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SECOND DIVISION

FAR EAST BANK AND TRUST


COMPANY, NOW BANK OF
THE PHILIPPINE ISLANDS,
Petitioner,

- versus -

G.R. No. 157314


Present:
PUNO, J., Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.

Promulgated:
THEMISTOCLES PACILAN, JR.,
Respondent.
July 29, 2005
x------------------------------------ --------------x

DECISION

CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari filed by Far East Bank and Trust
Company (now Bank of the Philippines Islands) seeking the reversal of the Decision [1] dated
August 30, 2002 of the Court of Appeals (CA) in CA-G.R. CV No. 36627 which ordered it, together
with its branch accountant, Roger Villadelgado, to pay respondent Themistocles Pacilan, Jr. [2] the
total sum of P100,000.00 as moral and exemplary damages. The assailed decision affirmed with
modification that of the Regional Trial Court (RTC) of Negros Occidental, Bacolod City, Branch 54,
in Civil Case No. 4908. Likewise sought to be reversed and set aside is the Resolution dated
January 17, 2003 of the appellate court, denying petitioner banks motion for reconsideration.
The case stemmed from the following undisputed facts:
Respondent Pacilan opened a current account with petitioner banks Bacolod Branch on May
23, 1980. His account was denominated as Current Account No. 53208 (0052-00407-4). The
respondent had since then issued several postdated checks to different payees drawn against the
said account. Sometime in March 1988, the respondent issued Check No. 2434886 in the amount
of P680.00 and the same was presented for payment to petitioner bank on April 4, 1988.
Upon its presentment on the said date, Check No. 2434886 was dishonored by petitioner
bank. The next day, or on April 5, 1988, the respondent deposited to his current account the
amount of P800.00. The said amount was accepted by petitioner bank; hence, increasing the
balance of the respondents deposit to P1,051.43.
Subsequently, when the respondent verified with petitioner bank about the dishonor of
Check No. 2434866, he discovered that his current account was closed on the ground that it was
improperly handled. The records of petitioner bank disclosed that between the period of March
30, 1988 and April 5, 1988, the respondent issued four checks, to wit: Check No. 2480416
for P6,000.00; Check No. 2480419 forP50.00; Check No. 2434880 for P680.00 and; Check No.
2434886 for P680.00, or a total amount of P7,410.00. At the time, however, the respondents
current account with petitioner bank only had a deposit of P6,981.43. Thus, the total amount of the
checks presented for payment on April 4, 1988 exceeded the balance of the respondents deposit
in his account. For this reason, petitioner bank, through its branch accountant, Villadelgado,
closed the respondents current account effective the evening of April 4, 1988 as it then had an
overdraft of P428.57. As a consequence of the overdraft, Check No. 2434886 was dishonored.

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On April 18, 1988, the respondent wrote to petitioner bank complaining that the closure of
his account was unjustified. When he did not receive a reply from petitioner bank, the respondent
filed with the RTC of Negros Occidental, Bacolod City, Branch 54, a complaint for damages against
petitioner bank and Villadelgado. The case was docketed as Civil Case No. 4908. The
respondent, as complainant therein, alleged that the closure of his current account by petitioner
bank was unjustified because on the first banking hour of April 5, 1988, he already deposited an
amount sufficient to fund his checks. The respondent pointed out that Check No. 2434886, in
particular, was delivered to petitioner bank at the close of banking hours on April 4, 1988 and,
following normal banking procedure, it (petitioner bank) had until the last clearing hour of the
following day, or on April 5, 1988, to honor the check or return it, if not funded. In disregard of this
banking procedure and practice, however, petitioner bank hastily closed the respondents current
account and dishonored his Check No. 2434886.
The respondent further alleged that prior to the closure of his current account, he had issued
several other postdated checks. The petitioner banks act of closing his current account allegedly
preempted the deposits that he intended to make to fund those checks. Further, the petitioner
banks act exposed him to criminal prosecution for violation of Batas Pambansa Blg. 22.
According to the respondent, the indecent haste that attended the closure of his account was
patently malicious and intended to embarrass him. He claimed that he is a Cashier of Prudential
Bank and Trust Company, whose branch office is located just across that of petitioner bank, and a
prominent and respected leader both in the civic and banking communities. The alleged malicious
acts of petitioner bank besmirched the respondents reputation and caused him social humiliation,
wounded feelings, insurmountable worries and sleepless nights entitling him to an award of
damages.
In their answer, petitioner bank and Villadelgado maintained that the respondents current
account was subject to petitioner banks Rules and Regulations Governing the Establishment and
Operation of Regular Demand Deposits which provide that the Bank reserves the right to close an
account if the depositor frequently draws checks against insufficient funds and/or uncollected
deposits and that the Bank reserves the right at any time to return checks of the depositor which
are drawn against insufficient funds or for any reason.[3]
They showed that the respondent had improperly and irregularly handled his current
account. For example, in 1986, the respondents account was overdrawn 156 times, in 1987, 117
times and in 1988, 26 times. In all these instances, the account was overdrawn due to the
issuance of checks against insufficient funds. The respondent had also signed several checks with
a different signature from the specimen on file for dubious reasons.
When the respondent made the deposit on April 5, 1988, it was obviously to cover for
issuances made the previous day against an insufficiently funded account. When his Check No.
2434886 was presented for payment on April 4, 1988, he had already incurred an overdraft; hence,
petitioner bank rightfully dishonored the same for insufficiency of funds.
After due proceedings, the court a quo rendered judgment in favor of the respondent as it
ordered the petitioner bank and Villadelgado, jointly and severally, to pay the respondent the
amounts of P100,000.00 as moral damages and P50,000.00 as exemplary damages and costs of
suit. In so ruling, the court a quo also cited petitioner banks rules and regulations which state that
a charge of P10.00 shall be levied against the depositor for any check that is taken up as a
returned item due to insufficiency of funds on the date of receipt from the clearing office even if
said check is honored and/or covered by sufficient deposit the following banking day. The same
rules and regulations also provide that a check returned for insufficiency of funds for any reason of
similar import may be subsequently recleared for one more time only, subject to the same
charges.
According to the court a quo, following these rules and regulations, the respondent, as
depositor, had the right to put up sufficient funds for a check that was taken as a returned item for
insufficient funds the day following the receipt of said check from the clearing office. In fact, the
said check could still be recleared for one more time. In previous instances, petitioner bank
notified the respondent when he incurred an overdraft and he would then deposit sufficient funds
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the following day to cover the overdraft. Petitioner bank thus acted unjustifiably when it immediately
closed the respondents account on April 4, 1988 and deprived him of the opportunity to reclear his
check or deposit sufficient funds therefor the following day.
As a result of the closure of his current account, several of the respondents checks were
subsequently dishonored and because of this, the respondent was humiliated, embarrassed and
lost his credit standing in the business community. The court a quo further ratiocinated that even
granting arguendo that petitioner bank had the right to close the respondents account, the manner
which attended the closure constituted an abuse of the said right. Citing Article 19 of the Civil
Code of the Philippines which states that [e]very person must, in the exercise of his rights and in
the performance of his duties, act with justice, give everyone his due, and observe honesty and
good faith and Article 20 thereof which states that [e]very person who, contrary to law, wilfully or
negligently causes damage to another, shall indemnify the latter for the same, the court a
quo adjudged petitioner bank of acting in bad faith. It held that, under the foregoing circumstances,
the respondent is entitled to an award of moral and exemplary damages.
The decretal portion of the court a quos decision reads:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:
1.

Ordering the defendants [petitioner bank and Villadelgado], jointly and


severally, to pay plaintiff [the respondent] the sum of P100,000.00 as moral
damages;

2.

Ordering the defendants, jointly and severally, to pay plaintiff the sum
of P50,000.00 as exemplary damages plus costs and expenses of the suit;
and

3.

Dismissing [the] defendants counterclaim for lack of merit.

SO ORDERED.[4]

On appeal, the CA rendered the Decision dated August 30, 2002, affirming with modification
the decision of the court a quo.
The appellate court substantially affirmed the factual findings of the court a quo as it held
that petitioner bank unjustifiably closed the respondents account notwithstanding that its own
rules and regulations allow that a check returned for insufficiency of funds or any reason of similar
import, may be subsequently recleared for one more time, subject to standard charges. Like the
court a quo, the appellate court observed that in several instances in previous years, petitioner
bank would inform the respondent when he incurred an overdraft and allowed him to make a timely
deposit to fund the checks that were initially dishonored for insufficiency of funds. However, on
April 4, 1988, petitioner bank immediately closed the respondents account without even notifying
him that he had incurred an overdraft. Even when they had already closed his account on April 4,
1988, petitioner bank still accepted the deposit that the respondent made on
April 5, 1988,
supposedly to cover his checks.
Echoing the reasoning of the court a quo, the CA declared that even as it may be conceded
that petitioner bank had reserved the right to close an account for repeated overdrafts by the
respondent, the exercise of that right must never be despotic or arbitrary. That petitioner bank
chose to close the account outright and return the check, even after accepting a deposit sufficient
to cover the said check, is contrary to its duty to handle the respondents account with utmost
fidelity. The exercise of the right is not absolute and good faith, at least, is required. The manner
by which petitioner bank closed the account of the respondent runs afoul of Article 19 of the Civil
Code which enjoins every person, in the exercise of his rights, to give every one his due, and
observe honesty and good faith.
The CA concluded that petitioner banks precipitate and imprudent closure of the
respondents account had caused him, a respected officer of several civic and banking
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associations, serious anxiety and humiliation. It had, likewise, tainted his credit standing.
Consequently, the award of damages is warranted. The CA, however, reduced the amount of
damages awarded by the court a quo as it found the same to be excessive:
We, however, find excessive the amount of damages awarded by the RTC. In
our view the reduced amount of P75,000.00 as moral damages and P25,000.00 as
exemplary damages are in order. Awards for damages are not meant to enrich the
plaintiff-appellee [the respondent] at the expense of defendants-appellants [the
petitioners], but to obviate the moral suffering he has undergone. The award is
aimed at the restoration, within limits possible, of the status quo ante, and should be
proportionate to the suffering inflicted.[5]
The dispositive portion of the assailed CA decision reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED, subject to
the MODIFICATION that the award of moral damages is reduced to P75,000.00 and
the award of exemplary damages reduced to P25,000.00.
SO ORDERED.[6]
Petitioner bank sought the reconsideration of the said decision but in the assailed Resolution
dated January 17, 2003, the appellate court denied its motion. Hence, the recourse to this Court.
Petitioner bank maintains that, in closing the account of the respondent in the evening of
April 4, 1988, it acted in good faith and in accordance with the rules and regulations governing
the operation of a
regular demand deposit which reserves to the bank the right to close an account if the depositor
frequently draws checks against insufficient funds and/or uncollected deposits. The same rules
and regulations also provide that the depositor is not entitled, as a matter of right, to overdraw on
this deposit and the bank reserves the right at any time to return checks of the depositor which are
drawn against insufficient funds or for any reason.
It cites the numerous instances that the respondent had overdrawn his account and those
instances where he deliberately signed checks using a signature different from the specimen on
file. Based on these facts, petitioner bank was constrained to close the respondents account for
improper and irregular handling and returned his Check No. 2434886 which was presented to the
bank for payment on April 4, 1988.
Petitioner bank further posits that there is no law or rule which gives the respondent a legal
right to make good his check or to deposit the corresponding amount to cover said check within 24
hours after the same is dishonored or returned by the bank for having been drawn against
insufficient funds. It vigorously denies having violated Article 19 of the Civil Code as it insists that it
acted in good faith and in accordance with the pertinent banking rules and regulations.
The petition is impressed with merit.
A perusal of the respective decisions of the court a quo and the appellate court show that
the award of damages in the respondents favor was anchored mainly on Article 19 of the Civil
Code which, quoted anew below, reads:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe
honesty and good faith.
The elements of abuse of rights are the following: (a) the existence of a legal right or duty;
(b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. [7]
Malice or bad faith is at the core of the said provision. [8] The law always presumes good faith and
any person who seeks to be awarded damages due to acts of another has the burden of proving
that the latter acted in bad faith or with ill-motive.[9] Good faith refers to the state of the mind which
is manifested by the acts of the individual concerned. It consists of the intention to abstain from
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taking an unconscionable and unscrupulous advantage of another. [10] Bad faith does not simply
connote bad judgment or simple negligence, dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of known duty due to some motives or interest or ill-will that
partakes of the nature of fraud.[11] Malice connotes ill-will or spite and speaks not in response to
duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad
motive.[12]
Undoubtedly, petitioner bank has the right to close the account of the respondent based on
the following provisions of its Rules and Regulations Governing the Establishment and Operation
of Regular Demand Deposits:
10)

The Bank reserves the right to close an account if the depositor frequently
draws checks against insufficient funds and/or uncollected deposits.

12)

However, it is clearly understood that the depositor is not entitled, as a matter of


right, to overdraw on this deposit and the bank reserves the right at any time to
return checks of the depositor which are drawn against insufficient funds or for
any other reason.

The facts, as found by the court a quo and the appellate court, do not establish that, in the
exercise of this right, petitioner bank committed an abuse thereof. Specifically, the second and
third elements for abuse of rights are not attendant in the present case. The evidence presented
by petitioner bank negates the existence of bad faith or malice on its part in closing the
respondents account on April 4, 1988 because on the said date the same was already overdrawn.
The respondent issued four checks, all due on April 4, 1988, amounting to P7,410.00 when the
balance of his current account deposit was only P6,981.43. Thus, he incurred an overdraft
of P428.57 which resulted in the dishonor of his Check No. 2434886. Further, petitioner bank
showed that in 1986, the current account of the respondent was overdrawn 156 times due to his
issuance of checks against insufficient funds.[13] In 1987, the said account was overdrawn 117
times for the same reason.[14] Again, in 1988, 26 times.[15] There were also several instances
when the respondent issued checks deliberately using a signature different from his specimen
signature on file with petitioner bank.[16] All these circumstances taken together justified the
petitioner banks closure of the respondents account on April 4, 1988 for improper handling.
It is observed that nowhere under its rules and regulations is petitioner bank required to
notify the respondent, or any depositor for that matter, of the closure of the account for frequently
drawing checks against insufficient funds. No malice or bad faith could be imputed on petitioner
bank for so acting since the records bear out that the respondent had indeed been improperly and
irregularly handling his account not just a few times but hundreds of times. Under the
circumstances, petitioner bank could not be faulted for exercising its right in accordance with the
express rules and regulations governing the current accounts of its depositors. Upon the opening
of his account, the respondent had agreed to be bound by these terms and conditions.
Neither the fact that petitioner bank accepted the deposit made by the respondent the day
following the closure of his account constitutes bad faith or malice on the part of petitioner bank.
The same could be characterized as simple negligence by its personnel. Said act, by itself, is not
constitutive of bad faith.
The respondent had thus failed to discharge his burden of proving bad faith on the part of
petitioner bank or that it was motivated by ill-will or spite in closing his account on April 4, 1988 and
in inadvertently accepting his deposit on April 5, 1988.
Further, it has not been shown that these acts were done by petitioner bank with the sole
intention of prejudicing and injuring the respondent. It is conceded that the respondent may have
suffered damages as a result of the closure of his current account. However, there is a material
distinction between damages and injury. The Court had the occasion to explain the distinction
between damages and injury in this wise:
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Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm
which results from the injury; and damages are the recompense or compensation
awarded for the damage suffered. Thus, there can be damage without injury in those
instances in which the loss or harm was not the result of a violation of a legal duty. In
such cases, the consequences must be borne by the injured person alone, the law
affords no remedy for damages resulting from an act which does not amount to a
legal injury or wrong. These situations are often called damnum absque injuria.
In other words, in order that a plaintiff may maintain an action for the injuries of
which he complains, he must establish that such injuries resulted from a breach of
duty which the defendant owed to the plaintiff a concurrence of injury to the plaintiff
and legal responsibility by the person causing it. The underlying basis for the award
of tort damages is the premise that the individual was injured in contemplation of law.
Thus, there must first be a breach of some duty and the imposition of liability for that
breach before damages may be awarded; and the breach of such duty should be the
proximate cause of the injury.[17]
Whatever damages the respondent may have suffered as a consequence, e.g., dishonor of
his other insufficiently funded checks, would have to be borne by him alone. It was the
respondents repeated improper
and irregular handling of his account which constrained petitioner bank to close the same in
accordance with the rules and regulations governing its depositors current accounts. The
respondents case is clearly one of damnum absque injuria.
WHEREFORE, the petition is GRANTED. The Decision dated August 30, 2002 and
Resolution dated January 17, 2003 of the Court of Appeals in CA-G.R. CV No. 36627
are REVERSED AND SET ASIDE.
SO ORDERED.

ROMEO J. CALLEJO, SR.


Associate Justice
WE CONCUR:
REYNATO S. PUNO
Associate Justice
Chairman

MA. ALICIA AUSTRIA-MARTINEZ


Associate Justice

DANTE O. TINGA
Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.

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REYNATO S. PUNO
Associate Justice
Chairman, Second Division

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairmans
Attestation, it is hereby certified that the conclusions in the above decision were reached in
consultation before the case was assigned to the writer of the opinion of the Courts Division.

HILARIO G. DAVIDE, JR.


Chief Justice

[1]

Penned by Associate Justice Oswaldo D. Agcaoili, with Associate Justices Eliezer R. Delos Santos and Danilo B.
Pine, concurring.
[2]
In the Resolution dated July 1, 2004 of the Court of Appeals, the Court was furnished a copy of the Notice of Death
of respondent Pacilan, Jr. In compliance with the Courts Resolution dated September 27, 2004, his counsel averred
that the respondent was survived by his children, namely, Jesus Rey, Jesus Rhoel, Jesus Rene and Jesus Ryan, all
surnamed Pacilan.
[3]
Exhibit 1, Records, p. 195. (Vol. I)
[4]
Records, p. 344. (Vol. II)
[5]
Rollo, p. 21.
[6]
Ibid.
[7]
Development Bank of the Philippines v. Court of Appeals, G.R. No. 137916, 8 December 2004, 445 SCRA 500.
[8]
ABS-CBN Broadcasting Corporation v. Court of Appeals, G.R. No. 128690, 21 January 1999, 301 SCRA 572.
[9]
Chua v. Court of Appeals, G.R. No. 112660, 14 March 1995, 242 SCRA 341.
[10]
Saber v. Court of Appeals, G.R. No. 132981, 31 August 2004, 437 SCRA 259.
[11]
Id. at 278-279.
[12]
Id. at 279.
[13]
Exhibits 3 up to 3-X, Records, pp. 197-221. (Vol. I)
[14]
Exhibits 4 up to 4-U, Id. at 222-243. (Vol. I)
[15]
Exhibits 5 up to 5-E, Id. at 244-249.
[16]
Exhibits 6 up to 6-C, Id. at 250-253.
[17]
BPI Express Card Corporation v. Court of Appeals, G.R. No. 120639, 25 September 1998, 296 SCRA 260.

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FIRST DIVISION
ALLAN C. GO, doing business
under the name and style ACG
Express Liner,
Petitioner,

G.R. No. 164703

- versus MORTIMER F. CORDERO,


Respondent.
x-----------------------------------------x
MORTIMER F. CORDERO,
Petitioner,

G.R. No. 164747


Present:

- versus -

ALLAN C. GO, doing business


under the name and style
ACG Express Liner, FELIPE M.
LANDICHO and VINCENT D. TECSON,
Respondents.

PUNO, C.J., Chairperson,


CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.
Promulgated:
May 4, 2010

x-----------------------------------------------------------------------------------------x
DECISION
VILLARAMA, JR., J.:
For review is the Decision[1] dated March 16, 2004 as modified by the Resolution[2] dated
July 22, 2004 of the Court of Appeals (CA) in CA-G.R. CV No. 69113, which affirmed with
modifications the Decision[3] dated May 31, 2000 of the Regional Trial Court (RTC) of Quezon City,
Branch 85 in Civil Case No. 98-35332.
The factual antecedents:
Sometime in 1996, Mortimer F. Cordero, Vice-President of Pamana Marketing Corporation
(Pamana), ventured into the business of marketing inter-island passenger vessels. After
contacting various overseas fast ferry manufacturers from all over the world, he came to meet Tony
Robinson, an Australian national based in Brisbane, Australia, who is the Managing Director of
Aluminium Fast Ferries Australia (AFFA).
Between June and August 1997, Robinson signed documents appointing Cordero as the
exclusive distributor of AFFA catamaran and other fast ferry vessels in the Philippines. As such
exclusive distributor, Cordero offered for sale to prospective buyers the 25-meter Aluminium
Passenger catamaran known as the SEACAT 25.[4]
After negotiations with Felipe Landicho and Vincent Tecson, lawyers of Allan C. Go who is
the owner/operator of ACG Express Liner of Cebu City, a single proprietorship, Cordero was able
to close a deal for the purchase of two (2) SEACAT 25 as evidenced by the Memorandum of
Agreement dated August 7, 1997.[5] Accordingly, the parties executed Shipbuilding Contract No.
7825 for one (1) high-speed catamaran (SEACAT 25) for the price of US$1,465,512.00. [6] Per
agreement between Robinson and Cordero, the latter shall receive commissions totalling
US$328,742.00, or 22.43% of the purchase price, from the sale of each vessel. [7]

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Cordero made two (2) trips to the AFFA Shipyard in Brisbane, Australia, and on one (1)
occasion even accompanied Go and his family and Landicho, to monitor the progress of the
building of the vessel. He shouldered all the expenses for airfare, food, hotel accommodations,
transportation and entertainment during these trips. He also spent for long distance telephone
calls to communicate regularly with Robinson, Go, Tecson and Landicho.
However, Cordero later discovered that Go was dealing directly with Robinson when he was
informed by Dennis Padua of Wartsila Philippines that Go was canvassing for a second catamaran
engine from their company which provided the ship engine for the first SEACAT 25. Padua told
Cordero that Go instructed him to fax the requested quotation of the second engine to the Park
Royal Hotel in Brisbane where Go was then staying. Cordero tried to contact Go and Landicho to
confirm the matter but they were nowhere to be found, while Robinson refused to answer his
calls. Cordero immediately flew to Brisbane to clarify matters with Robinson, only to find out that
Go and Landicho were already there in Brisbane negotiating for the sale of the second SEACAT
25. Despite repeated follow-up calls, no explanation was given by Robinson, Go, Landicho and
Tecson who even made Cordero believe there would be no further sale between AFFA and ACG
Express Liner.
In a handwritten letter dated June 24, 1998, Cordero informed Go that such act of dealing
directly with Robinson violated his exclusive distributorship and demanded that they respect the
same, without prejudice to legal action against him and Robinson should they fail to heed the
same.[8] Corderos lawyer, Atty. Ernesto A. Tabujara, Jr. of ACCRA law firm, also wrote ACG
Express Liner assailing the fraudulent actuations and misrepresentations committed by Go in
connivance with his lawyers (Landicho and Tecson) in breach of Corderos exclusive distributorship
appointment.[9]
Having been apprised of Corderos demand letter, Thyne & Macartney, the lawyer of AFFA
and Robinson, faxed a letter toACCRA law firm asserting that the appointment of Cordero as
AFFAs distributor was for the purpose of one (1) transaction only, that is, the purchase of a highspeed catamaran vessel by ACG Express Liner in August 1997. The letter further stated that
Cordero was offered the exclusive distributorship, the terms of which were contained in a draft
agreement which Cordero allegedly failed to return to AFFA within a reasonable time, and which
offer is already being revoked by AFFA.[10]
As to the response of Go, Landicho and Tecson to his demand letter, Cordero testified
before the trial court that on the same day, Landicho, acting on behalf of Go, talked to him over the
telephone and offered to amicably settle their dispute. Tecson and Landicho offered to convince
Go to honor his exclusive distributorship with AFFA and to purchase all vessels for ACG Express
Liner through him for the next three (3) years. In an effort to amicably settle the matter, Landicho,
acting in behalf of Go, set up a meeting with Cordero on June 29, 1998 between 9:30 p.m. to 10:30
p.m. at the Mactan Island Resort Hotel lobby. On said date, however, only Landicho and Tecson
came and no reason was given for Gos absence. Tecson and Landicho proposed that they will
convince Go to pay him US$1,500,000.00 on the condition that they will get a cut of 20%. And so it
was agreed between him, Landicho and Tecson that the latter would give him a weekly status
report and that the matter will be settled in three (3) to four (4) weeks and neither party will file an
action against each other until a final report on the proposed settlement. No such report was made
by either Tecson or Landicho who, it turned out, had no intention to do so and were just buying
time as the catamaran vessel was due to arrive from Australia. Cordero then filed a complaint with
the Bureau of Customs (BOC) to prohibit the entry of SEACAT 25 from Australia based on
misdeclaration and undervaluation. Consequently, an Alert Order was issued by Acting BOC
Commissioner Nelson Tan for the vessel which in fact arrived on July 17, 1998. Cordero claimed
that Go and Robinson had conspired to undervalue the vessel by around US$500,000.00.[11]
On August 21, 1998, Cordero instituted Civil Case No. 98-35332 seeking to hold Robinson,
Go, Tecson and Landicho liable jointly and solidarily for conniving and conspiring together in
violating his exclusive distributorship in bad faith and wanton disregard of his rights, thus depriving
him of his due commissions (balance of unpaid commission from the sale of the first vessel in the
amount of US$31,522.01 and unpaid commission for the sale of the second vessel in the amount
of
US$328,742.00) and causing
him
actual,
moral
and
exemplary
damages,
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including P800,000.00 representing expenses for airplane travel to Australia, telecommunications


bills and entertainment, on account of AFFAs untimely cancellation of the exclusive distributorship
agreement. Cordero also prayed for the award of moral and exemplary damages, as well as
attorneys fees and litigation expenses.[12]
Robinson filed a motion to dismiss grounded on lack of jurisdiction over his person and
failure to state a cause of action, asserting that there was no act committed in violation of the
distributorship agreement. Said motion was denied by the trial court onDecember 20,
1999. Robinson was likewise declared in default for failure to file his answer within the period
granted by the trial court.[13] As for Go and Tecson, their motion to dismiss based on failure to
state a cause of action was likewise denied by the trial court on February 26,
1999.[14] Subsequently, they filed their Answer denying that they have anything to do with the
termination by AFFA of Corderos authority as exclusive distributor in the Philippines. On the
contrary, they averred it was Cordero who stopped communicating with Go in connection with the
purchase of the first vessel from AFFA and was not doing his part in making progress status
reports and airing the clients grievances to his principal, AFFA, such that Go engaged the services
of Landicho to fly to Australia and attend to the documents needed for shipment of the vessel to the
Philippines. As to the inquiry for the Philippine price for a Wartsila ship engine for AFFAs other ongoing vessel construction, this was merely requested by Robinson but which Cordero
misinterpreted as indication that Go was buying a second vessel. Moreover, Landicho and Tecson
had no transaction whatsoever with Cordero who had no document to show any such shipbuilding
contract. As to the supposed meeting to settle their dispute, this was due to the malicious demand
of Cordero to be given US$3,000,000 as otherwise he will expose in the media the alleged
undervaluation of the vessel with the BOC. In any case, Cordero no longer had cause of action for
his commission for the sale of the second vessel under the memorandum of agreement
dated August 7, 1997 considering the termination of his authority by AFFAs lawyers on June 26,
1998.[15]
Pre-trial was reset twice to afford the parties opportunity to reach a settlement. However, on
motion filed by Cordero through counsel, the trial court reconsidered the resetting of the pre-trial to
another date for the third time as requested by Go, Tecson and Landicho, in view of the latters
failure to appear at the pre-trial conference on January 7, 2000 despite due notice. The trial court
further confirmed that said defendants misled the trial court in moving for continuance during the
pre-trial conference held onDecember 10, 1999, purportedly to go abroad for the holiday season
when in truth a Hold-Departure Order had been issued against them.[16] Accordingly, plaintiff
Cordero was allowed to present his evidence ex parte.
Corderos testimony regarding his transaction with defendants Go, Landicho and Tecson,
and the latters offer of settlement, was corroborated by his counsel who also took the witness
stand. Further, documentary evidence including photographs taken of the June 29, 1998 meeting
with Landicho, Tecson and Atty. Tabujara at Shangri-las Mactan Island Resort, photographs taken
in Brisbane showing Cordero, Go with his family, Robinson and Landicho, and also various
documents, communications, vouchers and bank transmittals were presented to prove that: (1)
Cordero was properly authorized and actually transacted in behalf of AFFA as exclusive distributor
in the Philippines; (2) Cordero spent considerable sums of money in pursuance of the contract with
Go and ACG Express Liner; and (3) AFFA through Robinson paid Cordero his commissions from
each scheduled payment made by Go for the first SEACAT 25 purchased from AFFA pursuant to
Shipbuilding Contract No. 7825.[17]
On May 31, 2000, the trial court rendered its decision, the dispositive portion of which reads
as follows:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in
favor of Plaintiff and against defendants Allan C. Go, Tony Robinson, Felipe
Landicho, and Vincent Tecson. As prayed for, defendants are hereby ordered to pay
Plaintiff jointly and solidarily, the following:
1. On the First Cause of Action, the sum total of SIXTEEN MILLION TWO
HUNDRED NINETY ONE THOUSAND THREE HUNDRED FIFTY TWO
10 | P a g e

