You are on page 1of 32

Republic of the Philippines Supreme Court Manila SECOND DIVISION G.R. No. 7 !"#.

Ma$ %& '%(7 P)CM)C& INC.& petitioner& vs. *+E +ONOR),-E IN*ERMEDI)*E )PPE--)*E CO.R* an/ V.-C)N IND.S*RI)- 0 MINER)- E1P-OR)*ION CORPOR)*ION& respon/ents. S2--),.S I. REMEDI)- -)34 EVIDENCE4 P)RO- EVIDENCE R.-E4 DOES NO* PREC-.DE )DMISSION O5 E1*RINSIC EVIDENCE *O PROVE S.,SE6.EN* )GREEMEN*S. 7 *he stan/ of the petitioner is ri8htl$ premise/ on the principle that the parol e9i/ence rule /oes not preclu/e the a/mission of e:trinsic e9i/ence to pro9e subse;uent a8reements bet<een the parties to a <ritten contract& to <it= >*he rule forbi//in8 the a/mission of parol or e:trinsic e9i/ence to alter& 9ar$& or contra/ict a <ritten instrument /oes not appl$ so as to prohibit the establishment b$ parol of an a8reement bet<een the parties to a <ritin8& entere/ into subse;uent to the time <hen the <ritten instrument <as e:ecute/& not<ithstan/in8 such a8reement ma$ ha9e the effect of a//in8 to& chan8in8& mo/if$in8& or e9en alto8ether abro8atin8 the contract of the parties as e9i/ence/ b$ the <ritin84 for the parol e9i/ence /oes not in an$ <a$ /en$ that the ori8inal a8reement of the parties <as that <hich the <ritin8 purports to e:press&

but merel$ 8oes to sho< that the parties ha9e e:ercise/ their ri8ht to chan8e or abro8ate the same& or to ma?e a ne< an/ in/epen/ent contract.> @A C.B.S. '""(C'""% cite/ in 5rancisco& E9i/ence& Volume VII Part I '%7A& p. 'D7. See Canuto 9. Mariano& A7 Phil& (!"E II. CIVI-)34 CON*R)C*S4 .NI-)*ER)*ERMIN)*ION 3I*+O.* -EG)B.S*I5IC)*ION4 P)R*2 3+O CON*R)VENES *ENOR O5 )GREEMEN* -I),-E 5OR D)M)GES4 C)SE )* ,)R. 7 *he recor/s establish that after the termination of the t<oC$ear <ritten contract& the parties a8ree/ on another term re8ar/in8 the /uration of their /istributorship arran8ement. *he$ also a8ree/ that the /istributorship arran8ement <oul/ remain in full force until one $ear from an/ after notice of its termination <oul/ ha9e been 8i9en to P)CM)C. *he ine9itable conclusion& therefore& is that the partiesF contract of e:clusi9e /istributorship arran8ement <as still in e:istence on )u8ust A& '%D# <hen V.-C)N /eci/e/ to stop /eli9eries of its pro/ucts to P)CM)C. V.-C)NFs unilateral act of terminatin8 the contract <ithout le8al Gustification ma?es it liable for /ama8es suffere/ b$ P)CM)C pursuant to )rticle ''7" of the Ne< Ci9il Co/e.

DECISION G.*IERREH& BR.& B p= *his is a petition for re9ie< on certiorari of the /ecision of the then Interme/iate )ppellate Court& no< the Court of )ppeals& <hich set asi/e the earlier /ecision in Ci9il Case No. 6C%A(D

of the then Court of 5irst Instance of RiIal& 7th Bu/icial District ,ranch VC6ueIon Cit$. In Ci9il Case No. 6C%A(D& P)CM)C Incorporate/ @hereinafter calle/ P)CM)CE alle8e/ that b$ 9irtue of an e:istin8 contract an/ arran8ement <ith V.-C)N Manufacturin8 Compan$ Incorporate/ @hereinafter calle/ V.-C)NE& the former since '%#A continuousl$ up to )u8ust A& '%D# has been the e:clusi9e /istributor of the latterFs pro/ucts an/ that in sai/ arran8ement V.-C)N <as obli8e/ to perio/icall$ /eli9er an/ sell& at its o<n /ictate/ price an$ number or 9olume of its pro/ucts e:clusi9el$ to P)CM)C. P)CM)C <oul/& in turn& e:clusi9el$ sell an/ /istribute sai/ pro/ucts to the open mar?et& <hether in <holesale or retail& at a price set an/ comman/e/ b$ V.-C)N& an/ that on )u8ust A& '%D# V.-C)N unilaterall$ terminate/ the contract of e:clusi9e /istributorship causin8 /ama8es to P)CM)C. In its ans<er& V.-C)N /enie/ the contract of e:clusi9e /istributorship <ith P)CM)C. ,$ <a$ of counterclaim& V.-C)N alle8e/ that P)CM)C is in/ebte/ to it as of September A"& '%D# in the sum of PA "& ". # plus interest representin8 the unpai/ purchase price of V.-C)NFs pro/ucts sol/ an/ /eli9ere/ to P)CM)C. *he facts of the case as foun/ b$ the trial court are not /ispute/. *he appellate court a/opte/ these factual fin/in8s& to <it= >It appears from the e9i/ence that plaintiff Pacmac& Inc.& <as or8aniIe/ in '%!% as a tra/in8 concern& <ith Russell *. Elliott as its presi/ent an/ 8eneral mana8er. 5ollo<in8 researches an/ e:perimentation con/ucte/ at Pacmac& Inc.& Elliott subse;uentl$ or8aniIe/ the /efen/ant corporation in '%#A&

as a manufacturin8 concern& startin8 off <ith the pro/uction of rubber cement. .pon the or8aniIation of /efen/ant corporation& then ?no<n as the Vulcan Manufacturin8 Co.& Inc.& Elliott also became its presi/ent an/ 8eneral mana8er& at the same time that he remaine/ presi/ent an/ 8eneral mana8er of the Pacmac& Inc. ,oth corporations ha/ their offices in the same buil/in8 insi/e the compoun/ of Pacmac& Inc. from '%#A up to '%D7. 5rom the start& /efen/ant sol/ its pro/ucts to plaintiff on D"C/a$ terms& an/ plaintiff in turn /ealt on sai/ pro/ucts in the open mar?et. It <as un/erstoo/ that plaintiff <oul/ not sell similar pro/ucts from other sources competiti9e <ith those of /efen/ant. >In '%#D& Patrocinio ,autista <ho ha/ ?no<n Elliott since '%# & became 9ice presi/ent concurrentl$ of both corporations& <hile Elliott continue/ to be presi/ent an/ 8eneral mana8er also of both as from the start. )t the same time& man$ if not all of the members of the boar/ of /irectors of plaintiff corporation <ere li?e<ise members of the boar/ of /irectors of /efen/ant corporation. *he setCup remaine/ as such until the earl$ part of '%D"& <hen upon the su88estion of Elliott for the reason that the 8ro<th of both corporations ha/ ma/e it /ifficult for him to mana8e both& Patrocinio ,autista <as ma/e presi/ent an/ 8eneral mana8er of Pacmac& Inc. at the same time ceasin8 to be 9ice presi/ent of Vulcan Manufacturin8 Co.& Inc.& <hile Elliott sta$e/ on as presi/ent an/ 8eneral mana8er onl$ of the latter compan$. *he shift in mana8ement

responsibilities o9er the t<o corporations <as e9entuall$ follo<e/ b$ a chan8e in the stoc?hol/in8s of Elliott an/ ,autista& <ho <ere substantial stoc?hol/ers in both. Elliott 8a9e up his shares in Pacmac& Inc. an/ ac;uire/ more shares in the Vulcan Manufacturin8 Co.& Inc. <hile ,autista 8a9e up all his shares in the latter corporation an/ ac;uire/ more shares in Pacmac& Inc. )ccor/in8 to the e9i/ence of plaintiff& this happene/ also in '%D"& but the e9i/ence of /efen/ant places this occurrence in '%D after a po<er stru88le o9er the control in the mana8ement of Vulcan Manufacturin8 Co.& Inc.& bet<een the 8roup of Elliott& on one han/& an/ that of ,autista& on the other& <hich ,autista lost in the sho</o<n at the annual stoc?hol/ersF meetin8 in that $ear. >*he /rift of e9ents appears to len/ more probabilit$ to the claim in of /efen/ant in this respect. It appears that on 5ebruar$ '7& '%D & the maGorit$ of the members of the boar/ of /irectors of /efen/ant corporation appro9e/ an amen/ment to its articles of incorporation thereb$ authoriIin8 the sai/ corporation to en8a8e in the merchan/iIin8 business as one of its secon/ar$ purposes an/ increasin8 the ?in/ of pro/ucts it coul/ manufacture. *his amen/ment li?e<ise <as subse;uentl$ appro9e/ b$ the stoc?hol/ers of the corporation /urin8 the annual meetin8 hel/ 5ebruar$ "& '%D . In the /irectorsF certificate to this amen/ment& /ate/ March "& '%D & ,autista still appears to ha9e si8ne/ as /irector of /efen/ant corporation @E:hs. >(>

an/ >(C)>E. >On December D& '%D & both parties entere/ into a <ritten contract @E:h. >D>E of e:clusi9e /istributorship for t<o $ears be8innin8 No9ember 'D& '%D o9er t<o pro/ucts manufacture/ b$ /efen/ant& the most pertinent pro9ision of <hich rea/s= '. *hat the P.RC+)SER shall ha9e the e:clusi9e ri8ht to /istribute an/ resell the M)N.5)C*.RERFs SODI.M SI-IC)*ES an/ )D+ESIVE pro/ucts. +o<e9er& in consi/eration of this e:clusi9e pri9ile8e& the P.RC+)SER a8rees not to /istribute or resell a/hesi9es an/ so/ium silicates pro/ucts of other manufacturers or bran/s4 @*his a8reement /oes not co9er shoe cement pro/ucts& moul/s& /ies& sho< ran?s an/ other pro/ucts manufacture/ b$ VulcanE.F It appears that the t<o pro/ucts subGect of the <ritten a8reement of e:clusi9e /istributorship <ere ne< pro/ucts of /efen/ant an/ the contract <as prompte/ b$ an a8itation in the boar/ of /irectors of /efen/ant in 9ie< of a /esire to 8o into the merchan/iIin8 business& as <as su88este/ to plaintiff )lon8 <ith that& /efen/ant also claims that there <as /issatisfaction <ith an alle8e/ la8 in plaintiffFs pa$ments of its accounts <ith /efen/ant.

>3hile the a8reement @E:h. >D>E <as not rene<e/ at the en/ of its t<oC$ear term& the purchase an/ sale b$ plaintiff of the t<o pro/ucts continue/. . . . >. . . on )u8ust A& '%D#& /efen/ant& . . . <rote plaintiff a letter @E:h. >7>E a/9isin8 the latter that as of that /ate /efen/ant <oul/ no lon8er /eli9er an$ of its pro/ucts to plaintiff e:cept those items for <hich or/ers ha/ alrea/$ been boo?e/& unless the same <oul/ be cancelle/ b$ plaintiff. Defen/ant Gustifie/ its action on the F?no<le/8e that P)CM)C is no< /istributin8 FDurabon/F Sole )ttachin8 Cement as manufacture/ b$ Re8ional Enterprise.F In a letter of repl$ of the same /ate @E:h. >'#>E& plaintiff& . . . /enie/ an/ proteste/ a8ainst the accusation . . . On the other han/& it <as recalle/ that Elliott ha/ pre9iousl$ a/mitte/ that /efen/ant ha/ been /istributin8 its o<n pro/ucts F/espite @itsE e:istin8 relationshipF <ith plaintiff& PlaintiffFs letter also a/9ise/ that its or/ers pre9iousl$ boo?e/ still stoo/. It /oes not appear& ho<e9er& that /eli9eries on the pen/in8 or/ers <ere thereafter ma/e& as it is a/mitte/ that /efen/ant stoppe/ /eli9eries as of )u8ust A& '%D#. *he reason 8i9en b$ /efen/ant for refusin8 to ma?e further /eli9eries on the pen/in8 or/ers from plaintiff <as the latterFs failure to pa$ a balance of P A&"""."" in accor/ance <ith an un/erstan/in8 bet<een them on )u8ust '"& '%D#. *he trial court foun/ for the petitioner. Consi/erin8 ho<e9er& that P)CM)C o<e/ V.-C)N the amount of PA"!&(##.#"

representin8 the unpai/ purchase price of V.-C)NFs pro/ucts sol/ an/ /eli9ere/ to P)CM)C an/ that the /ama8es /ue P)CM)C <as fi:e/ in the amount of P'(%&%"(.7D& the trial court or/ere/ P)CM)C to pa$ V.-C)N the sum of P''!&%!D.7! <ith interest therein at the le8al rate from September A"& '%D# until the same is pai/. ,oth parties appeale/ the /ecision to the then Interme/iate )ppellate Court. )s state/ earlier& the appellate court set asi/e the trial courtFs /ecision. *he /ispositi9e portion of the /ecision rea/s= >3+ERE5ORE& the /ecision appeale/ from is hereb$ set asi/e an/ Gu/8ment is ren/ere/ on the counterclaim& or/erin8 plaintiff P)CM)C Incorporate/ to pa$ the /efen/ant Vulcan Manufacturin8 an/ *ra/in8 Corporation& the sum of PA"!&(##.#" <ith le8al interest from September A"& '%D# until the same is full$ pai/& <ith costs a8ainst plaintiffCappellant. *his amount <as mutuall$ submitte/ an/ a8ree/ bet<een the parties /urin8 the preCtrial procee/in8s as the balance /ue the /efen/ant from the plaintiff on sai/ /ate.> *he main issue in the instant petition hin8es on the actual business relationship bet<een P)CM)C an/ V.-C)N on )u8ust A& '%D# <hen the latter su//enl$ stoppe/ /eli9eries of its pro/ucts to the former. *he conclusions of the appellate court on factual matters /iffer from those of the trial court. +ence& a minute scrutin$ b$ this Court is in or/er an/ resort to /ul$ pro9en e9i/ence becomes necessar$. @Serrano 9. Court of )ppeals& 'A% SCR) '7%4 -e8aspi 9. Court of )ppeals& D% SCR) AD"4 *olentino 9. De

