JOSE E. GENSON, petitioner, vs. SPS. EDUARDO ADARLE and SHERLITA MARI-ON, and INTERMEDIATE APPELLATE COURT, respondents.

This is a Petition for review which seeks to set aside the decision in CA-G.R. No. 00783 on the ground that the findings of the respondent Court of Appeals are based on misapprehension of facts and conflict with those of the trial court and that the conclusions drawn therefrom are based on speculations and conjectures. Arturo Arbatin was the successful bidder in the sale at public auction of junk and other unserviceable government property located at the compound of the Highway District Engineer's Office of Roxas City. Private respondent Eduardo Adarle was hired as a laborer by Arbatin to gather and take away scrap iron from the said compound with a daily wage of P12.00 or about 312.00 a month. On September 8, 1979, at 4:00 o'clock in the morning, on a Saturday and a non-working day, while the private respondent was tying a cable to a pile of scrap iron to be loaded on a truck inside the premises of the compound, and while the bucket of the payloader driven by Ramon Buensalido was being raised, the bucket suddenly fell and hit Adarle on the right back portion of his head just below the nape of his neck. Adarle was rushed to the St. Anthony Hospital, Roxas City. According to the medical certificate issued by the attending physician, the private respondent suffered the following injuries: 1) Comminuted fracture of the vertebral body of 13 with extreme Kyphosis of the segment by x-ray. 2) Cord compression 2nd to the injury with paralysis of the lower extremity, inability to defecate and urinate. (E Exh. A, Exhibits for the plaintiff-appellant, Original Records.) The medical certificate also reported that: The patient recovered the use of his urinary bladder and was able to defecate 2 months after surgery. He is paralyzed from the knee down to his toes. He can only sit on a wheel chair. The above residual damage is permanent 2nd to the injury incurred by Mr. Adarle, he is still confined in the Hospital. (idem) While still in the hospital, the private respondent instituted the action below for damages against Arbatin, his employer; Buensalido, the payloader operator; Candelario Marcelino, the civil engineer; and petitioner, the Highway District Engineer. During the trial on the merits, the petitioner put up the defense that he had no knowledge of or participation in the accident and that, when it happened, he was not present in the government compound. Apart from the fact that it was a Saturday and a non-working day, he was in Iloilo. As part of his evidence, the petitioner presented a memorandum directed to a certain Mr. Orlando Panaguiton ordering the latter to take charge of the district until his return (Exh. 1). The trial court found that, with the exception of the petitioner, all of the defendants were present at the Highway's compound when the accident occurred. However, it still adjudged the petitioner liable for damages because the petitioner was supposed to know what his men do with their government equipment within an area under his supervision. Thus, on January 19, 1982, the trial court rendered a decision finding all the defendants liable for damages under Articles 1172 and 2176 of the New Civil Code. The dispositive portion of the decision reads:

WHEREFORE, this court orders the defendants to pay to plaintiff the amounts stated in the complainant's prayer as follows: Ordering the defendants jointly and severally to pay the plaintiff the sum of 312.00 monthly from September 8, 1979 until his release from the hospital. Ordering the defendants jointly and severally to pay the plaintiff the sum of P7,410.63 for hospital expenses up to January 14, 1980 and an additional amount for further hospitalization until the release of plaintiff from the hospital; Ordering the defendants jointly and severally to pay the plaintiff the sum of at least P100,000.00 as actual and compensatory damages, considering that plaintiff Eduardo Adarle is totally incapacitated for any employment for life; Ordering the defendants jointly and severally to pay the plaintiff the sum of P20,000.00 as moral damages and another sum for exemplary damages which we leave to the sound discretion of the Honorable Court; Ordering the defendants jointly and severally to pay the plaintiff the sum of P5,000.00 as attorney's fees. (pp. 129- 130, Original Records). The petitioner appealed to the Intermediate Appellate Court which affirmed the decision of the trial court and further ordered the defendants to pay P5,000.00 exemplary damages. Defendant Candelario Marcelino was, however, absolved from liability. In its decision, the appellate court ruled: That payloader owned by the Government, as found by the lower court, should not have been operated that Saturday, September 8, 1979, a Saturday, a non-working holiday. There is no official order from the proper authorities authorizing Arbatin and plaintiff to work and Buensalido to operate the payloader on that day inside the Highway compound. Thereabouts, we can logically deduce that Arbatin and plaintiff went to the compound to work with the previous knowledge and consent of Highway District Engineer Jose E. Genson. And allowed him, probably upon the request of Arbatin. We have noted that Genson testified that his office does not authorize work on Saturdays. Genson testified that he was in Iloilo from September 9 and 10, 1979. The accident occurred on September 8, in the morning. In his answer, Genson did not allege his presence in Iloilo on September 9 and 10 ... . We fully concur with the lower court's conclusions regarding the physical presence of appellants inside the compound on that fateful day, pursuant to a previous understanding with Arbatin for plaintiff to work on the scrap iron and for Buensalido to operate the payloader inside the compound. Arbatin and plaintiff would not go to the compound on that Saturday, if there was no previous understanding with Genson and Buensalido. The liability of Genson is based on fault, intentional and voluntary or negligent (Eleano v. Hill, 77 SCRA 106; Jimena v. Lincallo, 63 O.G. 11,15, 8 C. A.R. 2567). He gave permission to Arbatin, plaintiff and Buensalido to work on Saturday, a non-working day, in contravention of his office' rules and regulations outlawing work on Saturdays.. (pp. 29-30, Rollo) In this present petition, the petitioner contends that the appellate court committed a palpable error when it ruled that the petitioner was present when the accident happened and that he had given permission to the other defendants to work on a Saturday, a non-working day. The petitioner argues that considering these were the facts relied upon by the said court in holding that he was negligent and thus liable for damages, such a conclusion, is without basis.

The petitioner further contends that the appellate court erred in not holding that the suit against the petitioner was, in effect, a suit against the government and, therefore, should be dismissed under the principle of non-suability of the state. As regards the petitioner's second contention, we hold that the petitioner's Identification as the Highway District Engineer in the complaint filed by the private respondent did not result in the said complaint's becoming a suit against the government or state. In Belizar v. Brazas, (2 SCRA 526), we ruled that "the fact that the duties and positions of the defendants are indicated does not mean that they are being sued in their official capacities, especially as the present action is not one against the Government." Furthermore, the accident in the case at bar happened on a non-working day and there was no showing that the work performed on that day was authorized by the government. While the equipment used belongs to the Government, the work was private in nature, for the benefit of a purchaser of junk. As we have held in the case of Republic v. Palacio (23 SCRA 899,906). xxx xxx xxx the ISU liability thus arose from tort and not from contract, and it is a well-entrenched rule in this jurisdiction, embodied in Article 2180 of the Civil Code of the Philippines, that the State is liable only for torts caused by its special agents, specially commissioned to carry out the acts complained of outside of such agent's regular duties (Merritt v. Insular Government, supra; Rosete v. Auditor General, 81 Phil. 453) There being no proof that the making of the tortious inducement was authorized, neither the State nor its funds can be made liable therefor. Therefore, the defense of the petitioner that he cannot be made liable under the principle of non-suability of the state cannot be sustained. With regard to the main contention of the petitioner that the appellate court based its conclusions on an erroneous finding of fact, we agree with him that the appellate court's finding that he was present within the premises when the accident happened is not supported by evidence indisputably showing that he was indeed there. Since the evidence fails to establish petitioner Genson's presence when the payloader's bucket fell on the head of Mr. Adarle, any liability on his part would be based only on his alleged failure to exercise proper supervision over his subordinates (See Umali v. Bacani, 69 SCRA 263, 267-268). According to the trial court, Mr. Genson authorized work on a Saturday when no work was supposed to be done. It stated that the petitioner should know what his men do with their government equipment and he should neither be lax nor lenient in his supervision over them. The petitioner contends that: 1. No evidence on record exists that Genson gave authority to Adarle and Arbatin, either verbally or in writing, to enter the work inside the Highways Compound on September 8, 1979; 2. Genson never knew or met Arbatin until the trial of the case. This fact was never denied by Arbatin nor rebutted by Adarle. How then could Genson have ordered or allowed Arbatin to enter the Highways Compound with Adarle? 3. Adarle himself repeatedly admitted that Arbatin, his employer, gave him the instructions to enter the compound, thus:

Q. Now particularly on September 8, 1979, did Arbatin ask you to go to the compound in the Highway? A. Yes sr. Q. Are you sure of that? A. Yes, sir. Q. Where did he say that to you? A. We went to the Highway compound for many times already and that was the time when I met the incident. Q. The particular day in question September 8. 1979, did you see Arturo Arbatin and he asked you to go the compound on that day? A. That date was included on the first day when "he instructed us to gather scrap ironuntil that work could be finished." (pp. 25-26, tsn., October 10, 1980) (Emphasis supplied) Q. Who told you to work there? A. "Through the instruction of Arturo Arbatin" (pp. 32, tsn., Oct. 10, 1980) (Emphasis supplied) (pp. 12-13, Rollo). Insofar as work on a Saturday is concerned, and assuming Mr. Genson verbally allowed it, we see nothing wrong in the petitioner's authorizing work on that day. As a matter of fact, it could even be required that the hauling of junk and unserviceable equipment sold at public auction must be done on non-working days. The regular work of the District Engineer's office would not be disturbed or prejudiced by a private bidder bringing in his trucks and obstructing the smooth flow of traffic and the daily routine within the compound. Obviously, it would also be safer for all concerned to effect the clearing of the junk pile when everything is peaceful and quiet. There is no showing from the records that it is against regulations to use government cranes and payloaders to load items sold at public auction on the trucks of the winning bidder. The items were formerly government property. Unless the contract specifies otherwise, it may be presumed that all the parties were in agreement regarding the use of equipment already there for that purpose. Of course, it would be different if the junk pile is in a compound where there is no equipment for loading or unloading and the cranes or payloaders have to be brought there. There is likewise no sufficient basis for the "master-servant" doctrine in tort law to apply. Buensalido was not working overtime as a government employee. It is doubtful if the district engineer can be considered an "employer" for purposes of tort liability who may be liable even if he was not there. No evidence was presented to show that an application for overtime work or a claim for overtime pay from the district engineer's office was ever filed. It is more logical to presume that Buensalido, the operator of the payloader, was trying to earn a little money on the side from the junk buyer and that his presence in the compound on that Saturday was a purely private arrangement. From the records of this case, we are not disposed to rule that a supervisor who tolerates his subordinates to moonlight on a non-working day in their office premises can be held liable for everything that happens on that day. It would have been preferable if Mr. Arbatin brought his own payloader operator and perhaps, his own equipment but we are not dealing with sound office practice in this case. The issue before us is subsidiary liability for tort comitted by a government employee who is moonlighting on a non-working day. This Court ruled in Dumlao v. Court of Appeals (114 SCRA 247, 251):

Nevertheless, it is a well-settled principle of law that a public official may be liable in his personal private capacity for whatever damage he may have caused by his act done with malice and in bad faith, (Mindanao realty Corp. v. Kintanar, 6 SCRA 814) or beyond the scope of his authority or jurisdiction. (the Philippine Racing Club v. Bonifacio, G.R. No. L-11844, August 31, 1960) The question, therefore, is whether petitioner did act in any of the manner aforesaid. Petitioner contends that, contrary to the holding of the respondent Court of Appeals, he was not sued in his personal capacity, but in his official capacity. Neither was malice or bad faith alleged against him in the complaint, much less proven by the evidence, as the respondent court made no such finding of malice or bad faith. Examining the allegations of the complaint and reviewing the evidence it would indeed be correct to say that petitioner was sued in his official capacity, and that the most that was imputed to him is act of culpable neglect, inefficiency and gross indifference in the performance of his official duties. Verily, this is not imputation of bad faith or malice, and what is more was not convincingly proven. According to the respondent court, "Genson and Buensalido divested themselves of their public positions and privileges to accomodate an acquaintance or probably for inordinate gain." (p. 31, Rollo). There is no showing from the records that Genson received anything which could be called "inordinate gain." It is possible that he permitted work on a Saturday to accomodate an acquaintance but it is more plausible that he simply wanted to clear his compound of junk and the best time for the winning bidder to do it was on a non-working day. At any rate, we see no malice, bad faith, or gross negligence on the part of Genson to hold him liable for the acts of Buensalido and Arbatin. WHEREFORE, the decision of the Intermediate Appellate Court is hereby REVERSED and SET ASIDE. The complaint against Jesus Genson is DISMISSED. SO ORDERED.

SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF APPEALS, MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ, in his capacity as Presiding Judge of Branch 89, Regional Trial Court of Quezon City, respondents. DECISION QUISUMBING, J.: This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside the Resolution[1] dated September 27, 1995 and the Decision[2] dated April 10, 1996 of the Court of Appeals[3] in CA-G.R. SP No. 36533,[4] and the Orders[5] dated August 29, 1994[6] and February 2, 1995[7] that were issued by the trial court in Civil Case No. Q-93-18394.[8] The pertinent antecedent facts which gave rise to the instant petition, as stated in the questioned Decision[9], are as follows: On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for its airlines based in Jeddah, Saudi Arabia. x x x On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a disco dance with fellow crew members Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals. Because it was almost morning when they returned to their hotels, they agreed to have breakfast together at the room of Thamer. When they were in te (sic) room, Allah left on some pretext. Shortly after he did, Thamer attempted to rape plaintiff. Fortunately, a roomboy and several security personnel heard her cries for help and rescued her. Later, the Indonesian police came and arrested Thamer and Allah Al-Gazzawi, the latter as an accomplice. When plaintiff returned to Jeddah a few days later, several SAUDIA officials interrogated her about the Jakarta incident. They then requested her to go back to Jakarta to help arrange the release of Thamer and Allah. In Jakarta, SAUDIA Legal Officer Sirah Akkad and base manager Baharini negotiated with the police for the immediate release of the detained crew members but did not succeed because plaintiff refused to cooperate. She was afraid that she might be tricked into something she did not want because of her inability to understand the local dialect. She also declined to sign a blank paper and a document written in the local dialect. Eventually, SAUDIA allowed plaintiff to return to Jeddah but barred her from the Jakarta flights. Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian authorities agreed to deport Thamer and Allah after two weeks of detention. Eventually, they were again put in service by defendant SAUDI (sic). In September 1990, defendant SAUDIA transferred plaintiff to Manila. On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind her, her superiors requested her to see Mr. Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he brought her to the police station where the police took her passport and questioned her about the Jakarta incident. Miniewy simply stood by as the police put pressure on her to make a statement dropping the case against Thamer and Allah. Not until she agreed to do so did the police return her passport and allowed her to catch the afternoon flight out of Jeddah. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the departure of her flight to Manila, plaintiff was not allowed to board the plane and instead ordered to take a later flight to Jeddah to see Mr. Miniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid of the SAUDIA office brought her to a Saudi court where she was asked to sign a document written in Arabic. They told her that this was necessary to close the case against Thamer and Allah. As it turned out, plaintiff signed a notice to her to appear before the court on June 27, 1993. Plaintiff then returned to Manila.

Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see Miniewy on June 27, 1993 for further investigation. Plaintiff did so after receiving assurance from SAUDIAs Manila manager, Aslam Saleemi, that the investigation was routinary and that it posed no danger to her. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge interrogated plaintiff through an interpreter about the Jakarta incident. After one hour of interrogation, they let her go. At the airport, however, just as her plane was about to take off, a SAUDIA officer told her that the airline had forbidden her to take flight. At the Inflight Service Office where she was told to go, the secretary of Mr. Yahya Saddick took away her passport and told her to remain in Jeddah, at the crew quarters, until further orders. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where the judge, to her astonishment and shock, rendered a decision, translated to her in English, sentencing her to five months imprisonment and to 286 lashes. Only then did she realize that the Saudi court had tried her, together with Thamer and Allah, for what happened in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing and listening to the music in violation of Islamic laws; and (3) socializing with the male crew, in contravention of Islamic tradition.[10] Facing conviction, private respondent sought the help of her employer, petitioner SAUDIA. Unfortunately, she was denied any assistance. She then asked the Philippine Embassy in Jeddah to help her while her case is on appeal. Meanwhile, to pay for her upkeep, she worked on the domestic flight of SAUDIA, while Thamer and Allah continued to serve in the international flights.[11] Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her and allowed her to leave Saudi Arabia. Shortly before her return to Manila,[12]she was terminated from the service by SAUDIA, without her being informed of the cause. On November 23, 1993, Morada filed a Complaint[13] for damages against SAUDIA, and Khaled Al-Balawi (AlBalawi), its country manager. On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss[14] which raised the following grounds, to wit: (1) that the Complaint states no cause of action against Saudia; (2) that defendant Al-Balawi is not a real party in interest; (3) that the claim or demand set forth in the Complaint has been waived, abandoned or otherwise extinguished; and (4) that the trial court has no jurisdiction to try the case. On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss)[15] Saudia filed a reply[16] thereto on March 3, 1994. On June 23, 1994, Morada filed an Amended Complaint[17] wherein Al-Balawi was dropped as party defendant. On August 11, 1994, Saudia filed its Manifestation and Motion to Dismiss Amended Complaint[18]. The trial court issued an Order[19] dated August 29, 1994 denying the Motion to Dismiss Amended Complaint filed by Saudia. From the Order of respondent Judge[20] denying the Motion to Dismiss, SAUDIA filed on September 20, 1994, its Motion for Reconsideration[21] of the Order dated August 29, 1994. It alleged that the trial court has no jurisdiction to hear and try the case on the basis of Article 21 of the Civil Code, since the proper law applicable is the law of the Kingdom of Saudi Arabia. On October 14, 1994, Morada filed her Opposition[22] (To Defendants Motion for Reconsideration). In the Reply[23] filed with the trial court on October 24, 1994, SAUDIA alleged that since its Motion for Reconsideration raised lack of jurisdiction as its cause of action, the Omnibus Motion Rule does not apply, even if that ground is raised for the first time on appeal. Additionally, SAUDIA alleged that the Philippines does not have any substantial interest in the prosecution of the instant case, and hence, without jurisdiction to adjudicate the same. Respondent Judge subsequently issued another Order[24] dated February 2, 1995, denying SAUDIAs Motion for Reconsideration. The pertinent portion of the assailed Order reads as follows:

Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines filed, thru counsel, on September 20, 1994, and the Opposition thereto of the plaintiff filed, thru counsel, on October 14, 1994, as well as the Reply therewith of defendant Saudi Arabian Airlines filed, thru counsel, on October 24, 1994, considering that a perusal of the plaintiffs Amended Complaint, which is one for the recovery of actual, moral and exemplary damages plus attorneys fees, upon the basis of the applicable Philippine law, Article 21 of the New Civil Code of the Philippines, is, clearly, within the jurisdiction of this Court as regards the subject matter, and there being nothing new of substance which might cause the reversal or modification of the order sought to be reconsidered, the motion for reconsideration of the defendant, is DENIED. SO ORDERED.[25] Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and Prohibition with Prayer for Issuance of Writ of Preliminary Injunction and/or Temporary Restraining Order[26] with the Court of Appeals. Respondent Court of Appeals promulgated a Resolution with Temporary Restraining dated February 23, 1995, prohibiting the respondent Judge from further conducting any proceeding, unless otherwise directed, in the interim. In another Resolution[28] promulgated on September 27, 1995, now assailed, the appellate court denied SAUDIAs Petition for the Issuance of a Writ of Preliminary Injunction dated February 18, 1995, to wit: The Petition for the Issuance of a Writ of Preliminary Injunction is hereby DENIED, after considering the Answer, with Prayer to Deny Writ of Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing that herein petitioner is not clearly entitled thereto (Unciano Paramedical College, et. Al., v. Court of Appeals, et. Al., 100335, April 7, 1993, Second Division). SO ORDERED. On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition [29] for Review with Prayer for Temporary Restraining Order dated October 13, 1995. However, during the pendency of the instant Petition, respondent Court of Appeals rendered the Decision[30] dated April 10, 1996, now also assailed. It ruled that the Philippines is an appropriate forum considering that the Amended Complaints basis for recovery of damages is Article 21 of the Civil Code, and thus, clearly within the jurisdiction of respondent Court. It further held that certiorari is not the proper remedy in a denial of a Motion to Dismiss, inasmuch as the petitioner should have proceeded to trial, and in case of an adverse ruling, find recourse in an appeal. On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary Restraining Order[31] dated April 30, 1996, given due course by this Court. After both parties submitted their Memoranda,[32] the instant case is now deemed submitted for decision. Petitioner SAUDIA raised the following issues: I The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394 based on Article 21 of the New Civil Code since the proper law applicable is the law of the Kingdom of Saudi Arabia inasmuch as this case involves what is known in private international law as a conflicts problem. Otherwise, the Republic of the Philippines will sit in judgment of the acts done by another sovereign state which is abhorred. II. Leave of court before filing a supplemental pleading is not a jurisdictional requirement. Besides, the matter as to absence of leave of court is now moot and academic when this Honorable Court required the respondents to comment on petitioners April 30, 1996 Supplemental Petition For Review With Prayer For A Temporary Restraining Order Within Order [27]

Ten (10) Days From Notice Thereof. Further, the Revised Rules of Court should be construed with liberality pursuant to Section 2, Rule 1 thereof. III. Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-G.R. SP NO. 36533 entitled Saudi Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al. and filed its April 30, 1996 Supplemental Petition For Review With Prayer For A Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or within the 15-day reglementary period as provided for under Section 1, Rule 45 of the Revised Rules of Court. Therefore, the decision in CA-G.R. SP NO. 36533 has not yet become final and executory and this Honorable Court can take cognizance of this case.[33] From the foregoing factual and procedural antecedents, the following issues emerge for our resolution: I. WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT THE REGIONAL TRIAL COURT OF QUEZON CITY HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-93-18394 ENTITLED MILAGROS P. MORADA V. SAUDI ARABIAN AIRLINES. II. WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT IN THE CASE PHILIPPINE LAW SHOULD GOVERN. Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the outset. It maintains that private respondents claim for alleged abuse of rights occurred in the Kingdom of Saudi Arabia. It alleges that the existence of a foreign element qualifies the instant case for the application of the law of the Kingdom of Saudi Arabia, by virtue of the lex loci delicti commissi rule.[34] On the other hand, private respondent contends that since her Amended Complaint is based on Articles 19[35] and 21[36] of the Civil Code, then the instant case is properly a matter of domestic law.[37] Under the factual antecedents obtaining in this case, there is no dispute that the interplay of events occurred in two states, the Philippines and Saudi Arabia. As stated by private respondent in her Amended Complaint[38] dated June 23, 1994: 2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines corporation doing business in the Philippines. It may be served with summons and other court processes at Travel Wide Associated Sales (Phils.), Inc., 3rd Floor, Cougar Building, 114 Valero St., Salcedo Village, Makati, Metro Manila. xxx xxx xxx

6. Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian authorities agreed to deport Thamer and Allah after two weeks of detention. Eventually, they were again put in service by defendant SAUDIA. In September 1990, defendant SAUDIA transferred plaintiff to Manila. 7. On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind her, her superiors requested her to see MR. Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he brought her to the police station where the police took her passport and questioned her about the Jakarta incident. Miniewy simply stood by as the police put pressure on her to make a statement dropping the case against Thamer and Allah. Not until she agreed to do so did the police return her passport and allowed her to catch the afternoon flight out of Jeddah.

8. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the departure of her flight to Manila, plaintiff was not allowed to board the plane and instead ordered to take a later flight to Jeddah to see Mr. Meniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid of the SAUDIA office brought her to a Saudi court where she was asked to sign a document written in Arabic. They told her that this was necessary to close the case against Thamer and Allah. As it turned out, plaintiff signed a notice to her to appear before the court on June 27, 1993. Plaintiff then returned to Manila. 9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see Miniewy on June 27, 1993 for further investigation. Plaintiff did so after receiving assurance from SAUDIAs Manila manager, Aslam Saleemi, that the investigation was routinary and that it posed no danger to her. 10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge interrogated plaintiff through an interpreter about the Jakarta incident. After one hour of interrogation, they let her go. At the airport, however, just as her plane was about to take off, a SAUDIA officer told her that the airline had forbidden her to take that flight. At the Inflight Service Office where she was told to go, the secretary of Mr. Yahya Saddick took away her passport and told her to remain in Jeddah, at the crew quarters, until further orders. 11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where the judge, to her astonishment and shock, rendered a decision, translated to her in English, sentencing her to five months imprisonment and to 286 lashes. Only then did she realize that the Saudi court had tried her, together with Thamer and Allah, for what happened in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing, and listening to the music in violation of Islamic laws; (3) socializing with the male crew, in contravention of Islamic tradition. 12. Because SAUDIA refused to lend her a hand in the case, plaintiff sought the help of the Philippine Embassy in Jeddah. The latter helped her pursue an appeal from the decision of the court. To pay for her upkeep, she worked on the domestic flights of defendant SAUDIA while, ironically, Thamer and Allah freely served the international flights.[39] Where the factual antecedents satisfactorily establish the existence of a foreign element, we agree with petitioner that the problem herein could present a conflicts case. A factual situation that cuts across territorial lines and is affected by the diverse laws of two or more states is said to contain a foreign element. The presence of a foreign element is inevitable since social and economic affairs of individuals and associations are rarely confined to the geographic limits of their birth or conception.[40] The forms in which this foreign element may appear are many.[41] The foreign element may simply consist in the fact that one of the parties to a contract is an alien or has a foreign domicile, or that a contract between nationals of one State involves properties situated in another State. In other cases, the foreign element may assume a complex form.[42] In the instant case, the foreign element consisted in the fact that private respondent Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign corporation. Also, by virtue of the employment of Morada with the petitioner Saudia as a flight stewardess, events did transpire during her many occasions of travel across national borders, particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a conflicts situation to arise. We thus find private respondents assertion that the case is purely domestic, imprecise. A conflicts problem presents itself here, and the question of jurisdiction[43] confronts the court a quo. After a careful study of the private respondents Amended Complaint,[44] and the Comment thereon, we note that she aptly predicated her cause of action on Articles 19 and 21 of the New Civil Code. On one hand, Article 19 of the New Civil Code provides;

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice give everyone his due and observe honesty and good faith. On the other hand, Article 21 of the New Civil Code provides: 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 damages. Thus, in Philippine National Bank (PNB) vs. Court of Appeals,[45] this Court held that: The aforecited provisions on human relations were intended to expand the concept of torts in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to specifically provide in the statutes. Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions. Thus, we agree with private respondents assertion that violations of Articles 19 and 21 are actionable, with judicially enforceable remedies in the municipal forum. Based on the allegations[46] in the Amended Complaint, read in the light of the Rules of Court on jurisdiction[47] we find that the Regional Trial Court (RTC) of Quezon City possesses jurisdiction over the subject matter of the suit.[48] Its authority to try and hear the case is provided for under Section 1 of Republic Act No. 7691, to wit: Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, is hereby amended to read as follows: SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive jurisdiction: xxx xxx xxx

(8) In all other cases in which demand, exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses, and costs or the value of the property in controversy exceeds One hundred thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the above-mentioned items exceeds Two hundred Thousand pesos (P200,000.00). (Emphasis ours) xxx xxx xxx

And following Section 2 (b), Rule 4 of the Revised Rules of Courtthe venue, Quezon City, is appropriate: SEC. 2 Venue in Courts of First Instance. [Now Regional Trial Court] (a) x x x xxx xxx

(b) Personal actions. All other actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiff resides, at the election of the plaintiff. Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor of the RTC Quezon City assuming jurisdiction. Paramount is the private interest of the litigant. Enforceability of a judgment if one is obtained is quite obvious. Relative advantages and obstacles to a fair trial are equally important. Plaintiff may not, by choice of an inconvenient forum, vex, harass, or oppress the defendant, e.g. by inflicting upon him needless expense or disturbance. But unless the balance is strongly in favor of the defendant, th e plaintiffs choice of forum should rarely be disturbed.[49]