AND FORTY THREE CENTAVOS (P16,291,352.43) as actual damages with


legal interest from 25 June 1998 until fully paid;
2. On the Second Cause of Action, the sum of ONE MILLION PESOS
(P1,000,000.00) as moral damages;
3. On the Third Cause of Action, the sum of ONE MILLION PESOS
(P1,000,000.00) as exemplary damages; and
4. On the Fourth Cause of Action, the sum of ONE MILLION PESOS
(P1,000,000.00) as attorneys fees;
Costs against the defendants.
SO ORDERED.[18]
Go, Robinson, Landicho and Tecson filed a motion for new trial, claiming that they have
been unduly prejudiced by the negligence of their counsel who was allegedly unaware that the pretrial conference on January 28, 2000 did not push through for the reason that Cordero was then
allowed to present his evidence ex-parte, as he had assumed that the said ex-parte hearing was
being conducted only against Robinson who was earlier declared in default. [19] In its Order
dated July 28, 2000, the trial court denied the motion for new trial. [20] In the same order, Corderos
motion for execution pending appeal was granted. Defendants moved to reconsider the said order
insofar as it granted the motion for execution pending appeal. [21] On August 8, 2000, they filed a
notice of appeal.[22]
On August 18, 2000, the trial court denied the motion for reconsideration and on August 21,
2000, the writ of execution pending appeal was issued. [23] Meanwhile, the notice of appeal was
denied for failure to pay the appellate court docket fee within the prescribed period. [24] Defendants
filed a motion for reconsideration and to transmit the case records to the CA.[25]
On September 29, 2000, the CA issued a temporary restraining order at the instance of
defendants in the certiorari case they filed with said court docketed as CA-G.R. SP No. 60354
questioning the execution orders issued by the trial court. Consequently, as requested by the
defendants, the trial court recalled and set aside its November 6, 2000 Order granting the exparte motion for release of garnished funds, cancelled the scheduled public auction sale of levied
real properties, and denied the ex-parte Motion for Break-Open Order and Ex-Parte Motion for
Encashment of Check filed by Cordero.[26] On November 29, 2000, the trial court reconsidered its
Order dated August 21, 2000 denying due course to the notice of appeal and forthwith directed the
transmittal of the records to the CA.[27]
On January 29, 2001, the CA rendered judgment granting the petition for certiorari in CAG.R. SP No. 60354 and setting aside the trial courts orders of execution pending appeal. Cordero
appealed the said judgment in a petition for review filed with this Court which was eventually
denied under our Decision dated September 17, 2002.[28]
On March 16, 2004, the CA in CA-G.R. CV No. 69113 affirmed the trial court (1) in
allowing Cordero to present his evidence ex-parte after the unjustified failure of appellants (Go,
Tecson and Landicho) to appear at the pre-trial conference despite due notice; (2) in finding that it
was Cordero and not Pamana who was appointed by AFFA as the exclusive distributor in the
Philippines of its SEACAT 25 and other fast ferry vessels, which is not limited to the sale of one (1)
such catamaran to Go on August 7, 1997; and (3) in finding that Cordero is entitled to a
commission per vessel sold for AFFA through his efforts in the amount equivalent to 22.43% of the
price of each vessel or US$328,742.00, and with payments of US$297,219.91 having been made
to Cordero, there remained a balance of US$31,522.09 still due to him. The CA sustained the trial
court in ruling that Cordero is entitled to damages for the breach of his exclusive distributorship
agreement with AFFA. However, it held that Cordero is entitled only to commission for the sale of
the first catamaran obtained through his efforts with the remaining unpaid sum of US$31,522.09
11 | P a g e

orP1,355,449.90 (on the basis of US$1.00=P43.00 rate) with interest at 6% per annum from the
time of the filing of the complaint until the same is fully paid. As to the P800,000.00 representing
expenses incurred by Cordero for transportation, phone bills, entertainment, food and lodging, the
CA declared there was no basis for such award, the same being the logical and necessary
consequences of the exclusive distributorship agreement which are normal in the field of sales and
distribution, and the expenditures having redounded to the benefit of the distributor (Cordero).
On the amounts awarded by the trial court as moral and exemplary damages, as well as
attorneys fees, the CA reduced the same to P500,000.00, P300,000.00 and P50,000.00,
respectively. Appellants were held solidarily liable pursuant to the provisions of Article 1207 in
relation to Articles 19, 20, 21 and 22 of the New Civil Code. The CA further ruled that no error was
committed by the trial court in denying their motion for new trial, which said court found to be pro
forma and did not raise any substantial matter as to warrant the conduct of another trial.
By Resolution dated July 22, 2004, the CA denied the motions for reconsideration
respectively filed by the appellants and appellee, and affirmed the Decision dated March 16, 2004
with the sole modification that the legal interest of 6% per annum shall start to run from June 24,
1998 until the finality of the decision, and the rate of 12% interest per annum shall apply once the
decision becomes final and executory until the judgment has been satisfied.
The case before us is a consolidation of the petitions for review under Rule 45 separately
filed by Go (G.R. No. 164703) and Cordero (G.R. No. 164747) in which petitioners raised the
following arguments:
G.R. No. 164703
(Petitioner Go)
I.

THE HONORABLE COURT OF APPEALS DISREGARDED THE RULES OF


COURT AND PERTINENT JURISPRUDENCE AND ACTED WITH GRAVE
ABUSE OF DISCRETION IN NOT RULING THAT THE RESPONDENT IS NOT
THE REAL PARTY-IN-INTEREST AND IN NOT DISMISSING THE INSTANT
CASE ON THE GROUND OF LACK OF CAUSE OF ACTION;

II.

THE HONORABLE COURT OF APPEALS IGNORED THE LAW AND


JURISPRUDENCE AND ACTED WITH GRAVE ABUSE OF DISCRETION IN
HOLDING HEREIN PETITIONER RESPONSIBLE FOR THE BREACH IN THE
ALLEGED EXCLUSIVE DISTRIBUTORSHIP AGREEMENT WITH ALUMINIUM
FAST FERRIES AUSTRALIA;

III.

THE HONORABLE APPELLATE COURT MISAPPLIED THE LAW AND ACTED


WITH GRAVE ABUSE OF DISCRETION IN FINDING PETITIONER LIABLE IN
SOLIDUM WITH THE CO-DEFENDANTS WITH RESPECT TO THE CLAIMS
OF RESPONDENT;

IV.

THE HONORABLE COURT OF APPEALS MISAPPLIED LAW AND


JURISPRUDENCE AND GRAVELY ABUSED ITS DISCRETION WHEN IT
FOUND PETITIONER LIABLE FOR UNPAID COMMISSIONS, DAMAGES,
ATTORNEYS FEES, AND LITIGATION EXPENSES; and

V.

THE HONORABLE APPELLATE COURT ACTED CONTRARY TO LAW AND


JURISPRUDENCE AND GRAVELY ABUSED ITS DISCRETION WHEN IT
EFFECTIVELY DEPRIVED HEREIN PETITIONER OF HIS RIGHT TO DUE
PROCESS BY AFFIRMING THE LOWER COURTS DENIAL OF
PETITIONERS MOTION FOR NEW TRIAL.[29]

G.R. No. 164747


(Petitioner Cordero)

12 | P a g e

I.
THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE JUDGMENT OF
THE TRIAL COURT AWARDING PETITIONER ACTUAL DAMAGES FOR HIS
COMMISSION FOR THE SALE OF THE SECOND VESSEL, SINCE THERE IS
SUFFICIENT EVIDENCE ON RECORD WHICH PROVES THAT THERE WAS A
SECOND SALE OF A VESSEL.
A. THE MEMORANDUM OF AGREEMENT DATED 7 AUGUST
1997 PROVIDES THAT RESPONDENT GO WAS CONTRACTUALLY
BOUND TO BUY TWO (2) VESSELS FROM AFFA.
B. RESPONDENT GOS POSITION PAPER AND COUNTERAFFIDAVIT/POSITION PAPER THAT WERE FILED BEFORE THE
BUREAU OF CUSTOMS, ADMITS UNDER OATH THAT HE HAD INDEED
PURCHASED A SECOND VESSEL FROM AFFA.
C. RESPONDENTS ADMITTED IN THEIR PRE-TRIAL BRIEF THAT
THEY HAD PURCHASED A SECOND VESSEL.
II.
THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER IS NOT
ENTITLED TO HIS COMMISSIONS FOR THE PURCHASE OF A SECOND
VESSEL, SINCE IT WAS PETITIONERS EFFORTS WHICH ACTUALLY
FACILITATED AND SET-UP THE TRANSACTION FOR RESPONDENTS.
III.
THE COURT OF APPEALS ERRED IN NOT IMPOSING THE PROPER LEGAL
INTEREST RATE ON RESPONDENTS UNPAID OBLIGATION WHICH SHOULD
BE TWELVE PERCENT (12%) FROM THE TIME OF THE BREACH OF THE
OBLIGATION.
V.
THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE ORIGINAL
AMOUNT OF CONSEQUENTIAL DAMAGES AWARDED TO PETITIONER BY THE
TRIAL COURT CONSIDERING THE BAD FAITH AND FRAUDULENT CONDUCT
OF RESPONDENTS IN MISAPPROPRIATING THE MONEY OF PETITIONER.[30]

The controversy boils down to two (2) main issues: (1) whether petitioner Cordero has the
legal personality to sue the respondents for breach of contract; and (2) whether the respondents
may be held liable for damages to Cordero for his unpaid commissions and termination of his
exclusive distributorship appointment by the principal, AFFA.
I. Real Party-in-Interest
First, on the issue of whether the case had been filed by the real party-in-interest as required
by Section 2, Rule 3 of the Rules of Court, which defines such party as the one (1) to be benefited
or injured by the judgment in the suit, or the party entitled to the avails of the suit. The purposes of
this provision are: 1) to prevent the prosecution of actions by persons without any right, title or
interest in the case; 2) to require that the actual party entitled to legal relief be the one to prosecute
the action; 3) to avoid a multiplicity of suits; and 4) to discourage litigation and keep it within certain
bounds, pursuant to sound public policy.[31] A case is dismissible for lack of personality to sue upon
proof that the plaintiff is not the real party-in-interest, hence grounded on failure to state a cause of
action.[32]
On this issue, we agree with the CA in ruling that it was Cordero and not Pamana who is the
exclusive distributor of AFFA in the Philippines as shown by the Certification dated June 1,
1997 issued by Tony Robinson.[33] Petitioner Go mentions the following documents also signed by
13 | P a g e

respondent Robinson which state that Pamana Marketing Corporation represented by Mr.
Mortimer F. Cordero was actually the exclusive distributor: (1) letter dated 1 June 1997 [34]; (2)
certification dated 5 August 1997[35]; and (3) letter dated 5 August 1997 addressed to petitioner
Cordero concerning commissions to be paid to Pamana Marketing Corporation.[36] Such
apparent inconsistency in naming AFFAs exclusive distributor in the Philippines is of no
moment. For all intents and purposes, Robinson and AFFA dealt only with Cordero who alone
made decisions in the performance of the exclusive distributorship, as with other clients to whom
he had similarly offered AFFAs fast ferry vessels. Moreover, the stipulated commissions from
each progress payments made by Go were directly paid by Robinson to Cordero. [37] Respondents
Landicho and Tecson were only too aware of Corderos authority as the person who was appointed
and acted as exclusive distributor of AFFA, which can be gleaned from their act of immediately
furnishing him with copies of bank transmittals everytime Go remits payment to Robinson, who in
turn transfers a portion of funds received to the bank account of Cordero in the Philippines as his
commission. Out of these partial payments of his commission, Cordero would still give Landicho
and Tecson their respective commission, or cuts from his own commission. Respondents
Landicho and Tecson failed to refute the evidence submitted by Cordero consisting of receipts
signed by them. Said amounts were apart from the earlier expenses shouldered by Cordero for
Landichos airline tickets, transportation, food and hotel accommodations for the trip to Australia.[38]
Moreover, petitioner Go, Landicho and Tecson never raised petitioner Corderos lack of
personality to sue on behalf of Pamana,[39] and did so only before the CA when they contended
that it is Pamana and not Cordero, who was appointed and acted as exclusive distributor for
AFFA.[40] It was Robinson who argued in support of his motion to dismiss that as far as said
defendant is concerned, the real party plaintiff appears to be Pamana, against the real party
defendant which is AFFA.[41] As already mentioned, the trial court denied the motion to dismiss
filed by Robinson.
We find no error committed by the trial court in overruling Robinsons objection over the
improper resort to summons by publication upon a foreign national like him and in an action in
personam, notwithstanding that he raised it in a special appearance specifically raising the issue of
lack of jurisdiction over his person. Courts acquire jurisdiction over the plaintiffs upon the filing of
the complaint, while jurisdiction over the defendants in a civil case is acquired either through the
service of summons upon them in the manner required by law or through their voluntary
appearance in court and their submission to its authority.[42] A party who makes a special
appearance in court challenging the jurisdiction of said court based on the ground of invalid service
of summons is not deemed to have submitted himself to the jurisdiction of the court.[43]
In this case, however, although the Motion to Dismiss filed by Robinson specifically stated
as one (1) of the grounds the lack of personal jurisdiction, it must be noted that he had earlier
filed a Motion for Time to file an appropriate responsive pleading even beyond the time provided in
the summons by publication.[44] Such motion did not state that it was a conditional appearance
entered to question the regularity of the service of summons, but an appearance submitting to the
jurisdiction of the court by acknowledging the summons by publication issued by the court and
praying for additional time to file a responsive pleading. Consequently, Robinson having
acknowledged the summons by publication and also having invoked the jurisdiction of the trial
court to secure affirmative relief in his motion for additional time, he effectively submitted voluntarily
to the trial courts jurisdiction. He is now estopped from asserting otherwise, even before this
Court.[45]
II. Breach of Exclusive Distributorship,
Contractual Interference and
Respondents Liability for Damages
In Yu v. Court of Appeals,[46] this Court ruled that the right to perform an exclusive
distributorship agreement and to reap the profits resulting from such performance are proprietary
rights which a party may protect. Thus, injunction is the appropriate remedy to prevent a wrongful
interference with contracts by strangers to such contracts where the legal remedy is insufficient
and the resulting injury is irreparable. In that case, the former dealer of the same goods purchased
the merchandise from the manufacturer inEngland through a trading firm in West Germany and
14 | P a g e

sold these in the Philippines. We held that the rights granted to the petitioner under the exclusive
distributorship agreement may not be diminished nor rendered illusory by the expedient act of
utilizing or interposing a person or firm to obtain goods for which the exclusive distributorship was
conceptualized, at the expense of the sole authorized distributor. [47]
In the case at bar, it was established that petitioner Cordero was not paid the balance of his
commission by respondent Robinson. From the time petitioner Go and respondent Landicho
directly dealt with respondent Robinson in Brisbane, and ceased communicating through petitioner
Cordero as the exclusive distributor of AFFA in the Philippines, Cordero was no longer informed of
payments remitted to AFFA in Brisbane. In other words, Cordero had clearly been cut off from the
transaction until the arrival of the first SEACAT 25 which was sold through his efforts. When
Cordero complained to Go, Robinson, Landicho and Tecson about their acts prejudicial to his
rights and demanded that they respect his exclusive distributorship, Go simply let his lawyers led
by Landicho and Tecson handle the matter and tried to settle it by promising to pay a certain
amount and to purchase high-speed catamarans through Cordero. However, Cordero was not
paid anything and worse, AFFA through its lawyer in Australia even terminated his exclusive
dealership insisting that his services were engaged for only one (1) transaction, that is, the
purchase of the first SEACAT 25 in August 1997.
Petitioner Go argues that unlike in Yu v. Court of Appeals[48] there is no conclusive proof
adduced by petitioner Cordero that they actually purchased a second SEACAT 25 directly from
AFFA and hence there was no violation of the exclusive distributorship agreement. Further, he
contends that the CA gravely abused its discretion in holding them solidarily liable to Cordero,
relying on Articles 1207, 19 and 21 of the Civil Code despite absence of evidence, documentary or
testimonial, showing that they conspired to defeat the very purpose of the exclusive distributorship
agreement.[49]
We find that contrary to the claims of petitioner Cordero, there was indeed no sufficient
evidence that respondents actually purchased a second SEACAT 25 directly from AFFA. But this
circumstance will not absolve respondents from liability for invading Corderos rights under the
exclusive distributorship. Respondents clearly acted in bad faith in bypassing Cordero as they
completed the remaining payments to AFFA without advising him and furnishing him with copies of
the bank transmittals as they previously did, and directly dealt with AFFA through Robinson
regarding arrangements for the arrival of the first SEACAT 25 in Manila and negotiations for the
purchase of the second vessel pursuant to the Memorandum of Agreement which Cordero signed
in behalf of AFFA. As a result of respondents actuations, Cordero incurred losses as he was not
paid the balance of his commission from the sale of the first vessel and his exclusive distributorship
revoked by AFFA.
Petitioner Go contends that the trial and appellate courts erred in holding them solidarily
liable for Corderos unpaid commission, which is the sole obligation of the principal AFFA. It was
Robinson on behalf of AFFA who, in the letter datedAugust 5, 1997 addressed to Cordero,
undertook to pay commission payments to Pamana on a staggered progress payment plan in the
form of percentage of the commission per payment. AFFA explicitly committed that it will, upon
receipt of progress payments, pay to Pamana their full commission by telegraphic transfer to an
account nominated by Pamana within one to two days of [AFFA] receiving such
payments.[50] Petitioner Go further maintains that he had not in any way violated or caused the
termination of the exclusive distributorship agreement between Cordero and AFFA; he had also
paid in full the first and only vessel he purchased from AFFA. [51]
While it is true that a third person cannot possibly be sued for breach of contract because
only parties can breach contractual provisions, a contracting party may sue a third person not for
breach but for inducing another to commit such breach.
Article 1314 of the Civil Code provides:
Art. 1314. Any third person who induces another to violate his contract shall be
liable for damages to the other contracting party.
15 | P a g e

The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the
part of the third person of the existence of a contract; and (3) interference of the third person is
without legal justification.[52]
The presence of the first and second elements is not disputed. Through the letters issued by
Robinson attesting that Cordero is the exclusive distributor of AFFA in the Philippines, respondents
were clearly aware of the contract between Cordero and AFFA represented by Robinson. In fact,
evidence on record showed that respondents initially dealt with and recognized Cordero as such
exclusive dealer of AFFA high-speed catamaran vessels in the Philippines. In that capacity as
exclusive distributor, petitioner Go entered into the Memorandum of Agreement and Shipbuilding
Contract No. 7825 with Cordero in behalf of AFFA.
As to the third element, our ruling in the case of So Ping Bun v. Court of Appeals[53] is
instructive, to wit:
A duty which the law of torts is concerned with is respect for the property of
others, and a cause of action ex delicto may be predicated upon an unlawful
interference by one person of the enjoyment by the other of his private property. This
may pertain to a situation where a third person induces a party to renege on or violate
his undertaking under a contract. In the case before us, petitioners Trendsetter
Marketing asked DCCSI to execute lease contracts in its favor, and as a result
petitioner deprived respondent corporation of the latters property right. Clearly, and
as correctly viewed by the appellate court, the three elements of tort interference
above-mentioned are present in the instant case.
Authorities debate on whether interference may be justified where the defendant
acts for the sole purpose of furthering his own financial or economic interest. One
view is that, as a general rule, justification for interfering with the business relations of
another exists where the actors motive is to benefit himself. Such justification does
not exist where his sole motive is to cause harm to the other. Added to this, some
authorities believe that it is not necessary that the interferers interest outweigh that of
the party whose rights are invaded, and that an individual acts under an economic
interest that is substantial, not merely de minimis, such that wrongful and malicious
motives are negatived, for he acts in self-protection. Moreover, justification for
protecting ones financial position should not be made to depend on a comparison of
his economic interest in the subject matter with that of others. It is sufficient if the
impetus of his conduct lies in a proper business interest rather than in wrongful
motives.
As early as Gilchrist vs. Cuddy, we held that where there was no malice in
the interference of a contract, and the impulse behind ones conduct lies in a
proper business interest rather than in wrongful motives, a party cannot be a
malicious interferer. Where the alleged interferer is financially interested, and such
interest motivates his conduct, it cannot be said that he is an officious or malicious
intermeddler.
In the instant case, it is clear that petitioner So Ping Bun prevailed upon DCCSI
to lease the warehouse to his enterprise at the expense of respondent
corporation. Though petitioner took interest in the property of respondent
corporation and benefited from it, nothing on record imputes deliberate
wrongful motives or malice in him.
x

While we do not encourage tort interferers seeking their economic interest to


intrude into existing contracts at the expense of others, however, we find that the
conduct herein complained of did not transcend the limits forbidding an obligatory
award for damages in the absence of any malice. The business desire is there to
make some gain to the detriment of the contracting parties. Lack of malice,
however, precludes damages. But it does not relieve petitioner of the legal
16 | P a g e

liability for entering into contracts and causing breach of existing ones. The
respondent appellate court correctly confirmed the permanent injunction and
nullification of the lease contracts between DCCSI and Trendsetter Marketing,
without awarding damages. The injunction saved the respondents from further
damage or injury caused by petitioners interference.[54] [EMPHASIS SUPPLIED.]

Malice connotes ill will or spite, and speaks not in response to duty. It implies an intention to
do ulterior and unjustifiable harm. Malice is bad faith or bad motive.[55] In the case of Lagon v.
Court of Appeals,[56] we held that to sustain a case for tortuous interference, the defendant must
have acted with malice or must have been driven by purely impure reasons to injure the plaintiff; in
other words, his act of interference cannot be justified. We further explained that the word
induce refers to situations where a person causes another to choose one course of conduct by
persuasion or intimidation. As to the allegation of private respondent in said case that petitioner
induced the heirs of the late Bai Tonina Sepi to sell the property to petitioner despite an alleged
renewal of the original lease contract with the deceased landowner, we ruled as follows:
Assuming ex gratia argumenti that petitioner knew of the contract, such
knowledge alone was not sufficient to make him liable for tortuous interference. x x x
Furthermore, the records do not support the allegation of private respondent that
petitioner induced the heirs of Bai Tonina Sepi to sell the property to him. The word
induce refers to situations where a person causes another to choose one course of
conduct by persuasion or intimidation. The records show that the decision of the
heirs of the late Bai Tonina Sepi to sell the property was completely of their own
volition and that petitioner did absolutely nothing to influence their judgment. Private
respondent himself did not proffer any evidence to support his claim. In short, even
assuming that private respondent was able to prove the renewal of his lease contract
with Bai Tonina Sepi, the fact was that he was unable to prove malice or bad faith on
the part of petitioner in purchasing the property. Therefore, the claim of tortuous
interference was never established.[57]
In their Answer, respondents denied having anything to do with the unpaid balance of the
commission due to Cordero and the eventual termination of his exclusive distributorship by
AFFA. They gave a different version of the events that transpired following the signing of
Shipbuilding Contract No. 7825. According to them, several builder-competitors still entered the
picture after the said contract for the purchase of one (1) SEACAT 25 was sent to Brisbane in July
1997 for authentication, adding that the contract was to be effective on August 7, 1997, the time
when their funds was to become available. Go admitted he called the attention of AFFA if it can
compete with the prices of other builders, and upon mutual agreement, AFFA agreed to give them a
discounted price under the following terms and conditions: (1) that the contract price be lowered;
(2) that Go will obtain another vessel; (3) that to secure compliance of such conditions, Go must
make an advance payment for the building of the second vessel; and (4) that the payment scheme
formerly agreed upon as stipulated in the first contract shall still be the basis and used as the
guiding factor in remitting money for the building of the first vessel. This led to the signing of
another contract superseding the first one (1), still to be dated 07 August 1997. Attached to the
answer were photocopies of the second contract stating a lower purchase price
(US$1,150,000.00) and facsimile transmission of AFFA to Go confirming the transaction.[58]
As to the cessation of communication with Cordero, Go averred it was Cordero who was
nowhere to be contacted at the time the shipbuilding progress did not turn good as promised, and
it was always Landicho and Tecson who, after several attempts, were able to locate him only to
obtain unsatisfactory reports such that it was Go who would still call up Robinson regarding any
progress status report, lacking documents for MARINA, etc., and go to Australia for ocular
inspection. Hence, in May 1998 on the scheduled launching of the ship in Australia, Go engaged
the services of Landicho who went to Australia to see to it that all documents needed for the
shipment of the vessel to the Philippines would be in order. It was also during this time that
Robinsons request for inquiry on the Philippine price of a Wartsila engine for AFFAs then ongoing vessel construction, was misinterpreted by Cordero as indicating that Go was buying a
second vessel.[59]
17 | P a g e

We find these allegations unconvincing and a mere afterthought as these were the very
same averments contained in the Position Paper for the Importer dated October 9, 1998, which
was submitted by Go on behalf of ACG Express Liner in connection with the complaint-affidavit
filed by Cordero before the BOC-SGS Appeals Committee relative to the shipment valuation of the
first SEACAT 25 purchased from AFFA.[60] It appears that the purported second contract
superseding the original Shipbuilding Contract No. 7825 and stating a lower price of
US$1,150,000.00 (not US$1,465,512.00) was only presented before the BOC to show that the
vessel imported into the Philippines was not undervalued by almost US$500,000.00. Cordero
vehemently denied there was such modification of the contract and accused respondents of
resorting to falsified documents, including the facsimile transmission of AFFA supposedly
confirming the said sale for only US$1,150,000.00. Incidentally, another document filed in said
BOC case, the Counter-Affidavit/Position Paper for the Importer dated November 16,
1998,[61] states in paragraph 8 under the Antecedent facts thereof, that -8.

