her house. That this finding appears to be in conflict with the allegation in the complaint as to the time of the incident bears no momentous significance since an allegation in a pleading is not evidence; it is a declaration that has to be proved by evidence. If evidence contrary to the allegation is presented, such evidence controls, not the allegation in the pleading itself, although admittedly it may dent the credibility of the witnesses. But not in the instant case. Msesm It is also argued by petitioner that private respondents failed to present as witnesses the persons they named as eyewitnesses to the incident and that they presented instead one Romeo Villaruel who was not named as a possible witness during the pre-trial proceedings. Charging that Villaruels testimony is not credible and should never have been accorded any weight at all, petitioner capitalizes on the fact that a great distance separates Villaruels residence and that of private respondents as reflected in their house numbers, the formers number being No. 223 M. Concepcion St., while that of the Nicolas spouses, No. 51 along the same street. This being so, petitioner concludes, Villaruel could not have witnessed the ugly confrontation between Rodrigo and Nestor. It appears however from Villaruels testimony that at the time of the incident complained of, he was staying in an apartment inside the compound adjacent to that of the Nicolas spouses. Whether his apartment was then numbered 223 is not stated. What is definite and clear is his statement that he and Nestor Nicolas were neighbors on 14 July 1985. There are other inconsistencies pointed out by petitioner in the testimonial evidence of private respondents but these are not of such significance as to alter the finding of facts of the lower court. Minor inconsistencies even guarantee truthfulness and candor, for they erase any suspicion of a rehearsed testimony.[9] Inconsistencies in the testimonies of witnesses with on minor details and collateral matters do not affect the substance of their testimonies.[10] All told, these factual findings provide enough basis in law for the award of damages by the Court of Appeals in favor of respondents. We reject petitioners posture that no legal provision supports such award, the incident complained of neither falling under Art. 2219 nor Art. 26 of the Civil Code. It does not need further elucidation that the incident charged of petitioner was no less than an invasion on the right of respondent Nestor as a person. The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil law. The Code Commission stressed in no uncertain terms that the human personality must be exalted. The sacredness of human personality is a concomitant consideration of every plan for human amelioration. The touchstone of every system of law, of the culture and civilization of every country, is how far it dignifies man. If the statutes insufficiently protect a person from being unjustly humiliated, in short, if human personality is not exalted then the laws are indeed defective.[11] Thus, under this article, the rights of persons are amply protected, and damages are provided for violations of a persons dignity, personality, privacy and peace of mind. Exsm It is petitioners position that the act imputed to him does not constitute any of those enumerated in Arts 26 and 2219. In this respect, the law is clear. The violations mentioned in the codal provisions are not exclusive but are merely examples and do not preclude other similar or analogous acts. Damages therefore are allowable for actions against a persons dignity, such as profane, insulting, humiliating, scandalous or abusive language. [12] Under Art. 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 if they are the proximate result of the defendants wrongful act or omission. There is no question that private respondent Nestor Nicolas suffered mental anguish, besmirched reputation, wounded feelings and social humiliation as a proximate result of petitioners abusive, scandalous and insulting language. Petitioner attempted to exculpate himself by claiming that he made an appointment to see Nestor through a nephew, Roncali, the son of Florence, so he could talk with Nestor to find out the truth about his rumored illicit relationship with Florence. He said that he wanted to protect his nephews and nieces and the name of his late brother (Florences husband).[13] How he could be convinced by some way other than a denial

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by Nestor, and how he would protect his nephews and nieces and his familys name if the rumor were true, he did not say. Petitioner admitted that he had already talked with Florence herself over the telephone about the issue, with the latter vehemently denying the alleged immoral relationship. Yet, he could not let the matter rest on the strength of the denial of his sister-in-law. He had to go and confront Nestor, even in public, to the latter's humiliation. Kyle Testifying that until that very afternoon of his meeting with Nestor he never knew respondent, had never seen him before, and was unaware of his business partnership with Florence, his subsequent declarations on the witness stand however belie this lack of knowledge about the business venture for in that alleged encounter he asked Nestor how the business was going, what were the collection problems, and how was the money being spent. He even knew that the name of the business, Floral Enterprises, was coined by combining the first syllables of the name Florence and Allem, the name of Nestors wife. He said that he casually asked Nestor about the rumor between him and Florence which Nestor denied. Not content with such denial, he dared Nestor to go with him to speak to his relatives who were the source of his information. Nestor went with him and those they were able to talk to denied the rumor. Kycalr We cannot help noting this inordinate interest of petitioner to know the truth about the rumor and why he was not satisfied with the separate denials made by Florence and Nestor. He had to confront Nestor face to face, invade the latters privacy and hurl defamatory words at him in the presence of his wife and children, neighbors and friends, accusing him - a married man - of having an adulterous relationship with Florence. This definitely caused private respondent much shame and embarrassment that he could no longer show himself in his neighborhood without feeling distraught and debased. This brought dissension and distrust in his family where before there was none. This is why a few days after the incident, he communicated with petitioner demanding public apology and payment of damages, which petitioner ignored. Calrky If indeed the confrontation as described by private respondents did not actually happen, then there would have been no cause or motive at all for them to consult with their lawyer, immediately demand an apology, and not obtaining a response from petitioner, file an action for damages against the latter. That they decided to go to court to seek redress bespeaks of the validity of their claim. On the other hand, it is interesting to note that while explaining at great length why Florence Concepcion testified against him, petitioner never advanced any reason why the Nicolas spouses, persons he never knew and with whom he had no dealings in the past, would sue him for damages. It also has not escaped our attention that, faced with a lawsuit by private respondents, petitioner sent his lawyer, a certain Atty. Causapin, to talk not to the Nicolas spouses but to Florence, asking her not to be involved in the case, otherwise her name would be messily dragged into it. Quite succinctly, Florence told the lawyer that it was not for her to decide and that she could not do anything about it as she was not a party to the court case. WHEREFORE, in light of the foregoing premises, the assailed Decision of the Court of Appeals affirming the judgment of the Regional Trial Court of Pasig City, Br. 167, holding Rodrigo Concepcion liable to the spouses Nestor Nicolas and Allem Nicolas for P50,000.00 as moral damages, P25,000.00 for exemplary damages, P10,000.00 for attorney's fees, plus costs of suit, is AFFIRMED. Mesm SO ORDERED.

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G.R. No. 8252

January 31, 1958

JOSE C. ZULUETA, plaintiff-appellant, vs. NICANOR NICOLAS in his capacity as Provincial Fiscal of Rizal, defendant-appellee. A.R. Teodoro for appellant. Lorenzo Sumulong and Antonio C. Masaquel for appellee. REYES, A., J.: This is an appeal taken by plaintiff from a decision of the Court of First Instance of Manila, dismissing his complaint for damages on the ground of lack of cause of action. Plaintiff instituted the present action on May 19, 1954 against the defendant provincial fiscal of Rizal to recover moral pecuniary damages in the sum of P10,000. The complaint in substance alleges on May 6, 1954, the defendant fiscal conducted an investigation of a complaint for libel filed by herein plaintiff against the provincial governor of Rizal and the staff members of the Philippine Free Press; that after said investigation the fiscal "rendered an opinion" that there was no prima facie case; that the alleged libelous statements were made in good faith and for the sole purpose of serving the best interest of the public; and that in consequence the fiscal absolved the said governor and the Free Press staff from the crime of libel. The only question for determination is whether plaintiff's complaint states a cause of action. The present action is based on article 27 of the new Civil Code, which provides that "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." But as we said in Bangalayvs. Ursal,* 50 Off. Gaz. 4231, this article "contemplates a refusal or neglect without just cause by a public servant or employee to perform his official duty." Refusal of the fiscal to prosecute when after the investigation he finds no sufficient evidence to establish a prima facie case is not a refusal, without just cause, to perform an official duty. The fiscal has for sure the legal duty to prosecute crimes where there is no evidence to justify such action. But it is equally his duty not to prosecute when after the investigation he has become convinved that the evidence available is not enough to establish a prima facie case. The fiscal is not bound to accept the opinion of the complainant in a criminal case as to whether or not a prima facie case exists. Vested with authority and discretion to determine whether there is sufficient evidence to justify the filing of corresponding the information and having control of the prosecution of a criminal case, the fiscal cannot be subjected to dictation from the offended party (People vs. Liggayu , et al., 97 Phil., 865, 51 Off Gaz., 5654; People vs. Natoza, 100 Phil., 533, 53 Off Gaz., 8099). Having legal cause to refrain from filing an information against the person whom the herein plaintiff wants him to charge with libel, the defendant fiscal cannot be said

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to have refused or neglected without just cause to perform his official duty. On the contrary, it would appear that he performed it. A contrary rule would be fraught with danger. Says the learned trial Judge on this point: Es altamente peligroso sentar un precedente judicial haciendo responsable por danos al Fiscal Provincial de Rizal, aqui demandado, por rehusar este de presentar querella si racionalmente y de buena fe, dicho Fiscal es o era de opinion en el ejercicio de su sana discrecion de que no existian motivos para presentar una querella; de sentar este peligroso procedimiento o precedente judicial contra los fiscales seria poner a estos en una situacion que en el cumplimento de su obligacion y en el ejercicio de su sana discrecion estuviesen siempre amenazados de una demanda civil si su opinion fuese contraria a la del denunciante, como una espada de Damocles pendiente en todo tiempo sobre sus cabezas. Si el denunciente en aquel asunto criminal de libelo, demandante en la presente causa, no estuvire conforme con la opinion o conclusion a que ha llegado el Fiscal Provincial de Rizal, demandado en esta causa, opinion o conclusion hecha con entrera buena fe y en en el ejercicio sano de sus facultades discrecionales, todavia queda al demandante otros recursos que nuestras leyes proveen para proteccion o ejercicio de sus derechos. It may not be amiss to state here that , as a general rule, a public prosecutor, being a quasi-judicial officer empowered to exercise discretion or judgment, is not personally liable for resulting injuries when acting within the scope of his authority, and in the line of his official duty. (42 Am. Jur. sec. 21 p. 256). As was said in the case of Mendoza vs. De Leon (33 Phil., 508, 513) Nor are officers or agents of the Government charged with the performance of governmental duties which are in their nature legislative, or quasi judicial, liable for the consequences of their official acts, unless it be shown that they act willfully and maliciously, and with the express purpos of inflicting injury upon the plaintiff. In view of the foregoing, the decision appealed from is affirmed, with costs against the appellant.

G.R. No. L-14986

July 31, 1962

CORNELIO AMARO and JOSE AMARO, plaintiffs-appellants, vs. AMBROSIO SUMANGUIT, defendant-appellee. Jose B. Gamboa for plaintiffs-appellants. L. G. Lopez for defendant-appellee. MAKALINTAL, J.: Appellants filed suit for damages in the Court of First Instance of Negros Occidental against the chief of police of the City of Silay. Although not specifically alleged in the complaint, it is admitted by both parties, as shown in their respective briefs, that the action is predicated on Articles 21 and/or 27 of the Civil Code, which provide: 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. 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. The complaint was dismissed upon appellee's motion in the court below on the ground that it does not state facts sufficient to constitute a cause of action. The only question now before us refers to correctness of the order dismissal.

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The pertinent allegations in the complaint are that on October 5, 1958 appellant Jose Amaro was assaulted and shot at near the city government building of Silay; that the following day he, together with his father (Cornelio Amaro) and his witnesses, "went to the office of the defendant but instead of obtaining assistance to their complaint they were harassed and terrorized;" that in view thereof they "gave up and renounced their right and interest in the prosecution of the crime . . . .;" that upon advice of the City Mayor given to appellee an investigation (of said crime) was conducted and as a result the city attorney of Silay was about to file or had already filed an information for illegal discharge of firearm against the assailant; and that "having finished the investigation of the crime complained of, the defendant chief of police is now harassing the plaintiffs in their daily work, ordering them thru his police to appear in his office when he is absent, and he is about to order the arrest of the plaintiffs to take their signatures in prepared affidavits exempting the police from any dereliction of duty in their case against the perpetrator of the crime." We are of the opinion that the facts set out constitute an actionable dereliction on appellee's part in the light of Article 27 of the Civil Code. That appellants were "harrased and terrorized" may be a conclusion of law and hence improperly pleaded. Their claim for relief, however, is not based on the fact of harassment and terrorization but on appellee's refusal to give them assistance, which it was his duty to do as an officer of the law. The requirement under the aforesaid provision that such refusal must be "without just cause" is implicit in the context of the allegation. The statement of appellee's dereliction is repeated in a subsequent paragraph of the complaint, where it is alleged that "he is about to order the arrest of the plaintiffs" to make them sign affidavits of exculpation in favor of the policemen. The complaint is, without doubt, imperfectly drafted. It suffers from vagueness and generalization. But all that the Rules require is that there be a showing by a statement of ultimate facts, that the plaintiff his a right and that such right has been violated by the defendant. An action should not be dismissed upon mere ambiguity, indefiniteness or uncertainty, for these are not grounds for a motion to dismiss, under Rule 8, but rather for a bill of particulars according to Rule 16. Moran, Comments on the Rules of Court, 1957 ed., Vol. I, p. 111. In two cases decided by this Court, it was observed: Under the new Rules of Court, an action cannot be dismissed upon the ground that the complaint is vague, ambiguous, or indefinite (see Rule 8, section 1), because the defendant, in such case, may ask for more particulars (Rule 16) or he may compel the plaintiff to disclose more relevant facts under the different methods of discovery provided by the Rules. (Rules 18, 20, 21, 22 and 23.) Professor Sunderland once said "The real test of good pleading under the new rules is whether the information given is sufficient to enable the party to plead and prepare for trial. A legal conclusion may serve the purpose of pleading as well as anything else if it gives the proper information. If the party wants more he may ask for more details in regard to the particular matter that is stated too generally (Vol. XIII, Cincinnati Law Review, January 1939.) Co Tiamco vs. Diaz, 75 Phil. 672. At any rate, if respondent's complaint, which was clear enough, had created confusion in petitioner's mind as to the foundation of her cause of action, then it should have moved for a more definite statement of the same before the trial. De Leon Brokerage Co., Inc. vs. The Court of Appeals, et al., G.R. No. L-15247, Feb. 28, 1962. The fact, cited by the court below in the order subject to review, that appellants have another recourse (in connection with the crime of illegal discharge of firearm supposedly committed against one of them) as by filing their complaint directly with the city attorney of Silay or by lodging an administrative charge against appellee herein, does not preclude this action for damages under Article 27 of the Civil Code and hence does not justify its dismissal. THE ORDER APPEALED from is set aside and the case is remanded to the Court of origin for further proceedings. Costs against appellee.

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 Municipal Municipality of Buenavista, Province of Iloilo, petitioners appellees, vs. SUSANO TAYO, as Mayor of the Municipal Municipality of Buenavista, Iloilo, respondent-appellant. Ramon A. Gonzales for petitioners-appellees. Rico & Tia for respondent-appellant.

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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 validity the regular session held by petitioners Abelardo Javellano 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 or 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 petitioner as councilors; to pay said Councilor Golez the sum of P100.00 as moral damages; and to pay P100.00 as attorney' fees plus costs. The case was submitted on the following Stipulation of Facts: I That the petitioners are duly elected and qualified a 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 Municipality 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 a secretary of the Council, they proceeded to do business. V 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 to councilor 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 21, 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 sessions above referred to as null and void and not in accordance with. VIII That the petitioners made repeated demands for payment of their per diems for the of June 1, June 15, July 6, July 20, August 3, August 17, September 7, 1960, by representing the payrolls; Provincial Forms No. 38(A) to the respondent Mayor for the latter signature, but that the respondent refused to affix his

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signature to the payrolls thus presented, covering the per diems of the petitioner alleging that the proceedings were illegal due to his absence. IX That the petitioners, acting through Atty. Bartolome T. Tina, 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, ViceMayor, said two councilors and the secretary, a copy which letter is herewith attached as Annex 'B' and made an integral part of this petition. X 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 is 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 resolution petitions presented to him and to sign the payrolls covering the per diems of the herein petitioners. XII That the respondent 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 possession of the Municipal Council without his presence individual 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 petitioner 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 session 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 democrats the minority should respect the majority and inasmuch as the petitioners constitute the majority political group, 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 session on the dates fixed by the Council. In the discharge of his of 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 part 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 on attending any session because if your project is not carried out, you may have the remedy, either by administrative or judicial relief, by questioning and 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 session 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:

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'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 my be taken.'lawphil.net But in support of the allegations in the petition, only petitioner Exequiel Golez was presented as a witness who prove moral damages he suffered as a consequence of the refusal the respondent Susano Tayo to perform his official duty. such, of all the petitioners, only Exequiel Golez is entitled receive moral damages in the sum of P100.00. IN VIEW OF THE FOREGOING, the petition for a writ of mandamus is hereby granted, and the respondent is here ordered to give due course to the resolutions and ordinance 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, 196 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 damage, to pay the sum of P100.00 as attorney's fee 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 the Municipal Council of Buenavista, Iloilo were valid an 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 an 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 these 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 as assembled in their proper places, will enable the body to transact its proper business, or, in other words, 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, he absented himself therefrom. Appellant likewise invokes Section 7 (third paragraph) of Republic Act No. 9264, 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.lawphil.net 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 in 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 public interest, as it would place in the hands of 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, regular sessions of the council. It is to be noted that same section 7 of Republic Act No. 2264 invoked by appellant provides, in case of permanent incapacity of mayor, vice-mayor, and the councilor obtaining the largest number of votes, to assume and perform the duties of 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 in interpretations, we adopt the one in consonance with the resumed intention of the legislature to give its enactmentthe most reasonable and beneficial construction, the 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 adopt the literal interpretation of appellant that only mayor, vicemayor, or the councilor receiving the largest number of votes could preside the council's meeting, to legal, irrespective of the presence of a quorum or majority of the councilors elected. Such an interpretation would, indeed, be fraught with dangerous consequences. For it would, in effect, deprive the municipal council its function, namely, the enactment of ordinances design for the general welfare of its inhabitants. As the trial court aptly observed, "To declare that the proceedings of thepetitioners (herein appellees) were null and void,

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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 belong 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 damage 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, not withstanding the action taken by the Provincial Fiscal an the Provincial Board upholding the validity of the session in question. WHEREFORE, the decision appealed from is hereby affirmed with costs against respondent-appellant. So ordered.

G.R. No. L-69866 April 15, 1988 ROGELIO ABERCA, RODOLFO BENOSA, NESTOR BODINO NOEL ETABAG DANILO DE LA FUENTE, BELEN DIAZ-FLORES, MANUEL MARIO GUZMAN, ALAN JAZMINEZ, EDWIN LOPEZ, ALFREDO MANSOS, ALEX MARCELINO, ELIZABETH PROTACIO-MARCELINO, JOSEPH OLAYER, CARLOS PALMA, MARCO PALO, ROLANDO SALUTIN, BENJAMIN SESGUNDO, ARTURO TABARA, EDWIN TULALIAN and REBECCA TULALIANpetitioners, vs. MAJ. GEN. FABIAN VER, COL. FIDEL SINGSON, COL. ROLANDO ABADILLA, COL. GERARDO B. LANTORIA, COL. GALILEO KINTANAR, 1ST LT. COL. PANFILO M. LACSON, MAJ. RODOLFO AGUINALDO, CAPT. DANILO PIZARRO, 1ST LT. PEDRO TANGO, 1ST LT. ROMEO RICARDO, 1ST LT. RAUL BACALSO, MSGT BIENVENIDO BALABA and REGIONAL TRIAL COURT, National Capital Judicial Region, Branch XCV (95), Quezon City,respondents.

YAP, J.: This petition for certiorari presents vital issues not heretofore passed upon by this Court. It poses the question whether the suspension of the privilege of the writ of habeas corpus bars a civil action for damages for illegal searches conducted by military personnel and other violations of rights and liberties guaranteed under the Constitution. If such action for damages may be maintained, who can be held liable for such violations: only the military personnel directly involved and/or their superiors as well. This case stems from alleged illegal searches and seizures and other violations of the rights and liberties of plaintiffs by various intelligence units of the Armed Forces of the Philippines, known as Task Force Makabansa (TFM) ordered by General Fabian Ver "to conduct pre-emptive strikes against known communist-terrorist (CT) underground houses in view of increasing reports about CT plans to sow disturbances in Metro Manila," Plaintiffs allege, among others, that complying with said order, elements of the TFM raided several places, employing in most cases defectively issued judicial search warrants; that during these raids, certain members of the raiding party confiscated a number of purely personal items belonging to plaintiffs; that plaintiffs were arrested without proper warrants issued by the courts; that for some period after their arrest, they were denied visits of relatives and lawyers; that plaintiffs were interrogated in violation of their rights to silence and counsel; that military men who interrogated them employed threats, tortures and other forms of violence on them in order to obtain incriminatory information or confessions and in order to punish them; that all violations of plaintiffs constitutional rights were part of a concerted and deliberate plan to forcibly extract information and incriminatory statements from plaintiffs and to terrorize, harass and punish them, said plans being previously known to and sanctioned by defendants.

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Plaintiffs sought actual/compensatory damages amounting to P39,030.00; moral damages in the amount of at least P150,000.00 each or a total of P3,000,000.00; exemplary damages in the amount of at least P150,000.00 each or a total of P3,000,000.00; and attorney's fees amounting to not less than P200,000.00. A motion to dismiss was filed by defendants, through their counsel, then Solicitor-General Estelito Mendoza, alleging that (1) plaintiffs may not cause a judicial inquiry into the circumstances of their detention in the guise of a damage suit because, as to them, the privilege of the writ of habeas corpus is suspended; (2) assuming that the courts can entertain the present action, defendants are immune from liability for acts done in the performance of their official duties; and (3) the complaint states no cause of action against the defendants. Opposition to said motion to dismiss was filed by plaintiffs Marco Palo, Danilo de la Fuente, Benjamin Sesgundo, Nel Etabag, Alfredo Mansos and Rolando Salutin on July 8, 1983, and by plaintiffs Edwin Lopez, Manuel Mario Guzman, Alan Jasminez, Nestor Bodino, Carlos Palma, Arturo Tabara, Joseph Olayer, Rodolfo Benosa, Belen Diaz, Flores, Rogelio Aberca, Alex Marcelino and Elizabeth Marcelino on July 21, 1983. On November 7, 1983, a Consolidated Reply was filed by defendants' counsel. Then, on November 8, 1983, the Regional Trial Court, National Capital Region, Branch 95, Judge Willelmo C. Fortun, Presiding, 1 issued a resolution granting the motion to dismiss. I sustained, lock, stock and barrel, the defendants' contention (1) the plaintiffs may not cause a judicial inquiry into the circumstances of their detention in the guise of a damage suit because, as to them, the privilege of the writ of habeas corpus is suspended; (2) that assuming that the court can entertain the present action, defendants are immune from liability for acts done in the performance of their official duties; and (3) that the complaint states no cause of action against defendants, since there is no allegation that the defendants named in the complaint confiscated plaintiffs' purely personal properties in violation of their constitutional rights, and with the possible exception of Major Rodolfo Aguinaldo and Sergeant Bienvenido Balabo committed acts of torture and maltreatment, or that the defendants had the duty to exercise direct supervision and control of their subordinates or that they had vicarious liability as employers under Article 2180 of the Civil Code. The lower court stated, "After a careful study of defendants' arguments, the court finds the same to be meritorious and must, therefore, be granted. On the other hand, plaintiffs' arguments in their opposition are lacking in merit." A motion to set aside the order dismissing the complaint and a supplemental motion for reconsideration was filed by the plaintiffs on November 18, 1983, and November 24, 1983, respectively. On December 9, 1983, the defendants filed a comment on the aforesaid motion of plaintiffs, furnishing a copy thereof to the attorneys of all the plaintiffs, namely, Attys. Jose W. Diokno, Procopio Beltran, Rene Sarmiento, Efren Mercado, Auguso Sanchez, Antonio L. Rosales, Pedro B. Ella Jr., Arno V. Sanidad, Alexander Padilla, Joker Arroyo, Rene Saguisag, Ramon Esguerra and Felicitas Aquino. On December 15, 1983, Judge Fortun issued an order voluntarily inhibiting himself from further proceeding in the case and leaving the resolution of the motion to set aside the order of dismissal to Judge Lising, "to preclude any suspicion that he (Judge Fortun) cannot resolve [the] aforesaid pending motion with the cold neutrality of an impartial judge and to put an end to plaintiffs assertion that the undersigned has no authority or jurisdiction to resolve said pending motion." This order prompted plaintiffs to reesolve an amplificatory motion for reconsideration signed in the name of the Free Legal Assistance Group (FLAG) of Mabini Legal Aid Committee, by Attys. Joker P. Arroyo, Felicitas Aquino and Arno Sanidad on April 12, 1984. On May 2,1984, the defendants filed a comment on said amplificatory motion for reconsideration. In an order dated May 11, 1984, the trial court, Judge Esteban Lising, Presiding, without acting on the motion to set aside order of November 8, 1983, issued an order, as follows: It appearing from the records that, indeed, the following plaintiffs, Rogelio Aberca, Danilo de la Fuente and Marco Palo, represented by counsel, Atty. Jose W. Diokno, Alan Jasminez represented by counsel, Atty. Augusta Sanchez, Spouses Alex Marcelino and Elizabeth Protacio-Marcelino, represented by counsel, Atty. Procopio Beltran, Alfredo Mansos represented by counsel, Atty. Rene Sarmiento, and Rolando Salutin, represented by counsel, Atty. Efren Mercado, failed to file a motion to reconsider the Order of November 8, 1983, dismissing the complaint, nor interposed an appeal therefrom within the reglementary period, as prayed for by the defendants, said Order is now final against said plaintiffs. Assailing the said order of May 11, 1984, the plaintiffs filed a motion for reconsideration on May 28,1984, alleging that it was not true that plaintiffs Rogelio Aberca, Danilo de la Fuente, Marco Palo, Alan Jasminez, Alex Marcelino, Elizabeth Protacio-Marcelino, Alfredo Mansos and Rolando Salutin failed to file a motion to reconsider the order of November 8, 1983 dismissing the complaint, within the reglementary period. Plaintiffs claimed that the motion to set aside the order of November 8, 1983 and the amplificatory motion for reconsideration was filed for all the plaintiffs, although signed by only some of the lawyers. In its resolution of September 21, 1984, the respondent court dealt with both motions (1) to reconsider its order of May 11, 1984 declaring that with respect to certain plaintiffs, the resolution of November 8, 1983 had already become final, and (2) to set aside its resolution of November 8, 1983 granting the defendants' motion to dismiss. In the dispositive portion of the order of September 21, 1984, the respondent court resolved: (1) That the motion to set aside the order of finality, dated May 11, 1984, of the Resolution of dismissal of the complaint of plaintiffs Rogelio Aberca, Danilo de la Fuente, Marco Palo, Alan

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Jasminez Alex Marcelino, Elizabeth Protacio-Marcelino, Alfredo Mansos and Rolando Salutin is deed for lack of merit; (2) For lack of cause of action as against the following defendants, to wit: 1. Gen Fabian Ver 2. Col. Fidel Singson 3. Col. Rolando Abadilla 4. Lt. Col. Conrado Lantoria, Jr. 5. Col. Galileo Montanar 6. Col. Panfilo Lacson 7. Capt. Danilo Pizaro 8. 1 Lt Pedro Tango 9. Lt. Romeo Ricardo 10. Lt. Raul Bacalso the motion to set aside and reconsider the Resolution of dismissal of the present action or complaint, dated November 8, 1983, is also denied but in so far as it affects and refers to defendants, to wit: 1. Major Rodolfo Aguinaldo, and 2. Master Sgt. Bienvenido Balaba the motion to reconsider and set aside the Resolution of dismissal dated November 3, 1983 is granted and the Resolution of dismissal is, in this respect, reconsidered and modified. Hence, petitioners filed the instant petition for certiorari on March 15, 1985 seeking to annul and set aside the respondent court's resolution of November 8, 1983, its order of May 11, 1984, and its resolution dated September 21, 1984. Respondents were required to comment on the petition, which it did on November 9, 1985. A reply was filed by petitioners on August 26, 1986. We find the petition meritorious and decide to give it due course. At the heart of petitioners' complaint is Article 32 of the Civil Code which 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: (1) Freedom of religion; (2) Freedom of speech; (3) Freedom to write for the press or to maintain a periodical publication; (4) Freedom from arbitrary or illegal detention; (5) Freedom of suffrage; (6) The right against deprivation of property without due process (7) of law; (8) The right to a just compensation when private property is taken for public use; (9) The right to the equal protection of the laws;

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(10) The right to be secure in one's person, house, papers, and effects against unreasonable searches and seizures; (11) The liberty of abode and of changing the same; (12) The privacy of cmmunication and correspondence; (13) The right to become a member of associations or societies for purposes not contrary to law; (14) The right to take part in a peaceable assembly to petition the Government for redress of grievances; (15) The right to be free from involuntary servitude in any form; (16) The rigth of the accused against excessive bail; (17) The rigth of the aaccused to be heard by himself and counsel, to be informed of the nature and cause of the accusation against him, to have a speedy and public trial, to meet the witnesses face to face, and to have compulsory process to secure the attendance of witness in behalf; (18) Freedom from being compelled to be a witness against ones self, or from being forced to confess guilt, or from being induced by a promise of immunity or reward to make such confession, except when the person confessing becomes a State witness; (19) Freedom from excessive fines or cruel and unusual punishment, unless the same is imposed or inflicted in accordance with a statute which has not been judicially declared unconstitutional; and (20) Freedom of access to the courts. In any of the cases referred to in this article, whether or not the defendant's act or omission constitutes a criminal offense, the against grieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action shall proceed independently of any criminal prosecution (if the latter be instituted), and may be proved by a preponderance of evidence. The indemnity shall include moral damages. Exemplary damages may also be adjudicated. The responsibility herein set forth is not demandable from a judge unless his act or omission constitutes a violation of the Penal Code or other penal statute. It is obvious that the purpose of the above codal provision is to provide a sanction to the deeply cherished rights and freedoms enshrined in the Constitution. Its message is clear; no man may seek to violate those sacred rights with impunity. In times of great upheaval or of social and political stress, when the temptation is strongest to yield borrowing the words of Chief Justice Claudio Teehankee to the law of force rather than the force of law, it is necessary to remind ourselves that certain basic rights and liberties are immutable and cannot be sacrificed to the transient needs or imperious demands of the ruling power. The rule of law must prevail, or else liberty will perish. Our commitment to democratic principles and to the rule of law compels us to reject the view which reduces law to nothing but the expression of the will of the predominant power in the community. "Democracy cannot be a reign of progress, of liberty, of justice, unless the law is respected by him who makes it and by him for whom it is made. Now this respect implies a maximum of faith, a minimum of Idealism. On going to the bottom of the matter, we discover that life demands of us a certain residuum of sentiment which is not derived from reason, but which reason nevertheless controls. 2 Seeking to justify the dismissal of plaintiffs' complaint, the respondents postulate the view that as public officers they are covered by the mantle of state immunity from suit for acts done in the performance of official duties or function In support of said contention, respondents maintain that Respondents are members of the Armed Forces of the Philippines. Their primary duty is to safeguard public safety and order. The Constitution no less provides that the President may call them "to prevent or supress lawless violence, invasion, insurrection or rebellion, or imminent danger thereof." (Constitution, Article VII, Section 9). On January 17, 1981, the President issued Proclamation No. 2045 lifting martial law but providing for the continued suspension of the privilege of the writ of habeas corpus in view of the remaining dangers to the security of the nation. The proclamation also provided "that the call to the Armed Forces of the Philippines to prevent or suppress lawless violence, insuitection rebellion and subversion shall continue to be in force and effect."

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Petitioners allege in their complaint that their causes of action proceed from respondent General Ver's order to Task Force Makabansa to launch pre-emptive strikes against communist terrorist underground houses in Metro Manila. Petitioners claim that this order and its subsequent implementation by elements of the task force resulted in the violation of their constitutional rights against unlawful searches, seizures and arrest, rights to counsel and to silence, and the right to property and that, therefore, respondents Ver and the named members of the task force should be held liable for damages. But, by launching a pre-emptive strike against communist terrorists, respondent members of the armed forces merely performed their official and constitutional duties. To allow petitioners to recover from respondents by way of damages for acts performed in the exercise of such duties run contrary to the policy considerations to shield respondents as public officers from undue interference with their duties and from potentially disabling threats of hability (Aarlon v. Fitzgerald 102 S. Ct. 2731-1 Forbes v. Chuoco Tiaco, 16 Phil. 634), and upon the necessity of protecting the performance of governmental and public functions from being harassed unduly or constantly interrupted by private suits (McCallan v. State, 35 Cal. App. 605; Metran v. Paredes, 79 Phil. 819). xxx xxx xxx The immunity of public officers from liability arising from the performance of their duties is now a settled jurisprudence Alzua v. Johnson, 21 Phil. 308; Zulueta v. Nicolas, 102 Phil. 944; Spalding v. Vilas, 161 US 483; 40 L. Ed. 780, 16 S. Ct. 631; Barr v. Mateo, 360; Butz v. Economon, 438 US 478; 57 L. Ed. 2d 895, 98 S. Ct. 2894; Scheuer v. Rhodes, 416 US 232; Forbes v. Chuoco Tiaco, supra; Miller v. de Leune, 602 F. 2d 198; Sami v. US, 617 F. 2d 755). Respondents-defendants who merely obeyed the lawful orders of the President and his call for the suppression of the rebellion involving petitioners enjoy such immunity from Suit. 3 We find respondents' invocation of the doctrine of state immunity from suit totally misplaced. The cases invoked by respondents actually involved acts done by officers in the performance of official duties written the ambit of their powers. As held in Forbes, etc. vs. Chuoco Tiaco and Crossfield: 4 No one can be held legally responsible in damages or otherwise for doing in a legal manner what he had authority, under the law, to do. Therefore, if the Governor-General had authority, under the law to deport or expel the defendants, and circumstances justifying the deportation and the method of carrying it out are left to him, then he cannot be held liable in damages for the exercise of this power. Moreover, if the courts are without authority to interfere in any manner, for the purpose of controlling or interferring with the exercise of the political powers vested in the chief executive authority of the Government, then it must follow that the courts cannot intervene for the purpose of declaring that he is liable in damages for the exeercise of this authority. It may be that the respondents, as members of the Armed Forces of the Philippines, were merely responding to their duty, as they claim, "to prevent or suppress lawless violence, insurrection, rebellion and subversion" in accordance with Proclamation No. 2054 of President Marcos, despite the lifting of martial law on January 27, 1981, and in pursuance of such objective, to launch pre- emptive strikes against alleged communist terrorist underground houses. But this cannot be construed as a blanket license or a roving commission untramelled by any constitutional restraint, to disregard or transgress upon the rights and liberties of the individual citizen enshrined in and protected by the Constitution. The Constitution remains the supreme law of the land to which all officials, high or low, civilian or military, owe obedience and allegiance at all times. Article 32 of the Civil Code which renders any public officer or employee or any private individual liable in damages for violating the Constitutional rights and liberties of another, as enumerated therein, does not exempt the respondents from responsibility. Only judges are excluded from liability under the said article, provided their acts or omissions do not constitute a violation of the Penal Code or other penal statute. This is not to say that military authorities are restrained from pursuing their assigned task or carrying out their mission with vigor. We have no quarrel with their duty to protect the Republic from its enemies, whether of the left or of the right, or from within or without, seeking to destroy or subvert our democratic institutions and imperil their very existence. What we are merely trying to say is that in carrying out this task and mission, constitutional and legal safeguards must be observed, otherwise, the very fabric of our faith will start to unravel. In the battle of competing Ideologies, the struggle for the mind is just as vital as the struggle of arms. The linchpin in that psychological struggle is faith in the rule of law. Once that faith is lost or compromised, the struggle may well be abandoned. We do not find merit in respondents' suggestion that plaintiffs' cause of action is barred by the suspension of the privilege of the writ of habeas corpus. Respondents contend that "Petitioners cannot circumvent the suspension of the privilege of the writ by resorting to a damage suit aimed at the same purpose-judicial inquiry into the alleged illegality of their detention. While the main relief they ask by the present action is indemnification for alleged damages they suffered, their causes of action are inextricably based on the same claim of violations of their constitutional rights that they invoked in the habeas corpus case as grounds for release from detention. Were the petitioners allowed the present suit, the judicial inquiry barred by the