Weighing the relative claims of the parties, the court a quo found it best to hear the case in the Philippines. Had it refused to take cognizance of the case, it would be forcing plaintiff (private respondent now) to seek remedial action elsewhere, i.e. in the Kingdom of Saudi Arabia where she no longer maintains substantial connections. That would have caused a fundamental unfairness to her. Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience have been shown by either of the parties. The choice of forum of the plaintiff (now private respondent) should be upheld. Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By filing her Complaint and Amended Complaint with the trial court, private respondent has voluntary submitted herself to the jurisdiction of the court. The records show that petitioner SAUDIA has filed several motions[50] praying for the dismissal of Moradas Amended Complaint. SAUDIA also filed an Answer In Ex Abundante Cautelam dated February 20, 1995. What is very patent and explicit from the motions filed, is that SAUDIA prayed for other reliefs under the premises. Undeniably, petitioner SAUDIA has effectively submitted to the trial courts jurisdiction by praying for the dismissal of the Amended Complaint on grounds other than lack of jurisdiction. As held by this Court in Republic vs. Ker and Company, Ltd.:[51] We observe that the motion to dismiss filed on April 14, 1962, aside from disputing the lower courts jurisdiction over defendants person, prayed for dismissal of the complaint on the ground that plaintiffs cause of action has prescribed. By interposing such second ground in its motion to dismiss, Ker and Co., Ltd. availed of an affirmative defense on the basis of which it prayed the court to resolve controversy in its favor. For the court to validly decide the said plea of defendant Ker & Co., Ltd., it necessarily had to acquire jurisdiction upon the latters person, who, being the proponent of the affirmative defense, should be deemed to have abandoned its special appearance and voluntarily submitted itself to the jurisdiction of the court. Similarly, the case of De Midgely vs. Ferandos, held that: When the appearance is by motion for the purpose of objecting to the jurisdiction of the court over the person, it must be for the sole and separate purpose of objecting to the jurisdiction of the court. If his motion is for any other purpose than to object to the jurisdiction of the court over his person, he thereby submits himself to the jurisdiction of the court. A special appearance by motion made for the purpose of objecting to the jurisdiction of the court over the person will be held to be a general appearance, if the party in said motion should, for example, ask for a dismissal of the action upon the further ground that the court had no jurisdiction over the subject matter.[52] Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of Quezon City. Thus, we find that the trial court has jurisdiction over the case and that its exercise thereof, justified. As to the choice of applicable law, we note that choice-of-law problems seek to answer two important questions: (1) What legal system should control a given situation where some of the significant facts occurred in two or more states; and (2) to what extent should the chosen legal system regulate the situation.[53] Several theories have been propounded in order to identify the legal system that should ultimately control. Although ideally, all choice-of-law theories should intrinsically advance both notions of justice and predictability, they do not always do so. The forum is then faced with the problem of deciding which of these two important values should be stressed.[54] Before a choice can be made, it is necessary for us to determine under what category a certain set of facts or rules fall. This process is known as characterization, or the doctrine of qualification. It is the process of deciding whether or not the facts relate to the kind of question specified in a conflicts rule.[55] The purpose of characterization is to enable the forum to select the proper law.[56] Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative fact.[57] An essential element of conflict rules is the indication of a test or connecting factor or point of contact. Choice-of-law

rules invariably consist of a factual relationship (such as property right, contract claim) and a connecting factor or point of contact, such as the situs of the res, the place of celebration, the place of performance, or the place of wrongdoing.[58] Note that one or more circumstances may be present to serve as the possible test for the determination of the applicable law.[59] These test factors or points of contact or connecting factors could be any of the following: (1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin; (2) the seat of a legal or juridical person, such as a corporation; (3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In particular, the lex situs is decisive when real rights are involved; (4) the place where an act has been done, the locus actus, such as the place where a contract has been made, a marriage celebrated, a will signed or a tort committed. The lex loci actus is particularly important in contracts and torts; (5) the place where an act is intended to come into effect, e.g., the place of performance of contractual duties, or the place where a power of attorney is to be exercised; (6) the intention of the contracting parties as to the law that should govern their agreement, the lex loci intentionis; (7) the place where judicial or administrative proceedings are instituted or done. The lex forithe law of the forumis particularly important because, as we have seen earlier, matters of procedure not going to the substance of the claim involved are governed by it; and because the lex fori applies whenever the content of the otherwise applicable foreign law is excluded from application in a given case for the reason that it falls under one of the exceptions to the applications of foreign law; and (8) the flag of a ship, which in many cases is decisive of practically all legal relationships of the ship and of its master or owner as such. It also covers contractual relationships particularly contracts of affreightment.[60] (Underscoring ours.) After a careful study of the pleadings on record, including allegations in the Amended Complaint deemed submitted for purposes of the motion to dismiss, we are convinced that there is reasonable basis for private respondents assertion that although she was already working in Manila, petitioner brought her to Jeddah on the pretense that she would merely testify in an investigation of the charges she made against the two SAUDIA crew members for the attack on her person while they were in Jakarta. As it turned out, she was the one made to face trial for very serious charges, including adultery and violation of Islamic laws and tradition. There is likewise logical basis on record for the claim that the handing over or turning over of the person of private respondent to Jeddah officials, petitioner may have acted beyond its duties as employer. Petitioners purported act contributed to and amplified or even proximately caused additional humiliation, misery and suffering of private respondent. Petitioner thereby allegedly facilitated the arrest, detention and prosecution of private respondent under the guise of petitioners authority as employer, taking advantage of the trust, confidence and faith she reposed upon it. As purportedly found by the Prince of Makkah, the alleged conviction and imprisonment of private respondent was wrongful. But these capped the injury or harm allegedly inflicted upon her person and reputation, for which petitioner could be liable as claimed, to provide compensation or redress for the wrongs done, once duly proven. Considering that the complaint in the court a quo is one involving torts, the connecting factor or point of contact could be the place or places where the tortious conduct orlex loci actus occurred. And applying the torts principle in a conflicts case, we find that the Philippines could be said as a situs of the tort (the place where the alleged tortious conduct took place). This is because it is in the Philippines where petitioner allegedly deceived private respondent, a Filipina residing and working here. According to her, she had honestly believed that petitioner would, in the exercise of its rights and in the performance of its duties, act with justice, give her her due and observe honesty and good faith. Instead, petitioner failed to protect her, she claimed. That certain acts or parts of the injury allegedly occurred in another country is of no moment. For in our view what is important here is the place where the over-all

harm or the fatality of the alleged injury to the person, reputation, social standing and human rights of complainant, had lodged, according to the plaintiff below (herein private respondent). All told, it is not without basis to identify the Philippines as the situs of the alleged tort. Moreover, with the widespread criticism of the traditional rule of lex loci delicti commissi, modern theories and rules on tort liability[61] have been advanced to offer fresh judicial approaches to arrive at just results. In keeping abreast with the modern theories on tort liability, we find here an occasion to apply the State of the most significant relationship rule, which in our view should be appropriate to apply now, given the factual context of this case. In applying said principle to determine the State which has the most significant relationship, the following contacts are to be taken into account and evaluated according to their relative importance with respect to the particular issue: (a) the place where the injury occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered.[62] As already discussed, there is basis for the claim that over-all injury occurred and lodged in the Philippines. There is likewise no question that private respondent is a resident Filipina national, working with petitioner, a resident foreign corporation engaged here in the business of international air carriage. Thus, the relationship between the parties was centered here, although it should be stressed that this suit is not based on mere labor law violations. From the record, the claim that the Philippines has the most significant contact with the matter in this dispute,[63] raised by private respondent as plaintiff below against defendant (herein petitioner), in our view, has been properly established. Prescinding from this premise that the Philippines is the situs of the tort complaint of and the place having the most interest in the problem, we find, by way of recapitulation, that the Philippine law on tort liability should have paramount application to and control in the resolution of the legal issues arising out of this case. Further, we hold that the respondent Regional Trial Court has jurisdiction over the parties and the subject matter of the complaint; the appropriate venue is in Quezon City, which could properly apply Philippine law. Moreover, we find untenable petitioners insistence that [s]ince private respondent instituted this suit, she has the burden of pleading and proving the applicable Saudi law on the matter.[64] As aptly said by private respondent, she has no ob ligation to plead and prove the law of the Kingdom of Saudi Arabia since her cause of action is based on Articles 19 and 21 of the Civil Code of the Philippines. In her Amended Complaint and subsequent pleadings she never alleged that Saudi law should govern this case.[65] And as correctly held by the respondent appellate court, considering that it was the petitioner who was invoking the applicability of the law of Saudi Arabia, thus the burden was on it [petitioner] to plead and to establish what the law of Saudi Arabia is.[66] Lastly, no error could be imputed to the respondent appellate court in upholding the trial courts denial of defendants (herein petitioners) motion to dismiss the case. Not only was jurisdiction in order and venue properly laid, but appeal after trial was obviously available, and the expeditious trial itself indicated by the nature of the case at hand. Indubitably, the Philippines is the state intimately concerned with the ultimate outcome of the case below not just for the benefit of all the litigants, but also for the vindication o f the countrys system of law and justice in a transnational setting. With these guidelines in mind, the trial court must proceed to try and adjudge the case in the light of relevant Philippine law, with due consideration of the foreign element or elements involved. Nothing said herein, of course, should be construed as prejudging the results of the case in any manner whatsoever. WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-93-18394 entitled Milagros P. Morada vs. Saudi Arabia Airlines is hereby REMANDED to Regional Trial Court of Quezon City, Branch 89 for further proceedings. SO ORDERED.

GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners, vs. THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS, respondents. CORTES, J.: Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and Radio Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and administrative assistant to the engineering operations manager. In 1972, GLOBE MACKAY discovered fictitious purchases and other fraudulent transactions for which it lost several thousands of pesos. According to private respondent it was he who actually discovered the anomalies and reported them on November 10, 1972 to his immediate superior Eduardo T. Ferraren and to petitioner Herbert C. Hendry who was then the Executive Vice-President and General Manager of GLOBE MACKAY. On November 11, 1972, one day after private respondent Tobias made the report, petitioner Hendry confronted him by stating that he was the number one suspect, and ordered him to take a one week forced leave, not to communicate with the office, to leave his table drawers open, and to leave the office keys. On November 20, 1972, when private respondent Tobias returned to work after the forced leave, petitioner Hendry went up to him and called him a "crook" and a "swindler." Tobias was then ordered to take a lie detector test. He was also instructed to submit specimen of his handwriting, signature, and initials for examination by the police investigators to determine his complicity in the anomalies. On December 6,1972, the Manila police investigators submitted a laboratory crime report (Exh. "A") clearing private respondent of participation in the anomalies. Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G. Fernandez, who on December 10, 1972, submitted a report (Exh. "2") finding Tobias guilty. This report however expressly stated that further investigation was still to be conducted. Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending Tobias from work preparatory to the filing of criminal charges against him. On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document Examiner, after investigating other documents pertaining to the alleged anomalous transactions, submitted a second laboratory crime report (Exh. "B") reiterating his previous finding that the handwritings, signatures, and initials appearing in the checks and other documents involved in the fraudulent transactions were not those of Tobias. The lie detector tests conducted on Tobias also yielded negative results. Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact that the report of the private investigator, was, by its own terms, not yet complete, petitioners filed with the City Fiscal of Manila a complaint for estafa through falsification of commercial documents, later amended to just estafa. Subsequently five other criminal complaints were filed against Tobias, four of which were for estafa through Falsification of commercial document while the fifth was for of Article 290 of' the Revised Penal Code (Discovering Secrets Through Seizure of Correspondence).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. One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to be observed for the rightful relationship between human beings and for the stability of the social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated certain fundamental precepts which were "designed to indicate certain norms that spring from the fountain of good conscience" and which were also meant to serve as "guides for human conduct [that] should run as golden threads through society, to the end that law may approach its supreme ideal, which is the sway and dominance of justice" (Id.) Foremost among these principles is that pronounced in Article 19 which provides: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the government of human

relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper. Article 20, which pertains to damage arising from a violation of law, provides that: Art. 20. Every person who contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. However, in the case at bar, petitioners claim that they did not violate any provision of law since they were merely exercising their legal right to dismiss private respondent. This does not, however, leave private respondent with no relief because Article 21 of the Civil Code provides that: Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they have actually suffered material and moral injury" [Id.] should "vouchsafe adequate legal remedy for that untold number of moral wrongs which it is impossible for human foresight to provide for specifically in the statutes" [Id. it p. 40; See also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247]. In determining whether or not the principle of abuse of rights may be invoked, there is no rigid test which can be applied. While the Court has not hesitated to apply Article 19 whether the legal and factual circumstances called for its application [See for e.g., Velayo v. Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra;Grand Union Supermarket, Inc. v. Espino, Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L-46558, July 31,1981,106 SCRA 391; United General Industries, Inc, v. Paler G.R. No. L-30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21, 1987, 153 SCRA 183] the question of whether or not the principle of abuse of rights has been violated resulting in damages under Article 20 or Article 21 or other applicable provision of law, depends on the circumstances of each case. And in the instant case, the Court, after examining the record and considering certain significant circumstances, finds that all petitioners have indeed abused the right that they invoke, causing damage to private respondent and for which the latter must now be indemnified. The trial court made a finding that notwithstanding the fact that it was private respondent Tobias who reported the possible existence of anomalous transactions, petitioner Hendry "showed belligerence and told plaintiff (private respondent herein) that he was the number one suspect and to take a one week vacation leave, not to communicate with the office, to leave his table drawers open, and to leave his keys to said defendant (petitioner Hendry)" [RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But regardless of whether or not it was private respondent Tobias who reported the anomalies to petitioners, the latter's reaction towards the former upon uncovering the anomalies was less than civil. An employer who harbors suspicions that an employee has committed dishonesty might be justified in taking the appropriate action such as ordering an investigation and directing the employee to go on a leave. Firmness and the resolve to uncover the truth would also be expected from such employer. But the highhanded treatment accorded Tobias by petitioners was certainly uncalled for. And this reprehensible attitude of petitioners was to continue when private respondent returned to work on November 20, 1972 after his one week forced leave. Upon reporting for work, Tobias was confronted by Hendry who said. "Tobby, you are the crook and swindler in this company." Considering that the first report made by the police investigators was submitted only on December 10, 1972 [See Exh. A] the statement made by petitioner Hendry was baseless. The imputation of guilt without basis and the pattern of harassment during the investigations of Tobias transgress the standards of human conduct set forth in Article 19 of the Civil Code. The Court has already ruled that the right of the employer to dismiss an employee should not be confused with the manner in which the right is exercised and the effects flowing therefrom. If the dismissal is done abusively, then the employer is liable for damages to the employee [Quisaba v. Sta. Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA 771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L21871, September 27,1966, 18 SCRA 107] Under the circumstances of the instant case, the petitioners clearly failed to