As elsewhere stated, the total remittances made by herein Importer


to AFFA does not alone represent the purchase price for Seacat
25. It includes advance payment for the acquisition of another
vessel as part of the deal due to the discounted price.[62]

which even gives credence to the claim of Cordero that respondents negotiated for the sale of the
second vessel and that the nonpayment of the remaining two (2) instalments of his commission for
the sale of the first SEACAT 25 was a result of Go and Landichos directly dealing with Robinson,
obviously to obtain a lower price for the second vessel at the expense of Cordero.
The act of Go, Landicho and Tecson in inducing Robinson and AFFA to enter into another
contract directly with ACG Express Liner to obtain a lower price for the second vessel resulted in
AFFAs breach of its contractual obligation to pay in full the commission due to Cordero and
unceremonious termination of Corderos appointment as exclusive distributor. Following our
pronouncement in Gilchrist v. Cuddy (supra), such act may not be deemed malicious if impelled
by a proper business interest rather than in wrongful motives. The attendant circumstances,
however, demonstrated that respondents transgressed the bounds of permissible financial interest
to benefit themselves at the expense of Cordero. Respondents furtively went directly to
Robinson afterCordero had worked hard to close the deal for them to purchase from AFFA two (2)
SEACAT 25, closely monitored the progress of building the first vessel sold, attended to their
concerns and spent no measly sum for the trip to Australia with Go, Landicho and Gos family
members. But what is appalling is the fact that even as Go, Landicho and Tecson secretly
negotiated with Robinson for the purchase of a second vessel, Landicho and Tecson continued to
demand and receive from Cordero their commission or cut from Corderos earned
commission from the sale of the first SEACAT 25.
Cordero was practically excluded from the transaction when Go, Robinson, Tecson and
Landicho suddenly ceased communicating with him, without giving him any explanation. While
there was nothing objectionable in negotiating for a lower price in the second purchase of
SEACAT 25, which is not prohibited by the Memorandum of Agreement, Go, Robinson, Tecson
and Landicho clearly connived not only in ensuring that Cordero would have no participation in the
contract for sale of the second SEACAT 25, but also that Cordero would not be paid the balance
of his commission from the sale of the first SEACAT 25. This, despite their knowledge that it was
commission already earned by and due to Cordero. Thus, the trial and appellate courts correctly
ruled that the actuations of Go, Robinson, Tecson and Landicho were without legal justification
and intended solely to prejudice Cordero.
The existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of
the trial court, when affirmed by the appellate court, are conclusive on this Court. [63] We see no
compelling reason to reverse the findings of the RTC and the CA that respondents acted in bad
faith and in utter disregard of the rights of Cordero under the exclusive distributorship agreement.
The failure of Robinson, Go, Tecson and Landico to act with fairness, honesty and good
faith in securing better terms for the purchase of high-speed catamarans from AFFA, to the
18 | P a g e

prejudice of Cordero as the duly appointed exclusive distributor, is further proscribed by Article 19
of the Civil Code:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe
honesty and good faith.
As we have expounded in another case:
Elsewhere, we explained that when a right is exercised in a manner which does not
conform with the norms enshrined in Article 19 and results in damage to another, a
legal wrong is thereby committed for which the wrongdoer must be responsible. The
object of this article, therefore, is to set certain standards which must be observed not
only in the exercise of ones rights but also in the performance of ones duties. These
standards are the following: act with justice, give everyone his due and observe
honesty and good faith. Its antithesis, necessarily, is any act evincing bad faith or
intent to injure. Its elements are the following: (1) There is a legal right or duty; (2)
which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring
another. When Article 19 is violated, an action for damages is proper under Articles
20 or 21 of the Civil Code. Article 20 pertains to damages arising from a violation of
law x x x. Article 21, on the other hand, states:
Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damage.
Article 21 refers to acts contra bonus mores and has the following elements: (1)
There is an act which is legal; (2) but which is contrary to morals, good custom, public
order, or public policy; and (3) it is done with intent to injure.
A common theme runs through Articles 19 and 21, and that is, the act
complained of must be intentional.[64]
Petitioner Gos argument that he, Landicho and Tecson cannot be held liable solidarily with
Robinson for actual, moral and exemplary damages, as well as attorneys fees awarded to
Cordero since no law or contract provided for solidary obligation in these cases, is equally bereft
of merit. Conformably with Article 2194 of the Civil Code, the responsibility of two or more persons
who are liable for the quasi-delict is solidary.[65] In Lafarge Cement Philippines, Inc. v. Continental
Cement Corporation,[66] we held:
[O]bligations arising from tort are, by their nature, always solidary. We
have assiduously maintained this legal principle as early as 1912 in Worcester
v. Ocampo, in which we held:
x x x The difficulty in the contention of the appellants is that they fail
to recognize that the basis of the present action is tort. They fail to
recognize the universal doctrine that each joint tort feasor is not only
individually liable for the tort in which he participates, but is also jointly
liable with his tort feasors. x x x
It may be stated as a general rule that joint tort feasors are all the
persons who command, instigate, promote, encourage, advise,
countenance, cooperate in, aid or abet the commission of a tort, or who
approve of it after it is done, if done for their benefit. They are each
liable as principals, to the same extent and in the same manner as if
they had performed the wrongful act themselves. x x x
Joint tort feasors are jointly and severally liable for the tort which
they commit. The persons injured may sue all of them or any number
less than all. Each is liable for the whole damages caused by all, and all
together are jointly liable for the whole damage. It is no defense for one
19 | P a g e

sued alone, that the others who participated in the wrongful act are not
joined with him as defendants; nor is it any excuse for him that his
participation in the tort was insignificant as compared to that of the
others. x x x
Joint tort feasors are not liable pro rata. The damages can not be
apportioned among them, except among themselves. They cannot insist
upon an apportionment, for the purpose of each paying an aliquot
part. They are jointly and severally liable for the whole amount. x x x
A payment in full for the damage done, by one of the joint tort
feasors, of course satisfies any claim which might exist against the
others. There can be but satisfaction. The release of one of the joint tort
feasors by agreement generally operates to discharge all. x x x
Of course, the court during trial may find that some of the alleged
tort feasors are liable and that others are not liable. The courts may
release some for lack of evidence while condemning others of the alleged
tort feasors. And this is true even though they are charged jointly and
severally.[67] [EMPHASIS SUPPLIED.]
The rule is that the defendant found guilty of interference with contractual relations cannot
be held liable for more than the amount for which the party who was inducted to break the contract
can be held liable.[68] Respondents Go, Landicho and Tecson were therefore correctly held liable
for the balance of petitioner Corderos commission from the sale of the first SEACAT 25, in the
amount of US$31,522.09 or its peso equivalent, which AFFA/Robinson did not pay in violation of
the exclusive distributorship agreement, with interest at the rate of 6% per annum from June 24,
1998 until the same is fully paid.
Respondents having acted in bad faith, moral damages may be recovered under Article
2219 of the Civil Code.[69] On the other hand, the requirements of an award of exemplary
damages are: (1) they may be imposed by way of example in addition to compensatory damages,
and only after the claimants right to them has been established; (2) that they cannot be recovered
as a matter of right, their determination depending upon the amount of compensatory damages
that may be awarded to the claimant; and (3) the act must be accompanied by bad faith or done in
a wanton, fraudulent, oppressive or malevolent manner.[70] The award of exemplary damages is
thus in order. However, we find the sums awarded by the trial court as moral and exemplary
damages as reduced by the CA, still excessive under the circumstances.
Moral damages are meant to compensate and alleviate the physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injuries unjustly caused. Although incapable of pecuniary estimation, the
amount must somehow be proportional to and in approximation of the suffering inflicted. Moral
damages are not punitive in nature and were never intended to enrich the claimant at the expense
of the defendant. There is no hard-and-fast rule in determining what would be a fair and reasonable
amount of moral damages, since each case must be governed by its own peculiar facts. Trial
courts are given discretion in determining the amount, with the limitation that it should not be
palpably and scandalously excessive. Indeed, it must be commensurate to the loss or injury
suffered.[71]
We believe that the amounts of P300,000.00 and P200,000.00 as moral and exemplary
damages, respectively, would be sufficient and reasonable. Because exemplary damages are
awarded, attorneys fees may also be awarded in consonance with Article 2208 (1). [72] We affirm
the appellate courts award of attorneys fees in the amount of P50,000.00.
WHEREFORE, the petitions are DENIED. The Decision dated March 16, 2004 as modified
by the Resolution dated July 22, 2004 of the Court of Appeals in CA-G.R. CV No. 69113 are

20 | P a g e

hereby AFFIRMED with MODIFICATION in that the awards of moral and exemplary damages are
hereby reduced to P300,000.00 and P200,000.00, respectively.
With costs against the petitioner in G.R. No. 164703.
SO ORDERED.
MARTIN S. VILLARAMA, JR.
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
CONCHITA CARPIO MORALES
Associate Justice

TERESITA J. LEONARDO-DE CASTRO


Associate Justice
LUCAS P. BERSAMIN
Associate Justice
CERTIFICATION

Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that the conclusions in
the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.
REYNATO S. PUNOChief Justice
[1]

[2]

[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19]
[20]
[21]
[22]
[23]
[24]
[25]
[26]
[27]
[28]
[29]
[30]
[31]
[32]
[33]

Penned by Associate Justice Jose Catral Mendoza (now a Member of this Court) and concurred in by Associate
Justices B.A. Adefuin-Dela Cruz and Eliezer R. Delos Santos.
Penned by Associate Justice Jose Catral Mendoza (now a Member of this Court) and concurred in by Associate
Justices Delilah Vidallon-Magtolis and Eliezer R. Delos Santos.
Penned by Judge Pedro M. Areola.
Folder of plaintiffs exhibits, pp. 1-34.
Id., pp. 35-39.
Id., pp. 43-51.
Id., pp. 40-42.
Id., pp. 52-53.
Id., pp. 54-56.
Id., pp. 56-57.
TSN, April 5, 2000, pp. 27-35; folder of plaintiffs exhibits, p. 58.
Records, Vol. I, pp. 1-16.
Id., pp. 155-157, 167-171, 186-189, 249-251.
Id., pp. 70-77, 178.
Id., pp. 213-214.
Id., pp. 298-299.
TSN, April 14, 2000, pp. 2-44.
Records, Vol. I, pp. 445-446.
Id., pp. 460-465.
Id., pp. 477-480.
Id., pp. 481-485.
Id., p. 486.
Id., pp. 500-502.
Id., p. 503.
Id., pp. 512-514.
Records, Vol. II, pp. 550-620.
Id., pp. 621-622.
Cordero v. Go, G.R. No. 149754, 389 SCRA 288.
Rollo (G.R. No. 164703), pp. 23-24.
Rollo (G.R. No. 164747), pp. 21-22.
Oco v. Limbaring, G.R. No. 161298, January 31, 2006, 481 SCRA 348, 358.
Tamondong v. Court of Appeals, G.R. No. 158397, November 26, 2004, 444 SCRA 509.
Folder of exhibits, Exhibit A-6, p. 7.

21 | P a g e

[34]
[35]
[36]
[37]
[38]

[39]
[40]
[41]
[42]

[43]
[44]
[45]

[46]
[47]
[48]
[49]
[50]
[51]
[52]

[53]
[54]
[55]
[56]
[57]
[58]
[59]
[60]
[61]
[62]
[63]
[64]

[65]

[66]
[67]
[68]
[69]

[70]

[71]

[72]

Id., Exhibit A-9, p. 10


Id., Exhibit A, p. 1.
Id., Exhibit A-3, p. 4.
Id., Exhibits J to J-2, K to K-4, M, Y to Y-4, pp. 59-66, 69-71, 314-318.
Id., Exhibits R-6, P, R-7, V, W , X to X-7, Y to Y-4 and Z to Z-2, pp. 232, 236-238, 239, 301321.
Records, Vol. I, pp. 70-73, 203-213, 265-267, 460-464.
CA rollo, pp. 78-84.
Records, Vol. I, pp. 241-242.
Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporation, G.R. No. 172242, August 14, 2007, 530 SCRA
170, 186.
United Coconut Planters Bank v. Ongpin, G.R. No. 146593, October 26, 2001, 368 SCRA 464, 470.
Records, Vol. I, pp. 168-170.
See Dole Philippines, Inc.(Tropifresh Division) v. Quilala, G.R. No. 168723, July 9, 2008, 557 SCRA 433, 437438.
G.R. No. 86683, January 21, 1993, 217 SCRA 328.
Id., pp. 331, 332.
Supra.
Rollo (G.R. No. 164703), pp. 33-34.
Id., pp 36-37; Exhibit A-3, folder of exhibits, p. 4.
Rollo (G.R. No. 164703), p. 39.
So Ping Bun v. Court of Appeals, G.R. No. 120554, September 21, 1999, 314 SCRA 751, 758, citing 30 Am Jur,
Section 19, pp. 71-72 and Sampaguita Pictures, Inc. v. Vasquez, et al. (Court of Appeals, 68 O.G. 7666).
Supra.
Id., pp. 758-760.
Borjal v. Court of Appeals, G.R. No. 126466, January 14, 1999, 301 SCRA 1, 28.
G.R. No. 119107, March 18, 2005, 453 SCRA 616, 626.
Id., p. 626.
Records, Vol. I, pp. 204-206.
Id., pp. 206-207.
Folder of exhibits, Exhibit BB, pp. 324-342.
Id., Exhibit CC, pp. 343-361.
Id., p. 345.
Ramas v. Quiamco, G.R. No. 146322, December 6, 2006, 510 SCRA 172, 178.
Nikko Hotel Manila Garden v. Reyes, G.R. No. 154259, February 28, 2005, 452 SCRA 532, 546547,
citing Albenson Enterprises Corp. v. Court of Appeals, G.R. No. 88694, January 11, 1993, 217
SCRA 16, 25.
Ngo Sin Sing v. Li Seng Giap & Sons, Inc., G.R. No. 170596, November 28, 2008, 572 SCRA 625, 638,
citing Chan, Jr. v. Iglesia ni Cristo, Inc., G.R. No. 160283, October 14, 2005, 473 SCRA 177, 186.
G.R. No. 155173, November 23, 2004, 443 SCRA 522.
As cited in Ngo Sin Sing v. Li Seng Giap & Sons, Inc., supra.
Daywalt v. Corporacion de PP. Agustinos Recoletos, 39 Phil. 587 (1919).
Magat v. Court of Appeals, G.R. No. 124221, August 4, 2000, 337 SCRA 298; Far East Bank & Trust Company v.
Court of Appeals, 311 Phil. 783 (1995); and Expertravel & Tours, Inc. v. Court of Appeals, G.R. No. 130030, June
25, 1999, 309 SCRA 141, 145-146.
National Steel Corporation v. Regional Trial Court of Lanao del Norte, Br. 2, Iligan City, G.R. No. 127004, March
11, 1999 304 SCRA 609.
Samson, Jr. v. Bank of the Philippine Islands, G.R. No. 150487, July 10, 2003, 405 SCRA 607, 611-612,
citing Expertravel & Tours, Inc. v. Court of Appeals, 368 Phil. 444 (1999); De la Serna v. Court of Appeals, G.R.
No. 109161, June 21, 1994, 233 SCRA 325; Visayan Sawmill Company, Inc. v. Court of Appeals, G.R. No. 83851,
March 3, 1993, 219 SCRA 378; Flores v. Uy, G.R. Nos. 121492 & 124325, October 26, 2001, 368 SCRA
347; Pagsuyuin v. Intermediate Appellate Court, G.R. No. 72121, February 6, 1991, 193 SCRA 547; Northwest
Airlines v. Laya, G.R. No. 145956, May 29, 2002, 382 SCRA 730; Cavite Development Bank v. Sps. Lim, 381 Phil.
355 (2000); Coca-Cola Bottlers, Phils., Inc. v. Roque, 367 Phil. 493 (1999); Morales v. Court of Appeals, G.R. No.
117228, June 19, 1997, 274 SCRA 282; Prudential Bank v. Court of Appeals, 384 Phil. 942 (1999); Singson v.
Court of Appeals, 346 Phil. 831 (1997); Del Rosario v. Court of Appeals, 334 Phil. 812 (1997); Philippine National
Bank v. Court of Appeals, 326 Phil. 326 (1996); Mayo v. People, G.R. No. 91201, December 5, 1991, 204 SCRA
642; Policarpio v. Court of Appeals, G.R. No. 94563, March 5, 1991, 194 SCRA 729; Radio Communications of
the Phils., Inc. v. Rodriguez, G.R. No. 83768, February 28, 1990, 182 SCRA 899; and Prudenciado v. Alliance
Transport System, Inc., No. L-33836, March 16, 1987, 148 SCRA 440.
B.F. Metal (Corporation) v. Lomotan, G.R. No. 170813, April 16, 2008, 551 SCRA 618.

22 | P a g e

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-32570 February 28, 1977
ALBETZ INVESTMENTS, INC., petitioner,
vs.
COURT OF APPEALS, HON. JOSE N. LEUTERIO, as Judge of the Court of First Instance of
Manila, Branch II, and SPOUSES RICARDO CALMA AND VICENTA D. CALMA, and
SPOUSES FRANCISCO UMENGAN and MARIA R. UMENGAN, respondents.
R. Quisumbing, Jr. for petitioner.
F M. Guanlao for respondents.
ANTONIO, J.:
Appeal by certiorari from the decision of the Court of Appeals in CA-G. R. No. 39253-R, entitled
"Spouses Ricardo Calma and Vicenta D. Calma, and Spouses Francisco Umengan and Maria R.
Umengan, Plaintiffs-Appellees, versus Albetz Investments, Inc., Defendant-Appellant",
promulgated on May 26, 1970, affirming the judgment of the Court of First Instance of Manila,
Branch II, whereby Albetz Investments, Inc. was ordered to pay damages and attorney's fees to
the plaintiffs.
The facts, as found by the trial court, and adopted by the Court of Appeals, are as follows:
This is an action for damages caused to the plaintiffs' properties due to the alleged
indiscriminate, negligent, and wanton demolition of the house of the plaintiffs when
the sheriff served the writ of execution issued by the Municipal Court.
The Calma spouses were the lessees of that lot describe as Lot No. 27 pt., Block No.
BP-52 of a subdivision plan and located No. 816 Prudencio Street, Sampaloc, Manila.
The defendant Albetz Investments, Inc., the lessor, needing the premises in order to
construct a new building, demanded delivery of the lot to it and upon refusal of of the
Calma Spouses, Albetz Investments, Inc. brought an action of unlawful detainer
against Vicenta Calma, Civil Case No. 119712 (Exh. C). Judgment by default was
rendered by the Municipal Court on March 30, 1964, ordering Vicenta Calma and all
persons claiming under her to vacate the premises and to pay the corresponding
rentals (Exh. 7). The judgment having become final, Atty. Macario S. Meneses,
director and lawyer of Albetz Investments, Inc., filed a motion for execution (Exh. 10).
The motion was granted and the Municipal Court issued the writ of execution, Exh. 2,
on July 1, 1964, commanding the Sheriff to remove the defendants in the premises
and to collect the damages. The Sheriff submitted his return of September 12, 1964,
Exh. 12, informing the Court that or the date of the return the defendant has not yet
demolished her house and improvements or vacated the lot. Vicenta Calma and
others filed a petition for certiorari with preliminary injunction on September 7, 1964 in
the Court of First Instance of Manila, Civil Case No. 58246, entitled Narciso Nakpil, et
al. vs. Hon. Crisanto Aragon, etc. and Albetz Investments, Inc. (Exh. C). Upon the
filing of this petition, counsel for Vicenta Calma filed a motion on September 8, 1964,
in the unlawful detainer case, Exh. D, praying that all proceedings be suspended until
the termination of the petition for certiorari with prohibition, Special Civil Action No.
58246. The Municipal Judge, acting upon the said motion for suspension, issued on
September 17, 1,964, the following order (Exh. E):
In view of the special civil action for Certiorari and Prohibition with
preliminary and mandatory injuction filed by defendant in the Court of
First Instance of Manila bearing No. 58246, all the proceedings in the
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above-entitled cases are hereby suspended until after the said special
action shall have been finally resolved.
The petition for certiorari with prohibition was denied by the Court of First Instance.
From the order of dismissal, Vicenta Calma appealed to the Supreme Court on
December 19, 1964. Atty. Meneses then filed a motion for demolition on February 9,
1965, Exh. 13, which was duly opposed by defendant Vicenta Calma, Exh. 14. Acting
upon the said motion, the Municipal Judge entered an order on April 29, 1965, Exh.
15, granting the defendant 30 days from the receipt thereof to vacate and remove her
house on the premises, otherwise a demolition order would issue. Vicenta Calma
having failed to remove the house within the 30 day period, upon motion of Albetz
investments, Inc., the Court issued an order on June 21, 1965, Exh. 17, authorizing
and ordering the Sheriff to destroy, demolish or remove the house which had been
constructed by the defendants.
The appeal of the Calmas in the certiorari case was dimissed by the Supreme Court.
Thereafter, the spouses Calma filed an action for specific performance with injuction
against Albetz Investments, Inc., civil Case No. 63549, on December 2, 1965, praying
that Albetz Investments, Inc. be ordered to sell the lot in question to the plaintiffs at a
reasonable price. This complaint, Exh. N, was dismiss on February 15, 1966, Exh. 0,
and on February 19, or four days thereafter the Sheriff, at the instance of defendant
Albetz Investments, Inc., thru its lawyer, Atty. Meneses, demolished the house of' the
spouses Calma without any new writ or order for demolition leaving been issued by
the Municipal Court and only on the strength of the order of June 21, 1965.
Alleging that the demolition was illegal because it was made eight (8) months after issuance of the
demolition order, and that the manner it was carried out was indiscriminate, causing damage to
their personal properties, the spouses Calma, owners of the house, and the spouses Umengan,
occupants of its ground floor, commenced the instant action in the Court of First Instance of Manila.
On the principal grounds that the order of demolition was no longer in force, having been issued
eight (8) months before its enforcement, and that the said spouses were not notified of the order of
demolition, and they demolished the house indiscrimately and the personal properties were
carelessly placed, resulting in their being damaged, the Court of First Instance rendered judgment
in favor of the plaintiffs and against the defendant, awarding them damages in specified amounts,
as well as attorney's fees and costs of suit. Defendant appealed to the Court of Appeals.
The Court of Appeals affirmed en toto the decision of the Court of First Instance, saying that "it is
not disputed that plaintiffs were only notified of the order of demolition on the day the Sheriff
appeared at the place of plaintiffs in the morning of February 19, 1966, with about 35 laborers to
carry out the demolition of plaintiffs' house", it further appearing that they had not as yet been
notified of the dismissal of their complaint for specific performance with injunction, Civil Case No.
63549.
Alleging that both the Appellate Court and the trial court erred in declaring that an order of
demolition, issued under section 13 (now section 14) of Rule 39 of the Rules, which is not
implemented within sixty (60) days becomes a nullity, petitioner has filed the present petition.
It is very clear from the records that this case arose out of a judgment in favor of the petitioner in an
unlawful detainer case, which judgment had long been final and executory. Writ of execution was
not satisfied because defendants Calma spouses refused to vacate the premises subject matter of
the action and to remove their house therefrom. From then on, a series of delays in the execution
was occasioned by the moves of the Calma spouses to forestall the enforcement of the judgment.
We find, on the basis of the records, that the Calma spouses could not have been unaware of the
order of demolition prior to the date when their house was actually demolished. The motion of
Albetz Investments, Inc. for demolition which was filed on February 9, 1965 was duly opposed by
the Calma spouses. On April 29, 1965, the Municipal Judge granted the said spouses a period of
thirty (30) days within which to vacate the premises and remove their house therefrom, otherwise
an order of demolition would issue. The order of demolition of June 21, 1965 was issued only after
24 | P a g e

the certiorari case in the Court of First Instance was dismissed and after the Calma spouses failed
to remove their house within the period granted to them by the court. It must also be noted that
even after the Municipal Court issued its order of June 21, 1965, authorizing the Sheriff to demolish
and remove the house constructed thereon by the Calma spouses, the Latter sought to forestall the
implementation of said order by filing another action, this time for specific performance on
December 2, 1965, after 'the dismissal of their certiorari case by this Court, was later action was
ultimately dismissed by the Court of First Instance on February 15, 1966.
It is also important to- note that, by order of the Municipal Court in the unlawful detainer case, the
proceedings therein, specifically, the execution of the judgment, were suspended only until after
the special civil action for certiorari was finally resolved, and the final resolution took place when
the Supreme Court dismissed the appeal of the Calma spouses thereon.
It is apparent, therefore, that the Calma spouses were given more than sufficient time to comply
with the order of the Municipal Court to remove voluntarily their house from the premises. It is not
even necessary to await the order of demolition to be served upon the said spouses before
carrying out the writ of demolition. As stated in Acibo vs. Macadaeg 1 "Since the order of demolition
was not appealable, there was no point in waiting until that order could be served on the adverse
party before issuing the corresponding writ of demolition."
The nature of forcible entry or unlawful detainer proceedings is that they are summary in character,
"intended to provide an expeditious means of protecting actual possession or the right to
possession of property." 2
As aptly explained by Chief Justice Moran in Co Tiamco v. Diaz. 3
... Cases of forcible entry and detainer are summary in nature for they involve
perturbation of social order which must be restored as promptly as possible and,
accordingly, technicalities or details of procedure which may cause unnecessary
delays should carefully be avoided.
It is for this reason that when judgment is in favor of the plaintiff, it should be executed immediately
in order to prevent further damages to him caused by the loss of his possession. 4 The theory of
private respondents is inconsistent with the special, summary character and purposes of an
unlawful detainer proceedings.
There is no question that the Municipal Court had full authority to order the demolition of the
Calma's house by the Sheriff in order to give effect to its judgment in the unlawful detainer case. It
is not enough for the Sheriff, in the enforcement of a judgment for delivery or restitution of property,
to direct the defeated party to make such delivery or restitution. It is the duty of the Sheriff to oust
the defeated party from the property and make the restitution by placing the winning party in
possession of said property. If to accomplish this he has to remove an improvement constructed by
the defeated party, he cannot effect such removal without special order of the court, which order
can only be issued upon motion of the prevailing party with notice and after hearing, and upon the
defeated party's failure to remove the improvement within the reasonable time given to him by the
court. 5
Thus, Section 14, Rule 39, of the Revised Rules of Court, specifically provides:
SEC. 14 Removal of improvements on property object of execution.When the
property subject of the execution contains improvements constructed or planted by
the judgment debtor or his agent, the officer shall not destroy, demolish or remove
said improvements except upon special order of the court, issued upon petition of the
judgment creditor after due hearing and after the former has failed to remove the
same within a reasonable time fixed by the court.
This provision has been taken from section 1 of Commonwealth Act No. 39, which states that: "The
Provincial Sheriff, in executing the decision of a competent court in ejectment cases, shall not
destroy, demolish, or remove the improvements constructed or planted by the defendant or his
agent or servant on the premises, unless expressly authorized by the Court. The court may
25 | P a g e

authorize the Provincial Sheriff to do so, upon petition of the plaintiff or his attorney, after due
hearing, and upon failure of the defendant to remove the after-mentioned improvements within a
reasonable time after being so ordered by the Court."
Evident from the foregoing is the statutory purpose which is to grant to the defeated party a
reasonable time to remove his improvement from the premises. Therefore, any delay in the
implementation of the order of demolition accrues to the benefit of the deforciant. The grant of such
a reasonable period to remove the improvements is predicated upon reasons of fairness and
justice to enable the defeated party to look for another place wherein he can transfer his
improvements and personal effects. The law does not specify the period within which the order of
demolition should be carried out. The reason is obvious. There may be factors and circumstances
which would justify deferment of the implementation of the order of demolition.
Anent the manner in which the demolition was carried out, however, We affirm the finding of the
trial court and the Court of Appeals that the same was indiscriminate, without due regard to the
safety of the personal properties belonging to the Calma and Umengan spouses, resulting in their
destruction. AS found by the trial court and the Court of Appeals:
In the course of the demolition, which was, according to the evidence for the the
plaintiffs, indiscriminate, the personal properties were just carelessly placed between
the house and the fence, and the were left in the house and they were damaged by
falling debris. As here was no one to take care (of them), many of the properties ere
lost.
While it is true that Albetz Investments, Inc. had the legal right to the surrender to them of the
parcel of land leased by the Calma spouses, which could only be achieved thru the demolition of
the house standing thereon, nevertheless, such right should not have been exercised in such a
manner as to unduly prejudice its owners. Urged by the lawyer of petitioner, the Sheriff, aided with
petitioner's laborers, wantonly, maliciously and indiscriminately demolished the house, destroying
in the process many of the personal properties therein which belonged to the spouses Calma and
Umengan. The extent of the damage has been determined by the trial court and affirmed by the
Court of Appeals, upon a finding that the same was not contested by petitioner.
We find that the provisions of the Civil Code on Human Relations (Chapter 2) are applicable,
specifically Article 19 which provides, thus:
Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
Certainly, the demolition complained of in the case at bar was not carried out in a manner
consistent with justice and good faith. At the instance of petitioner, it was done in a swift,
unconscionable manner, giving the occupants of the house no time at all to remove their
belongings therefrom. No damage worth mentioning would have been sustained by petitioner
Albetz Investments, Inc. if their men, led by the Sheriff, had been instructed to allow said occupants
to remove their personal properties, considering that this would not have taken a considerable
length of time.
WHEREFORE, with the foregoing modifications, the appealed decision is hereby AFFIRMED,
without pronouncement as to costs.
Fernando, (Chairman), Barredo, Muoz Palma, and Aquino, JJ., concur.
Concepcion Jr., J., took no part.
Muoz Palma J, was designated to sit in the Second division.
Footnotes
1 11 SCRA 446, 452.
2 Co Tiac v. Natividad, et al.,80 Phil. 127.
3 75. Phil. 672, 686.
4 Sec. 8, Rule 70, Revised Rules of Court; Pascua v. Nable, 71 Phil. 186; Yu Tiong Tay v. Barrios, 79 Phil. 579;
Sumintac v. CFI of Rizal, 71 Phil. 445; Arcilla v. Del Rosario, et al., 74 Phil. 445.
5 Guevara v. Laico et al., 64 Phil. 144.