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suspension of the privilege of the writ will take place. The net result is that what the courts cannot do, i.e. override the suspension ordered by the President, petitioners will be able to do by the mere expedient of altering the title of their action." We do not agree. We find merit in petitioners' contention that the suspension of the privilege of the writ of habeas corpus does not destroy petitioners' right and cause of action for damages for illegal arrest and detention and other violations of their constitutional rights. The suspension does not render valid an otherwise illegal arrest or detention. What is suspended is merely the right of the individual to seek release from detention through the writ of habeas corpus as a speedy means of obtaining his liberty. Moreover, as pointed out by petitioners, their right and cause of action for damages are explicitly recognized in P.D. No. 1755 which amended Article 1146 of the Civil Code by adding the following to its text: However, when the action (for injury to the rights of the plaintiff or for a quasi-delict) arises from or out of any act, activity or conduct of any public officer involving the exercise of powers or authority arising from Martial Law including the arrest, detention and/or trial of the plaintiff, the same must be brought within one (1) year. Petitioners have a point in contending that even assuming that the suspension of the privilege of the writ of habeas corpus suspends petitioners' right of action for damages for illegal arrest and detention, it does not and cannot suspend their rights and causes of action for injuries suffered because of respondents' confiscation of their private belongings, the violation of their right to remain silent and to counsel and their right to protection against unreasonable searches and seizures and against torture and other cruel and inhuman treatment. However, we find it unnecessary to address the constitutional issue pressed upon us. On March 25, 1986, President Corazon C. Aquino issued Proclamation No. 2, revoking Proclamation Nos. 2045 and 2045-A and lifting the suspension of the privilege of the writ of habeas corpus. The question therefore has become moot and academic. This brings us to the crucial issue raised in this petition. May a superior officer under the notion of respondent superior be answerable for damages, jointly and severally with his subordinates, to the person whose constitutional rights and liberties have been violated? Respondents contend that the doctrine of respondent superior is applicable to the case. We agree. The doctrine of respondent superior has been generally limited in its application to principal and agent or to master and servant (i.e. employer and employee) relationship. No such relationship exists between superior officers of the military and their subordinates. Be that as it may, however, the 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. By this provision, the principle of accountability of public officials under the Constitution 5 acquires added meaning and asgilrnes a larger dimension. No longer may a superior official relax his vigilance or abdicate his duty to supervise his subordinates, secure in the thought that he does not have to answer for the transgressions committed by the latter against the constitutionally protected rights and liberties of the citizen. Part of the factors that propelled people power in February 1986 was the widely held perception that the government was callous or indifferent to, if not actually responsible for, the rampant violations of human rights. While it would certainly be go naive to expect that violators of human rights would easily be deterred by the prospect of facing damage suits, it should nonetheless be made clear in no ones terms that Article 32 of the Civil Code makes the persons who are directly, as well as indirectly, responsible for the transgression joint tortfeasors. In the case at bar, the trial court dropped defendants General Fabian Ver, Col. Fidel Singson, Col. Rolando Abadilla, Col. Gerardo Lantoria, Jr., Col. Galileo Kintanar, Col. Panfilo Lacson, Capt. Danilo Pizarro, lst Lt. Pedro Tango, Lt. Romeo Ricardo and Lt. Ricardo Bacalso from the acts of their subordinates. Only Major Rodolfo Aguinaldo and Master Sgt. Bienvenido Balaba were kept as defendants on the ground that they alone 'have been specifically mentioned and Identified to have allegedly caused injuries on the persons of some of the plaintiff which acts of alleged physical violence constitute a delict or wrong that gave rise to a cause of action. But such finding is not supported by the record, nor is it in accord with law and jurisprudence. Firstly, it is wrong to at the plaintiffs' action for damages 5 Section 1, Article 19. to 'acts of alleged physical violence" which constituted delict or wrong. Article 32 clearly specifies as actionable the act of violating or in any manner impeding or impairing any of the constitutional rights and liberties enumerated therein, among others 1. Freedom from arbitrary arrest or illegal detention; 2. The right against deprivation of property without due process of law;

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3. The right to be secure in one's person, house, papers and effects against unreasonable searches and seizures; 4. The privacy of communication and correspondence; 5. Freedom from being compelled to be a witness against one's self, or from being forced to confess guilt, or from being induced by a promise of immunity or reward to make a confession, except when the person confessing becomes a state witness. The complaint in this litigation alleges facts showing with abundant clarity and details, how plaintiffs' constitutional rights and liberties mentioned in Article 32 of the Civil Code were violated and impaired by defendants. The complaint speaks of, among others, searches made without search warrants or based on irregularly issued or substantially defective warrants; seizures and confiscation, without proper receipts, of cash and personal effects belonging to plaintiffs and other items of property which were not subversive and illegal nor covered by the search warrants; arrest and detention of plaintiffs without warrant or under irregular, improper and illegal circumstances; detention of plaintiffs at several undisclosed places of 'safehouses" where they were kept incommunicado and subjected to physical and psychological torture and other inhuman, degrading and brutal treatment for the purpose of extracting incriminatory statements. The complaint contains a detailed recital of abuses perpetrated upon the plaintiffs violative of their constitutional rights. Secondly, neither 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 violation. The responsibility of the defendants, whether direct or indirect, is amply set forth in the complaint. It is well established in our law and jurisprudence that a motion to dismiss on the ground that the complaint states no cause of action must be based on what appears on the face of the complaint. 6 To determine the sufficiency of the cause of action, only the facts alleged in the complaint, and no others, should be considered. 7 For this purpose, the motion to dismiss must hypothetically admit the truth of the facts alleged in the complaint. 8 Applying this test, it is difficult to justify the trial court's ruling, dismissing for lack of cause of action the complaint against all the defendants, except Major Rodolfo Aguinaldo and Master Sgt. Bienvenido Balaba. The complaint contained allegations against all the defendants which, if admitted hypothetically, would be sufficient to establish a cause or causes of action against all of them under Article 32 of the Civil Code. This brings us to the last issue. Was the trial court correct in dismissing the complaint with respect to plaintiffs Rogelio Aberca, Danilo de la Puente, Marco Palo, Alan Jazminez, Alex Marcelino, Elizabeth Protacio-Marcelino, Alfredo Mansos and Rolando Salutin, on the basis of the alleged failure of said plaintiffs to file a motion for reconsideration of the court's resolution of November 8, 1983, granting the respondent's motion to dismiss? It is undisputed that a timely motion to set aside said order of November 8, 1983 was filed by 'plaintiffs, through counsel. True, the motion was signed only by Atty. Joker P. Arroyo, counsel for Benjamin Sesgulido; Atty. Antonio Rosales, counsel for Edwin Lopez and Manuel Martin Guzman; Atty. Pedro B. Ella, Jr., counsel for Nestor Bodino and Carlos Palma; Atty. Arno V. Sanidad, counsel for Arturo Tabara; Atty. Felicitas S. Aquino, counsel for Joseph Olayer; and Atty. Alexander Padilla, counsel for Rodolfo Benosa. But the body of the motion itself clearly indicated that the motion was filed on behalf of all the plaintiffs. And this must have been also the understanding of defendants' counsel himself for when he filed his comment on the motion, he furnished copies thereof, not just to the lawyers who signed the motion, but to all the lawyers of plaintiffs, to wit: Attys. Jose Diokno, Procopio Beltran, Rene Sarmiento, Efren Mercado, Augusto Sanchez, Antonio Rosales, Pedro Efla Jr., Arno Sanidad, Alexander Padilla, Joker Arroyo, Rene Saguisag, Ramon Esguerra and Felicitas S. Aquino. In filing the motion to set aside the resolution of November 8, 1983, the signing attorneys did so on behalf of all the plaintiff. They needed no specific authority to do that. The authority of an attorney to appear for and in behalf of a party can be assumed, unless questioned or challenged by the adverse party or the party concerned, which was never done in this case. Thus, it was grave abuse on the part of respondent judge to take it upon himself to rule that the motion to set aside the order of November 8, 1953 dismissing the complaint was filed only by some of the plaintiffs, when by its very language it was clearly intended to be filed by and for the benefit of all of them. It is obvious that the respondent judge took umbrage under a contrived technicality to declare that the dismissal of the complaint had already become final with respect to some of the plaintiffs whose lawyers did not sign the motion for reconsideration. Such action tainted with legal infirmity cannot be sanctioned. Accordingly, we grant the petition and annul and set aside the resolution of the respondent court, dated November 8, 1983, its order dated May 11, 1984 and its resolution dated September 21, 1984. Let the case be remanded to the respondent court for further proceedings. With costs against private respondents. SO ORDERED.

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Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes and GrioAquino, JJ., concur. Gutierrez, Jr., J., concur in the result. Padilla, J., took no part.

G.R. No. L-56180 October 16, 1986 ATENEO DE MANILA UNIVERSITY, petitioner, vs. COURT OF APPEALS, and SPOUSES ROMEO G. GUANZON and TERESITA REGALADO, respondents. Ernesto P. Pangalangan for petitioner. Mirano, Mirano & Associates for private respondents.

GUTIERREZ, JR., J.: In a letter-complaint dated December 13, 1967 addressed to Rev. William Welsh S.J., Dean of Men, Dean of Resident Students, and Chairman of the Board of Discipline, College of Arts and Sciences, Ateneo de Manila, Carmelita Mateo, a waitress in the cafeteria of Cervini Hall inside the university campus charged Juan Ramon Guanzon, son of private respondents Romeo Guanzon and Teresita Regalado, and a boarder and first year

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student of the university with unbecoming conduct committed on December 12, 1967 at about 5:15 in the evening at the Cervini Hall's cafeteria, as follows: xxx xxx xxx Mr. Guanzon, a boarder at Cervini who I think comes from Bacolod, was asking for "siopao." I was at the counter and I told him that the "siopao" had still to be heated and asked him to wait for a while. Then Mr. Guanzon started mumbling bad words directed to me, in the hearing presence of other boarders. I asked him to stop cursing, and he told me that was none of my business. Since he seemed impatient, I was going to give back his money without any contempt. (sic) He retorted that he did not like to accept the money. He got madder and started to curse again. Then he threatened to strike me with his fist. I tried to avoid this. But then he actually struck me in my left temple. Before he could strike again, his fellow boarders held him and Dr. Bella and Leyes coaxed him to stop; I got hold of a bottle so I could dodge him. It was then that Fr. Campbell arrived. The incident was hidden from Fr. Campbell by the boarders. I could not tell him myself as I had gone into the kitchen crying because I was hurt. The university conducted an investigation of the slapping incident. On the basis of the investigation results, Juan Ramon was dismissed from the university. The dismissal of Juan Ramon triggered off the filing of a complaint for damages by his parents against the university in the then Court of First Instance of Negros Occidental at Bacolod City. The complaint states that Juan Ramon was expelled from school without giving him a fair trial in violation of his right to due process and that they are prominent and well known residents of Bacolod City, with the unceremonious expulsion of their son causing them actual, moral, and exemplary damages as well as attorney's fees. In its answer, the university denied the material allegations of the complaint and justified the dismissal of Juan Ramon on the ground that his unbecoming behavior is contrary to good morals, proper decorum, and civility, that such behavior subjected him as a student to the university's disciplinary regulations' action and sanction and that the university has the sole prerogative and authority at any time to drop from the school a student found to be undesirable in order to preserve and maintain its integrity and discipline so indispensable for its existence as an institution of learning. After due trial, the lower court found for the Guanzons and ordered the university to pay them P92.00 as actual damages; P50,000.00 as moral damages; P5,000.00 as attorney's fees and to pay the costs of the suit. Upon appeal to the Court of Appeals by the university, the trial court's decision was initially reversed and set aside. The complaint was dismissed. However, upon motion for reconsideration filed by the Guanzons, the appellate court reversed its decision and set it aside through a special division of five. In the resolution issued by the appellate court, the lower court's decision was reinstated. The motion for reconsideration had to be referred to a special division of five in view of the failure to reach unanimity on the resolution of the motion, the vote of the regular division having become 2 to 1. The petitioner now asks us to review and reverse the resolution of the division of five on the following grounds: ONE THE RESOLUTION OF THE DIVISION OF FIVE COMMITTED A SERIOUS AND GRAVE ERROR OF LAW IN RULING THAT PRIVATE RESPONDENTS WERE NOT AFFORDED DUE PROCESS IN THE DISCIPLINE CASE AGAINST THEIR SON, JUAN RAMON GUANZON. TWO THE RESOLUTION OF THE DIVISION OF FIVE ERRONEOUSLY RULED THAT THE RESORT TO JUDICIAL REMEDY BY PRIVATE RESPONDENTS DID NOT VIOLATE THE RULE ON FINALITY OF ADMINISTRATION ACTION OR EXHAUSTION OF ADMINISTRATIVE REMEDIES. THREE THE FINDING AND CONCLUSIONS OF THE RESOLUTION OF THE DIVISION OF FIVE ARE TAINTED WITH GRAVE ABUSE OF DISCRETION, OR ARE CONFLICTING, OR CONTRARY TO THE EVIDENCE IN THE CASE. In reversing its own decision, the appellate court relied heavily on the findings of the Director of Private Schools affirmed by the Minister of Education and the findings of the lower Court to the effect that due process of law was not observed by the petitioner when it dismissed the private respondents' son Juan Ramon. The resolution invoked the rule that findings of facts by administrative officers in matters falling within their competence will

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not generally be reviewed by the courts, as well as the principle that findings of facts of the trial court are entitled to great weight and should not be disturbed on appeal. The conclusions of the Court of Appeals in its split decision are not sustained by the facts on record. The statement regarding the finality given to factual findings of trial courts and administrative tribunals is correct if treated as a general principle. The general principle, however, is subject to well established exceptions. We disregard the factual findings of trial courts when-(l) the conclusion is a finding grounded on speculations, surmises, and conjectures; (2) the inferences made are manifestly mistaken, absurd, or impossible; (3) there is a grave abuse of discretion; (4) there is a misapprehension of facts; and (5) the court, in arriving at its findings, went beyond the issues of the case and the same are contrary to the admissions of the parties or the evidence presented. (Gomez v. Intermediate Appellate Court, 135 SCRA 620; Republic v. Court of Appeals, 132 SCRA 514; Carolina Industries, Inc. v. CMS Stock Brokerage, Inc., 97 SCRA 734; and Bacayo v. Genato, 135 SCRA 668). A similar rule applies to administrative agencies. By reason of their special knowledge and expertise gained from the handling of specific matters falling under their respective jurisdictions, we ordinarily accord respect if not finality to factual findings of administrative tribunals. However, there are exceptions to this rule and judicial power asserts itself whenever the factual findings are not supported by evidence; where the findings are vitiated by fraud, imposition, or collusion; where the procedure which led to the factual findings is irregular; when palpable errors are committed; or when a grave abuse of discretion, arbitrariness, or capriciousness is manifest. (International Hardwood and Veneer Co., of the Philippines v. Leogardo, 117 SCRA 967; Baguio Country Club Corporation v. National Labor Relations Commission, 118 SCRA 557; Sichangco v. Commissioner of Immigration, 94 SCRA 61; and Eusebio v. Sociedad Agricola de Balarin, 16 SCRA 569). The Court of Appeals ruled that Juan Ramon Guanzon was not accorded due process. We fail to see what, in the records, made the respondent court reverse its earlier and correct finding that there was due process. The original decision, penned by then Associate and now Presiding Justice Emilio A. Gancayco reviews the facts on record to show that the procedures in the expulsion case were fair, open, exhaustive, and adequate. The decision states: First, after the slapping incident which happened on December 12, 1967, Fr. Welsh in his capacity as Chairman of the Board of Discipline upon receipt of the letter-complaint (Exh. 2) of Carmelita Mateo conducted a preliminary inquiry by interviewing the companions and friends of Juan Ramon Guanzon who were also at the cafeteria. They confirmed the incident in question. (Exhs. 5, 6, 7 and 9). Second, Fr. Welsh, finding that there was probable cause against Mr. Guanzon, prepared a memorandum to the members of the Board of Discipline dated December 16, 1967 (Exh. 8) and delivered a copy each to Fr. Francisco Perez, Dr. Amada Capawan, Mr. Piccio and Dr. Reyes. Third, on December 14, 1967, Mr. Guanzon was fully informed of the accusation against him when Fr. Welsh read the letter-complaint of Carmelita Mateo and he admitted the truth of the charge. (tsn., pp. 38-39, May 9, 1970; Exh. 4). Fourth, Fr. Welsh also sent separate letters to Rev. Antonio Cuna, Student Counselor of the College of Arts and Sciences dated December 18, 1967 and Rev. James Culligan, Director of Guidance of the College of Arts and Sciences dated December 18, 1967 seeking any information for guidance in the action of the Board of Discipline regarding the case of Mr. Guanzon. (Exhs. 10-11) Fifth, notice of the meeting of the Board of Discipline set on December 19, 1967 was posted at the Bulletin Board of the College of Arts and Sciences and also at Dormitory Halls (tsn., pp. 21-22, July 21, 1970) The Secretary of the Dean of Discipline personally notified Mr. Guanzon of the meeting of the Board on December 19, 1967, he was told to seek the help of his guardians, parents and friends including the student counsellors in the residence halls and College of Arts and Sciences. (tsn., p. 18, July 21, 1970) Sixth, despite notice of the Board of Discipline on December 19, 1967, Mr. Guanzon did not care to inform his parents or guardian knowing fully well the seriousness of the offense he had committed and instead he spoke for himself and admitted to have slapped Carmelita Mateo. He then asked that he be excused as he wanted to catch the boat for Bacolod City for the Christmas vacation.

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Seventh, the decision of the Board of Discipline was unanimous in dropping from the rolls of students Mr. Guanzon (Exh. 12) which was elevated to the office of the Dean of Arts and Sciences, Rev. Joseph A. Galdon, who after a review of the case found no ground to reverse the decision of the Board of Discipline. (Exh. 13) The case was finally elevated to the President of the Ateneo University who sustained the decision of the Board of Discipline (Exh. 21-A, p. 6) A motion for reconsideration was filed by the President of the Student Council in behalf of Mr. Guanzon (Exh. 15) but the same was denied by the President of the University. Eighth, when the decision of the Board of Discipline was about to be carried out, Mr. Guanzon voluntarily applied for honorable dismissal. He went around to the officials of the university to obtain his clearance and this was approved on January 8, 1968. (Exh. 3, tsn., p. 58, May 6, 1970) Ninth, Mr. Romeo Guanzon, father of Juan Ramon Guanzon arranged for full and complete refund of his tuition fee for the entire second semester of the school year 1967-68. Juan Ramon was never out of school. He was admitted at the De la Salle College of Bacolod City and later transferred to another Jesuit School. From the above proceedings that transpired it can not be said that Juan Ramon Guanzon was denied due proems of law. On the contrary, we find that he was given the full opportunity to be heard to be fully informed of the charge against him and to be confronted of the witnesses face to face. And since he chose to remain silent and did not bother to inform his parents or guardian about the disciplinary action taken against him by the defendant university, neither he nor his parents should find reason to complain. xxx xxx xxx When the letter-complaint was read to Juan Ramon, he admitted the altercation with the waitress and his slapping her on the face. Rev. Welsh did not stop with the admission. He interviewed Eric Tagle, Danny Go, Roberto Beriber, and Jose Reyes, friends of Juan Ramon who were present during the incident. The Board of Discipline was made up of distinguished members of the faculty-Fr. Francisco Perez, Biology Department Chairman; Dr. Amando Capawan, a Chemistry professor; Assistant Dean Piccio of the College; and Dr. Reyes of the same College. There is nothing in the records to cast any doubt on their competence and impartiality insofar as this disciplinary investigation is concerned. Juan Ramon himself appeared before the Board of Discipline. He admitted the slapping incident, then begged to be excused so he could catch the boat for Bacolod City. Juan Ramon, therefore, was given notice of the proceedings; he actually appeared to present his side; the investigating board acted fairly and objectively; and all requisites of administrative due process were met. We do not share the appellate court's view that there was no due process because the private respondents, the parents of Juan Ramon were not given any notice of the proceedings. Juan Ramon, who at the time was 18 years of age, was already a college student, intelligent and mature enough to know his responsibilities. In fact, in the interview with Rev. Welsh, he even asked if he would be expelled because of the incident. He was fully cognizant of the gravity of the offense he committed. When informed about the December 19, 1967 meeting of the Board of Discipline, he was asked to seek advice and assistance from his guardian and/or parents. In the natural course of things, Juan Ramon is assumed to have reported this serious matter to his parents. The fact that he chose to remain silent and did not inform them about his case, not even when he went home to Bacolod City for his Christmas vacation, was not the fault of the petitioner university. Moreover, notwithstanding the non-participation of the private respondents, the university, as stated earlier, undertook a fair and objective investigation of the slapping incident. Due process in administrative proceedings also requires consideration of the evidence presented and the existence of evidence to support the decision (Halili v. Court of Industrial Relations, 136 SCRA 112). While it may be true that Carmelita Mateo was not entirely blameless for what happened to her because she also shouted at Juan Ramon and tried to hit him with a cardboard box top, this did not justify Juan Ramon's slapping her in the face. The evidence clearly shows that the altercation started with Juan Ramon's utterance of the offensive language "bilat ni bay," an Ilongo phrase which means sex organ of a woman. It was but normal on the part of Mateo to react to the nasty remark. Moreover, Roberto Beriber, a friend of Juan Ramon who was present during the incident told Rev. Welsh during the investigation of the case that Juan Ramon made threatening gestures at Mateo prompting her to pick up a cardboard box top which she threw at Juan Ramon. The incident was in public thus adding to the humiliation of Carmelita Mateo. There was "unbecoming conduct" and pursuant to the Rules of Discipline and Code of Ethics of the university, specifically under the 1967-1969 Catalog containing the rules and academic regulations (Exhibit 19), this offense constituted a ground for dismissal from the college. The action of the petitioner is sanctioned by law. Section 107 of the Manual of

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Regulations for Private Schools recognizes violation of disciplinary regulations as valid ground for refusing reenrollment of a student (Tangonan v. Pano, 137 SCRA 245). Before Juan Ramon was admitted to enroll, he received (1) the College of Arts and Sciences Handbook containing the general regulations of the school and the 1967-1969 catalog of the College of Arts and Sciences containing the disciplinary rules and academic regulations and (2) a copy of the Rules and Regulations of the Cervini-Elizo Halls of the petitioner university one of the provisions of which is as follows: under the title "Dining Room"-"The kitchen help and server should always be treated with civility." Miss Mateo was employed as a waitress and precisely because of her service to boarders, not to mention her sex, she deserved more respect and gracious treatment. The petitioner is correct in stating that there was a serious error of law in the appellate court's ruling on due process. The petitioner raises the issue of "exhaustion of administrative remedies" in view of its pending appeal from the decision of the Ministry of Education to the President of the Philippines. It argues that the private respondents' complaint for recovery of damages filed in the lower court was premature. The issue raised in court was whether or not the private respondents can recover damages as a result of the dismissal of their son from the petitioner university. This is a purely legal question and nothing of an administrative nature is to or can be done. (Gonzales v. Hechanova, 9 SCRA 230; Tapales v. University of the Philippines, 7 SCRA 553; Limoico v. Board of Administrators, (PVA), 133 SCRA 43; Malabanan v. Ramonte, 129 SCRA 359). The case was brought pursuant to the law on damages provided in the Civil Code. The jurisdiction to try the case belongs to the civil courts. There was no need to await action from Malacaang. This brings us to the final issue which is whether or not the private respondents are entitled to damages. There is no basis for the recovery of damages. Juan Ramon was afforded due process of law. The penalty is based on reasonable rules and regulations applicable to all students guilty of the same offense. He never was out of school. Before the decision could be implemented, Juan Ramon asked for an honorable dismissal which was granted. He then enrolled at the De la Salle University of Bacolod City and later transferred to another Jesuit school Moreover, his full and complete tuition fees for the second semester were refunded through the representation of Mr. Romeo Guanzon, Juan Ramon's father. It is unfortunate of the parents suffered some embarrassment because of the incident. However, their predicament arose from the misconduct of their own son who, in the exuberance of youth and unfortunate loss of self control, did something which he must have, later, regretted. There was no bad faith on the part of the university. In fact, the college authorities deferred any undue action until a definitive decision had been rendered. The whole procedure of the disciplinary process was set up to protect the privacy of the student involved. There is absolutely no indication ot malice,. fraud, and improper or willful motives or conduct on the part of the Ateneo de Manila University in this case. WHEREFORE, the instant petition is hereby GRANTED. The appellate court's resolution dated January 26, 1981 is REVERSED and SET ASIDE. The appellate court's decision dated March 15, 1979 is REINSTATED. SO ORDERED.

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G.R. No. 86720 September 2, 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. Benjamin M. Dacanay for petitioners. Emmanuel O. Tansingco for private respondents.

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).

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On October 25, 1983, at about 10:30 A.M., petitioner de Guzman, Captain Renato M. Peafiel, 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 Peafiel to petitioner corporation for safekeeping. A criminal complaint for unfair competition was then filed against private respondents. 2 During 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. 4 In its Decision dated January 9, 1987, the trial court ruled for the private 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, Decision with modification, thus:
5

affirmed the

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

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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. 6 In the case at bench, the seizure was made without any warrant. Under the Rules of Court, 7 a warrantless 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." 8 These facts and 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, 9 we ruled for the recovery of damages for violation of 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. xxx xxx xxx (9) The rights to be secure in one's person, house, papers, and effects against unreasonable searches and seizures.

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xxx xxx xxx 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: xxx xxx xxx (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, responsible, viz:
10

the Court En Banc explained the liability of persons indirectly

[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. 11 As correctly observed by respondent court: 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 to 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. 13 So with the 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.

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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. 15 Petitioners did not have the unbridled license to cause the seizure of 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, 16 in respect of 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. 17 Conformably with our ruling in 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. 21 It will also serve as a stern reminder to all and sundry that the constitutional 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. 22 Costs against petitioners. SO ORDERED.

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G.R. No. 119398 July 2, 1999 EDUARDO M. COJUANGCO JR., petitioner, vs. COURT OF APPEALS, THE PHILIPPINE CHARITY SWEEPSTAKES OFFICE and FERNANDO O. CARRASCOSO JR., respondents.

PANGANIBAN, J.: To hold public officers personally liable for moral and exemplary damages and for attorney's fees for acts done in the performance of official functions, the plaintiff must prove that these officers exhibited acts characterized by evident bad faith, malice, or gross negligence. But even if their acts had not been so tainted, public officers may still be held liable for nominal damages if they had violated the plaintiff's constitutional rights. The Case Before us is a Petition for Review under Rule 45 of the Rules of Court seeking to set aside the Decision 1 of the Court of Appeals 2 in CA-GR CV No. 39252 promulgated on September 9, 1994. The assailed Decision reversed the Regional Trial Court (RTC) of Manila, Branch 2, in Civil Case No. 91-55873, which disposed of the controversy in favor of herein petitioner in the following manner: 3 WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants, ordering them, jointly and severally the following: ON THE FIRST CAUSE OF ACTION 1. To pay P143,000.00 plus interest thereon from March 26, 1986 until complete payment thereof; 2. To pay P28,000.00 plus interest thereon [from] June 8, 1986 until complete payment thereof; 3. To pay P142,700.00 plus interest thereon from July 10, 1987 until complete payment thereof; 4. To pay P70,000.00 plus interest thereon from February 1, 1987 until complete payment thereof; 5. To pay P140,000.00 plus interest thereon from March 22, 1987 until complete payment thereof;

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6. To pay P28,000.00 plus interest thereon from April 26, 1987 until complete payment thereof; 7. To pay P14,000.00 plus interest thereon from May 17, 1987 until complete payment thereof; 8. To pay P140,000.00 plus interest thereon from August 9, 1987 until complete payment thereof; 9. To pay P174,000.00 plus interest thereon from December 13, 1987 until complete payment thereof; 10. To pay P140,000.00 plus interest thereon from September 18, 1988 until complete payment thereof; 11. All income derived from the foregoing amounts. ON THE SECOND CAUSE OF ACTION Ordering defendant Fernando O. Carrascoso the following: 1. To pay moral damages in the amount of One Hundred Thousand Pesos (P100,000.00); 2. To pay exemplary damages in the amount of Twenty Thousand Pesos (P20,000.00); 3. To pay attorney's fees in the amount of Thirty Thousand Pesos (P30,000.00); 4. To pay the costs of suit. The counterclaim is ordered dismissed, for lack of merit. SO ORDERED. In a Resolution
4

dated March 7, 1995, Respondent Court denied petitioner's Motion for Reconsideration. The Facts

The following is the Court of Appeals' undisputed narration of the facts: Plaintiff [herein petitioner] is a known businessman-sportsman owning several racehorses which he entered in the sweepstakes races between the periods covering March 6, 1986 to September 18, 1989. Several of his horses won the races on various dates, landing first, second or third places, respectively, and winning prizes together with the 30% due for trainer/grooms which are itemized as follows: Date Place Winner Grooms 1st 2nd 1st 1st 1st 3rd 1st 1st 1st 1st Stake Horse Racewinning Prize Claims Training PCSO Hansuyen 200,000.00 Stronghold 40,000.00 Kahala 200,000.00 Devil's Brew 100,000.00 Time to Explode 200,000.00 Stormy Petril 40,000.00 Starring Role 20,000.00 Star Studded 200,000.00 Charade 250,000.00 Hair Trigger 200,000.00 TOTAL 1,450,000.00 30% Due Withheld by 57,000.00 12,000.00 57,300.00 30,000.00 60,000.00 12,000.00 6,000.00 60,000.00 75,000.00 60,000.00 4,293,000.00 Net Amount

3/25/86 6/8/86 7/10/86 2/1/87 3/22/87 4/26/87 5/17/87 8/8/87 12/13/87 9/18/88

143,000.00 28,000.00 142,700.00 70,000.00 140,000.00 28,000.00 14,000.00 140,000.00 174,000.00 140,000.00 1,020,700.00

[Herein petitioner] sent letters of demand (Exhibits "A," dated July 3, 1986; "B" dated August 18, 1986; and "C," dated September 11, 1990) to the defendants [herein private respondents] for the

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collection of the prizes due him. And [herein private respondents] consistently replied. (Exhibits 2 and 3) that the demanded prizes are being withheld on advice of Commissioner Ramon A. Diaz of the Presidential Commission on Good Government. Finally on January 30, 1991; this case was filed before the Regional Trial Court of Manila. But before receipt of the summons on February 7, Presidential Commission on Good Government advi[s]ed defendants that "if poses no more objection to the remittance of the prize winnings" (Exh. 6) to [herein petitioner]. Immediately, this was communicated to Atty. Estelito Mendoza by [Private Respondent Fernando] Carrascoso [Jr.]. 5 As culled from the pleadings of the parties, Atty. Estelito P. Mendoza, petitioner's counsel, refused to accept the prizes at this point, reasoning that the matter had already been brought to court. Ruling of the Trial Court The trial court ruled that Respondent Philippine Charity Sweepstakes Office (PCSO) and its then chairman, Respondent Fernando O. Carrascoso Jr., had no authority to withhold the subject racehorse winnings of petitioner, since no writ of sequestration therefor had been issued by the Presidential Commission on Good Government (PCGG). It held that it was Carrascoso's unwarranted personal initiative not to release the prizes. Having been a previous longtime associate of petitioner in his horse racing and breeding activities, he had supposedly been aware that petitioner's winning horses were not ill-gotten. The trial court held that, by not paying the winnings, Carrascoso had acted in bad faith amounting to the persecution and harassment of petitioner and his family. 6 It thus ordered the PCSO and Carrascoso to pay in solidum petitioner's claimed winnings plus interests. It further ordered Carrascoso to pay moral and exemplary damages, attorney's fees and costs of suit.1wphi1.nt While the case was pending with the Court of Appeals, petitioner moved for the partial execution pending appeal of the RTC judgment, praying for the payment of the principal amount of his prize winnings. Private respondents posed no objection thereto and manifested their readiness to release the amount prayed for. Hence, the trial court issued on February 14, 1992, an Order 7 for the issuance of a writ of execution in the amount of P1,020,700. Accordingly, on May 20, 1992, Respondent PCSO delivered the amount to petitioner. Ruling of the Court of Appeals Before the appellate court, herein private respondents assigned the following errors: I THE COURT A QUO ERRED IN HOLDING THAT DEFENDANTS-APPELLANTS ACTED IN BAD FAITH IN WITHHOLDING PLAINTIFF-APPELLEE['S] PRIZE[S]; II THE COURT A QUO ERRED [IN] AWARDING MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEY'S FEES IN FAVOR OF PLAINTIFF-APPELLEE. In reversing the trial court's finding of bad faith on the part of Carrascoso, the Court of Appeals held that the former PCSO chairman was merely carrying out the instruction of the PCGG in regard to the prize winnings of petitioner. It noted that, at the time, the scope of the sequestration of the properties of former President Ferdinand E. Marcos and his cronies was not well-defined. Respondent Court explained: 9 . . . Under those equivocalities, defendant Carrascoso could not be faulted in asking further instructions from the PCGG, the official government agency on the matter, on what to do with the prize winnings of the [petitioner], and more so, to obey the instructions subsequently given. The actions taken may be a hard blow on [petitioner] but defendant Carrascoso had no alternative. It was the safest he could do in order to protect public interest, act within the powers of his position and serve the public demands then prevailing. More importantly, it was the surest way to avoid a possible complaint for neglect of duty or misfeasance of office or an anti-graft case against him. The Court of Appeals also noted that the following actuations of Carrascoso negated bad faith: (1) he promptly replied to petitioner's demand for the release of his prizes, citing PCGG's instruction to withhold payment thereof; (2) upon PCGG's subsequent advice to release petitioner's winnings, he immediately informed petitioner thereof; and (3) he interposed no objection to the partial execution, pending appeal, of the RTC decision. Respondent Court finally disposed as follows: 10 IN VIEW OF ALL THE FOREGOING, the judgment appealed from is REVERSED and SET ASIDE and a new one entered DISMISSING this case. No pronouncement as to costs. On September 29, 1994, petitioner filed a Motion for Reconsideration, which was denied on March 7, 1995. Hence, this petition. 11
8

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Issues Petitioner asks this Court to resolve the following issues: a. Whether the Court of Appeals had jurisdiction over the appeal of respondent Philippine Charity Sweepstakes Office (PCSO); b. Whether the appeal of respondent Carrascoso, Jr. should have been dismissed for his failure to file an appeal brief; c. Whether the Court of Appeals had jurisdiction to review and reverse the judgment on a cause of action which was not appealed from by the respondents; d. Whether the award for damages against respondent Carrascoso, Jr. is warranted by evidence and the law.12 Being related, the first two issues will be discussed jointly. The Court's Ruling The petition is partly meritorious. First and Second Issues: Effect of PCSO's Appeal Brief Petitioner contends that the appeal filed by the PCSO before Respondent Court of Appeals should have been dismissed outright. The appealed RTC decision ruled on two causes of action: (1) a judgment against both PCSO and Carrascoso to jointly and severally pay petitioner his winnings plus interest and income; and (2) a judgment against Carrascoso alone for moral and exemplary damages, as well as attorney's fees and costs. The PCSO, through the Office of the Government Corporate Counsel (OGCC), appealed only the second item: "the impropriety of the award of damages . . . ." This appealed portion, however, condemned only Carrascoso, not the PCSO. Technically, petitioner claims, PCSO could not have appealed the second portion of the RTC Decision which ruled against Carrascoso only, and not against the government corporation. Petitioner further avers that Carrascoso failed to file his own appeal brief; accordingly, his appeal should have, been dismissed. The PCSO brief, he submits, could not have inured to the benefit of Carrascoso, because the latter was no longer chairman of that office at the time the brief was filed and, hence, could no longer be represented by the OGCC. On the other hand, respondents aver that the withholding of petitioner's racehorse winnings by Respondent Carrascoso occurred during the latter's incumbency as PCSO chairman. According to him, he had honestly believed that it was within the scope of his authority not to release said winnings, in view of then President Corazon C. Aquino's Executive Order No. 2 (EO 2), in which she decreed the following: (1) Freeze all assets and properties in the Philippines in which former President Marcos and/or his wife, Mrs. Imelda Romualdez Marcos, their close friends, subordinates, business associates, dummies, agents, or nominees have any interest or participation; (2) Prohibit any person from transferring, conveying, encumbering or otherwise depleting or concealing such assets and properties or from assisting or taking part in their transfer, encumbrance, concealment, or dissipation, under pain of such penalties as are prescribed by law. Moreover, he argues that he sought the advice of the PCGG as to the nature of the subject racehorse winnings, and he was told that they were part of petitioner's sequestered properties. Under these circumstances and in his belief that said winnings were fruits of petitioner's ill-gotten properties, he deemed it his duty to withhold them. The chairman of the PCSO, he adds, is empowered by law to order the withholding of prize winnings. The representation of the OGCC on behalf of the PCSO and Mr. Carrascoso is pursuant to its basic function to "act as the principal law office of all government-owned or controlled corporations, their subsidiaries, other corporate offsprings and government acquired asset corporations and . . . [to] exercise control and supervision over all legal departments or divisions maintained separately and such powers and functions as are now or may hereafter be provided by law." 13 The OGCC was therefore duty-bound to defend the PCSO because the latter, under its charter, 14 is a government-owned corporation. The government counsel's representation extends to the concerned government functionary's officers when the issue involves the latter's official acts or duties. 15 Granting that upon his separation from the government, Carrascoso ceased to be entitled to the legal services of the government corporate counsel, this development does not automatically revoke or render ineffective his notice of appeal of the trial court's Decision. The filing of an appellant's brief is not an absolute requirement for the perfection of an appeal. 16 Besides, when noncompliance with the Rules of Court is not intended for delay or