Besus& #D SCR) 'D7E. )lthou8h the appellate court foun/ that there e:iste/ an implie/ contract of e:clusi9e /istributorship bet<een the t<o parties <ith P)CM)C as /istributor of V.-C)NFs pro/ucts be8innin8 in '%#A& it rule/ that this implie/ contract <as terminate/ <hen on December D& '%D both parties entere/ into a formal <ritten contract @E:hibit FDFE of e:clusi9e /istributorship for t<o $ears be8innin8 No9ember 'D& '%( co9erin8 onl$ t<o pro/ucts& namel$ so/ium silicates an/ a/hesi9e pro/ucts manufacture/ b$ V.-C)N. .n/er this theor$& the appellate court opine/ that the terms in the <ritten contract superse/e/ all pre9ious contracts bet<een the t<o parties. Conse;uentl$& the appellate court conclu/e/ that since the contract pro9i/es for the e:piration of the e:clusi9e /istributorship after $ears& specificall$ on No9ember 'D& '%D!& there coul/ ha9e been no 8ross an/ e9i/ent ba/ faith on the part of V.-C)N <hen on )u8ust A& '%D# it terminate/ the e:clusi9e /istributorship a8reement embo/ie/ in E:hibit >D.> *he appellate court came up <ith this conclusion appl$in8 the parol e9i/ence rule <hich is Section 7& Rule 'A" of the Re9ise/ Rules of Court& to <it= >3hen the terms of an a8reement ha9e been re/uce/ to <ritin8& it is to be consi/ere/ as containin8 all such terms& an/& therefore& there can be& bet<een the parties an/ their successors in interest& no e9i/ence of the terms of the a8reement other than the contents of the <ritin8& . . .> *he petitioner no< conten/s that the parol e9i/ence rule erroneousl$ applie/ b$ the appellate court because there e9i/ence of an oral a8reement an/ acts implementin8 a8reement on the part of both parties subse;uent to <as <as that the

e:ecution of the <ritten contract <hich chan8e/ an/ a//e/ to the terms of the /istributorship arran8ement. .n/er these circumstances& P)CM)C ar8ues that the <ritten contract <as an ina/e;uate measure of the entire a8reement bet<een the parties thereto. *he stan/ of the petitioner is ri8htl$ premise/ on the principle that the parol e9i/ence rule /oes not preclu/e the a/mission of e:trinsic e9i/ence to pro9esubse;uent a8reements bet<een the parties to a <ritten contract& to <it= >*he rule forbi//in8 the a/mission of parol or e:trinsic e9i/ence to alter& 9ar$& or contra/ict a <ritten instrument /oes not appl$ so as to prohibit the establishment b$ parol of an a8reement bet<een the parties to a <ritin8& entere/ into subse;uent to the time <hen the <ritten instrument <as e:ecute/& not<ithstan/in8 such a8reement ma$ ha9e the effect of a//in8 to& chan8in8& mo/if$in8& or e9en alto8ether abro8atin8 the contract of the parties as e9i/ence/ b$ the <ritin84 for the parol e9i/ence /oes not in an$ <a$ /en$ that the ori8inal a8reement of the parties <as that <hich the <ritin8 purports to e:press& but merel$ 8oes to sho< that the parties ha9e e:ercise/ their ri8ht to chan8e or abro8ate the same& or to ma?e a ne< an/ in/epen/ent contract.> @A C.B.S. '""(C'""% cite/ in 5rancisco& E9i/ence& Volume VII Part I '%7A& p. 'D7. See Canuto 9. Mariano& A7 Phil& (!"E *he appellate court& therefore& erre/ <hen it faile/ to consi/er the e9i/ence pro9in8 that the e:clusi9e contract of /istributorship bet<een the parties <ent be$on/ the e:piration of the t<o $ear <ritten contract bet<een the parties.

*he petitioner presente/ e9i/ence to sho< that after sensin8 V.-C)NFs /esire to 8o into /istribution of its o<n pro/ucts& Patrocinio ,autista& presi/ent an/ 8eneral mana8er of P)CM)C secure/ 9erbal assurances from Russel Elliott& V.-C)NFs presi/ent an/ 8eneral mana8er& to 8i9e the former at least a $earFs notice in a/9ance before cuttin8 off the /istributorship arran8ement bet<een the t<o parties. *his <as 8i9en cre/ence b$ the trial court o9er the /enials of V.-C)N. Bose ,asa& a <itness for V.-C)N testifie/ that in a letter /ate/ No9ember 'D& '%D! @E:h. >!&> alle8e/ true cop$ of letterE V.-C)N notifie/ P)CM)C of the e:pir$ /ate of the C$ear /istributorship a8reement4 that in repl$ to this letter& P)CM)C throu8h P.E. ,autista& as?e/ for at least AC months notice before the business relationship coul/ be effecti9el$ terminate/ b$ either of the parties. *his letter& mar?e/ as E:h. #& <as an alle8e/ true cop$ of the letter <ritten b$ P.E. ,autista. *his <as /enie/ b$ ,autista. 3ith t<o conflictin8 pieces of e9i/ence before it& the trial court sai/= >. . . Of the t<o conflictin8 e9i/ence on the point& the Court is more incline/ to 8i9e cre/ence to the testimon$ of ,autista& than to E:h. # of /efen/ant <hich <as testifie/ to b$ <itness Bose ,asa <hose testimon$ has heretofore been foun/ to suffer from /oubtful 9eracit$. Moreo9er& consi/erin8 the e:tent an/ 9olume of business carrie/ on bet<een plaintiff an/ /efen/ant un/er the /istributorship arran8ement& it is improbable that plaintiff <oul/ ha9e bar8aine/ for onl$ a minimum of three monthsF notice <ithin <hich to a/Gust its

business. One $earFs notice coul/ not ha9e been unreasonable it appearin8 that for the $ear en/in8 December A'& '%DD& plaintiff mana8e/ to ma?e a net income of onl$ PD(&!"!.#7 @E:h. DC!E as compare/ to its net income for the $ear '%D!& <hen the /istributorship arran8ement <as still intact& in the amount of P '(&A'A.AA @E:h& DC E. . . .> @Boint Recor/ on )ppeal& pp. %%C'""E. 3e fin/ no substantial reason from the recor/s to /e9iate from& much less re9erse& these factual fin/in8s of the trial court. *he trial courtFs conclusion that e9i/ence on the one $ear notice to terminate the e:clusi9e /istributorship arran8ement bet<een the t<o parties is more cre/ible than the proof of a threeCmonth notice alle8e/ b$ V.-C)N /ue to the 9olume of business carrie/ on b$ the t<o parties is bolstere/ b$ the unrebutte/ e9i/ence of P)CM)Cthat before the /istributorship arran8ement <as terminate/& more than D"J of its 8ross sales consiste/ of V.-C)NFs pro/ucts. V.-C)N continue/ to suppl$ the same amounts an/ un/er the same terms to P)CM)C of its entire ran8e of pro/ucts. )fter termination& 8ross sales of P &D '&(#7.!D <ere re/uce/ b$ P'&#7"&"""."" in one $earFs sales. *he recor/s establish that after the termination of the t<oC$ear <ritten contract& the parties a8ree/ on another term re8ar/in8 the /uration of their /istributorship arran8ement. *he$ also a8ree/ that the /istributorship arran8ement <oul/ remain in full force until one $ear from an/ after notice of its termination <oul/ ha9e been 8i9en to P)CM)C. *he ine9itable conclusion& therefore& is that the partiesF contract of e:clusi9e /istributorship arran8ement <as still in e:istence on )u8ust A& '%D# <hen V.-C)N /eci/e/ to stop /eli9eries

of its pro/ucts to P)CM)C. V.-C)NFs unilateral act of terminatin8 the contract <ithout le8al Gustification ma?es it liable for /ama8es suffere/ b$ P)CM)C pursuant to )rticle ''7" of the Ne< Ci9il Co/e <hich pro9i/es= >*hose <ho in the performance of their obli8ations are 8uilt$ of frau/& ne8li8ence or /ela$& an/ those <ho in an$ manner contra9ene the tenor thereof& are liable for /ama8es.> *he petitioner ar8ues on the basis of the e9i/ence it presente/ before the trial court that it is entitle/ to actual an/ compensator$ /ama8es of at least PAD"&"""."" plus interest& e:emplar$ /ama8es of at least P'""&""".""& attorne$Fs fees of at least P#"&"""."" an/ liti8ation e:penses of at least P #&"""."". *he trial court re/uce/ the claims for /ama8es to more reasonable le9els. 3e a8ree <ith its fin/in8s that= >Neither can the Court reasonable 8o alon8 <ith plaintiff that the measure of /ama8es /ue it shoul/ be base/ on the a9era8e monthl$ profit of PA'&A"7.D( it <as 8ettin8 out of the sales of /efen/antFs pro/ucts /urin8 the e:istence of the /istributorship arran8ement @E:h. DE. E9i/entl$ an/ as can be 8athere/ from the testimon$ of plaintiffFs <itness 5elicisimo S. /e Ocampo& <ho prepare/ E:h. D& the a9era8e monthl$ profit arri9e/ at in the sum of PA'&A"7.D( /oes not actuall$ represent the a9era8e net monthl$ profit from the sale of /efen/antFs pro/ucts& since the sellin8 or a/ministrati9e e:penses ha9e not been ta?en into account. )s a matter of fact& Ocampo

coul/ not state <hat part of plaintiffFs sellin8 e:penses referre/ to /efen/antFs pro/ucts. Moreo9er& it <as incumbent upon plaintiff to minimiIe its /ama8es b$ 8ettin8 other suppliers an/ sellin8 other pro/ucts <hen /efen/ant alto8ether stoppe/ sellin8 to plaintiff. It is reasonable to assume that& in/ee/& plaintiff /i/ Gust this. *he more e;uitable basis then <oul/ be the /iminution in the net income of plaintiff /urin8 the entire $ear follo<in8 the termination of the /istributorship arran8ement& or the /ifference bet<een its net income of P '(&A'A.AA in '%D!& sho<n b$ its o<n e9i/ence @E:h. DC E& as a8ainst PD(&!"!.7# in '%DD& also sho<n b$ its o<n e9i/ence @E:h. DC!E& <hich is P'!%&%"(.7D. 5or ha9in8 acte/ in 8ross an/ e9i/ent ba/ faith& consi/erin8 /efen/antFs unGustifie/ an/ su//en cuttin8 off of its sales to plaintiff& after ha9in8 surreptitiousl$ sol/ its pro/ucts in the open mar?et @see E:hs. %C)& '"C)& ''C) an/ ' C)E& all in a <ilful breach of the /istributorship arran8ement <ith plaintiff an/ min/less of the preGu/ice to the latterFs business& /efen/ant is also liable to plaintiff for e:emplar$ /ama8es in the amount of PA"&"""."" an/ attorne$Fs fees in the amount of P'"&"""."". >On the other han/& upon /efen/antFs counterclaim& plaintiff is in turn liable for the pa$ment of its a/mitte/ account <ith /efen/ant in the amount of PA"!&(##.#" as of September A"& '%D# @E:h. C or 'E. Compensatin8 the amounts /ue plaintiff un/er its complaint in the total sum of P'(%&%"(.7D

a8ainst the amount /efen/ant un/er its counterclaim in the sum of PA"!&(##.#"& there still remains a net amount of P''!&%!D.7!& e:clusi9e of interest& /ue /efen/ant from plaintiff. Defen/antFs claim for interest on plaintiffFs account at t<el9e @' JE percent per annum is not sufficientl$ supporte/ b$ the e9i/ence. E:cept for the so/ium silicates an/ a/hesi9es subGect of the <ritten t<oC$ear a8reement @E:h. DE& <herein it <as stipulate/ that nonpa$ment <ithin si:t$ @D"E /a$s <oul/ ma?e plaintiff liable to one @'JE percent interest char8e per month until the account is pai/& there is nothin8 in the e9i/ence to pro9e that the plaintiffFs accounts as to the other pro/ucts <ere also subGect to the same rate of penalt$& or <hat part& if an$& of plaintiffFs accounts pertaine/ to unpai/ purchases of so/ium silicates an/ a/hesi9es. +o<e9er& /efen/ant is entitle/ to interest at the le8al rate on the amount /ue it from plaintiff after compensatin8 their respecti9e claims.> @Boint Recor/ on )ppeal& pp. '""C'"AE.

3+ERE5ORE& the instant petition is GR)N*ED. *he ;uestione/ /ecision of the Interme/iate )ppellate Court is REVERSED an/ SE* )SIDE. *he trial courtFs /ecision is REINS*)*ED. SO ORDERED. 5ernan& @ChairmanE& Paras& ,i/in an/ Cortes& BB.& concur. Pa/illa& B.& too? no part.