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Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 83768 February 28, 1990
RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI) and GLOBE MACKAY AND
RADIO CORPORATION, petitioners,
vs.
RUFUS B. RODRIGUEZ, respondent.
Salalima, Ungos and David for petitioners.
Maximo G. Rodriguez for private respondent.
GUTIERREZ, JR., J.:
This petition for review on certiorari seeks to reverse the decision of the Court of Appeals which
affirmed the decision of the then Court of First Instance of Rizal, Branch 17-B, Quezon City in Civil
Case No. Q-26623 ordering petitioner Radio Communications of the Philippines, Inc. [RCPI] and
their co-defendant Globe Mackay and Radio Corporation (Globe Mackay), jointly and severally to
pay the plaintiff, private respondent herein, a total amount of Two Hundred Thirteen Thousand One
Hundred Forty Eight Pesos (P213,148.00) broken down as follows: a) P100, 000.00 as moral
damages; b) P50,000.00 as exemplary damages; c) P43,148.00 as actual damages; and d)
P20,000.00 as attorney's fees by way of damages.
This is the second time that this case has been brought to us. The first was when petitioner RCPI
questioned the decision of the Court of Appeals which refused to set aside the orders of the lower
court directing execution pending appeal of the money awards. In that case (G.R. No. 59311, 134
SCRA [1985]) we set aside the decision of the appellate court and entered a new order authorizing
execution pending appeal of the award of actual damages but enjoining the execution of the award
of moral damages, exemplary damages and attorney's fees until after the resolution of the issues
in the main case. We summarized the facts of the case as follows:
On September 8, 1978, Rufus B. Rodriguez, as President of the World Association of
Law Students (WALS), sent two cablegrams overseas through RCPI, one addressed
to Mohamed Elsir Taha in Khartoum, Sudan Socialist Union, and the other to Diane
Merger in Athens, Georgia, United States. The cablegram were, in turn, relayed to
GLOBE for transmission to their foreign destination The telegram to Taha advised
him of Rodriguez's pending arrival in Khartoum on September 18, 1978, while the
telegram to Merger advised her of the scheduled WALS conference in Khartoum.
Rodriguez left the Philippines on September 15, 1978. On September 18, 1978, he
arrived in Khartoum, Sudan at 9:30 in the evening. Nobody was at the airport to meet
him. Due to the lateness of the hour, he was forced to sleep at the airport. He lined
up five (5) chairs together and lay down with his luggages near him. Because of the
non-receipt of the cablegram, Taha was not able to meet him. Worse all preparations
for the international conference had to be cancelled. Furthermore, Fernando Barros,
the Vice-President, arrived the next day from Chile, followed by the other officers
from other countries except Diane Merger, the organization's secretary. It turned out
that the wire sent by Rodriguez to Merger was delivered to the address on the
message but the person who delivered it was told that the address was no longer
staying there. This fact was not accordingly reported to Rodriguez in Metro Manila.
The undelivered cablegram was not returned by the correspondent abroad to Globe
for disposition in the Philippines.

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On December 8, 1978, Rodriguez filed a complaint for compensatory damages in the


amount of P45,147.00, moral damages in the amount of P200,000.00, and exemplary
damages in the amount of P50,000.00 against RCPI and GLOBE.
On March 17, 1980, the then Presiding Judge Lino L. Anover of the Court of First
Instance of Rizal rendered a decision, the dispositive portion of which reads as
follows:
"WHEREFORE, judgment is hereby rendered ordering the defendants
jointly and severally to pay the plaintiff the total sum of TWO HUNDRED
THIRTEEN THOUSAND ONE HUNDRED FORTY EIGHT PESOS
(P213,148.00) by way of damages and to pay the costs of this suit."
The above amount is broken down as follows by the trial court:
"Moral damages consequent to the humiliation and embarrassment that
the plaintiff suffered under the two causes of action in the amount of
P100,000.00 are adequate. Exemplary damages under both counts are
fixed reasonably at P50,000.00. On the actual damages, the court
accepts plaintiffs expenses for the preparation of the trip at P10,000.00;
plane fare at P20,000.00; stay in transit in Pakistan at P5,000.00; his
hotel bills in Khartoum at P4,000.00; his meals in Khartoum at
P4,000.00 and the telegraphic toll at P78.00. The court refuses the sum
spent for the dinner that he allegedly tendered as not established by
sufficient proof.
With respect to the telegram sent to Diane Merger, the court finds that
the actual damages amount to P70.00 representing the cost of
cablegram. As for attorney's fees, the court finds that the amount of
P20,000.00 including litigation expenses are reasonable. (at pp. 396398)"
Upon appeal, the Court of Appeals affirmed the lower court's decision. A motion for reconsideration
was denied.
Hence, this petition filed by RCPI. The title of the case includes Globe Mackay but the petition
proper and the name on counsel show that only RCPI comes to this Court through the petition.
Globe Mackay did not join as petitioner and its counsel Atty. Romulo P. Atencia did not sign the
petition.
The issues raised by petitioner RCPI are two-fold 1) whether or nor petitioner RCPI is
responsible for the non-delivery of the two (2) telegrams notwithstanding the fact that RCPI relayed
said telegrams to Globe Mackay and 2) whether or not under the attendant facts and
circumstances petitioner RCPI is liable for moral damages in the amount of P100,000.00;
exemplary damages in the amount of P50,000.00; actual damages in the amount of P43,148.00
and attorney's fees in the amount of P20,000.00.
RCPI insists that its responsibility vis-a-vis the two (2) telegrams ceased after it relayed and
transmitted the telegrams on the same day they were filed to Globe Mackay. It argues that it was
not incumbent upon RCPI to advise respondent Rodriguez the status of his telegrams because
Globe Mackay did not also inform RCPI what happened to the telegrams since the respective
operating agency of the country of destination did not also inform Globe Mackay about the nondelivery of the telegrams.
Moreover, RCPI blames respondent Rodriguez for the non-delivery of the two telegrams.
Regarding the telegram addressed to Elsir Taha, RCPI avers that it has an incomplete address as
it did not include P.O. Box 1850 per instruction of Taha in an earlier cable asking for respondent to
reply via telex, to wit:

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... send me a telegram immediately after receiving this one a telex number if any.
Thanks. Mohammed Elsir Taha Regional Director WALS Africa Youth Committee
SSU, Khartoum, P.O. Box 1850. (Exhibit D). (Rollo, p. 27)
In regard to the telegram addressed to Diane Merger which she did not receive because she had
moved, to another place RCPI avers that respondent Rodriguez was partly at fault for not verifying
the address of Diane before sending the telegram and that Merger was negligent by not leaving her
forwarding address with the present occupant of the apartment she vacated.
Petitioner RCPI is a domestic corporation engaged in the business of receiving and transmitting
messages. Mr. Alfredo Catolico, Jr., manager, Customer and Relations Office testified that RCPI
does not have facilities for foreign countries, hence it has a contract to course all international
communications thru Globe Mackay. On the other hand, Wenceslao Felix, the Traffic Operations
Manager of Globe Mackay testified that Globe Mackay has an inter-connecting agreement with
RCPI under which the latter's international messages are coursed thru Globe Mackay in the same
way that local and domestic messages received by Globe Mackay are coursed thru RCPI.
Respondent Rodriguez and RCPI entered into a contract whereby for a fee RCPI undertook to
send the respondent's messages overseas. When, therefore, respondent Rodriguez paid RCPI to
deliver his messages overseas by telegram, RCPI obligated itself to transmit the messages to the
addressee. Clearly, RCPI reneged on its obligation when it failed to deliver the messages or to
inform the sender about the non-delivery, thus making it liable for damages. (Article 1170, Civil
Code; Article 2176; see also Telefast Communication/Philippine Wireless, Inc. v. Castro, Sr., 158
SCRA 445 [1988]).
Parenthetically, RCPI cannot escape liability for damages by passing off the blame for negligence
to Globe Mackay. It has an inter-connecting agreement with Globe Mackay. RCPI receives
messages for overseas destinations and conducts its business to transmit foreign messages only
through Globe Mackay. To allow it to escape liability for damages by attributing sole negligence to
Globe Mackay for the expedient reason that it had already delivered the messages to the latter
would deprive the general public availing of the services of RCPI of an effective and adequate
remedy. (See Radio Communications of the Philippines, Inc. (RCPI) v. Court of Appeals, 143
SCRA 657 [1986]). It cannot simply wash its hands of all responsibility.
RCPI's similar attempt to pass the total blame for the non-delivery of the telegram intended for
Taha to respondent Rodriguez is not supported by the records. The evidence clearly demonstrates
that an earlier cablegram dated July 27, 1978 (Exhibit "E") similarly addressed to Taha, Africa,
Youth Committee, Khartoum, SSU and without P.O. Box 1850 was received by Taha. This is
conclusively shown by a cable (Exhibit "F") addressed by Taha to respondent Rodriguez
acknowledging the receipt of the July 27 cablegram. Evidence was also introduced to show that
the Africa Youth Committee is a very important office in Khartoum, Sudan and the building that
houses it is a very popular building known to the people.
We rule that the arguments about the alleged negligence on the part of respondent Rodriguez in
not verifying the address of Diane Merger before sending the telegram and also the alleged
negligence on the part of Merger for not leaving a forwarding address do not deserve much
consideration. Considering the public utility nature of RCPI's business and its contractual obligation
to transmit messages, it should exercise due diligence to ascertain that messages are delivered to
the persons at the given address and should provide a system whereby in cases of undelivered
messages the sender is given notice of non-delivery. Messages sent by cable or wireless means
are usually more important and urgent than those which can wait for the mail.
For recovery of damages, Article 2217 of the New Civil Code applies. It is provided therein that:
"Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feeling, moral shock, social humiliation, and similar injury. Though incapable
of pecuniary computation moral damages may be recovered if they are the proximate result of the
defendant's wrongful act or omission." (Emphasis supplied)
There is no doubt that RCPI's failure to deliver the two questioned telegrams resulted in the
suffering that respondent Rodriguez, had to undergo.
29 | P a g e

Respondent Rodriguez left Manila for Khartoum, Sudan believing that Taha received his telegram
and would meet him at the airport. He related his experience at the airport of Khartoum, Sudan as
follows:
Q. All right, from 9:30 in the evening up to 12:00 midnight, was there
any person or officer of the World Association of Law Students who met
you?
A. None.
Q. Now, inform the Court what was your feeling during that time in a
foreign country?
A. First of all, when I arrived at 9:30 A.M., I was thinking that Mr. Taha
was first late in fetching me but when it was already 10:30 to 11:00
P.M., I was already afraid because there was no one there that I know
and it was already late in the evening that I could not go to the address
of Mr. Taha. (TSN pages 18 and 19, August 20, 1979).
Q. What were you doing at that time from 9:30 in the evening until 6:00
in the morning?
A. I was every tired and what I did was pulled five chairs together. I
remember there were about ten (10) persons and some tourists in that
restaurant. I got five chairs together and laid my baggage trying to sleep
but which I was not able to do because of fear and anxiety. (TSN,
pages 10 and 11, August 20, 1979). (Rollo, p. 15)
We are convinced that respondent Rodriguez suffered a certain degree of mental anguish, fear and
anxiety considering his experience at the airport of a foreign country. His suffering was caused by
the non-appearance of Taha who did not receive the telegram sent by the respondent due to the
gross negligence of RCPI. There is moreover, the dismay arising from the fact, that after so much
preparation and travel on the part of Rodriguez, his pains were all for nothing. Hence, RCPI is
liable for moral damages.
Nevertheless, we find the award of P100,000.00 as moral damages in favor of respondent
Rodriguez excessive and unconscionable. In the case of Prudenciado v. Alliance Transport
System, Inc. (148 SCRA 440 [1987]) we said:
... [I]t is undisputed that the trial courts are given discretion to determine the amount
of moral damages (Alcantara v. Surro, 93 Phil. 472) and that the Court of Appeals
can only modify or change the amount awarded when they are palpably and
scandalously excessive 'so as to indicate that it was the result of passion, prejudice
or corruption on the part of the trial court' (Gellada v. Warner Barnes & Co., Inc., 57
O.G. [4] 7347, 7358; Sadie v. Bachrach Motors Co., Inc., 57 O.G. [4] 636 and Adone
v. Bachrach Motor Co., Inc., 57 O.G. 656). But in more recent cases where the
awards of moral and exemplary damages are far too excessive compared to the
actual losses sustained by the aggrieved party, this Court ruled that they should be
reduced to more reasonable amounts.
Thus, in the case of San Andres v. Court of Appeals (116 SCRA 85 [1982]) the
Supreme Court ruled that while the amount of moral damages is a matter left largely
to the sound discretion of a court, the same when found excessive should be reduced
to more reasonable amounts, considering the attendant facts and circumstances.
Moral damages, though incapable of pecuniary estimation, are in the category of an
award designed to compensate the claimant for actual injury suffered and not to
impose a penalty on the wrongdoer.
In a much later case (Siguenza v. Court of Appeals, 137 SCRA 578-579 [1985]), the
Supreme Court, reiterating the above ruling, reduced the awards of moral and
30 | P a g e

exemplary damages which were far too excessive compared to the actual losses
sustained by the aggrieved parties and where the records show that the injury
suffered was not serious or gross and, therefore, out of proportion to the amount of
damages generously awarded by the trial court.
In any case the Court held that 'moral damages are emphatically not intended to
enrich a complainant at the expense of a defendant. They are awarded only to enable
the injured party to obtain means, diversion or amusements that will serve to alleviate
the moral suffering he has undergone, by reason of the defendants' culpable action.'
The award of moral damages must be proportionate to the suffering inflicted (R & B
Surety & Insurance Co., Inc. v. Intermediate Appellate Court, 129 SCRA 745 [1984]
citing Grand Union Supermarket, Inc. v. Espino, Jr., 94 SCRA 966). (Emphasis
supplied)
The respondent is not entirely blameless for the problems which befell him. Apart from the various
arguments raised by RCPI in its petition, there are other factors to be considered in fixing the
amount of damages. Anybody who has been involved in international conferences and meetings
knows that a telegram is not adequate preparation. Considering the lackaidaisical attitude of public
utility employees in the Philippines and presumably in Africa, the head of an international student
organization cannot simply send a telegram and nonchalantly assume that every preparation will
proceed as he anticipates it. The planning expertise and degree of thoroughness incumbent upon
conference organizers is missing from the records. The trial court appears to have been influenced
by the impressive title of World Association of Law Students. There is nothing in the records
pointing to a certain degree of distinction earned by WALS which would warrant substantial
damages because of a failed meeting.
Be that as it may, damages are warranted. People depend on telecommunications companies in
times of deep emotional stress or pressing financial needs. Knowing that messages about the
illnesses or deaths of loved ones, births or marriages in a family, important business transactions,
and notices of conferences or meetings as in this case, are coursed through the petitioner and
similar corporations, it is incumbent upon them to exercise a greater amount of care and concern
than that shown in this case. Every reasonable effort to inform senders of the non-delivery of
messages should be undertaken. From the pleadings filed by counsel in this case, RCPI does not
seem to be particularly concerned about its responsibility.
We rule that the amount of P10,000.00 as moral damages in favor of the respondent would be
reasonable considering the facts and circumstances surrounding the petitioner's liability.
The award of exemplary damages is not proper considering that there is no showing that RCPI
acted in "a wanton, fraudulent, reckless, oppressive, or malevolent manner." (Article 2232, New
Civil Code).
Respondent Rodriguez was awarded the total amount of P43,148.00 as actual or compensatory
damages broken down as follows: (a) P10,000.00 for the preparation of the trip; (b) P20,000.00 for
plane fare; (c) P5,000.00 for respondent's stay in transit in Pakistan; (d) P4,000.00 for hotel bills in
Khartoum; (e) P78.00 for the telegraphic toll, and P70.00 for the cost of the cablegram sent to
Diane Merger. The trial court rejected the expenses allegedly incurred by the respondent for a
dinner he tendered for the officers, organizers and students at Khartoum for insufficiency of
evidence. It is to be noted that the petitioner does not controvert the amounts. Instead, the
petitioner concentrates its opposition to the award of actual damages on the argument that the
respondent's expenses were actually paid by the organization and the Sudanese government. The
petitioner, however, fails to substantiate its allegations with clear proof. On the other hand, what is
evident on record is that due to the non-receipt of the telegram which would have confirmed the
scheduled conference on September 20, 1978, Taha cancelled all preparations and stopped the
soliciting of funds for the conference which would have included the expenses of the respondent.
As a result of the cancellation of the conference, triggered by the non-delivery of the telegrams, the
officers were constrained to schedule another meeting in Santiago, Chile in April 1979. Therefore,
we see no reason to disturb these findings of the trial court affirmed by the appellate court as these
were not sufficiently controverted by the petitioner (See Ganzon v. Court of Appeals, 161 SCRA
646 [1988]).
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Finally, petitioner RCPI objects to the award of attorney's fees. Citing the case of Mirasol v. De la
Cruz (84 SCRA 337 (1987]), RCPI contends that the award of attorney's fees was improper
because there was no allegation in the complaint with respect to attorney's fees; respondent
Rodriguez did not present any evidence to prove attorney's fees and the decision failed to explain
why attorney's fees are being awarded.
We agree. In the recent case of Stronghold Insurance Company, Inc. v. Court of Appeals, (G.R.
No. 88376, May 29,1989), we ruled:
In Abrogar v. Intermediate Appellate Court (G.R. No. 67970, January 15, 1988, 157
SCRA 57) the Court had occasion to state that '[t]he reason for the award of
attorney's fees must be stated in the text of the court's decision, otherwise, if it is
stated only in the dispositive portion of the decision, the same must be disallowed on
appeal. (at p. 61 citing Mirasol v. dela Cruz, G.R. No. L-32552, July 31, 1978, 84
SCRA 337).
A cursory reading of the trial court's decision shows that the award of attorney's fees was stated
only once "As for attorney's fees, the court finds that the amount of P20,000.00 including
litigation expenses are reasonable" just below the dispositive portion of the decision which
reads: "WHEREFORE judgment is hereby rendered ordering the defendants jointly and severally
liable to pay the plaintiff the total sum of TWO HUNDRED THIRTEEN THOUSAND ONE
HUNDRED FORTY EIGHT PESOS (P213,148.00) by way of damages and to pay the costs of this
suit." The trial court failed to justify the payment of attorney's by RCPI, therefore, the award of
attorney's fees as part of its liability should be disallowed and deleted.
WHEREFORE, the instant petition is PARTLY GRANTED. The questioned decision of the
respondent court is MODIFIED. The award directing Radio Communications of the Philippines,
Inc., to pay P100,000.00 moral damages is reduced to P10,000.00. The award ordering it to pay
exemplary damages and attorney's fees is DELETED. In all other respects, the questioned
decision is AFFIRMED. Costs against the petitioner.
SO ORDERED.
Fernan, C.J. (Chairman), Feliciano, Bidin and Cortes JJ., concur.

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Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 88694 January 11, 1993


ALBENSON ENTERPRISES CORP., JESSE YAP, AND BENJAMIN MENDIONA, petitioners,
vs.
THE COURT OF APPEALS AND EUGENIO S. BALTAO, respondents.
Puruganan, Chato, Chato & Tan for petitioners.
Lino M. Patajo, Francisco Ma. Chanco, Ananiano Desierto and Segundo Mangohig for private
respondent.

BIDIN, J.:
This petition assails the decision of respondent Court of Appeals in
CA-GR CV No. 14948 entitled "Eugenio S. Baltao, plaintiff-appellee vs. Albenson Enterprises
Corporation, et al, defendants-appellants", which modified the judgment of the Regional Trial Court
of Quezon City, Branch XCVIII in Civil Case No. Q-40920 and ordered petitioner to pay private
respondent, among others, the sum of P500,000.00 as moral damages and attorney's fees in the
amount of P50,000.00.
The facts are not disputed.
In September, October, and November 1980, petitioner Albenson Enterprises Corporation
(Albenson for short) delivered to Guaranteed Industries, Inc. (Guaranteed for short) located at 3267
V. Mapa Street, Sta. Mesa, Manila, the mild steel plates which the latter ordered. As part payment
thereof, Albenson was given Pacific Banking Corporation Check No. 136361 in the amount of
P2,575.00 and drawn against the account of E.L. Woodworks (Rollo, p. 148).
When presented for payment, the check was dishonored for the reason "Account Closed."
Thereafter, petitioner Albenson, through counsel, traced the origin of the dishonored check. From
the records of the Securities and Exchange Commission (SEC), Albenson discovered that the
president of Guaranteed, the recipient of the unpaid mild steel plates, was one "Eugenio S. Baltao."
Upon further inquiry, Albenson was informed by the Ministry of Trade and Industry that E.L.
Woodworks, a single proprietorship business, was registered in the name of one "Eugenio Baltao".
In addition, upon verification with the drawee bank, Pacific Banking Corporation, Albenson was
advised that the signature appearing on the subject check belonged to one "Eugenio Baltao."
After obtaining the foregoing information, Albenson, through counsel, made an extrajudicial
demand upon private respondent Eugenio S. Baltao, president of Guaranteed, to replace and/or
make good the dishonored check.
Respondent Baltao, through counsel, denied that he issued the check, or that the signature
appearing thereon is his. He further alleged that Guaranteed was a defunct entity and hence, could
not have transacted business with Albenson.

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On February 14, 1983, Albenson filed with the Office of the Provincial Fiscal of Rizal a complaint
against Eugenio S. Baltao for violation of Batas Pambansa Bilang 22. Submitted to support said
charges was an affidavit of petitioner Benjamin Mendiona, an employee of Albenson. In said
affidavit, the above-mentioned circumstances were stated.
It appears, however, that private respondent has a namesake, his son Eugenio Baltao III, who
manages a business establishment, E.L. Woodworks, on the ground floor of the Baltao Building,
3267 V. Mapa Street, Sta. Mesa, Manila, the very same business address of Guaranteed.
On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an information against Eugenio S.
Baltao for Violation of Batas Pambansa Bilang 22. In filing said information, Fiscal Sumaway
claimed that he had given Eugenio S. Baltao opportunity to submit controverting evidence, but the
latter failed to do so and therefore, was deemed to have waived his right.
Respondent Baltao, claiming ignorance of the complaint against him, immediately filed with the
Provincial Fiscal of Rizal a motion for reinvestigation, alleging that it was not true that he had been
given an opportunity to be heard in the preliminary investigation conducted by Fiscal Sumaway,
and that he never had any dealings with Albenson or Benjamin Mendiona, consequently, the check
for which he has been accused of having issued without funds was not issued by him and the
signature in said check was not his.
On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal reversed the finding of Fiscal
Sumaway and exonerated respondent Baltao. He also instructed the Trial Fiscal to move for
dismissal of the information filed against Eugenio S. Baltao. Fiscal Castro found that the signature
in PBC Check No. 136361 is not the signature of Eugenio S. Baltao. He also found that there is no
showing in the records of the preliminary investigation that Eugenio S. Baltao actually received
notice of the said investigation. Fiscal Castro then castigated Fiscal Sumaway for failing to exercise
care and prudence in the performance of his duties, thereby causing injustice to respondent who
was not properly notified of the complaint against him and of the requirement to submit his counter
evidence.
Because of the alleged unjust filing of a criminal case against him for allegedly issuing a check
which bounced in violation of Batas Pambansa Bilang 22 for a measly amount of P2,575.00,
respondent Baltao filed before the Regional Trial Court of Quezon City a complaint for damages
against herein petitioners Albenson Enterprises, Jesse Yap, its owner, and Benjamin Mendiona, its
employee.
In its decision, the lower court observed that "the check is drawn against the account of "E.L.
Woodworks," not of Guaranteed Industries of which plaintiff used to be President. Guaranteed
Industries had been inactive and had ceased to exist as a corporation since 1975. . . . . The
possibility is that it was with Gene Baltao or Eugenio Baltao III, a son of plaintiff who had a
business on the ground floor of Baltao Building located on V. Mapa Street, that the defendants may
have been dealing with . . . ." (Rollo, pp. 41-42).
The dispositive portion of the trial court 's decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against
defendants ordering the latter to pay plaintiff jointly and severally:
1. actual or compensatory damages of P133,350.00;
2. moral damages of P1,000,000.00 (1 million pesos);
3. exemplary damages of P200,000.00;
4. attorney's fees of P100,000.00;
5 costs.

34 | P a g e

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

Article 19 must be observed. A right, though by itself legal because recognized or granted by law
as such, may nevertheless become the source of some illegality. When a right is exercised in a
manner which does not conform with the norms enshrined in Article 19 and results in damage to
another, a legal wrong is thereby committed for which the wrongdoer must be held responsible.
Although the requirements of each provision is different, these three (3) articles are all related to
each other. As the eminent Civilist Senator Arturo Tolentino puts it: "With this article (Article 21),
combined with articles 19 and 20, the scope of our law on civil wrongs has been very greatly
broadened; it has become much more supple and adaptable than the Anglo-American law on torts.
It is now difficult to conceive of any malevolent exercise of a right which could not be checked by
the application of these articles" (Tolentino, 1 Civil Code of the Philippines 72).
There is however, no hard and fast rule which can be applied to determine whether or not the
principle of abuse of rights may be invoked. The question of whether or not the principle of abuse
of rights has been violated, resulting in damages under Articles 20 and 21 or other applicable
provision of law, depends on the circumstances of each case. (Globe Mackay Cable and Radio
Corporation vs. Court of Appeals, 176 SCRA 778 [1989]).
The elements of an abuse of right under Article 19 are the following: (1) There is a legal right or
duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another.
Article 20 speaks of the general sanction for all other provisions of law which do not especially
provide for their own sanction (Tolentino, supra, p. 71). Thus, anyone who,
whether willfully or negligently, in the exercise of his legal right or duty, causes damage to another,
shall indemnify his victim for injuries suffered thereby. Article 21 deals with acts contra bonus
mores, and has the following elements: 1) There is an act which is legal; 2) but which is contrary to
morals, good custom, public order, or public policy; 3) and it is done with intent to injure.
Thus, under any of these three (3) provisions of law, an act which causes injury to another may be
made the basis for an award of damages.
There is a common element under Articles 19 and 21, and that is, the act must be intentional.
However, Article 20 does not distinguish: the act may be done either "willfully", or "negligently". The
trial court as well as the respondent appellate court mistakenly lumped these three (3) articles
together, and cited the same as the bases for the award of damages in the civil complaint filed
against petitioners, thus:
With the foregoing legal provisions (Articles 19, 20, and 21) in focus, there is not
much difficulty in ascertaining the means by which appellants' first assigned error
should be resolved, given the admitted fact that when there was an attempt to collect
the amount of P2,575.00, the defendants were explicitly warned that plaintiff Eugenio
S. Baltao is not the Eugenio Baltao defendants had been dealing with (supra, p. 5).
When the defendants nevertheless insisted and persisted in filing a case a criminal
case no less against plaintiff, said defendants ran afoul of the legal provisions
(Articles 19, 20, and 21 of the Civil Code) cited by the lower court and heretofore
quoted (supra).
Defendants, not having been paid the amount of P2,575.00, certainly had the right to
complain. But that right is limited by certain constraints. Beyond that limit is the area
of excess, of abuse of rights. (Rollo, pp.
44-45).
Assuming, arguendo, that all the three (3) articles, together and not independently of each one,
could be validly made the bases for an award of damages based on the principle of "abuse of
right", under the circumstances, We see no cogent reason for such an award of damages to be
made in favor of private respondent.
Certainly, petitioners could not be said to have violated the aforestated principle of abuse of right.
What prompted petitioners to file the case for violation of Batas Pambansa Bilang 22 against
private respondent was their failure to collect the amount of P2,575.00 due on a bounced check
which they honestly believed was issued to them by private respondent. Petitioners had conducted
inquiries regarding the origin of the check, and yielded the following results: from the records of the
36 | P a g e