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does not prejudice the adverse party, the dismissal of an appeal on a mere technicality may be stayed and the court may, at its sound discretion, exercise its equity jurisdiction. 17 The emerging trend in our jurisprudence is to afford every party-litigant the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities. 18 What is important is that Respondent Carrascoso filed his notice of appeal on time and that his counsel before the lower court, who was presumed to have continued representing him on appeal, 19 had filed an appeal brief on his behalf. The Manifestation of Carrascoso before the Court of Appeals that he intended to hire the services of another counsel and to file his own brief did not ipso facto effect a change of counsel under the existing rules of procedure. The former counsel must first file a formal petition withdrawing his appearance with the client's consent, and the newly appointed attorney should formally enter his appearance before the appellate court with notice to the adverse party. 20 But other than Carrascoso's manifestation of his intention to hire a counsel of his own, the requisites for a change of counsel were not fully complied with. Nevertheless, as stated earlier, even an effective change of attorney will not abrogate the pleadings filed before the court by the former counsel. All in all, we hold that the appellate court committed no reversible error in not dismissing the appeal, since this matter was addressed to its sound discretion, and since such discretion exercised reasonably in accordance with the doctrine that cases should, as much as possible, be decided on their merits. Third Issue: Scope of the Appeal Before Respondent Court Petitioner is correct in asserting that the entire RTC judgment was not appealed to Respondent Court of Appeals. The errors assigned in the appellants' Brief, as quoted earlier, attacked only the trial court's (1) conclusion that "defendants-appellants acted in bad faith" and (2) award of damages in favor of herein petitioner. In short, only those parts relating to the second cause of action could be reviewed by the CA. Respondent Court could not therefore reverse and set aside the RTC Decision in its entirety and dismiss the original Complaint without trampling upon the rights that had accrued to the petitioner from the unappealed portion of the Decision. It is well-settled that only the errors assigned and properly argued in the brief, and those necessarily related thereto, may be considered by the appellate court in resolving an appeal in a civil case. 21 The appellate court has no power to resolve unassigned errors, except those that affect the court's jurisdiction over the subject matter and those that are plain or clerical errors. 22 Having said that, we note, however, that Respondent Court in its Decision effectively recognized the confines of the appeal, as it stated at the outset that "this appeal shall be limited to the damages awarded in the [RTC] decision other than the claims for race winning prizes." 23 The dispositive portion of the Decision must be understood together with the aforequoted statement that categorically defined the scope of Respondent Court's review. Consequently, what the assailed Decision "reversed and set aside" was only that part of the appealed judgment finding bad faith on the part of herein Private Respondent Carrascoso and awarding damages to herein petitioner. It did not annul the trial court's order for Respondent PCSO to pay Petitioner Cojuangco his racehorse winnings, because this Order had never been assigned as an error sought to be corrected. On the contrary, Respondent PCSO had probably never intended to further object to the payment, as it so manifested before the trial court 24 in answer to Petitioner Cojuangco's Motion 25 for the partial execution of the judgment. In fact, on May 20, 1992, PCSO willingly and readily paid the petitioner the principal amount of P1,020,700 in accordance with the writ of execution issued by the trial court on February 14, 1992. 26 Obviously and plainly, the RTC judgment, insofar as it related to the first cause of action, had become final and no longer subject to appeal. In any event, the Court of Appeals' discussion regarding the indispensability of the PCGG as a party-litigant to the instant case was not pivotal to its reversal of the appealed trial court Decision. It merely mentioned that the non-joinder of the PCGG made the Complaint vulnerable or susceptible to dismissal. It did not rule that it was the very ground, or at least one of the legal grounds, it relied upon in setting aside the appealed judgment. It could not have legally done so anyway, because the PCGG's role in the controversy, if any, had never been an issue before the trial court. Well-settled is the doctrine that no question, issue or argument will be entertained on appeal unless it has been raised in the court a quo. 27 The aforementioned discussion should therefore be construed only in light of the previous paragraphs relating to Respondent Carrascoso's good faith which, the appellate court surmised, was indicated by his reliance on PCGG's statements that the subject prize winnings of Petitioner Cojuangco were part of the sequestered properties. In other words, Respondent Court's view that the non-inclusion of PCGG as a party made the Complaint dismissible was a mere aside that did not prejudice petitioner. Fourth Issue:

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Damages Petitioner insists that the Court of Appeals erred in reversing the trial court's finding that Respondent Carrascoso acted in bad faith in withholding his winnings. We do not think so. Bad faith does not simply connote bad judgment or simple negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty due to some motive or interest or ill will that partakes of the nature of fraud. 28 We do not believe that the above judicially settled nature of bad faith characterized the questioned acts of Respondent Carrascoso. On the contrary, we believe that there is sufficient evidence on record to support Respondent Court's conclusion that he did not act in bad faith. It reasoned, and we quote with approval: 29 A close examination of the June 10, 1986 letter of defendant Carrascoso to Jovito Salonga, then Chairman of the Presidential Commission on Good Government, readily display uncertainties in the mind of Chairman Carrascoso as to the extent of the sequestration against the properties of the plaintiff. In the said letter (Exhibit "1") the first prize for the March 16, 1986 draw and the second prize for the June 8, 1986 draw, were, in the meantime, being withheld to "avoid any possible violation of your sequestration order on the matter" because while he is aware of the sequestration order issued against the properties of defendant Eduardo Cojuangco, he is not aware of the extent and coverage thereof. It was for that reason that, in the same letter, defendant Carrascoso requested for a clarification whether the prizes are covered by the order and if it is in the affirmative, for instructions on the proper disposal of the two (2) prizes taking into account the shares of the trainer and the groom. Correspondingly, in a letter dated June 13, 1986 (Exhibit 2) PCGG Commissioner Ramon A. Diaz authorized the payment to the trainer and the groom but instructed the withholding of the amounts due plaintiff Eduardo Cojuangco. This piece of evidence should be understood and appreciated in the light of the circumstances prevailing at the time. PCGG was just a newly born legal creation and "sequestration" was a novel remedy which even legal luminaries were not sure as to the actual procedure, the correct approach and the manner how the powers of the said newly created office should be exercised and the remedy of sequestration properly implemented without violating due process of law. To the mind of their newly installed power, the immediate concern is to take over and freeze all properties of former President Ferdinand E. Marcos, his immediate families, close associates and cronies. There is no denying that plaintiff is a very close political and business associate of the former President. Under those equivocalities, defendant Carrascoso could not be faulted in asking further instructions from the PCGG, the official government agency on the matter, on what to do with the prize winnings of the plaintiff, and more so, to obey the instructions subsequently given. The actions taken may be a hard blow on plaintiff but defendant Carrascoso had no alternative. It was the safest he could do in order to protect public interest, act within the powers of his position and serve the public demands then prevailing. More importantly, it was the surest way to avoid a possible complaint for neglect of duty or misfeasance of office or an anti-graft case against him. xxx xxx xxx Moreover, the finding of bad faith against defendant Carrascoso is overshadowed by the evidences showing his good faith. He was just recently appointed chairman of the PCGG when he received the first demand for the collection of the prize for the March 16, 1986 race which he promptly answered saying he was under instructions by the PCGG to withhold such payment. But the moment he received the go signal from the PCGG that the prize winnings of plaintiff Cojuangco could already be released, he immediately informed the latter thereof, interposed no objection to the execution pending appeal relative thereto, in fact, actually paid off all the winnings due the plaintiff. . . . Carrascoso's decision to withhold petitioner's winnings could not be characterized as arbitrary or whimsical, or even the product of ill will or malice. He had particularly sought from PCGG a clarification of the extent and coverage of the sequestration order issued against the properties of petitioner. 30 He had acted upon the PCGG's statement that the subject prizes were part of those covered by the sequestration order and its instruction "to hold in a proper bank deposits [sic] earning interest the amount due Mr. Cojuangco." 31 Besides, EO 2 had just been issued by then President Aquino," freez[ing] all assets and properties in the Philippines [of] former President Marcos and/or his wife, . . . their close friends, subordinates, business associates . . ."; and enjoining the "transfer, encumbrance, concealment, or dissipation [thereof], under pain of such penalties as prescribed by law." It cannot, therefore, be said that Respondent Carrascoso, who relied upon these issuances, acted with malice or bad faith. The extant rule is that a public officer shall not be liable by way of moral and exemplary damages for acts done in the performance of official duties, unless there is a clear showing of bad faith, malice or gross negligence. 32Attorney's fees and expenses of litigation cannot be imposed either, in the absence of a clear showing of any of the grounds provided therefor under the Civil Code. 33 The trial court's award of these kinds of damages must perforce be deleted, as ruled by the Court of Appeals.

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Nevertheless, this Court agrees with the petitioner and the trial that Respondent Carrascoso may still be held liable under Article 32 of the Civil Code, which provides: Art. 32. Any public officer or employee, or any private individual, who directly or indirectly obstruct, 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 (6) The rights against deprivation of property without due process of law; xxx xxx xxx In Aberca v. Ver,
34

this Court explained the nature and the purpose of this article as follows:

It is obvious that the purpose of the above codal provision is to provide a sanction to the deeply cherished rights and freedoms enshrined in the Constitution. Its message is clear; no man may seek to violate those sacred rights with impunity. In times of great upheaval or of social and political stress, when the temptation is strongest to yield borrowing the words of Chief Justice Claudio Teehankee to the law of force rather than the force of law, it is necessary to remind ourselves that certain basic rights and liberties are immutable and cannot be sacrificed to the transient needs or imperious demands of the ruling power. The rule of law must prevail, or else liberty will perish. Our commitment to democratic principles and to the rule of law compels us to reject the view which reduces law to nothing but the expression of the will of the predominant power in the community. "Democracy cannot be a reign of progress, of liberty, of justice, unless the law is respected by him who makes it and by him for whom it is made. Now this respect implies a maximum of faith, a minimum of idealism. On going to the bottom of the matter, we discover that life demands of us a certain residuum of sentiment which is not derived from reason, but which reason nevertheless controls." 35 Under the aforecited article, it is not necessary that the public officer acted with malice or bad faith. 36 To be liable, it is enough that there was a violation of the constitutional rights of petitioner, even on the pretext of justifiable motives or good faith in the performance of one's duties. 37 We hold that petitioner's right to the use of his property was unduly impeded. While Respondent Carrascoso may have relied upon the PCGG's instructions, he could have further sought the specific legal basis therefor. A little exercise of prudence would have disclosed that there was no writ issued specifically for the sequestration of the racehorse winnings of petitioner. There was apparently no record of any such writ covering his racehorses either. The issuance of a sequestration order requires the showing of a prima facie case and due regard for the requirements of due process. 38 The withholding of the prize winnings of petitioner without a properly issued sequestration order clearly spoke of a violation of his property rights without due process of law. Art. 2221 of the Civil Code authorizes the award of nominal damages to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, not for indemnifying the plaintiff for any loss suffered. 39 The court may also award nominal damages in every case where a property right has been invaded. 40 The amount of such damages is addressed to the sound discretion of the court, with the relevant circumstances taken into account. 41 WHEREFORE, the petition is hereby partially GRANTED. The assailed Decision, as herein clarified, is AFFIRMED with the MODIFICATION that Private Respondent Fernando O. Carrascoso Jr. is ORDERED TO PAY petitioner nominal damages in the amount of fifty thousand pesos (P50,000). No pronouncement as to costs. SO ORDERED.

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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 Decision1 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:

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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 latters 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 Agtani9 was filed before the Fiscals Office of Manila, for violation of Republic Act (R.A.) No. 6425, as amended by Batas Pambansa Bilang 179 (The Dangerous Drugs Act). An Information10 indicting the union officers was subsequently filed by the Fiscals 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 Complaint12against 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 Decision13 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 courts 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 attorneys fees.

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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 courts 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 courts 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. Aruta17and Section 13, Rule 12618 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 ones 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)

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As constitutional rights, like the right to be secure in ones 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. Babays account of why petitioners and company went to the union office to consider Panlilios 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 ones 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 complaint29 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:

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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. Marti31 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 [ones] 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.

198

G.R. No. 141309

June 19, 2007

LIWAYWAY VINZONS-CHATO, petitioner, vs. FORTUNE TOBACCO CORPORATION, respondent. DECISION YNARES-SANTIAGO, J.: Petitioner assails the May 7, 1999 Decision1 of the Court of Appeals in CA-G.R. SP No. 47167, which affirmed the September 29, 1997 Order2 of the Regional Trial Court (RTC) of Marikina, Branch 272, in Civil Case No. 97-341MK, denying petitioners motion to dismiss. The complaint filed by respondent sought to recover damages for the alleged violation of its constitutional rights arising from petitioners issuance of Revenue Memorandum Circular No. 37-93 (RMC 37-93), which the Court declared invalid in Commissioner of Internal Revenue v. Court of Appeals.3 Petitioner Liwayway Vinzons-Chato was then the Commissioner of Internal Revenue while respondent Fortune Tobacco Corporation is an entity engaged in the manufacture of different brands of cigarettes, among which are "Champion," "Hope," and "More" cigarettes. On June 10, 1993, the legislature enacted Republic Act No. 7654 (RA 7654), which took effect on July 3, 1993. Prior to its effectivity, cigarette brands Champion," "Hope," and "More" were considered local brands subjected to an ad valorem tax at the rate of 20-45%. However, on July 1, 1993, or two days before RA 7654 took effect, petitioner issued RMC 37-93 reclassifying "Champion," "Hope," and "More" as locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax.4 RMC 37-93 in effect subjected "Hope," "More," and"Champion" cigarettes to the provisions of RA 7654, specifically, to Sec. 142,5 (c)(1) on locally manufactured cigarettes which are currently classified and taxed at 55%, and which imposes an ad valorem tax of "55% provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack."6 On July 2, 1993, at about 5:50 p.m., BIR Deputy Commissioner Victor A. Deoferio, Jr. sent via telefax a copy of RMC 37-93 to Fortune Tobacco but it was addressed to no one in particular. On July 15, 1993, Fortune Tobacco received, by ordinary mail, a certified xerox copy of RMC 37-93. On July 20, 1993, respondent filed a motion for reconsideration requesting the recall of RMC 37-93, but was denied in a letter dated July 30, 1993.7 The same letter assessed respondent for ad valorem tax deficiency amounting to P9,598,334.00 (computed on the basis of RMC 37-93) and demanded payment within 10 days from receipt thereof.8 On August 3, 1993, respondent filed a petition for review with the Court of Tax Appeals (CTA), which on September 30, 1993, issued an injunction enjoining the implementation of RMC 37-93.9 In its decision dated August 10, 1994, the CTA ruled that RMC 37-93 is defective, invalid, and unenforceable and further enjoined petitioner from collecting the deficiency tax assessment issued pursuant to RMC No. 37-93. This ruling was affirmed by the Court of Appeals, and finally by this Court in Commissioner of Internal Revenue v. Court of Appeals.10 It was held, among others, that RMC 37-93, has fallen short of the requirements for a valid administrative issuance. On April 10, 1997, respondent filed before the RTC a complaint11 for damages against petitioner in her private capacity. Respondent contended that the latter should be held liable for damages under Article 32 of the Civil Code considering that the issuance of RMC 37-93 violated its constitutional right against deprivation of property without due process of law and the right to equal protection of the laws. Petitioner filed a motion to dismiss12 contending that: (1) respondent has no cause of action against her because she issued RMC 37-93 in the performance of her official function and within the scope of her authority. She claimed that she acted merely as an agent of the Republic and therefore the latter is the one responsible for her acts; (2) the complaint states no cause of action for lack of allegation of malice or bad faith; and (3) the certification against forum shopping was signed by respondents counsel in violation of the rule that it is the plaintiff or the principal party who should sign the same. On September 29, 1997, the RTC denied petitioners motion to dismiss holding that to rule on the allegations of petitioner would be to prematurely decide the merits of the case without allowing the parties to present evidence. It further held that the defect in the certification against forum shopping was cured by respondents submission of the corporate secretarys certificate authorizing its counsel to execute the certification against forum shopping. The dispositive portion thereof, states: WHEREFORE, foregoing premises considered, the motion to dismiss filed by the defendant Liwayway Vinzons-Chato and the motion to strike out and expunge from the record the said motion to dismiss filed by plaintiff Fortune Tobacco Corporation are both denied on the grounds aforecited. The defendant is ordered to file her answer to the complaint within ten (10) days from receipt of this Order.

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SO ORDERED.13 The case was elevated to the Court of Appeals via a petition for certiorari under Rule 65. However, same was dismissed on the ground that under Article 32 of the Civil Code, liability may arise even if the defendant did not act with malice or bad faith. The appellate court ratiocinated that Section 38, Book I of the Administrative Code is the general law on the civil liability of public officers while Article 32 of the Civil Code is the special law that governs the instant case. Consequently, malice or bad faith need not be alleged in the complaint for damages. It also sustained the ruling of the RTC that the defect of the certification against forum shopping was cured by the submission of the corporate secretarys certificate giving authority to its counsel to execute the same. Undaunted, petitioner filed the instant recourse contending that the suit is grounded on her acts done in the performance of her functions as a public officer, hence, it is Section 38, Book I of the Administrative Code which should be applied. Under this provision, liability will attach only when there is a clear showing of bad faith, malice, or gross negligence. She further averred that the Civil Code, specifically, Article 32 which allows recovery of damages for violation of constitutional rights, is a general law on the liability of public officers; while Section 38, Book I of the Administrative Code is a special law on the superior public officers liability, such that, if the complaint, as in the instant case, does not allege bad faith, malice, or gross negligence, the same is dismissible for failure to state a cause of action. As to the defect of the certification against forum shopping, she urged the Court to strictly construe the rules and to dismiss the complaint. Conversely, respondent argued that Section 38 which treats in general the public officers "acts" from which civil liability may arise, is a general law; while Article 32 which deals specifically with the public officers violation of constitutional rights, is a special provision which should determine whether the complaint states a cause of action or not. Citing the case of Lim v. Ponce de Leon,14 respondent alleged that under Article 32 of the Civil Code, it is enough that there was a violation of the constitutional rights of the plaintiff and it is not required that said public officer should have acted with malice or in bad faith. Hence, it concluded that even granting that the complaint failed to allege bad faith or malice, the motion to dismiss for failure to state a cause of action should be denied inasmuch as bad faith or malice are not necessary to hold petitioner liable. The issues for resolution are as follows: (1) May a public officer be validly sued in his/her private capacity for acts done in connection with the discharge of the functions of his/her office? (2) Which as between Article 32 of the Civil Code and Section 38, Book I of the Administrative Code should govern in determining whether the instant complaint states a cause of action? (3) Should the complaint be dismissed for failure to comply with the rule on certification against forum shopping? (4) May petitioner be held liable for damages? On the first issue, the general rule is that a public officer is not liable for damages which a person may suffer arising from the just performance of his official duties and within the scope of his assigned tasks.15 An officer who acts within his authority to administer the affairs of the office which he/she heads is not liable for damages that may have been caused to another, as it would virtually be a charge against the Republic, which is not amenable to judgment for monetary claims without its consent.16 However, a public officer is by law not immune from damages in his/her personal capacity for acts done in bad faith which, being outside the scope of his authority, are no longer protected by the mantle of immunity for official actions.17 Specifically, under Section 38, Book I of the Administrative Code, civil liability may arise where there is bad faith, malice, or gross negligence on the part of a superior public officer. And, under Section 39 of the same Book, civil liability may arise where the subordinate public officers act is characterized by willfulness or negligence. Thus Sec. 38. Liability of Superior Officers. (1) A public officer shall not be civilly liable for acts done in the performance of his official duties, unless there is a clear showing of bad faith, malice or gross negligence. xxxx Section 39. Liability of Subordinate Officers. No subordinate officer or employee shall be civilly liable for acts done by him in good faith in the performance of his duties. However, he shall be liable for willful or negligent acts done by him which are contrary to law, morals, public policy and good customs even if he acts under orders or instructions of his superior. In addition, the Court held in Cojuangco, Jr. v. Court of Appeals,18 that a public officer who directly or indirectly violates the constitutional rights of another, may be validly sued for damages under Article 32 of the Civil Code even if his acts were not so tainted with malice or bad faith.

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Thus, the rule in this jurisdiction is that a public officer may be validly sued in his/her private capacity for acts done in the course of the performance of the functions of the office, where said public officer: (1) acted with malice, bad faith, or negligence; or (2) where the public officer violated a constitutional right of the plaintiff. Anent the second issue, we hold that the complaint filed by respondent stated a cause of action and that the decisive provision thereon is Article 32 of the Civil Code. A general statute is one which embraces a class of subjects or places and does not omit any subject or place naturally belonging to such class. A special statute, as the term is generally understood, is one which relates to particular persons or things of a class or to a particular portion or section of the state only.19 A general law and a special law on the same subject are statutes in pari materia and should, accordingly, be read together and harmonized, if possible, with a view to giving effect to both. The rule is that where there are two acts, one of which is special and particular and the other general which, if standing alone, would include the same matter and thus conflict with the special act, the special law must prevail since it evinces the legislative intent more clearly than that of a general statute and must not be taken as intended to affect the more particular and specific provisions of the earlier act, unless it is absolutely necessary so to construe it in order to give its words any meaning at all.20 The circumstance that the special law is passed before or after the general act does not change the principle. Where the special law is later, it will be regarded as an exception to, or a qualification of, the prior general act; and where the general act is later, the special statute will be construed as remaining an exception to its terms, unless repealed expressly or by necessary implication.21 Thus, in City of Manila v. Teotico,22 the Court held that Article 2189 of the Civil Code which holds provinces, cities, and municipalities civilly liable for death or injuries by reason of defective conditions of roads and other public works, is a special provision and should prevail over Section 4 of Republic Act No. 409, the Charter of Manila, in determining the liability for defective street conditions. Under said Charter, the city shall not be held for damages or injuries arising from the failure of the local officials to enforce the provision of the charter, law, or ordinance, or from negligence while enforcing or attempting to enforce the same. As explained by the Court: Manila maintains that the former provision should prevail over the latter, because Republic Act 409 is a special law, intended exclusively for the City of Manila, whereas the Civil Code is a general law, applicable to the entire Philippines. The Court of Appeals, however, applied the Civil Code, and, we think, correctly. It is true that, insofar as its territorial application is concerned, Republic Act No. 409 is a special law and the Civil Code a general legislation; but, as regards the subject matter of the provisions above quoted, Section 4 of Republic Act 409 establishes a general rule regulating the liability of the City of Manila for "damages or injury to persons or property arising from the failure of" city officers "to enforce the provisions of" said Act "or any other law or ordinance, or from negligence" of the city "Mayor, Municipal Board, or other officers while enforcing or attempting to enforce said provisions." Upon the other hand, Article 2189 of the Civil Code constitutes a particular prescription making "provinces, cities and municipalities . . . liable for damages for the death of, or injury suffered by, any person by reason" specifically "of the defective condition of roads, streets, bridges, public buildings, and other public works under their control or supervision." In other words, said section 4 refers to liability arising from negligence, in general, regardless of the object thereof, whereas Article 2189 governs liability due to "defective streets," in particular. Since the present action is based upon the alleged defective condition of a road, said Article 2189 is decisive thereon.23 In the case of Bagatsing v. Ramirez,24 the issue was which law should govern the publication of a tax ordinance, the City Charter of Manila, a special act which treats ordinances in general and which requires their publication before enactment and after approval, or the Tax Code, a general law, which deals in particular with "ordinances levying or imposing taxes, fees or other charges," and which demands publication only after approval. In holding that it is the Tax Code which should prevail, the Court elucidated that: There is no question that the Revised Charter of the City of Manila is a special act since it relates only to the City of Manila, whereas the Local Tax Code is a general law because it applies universally to all local governments. Blackstone defines general law as a universal rule affecting the entire community and special law as one relating to particular persons or things of a class. And the rule commonly said is that a prior special law is not ordinarily repealed by a subsequent general law. The fact that one is special and the other general creates a presumption that the special is to be considered as remaining an exception of the general, one as a general law of the land, the other as the law of a particular case. However, the rule readily yields to a situation where the special statute refers to a subject in general, which the general statute treats in particular. Th[is] exactly is the circumstance obtaining in the case at bar. Section 17 of the Revised Charter of the City of Manila speaks of "ordinance" in general, i.e., irrespective of the nature and scope thereof, whereas, Section 43 of the Local Tax Code relates to "ordinances levying or imposing taxes, fees or other charges" in particular. In regard, therefore, to ordinances in general, the Revised Charter of the City of Manila is doubtless dominant, but, that dominant force loses its continuity when it approaches the realm of "ordinances levying or imposing taxes, fees or

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other charges" in particular. There, the Local Tax Code controls. Here, as always, a general provision must give way to a particular provision. Special provision governs. Let us examine the provisions involved in the case at bar. Article 32 of the 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 (6) The right against deprivation of property without due process of law; xxxx (8) The right to the equal protection of the laws; xxxx The rationale for its enactment was explained by Dean Bocobo of the Code Commission, as follows: "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 persons 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 ones 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."25 The Code Commission deemed it necessary to hold not only public officers but also private individuals civilly liable for violation of the rights enumerated in Article 32 of the Civil Code. It is not 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. It suffices that there is a violation of the constitutional right of the plaintiff.26 Article 32 was patterned after the "tort" in American law.27 A tort is a wrong, a tortious act which has been defined as the commission or omission of an act by one, without right, whereby another receives some injury, directly or indirectly, in person, property, or reputation.28 There are cases in which it has been stated that civil liability in tort is determined by the conduct and not by the mental state of the tortfeasor, and there are circumstances under which the motive of the defendant has been rendered immaterial. The reason sometimes given for the rule is that otherwise, the mental attitude of the alleged wrongdoer, and not the act itself, would determine whether the act was wrongful.29 Presence of good motive, or rather, the absence of an evil motive, does not render lawful an act which is otherwise an invasion of anothers legal right; that is, liability in tort is not precluded by the fact that defendant acted without evil intent.30 The clear intention therefore of the legislature was to create a distinct cause of action in the nature of tort for violation of constitutional rights, irrespective of the motive or intent of the defendant.31 This is a fundamental innovation in the Civil Code, and in enacting the Administrative Code pursuant to the exercise of legislative powers, then President Corazon C. Aquino, could not have intended to obliterate this constitutional protection on civil liberties. In Aberca v. Ver,32 it was held that with the enactment of Article 32, the principle of accountability of public officials under the Constitution acquires added meaning and assumes a larger dimension. No longer may a superior official relax his vigilance or abdicate his duty to supervise his subordinates, secure in the thought that he does not have to answer for the transgressions committed by the latter against the constitutionally protected rights and liberties of the citizen. Part of the factors that propelled people power in February 1986 was the widely held perception that the government was callous or indifferent to, if not actually responsible for,

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the rampant violations of human rights. While it would certainly be too naive to expect that violators of human rights would easily be deterred by the prospect of facing damage 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. On the other hand, Sections 38 and 39, Book I of the Administrative Code, laid down the rule on the civil liability of superior and subordinate public officers for acts done in the performance of their duties. For both superior and subordinate public officers, the presence of bad faith, malice, and negligence are vital elements that will make them liable for damages. Note that while said provisions deal in particular with the liability of government officials, the subject thereof is general, i.e., "acts" done in the performance of official duties, without specifying the action or omission that may give rise to a civil suit against the official concerned. Contrarily, Article 32 of the Civil Code specifies in clear and unequivocal terms a particular specie of an "act" that may give rise to an action for damages against a public officer, and that is, a tort for impairment of rights and liberties. Indeed, Article 32 is the special provision that deals specifically with violation of constitutional rights by public officers. All other actionable acts of public officers are governed by Sections 38 and 39 of the Administrative Code. While the Civil Code, specifically, the Chapter on Human Relations is a general law, Article 32 of the same Chapter is a special and specific provision that holds a public officer liable for and allows redress from a particular class of wrongful acts that may be committed by public officers. Compared thus with Section 38 of the Administrative Code, which broadly deals with civil liability arising from errors in the performance of duties, Article 32 of the Civil Code is the specific provision which must be applied in the instant case precisely filed to seek damages for violation of constitutional rights. The complaint in the instant case was brought under Article 32 of the Civil Code. Considering that bad faith and malice are not necessary in an action based on Article 32 of the Civil Code, the failure to specifically allege the same will not amount to failure to state a cause of action. The courts below therefore correctly denied the motion to dismiss on the ground of failure to state a cause of action, since it is enough that the complaint avers a violation of a constitutional right of the plaintiff. Anent the issue on non-compliance with the rule against forum shopping, the subsequent submission of the secretarys certificate authorizing the counsel to sign and execute the certification against forum shopping cured the defect of respondents complaint. Besides, the merits of the instant case justify the liberal application of the rules.33 WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision of the Court of Appeals dated May 7, 1999 which affirmed the Order of the Regional Trial Court of Marikina, Branch 272, denying petitioners motion to dismiss, is AFFIRMED. The Presiding Judge, Regional Trial Court of Marikina, Branch 272, is hereby DIRECTEDto continue with the proceedings in Civil Case No. 97-341-MK with dispatch. With costs. SO ORDERED.

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G.R. No. 124245

February 15, 2000

ANTONIO F. NAVARRETE, petitioner, vs. COURT OF APPEALS, and LEONILA E. GENEROSO, respondents. GONZAGA-REYES, J.: Before us is a petition for review seeking the reversal of the Decision1 of the respondent Court of Appeals dated March 14, 1996 in CA-G.R. CV No. 33838 insofar as it deleted the award of moral damages and attorney's fees granted to him by the Regional Trial Court of Manila in its Decision2 dated September 27, 1990 in Civil Case No. 87-41856. Petitioner is a lawyer and is one of the defendants in Civil Case No. 87-41856 for annulment of "Deed of Sale with Right to Repurchase and Damages", filed with the Regional Trial Court of Manila entitled "Leonila E. Generoso, et, al. vs. Frederick S. Pumaren, et. al.". Private respondent filed the civil case on September 2, 1987 originally against Mr. Frederick S. Pumaren, Mr. Avelino Profeta and the Register of Deeds of Metro Manila seeking to annul a deed of sale executed over her property on the ground that her purported signature therein was forged. On December 21, 1987, the complaint was amended to include petitioner and Atty. Rafael C. Dinglasan. The Deed of Sale with Right of Repurchase involved in the civil case was prepared and notarized by petitioner. Petitioner claims that the statements made by private respondent in her Amended Complaint and her testimonies in the course of the trial falsely and maliciously slandered him. Hence, petitioner now assails the denial of his right to recover moral damages and attorney's fees from private respondent. The alleged malicious and false statements made by private respondent against petitioner were uttered on December 14 and 21, 1987. On these dates, the lower court conducted the hearings for the issuance of a writ of preliminary injunction in Civil Case No. 87-41856. Petitioner claims that private respondent alluded to him when she said the words "stupid", "bastards", "swindlers", and "plunderers" while testifying on the Deed of Sale with Right of Repurchase. Quoted below are the pertinent portions of private respondent's testimonies: Q. Now, there are signatures here as witnesses appearing on page 2 of the document, can you tell us, Ms. Witness, if you can recognize those signatures? A. I do not know any of those bastards, none of them.3 xxx Q. A xxx xxx

One of the defendants in this case is a certain Avelino Profeta, have you met him before? I never met this swindler before. I never seen him. Never heard of him.4 xxx xxx xxx

Q. Before this proceedings commence as it appears that it was so confirmed thru a petition be defendant Frederick S. Pumaren on October 13, 1986, did you receive from the Court or from the defendants that there was such proceedings? A. No, sir. I did not receive any notice from the court or from these stupid people.5 xxx xxx xxx

A. I do not know this document. I do not know about the selling. Those people are really swindlers.6 xxx xxx xxx

A. I still could not understand how this certificate of title could be recopied. There must be somebody who is responsible for it. How was it possible that this was copied by these swindlers.7 xxx xxx xxx

A. We came here precisely for this because I can not let these things go ahead. My property is beingstolen behind my back. I have to come here 10,000 miles away to defend my property so that justice may be given to punish those plunderers.8 xxx xxx xxx

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DRA. GENEROSO: Before we have the break, can I make a statement to Atty. Villanueva? Are you defending Avelino Profeta, one of the swindlers in this case? How can you, after examining all those papers, protect and defend him after they plundered my property?9 (Emphasis supplied) Petitioner is also convinced that the following allegations of private respondent in her Amended Complaint are actionable: (a) Accused "private defendants" of "forging" Leonila Generoso's signature in the Deed of Absolute Sale with Right of Repurchase" (par. 51); (b) Claimed that "the same conspiring defendants falsified the signatures of Leonila E. Generoso" (par. 61); (c) Pointed to private defendants' wanton and malevolent acts to deceive and defraud plaintiffs" (par. 91); and (d) Charged the defendants of "blatant, malicious and fraudulent acts as aforestated" (par. 10)10 (Emphasis supplied) On September 27, 1990, the Regional Trial Court of Manila rendered its Decision in Civil Case No. 87-41856, the dispositive portion of which reads: WHEREFORE, and in view of the foregoing considerations, judgment is hereby rendered: (a) Declaring plaintiff Leonila E. Generoso as the absolute, exclusive and paraphernal owner of the subject property covered by her already deemed cancelled Transfer Certificate of Title No. 143351, now Transfer Certificate of Title No. 154609, of the Register of Deeds of Manila; (b) Declaring the Deed of Absolute Sale with Right of Repurchase, Exhibit A, and Transfer Certificate of Title Nos. 143551 and 175354 issued to Frederick S. Pumaren as null and void, concelled (sic) without force and effect; (c) Declaring Transfer Certificate of Title No. 154609 issued to plaintiff Leonila E. Generoso as the lawful and valid title to the land in question; (d) Dismissing the complaint with respect to defendant Antonio Navarrete and, on his counterclaim, ordering plaintiffs to pay him the amount of P100,000.00 as moral damages and P 20,000.00 as attorney's fees. No pronouncement as to costs.11 Both parties appealed, including petitioner who protested the minimal amount of damages awarded to him. On March 14, 1996, the Court of Appeals upheld the finding that the Deed of Sale with Right of Repurchase and the Transfer of Certificate of Title issued to Pumaren were null and void, but deleted the award of damages in favor of petitioner. It held: IN THE LIGHT OF ALL THE FOREGOING, the assailed Decision is hereby AFFIRMED with the modifications that: (a) the award of moral damages and attorney's fees in favor of Navarrete are hereby deleted; (b) Appellant Pumaren and Dinglasan are hereby ordered to pay to Appellant Generoso and Elshawi jointly and severally, the amount of US $2,650.00 or its peso equivalent by way of actual damages; to Appellant Generoso, the amount of P50,00.00 by way of exemplary damages; and to Appellants Generoso and Elshawi, the amount of P 20,000.00 as attorney's fees; and the costs of suit.12 Petitioner believes that this Court should overturn the decision of the Court of Appeals on the ground that: IN HOLDING THAT A PARTY TO A CASE HAS THE ABSOLUTE PRIVILEGE OF FALSELY AND MALICIOUSLY MALIGNING A LAWYER, EVEN WHILE THE LATTER IS NOT YET A PARTY TO THAT CASE, THE RESPONDENT COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE, NOT HERETOFORE DETERMINED BY THIS HONORABLE COURT, OR HAS DECIDED IT IN A WAY CLEARLY NOT IN ACCORD WITH LAW, WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT OR, AT THE VERY LEAST, WITH FAIRNESS AND EQUITY.13 In questioning the conclusion of the Court of Appeals that the statements made by private respondent in the pleadings and in her testimony are considered absolutely privileged, petitioner deplores the fact that only American cases were cited by the Court to justify its conclusion. He insists that under Philippine law and jurisprudence, the statements made by private respondent are not absolutely privileged. The petition underscores the fact that petitioner is a lawyer whose reputation has been allegedly besmirched by a "brown American".14Petitioner now turns to this Court to vindicate his honor.

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In her Answer, private respondent cited decisions15 of the Supreme Court to the effect that no action for libel or for damages may be founded on utterances made in the course of judicial proceedings.16 This Court finds that the Court of Appeals did not commit any reversible error in revoking the award of moral damages and attorney's fees to petitioner. It is a settled principle in this jurisdiction that statements made in the course of judicial proceedings are absolutely privileged.17 This absolute privilege remains regardless of the defamatory tenor and the presence of malice if the same are relevant, pertinent or material to the cause in hand or subject of the inquiry.18 Thus, the person making these statements such as a judge, lawyer or witness does not thereby incur the risk of being found liable thereon in a criminal prosecution or an action for the recovery of damages.19 The doctrine that statements made during the course of judicial proceedings enjoy the shield of absolute privilege was first categorically established20 in the case of Sison vs. David.21 In said case, the petition allegedly contained libelous allegations, implying that the complainant was incompetent to manage the affairs of a corporation and that he was converting his wife's paraphernal properties into conjugal properties.22 This Court ruled in that case that the allegations in the pleadings were absolutely privileged and went further by saying that: Also, sarcastic, pungent and harsh allegations in a pleading although tending to detract from the dignity that should characterize proceedings in courts of justice, are absolutely privileged, if relevant to the issues.23 We have adopted the same ruling in several cases24 wherein statements made during judicial proceedings were sued upon for libel or damages. The lone requirement imposed to maintain the cloak of absolute privilege is the test of relevancy.25 The doctrine of privileged communication has a practical purpose. As enunciated in the case of Deles vs.Aragona, Jr.26: The privilege is not intended so much for the protection of those engaged in the public service and in the enactment and administration of law, as for the promotion of public welfare, the purpose being that members of the legislature, judges of courts, jurors, lawyers and witnesses may speak their minds freely and exercise their respective functions without incurring the risk of a criminal prosecution or an action for damages.27 In determining the issue of relevancy of statements made in judicial proceedings, courts have adopted a liberal attitude by resolving all doubts in favor of relevancy.28 In People vs. Aquino29, we emphasized that "it is the rule that what is relevant or pertinent should be liberally considered to favor the writer, and the words are not to be scrutinized with microscopic intensity".30 In this case, the allegations made by private respondent in her Amended Complaint stand the test of relevancy. The words "forging", "malicious and fraudulent" and "falsified" are clearly pertinent to the cause of action of private respondent, which is to annul the Deed of Sale with Right of Repurchase wherein private respondent's signature was forged by an impostor, and to recover damages resulting from such forgery. With respect to the words "swindlers", "plunderers" "stupid" and "bastards" uttered by private respondent in the course of her testimony, we are inclined to agree that such language is too ignominious and degrading and is out of place in a courtroom. Understandably, private respondent has no love lost for the people she accused of illegally depriving her of her property, but her indignation does not give her the right to use contumacious language with impunity in a courtroom. The judge31 and commissioner32 then presiding at the time private respondent uttered the contemptuous words should have restrained the latter because order and proper decorum should always be maintained in the courtroom.33 Without question, the use of blatantly defamatory language like "stupid", "bastards", "swindlers", and "plunderers" in describing the adverse parties detract from the honor and dignity that befits a court proceeding and should have been stricken out of the records. The foregoing notwithstanding, the Court finds that the terms used by the private respondent in her pleading and in her testimony cannot be the basis for an award of moral damages and attorney's fees in favor of petitioner. As stated earlier, the words "forging", "falsified", "malicious" and "fraudulent" in the Amended Complaint are unmistakably relevant to private respondent's cause of action which is to annul the Deed of Sale where her signature was forged. The words "stupid", "bastards", "swindlers", and "plunderers" uttered by private respondent did not specifically pertain to petitioner to sufficiently identify him as the object of defamation, such identifiability being an element of a libelous imputation.34 We believe that neither petitioner's good name and reputation nor his high standing in the profession have been damaged by these utterances. An examination of the transcript earlier quoted will show that private respondent did not allude to petitioner in particular when she used the words "stupid" and "bastards". The word "bastards" was in response to this question: "Now, there are signatures here as witnesses appearing on page 2 of the document, can you tell us, Ms. Witness, if you can recognize those signatures?"35 Clearly, private respondent was alluding to the witnesses to the deed in question, who are not parties in the present action. Petitioner was not a witness to the deed, he prepared and notarized it. Also, the word "swindler" was used with particular reference to defendant Avelino

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Profeta who also is not a party to the instant case. Used in the plural form in the other parts of her testimony, the words "those swindlers", "those plunderers" and "those stupid people" referred to none of the defendants in particular. As regards the testimony of private respondent on December 14, 1987, the words complained of were uttered before the complaint was amended to include petitioner. It was on December 21, 1987 when private respondent amended her complaint to include petitioner and Atty. Rafael Dinglasan as defendants. The petitioner was well aware that the malicious imputations were made "while (he) is not yet a party to the case" and could not have been the object thereof.1wphi1.nt We accordingly affirm the ruling of the respondent court deleting the award of attorney's fees in favor of petitioner. WHEREFORE, this petition is hereby DENIED. SO ORDERED.