exercise in a legitimate manner their right to dismiss Tobias, giving the latter the right to recover damages under Article 19 in relation to Article 21 of the Civil Code. But petitioners were not content with just dismissing Tobias. Several other tortious acts were committed by petitioners against Tobias after the latter's termination from work. Towards the latter part of January, 1973, after the filing of the first of six criminal complaints against Tobias, the latter talked to Hendry to protest the actions taken against him. In response, Hendry cut short Tobias' protestations by telling him to just confess or else the company would file a hundred more cases against him until he landed in jail. Hendry added that, "You Filipinos cannot be trusted." The threat unmasked petitioner's bad faith in the various actions taken against Tobias. On the other hand, the scornful remark about Filipinos as well as Hendry's earlier statements about Tobias being a "crook" and "swindler" are clear violations of 'Tobias' personal dignity [See Article 26, Civil Code]. The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY due to dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO and as a result of which, Tobias remained unemployed for a longer period of time. For this further damage suffered by Tobias, petitioners must likewise be held liable for damages consistent with Article 2176 of the Civil Code. Petitioners, however, contend that they have a "moral, if not legal, duty to forewarn other employers of the kind of employee the plaintiff (private respondent herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that "it is the accepted moral and societal obligation of every man to advise or warn his fellowmen of any threat or danger to the latter's life, honor or property. And this includes warning one's brethren of the possible dangers involved in dealing with, or accepting into confidence, a man whose honesty and integrity is suspect" [Id.]. These arguments, rather than justify petitioners' act, reveal a seeming obsession to prevent Tobias from getting a job, even after almost two years from the time Tobias was dismissed. Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias. Petitioners contend that there is no case against them for malicious prosecution and that they cannot be "penalized for exercising their right and prerogative of seeking justice by filing criminal complaints against an employee who was their principal suspect in the commission of forgeries and in the perpetration of anomalous transactions which defrauded them of substantial sums of money" [Petition, p. 10, Rollo, p. 11]. While sound principles of justice and public policy dictate that persons shall have free resort to the courts for redress of wrongs and vindication of their rights [Buenaventura v. Sto. Domingo, 103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2 SCRA 337, the Court held that the right to file criminal complaints should not be used as a weapon to force an alleged debtor to pay an indebtedness. To do so would be a clear perversion of the function of the criminal processes and of the courts of justice. And in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court upheld the judgment against the petitioner for actual and moral damages and attorney's fees after making a finding that petitioner, with persistence, filed at least six criminal complaints against respondent, all of which were dismissed. To constitute malicious prosecution, there must be proof that the prosecution was prompted by a design to vex and humiliate a person and that it was initiated deliberately by the defendant knowing that the charges were false and groundless [Manila Gas Corporation v. CA, G.R. No. L-44190, October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by itself, does not render a person liable for malicious prosecution [Inhelder Corporation v. CA, G.R. No. 52358, May 301983122 SCRA 576]. The mere dismissal by the fiscal of the criminal complaint is not a ground for an award of damages for malicious prosecution if there is no competent evidence to show that the complainant had acted in bad faith [Sison v. David, G.R. No. L-11268, January 28,1961, 1 SCRA 60]. In the instant case, however, the trial court made a finding that petitioners acted in bad faith in filing the criminal complaints against Tobias, observing that:

xxx Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6) criminal cases, five (5) of which were for estafa thru falsification of commercial document and one for violation of Art. 290 of the Revised Penal Code "discovering secrets thru seizure of correspondence," and all were dismissed for insufficiency or lack of evidence." The dismissal of four (4) of the cases was appealed to the Ministry of Justice, but said Ministry invariably sustained the dismissal of the cases. As above adverted to, two of these cases were refiled with the Judge Advocate General's Office of the Armed Forces of the Philippines to railroad plaintiffs arrest and detention in the military stockade, but this was frustrated by a presidential decree transferring criminal cases involving civilians to the civil courts. xxx To be sure, when despite the two (2) police reports embodying the findings of Lt. Dioscoro Tagle, Chief Document Examiner of the Manila Police Department, clearing plaintiff of participation or involvement in the fraudulent transactions complained of, despite the negative results of the lie detector tests which defendants compelled plaintiff to undergo, and although the police investigation was "still under follow-up and a supplementary report will be submitted after all the evidence has been gathered," defendants hastily filed six (6) criminal cases with the city Fiscal's Office of Manila, five (5) for estafa thru falsification of commercial document and one (1) for violation of Art. 290 of the Revised Penal Code, so much so that as was to be expected, all six (6) cases were dismissed, with one of the investigating fiscals, Asst. Fiscal de Guia, commenting in one case that, "Indeed, the haphazard way this case was investigated is evident. Evident likewise is the flurry and haste in the filing of this case against respondent Tobias," there can be no mistaking that defendants would not but be motivated by malicious and unlawful intent to harass, oppress, and cause damage to plaintiff. xxx [RTC Decision, pp. 5-6; Rollo, pp. 235-236]. In addition to the observations made by the trial court, the Court finds it significant that the criminal complaints were filed during the pendency of the illegal dismissal case filed by Tobias against petitioners. This explains the haste in which the complaints were filed, which the trial court earlier noted. But petitioners, to prove their good faith, point to the fact that only six complaints were filed against Tobias when they could have allegedly filed one hundred cases, considering the number of anomalous transactions committed against GLOBE MACKAY. However, petitioners' good faith is belied by the threat made by Hendry after the filing of the first complaint that one hundred more cases would be filed against Tobias. In effect, the possible filing of one hundred more cases was made to hang like the sword of Damocles over the head of Tobias. In fine, considering the haste in which the criminal complaints were filed, the fact that they were filed during the pendency of the illegal dismissal case against petitioners, the threat made by Hendry, the fact that the cases were filed notwithstanding the two police reports exculpating Tobias from involvement in the anomalies committed against GLOBE MACKAY, coupled by the eventual dismissal of all the cases, the Court is led into no other conclusion than that petitioners were motivated by malicious intent in filing the six criminal complaints against Tobias. Petitioners next contend that the award of damages was excessive. In the complaint filed against petitioners, Tobias prayed for the following: one hundred thousand pesos (P100,000.00) as actual damages; fifty thousand pesos (P50,000.00) as exemplary damages; eight hundred thousand pesos (P800,000.00) as moral damages; fifty thousand pesos (P50,000.00) as attorney's fees; and costs. The trial court, after making a computation of the damages incurred by Tobias [See RTC Decision, pp. 7-8; Rollo, pp. 154-1551, awarded him the following: eighty thousand pesos (P80,000.00) as actual damages; two hundred thousand pesos (P200,000.00) as moral damages; twenty thousand pesos (P20,000.00) as exemplary damages; thirty thousand pesos (P30,000.00) as attorney's fees; and, costs. It must be underscored that petitioners have been guilty of committing several actionable tortious acts, i.e., the abusive manner in which they dismissed Tobias from work including the baseless imputation of guilt and the harassment during the

investigations; the defamatory language heaped on Tobias as well as the scornful remark on Filipinos; the poison letter sent to RETELCO which resulted in Tobias' loss of possible employment; and, the malicious filing of the criminal complaints. Considering the extent of the damage wrought on Tobias, the Court finds that, contrary to petitioners' contention, the amount of damages awarded to Tobias was reasonable under the circumstances. Yet, petitioners still insist that the award of damages was improper, invoking the principle of damnum absque injuria. It is argued that "[t]he only probable actual damage that plaintiff (private respondent herein) could have suffered was a direct result of his having been dismissed from his employment, which was a valid and legal act of the defendantsappellants (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. L-18805, August 14, 1967, 20 SCRA 987]. This principle finds no application in this case. It bears repeating that even granting that petitioners might have had the right to dismiss Tobias from work, the abusive manner in which that right was exercised amounted to a legal wrong for which petitioners must now be held liable. Moreover, the damage incurred by Tobias was not only in connection with the abusive manner in which he was dismissed but was also the result of several other quasi-delictual acts committed by petitioners. Petitioners next question the award of moral damages. However, the Court has already ruled in Wassmer v. Velez, G.R. No. L-20089, December 26, 1964, 12 SCRA 648, 653, that [p]er express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the cases mentioned in Article 21 of said Code." Hence, the Court of Appeals committed no error in awarding moral damages to Tobias. Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of the Civil Code provides that "[i]n quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence," the Court, in Zulueta v. Pan American World Airways, Inc., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled that if gross negligence warrants the award of exemplary damages, with more reason is its imposition justified when the act performed is deliberate, malicious and tainted with bad faith. As in the 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.

UNIVERSITY OF THE EAST, petitioner, vs. ROMEO A. JADER, respondent. 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 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-C1", "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. 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:

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, againincluded 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.

CONRADO BUNAG, JR., petitioner, vs. HON. COURT OF APPEALS and ZENAIDA B. CIRILO, respondents. Petitioner appeals for the reversal of the decision 1 of respondent Court of Appeals promulgated on May 17, 1991 in CA-G.R. CV No. 07054, entitled "Zenaida B. Cirilo vs. Conrado Bunag, Sr. and Conrado Bunag, Jr.," which affirmedin toto the decision of the Regional Trial Court, Branch XI at Bacoor, Cavite, and, implicitly, respondent court's resolution of September 3, 1991 2 denying petitioner's motion for reconsideration. Respondent court having assiduously discussed the salient antecedents of this case, vis-a-vis the factual findings of the court below, the evidence of record and the contentions of the parties, it is appropriate that its findings, which we approve and adopt, be extensively reproduced hereunder: Based on the evidence on record, the following facts are considered indisputable: On the afternoon of September 8, 1973, defendant-appellant Bunag, Jr. brought plaintiff-appellant to a motel or hotel where they had sexual intercourse. Later that evening, said defendant-appellant brought plaintiff-appellant to the house of his grandmother Juana de Leon in Pamplona, Las Pias, Metro Manila, where they lived together as husband and wife for 21 days, or until September 29, 1973. On September 10, 1973, defendant-appellant Bunag, Jr. and plaintiff-appellant filed their respective applications for a marriage license with the Office of the Local Civil Registrar of Bacoor, Cavite. On October 1, 1973, after leaving plaintiff-appellant, defendant-appellant Bunag, Jr. filed an affidavit withdrawing his application for a marriage license. Plaintiff-appellant contends that on the afternoon of September 8, 1973, defendant-appellant Bunag, Jr., together with an unidentified male companion, abducted her in the vicinity of the San Juan de Dios Hospital in Pasay City and brought her to a motel where she was raped. The court a quo, which adopted her evidence, summarized the same which we paraphrased as follows: Plaintiff was 26 years old on November 5, 1974 when she testified, single and had finished a college course in Commerce (t.s.n., p. 4, Nov. 5, 1974). It appears that on September 8, 1973, at about 4:00 o'clock in the afternoon, while she was walking along Figueras Street, Pasay City on her way to the San Juan de Dios Canteen to take her snack, defendant, Conrado Bunag, Jr., came riding in a car driven by a male companion. Plaintiff and defendant Bunag, Jr. were sweethearts, but two weeks before September 8, 1973, they had a quarrel, and Bunag, Jr. wanted to talk matters over with plaintiff, so that he invited her to take their merienda at the Aristocrat Restaurant in Manila instead of at the San Juan de Dios Canteen, to which plaintiff obliged, as she believed in his sincerity (t.s.n., pp. 8-10, Nov. 5, 1974). Plaintiff rode in the car and took the front seat beside the driver while Bunag, Jr. seated himself by her right side. The car travelled north on its way to the Aristocrat Restaurant but upon reaching San Juan Street in Pasay City, it turned abruptly to the right, to which plaintiff protested, but which the duo ignored and instead threatened her not to make any noise as they were ready to die and would bump the car against the post if she persisted. Frightened and silenced, the car travelled its course thru F.B. Harrison Boulevard until they reached a motel. Plaintiff was then pulled and dragged from the car against her will, and amidst her cries and pleas. In spite of her struggle she was no match to the joint strength of the two male combatants because of her natural weakness being a woman and her small stature. Eventually, she was brought inside the hotel where the defendant Bunag, Jr. deflowered her against her will and consent. She could not fight back and repel the attack because after Bunag, Jr. had forced her to lie down and embraced her, his companion held her two feet, removed her panty, after which he left. Bunag, Jr. threatened her that he would ask his companion to come back and hold her feet if she did not surrender her womanhood to him, thus he succeeded in feasting on her virginity. Plaintiff described the pains she felt and how blood came out of her private parts after her vagina was penetrated by the penis of the defendant Bunag, Jr. (t.s.n. pp. 17-24, Nov. 5, 1974). After that outrage on her virginity, plaintiff asked Bunag, Jr. once more to allow her to go home but the latter would not consent and stated that he would only let her go after they were married as he intended to marry her, so much so that she promised not to make any scandal and to marry him. Thereafter, they took a taxi together after the car that they