Republic of the Philippines Supreme Court Manila 5IRS* DIVISION G.R. No. ' 'DD. March ''& '%%(

CRESEN*E 2. --OREN*E& BR.& petitioner& vs. S)NDIG)N,)2)N an/ -E*ICI) G. 5.ER*ES& respon/ents. Ruben E. )8palo an/ )le:an/er G. Castro for petitioner. *he Solicitor General for respon/ents. S2NOPSIS Pri9ate complainant -eticia C. 5uertes is the /ul$ appointe/ )ssistant Municipal *reasurer in the Municipalit$ of Sin/an8an& Hamboan8a /el Norte& since October '(& '%(#. Startin8 '%(D& she <as /etaile/ to /ifferent offices& an/ returne/ to her post in Sin/an8an onl$ in Bul$& '%%". +o<e9er& she <as not pro9i/e/ office e;uipments nor 8i9en an$ assi8nments4 neither her /ail$ time recor/ an/ application for lea9e acte/ upon b$ the municipal treasurer per instruction of accuse/ Ma$or. On March ' & '%%'& accuse/ Ma$or recei9e/ a letter from the San88unian8 ,a$an of the Municipalit$ of Pinan& Hamboan8a /el Norte& /eman/in8 from the pri9ate complainant return of the amount o9erpai/ to her as salaries. Pri9ate complainant file/ a Petition for Man/amus<ith Dama8es a8ainst the accuse/ Ma$or an/ the Municipalit$ of Sin/an8an for the alle8e/ unGustifie/ refusal of Ma$or -lorente to si8n an/Kor appro9e her pa$rolls an/Kor 9ouchers representin8 her salaries an/ other emoluments. She

also alle8e/ that althou8h she ren/ere/ ser9ices at the municipalit$ of Pinan for the month of Bune& '%%"& she coul/ not collect her salar$ there consi/erin8 that as of that month& the municipalit$ of Pinan ha/ alrea/$ appointe/ an )ssistant Municipal *reasurer. She <as a/9ise/ to claim her salar$ <ith her mother a8enc$& the Municipalit$ of Sin/an8an. In an amicable settlement& pri9ate complainant <as pai/ her salaries but onl$ for Banuar$ to )u8ust '%%'. She <as able to recei9e complete pa$ment of her claims onl$ on Banuar$ !& '%%A in the form of chec?s. 5or causin8 an un/ue inGur$ in the /ischar8e of his official functions throu8h e9i/ent ba/ faith& accuse/ Ma$or <as char8e/ an/ foun/ 8uilt$ <ith 9iolation of Sec. ALeM of R.). No. A"'%& the )ntiCGraft an/ Corrupt Practices )ct. )+Sa*I .n/ue inGur$ in Sec. ALeM of the la< cannot be presume/ e9en after a <ron8 has been establishe/. Its e:istence must be pro9en as one of the elements of the crime because here& it constitutes the 9er$ act punishe/ un/er this section. *hus& it is re;uire/ that the un/ue inGur$ be specifie/& ;uantifie/ an/ pro9en to the point of moral certaint$. Mere alle8ation <ithout specific /etails that complainant un/er<ent financial /ifficult$ from the /ela$ in the satisfaction of her claims is ina/e;uate. )n/ after she full$ recei9e/ her monetar$ claims& there is no lon8er an$ bases for compensator$ /ama8es or un/ue inGur$& there bein8 nothin8 more to compensate. )lso& complainant faile/ to submit mone$ an/ propert$ clearances for her 9ouchers4 an/ an appropriation b$ the San88unian8 ,a$an <as re;uire/ before her 9oucher coul/ be appro9e/. +ence& complainant is not entirel$ blameless for the /ela$ in the appro9al of her claims& an/ e9i/ent ba/ faith not completel$ imputable to the accuse/& consi/erin8 also that the failure to appro9e complainantFs 9ouchers <as /ue to some le8al obstacles. S2--),.S

I.

CRIMIN)- -)34 )N*ICGR)5* )ND CORR.P* PR)C*ICES )C* @R.). A"'%E4 CORR.P* PR)C*ICES O5 P.,-IC O55ICERS4 C).SING .ND.E INB.R2 *O ) P)R*24 E-EMEN*S. 7 *o hol/ a person liable un/er Section ALeM of R.). A"'%& the )ntiCGraft an/ Corrupt Practices )ct& the concurrence of the follo<in8 elements must be establishe/ be$on/ reasonable /oubt b$ the prosecution= >@'E that the accuse/ is a public officer or a pri9ate person char8e/ in conspirac$ <ith the former4 @ E that sai/ public officer commits the prohibite/ acts /urin8 the performance of his or her official /uties or in relation to his or her public positions4 @AE that he or she causes un/ue inGur$ to an$ part$& <hether the 8o9ernment or a pri9ate part$4 an/ @!E that the public officer has acte/ <ith manifest partialit$& e9i/ent ba/ faith or 8ross ine:cusable ne8li8ence .> )ID*+C ID.4 ID.4 ID.4 .ND.E INB.R24 RE6.IRES PROO5 O5 )C*.)- D)M)GE. 7 >.n/ue InGur$> re;uires proof of actual inGur$ or /ama8e. .nli?e in actions for torts& un/ue inGur$ in Sec. ALeM cannot be presume/ e9en after a <ron8 or a 9iolation of a ri8ht has been establishe/. Its e:istence must be pro9en as one of the elements of the crime. In fact& the causin8 of un/ue inGur$ or the 8i9in8 of an$ un<arrante/ benefits& a/9anta8e of preference throu8h manifest partialit$& e9i/ent ba/ faith or 8ross ine:cusable ne8li8ence constitutes the 9er$ act punishe/ un/er this section. *hus& it is re;uire/ that the un/ue inGur$ be specifie/& ;uantifie/ an/ pro9en to the point of moral certaint$. Causin8 means >to be the cause or occasion of& to effect as an a8ent& to brin8 into e:istence& to ma?e or to in/uce& to compel.> Causin8 is& therefore& not limite/ to positi9e acts onl$. E9en passi9e acts or inaction ma$ cause un/ue inGur$. 3hat is essential is that un/ue inGur$& <hich is ;uantifiable an/

/emonstrable& results from the ;uestione/ official act or inaction. In Gurispru/ence& >un/ue inGur$> is consistentl$ interprete/ as >actual /ama8e.> .n/ue has been /efine/ as >more than necessar$& not proper& LorM ille8al4> an/ inGur$ as >an$ <ron8 or /ama8e /one to another& either in his person& ri8hts& reputation or propert$4 that is& the in9asion of an$ le8all$ protecte/ interest of another.> )ctual /ama8e& in the conte:t of these /efinitions& is a?in to that in ci9il la<. III. CIVI- -)34 )C*.)- D)M)GES4 E-),OR)*ED. 7 )ctual or compensator$ /ama8es is /efine/ b$ )rticle '%% of the Ci9il Co/e. 5un/amental in the la< on /ama8es is that one inGure/ b$ a breach of a contract& or b$ a <ron8ful or ne8li8ent act or omission shall ha9e a fair an/ Gust compensation commensurate to the loss sustaine/ as a conse;uence of the /efen/antFs act. )ctual pecuniar$ compensation is a<ar/e/ as a 8eneral rule& e:cept <here the circumstances <arrant the allo<ance of other ?in/s of /ama8es. )ctual /ama8es are primaril$ inten/e/ to simpl$ ma?e 8oo/ or replace the loss cause/ b$ the <ron8. 5urthermore& /ama8es must not onl$ be capable of proof& but must be actuall$ pro9en <ith a reasonable /e8ree of certaint$. *he$ cannot be base/ on flims$ an/ nonCsubstantial e9i/ence or upon speculation& conGecture or 8uess<or?. *he$ cannot inclu/e speculati9e /ama8es <hich are too remote to be inclu/e/ in an accurate estimate of the loss or inGur$. ID.4 ID.4 NO* PRESEN* IN C)SE )* ,)R. 7 Complainant testifie/ that <hen her salar$ an/ allo<ance <ere <ithhel/& her famil$ un/er<ent financial /ifficult$. +o<e9er& Respon/ent Court foun/ that all her monetar$ claims <ere satisfie/. )fter she full$ recei9e/ her monetar$ claims& there is no lon8er

II.

IV.

an$ basis for compensator$ /ama8es or un/ue inGur$& there bein8 nothin8 more to compensate. ComplainantFs testimon$ re8ar/in8 her famil$Fs financial stress <as ina/e;uate an/ lar8el$ speculati9e. 3ithout 8i9in8 specific /etails& she ma/e onl$ 9a8ue references to the fact that her four chil/ren <ere all 8oin8 to school an/ that she <as the brea/<inner in the famil$. She& ho<e9er& /i/ not sa$ that she <as unable to pa$ their tuition fees an/ the specific /ama8e brou8ht b$ such nonpa$ment. *he fact that the >inGur$> to her famil$ <as unspecifie/ or un;uantifie/ /oes not satisf$ the element of un/ue inGur$& as a?in to actual /ama8es. )s in ci9il cases& actual /ama8es& if not supporte/ b$ e9i/ence on recor/& cannot be consi/ere/. *he incon9enience that complainant suffere/ b$ reason of the >lon8 perio/ of time> that her emoluments <ere <ithhel/ is not constituti9e of un/ue inGur$. V. REMEDI)- -)34 EVIDENCE4 ,)D 5)I*+4 NO* PRESEN* IN C)SE )* ,)R. 7 Respon/ent Court foun/ e9i/ent ba/ faith on the part of the petitioner& hol/in8 that& <ithout an$ 9ali/ reason& accuse/ <ithhel/ the pa$ment of complainantFs salaries an/ other benefits for almost $ears. It brushe/ asi/e petitionerFs /efenses that complainant faile/ to submit mone$ an/ propert$ clearances for her 9ouchers& an/ that an appropriation b$ the San88unian8 ,a$an <as re;uire/ before complainantFs 9ouchers coul/ be appro9e/. *he Court /isa8rees. Complainant faile/ to submit the re;uire/ clearance. *his re;uirement& <hich the complainant /isre8ar/e/& <as e9en printe/ at the bac? of the 9er$ 9ouchers sou8ht to be appro9e/. )s assistant municipal treasurer& she ou8ht to ?no< that this is a con/ition for the pa$ment of her claims. *his clearance is re;uire/ b$ )rticle !!A of the Implementin8 Rules an/ Re8ulations of the -ocal

Go9ernment Co/e of '%%'. 5or her o<n failure to submit the re;uire/ clearance& complainants is not entirel$ blameless for the /ela$ in the appro9al of her claims. )lso& 8i9en the lac? of correspon/in8 appropriation or/inance an/ certification of a9ailabilit$ of fun/s for such purpose& petitioner ha/ the /ut$ not to si8n the 9ouchers. )s Chief e:ecuti9e of the municipalit$& -lorente coul/ not ha9e appro9e/ the 9oucher for the pa$ment of complainantFs salaries un/er Sec. A!!& -ocal Go9ernment Co/e of '%%'. )lso )ppropriation Or/inance No. " " a//in8 a supplemental bu/8et for calen/ar $ear '%%" <as appro9e/ on )pril '"& '%(%& or almost a $ear before complainant <as transferre/ bac? to Sin/an8an. +ence& she coul/ not ha9e been inclu/e/ therein. S, Resolution No. " an/ )ppropriation Or/inance No. "A#& <hich fi:e/ the municipal bu/8et for calen/ar $ear '%%'& <as passe/ onl$ on Ma$ '& '%%"& or almost another $ear after the transfer too? effect. *he petitionerFs failure to appro9e the complainantFs 9ouchers <as therefore /ue to some le8al obstacles& an/ not entirel$ <ithout reason. *hus& e9i/ent ba/ faith cannot be completel$ impute/ to him. DECISION P)NG)NI,)N& B p= In a prosecution for 9iolation of Section ALeM of the )ntiCGraft -a<& that is& >causin8 un/ue inGur$ to an$ part$&> the 8o9ernment prosecutors must pro9e >actual> inGur$ to the offen/e/ part$4 speculati9e or inci/ental inGur$ is not sufficient. *he Case ,efore us is a petition for re9ie< of the Decision promul8ate/

on Bune A& '%%# an/ the Resolution promul8ate/ on October ' & '%%# of theSan/i8anba$an in Criminal Case No. '(A!A& fin/in8 Cresente 2. -lorente& Br. 8uilt$ as char8e/. -lorente& then municipal ma$or of Sin/an8an& Hamboan8a /el Norte& <as char8e/ <ith 9iolation of Sec. ALeM of Republic )ct No. A"'%& other<ise ?no<n as the )ntiCGraft an/ Corrupt Practices )ct& un/er an Information /ate/ October & '%% & te:tuall$ repro/uce/ as follo<s= >*hat in or about an/ /urin8 the perio/ of Bul$& '%%" to October& '%%'& or for sometime subse;uent thereto& in the Municipalit$ of Sin/an8an& Pro9ince of Hamboan8a /el Norte& Philippines& an/ <ithin the Guris/iction of this +onorable Court& the abo9eCname/ accuse/ Cresente 2. -lorente&Br.& a public officer& bein8 then the Ma$or of Sin/an8an& Hamboan8a /el Norte& in the e:ercise of his official an/ a/ministrati9e functions& /i/ then an/ there& <ilfull$& unla<full$ an/ criminall$ <ith e9i/ent ba/ faith refuse to si8n an/ appro9e the pa$rolls an/ 9ouchers representin8 the pa$ments of the salaries an/ other emoluments of -eticia G. 5uertes& <ithout Gust 9ali/ cause an/ <ithout /ue process of la<& thereb$ causin8 un/ue inGur$ to the sai/ -eticia G. 5uertes. CON*R)R2 *O -)3.> Dul$ arrai8ne/ on March %& '%%A& petitioner& <ith the assistance of counsel& entere/ a plea of >NO* G.I-*2.> )fter trial in /ue course& theSan/i8anba$an ren/ere/ the assaile/ Decision& /isposin8 as follo<s=

>3+ERE5ORE& Gu/8ment is hereb$ ren/ere/ fin/in8 accuse/ Ma$or Cresente 2. -lorente& Br. G.I-*2 be$on/ reasonable /oubt as principal of the crime of Violation of Section A@eE of Republic )ct A"'%& as amen/e/& an/ he is hereb$ sentence/ to suffer imprisonment of SI1 @DE 2E)RS an/ ONE @'E MON*+& as minimum to SEVEN @7E 2E)RS& as ma:imum4 to further suffer perpetual /is;ualification from public office4 an/ to pa$ the costs.> Respon/ent Court /enie/ the subse;uent reconsi/eration in the assaile/ Resolution thus= motion for

>3+ERE5ORE& accuse/Fs FMotion for Reconsi/eration an/Kor Ne< *rialF is hereb$ DENIED for lac? of merit. +is FMotion for Mar?in8 of )//itional E:hibits Cum Offer of Documentar$ E:hibits in Support of Motion for Reconsi/eration an/Kor Ne< *rialF is no< ren/ere/ moot an/ aca/emic.> +ence& this petition. *he 5acts Version of the Prosecution )s foun/ b$ Respon/ent Court& the prosecutionFs 9ersion of the facts of this case is as follo<s= >)fter appreciatin8 all the e9i/ence on both si/es& the follo<in8 uncontro9erte/ facts ma$ be 8leane/=