G.R. No. 150256

March 25, 2004

CATALINO P. ARAFILES, petitioner, vs. PHILIPPINE JOURNALISTS, INC., ROMY MORALES, MAX BUAN, JR., and MANUEL C. VILLAREAL, JR.,respondents. DECISION CARPIO MORALES, J.: Petitioner, Catalino P. Arafiles, seeks a review of the July 31, 2001 Decision1 of the Court of Appeals dismissing his complaint for damages against respondents Philippine Journalists, Inc., Romy Morales, Max Buan, Jr., and Manuel C. Villareal, Jr. About 2 a.m. on April 14, 1987, while respondent Morales, a reporter of Peoples Journal Tonight, was at the Western Police District (WPD) Headquarters along United Nations Avenue, Manila, Emelita Despuig (Emelita), an employee of the National Institute of Atmospheric Sciences (NIAS), lodged a complaint against petitioner, a NIAS director, for forcible abduction with rape and forcible abduction with attempted rape before the then on duty Patrolman Benito Chio at the General Assignments Section of the headquarters.2 In the presence of Morales, Emelita executed a sworn statement3 narrating the events surrounding the reported offenses committed against her by petitioner. The pertinent portions of her sworn statement are reproduced hereunder: T: Ano ang dahilan at ikaw ay naririto ngayon sa aming tanggapan at nagbibigay ng isang malaya at kusang loob na salaysay?

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A: Para po magsuplong, tungkol sa karumaldumal naginawa sa akin ni Director Catalino P. Arafiles ng PAG-ASA. T: Kailan at saan ito nangyari? A: Noong hong March 14, 1987, diyan ho sa Plaza Miranda ako sapilitan isinakay sa kotse niya at itinuloy sa Flamingo hotel bandang alas pagitan ng 5:30 at 6:00 ng hapon. T: Kailan naman ang sumunod na pagtatangka sa puri mo si Direktor Arafiles? S: Kagabi ho. Bandang alas 9:00 ng gabi. T: Sa ikaliliwanag ng pagsisiyasat na ito maari bang isalaysay mo sa akin sa isang maikling talata kung paano nangyari ang ipinagsusumbong mong ito? S Kagagaling ko lang po sa aking klase sa Feati University noong March 14, 1987, bandang alas 5:45 ng hapon, humigit kumulang, habang ako ay naghihintay ng sasakyan pauwi mula sa Plaza Miranda ng may tumigil sa sasakyan sa tabi ko, at bigla na lang po akong hinaltak ni Direktor Arafiles papasok sa loob ng kotse niya at may ipina-amoy sa akin na nasa tissue na kulay yellow at bigla na lamang akong naghina at nahilo. Sabay din ho sa pagpapa-amoy niya sa akin ang pagtutok niya sa akin ng isang kutsilyo, at sabi sa akin ay huwag daw akong makulit tapos ay pinatakbo na niya ang kotse niya. Pamaya-maya ay nararamdaman kong karga-karga niya ako pa-akyat sa isang hagdanan. Tapos ibinaba ako sa isang kamang naroroon at akoy unti-unti niyang hinuhubaran. Pamaya-maya ho ay pinaghahalikan po niya ako at nararamdaman ko rin ang mga kamay niya sa mga maseselan na parte ng katawan ko, pero wala akong sapat na lakas para pigilin siya o sumigaw man lamang. Nagawa niyang makuha ang aking pagka-babae noong gabing iyon at nararamdaman kong masakit na masakit ang buong katawan ko. Tinakot niya ako na huwag magsumbong sa mga kapatid ko at sa mga maykapangyarihan at kung hindi ay papatayin daw ako at tatanggalin pa sa trabaho at pati mga kapatid ko ay papatayin daw po. Binibigyan ako ng pera pero ayaw kung tanggapin pero pilit niyang inilagay sa bag ko at ng tingnan ko ay P55.00 lang. Pagkatapos ay hinila na niya akong pababa at pilit ding pinasakay sa kotse niya at doon ako pinababa sa isang lugar na maraming dumadaan ng biyaheng Quiapo at sumakay na lamang ako ng jeep pauwi. Kagabi naman po, bandang alas-9:00 ng gabi, sa may kanto ng United Nations Ave. at Taft Ave., Ermita, Mla., habang hinihintay ko ang pinsan ko na umihi lang matapos akong bumili ng gamot ng tumigil na naman sa tapat ko ang kotse ni Director. Bigla na lamang niya akong hinila papasok sa kotse sabay tutok sa akin ng kutsilyo at sabi sa akin ay huwag na raw akong papalag, total ay butas na raw ako. Sa takot ko ay hindi ako nakakibo at itinuloy din ako sa Flamingo hotel. Ng hinuhubaran na niya ako ay bigla na lamang nag-buzzer tapos naka-usap niya yong bellboy na nagsabi sa kanya na may naghahanap daw sa akin o sa amin dalawa na nakakita sa paghaltak niya sa akin. Ng umakyat sa itaas yong bellboy ay nag-usap sila sandali tapos nakita ko pinagbibigyan niya ng pera yong bellboy at yong guwardiya. Tapos ay doon kami bumaba sa likod na sa tingin ko ay fire escape at nakalabas kami ng hotel tapos doon ako ibinaba sa isang lugar na hindi ko rin matandaan kong saan at doon na lang ako kumuha ng taxi at nagpahatid ako sa Pasay City Police ngunit dito rin ako itinuro.4 (Underscoring supplied) Following the execution by Emelita of her sworn statement, Patrolman Chio made the following entry in the Police Blotter which was perused by Morales: 280 11:00 PM 4/13/87 PAT. BENITO CHIO ON DUTY 2:00 AM 4/14/87 Subject Emelita Despuig y Puaso reported and personally came to this office that she was abducted by a certain Catalino P. Arafiles and alledgely (sic) rape (sic) last March 14, 1987 in a motel in Ermita. The undersigned made a referral to Medico-legal for Physical/Genital Exam. B. Chio.5 Morales thereupon personally interviewed Emelita for the purpose of reporting the same in the next issue of Peoples Journal Tonight.6 By his claim, he, after the interview, tried to contact Arafiles at the NIAS office to verify Emelitas story but failed, the office having already closed.7 Morales then wrote an account about Emelitas complaint and submitted it to his editor.8 That same day, April 14, 1987, Morales report appeared as headline on Peoples Journal Tonight reading: GOVT EXEC RAPES COED By ROMY MORALES

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A PRETTY coed, working as a grant-in-aid scholar at a Manila university and as an office worker at a government office in Quezon City, was raped by her boss, a government agency director, last March 15, but afraid to lose her job and of being harmed she chose to keep her ordeal to herself. Last night, the government man, a director of the National Institute of Atmospheric Science, a branch of PAGASA,again abducted the girl after following her around, forcing her into his car and locking her up in a Malate motel. This time, however, the girl was not to be raped as easily as the first time, when the man used chloroform in forcing her into submission. The girl fought like a tigress, alerting roomboys at the Flamingo Motel at corner Carolina and Quirino Ave. Perhaps as a ploy, motel personnel called up the room and told the man some Capcom soldiers were waiting for them outside. The call saved the girl from being raped the second time around. Her abductor immediately left the motel, with the girl in tow, and then dropped her off somewhere in Ermita. When the man had gone, the girl took a taxi and went straight to the Western Police District and filed a complaint. The girl, 20-year-old Emilita Arcillano (not her real name), said she was first raped last March 15 by her boss whom she identified as a certain Director Catalino Arafiles. She recalled that while waiting for a ride at Plaza Miranda, Arafiles alighted from his Volkswagen Beetle, dragged her inside and then pressed a cotton with chloroform on her mouth and nose. When she regained consciousness she was already inside the Flamingo Motel, already raped, she said. She said Arafiles told her not to report the matter or she would lose her job and she and her family would be harmed. When the act was to be repeated last night, Emilita decided to fight. "Nanlaban ako at nagsisigaw at sinabi kong mabuti pang patayin na lang niya ako," Emilita told Pat. Benito Chio of WPD General Assignments Section. She said the suspect abducted her at the corner of Taft Ave. and United Nations Ave. at about 9:15 last night. When Arafiles was told Capcom soldiers were waiting for them outside the Flamingo Motel, he allegedly paid P100 each to four roomboys to help him go out through a side gate. The police will pick up Arafiles for questioning today.9 (Emphasis and underscoring supplied) About a year following the publication of above-quoted report or on April 13, 1988, petitioner instituted a complaint before the Regional Trial Court of Quezon City against respondents for damages10 arising therefrom. In his Complaint, docketed as Civil Case No. Q-53399, petitioner alleged that on account of the "grossly malicious and overly sensationalized reporting in the news item" prepared by respondent Morales, edited by respondent Buan, Jr., allowed for publication by respondent Villareal, Jr. as president of Philippine Journalists, Inc., and published by respondent Philippine Journalists, Inc., aspersions were cast on his character; his reputation as a director of the NIAS at the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) was injured; he became the object of public contempt and ridicule as he was depicted as a sex-crazed stalker and serial rapist; and the news item deferred his promotion to the position of Deputy Administrator of PAGASA. In their Answer,11respondents prayed for the dismissal of the Complaint, they alleging that "the news item, having been sourced from the Police Blotter which is an official public document and bolstered by a personal interview of the victim is therefore privileged and falls within the protective constitutional provision of freedom of the press . . . . ," and by way of Compulsory Counterclaim, they prayed for the award of moral and exemplary damages plus attorneys fees. Branch 97 of the Quezon City RTC, noting as follows: [T]he publication stated that a "pretty coed was raped by her boss", and not qualifying said statement that it was merely a report, with such phrases as "allegedly" or "reportedly". Furthermore, the article in question continued reporting as if it were fact and truth the alleged abduction of the same girl by her boss, identified as "Director of the National Institute of Atmospheric Science." The questioned article did not even hint that it was merely based on interview with the said girl or that it was reflected in the police blotter, and then it would have

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been fair, for the mind of the reader would be offered the other side to speculate on. As it turned out, the other side, the side of the defamed and libeled had an alibi to prove the story false, aside from his testimony that proved the inherent unnaturalness and untruthfulness of the alleged victim of the alleged rape and abduction,12 rendered a Decision13 of August 13, 1992, in favor of petitioner, disposing as follows: In view of the above evidence and the foregoing considerations, this Court hereby renders judgment in favor of plaintiff and against the above-mentioned defendants, and orders the latter to pay jointly and severally to the plaintiff the following amounts: 1.) P1,000,000.00, as nominal damages; 2.) P50,000.00, as exemplary damages; 3.) P1,000.000.00, as moral damages; 4.) P50,000.00, as attorneys fees; and 5.) Costs of suit. SO ORDERED.14 Respondents motion for reconsideration15 of the trial courts decision having been denied by Resolution16 of March 2, 1993, they appealed to the Court of Appeals (CA). Citing Borjal et al. v. Court of Appeals et al.17 which held that: The doctrine of fair comment means that while in general every discreditable imputation publicly made is deemed false, because every man is presumed innocent until his guilt is judicially proved, and every false imputation is deemed malicious, nevertheless, when the discreditable imputation is directed against a public person in his public capacity, it is not necessarily actionable. In order that such discreditable imputation to a public official may be actionable, it must either be a false allegation of fact or a comment based on a false supposition. If the comment is an expression of opinion, based on established facts, then it is immaterial that the opinion happens to be mistaken, as long as it might be reasonably inferred from the facts.18 (Underscoring supplied), the CA found that herein petitioner "was not able to prove by a preponderance of evidence that [herein respondents] were motivated by a sinister intent to cause harm and injury to [herein petitioner] . . ." Accordingly, by Decision of July 31, 2001, the CA reversed and set aside the trial courts decision and dismissed petitioners complaint.19 Petitioners motion for reconsideration20 of the appellate courts decision was denied by Resolution of October 12, 2001,21 hence, the petition at bar. The petition revolves around the issue of whether the CA erred in holding that the publication of the news item was not attended with malice to thus free respondents of liability for damages. It bears noting that the complaint petitioner instituted is one for damages under Article 33 of the Civil Code which provides: Art. 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, shall require only a preponderance of evidence. Article 33 contemplates a civil action for the recovery of damages that is entirely unrelated to the purely criminal aspect of the case.22 A civil action for libel under this article shall be instituted and prosecuted to final judgment and proved by preponderance of evidence separately from and entirely independent of the institution, pendency or result of the criminal action because it is governed by the provisions of the New Civil Code and not by the Revised Penal Code governing the criminal offense charged and the civil liability arising therefrom.23 The pertinent provisions of the Civil Code, those found in the Chapter on Human Relations, namely Articles 19 and 21, provide: 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. Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. In actions for damages for libel, it is axiomatic that the published work alleged to contain libelous material must be examined and viewed as a whole.24 The article must be construed as an entirety including the headlines, as they may enlarge, explain, or restrict or be enlarged, explained or strengthened or restricted by the context. Whether or not it is libelous, depends upon the scope, spirit and motive of the publication taken in its entirety. x x x A publication claimed to be defamatory must be read and construed in the sense in which the readers to whom it is addressed would ordinarily understand it. So, the whole item, including display lines, should be read and construed together, and its meaning and signification thus determined.

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In order to ascertain the meaning of a published article, the whole of the article must be considered, each phrase must be construed in the light of the entire publication x x x The headlines of a newspaper must also be read in connection with the language which follows.25 Petitioner brands the news item as a "malicious sensationalization" of a patently embellished and salacious narration of fabricated facts involving rape and attempted rape incidents. For, so petitioner argues, the police blotter which was the sole basis for the news item plainly shows that there was only one count of abduction and rape reported by Emelita. The entry made by Patrolman Chio in the police blotter which respondent Morales scrutinized at the WPD headquarters recorded indeed Emelitas complaint about only a case for abduction with rape which occurred on March 14, 1987. In her above-quoted sworn statement, however, earlier given before the same Patrolman Chio in the presence of Morales who subsequently interviewed her, Emelita reported about an abduction with rape incident which occurred on March 14, 1987 and an abduction incident which occurred on April 13, 1987. Petitioners anchoring of his complaint for damages on a charge of "malicious" sensationalization of fabricated facts thus fails. The presentation of the news item subject of petitioners complaint may have been in a sensational manner, but it is not per se illegal.26 Respondents could of course have been more circumspect in their choice of words as the headline and first seven paragraphs of the news item give the impression that a certain director of the NIAS actually committed the crimes complained of by Emelita. The succeeding paragraphs (in which petitioner and complainant Emelita were eventually identified) sufficiently convey to the readers, however, that the narration of events was only an account of what Emelita had reported at the police headquarters. In determining the manner in which a given event should be presented as a news item and the importance to be attached thereto, newspapers must enjoy a certain degree of discretion. Every citizen of course has the right to enjoy a good name and reputation, but we do not consider that the respondents, under the circumstances of this case, had violated said right or abused the freedom of the press.The newspapers should be given such leeway and tolerance as to enable them to courageously and effectively perform their important role in our democracy. In the preparation of stories, press reporters and [editors] usually have to race with their deadlines; and consistently with good faith and reasonable care, they should not be held to account, to a point of suppression, for honest mistakes or imperfection in the choice of words.27 (Underscoring supplied) In fine, this Court finds that case against respondents has not been sufficiently established by preponderance of evidence. WHEREFORE, the petition is hereby DENIED. SO ORDERED.

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G.R. No. 135306

January 28, 2003

MVRS PUBLICATIONS, INC., MARS C. LACONSAY, MYLA C. AGUJA and AGUSTINO G. BINEGAS, JR.,petitioners, vs. ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES, INC., ABDULRAHMAN R.T. LINZAG, IBRAHIM F.P. ARCILLA, ABDUL RASHID DE GUZMAN, AL-FARED DA SILVA and IBRAHIM B.A. JUNIO, respondents. BELLOSILLO, J.: I may utterly detest what you write, but I shall fight to the death to make it possible for you to continue writing it. Voltaire VOLTAIRE'S PONTIFICAL VERSE bestirs once again the basic liberties to free speech and free press liberties that belong as well, if not more, to those who question, who do not conform, who differ. For the ultimate good which we all strive to achieve for ourselves and our posterity can better be reached by a free exchange of ideas, where the best test of truth is the power of the thought to get itself accepted in the competition of the free market not just the ideas we desire, but including those thoughts we despise.1 ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES, INC., a local federation of more than seventy (70) Muslim religious organizations, and individual Muslims ABDULRAHMAN R.T. LINZAG, IBRAHIM F.P. ARCILLA, ABDUL RASHID DE GUZMAN, AL-FARED DA SILVA and IBRAHIM B.A. JUNIO, filed in the Regional Trial Court of Manila a complaint for damages in their own behalf and as a class suit in behalf of the Muslim members nationwide against MVRS PUBLICATIONS, INC., MARS C. LACONSAY, MYLA C. AGUJA and AGUSTINO G. BINEGAS, JR., arising from an article published in the 1 August 1992 issue of Bulgar, a daily tabloid. The article reads: "ALAM BA NINYO? Na ang mga baboy at kahit anong uri ng hayop sa Mindanao ay hindi kinakain ng mga Muslim? Para sa kanila ang mga ito ay isang sagradong bagay. Hindi nila ito kailangang kainin kahit na sila pa ay magutom at mawalan ng ulam sa tuwing sila ay kakain. Ginagawa nila itong Diyos at sinasamba pa nila ito sa tuwing araw ng kanilang pangingilin lalung-lalo na sa araw na tinatawag nilang 'Ramadan'." The complaint alleged that the libelous statement was insulting and damaging to the Muslims; that these words alluding to the pig as the God of the Muslims was not only published out of sheer ignorance but with intent to hurt the feelings, cast insult and disparage the Muslims and Islam, as a religion in this country, in violation of law, public policy, good morals and human relations; that on account of these libelous words Bulgar insulted not only the Muslims in the Philippines but the entire Muslim world, especially every Muslim individual in nonMuslim 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

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On 30 June 1995 the trial court dismissed the complaint holding that the plaintiffs failed to establish their cause of action since the persons allegedly defamed by the article were not specifically identified It must be noted that the persons allegedly defamed, the herein plaintiffs, were not identified with specificity. The subject article was directed at the Muslims without mentioning or identifying the herein plaintiffs x x x. It is thus apparent that the alleged libelous article refers to the larger collectivity of Muslims for which the readers of the libel could not readily identify the personalities of the persons defamed. Hence, it is difficult for an individual Muslim member to prove that the defamatory remarks apply to him. The evidence presented in this case failed to convince this court that, indeed, the defamatory remarks really applied to the herein plaintiffs.3 On 27 August 1998 the Court of Appeals reversed the decision of the trial court. It opined that it was "clear from the disputed article that the defamation was directed to all adherents of the Islamic faith. It stated that pigs were sacred and idolized as god by members of the Muslim religion. This libelous imputation undeniably applied to the plaintiff-appellants who are Muslims sharing the same religious beliefs." It added that the suit for damages was a "class suit" and that ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES, INC.'s religious status as a Muslim umbrella organization gave it the requisite personality to sue and protect the interests of all Muslims.4 Hence, the instant petition for review assailing the findings of the appellate court (a) on the existence of the elements of libel, (b) the right of respondents to institute the class suit, and, (c) the liability of petitioners for moral damages, exemplary damages, attorney's fees and costs of suit. Defamation, which includes libel and slander, means the offense of injuring a person's character, fame or reputation through false and malicious statements.5 It is that which tends to injure reputation or to diminish the esteem, respect, good will or confidence in the plaintiff or to excite derogatory feelings or opinions about the plaintiff.6 It is the publication of anything which is injurious to the good name or reputation of another or tends to bring him into disrepute.7 Defamation is an invasion of a relational interest since it involves the opinion which others in the community may have, or tend to have, of the plaintiff.8 It must be stressed that words which are merely insulting are not actionable as libel or slander per se, and mere words of general abuse however opprobrious, ill-natured, or vexatious, whether written or spoken, do not constitute a basis for an action for defamation in the absence of an allegation for special damages.9 The fact that the language is offensive to the plaintiff does not make it actionable by itself.10 Declarations made about a large class of people cannot be interpreted to advert to an identified or identifiable individual. Absent circumstances specifically pointing or alluding to a particular member of a class, no member of such class has a right of action11 without at all impairing the equally demanding right of free speech and expression, as well as of the press, under the Bill of Rights.12 Thus, in Newsweek, Inc. v. Intermediate Appellate Court,13 we dismissed a complaint for libel against Newsweek, Inc., on the ground that private respondents failed to state a cause of action since they made no allegation in the complaint that anything contained in the article complained of specifically referred to any of them. Private respondents, incorporated associations of sugarcane planters in Negros Occidental claiming to have 8,500 members and several individual members, filed a class action suit for damages in behalf of all sugarcane planters in Negros Occidental. The complaint filed in the Court of First Instance of Bacolod City alleged that Newsweek, Inc., committed libel against them by the publication of the article "Island of Fear" in its weekly newsmagazine allegedly depicting Negros Province as a place dominated by wealthy landowners and sugar planters who not only exploited the impoverished and underpaid sugarcane workers but also brutalized and killed them with impunity. Private respondents alleged that the article showed a deliberate and malicious use of falsehood, slanted presentation and/or misrepresentation of facts intended to put the sugarcane planters in a bad light, expose them to public ridicule, discredit and humiliation in the Philippines and abroad, and make them the objects of hatred, contempt and hostility of their agricultural workers and of the public in general. We ratiocinated x x x where the defamation is alleged to have been directed at a group or class, it is essential that the statement must be so sweeping or all-embracing as to apply to every individual in that group or class, or sufficiently specific so that each individual in the class or group can prove that the defamatory statement specifically pointed to him, so that he can bring the action separately, if need be x x x x The case at bar is not a class suit. It is not a case where one or more may sue for the benefit of all, or where the representation of class interest affected by the judgment or decree is indispensable to make each member of the class an actual party. We have here a case where each of the plaintiffs has a separate and distinct reputation in the community. They do not have a common or general interest in the subject matter of the controversy. In the present case, there was no fairly identifiable person who was allegedly injured by the Bulgar article. Since the persons allegedly defamed could not be identifiable, private respondents have no individual causes of action; hence, they cannot sue for a class allegedly disparaged. Private respondents must have a cause of action in common with the class to which they belong to in order for the case to prosper. An individual Muslim has a reputation that is personal, separate and distinct in the community. Each Muslim, as part of the larger Muslim community in the Philippines of over five (5) million people, belongs to a different trade and profession; each has a varying interest and a divergent political and religious view some may be conservative, others liberal. A Muslim may find the article dishonorable, even blasphemous; others may find it as an opportunity to strengthen their faith and educate the non-believers and the "infidels." There is no injury

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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

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Defamation is made up of the twin torts of libel and slander the one being, in general, written, while the other in general is oral. In either form, defamation is an invasion of the interest in reputation and good name. This is a "relational interest" since it involves the opinion others in the community may have, or tend to have of the plaintiff. The law of defamation protects the interest in reputation the interest in acquiring, retaining and enjoying one's reputation as good as one's character and conduct warrant. The mere fact that the plaintiff's feelings and sensibilities have been offended is not enough to create a cause of action for defamation. Defamation requires that something be communicated to a third person that may affect the opinion others may have of the plaintiff. The unprivileged communication must be shown of a statement that would tend to hurt plaintiff's reputation, to impair plaintiff's standing in the community. Although the gist of an action for defamation is an injury to reputation, the focus of a defamation action is upon the allegedly defamatory statement itself and its predictable effect upon third persons. A statement is ordinarily considered defamatory if it "tend[s] to expose one to public hatred, shame, obloquy, contumely, odium, contempt, ridicule, aversion, ostracism, degradation or disgracex x x." The Restatement of Torts defines a defamatory statement as one that "tends to so harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him." Consequently as a prerequisite to recovery, it is necessary for the plaintiff to prove as part of his prima faciecase that the defendant (1) published a statement that was (2) defamatory (3) of and concerning the plaintiff. The rule in libel is that the action must be brought by the person against whom the defamatory charge has been made. In the American jurisdiction, no action lies by a third person for damages suffered by reason of defamation of another person, even though the plaintiff suffers some injury therefrom. For recovery in defamation cases, it is necessary that the publication be "of and concerning the plaintiff." Even when a publication may be clearly defamatory as to somebody, if the words have no personal application to the plaintiff, they are not actionable by him. If no one is identified, there can be no libel because no one's reputation has been injured x x x x In fine, in order for one to maintain an action for an alleged defamatory statement, it must appear that the plaintiff is the person with reference to whom the statement was made. This principle is of vital importance in cases where a group or class is defamed since, usually, the larger the collective, the more difficult it is for an individual member to show that he was the person at whom the defamation was directed. If the defamatory statements were directed at a small, restricted group of persons, they applied to any member of the group, and an individual member could maintain an action for defamation. When the defamatory language was used toward a small group or class, including every member, it has been held that the defamatory language referred to each member so that each could maintain an action. This small group or class may be a jury, persons engaged in certain businesses, professions or employments, a restricted subdivision of a particular class, a society, a football team, a family, small groups of union officials, a board of public officers, or engineers of a particular company. In contrast, if defamatory words are used broadly in respect to a large class or group of persons, and there is nothing that points, or by proper colloquium or innuendo can be made to apply, to a particular member of the class or group, no member has a right of action for libel or slander. Where the defamatory matter had no special, personal application and was so general that no individual damages could be presumed, and where the class referred to was so numerous that great vexation and oppression might grow out of the multiplicity of suits, no private action could be maintained. This rule has been applied to defamatory publications concerning groups or classes of persons engaged in a particular business, profession or employment, directed at associations or groups of association officials, and to those directed at miscellaneous groups or classes of persons. Distinguishing a small group which if defamed entitles all its members to sue from a large group which if defamed entitles no one to sue is not always so simple. Some authorities have noted that in cases permitting recovery, the group generally has twenty five (25) or fewer members. However, there is usually no articulated limit on size. Suits have been permitted by members of fairly large groups when some distinguishing characteristic of the individual or group increases the likelihood that the statement could be interpreted to apply individually. For example, a single player on the 60 to 70 man Oklahoma University football team was permitted to sue when a writer accused the entire team of taking amphetamines to "hop up" its performance; the individual was a fullback, i.e., a significant position on the team and had played in all but two of the team's games. A prime consideration, therefore, is the public perception of the size of the group and whether a statement will be interpreted to refer to every member. The more organized and cohesive a group, the easier it is to tar all its members with the same brush and the more likely a court will permit a suit from an individual even if the group includes more than twenty five (25) members. At some point, however, increasing size may be seen to dilute the harm to individuals and any resulting injury will fall beneath the threshold for a viable lawsuit.

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x x x x There are many other groupings of men than those that are contained within the foregoing group classifications. There are all the religions of the world, there are all the political and ideological beliefs; there are the many colors of the human race. Group defamation has been a fertile and dangerous weapon of attack on various racial, religious and political minorities. Some states, therefore, have passed statutes to prevent concerted efforts to harass minority groups in the United States by making it a crime to circulate insidious rumors against racial and religious groups. Thus far, any civil remedy for such broadside defamation has been lacking. There have been numerous attempts by individual members to seek redress in the courts for libel on these groups, but very few have succeeded because it felt that the groups are too large and poorly defined to support a finding that the plaintiff was singled out for personal attack x x x x (citations omitted). Our conclusion therefore is that the statements published by petitioners in the instant case did not specifically identify nor refer to any particular individuals who were purportedly the subject of the alleged libelous publication. Respondents can scarcely claim to having been singled out for social censure pointedly resulting in damages. A contrary view is expressed that what is involved in the present case is an intentional tortious act causing mental distress and not an action for libel. That opinion invokes Chaplinsky v. New Hampshire22 where the U.S. Supreme Court held that words heaping extreme profanity, intended merely to incite hostility, hatred or violence, have no social value and do not enjoy constitutional protection; and Beauharnais v. Illinois23 where it was also ruled that hate speech which denigrates a group of persons identified by their religion, race or ethnic origin defames that group and the law may validly prohibit such speech on the same ground as defamation of an individual. We do not agree to the contrary view articulated in the immediately preceding paragraph. Primarily, an "emotional distress" tort action is personal in nature, i.e., it is a civil action filed by an individual24 to assuage the injuries to his emotional tranquility due to personal attacks on his character. It has no application in the instant case since no particular individual was identified in the disputed article of Bulgar. Also, the purported damage caused by the article, assuming there was any, falls under the principle of relational harm which includes harm to social relationships in the community in the form of defamation; as distinguished from the principle of reactive harm which includes injuries to individual emotional tranquility in the form of an infliction of emotional distress. In their complaint, respondents clearly asserted an alleged harm to the standing of Muslims in the community, especially to their activities in propagating their faith in Metro Manila and in other non-Muslim communities in the country.25 It is thus beyond cavil that the present case falls within the application of the relational harm principle of tort actions for defamation, rather than the reactive harm principle on which the concept of emotional distress properly belongs. Moreover, under the Second Restatement of the Law, to recover for the intentional infliction of emotional distress the plaintiff must show that: (a) The conduct of the defendant was intentional or in reckless disregard of the plaintiff; (b) The conduct was extreme and outrageous; (c) There was a causal connection between the defendant's conduct and the plaintiff's mental distress; and, (d) The plaintiff's mental distress was extreme and severe.26 "Extreme and outrageous conduct" means conduct that is so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in civilized society. The defendant's actions must have been so terrifying as naturally to humiliate, embarrass or frighten the plaintiff.27 Generally, conduct will be found to be actionable where the recitation of the facts to an average member of the community would arouse his resentment against the actor, and lead him or her to exclaim, "Outrageous!" as his or her reaction.28 "Emotional distress" means any highly unpleasant mental reaction such as extreme grief, shame, humiliation, embarrassment, anger, disappointment, worry, nausea, mental suffering and anguish, shock, fright, horror, and chagrin.29 "Severe emotional distress," in some jurisdictions, refers to any type of severe and disabling emotional or mental condition which may be generally recognized and diagnosed by professionals trained to do so, including posttraumatic stress disorder, neurosis, psychosis, chronic depression, or phobia.30 The plaintiff is required to show, among other things, that he or she has suffered emotional distress so severe that no reasonable person could be expected to endure it; severity of the distress is an element of the cause of action, not simply a matter of damages.31 Any party seeking recovery for mental anguish must prove more than mere worry, anxiety, vexation, embarrassment, or anger. Liability does not arise from mere insults, indignities, threats, annoyances, petty expressions, or other trivialities. In determining whether the tort of outrage had been committed, a plaintiff is necessarily expected and required to be hardened to a certain amount of criticism, rough language, and to occasional acts and words that are definitely inconsiderate and unkind; the mere fact that the actor knows that the other will regard the conduct as insulting, or will have his feelings hurt, is not enough.32 Hustler Magazine v. Falwell33 illustrates the test case of a civil action for damages on intentional infliction of emotional distress. A parody appeared in Hustler magazine featuring the American fundamentalist preacher and evangelist Reverend Jerry Falwell depicting him in an inebriated state having an incestuous, sexual liaison with his mother in an outhouse. Falwell sued Hustler and its publisher Larry Flynt for damages. The United

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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 anindividual particularly singled out or identified in the parody appearing on Hustler magazine. Also, the emotional distress allegedly suffered by Reverend Falwell involved a reactive interest an emotional response to the parody which supposedly injured his psychological well-being. Verily, our position is clear that the conduct of petitioners was not extreme or outrageous. Neither was the emotional distress allegedly suffered by respondents so severe that no reasonable person could be expected to endure it. There is no evidence on record that points to that result. Professor William Prosser, views tort actions on intentional infliction of emotional distress in this manner34 There is virtually unanimous agreement that such ordinary defendants are not liable for mere insult, indignity, annoyance, or even threats, where the case is lacking in other circumstances of aggravation. The reasons are not far to seek. Our manners, and with them our law, have not yet progressed to the point where we are able to afford a remedy in the form of tort damages for all intended mental disturbance. Liability of course cannot be extended to every trivial indignity x x x x The plaintiff must necessarily be expected and required to be hardened to a certain amount of rough language, and to acts that are definitely inconsiderate and unkind x x x The plaintiff cannot recover merely because of hurt feelings. Professor Calvert Magruder reinforces Prosser with this succinct observation, viz:35 There is no occasion for the law to intervene in every case where someone's feelings are hurt. There must still be freedom to express an unflattering opinion, and some safety valve must be left through which irascible tempers may blow off relatively harmless steam. Thus, it is evident that even American courts are reluctant to adopt a rule of recovery for emotional harm that would "open up a wide vista of litigation in the field of bad manners," an area in which a "toughening of the mental hide" was thought to be a more appropriate remedy.36 Perhaps of greater concern were the questions of causation, proof, and the ability to accurately assess damages for emotional harm, each of which continues to concern courts today.37 In this connection, the doctrines in Chaplinsky and Beauharnais had largely been superseded by subsequent First Amendment doctrines. Back in simpler times in the history of free expression the Supreme Court appeared to espouse a theory, known as the Two-Class Theory, that treated certain types of expression as taboo forms of speech, beneath the dignity of the First Amendment. The most celebrated statement of this view was expressed inChaplinsky: There are certain well-defined and narrowly limited classes of speech, the prevention and punishment of which have never been thought to raise any Constitutional problem. These include the lewd and obscene, the profane, the libelous, and the insulting or "fighting" words those which by their very utterance inflict injury or tend to incite an immediate breach of the peace. It has been well observed that such utterances are no essential part of any exposition of ideas, and are of such slight social value as a step to truth that any benefit that may be derived from them is clearly outweighed by the social interest in order and morality. Today, however, the theory is no longer viable; modern First Amendment principles have passed it by. American courts no longer accept the view that speech may be proscribed merely because it is "lewd," "profane," "insulting" or otherwise vulgar or offensive.38 Cohen v. California39 is illustrative: Paul Robert Cohen wore a jacket bearing the words "Fuck the Draft" in a Los Angeles courthouse in April 1968, which caused his eventual arrest. Cohen was convicted for violating a California statute prohibiting any person from "disturb[ing] the peace x x x by offensive conduct." The U.S. Supreme Court conceded that Cohen's expletive contained in his jacket was "vulgar," but it concluded that his speech was nonetheless protected by the right to free speech. It was neither considered an "incitement" to illegal action nor "obscenity." It did not constitute insulting or "fighting" words for it had not been directed at a person who was likely to retaliate or at someone who could not avoid the message. In other words, no one was present in the Los Angeles courthouse who would have regarded Cohen's speech as a direct personal insult, nor was there any danger of reactive violence against him. No specific individual was targeted in the allegedly defamatory words printed on Cohen's jacket. The conviction could only be justified by California's desire to exercise the broad power in preserving the cleanliness of

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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, whenBeauharnais 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 "Brandenburgmust be understood as overruling Beauharnais and eliminating the possibility of treating group libel under the same First Amendment standards as individual libel."46 It may well be considered as one of the lynchpins of the modern doctrine of free speech, which seeks to give special protection to politically relevant speech. In any case, respondents' lack of cause of action cannot be cured by the filing of a class suit. As correctly pointed out by Mr. Justice Jose C. Vitug during the deliberations, "an element of a class suit is the adequacy of representation. In determining the question of fair and adequate representation of members of a class, the court must consider (a) whether the interest of the named party is coextensive with the interest of the other members of the class; (b) the proportion of those made parties as it so bears to the total membership of the class; and, (c) any other factor bearing on the ability of the named party to speak for the rest of the class.47 The rules require that courts must make sure that the persons intervening should be sufficiently numerous to fully protect the interests of all concerned. In the present controversy, Islamic Da'wah Council of the Philippines, Inc., seeks in effect to assert the interests not only of the Muslims in the Philippines but of the whole Muslim world as well. Private respondents obviously lack the sufficiency of numbers to represent such a global group; neither have they been able to demonstrate the identity of their interests with those they seek to represent. Unless it can be shown that there can be a safe guaranty that those absent will be adequately represented by those present, a class suit, given its magnitude in this instance, would be unavailing."48 Likewise on the matter of damages, we agree that "moral damages may be recovered only if the plaintiff is able to satisfactorily prove the existence of the factual basis for the damages and its causal connection with the acts complained of,49 and so it must be, as moral damages although incapable of pecuniary estimation are designed not to impose a penalty but to compensate for injury sustained and actual damages suffered.50 Exemplary damages, on the other hand, may only be awarded if claimant is able to establish his right to moral, temperate, liquidated or compensatory damages.51 Unfortunately, neither of the requirements to sustain an award for either of these damages would appear to have been adequately established by respondents." In a pluralistic society like the Philippines where misinformation about another individual's religion is as commonplace as self-appointed critics of government, it would be more appropriate to respect the fair criticism of religious principles, including those which may be outrageously appalling, immensely erroneous, or those couched as fairly informative comments. The greater danger in our society is the possibility that it may encourage the frequency of suits among religious fundamentalists, whether Christian, Muslim, Hindu, Buddhist, Jewish, or others. This would unnecessarily make the civil courts a battleground to assert their spiritual ideas, and advance their respective religious agenda. It need not be stressed that this Court has no power to determine which is proper religious conduct or belief; neither does it have the authority to rule on the merits of one religion over another, nor declare which belief to

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uphold or cast asunder, for the validity of religious beliefs or values are outside the sphere of the judiciary. Such matters are better left for the religious authorities to address what is rightfully within their doctrine and realm of influence. Courts must be viewpoint-neutral when it comes to religious matters if only to affirm the neutrality principle of free speech rights under modern jurisprudence where "[a]ll ideas are treated equal in the eyes of the First Amendment even those ideas that are universally condemned and run counter to constitutional principles."52 Under the right to free speech, "there is no such thing as a false idea. However pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries but on the competition of other ideas."53 Denying certiorari and affirming the appellate court decision would surely create a chilling effect on the constitutional guarantees of freedom of speech, of expression, and of the press. WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated 27 August 1998 is REVERSED and SET ASIDE, and the Decision of the RTC-Br. 4, Manila, dismissing the complaint for lack of merit, is REINSTATED and AFFIRMED. No pronouncement as to costs. SO ORDERED. Davide, Jr., C .J ., Puno, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Corona and Callejo, Sr., JJ ., concur. Mendoza, J ., in the result. Vitug, J ., see concurring opinion. Panganiban, J ., joins the dissenting opinion of Justice A.T. Carpio. Carpio, J ., see dissenting opinion. Austria-Martinez, J ., see dissenting opinion. Carpio-Morales, J ., joins the dissenting opinion of Justice A.T. Carpio. Azcuna, J ., joins the dissenting opinion of Justice Austria-Martinez.