Securities and Exchange Commission, it was discovered that the President of Guaranteed (the
recipient of the unpaid mild steel plates), was one "Eugenio S. Baltao"; an inquiry with the Ministry
of Trade and Industry revealed that E.L. Woodworks, against whose account the check was drawn,
was registered in the name of one "Eugenio Baltao"; verification with the drawee bank, the Pacific
Banking Corporation, revealed that the signature appearing on the check belonged to one
"Eugenio Baltao".
In a letter dated December 16, 1983, counsel for petitioners wrote private respondent demanding
that he make good the amount of the check. Counsel for private respondent wrote back and
denied, among others, that private respondent ever transacted business with Albenson Enterprises
Corporation; that he ever issued the check in question. Private respondent's counsel even went
further: he made a warning to defendants to check the veracity of their claim. It is pivotal to note at
this juncture that in this same letter, if indeed private respondent wanted to clear himself from the
baseless accusation made against his person, he should have made mention of the fact that there
are three (3) persons with the same name, i.e.: Eugenio Baltao, Sr., Eugenio S. Baltao, Jr. (private
respondent), and Eugenio Baltao III (private respondent's son, who as it turned out later, was the
issuer of the check). He, however, failed to do this. The last two Baltaos were doing business in the
same building Baltao Building located at 3267 V. Mapa Street, Sta. Mesa, Manila. The mild
steel plates were ordered in the name of Guaranteed of which respondent Eugenio S. Baltao is the
president and delivered to Guaranteed at Baltao building. Thus, petitioners had every reason to
believe that the Eugenio Baltao who issued the bouncing check is respondent Eugenio S. Baltao
when their counsel wrote respondent to make good the amount of the check and upon refusal, filed
the complaint for violation of BP Blg. 22.
Private respondent, however, did nothing to clarify the case of mistaken identity at first hand.
Instead, private respondent waited in ambush and thereafter pounced on the hapless petitioners at
a time he thought was propitious by filing an action for damages. The Court will not countenance
this devious scheme.
The criminal complaint filed against private respondent after the latter refused to make good the
amount of the bouncing check despite demand was a sincere attempt on the part of petitioners to
find the best possible means by which they could collect the sum of money due them. A person
who has not been paid an obligation owed to him will naturally seek ways to compel the debtor to
pay him. It was normal for petitioners to find means to make the issuer of the check pay the
amount thereof. In the absence of a wrongful act or omission or of fraud or bad faith, moral
damages cannot be awarded and that the adverse result of an action does not per se make the
action wrongful and subject the actor to the payment of damages, for the law could not have meant
to impose a penalty on the right to litigate (Rubio vs. Court of Appeals, 141 SCRA 488 [1986]).
In the case at bar, private respondent does not deny that the mild steel plates were ordered by and
delivered to Guaranteed at Baltao building and as part payment thereof, the bouncing check was
issued by one Eugenio Baltao. Neither had private respondent conveyed to petitioner that there are
two Eugenio Baltaos conducting business in the same building he and his son Eugenio Baltao
III. Considering that Guaranteed, which received the goods in payment of which the bouncing
check was issued is owned by respondent, petitioner acted in good faith and probable cause in
filing the complaint before the provincial fiscal.
To constitute malicious prosecution, there must be proof that the prosecution was prompted by a
sinister design to vex and humiliate a person, and that it was initiated deliberately by the defendant
knowing that his charges were false and groundless. Concededly, the mere act of submitting a
case to the authorities for prosecution does not make one liable for malicious prosecution. (Manila
Gas Corporation vs. Court of Appeals, 100 SCRA 602 [1980]). Still, private respondent argues that
liability under Articles 19, 20, and 21 of the Civil Code is so encompassing that it likewise includes
liability for damages for malicious prosecution under Article 2219 (8). True, a civil action for
damages for malicious prosecution is allowed under the New Civil Code, more specifically Articles
19, 20, 26, 29, 32, 33, 35, and 2219 (8) thereof. In order that such a case can prosper, however,
the following three (3) elements must be present, to wit: (1) The fact of the prosecution and the
further fact that the defendant was himself the prosecutor, and that the action was finally
terminated with an acquittal; (2) That in bringing the action, the prosecutor acted without probable
37 | P a g e

cause; (3) The prosecutor was actuated or impelled by legal malice (Lao vs. Court of Appeals, 199
SCRA 58, [1991]).
Thus, a party injured by the filing of a court case against him, even if he is later on absolved, may
file a case for damages grounded either on the principle of abuse of rights, or on malicious
prosecution. As earlier stated, a complaint for damages based on malicious prosecution will
prosper only if the three (3) elements aforecited are shown to exist. In the case at bar, the second
and third elements were not shown to exist. It is well-settled that one cannot be held liable for
maliciously instituting a prosecution where one has acted with probable cause. "Probable cause is
the existence of such facts and circumstances as would excite the belief, in a reasonable mind,
acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of
the crime for which he was prosecuted. In other words, a suit will lie only in cases where a legal
prosecution has been carried on without probable cause. The reason for this rule is that it would be
a very great discouragement to public justice, if prosecutors, who had tolerable ground of
suspicion, were liable to be sued at law when their indictment miscarried" (Que vs. Intermediate
Appellate Court, 169 SCRA 137 [1989]).
The presence of probable cause signifies, as a legal consequence, the absence of malice. In the
instant case, it is evident that petitioners were not motivated by malicious intent or by sinister
design to unduly harass private respondent, but only by a well-founded anxiety to protect their
rights when they filed the criminal complaint against private respondent.
To constitute malicious prosecution, there must be proof that the prosecution was
prompted by a sinister design to vex and humiliate a person, that it was initiated
deliberately by the defendant knowing that his charges were false and groundless.
Concededly, the mere act of submitting a case to the authorities for prosecution does
not make one liable for malicious prosecution. Proof and motive that the institution of
the action was prompted by a sinister design to vex and humiliate a person must be
clearly and preponderantly established to entitle the victims to damages (Ibid.).
In the case at bar, there is no proof of a sinister design on the part of petitioners to vex or humiliate
private respondent by instituting the criminal case against him. While petitioners may have been
negligent to some extent in determining the liability of private respondent for the dishonored check,
the same is not so gross or reckless as to amount to bad faith warranting an award of damages.
The root of the controversy in this case is founded on a case of mistaken identity. It is possible that
with a more assiduous investigation, petitioners would have eventually discovered that private
respondent Eugenio S. Baltao is not the "Eugenio Baltao" responsible for the dishonored check.
However, the record shows that petitioners did exert considerable effort in order to determine the
liability of private respondent. Their investigation pointed to private respondent as the "Eugenio
Baltao" who issued and signed the dishonored check as the president of the debtor-corporation
Guaranteed Enterprises. Their error in proceeding against the wrong individual was obviously in
the nature of an innocent mistake, and cannot be characterized as having been committed in bad
faith. This error could have been discovered if respondent had submitted his counter-affidavit
before investigating fiscal Sumaway and was immediately rectified by Provincial Fiscal Mauro
Castro upon discovery thereof, i.e., during the reinvestigation resulting in the dismissal of the
complaint.
Furthermore, the adverse result of an action does not per se make the act wrongful and subject the
actor to the payment of moral damages. The law could not have meant to impose a penalty on the
right to litigate, such right is so precious that moral damages may not be charged on those who
may even exercise it erroneously. And an adverse decision does not ipso facto justify the award of
attorney's fees to the winning party (Garcia vs. Gonzales, 183 SCRA 72 [1990]).
Thus, an award of damages and attorney's fees is unwarranted where the action was filed in good
faith. If damage results from a person's exercising his legal rights, it is damnum absque
injuria (Ilocos Norte Electric Company vs. Court of Appeals, 179 SCRA 5 [1989]).
Coming now to the claim of private respondent for actual or compensatory damages, the records
show that the same was based solely on his allegations without proof to substantiate the same. He
38 | P a g e

did not present proof of the cost of the medical treatment which he claimed to have undergone as a
result of the nervous breakdown he suffered, nor did he present proof of the actual loss to his
business caused by the unjust litigation against him. In determining actual damages, the court
cannot rely on speculation, conjectures or guesswork as to the amount. Without the actual proof of
loss, the award of actual damages becomes erroneous (Guilatco vs. City of Dagupan, 171 SCRA
382 [1989]).
Actual and compensatory damages are those recoverable because of pecuniary loss in
business, trade, property, profession, job or occupation and the same must be proved,
otherwise, if the proof is flimsy and unsubstantiated, no damages will be given (Rubio vs. Court of
Appeals, 141 SCRA 488 [1986]). For these reasons, it was gravely erroneous for respondent court
to have affirmed the award of actual damages in favor of private respondent in the absence of
proof thereof.
Where there is no evidence of the other party having acted in wanton, fraudulent or reckless, or
oppressive manner, neither may exemplary damages be awarded (Dee Hua Liong Electrical
Equipment Corporation vs. Reyes, 145 SCRA 488 [1986]).
As to the award of attorney's fees, it is well-settled that the same is the exception rather than the
general rule. Needless to say, the award of attorney's fees must be disallowed where the award of
exemplary damages is eliminated (Article 2208, Civil Code; Agustin vs. Court of Appeals, 186
SCRA 375 [1990]). Moreover, in view of the fact that there was no malicious prosecution against
private respondent, attorney's fees cannot be awarded him on that ground.
In the final analysis, there is no proof or showing that petitioners acted maliciously or in bad faith in
the filing of the case against private respondent. Consequently, in the absence of proof of fraud
and bad faith committed by petitioners, they cannot be held liable for damages (Escritor, Jr. vs.
Intermediate Appellate Court, 155 SCRA 577 [1987]). No damages can be awarded in the instant
case, whether based on the principle of abuse of rights, or for malicious prosecution. The
questioned judgment in the instant case attests to the propensity of trial judges to award damages
without basis. Lower courts are hereby cautioned anew against awarding unconscionable sums as
damages without bases therefor.
WHEREFORE, the petition is GRANTED and the decision of the Court of Appeals in C.A. G.R.
C.V. No. 14948 dated May 13, 1989, is hereby REVERSED and SET ASIDE. Costs against
respondent Baltao.
SO ORDERED.
Gutierrez, Jr., Davide, Jr., Romero and Melo, JJ., concur.
# Footnotes
** "Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.
"Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall
indemnify the latter for the same.
"Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.

39 | P a g e

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-4606

May 30, 1952

RAMON B. FELIPE, SR., as Chairman, Board of Judges, petitioner,


vs.
HON. JOSE N. LEUTERIO, Judge, Court of First Instance of Camarines Sur, EMMA
IMPERIAL, represented by her guardian-ad-litem JUSTO V. IMPERIAL, and SOUTHERN
LUZON COLLEGE,respondents.
Ramon Felipe, Jr., and L. B. Karingal for petitioner.
Ezequiel S. Grageda and Victoriano Yamson for respondents Judge Leuterio and Emma Imperial.
Padilla and San Juan for respondent Southern Luzon College.
BENGZON, J.:
Statement of the case. The issue in the litigation is whether the courts have the authority to reverse
the award of the board of judges of an oratorical competition.
In an oratorical contest held in Naga, Camarines Sur, first honor was given by the board of five
judges to Nestor Nosce, and second honor to Emma Imperial. Six days later, Emma asked the
court of the first instance of that province to reversed that award, alleging that one of the judges
had fallen to error in grading her performance. After a hearing, and over the objection of the other
four judges of the contest, the court declared Emma Imperial winner of the first place. Hence this
special civil action challenging the court's power to modify the board's verdict.
The facts. There is no dispute about the facts:
1. On March 12, 1950 a benefit inter-collegiate oratorical contest was held in Naga City. The contestants were
eight, among them Nestor Nosce, Emma Imperial, and Luis General, Jr.
2. There were five judges of the competition, the petitioner Ramon B. Felipe, Sr. being the Chairman.
3. After the orators had delivered their respective pieces, and after the judges had expressed their votes, the
Chairman publicly announced their decision awarding first price to Nestor Nosce, second price to Emma
Imperial, third price to Menandro Benavides and fourth place to Luis General, Jr.
4. Four days afterwards, Emma Imperial addressed a letter to the Board of Judges protesting the verdict, and
alleging that one of the Judges had committed a mathematical mistake, resulting in her second place only,
instead of the first, which she therefore claimed.
5. Upon refusal of the Board to amend their award, she filed a complaint in the court of first instance.
6. At the contest the five judges were each furnished a blank form wherein he give the participants grades
according to his estimate of their abilities, giving number 1 to the best, number 2 to the second best etc.,
down to number 8. Then the grades were added, and the contestant receiving the lowest number got first
prize, the next second prize, etc.
7. The sums for the first four winners were: Nosce 10; Imperial 10; Benevides 17, General 17, the Board of
judges having voted as follows:

40 | P a g e

Judge
Felipe Sr. .........
Obias ..............
Rodriguez ..........
Prado ..............
Moll ...............

Nosce

Imperial
Buenavides
General
3
1
2
4
1
2
4
3
1
4
5
3
3
2
1
3
2
1
5
4
10
10
17
17
8. It appearing that Nestor Nosce and Emma Imperial had tied for the first place, the Chairman, apparently with
the consent of the board, broke the tie awarding first honors to Nosce and second honors to Imperial.
9. For the convenience of the judges the typewritten forms contained blank spaces in which, after the names
of the rival orators and their respective orations, the judge could not jot down the grades he thought the
contestants deserved according to "Originality", "Timeliness", "English", "Stage Personality", "Pronunciation
and Enunciation" and "Voice". From such data he made up his vote.
10. It was discovered later that the form filed by Delfin Rodriguez, one of the Judges, gave Imperial and
General the following ratings under the above headings; Imperial 19-15-15-18-14-14 Total 94-Place 4th General
19-15-15 or 14-19-14-14 Total 95-Place 3rd.
11. Imperial asserts that her total should be 95 instead of 94 and therefore should rank 3rd place in Rodriguez'
vote. And if she got 3 from Rodriguez, her total vote should have been 9 instead of ten, with the result that she
copped first place in the speaking joust.
12. Rodriguez testified that he made a mistake in adding up Imperial's ratings; that she should have been
given a total of 95, or placed No. 3, the same as General; that he was not disposed to break the tie between her
and General and insisted that he wanted to give rank 3 to Imperial and rank 3 also to General.

Discussion. Although it would seem anomalous for one judge to give the same rank to two
contestants, we will concede for the moment that Delfin Rodriguez could have given 3 to Imperial
to General.
However if deductions are to be made from his recorded vote (Exhibit 3) one may infer that after
the contest and before submitting his vote he decided to give General an edge over Imperial. How?
Under the caption "English" General was given by himself at first "14", later increased to "15".
Evidently because after he had added the ratings of Imperial and (erroneously) reached the sum of
94, he added the ratings of General (which were the same as Imperial with 14 under "English") and
(mistakenly) reached 94 also. So what did he also? He raised the 14 to 15 and thus gave general
95 to place him over Imperial's 94. (Mistakingly again, because with 15 General got 96 instead of
95).
But to us the important thing is Rodriguez' vote during and immediately after the affair. His vote in
Exhibit 3 definitely gave General place No. 3 and Imperial place No. 4. His calculations recorded
on Exhibit 3 were not material. In fact the Chairman did not bother to fill out the blank spaces in his
own form, and merely set down his conclusions giving one to Imperial, 2 to Benavides etc. without
specifying the ratings for "Voice", "English", "Stage Personality" etc. In other words what counted
was the vote.
Probably for the above reasons the board refused to "correct" the alleged error.
The situation then is this: Days after a contest has been conducted and the winners announced,
one of the judges confesses he made a mistake, that the ratings he gave the second place winner
should have been such as would entitle her to first place. The other judges refuse to alter their
verdict. May the matter be brought to the court to obtain a new award, reversing the decision of the
board of judges?
For more than thirty years oratorical tilts have been held periodically by schools and colleges in
these islands. Inter-collegiate oratorical competitions are of more recent origin. Members of this
court have taken part in them either as contestants in their school days 1, or as members of the
board of judges afterwards. They know some (few) verdicts did not reflect the audience's
preference and that errors have sometimes been ascribed to the award of the judges. Yet no party
ever presumed to invoke judicial intervention; for it is unwritten law in such contests that the
board's decision is final and unappealable.

41 | P a g e

Like the ancient tournaments of the Sword, these tournaments of the Word apply the highest tenets
of sportmanship: finally of the referee's verdict. No alibis, no murmurs of protest. The participants
are supposed to join the competition to contribute to its success by striving their utmost: the prizes
are secondary.
No rights to the prizes may be asserted by the contestants, because their's was merely the
privilege to compete for the prize, and that privilege did not ripen into a demandable right unless
and until they were proclaimed winners of the competition by the appointed arbiters or referees or
judges.
Incidentally, these school activities have been imported from the United States. We found in
American jurisprudence no litigation questioning the determination of the board of judges.
Now, the fact that a particular action has had no precedent during a long period affords some
reason for doubting the existence of the right sought to be enforced, especially where occasion for
its assertion must have often arisen; and courts are cautious before allowing it, being loath to
establish a new legal principle not in harmony with the generally accepted views thereon. (See
C.J.S. Vol. 1, p. 1012).
We observe that in assuming jurisdiction over the matter, the respondent judge reasoned out that
where there is a wrong there is a remedy and that courts of first instance are courts of general
jurisdiction.
The flaw in his reasoning lies in the assumption that Imperial suffered some wrong at the hands of
the board of judges. If at all, there was error on the part of one judge, at most. Error and wrong do
not mean the same thing. "Wrong" as used in the aforesaid legal principle is the deprivation or
violation of a right. As stated before, a contestant has no right to the prize unless and until he or
she is declared winner by the board of referees or judges.
Granting that Imperial suffered some loss or injury, yet in law there are instances of "damnum
absque injuria". This is one of them. If fraud or malice had been proven, it would be a different
proposition. But then her action should be directed against the individual judge or judges who
fraudulently or maliciously injured her. Not against the other judges.
By the way what is here in stated must not be understood as applying to those activities which the
government has chosen to regulate with the creation of the Games and Amusements Board in
Executive Order No. 392, Series 1950.
Judgment. In view of all the foregoing, we are of the opinion and so declare, that the judiciary has
no power to reverse the award of the board of judges of an oratorical contest. For that matter it
would not interfere in literary contests, beauty contests and similar competitions.
Wherefore the order in controversy is hereby set aside. No costs.
Paras, C.J., Pablo, Tuason, Montemayor, Bautista Angelo and Ladrador, JJ., concur.
Feria, J., concurs in the result.
Footnotes
1

In the College of Law U.P. annual oratorical contest, first prize was awarded to Justice Montemayor in 1914
and to Justice Labradorin 1916.

42 | P a g e

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-19671

November 29, 1965

PASTOR B. TENCHAVEZ, plaintiff-appellant,


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

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

(army chaplain Lavares) in the presence of competent witnesses. It is nowhere shown that said
priest was not duly authorized under civil law to solemnize marriages.
The chaplain's alleged lack of ecclesiastical authorization from the parish priest and the Ordinary,
as required by Canon law, is irrelevant in our civil law, not only because of the separation of
Church and State but also because Act 3613 of the Philippine Legislature (which was the marriage
law in force at the time) expressly provided that
SEC. 1. Essential requisites. Essential requisites for marriage are the legal capacity of the
contracting parties and consent. (Emphasis supplied)
The actual authority of the solemnizing officer was thus only a formal requirement, and, therefore,
not essential to give the marriage civil effects,3 and this is emphasized by section 27 of said
marriage act, which provided the following:
SEC. 27. Failure to comply with formal requirements. No marriage shall be declared invalid
because of the absence of one or several of the formal requirements of this Act if, when it
was performed, the spouses or one of them believed in good faith that the person who
solemnized the marriage was actually empowered to do so, and that the marriage was
perfectly legal.
The good faith of all the parties to the marriage (and hence the validity of their marriage) will be
presumed until the contrary is positively proved (Lao vs. Dee Tim, 45 Phil. 739, 745; Francisco vs.
Jason, 60 Phil. 442, 448). It is well to note here that in the case at bar, doubts as to the authority of
the solemnizing priest arose only after the marriage, when Vicenta's parents consulted Father
Reynes and the archbishop of Cebu. Moreover, the very act of Vicenta in abandoning her original
action for annulment and subsequently suing for divorce implies an admission that her marriage to
plaintiff was valid and binding.
Defendant Vicenta Escao argues that when she contracted the marriage she was under the
undue influence of Pacita Noel, whom she charges to have been in conspiracy with appellant
Tenchavez. Even granting, for argument's sake, the truth of that contention, and assuming that
Vicenta's consent was vitiated by fraud and undue influence, such vices did not render her
marriage ab initio void, but merely voidable, and the marriage remained valid until annulled by a
competent civil court. This was never done, and admittedly, Vicenta's suit for annulment in the
Court of First Instance of Misamis was dismissed for non-prosecution.
It is equally clear from the record that the valid marriage between Pastor Tenchavez and Vicenta
Escao remained subsisting and undissolved under Philippine law, notwithstanding the decree of
absolute divorce that the wife sought and obtained on 21 October 1950 from the Second Judicial
District Court of Washoe County, State of Nevada, on grounds of "extreme cruelty, entirely mental
in character." At the time the divorce decree was issued, Vicenta Escao, like her husband, was
still a Filipino citizen.4 She was then subject to Philippine law, and Article 15 of the Civil Code of the
Philippines (Rep. Act No. 386), already in force at the time, expressly provided:
Laws relating to family rights and duties or to the status, condition and legal capacity of
persons are binding upon the citizens of the Philippines, even though living abroad.
The Civil Code of the Philippines, now in force, does not admit absolute divorce, quo ad vinculo
matrimonii; and in fact does not even use that term, to further emphasize its restrictive policy on the
matter, in contrast to the preceding legislation that admitted absolute divorce on grounds of
adultery of the wife or concubinage of the husband (Act 2710). Instead of divorce, the present Civil
Code only provides for legal separation (Title IV, Book 1, Arts. 97 to 108), and, even in that case, it
expressly prescribes that "the marriage bonds shall not be severed" (Art. 106, subpar. 1).
For the Philippine courts to recognize and give recognition or effect to a foreign decree of absolute
divorce betiveen Filipino citizens could be a patent violation of the declared public policy of the
state, specially in view of the third paragraph of Article 17 of the Civil Code that prescribes the
following:
45 | P a g e

Prohibitive laws concerning persons, their acts or property, and those which have for their
object public order, policy and good customs, shall not be rendered ineffective by laws or
judgments promulgated, or by determinations or conventions agreed upon in a foreign
country.
Even more, the grant of effectivity in this jurisdiction to such foreign divorce decrees would, in
effect, give rise to an irritating and scandalous discrimination in favor of wealthy citizens, to the
detriment of those members of our polity whose means do not permit them to sojourn abroad and
obtain absolute divorces outside the Philippines.
From this point of view, it is irrelevant that appellant Pastor Tenchavez should have appeared in
the Nevada divorce court. Primarily because the policy of our law cannot be nullified by acts of
private parties (Civil Code,Art. 17, jam quot.); and additionally, because the mere appearance of a
non-resident consort cannot confer jurisdiction where the court originally had none (Area vs. Javier,
95 Phil. 579).
From the preceding facts and considerations, there flows as a necessary consequence that in this
jurisdiction Vicenta Escao's divorce and second marriage are not entitled to recognition as valid;
for her previous union to plaintiff Tenchavez must be declared to be existent and undissolved. It
follows, likewise, that her refusal to perform her wifely duties, and her denial of consortium and her
desertion of her husband constitute in law a wrong caused through her fault, for which the husband
is entitled to the corresponding indemnity (Civil Code, Art. 2176). Neither an unsubstantiated
charge of deceit nor an anonymous letter charging immorality against the husband constitute,
contrary to her claim, adequate excuse. Wherefore, her marriage and cohabitation with Russell Leo
Moran is technically "intercourse with a person not her husband" from the standpoint of Philippine
Law, and entitles plaintiff-appellant Tenchavez to a decree of "legal separation under our law, on
the basis of adultery" (Revised Penal Code, Art. 333).
The foregoing conclusions as to the untoward effect of a marriage after an invalid divorce are in
accord with the previous doctrines and rulings of this court on the subject, particularly those that
were rendered under our laws prior to the approval of the absolute divorce act (Act 2710 of the
Philippine Legislature). As a matter of legal history, our statutes did not recognize divorces a
vinculo before 1917, when Act 2710 became effective; and the present Civil Code of the
Philippines, in disregarding absolute divorces, in effect merely reverted to the policies on the
subject prevailing before Act 2710. The rulings, therefore, under the Civil Code of 1889, prior to the
Act above-mentioned, are now, fully applicable. Of these, the decision in Ramirez vs. Gmur, 42
Phil. 855, is of particular interest. Said this Court in that case:
As the divorce granted by the French Court must be ignored, it results that the marriage of
Dr. Mory and Leona Castro, celebrated in London in 1905, could not legalize their relations;
and the circumstance that they afterwards passed for husband and wife in Switzerland until
her death is wholly without legal significance. The claims of the very children to participate in
the estate of Samuel Bishop must therefore be rejected. The right to inherit is limited to
legitimate, legitimated and acknowledged natural children. The children of adulterous
relations are wholly excluded. The word "descendants" as used in Article 941 of the Civil
Code cannot be interpreted to include illegitimates born of adulterous relations. (Emphasis
supplied)
Except for the fact that the successional rights of the children, begotten from Vicenta's marriage to
Leo Moran after the invalid divorce, are not involved in the case at bar, the Gmur case is authority
for the proposition that such union is adulterous in this jurisdiction, and, therefore, justifies an
action for legal separation on the part of the innocent consort of the first marriage, that stands
undissolved in Philippine law. In not so declaring, the trial court committed error.
True it is that our ruling gives rise to anomalous situations where the status of a person (whether
divorced or not) would depend on the territory where the question arises. Anomalies of this kind are
not new in the Philippines, and the answer to them was given in Barretto vs. Gonzales, 58 Phil.
667:

46 | P a g e

The hardship of the existing divorce laws in the Philippine Islands are well known to the
members of the Legislature. It is the duty of the Courts to enforce the laws of divorce as
written by Legislature if they are constitutional. Courts have no right to say that such laws
are too strict or too liberal. (p. 72)
The appellant's first assignment of error is, therefore, sustained.
However, the plaintiff-appellant's charge that his wife's parents, Dr. Mamerto Escao and his wife,
the late Doa Mena Escao, alienated the affections of their daughter and influenced her conduct
toward her husband are not supported by credible evidence. The testimony of Pastor Tenchavez
about the Escao's animosity toward him strikes us to be merely conjecture and exaggeration, and
are belied by Pastor's own letters written before this suit was begun (Exh. "2-Escao" and
"Vicenta," Rec. on App., pp. 270-274). In these letters he expressly apologized to the defendants
for "misjudging them" and for the "great unhappiness" caused by his "impulsive blunders" and
"sinful pride," "effrontery and audacity" [sic]. Plaintiff was admitted to the Escao house to visit and
court Vicenta, and the record shows nothing to prove that he would not have been accepted to
marry Vicente had he openly asked for her hand, as good manners and breeding demanded. Even
after learning of the clandestine marriage, and despite their shock at such unexpected event, the
parents of Vicenta proposed and arranged that the marriage be recelebrated in strict conformity
with the canons of their religion upon advice that the previous one was canonically defective. If no
recelebration of the marriage ceremony was had it was not due to defendants Mamerto Escao
and his wife, but to the refusal of Vicenta to proceed with it. That the spouses Escao did not seek
to compel or induce their daughter to assent to the recelebration but respected her decision, or that
they abided by her resolve, does not constitute in law an alienation of affections. Neither does the
fact that Vicenta's parents sent her money while she was in the United States; for it was natural
that they should not wish their daughter to live in penury even if they did not concur in her decision
to divorce Tenchavez (27 Am. Jur. 130-132).
There is no evidence that the parents of Vicenta, out of improper motives, aided and abetted her
original suit for annulment, or her subsequent divorce; she appears to have acted independently,
and being of age, she was entitled to judge what was best for her and ask that her decisions be
respected. Her parents, in so doing, certainly cannot be charged with alienation of affections in the
absence of malice or unworthy motives, which have not been shown, good faith being always
presumed until the contrary is proved.
SEC. 529. Liability of Parents, Guardians or Kin. The law distinguishes between the right
of a parent to interest himself in the marital affairs of his child and the absence of rights in a
stranger to intermeddle in such affairs. However, such distinction between the liability of
parents and that of strangers is only in regard to what will justify interference. A parent
isliable for alienation of affections resulting from his own malicious conduct, as where he
wrongfully entices his son or daughter to leave his or her spouse, but he is not liable unless
he acts maliciously, without justification and from unworthy motives. He is not liable where
he acts and advises his child in good faith with respect to his child's marital relations in the
interest of his child as he sees it, the marriage of his child not terminating his right and
liberty to interest himself in, and be extremely solicitous for, his child's welfare and
happiness, even where his conduct and advice suggest or result in the separation of the
spouses or the obtaining of a divorce or annulment, or where he acts under mistake or
misinformation, or where his advice or interference are indiscreet or unfortunate, although it
has been held that the parent is liable for consequences resulting from recklessness. He
may in good faith take his child into his home and afford him or her protection and support,
so long as he has not maliciously enticed his child away, or does not maliciously entice or
cause him or her to stay away, from his or her spouse. This rule has more frequently been
applied in the case of advice given to a married daughter, but it is equally applicable in the
case of advice given to a son.
Plaintiff Tenchavez, in falsely charging Vicenta's aged parents with racial or social discrimination
and with having exerted efforts and pressured her to seek annulment and divorce, unquestionably
caused them unrest and anxiety, entitling them to recover damages. While this suit may not have
been impelled by actual malice, the charges were certainly reckless in the face of the proven facts
47 | P a g e

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

Footnotes
48 | P a g e

The latter was substituted by her heirs when she died during the pendency of the case in
the trial court.
2

The original complaint included the Roman Catholic Church as a defendant, sought to be
enjoined from acting on a petition for the ecclesiastical annulment of the marriage between
Pastor Tenchavez and Vicenta Escao; the case against the defendant Church was
dismissed on a joint motion.
3

In the present Civil Code the contrary rule obtains (Art. 53).