'. )ccuse/ Ma$or Cresente 2. -lorente& Br.& at the time the alle8e/ act <as committe/& <as the Municipal Ma$or of Sin/an8an& Hamboan8a /el Norte. . Pri9ate LCMomplainant& -eticia C. 5uertes& is the /ul$ appointe/ )ssistant Municipal *reasurer in the same municipalit$ since October '(& '%(#. A. Startin8 '%(D& pri9ate complainant <as /etaile/ to /ifferent offices& as follo<s= a. Municipalit$ of Natipunan& Hamboan8a /el Norte 7 from )pril& '%(D to )u8ust& '%(7 as OIC Municipal *reasurer. b. Municipalit$ of Ro:as& Hamboan8a /el Norte 7 from September& '%(7 to March& '%(( as OIC Municipal *reasurer. c. Office of the Pro9incial *reasurer of Hamboan8a /el Norte 7 from )pril& '%(( to Ma$& '%((. /. Municipalit$ of PiOan& Hamboan8a /el Norte 7 from Bune& '%(( to Bune& '%%" as OIC Municipal *reasurer. !. In Bul$& '%%"& she <as returne/ to her post as )ssistant Municipal *reasurer in the to<n of Sin/an8an. She <as not pro9i/e/ <ith office table an/ chair nor 8i9en an$ assi8nment4 neither her /ail$ time recor/ an/ application for lea9e acte/ upon b$

the municipal treasurer per instruction of accuse/ Ma$or @E:h. FGC F4 FGCAFE. #. On Bul$ A& '%%"& the San88unian8 ,a$an of Sin/an8an& Hamboan8a /el Norte& presi/e/ b$ accuse/ Ma$or& passe/ Resolution No. S,C '! @E:h. FAFE& 9ehementl$ obGectin8 to the assi8nment of complainant as )ssistant Municipal *reasurer of Sin/an8an. D. On March ' & '%%'& accuse/ Municipal Ma$or recei9e/ a letter @S, Resolution No. ADE from the San88unian8 ,a$an of the Municipalit$ of PiOan& /eman/in8 from the pri9ate complainant return of the amount o9erpai/ to her as salaries @par. %& p. of E:h. F!F 7 counterCaffi/a9it of accuse/ Ma$orE. 7. On Ma$ & '%%'& pri9ate complainant file/ a Petition for Man/amus <ith Dama8es @E:h. FEFE a8ainst the accuse/ Ma$or an/ the Municipalit$ of Sin/an8an before ,ranch II& Re8ional *rial Court of Sin/an8an& Hamboan8a /el Norte /oc?ete/ as Special Procee/in8s No. !#& for the alle8e/ unGustifie/ refusal of Ma$or -lorente to si8n an/Kor appro9e her pa$rolls an/Kor 9ouchers representin8 her salaries an/ other emoluments as follo<s= @aE salar$ for the month of Bune& '%%" in the amount of P#&!# ."" un/er /isbursement 9oucher /ate/ September #& '%%" @E:h. F+FE. )lthou8h complainant ren/ere/ ser9ices at the municipalit$ of PiOan /urin8 this perio/& she coul/ not collect her salar$ there consi/erin8 that as of that month& PiOan ha/ alrea/$ appointe/ an )ssistant Municipal *reasurer. 3hen she referre/ the matter to the Pro9incial )u/itor& she <as a/9ise/ to claim her

salar$ for that month <ith her mother a8enc$& the Municipalit$ of Sin/an8an& L@Mp. ' & *SN of )u8ust %& '%%!4 '"th para8raph of complainantFs Supplemental )ffi/a9it mar?e/ E:h. FGFE4 @bE salar$ /ifferential for the perio/ from Bul$ '& '%(% to )pril A"& '%%" in the total amount of P'%&!("."" un/er /isbursement 9oucher /ate/ )u8ust& '%%" @E:h. FIFE4 @cE 'Ath month pa$& cash 8ift an/ clothin8 allo<ance un/er Supplemental ,u/8et No. #& C2 '%%" in the total amount of P7& 7# per /isbursement 9oucher /ate/ December !& '%%" @E:h. FBFE4 @/E 9acation lea9e commutation for the perio/ from October to December A'& '%%" in the total amount of P'D&A#D."" per /isbursement 9oucher /ate/ December A& '%%" @E:h. FNFE4 @eE R)*) for the months of Bul$& )u8ust an/ September& '%%"& Banuar$ an/ 5ebruar$& '%%' in the total amount of P#&%""."" @par. ' 0 'D of E:h. FEFE4 an/ @fE salaries for Banuar$ an/ 5ebruar$& '%%' in the total amount of P'"&%"!."" @par. '7 of E:h . FEFE. (. )ccuse/ Ma$or /i/ not file an ans<er4 instea/& he ne8otiate/ for an amicable settlement of the case @p. !& *SN of )u8ust '"& '%%!E. In/ee/& a Compromise )8reement @E:h. F)FE /ate/ )u8ust 7& '%%'& bet<een the accuse/ an/ pri9ate complainant <as submitte/ to an/ appro9e/ b$ the court& hereto ;uote/ as follo<s= FCOMPROMISE )GREEMEN* F*hat the parties ha9e a8ree/& as the$ hereb$ a8ree& to settle this case amicabl$ on the basis of the follo<in8 terms an/

con/itions& to <it= a. *hat the respon/ent Ma$or Cresente 2. -lorente& Br. bin/s himself to si8n an/Kor appro9e all 9ouchers an/Kor pa$rolls for unpai/ salaries& R)*)& CashC8ifts& 'Ath month pa$& clothin8 allo<ance& salar$ /ifferentials an/ other emoluments <hich the petitioner is entitle/ as )ssistant Municipal *reasurer of Sin/an8an& Hamboan8a /el Norte4 b. *hat the parties herein hereb$ <ai9e& renounce an/ relin;uish their other claims an/ counterCclaims a8ainst each other4 c. *hat the respon/ent Ma$or Cresente 2. -lorente Br. bin/s himself to si8n an/Kor appro9e all subse;uent 9ouchers an/ pa$rolls of the herein petitioner.F %. On )u8ust 7& '%%'& a Decision @E:h. F,FE <as ren/ere/ b$ Bu/8e 3ilfre/o Ochotorena on the basis of the aforesai/ compromise a8reement. '". 5or his failure to compl$ <ith the terms of the compromise a8reement& pri9ate complainant& thru counsel& file/ a Motion for E:ecution on September ' & '%%'. ) 3rit of E:ecution @E:h. FCFE <as issue/ b$ the Court on September '7& '%%'& an/ ser9e/ LonM the accuse/ on September A& '%%'. ''. )s sho<n in the SheriffFs Return /ate/ No9ember '%& '%%' @E:h. FDFE& pri9ate complainant <as pai/ her salaries for the perio/

from Banuar$& '%%' to )u8ust& '%%'& <hile the rest of her salaries inclu/in8 the R)*) an/ other emoluments <ere not pai/ consi/erin8 the alle8e/ nee/ of a supplemental bu/8et to be enacte/ b$ the San88unian8 ,a$an of Sin/an8an per 9erbal alle8ation of the municipal treasurer. ' . Complainant <as not also pai/ her salaries from Bul$ to December '%%"4 September an/ October& '%%'4 R)*) for the perio/ from Bul$ '%%" to Bune '%%! @a/mission of accuse/& pp. (C %& *SN of Bune 7& '%%!& a.m.4 E:h. FEF4 p. '7& *SN of Bune 7& '%%!E. 'A. Sometime in '%%A& accuse/ municipal ma$or recei9e/ from the Municipalit$ of PiOan& ,ill No. %AC"( @E:h. F'FE& /eman/in8 from the Municipalit$ of Sin/an8an settlement of o9erpa$ment to complainant 5uertes in the amount of P#"&D!A.%A per S, Resolution No. D sent on Bul$ A& '%%". *he bill <as settle/ b$ the Municipalit$ of Sin/an8an in December& '%%A per Disbursement Voucher No. '"'C %A' !(7 /ate/ December & '%%A @E:h. F FE. '!. Pri9ate complainant <as able to recei9e complete pa$ment of her claims onl$ on Banuar$ !& '%%A in the form of chec?s all /ate/ December %& '%% @as appearin8 on =E:hs. F+F& FIF& FBF& FNF of the prosecution& E:hs. FDF& F7F& F(F& of the /efenseE e:cept her R)*) <hich <as 8i9en to her onl$ on Bul$ #& '%%!& co9erin8 the perio/ from Bul$ '%%" to December& '%%A amountin8 to P##&'"!.""& as e9i/ence/ b$ Disbursement Voucher /ate/ Bul$ #& '%%!

@E:h. F#FE.> Version of the Defense 3hile a/mittin8 some /ela$s in the pa$ment of the complainantFs claims& petitioner sou8ht to pro9e the /efense of 8oo/ faith 7 that the <ithhol/in8 of pa$ment <as /ue to her failure to submit the re;uire/ mone$ an/ propert$ clearance an/ to the San88unian8 ,a$anFs /ela$e/ enactment of a supplemental bu/8et to co9er the claims. +e a//s that such /ela$s /i/ not result in >un/ue inGur$> to complainant. In his memoran/um& petitioner restates the facts as follo<s= '. Complainant . . . <as appointe/ assistant municipal treasurer of Sin/an8an& Hamboan8a /el Norte on October '(& '%(#. +o<e9er& startin8 '%(D until Bul$ '%%"& or for a perio/ of about four @!E an/ one half @'K E $ears& she <as /etaile/ in other municipalities an/ in the Office of the Pro9incial *reasurer of Hamboan8a /el Norte. She returne/ as assistant treasurer of Sin/an8an in Bul$ '%%". @Decision& pp. #CDE. . )s complainant ha/ been <or?in8 in municipalities an/ offices other than in Sin/an8an for more than four @!E $ears& her name <as remo9e/ from the re8ular pa$roll of Sin/an8an& an/ pa$ment of past salaries an/ other emoluments ha/ to be /one b$ 9ouchers. 3hen complainant . . . presente/ her 9ouchers to petitioner& the latter re;uire/ her to submit clearances from the /ifferent offices to <hich she <as /etaile/& as <ell as a certificate of last pa$ment as re;uire/ b$ CO) re8ulations @*sn& p. ''& )u8. '"& '%%!E. Instea/ of submittin8 the re;uire/ /ocuments& Mrs. 5uertes sai/ that F<hat I /i/& l en/orse/ m$ 9oucher to the ma$or

throu8h the municipal treasurerF @*sn& p. 'A& Bune 7& '%%!E. *he municipal treasurer coul/ not& ho<e9er& process the 9ouchers an/ certif$ as to the a9ailabilit$ of fun/s until after the San88unian8 ,a$an ha/ passe/ a supplemental bu/8et for the purpose @E:hs. D an/ DCc MotionE& <hich came onl$ in December '%% . A. Petitioner& in the mean<hile& recei9e/ on March ' & '%%' S, Resolution No. AD from the Municipalit$ of Pinan& /eman/in8 from Mrs. . . . 5uertes the reimbursement of P'"#&%'#.""& an/ because of this /eman/& he nee/e/ time to 9erif$ the matter before actin8 on Mrs. 5uertesF claims @E:h. !E. Mrs. 5uertes a/mitte/ that she ha/ at the time problems of accountabilit$ <ith the Municipalit$ of Pinan. She testifie/= F6.Counsel no< is as?in8 $ou& <hen $ou <ent bac? to Sin/an8an there <as LsicM still problems of the claims either a8ainst $ou or a8ainst the Municipalit$ of Sin/an8an b$ the municipalities ha/& LsicM in their min/s& o9erpai/ $ouP ).2es& $our +onor& that <as e9i/enceL/M b$ the bill of the Municipalit$ of Pinan to the Municipalit$ of Sin/an8an.F @*sn& p. '(& )u8. A& '%%!E. !. Petitioner also state/ that he coul/ not act on complainantFs claims because she ha/ not submitte/ the re;uire/ mone$ an/ propert$

accountabilit$ clearance from Pinan @*sn& ''& )u8. '"& '%%!E an/ that at the time the San88unian8 ,a$an ha/ not appropriate/ fun/s for the purpose. @*sn& pp. '(& A"& ! C!A& )u8. '"& '%%!E. Nonetheless& petitioner inclu/e/ Mrs. 5uertesF name in the re8ular annual bu/8et be8innin8 '%%' @E:hs. !Cb& !C/& !CfE& as a result of <hich she ha/ been since then recei9in8 her re8ular monthl$ salar$. #. On Ma$ '& '%%'& Mrs. 5uertes file/ a complaint . . . Petitioner file/ his ans<er to the complaint& alle8in8 as a /efense& that plaintiff /i/ not e:haust a/ministrati9e reme/ies. @)nne: ,& p. A& Petition4 E:h. 'CMotionE. On )u8ust 7& '%%'& the parties entere/ into a compromise a8reement& <hich the trial court appro9e/ @E:h. ,E. . . D. .pon motion of counsel for Mrs. 5uertes& the trial court issue/ a <rit of e:ecution of the compromise Gu/8ment. +o<e9er& the <rit of e:ecution <as a//resse/ onl$ to petitioner4 it <as not ser9e/ on the municipal San88unian8 ,a$an. . . *hus& Mrs. 5uertes ha/ been recei9in8 her re8ular salar$ from Banuar$& '%%' because petitioner ha/ inclu/e/ her name in the re8ular bu/8et be8innin8 '%%'& <hich fact complainant /i/ not /ispute. 3ith respect to her other claims for past ser9ices in other offices& Municipal *reasurer& Mrs. Narcisa Caber& informe/ that a supplemental bu/8et for such purpose to be passe/ b$ the San88unian8 ,a$an <as necessar$ before she coul/ be pai/ thereof. ,ein8 the municipal treasurer& Mrs. Caber ?ne<

that <ithout such supplemental bu/8et& pa$ment of Mrs. 5uertesF other claims coul/ not be ma/e because the la< re;uires that F/isbursements shall be ma/e in accor/ance <ith the or/inance authoriIin8 the annual or supplemental appropriationsF @Sec. A!D& R) 7'D"E an/ that Fno mone$ shall be /isburse/ unless . . . the local treasurer certifies to the a9ailabilit$ of fun/s for the purpose.F @Sec. A!!& R) 7'D"E. 7. Petitioner ha/ instructe/ the municipal bu/8et officer to prepare the supplemental bu/8et for pa$ment of complainantFs unpai/ claims for submission to the San88unian8 L,a$anM for enactment. @*sn& pp. A CAA& )u8. '"& '%%!E. *he bu/8et officer& Mr. Narciso Siasico state/ as follo<s= a. I am the bu/8et officer for the Municipalit$ of Sin/an8an& Hamboan8a /el Norte& a position I ha9e hel/ since '%('. b. Imme/iatel$ after sai/ man/amus case <as settle/ throu8h a compromise a8reement& Ma$or -lorente instructe/ me to prepare the necessar$ bu/8et proposals for the /eliberation an/ appro9al of the San88unian8 ,a$an4 (. Instea/ of <aitin8 for the San88unian8 ,a$an to enact the bu/8et or of securin8 an alias <rit of e:ecution to compel the San88unian8 ,a$an to pass the same& Mrs. 5uertes file/ a criminal complaint <ith the Office of the Ombu/sman un/er /ate of October (& '%%'& a/mittin8