Separate Opinions VITUG, J ., concurring: The innate right of a person to an unimpaired reputation and good name is no less a constitutional imperative than that which protects his life, liberty or property. Thus, the law imposes upon him who attacks another's reputation, by slanderous words or libelous publication, a liability to make compensation for the injury done and the damages sustained.1 Private respondent Islamic Da'wah Council of the Philippines, Inc., a federation of more than 70 Muslim religious organizations in the country, and the other named respondents all claim, with understandable indignation, that they have been defamed by an item published by petitioners in Bulgar, a tabloid, circulated in the Metro Manila area. The article reads: "ALAM BA NINYO? "Na ang mga baboy at kahit anong uri ng hayop sa Mindanao ay hindi kinakain ng mga Muslim? "Para sa kanila ang mga ito ay isang sagradong bagay. Hindi nila ito kailangang kainin kahit na sila pa ay magutom at mawalan ng ulam sa tuwing sila ay kakain. Ginagawa nila itong Diyos at sinasamba pa nila ito sa tuwing araw ng kanilang pangingilin lalung-lalo na sa araw na tinatawag nilang 'Ramadan'." Private respondents, for themselves and in behalf of all Muslims, filed the complaint before the trial court against petitioners, alleging that the published article was defamatory and an insult to respondents. The trial court dismissed the complaint. On appeal, the Court of Appeals reversed the decision of the lower court and ordered petitioners to pay damages to private respondents. Aggrieved, petitioners are now before the Court to assail the findings of the Court of Appeals on the existence of the elements of libel, the right of respondents to institute the class suit, and the liability of petitioners for moral damages, exemplary damages, attorney's fees and costs of suit. The present controversy stems from a civil action for damages and not from a criminal complaint. The Civil Code recognizes the possibility of such a civil action either pursuant to Article 26, paragraph (4), to the effect that although it may not constitute a criminal offense, "vexing or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect, or other personal condition," can give rise to a cause of action for damages, or consonantly with Article 33 which provides that in case of defamation, a civil complaint for damages, entirely separate and distinct from the criminal case, may be brought by the injured party. Both civil actions are based on tort liability under common law and require the plaintiff to establish that he has suffered personal damage or injury as a direct consequence of the defendant's wrongful conduct. In fine, it must be shown that the act complained of is vexatious or defamatory of, and as it pertains to, the claimant, thereby humiliating or besmirching the latter's dignity and honor.

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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 threats7which are considered to amount to nothing more than mere annoyances or hurt feelings.8 At all events, it would be essential to prove that personal damage is directly suffered by the plaintiff on account of the wrongful act of the defendant. A kindred concept, albeit of greater degree of perversity, defamation, broadly defined, is an attack on the reputation of another, the unprivileged publication of false statements which naturally and proximately result in injury to another.9 It is that which tends to diminish the esteem, respect, goodwill or confidence in which a person is held, or to excite adverse, derogatory or unpleasant feelings or opinions against him.10 Defamation is an invasion of a "relational interest" since it involves the opinion which others in the community may have, or tend to have, of the plaintiff.11 The Revised Penal Code, although not the primary governing law in this instance, provides an instructive definition of libel as being a form of defamation expressed in writing, print, pictures, or signs,12 to wit: "A libel is a public and malicious imputation of a crime, or vice or defect, real or imaginary, or any act, omission, condition, status, or circumstance tending to cause the dishonor, discredit, or contempt of a natural or juridical person, or to blacken the memory of one who is dead."13 While arguably, the article subject of the complaint could be characterized as vexatious or defamatory and as imparting an erroneous interpretation of a Muslim practice that tends to ridicule the Islamic faith, it is, however, impersonal on its face, its language not being directed at any particular person but to a large segment of society. In order that defamatory words can be actionable in court, it is essential that they are personal to the party maligned, an ascertained or ascertainable individual.14 It is only then that plaintiff's emotions and/or reputation can be said to have been injured; thus, the plaintiff, to recover, must show that he or she is the person to whom the statements are directed.15 Declarations made about a large class of people cannot be interpreted to advert to an identified or identifiable individual. Absent circumstances specifically pointing or alluding to a particular member of a class, no member of such class has a right of action16 without at all impairing the equally demanding right of free speech and expression, as well as of the press, under the bill of rights.17 If an article, for instance, states that "judges in the Philippines are corrupt," such a general condemnation cannot reasonably be interpreted to be pointing to each judge or to a certain judge in the Philippines. Thus, no particular magistrate can claim to have been disgraced or to have sustained an impaired reputation because of that article. If, on the other hand, the article proclaims that "judges in Metro Manila are corrupt," such statement of derogatory conduct now refers to a relatively narrow group that might yet warrant its looking into in an appropriate suit. And if the article accuses the "Justices of the Supreme Court" of corruption, then there is a specific derogatory statement about a definite number of no more than fifteen persons. Jurisprudence would appear to suggest that in cases permitting recovery, the group generally has 25 or fewer members.18 When statements concern groups with larger composition, the individual members of that group would be hardput to show that the statements are "of and concerning them."19 Although no precise limits can be set as to the size of a group or class that would be sufficiently small, increasing size, at some point, would be seen to dilute the harm to individuals and any resulting injury would fall beneath the threshold for a viable lawsuit.20 This principle is said to embrace two important public policies: 1) where the group referred to is large, the courts presume that no reasonable reader would take the statements as so literally applying to each individual member; and 2) the limitation on liability would satisfactorily safeguard freedom of speech and expression, as well as of press, effecting a sound compromise between the conflicting fundamental interests involved in libel cases.21 Thus, no recovery was allowed where the remarks complained of had been made about correspondence schools, one school suing;22 or where there was imputation of criminality to a union, one member suing;23 or where an attack was made on Catholic clergymen, one clergyman suing.24 In Newsweek, Inc., vs. Intermediate Appellate Court,25 this Court dismissed a class suit for scurrilous remarks filed by four incorporated associations of sugar planters in Negros Occidental in behalf of all sugar planters in that province, against Newsweek, Inc., on the ground, among other things, that the plaintiffs were not sufficiently ascribed to in the article published by the defendant. And so also it was in an older case,26 where the Court ratiocinated that an article directed at a class or group of persons in broad language would not be actionable by individuals composing the class or group unless the statements were sweeping but, even then, it would be highly probable, said the Court, that no action could lie "where the body is composed of so large a number of persons that common sense would tell those to whom the publication was made that there was room for persons connected with the body to pursue an upright and law abiding course and that it would be unreasonable and absurd to condemn all because of the actions of a part." In the present case, the subject article relates to the entire Muslim population and not just to the Islamic Da'wah Council of the Philippines or to any of the individual respondents. There is no direct reference or allusion to the federation or any of its members, or to any of the individual complainants. Respondents scarcely

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can claim having been singled out for social censure pointedly resulting in damages. Islamic Da'wah Council of the Philippines, Inc., itself, much like any other artificial being or juridical entity, having existence only in legal contemplation, would be devoid of any such real feeling or emotion as ordinarily these terms are understood,27 and it cannot have that kind of reputation that an individual has that could allow it to sue for damages based on impinged personal reputation.28 WHEREFORE, I vote to GRANT the petition and to SET ASIDE the assailed decision of the Court of Appeals, REINSTATING thereby the order of dismissal rendered by the Regional Trial Court.

Dissenting Opinion CARPIO, J ., dissenting: I dissent not because the newspaper article in question is libelous, but because it constitutes an intentional tortious act causing mental distress to those whom private respondent Islamic Da'wah Council of the Philippines; Inc. represents. 1. Nature of Action: Not a Libel but a Tort Case Private respondents filed this class suit under Articles 19, 20, 21 and 26 of the Civil Code. Accordingly, private respondents stated their case as follows: "Statement of Case The Civil Code of the Philippines provides: 'Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due and observe honesty and good faith.' [Art. 19] 'Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.' [Art. 20] 'Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.' [Art. 21] 'Every person shall respect the dignity, personality, privacy and peace of mind of his neighbor and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief: (1) Prying into the privacy of another's residence; (2) Meddling with or disturbing the private life or family relation of another; (3) Intriguing to cause another to be alienated from his friends; (4) Vexing or humiliating another on account of his religious belief, lowly station in life, place of birth, physical defect, or other personal condition.' [Art. 26] It is on account of the foregoing provisions of our Civil Code that plaintiffs brought to the court 'a quo' a civil case for damages on account of a published article at the editorial section of the defendant newspaper x x x."1 Petitioners acknowledge that private respondents' principal cause of action is based on tortious conduct when petitioners state in their Petition that "[p]laintiffs rely heavily on Article 26 of the Civil Code particularly par. 4 thereof." Petitioners, however, assert that the newspaper article in question has not caused mental anguish, wounded feelings, moral shock, social humiliation or similar injury to private respondents.2 Clearly, the instant case is not about libel which requires the identification of the plaintiff in the libelous statement. If this were a libel case under Article 303 of the Civil Code, which authorizes a separate civil action to recover civil liability arising from a criminal offense, I would agree that the instant case could not prosper for want of identification of the private respondents as the libeled persons. But private respondents do not anchor their action on Article 30 of the Civil Code. Private respondents insist that this case is principally about tortious conduct under Article 26 of the Civil Code. Unlike the action in Article 30 of the Civil Code which must arise from a "criminal offense," the action under Article 26 "may not constitute a criminal offense." Article 26, adopted from American jurisprudence, covers

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several kinds of intentional torts. Paragraph 4 of Article 26, which refers to acts humiliating another for his religious beliefs, is embraced in the tort known as intentional infliction of mental or emotional distress. This case must be decided on the issue of whether there was such tortious conduct, and not whether there was defamation that satisfied the elements of the crime of libel. II. The Tortious Act in Question The newspaper article in question published by petitioners states as follows: "ALAM BA NINYO? Na ang mga baboy at kahit anong uri ng hayop sa Mindanao ay hindi kinakain ng mga Muslim? Para sa kanila ang mga ito ay isang sagradong bagay. Hindi nila ito kailangang kainin kahit na sila pa ay magutom at mawalan ng ulam sa tuwing sila kakain. Ginagawa nila itong Diyos at sinasamba pa nila ito sa tuwing araw ng kanilang pangingilin lalung-lalo na sa araw na tinatawag nilang 'Ramadan'." Private respondents claim that the newspaper article, which asserts that Muslims worship the pig as their god, was published with intent to humiliate and disparage Muslims and cast insult on Islam as a religion in this country. The publication is not only grossly false, but is also the complete opposite of what Muslims hold dear in their religion. The trial court found that the newspaper article clearly imputes a disgraceful act on Muslims. However, the trial court ruled that the article was not libelous because the article did not identify or name the plaintiffs. Declared the trial court: "There is no doubt that the subject article contains an imputation of a discreditable4 act when it portrayed the Muslims to be worshipping the pig as their god. Likewise, there is no doubt that the subject article was published, the newspaper 'Bulgar' containing the same having been circulated in Metro Manila and in other parts of the country. The defendants did not dispute these facts x x x However, x x x identity of the person is not present. It must be noted that the persons allegedly defamed, the herein plaintiffs were not identified with specificity. The subject article was directed at the Muslims without mentioning or identifying the herein plaintiffs. x x x x." In their appeal to the Court of Appeals, private respondents assailed the trial court for "deciding the case as a libel case rather than a case for damages for violation of Articles 19, 20, 21 and 26 of the Civil Code." The Court of Appeals reversed the decision of the trial court not on the basis of Articles 19, 20, 21 and 26, but on the ground that the newspaper article was libelous. Thus, the Court of Appeals held: "It is clear from the disputed article that the defamation was directed at all adherents of the Islamic faith. It stated that pigs were sacred and idolized as god by members of the Muslim religion. This libelous imputation undeniably applied to the plaintiffs-appellants who are Muslims sharing the same religious beliefs." Thus, both the trial and appellate courts found the newspaper article in question insulting and humiliating to Muslims, causing wounded feelings and mental anguish to believers of Islam. This is a finding of fact that the Court is duty bound to respect.5 This finding of fact establishes that petitioners have inflicted on private respondents an intentional wrongful act humiliating persons because of their religious beliefs. Like the trial and appellate courts, we find the newspaper article in question dripping with extreme profanity, grossly offensive and manifestly outrageous, and devoid of any social value. The article evidently incites religious hatred, discrimination and hostility against Muslims. Private respondents have certainly suffered humiliation and mental distress because of their religious beliefs. The only question is whether the wrongful act committed by petitioners, which does not constitute the crime of libel, is a case of damnum absque injuria or an actionable tort under paragraph 4, Article 26 of the Civil Code. III. Why Article 26 of the Civil Code was Enacted The Code Commission explained the inclusion of Article 26 in the Civil Code in this wise: "The present laws, criminal or civil, do not adequately cope with interferences and vexations mentioned in Article 26. The privacy of one's home is an inviolable right. Yet the laws in force do not squarely and effectively protect this right. The acts referred to in No. 2 are multifarious, and yet many of them are not within the purview of the law in force. Alienation of the affection of another's wife or husband, unless it constituted adultery or

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concubinage, is not condemned by the law, much as it may shock society. There are numerous acts, short of criminal unfaithfulness, whereby the husband or the wife breaks the marital vows, thus causing untold moral suffering to the other spouse. Why should not these acts be the subject matter of a civil action for damages? In American law, they are. Again, there is meddling of so-called friends who poison the mind of one or more members of the family against the other members. In this manner many a happy family is broken up or estranged. Why should not the law try to stop this by creating a civil action for damages? Of the same nature is that class of acts specified in No. 3: intriguing to cause another to be alienated from his friends. No less serious are the acts mentioned in No. 4: vexing, or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect or other personal condition. The penal laws against defamation and unjust vexation are glaringly inadequate. Religious freedom does not authorize anyone to heap obloquy and disrepute upon another by reason of the latter's religion. Not a few of the rich people treat the poor with contempt because of the latter's lowly station in life. To a certain extent this is inevitable, from the nature of the social make-up, but there ought to be a limit somewhere, even when the penal laws against defamation and unjust vexation are not transgressed. In a democracy, such a limit must be established. The courts will recognize it in each case. Social equality is not sought by the legal provision under consideration, but due regard for decency and propriety. Place of birth, of physical defect and other personal conditions are too often the pretext of humiliation cast upon other persons. Such tampering with human personality, even though the penal laws are not violated, should be the cause of civil action. The article under study denounces "similar acts" which could readily be named, for they occur with unpleasant frequency."6 (Emphasis supplied) The intent of the Code Commission is quite clear: Article 26 specifically applies to intentional acts which fall short of being criminal offenses. Article 24 itself expressly refers to tortious conduct which "may not constitute criminal offenses." The purpose is precisely to fill a gap or lacuna in the law where a person who suffers injury because of a wrongful act not constituting a crime is left without any redress. Under Article 26, the person responsible for such act becomes liable for "damages, prevention and other relief." In short, to preserve peace and harmony in the family and in the community, Article 26 seeks to eliminate cases of damnum absque injuria in human relations. Consequently, the elements that qualify the same acts as criminal offenses do not apply in determining responsibility for tortious conduct under Article 26. Where the tortious act humiliating another because of his religious beliefs is published in a newspaper, the elements of the crime of libel need not be satisfied before the aggrieved person can recover damages under Article 26. In intentional tort under Article 26, the offensive statements may not even be published or broadcasted but merely hurled privately at the offended party. In intentional infliction of mental distress, the gravamen of the tort is not the injury to plaintiff's reputation, but the harm to plaintiff's mental and emotional state. In libel, the gist of the action is the injury to plaintiff's reputation. Reputation is the community's opinion of what a person is.7 In intentional infliction of mental distress, the opinion of the community is immaterial to the existence of the action although the court can consider it in awarding damages. What is material is the disturbance on the-mental or emotional state of the plaintiff who is entitled to peace of mind. The offensive act or statement need not identify specifically the plaintiff as the object of the humiliation. What is important is that the plaintiff actually suffers mental or emotional distress because he saw the act or read the statement and it alludes to an identifiable group to which he clearly belongs. If one of the petitioners, without specifically naming private respondents, hurled the same statement in private separately to each of the private respondents, the act would be actionable under Article 26 because it would cause mental distress to each private respondent. The fact that the statement was made publicly in fact makes matters worse because the mental or emotional distress caused on private respondents would even be aggravated by the publicity. This merely illustrates that the requirements of libel have no application in intentional torts under Article 26 where the impression of the public is immaterial while the impact on the mind or emotion of the offended party is all-important. That is why in American jurisprudence the tort of intentional infliction of mental or emotional distress is completely separate and distinct8 from the twin torts of libel and slander.9 The majority opinion, however, cites the U.S. Supreme Court decision in Hustler Magazine v. Falwell10 as authority that a person "may not recover for intentional infliction of emotional distress arising from a publication unless the publication contained a false statement of fact that was made with actual malice, that is, with a knowledge of falsity or reckless disregard for the truth." The majority opinion's reliance on Hustler is misplaced. The doctrine in Hustlerapplies only to public figures, and the U.S. Supreme Court found that

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"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 Rights13 to which the Philippines is a signatory. This is clear from the following exchange in the deliberations of the Constitutional Commission: "MR. GARCIA: But it does not mean that we will refer to each and every specific article therein, but only to those that pertain to the civil and politically related, as we understand it in this Commission on Human Rights. MR. GUINGONA: Madam President, I am not clear as to the distinction between social and civil rights. MR. GARCIA: There are two international covenants: the International Covenant (on) Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights. The second covenant contains all the different rights the rights of labor to organize, the right to education, housing, shelter, etcetera. MR. GUINGONA: So we are just limiting at the moment the sense of the committee to those the Gentleman has specified. MR. GARCIA: Yes, to civil and political rights. MR. GUINGONA: Thank you."14 (Emphasis supplied) Article 20 (2) of the International Covenant on Civil and Political Rights provides that "[a]ny advocacy of x x xreligious hatred that constitutes incitement to discrimination, hostility or violence shall be prohibited by law." The Human Rights Committee created under the Covenant, in its 1983 Nineteenth Session, reported to member states that: "1. x x x In view of the nature of article 20, States parties are obliged to adopt the necessary legislative measures prohibiting the actions referred to therein. However, the reports have shown that in some States such actions are neither prohibited by law nor are appropriate efforts intended or made to prohibit them. Further, many reports failed to give sufficient information concerning the relevant national legislation and practice. 2. x x x For article 20 to become fully effective there ought to be a law making it clear that propaganda and advocacy as described therein are contrary to public policy and providing for an appropriate sanction in case of violation. x x x ."15 The Covenant, being an international treaty to which the Philippines is a signatory, is part of the country's municipal law.16 The Covenant carries great weight in the interpretation of the scope and meaning of the term "human rights" as used in the Constitution. Unquestionably, the framers of the Constitution intentionally referred to the civil and political rights embraced in the Covenant in describing the term "human rights." The Constitution even mandates the independent Commission on Human Rights to monitor the compliance of the Philippine Government, which includes the judiciary, with its treaty obligations under the Covenant. Paragraph 4, Article 26 of the Civil Code makes civilly liable any person who humiliates another because of his religious beliefs. This is just a soft prohibition of advocacy of religious hatred that incites discrimination, hostility or violence, the act the Covenant seeks to curb and which the Philippine Government has undertaken to declare unlawful. Other countries that signed the Covenant have criminalized the acts prohibited under the Covenant. Since our ratification of the Covenant in 1986, the Philippines has not enacted any special legislation to enforce the provisions of the Covenant, on the ground that existing laws are adequate to meet the requirements of the Covenant. There is no other law, except paragraph 4, Article 26 of the Civil Code, that can

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provide a sanction against intentional conduct, falling short of a criminal act, advocating religious hatred that incites hostility between Muslims and Christians in this country. If we are to comply in good faith with our treaty obligations under the Covenant, as the Constitution expressly mandates the Philippine Government, we must give redress under Article 26 to the outrageous profanity suffered by private respondents. Our Constitution adopts the generally accepted principles of international law as part of the law of the land. Pacta sunt servanda every treaty in force binds the parties who must comply with the treaty in good faith17 is one such principle. Thus, if we refuse to apply Article 26 to the instant case, then we admit that we have no law to enforce the Covenant. In effect, we admit non-compliance with the Covenant. The Supreme Court of Canada, in interpreting Canada's obligation under the Covenant, explained in R. v. Keegstra:18 "C.E.R.D. (Convention on the Elimination of All Forms of Racial Discrimination) and I.C.C.P.R. (International Covenant on Civil and Political Rights) demonstrate that the prohibition of hate promoting expression is considered to be not only compatible with a signatory nation's guarantee of human rights, but is as well an obligatory aspect of this guarantee. Decisions under the European Convention for the Protection of Human Rights and Fundamental Freedoms are also of aid in illustrating the tenor of the international community's approach to hate propaganda and free expression. This is not to deny that finding the correct balance between prohibiting hate propaganda and ensuring freedom of expression has been a source of debate internationally (see, e.g., Nathan Lerner, The U.N. Convention on the Elimination of All Forms of Racial Discrimination (1980), at pp. 43-54). But despite debate Canada, along with other members of the international community, has indicated a commitment to prohibiting hate propaganda, and in my opinion this court must have regard to that commitment in investigating the nature of the government objective behind s. 319(2) of the Criminal Code. That the international community has collectively acted to condemn hate propaganda, and to oblige State Parties to C.E.R.D. and I.C.C.P.R. to prohibit such expression, thus emphasizes the importance of the objective behind s. 319(2) and the principles of equality and the inherent dignity of all persons that infuse both international human rights and the Charter." As a signatory to the Covenant, the Philippines is, like, Canada, obligated under international law and the 1987 Constitution to protect the inherent dignity and human rights of all its citizens. V. Freedom of Expression and Profane Utterances The blatant profanity contained in the newspaper article in question is not the speech that is protected by the constitutional guarantee of freedom of expression. Words that heap extreme profanity, intended merely to incite hostility, hatred or violence, have no social value and do not enjoy constitutional protection. As explained by the United States Supreme Court in the landmark case of Chaplinsky v. New Hampshire:19 "Allowing the broadest scope to the language and purpose of the Fourteenth Amendment, it is well understood that the right of free speech is not absolute at all times and under all circumstances. There are certain well-defined and narrowly limited classes of speech, the prevention and punishment of which has never been thought to raise any Constitutional problem. These include the lewd and obscene, the profane, the libelous, and the insulting or 'fighting' words those which by their very utterance inflict injury or tend to incite an immediate breach of the peace. It has been well observed that such utterances are no essential part of any exposition of ideas, and are of such slight social value as a step to truth that any benefit that may be derived from them is clearly outweighed by the social interest in order and morality. Resort to epithets or personal abuse is not in any proper sense communication of information or opinion safeguarded by the Constitution, and its punishment as a criminal act would raise no question under that instrument." (Emphasis supplied) Chaplinsky expressly includes profane utterances as belonging to the narrowly limited classes of speech that arenot 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.

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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 judicataprinciple on all members of the class whether or not they were before the court.25 This rule will address the fear that cases will swamp the courts all over the country if profanities against religious groups are made actionable under Article 26. VII. The Special Circumstance of Muslim Secession in the South Limitations on freedom of expression have always been rooted on special circumstances confronting a society in its historical development. In the 1950s, faced with rising racial tension in American society, the U.S Supreme Court ruled in Beauharnais v. Illinois26 that hate speech which denigrates a group of persons defined by their religion, race or ethnic origin defames that group and the law may validly prohibit such speech on the same ground as defamation of an individual. This was the only time that the U.S. Supreme Court upheld group libel, and since then, there has been a consistent retreat from this doctrine as blacks and other ethnic groups became more assimilated into the mainstream of American society. Beauharnais expressly acknowledged that race riots and massive immigration of unassimilated ethnic groups justified the legislature in "punishing x x x libels directed at designated collectives and flagrantly disseminated." The majority opinion states also that Beauharnais has been superseded by Brandenburg v. Ohio."27 The majority opinion explains that Brandenburg, a 1969 decision, ruled that "advocacy of illegal action becomes punishable only if such advocacy is directed to inciting or producing imminent lawless action and is likely to incite or produce such action." While Beauharnais has been apparently weakened by subsequent decisions of the U.S. Supreme Court, it was not overturned in Brandenburg which did not even cite or mention Beauharnais. What Brandenburgoverturned 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

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In 1990, the Canadian Supreme Court, in R. v. Keegstra,30 upheld a law criminalizing hate speech toward any section of the public distinguished by color, race, religion or ethnic origin. The Canadian Supreme Court rejected the clear and present danger test of the U.S. Supreme Court, stating that it did not address the psychological trauma hate propaganda causes and the subtle and incremental way hate propaganda works. The Canadian Supreme Court found the U.S. Supreme Court's Beauharnais decision more reflective of Canadian values rather than later U.S. decisions that weakened Beauharnais. The Canadian Supreme Court handed down Keegstra at a time when Canada was becoming a multi-racial society following the influx of immigrants of different color, ethnic origin and religion. The following passages in Keegstra are instructive: "A myriad of sources both judicial and academic offer reviews of First Amendment jurisprudence as it pertains to hate propaganda. Central to most discussions is the 1952 case of Beauharnais v. Illinois, where the Supreme Court of the United States upheld as constitutional a criminal statute forbidding certain types of group defamation. Though never overruled, Beauharnais appears to have been weakened by later pronouncements of the Supreme Court (see, e.g., Garrison v. Louisiana, 379 U.S. 64 (1964); Ashton v. Kentucky, 384 U.S. 195 (1966); New York Times Co. v. Sullivan, 376 U.S. 254 1964); Brandenburg v. Ohio, 395 U.S. 444 (1969); and Cohen v. California, 403 U.S. 15 (1971)). The trend reflected in many of these pronouncements is to protect offensive, public invective as long as the speaker has not knowingly lied and there exists no clear and present danger of violence or insurrection. xxx xxx xxx

The question that concerns us in this appeal is not, of course, what the law is or should be in the United States. But it is important to be explicit as to the reasons why or why not American jurisprudence may be useful in the s. 1 analysis of s. 319(2) of the Criminal Code. In the United States, a collection of fundamental rights has been constitutionally protected for over 200 years. The resulting practical and theoretical experience is immense, and should not be overlooked by Canadian courts. On the other hand, we must examine American constitutional law with a critical eye, and in this respect La Forest J. has noted in R. v. Rahey, (1987) 1 S.C.R. 588 at 639: 'While it is natural and even desirable for Canadian courts to refer to American constitutional jurisprudence in seeking to elucidate the meaning of Charter guarantees that have counterparts in the United States Constitution, they should be wary of drawing too ready a parallel between constitutions born to different countries in different ages and in very different circumstances. . .' Canada and the United States are not alike in every way, nor have the documents entrenching human rights in our two countries arisen in the same context. It is only common sense to recognize that, just as similarities will justify borrowing from the American experience, differences may require that Canada's constitutional vision depart from that endorsed in the United States." (Other citations omitted) xxx xxx xxx

First, it is not entirely clear that Beauharnais must conflict with existing First Amendment doctrine. Credible arguments have been made that later Supreme Court cases do not necessarily erode its legitimacy (see, e.g., Kenneth Lasson, "Racial Defamation as Free Speech: Abusing the First Amendment" (1985), 17 Colum. Human Rights L. Rev. 11). Indeed, there exists a growing body of academic writing in the United States which evinces a stronger focus upon the way in which hate propaganda can undermine the very values which free speech is said to protect. This body of writing is receptive to the idea that, were the issue addressed from this new perspective, First Amendment doctrine might be able to accommodate statutes prohibiting hate propaganda (see, e.g., Richard Delgado, "Words That Wound: A Tort Action for Racial Insults, Epithets, and Name-Calling" (1982), 17 Harv. C.R.-C.L. Law Rev. 133; Irving Horowitz, "Skokie, the ACLU and the Endurance of Democratic Theory" (1979), 43 Law & Contemp. Prob. 328; Lasson, op. cit., at pp. 2030; Mari Matsuda, "Public Response to Racist Speech: Considering the Victim's Story," (1989), 87 Mich. L. Rev. 2320, at p. 2348; "Doe v. University of Michigan: First Amendment Racist and Sexist Expression on Campus Court Strikes Down University Limits on Hate Speech" (1990), 103 Harv. L. Rev. 1397)." In deciding Keegstra, the Canadian Supreme Court also relied on Canada's treaty obligations under the United Nations International Covenant on Civil and Political Rights which requires signatory states to prohibit any "advocacy of x x x religious hatred that constitutes incitement to discrimination, hostility or violence." During the negotiations of the Covenant, the United States objected to this provision on free speech grounds. When it finally ratified the Covenant, the United States made a reservation rejecting this provision insofar as it conflicts with U.S. constitutional protections.31 The Covenant opened for ratification on December 19, 1966 and entered into force on March 23, 1976. The Philippines ratified the Covenant in 1986 without any reservation, just like Canada. The 1987 Constitution of the Philippines even created a Commission on Human Rights to "[M]onitor the Philippine Government's compliance with international treaty obligations on human rights." Obviously, Canada and the Philippines are alike in their obligations under the Covenant, but the United States is differently situated.32 In our country, there has been a long festering and bloody Muslim secessionist movement in the South, fueled not only by poverty but also by the palpable feeling among Muslims that the Christian majority is not treating Muslims fairly. Private respondents in the instant case, despite the outrageous profanity hurled at them by petitioners, chose not to join their secessionist brethren in the armed struggle but instead decided to petition

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our courts for legal redress of their grievance. They could have easily retaliated by flinging their own blasphemous invectives against the Christian religion. They did not, realizing perhaps that answering profanity with more profanity would mean answering hatred with more hatred, further dividing rather than unifying the Filipino nation. Just last November of 2002, a Christian newspaper in Nigeria where the Miss World contest was being held opined that the Prophet Mohammed would have approved of the beauty contest. The newspaper stated: "What would Mohammed think? In all honesty, he would have probably chosen a wife from one of them." These words provoked bloody rioting in Nigeria among Muslims who felt insulted by the article. Hundreds died in the religious riots. Yet the offensive article in the Nigerian newspaper pales in comparison to the utterly profane newspaper article in the instant case. Indeed, private respondent Islamic Da'wah Council of the Philippines, a federation of more than 70 Muslim religious organizations in the Philippines, deserves commendation for bringing this case before our courts for a peaceful and legal resolution of the issue. Private respondents have placed their trust and faith in our courts, knowing and insisting that they are entitled to a just remedy under paragraph 4, Article 26 of the Civil Code. It is time to breathe life to this long dormant provision of the Civil Code, to give even just a token redress to religious minorities who suffer mental and emotional distress from mindless profanity committed by irresponsible persons belonging to the religious majority. In the process we will contribute in avoiding a further cleavage in the fabric of our nation, and demonstrate to our Muslim brothers that their grievances can be redressed under the rule of law. The instant case does not even call for a re-examination of the clear and present danger test which we have adopted in this jurisdiction in determining the constitutionality of legislation that impinges on civil liberties.33 Even under the clear and present danger test, profane utterances are not constitutionally protected at least with respect to profanities directed against private individuals. The special circumstance involving the Muslim secessionist movement in the South should make us more sensitive to the grievances of our Muslim brothers who continue to have faith in the rule of law in this country. Since the peace of mind of private respondents has been violated by the publication of the profane article in question, Article 26 of the Civil Code mandates that the tortious conduct "shall produce a cause of action for damages, prevention and other relief." Article 2219 of the same Code provides that "[M]oral damages may be recovered in x x x actions referred to in Articles 21, 26 x x x ." Private respondents are entitled to moral damages because, as duly established by the testimonies of prominent Muslims,34 private respondents suffered emotional distress which was evidently the proximate result of the petitioners' wrongful publication of the article in question.35 VII. Conclusion Almost thirty years ago, I had occasion to write about Article 26 in this wise: "At the time Article 26 was lifted by the Code Commission from American jurisprudence, many of the rights embodied therein were not yet widely accepted by American courts, and in fact even now at least one, the right to privacy, is still struggling to gain recognition in some states. While we have been quick to leapfrog American state decisions in recognizing such rights, we have, however, been painfully slow in galvanizing the same in actual cases. To date Article 26 stands almost as a mere decorative provision in our statutes; but it may be harnessed fruitfully anytime."36 Now is the time to apply this provision of law since the instant case falls clearly within paragraph 4 of Article 26. Applying Article 26 will not undermine freedom of speech since the profane publication in question belongs to the class of speech that clearly does not enjoy constitutional protection. Applying Article 26 demonstrates good faith compliance with our treaty obligations under the International Covenant on Civil and Political Rights. Applying Article 26 implements the constitutional policy that the "State values the dignity of every human person and guarantees full respect for human rights." Applying Article 26 constitutes compliance by the Court of its constitutional duty to protect and enforce constitutional rights. Applying Article 26 will help bind the wounds that mindless profanities inflict on religious minorities in violation of their human rights. Accordingly, I vote to dismiss the petition and affirm the award by the Court of Appeals of P50,000.00 moral damages, P10,000.00 exemplary damages, and P10,000.00 attorney's fees to respondent Islamic Da'wah Council of the Philippines, Inc. based on paragraph 4, Article 26 of the Civil Code.

Dissenting Opinion AUSTRIA-MARTINEZ, J., dissenting: I vote to affirm the assailed decision of the Court of Appeals with certain modifications.