used had already gone, and proceeded to the house of Juana de Leon, Bunag, Jr.'s grandmother in Pamplona, Las Pias, Metro Manila where they arrived at 9:30 o'clock in the evening (t.s.n., p. 26, Nov. 5, 1974). At about ten (10) o'clock that same evening, defendant Conrado Bunag, Sr., father of Bunag, Jr. arrived and assured plaintiff that the following day which was a Monday, she and Bunag, Jr. would go to Bacoor, to apply for a marriage license, which they did. They filed their applications for marriage license (Exhibits "A" and "C") and after that plaintiff and defendant Bunag, Jr. returned to the house of Juana de Leon and lived there as husband and wife from September 8, 1973 to September 29, 1973. On September 29, 1973 defendant Bunag, Jr. left and never returned, humiliating plaintiff and compelled her to go back to her parents on October 3, 1973. Plaintiff was ashamed when she went home and could not sleep and eat because of the deception done against her by defendants-appellants (t.s.n., p. 35, Nov. 5, 1974). The testimony of plaintiff was corroborated in toto by her uncle, Vivencio Bansagan who declared that on September 8, 1973 when plaintiff failed to arrive home at 9:00 o'clock in the evening, his sister who is the mother of plaintiff asked him to look for her but his efforts proved futile, and he told his sister that plaintiff might have married (baka nag-asawa, t.s.n., pp. 5-6, March 18, 1976). However, in the afternoon of the next day (Sunday), his sister told him that Francisco Cabrera, accompanied by barrio captain Jacinto Manalili of Ligas, Bacoor, Cavite, informed her that plaintiff and Bunag, Jr. were in Cabrera's house, so that her sister requested him to go and see the plaintiff, which he did, and at the house of Mrs. Juana de Leon in Pamplona, Las Pias, Metro Manila he met defendant Conrado Bunag, Sr., who told him, "Pare, the children are here already. Let us settle the matter and have them married." He conferred with plaintiff who told him that as she had already lost her honor, she would bear her sufferings as Boy Bunag, Jr. and his father promised they would be married. Defendants-appellants, on the other hand, deny that defendant-appellant Conrado Bunag, Jr. abducted and raped plaintiff-appellant on September 8, 1973. On the contrary, plaintiff-appellant and defendant-appellant Bunag, Jr. eloped on that date because of the opposition of the latter's father to their relationship. Defendant-appellants claim that defendant-appellant Bunag, Jr. and plaintiff-appellant had earlier made plans to elope and get married, and this fact was known to their friends, among them, Architect Chito Rodriguez. The couple made good their plans to elope on the afternoon of September 8, 1973, when defendant-appellant Bunag, Jr., accompanied by his friend Guillermo Ramos, Jr., met plaintiff-appellant and her officemate named Lydia in the vicinity of the San Juan de Dios Hospital. The foursome then proceeded to (the) aforesaid hospital's canteen where they had some snacks. Later, Guillermo Ramos, Jr. took Lydia to Quirino Avenue where she could get a ride home, thereby leaving the defendant-appellant Bunag, Jr. and plaintiff-appellant alone. According to defendant-appellant Bunag, Jr., after Guillermo Ramos, Jr. and Lydia left, he and plaintiff-appellant took a taxi to the Golden Gate and Flamingo Hotels where they tried to get a room, but these were full. They finally got a room at the Holiday Hotel, where defendantappellant registered using his real name and residence certificate number. Three hours later, the couple check out of the hotel and proceeded to the house of Juana de Leon at Pamplona, Las Pias, where they stayed until September 19, 1873. Defendant-appellant claims that bitter disagreements with the plaintiff-appellant over money and the threats made to his life prompted him to break off their plan to get married. During this period, defendant-appellant Bunag, Sr. denied having gone to the house of Juan de Leon and telling plaintiff-appellant that she would be wed to defendant-appellant Bunag, Jr. In fact, he phoned Atty. Conrado Adreneda, member of the board of directors of Mandala Corporation, defendant-appellant Bunag, Jr.'s employer, three times between the evening of September 8, 1973 and September 9, 1973 inquiring as to the whereabouts of his son. He came to know about his son's whereabouts when he was told of the couple's elopement late in the afternoon of September 9, 1973 by his mother Candida Gawaran. He likewise denied having met relatives and emissaries of plaintiff-appellant and agreeing to her marriage to his son. 3

A complaint for damages for alleged breach of promise to marry was filed by herein private respondent Zenaida B. Cirilo against petitioner Conrado Bunag, Jr. and his father, Conrado Bunag, Sr., as Civil Case No. N-2028 of the Regional Trial Court, Branch XIX at Bacoor, Cavite. On August 20, 1983, on a finding, inter alia, that petitioner had forcibly abducted and raped private respondent, the trial court rendered a decision 4 ordering petitioner Bunag, Jr. to pay private respondent P80,000.00 as moral damages, P20,000.00 as exemplary damages, P20,000.00 by way of temperate damages, and P10,000.00 for and as attorney's fees, as well as the costs of suit. Defendant Conrado Bunag, Sr. was absolved from any and all liability. Private respondent appealed that portion of the lower court's decision disculpating Conrado Bunag, Sr. from civil liability in this case. On the other hand, the Bunags, as defendants-appellants, assigned in their appeal several errors allegedly committed by trial court, which were summarized by respondent court as follows: (1) in finding that defendantappellant Conrado Bunag, Jr. forcibly abducted and raped plaintiff-appellant; (2) in finding that defendants-appellants promised plaintiff-appellant that she would be wed to defendant-appellant Conrado Bunag, Jr.; and (3) in awarding plaintiff-appellant damages for the breach of defendants-appellants' promise of marriage. 5 As stated at the outset, on May 17, 1991 respondent Court of Appeals rendered judgment dismissing both appeals and affirming in toto the decision of the trial court. His motion for reconsideration having been denied, petitioner Bunag, Jr. is before us on a petition for review, contending that (1) respondent court failed to consider vital exhibits, testimonies and incidents for petitioner's defense, resulting in the misapprehensions of facts and violative of the law on preparation of judgment; and (2) it erred in the application of the proper law and jurisprudence by holding that there was forcible abduction with rape, not just a simple elopement and an agreement to marry, and in the award of excessive damages. 6 Petitioner Bunag, Jr. first contends that both the trial and appellate courts failed to take into consideration the alleged fact that he and private respondent had agreed to marry, and that there was no case of forcible abduction with rape, but one of simple elopement and agreement to marry. It is averred that the agreement to marry has been sufficiently proven by the testimonies of the witnesses for both parties and the exhibits presented in court. This submission, therefore, clearly hinges on the credibility of the witnesses and evidence presented by the parties and the weight accorded thereto in the factual findings of the trial court and the Court of Appeals. In effect, what petitioner would want this Court to do is to evaluate and analyze anew the evidence, both testimonial and documentary, presented before and calibrated by the trial court, and as further meticulously reviewed and discussed by respondent court. The issue raised primarily and ineluctably involves questions of fact. We are, therefore, once again constrained to stress the well-entrenched statutory and jurisprudential mandate that findings of fact of the Court of Appeals are, as a rule, conclusive upon this Court. Only questions of law, distinctly set forth, may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court, subject to clearly settled exceptions in case law. Our jurisdiction in cases brought to us from the Court of Appeals is limited to reviewing and revising the errors of law imputed to the latter, its findings of fact being conclusive. This Court has emphatically declared that it is not its function to analyze or weigh such evidence all over again, its jurisdiction being limited to reviewing errors of law that might have been committed by the lower court. Barring, therefore, 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, such findings must stand, for this Court is not expected or required to examine or contrast the oral and documentary evidence submitted by the parties. 7 Neither does the instant case reveal any feature falling within, any of the exceptions which under our decisional rules may warrant a review of the factual findings of the Court of Appeals. On the foregoing considerations and our review of the records, we sustain the holding of respondent court in favor of private respondent. Petitioner likewise asserts that since action involves a breach of promise to marry, the trial court erred in awarding damages.

It is true that in this jurisdiction, we adhere to the time-honored rule that an action for breach of promise to marry has no standing in the civil law, apart from the right to recover money or property advanced by the plaintiff upon the faith of such promise. 8 Generally, therefore, a breach of promise to marry per se is not actionable, except where the plaintiff has actually incurred expenses for the wedding and the necessary incidents thereof. However, the award of moral damages is allowed in cases specified in or analogous to those provided in Article 2219 of the Civil Code. Correlatively, under Article 21 of said Code, in relation to paragraph 10 of said Article 2219, 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 moral damages. 9 Article 21 was 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, and is intended to vouchsafe adequate legal remedy for that untold number of moral wrongs which is impossible for human foresight to specifically provide for in the statutes. 10 Under the circumstances obtaining in the case at bar, the acts of petitioner in forcibly abducting private respondent and having carnal knowledge with her against her will, and thereafter promising to marry her in order to escape criminal liability, only to thereafter renege on such promise after cohabiting with her for twenty-one days, irremissibly constitute acts contrary to morals and good customs. These are grossly insensate and reprehensible transgressions which indisputably warrant and abundantly justify the award of moral and exemplary damages, pursuant to Article 21 in relation to paragraphs 3 and 10, Article 2219, and Article 2229 and 2234 of Civil Code. Petitioner would, however, belabor the fact that said damages were awarded by the trial court on the basis of a finding that he is guilty of forcible abduction with rape, despite the prior dismissal of the complaint therefor filed by private respondent with the Pasay City Fiscal's Office. Generally, the basis of civil liability from crime is the fundamental postulate of our law that every person criminally liable for a felony is also civilly liable. In other words, criminal liability will give rise to civil liability ex delicto only if the same felonious act or omission results in damage or injury to another and is the direct and proximate cause thereof. 11 Hence, extinction of the penal action does not carry with it the extinction of civil liability unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist. 12 In the instant case, the dismissal of the complaint for forcible abduction with rape was by mere resolution of the fiscal at the preliminary investigation stage. There is no declaration in a final judgment that the fact from which the civil case might arise did not exist. Consequently, the dismissal did not in any way affect the right of herein private respondent to institute a civil action arising from the offense because such preliminary dismissal of the penal action did not carry with it the extinction of the civil action. The reason most often given for this holding is that the two proceedings involved are not between the same parties. Furthermore, it has long been emphasized, with continuing validity up to now, that there are different rules as to the competency of witnesses and the quantum of evidence in criminal and civil proceedings. In a criminal action, the State must prove its case by evidence which shows the guilt of the accused beyond reasonable doubt, while in a civil action it is sufficient for the plaintiff to sustain his cause by preponderance of evidence only. 13 Thus, in Rillon, et al. vs. Rillon, 14 we stressed that it is not now necessary that a criminal prosecution for rape be first instituted and prosecuted to final judgment before a civil action based on said offense in favor of the offended woman can likewise be instituted and prosecuted to final judgment. WHEREFORE, the petition is hereby DENIED for lack of merit, and the assailed judgment and resolution are hereby AFFIRMED. MIGUEL PEREZ RUBIO, petitioner, vs. COURT OF APPEALS, ROBERT O. PHILLIPS & SONS, INC., MAGDALENA YSMAEL PHILLIPS,

MANUFACTURERS BANK & TRUST COMPANY, INC., HACIENDA BENITO, INC., VICTORIA VALLEY DEVELOPMENT CORPORATION and ROBERT O. PHILLIPS, respondents. This is a petition to review the decision of the Court of Appeals, now the Intermediate Appellate Court, in CA-G.R. No. 60896-R, which affirmed the trial court's decision ordering Robert O. Phillips & Sons, Inc., and the plaintiff-spouses to pay Miguel Perez Rubio the sum of P4,250,000.00 but ordered Perez Rubio to pay Robert O. Phillips & Sons, Inc. and the other plaintiffs damages in the amount of P4,404,510.76. The appellate court, however, modified the lower court's order to pay P4,250,000.00 by removing the eight (8%) percent per annum interests on that amount, dispensing with the ten (10%) percent attomey's fees and limiting the liability to Robert O. Phillips and Sons, Inc., only. Also affirmed was the order directing Perez Rubio, as third party plaintiff, to pay Hacienda Benito, Inc. the sum of P7,051,496.23 as actual damages and P150,000.00 attorney's fees and to pay Manufacturer's Bank and Trust Co. P895,085.16 actual damages, plus ten (10%) percent of that amount as attorney's fees. The decision of the trial court in Civil Case No. 8632 has actually been the subject matter of two earlier petitions for certiorari filed by the petitioner against the same respondents. These are G.R. No. L-24581 entitled Miguel Perez Rubio v. The Honorable Samuel Reyes Roberto O. Phillips and Magdalena Ysmael Phillips, Manufacturer's Bank and Trust Company, Victoria Valley Development Corporation and Hacienda Benito, Inc. and G.R. No. L-30404 entitled Miguel Perez Rubio v. Honorable Judge Herminio Mariano in his capacity as Presiding Judge of Branch X of the Court of First Instance of Rizal Robert O. Phillips and Sons, Inc. Robert O. Phillips, Magdalena Ysmael Phillips, Victoria Valley Development Corporation Manufacturers Bank and Trust Company and Hacienda Benito, Inc. This petition arose from the same facts and events which triggered off the filing of the earlier petitions. These facts and events are cited in our Resolution dated January 31, 1966 issued in G.R. No, L-24581, as follows: Upon the facts alleged in the complaint filed in Civil Case No, 8632 of the Court of First Instance of Rizal by Robert O. Phillips and Sons, Inc., et al. v. Miguel Perez Rubio, said plaintiffs prayed for judgment as follows: 1. That a Temporary restraining order and/or exparte writ of preliminary injunction be issued against the defendant to prevent and restrain them from further unlawfull and willful interference with the transaction between the plaintiff corporation with Alfonso T. Yuchengco on the sale of the shares of stock of Hacienda Benito, Inc., and from enforcing whatever amount he may claim to be due to them from the plaintiffs under the Agreements (Annexes "A", "A-1" and "A2"), after the approval of the injunction bond; 2. That, after the hearing, judgment be rendered in favor of the plaintiffs against the defendant: a) Restraining him from willfully and unlawfully interfering with the transaction of the plaintiffs with Alfonso T. Yuchengco on the sale of the shares of stock of Hacienda Benito, Inc.; b) Declaring that the defendant has no right to rescind the Agreements as referred to in Annexes "A", "A.1" and "A.2"; c) Declaring that the defendant has no vendors' lien over the shares of stock of Hacienda Benito, Inc., sold by them to the plaintiff corporation; d) Restraining the defendant from enforcing any collection action against the plaintiff until the obligation, if any, mature; e) Making the writ of preliminary injunction permanent; f) Sentencing the defendant to pay the plaintiffs;