She was naturalized as an American citizen only on 8 August 1958.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-17396

May 30, 1962

CECILIO PE, ET AL., plaintiffs-appellants,


vs.
ALFONSO PE, defendant-appellee.
Cecilio L. Pe for and in his own behalf as plaintiff-appellant.
Leodegario L. Mogol for defendant-appellee.
BAUTISTA ANGELO, J.:
49 | P a g e

Plaintiffs brought this action before the Court of First Instance of Manila to recover moral,
compensatory, exemplary and corrective damages in the amount of P94,000.00 exclusive of
attorney's fees and expenses of litigation.
Defendant, after denying some allegations contained in the complaint, set up as a defense that the
facts alleged therein, even if true, do not constitute a valid cause of action.
After trial, the lower court, after finding that defendant had carried on a love affair with one Lolita
Pe, an unmarried woman, being a married man himself, declared that defendant cannot be held
liable for moral damages it appearing that plaintiffs failed to prove that defendant, being aware of
his marital status, deliberately and in bad faith tried to win Lolita's affection. So it rendered decision
dismissing the complaint.1wph1.t
Plaintiffs brought this case on appeal before this Court on the ground that the issues involved are
purely of law.
The facts as found by the trial court are: Plaintiffs are the parents, brothers and sisters of one Lolita
Pe. At the time of her disappearance on April 14, 1957, Lolita was 24 years old and unmarried.
Defendant is a married man and works as agent of the La Perla Cigar and Cigarette Factory. He
used to stay in the town of Gasan, Marinduque, in connection with his aforesaid occupation. Lolita
was staying with her parents in the same town. Defendant was an adopted son of a Chinaman
named Pe Beco, a collateral relative of Lolita's father. Because of such fact and the similarity in
their family name, defendant became close to the plaintiffs who regarded him as a member of their
family. Sometime in 1952, defendant frequented the house of Lolita on the pretext that he wanted
her to teach him how to pray the rosary. The two eventually fell in love with each other and
conducted clandestine trysts not only in the town of Gasan but also in Boac where Lolita used to
teach in a barrio school. They exchanged love notes with each other the contents of which reveal
not only their infatuation for each other but also the extent to which they had carried their
relationship. The rumors about their love affairs reached the ears of Lolita's parents sometime, in
1955, and since then defendant was forbidden from going to their house and from further seeing
Lolita. The plaintiffs even filed deportation proceedings against defendant who is a Chinese
national. The affair between defendant and Lolita continued nonetheless.
Sometime in April, 1957, Lolita was staying with her brothers and sisters at their residence at 54-B
Espaa Extension, Quezon City. On April 14, 1957, Lolita disappeared from said house. After she
left, her brothers and sisters checked up her thing and found that Lolita's clothes were gone.
However, plaintiffs found a note on a crumpled piece of paper inside Lolita's aparador. Said note,
written on a small slip of paper approximately 4" by 3" in size, was in a handwriting recognized to
be that of defendant's. In English it reads:
Honey, suppose I leave here on Sunday night, and that's 13th of this month and we will
have a date on the 14th, that's Monday morning at 10 a.m.
Reply
Love
The disappearance of Lolita was reported to the police authorities and the NBI but up to the
present there is no news or trace of her whereabouts.
The present action is based on Article 21 of the New Civil Code which provides:
Any person who wilfully causes loss or injury to another in a manner which is contrary to
morals, good customs or public policy shall compensate the latter for the damage.
There is no doubt that the claim of plaintiffs for damages is based on the fact that defendant, being
a married man, carried on a love affair with Lolita Pe thereby causing plaintiffs injury in a manner
contrary to morals, good customs and public policy. But in spite of the fact that plaintiffs have
clearly established that in illicit affair was carried on between defendant and Lolita which caused
great damage to the name and reputation of plaintiffs who are her parents, brothers and sisters,
50 | P a g e

the trial court considered their complaint not actionable for the reason that they failed to prove that
defendant deliberately and in bad faith tried to win Lolita's affection Thus, the trial court said: "In the
absence of proof on this point, the court may not presume that it was the defendant who
deliberately induced such relationship. We cannot be unmindful of the uncertainties and sometimes
inexplicable mysteries of the human emotions. It is a possibility that the defendant and Lolita simply
fell in love with each other, not only without any desire on their part, but also against their better
judgment and in full consciousness of what it will bring to both of them. This is specially so with
respect to Lolita, being an unmarried woman, falling in love with defendant who is a married man."
We disagree with this view. The circumstances under which defendant tried to win Lolita's affection
cannot lead, to any other conclusion than that it was he who, thru an ingenious scheme or trickery,
seduced the latter to the extent of making her fall in love with him. This is shown by the fact that
defendant frequented the house of Lolita on the pretext that he wanted her to teach him how to
pray the rosary. Because of the frequency of his visits to the latter's family who was allowed free
access because he was a collateral relative and was considered as a member of her family, the
two eventually fell in love with each other and conducted clandestine love affairs not only in Gasan
but also in Boac where Lolita used to teach in a barrio school. When the rumors about their illicit
affairs reached the knowledge of her parents, defendant was forbidden from going to their house
and even from seeing Lolita. Plaintiffs even filed deportation proceedings against defendant who is
a Chinese national. Nevertheless, defendant continued his love affairs with Lolita until she
disappeared from the parental home. Indeed, no other conclusion can be drawn from this chain of
events than that defendant not only deliberately, but through a clever strategy, succeeded in
winning the affection and love of Lolita to the extent of having illicit relations with her. The wrong he
has caused her and her family is indeed immeasurable considering the fact that he is a married
man. Verily, he has committed an injury to Lolita's family in a manner contrary to morals, good
customs and public policy as contemplated in Article 21 of the new Civil Code.
WHEREFORE, the decision appealed from is reversed. Defendant is hereby sentenced to pay the
plaintiffs the sum of P5,000.00 as damages and P2,000.00 as attorney's fees and expenses of
litigations. Costs against appellee.
Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes and Dizon, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-18782

August 29, 1963

BINALBAGAN-ISABELA SUGAR CO., INC., (BISCOM), petitioner,


vs.
PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU), ET AL., respondents.
Salonga, Ordoez, Sicat & Associates for petitioner.
Cipriano Cid & Associates for respondents.
BAUTISTA ANGELO, J.:
The Binalbagan-Isabela Sugar Co., Inc., BISCOM for short, is a corporation engaged in the
manufacture of centrifugal sugar at Binalbagan, Negros Occidental. Among its employees were
Enrique G. Entila and Victoriano Tenazas.
On March 6, 1952, Entila and Tenazas joined the Fraternal Labor Organization (FLO), which is a
labor union composed of employees and laborers of the BISCOM. On May 3, 1957, the BISCOM
entered into a two-year collective bargaining agreement containing a closed shop clause with said
union wherein it was stipulated that the agreement may be extended for a period of one year
51 | P a g e

unless either party notifies the other in writing, not less than 60 days prior to its expiry date of its
intention to terminate the same. The closed shop clause, among others, contains the following
provisions. "Any employee who resigns or for any reason ceases to be a member or a member of
good standing of the UNION, or who, not being a member fails to become member of the UNION,
within the aforementioned fifteen (15) day-period shall be considered as a sufficient cause for
dismissal by the COMPANY and for the forfeiture of all privileges extended by the COMPANY by
virtue of this Agreement."
On March 4, 1959, the BISCOM and the aforesaid Union entered into a new collective bargaining
agreement incorporating therein the same closed shop clause which was also made effective for a
period of two years from March 4, 1959, extendible for another period of one year unless either
party notifies the other in writing, not less than 60 days prior to the expiry date, of its intention to
terminate the same. This as well as the original collective bargaining agreement were signed by
Entila and Tenazas who agreed to abide by and respect its terms and conditions.
Notwithstanding their commitment to respect the collective bargaining agreement signed on March
4, 1959, Entila and Tenazas, in violation of its closed shop provision, joined the Philippine
Association of Free Labor Unions (PAFLU), another labor organization composed of laborer, and
employees of the BISCOM, and campaigned among their co-employees and laborers persuading
them to join and affiliate with the latter union, for which reason they were investigated in connection
with union activities. Two hearings were held at which Entila and Tenazas were given an
opportunity to explain their behavior. And having been found guilty of misconduct they were
expelled from the Fraternity Labor Organization. On May 31, 1959, the Fraternal Labor
Organization notified the BISCOM of the action taken against Entila and Tenazas, and, acting in
line with the closed shop provision contained in the collective bargaining agreement, it decreed the
dismissal of said employees.
As a result of their dismissal, the two employees, together with the Philippine Association of Free
Labor Unions (PAFLU), with which they were later affiliated, filed a complaint for unfair labor
practice against the BISCOM and the Fraternal Labor Organization (FLO) with the Court of
Industrial Relations alleging that because said employees joined the PAFLU and campaigned
actively for membership therein among their co-employees especially those affiliated with the FLO,
they were dismissed from their employment by the BISCOM.
The BISCOM denied the unfair labor practice imputation. It alleged that Entila and Tenazas were
dismissed pursuant to the closed shop provision contained in the collective bargaining agreement
executed between the FLO and the BISCOM, and that on May 31, 1959, the BISCOM was notified
by the FLO of the expulsion from the union of said employees asking for their dismissal, and so it
had to accede to the demand in line with the closed shop provision. The FLO, in turn, also denied
the charge and alleged that the expulsion of Entila and Tenazas was effected in accordance with
its constitution and by-laws and because of their failure to respect the closed shop provision
contained in the collective bargaining agreement.
In a decision rendered on March 29, 1961, Presiding Judge Jose S. Bautista, who was assigned to
receive the evidence, found that the unfair labor practice charge was justified and so he decreed
that Entila and Tenazas be reinstated to their former positions with payment of back wages from
the time of their dismissal, the Judge stating that, since it was established that said employees
performed the duties of supervisors, it was improper for them to join the FLO or any other rank and
file union even if they may become members of a supervisors' union. And as this decision was
affirmed by the Court of Industrial Relations en banc, the BISCOM interposed the present petition
for review.1wph1.t
The issues posed by the parties when this case was submitted for decision after the presentation
of their evidence were boiled down by the court a quo as follows: (1) Do Entila and Tenazas come
within the scope of supervisory employees?; (2) Was their suspension and expulsion by the FLO in
accordance with due process?; (3) Is the closed shop provision contained in the collective
bargaining agreement concluded on March 3, 1947 valid?; and (4) Was the dismissal of Entila and
Tenazas legal?

52 | P a g e

Anent the first issue, the parties submitted both testimonial as well as documentary evidence, and
after a detailed and minute analysis thereof, the court a quo found that, Entila and Tenazas
performed the duties of foremen or supervisors. In other words, contrary to the contention of the
BISCOM, the court a quo became convinced that the duties performed by them were essentially
those of foremen since they were given the right to recommend or suggest the disciplinary
measures that should be taken against the erring employees. Indeed, the court said: "Within the
purview of the legal definition of supervisor, both (complainants herein) had exercised the inherent
powers as such when they were allowed by the company to make suggestions or
recommendations for disciplinary matters on their men", and this conclusion is supported not only
by testimonial evidence but by numerous exhibits.
The company now disputes this filing, but being a question of fact which is supported by substantial
evidence, we are not now justified in inquiring into the matter.
Anent the second issue, the court a quo likewise found that Tenazas, being a member of the Board
of Directors of the FLO, did not undergo am impeachment proceeding as provided in its by-laws
relative to the action to be taken against an officer of the union, while Entila was not given proper
hearing even if he was called before a lawyer of the union for investigation. The court found that
during the alleged hearing not a single witness was presented as Entila was merely questioned
investigating the contents of certain affidavits. In fact, the son of Entila who was a law student
asked for postponement of the hearing so that he could prepare the defense of his father, but the
request was denied. This is also a question of fact which we cannot now look into being supported
by substantial evidence.
Concerning the collective bargaining agreement involved in the third issue, the company disputes
the view taken by the court a quo that said collective bargaining agreement was illegal because it
was entered into with a union which was not certified by the court as the one chosen by the
employees as their collective bargaining unit for, it is contended, such view ignores the fact that
under the law there are four different ways under which a collective bargaining agreement maybe
entered into by an employer and his employees, one of them being when "a majority of the
employees designate the labor organization it may choose to act as its representative for the
purpose of collective bargaining, which it can do without court intervention, and the organization so
designated may immediately conclude a collective bargaining with the employer."
This contention may be correct if a majority of the employees should request the employer to
designate certain labor union as their representative in order that it may conclude with it the
necessary collective bargaining agreement, but this can only take place when there is no dispute
as to what union counts in its membership with a majority of its employees for otherwise there
would be need to file in court a petition for certification election, the reason for this requirement
being that a labor union cannot on its own accord and responsibility determine by itself the
question of majority membership. Here this is precisely the question in dispute when the Visayan
Free Workers Union, one of the several unions existing in the BISCOM, filed a petition for
certification election in order that the court may determine the union that has a majority
representation, but notwithstanding this petition, which was joined by other legally existing unions,
the BISCOM concluded with the FLO the disputed collective bargaining agreement. Said the
court a quo on this matter.
. . . However, the records show that before the execution of the contract on May 3, 1957,
there was already a pending petition for certification election docketed as Case No. 3-MCIloilo which was filed by the Free Visayan Union on December 8, 1956. Summons was
served to the Binalbagan-Isabela Sugar Co., Inc. (BISCOM) on December 14, 1956 where a
return of service was executed by a police officer of the Municipality of Binalbagan. A motion
for intervention under the same case was filed by the Allied Workers Association on August
15, 1957 and another motion for intervention was filed by the Philippine Association of Free
Labor Unions (PAFLU) on January 27, 1959. Based on these dates, it could be clearly said
that there was already an issue of majority representation in the proper collective bargaining
unit before the execution of the agreement on May 3, 1957. The filing of a petition for
certification election raises a doubt as to the majority representation. Only the Court should
resolve this point. The company or any interested union has no authority to resolve it as in
this case, there were other unions apparently existing in the company aside from the FLO
53 | P a g e

before May 3, 1957. The three or four contending unions were asserting their majority
representation. The written affirmation made by the members of the FLO or their willingness
to side with the FLO for purposes of executing a collective bargaining agreement does not
cure nor resolves the question of majority representations. Nevertheless, the company,
despite the absence of any compelling necessity for dealing only with the FLO, executed a
collective bargaining agreement on May 3, 1957. There was no cogent reason why it
hurriedly executed such contract. It may be surmised that the company just relied on the
different signatures of alleged members as the only factors that led to the execution of the
contract on May 3, 1957. However, there was no positive proof that all the signatures
obtained were genuine and freely given for such purpose. Precisely, the very reason why
court's intervention is mandatory on cases of certification involving many unions in a
particular unit is to assure freedom of choice through democratic proceedings. The Court
frowns at unilateral determination of majority representation in a unit for this leads to either
company domination or preference. In the case at bar, at least four (4) unions claim for
majority, hence it is incumbent for the Court to determine and the company to defer its
execution of a contract. The impact of company's preference with the FLO is revealing at the
expense of other unions then existing.
Having reached the conclusion that the collective bargaining agreement in question was concluded
not in accordance with the law, we find no cogent reason for disturbing the decision of the Court of
Industrial Relations.
WHEREFORE, the decision appealed from is affirmed, with costs against petitioner.
Bengzon, C.J., Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and
Makalintal JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-18783

May 25, 1964

GENEROSO BAJE and SATURNINA SACDALAN, petitioners,


vs.
COURT OF APPEALS, CRISTINA VALDEZ, VICENTE VALDEZ,
CLEMENTE VALDEZ, MACARIA VALDEZ, GERONIMO VALDEZ,
MARCELO VALDEZ II, accompanied by his guardian ad litem
CRISTINA VALDEZ, MAXIMO VALDEZ, MARIA DE LOS SANTOS and AMBROSIO
CACAYAN, respondents.
Eliodoro M. Benitez for petitioners.
Felino G. Quilling for respondents.
CONCEPCION, J.:
Appeal by certiorari from a decision of the Court of Appeals. As set forth in said decision, the facts
are:
It appears that on June 17, 1932, Marcelo Valdez, now deceased, was issued homestead
patent No. 19151 covering four parcels of land situated in barrio Wakal Bayombong and
Solano, Nueva Vizcaya, together with the improvements existing thereon; that said patent
having been recorded in the registry of deeds of Nueva Vizcaya, Original Certificate of Title
No. 542 was issued in the name of said Marcelo Valdez; that he and his family had been
possessing said parcel of land from 1907 to the time they were sold to appellees in 1933
and 1935; that since then appellees have been in possession of said parcels of land which
have an average annual yield of 50 cavanes of palay of 50 kilos each per hectare, one-half
of which belongs to the tenant and the other half to the owner, the current price of a cavan
54 | P a g e

of palay being P9.00; that on April 1936, May 1940 and December 1946, appellants Macaria
and Cristina, surnamed Valdez, daughters of the late Marcelo Valdez, demanded the return
of the parcels of land in question from appellees but the latter refused to do so; and that on
March 1, 1953 appellants Cristina, Vicente and Clemente, surnamed Valdez, formally
required from appellees the return and delivery of said parcels of land.
In the light of the foregoing facts, the lower court dismissed the present action holding that
appellants having been guilty of laches had lost their right to demand the return of the
parcels of land in dispute.
The Court of Appeals disagreed with this conclusion of the court of first instance upon the ground
that the "requisites for the existence of the equitable defense of laches are not present in this case"
and that:
... even if appellants may be held guilty of laches for having instituted this action only on
March 23, 1953, after the lapse of almost twenty-one years since the homestead patent was
issued in the name of the late Marcelo Valdez, still they are entitled as heirs of said Marcelo
Valdez to recover the parcels of land in dispute it appearing that their sale in favor of
appellants having been made within the period of five years from the date of the issuance of
the homestead patent, the same was null and void from its execution (Secs. 116, 122, Act
No. 2874 as amended; Labrador, et al. vs. Santos, et al., 66 Phil. 579, 581; Oliveros vs.
Porciongcola, 69 Phil. 305, 306; Corpuz, et al. vs. Beltran, et al., 51 Off. Gaz. 5631-5632;
Angeles, et al. vs. Court of Appeals, G.R. No. L-11024, January 31. 1958). And appellants
as heirs of the late Marcelo Valdez had personality to institute the present action for the
declaration of the inexistence of such sale, and such action does not prescribe (Art. 1410,
new Civil Code; Eugenio et al. vs. Perdido, et al., G.R. No. L-7083, May 19, 1955).
The Court of Appeals further held:
On the other hand, appellees claim that they are not bound to pay damages as they were
possessors in good faith. But they ceased to be such possessors in good faith from the time
they became actually aware of the flaw in their title and that was on March 23, 1953, when
the original complaint in this case was filed. Hence, from such date appellees are liable to
appellants for damages.
The dispositive part of the decision of the Court of Appeals reads:
WHEREFORE, the decision appealed from is hereby reversed and another entered
declaring appellants to be the owners of the four parcels of land in dispute with right of
possession thereof; ordering appellees to deliver the ownership and possession of said
parcels of land to appellants; ordering the cancellation of transfer certificate of title No. 2213
in appellees' name and the issuance of another in appellants' name and ordering appellees
to pay appellants in the concept of damages the current price of P9.00 per cavan of palay
for 25 cavanes of palay of 50 kilos each per hectare annually from March 23, 1953, until
delivery of the parcels of land shall have actually been made to appellants. Without any
pronouncement as to costs.1wph1.t
Hence, the case is now before us on petition for review by certiorari filed by the defendants in the
lower court, Generoso Baje and his wife Saturnina Sacdalan. In their original petition the Bajes
assigned eight (8) errors allegedly committed by the Court of Appeals; however, in their amended
petition they maintained that the Court of Appeals had merely erred:
1. ... in holding that petitioners deliver possession of the lands in question without ordering
the respondents to return the purchase price paid therefor.
2. ... in not holding that the petitioners are entitled to reimbursement of the value of
improvements introduced by petitioners in good faith and also in not holding that the
petitioners have the right to retain the land in question until they are reimbursed of said
value of improvements.
55 | P a g e

With respect to the first assignment of error, it appears that, upon receipt of notice of the decision
of the Court of Appeals, the Bajes filed therein a motion for reconsideration alleging inter alia, that,
if the sales in their favor are null and void, and, accordingly, the lands in question belong to the
heirs of Marcelo Valdez, said heirs should be sentenced to refund the amounts paid by the Bajes to
Marcelo Valdez, or the aggregate sum of P3,734. This relief was denied by the Court of Appeals,
upon the ground:
That the appellants are not bound to return to appellees the purchase price that their
predecessors in interest, the late Marcelo Valdez, had received in consideration of the sale,
appellees recourse being to institute an intestate proceedings covering the estate of the
deceased Marcelo Valdez and file therein a claim for the purchase price paid by them or
their predecessors-in-interest.
This view is supported by Labrador vs. De los Santos, 66 Phil. 579, 581-582 (November 26, 1938),
in which it was held:
The alienation by Santiago de los Santos of his land in favor of the plaintiffs Antonio
Labrador and Felipa Canonizado was made in violation of the provision of section 116 of Act
No. 2874, as amended by section 23 of Act No. 3517, which prohibits the encumbering or
alienation of a land acquired as a homestead within five years from the issuance of the
homestead patent, wherefore, it is illegal and void. As the declaration of nullity of a contract
void ab initio operates to restore things in the state and condition in which they were found
before the execution thereof, the land in question was returned to the ownership of Santiago
de los Santos, in his lifetime, and that of his children, after his death, with the obligation on
the part of said Santiago de los Santos to return to the purchasers, the plaintiffs , the price of
the sale, with interest (Art. 1303, Civil Code). Santiago de los Santos being the vendor, had
the declaration of nullity taken place while he was living, he would have to return said price
to the purchasers; but having died before the declaration of nullity, the plaintiffs should have
presented their claim for the return of the price in the testate or intestate proceedings of the
deceased, and they cannot go against the children of the latter inasmuch as the said
children inherit with the benefit of inventory and only that remaining of the inheritance after
paying the indebtedness of the testate or intestate. While it is true that the defendants
inherited the land in question, the price of the sale cannot be charged thereon, because the
said section 116 of Act No. 2874, as amended by section 23 of Act No. 3517, prohibits the
subjection of such land to the payment of said obligation which was contracted within five
years from the issuance of the homestead patent, as above stated. In any event, the
plaintiffs may institute the intestate proceedings of Santiago de los Santos and file their
claim before the committee on claims and appraisal to be named therein.
This ruling was reiterated in Castro, et al. v. Orpiano, 90 Phil. 491, 493 (November 29, 1951), but it
is inconsistent with subsequent decisions of this Court.
After declaring that the sale of a, homestead made within five (5) years from the issuance of the
corresponding patent is null and void and that the heirs of the deceased homesteaders "have the
right to recover the homestead illegally disposed of", we held in Angeles vs. Court of Appeals, L11024 (January 21, 1958), speaking thru Mr. Justice Labrador:
With respect to the price that the defendants had paid for the land P2,500, in view of the rule
that no one should enrich himself at the expense of another, the return of the said amount
by the plaintiffs should be decreed, before the plaintiffs may be allowed to recover back the
possession of the homestead, subject of the action.
The decision of the Court of Appeals is hereby reversed and judgment is hereby entered
declaring the sale of the homestead null and void, ordering the defendants to return the
same to the plaintiffs upon payment by the latter to them of the sum of P2,500. The claim of
plaintiffs for the value of the products of the land and that of defendants for the expenses in
the construction of the dike are both dismissed. Without costs in this appeal. (Emphasis
ours.)
In Medel vs. Eliazo, L-12617 (August 27, 1959), the language used was:
56 | P a g e

It is the contention of plaintiffs that the contract of sale was void ab initio, therefore, it does
not exist in the eyes of the law and so it does not have any consideration; consequently,
they are not liable to pay or return the P1,500, the price of the sale. We agree with the
defendant that plaintiffs may not enrich themselves at his expense. The sale of the
homestead in question, having been executed before the expiration of the five-year period
prescribed by law, it is void, but it does not mean that since they continue to be owners of
the land they should not return the sum received by them as the sales price. It is a case of
mutual restitution incident to the nullity ab initio of the conveyance (Santander, et al. vs.
Villanueva, et al., G.R. No. L-6184, prom. February 28, 1958; Felices vs. Iriola, G.R. No. L11269, prom. February 28, 1958). (Emphasis ours.)
Again, under substantially the same conditions, we affirmed, in Companero vs. Coloma, L-11908
(January 30, 1960), a decision of the Court of First Instance of Nueva Vizcaya, the dispositive part
of which reads as follows:
In view of the foregoing, decision is hereby rendered in favor of the plaintiffs and against the
defendants, ordering the latter to surrender the possession of the parcel of land in question
to the plaintiffs; and ordering the cancellation of Transfer Certificate of Title No. 2398 in the
name of the defendant Apolonio T. Coloma, over the parcel of land in question and the
issuance, in lieu thereof, of another transfer certificate of title in the name of the herein
plaintiffs in equal shares, upon reimbursement by them to the defendants of the sum of
P700.00 1 with interest at the rate of 6% per annum from the date this decision has become
final. And without special pronouncement as to costs. (Emphasis ours.)
In a decision penned by Mr. Justice Reyes (J.B.L.), we expressed ourselves in Manzano vs.
Ocampo, L-14778 (February 28, 1961), as follows:
We therefore, hold that the sale in question is illegal and void for having been made within
five years from the date of Manzano's patent, in violation of section 118 of the Public Land
Law. Being void from its inception, the approval thereof by the Undersecretary of Agriculture
and Natural Resources after the lapse of five years from Manzano's patent did not legalize
the sale (Santander v. Villanueva, G.R. No. L-6184, Feb. 28, 1958; Cadiz vs. Nicolas, G.R.
No. L-9198, Feb. 13, 1958). The result is that the homestead in question must be returned
to Alanzano's heirs, petitioners herein, who are, in turn bound to restore to appellee
Ocampo the sum of P3,000.00 received by Manzano as the price thereof (Medel v. Eliazo
G.R. No. L-12617, Aug. 27, 1959; Santander vs. Villanueva, supra; Felices vs. Iriola, G.R.
No. L-11269, Feb. 28, 1958). The fruits of the land should equitably compensate the interest
on the price.
WHEREFORE, the judgment appealed from is reversed and another one entered declaring
null and void the sale of the homestead in question to appellee Rufino Ocampo. The
Register of Deeds for the Province of Nueva Ecija is hereby ordered to cancel appellee
Ocampo's Transfer Certificate of Title No. 15584, and reissue to the heirs of the deceased
Victoriano Manzano the title to the homestead in question. Petitioners are, however, ordered
to return to appellee Ocampo the amount of P3,000.00 received by their predecessor
Victorians Manzano as the price of said homestead. No costs. (Emphasis ours.)
In other words the doctrine laid down in the Labrador and the Castro cases must be deemed
revoked. Indeed, performance of the obligation of the Bajes to restore the possession of the lots in
dispute to the heirs of the deceased Marcelo Valdez cannot be demanded by the latter unless they,
in turn, comply with their reciprocal obligation to refund the price paid by the Bajes Hence, the first
assignment of error is well taken.
Under the second assignment of error, the Bajes maintain that they are entitled to reimbursement
of the cost of the improvements allegedly introduced by them in good faith and to retain the land in
question until such reimbursement shall have been made. The record does not satisfactorily show,
however, the existence of any such improvements. What is more, the court of first instance found
and the Court of Appeals has not disturbed this finding that the expenses allegedly incurred
by the Bajes in connection with the lots in litigation were not necessary for the preservation thereof
and did not constitute improvements, but were mere expenses of production the reimbursement of
57 | P a g e

which may not be demanded by the Bajes they having been compensated therefor by the products
of said lots harvested by them. The second assignment of error is, therefore, untenable.
In short, the sale made by the deceased Marcelo Valdez to herein petitioners Generoso Baje and
Saturnina Sacdalan is null and void ab initio, for which reason the respondents herein, as heirs and
successors in interest of Marcelo Valdez are the owners of the lots aforementioned, and, hence,
entitled to the possession thereof upon reimbursement to the Bajes of the sum of P3,734.00 paid
by them to the deceased. Thereafter, Transfer Certificate of Title No. 2213, in the name of herein
petitioners, shall be cancelled and another one issued in the name of respondents herein.
Inasmuch as the latter have no right to the possession of the lots in question until after the
reimbursement above referred to shall have taken place, and they have neither judicially consigned
said sum of P3,734.00, nor offered to make such reimbursement, the Bajes are not bound to pay to
herein respondents the damages awarded in the decision of the Court of Appeals, except those
that may be caused from and after the refund of said sum of P3,734.00.
With this modification, said decision is hereby affirmed, without special pronouncement as to costs.
It is so ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Barrera, Paredes, Dizon and Makalintal, JJ.,
concur.
Reyes, J.B.L. and Regala, JJ., took no part.
Footnotes
1

Representing the purchase price of the land in question.