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For a proper perspective of the issues involved in the present petition, it must be emphasized that the portion of the subject article which alludes to the Muslims as not eating pork because it is dirty is not the bone of contention of respondents, because admittedly, the Muslims may eat pork if driven by necessity, as expressed in the Quran, to wit: "Allah has forbidden you only what dies of itself and blood and the flesh of swine and that over which any other (name) than (that of) Allah has been invoked. Then, whoever is driven by necessity, not desiring, nor exceeding the limit, no sin is upon him."1 The focal point of private respondents' claim for damages is the insult heaped upon them because of the malicious publication that the Muslims worship the pig as their God which is absolutely contrary to their basic belief as Muslims that there is only one God they call Allah, and, that the greatest sin in Islam is to worship things or persons other than Allah.2 Petitioners are liable for damages both under Articles 33 and 26(4) of the Civil Code. The instances that can be brought under Article 26 may also be subject to an action for defamation under Article 33. In such a case, the action brought under Article 26 is an alternative remedy, and the plaintiff can proceed upon either theory, or both, although he can have but one recovery for a single instance of publicity.3 Article 33 of the Civil Code provides: "Article 33. In cases of defamation, fraud and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence." (Emphasis supplied) Necessarily, Article 353 of the Revised Penal Code comes into play. In the present civil case, it is necessary that respondents are able to establish by preponderance of evidence the following elements of defamation: "1. That there must be an imputation of a crime, or of a vice or defect, real or imaginary, or any act, omission, condition, status, or circumstance. "2. That the imputation must be made publicly. "3. That it must be malicious. "4. That the imputation must be directed at a natural or juridical person, or one who is dead. "5. That the imputation must tend to cause the dishonor, discredit or contempt of the person defamed."4 An allegation is considered defamatory if it ascribes to a person the commission of a crime, the possession of a vice or defect, real or imaginary, or any act, omission, condition, status or circumstance which tends to dishonor or discredit or put him in contempt, or which tends to blacken the memory of one who is dead.5 As a general rule, words, written or printed, are libelous per se if they tend to expose a person to public hatred, contempt, ridicule, aversion, or disgrace, induce an evil opinion of him in the minds of right thinking persons, and deprive him of their friendly intercourse in society, regardless of whether they actually produce such results.6Otherwise stated; words published are libelous if they discredit plaintiff in the minds of any considerable and respectable class in the community, taking into consideration the emotions, prejudices, and intolerance of mankind.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

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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.14In matters of libel, the question is not what the writer of an alleged libel means, but what is the meaning of the words he has used.15 The meaning of the writer is quite immaterial. The question is, not what the writer meant, but what he conveyed to those who heard or read.16 In other words, it is not the intention of the speaker or writer, or the understanding of the plaintiff or of any particular hearer or reader, by which the actionable quality of the words is to be determined. It is the meaning that the words in fact conveyed, rather than the effect which the language complained of was fairly calculated to produce and would naturally produce on the minds of persons of reasonable understanding, discretion, and candor, taking into consideration accompanying explanations and surrounding circumstances which were known to the hearer or reader. The alleged defamatory statement should be construed not only as to the expression used but also with respect to the whole scope and apparent object of the writer.17 Want of intention to vilify does not render an objectionable publication any the less a libel and a publication is not excused by the publisher's ignorance that it contains libelous matter.18 The state of mind of the person who publishes a libel is immaterial in determining liability. The law looks at the tendency and consequences of the publication rather than the motive or intention of the writer or publisher.19 It does not signify what the motive of the person publishing the libel was, or whether he intended it to have a libelous meaning or not.20 The defendant may not have intended to injure the plaintiff's reputation at all and he may have published the words by mistake or inadvertence,21 or in jest, or without intending to refer, or knowing that he was referring, to the plaintiff, or any existing person, or again he may have been actuated by the best motives in publishing the words, but such facts will usually afford the defendant no defense, though they may be urged in mitigation of damages.22 Tested with the foregoing principles of law, there is no doubt that the article in question is defamatory under Article 33 of the Civil Code. If the imputation is defamatory,23 the Court has held that malice is presumed and the burden of overcoming the presumption of malice by mere preponderance of evidence rested on the petitioners. A careful examination of the records of the case does not reveal any cogent reason that would set aside the presumption of malice. In fact, there is convincing evidence that the publication of the assailed article was malicious, as more extensively discussed in the latter portion of herein opinion. Furthermore, there is no showing that the instant case falls under any of the exceptions provided for in Article 354 of the Revised Penal Code, to wit: "Art. 354. Requirement of publicity. Every defamatory imputation is presumed to be malicious, even if it be true, if no good intention and justifiable motive for making it is shown, except in the following cases: "1. A private communication made by any person to another in the performance of any legal, moral or social duty; and "2. A fair and true report, made in good faith, without any comments or remarks, of any judicial, legislative or other official proceedings which are not of confidential nature, or of any statement, report or speech delivered in said proceedings, or of any other act performed by public officers in the exercise of their functions." Consequently, there is no compelling reason to disregard the findings of the Court of Appeals that no evidence was presented to overcome said presumption of malice. On the matter of publication, there is no dispute that the same is present, as the subject article was admittedly published in the newspaper "Bulgar" which was circulated in Metro Manila and in other parts of the country. It must be emphasized that not only did both the trial court and the appellate court find that the subject article was published, they also held that the subject article contains an imputation of a discreditable act when it portrayed the Muslims to be worshipping the pig as their god. But the trial court and the appellate court differed as to the presence of the element of the identity of the persons defamed. While the trial court held that the libelous article does not identify the personalities of the

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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 allembracing as to apply to every individual in that class or group, or sufficiently specific so that each individual in that class or group can prove that the defamatory statement specifically pointed to him, so that he can bring the action separately, if need be," obviously applies to the present case. Certainly, the defamatory imputation contained in the subject article is a sweeping statement affecting a common or general interest of all Muslims, that is, their religious belief in Allah as the one and only God. The publication was directed against all Muslims without exceptions and it is not necessary to name each one of them as they could only have one cause of action which is the damage suffered by them caused by the insult inflicted on their basic religious tenets. All premises considered, petitioners are indeed liable for damages under Article 33 of the Civil Code. Significantly, the respondents brought to the attention of the Court of Appeals the failure of the trial court to appreciate Article 26(4) of the Civil Code, but the appellate court simply delved exclusively on the applicability of libel and the existence of its elements. Ordinarily, the Court may only pass upon errors assigned.27 However, this rule is not without exceptions. The Court has ruled that an appellate court is accorded a broad discretionary power to consider errors not assigned, involving, among others, (1) matters not assigned as errors on appeal but consideration of which is necessary in arriving at a just decision and complete resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice; (2) matters not specifically assigned as errors on appeal but raised in the trial court and are matters of record having some bearing on the issue submitted which the parties failed to raise or which the lower court ignored; and (3) matters not assigned as errors on appeal but upon which the determination of a question properly assigned, is dependent.28 Evidently, all three exceptions apply to the present case. Necessarily, the Court has to dwell on the applicability of Article 26 (4) of the Civil Code in support of respondents' claim for damages. Before proceeding any further, a distinction must first be made between a cause of action based on libel or defamation, whether in a criminal or civil case, and one based on Article 26. In libel, the gravamen of the claim is reputational harm; whereas, under Article 26, it can be the embarrassment, emotional harm or mental distress caused upon a person.29 In libel cases, its four (4) constitutive elements, to wit: (a) defamatory imputation; (b) malice; (c) publication; and (d) identifiability of the victim,30 must be established, by mere preponderance of evidence in a civil case which herein petitioners have done in the present case. Said elements, however, are not essential in a cause of action based on tort under Article 26, wherein one is liable for personal injury, whether administered intentionally, wantonly or by negligence.31 Personal injury herein refers not only to reputation but also encompasses character, conduct, manner, and habits of a person.32 American Tort Law, on the basis of which, Philippine Tort Law was patterned, has recognized that if the plaintiff is shown to have suffered a wrong, the mere paucity of cases or absence of any precedent does not constitute sufficient reason for refusing relief if a sound principle of law can be found which governs, or which by analogy ought to govern.33 The fact that a case is novel does not operate to defeat recovery, if it can be brought within the general rules of law applicable to torts.34 Neither is the fact that a tort action does not fit into a nicely defined or established "cubbyhole" of the law has been said not to warrant, in itself, the denial of relief to one who is injured.35 Thus, to ignore the application of the proper provision of law in the instant case would be an abdication of the judiciary's primordial objective, which is, the just resolution of disputes. Article 26 is an integral part of the Chapter in the Civil Code on human relations, "designed to indicate certain norms that spring from the fountain of good conscience. These guides for human conduct should run as golden threads through society, to the end that law may approach its supreme ideal, which is the sway and dominance of justice."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;

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"(3) Intriguing to cause another to be alienated from his friends; "(4) Vexing or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect, or other personal condition." (Emphasis supplied) The raison d'tre for the foregoing statutory provision, as stated by the Code Commission in its Report, is worth setting forth verbatim: "The sacredness of human personality is a concomitant of every plan for human amelioration. The touchstone of every system of laws, of the culture and civilization of every country, is how far it dignifies man. If in legislation, inadequate regard is observed for human life and safety; if the laws do not sufficiently forestall human suffering, or do not try effectively to curb those factors or influences that wound the noblest sentiments; if the statutes insufficiently protect persons from being unjustly humiliated, in short, if human personality is not properly exalted then the laws are indeed defective. Sad to say, such is to some "degree the present state of legislation in the Philippines. To remedy this grave fault in the laws is one of the principal aims of the Project of Civil Code. Instances will now be specified. "The present laws, criminal and civil, do not adequately cope with the interferences and vexations mentioned in Article 26."37 (Emphasis supplied) Thus, Article 26 provides aggrieved individuals with a legal remedy against violations of human personality, even though such do not amount to violations of penal laws. Social equality is not sought, but simply due regard for decency and propriety.38 Among the rights covered by Article 26 are: (a) personal dignity, (b) personal security; (c) family relations, (d) social intercourse, (e) privacy and (f) peace of mind.39 However, it has been held that the violations mentioned in the Article 26 are not exclusive but are merely examples and do not preclude other similar acts.40 Thus, disturbing or offensive utterances, such as threats, false statements, or insulting, humiliating, scandalous, or abusive language,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 true46 .

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Such shocking irresponsible attitude on her part who at that time was an Assistant Editor of Bulgar is utterly malicious, in the same degree as the failure of the rest of the petitioners (except Binegas, Jr.)47 to verify the truthfulness of the subject article, for which they should be held liable for damages. The freedom of expression and the right of speech and of the press are, to be sure, among the most zealously protected rights in the Constitution. But the constitutional right of freedom of expression may not be availed of to broadcast lies or half-truths nor may it be used to insult others, for such would be contrary to the plain mandate of the Civil Code for each person "to respect the dignity, personality, privacy and peace of mind of his neighbors and other persons." The freedom of speech does not require a journalist to guarantee the truth of what he says or publishes but it does prohibit publishing or circulating statements in reckless disregard without any bona fide effort to ascertain the truth thereof.48 By causing the assailed article to be published in reckless disregard of the truth thereof, petitioners publisher MVRS, Editor-in-Chief Mars C. Laconsay, Assistant Editor and writer Myla C. Aguja (Myla Tabora) exhibited utter irresponsibility and acted contrary to the Code of Ethics adopted by the journalism profession in the Philippines, for which they deserve condemnation. The assailed article has falsely portrayed all Muslims as worshippers of pig or swine and thus, perverted their religious beliefs and demeaned the Muslims as a segment of human society. It belittled the Muslims by inverting the relative importance of their religious beliefs and practice, thereby disgracing the ideals and aspirations of the Muslim people. Such amounts to a violation of their personal dignity and peace of mind, which are the very rights affirmed by Article 26. Petitioner Binegas should be absolved from liability. It is not refuted that the principal function of petitioner Binegas, Jr., as Circulation Manager of Bulgar, was to supervise the delivery and the distribution of the paper, monitor the accounts of the agents and schedule the circulation personnel. It is likewise unrebutted that petitioner Binegas, Jr. was never consulted on what articles are to be published; that he had no authority to decide whether or not a certain publication of Bulgar shall be circulated; and that his only duty was to distribute the issue after its printing.49 As such, his duty being ministerial in character, petitioner Binegas, Jr., should have been exonerated from liability. Now, do plaintiffs-respondents IDCP and its officers have the requisite personality to institute the suit? The answer is in the affirmative. Respondents IDCP and its officers have the requisite personality to institute the suit inasmuch as the action is properly a class suit. The concept of a "true" class suit has been elucidated upon in Re: Request of the Heirs of the Passengers of Doa Paz,50 thus: "What makes a situation a proper case for a class suit is the circumstance that there is only one right or cause of action pertaining or belonging in common to many persons, not separately or severally to distinct individuals. 'The 'true' class action, which is the invention of equity, is one which involves the enforcement of a right which is joint, common, or secondary or derivative. x x (It) is a suit wherein, but for the class action device, the joinder of all interested parties would be essential. 'A 'true class action' as distinguished from the so-called hybrid and the spurious class action in U.S. Federal Practice 'involves principles of compulsory joinder, since x x (were it not) for the numerosity of the class members all should x x (be) before the court. Included within the true class suit x x (are) the shareholders' derivative suit and a class action by or against an unincorporated association x x. A judgment in a true class suit, whether favorable or unfavorable to the class, is binding under res judicata principles upon all the members of the class, whether or not they were before the court. It is the nondivisible nature of the right sued on which determines both the membership of the class and the res judicata effect of the final determination of the right.' "The object of the suit is to obtain relief for or against numerous persons as a group or as an integral entity, and not as separate, distinct individuals whose rights or liabilities are separate from and independent of those affecting the others." (Emphasis supplied) In order that a class suit may prosper, Section 12, Rule 3 of the Rules of Court requires the concurrence of three (3) essential elements, namely: (1) that the subject matter of the controversy is one of common or general interest to many persons; (2) that the parties are so numerous that it is impracticable to bring them all before the court; and (3) that the action be maintained by parties who will fairly and adequately represent the class. Under the first requisite, the person who sues must have an interest in the controversy, common with those for whom he sues, and there must be that unity of interest between him and all such other persons which would entitle them to maintain the action if suit was brought by them jointly.51 As to what constitutes common interest in the subject matter of the controversy has been explained in Sulo ng Bayan, Inc. vs. Araneta, Inc.,52 thus:

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"The interest that will allow parties to join in a bill of complaint, or that will enable the court to dispense with the presence of all the parties, when numerous, except a determinate number, is not only an interest in the question, but one in common in the subject matter of the suit, x x x a community of interest growing out of the nature and condition of the right in dispute; for, although there may not be any privity between the numerous parties, there is a common title out of which the question arises, and which lies at the foundation of the proceedings x x x [here] the only matter in common among the plaintiffs, or between them and the defendants, is an interest in the question involved, which alone cannot lay a foundation for the joinder of parties. There is scarcely a suit at law, or in equity, which settles a principle or applies a principle to a given state of facts or in which a general statute is interpreted, that does not involve a question in which other parties are interested x x x." It has further been held that in order to maintain a class action there must be an ascertainable class as well as a community of interest among the members of that class in questions of law and fact involved.53 The class must be cognizable and manageable, and must be defined at the outset of the action. There must be a cognizable class beyond the general strains which can be conceived to create a class of any superficially resembling parties, but it is not necessary that the exact number comprising the class be specified or that the members be identified.54 The first element is present in this case. The class spoken of in the assailed article that segregates them from the other members of the general populace is the Muslim people, and their common interest, undoubtedly, is their religious belief in adoring Allah as the one and only God and that the greatest sin is to worship persons or things other than Allah. The article is an outrageous misrepresentation, inflicting stark insult on the religious beliefs of the Muslims. Concerning the second element, i.e., numerosity of parties one must bear in mind that the purpose. of the rule permitting class actions is to furnish a mode of obtaining a complete determination of the rights of the parties in such cases, when the number is so great as to preclude involvement by actual service. In this class of cases, one is allowed to sue for all as a matter of convenience in the administration of justice. A class action is particularly proper in an action wherein the persons are so multitudinous as vexatiously to prolong and probably altogether prevent a full hearing.55 Judicial notice may be taken of the fact that Muslims in this country comprise a lot of the population, thus, it is highly impractical to make them all parties or bring them all before the court. It is beyond contradiction that the Muslims affected by the assailed article are multitudinous, and therefore, the second element is present in the instant case. With regards to the third element, that the action be maintained by one who fairly and adequately represents the class, it is essential that the relief sought must be beneficial to the class members, the party must represent the entire class asserted, and be a member of the class he claims to represent, in addition to having an interest in the controversy common with those for whom he sues.56 For adequate representation, it is sufficient that there are persons before the court who have the same interest as the absent persons and are equally certain to bring forward the entire merits of the question and thus give such interest effective protection.57 It has also been held that whether the class members are adequately represented by the named plaintiffs depends on the quality of representation rather than on the number of representative parties as compared with the total membership of the class.58 Thus, even one member of a large class can provide the kind of representation for all that is contemplated by the class suit.59 Respondent IDCP, as a religious organization, being a federation or umbrella organization of more than seventy (70) Muslim religious organizations in the Philippines, and its officers who are individual respondents as well, carry the requisite personality to file a case for damages in behalf of all Muslims. Unequivocally, they properly represent the Muslims who are similarly situated and affected by the assailed article. Respondent officers of IDCP namely, Abdulrahman R.T. Linzag, Ibrahim F. P. Arcilla, Abdul Rashid De Guzman, and Ibrahim B. A. Junio, as well as their witness, Professor Abdul Rafih Sayedy, not only testified on how the assailed article emotionally, as well as psychologically, affected each of them, but also as to how the said article received the condemnation and contempt of other Muslims, further evidenced by the letter dated September 21, 1992 from thirty-one (31) students of the Islamic University Madinah Al-Mukarramah, K.S.A.,60 and the seething letter of one Abdil T. Arafat of South Cotabato province, dated September 29, 1992.61 Moreover, an officer may sue in his own behalf if the defamation affects him as well as the corporation62 , or where the defamation against the officer has a direct relation to the corporation's trade or business and it causes injury63. 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

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Individual Muslim plaintiffs-respondents, Abdulrahman R.T. Linzag, Ibrahim F. P. Arcilla, Abdul Rashid De Guzman, and Ibrahim B. A. Junio, as well as their witness, Professor Abdul Rafih Sayedy, as proper representatives of the class action testified on the despair, mental anguish, social humiliation and inferior feeling experienced by the Muslims as a result of the vexatious article.67 Thus, the award of moral damages is justified. The award of exemplary damages and attorney's fees is likewise warranted and the amount is in accordance with Articles 222968 and 220869 of the Civil Code. However, damages awarded to individual respondents should be deleted inasmuch as the instant case is considered as a class suit and they merely acted as officers and members of the principal plaintiff-respondent IDCP. One last point. There should be no room for apprehension on future litigations relating to the assailed article in view of the fact that the instant suit is a class suit. In a class suit, each member of the class for whose benefit the action is brought is a party plaintiff; the persons represented are quasi parties or parties by representation. A suit brought in behalf of others in a class gives the court jurisdiction of the whole subject matter, and of all the parties, such that the judgment will be binding on all persons belonging to the class represented.70 In other words, a judgment in a class action concludes upon all members of the class, whether formally joined as parties or not. 71 The class action has preclusive effect against one who was not named representative of the class, as long as he was a member of the class which was a party to the judgment.72 Thus, in the case at bar, the Muslims, who are parties represented by respondent IDCP and its officers, are thereby precluded from instituting separate or individual suits for damages against MVRS Publications, Inc., et al., as they are bound by the judgment in this class action, which amounts to res judicata. In the light of all the foregoing, I am constrained to dissent from the majority opinion.

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G.R. No. L-19331

April 30, 1965

VICTORIA G. CAPUNO and JOSEPHINE G. CAPUNO, plaintiffs-appellants, vs. PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES and JON ELORDI, defendants-appellees. Federico Andres for plaintiffs-appellants. Vicente J. Francisco for defendants-appellees. MAKALINTAL, J.: This appeal (in forma pauperis), certified here by the Court of Appeals, is from the order of the Court of First Instance of Tarlac dismissing appellant's complaint in Civil Case No. 3315 for recovery of damages for the death of Cipriano Capuno. The case arose from a vehicular collision which occurred on January 3, 1953 in Apalit, Pampanga. Involved were a Pepsi-Cola delivery truck driven by Jon Elordi and a private car driven by Capuno. The collision proved fatal to the latter as well as to his passengers, the spouses Florencio Buan and Rizalina Paras. On January 5, 1953 Elordi was charged with triple homicide through reckless imprudence in the Court of First Instance of Pampanga (criminal case No. 1591). The information was subsequently amended to include claims for damages by the heirs of the three victims. It is urged for the applicant that no opposition has been registered against his petition on the issues abovediscussed. Absence of opposition, however, does not preclude the scanning of the whole record by the appellate court, with a view to preventing the conferment of citizenship to persons not fully qualified therefor (Lee Ng Len vs. Republic, G.R. No. L-20151, March 31, 1965). The applicant's complaint of unfairness could have some weight if the objections on appeal had been on points not previously passed upon. But the deficiencies here in question are not new but well-known, having been ruled upon repeatedly by this Court, and we see no excuse for failing to take them into account.1wph1.t On October 1, 1953, while the criminal case was pending, the Intestate Estate of the Buan spouses and their heirs filed a civil action, also for damages, in the Court of First Instance of Tarlac against the Pepsi-Cola Bottling Company of the Philippines and Jon Elordi (civil case No. 838). Included in the complaint was a claim for indemnity in the sum of P2,623.00 allegedly paid by the Estate to the heirs of Capuno under the Workmen's Compensation Act. In the criminal case both the heirs of Capuno and the Estate of Buan the former being appellants herein were represented by their respective counsel as private prosecutors: Attorney Ricardo Y. Navarro and Attorneys Jose W. Diokno and Augusto M. Ilagan. In view of the filing of the civil action the accused Jon Elordi moved to strike out the appearances of these private prosecutors in the criminal case. Grounds for the motion were (1) that as the Capuno heirs were concerned, they no longer had any interest to protect in the criminal case since they had already claimed and received compensation for the death of their decedent; and (2) that on the part of the Estate of Buan its right to intervene in said case had been abated by the civil action. The appearance and intervention of Attorneys Diokno and Ilagan was disallowed by the Court in an order dated September 23, 1953, and that of Attorney Navarro was disallowed in an amending order dated October 23, 1954. No appeal was taken from either of the two orders.

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On June 11, 1958 the parties in Civil Case No. 838 entered into a "Compromise and Settlement." For P290,000.00 the Buan Estate gave up its claims for damages, including the claim for reimbursement of the sum of P2,623.00 previously paid to the heirs of Capuno "under the Workmen's Compensation Act." The Court approved the compromise and accordingly dismissed the case on the following June 17. At that time the criminal case was still pending; judgment was rendered only on April 15, 1959, wherein the accused Elordi was acquitted of the charges against him. Prior thereto, or on September 26, 1958, however, herein appellants commenced a civil action for damages against the Pepsi-Cola Bottling Company of the Philippines and Jon Elordi. This is the action which, upon appellees' motion, was dismissed by the Court a quo in its order of February 29, 1960, from which order the present appeal has been taken. The grounds upon which appellees based their motion for dismissal and which the Court found to be "well taken" were; (1) that the action had already prescribed; and (2) that appellees had been released from appellants' claim for damages by virtue of the payment to the latter of the sum of P2,623.00 by the Buan Estate under the Workmen's Compensation Act, which sum, in turn, was sought to be recovered by the said Estate from appellees in Civil Case No. 838 but finally settled by them in their compromise. The ruling of the court below on both points is now assailed by appellants as erroneous. In our opinion the question of prescription is decisive. There can be no doubt that the present action is one for recovery of damages based on a quasi-delict, which action must be instituted within four (4) years (Article 1146, Civil Code). Appellants originally sought to enforce their claim ex-delicto, that is, under the provisions of the Penal Code, when they intervened in the criminal case against Jon Elordi. The information therein, it may be recalled, was amended precisely to include an allegation concerning damages suffered by the heirs of the victims of the accident for which Elordi was being prosecuted. But appellants' intervention was subsequently disallowed and they did not appeal from the Court's order to the effect. And when they commenced the civil action on September 26, 1958 the criminal case was still pending, showing that appellants then chose to pursue the remedy afforded by the Civil Code, for otherwise that action would have been premature and in any event would have been concluded by the subsequent judgment of acquittal in the criminal case. In filing the civil action as they did appellants correctly considered it as entirely independent of the criminal action, pursuant to Articles 31 and 33 of the Civil Code, which read: ART. 31. When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil action may proceed independently of the criminal proceedings and regardless of the result of the latter. ART. 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. The term "physical injuries" in Article 33 includes bodily injuries causing death (Dyogi v. Yatco, G.R. No. L-9623, Jan. 22, 1957, 22 L.J. 175). In other words, the civil action for damages could have been commenced by appellants immediately upon the death of their decedent, Cipriano Capuno, on January 3, 1953 or thereabouts, and the same would not have been stayed by the filing of the criminal action for homicide through reckless imprudence. But the complaint here was filed only on September 26, 1958, or after the lapse of more than five years. In the case of Diocosa Paulan, et al. vs. Zacarias Sarabia, et al., G.R. No. L-10542, promulgated July 31, 1958, this Court held that an action based on a quasi-delict is governed by Article 1150 of the Civil Code as to the question of when the prescriptive period of four years shall begin to run, that is, "from the day (the action) may be brought," which means from the day the quasi-delict occurred or was committed. The foregoing considerations dispose of appellants' contention that the four-year period of prescription in this case was interrupted by the filing of the criminal action against Jon Elordi inasmuch as they had neither waived the civil action nor reserved the right to institute it separately. Such reservation was not then necessary; without having made it they could file as in fact they did a separate civil action even during the pendency of the criminal case (Pacheco v. Tumangday, L-14500, May 25, 1960; Azucena v. Potenciano, L-14028, June 30, 1962); and consequently, as held in Paulan v. Sarabia, supra, "the institution of a criminal action cannot have the effect of interrupting the institution of a civil action based on a quasi-delict." As to whether or not Rule 111, Section 2, of the Revised Rules of Court which requires the reservation of the right to institute a separate and independent civil action in the cases provided for in Articles 31, 32, 33, 34, and 2177 of the Civil Code affects the question of prescription, we do not now decide. The said rule does not apply in the present case. Having found the action of appellants barred by the statute of limitations, we do not consider it necessary to pass upon the other issues raised in their brief. The order appealed from is affirmed, without costs.

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G.R. No. L-51183 December 21, 1983 CARMEN L. MADEJA, petitioner, vs. HON. FELIX T. CARO and EVA ARELLANO-JAPZON, respondents. Ernesto P. Miel for petitioner. Gorgonio T. Alvarez for respondents.

ABAD SANTOS, J.:+.wph!1 In Criminal Case No. 75-88 of the defunct Court of First Instance of Eastern Samar, DR. EVA A. JAPZON is accused of homicide through reckless imprudence for the death of Cleto Madeja after an appendectomy. The complaining witness is the widow of the deceased, Carmen L. Madeja. The information states that: "The offended party Carmen L. Madeja reserving her right to file a separate civil action for damages." (Rollo, p. 36.) The criminal case still pending, Carmen L. Madeja sued Dr. Eva A. Japzon for damages in Civil Case No. 141 of the same court. She alleged that her husband died because of the gross negligence of Dr. Japzon. The respondent judge granted the defendant's motion to dismiss which motion invoked Section 3(a) of Rule 111 of the Rules of Court which reads:t.hqw Sec. 3. Other civil actions arising from offenses. In all cases not included in the preceding section the following rules shall be observed:

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(a) Criminal and civil actions arising from the same offense may be instituted separately, but after the criminal action has been commenced the civil action can not be instituted until final judgment has been rendered in the criminal action. ... According to the respondent judge, "under the foregoing Sec. 3 (a), Rule 111, New Rules of Court, the instant civil action may be instituted only after final judgment has been rendered in the criminal action." (Rollo, p. 33.) The instant petition which seeks to set aside the order of the respondent judge granting the defendant's motion to dismiss Civil Case No. 141 is highly impressed with merit. Section 2, Rule 111 of the Rules of Court in relation to Article 33 of the Civil Code is the applicable provision. The two enactments are quoted hereinbelow:t.hqw Sec. 2. Independent civil action. In the cases provided for in Articles 31,32, 33, 34 and 2177 of the Civil Code of the Philippines, an independent civil action entirely separate and distinct from the criminal action, may be brought by the injured party during the pendency of the criminal case, provided the right is reserved as required in the preceding section. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence." (Rule 111, Rules of Court.) Art. 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. (Civil Code,) There are at least two things about Art. 33 of the Civil Code which are worth noting, namely: 1. The civil action for damages which it allows to be instituted is ex-delicto. This is manifest from the provision which uses the expressions "criminal action" and "criminal prosecution." This conclusion is supported by the comment of the Code Commission, thus:t.hqw The underlying purpose of the principle under consideration is to allow the citizen to enforce his rights in a private action brought by him, regardless of the action of the State attorney. It is not conducive to civic spirit and to individual self-reliance and initiative to habituate the citizens to depend upon the government for the vindication of their own private rights. It is true that in many of the cases referred to in the provision cited, a criminal prosecution is proper, but it should be remembered that while the State is the complainant in the criminal case, the injured individual is the one most concerned because it is he who has suffered directly. He should be permitted to demand reparation for the wrong which peculiarly affects him. (Report, p. 46.) And Tolentino says:t.hqw The general rule is that when a criminal action is instituted, the civil action for recovery of civil liability arising from the offense charged is impliedly instituted with the criminal action, unless the offended party reserves his right to institute it separately; and after a criminal action has been commenced, no civil action arising from the same offense can be prosecuted. The present articles creates an exception to this rule when the offense is defamation, fraud, or physical injuries, In these cases, a civil action may be filed independently of the criminal action, even if there has been no reservation made by the injured party; the law itself in this article makes such reservation; but the claimant is not given the right to determine whether the civil action should be scheduled or suspended until the criminal action has been terminated. The result of the civil action is thus independent of the result of the civil action." (I Civil Code, p. 144 [1974.]) 2. The term "physical injuries" is used in a generic sense. It is not the crime of physical injuries defined in the Revised Penal Code. It includes not only physical injuries but consummated, frustrated and attempted homicide.t.hqw The Article in question uses the words 'defamation', 'fraud' and 'physical injuries.' Defamation and fraud are used in their ordinary sense because there are no specific provisions in the Revised Penal Code using these terms as means of offenses defined therein, so that these two terms defamation and fraud must have been used not to impart to them any technical meaning in the laws of the Philippines, but in their generic sense. With this apparent circumstance in mind, it is evident that the terms 'physical injuries' could not have been used in its specific sense as a crime defined in the Revised Penal Code, for it is difficult to believe that the Code Commission would have used terms in the same article-some in their general and another in its technical sense. In other words, the term 'physical injuries' should be understood to mean bodily injury, not the crime of physical injuries, bacause the terms used with the latter are general terms. In any case the Code Commission recommended that the civil action for physical injuries be similar to the civil action for assault and battery in American Law, and this recommendation must hove been accepted by the Legislature when it approved the article intact as recommended. If the intent has been to establish a civil action for the bodily harm received by the complainant similar to the

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civil action for assault and battery, as the Code Commission states, the civil action should lie whether the offense committed is that of physical injuries, or frustrated homicide, or attempted homicide, or even death," (Carandang vs. Santiago, 97 Phil. 94, 96-97 [1955].) Corpus vs. Paje, L-26737, July 31, 1969, 28 SCRA 1062, which states that reckless imprudence or criminal negligence is not included in Article 33 of the Civil Code is not authoritative. Of eleven justices only nine took part in the decision and four of them merely concurred in the result. In the light of the foregoing, it is apparent that the civil action against Dr. Japzon may proceed independently of the criminal action against her. WHEREFORE, the petition is hereby granted; the order dismissing Civil Case No. 141 is hereby set aside; no special pronouncement as to costs. SO ORDERED.1wph1.t Makasiar (Chairman), Concepcion, Jr., Guerrero, De Castro and Escolin, JJ., concur.

Separate Opinions

AQUINO, J., concurring: I concur. Death due to a negligent act may be a delict or quasi-delict. It may create a civil action based on article 100 of the Penal Code or an action based on culpa aquiliana under article 2176 of the Civil Code. These alternatives are assumed in article 2177 of the Civil Code "but the plaintiff cannot recover twice for the same act or omission of the defendant" (Barredo vs. Garcia, 73 Phil. 607 and Sudario vs. Acro Taxi and Yuson, 86 Phil. 1. See Formento vs. CA, L-26442, August 29,1969,29 SCRA 437). The term "physical injuries" in article 33 of the Civil Code includes death and may give rise to an independent civil action (Dyogi vs. Yatco, 100 Phil. 1095). The rule in Corpus vs. Paje, L-26737, July 31, 1969, 28 SCRA 1062, that reckless imprudence is not included in article 33 of the Civil Code, is not authoritative doctrine because it was concurred in by only five Justices. Four Justices concurred in the result.

Separate Opinions AQUINO, J., concurring: I concur. Death due to a negligent act may be a delict or quasi-delict. It may create a civil action based on article 100 of the Penal Code or an action based on culpa aquiliana under article 2176 of the Civil Code. These alternatives are assumed in article 2177 of the Civil Code "but the plaintiff cannot recover twice for the same act or omission of the defendant" (Barredo vs. Garcia, 73 Phil. 607 and Sudario vs. Acro Taxi and Yuson, 86 Phil. 1. See Formento vs. CA, L-26442, August 29,1969,29 SCRA 437). The term "physical injuries" in article 33 of the Civil Code includes death and may give rise to an independent civil action (Dyogi vs. Yatco, 100 Phil. 1095). The rule in Corpus vs. Paje, L-26737, July 31, 1969, 28 SCRA 1062, that reckless imprudence is not included in article 33 of the Civil Code, is not authoritative doctrine because it was concurred in by only five Justices. Four Justices concurred in the result.

G.R. No. L-20395 May 13, 1985

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ELTON W. CHASE, as minority Stockholder and on behalf of other Stockholders similarly situated and for the benefit of AMERICAN MACHINERY AND PARTS MANUFACTURING, INC., plaintiff-appellant, vs. DR. VICTOR BUENCAMINO, SR., VICTOR BUENCAMINO, JR., JULIO B. FRANCIA and DOLORES A. BUENCAMINO, respondents. N.J. Quisumbing & Associates for plaintiff-appellant. Belo, Gozon & Associates for private respondents.

CUEVAS, J.: This is a joint appeal interposed by both plaintiffs and defendants from the decision of the then Court of First Instance of Manila in its Civil Case No. 49346, the dispositive portion of which reads IN VIEW WHEREOF, on the complaint, Dr. Buencamino is condemned to pay Amparts the sum of Pl,970,200.00 with legal interest from the date of the filing of the complaint; he is also prohibited from collecting any interest on the sum of P300,000 paid by him on the 15th July, 1955 on the initial subscription, and such interest as has already been paid to him is ordered refunded with legal interest from the date of the filing of the complaint; the lease on his Apartment is declared to terminate and be terminated after 1 year from the date this decision shall have become final; on the counterclaims, Elton Chase is condemned to pay Amparts the sum of P500.00 with legal interest from the date of the filing of the counterclaim, the other charges and countercharges are dismissed; no more pronouncement as to costs. SO ORDERED. Manila, 3 May, 1962. On August 20, 1960, Elton Chase in his capacity as director and minority stockholder of American Machinery and Parts Manufacturing, Inc. (AMPARTS) and in behalf of the other stockholders of said corporation similarly situated and for the benefit of Amparts filed Civil Case No. 49346, before the then Court of First Instance of Manila, Branch XIV against a) Dr. Victor Buencamino, Sr. in his capacity as Director, President and General Manager of Amparts; b) Victor Buencamino. Jr., in his capacity as Director, Treasurer and Liaison Officer; c) Julio B. Francia in his capacity as Director and Assistant General Manager; d) Dolores A. Buencamino in her capacity as Director; and e) Spouses William E. Cranker and Florence Cranker alias Florence Barker who together hold 1/3 of the entire subscribed and outstanding shares of stocks of Amparts. The complaint seeks a) the removal of Dr. Buencamino, Sr., Victor Buencamino, Jr. and Julio B. Francia from the offices held by them; b) to enjoin defendants from participating in the management, operation and control of Amparts; c) if necessary, order a dissolution and liquidation of Amparts; d) the appointment of a receiver pendente lite in order to prevent the continuance and aggravation of the violations of defendants and to preserve and protect the rights and interests of plaintiff-appellant and other stockholders similarly situated; and e) for general relief.
1

Defendants William E. Cranker and Florence Cranker even at the time the complaint was filed no longer resided in the Philippines and had no assets against which a judgment may be executed because as alleged by the plaintiffs, the said defendants "had already disposed of their interests in favor of defendants Buencaminos". For this reason, plaintiffs' motion to serve summons upon them extraterritorially was denied by the lower court. 2 The remaining defendants, Dr. Victor Buencamino, Sr., Victor Buencamino, Jr., Mrs. Dolores A. Buencamino and Julio B. Francia filed their "Opposition to Preliminary Receivership" 3 and subsequently, on September 6, 1960, their Answer with Counterclaim. 4

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On June 10, 1961, the lower court issued an Order denying plaintiffs' application for receivership but ordering defendants to file a bond in the amount of P100,000.00 to answer for the damages that plaintiffs might suffer by the non-appointment of a receiver. 5 After trial on the merits, the lower court (then presided by Judge Magno Gatmaitan) rendered judgment dated May 3, 1962, finding defendant Dr. Buencamino guilty of "breach of a legal obligation". The dispositive portion of the said decision had earlier been quoted herein. From the aforesaid decision and from the Orders denying defendants' Motion for Reconsideration, both plaintiffs and defendants appealed to this Court, plaintiffs contending that the lower court erred I In not ordering the ouster of defendants from the management of Amparts notwithstanding its finding that defendant Buencamino was "guilty of breach of a legal obligation" and its sentence that he pay back his frauds; II In not awarding at least the dissolution of Amparts and the consequent return of the investment and participation of plaintiff-appellant in said business notwithstanding its finding of fraud against defendants; III In condemning defendants Buencamino to pay back Amparts only the proceeds he received from the black- market sales of Amparts dollar; and in not including the amount of excess remittances of dollars Amparts has fraudulently caused to make plus interests on loans and other bank charges Amparts paid to make those excess remittances and in failing to order said defendant to render accounting of his management; IV In not ordering the rescission and resolution of the resale of the Pasig land by defendants to themselves; V In not requiring defendants to account for the illegal overprice of the Forkner Hanger parts and for the other frauds committed by them; and VI In finding plaintiff-appellant Chase guilty of the two counts on the counterclaims and in condemning him to pay P500.00 as damages. On the other hand, defendants contend that the lower court erredI In not holding that plaintiff was a party to and/or consented to the alleged fraudulent acts committed by Cranker and Buencamino; II In not holding that defendants and particularly defendant Dr. Buencamino were unaware of the private arrangements between plaintiff and Cranker as to the sale of plaintiff's plant; III In not holding that plaintiff is in estoppel; IV In ruling that plaintiff had proven the alleged fraudulent acts and in requiring Dr. Buencamino to pay to the corporation the alleged excess price; V

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In not holding that it was plaintiff who defrauded defendant Dr. Buencamino; VI In voiding the assignment of credit; VII In holding that Dr. Buencamino is guilty of breach of trust; VIII In absolving plaintiff from responsibility for alleged sale of dollars and rendering judgment against Dr. Buencamino for the alleged proceeds of dollar sales; IX In holding Dr. Buencamino liable for the entire amount including the share of Cranker, assuming arguendo, that Cranker and Dr. Buencamino profited in the alleged sale of dollars; X In charging Dr. Buencamino and Cranker twice for the same amounts assuming, arguendo, that they profited in the alleged sale of dollars; XI In requiring Cranker and Dr. Buencamino to pay for the alleged profits on the Bertoni and Cotti deal; XII In holding that the term of lease of the building constructed by Dr. Buencamino to be only for a term of seven years; XIII In ruling that Amparts was charged with interest for payment of stock; XIV In not rendering judgment against plaintiff and in favor of the defendants on the first cause of action of the counterclaim; XV In not rendering judgment against plaintiff in favor of Amparts on the second cause of action of the counterclaim; XVI In requiring plaintiff to pay only P500.00 on the third cause of action of the counterclaim; XVII In not rendering judgment against plaintiff in favor of defendants on the fourth cause of action of the counterclaim; and XVIII In not rendering judgment against plaintiff in favor of the defendants on the fifth cause of action of the counterclaim. all of which assigned errors boil down to the more important issues of a) Were the defendants, more particularly defendant Dr. Buencamino, guilty of "fraud" and/or breach of a legal obligation as would entitle plaintiff not only to a "money judgment" but also to