(1) P 2,500,000.00, more or less, as actual damages; (2) Moral damages which this Honorable Court may deem just and reasonable; (3) Exemplary damages, which this Honorable Court may deem just and reasonable; (4) P50,000.00, as attorney's fees; and (5) Costs of suit; and 3. That the plaintiffs be granted such further and other reliefs to which they may be entitled in law and in equity' Upon an ex-parte petition filed by the plaintiffs, the respondent judge issued on April 1, 1965 a writ of preliminary injunction to be mentioned again later. Subsequently, the respondent judge also denied Perez Rubio's motion to dissolve the preliminary injunction. It appears that the Perez Rubio spouses owned shares of stock in Hacienda Benito, Inc. registered in their names and in the names of Joaquin Ramirez and Joaquin Ramirez, Jr. On August 13, 1963 the Perez Rubios, with the conformity of the Ramirezes, sold said shares to Robert O. Phillips and Sons, Inc. for P5,500,000.00 payable in installments and other conditions agreed upon as follows: xxx xxx xxx 3. That for and in consideration of the mutual agreements and promises, MIGUEL and MARIA LUISA hereby sell to PHILLIPS all the shares of stock of Hacienda Benito, Inc. registered in their names and in the names of Joaquin Ramirez and Joaquin, Jr. for the total price of FIVE MILLION FIVE HUNDRED THOUSAND PESOS (P5,500,000.00), Philippine Currency, payable as follows: a FIFTY THOUSAND PESOS (P50,000.00) upon execution of this agreement, b. ONE MILLION TWO HUNDRED THOUSAND PESOS (P l,200,000.00) within sixty (60) days from this date. c ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on April 30, 1964 less than the amount of P 96,830.56 due the Hacienda Benito, Inc. from MARIA LUISA and the amount of P127,096.09 from MIGUEL; hereby authorized PHILLIPS to deduct said amounts and to pay the same to Hacienda Benito, Inc. d ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on or before April 30, 1965. e ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on or before April 30, 1965. f FIVE HUNDRED THOUSAND PESOS (P500,000.00) on or before April 30, 1967. 4. That should PHILLIPS fail to pay the amount of ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000.00) due sixty days from this date and to execute the letter of credit and/or bond or both to secure the payment of the remaining installments, as agreed upon, then the Seller shall have the right, at their own discretion, either to rescind this agreement or to enforce the same, provided that any number of days used by the Sellers to

consider the acceptability of the bank or bonding company proposed by PHILLIPS shall be added to the period of sixty (60) days herein mentioned; 5. That in case of default, PHILLIPS shall pay interest at the rate of eight percent (8%) per annum on all amounts in arrears until paid in full either by the guaranteeing bank, bonding company or PHILLIPS; 6. That all the installments due during the years 1964, 1965, 1966, and 1967 with all the conditions above mentioned, shall be jointly and severally guaranteed by means of Irrevocable Standby letter of Credit from a bank in favor of MIGUEL and MARIA LUISA, in the proportion they may agree, which shall be communicated to the bank and to PHILLIPS before final contract is entered into with the bank, or by a bond from a bonding company duly approved by MIGUEL and MARIA LUISA; 7. That the stock certificates corresponding to the shares sold, including those in the names of Joaquin Ramirez and Joaquin Ramirez, Jr. shall not be transferred to PHILLIPS until the installments due within sixty (60) days from this date is paid in full.' On June 23, 1964 Robert O. Phillips and Sons, Inc., and Robert O. Phillips himself and his wife, entered into an agreement with the Perez Rubios deferring payment of the April 31, 1964 under the following conditions; (a) The deferred installment would bear an interest of eight (8%) percent per annum from April 30, 1964 although partial payment, on the principal and on the interest due may be paid during the period granted, in such amounts and at such times as funds are available to Robert O. Phillips & Sons, Inc.; (b) Should Robert O. Phillips & Sons, lnc. fail to pay the particular installment now due on August 31, 1964 or any of the subsequent installments on the exact date due, the whole obligation would become immediately demandable without notice; (c) In consideration of this extension granted to Robert O. Phillips & Sons, Inc., Robert O. Phillips himself and his wife, Magdalena Ysmael Phillips, jointly and severally guaranteed all the installments and other obligations of Robert O. Phillips & Sons, Inc. under the original contract of sale dated April 13, 1963.' In the meantime, Robert O. Phillips, in his behalf and in that of his wife and Robert O. Phillips and Sons, Inc., entered into negotiations for the sale of their shares of stock in Hacienda Benito, Inc. to Alfonso Yuchengco. Upon being informed of this, the Perez Rubios, through their attorney-in-fact, Joaquin Ramirez, reminded the Phillips spouses and the Phillips corporation in writing of their obligations under the contract of sale of April 13, 1963 and reminded them in particular that the shares subject matter thereof were still subject to the payment of the unpaid balance of the sale price. They gave a similar notice to Alfonso Yuchengco, but expressed no objection to the sale provided the obligations in their favor were satisfied. On March 26, 1965, the Phillips (individuals and corporation), through their attorney, Juan T. David, sent a letter to the Perez Rubios telling them, in substance, that the only obstacle to the consummation of the Phillips-Yuchengco sale of the shares of stock of Hacienda Benito, Inc. was their letter of November 24, 1964 and warned that unless the same was withdrawn by March 29, they would seek redress elsewhere. On March 27, 1965, the Perez Rubios, for their part, wrote the Phillips that due to the latter's inability to comply with the former's conditions, the negotiations going on between them were cancelled, and should the full amount due to them remained unpaid by noon of March 31, 1965, they would file action in court in the afternoon thereof. However, on March 30, 1965, stealing a march on the Perez Rubios, the Phillips individuals and corporations filed Civil Case No. 8632 mentioned heretofore where they obtained, ex-parte, a preliminary injunction to this effect:

IT IS HEREBY ORDERED by the undersigned Judge of the Court of First Instance that, until further orders, you, all your attorneys, representatives, agents, and any other person assisting you, REFRAIN from interfering with the transaction between the plaintiff-corporation with Alfonso T. Yuchengco on the sale of the shares of stock of Hacienda Benito, Inc., and from enforcing whatever amount he may claim to be due to them from the plaintiffs under the Agreements (Annexes 'A', 'A-l', and 'A.2') mentioned in the complaint.' On April 8, 1965 the Perez Rubios filed a motion to dissolve the above reproduced writ of preliminary injunction, which the respondent judge denied on May 6, 1964. But even before the motion aforesaid could be acted upon, they also filed their answer to the combatting plaint with a counterclaim of P4,500,000.00 representing the unpaid balance of the sale price of their shares. Because of this the Perez Rubios were charged with contempt. " (16 SCRA 168, 172). xxx xxx xxx Because of the above incidents and orders, Perez Rubio filed a petition for certiorari against Robert O. Phillips in G.R. No. L- 24581 alleging that in taking cognizance of Civil Case No. 8632 and in issuing the writ of preliminary injunction ex parte, the respondent court committed a grave abuse of discretion The petitioner prayed that the respondent court be restrained from in any way proceeding with the case, and that, respondent Phillips be enjoined from proceeding with the sale of the shares of stock of Hacienda Benito, Inc. or any of its assets to Alfonso Yuchengco or to any other person, or from performing any act which would diminish the value of said shares of stock or deplete the assets of the company. Upon the filing of the original Perez Rubio petition, we issued on July 26, 1965 a writ of preliminary injunction restraining all the respondents named in the original petition (l) from taking further proceedings in Civil Case No. 8632; (2) from proceeding with the sale of shares of stock of Hacienda Benito, Inc. or any of its assets to Alfonso T. Yuchengco or to any other person, and (3) from performing any act which would either diminish the value of said shares of stock or deplete the assets of the Hacienda subject matter of Civil Case No. 8632. On June 10, 1965, the Manufacturers Bank and Trust Company filed a complaint against Phillips and Sons and Hacienda Benito, Inc. as well as the other corporations controlled by Robert O. Phillips for the foreclosure of a real estate mortgage constituted on the properties of the Hacienda. The case was filed in another branch of the Court of First Instance of Rizal and was docketed as Civil Case No. 8766. On the premise that the foreclosure by the bank of the mortgage constituted on the properties of Hacienda Benito, Inc., was intended simply to remove properties and the assets of the Hacienda pertaining to the Phillips spouses beyond Perez Rubios' reach and thus make it impossible for him to collect the sum of P4,250,000.00, Perez Rubio filed a motion for the admission of a supplemental petition, to include Manufacturer's Bank and Victoria Valley Development Corporation as additional respondents. Victoria Valley was a newly formed corporation which Perez Rubio alleged had been hurriedly organized and to which Manufacturer's Bank would transfer all the foreclosed properties thus making it difficult for him to enforce his vendor's lien. Before the first amended supplemental petition could be acted upon, Perez Rubio filed a second amended supplemental petition to implead Hacienda Benito, Inc. as additional party respondent with a specific plea that pending the issuance of a writ of preliminary injunction, Hacienda Benito be restrained from disposing of its properties or assets in any way save in the ordinary course of its business of selling lots of the subdivision. Both supplemental amended petitions were admitted. After all the respondents had filed their answers to the amended petition and after the petitioner filed an answer to the counterclaim interposed by respondents Phillips and Sons, Inc. and the Hacienda, this Court promulgated a decision dated May 27, 1968 wherein, among others, we ruled: (1) In connection with the writ of preliminary injunction issued by the respondent judge in Civil Case 8632 on April 1, 1965 mentioned heretofore, the same is hereby declared null and void and is, consequently, set aside with the result that the writ of preliminary injunction issued by Us in this case enjoining its enforcement is hereby made final. The order

of the respondent judge of May 6, 1965 denying petitioner's motion to set aside the aforesaid writ of preliminary injunction of April 1 of the same year is hereby reversed; (2) The writ of certiorari prayed for by petitioner is hereby denied insofar as it seeks to annul the judicial proceedings had in Civil Case 8766 of the Court of First Instance of Rizal, instituted by the Bank against Hacienda and other parties for the foreclosure of the mortgage constituted in its favor upon the properties of Hacienda; without prejudice, however, to the right of petitioner to seek such relief and any other relief that he might be lawfully entitled to against the herein respondents, singly or collectively, in the aforesaid Civil Case 8766 of the Court of First Instance of Rizal or in a separate action. In this connection, it is our judgment that the writ of preliminary injunction issued in this case shall remain subsisting and binding for a period of thirty days from the date of finality of this decision, upon the expiration of which period the same shall be deemed automatically lifted or dissolved, irrespective of whether petitioner had or had not taken steps required for the enforcement and protection of his rights as already indicated; (23 SCRA 773, 789 & 790) In the belief that the forum for the "separate action" referred to in our decision meant Civil Case No. 8632, petitioner Perez Rubio filed in the said case on July 9, 1968 an "Urgent Motion to Admit Amended and Supplemental Answer and Third-Party complaint," the third-party complaint being directed against Manufacturer's Bank, Victoria Valley and hacienda Benito. The motion was denied by the lower court. Hence, the petitioner filed another petition for certiorari to review and set aside the lower court's order dated September 13, 1968 with the additional prayer that pending determination of the issues raised in the petition, the respondent court be restrained from proceeding with the hearing of the case below and the other respondents from transferring or proceeding with the agreement to transfer any of the assets of Hacienda Benito, Inc. to any third person except in the ordinary course of selling subdivision lots. The case was docketed as G.R. No. 30904. On April 16, 1969, we issued a prayed for temporary restraining order. The petition was later granted. In our decision dated January 31, 1973, we ruled: WHEREFORE, the orders complained of are set aside and respondent Judge or whosoever is assigned to try the case below is instructed to admit the amended and supplemental answer and third-party complaint filed by Miguel Perez Rubio. Thereafter, these cases shall proceed accordingly. The restraining order hereinbefore issued by this Court is hereby lifted insofar as it restrains respondent Judge from proceeding with the hearing of Civil Case No. 8632 of the Court of First Instance of Rizal Branch X (Pasig, Rizal), and maintained insofar as it restrains (the other respondents) 'from proceeding with the transfer of the shares and/or of the assets of Hacienda Benito, Inc. to each other or to any other person, except in the ordinary course of selling subdivision lots without prejudice to the judgment that may be rendered by the court a quo in the case. Costs against the respondents. (49 SCRA 319, 337). The third-party complaint sought to secure the return by Manufacturer's Bank and/or Victoria Valley of the properties it and/or they bought as a consequence of the judicial foreclosure of mortgage case, Civil Case No. 8766, with a further plea that in the event the Phillips spouses are ordered to pay Miguel Perez Rubio the judgment on his counterclaim said properties and funds foreclosed by the defendant Bank be held to answer for such judgment or any part thereof unpaid by the Phillips spouses together with damages. The third-party defendants, respondents herein, filed their separate answers. In addition to their answer, Manufacturer's Bank and Hacienda Benito filed separate counterclaims for actual damages for malicious prosecution plus attorney's fees. After trial on the merits, the lower court rendered a decision the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered:

(1) Sentencing the plaintiffs to pay jointly and severally the amount of P4,250,000 to defendant Miguel Perez-Rubio, with interest of 8% per annum from April 30, 1964 and attorney's fees equivalent to 10% of the said amount. The plaintiffs however, may offset the foregoing amount by the damages which Perez-Rubio should pay to them for having unlawfully interferred in the transaction with Alfonso Yuchengco which is merely assess at P4,404,510.76. (2) Sentencing the defendant Perez-Rubio to pay to HBI the sum of P 7,051,496.23; attorney's fees of P150,000.00, and to MBTC the sum of P 895,085.16 as actual damages and the sum of 10% thereof as attorney's fees. (3) Dismissing all other causes of action of the parties in this case without pronouncement as to costs. Plaintiffs Phillips and Sons and the Phillips spouses as well as defendant and third-party plaintiff Perez Rubio appealed the decision to the Court of Appeals. As earlier stated, the appealed decision was amended by the appellate court in so far as it related ' to the liability of the plaintiffs on their P4,250,000.00 debt. The appellate court ruled that only plaintiff Phillips and Sons was liable to pay the amount of P4,250,000.00 to defendant Perez Rubio without interest and without attorney's fees. The rest of the trial court's decision was affirmed in full. A motion for reconsideration filed by Perez Rubio was denied by the appellate court. Hence the instant petition was filed. Petitioner Perez Rubio raises the following assignments of errors: THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT YOUR PETITIONER UNLAWFULLY AND INOFFICIOUSLY INTERFERRED IN THE TRANSACTION BETWEEN RESPONDENTS ROBERT O. PHILLIPS & SONS, INC., ROBERT O. PHILLIPS & SONS AND HIS WIFE MAGDALENA WHEN THE SUPREME COURT ITSELF DESCRIBED THE ACTS TAKEN BY YOUR PETITIONER AS A VALID ENFORCEMENT OF ONE'S RIGHT AS A CREDITOR. THE COURT OF APPEALS GRAVELY ERRED IN AWARDING DAMAGES TO RESPONDENTS ROBERT 0. PHILLIPS, HIS WIFE, AND ROBERT O. PHILLIPS & SONS, INC., ON THE ALLEGED GROUND OF UNLAWFUL INTERFERENCE WITHOUT BASIS IN FACT AS TO WHAT THE DAMAGE CONSISTED OF NOR OF THE MEASURE FOR SAID DAMAGES. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT YOUR PETITIONER WAS LIABLE FOR DAMAGES TO THE MANUFACTURERS BANK AND TRUST COMPANY, INC. BY REASON OF THE TWO INJUNCTIONS ISSUED BY THIS HONORABLE COURT IN L-24581 (MIGUEL PEREZ RUBIO, ET AL.) AND L-30404 (MIGUEL PEREZ RUBIO VERSUS THE HON. HERMINIO MARIANO, ET AL.), DESPITE THE FACT THAT THERE WAS ACTUALLY ONE RESTRAINING ORDER ISSUED BY THIS HONORABLE COURT INSOFAR AS RESPONDENT MBTC IS CONCERNED AND DESPITE THE FACT THAT NO VALID PROOF OF DAMAGES WAS PRESENTED. THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THAT YOUR PETITIONER PEREZ RUBIO WAS LIABLE TO HACIENDA BENITO, INC., WITHOUT MAKING SO MUCH AS A COMMENT OF FINDING THEREOF, BUT BY THE MERE EXPEDIENT OF AFFIRMING THE DECISION OF THE TRIAL COURT. THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT IN FINDING YOUR PETITIONER LIABLE TO RESPONDENT HACIENDA BENITO, INC. FOR THE ALLEGED DAMAGES IT SUFFERED BY REASON OF THE INJUNCTION ALLEGEDLY ISSUED BY THE SUPREME COURT AGAINST