receipt of her salaries from Banuar$ '%%' an/ sa$in8 she ha/ not been pai/ her other claims in 9iolation of the compromise Gu/8ment. @E:h. 5E. She ha/ thus ma/e the Office of the Ombu/sman a collectin8 a8enc$ to compel pa$ment of the Gu/8ment obli8ation. %. 3hile the bu/8et proposal ha/ been prepare/ an/ submitte/ to the San88unian8 ,a$an for action& it too? time for the San88unian8 ,a$an to pass the supplemental bu/8et an/ for the Pro9incial ,oar/ to appro9e the same. It <as onl$ on December 7& '%% that the municipal treasurer an/ the municipal accountant issue/ a certification of a9ailabilit$ of fun/s for the purpose. Petitioner appro9e/ the 9ouchers imme/iatel$& an/ in a perio/ of one <ee?& Mrs. 5uertes <as pai/ all claims& as e9i/ence/ b$ the prosecutionFs E:hs. +& I& B an/ N& <hich <ere the four 9ouchers of Mrs. 5uertes& . . . '". Petitioner testifie/ that he coul/ not imme/iatel$ si8n or appro9e the 9ouchers of Mrs. 5uertes for the follo<in8 reasons= a. *he San88unian8 ,a$an ha/ not appropriate/ the amounts to pa$ Mrs. 5uertes. @*sn& pp. '(& A"&! C!A& )u8. '"& '%%!E. b. Municipal *reasurer Caber& to <hom Mrs. 5uertes en/orse/ her 9ouchers for processin8& an/ the Municipal )ccountant issue/ the certificate of a9ailabilit$ of fun/s onl$ on December 7& '%% @*sn& p. ! & )u8. '"& '%%!4 E:hs. +& I& B an/ NE4

an/ the /ela$ in the issuance of the certificate of a9ailabilit$ of fun/s <as /ue to the /ela$ b$ the Pro9incial ,oar/ to appro9e the supplemental bu/8et. @*sn& p. !A& )u8. '"& '%%!E. c. +e recei9e/ on March ' & '%%' a /eman/ from the Municipalit$ of Pinan& Hamboan8a /el Norte& <here Mrs. 5uertes last <or?e/& for the reimbursement of P'"#&%'#.""& an/ the matter ha/ to be clarifie/ first. @E:h. !E. Mrs. 5uertes a/mitte/ that she ha/ some problem of accountabilit$ <ith the Municipalit$ of Pinan. @*sn& p. '(& '%%!E. It too? time before this matter coul/ be clarifie/ b$ the Municipalit$ of Pinan re/ucin8 its claim to P#"&D!7."%A an/ the Municipalit$ of Sin/an8an pa$in8 sai/ claim. @E:h. 4 Decision& p. %E /. Mrs. 5uertes ha/ not submitte/ the re;uire/ clearance from the Municipalit$ of Pinan. @*sn& p. ''& )u8. '"& '%%!E. +e /i/ not insist on this re;uirement after the trial court issue/ the <rit of e:ecution to implement the compromise Gu/8ment. @*sn& p. A& )u8. '"& '%%!E. Nonetheless& in the post au/it of Mrs. 5uertesF accountabilit$& the Commission on )u/it issue/ a notice of suspension of the amount of P#&!# ."" from Mrs. 5uertes for her failure to submit= F'. Clearance for mone$ 0 propert$ accountabilit$& from former office. . Certification as LsicM last /a$ of ser9ice in former office. A.

Certification of last salar$ recei9e/ 0 issue/ b$ the /isbursin8 officer in former office& certifie/ b$ chief accountant an/ 9erifie/ b$ resi/ent au/itor.F @E:h. C MotionE. ''. *he Information /ate/ October ' & '%% file/ a8ainst petitioner alle8e/ that petitioner as ma$or /i/ not si8n an/ appro9e the 9ouchers of Mrs. 5uertes for pa$ment of her salaries an/ other emoluments from Bul$ '& '%%" to October '%%'& <hich cause/ her un/ue inGur$. +o<e9er& the prosecutionFs E:h. FDF& the sheriffFs return /ate/ No9ember '%& '%%'& state/ that Mrs. 5uertes ha/ recei9e/ her salar$ from Banuar$ '& '%%' Fup to the presentF& <hich meant that e9en before the information <as file/& she ha/ been pai/ her re8ular salaries from Banuar$ '& '%%' to October '%%'. *he supplemental bu/8et to co9er pa$ment of her other claims for past ser9ices <as passe/ onl$ in December '%% an/ the municipal treasurer an/ accountant issue/ the certificate of a9ailabilit$ of fun/s onl$ on December 7& '%% & an/ Mrs. 5uertes 8ot pai/ of LsicM all her other claims& inclu/in8 those not claime/ in the Information& <ithin one <ee? therefrom. @E:hs. +& I& B& an/ NE. Rulin8 of the San/i8anba$an Respon/ent Court hel/ that the /ela$ or <ithhol/in8 of complainantFs salaries an/ emoluments <as unreasonable an/ cause/ complainant un/ue inGur$. ,ein8 then the sole brea/<inner in their famil$& the <ithhol/in8 of her salaries cause/ her /ifficulties in meetin8 her famil$Fs financial obli8ations li?e pa$in8 for the tuition fees of her four chil/ren.

PetitionerFs /efense that complainant faile/ to attach the re;uire/ mone$ an/ propert$ clearance to her 9ouchers <as hel/ to be an afterthou8ht that <as brou8ht about& in the first place& b$ his o<n failure to issue an$ memoran/um re;uirin8 its submission. *hat the 9oucher form liste/ the clearance as one of the re;uirements for its appro9al ha/ neither been brou8ht to complainantFs attention nor raise/ b$ petitioner as /efense in his ans<er. In an$ e9ent& the pa$ment of complainantFs salar$ from Banuar$ to No9ember '%%'& confirme/ b$ the sheriffFs return& sho<e/ that the clearance <as not an in/ispensable re;uirement& because petitioner coul/ ha9e acte/ upon or appro9e/ the /isbursement e9en <ithout it. *he alle8e/ lac? of a supplemental bu/8et <as also reGecte/& because it <as petitionerFs /ut$ as municipal ma$or to prepare an/ submit the >e:ecuti9e an/ supplemental bu/8ets> un/er Sections A'(& A "& an/ !!! @AE@iiE of the -ocal Go9ernment Co/e& % an/ the complainantFs claims as assistant municipal treasurer& a permanent position inclu/e/ in the plantilla for calen/ar $ear '%%" an/ '%%'& <ere classifie/ as >current operatin8 e:pen/itures> for the same calen/ar $ears& <hich <ere char8eable a8ainst the 8eneral fun/s of the to<n of Sin/an8an. E:cept for the representation an/ transportation allo<ance& 5uertesF claims for thirteenth month pa$& cash 8ift an/ clothin8 allo<ance <ere alrea/$ co9ere/ b$ Supplemental ,u/8et No. # for calen/ar $ear '%%". PetitionerFs contention that fun/s co9erin8 complainantFs claims <ere ma/e a9ailable onl$ in December '%% <as unbelie9able& consi/erin8 that an or/inance enactin8 a supplemental bu/8et ta?es effect upon its appro9al or on the /ate fi:e/ therein un/er Sec. A " of the -ocal Go9ernment Co/e. *he San/i8anba$an also rule/ that the petitionerFs e9i/ent ba/ faith <as the /irect an/ pro:imate cause of 5uertesF un/ue inGur$. ComplainantFs salaries an/ allo<ances <ere <ithhel/ for no 9ali/ or Gustifiable reasons. Such /ela$ <as inten/e/ to harass complainant& because petitioner <ante/ to replace her

<ith his political prote8e <hom he e9entuall$ /esi8nate/ as municipal treasurer& b$passin8 5uertes <ho <as ne:t in seniorit$. ,a/ faith <as further e9i/ence/ b$ petitionerFs instructions to the out8oin8 municipal treasurer not to 8i9e the complainin8 <itness an$ <or? assi8nment& not to pro9i/e her <ith office table an/ chair& not to act on her /ail$ time recor/ an/ application for lea9e of absence& instructions <hich <ere confirme/ in the municipal treasurerFs certification. @E:h. GC E. *he Issues In his memoran/um& petitioner submits the follo<in8 issues= '. Coul/ accuse/ be hel/ liable un/er Sec. A@eE of R.). A"'% Fin the /ischar8e of his official a/ministrati9e /utiesF& a positi9e act& <hen <hat <as impute/ to him <as failin8 an/ refusin8 to si8n an/Kor appro9e the 9ouchers of MrLsM. 5uertes on time or b$ Finaction on his obli8ation un/er the compromise a8reementF @ibi/.& p. '%E& a passi9e actP Di/ not the act come un/er Sec. A@fE of R.). A"'%& of LsicM <hich accuse/ <as not char8e/ <ithP . )ssumin8& ar8uen/o& that his failure an/ refusal to imme/iatel$ si8n an/ appro9e the 9ouchers of Mrs. 5uertes comes LsicM un/er Sec. A@eE& the ;uestions are= a. Di/ not the /ut$ to si8n an/ appro9e the same arise onl$ after the San88unian8 ,a$an ha/ passe/ an appropriations or/inance& an/ not beforeP In other <or/s& <as the nonCpassa8e of the appropriation or/inance a Gustifiable reason for not si8nin8 the 9ouchersP

b. Di/ Mrs. 5uertes suffer un/ue inGur$& as the term is un/erstoo/ in Sec. A@eE& she ha9in8 been pai/ all her claimsP c. Di/ petitioner not act in 8oo/ faith in refusin8 to imme/iatel$ si8n the 9ouchers an/ implement the compromise a8reement until the San88unian8 ,a$an ha/ enacte/ the appropriation or/inance an/ until Mrs. 5uertes submitte/ the clearance from the Municipalit$ of Pinan& Hamboan8a /el NorteP> Restate/& petitioner claims that the prosecution faile/ to establish the elements of un/ue inGur$ an/ ba/ faith. )//itionall$& petitioner submits that a 9iolation of Section ALeM of R) A"'% cannot be committe/ throu8h nonfeasance. *he CourtFs Rulin8 *he petition is meritorious. )fter careful re9ie< of the e9i/ence on recor/ an/ thorou8h /eliberation on the applicable pro9ision of the )ntiCGraft -a<& the Court a8rees <ith the solicitor 8eneralFs assessment that the prosecution faile/ to establish the elements of the crime char8e/. 5irst Issue = .n/ue InGur$ Petitioner <as char8e/ <ith 9iolation of Section ALeM of R.). A"'%& <hich states= >SEC. A.Corrupt practices of public officers. 7 In a//ition to acts or omissions of public officers alrea/$ penaliIe/ b$ e:istin8 la<& the follo<in8 shall constitute corrupt practices of an$ public officer an/ are hereb$ /eclare/ to

be unla<ful= @eECausin8 an$ un/ue inGur$ to an$ part$& inclu/in8 the Go9ernment& or 8i9in8 an$ pri9ate part$ an$ un<arrante/ benefits& a/9anta8e or preference in the /ischar8e of his official& a/ministrati9e or Gu/icial functions throu8h manifest partialit$& e9i/ent ba/ faith or 8ross ine:cusable ne8li8ence. *his pro9ision shall appl$ to officers an/ emplo$ees of offices or 8o9ernment corporations char8e/ <ith the 8rant of licenses or permits or other concessions.> *o hol/ a person liable un/er this section& the concurrence of the follo<in8 elements must be establishe/ be$on/ reasonable /oubt b$ the prosecution= '. that the accuse/ is a public officer or a pri9ate person char8e/ in conspirac$ <ith the former4 . that sai/ public officer commits the prohibite/ acts /urin8 the performance of his or her official /uties or in relation to his or her public positions4 A. that he or she causes un/ue inGur$ to an$ part$& <hether the 8o9ernment or a pri9ate part$4 an/ !. that the public officer has acte/ <ith manifest partialit$& e9i/ent ba/ faith or 8ross ine:cusable ne8li8ence.> *he solicitor 8eneral& in his manifestation& points out that >un/ue inGur$> re;uires proof of actual inGur$ or /ama8e& citin8

our rulin8 in )leGan/ro 9s. People an/ Bacinto 9s. San/i8anba$an. Inasmuch as complainant <as actuall$ pai/ all her claims& there <as thus no >un/ue inGur$> establishe/. *his point is <ellCta?en. .nli?e in actions for torts& un/ue inGur$ in Sec. ALeM cannot be presume/ e9en after a <ron8 or a 9iolation of a ri8ht has been establishe/. Its e:istence must be pro9en as one of the elements of the crime. In fact& the causin8 of un/ue inGur$ or the 8i9in8 of an$ un<arrante/ benefits& a/9anta8e or preference throu8h manifest partialit$& e9i/ent ba/ faith or 8ross ine:cusable ne8li8ence constitutes the 9er$ act punishe/ un/er this section. *hus& it is re;uire/ that the un/ue inGur$ be specifie/& ;uantifie/ an/ pro9en to the point of moral certaint$. In Gurispru/ence& >un/ue inGur$> is consistentl$ interprete/ as >actual /ama8e.> .n/ue has been /efine/ as >more than necessar$& not proper& LorM ille8al4> an/ inGur$ as >an$ <ron8 or /ama8e /one to another& either in his person& ri8hts& reputation or propert$ L4 that is& theM in9asion of an$ le8all$ protecte/ interest of another.> )ctual /ama8e& in the conte:t of these /efinitions& is a?in to that in ci9il la<. In turn& actual or compensator$ /ama8es is /efine/ b$ )rticle '%% of the Ci9il Co/e as follo<s= >)rt. '%%.E:cept as pro9i/e/ b$ la< or b$ stipulation& one is entitle/ to an a/e;uate compensation onl$ for such pecuniar$ loss suffere/ b$ him as he has /ul$ pro9e/. Such compensation is referre/ to as actual or compensator$ /ama8es.> 5un/amental in the la< on /ama8es is that one inGure/ b$ a breach of a contract& or b$ a <ron8ful or ne8li8ent act or