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the dissolution of Amparts and/or the removal of defendants Buencaminos from the management of the said corporation; and b) Was plaintiff Chase himself guilty of fraud as would entitle defendants to recover on their counterclaims. The evidence on record discloses that defendant Dr. Buencamino, Sr., a Filipino and William Cranker, an American, even prior to the year 1954 were already business associates. They owned two firms namely, the Philippine American Machinery and Equipment Corporation (PAMEC) which was organized in 1947 and the BUCRA which means Buencamino and Cranker. 6 Plaintiff Elton Chase, on the other hand, was the owner of Production Manufacturing Company, of Portland, Oregon, USA, a corporation primarily dedicated to the operation of a machine shop and heat-treating plant for the production of tractor parts. 7 Sometime in 1954, Chase was notified by the Highway Commission of the State of Oregon that his factory was going to be in the path of a proposed highway. He was then advised to sell or face expropriation and warned to remove his plant within a year. His distributor Craig Carrol told him of a Dr. Buencamino of Manila who he said was interested in establishing a manufacturing plant in the Philippines. Craig Carrol contacted Buencamino who told him to contact his associate William Cranker in the United States. 8 Thereafter, a series of negotiations took place both here in Manila, and in the United States, between Chase on the one hand, and Cranker and Buencamino, on the other, for the purchase of Chase's factory (Production Manufacturing Company) and the establishment of a new factory in Manila which was to be called the American Machinery Engineering Parts, Inc. (Amparts for short). These negotiations culminated in a final agreement to the effect that-Elton Chase was to be paid One Hundred Thousand Dollars ($100,000.00) and he would also be given a one-third interest in Amparts, with the other two, Dr. Buencamino and Cranker, as the owner of the other two-thirds (2/3) interest, 1/3 interest each; that in exchange for said $100,000.00 and the 1/3 interest, Chase was to transfer to Amparts his tractor plant, ship his machineries to Manila, assuming all costs of dismantling, preserving and crating for shipment to Manila, install said machineries at Amparts plant with the aid of five technicians and finally, he has to be the production manager of Amparts. Amparts was formally organized as a corporation on July 5, 1955 with an authorized capital stock of P4,000,000.00 divided into 4,000 shares with a par value of P1,000.00 each. The original subscription was P1,800,000.00. Dr. Buencamino, Cranker & Chase subscribed P600,000.00 each. But since five were necessary to organize a corporation, Buencamino and Cranker took in their respective wives. In the meanwhile, Chase had already shipped his machineries and had them installed in the Amparts plant in Pasig, Rizal. Amparts then began operation with Dr. Buencamino as President, William Cranker as Manager and Elton Chase as Production Manager. For sometime the three maintained harmonious relations but later on distrust came in until finally Chase tendered his letter of resignation as Production Manager, dated March 28, 1957. 9which was accepted by both Dr. Buencamino and Cranker thru a letter dated July 8, 1957. 10 On April 21, 1958, Chase thru his lawyer addressed a letter of demand to both Dr. Buencamino and Cranker 11which reads April 21, 1958 Dr. Victor Buencamino Mr. William E. Cranker American Machinery & Parts Manufacturing Co., Inc. 1501 A. Mabini, Manila Gentlemen: Mr. Elton W. Chase has retained our services to enforce his claim against you for breach of contract, unpaid salaries and expenses, and damages amounting to approximately P500,000.00 at the official rate of exchange between pesos and U.S. dollars. Inasmuch as you are aware of the claims of Mr. Chase, We shall not enter into details in this letter. Our purpose in writing to you is to inform you that, unless Mr. Chase's claims are satisfied within five days from receipt of this letter, we shall have no recourse but to file suit against you. If you would care to discuss this matter with me, I shall be free on Friday, April 25, 1958, from 3:00 P.M. onwards, and shall be glad to meet with you at any place convinient to you. Very truly your,

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DIOKNO & SISON By: (Sgd) JOSE W. DIOKNO This was answered by Dr. Buencamino the next day in the following letter April 22, 1958 Messrs. Diokno & Sison Regina Bldg. Room 332-334 Escolta, Manila Attention: Mr. Jose W. Diokno Re: Claim of Elton W. Chase Gentlemen: Your letter of April 21, 1958, wherein you make reference to a claim of Mr. Chase "for breach of contract, unpaid salaries and expenses, and damages amounting to approximately P500,00.00", was, and continues to be a surprise to us not only because you go far as to assume that we are aware of said claims. Until we receive a more definite statement from you or from Mr. Chase himself, we cannot enter in into any discussion. We might add that any claim that Mr. Chase may have should be directed to the American Machinery & Parts Manufacturing, Inc. of which he himself is a one-third owner. Your letter under reply, which was addressed to Messrs. V. Buencamino, W.E. Cranker and American Machinery & Parts Manufacturing, Inc. is obviously misdirected. Very truly yours, AMERICAN MACHINERY & PARTS MANUFACTURING, INC. By: V. BUENCAMINO President On May 23, 1958, Chase filed an action against Cranker with the Superior Court of Los Angeles 12 seeking to recover the sum of $ 150,000.00 as alleged balance of the purchase price of his plant. This case however died a natural death because Cranker I left and was never reached by process from the California Court. Then, sometime in August 1958, Cranker sold out all his interest in Amparts to Dr. Buencamino. 13 Finally, on August 20, 1960, Chase filed this case before the Court of First Instance of Manila, alleging various acts of fraud which he claimed had been committed by both Dr. Buencamino and Cranker, namely, 1. Dr. Buencamino got stock in part without paying for it and in part with proceeds of the sale of Amparts dollars in the blackmarket; 2. Dr. Buencamino purchased for Amparts certain materials from Bertoni and Cotti of Italy and inflated the invoice price from $ 122,250.00 to $ 387,933.36, sending the excess dollars abroad and selling them at the blackmarket for his private gain; 3. Dr. Buencamino purchased land from the province of Rizal for Amparts and then resold part of it to himself for private gain; 4. Dr. Buencamino and Cranker in August 1955, bought a surplus building in Guam for $ 60,000.00 C.I.F. and in the same year sold it to Amparts for $ 187,500.00 for their private gain; 5. Dr. Buencamino permitted the use of third parties for his private gain, of the Amparts dock at the Pasig River; 6. Dr. Buencamino collected and collects rentals for apartments by him constructed even though no longer used by Amparts technicians; 7. Dr. Buencamino permitted the sale abroad of Amparts manufactured tractor parts at depressed prices; 8. Dr. Buencamino collected a mark up interest on moneys borrowed by him from the banks and by him advanced unto Amparts;

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9. The Board Resolutions of 13 May 1960 which also increased compensation of Buencamino's relatives and gave him an increased mark up on his evidences and authorized his and his wife's trip abroad and also authorized the conversion of his credit for unpaid interest into Amparts stocks were all void. On the other hand, defendants in their Answer set up by way of counterclaim that1. Chase sold machineries unto Amparts thru Overseas part of which consisting of 24 pieces worth of P264,000.00 were junk; 2. Chase maliciously spread false rumors against Amparts, and induced its employees to leave; and is engaged in competition with Amparts; 3. Chase spread false rumors against the integrity of defendants to embarass and humiliate them and injure their reputation; 4. Chase took into the Philippines thru the shipment of his factory, his own personal effects, machineries and materials the freight expenses for which reach P6,676.60; and 5. Chase by the unfounded action should pay defendants their attorney's fees; for all of which counterclaims, defendants claim a monetary judgment against Chase. After a careful and painstaking review of the voluminous evidences on record, We find that the lower court correctly found that Buencamino and Cranker committed the following frauds and profited from the same I-A Through overpricing, Amparts remitted to U.S. $ 312,500.00 for Chase's factory. Only $ 80,000.00 was paid Chase for his machineries at this time. The excess dollars were blackmarketed and the peso proceeds thereof went to pay the stocks subscription in Amparts of Buencamino and his wife and Cranker and his wife. (Analysis and Synthesis of Evidence, par. 1-A, pp. 1-10) That these profits from overpricing and remittance of dollars went to Buencamino and Cranker was testified to by no less than Buencamino's long time accountant Maximo Penas, corroborated by the bank accounts which he kept for Buencamino and Cranker, Exhibit UU, the duplicates of the letters of Cranker to the Bank of America containing Buencamino's admitted initials, Exhibit "L", "M" and "N", the Bank of America's remittance receipts and order Exhibit "P", and Amparts own books, namely, journal entries Nos. 16, 21 and 26, Exhibit "FFF", pp. 23. I-B Through overpricing, Amparts remitted to U.S. $ 207,000.00 for forwarding costs, technical services and promotional expenses. But forwarding costs were already paid from the $ 312,500.00 remittances for plant purchase price and Chase was never paid his salary for one year nor his promotional expenses. Of the $ 207,000.00 remittance, only $ 15,000.00 was expended to pay Chase the balance due in the purchase of his factory totalling $ 100,000.00. The excess remittances of dollars were blackmarketed and the peso proceeds thereof totalling P434,000.00 were deposited in Buencamino's bank account at the Philippine Trust Company. (Analysis and Synthesis of Evidence. par. 1-B, pp. 10-12). I-C Through overpricing, Amparts remitted to U.S. $ 387,933.66 for the tractor parts and track press imported from Bertoni and Cotti. Only $ 212,250.00 was paid to Bertoni and Cotti of the excess remittance, $ 117,000.00 were blackmarketed realizing P391,200.00 which were deposited in the personal bank account of Buencamino at the Philippine Trust Company and People's Bank. (Analysis and Synthesis of Evidence, par. 1C, pp. 12-15). Again, this fraud committed by Buencamino and Cranker was testified to by their own accountant Maximo Penas and he testified from the very book of account he kept for them, Exhibit "UU". They were corroborated by Bertoni and Cotti's letters Exhibit "FF" and "HH", the debit notes of First National Bank of Portland, Exhibits "NN" and "NN-1" and Buencamino's initial appearing in Bertoni: and Cotti's letter, Exhibit 'ff ' plus Buencamino's admission that the address to which the Bertoni and Cotti's letter was sent, i.e., "P.O. Box 2493, Manila Filipinas", as the address of Overseas Ltd., was the postal box of Amparts. (p. 72, tsn, November 18, 1960) II. The fraudulent issue of P1,200,000.00 fully paid-up Amparts shares, without payment obviously resulted to the profits of only Buencamino and Cranker and their families in whose favor they were issued. (Analysis and Synthesis of Evidence, par. II, pp. 18-35) Aside from Ampart's borrowing of money for the initial payment on the subscription of Buencamino and Cranker and their wives and the withdrawal thereof, the charging of interest thereon, the application of the proceeds of sales at blackmarket of Amparts' dollars for the payment of their subscription totalling P570,000.00 there were the acknowledgments obtained from Amparts of an indebtedness to Overseas Investment Co., Ltd. of $ 287,500.00 for the purchase price of Chase's factory, Amparts acknowledgments of an assumption of such indebtedness by Buencamino and Cranker Company to Overseas Investment Company, Ltd. and to pay Buencamino and Cranker Company its peso equivalent or P575,000.00 through the issue of fully paid-up P330,000.00 worth of shares to Buencamino and Cranker and their wives and crediting Buencamino's account with P245,000.00.

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In this jurisdiction, it is a "fundamental and settled rule that conclusions and findings of fact by the trial court are entitled to great weight on appeal and should not be disturbed unless for strong and cogent reasons because the trial court is in a better position to examine real evidence, as well as to observe the demeanor of the witnesses while testifying in the case." 14 We have reviewed the evidence on record thoroughly and We are satisfied that the lower court has not overlooked factors of substance and value which if considered, might affect the result of the case. We therefore uphold the following findings and conclusions of the lower court We go first to the Bertoni and Cotti transaction; while the defense that Dr. Buencamino only saw Exh. FF the letter of Bertoni and Cotti and did not anymore pay attention to it might be plausible, the Court considering his long relationship with Cranker, for he and Cranker had their own BUCRA and PAMEC-and the fact that the testimony of Maximo Penas is corroborated by the padded invoice of the transaction, is impelled to conclude that he was a party to it, probably not at first but surely afterwards, he willingly benefited therefrom; that was a fraud upon Amparts and on the broad principle of agency and trust, 1455, 1891, New Civil Code, he should surrender thereon, his gains of P391,200.00; and on the same reasoning as this, the Court must also hold that with respect to the blackmarketing of the excess dollars on the forwarding and promotion costs in the amount of $ 140,000.00, he once more should be made to account for P434,000.00; unless the Court as already stated a few pages back, should sustain his defenses as to all these charges, namely, a) That they took place when he was not yet the manager; b) That he is estopped by reason of his letter Exh. 10, his complaint and affidavit Exhs. 11 and 12 and the actuations of his own auditor Hendershott as revealed in the Board Meeting of 27 November 1956 Exh. 4. Now as to these, a) That he was not the manager but Cranker to the Court is not very important because as the Court sees it, since the inception of the venture and even when it had become a reality, he was one of the guiding hands if not the principal guide; he was President and Director; and he knowingly profited from the transactions which should go to Amparts otherwise; once more the Court applying 1455 and 1891 of the New Civil Code must hold that in these transactions where he had thus profited, he was guilty of breach of a legal obligation; b) The Court having seen with its own eyes the evidence proving the fraud, can not find it easy to refuse relief unto Chase because of the failure of his auditor to discover the anomalies; or because of the fact that he had filed a suit against Cranker in California and failed to mention Dr. Buencamino there as a guilty party, for this would only weaken his evidence but would not be enough to put him in estoppel for as Chase correctly says, it did not mislead Dr. Buencamino to adopt a course of action to the latter's prejudice; and as well does the Court feel bound not to bar the case of Chase by reason of his letter Exh. 10 wherein he blamed Cranker not Dr. Buencamino for his predicament, for the same reason; the Court of course must grant that there was inconsistency in the position here; for there in California and in the letter Exh. 10, he proceeded on the theory that the transaction on his plant was between him and Cranker for $ 250,000.00 while here his theory is that it was a deal between him, Cranker and Dr. Buencamino wherein these two would pay him $ 100,000.00 and they three would form Amparts with 1/3 of the shares being given to him fully paid up as part of the purchase price; but the Court while it must admit that this has weakened the case for Chase, must also admit that they have not altogether destroyed that since in the first place, the inconsistency in theory adopted in the California Court from that adopted here as an obstacle to the present action is as the Court takes it, obviated by the very evidence of Dr. Buencamino since because the theory of California was that Chase was entitled to only $ 250,000.00, and nothing more and what would if true, not grant unto Chase any personality to file this derivative suit as an Amparts stockholder, but the evidence of defendants proves very clearly that right from the start, Chase was by them recognized as a stockholder and initial incorporator with 600 paid up shares representing a 1/3 interest in Amparts, and that would be enough for Chase to have the correct personality to institute this derivative suit; the second place, it also appears apparently undenied that Chase did not win in California so that he did not recover the $150,000.00 that he had prayed for there against Overseas, which if he had would really in the mind of the Court have put him in estoppel to intervene in any manner as incorporator or stockholder of Amparts; and in the third place and most important it should not be forgotten that Chase has filed the present case not for his personal benefit, but for the benefit of Amparts, so that to the Court the argument of estoppel as against him would appear to be out of place; the estoppel to be valid as a defense must be an estoppel against Amparts itself; the long and short of it is that the Court is impelled and constrained to discard all the other defenses set up by Dr. Buencamino on the principal complaint; the result of all these would be to sustain so far, the position of Chase that Dr. Buencamino must account for the P570,000.00 used to pay the second series of payment on the subscription, the P330,000.00 used in paying the lst series on the subscription, plus another sum of P245,000.00 entered as loan on his favor and against Amparts, for the sum of P434,000.00 earned in the blackmarketing of the excess of $140,000.00 dollars on the forwarding costs and promotional expenses, for the sum of P391,200.00 earned in the blackmarketing of the excess of $117,000.00 in the transaction with Bertoni and Cotti, and all these would reach a total of P1,970,200.00; and as the appropriation of the profits for himself was a quasi-delict, the liability therefore assuming that it had been done with the cooperation of Cranker would have to be solidary, 2194 New Civil Code, because it was a quasi-delict; but the next question is whether these findings must justify the remedy of change of management and dissolution; before going to this, the Court seeing that this is a question interrelated to the counterclaims, will proceed to examine them.

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xxx xxx xxx the result of the foregoing will be that the Court must find it proved on the counterclaims, that Chase had helped a competitor contrary to his position of trust as director of Amparts, and that Chase had also spread rumors against Amparts, and its management; for these acts, the Court will impose some damages which in the absence of better proof the Court will fix at five hundred (P500.00) pesos; we go to the most important point of debate, namely, the final remedy that the Court must now concede. It will above be noted that while the Court found Chase guilty on two counts, on the counterclaims the guilt referred to acts performed during the litigation; they do not show that Chase had come to Court already guilty; as the Court has found, when he came to Court on 20 August, 1960, he was an innocent party, and Amparts was the victim of fraud; on the other hand, while this really is true, the Court can not see how under the present circumstances, the correct equitable relief that the Court should grant should be to change over the management from Buencamino unto Chase; especially considering that the Court has also seen that Chase pendente lite had performed an act that has virtually helped an Amparts competitor; neither can the Court grant a dissolution because the action is a derivative one for the benefit of Amparts and not for the personal benefit of Chase, and Amparts can not be benefited by its extinction; as to the ouster of Dr. Buencamino from management, it should not be forgotten that Dr. Buencamino is not only a manager, but is in fact 2/3 owner of Amparts and to oust him from management would amount to his disenfranchisement as owner of the majority of the enterprise apart from the fact that it is also established in the proofs that Amparts is already picking up and has been a going concern after Cranker left unto him the direction of its affairs; the Court therefore having in mind all these finds that the solution most equitable and just would be to limit its decision to imposing a monetary judgment upon the guilty parties for the benefit of Amparts. The record further shows that there were other precautionary measures adopted by lower court for the protection of Chase's rights and interest in Amparts. 15 Thus, on May 12, 1962, the following Order was issued After hearing the parties and with a view to protect the interests of both and to prevent a possibility of abuse, the Court resolves that until further orders, the hereinafter while the case is pending: (1) Mr. Chase shall have free access to AMPARTS and its record personally and/or through representative duly authorized; (2) Decisions of Dr. Buencamino and/or management of AMPARTS shall be made known to Chase who shall have the right to object and if so, the matter shall be notified to the Court which shall resolve the difficulties; in the interim, pending the objection, the decision shall not be enforced or made operative; With this resolution, the Court disposes for the present of the issue of receivership. Supplementing the above-quoted Order, the lower court, then already presided by the Honorable Jesus de Veyra, issued the following, Order of August 27, 1962: As for the appointment of a receiver, Judge Gatmaitan decided on the temporary measure of giving plaintiff (petitioner herein) a veto right, appealable to this Court, on all decisions of management. Considering that up to the present, the Buencaminos own 2/3 of the stock corporation, the solution is equitable, and must be allowed to continue subject to the condition that once a decision of management is made known to plaintiff, he must make known his objection thereto to the Court within five (5) days from receipt of said decision, otherwise he shall be deemed to have waived any objection to the decision. The removal of a stockholder (in this case a majority stockholder) from the management of the corporation and/or the dissolution of a corporation in a suit filed by a minority stockholder is a drastic measure. It should be resorted to only when the necessity is clear which is not the situation in the case at bar. WHEREFORE, finding the appealed decision to be in accordance with the law and the evidence, the same is hereby AFFIRMED. No pronouncement as to costs. SO ORDERED. Makasiar, Abad Santos, and Escolin, JJ., concur. Concepcion, Jr., J., is on leave.

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Separate Opinions

AQUINO, J., concurring: I concur in the opinion of Justice Cuevas. Elton W. Chase, as minority stockholder, filed a derivative suit for the removal of the officers and directors of American Machinery & Parts Manufacturing, Inc. (Amparts) on the ground of breach of trust and for the appointment of a receiver and the dissolution and liquidation of Amparts if necessary. After trial, Hon. Judge Magno S. Gatmaitan in his decision dated May 3, 1962 ordered Doctor Victor Buencamino, Sr., director, president and general manager, to pay Amparts the sum of P1,970,200 with legal interest from the filing of the complaint, enjoined him from collecting interest on the sum of P300,000 which he had paid as his initial subscription on July 15, 1955 and asked him to refund the interest which he had already collected, with legal interest from the filing of the complaint (See Chase vs. CFI of Manila, 124 Phil. 1128,1130). In an order dated May 12, 1962, the trial court directed that Chase, personally or through a duly authorized representative, should have "direct access to Amparts and its records" and that the decisions of Buencamino or the management of Amparts should be made known to Chase who would have the right to object and, if he objects, the matter should be taken up in court which should "resolve the difficulties" and, "in the interim, pending the objection, the decision shall be enforced or made operative " (124 Phil.1130). In another order dated August 27, 1962, the trial court clarified Chase's veto power by declaring that "once a decision of management is made known to plaintiff (Chase), he must make known his objection thereto to the Court within five (5) days from receipt of said decision, otherwise he shall be deemed to have waived any objection to the decision" (124 Phil. 1131). In view of those precautionary measures, this Court sustained the trial court's orders denying Chase's petition for receivership (124 Phil. 1128). All the parties appealed from the trial court's 140-page decision. The appeal involves questions of law and fact, having been perfected under Republic Act No. 2613 and before Republic Act No. 5440 was enacted. ** Elton W. Chase, now dead, a machinist who finished first year high school, was the owner of a firm manufacturing tractor parts in Portland, Oregon. In 1954, he was advised by the state's highway commission to transfer his factory and heating plant, which were in the path of a proposed freeway, or face expropriation, To solve that problem, Chase, without the assistance of a lawyer, agreed to convey his plant to a corporation to be organized in the Philippines by Doctor Victor Buencamino, Sr. and his partner, William E. Cranker (Buencamino & Cranker or BUCRA), who both controlled the Philippine American Machinery Equipment Co., Inc. (Pamec). Cranker and his wife, Florence M. Barker (who was also his secretary), owned a firm known as Overseas Investment Co., Ltd. which was domiciled in Tangier, Morocco. That firm undertook the sale of Chase's Oregon machinery and equipment. It was proposed that the price would be $250,000 with $100,000 payable in cash and $150,000 to be "repatriated" to Chase as a profit. Chase's equity in Amparts would be P600,000 or P650,000 according to Florence M. Cranker or Barker (Exh. 12-E). Chase testified that he, Buencamino and Cranker finally agreed that Chase would have a one-third interest in Amparts and receive $100,000 cash in advance. At his expense, he would dismantle his Oregon plant, crate the machinery and equipment and ship them to Manila, reinstall them here, hire five technicians and assume the position of production manager at Amparts (25-28 tsn October 30,1960). Even before Amparts was formally incorporated, Buencamino, as acting president, pretending that Amparts was already a corporation, filed an application with the Central Bank for an allocation of $900,000, specifying that the amount would be used to purchase Chase's factory, as shown below (Exh. A): (a) Plant purchase (where is).......................................$693,000 (b) Forwarding costs to Phil.............................................47,000 (c) Technical services.......................................................90,000 (d) Promotional expenses.................................................70,000

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Total.................................................$900,000 Buencamino represented in that application that the sum of $693,000 represented the depreciated value of Chase's machinery and equipment as of January 10, 1955 (Exh. A). G.S. Licaros of the Central Bank in a letter dated October 26, 1955 (after Amparts was incorporated) advised the Philippine Trust Company that Amparts was given the quota allocation of $519,500, broken down as follows (pp. 62-63, Record on Appeal): (a) Purchase price of Chase Machinery and equipment........................................... $312,500 (b) Forwarding costs to the Phil.................................... 47,000 (c) Technical services of the techni cians for one year..........................................90,000 (d) Chase's salary for one year promotional expenses....................................70,000 Total.............................$519,500 Chase's counsel contends that Amparts bought the machinery of Chase for $100,000 and P600,000 worth of shares of stock in Amparts or a one-third interest therein (pp.15-16, plaintiff-appellee's brief). On the other hand, Buencamino's counsel failed to state with precision what amount should be paid to Chase for his machinery and equipment which counsel branded as mostly junk with a book value of $18,000 only but which Buencamino appraised at $693, 000 (p. 173, Vol. III, Rollo, Exh. A). It is also the theory of Chase that he agreed with Cranker to sell his plant for $250,000 (Exh. 11) and that Cranker's firm Overseas Investment Co., Ltd., in turn resold the said plant to Amparts for $600,000. By means of a letter of credit, Amparts paid to Cranker $312,500 as the initial installment on the price of $600,000. That amount of $3 12,500 was withdrawn by Cranker from the National Bank of Commerce at Seattle, Washington and the National Bank in Portland, Oregon. Out of that amount, Cranker paid Chase $100,000 (Exh. 12). The balance of $212,500 was allegedly disposed of by Cranker and Buencamino for their personal benefit as shown in the withdrawals made by Cranker from the Bank of America (Exh. L to S). The sum of $190,000 of that amount was sold in the blackmarket at the rate of three pesos a dollar. The proceeds of the sale in the sum of P570,000 were deposited in Buencamino's bank account (549-0, Record on Appeal). On July 5, 1955, Amparts was organized with an authorized capital stock of P4,000,000 divided into 4,000 shares with a par value of Pl,000 each. The incorporators, the Buencamino spouses, the Cranker spouses and Chase, subscribed to the stock of Amparts in the total sum of P1,800,000, or 600 shares for Chase, 600 shares for the Buencaminos and 600 shares for the Crankers, of which P450,000, or 25% of the subscription was supposedly paid or deposited in the bank. The sum of P150,000, as Chase quota, was paid by Buencamino with the understanding that the machinery and equipment of Chase would later be conveyed to Amparts as payment of his subscription and then the amount advanced by Buencamino would be returned to him. Corporate funds in the sum of P388,000 were transferred to Buencamino's personal account allegedly because he used his personal credit to raise additional operating capital (Exh. B). Eventually, Buencamino, Cranker and Chase each owned 600 fully paid shares of Amparts (212-213, Record on Appeal)', Chase received on February 8, 1960 his stock certificate for 600 (598) shares dated May 14, 1958 which he at first refused to receive (140-141. Record on Appeal; 74 tsn October 30, 1960). Thus, he became a "one-third owner" of Amparts (Exh. 18-A). On August 1, 1956, Chase executed an affidavit of final payment wherein he acknowledged that he had received from Overseas Investment Co., Ltd, the full payment and other considerations for the sale of his plant to Amparts (Exh. 14). Chase's dismantled factory was shipped to Manila and was installed at Amparts' site in Pasig, Rizal. Buencamino served as president of Amparts, Cranker as board chairman and general manager, and Chase as production manager. They also served as directors. The other two directors were Mrs. Cranker and Mrs. Buencamino. For a time, Buencamino, Cranker and Chase worked in harmony and the plant was functioning properly. Then distrust and discord set in. Amparts sustained a net loss of P155,881.95 for 1956 (Exh. 25). On March 28, 1957, or less than two years after the organization of Amparts, Chase tendered his resignation as production manager because, as he said, "there are so many points of disagreement between us on business procedures, plant developments and operations, and the present course being followed on sates products, that I cannot continue here" (Exh. 15).

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He requested that he be replaced at once and that there be a "final settlement of the amounts" due to him and "the issuance of stocks in both Amparts and Overseas as per agreement" (Exh. 15). Without waiting for the acceptance of his resignation, Chase left his job and went home to Los Angeles, California. Chase's resignation was accepted by Buencamino in his letter dated July 8, 1957, when Chase was in Los Angeles. Buencamino said: Bill Cranker and I have decided to accept your letter of resignation effective immediately. Please understand that this does not in anyway affect your interest in the corporation nor your membership in the Board of Directors. We find this as a possible remedy to the present financial standing of the corporation of which you are fully cognizant. However, should you be successful in your endeavor to buy out the interest of Bill Cranker and mine in the corporation, you will then of course be in a position to decide who will direct the policies of the corporation (Exh. 16). Several months later, or in March, 1958, Alberto Cacnio in a letter to Chase dated March 12, 1958 offered to buy Chase's 600 shares in Amparts at P165 a share (the par value was P600,000), or for P98,000 only (Exh. D). On their part, Buencamino and Cranker in a letter dated March 20, 1958 gave Cacnio up to April 1, 1958 to buy their 1,200 shares at P165 a share (Exh. 28). Cranker in his letter to Chase dated March 15, 1958 stressed that Cacnio's offer was a close approximation of the actual value of the shares and that Chase should accept the offer "or be completely wiped out, plus the contingency of further personal litigations and judgments" should the bank sue Chase, Buencamino and Cranker on their personal liability (Exh. E). Cranker in his letter further stressed the precarious position of Amparts whose business continued to deteriorate and said that it was "perilously close to the end". He added this alarming postscript: "Should (heaven forbid) you decide not to sell, then I suggest you consult an attorney as our position is hopeless" (Exh. E). Chase rejected the offer. He sent to the Philippines for the second time his auditor to examine the books of Amparts. The auditor reported to Chase by telephone and telegrams that there was evidence that Buencamino and Cranker had allegedly "robbed" Amparts of an amount exceeding $250,000 in connection with its transaction with the firm of Bertoni & Cotti (63 tsn October 30, 1960). Chase's lawyer in a letter to Buencamino and Cranker dated April 21, 1958 demanded the payment of his unpaid salaries, expenses and damages amounting to approximately P500,000 (Exh. 18). Buencamino replied that he was unaware of Chase's claim and that any claim of Chase should be directed to Amparts of which Chase is a one-third owner (Exh. 18-A). Chase sued Cranker and Overseas Investment Co., Ltd. on May 23, 1958 in the Superior Court of California at Los Angeles for the recovery of $150,000 as the alleged unpaid balance of the purchase price for the sale of his tractor and heating plant to Overseas Investment Co., Ltd. (Exh. C and 11, pp. 188-197, Record on Appeal). Upon Chase's motion, that case was dismissed without prejudice in an order dated September 16,1960 or after the instant case was filed. Chase said that it was futile to sue Cranker in California since he had no funds in that state and the tax authorities were after him (pp. 36-37, Defendants-appellants' brief; p. 56, Plaintiff-Appellee's Brief; pp. 272-273, Record on Appeal, 69 tsn October 30, 1960). At this juncture, it should be noted that although Chase in a 1956 affidavit had sworn that he had already been paid by Overseas Investment Co., Ltd. for his factory (Exh. 14), yet in the 1958 suit which he filed against Cranker and Overseas Investment and in his counter-affidavit of October 10, 1958 (which he filed in the California case) as well as in his handwritten letter to Buencamino dated July 3, 1958 (Exh. 10), Chase claimed that Cranker had not paid the said balance of $150,000, that Cranker "devised and engineered a plan whereby" Chase was deprived of his machinery and equipment for Cranker's benefit; that Cranker used Amparts as a front to divert funds to enrich Overseas Investment Co., Ltd. and that Cranker had manipulated the affairs of Pamec, Bucra and Amparts for his own benefit and to the prejudice of Chase (Exh. 10). In August, 1958, Cranker sold his 600 shares of stock in Amparts to Buencamino, severed his connection with that firm and left the Philippines. Thus, Buencamino became the controlling stockholder of Amparts or Amparts became the family corporation of the Buencaminos, with Chase as the only minority stockholder. In a letter dated October 1, 1959 Chase's lawyer demanded from Amparts the payment of P19,630.93 for the materials which Chase shipped to Amparts (Exh. II; No. 9, Annex A of Exh. 4). On May 13, 1960, the board of directors of Amparts held a meeting. Present were Buencamino, Sr., Buencamino, Jr., Julio B. Francia, Jr. (son-in-law of Buencamino) and Chase whose lawyer was allowed to sit beside him. In that meeting certain resolutions were passed over the objection of Chase. The board resolved (1) to increase to 12% per annum the interest on the loans of Buencamino, Sr. to Amparts; (2) to increase to Pl,800 the monthly salaries of Buencamino, Jr., Jorge F. Paez (another son-in-law of

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Buencamino, Sr.) and Francia, Jr. and to supply each of the three with a company car with a driver to be used when they would perform their duties as company officials; (3) to authorize Buencamino, Sr. and his wife to represent Amparts in any manner in the execution of contracts on condition that, the contracts entered into by them be confirmed by the board of directors: (4) that the reasonable transportation and lodging expenses of Buencamino, Sr. and his wife be borne by the company; (5) that the sum of P100,000 as the unpaid interest on the loans made by Buencamino, Sr. to Amparts be paid by means of shares of stock; (6) approving the auditor's report for 1958-59; (7) designating Francia, Jr. as acting president and general manager in the absence of Buencamino, Sr. and (8) authorizing Buencamino, Sr. to open a current account with the Commercial Bank and Trust Company (Exh, JJ). The annual audit reports show the following results for Amparts' business operations: 1956Net 1957Net 1958Net 1959Net 1960Net loss of P155,857.05 (Exh. 25) loss of Pl 88,870.61 (Exh. 25-a) profit of P46,647.43 (Exh. 25-b) profit of P489,775.03 (Exh. 25-c) profit of P103,548.30 (Exh. EEE)

As of June 30, 1961, Amparts suffered a net loss amounting to P27,603.32 (Exh. JJJ). It had a net profit of P979.46 for 1962. It suffered losses for 1963 to 1969 (no record for 1966) (p. 166, Vol. III, Rollo). As of December 31, 1960, Amparts had current assets of P2,937,078.63 and fixed assets of P2,563,487.56. It owed the Philippine National Bank P297,973.49 and its "officer" (presumably Buencamino, Sr.) Pl,379,189.57 (Exh. EEE). Aside from Chase, the stockholders of Amparts in September, 1960 were the Buencamino spouses, 625 shares; Buencamino's two daughters, Mrs. Paez and Mrs. Francia, 380 shares and his two sons-in-law, 20 shares (pp. 140-142, Record on Appeal). The complaint in this case was filed on August 20, 1960. The Cranker spouses, being abroad, were never served with summons. The trial court denied the motion for the extra-judicial service of summons to them since, as already stated, they had transferred their stocks to Buencamino. So, the antagonists in this case are Chase and Buencamino. Chase in his complaint prayed for the removal of Buencamino, Sr. as director, president and general manager of Amparts; Buencamino, Jr. as director, treasurer and liaison officer of Amparts and Julio B. Francia, Jr., Buencamino's son-in-law, as director and assistant general manager of Amparts. Chase alleged that Buencamino, Sr., his son and son-in-law have been guilty of breach of trust. The trial court in its order of June 10, 1961 denied Chase's petition for receivership but required the defendants to post a bond in the sum of P100,000 to answer for the damages which Chase might suffer because no receiver was appointed (pp. 406-7, Record on Appeal). Findings of the trial court: blackmarketing of dollars.The trial court found that Chase was to receive $100,000 plus a fully paid one-third interest in Amparts, meaning that Amparts' plant was to be owned by Buencamino, Cranker and Chase, with Chase contributing his machinery and Buencamino and Cranker contributing money for the purchase of Chase plant and the $100,000 due to Chase (p. 548, Record on Appeal). Buencamino and Cranker were supposed to pay P1,200,000 for their shares in Amparts. The sum of P600,000 as the par value of Chase's shares was paid by means of the transfer of his plant to Amparts. Buencamino made the following payments on the amounts due from him and Cranker: Amount paid to Amparts on July 15, 1955 .......................... P450,000 Less P150,000 corresponding to Chase.................... 150,000 Net amount corresponding to Buencamino and Cranker............................................... 300,000 Add subsequent payments: Payment on December 15, 1955................................ 35,000 Payment on December 29, 1955.............................. 200,000 Payment on January 31, 1956............................... 335,000 Payment by assignment to Buencamino and Cranker of the credit of Overseas Investment against Amparts.................................. 330,000 Total....................................................... Pl,200,000 Amparts was indebted to Buencamino in the sum of P245,000, representing the difference between the assigned credit of P575,000 and the sum of P300,000 paid to Amparts as subscription of Buencamino and Cranker (512-3, Record on Appeal).