HACIENDA BENITO, DESPITE THE FACT THAT THE SUPREME COURT AFFIRMED THE PROPRIETY OF THE INJUNCTION ISSUED BY IT. THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE AWARD OF DAMAGES IN FAVOR OF RESPONDENT HACIENDA BENITO, INC. DESPITE THE FACT THAT THERE WAS NO BASIS IN THE EVIDENCE FOR THE AWARD. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISCHARGING THE RESPONDENT SPOUSES PHILLIPS FROM THEIR JOINT AND SEVERAL GUARANTEE OF YOUR PETITIONERS' CREDIT AND IN DISALLOWING INTEREST TO RUN THEREON WITHOUT ANY BASIS OR REASON DESPITE THE FACT THEY WERE EXPRESSLY PROVIDED IN THE AGREEMENTS ENTERED INTO BETWEEN YOUR PETITIONER, THE RESPONDENTS ROBERT O. PHILLIPS HIS WIFE MAGDALENA AND ROBERT . PHILLIPS & SONS, INC. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISALLOWING ATTORNEY'S FEES AND MORAL AS WELL AS EXEMPLARY DAMAGES IN FAVOR OF YOUR PETITIONER PEREZ RUBIO DESPITE THE FACT THAT THIS HONORABLE COURT HAD CLEARLY SHOWN THAT YOUR PETITIONER HAD BEEN IMPROPERLY SUED AND DESPITE THE FACT THAT THIS HONORABLE COURT HAD ALREADY RULED THAT THE IMPLEADING OF OTHER PARTIES WAS PROPER AND NECESSARY FOR THE PROTECTION OF HIS RIGHTS. THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DISCHARGING RESPONDENTS MANUFACTURERS BANK AND TRUST CO., INC., (MBTC) AND VICTORIA VALLEY DEVELOPMENT CORPORATION FROM ANY LIABILITY TO YOUR PETITIONER DESPITE THEIR VERY ACTIVE PARTICIPATION IN ATTEMPTING TO AND IN ACTUALLY COMMENCING TO REMOVE ALL OF THE ASSETS OF HACIENDA BENITO, INC., AND TRANSFERRING THEM TO RESPONDENT VVDC. The first two assigned errors are in relation to the original complaint in Civil Case No. 8632 filed by Phillips and Sons, Inc., and the Phillips spouses against petitioner Perez Rubio for alleged unlawful interference in the transaction between the respondents on one hand and Alfonso Yuchengco on the other hand. As earlier stated, because of the issuance of a preliminary injunction ex parte which restrained petitioner Perez Rubio from interfering with the Yuchengco transaction and the denial of a motion to dissolve the injunction in Civil Case No. 8632, petitioner Perez Rubio was constrained to file a petition for certiorari with this Court in G.R. No. 24581 alleging that the lower court committed a grave abuse of discretion in issuing the preliminary injunction. Resolving the matter on the propriety of the preliminary injunction, we ruled: It is obvious that what the plaintiffs in Civil Case No. 8632 considered as interference, on the part of the therein defendant (petitioner herein) with the negotiations or transaction at that time being carried on between said plaintiffs, on one hand, and Alfonso T. Yuchengco, on the other, regarding the sale of the shares of stock of Hacienda was said defendant's intention to enforce his right to collect from Robert O. Phillips and Sons, Inc. and its guarantors, the Phillips spouses, the unpaid balance- P4,250,000.00-due to him from the latter of the purchase price of their shares in Hacienda mentioned at the beginning hereof. As a matter of fact, when said defendant filed his answer in Civil Case No. 8632 interposing therein a counterclaim for the collection of said unpaid balance, the plaintiffs therein charged him with having violated the terms of the writ of preliminary injunction issued by the respondent judge. Proceedings in connection with this charge, however, were held in abeyance by reason of the writ of preliminary injunction ion We issued in the present case. After a careful consideration of the material facts and the law applicable to them, We are of the opinion and so hold, that the writ of preliminary injunction issued ex parte by the respondent judge was unjust and improvident. Without hearing the party concerned, and without any legal justification, it restrained a creditor (Perez Rubio) from enforcing his

undenied right to collect from his debtor and the latter's guarantors the sum of P4,250,000.00 representing the unpaid balance of the purchase price of his shares in Hacienda. It is a fact that the debtor Corporation (Robert O. Phillips and Sons, Inc.) and its guarantors, the Phillips spouses, do not deny the indebtedness, and yet, notwithstanding its extraordinary amount, they attempted to sell all the shares of stock of Hacienda without making any reasonable provision for the payment thereof. For them to prevent their creditor from enforcing his right to collect, and for the Court to enjoin said creditor from enforcing that right in any lawful manner is, in any language, rank injustice. (23 SCRA 773, 780). The petitioner assumes that the foregoing pronouncement categorically ruled that he did not unlawfully and inofficiously interfere in the transaction between respondents Phillips and Sons and the Phillips spouses on one hand and Alfonso Yuchengco on the other hand and that his acts were a valid enforcement of his rights as a creditor. This assumption is incorrect. It is very clear from the decision that we ruled on the impropriety of the manner in which the preliminary injunction was issued. We stated that without hearing the party concerned and without any legal justification, the trial court restrained creditor Perez Rubio from enforcing his undenied right. We could not have possibly ruled as suggested because the case before us was a petition for certiorari alleging that the trial court committed a grave abuse of discretion in issuing the preliminary injunction ex parte. The issue to be resolved was a pure question of law based on the circumstances surrounding the issuance of the questioned preliminary injunction ex parte. Whether or not the petitioner unlawfully and inofficiously interfered with the aforementioned transaction was a question of fact and any grave abuse of discretion could not, at that time, be resolved by this Court. A trial on the merits was necessary, Our decision in the second petition for certiorari, filed by the petitioner in connection with Civil Case No. 8632 lifted the temporary restraining order in so far as it restrained the trial court from proceeding with the hearing and ordered the cases including the third party complaint to proceed accordingly. Trial on the merits accordingly proceeded after which the trial court concluded that the petitioner unlawfully and inofficiously interfered with the subject transaction as a result of which Phillips and Sons and the Phillips spouses suffered damages. This conclusion was upheld by the Court of Appeals. The appellate court justified its ruling as follows: It is a fact, which defendant Perez Rubio does not and can not deny. that he had informed Alfonso Yuchengco of his vendor's lien over the unpaid shares of stock in the Hacienda Benito, Inc., and that he still had the right to rescind the sale of his stocks to ROPSI (t.s.n., August 7, 1974, pp. 31-35; Exhibit D-1-A-Plaintiffs, I Folder of Exhibits, p. 2). As stated before, Alfonso Yuchengco cooled off, as it were, and withdrew from the transaction (t.s.n., October 30, 1974, pp. 94-95) to which he had previously given his conformity (Exhibits 18-, 21 -Rubio-II Folder of Exhibits, pp. 37, 43) because of Perez Rubio's refusal to withdraw his letter to Yuchengco containing his threat to rescind the sale of his stocks to ROPSI. If this Court has said it before it is repeated here for emphasis that Alfonso Yuchengco had no intention to holding an empty bag, and for defendant Perez Rubio to block the plaintiffs from consummating a transaction the terms of which have already been approved in principle providing for the payment of Perez Rubio's credit is unlawful and inofficious interference. It should be noted that defendant Perez Rubio had already delivered completely the shares of stock of hacienda Benito, Inc. which he had sold to plaintiff ROPSI and that these shares were transferred in the books of the Hacienda in the name of ROPSI (t.s.n., August 5, 1974, pp. 129-130, 131-132, 133-134; August 7, 1974, p. 62; May 14, 1975, p. 32). The plaintiffs therefore had all the right to dispose of the shares of stock. Defendant Perez Rubio also admitted that there was no agreement or document prohibiting plaintiff ROPSI from selling the said shares of stock to any person (t.s.n., August 3, 1974, pp. 12-13) nor any agreement or document requiring his prior permission before ROPSI could sell or otherwise dispose of the said shares of stock (lbid., p. 14). There was also no vendor's lien annotated in the books of Hacienda Benito, Inc. over the said shares of stock (t.s.n., August 7, 1974, pp. 14-16, 63, 66-67), What is more, the plaintiffs have made reasonable provisions for the payment of the unpaid balance due the defendant in their transaction with Alfonso Yuchengco (Exhibit 18-Rubio, paragraph 19, II Folder of Exhibits, pp. 36-37, Exhibit 20-Rubio, paragraphs 8 and 12, lbid., pp. 41-42, Exhibit 22-Rubio, paragraph 5, lbid., p. 46; t.s.n., May 14, 1975, pp. 46, 119120). Clearly, there appears no valid reason why defendant Perez Rubio had to block the plaintiffs' transaction with

Alfonso Yuchengco, except 'to destroy' and 'ruin' the plaintiffs (t.s.n., May 14, 1975, pp. 129- 130), which defendant Perez Rubio himself vowed he would do (t.s.n., May 14, 1975, p. 136). A thorough examination of the record reveals that the factual findings of the appellate court are incomplete and do not reflect the actual events that transpired concerning the sale of shares of stock of Hacienda Benito to Alfonso Yuchengco. The important point left out by the appellate court refers to the controversial November 24, 1964 letter of the petitioner to Phillips and Sons and to the Phillips spouses wherein the petition stated that he has a vendor's lien over the shares of stock of Hacienda Benito and that he still has the option to rescind the contract as regards his sale of stock of the Hacienda. A copy of the letter was sent to Alfonso Yuchengeo, the prospective buyer of the shares of stock of Hacienda Benito, but even after receipt of the letter, the negotiations on the sale of the shares of stock of Hacienda Benito to Alfonso Yuchengco continued. This is shown by the following events: 1. In a letter dated December 17, 1964, Hacienda Benito through Robert O. Phillips as president, Phillips and Sons, through Robert Phillips as president and Robert Phillips in his own behalf offered to Alfonso Yuchengco an option to buy 100% of the shares of stock of Hacienda Benito. It is to be noted that the first option contained in the letter of November 17, 1964 offered to Alfonso Yuchengco was the sale of 80% of the shares of stock of Hacienda Benito. In reply Alfonso Yuchengco in his letter to the Phillips spouses and Phillips and Sons dated January 6, 1965 accepted the option but with modifications as to the terms of the sale, Included in the terms of the sale were provisions for the payment of the seller's debts. 2. In a letter dated February 12, 1965 from the law firm of Ramirez and Ortigas, counsel of the petitioner to Phillips and Sons and the Phillips spouses in relation to the ongoing negotiations for the settlement of the P3,800,000.00, it was stated that the petitioner was not willing to extend the manner of payment of the credit further than April 30, 1967. Contained in the same letter of the law firm was an offer of a compromise as to the manner of payment. 3. In reply to the aforementioned letter, Phillips and Sons and the Phillips spouses wrote a letter dated February 16, 1965 stating their final proposal as to the manner of payment. ln accordance with the final proposal, the last payment of the debt would be on April 30, 1968. On the basis of the terms and conditions of the final proposal, Phillips and Sons and the Phillips spouses requested a "waiver for the consummation of the proposed sale to Mr. Alfonso Yuchengco" (Exhibit 22-Perez Rubio, Exhibits 11, p. 46). 4. In a letter dated February, 22, 1965, the law firm of Ramirez and Ortigas informed Phillips and Sons that their client, the petitioner, rejected the plan to modify in any way the original agreements for payment and that the letter was a formal notice that the complaint for the enforcement of the original contracts would be filed on March 8, 1965 unless the case is settled in a satisfactory manner. (Exhibit 23-Perez Rubio, Exhibit 11, p. 80). As a consequence of the February 22, 1965 letter of the petitioner, Juan T. David, counsel for Phillips and Sons wrote the petitioner himself. In this letter dated March 12, 1965, Atty. David requested that the petitioner withdraw his controversial November 24, 1964 letter. According to David the said letter was the "only obstacle to the conclusion of the transaction between my client, Robert O. Phillips and Sons, Inc. and Mr. Yuchengco involving the shares of stock of Hacienda Benito, Inc." A copy of the letter was attached to a letter sent to Yuchengco also dated March 12, 1965 informing him about the failure to obtain the desired waiver and expressing the view that "waiver is unnecessary." In another letter dated March 26, 1965 addressed to the petitioner, Atty. David gave the petitioner until March 29, 1965 to withdraw unconditionally the controversial letter. The petitioner was informed that Yuchengco had given an ultimatum that if waiver was not obtained by March 31, 1965, the transaction would have to be cancelled. In reply to the March 26, 1965 letter, the petitioner sent a letter addressed to Phillips and Sons and the Phillips spouses informing them that the letter served as notice that all negotiations had been cancelled. Perez Rubio gave them until March 31, 1965 to pay the balance of the payment for his shares of stock plus interests and attorney's fees.