58 | P a g e

EN BANC
[G.R. No. L-7817. October 31, 1956.]
ALFREDO M. VELAYO, in his capacity as Assignee of the insolvent COMMERCIAL AIR
LINES, INC. (CALI), Plaintiff-Appellant, vs. SHELL COMPANY OF THE PHILIPPINE ISLANDS,
LTD., Defendant-Appellee, YEK HUA TRADING CORPORATION, PAUL SYCIP and MABASA
& CO., intervenors.
DECISION
FELIX, J.:
Antecedents The Commercial Air Lines, Inc., which will be hereinafter referred to as CALI, is a
corporation duly organized and existing in accordance with the Philippines laws, with offices in the
City of Manila and previously engaged in air transportation business. The Shell Company of the P.
I., Ltd., which will be designated as the Defendant, is on the other hand, a corporation organized
under the laws of England and duly licensed to do business in the Philippines, with principal offices
at the Hongkong and Shanghai Bank building in the City of Manila.
Since the start of CALIs operations, its fuel needs were all supplied by the Defendant. Mr.
Desmond Fitzgerald, its Credit Manager who extended credit to CALI, was in charge of the
collection thereof. However, all matters referring to extensions of the term of payment had to be
decided first by Mr. Stephen Crawford and later by Mr. Wildred Wooding, who represented in this
country Defendants Board of Directors, the residence of which is in London, England (Exhs. 4-B
and 4-A).
As of August, 1948, the books of the Defendant showed a balance of P170,162.58 in its favor for
goods it sold and delivered to CALI. Even before August 6, 1948, Defendant had reasons to
believe that the financial condition of the CALI was for from being satisfactory. As a matter of fact,
according to Mr. Fitzgerald, CALIs Douglas C-54 plane, then in California, was offered to him by
Mr. Alfonso Sycip, CALIs President of the Board of Directors, in partial settlement of their
accounts, which offer was, however, declined by Mr. Crawford, probably because upon inquiries
made by Mr. Fitzgerald sometime before August 6, 1948, for the purpose of preparing the report for
its London office regarding CALIs indebtedness, Col. Lambert, CALIs Vice President and General
Manager, answered that the total outstanding liabilities of his corporation was only P550,000, and
the management of Defendant probably assumed that the assets of the CALI could very well meet
said liabilities and were not included to take charge of the sale of CALIs said Douglas C-54 plane
to collect its credit.
On August 6, 1948, the management of CALI informally convened its principal creditors (excepting
only the insignificant small claims) who were invited to a luncheon that was held between
12:chanroblesvirtuallawlibrary00 and 2:chanroblesvirtuallawlibrary00 oclock in the afternoon of that
day in the Trade and Commerce Building at 123 Juan Luna St., Manila, and informed them that
CALI was in a state of insolvency and had to stop operation. The creditors present, or represented
at the meeting, were:chanroblesvirtuallawlibrary
Mr. A. L. Bartolini, representing Firestone Tire & Rubber Co.; chan roblesvirtualawlibrary
Mr. Quintin Yu, representing Commercial News; chan roblesvirtualawlibrar
Mr. Mark Pringle, representing Smith, Bell & Co. (Lloyds of London); chan r]
Messrs. Vicente Liwag, C. Dominguez and Pacifico Agcaoili, representing National Airports
Corporation; chan r
59 | P a g e

Messrs. W. J. Bunnel and Manuel Chan, representing Goodrich International Rubber Co.; chan
roblesvirtualawlibrary
Mr. G. E. Adair, representing Goodyear Tire & Rubber Co.; chan roblesvirtualawlibrary
Mr. J. T. Chuidian, representing Gibbs, Gibbs, Chuidian & Quasha; chan roblesvirtualawlibrar
Mr. E. Valera, representing Mabasa & Co.; chan roblesvirtualawlibrary
Mr. D. Fitzgerald, representing Shell Co. P.I. Ltd.; chan roblesvirtualawlibrary
and Mr. Alfonso Z. Sycip, representing himself, Yek Hua Trading Corporation and Paul Sycip
(Exhs. NN, JJJ, MM, QQQ, II-4, SS, TT, UU, VV, WW, XX, YY, ZZ, AAA, BBB, CCC, DDD, EEE,
FFF, GGG, and HHH).
The persons present, including Mr. Desmond Fitzgerald, signed their names and the names of the
companies they represented on a memorandum pad of the law firm Quisumbing, Sycip, and
Quisumbing (Exhs. VV and VV-1).
In that meeting at noontime of August 6, 1948, out of the 194 creditors in all (Exh. OO) 15 were
listed as principal creditors having big balances (Exh. NN), to wit:chanroblesvirtuallawlibrary
13th Air Force P12,880.00
Civil Aeronautics Administration 98,127.00
Gibbs, Giibs, Chuidian & Quasha 5,544.90
Goodrich Intl Rubber Co. 3,142.47
Goodyear Tire & Rubber Co. 1,727.50
Mabasa & Co. 4,867.72
Manila Intl Airport 55,280.04
Manila Intl Air Terminal (PAL) 36,163.68
Shell Co. of the Phil., Ltd. 152,641.68
Smith, Bell & Co., Ltd. 45,534.00
Paul Sycip 8,189.33
Mrs. Buenaventura 20,000.00
Firestone Tire & Rubber Co. 4,911.72
Alfonso Sycip 575,880.83
Yek Hua Trading Corp. 487,871.20

P1,512,762.87
What occurred in that meeting may be summarized as follows:chanroblesvirtuallawlibrary
Mr. Alexander Sycip, Secretary of the Board of Directors of the CALI, informed the creditors
present that this corporation was insolvent and had to stop operations. He explained the
memorandum agreement executed by the CALI with the Philippine Air Lines, Inc., on August 4,
1948, regarding the proposed sale to the latter of the aviation equipments of the former (Exhs. MM
and QQQ, par. 1 memo of meeting; chan roblesvirtualawlibrar
Exhs. III and PPP P. Agcaoilis memorandum dated August 7, 1948, to the General Manager of
the National Airports Corp.). Mr. Alexander Sycip was assisted in the explanation by CPA Alfredo
Velayo of Washington, Sycip & Company, Auditors of the CALI, who discussed the balance sheets
and distributed copies thereof to the creditors present (Exhs. NN, NN-1 to 7; chan
roblesvirtualawlibrary
Exh. JJ P. Agcaoilis copy of balance sheet p. 229- 230 t.s.n., Nov. 27, 1951, of the testimony of
D. Fitzgerald). The said balance sheet made mention of a C-54 plane in the United States, the
property now involved in this suit. He was likewise assisted in his explanation by Mr. Curtis L.
Lambert, Vice President and General Manager of the CALI, who described in greater detail the
assets of the CALI. There was a general understanding among all the creditors present on the
desirability of consummating the sale in favor of the Philippine Air Lines Inc. (Exhs. MM and QQQ,
par. 2 Memo of meeting; chan roblesvirtualawlibrary
Exhs. III and PPP, par. 5 P. Agcoailis memorandum dated August 7, 1948, to the General
Manager of the National Airports Corp.; chan roblesvirtualawlibraryand pp. 299-300 t.s.n., January
15, 1952, of the testimony of Desmond Fitzgerald).
Then followed a discussion on the payment of claims of creditors and the preferences claimed for
the accounts due to the employees, the Government and the National Airports Corporation. The
representatives of the latter Messrs. Vicente H. Liwag, C. Dominguez and Pacifico V. Agcaoili,
60 | P a g e

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

Pacific Overseas Air Lines for the CALI (Exhs. N, O, P, AA, BB, BB-1 and CC) and on January 5,
1949, a judgment by default was entered by the American court (Exhs. J, EE, FF, GG, and HH).
Unaware of Defendants assignments of credit and attachment suit, the stockholders of CALI
resolved in a special meeting of August 12, 1948, to approve the memorandum agreement of sale
to the Philippine Air Lines, Inc, and noted that the Board had been trying to reach an agreement
with the creditors of the corporation to prevent insolvency proceedings, but so far no definite
agreement had been reached (Exh. OO Minutes of August 12, 1948, stockholders meeting).
By the first week of September, 1948, the National Airports Corporation learned ofDefendants
action in the United States and hastened to file its own complaint with attachment against the CALI
in the Court of First Instance of Manila (Exhs. KKK, LLL, and MMM). The CALI, also prompted
by Defendants action in getting the alleged undue preference over the other creditors by attaching
the C-54 plane in the United States, beyond the jurisdiction of the Philippines, filed on October 7,
1948, a petition for voluntary insolvency. On this date, an order of insolvency was issued by the
court (Exh. JJ) which necessarily stayed the National Airports Corporations action against the
CALI and dissolved its attachment (Exh. NNN), thus compelling the National Airports Corporation
to file its claims with the insolvency court (Exh. SS).
By order of October 28, 1948, the Court confirmed the appointment of Mr. Alfredo M. Velayo, who
was unanimously elected by the creditors as Assignee in the proceedings, and ordered him to
qualify as such by taking the oath of office within 5 days from notice and filing a bond in the sum of
P30,000.00 to be approved by the Court conditioned upon the faithful performance of his duties,
and providing further that all funds that the Assignee may collect or receive from the debtors of the
corporation, or from any other source or sources, be deposited in a local bank (Exh. KK). On
November 3, 1948, the clerk of court executed a deed of conveyance in favor of the Assignee
(Alfredo M. Velayo) over all the assets of the CALI (Exh. LL).
The Case. After properly qualifying as Assignee, Alfredo M. Velayo instituted this case (No.
6966 of the Court of First Instance of Manila) on December 17, 1948, against the Shell Company of
P. I., Ltd., for the purpose of securing from the Court a writ of injunction restrainingDefendant, its
agents, servants, attorneys and solicitors from prosecuting in and for the County of San Bernardino
in the Superior Court of the State of California, U.S.A. the aforementioned Civil Case No. 62576
against the insolvent Commercial Air Lines, Inc., begun by it in the name of the American
corporation Shell Oil Company, Inc., and as an alternative remedy, in case the purported
assignment of Defendants alleged credit to the American corporation Shell Oil Company, Inc., and
the attachment issued against CALI in the said Superior Court of California shall have the effect of
defeating the procurement by Plaintiff as Assignee in insolvency of the above- mentioned airplane,
which is the property of the insolvent CALI, situated in the Ontario International Airport, with in the
County of San Bernardino, State of California, U.S.A., that judgment for damages in double the
value of the airplane be awarded in favor of Plaintiffagainst Defendant, with costs.
The complaint further prays that upon the filing of a bond executed to the Defendant in an amount
to be fixed by the Court, to the effect that Plaintiff will pay to Defendant all damages the latter may
sustain by reason of the injunction if the Court should finally decide that thePlaintiff was not entitled
thereto, the Court issued a writ of preliminary injunction enjoining the Defendant, its agent,
servants, attorneys and solicitor, from prosecuting the aforementioned case No. 62576, the same
writ of preliminary injunction to issue without notice to the Defendant it appearing by verified
complaint that the great irreparable injury will result to the Plaintiff-Appellant before the matter
could be on notice. The Plaintiff also prays for such other remedies that the Court may deem
proper in the premises.
On December 20, 1948, the Defendant filed an opposition to the Plaintiffs petition for the issuance
of a writ of the preliminary injunction, and on December 22, 1948, the Court denied the same
because whether the conveyance of Defendants credit was fraudulent or not, the Philippine court
would not be in position to enforce its orders as against the American corporation Shell Oil
Company, Inc., which is outside of the jurisdiction of the Philippines.
Plaintiff having failed to restrain the progress of the attachment suit in the United States by denial
of his application for a writ of preliminary injunction and the consequences on execution of the C-54
plane in the County of San Bernardino, State of California, U. S. A., he confines his action to the
recovery of damages against the Defendant.
On December 28, 1948, Defendant filed its answer to the complaint, which was amended on
February 3, 1949. In its answer, Defendant, besides denying certain averments of the complaint
62 | P a g e

alleged, among other reasons, that the assignment of its credit in favor of the Shell Oil Company,
Inc., in the United States was for a valuable consideration and made in accordance with the
established commercial practices, there being no law prohibiting a creditor from assigning his credit
to another; chan roblesvirtualawlibrarythat it had no interest whatsoever in Civil Case No. 62576
instituted in the Superior Court in the State of California by the Shell Oil Company, Inc., which is a
separate and distinct corporation organized and existing in the State of Virginia and doing business
in the State of California, U. S. A., the Defendant having as its stockholders the Shell Petroleum
Company of London and other persons residing in that City, while the Shell Oil Company Inc., of
the United State has its principal stockholders the Shell Union Oil Company of the U.S. and
presumably countless American investors inasmuch as its shares of stock are being traded daily in
the New York stock market; chan roblesvirtualawlibrarythat Mr. Fitzgerald,Defendants Credit
Manager, was merely invited to a luncheon-meeting at the Trade and Commerce Building in the
City of Manila on August 6, 1948, without knowing the purpose for which it was called; chan
roblesvirtualawlibraryand that Mr. Fitzgerald could not have officially represented theDefendant at
that time because such authority resides on Mr. Stephen Crawfurd. Defendant, therefore, prays
that the complaint be dismissed with costs against the Plaintiff.
Then Alfonso Sycip, Yek Hua Trading Corporation and Paul Sycip, as well as Mabasa & Co., filed,
with permission of the Court, their respective complaints in intervention taking the side of
thePlaintiff. These complaints in intervention were timely answered by Defendant which prayed that
they be dismissed.
After proper proceedings and hearing, the Court rendered decision on February 26, 1954,
dismissing the complaint as well as the complaints in intervention, with costs against thePlaintiff. In
view of this outcome, Plaintiff comes to us praying that the judgment of the lower court be reversed
and that the Defendant be ordered to pay him damages in the sum of P660,000 (being double the
value of the airplane as established by evidence, i.e., P330,000), with costs, and for such other
remedy as the Court may deem just and equitable in the premises.
The Issues. Either admission of the parties, or by preponderance of evidence, or by sheer
weight of the circumstance attending the transactions herein involved, We find that the facts
narrated in the preceding statement of the antecedents have been sufficiently established, and
the questions at issue submitted to our determination in this instance may be boiled down to the
following propositions:chanroblesvirtuallawlibrary
(1) Whether or not under the facts of the case, the Defendant Shell Company of the P. I., Ltd.,
taking advantage of its knowledge of the existence of CALIs airplane C-54 at the Ontario
International Airport within the Country of San Bernardino, State of California, U. S. A.,
(Which knowledge it acquired:chanroblesvirtuallawlibrary first at the informal luncheon-meeting of
the principal creditors of CALI on August 5, 1948, where its Credit Manager, Mr. Desmond
Fitzgerald, was selected to form part of the Working Committee to supervise the preservation of
CALIs properties and to study the way of making a fair division of all the assets among the
creditors and thus avoid the institution of insolvency proceedings in court; chan
roblesvirtualawlibraryand
Subsequently, at the meeting of August 9, 1948, when said Mr. Fitzgerald met the other members
of the said Working Committee and heard and discussed the contention of certain creditors of CALI
on the accounts due the employees, the Government and the National Airports Corporation
who alleged that their claims were preferred),
acted in bad faith and betrayed the confidence and trust of the other creditors of CALI present in
said meeting by affecting a hasty telegraphic transfer of its credit to the American corporation Shell
Oil Company, Inc., for the sum of $79,440 which was subsequently followed by a deed of
assignment of credit dated August 10, 1948, amounting this time to the sum of $85,081.28 (Exhs.
Z), thus defeating the purpose of the informal meetings of CALIs principal creditors end depriving
the Plaintiff, as its Assignee, of the means of obtaining said C-54 plane, or the value thereof, to the
detriment and prejudice of the other CALIs creditors who were consequently deprived of their
share in the distribution of said value; chan roblesvirtualawlibraryand (2) Whether or not by reason
of said betrayal of confidence and trust, Defendant may be made under the law to answer for the
damages prayed by the Plaintiff; chan roblesvirtualawlibraryand if so, what should be the amount of
such damages.
DISCUSSION OF THE CONTROVERSY
63 | P a g e

I. The mere enunciation of the first proposition can lead to no other conclusion than thatDefendant,
upon learning the precarious economic situation of CALI and that with all probability, it could not
get much of its outstanding credit because of the preferred claims of certain other creditors, forgot
that Man does not live by bread alone and entirely disregarded all moral inhibitory tenets. So, on
the very day its Credit Manager attended the meeting of the Working Committee on August 9,
1948, it hastily made a telegraphic assignment of its credit against the CALI to its sister American
Corporation, the Shell Oil Company, Inc., and by what is stated in the preceding pages hereof, We
know that were the damaging effects of said assignment upon the right of other creditors of the
CALI to participate in the proceeds of said CALIs plane C-54.
Defendants endeavor to extricate itself from any liability caused by such evident misdeed of its
part, alleging that Mr. Fitzgerald had no authority from his principal to commit the latter on any
agreement; chan roblesvirtualawlibrarythat the assignment of its credit in favor of its sister
corporation, Shell Oil Company, Inc., was for a valuable consideration and in accordance with the
established commercial practices; chan roblesvirtualawlibrarythat there is no law prohibiting a
creditor from assigning his credit to another; chan roblesvirtualawlibraryand that the Shell Oil
Company Inc., of the United States is a corporation different and independent from the Defendant.
But all these defenses are entirely immaterial and have no bearing on the main question at issue in
this appeal. Moreover, we might say thatDefendant could not have accomplished the transfer of its
credit to its sister corporation if all the Shell companies throughout the world would not have a sort
of union, relation or understanding among themselves to come to the aid of each other. The
telegraphic transfer made without knowledge and at the back of the other creditors of CALI may be
a shrewd and surprise move that enabled Defendant to collect almost all if not the entire amount of
its credit, but the Court of Justice cannot countenance such attitude at all, and much less from a
foreign corporation to the detriment of our Government and local business.
To justify its actions, Defendant may also claim that Mr. Fitzgerald, based on his feeling of distrust
and apprehension, entertained the conviction that intervenors Alfonso Sycip and Yek Hua Trading
Corporation tried to take undue advantage by infiltrating their credits. But even assuming for the
sake of argument, that these intervenors really resorted to such strategem or fraudulent device,
yet Defendants act finds not justification for no misdeed on the part of a person is cured by any
misdeed of another, and it is to be noted that neither Alfonso Z. Sycip, nor Yek Hua Trading
Corporation were the only creditors of CALI, nor even preferred ones, and that the infiltration of
ones credit is of no sequence if it cannot be proven in the insolvency proceedings to the
satisfaction of the court. Under the circumstances of the case, Defendants transfer of its
aforementioned credit would have been justified only if Mr. Fitzgerald had declined to take part in
the Working Committee and frankly and honestly informed the other creditors present that he had
no authority to bind his principal and that the latter was to be left free to collect its credit from CALI
by whatever means his principal deemed wise and were available to it. But then such information
would have immediately dissolved all attempts to come to an amicable conciliation among the
creditors and would have precipitated the filing in court of CALIs voluntary insolvency proceedings
and nulified the intended transfer ofDefendants credit to its above-mentioned sister corporation.
II. We may agree with the trial judge, that the assignment of Defendants credit for a valuable
consideration is not violative of the provisions of sections 32 and 70 of the Insolvency Law (Public
Act No. 1956), because the assignment was made since August 9, 1948, the original complaint in
the United States was filed on August 12, 1948, and the writ of attachment issued on this same
date, while CALI filed its petition for insolvency on October 7, 1948. At his Honor correctly states,
said Sections 32 and 70 only contemplate acts and transactions occuring within 30 days prior to
the commencement of the proceedings in insolvency and, consequently, all other acts outside of
the 30-day period cannot possibly be considered as coming within the orbit of the operation. In
addition to this, We may add that Article 70 of the Insolvency Law refers to acts of the debtor (in
this case the insolvent CALI) and not of the creditor, the Shell Company of the P. I. Ltd. But section
70 does not constitute the only provisions of the law pertinent to the matter. The Insolvency Law
also provides the following:chanroblesvirtuallawlibrary
SEC. 33. The assignee shall have the right to recover all the estate, debt and effects of said
insolvent. If at the time of the commencement of the proceedings in insolvency, an action is
pending in the name of the debtor, for the recovery of a debt or other thing might or ought to pass
to the assignee by the assignment, the assignee shall be allowed to prosecute the action, in like
manner and with life effect as if it had been originally commenced by him. If there are any rights of
action in favor of the insolvency for damages, on any account, for which an action is not pending
64 | P a g e

the assignee shall have the right to prosecute the same with effect as the insolvent might have
done himself if no proceedings in insolvency had been instituted cralaw .
It must not be forgotten that in accordance with the spirit of the Insolvency Law and with the
provisions of Chapter V thereof which deal with the powers and duties of a receiver, the assignee
represents the insolvent as well as the creditors in voluntary and involuntary proceedings
Intestate of Mariano G. Veloso, etc. vs. Vda. de Veloso S. C. G. R. No. 42454; chan
roblesvirtualawlibraryHunter, Kerr & Co. vs. Samuel Murray, 48 Phil. 449; chan
roblesvirtualawlibraryChartered Bank vs. Imperial, 48 Phil. 931; chan roblesvirtualawlibraryAsia
Banking Corporation vs. Herridge, 45 Phil. 527 (II Tolentinos Commercial Laws of the
Philippines, 633). See also Section 36 of the Insolvency Law.From the foregoing, We see
that Plaintiff, as Assignee of the Insolvent CALI, had personality and authority to institute this case
for damages, and the only question that remains determination is whether the payment of damages
sought to be recovered from Defendant may be ordered under the Law and the evidence of record.
IF ANY PERSON, before the assignment is made, having notice of the commencement of the
proceedings in insolvency, or having reason to believe that insolvency proceedings are about to be
commenced, embezzles or disposes of any money, goods, chattels, or effects of the insolvent, he
is chargeable therewith, and liable to an action by the assignee for double the value of the property
sought to be embezzled or disposed of, to be received for the benefit of the insolvent estate.
The writer of this decision does not entertain any doubt that the Defendant taking advantage of
his knowledge that insolvency proceedings were to be instituted by CALI if the creditors did not
come to an understanding as to the manner of distribution of the insolvent asset among them, and
believing it most probable that they would not arrive at such understanding as it was really the case
schemed and effected the transfer of its sister corporation in the United States, where CALIs
plane C-54 was by that swift and unsuspected operation efficaciously disposed of said insolvents
property depriving the latter and the Assignee that was latter appointed, of the opportunity to
recover said plane. In addition to the aforementioned Section 37, Chapter 2 of the PRELIMINARY
TITLE
of
the
Civil
Code,
dealing
on
Human
Relations,
provides
the
following:chanroblesvirtuallawlibrary
Art 19. Any person must, in the exercise of his rights and in the performances of his duties, act
with justice, give everyone his due and observe honesty and good faith.
It maybe said that this article only contains a mere declarations of principles and while such
statement may be is essentially correct, yet We find that such declaration is implemented by Article
21 and sequence of the same Chapter which prescribe the following:chanroblesvirtuallawlibrary
Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.
The Code Commission commenting on this article, says the following:chanroblesvirtuallawlibrary
Thus at one stroke, the legislator, if the forgoing rule is approved (as it was approved), would
vouchsafe adequate legal remedy for that untold numbers of moral wrongs which is impossible for
human foresight to provide for specifically in the statutes.
But, it may be asked, would this proposed article obliterate the boundary line between morality
and law? The answer is that, in the last analysis, every good law draws its breath of life from
morals, from those principles which are written with words of fire in the conscience of man. If this
premises is admitted, then the proposed rule is a prudent earnest of justice in the face of the
impossibility of enumerating, one by one, all wrongs which cause damages. When it is reflected
that while codes of law and statutes have changed from age to age, the conscience of man has
remained fixed to its ancient moorings, one cannot but feel that it is safe and salutary to transmute,
as far as may be, moral norms into legal rules, thus imparting to every legal system that enduring
quality which ought to be one of its superlative attributes.
Furthermore, there is no belief of more baneful consequence upon the social order than that a
person may with impunity cause damage to his fellow-men so long as he does not break any law of
the State, though he may be defying the most sacred postulates of morality. What is more, the
victim loses faith in the ability of the government to afford him protection or relief.
A provision similar to the one under consideration is embodied in article 826 of the German Civil
Code.