omission shall ha9e a fair an/ Gust compensation commensurate to the loss sustaine/ as a conse;uence of the /efen/antFs act. )ctual pecuniar$ compensation is a<ar/e/ as a 8eneral rule& e:cept <here the circumstances <arrant the allo<ance of other ?in/s of /ama8es. )ctual /ama8es are primaril$ inten/e/ to simpl$ ma?e 8oo/ or replace the loss cause/ b$ the <ron8. 5urthermore& /ama8es must not onl$ be capable of proof& but must be actuall$ pro9en <ith a reasonable /e8ree of certaint$. *he$ cannot be base/ on flims$ an/ nonCsubstantial e9i/ence or upon speculation& conGecture or 8uess<or?. *he$ cannot inclu/e speculati9e /ama8es <hich are too remote to be inclu/e/ in an accurate estimate of the loss or inGur$. In this case& the complainant testifie/ that her salar$ an/ allo<ance for the perio/ be8innin8 Bul$ '%%" <ere <ithhel/& an/ that her famil$ un/er<ent financial /ifficult$ <hich resulte/ from the /ela$ in the satisfaction of her claims. )s re8ar/s her mone$ claim& pa$ment of her salaries from Banuar$ '%%' until No9ember '%& '%%' <as e9i/ence/ b$ the SheriffFs Return /ate/ No9ember '%& '%%' @E:h. DE. She also a/mitte/ ha9in8 been issue/ a chec? on Banuar$ !& '%%! to co9er her salar$ from Bune ' to Bune A"& '%%"4 her salar$ /ifferential from Bul$ '& '%(% to )pril A"& '%%"4 her thirteenthCmonth pa$4 her cash 8ift4 an/ her clothin8 allo<ances. Respon/ent Court foun/ that all her monetar$ claims <ere satisfie/. )fter she full$ recei9e/ her monetar$ claims& there is no lon8er an$ basis for compensator$ /ama8es or un/ue inGur$& there bein8 nothin8 more to compensate. ComplainantFs testimon$ re8ar/in8 her famil$Fs financial stress <as ina/e;uate an/ lar8el$ speculati9e. 3ithout 8i9in8 specific /etails& she ma/e onl$ 9a8ue references to the fact that her four chil/ren <ere all 8oin8 to school an/ that she <as the brea/<inner in the famil$. She& ho<e9er& /i/ not sa$ that she <as unable to pa$ their tuition fees an/ the specific /ama8e

brou8ht b$ such nonpa$ment. *he fact that the >inGur$> to her famil$ <as unspecifie/ or un;uantifie/ /oes not satisf$ the element of un/ue inGur$& as a?in to actual /ama8es. )s in ci9il cases& actual /ama8es& if not supporte/ b$ e9i/ence on recor/& cannot be consi/ere/. Other than the amount of the <ithhel/ salaries an/ allo<ances <hich <ere e9entuall$ recei9e/& the prosecution faile/ to specif$ an/ to pro9e an$ other loss or /ama8e sustaine/ b$ the complainant. Respon/ent Court insists that complainant suffere/ b$ reason of the >lon8 perio/ of time> that her emoluments <ere <ithhel/. *his incon9enience& ho<e9er& is not constituti9e of un/ue inGur$. In Bacinto& this Court hel/ that the inGur$ suffere/ b$ the complainin8 <itness& <hose salar$ <as e9entuall$ release/ an/ <hose position <as restore/ in the plantilla& <as ne8li8ible4 un/ue inGur$ entails /ama8es that are more than necessar$ or are e:cessi9e& improper or ille8al. In )leGan/ro& the Court hel/ that the hospital emplo$ees <ere not cause/ un/ue inGur$& as the$ <ere in fact pai/ their salaries. Secon/ Issue = No E9i/ent ,a/ 5aith In the challen8e/ Decision& Respon/ent Court foun/ e9i/ent ba/ faith on the part of the petitioner& hol/in8 that& <ithout an$ 9ali/ or Gustifiable reason& accuse/ <ithhel/ the pa$ment of complainantFs salaries an/ other benefits for almost t<o @ E $ears& /emonstratin8 a clear manifestation of ba/ faith. It then brushe/ asi/e the petitionerFs /efenses that complainant faile/ to submit mone$ an/ propert$ clearances for her 9ouchers& an/ that an appropriation b$ the San88unian8 ,a$an <as re;uire/ before complainantFs 9ouchers coul/ be appro9e/. It sai/= >Secon/l$& his reliance on the failure of complainant to submit the clearances <hich

<ere alle8e/l$ necessar$ for the appro9al of 9ouchers is futile in the li8ht of the fore8oin8 circumstances= a. *he e9i/ence on recor/ sho<s that complainantFs salaries for the perio/ from Banuar$ to No9ember '%%' @inclu/e/ as subGect matter in the man/amus caseE <ere /ul$ pai/& as confirme/ in the SheriffFs Return /ate/ No9ember '%& '%%' @E:h. FDFE. *his means that accuse/& e9en <ithout the necessar$ clearance& coul/ ha9e acte/ upon or appro9e/ complainantFs /isbursement 9ouchers if he <ante/ to. b. It ma$ be true that a clearance is an in/ispensable re;uirement before complainant <ill be pai/ of her claims& but accuse/ coul/ not Gust hi/e behin/ the cloa? of the clearance re;uirement in or/er to e:culpate himself from liabilit$. )s the appro9in8 officer& it <as his /ut$ to /irect complainant to submit the same. Moreo9er& accuse/ coul/ not Gust set asi/e the obli8ation he 9oluntaril$ impose/ upon himself <hen he entere/ into a compromise a8reement bin/in8 himself to si8n complainantFs 9ouchers <ithout an$ ;ualification as to the clearance re;uirement. Perforce. he coul/ ha9e seen to it that complainant secure/ the same in or/er that he coul/ compl$ <ith the sai/ obli8ation. 5ourthl$& accuse/Fs contention that the /ela$

in the release of complainantFs claim coul/ not be attribute/ to him because the 9ouchers <ere onl$ submitte/ to him for his si8nature on December !C 7& '%% 4 that the appro9al of the bu/8et appropriationsKresolutions /epen/s on the San88unian8 ,a$an& ,u/8et Officer an/ the San88unian8 Panlala<i8an& is una9ailin8. )s re9eale/ in the alle8e/ ne<l$ /isco9ere/ e9i/ence themsel9es& particularl$ . . . S, Res. No. " an/ )ppropriation Or/inance No. "A#& both /ate/ Ma$ '' '%%" @E:h. F#CaFC MotionE& the San88unian8 ,a$an appropriate/ a bu/8et of P#M in the General 5un/ for calen/ar $ear '%%' Lthe ,u/8et Officer /oes not appro9e the bu/8et but assists the Municipal Ma$or an/ the San88unian8 ,a$an in the preparation of the bu/8et @Sec. !7#& -ocal Go9ernment Co/e of '%%'EM. ComplainantFs claims consiste/ of her salaries an/ other benefits for '%%" an/ '%%' <hich <ere classifie/ as Current Operatin8 E:pen/itures char8eable a8ainst the General 5un/. It is un/ispute/ that she <as hol/in8 her position as )ssistant Municipal *reasurer in a permanent capacit$ @her position <as also /esi8nate/ )ssistant Department +ea/E& <hich <as inclu/e/ in the plantilla for calen/ar $ears '%%" an/ '%%' @E:hs. F!CaF 0 F!CbF& MotionE. In Pro8ram )ppropriation an/ Obli8ation b$ ObGect @E:hs. F!CcF 0 F!CcF& MotionE& appropriations <ere ma/e for current operatin8 e:pen/itures to <hich complainantFs claims properl$ appertaine/. . . Veril$& complainantFs claims <ere co9ere/ b$

appropriations /ul$ appro9e/ b$ the officials concerne/& si8nif$in8 that a/e;uate fun/s <ere a9ailable for the purpose. In fact& e9en complainantFs claims for her 'Ath month pa$& cash 8ift an/ clothin8 allo<ance& subGect matter of Disbursement Voucher mar?e/ E:hibit FBF <hich <oul/ nee/ a supplemental bu/8et <as co9ere/ b$ FSupplemental ,u/8et No. # for C2 '%%" /ul$ appro9e/ b$ the authorities concerne/F as sho<n in the 9oucher itself. *his means that the sai/ claim <as alrea/$ obli8ate/ @fun/s <ere alrea/$ reser9e/ for itE as of calen/ar $ear '%%". . . It is clear& then& that as re8ar/s a9ailabilit$ of fun/s& there <as no obstacle for the release of all the complainantFs claims.> *he Court /isa8rees. Respon/ent Court cannot shift the blame on the petitioner& <hen it <as the complainant <ho faile/ to submit the re;uire/ clearance. *his re;uirement& <hich the complainant /isre8ar/e/& <as e9en printe/ at the bac? of the 9er$ 9ouchers sou8ht to be appro9e/. )s assistant municipal treasurer& she ou8ht to ?no< that this is a con/ition for the pa$ment of her claims. *his clearance is re;uire/ b$ )rticle !!A of the Implementin8 Rules an/ Re8ulations of the -ocal Go9ernment Co/e of '%%'= >)rt !!A.Propert$ Clearances. 7 3hen an emplo$ee transfers to another 8o9ernment office retires& resi8ns& is /ismisse/& or is separate/ from the ser9ice& he shall be re;uire/ to secure supplies or propert$ clearance from the suppl$ officer concerne/ the pro9incial or cit$ 8eneral ser9ices officer concerne/& the municipal ma$or an/ the municipal treasurer or the punon8 baran8a$

an/ the baran8a$ treasurer as the case ma$ be *he local chief e:ecuti9e shall prescribe the propert$ clearance form for this purpose.> 5or her o<n failure to submit the re;uire/ clearance& complainant is not entirel$ blameless for the /ela$ in the appro9al of her claims. )lso& 8i9en the lac? of correspon/in8 appropriation or/inance an/ certification of a9ailabilit$ of fun/s for such purpose& petitioner ha/ the /ut$ not to si8n the 9ouchers. )s chief e:ecuti9e of the municipalit$& -lorente coul/ not ha9e appro9e/ the 9oucher for the pa$ment of complainantFs salaries un/er Sec. A!!& -ocal Go9ernment Co/e of '%%'. )lso& )ppropriation Or/inance No. " " a//in8 a supplemental bu/8et for calen/ar $ear '%%" <as appro9e/ on )pril '"& '%(%& or almost a $ear before complainant <as transferre/ bac? to Sin/an8an. +ence& she coul/ not ha9e been inclu/e/ therein. S, Resolution No. " an/ )ppropriation Or/inance No. "A#& <hich fi:e/ the municipal bu/8et for calen/ar $ear '%%'& <as passe/ onl$ on Ma$ '& '%%"& or almost another $ear after the transfer too? effect. *he petitionerFs failure to appro9e the complainantFs 9ouchers <as therefore /ue to some le8al obstacles& an/ not entirel$ <ithout reason. *hus& e9i/ent ba/ faith cannot be completel$ impute/ to him. >,a/ faith /oes not simpl$ connote ba/ Gu/8ment or ne8li8ence4 it imputes a /ishonest purpose or some moral obli;uit$ an/ conscious /oin8 of a <ron84 a breach of s<orn /ut$ throu8h some moti9e or intent or ill <ill4 it parta?es of the nature of frau/. @Spie8el 9 ,eacon Participations& ( NE n/ Series (%#& '""7E. It contemplates a state of min/ affirmati9el$ operatin8 <ith furti9e /esi8n or some moti9e of self interest or ill <ill for

ulterior purposes @)ir 5rance 9. Carrascoso& '( SCR) '##& 'DDC'D7E. E9i/ent ba/ faith connotes a manifest /eliberate intent on the part of the accuse/ to /o <ron8 or cause /ama8e.> In Bacinto& e9i/ent ba/ faith <as not appreciate/ because the actions ta?en b$ the accuse/ <ere not entirel$ <ithout rh$me or reason4 he refuse/ to release the complainantFs salar$ because the latter faile/ to submit her /ail$ time recor/4 he refuse/ to appro9e her sic?Clea9e application because he foun/ out that she /i/ not suffer an$ illness4 an/ he remo9e/ her name from the plantilla because she <as moonli8htin8 /urin8 office hours. Such actions <ere measures ta?en b$ a superior a8ainst an errin8 emplo$ee <ho stu/iousl$ i8nore/& if not /efie/& his authorit$. In )leGan/ro& e9i/ent ba/ faith <as rule/ out& because the accuse/ 8a9e his appro9al to the ;uestione/ /isbursement after rel$in8 on the certification of the boo??eeper on the a9ailabilit$ of fun/s for such /isbursement. *hir/ Issue = Interpretation of Causin8 *he Court /oes not completel$ a8ree <ith petitionerFs assertion that the impute/ act /oes not fall un/er Sec. ALeM <hich& accor/in8 to him& re;uires a positi9e act 7 a malfeasance or misfeasance. Causin8 means >to be the cause or occasion of& to effect as an a8ent& to brin8 into e:istence& to ma?e or to in/uce& to compel.> Causin8 is& therefore& not limite/ to positi9e acts onl$. E9en passi9e acts or inaction ma$ cause un/ue inGur$. 3hat is essential is that un/ue inGur$& <hich is ;uantifiable an/ /emonstrable& results from the ;uestione/ official act or inaction In this case& the prosecution accuse/ petitioner of failin8 or

refusin8 to pa$ complainantFs salaries on time& <hile Respon/ent Court con9icte/ him of un/ul$ /ela$in8 the pa$ment of complainantFs claims. )s alrea/$ e:plaine/& both acts /i/ not& ho<e9er& le8all$ result in >un/ue inGur$> or in >8i9in8 an$ un<arrante/ benefits& a/9anta8e or preference in the /ischar8e of his official& LorM a/ministrati9e . . . functions.> *hus& these acts are not punishable un/er Sec. ALeM. It <oul/ appear that petitionerFs failure or refusal to act on the complainantFs 9ouchers& or the /ela$ in his actin8 on them more properl$ falls un/er Sec. ALfM= >@fENe8lectin8 or refusin8& after /ue /eman/ or re;uest& <ithout sufficient Gustification& to act <ithin a reasonable time on an$ matter pen/in8 before him for the purpose of obtainin8& /irectl$ or in/irectl$& from an$ person intereste/ in the matter some pecuniar$ or material benefit or a/9anta8e& or for purpose of fa9orin8 his o<n interest or 8i9in8 un/ue a/9anta8e in fa9or of or /iscriminatin8 a8ainst an$ other intereste/ part$.> +ere& the ne8lect or refusal to act <ithin a reasonable time is the criminal act& not the causin8 of un/ue inGur$. *hus& its elements are= '. *he offen/er is a public officer4 . Sai/ officer has ne8lecte/ or has refuse/ to act <ithout sufficient Gustification after /ue /eman/ or re;uest has been ma/e on him4 A. Reasonable time has elapse/ from such /eman/ or re;uest <ithout the public officer ha9in8 acte/ on the matter pen/in8 before him4 an/

!. Such failure to so act is Ffor the purpose of obtainin8& /irectl$ or in/irectl$& from an$ person intereste/ in the matter some pecuniar$ or material benefit or a/9anta8e in fa9or of an intereste/ part$& or /iscriminatin8 a8ainst another.> +o<e9er& petitioner is not char8e/ <ith a 9iolation of Sec. ALfM. +ence& further /is;uisition is not proper. Neither ma$ this Court con9ict petitioner un/er Sec. ALfM <ithout 9iolatin8 his constitutional ri8ht to /ue process. 3+ERE5ORE& the petition is hereb$ GR)N*ED. Petitioner is )C6.I**ED of 9iolatin8 Section ALeM of R.). A"'%& as amen/e/. No costs. SO ORDERED. Da9i/e& Br.& ,ellosillo& Vitu8 an/ 6uisumbin8& BB .& concur.