The letter served as the last communications between the petitioner and Phillips and Sons and the Phillips spouses before March 31, 1965 when Civil Case No. 8632 was filed. Taking into consideration, all the details of the negotiations in the sale of the shares of stock of Hacienda Benito, Inc. from Phillips and Sons to Mr. Yuchengco, there is no factual or legal basis for the appellate court's conclusion that the petitioner unlawfully and inofficiously interfered with the negotiations. We fail to see any reason why the petitioner should be accused of unlawful interference in maintaining his stand regarding the sale of shares of stock of Hacienda Benito, Inc. that he still had the option to rescind the contract between him and Phillips and Sons and stating the existence of his vendor's hen over said shares of stock. The petitioner never pretended that he still had full control of the shares of stock which he sold to Phillips and Sons. He in fact admitted that the shares of stock were already transferred to the corporation and that he did not have a recorded lien therein. He merely made of record his right to rescind under the original contract of sale. The details pertaining to the earlier transaction governing the sale of the shares of stock between the petitioner and Phillips and Sons were in fact, all known to Yuchengco. And, more important, it is obvious from the records that the petitioner's interest was only in the payment of the P4,250,000.00 balance due him from Phillips and Sons. Thus, in a meeting called by Yuchengco where the negotiations for the sale of the shares of stock of Hacienda Benito were discussed, the petitioner made it clear that he was amenable to his waiving or withdrawing the controversial November 24, 1964 letter provided his interests would be taken care of and protected. (Testimony of Perez Rubio, TSN., August 5, 1970, pp. 44-50). Obviously, the petitioner felt that the payment of his P4,250,000.00 was not secured under the terms of payment proposed by Yuchengco. He had the right to refuse to withdraw the November 24, 1964 letter. We see nothing illegal or inofficious about the letter or the refusal to withdraw it. Whether or not Yuchengco, the prospective buyer, believed that Perez Rubio had a good ground to rescind and whether or not the buyer's interest would be prejudiced were matters of decision-making dependent solely on hint In fact the March 12, 1965 letter of Atty. Juan T. David to the petitioner is quite revealing. Phillips and Sons admitted that under the circumstances, the petitioner's waiver of the controversial November 24, 1964 letter was unnecessary. The letter disclosed the fact that the waiver issue was extensively discussed by the parties including their counsel's maintaining the view that waiver was unnecessary. Thus: MR. MIGUEL PEREZ RUBIO c/o Ramirez and Ortigas Law Office 1515 Roxas Boulevard Manila Sir: xxx xxx xxx Taking advantage of the permission given to us by Mr. Yuchengco, to take up the aforementioned legal aspect of the 'waiver', with his counsel, Atty. Alberto M. Meer, we conferred with the latter and expressed our understanding of a 'waiver', and the conclusion that it has no place in the present case, considering the fact that a 'waiver' is only appropriate where the person from whom it is sought has a direct recorded lien on the subject thereof, particularly when the subject is a negotiable instrument; that, at best, a withdrawal of your aforementioned letter should be sufficient to

allay the fear of Mr. Yuchengco on the possibility of a suit which might involve him after the sale, if the 'waiver' is not obtained from you. We also called the attention of Mr. Yuchengco that the shares of stock subject of the transaction are clean and unencumbered, therefore, there is nothing to waive on the part of any person; that the negotiability of the said shares of stock is not impaired by the fact that the owner thereof is indebted to another, especially considering the fact that, instead of securing your credit against my client with the encumbrance of its shares of stock, you preferred the personal guaranty of Mr. and Mrs. Robert O. Phillips, as recorded in the corresponding instruments. Atty. Meer told us that, if we could obtain from you the letter of withdrawal and the phraseology thereof is adequate, the only obstacle to the consummation of the transaction will have been removed and he is disposed to advise his client, Mr. Yuchengco, to go through with the purchase of the shares of stocks of the Hacienda Benito, Inc., therefore, we reiterate our request for the withdrawal of your aforementioned letter. xxx xxx xx. A carbon copy of a March 12, 1965 letter from Atty. David to Mr. Alfonso Yuchengco was attached to the letter addressed to Mr. Perez Rubio. In the letter to Mr. Yuchengco, the counsel for Phillips and Sons stressed the View that the waiver or withdrawal of the Perez Rubio letter was unnecessary. The conclusion to be drawn from these facts is that the petitioner is not liable for any form of damages in favor of Phillips and Sons and the Phillips spouses. Consequently, we come to the issue of whether or not the Phillips spouses are solidarily liable for the debt of Phillips and Sons. This is the issue raised in the seventh assignment of error. It should be remembered that on June 23, 1964, Philipps and Sons and the Phillips spouses entered into an agreement wherein, in consideration of the extension granted to Phillips and Sons in the payment of the latter's outstanding debt to the petitioner, the Phillips spouses ". . . jointly and severally guaranteed all the installments and other obligations of Robert O. Phillips & Sons, Inc. under the signed contract of sale dated April 13, 1963. " Phillips and Sons was not able to pay the petitioner as covenanted in the agreement. The agreement was not assailed in any of the cases involving the petitioner Phillips and Sons and the Phillips spouses. Both parties admit the veracity of the agreement. The agreement serves as the law between the parties. The full enforcement of the agreement's provisions necessarily is in order. We rule that per agreement, the Phillips spouses are jointly and severally liable to the petitioner for the outstanding debt of Phillips and Sons with interest therein from April 30, 1964 until fully paid. The third, fourth, fifth and sixth assignments of errors refer to the actual damages awarded to Manufacturers Bank and Hacienda Benito by the appellate court. Both awards were premised on the appellate court's finding that Manufacturers Bank and Hacienda Benito were wrongfully impleaded as parties by the petitioner in his two petitions earlier filed wherein two injunctions were issued by this Court. As a result, the parties allegedly suffered damages. The appellate court premises its findings on the following justifications: (a) Even before the aborted transaction between ROPSI and Alfonso Yuchengco, Hacienda Benito, Inc. was already indebted to the Manufacturers Bank the year before. Appellant ROPSI had also executed real estate mortgages on 78 hectares out of the 135-hectare holding of Hacienda Benito, Inc. in favor of the Manufacturers Bank. Subsequently, the Hacienda executed a Memorandum Agreement on June 5, 1965 with Victoria Valley Development Corporation, with the conformity of the Manufacturers Bank as mortgage creditor, where the financial obligations of the Hacienda and its other affiliate corporations were restructured thus freeing them from their financial obligations to the Manufacturers

Bank in exchange for 78 hectares of land which were then mortgaged with the Manufacturers Bank, let alone the payment of a huge amount of interest on the principal. As of May 21, 1965, the Hacienda and its affiliates have not paid the Manufacturers Bank P 7,459,042.98 which was already due and demandable forcing the Manufacturers Bank to file Civil Case No. 8766 against the Hacienda for the foreclosure of the mortgages which resulted in a compromise agreement between the parties, which the court below approved. (Defendant's Record on Appeal, pp. 498-499). (b) As early as October 8, 1965, Miguel Perez Rubio knew that no assets have been transferred under the Memorandum Agreement of June 5, 1965 and that Victoria Valley Development Corporation has considered said Agreement without force and effect making it moot and academic for purposes of rescission (Ibid, p. 501), (c) There is nothing in the promissory notes and the real estate mortgages forming part of the records of Civil Case No. 8766 to show that they have been executed in bad faith or to defeat the credit of Miguel Perez Rubio against ROPSI since they were executed in 1963 over 78 hectares out of the 135- hectare holding of Hacienda Benito, Inc. in the Victoria Valley Subdivision so that prior to the default of ROPSI in the payment of the third installment on August 31, 1964 in favor of Perez Rubio, there were already prior and existing mortgages over the 78 hectares owned by the Hacienda in favor of the Manufacturers Bank (Ibid., pp. 501- 502). (d) The existence of sufficient assets for the payment of the credit of Perez Rubio failed to contradict the evidence showing the existence of unencumbered properties of Hacienda Benito, Inc. which were more than sufficient to meet his credit against ROPSI in the amount of P4,250,000.00 as well as the evidence showing the good financial position of the Hacienda as shown by Exhibit II -Benito, also marked as Exhibit 9-MBTC, III Folder of Exhibits, p. 129 (Ibid., pp. 502- 503). (e) The admission of Perez Rubio that he did not investigate with the corresponding registers of deeds and other entities the status of the unencumbered properties of Hacienda Benito, Inc., ROPSI, Robert O. Phillips and his wife, and the other corporations owned by the Phillips spouses before filing the third-party complaints against the Manufacturers Bank & Trust Company, Hacienda Benito, Inc. and Victoria Valley Development Corporation (t.s.n., August 21, 1974, pp. 133- 138). . . . xxx xxx xxx These findings do not justify the appellate court's conclusion that Manufacturers Bank and Hacienda Benito were wrongfully impleaded and that Perez Rubio owes them millions of pesos in damages as a result. In the welter of cases filed by the contending parties over the same properties and the confusion spawned by the many incidents which gave rise to separate petitions, one basic fact tends to be forgotten. It is this. The Perez Rubio spouses sold Hacienda Benito, Inc. to Phillips and Sons for P5,500,000.00 in 1963 or more than 22 years ago. P50,000.00 was paid immediately; P1,2000,000.00 was due in 60 days; in another 6 months, a third payment of P1,250,000.00 was to be paid. The full amount should have been paid by April 30, 1967. Up to now, P4.25 million of the basic indebtedness has not been paid. The Perez Rubio spouses were not paid as agreed in the contract. When the buyers could not comply with their commitments, the Perez Rubios graciously acceded to a deferment of overdue accounts under a new agreement. Still the payments could not be effected under the extension. All the transactions which led to the litigations by, against, or among Manufacturers Bank, Hacienda Benito, Phillips and Sons, and the Phillips spouses were entered into at the time when payments on the petitioner's shares of stock were overdue, A person who has not been paid a balance of P4,250,000.00 on a sale of P5,500,000.00 will naturally be extremely disturbed to see the buyers and other parties dealing with the properties in a manner which could be reasonably construed as calculated to bring them beyond his reach and making full payment of the debt extremely

difficult, if not impossible. It was a normal reaction and to be expected for the original owner to inform third persons trying to buy the still unpaid properties about that fact of non- payment and to emphasize to them his right and options under the original contract of sale. It was also normal to include the third party would-be-buyers who had taken sides with the defaulting original buyer in the litigations brought against Perez Rubio, the man seeking to protect his endangered interests. The inclusion of Manufacturers Bank and Hacienda Benito was part and parcel of the efforts to protect Perez Rubio's interests. It should be noted that petitions wherein they were impleaded had for their subject matter the same unpaid obligation of P4,250,000.00 from Phillips and Sons. The properties to be foreclosed by the Bank represented properties of Perez Rubio for which he had not yet been paid. There is nothing in the records to show that, far from protecting his P4.25 million, Perez Rubio filed the third party complaint to vex and humiliate Manufacturers Bank and Hacienda Benito. As we ruled in the case of R & B Surety and Insurance Company Inc, v. Intermediate Appellate Court (129 SCRA 736): xxx xxx xxx While petitioner might have been negligent in not verifying the authenticity of the signatures in the indemnity agreement, still the same does not amount to bad faith as to justify the award of damages and the conclusion that the act of filing the complaint against respondent Uson amounts to malicious prosecution. In filing the action, the petitioner was only protecting its business interests by trying to recover the amount it had already paid to the Philippine National Bank. In a long line of cases, we have consistently ruled that in the absence of a wrongful act or ommission 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. . . . The actual damages awarded to both the Manufacturers Bank and Hacienda Benito apart from having no legal basis were also not duly proven. In fact, the appellate court made no findings of fact on how it arrived at the total amount of P895,085.14 awarded to Manufacturers Bank much less did the court discuss the damages awarded to Hacienda Benito. The damages awarded to Hacienda Benito were only impliedly affirmed by the dispositive portion of the decision wherein it declared that the decision of the lower court was affirmed in toto. This can not be done. As we ruled in Perfecto v. Gonzales (128 SCRA 635): xxx xxx xxx . . . [A]ctual or 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 non- substantial, no damages will be given. In the case of Malonzo v. Galang, log Phil. 16, the Court, speaking through Justice J.B.L. Reyes, held that with respect to compensatory damages assuming that they are recoverable under the theory that petitioner had filed a clearly unfounded suit against respondent, the same constitutes a tort against the latter that makes the former liable for all damages which are the natural and probable consequences of the act or omissions complained of. These damages, cannot, however, be presumed and must be duly proved (Article 2199, New Civil Code). Well settled is the rule that even if the complaint filed by one against the other is clearly unfounded this does not necessarily mean, in the absence of specific facts proving damages, that said defendant reany suffered actual damage over and above attorney's fees and costs. The Court cannot rely on its relations as to the fact and amount of damages. It must depend on actual proof of the damages alleged to have been suffered.

Considering these conclusions, the final question to be resolved is whether or not the petitioner is entitled to moral and exemplary damages? This is the subject matter of the eighth and ninth assigned errors. We have stated that the petitioner had valid reasons to implead Manufacturers Bank and Hacienda Benito in his cases against Phillips and Sons and the Phillips spouses. An assessment of the evidence in record shows that the filing of the complaint may likewise be characterized as a sincere attempt on the part of Phillips and Sons and the Phillips spouses to find means or to buy time to pay their debt to the petitioner. In the case of Manufacturers Bank, the record shows that its active participation in the transaction involving the properties of Hacienda was legitimate. While no damages are due the Bank, neither is it liable for damages. As far as Victoria Valley is concerned, we find no reason to conclude that it was really organized or actively participated to prejudice the interests of the petitioner. The record shows that Victoria Valley withdrew from the transaction involving the properties of Hacienda Benito even before the filing of the third party complaint. The eighth and ninth assignments of errors under consideration are, therefore, without merit. WHEREFORE, the petition is GRANTED. The decision of the former Court of Appeals is hereby REVERSED and SET ASIDE. The respondents Robert O. Phillips and Sons and the Phillips spouses are declared to be jointly and severally liable to the petitioner for the outstanding debt of Phillips and Sons in the amount of FOUR MILLION, TWO HUNDRED FIFTY THOUSAND PESOS (P4,250,000.00) with interest at the rate of eight (8%) percent per annum from April 30, 1964 until fully paid as provided for in the parties' agreement dated August 13, 1963. Costs against the respondents. SO ORDERED.