65 | P a g e

The same observations may be made concerning injurious acts that are contrary to public policy
but are not forbidden by statute. There are countless acts of such character, but have not been
foreseen by the lawmakers. Among these are many business practices that are unfair or
oppressive, and certain acts of landholders and employers affecting their tenants and employees
which contravene the public policy of social justice.
Another rule is expressed in Article 24 which compels the return of a thing acquired without just or
legal grounds. This provision embodies the doctrine that no person should unjustly enrich himself
at the expense of another, which has been one of the mainstays of every legal system for
centuries. It is most needful that this ancient principles be clearly and specifically consecrated in
the proposed Civil Code to the end that in cases not foreseen by the lawmaker, no one may
unjustly benefit himself to the prejudice of another. The German Civil Code has a similar provision
(art. 812). (Report of the Code Commission on the Proposed Civil Code of the Philippines, p. 4041).
From the Civil Code Annotated by Ambrosio Padilla, Vol. I, p. 51, 1956 edition, We also copy the
following:chanroblesvirtuallawlibrary
A moral wrong or injury, even if it does not constitute a violation of a statute law, should be
compensated by damages. Moral damages (Art. 2217) may be recovered (Art. 2219). In Article 20,
the liability for damages arises from a willful or negligent act contrary to law. In this article, the act
is contrary to morals, good customs or public policy.
Now, if Article 23 of the Civil Code goes as far as to provide that:chanroblesvirtuallawlibrary
Even if an act or event causing damage to anothers property was not due to the fault or
negligence of the Defendant, the latter shall be liable for indemnity if through the act or event he
was benefited.
with mere much more reason the Defendant should be liable for indemnity for acts it committed in
bad faith and with betrayal of confidence.
It may be argued that the aforequoted provisions of the Civil Code only came into effect on August
30, 1950, and that they cannot be applicable to acts that took place in 1948, prior to its effectivity.
But Article 2252 of the Civil Code, though providing that:chanroblesvirtuallawlibrary
Changes made and new provisions and rules laid down by this Code which may be prejudice or
impair vested or acquired rights in accordance with the old legislation, shall have no retroactive
effect cralaw .
implies that when the new provisions of the Code does nor prejudice or impair vested or acquired
rights in accordance with the old legislation and it cannot be alleged that in the case at
bar Defendant had any vested or acquired right to betray the confidence of the insolvent CALI or of
its creditors said new provisions, like those on Human Relations, can be given retroactive effect.
Moreover, Article 2253 of the Civil Code further provides:chanroblesvirtuallawlibrary
cralaw But if a right should be declared for the first time in this Code, it shall be effective at once,
even though the act or event which may give rise thereto may have been done or may have
occurred under the prior legislation, provided said new right does not prejudice or impair any
vested or acquired right, of the same origin.
and according to Article 2254, no vested or acquired right can arise from acts or omissions which
are against the law or which infringe upon the right of others.
In case of Juan Castro vs. Acro Taxicab Company, (82 Phil., 359; chan roblesvirtualawlibrary47
Off. Gaz., [5] 2023), one of the question at issue was whether or not the provisions of the New Civil
Code of the Philippines on moral damages should be applied to an act of negligence which
occurred before the effectivity of said code, and this Court, through Mr. Justice Briones, sustaining
the affirmative proposition and citing decisions of the Supreme Court of Spain of February 14,
1941, and November 14, 1934, as well as the comment of Mr. Castan, Chief Justice of the
Supreme Court of Spain, about the revolutionary tendency of Spanish jurisprudence, said the
following:chanroblesvirtuallawlibrary
We conclude, therefore, reaffirming the doctrine laid down in the case of Lilius (59 J. F. 800) in the
sense that indemnity lies for moral and patrimonial damages which include physical and pain
sufferings. With this (doctrine), We effect in this jurisdiction a real symbiosis 1 of the Spanish and
American Laws and, at the same time, We act in consonance with the spirit and progressive march
of time (translation)
66 | P a g e

The writer of this decision does not see any reason for not applying the provisions of Section 37 of
the Insolvency Law to the case at bar, specially if We take into consideration that the term any
person used therein cannot be limited to the officers or employee of the insolvent, as no such
limitation exist in the wording of the section (See also Sec. 38 of the same Act), and that, as stated
before, the Defendant schemed and affected the transfer of its credits (from which it could derive
practically nothing) to its sister corporation in the United States where CALIs plane C-54 was then
situated, succeeding by such swift and unsuspected operation in disposing of said insolvents
property by removing it from the possession and ownership of the insolvent. However, some
members of this Court entertain doubt as to the applicability of said section 37 because in their
opinion what Defendant in reality disposed of was its own credit and not the insolvents property,
although this was practically the effect and result of the scheme. Having in mind this objection and
that the provisions of Article 37 making the person coming within its purview liable for double the
value of the property sought to be disposed of constitute a sort of penal clause which shall be
strictly construed, and considering further that the same result may be obtained, by applying only
the provisions of the Civil Code, the writer of this decision yields to the objection aforementioned.
Articles 2229, 2232, 2234,
follows:chanroblesvirtuallawlibrary

2142,

and

2143

of

the

Civil

Code

read

as

Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the
public good, in addition to the moral, temperate, liquidated or compensatory damages.
Art. 2232. In contracts quasi-contracts, the Court may award exemplary damages if
theDefendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
Art. 2234. While the amount of the exemplary damages need not be proved, the Plaintiffmust
show that he is entitled to moral, temperate, or compensatory damages before the court may
consider the question of whether or not exemplary damages should be awarded. In case liquidated
damages should be upon, although no proof of loss is necessary in order that such liquidated
damages be recovered, nevertheless, before the court may consider the question of granting
exemplary in addition to the liquidated damages, the Plaintiff must show that he would be entitled
to moral, temperate or compensatory damages were it not for the stipulation for liquidated
damages.
Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasicontract to the end that no one shall be unjustly enriched or benefited at the expense of another.
Art, 2143. The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts
which may come within the purview of the preceding article.
In accordance with these quoted provisions of the Civil Code, We hold Defendant liable to pay to
the Plaintiff, for the benefit of the insolvent CALI and its creditors, as compensatory damages a
sum equivalent to the value of the plane at the time aforementioned and another equal sum as
exemplary damages.
There is no clear proof in the record about the real value of CALIs plane C-54 at the time
whenDefendants credit was assigned to its sister corporation in the United States.
Judgment
Wherefore, and on the strength of the foregoing considerations, the decision appealed from is
reversed and Defendant-Appellee-, Shell Company of the Philippine Islands, Ltd., is hereby
sentenced to pay to Plaintiff-Appellant, as Assignee of the insolvent CALI, damages in a sum
double the amount of the value of the insolvents airplane C-54 at the time Defendants credit
against the CALI was assigned to its sister corporation in the United States, which value shall be
determined in the corresponding incident in the lower court after this decision becomes final. Costs
are taxed against Defendant-Appellee. It is SO ORDERED.
Paras, C.J., Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L.,
and Endencia, concur.
RESOLUTION
July 30, 1957

67 | P a g e

FELIX, J.:
Plaintiff-Appellant and intervenors on one hand and Defendant Shell Company of the Philippine
Islands, Ltd., on the other, have filed their respective motions for reconsideration of Our decision
rendered in this case. The motion of Plaintiff Appellant and the intervenors seeks the
reconsideration of said decision in so far as it held that:chanroblesvirtuallawlibrary
There is no clear proof in the record about the real value of CALIs plane C-54, at the time
when Defendants credit was assigned to its sister corporation in the United States.
and, upon such holding, it orders that the value of the C-54 plane
be determined in the corresponding incident in the lower Court after this decision becomes final.
The movants maintain that there is evidence sufficient to support a finding that CALIs C-54 plane
had a fair market value of $165,000 at or about the time Defendant credit was assigned to its sister
corporation in the United States and the plane attached. This motion was opposed by DefendantAppellee which was replied by Plaintiff- Appellant with a supplemental motion for reconsideration,
and then retorted with a manifestation and motion of Defendant-Appellant followed by Defendants
answer to Plaintiffs motion for reconsideration.
After considering the evidence pointed out by said parties in support of their respective
contentions, we are more convinced that the proofs relative to the real value of CALI plane C-54 at
the time Defendants credit was assigned to its sister corporation in the United States, is not clear.
Hence, Plaintiff-Appellants and intervenors motion for reconsideration is hereby overruled.
The main grounds on which Defendant-Appellee bases its motion for reconsideration, as relied
upon in its counsels memoranda and oral argument, may be reduced to the
following:chanroblesvirtuallawlibrary
(1) That the Defendant Appellee is not guilty of bad faith, it having done nothing but to protect
legitimately its own interest or credit against the bad faith of its debtor, the insolvent CALI, under
the control of the latters President Alfonso Sycip;
(2) That Appellees transfer of its credit to its sister corporation in the United States, did not
prejudice the Government, because its claims were fully paid, nor caused any loss or injury to other
creditors, except the entities and groups controlled by Alfonso Z. Sycip;
(3) That Appellee is not liable for exemplary damages because the provisions of the new Civil
Code on the matter are not applicable to this case;
(4) That the Plaintiff-Appellant has no cause of action against Defendant-Appellant and is not the
real party in interest; chan roblesvirtualawlibraryand
(5) That Plaintiffs right of action was based and prosecuted in the lower court under the provisions
of the Insolvency Law and consequently that he is stopped from pursuing another theory and is not
entitled to damages under the provisions of the New Civil Code.
I. The facts on which this Court based its conclusion that Defendant corporation acted in bad faith
are plainly and explicitly narrated in the decision. They are not and cannot be denied or
contradicted by said Defendant. On the contrary they are in many respects admitted by
theDefendant and no amount of reasoning can make Us change that conclusion.
II. As pointed out by counsel for Plaintiff, Defendant choses to ignore that besides the claims of
intervenors Alfonso Z. Sycip and Yek Hua Trading Corporation, which counsel for the Shell says to
constitute 10/11 of the approved ordinary claims, there is still 1/11 of the other creditors whose
claims have been also approved by the insolvency Court, in addition to the ordinary creditors
whose claims are yet unapproved by the insolvency Court, amounting to P560,296,32, and no
good reason suggests itself why these unapproved but pending claims should be taken into
account in considering the prejudice caused all the creditors of the insolvent CALI. As long as
these claims are pending, the contingency exist, that these creditors may recover from the
insolvent estate and when they do, they will suffer to the diminution of CALIs asset resulting from
the attachment of the plane by Appellee Shell.
Answering Defendants contention that the transfer of its credit to its sister corporation in the United
States did not prejudice the Government or the other creditors of CALI, counsel forPlaintiffAppellant has the following to say:chanroblesvirtuallawlibrary

68 | P a g e

So far as the claims of the Government are concerned, it is true that they were preferred claims
and have all been paid. But this circumstance cannot erase the fact that the Appellees action
jeopardised the Governments claims as well as the other claims. There was doubt as to the
preferential character of the Governments claims. Indeed, the preferential character of one of the
Governments claims necessitated a litigation to establish. Had it been held to be an ordinary claim,
the Government would have suffered as other creditors. But that is neither here nor there; chan
roblesvirtualawlibraryneither the character of the claim nor the identity of the claimant can possibly
affect the application of a principle that no person may profit from his betrayal of a trust.
And the Appellant continues thus:chanroblesvirtuallawlibrary
Appellee had a credit of P170,000 against the insolvent CALI as of August 1948, which is
assigned to its sister corporation in the United States for P120.000. Hence, Appellee recovered
70% of its credit and immediately upon making the assignment in 1948. More than this, the stated
consideration was fixed by and and between two sister companies. The fact remains
that Appellees sister company was enabled to get hold of a C-54 plane worth about P330,000.
On the other hand, the ordinary creditors who filed their claims against the insolvent CALI had to
wait until November 1956 to get their dividends and only at the rate of 30%, computed as
follows:chanroblesvirtuallawlibrary
Assets as of October 30, 1956 P668,605.15
Less:chanroblesvirtuallawlibrary
Preferred claims still uncollected,
assignee and attorneys fees and
other reserves P138,719.56

Amount available for distribution P529,885.59


Divident:chanroblesvirtuallawlibrary
Amount available for distribution P529,885.59
= 30%
Total of all ordinary claims approved
and unapproved P1,746,222.33
Had Appellee not assigned its credit in 1948, the insolvent CALI would have realized from the sale
of the plane (which was attached by Appellee) P330,000 representing the fair market value of the
plane at the time of the attachment. Therefore, if this amount of P330,000 is added to the
distributable amount of P529,- 885.59, the share of each of the ordinary creditos would certainly
amount to approximately 1 1/2 times the dividend each of them has received; chan
roblesvirtualawlibraryin other words, each ordinary creditors would received not 30% but
approximately 45% of his claim, and Appellee would recover approximately only 45% and not 70%
of its credit.
And even if the sale of CALIs plane would not have obtained the sum of P330,000.00, the
proceeds thereof that might be diminished though affecting, no doubt, the calculated dividend of
each of the ordinary creditors, estimated at 45% by reducing it proportionately, such diminution
would at the same time increase the difference between the dividend paid CALIs ordinary creditors
in November, 1956, and the dividend of 70% secured by DefendantShell in 1948.
III and IV. That Appellee Shell is not liable for exemplary damages in this case and thatPlaintiffAppellant has no cause of action against Defendant-Appellee, for he is not the real party in interest,
are matters fully discussed in Our decision and We find no sensible reason for disturbing the
conclusions We reached therein.
V. As to the fifth question raised by counsel for Appellee in the course of his oral argument at the
hearing in the City of Baguio of his motion, i.e., that Plaintiffs right of action was based and
prosecuted in the lower court under the provisions of the Insolvency Law and he is, therefore,
stopped from pursuing on appeal another theory under which he might be entitled to damages in
consonance with the provisions of the new Civil Code, We may invoke the decision in the case of
69 | P a g e

Dimaliwat vs. Asuncion, 59 Phil.,


following:chanroblesvirtuallawlibrary

396,

401.

In

that

decision

We

said

the

Vicente Dimaliwat contends that Esperanza Dimaliwat has no right to claim the ownership of the
property in question to the exclusion of the children of the third marriage, under the foregoing
provisions of the Civil Code, because the case was not tried on that theory in the lower court. We
find no merit in that contention. The decision cited are not in point. Articles 968 and 969 of the Civil
Code are rules of substantive law, and if they are applicable to the facts of this case they must be
given effect.
The same thing can be said in the case at bar. Articles 19, 21, 2229, 2232, 2234, 2142 and 2143 of
the new Civil Code are rules of substantive law, and if they are applicable to the facts of this case,
which We hold they do, they must be made operative and given effect in this litigation.
xxx

xxx

xxx

It maybe seen from the foregoing that the above mentioned grounds on which the motion for
reconsideration of the Defendant Shell stand, are not well taken. However, and despite this finding,
We insist to delve in the question of whether the exemplary damages imposed in this Court
upon Defendant Appellee, which the latters counsel contends to be inequitable and unfair, may be
modified.
It will be remembered that this case was looked into from the point of view of the provisions of
Section 37 of the Insolvency Law, which reads as follows:chanroblesvirtuallawlibrary
SEC. 37. IF ANY PERSON, before the assignment is made, having notice of the commencement
of the proceedings in insolvency, or having reason to believe that insolvency proceedings are
about to be commenced, embezzles or disposses of any of the money, goods, chattels, or effects
of the insolvent, he is chargeable therewith, and liable to an action by the assignee for double the
value of the property sought to be embezzled or disposed of, to be received for the benefit of the
insolvent estate.
The writer of the decision was then and still is of the opinion that the provisions of this section were
applicable to the case, and accordingly, that Defendant Shell was liable in this action instituted by
the Assignee for double the value of the property disposed of, to be received for the benefit of the
Insolvent estate. However, some of the members of this Court, for the reasons already stated in
the decision, entertained some doubt as to the applicability of said Section 37, and yielding to their
objections the writer of the decision turned his eyes to the provisions of the new Civil Code,
inasmuch as the same result could be achieved. In the case at bar, it cannot be denied
that:chanroblesvirtuallawlibrary
Defendant taking advantage of his knowledge that insolvency proceedings were to be instituted
by CALI if the creditors did not come to an understanding as to the manner of distribution of the
insolvent assets among them, and believing as most probable that they would not arrive at such
understanding, as it was really the case- schemed and effected the transfer of its credit to its sister
corporation in the United States where CALIs plane C-54 was and by this swift and unsuspected
operation efficaciously disposed of said insolvents property depriving the latter and the Assignee
that was later appointed, of the opportunity to recover said plane.
These acts of Defendant Shell come squarely within the sanction prescribed by Congress by
similar acts and no reflection can be reasonably cast on Us if in the measure of the exemplary
damages that were to be imposed upon Defendant-Appellee, We were influenced by the provisions
of Section 37 of the Insolvency Law. In this connection it is to be noted that, according to the Civil
Code, exemplary or corrective damages are imposed by way of example or correction for the
public good, in addition of the moral, temperate, liquidated or compensatory damages Art. 2229,
and that the amount of the exemplary damages need not be proved (Art. 2234), for it is left to the
sound discretion of the Court.
Notwithstanding the foregoing, a majority of this Court was of the belief that the value of CALIs
plane C-54, at the time when Defendants credit was assigned to its sister corporation in the United
States, might result quite high, and that exemplary damages should not be left to speculation but
properly determined by a certain and fixed amount. So they voted for the reconsideration of the
decision with regard to the amount of exemplary damages which this Court fixed at P25,000.00.
Because of this attitude of the Court, the dispositive part of our decision rendered in this case is
hereby amended to read as follows:chanroblesvirtuallawlibrary
70 | P a g e

Wherefore, and on the strength of the foregoing considerations, the decision appealed from is
reversed and Defendant-Appellee, Shell Company of the Philippine Islands Ltd., is hereby
sentenced to pay Plaintiff-Appellant, as Assignee of the insolvent CALI, compensatory damages in
a sum equal to the value of the insolvents airplane C-54 at the time Defendants credit against
CALI was assigned to its sister corporation in the United States - which shall be determined in the
corresponding incident in the lower Court after this decision becomes final - and exemplary
damages in the sum of P25,000. Costs are taxed against Defendant-Appellee. It is SO ORDERED.
Pars, C.J., Padilla, Concepcion and Endencia, JJ., concur.
Separate Opinions
MONTEMAYOR, J., concurring:chanroblesvirtuallawlibrary
We concur, but we feel that the ends of justice would be sufficiently served if the exemplary
damages were reduced to P10,000.
Reyes, Bengzon, Bautista Angelo and Labrador, JJ., concur.
Endnotes:chanroblesvirtuallawlibrary
1. SYMBIOSIS Biol. The living together in more or less intimate association or even close
union of two dissimilar organisms. In a broad sense the term includes parasitism or antagonistic or
antipathetic symbiosis in which the association is disadvantageous or destructive to one of the
organism, but ordinarily it is used of cases where the association is advantageous, or often
necessary, to one or both, and not harmful to either. (Websters New International Dictionary, 2nd
Ed., p. 2555).

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION

G.R. No. L-35785 May 29, 1974


THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
DOMICIANO BAYLON, defendant-appellant.
Office of the Solicitor General Estelito P. Mendoza, Assistant Solicitor General Jaime M. Lantin and
Solicitor Rosario Quetulio-Losa for plaintiff-appellee.
Jorge S. Castillo for defendant-appellant.

FERNANDO, J.:p
There is nothing unique to distinguish this appeal from a number of others where conviction for the
crime of rape is sought to be set aside. A careful scrutiny of the records of the case discloses that
the unfortunate victim was suddenly pounced upon by appellant, Domiciano Baylon, and
notwithstanding her resistance was, by virtue of his superior strength and the intimidation caused a
knife pointed at her chest, made to submit to his carnal desires. The absence of novelty is likewise
reflected in the defense offered, that of alibi. The lower court rejected it and rightly so, considering

71 | P a g e

the highly persuasive character of the narration by the offended party, hardly in her teens, as to
how the offense was committed. The sentence imposed must be affirmed.
The complainant, Sugana Aspili, only thirteen years of age at the time of the alleged crime, testified
that as a first year high school student, she used to commute from the barrio where she lived to the
poblacion, about four kilometers away from where she lived, where the Batac Institute was
located. 1 She was on March 15, 1965, at about 5:00 o'clock in the morning, on her way to school,
her classes starting at 7:30. 2 As she was nearing the barrio school of Colo, appellant, suddenly
emerged from the thicket on the left side of the road, embraced her, and at the same time pulled
her towards him. 3 She shouted and cried for help; she was silenced, appellant covering her mouth
with his right palm, and pointing a knife on her right chest, saying, "You shout and I will kill you.
[Expletive deleted], if you cry, I will kill you." 4 Her bandanna was then wrapped around her mouth
by appellant, who dragged her in the direction of the canal on the left side of the road. 5 Upon
reaching the spot, he tried to force her to the ground, but she strongly resisted. She was then hit by
him on her abdomen, the painful blow resulting in her weakened condition. Appellant was quick to
take advantage. Forthwith, he pushed her to the ground, raised her chemise, forcibly removed her
panties, separated her legs and knelt between her thighs. He then unbuttoned his pants, went on
top of her and tried to insert his penis into her private
parts. 6 At first, he was unable to do so, as she continued her resistance, but ultimately he was able
to pin her shoulders down with his elbows at which instance, he finally succeeded in putting his
penis into her organ. 7 While thus on top of her, appellant moved his hips up and down, at the same
time kissing her, after removing the bandana tied over her mouth. Shortly thereafter, she felt
something hot and slippery emitting from the penis of the appellant. Soon, he released her from his
grip and left the place. 8
Complainant, still suffering from pains in her vagina and on her hips, shoulders and thighs,
searched for her panties and her skirt and put them on. She then ran back to her home which was
around 300 meters away from the place of the commission of the offense. When she was running,
she felt uneasy because of a sticky and slippery substance oozing down along her thighs which
she wiped away with her chemise. 9 From a distance, she saw her mother in their yard burning
some leaves. She ran towards her, embraced her, and with tears rolling down her cheeks, called
her, "Mother, mother." It was then that the offended party revealed to her what was done by
Domiciano Baylon. 10 Her mother was shocked and could only say, "It's too bad. Where did the
incident happen?" She told her mother what happened, and after hearing the story, the mother,
too, was overcome with sorrow and cried together with her daughter.11 The father was then
informed of what happened; he told the complainant to go up the house and rest, while he and her
mother would report the matter to the barrio captain. 12 She continued to be uncomfortable with the
slippery substance on her private part. She, therefore, washed her organ with soap and water and
then went to bed. 13 Meantime, her parents proceeded to the house of the barrio captain, Juan
Asuncion, who, after hearing what transpired, went to fetch the complainant and investigated her in
his house. 14 With her father and mother present, the complainant described to the barrio captain
how she was raped by the appellant Domiciano Baylon. 15 Thereafter, the barrio captain brought
the three of them to the house of Fidel Ramos, a barrio councillor, as this house was the center of
the barrio. 16 It was the councilor who had the appellant fetched for investigation. Appellant, as he
had a right to, refused to deny or confirm the accusation against him, maintaining his silence,
preferring to speak only if so advised by counsel. 17
It was on the basis of the above testimony reinforced by three other prosecution witnesses, Dr.
Ofelia Agabin Flor, the resident physician of the Provincial Hospital of Ilocos Norte, who conducted
on the very same day the medical examination; 18 Aquilino Gamiao, a member of the police force of
Batac, Ilocos Norte, with sixteen years of experience behind him, who investigated the matter
; 19 and Monica Lagmay Aspili, the mother of the offended party, 20 that Judge Jose A. Madarang, in
a well-written decision, convicted the accused, Domiciano Baylon. He would have us reverse,
reiterating his defense of alibi. At the same time, his counsel would try to cast doubt on the finding
that complainant was actually raped. As indicated at the outset, a careful study of the record fails to
lessen the moral certainty that the crime of rape was committed and that appellant was guilty
thereof.
1. In essence, appellant, by the defenses interposed, would have us ignore the well-settled
doctrine that the determination by the trial judge who could weigh and appraise the testimony as to
72 | P a g e

the facts duly proven is entitled to the highest respect, absent a showing that he ignored or
disregarded circumstances of weight or influence sufficient to call for a different conclusion. There
was a reiteration of that doctrine in the recent case of People v. Carandang, 21 reference being
made to an early formulation thereof in People v. De Otero 22 where Justice Malcolm, speaking for
the Court, stated: "After everything is said and done, we come back, as we invariably do in cases
of this nature, to a recognition of the rule that the Supreme Court will not interfere with the
judgment of the trial court in passing on the credibility of the opposing witnesses, unless there
appears in the record some fact or circumstances of weight and influence, which has been
overlooked or the significance of which has been misinterpreted." 23 Since People v. Carandang,
there have been a number of cases to the same effect. 24
The pertinence of the above doctrine is even more apparent considering that the principal reliance
is on alibi, appellant relying on the testimony of his sister, Benedicta Baylon, 25 who stated that on
the morning of March 15, 1965, from the time she woke him up at 4:30 until 7:00 o'clock in the
morning, he was in a flue-curing barn collecting tobacco leaves, appellant at no time leaving the
place. 26 The trial judge took careful note of the defense of alibi. He could not accept it as in his
opinion, the complainant "definitely and unerringly identified the accused as the one who attacked
her in the early morning of March 15, 1965. 27 He went on to state: "In fact, Susana testified that it
took about ten minutes for the accused to consummate the crime, starting from the time the
accused placed his knees between the thighs and pressing on the base of her hands, then
inserting his penis into her private part up to the time he stood up. Said ten minutes would exclude
the period of struggle and before the poor victim was finally subdued." 28 At a later portion of the
decision, he identified the defense of alibi as a feeble "attempt at escaping responsibility
considering that the scene of the crime was only two hundred meters from said flue-curing barn,
and, therefore, the accused had all the facility of immediate flight from one place to the
other." 29 Support for such a view may be discerned in this recent opinion of Justice Aquino
in People v. Resayaga: "It is obvious that no credence can be accorded to Resayaga's alibi. To
establish an alibi, the accused must show that he was at another place for such a period of time
that it was impossible for him to have been at the place where the crime was committed at the time
of its commission." 30
The other point raised in the brief for appellant that the crime of rape was not shown to have been
committed defies rationality, let alone common sense. Time and time again, this Court had
correctly observed that no woman, especially one of tender age, would willingly expose herself to
the embarrassment of a public trial wherein she would have not only to admit but also to narrate
the violation of her person, if such indeed were not the case. Far better it is in not a few cases to
spare herself the humiliation if there be some other way of bringing the offender to justice. Here,
there was such a testimony coming from the offended party, firm, categorical, straightforward. Her
clothing, including the most intimate garments, soiled and smudged, ripped and torn, were mute
witness of the futile resistance she put up. 31 It is quite a strain on one's credulity to believe that
under such circumstances, the young girl's honor remained unsullied, the nefarious design
unfulfilled. To repeat, appellant had not made out a case for a reversal.
2. Nor is this all. As was noted in a recent case, People v. Molina, 32 it is manifest in the decisions
of this Court that where the offended parties are young and immature girls like the victim in this
case, 33 there is a marked receptivity on its part to lend credence to their version of what transpired.
It is not to be wondered at. The state, as parens patriae, is under the obligation to minimize the risk
of harm to those, who, because of their minority, are as yet unable to take care of themselves fully.
Those of tender years deserve its utmost protection. Moreover, the injury in cases of rape is not
inflicted on the unfortunate victim alone. The consternation it causes her family must also be taken
into account. It may reflect a failure to abide by the announced concern in the fundamental law for
such institution . 34 There is all the more reason then for the rigorous application of the penal law
with its severe penalty for this offense, whenever warranted. It has been aptly remarked that with
the advance in civilization, the disruption in public peace and order it represents defies explanation,
much more so in view of what currently appears to be a tendency for sexual permissiveness.
Where the prospects of relationship based on consent are hardly minimal, self-restraint should
even be more marked.
WHEREFORE, the decision of Judge Jose Madarang of May 18, 1972 finding the accused
Domiciano Baylon guilty beyond reasonable doubt of the crime of rape and sentencing him
73 | P a g e

to reclusion perpetua is affirmed with this modification. Appellant Baylon must likewise pay an
indemnity of P5,000.00 to the offended party, Susana Aspili. Costs against appellant.
Zaldivar (Chairman), Antonio, Fernandez and Aquino, JJ., concur.
Barredo, J., took no part.

Footnotes
1 T.s.n., Session of September 23, 1966, 77-78.
2 Ibid, 79-80.
3 Ibid, 85-87.
4 Ibid, 87.
5 Ibid, 86.
6 Ibid, 89-92.
7 Ibid, 93 and 108-109.
8 Ibid, 93.
9 T.s.n., Session of September 28, 1966, 106-111.
10 Ibid, 112.
11 Ibid.
12 Ibid, 113-114.
13 Ibid, 114.
14 Ibid, 132-133.
15 Ibid, 133.
16 Ibid, 133-134.
17 Ibid, 135-136.
18 T.s.n., Session of August 10, 1966, 2-33.
19 Ibid, 35-75.
20 T.s.n., Session of August 11, 1967, 129-142..
21 L-31012, August 15, 1973, 52 SCRA 259.
22 51 Phil. 201 (1927)..
23 Ibid, 209.
24 People v. Abboc, L-28327, Sept. 14, 1973, 53 SCRA 54; People v. Geronimo, L35700, Oct 15, 1973, 53 SCRA 246; People v. Macaraeg, L-32806, Oct. 23, 1973, 53
SCRA 285; People v. Resayaga, L-23234, Dec. 26, 1973; People v. Tamani, L22160, Jan. 21, 1974; People v. Diaz, L-24002, Jan. 21, 1974;People v. Reduca, L26729, Jan. 21, 1974; People v. Doria, L-26188, Jan. 31, 1974; People v. Carino, L33608, Feb. 12, 1974.
25 T.s.n., Session of April 30, 1970, 181-202.
26 Ibid, 184-186.
27 Decision, Appendix to Brief for the Defendant-Appellant, 5.
28 Ibid.
29 Ibid, 8.
30 L-23234, Dec. 26, 1973. Cf. People v. Tamani, L-22160, Jan. 21, 1974;People v.
Turalba, L-29118, Feb. 28, 1974; People v. Ybanez L-30421, March 28, 1974.
31 The clothing materials submitted as evidence consisted of the blouse, Exhibit C,
the skirt, Exhibit D, the bandanna, Exhibit F, the panties, Exhibit G and the chemise,
Exhibit H.
32 L-30191, Oct. 27, 1973, 53 SCRA 495.
33 Cf. United States v. Rojo, 10 Phil. 369 (1908), People v. De Guzman, 51 Phil. 105
(1928); People v. Alqueza, 51 Phil. 817 (1928), People v. Apiado, 53 Phil. 325
(1929); People v. Lomibao, 55 Phil. 616 (1931);De los Santos v. People, 69 Phil. 321
(1940); People v. Soriano, L-29057, Oct. 30, 1970, 35 SCRA 633; People vs. Modelo,
L-29144, Oct. 30,1970, 35 SCRA 639..
34 According to Article II, Section 4 of the Constitution: "The State shall strengthen
the family as a basic social institution. The natural right and duty of parents in the
rearing of the youth for civic efficiency and the development of moral character shall
receive the aid and support of the Government."
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75 | P a g e