Republic of the Philippines Supreme Court Manila 5IRS* DIVISION G.R. No. '!'%'". )u8ust D& "" 5G. INS.R)NCE CORPOR)*ION& petitioner& vs. G.P. S)RMIEN*O *R.CNING CORPOR)*ION an/ -)M,ER* M. ERO-ES& respon/ents. Dollete ,lanco EGercito an/ )ssociates for petitioner. Marbibi 0 )ssociates -a< Office for pri9ate respon/ents. S2NOPSIS Respon/ent G.P. Sarmiento truc?in8 compan$ @G*SE un/ertoo? to transport car8oes for Concepcion In/ustries& Inc. <hen it colli/e/ <ith an uni/entifie/ truc?& causin8 /ama8e to the car8oes. Petitioner& 5G.& insurer of the shipment& pai/ to Concepcion In/ustries the 9alue of the co9ere/ car8oes. *hen& as subro8ee of Concepcion In/ustries& Inc.& petitioner 5G. sue/ GPS for breach of contract of carria8e for reimbursement. Instea/ of filin8 an ans<er& GPS file/ a /emurrer to e9i/ence& claimin8 that it cannot be hel/ liable as a common carrier because it <as onl$ a pri9ate carrier& bein8 the e:clusi9e hauler onl$ of Concepcion In/ustries& Inc. since '%((. *he lo<er court 8rante/ the motion& rulin8 that plaintiff 5G. faile/ to pro9e that GPS is a common carrier. *he C) affirme/ the trial courtFs or/er. On appeal& the Supreme Court hel/4 that GPS cannot be

consi/ere/ a common carrier as it ren/ers ser9ice e:clusi9el$ to Concepcion In/ustries4 that not<ithstan/in8& GPS cannot escape from liabilit$ since in culpa contractual& mere proof of the e:istence of the contract an/ the failure of its compliance Gustif$ prima facie a correspon/in8 ri8ht of relief. Respon/ent /ri9er& ho<e9er& <ho is not a part$ to the contract of carria8e& ma$ not be hel/ liable un/er the a8reement <ithout concrete proof of his ne8li8ence or fault. +Sc)EC +ence& the Supreme Court affirme/ the assaile/ or/er of the trial court an/ the C) insofar as the respon/ent /ri9er <as concerne/ but GPS truc?in8 compan$ <as or/ere/ to pa$ the petitioner 5G. the 9alue of the /ama8e/ an/ lost car8oes. S2--),.S I. CIVI- -)34 COMMON C)RRIERS4 DE5INED4 C)SE )* ,)R. 7 *he Court fin/s the conclusion of the trial court an/ the Court of )ppeals to be ampl$ Gustifie/. GPS& bein8 an e:clusi9e contractor an/ hauler of Concepcion In/ustries& Inc.& ren/erin8 or offerin8 its ser9ices to no other in/i9i/ual or entit$& cannot be consi/ere/ a common carrier. Common carriers are persons& corporations& firms or associations en8a8e/ in the business of carr$in8 or transportin8 passen8ers or 8oo/s or both& b$ lan/& <ater& or air& for hire or compensation& offerin8 their ser9ices to the public& <hether to the public in 8eneral or to a limite/ clientele in particular& but ne9er on an e:clusi9e basis. *he true test of a common carrier is the carria8e of passen8ers or 8oo/s& pro9i/in8 space for those <ho opt to a9ail themsel9es of its transportation ser9ice for a fee. Gi9en accepte/ stan/ar/s& GPS scarcel$ falls <ithin the term >common carrier.> ID.4 O,-IG)*IONS )ND CON*R)C*S4 C.-P) CON*R)C*.)-4 MERE PROO5 O5 *+E

II.

E1IS*ENCE O5 *+E CON*R)C* )ND 5)I-.RE O5 I*S COMP-I)NCE B.S*I52& PRIM) 5)CIE& ) CORRESPONDING RIG+* O5 RE-IE54 C)SE )* ,)R. 7 In culpa contractual& upon <hich the action of petitioner rests as bein8 the subro8ee of Concepcion In/ustries& Inc.& the mere proof of the e:istence of the contract an/ the failure of its compliance Gustif$& prima facie& a correspon/in8 ri8ht of relief. *he la<& reco8niIin8 the obli8ator$ force of contracts& <ill not permit a part$ to be set free from liabilit$ for an$ ?in/ of misperformance of the contractual un/erta?in8 or a contra9ention of the tenor thereof. ) breach upon the contract confers upon the inGure/ part$ a 9ali/ cause for reco9erin8 that <hich ma$ ha9e been lost or suffere/. *he reme/$ ser9es to preser9e the interests of the promisee that ma$ inclu/e his >e:pectation interest&> <hich is his interest in ha9in8 the benefit of his bar8ain b$ bein8 put in as 8oo/ a position as he <oul/ ha9e been in ha/ the contract been performe/& or his >reliance interest&> <hich is his interest in bein8 reimburse/ for loss cause/ b$ reliance on the contract b$ bein8 put in as 8oo/ a position as he <oul/ ha9e been in ha/ the contract not been ma/e4 or his >restitution interest&> <hich is his interest in ha9in8 restore/ to him an$ benefit that he has conferre/ on the other part$. In/ee/& a8reements can accomplish little& either for their ma?ers or for societ$& unless the$ are ma/e the basis for action. *he effect of e9er$ infraction is to create a ne< /ut$& that is& to ma?e recompense to the one <ho has been inGure/ b$ the failure of another to obser9e his contractual obli8ation unless he can sho< e:tenuatin8 circumstances& li?e proof of his e:ercise of /ue /ili8ence @normall$ that of the /ili8ence of a 8oo/ father of a famil$ or& e:ceptionall$ b$ stipulation or b$ la< such as in the case of common carriers& that of e:traor/inar$ /ili8enceE or of the atten/ance of

fortuitous e9ent& to e:cuse him from his ensuin8 liabilit$. Respon/ent truc?in8 corporation reco8niIes the e:istence of a contract of carria8e bet<een it an/ petitionerFs assure/& an/ a/mits that the car8oes it has assume/ to /eli9er ha9e been lost or /ama8e/ <hile in its custo/$. In such a situation& a /efault on& or failure of compliance <ith& the obli8ation 7 in this case& the /eli9er$ of the 8oo/s in its custo/$ to the place of /estination 7 8i9es rise to a presumption of lac? of care an/ correspon/in8 liabilit$ on the part of the contractual obli8or the bur/en bein8 on him to establish other<ise. GPS has faile/ to /o so. III. ID.4 ID.4 ID.4 ID.4 CON*R)C* C)N ,IND ON-2 *+E P)R*IES 3+O +)VE EN*ERED IN*O I*4 C)SE )* ,)R. 7 Respon/ent /ri9er& on the other han/& <ithout concrete proof of his ne8li8ence or fault& ma$ not himself be or/ere/ to pa$ petitioner. *he /ri9er& not bein8 a part$ to the contract of carria8e bet<een petitionerFs principal an/ /efen/ant& ma$ not be hel/ liable un/er the a8reement. ) contract can onl$ bin/ the parties <ho ha9e entere/ into it or their successors <ho ha9e assume/ their personalit$ or their Guri/ical position. Consonantl$ <ith the a:iom res inter alios acta aliis ne;ue nocet pro/est& such contract can neither fa9or nor preGu/ice a thir/ person. PetitionerFs ci9il action a8ainst the /ri9er can onl$ be base/ on culpa a;uiliana& <hich& unli?e culpa contractual& <oul/ re;uire the claimant for /ama8es to pro9e ne8li8ence or fault on the part of the /efen/ant. ID.4 ID.4 RESIPS) -O6.I*OR4 RE-IEVES *+E P-)IN*I55 O5 *+E ,.RDEN O5 PROD.CING SPECI5IC PROO5 O5 NEG-IGENCE4 C)SE )* ,)R. 7Res ipsa lo;uitur& a /octrine bein8 in9o?e/ b$ petitioner& hol/s a /efen/ant liable <here the thin8

IV.

<hich cause/ the inGur$ complaine/ of is sho<n to be un/er the latterFs mana8ement an/ the acci/ent is such that& in the or/inar$ course of thin8s& cannot be e:pecte/ to happen if those <ho ha9e its mana8ement or control use proper care. It affor/s reasonable e9i/ence& in the absence of e:planation b$ the /efen/ant& that the acci/ent arose from <ant of care. It is not a rule of substanti9e la< an/& as such& it /oes not create an in/epen/ent 8roun/ of liabilit$. Instea/& it is re8ar/e/ as a mo/e of proof& or a mere proce/ural con9enience since it furnishes a substitute for& an/ relie9es the plaintiff of& the bur/en of pro/ucin8 specific proof of ne8li8ence. *he ma:im simpl$ places on the /efen/ant the bur/en of 8oin8 for<ar/ <ith the proof. Resort to the /octrine& ho<e9er& ma$ be allo<e/ onl$ <hen @aE the e9ent is of a ?in/ <hich /oes not or/inaril$ occur in the absence of ne8li8ence4 @bE other responsible causes& inclu/in8 the con/uct of the plaintiff an/ thir/ persons& are sufficientl$ eliminate/ b$ the e9i/ence4 an/ @cE the in/icate/ ne8li8ence is <ithin the scope of the /efen/antFs /ut$ to the plaintiff. *hus& it is not applicable <hen an une:plaine/ acci/ent ma$ be attributable to one of se9eral causes& for some of <hich the /efen/ant coul/ not be responsible. Res ipsa lo;uitur 8enerall$ fin/s rele9ance <hether or not a contractual relationship e:ists bet<een the plaintiff an/ the /efen/ant& for the inference of ne8li8ence arises from the circumstances an/ nature of the occurrence an/ not from the nature of the relation of the parties. Ne9ertheless& the re;uirement that responsible causes other than those /ue to /efen/antFs con/uct must first be eliminate/& for the /octrine to appl$& shoul/ be un/erstoo/ as bein8 confine/ onl$ to cases of pure @nonCcontractualE tort since ob9iousl$ the presumption of ne8li8ence in culpa contractual& as pre9iousl$ so pointe/ out& imme/iatel$ attaches b$ a failure of the

co9enant or its tenor. In the case of the truc? /ri9er& <hose liabilit$ in a ci9il action is pre/icate/ on culpa ac;uiliana& <hile he a/mitte/l$ can be sai/ to ha9e been in control an/ mana8ement of the 9ehicle <hich fi8ure/ in the acci/ent& it is not e;uall$ sho<n& ho<e9er& that the acci/ent coul/ ha9e been e:clusi9el$ /ue to his ne8li8ence& a matter that can allo<& forth<ith& res ipsa lo;uitur to <or? a8ainst him. *cSa+C DECISION VI*.G& B p= G.P. Sarmiento *ruc?in8 Corporation @GPSE un/ertoo? to /eli9er on '( Bune '%%! thirt$ @A"E units of Con/ura S.D. <hite refri8erators aboar/ one of its IsuIu truc?& /ri9en b$ -ambert Eroles& from the plant site of Concepcion In/ustries& Inc.& alon8 South Superhi8h<a$ in )laban8& Metro Manila& to the Central -uIon )ppliances in Da8upan Cit$. 3hile the truc? <as tra9ersin8 the north /i9ersion roa/ alon8 Mc)rthur hi8h<a$ in ,aran8a$ )nupol& ,amban& *arlac& it colli/e/ <ith an uni/entifie/ truc?& causin8 it to fall into a /eep canal& resultin8 in /ama8e to the car8oes. 5G. Insurance Corporation @5G.E& an insurer of the shipment& pai/ to Concepcion In/ustries& Inc.& the 9alue of the co9ere/ car8oes in the sum of P "!&!#"."". 5G.& in turn& bein8 the subro8ee of the ri8hts an/ interests of Concepcion In/ustries& Inc.& sou8ht reimbursement of the amount it ha/ pai/ to the latter from GPS. Since the truc?in8 compan$ faile/ to hee/ the claim& 5G. file/ a complaint for /ama8es an/ breach of contract of carria8e a8ainst GPS an/ its /ri9er -ambert Eroles <ith the a Re8ional *rial Court& ,ranch DD& of Ma?ati Cit$. In its ans<er& respon/ents asserte/ that GPS <as the e:clusi9e hauler onl$ of Concepcion In/ustries& Inc.& since '%((& an/ it

<as not so en8a8e/ in business as a common carrier. Respon/ents further claime/ that the cause of /ama8e <as purel$ acci/ental. *he issues ha9in8 thus been Goine/& 5G. presente/ its e9i/ence& establishin8 the e:tent of /ama8e to the car8oes an/ the amount it ha/ pai/ to the assure/. GPS& instea/ of submittin8 its e9i/ence& file/ <ith lea9e of court a motion to /ismiss the complaint b$ <a$ of /emurrer to e9i/ence on the 8roun/ that petitioner ha/ faile/ to pro9e that it <as a common carrier. *he trial court& in its or/er of A" )pril '%%D& 8rante/ the motion to /ismiss& e:plainin8 thusl$= >.n/er Section ' of Rule 'A' of the Rules of Court& it is pro9i/e/ that FEach part$ must pro9e his o<n affirmati9e alle8ation& . . . F >In the instant case& plaintiff /i/ not present an$ sin8le e9i/ence that <oul/ pro9e that /efen/ant is a common carrier. >)ccor/in8l$& the application of the la< on common carriers is not <arrante/ an/ the presumption of fault or ne8li8ence on the part of a common carrier in case of loss& /ama8e or /eterioration of 8oo/s /urin8 transport un/er '7A# of the Ci9il Co/e is not a9ailin8. >*hus& the la<s 8o9ernin8 the contract bet<een the o<ner of the car8o to <hom the plaintiff <as subro8ate/ an/ the o<ner of the 9ehicle <hich transports the car8o are the la<s on obli8ation an/ contract of the Ci9il Co/e as <ell as the la< on ;uasi /elicts.