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The lower court rejected Chase's theory as to Buencamino's withdrawal of P383,000 and P35,000 sometime after he paid to Amparts the sum of P450,000 as initial payment on the subscription of the three major stockholders (514-5, Record on Appeal). The trial court also found that out of the dollar allocation of $312,500 given by the Central Bank to Amparts for the purchase of Chase's machinery and equipment (Exh. A), Buencamino and Cranker sold in the blackmarket $190,000 at three pesos a dollar. The proceeds of the sale amounting to P570,000 were deposited in Buencamino's account. As to this amount, the trial court held that Buencamino was accountable because in depositing it in his account he committed a breach of trust (528-9, Record on Appeal). It should be repeated that Overseas Investment Co., Ltd. supposedly purchased from Chase his machinery and equipment for $250,000 (Exh. 11), that Overseas in turn contracted to sell the same to Amparts for $600,000 and that only the sum of $312,500 was paid by Amparts, thus leaving a balance of $287,500 or P575,000. Overseas, through Mrs. Cranker, in a letter dated November 3, 1955 to Amparts said that Overseas had assigned to the firm of Buencamino and Cranker (Bucra) that credit of $287,000 so that Amparts would not be indebted anymore for that amount to Overseas but Amparts' creditor would be the Bucra firm (Exh. 12-a). A week later, or on November 10, Buencamino as president of Amparts wrote a letter to Bucra, confirming Mrs. Cranker's letter and advising Bucra that Amparts was indebted to Bucra in the sum of P575,000, a two-two-one valuation of the sum of $287,500 (Exh. 12-b). Then, five days later, or on November 15, 1955. Cranker, as managing partner of Bucra, informed Amparts that P330,000 out of the P575,000 owed by Amparts, first to Overseas and later to Bucra, should be considered as a payment of the subscription of the Buencamino and Cranker spouses to Amparts in this manner: P165,000 for the Buencamino spouses and P165,000 also for the Cranker spouses. Cranker added that the balance of P245,000 owed by Amparts to Bucra should be regarded as an "advance" made by Buencamino and should be owed by Amparts to Buencamino rather than to Bucra (Exh. 12- c). The trial court stressed that the profit from the negotiation of the dollar allocation was deposited in Buencamino's name and, therefore, he has to account to Amparts for the sum of P570,000 which he obtained from the blackmarketing of dollars (549-50, Record on Appeal). Findings regarding Pasig lot.On September 8, 1955, Amparts bought from Rizal Province 163 parcels of land with a total area of 76,000 square meters (which used to be the site of the old capitol), with two buildings, located at Barrio Sta. Rosa, Pasig, Rizal for the aggregate price of P395,000 (Exh. VV-l). More than a month later, Amparts bought from Rizal Province four additional parcels of land with an area of 7,838 square meters, also situated at Barrio Sta. Rosa for P39,190 or at five peso a square meter (Exh. VV). The said parcels were the unregistered portions of the old capitol site. As of November 4, 1960, Amparts owed the province of Rizal P251,622 on the price of the two purchases (Exh. WW). In a resolution dated December 12, 1955, it was decided that Amparts would retain only 13,498 square meters of the said land as the site of its factory and that the rest would be resold at cost to Buencamino and Cranker (Exh. C). The trial court explained that there was nothing wrong with the resale. Buencamino did not make any profit in the said resale. Amparts was not prejudiced (555-6, Record on Appeal). Sale of hangar parts from Pamec.Surplus hangar parts, which Pamec, a corporation controlled by Cranker and Buencamino, bought for P60,000, were sold to Amparts for P187,500. The trial court found the price to be reasonable (560, Record on Appeal). Buencamino, Cranker and Chase, as directors, approved the sale at the board meeting held on September 25,1956 (Exh. 2). Use of Amparts' docks. Pamec allegedly allowed third parties to use the docks of Amparts at the Pasig River and did not turn over to Amparts the fees collected for the use of the docks. The trial court found that there was no prejudice to Amparts because Pamec did not charge Amparts any fee for certain services and, moreover, Pamec, having used its crane and personnel at the docks, could charge fees therefore (560-1, Record on Appeal). Rent for Buencamino's apartments. The trial court ruled that one year after its decision became final, Amparts should not pay anymore rentals to Buencamino for the apartments intended for the technicians which had already been vacated and were no longer occupied (565, Record on Appeal). Sale of tractor parts at depressed prices. The trial court found no proof that by means of the sale of Amparts' tractor parts abroad by Overseas Investment Co., Ltd. Buencamino was able to sell dollars in the blackmarket or salt dollars abroad (566, Record on Appeal). Matters covered by board resolution of May 13, 1960. The trial court found nothing wrong in Buencamino's charging of 12% interest per annum on his loans to Amparts, in the increase in salaries of the company's

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officers, in the trip abroad of Buencamino spouses at the expense of Amparts, in the conversion into shares of stock of Amparts of the sum of P100,000 representing unpaid interests to Buencamino. Transaction with Bertoni and Cotti.The trial court found that Amparts imported from Bertoni and Cotti tractor parts worth $122,250 but which Buencamino inflated to $387,933.66, the amount which Amparts remitted to the United States. So, there was an excess remittance of $265,683.66. The sum of $117,000 out of that excess amount was sold in the blackmarket at P3.42 a dollar. The proceeds of P391,200 were deposited in the bank account of Buencamino in the Philippine Trust Company (Exh. UU, p. 24). The trial court held that Buencamino should account for that amount to Amparts. Forwarding costs, technical services and promotional expenses.Amparts remitted to Overseas Investment Co., Ltd., through American banks, the sum of $297,000 (p. 6, Exh UU-5). The sum of $140,000 out of that amount was sold in the blackmarket at the rate of three pesos and ten centavos a dollar (p. 31, Exh. UU-6). The trial court held that Buencamino should also account for the proceeds of the sale amounting to P434,000. Recapitulation.-Hence, according to the trial court, Buencamino should account for the following amounts: 1 . Sale of $285,000 on the blackmarket.......................... P570,000 2. Amount used in paying for subscription................... 330,000 3. Amount of alleged loans to Buencamino by Amparts.................................................... 245,000 4. Sale in the blackmarket of $140,000.......................... 434,000 5. Sale in the blackmarket of $117,000......................... 391,200 GRAND TOTAL......................... P1,970,200 Buencamino's counterclaim.The trial court found that the Buencamino's claim that Chase should refund to Amparts the value of 24 pieces of machinery, which were allegedly useless, is not well-founded. Not wellfounded because those pieces of machinery were intended for the manufacture of agricultural implements but Buencamino and Cranker decided not to engage in that kind of business. Hence, it was not the fault of Chase if the said machinery was not used by Amparts. Amparts is not entitled to recover from Chase the sum of P6,676.60 as the freight charges paid by Amparts for the pieces of machinery and materials which Chase shipped to the Philippines but which were not a part of the plant that he had sold to Amparts. The trial court found that matter was settled in the memorandum annexed to the minutes of the board meeting held on November 27, 1956 (Exh. 4). In fact, Chase's lawyer in a letter dated October 1, 1959 asked Amparts to pay for the said materials valued at P19,630.93 (Exh. 11). For intriguing against Amparts after this case had been filed, the trial court imposed upon Chase damages amounting to P500. On the issue of dissolution or receivership.The trial court held that Amparts cannot be benefitted by its dissolution and that as Buencamino and his group own 2/3 of Amparts, it would not be proper to oust him as manager of Amparts. The most equitable solution would be to require him to pay his monetary liability to Amparts. I concur in Justice Cuevas' conclusion that Judge Gatmaitan 's decision is supported by the law and the evidence. The appeals should not be sustained.

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G.R. No. 74886 December 8, 1992 PRUDENTIAL BANK, petitioner, vs. INTERMEDIATE APPELLATE COURT, PHILIPPINE RAYON MILLS, INC. and ANACLETO R. CHI, respondents.

DAVIDE, JR., J.: Petitioner seeks to review and set aside the decision 1 of public respondent; Intermediate Appellate Court (now Court of Appeals), dated 10 March 1986, in AC-G.R. No. 66733 which affirmed in toto the 15 June 1978 decision of Branch 9 (Quezon City) of the then Court of First Instance (now Regional Trial Court) of Rizal in Civil Case No. Q-19312. The latter involved an action instituted by the petitioner for the recovery of a sum of money representing the amount paid by it to the Nissho Company Ltd. of Japan for textile machinery imported by the defendant, now private respondent, Philippine Rayon Mills, Inc. (hereinafter Philippine Rayon), represented by co-defendant Anacleto R. Chi. The facts which gave rise to the instant controversy are summarized by the public respondent as follows: On August 8, 1962, defendant-appellant Philippine Rayon Mills, Inc. entered into a contract with Nissho Co., Ltd. of Japan for the importation of textile machineries under a five-year deferred payment plan (Exhibit B, Plaintiff's Folder of Exhibits, p 2). To effect payment for said machineries, the defendant-appellant applied for a commercial letter of credit with the Prudential Bank and Trust Company in favor of Nissho. By virtue of said application, the Prudential Bank opened Letter of Credit No. DPP-63762 for $128,548.78 (Exhibit A, Ibid., p. 1). Against this letter of credit, drafts were drawn and issued by Nissho (Exhibits X, X-1 to X-11, Ibid., pp. 65, 66 to 76), which were all paid by the Prudential Bank through its correspondent in Japan, the Bank of Tokyo, Ltd. As indicated on their faces, two of these drafts (Exhibit X and X-1, Ibid., pp. 65-66) were accepted by the defendant-appellant through its president, Anacleto R. Chi, while the others were not (Exhibits X-2 to X-11, Ibid., pp. 66 to 76). Upon the arrival of the machineries, the Prudential Bank indorsed the shipping documents to the defendant-appellant which accepted delivery of the same. To enable the defendant-appellant to take delivery of the machineries, it executed, by prior arrangement with the Prudential Bank, a trust receipt which was signed by Anacleto R. Chi in his capacity as President (sic) of defendantappellant company (Exhibit C, Ibid., p. 13). At the back of the trust receipt is a printed form to be accomplished by two sureties who, by the very terms and conditions thereof, were to be jointly and severally liable to the Prudential Bank should the defendant-appellant fail to pay the total amount or any portion of the drafts issued by Nissho and paid for by Prudential Bank. The defendant-appellant was able to take delivery of the textile machineries and installed the same at its factory site at 69 Obudan Street, Quezon City. Sometime in 1967, the defendant-appellant ceased business operation (sic). On December 29, 1969, defendant-appellant's factory was leased by Yupangco Cotton Mills for an annual rental of P200,000.00 (Exhibit I, Ibid., p. 22). The lease was renewed on January 3, 1973 (Exhibit J, Ibid., p. 26). On January 5, 1974, all the textile machineries in the defendant-appellant's factory were sold to AIC Development Corporation for P300,000.00 (Exhibit K, Ibid., p. 29). The obligation of the defendant-appellant arising from the letter of credit and the trust receipt remained unpaid and unliquidated. Repeated formal demands (Exhibits U, V, and W, Ibid., pp. 62, 63, 64) for the payment of the said trust receipt yielded no result Hence, the present action for the collection of the principal amount of P956,384.95 was filed on October 3, 1974 against the defendant-appellant and Anacleto R. Chi. In their respective answers, the defendants interposed identical special defenses, viz., the complaint states no cause of action; if there is, the same has prescribed; and the plaintiff is guilty of laches. 2

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On 15 June 1978, the trial court rendered its decision the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered sentencing the defendant Philippine Rayon Mills, Inc. to pay plaintiff the sum of P153,645.22, the amounts due under Exhibits "X" & "X-1", with interest at 6% per annum beginning September 15, 1974 until fully paid. Insofar as the amounts involved in drafts Exhs. "X" (sic) to "X-11", inclusive, the same not having been accepted by defendant Philippine Rayon Mills, Inc., plaintiff's cause of action thereon has not accrued, hence, the instant case is premature. Insofar as defendant Anacleto R. Chi is concerned, the case is dismissed. Plaintiff is ordered to pay defendant Anacleto R. Chi the sum of P20,000.00 as attorney's fees. With costs against defendant Philippine Rayon Mills, Inc. SO ORDERED.
3

Petitioner appealed the decision to the then Intermediate Appellate Court. In urging the said court to reverse or modify the decision, petitioner alleged in its Brief that the trial court erred in (a) disregarding its right to reimbursement from the private respondents for the entire unpaid balance of the imported machines, the total amount of which was paid to the Nissho Company Ltd., thereby violating the principle of the third party payor's right to reimbursement provided for in the second paragraph of Article 1236 of the Civil Code and under the rule against unjust enrichment; (b) refusing to hold Anacleto R. Chi, as the responsible officer of defendant corporation, liable under Section 13 of P.D No 115 for the entire unpaid balance of the imported machines covered by the bank's trust receipt (Exhibit "C"); (c) finding that the solidary guaranty clause signed by Anacleto R. Chi is not a guaranty at all; (d) controverting the judicial admissions of Anacleto R. Chi that he is at least a simple guarantor of the said trust receipt obligation; (e) contravening, based on the assumption that Chi is a simple guarantor, Articles 2059, 2060 and 2062 of the Civil Code and the related evidence and jurisprudence which provide that such liability had already attached; (f) contravening the judicial admissions of Philippine Rayon with respect to its liability to pay the petitioner the amounts involved in the drafts (Exhibits "X", "X-l" to "X-11''); and (g) interpreting "sight" drafts as requiring acceptance by Philippine Rayon before the latter could be held liable thereon. 4 In its decision, public respondent sustained the trial court in all respects. As to the first and last assigned errors, it ruled that the provision on unjust enrichment, Article 2142 of the Civil Code, applies only if there is no express contract between the parties and there is a clear showing that the payment is justified. In the instant case, the relationship existing between the petitioner and Philippine Rayon is governed by specific contracts, namely the application for letters of credit, the promissory note, the drafts and the trust receipt. With respect to the last ten (10) drafts (Exhibits "X-2" to "X-11") which had not been presented to and were not accepted by Philippine Rayon, petitioner was not justified in unilaterally paying the amounts stated therein. The public respondent did not agree with the petitioner's claim that the drafts were sight drafts which did not require presentment for acceptance to Philippine Rayon because paragraph 8 of the trust receipt presupposes prior acceptance of the drafts. Since the ten (10) drafts were not presented and accepted, no valid demand for payment can be made. Public respondent also disagreed with the petitioner's contention that private respondent Chi is solidarily liable with Philippine Rayon pursuant to Section 13 of P.D. No. 115 and based on his signature on the solidary guaranty clause at the dorsal side of the trust receipt. As to the first contention, the public respondent ruled that the civil liability provided for in said Section 13 attaches only after conviction. As to the second, it expressed misgivings as to whether Chi's signature on the trust receipt made the latter automatically liable thereon because the so-called solidary guaranty clause at the dorsal portion of the trust receipt is to be signed not by one (1) person alone, but by two (2) persons; the last sentence of the same is incomplete and unsigned by witnesses; and it is not acknowledged before a notary public. Besides, even granting that it was executed and acknowledged before a notary public, Chi cannot be held liable therefor because the records fail to show that petitioner had either exhausted the properties of Philippine Rayon or had resorted to all legal remedies as required in Article 2058 of the Civil Code. As provided for under Articles 2052 and 2054 of the Civil Code, the obligation of a guarantor is merely accessory and subsidiary, respectively. Chi's liability would therefore arise only when the principal debtor fails to comply with his obligation. 5 Its motion to reconsider the decision having been denied by the public respondent in its Resolution of 11 June 1986, 6 petitioner filed the instant petition on 31 July 1986 submitting the following legal issues: I. WHETHER OR NOT THE RESPONDENT APPELLATE COURT GRIEVOUSLY ERRED IN DENYING PETITIONER'S CLAIM FOR FULL REIMBURSEMENT AGAINST THE PRIVATE RESPONDENTS FOR THE PAYMENT PETITIONER MADE TO NISSHO CO. LTD. FOR THE BENEFIT OF PRIVATE RESPONDENT UNDER ART. 1283 OF THE NEW CIVIL CODE OF THE PHILIPPINES AND UNDER THE GENERAL PRINCIPLE AGAINST UNJUST ENRICHMENT; II. WHETHER OR NOT RESPONDENT CHI IS SOLIDARILY LIABLE UNDER THE TRUST RECEIPT (EXH. C);

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III. WHETHER OR NOT ON THE BASIS OF THE JUDICIAL ADMISSIONS OF RESPONDENT CHI HE IS LIABLE THEREON AND TO WHAT EXTENT; IV. WHETHER OR NOT RESPONDENT CHI IS MERELY A SIMPLE GUARANTOR; AND IF SO; HAS HIS LIABILITY AS SUCH ALREADY ATTACHED; V. WHETHER OR NOT AS THE SIGNATORY AND RESPONSIBLE OFFICER OF RESPONDENT PHIL. RAYON RESPONDENT CHI IS PERSONALLY LIABLE PURSUANT TO THE PROVISION OF SECTION 13, P.D. 115; VI. WHETHER OR NOT RESPONDENT PHIL. RAYON IS LIABLE TO THE PETITIONER UNDER THE TRUST RECEIPT (EXH. C); VII. WHETHER OR NOT ON THE BASIS OF THE JUDICIAL ADMISSIONS RESPONDENT PHIL. RAYON IS LIABLE TO THE PETITIONER UNDER THE DRAFTS (EXHS. X, X-1 TO X-11) AND TO WHAT EXTENT; VIII. WHETHER OR NOT SIGHT DRAFTS REQUIRE PRIOR ACCEPTANCE FROM RESPONDENT PHIL. RAYON BEFORE THE LATTER BECOMES LIABLE TO PETITIONER. 7 In the Resolution of 12 March 1990, 8 this Court gave due course to the petition after the filing of the Comment thereto by private respondent Anacleto Chi and of the Reply to the latter by the petitioner; both parties were also required to submit their respective memoranda which they subsequently complied with. As We see it, the issues may be reduced as follows: 1. Whether presentment for acceptance of the drafts was indispensable to make Philippine Rayon liable thereon; 2. Whether Philippine Rayon is liable on the basis of the trust receipt; 3. Whether private respondent Chi is jointly and severally liable with Philippine Rayon for the obligation sought to be enforced and if not, whether he may be considered a guarantor; in the latter situation, whether the case should have been dismissed on the ground of lack of cause of action as there was no prior exhaustion of Philippine Rayon's properties. Both the trial court and the public respondent ruled that Philippine Rayon could be held liable for the two (2) drafts, Exhibits "X" and "X-1", because only these appear to have been accepted by the latter after due presentment. The liability for the remaining ten (10) drafts (Exhibits "X-2" to "X-11" inclusive) did not arise because the same were not presented for acceptance. In short, both courts concluded that acceptance of the drafts by Philippine Rayon was indispensable to make the latter liable thereon. We are unable to agree with this proposition. The transaction in the case at bar stemmed from Philippine Rayon's application for a commercial letter of credit with the petitioner in the amount of $128,548.78 to cover the former's contract to purchase and import loom and textile machinery from Nissho Company, Ltd. of Japan under a five-year deferred payment plan. Petitioner approved the application. As correctly ruled by the trial court in its Order of 6 March 1975: 9 . . . By virtue of said Application and Agreement for Commercial Letter of Credit, plaintiff bank 10 was under obligation to pay through its correspondent bank in Japan the drafts that Nisso (sic) Company, Ltd., periodically drew against said letter of credit from 1963 to 1968, pursuant to plaintiff's contract with the defendant Philippine Rayon Mills, Inc. In turn, defendant Philippine Rayon Mills, Inc., was obligated to pay plaintiff bank the amounts of the drafts drawn by Nisso (sic) Company, Ltd. against said plaintiff bank together with any accruing commercial charges, interest, etc. pursuant to the terms and conditions stipulated in the Application and Agreement of Commercial Letter of Credit Annex "A". A letter of credit is defined as an engagement by a bank or other person made at the request of a customer that the issuer will honor drafts or other demands for payment upon compliance with the conditions specified in the credit. 11 Through a letter of credit, the bank merely substitutes its own promise to pay for one of its customers who in return promises to pay the bank the amount of funds mentioned in the letter of credit plus credit or commitment fees mutually agreed upon. 12 In the instant case then, the drawee was necessarily the herein petitioner. It was to the latter that the drafts were presented for payment. In fact, there was no need for acceptance as the issued drafts are sight drafts. Presentment for acceptance is necessary only in the cases expressly provided for in Section 143 of the Negotiable Instruments Law (NIL). 13 The said section reads: Sec. 143. When presentment for acceptance must be made. Presentment for acceptance must be made: (a) Where the bill is payable after sight, or in any other case, where presentment for acceptance is necessary in order to fix the maturity of the instrument; or

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(b) Where the bill expressly stipulates that it shall be presented for acceptance; or (c) Where the bill is drawn payable elsewhere than at the residence or place of business of the drawee. In no other case is presentment for acceptance necessary in order to render any party to the bill liable. Obviously then, sight drafts do not require presentment for acceptance. The acceptance of a bill is the signification by the drawee of his assent to the order of the drawer; be done in writing by the drawee in the bill itself, or in a separate instrument. 15
14

this may

The parties herein agree, and the trial court explicitly ruled, that the subject, drafts are sight drafts. Said the latter: . . . In the instant case the drafts being at sight, they are supposed to be payable upon acceptance unless plaintiff bank has given the Philippine Rayon Mills Inc. time within which to pay the same. The first two drafts (Annexes C & D, Exh. X & X-1) were duly accepted as indicated on their face (sic), and upon such acceptance should have been paid forthwith. These two drafts were not paid and although Philippine Rayon Mills ought to have paid the same, the fact remains that until now they are still unpaid. 16 Corollarily, they are, pursuant to Section 7 of the NIL, payable on demand. Section 7 provides: Sec. 7. When payable on demand. An instrument is payable on demand (a) When so it is expressed to be payable on demand, or at sight, or on presentation; or (b) In which no time for payment in expressed. Where an instrument is issued, accepted, or indorsed when overdue, it is, as regards the person so issuing, accepting, or indorsing it, payable on demand. (emphasis supplied) Paragraph 8 of the Trust Receipt which reads: "My/our liability for payment at maturity of any accepted draft, bill of exchange or indebtedness shall not be extinguished or modified" 17 does not, contrary to the holding of the public respondent, contemplate prior acceptance by Philippine Rayon, but by the petitioner. Acceptance, however, was not even necessary in the first place because the drafts which were eventually issued were sight drafts And even if these were not sight drafts, thereby necessitating acceptance, it would be the petitioner and not Philippine Rayon which had to accept the same for the latter was not the drawee. Presentment for acceptance is defined an the production of a bill of exchange to a drawee for acceptance. 18 The trial court and the public respondent, therefore, erred in ruling that presentment for acceptance was an indispensable requisite for Philippine Rayon's liability on the drafts to attach. Contrary to both courts' pronouncements, Philippine Rayon immediately became liable thereon upon petitioner's payment thereof. Such is the essence of the letter of credit issued by the petitioner. A different conclusion would violate the principle upon which commercial letters of credit are founded because in such a case, both the beneficiary and the issuer, Nissho Company Ltd. and the petitioner, respectively, would be placed at the mercy of Philippine Rayon even if the latter had already received the imported machinery and the petitioner had fully paid for it. The typical setting and purpose of a letter of credit are described in Hibernia Bank and Trust Co. vs. J. Aron & Co., Inc., 19 thus: Commercial letters of credit have come into general use in international sales transactions where much time necessarily elapses between the sale and the receipt by a purchaser of the merchandise, during which interval great price changes may occur. Buyers and sellers struggle for the advantage of position. The seller is desirous of being paid as surely and as soon as possible, realizing that the vendee at a distant point has it in his power to reject on trivial grounds merchandise on arrival, and cause considerable hardship to the shipper. Letters of credit meet this condition by affording celerity and certainty of payment. Their purpose is to insure to a seller payment of a definite amount upon presentation of documents. The bank deals only with documents. It has nothing to do with the quality of the merchandise. Disputes as to the merchandise shipped may arise and be litigated later between vendor and vendee, but they may not impede acceptance of drafts and payment by the issuing bank when the proper documents are presented. The trial court and the public respondent likewise erred in disregarding the trust receipt and in not holding that Philippine Rayon was liable thereon. In People vs. Yu Chai Ho, 20 this Court explains the nature of a trust receipt by quoting In re Dunlap Carpet Co., 21 thus:

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By this arrangement a banker advances money to an intending importer, and thereby lends the aid of capital, of credit, or of business facilities and agencies abroad, to the enterprise of foreign commerce. Much of this trade could hardly be carried on by any other means, and therefore it is of the first importance that the fundamental factor in the transaction, the banker's advance of money and credit, should receive the amplest protection. Accordingly, in order to secure that the banker shall be repaid at the critical point that is, when the imported goods finally reach the hands of the intended vendee the banker takes the full title to the goods at the very beginning; he takes it as soon as the goods are bought and settled for by his payments or acceptances in the foreign country, and he continues to hold that title as his indispensable security until the goods are sold in the United States and the vendee is called upon to pay for them. This security is not an ordinary pledge by the importer to the banker, for the importer has never owned the goods, and moreover he is not able to deliver the possession; but the security is the complete title vested originally in the bankers, and this characteristic of the transaction has again and again been recognized and protected by the courts. Of course, the title is at bottom a security title, as it has sometimes been called, and the banker is always under the obligation to reconvey; but only after his advances have been fully repaid and after the importer has fulfilled the other terms of the contract. As further stated in National Bank vs. Viuda e Hijos de Angel Jose,
22

trust receipts:

. . . [I]n a certain manner, . . . partake of the nature of a conditional sale as provided by the Chattel Mortgage Law, that is, the importer becomes absolute owner of the imported merchandise as soon an he has paid its price. The ownership of the merchandise continues to be vested in the owner thereof or in the person who has advanced payment, until he has been paid in full, or if the merchandise has already been sold, the proceeds of the sale should be turned over to him by the importer or by his representative or successor in interest. Under P.D. No. 115, otherwise known an the Trust Receipts Law, which took effect on 29 January 1973, a trust receipt transaction is defined as "any transaction by and between a person referred to in this Decree as the entruster, and another person referred to in this Decree as the entrustee, whereby the entruster, who owns or holds absolute title or security interests' over certain specified goods, documents or instruments, releases the same to the possession of the entrustee upon the latter's execution and delivery to the entruster of a signed document called the "trust receipt" wherein the entrustee binds himself to hold the designated goods, documents or instruments in trust for the entruster and to sell or otherwise dispose of the goods, documents or instruments with the obligation to turn over to the entruster the proceeds thereof to the extent of the amount owing to the entruster or as appears in the trust receipt or the goods, instruments themselves if they are unsold or not otherwise disposed of, in accordance with the terms and conditions specified in the trusts receipt, or for other purposes substantially equivalent to any one of the following: . . ." It is alleged in the complaint that private respondents "not only have presumably put said machinery to good use and have profited by its operation and/or disposition but very recent information that (sic) reached plaintiff bank that defendants already sold the machinery covered by the trust receipt to Yupangco Cotton Mills," and that "as trustees of the property covered by the trust receipt, . . . and therefore acting in fiduciary (sic) capacity, defendants have willfully violated their duty to account for the whereabouts of the machinery covered by the trust receipt or for the proceeds of any lease, sale or other disposition of the same that they may have made, notwithstanding demands therefor; defendants have fraudulently misapplied or converted to their own use any money realized from the lease, sale, and other disposition of said machinery." 23 While there is no specific prayer for the delivery to the petitioner by Philippine Rayon of the proceeds of the sale of the machinery covered by the trust receipt, such relief is covered by the general prayer for "such further and other relief as may be just and equitable on the premises." 24 And although it is true that the petitioner commenced a criminal action for the violation of the Trust Receipts Law, no legal obstacle prevented it from enforcing the civil liability arising out of the trust, receipt in a separate civil action. Under Section 13 of the Trust Receipts Law, the failure of an entrustee to turn over the proceeds of the sale of goods, documents or instruments covered by a trust receipt to the extent of the amount owing to the entruster or as appear in the trust receipt or to return said goods, documents or instruments if they were not sold or disposed of in accordance with the terms of the trust receipt shall constitute the crime of estafa, punishable under the provisions of Article 315, paragraph 1(b) of the Revised Penal Code. 25Under Article 33 of the Civil Code, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party in cases of defamation, fraud and physical injuries. Estafa falls underfraud. We also conclude, for the reason hereinafter discussed, and not for that adduced by the public respondent, that private respondent Chi's signature in the dorsal portion of the trust receipt did not bind him solidarily with Philippine Rayon. The statement at the dorsal portion of the said trust receipt, which petitioner describes as a "solidary guaranty clause", reads: In consideration of the PRUDENTIAL BANK AND TRUST COMPANY complying with the foregoing, we jointly and severally agree and undertake to pay on demand to the PRUDENTIAL BANK AND TRUST COMPANY all sums of money which the said PRUDENTIAL BANK AND TRUST COMPANY may call upon us to pay arising out of or pertaining to, and/or in any event connected with the default of and/or non-fulfillment in any respect of the undertaking of the aforesaid: PHILIPPINE RAYON MILLS, INC.

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We further agree that the PRUDENTIAL BANK AND TRUST COMPANY does not have to take any steps or exhaust its remedy against aforesaid: before making demand on me/us. (Sgd.) Anacleto R. Chi ANACLETO R. CHI 26 Petitioner insists that by virtue of the clear wording of the statement, specifically the clause ". . . we jointly and severally agree and undertake . . .," and the concluding sentence on exhaustion, Chi's liability therein is solidary. In holding otherwise, the public respondent ratiocinates as follows: With respect to the second argument, we have our misgivings as to whether the mere signature of defendant-appellee Chi of (sic) the guaranty agreement, Exhibit "C-1", will make it an actionable document. It should be noted that Exhibit "C-1" was prepared and printed by the plaintiff-appellant. A perusal of Exhibit "C-1" shows that it was to be signed and executed by two persons. It was signed only by defendant-appellee Chi. Exhibit "C-1" was to be witnessed by two persons, but no one signed in that capacity. The last sentence of the guaranty clause is incomplete. Furthermore, the plaintiff-appellant also failed to have the purported guarantee clause acknowledged before a notary public. All these show that the alleged guaranty provision was disregarded and, therefore, not consummated. But granting arguendo that the guaranty provision in Exhibit "C-1" was fully executed and acknowledged still defendant-appellee Chi cannot be held liable thereunder because the records show that the plaintiff-appellant had neither exhausted the property of the defendant-appellant nor had it resorted to all legal remedies against the said defendant-appellant as provided in Article 2058 of the Civil Code. The obligation of a guarantor is merely accessory under Article 2052 of the Civil Code and subsidiary under Article 2054 of the Civil Code. Therefore, the liability of the defendant-appellee arises only when the principal debtor fails to comply with his obligation. 27 Our own reading of the questioned solidary guaranty clause yields no other conclusion than that the obligation of Chi is only that of a guarantor. This is further bolstered by the last sentence which speaks of waiver of exhaustion, which, nevertheless, is ineffective in this case because the space therein for the party whose property may not be exhausted was not filled up. Under Article 2058 of the Civil Code, the defense of exhaustion (excussion) may be raised by a guarantor before he may be held liable for the obligation. Petitioner likewise admits that the questioned provision is a solidary guaranty clause, thereby clearly distinguishing it from a contract of surety. It, however, described the guaranty as solidary between the guarantors; this would have been correct if two (2) guarantors had signed it. The clause "we jointly and severally agree and undertake" refers to the undertaking of the two (2) parties who are to sign it or to the liability existing between themselves. It does not refer to the undertaking between either one or both of them on the one hand and the petitioner on the other with respect to the liability described under the trust receipt. Elsewise stated, their liability is not divisible as between them, i.e., it can be enforced to its full extent against any one of them. Furthermore, any doubt as to the import, or true intent of the solidary guaranty clause should be resolved against the petitioner. The trust receipt, together with the questioned solidary guaranty clause, is on a form drafted and prepared solely by the petitioner; Chi's participation therein is limited to the affixing of his signature thereon. It is, therefore, a contract of adhesion; 28 as such, it must be strictly construed against the party responsible for its preparation. 29 Neither can We agree with the reasoning of the public respondent that this solidary guaranty clause was effectively disregarded simply because it was not signed and witnessed by two (2) persons and acknowledged before a notary public. While indeed, the clause ought to have been signed by two (2) guarantors, the fact that it was only Chi who signed the same did not make his act an idle ceremony or render the clause totally meaningless. By his signing, Chi became the sole guarantor. The attestation by witnesses and the acknowledgement before a notary public are not required by law to make a party liable on the instrument. The rule is that contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present; however, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that it be proved in a certain way, that requirement is absolute and indispensable. 30 With respect to a guaranty, 31 which is a promise to answer for the debt or default of another, the law merely requires that it, or some note or memorandum thereof, be in writing. Otherwise, it would be unenforceable unless ratified. 32 While the acknowledgement of a surety before a notary public is required to make the same a public document, under Article 1358 of the Civil Code, a contract of guaranty does not have to appear in a public document. And now to the other ground relied upon by the petitioner as basis for the solidary liability of Chi, namely the criminal proceedings against the latter for the violation of P.D. No. 115. Petitioner claims that because of the

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said criminal proceedings, Chi would be answerable for the civil liability arising therefrom pursuant to Section 13 of P.D. No. 115. Public respondent rejected this claim because such civil liability presupposes prior conviction as can be gleaned from the phrase "without prejudice to the civil liability arising from the criminal offense." Both are wrong. The said section reads: Sec. 13. Penalty Clause. The failure of an entrustee to turn over the proceeds of the sale of the goods, documents or instruments covered by a trust receipt to the extent of the amount owing to the entruster or as appears in the trust receipt or to return said goods, documents or instruments if they were not sold or disposed of in accordance with the terms of the trust receipt shall constitute the crime of estafa, punishable under the provisions of Article Three hundred and fifteen, paragraph one (b) of Act Numbered Three thousand eight hundred and fifteen, as amended, otherwise known as the Revised Penal Code. If the violation or offense is committed by a corporation, partnership, association or other juridical entities, the penalty provided for in this Decree shall be imposed upon the directors, officers, employees or other officials or persons therein responsible for the offense, without prejudice to the civil liabilities arising from the criminal offense. A close examination of the quoted provision reveals that it is the last sentence which provides for the correct solution. It is clear that if the violation or offense is committed by a corporation, partnership, association or other juridical entities, the penalty shall be imposed upon the directors, officers, employees or other officials or persons therein responsible for the offense. The penalty referred to is imprisonment, the duration of which would depend on the amount of the fraud as provided for in Article 315 of the Revised Penal Code. The reason for this is obvious: corporations, partnerships, associations and other juridical entities cannot be put in jail. However, it is these entities which are made liable for the civil liability arising from the criminal offense. This is the import of the clause "without prejudice to the civil liabilities arising from the criminal offense." And, as We stated earlier, since that violation of a trust receipt constitutes fraud under Article 33 of the Civil Code, petitioner was acting well within its rights in filing an independent civil action to enforce the civil liability arising therefrom against Philippine Rayon. The remaining issue to be resolved concerns the propriety of the dismissal of the case against private respondent Chi. The trial court based the dismissal, and the respondent Court its affirmance thereof, on the theory that Chi is not liable on the trust receipt in any capacity either as surety or as guarantor because his signature at the dorsal portion thereof was useless; and even if he could be bound by such signature as a simple guarantor, he cannot, pursuant to Article 2058 of the Civil Code, be compelled to pay until after petitioner has exhausted and resorted to all legal remedies against the principal debtor, Philippine Rayon. The records fail to show that petitioner had done so 33 Reliance is thus placed on Article 2058 of the Civil Code which provides: Art. 2056. The guarantor cannot be compelled to pay the creditor unless the latter has exhausted all the property of the debtor, and has resorted to all the legal remedies against the debtor. Simply stated, there is as yet no cause of action against Chi. We are not persuaded. Excussion is not a condition sine qua non for the institution of an action against a guarantor. In Southern Motors, Inc. vs. Barbosa, 34 this Court stated: 4. Although an ordinary personal guarantor not a mortgagor or pledgor may demand the aforementioned exhaustion, the creditor may, prior thereto, secure a judgment against said guarantor, who shall be entitled, however, to a deferment of the execution of said judgment against him until after the properties of the principal debtor shall have been exhausted to satisfy the obligation involved in the case. There was then nothing procedurally objectionable in impleading private respondent Chi as a co-defendant in Civil Case No. Q-19312 before the trial court. As a matter of fact, Section 6, Rule 3 of the Rules of Court on permissive joinder of parties explicitly allows it. It reads: Sec. 6. Permissive joinder of parties. All persons in whom or against whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the alternative, may, except as otherwise provided in these rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law or fact common to all such plaintiffs or to all such defendants may arise in the action; but the court may make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in which he may have no interest. This is the equity rule relating to multifariousness. It is based on trial convenience and is designed to permit the joinder of plaintiffs or defendants whenever there is a common question of law or fact. It will save the parties unnecessary work, trouble and expense. 35 However, Chi's liability is limited to the principal obligation in the trust receipt plus all the accessories thereof including judicial costs; with respect to the latter, he shall only be liable for those costs incurred after being judicially required to pay. 36 Interest and damages, being accessories of the principal obligation, should also be

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paid; these, however, shall run only from the date of the filing of the complaint. Attorney's fees may even be allowed in appropriate cases. 37 In the instant case, the attorney's fees to be paid by Chi cannot be the same as that to be paid by Philippine Rayon since it is only the trust receipt that is covered by the guaranty and not the full extent of the latter's liability. All things considered, he can be held liable for the sum of P10,000.00 as attorney's fees in favor of the petitioner. Thus, the trial court committed grave abuse of discretion in dismissing the complaint as against private respondent Chi and condemning petitioner to pay him P20,000.00 as attorney's fees. In the light of the foregoing, it would no longer necessary to discuss the other issues raised by the petitioner WHEREFORE, the instant Petition is hereby GRANTED. The appealed Decision of 10 March 1986 of the public respondent in AC-G.R. CV No. 66733 and, necessarily, that of Branch 9 (Quezon City) of the then Court of First Instance of Rizal in Civil Case No. Q19312 are hereby REVERSED and SET ASIDE and another is hereby entered: 1. Declaring private respondent Philippine Rayon Mills, Inc. liable on the twelve drafts in question (Exhibits "X", "X-1" to "X-11", inclusive) and on the trust receipt (Exhibit "C"), and ordering it to pay petitioner: (a) the amounts due thereon in the total sum of P956,384.95 as of 15 September 1974, with interest thereon at six percent (6%) per annum from 16 September 1974 until it is fully paid, less whatever may have been applied thereto by virtue of foreclosure of mortgages, if any; (b) a sum equal to ten percent (10%) of the aforesaid amount as attorney's fees; and (c) the costs. 2. Declaring private respondent Anacleto R. Chi secondarily liable on the trust receipt and ordering him to pay the face value thereof, with interest at the legal rate, commencing from the date of the filing of the complaint in Civil Case No. Q19312 until the same is fully paid as well as the costs and attorney's fees in the sum of P10,000.00 if the writ of execution for the enforcement of the above awards against Philippine Rayon Mills, Inc. is returned unsatisfied. Costs against private respondents. SO ORDERED.

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