>.n/er the la< on obli8ation an/ contract& ne8li8ence or fault is not presume/. *he la< on ;uasi /elict pro9i/es for some presumption of ne8li8ence but onl$ upon the atten/ance of some circumstances. *hus& )rticle '(# pro9i/es= F)rt. '(#. .nless there is proof to the contrar$& it is presume/ that a person /ri9in8 a motor 9ehicle has been ne8li8ent if at the time of the mishap& he <as 9iolatin8 an$ traffic re8ulation.F >E9i/ence for the plaintiff sho<s no proof that /efen/ant <as 9iolatin8 an$ traffic re8ulation. +ence& the presumption of ne8li8ence is not obtainin8. >Consi/erin8 that plaintiff faile/ to a//uce e9i/ence that /efen/ant is a common carrier an/ /efen/antFs /ri9er <as the one ne8li8ent& /efen/ant cannot be ma/e liable for the /ama8es of the subGect car8oes.> *he subse;uent motion for reconsi/eration ha9in8 been /enie/& plaintiff interpose/ an appeal to the Court of )ppeals& conten/in8 that the trial court ha/ erre/ @aE in hol/in8 that the appellee corporation <as not a common carrier /efine/ un/er the la< an/ e:istin8 Gurispru/ence4 an/ @bE in /ismissin8 the complaint on a /emurrer to e9i/ence. *he Court of )ppeals reGecte/ the appeal of petitioner an/ rule/ in fa9or of GPS. *he appellate court& in its /ecision of '" Bune '%%%& /iscourse/& amon8 other thin8s& that 7 >. . . in or/er for the presumption of

ne8li8ence pro9i/e/ for un/er the la< 8o9ernin8 common carrier @)rticle '7A#& Ci9il Co/eE to arise& the appellant must first pro9e that the appellee is a common carrier. Shoul/ the appellant fail to pro9e that the appellee is a common carrier& the presumption <oul/ not arise4 conse;uentl$& the appellant <oul/ ha9e to pro9e that the carrier <as ne8li8ent. >,ecause it is the appellant <ho insists that the appellees can still be consi/ere/ as a common carrier& /espite its Flimite/ clienteleF& @assumin8 it <as reall$ a common carrierE& it follo<s that it @appellantE has the bur/en of pro9in8 the same. It @plaintiffCappellantE Fmust establish his case b$ a prepon/erance of e9i/ence& <hich means that the e9i/ence as a <hole a//uce/ b$ one si/e is superior to that of the other.F @Summa Insurance Corporation 9s. Court of )ppeals& !A SCR) '7#E. *his& unfortunatel$& the appellant faile/ to /o 7 hence& the /ismissal of the plaintiffs complaint b$ the trial court is Gustifie/. >,ase/ on the fore8oin8 /is;uisitions an/ consi/erin8 the circumstances that the appellee truc?in8 corporation has been Fits e:clusi9e contractor& hauler since '%7"& /efen/ant has no choice but to compl$ <ith the /irecti9e of its principal&F the ine9itable conclusion is that the appellee is a pri9ate carrier. >. . . the lo<er court correctl$ rule/ that Fthe application of the la< on common carriers is

not <arrante/ an/ the presumption of fault or ne8li8ence on the part of a common carrier in case of loss& /ama8e or /eterioration of 8oo/LsM /urin8 transport un/er LarticleM '7A# of the Ci9il Co/e is not a9ailin8.F . . . >5inall$& 3e a/9ert to the lon8 establishe/ rule that conclusions an/ fin/in8s of fact of a trial court are entitle/ to 8reat <ei8ht on appeal an/ shoul/ not be /isturbe/ unless for stron8 an/ 9ali/ reasons.> PetitionerFs motion for reconsi/eration <as li?e<ise /enie/4 hence& the instant petition& raisin8 the follo<in8 issues= I. 3+E*+ER RESPONDEN* GPS M)2 ,E CONSIDERED )S ) COMMON C)RRIER )S DE5INED .NDER *+E -)3 )ND E1IS*ING B.RISPR.DENCE. 3+E*+ER RESPONDEN* GPS& EI*+ER )S ) COMMON C)RRIER OR ) PRIV)*E C)RRIER& M)2 ,E PRES.MED *O +)VE ,EEN NEG-IGEN* 3+EN *+E GOODS I* .NDER*OON *O *R)NSPOR* S)5E-2 3ERE S.,SE6.EN*-2 D)M)GED 3+I-E IN I*S PRO*EC*IVE C.S*OD2 )ND POSSESSION. 3+E*+ER *+E DOC*RINE O5 RES IPS) -O6.I*.R IS )PP-IC),-E IN *+E INS*)N* C)SE.

II.

III.

On the first issue& the Court fin/s the conclusion of the trial

court an/ the Court of )ppeals to be ampl$ Gustifie/. GPS& bein8 an e:clusi9e contractor an/ hauler of Concepcion In/ustries& Inc.& ren/erin8 or offerin8 its ser9ices to no other in/i9i/ual or entit$& cannot be consi/ere/ a common carrier. Common carriers are persons& corporations& firms or associations en8a8e/ in the business of carr$in8 or transportin8 passen8ers or 8oo/s or both& b$ lan/& <ater& or air& for hire or compensation& offerin8 their ser9ices to the public& <hether to the public in 8eneral or to a limite/ clientele in particular& but ne9er on an e:clusi9e basis. *he true test of a common carrier is the carria8e of passen8ers or 8oo/s& pro9i/in8 space for those <ho opt to a9ail themsel9es of its transportation ser9ice for a fee. Gi9en accepte/ stan/ar/s& GPS scarcel$ falls <ithin the term >common carrier.> *he abo9e conclusion not<ithstan/in8& GPS cannot escape from liabilit$. In culpa contractual& upon <hich the action of petitioner rests as bein8 the subro8ee of Concepcion In/ustries& Inc.& the mere proof of the e:istence of the contract an/ the failure of its compliance Gustif$& prima facie& a correspon/in8 ri8ht of relief. *he la<& reco8niIin8 the obli8ator$ force of contracts& <ill not permit a part$ to be set free from liabilit$ for an$ ?in/ of misperformance of the contractual un/erta?in8 or a contra9ention of the tenor thereof. ) breach upon the contract confers upon the inGure/ part$ a 9ali/ cause for reco9erin8 that <hich ma$ ha9e been lost or suffere/. *he reme/$ ser9es to preser9e the interests of the promisee that ma$ inclu/e his >e:pectation interest&> <hich is his interest in ha9in8 the benefit of his bar8ain b$ bein8 put in as 8oo/ a position as he <oul/ ha9e been in ha/ the contract been performe/& or his >reliance interest&> <hich is his interest in bein8 reimburse/ for loss cause/ b$ reliance on the contract b$ bein8 put in as 8oo/ a position as he <oul/ ha9e been in ha/ the contract not been ma/e4 or his >restitution interest&> <hich is his interest in

ha9in8 restore/ to him an$ benefit that he has conferre/ on the other part$. In/ee/& a8reements can accomplish little& either for their ma?ers or for societ$& unless the$ are ma/e the basis for action. *he effect of e9er$ infraction is to create a ne< /ut$& that is& to ma?e recompense to the one <ho has been inGure/ b$ the failure of another to obser9e his contractual obli8ation unless he can sho< e:tenuatin8 circumstances& li?e proof of his e:ercise of /ue /ili8ence @normall$ that of the /ili8ence of a 8oo/ father of a famil$ or& e:ceptionall$ b$ stipulation or b$ la< such as in the case of common carriers& that of e:traor/inar$ /ili8enceE or of the atten/ance of fortuitous e9ent& to e:cuse him from his ensuin8 liabilit$. Respon/ent truc?in8 corporation reco8niIes the e:istence of a contract of carria8e bet<een it an/ petitionerFs assure/& an/ a/mits that the car8oes it has assume/ to /eli9er ha9e been lost or /ama8e/ <hile in its custo/$. In such a situation& a /efault on& or failure of compliance <ith& the obli8ation 7 in this case& the /eli9er$ of the 8oo/s in its custo/$ to the place of /estination 7 8i9es rise to a presumption of lac? of care an/ correspon/in8 liabilit$ on the part of the contractual obli8or the bur/en bein8 on him to establish other<ise. GPS has faile/ to /o so. Respon/ent /ri9er& on the other han/& <ithout concrete proof of his ne8li8ence or fault& ma$ not himself be or/ere/ to pa$ petitioner. *he /ri9er& not bein8 a part$ to the contract of carria8e bet<een petitionerFs principal an/ /efen/ant& ma$ not be hel/ liable un/er the a8reement. ) contract can onl$ bin/ the parties <ho ha9e entere/ into it or their successors <ho ha9e assume/ their personalit$ or their Guri/ical position. Consonantl$ <ith the a:iom res inter alios acta aliis ne;ue nocet pro/est& such contract can neither fa9or nor preGu/ice a thir/ person. PetitionerFs ci9il action a8ainst the /ri9er can onl$ be base/ on culpa a;uiliana& <hich& unli?e culpa contractual& <oul/ re;uire the claimant for

/ama8es to pro9e ne8li8ence or fault on the part of the /efen/ant. ) <or/ in passin8. Res ipsa lo;uitur& a /octrine bein8 in9o?e/ b$ petitioner& hol/s a /efen/ant liable <here the thin8 <hich cause/ the inGur$ complaine/ of is sho<n to be un/er the latterFs mana8ement an/ the acci/ent is such that& in the or/inar$ course of thin8s& cannot be e:pecte/ to happen if those <ho ha9e its mana8ement or control use proper care. It affor/s reasonable e9i/ence& in the absence of e:planation b$ the /efen/ant& that the acci/ent arose from <ant of care. It is not a rule of substanti9e la< an/& as such& it /oes not create an in/epen/ent 8roun/ of liabilit$. Instea/& it is re8ar/e/ as a mo/e of proof& or a mere proce/ural con9enience since it furnishes a substitute for& an/ relie9es the plaintiff of& the bur/en of pro/ucin8 specific proof of ne8li8ence. *he ma:im simpl$ places on the /efen/ant the bur/en of 8oin8 for<ar/ <ith the proof. Resort to the /octrine& ho<e9er& ma$ be allo<e/ onl$ <hen @aE the e9ent is of a ?in/ <hich /oes not or/inaril$ occur in the absence of ne8li8ence4 @bE other responsible causes& inclu/in8 the con/uct of the plaintiff an/ thir/ persons& are sufficientl$ eliminate/ b$ the e9i/ence4 an/ @cE the in/icate/ ne8li8ence is <ithin the scope of the /efen/antFs /ut$ to the plaintiff. *hus& it is not applicable <hen an une:plaine/ acci/ent ma$ be attributable to one of se9eral causes& for some of <hich the /efen/ant coul/ not be responsible. Res ipsa lo;uitur 8enerall$ fin/s rele9ance <hether or not a contractual relationship e:ists bet<een the plaintiff an/ the /efen/ant& for the inference of ne8li8ence arises from the circumstances an/ nature of the occurrence an/ not from the nature of the relation of the parties. Ne9ertheless& the re;uirement that responsible causes other than those /ue to /efen/antFs con/uct must first be eliminate/& for the /octrine to appl$& shoul/ be un/erstoo/ as bein8 confine/ onl$ to cases of

pure @nonCcontractualE tort since ob9iousl$ the presumption of ne8li8ence in culpa contractual& as pre9iousl$ so pointe/ out& imme/iatel$ attaches b$ a failure of the co9enant or its tenor. In the case of the truc? /ri9er& <hose liabilit$ in a ci9il action is pre/icate/ on culpa ac;uiliana& <hile he a/mitte/l$ can be sai/ to ha9e been in control an/ mana8ement of the 9ehicle <hich fi8ure/ in the acci/ent& it is not e;uall$ sho<n& ho<e9er& that the acci/ent coul/ ha9e been e:clusi9el$ /ue to his ne8li8ence& a matter that can allo<& forth<ith& res ipsa lo;uitur <or? a8ainst him. If a /emurrer to e9i/ence is 8rante/ but on appeal the or/er of /ismissal is re9erse/& the mo9ant shall be /eeme/ to ha9e <ai9e/ the ri8ht to present e9i/ence. *hus& respon/ent corporation ma$ no lon8er offer proof to establish that it has e:ercise/ /ue care in transportin8 the car8oes of the assure/ so as to still <arrant a reman/ of the case to the trial court. 3+ERE5ORE& the or/er& /ate/ A" )pril '%%D& of the Re8ional *rial Court& ,ranch DD& of Ma?ati Cit$& an/ the /ecision& /ate/ '" Bune '%%%& of the Court of )ppeals& are )55IRMED onl$ insofar as respon/ent -ambert M. Eroles is concerne/& but sai/ assaile/ or/er of the trial court an/ /ecision of the appellate court are REVERSED as re8ar/s G.P. Sarmiento *ruc?in8 Corporation <hich& instea/& is hereb$ or/ere/ to pa$ 5G. Insurance Corporation the 9alue of the /ama8e/ an/ lost car8oes in the amount of P "!&!#"."". No costs. SO ORDERED. Da9i/e& Br.& C.B.& Napunan& 2naresCSantia8o an/ )ustriaC MartineI& BB.& concur.