Tanada vs Tuvera (136 SCRA 27)

TITLE: Tanada v Tuvera

CITATION: L-63915, April 24, 1985| 136 SCRA 27

FACTS:
Petitioners seek a writ of mandamus in compelling respondent public officials to publish and/ or cause the publication in the Official
Gazette of various presidential decrees, letter of instructions, general orders, proclamations, executive orders, letter of
implementation and administrative orders.
The general rule in seeking writ of mandamus is that it would be granted to a private individual only in those cases where he has
some private or particular interest to be subserved, or some particular right to be protected, independent of that which he holds with
the public at large," and "it is for the public officers exclusively to apply for the writ when public rights are to be subserved.
The legal capacity of a private citizen was recognized by court to make the said petition for the reason that the right sought to be
enforced by petitioners herein is a public right recognized by no less than the fundamental law of the land.

ISSUE: Whether publication in the Official Gazette is still required considering the clause in Article 2 unless otherwise provided.

HELD:

Unless it is otherwise provided refers to the date of effectivity and not with the publication requirement which cannot be omitted as
public needs to be notified for the law to become effective.
The necessity for the publication in the Official Gazette of all
unpublished presidential issuances which are of general application, was affirmed by the court on April 24, 1985. This is necessary
to provide the general public adequate notice of the various laws which regulate actions and conduct as citizens. Without this, there
would be no basis for Art 3 of the Civil Code Ignorance of the law excuses no one from compliance therewith.
WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential issuances which
are of general application, and unless so published, they shall have no binding force and effect.

G.R. No. L-63915 (146 SCRA 446) April 24, 1985

Taada vs. Tuvera

FACTS:
Petitioners sought a writ of mandamus to compel respondent public officials to publish, and/or cause the publication in the Official
Gazette of various presidential decrees, letters of instructions, general orders, proclamations, executive orders, letter of
implementation and administrative orders, invoking the right to be informed on matters of public concern as recognized by the 1973
constitution.

ISSUE:

Whether or not the publication of presidential decrees, letters of instructions, general orders, proclamations, executive orders, letter
of implementation and administrative orders is necessary before its enforcement.

RULING:

Article 2 of the Civil Code provides that laws shall take effect after fifteen days following the completion of their publication in the
Official Gazette, unless it is otherwise provided The Court has ruled that publication in the Official Gazette is necessary in those
cases where the legislation itself does not provide for its effectivity date-for then the date of publication is material for determining its
date of effectivity, which is the fifteenth day following its publication-but not when the law itself provides for the date when it goes into
effect. Article 2 does not preclude the requirement of publication in the Official Gazette, even if the law itself provides for the date of
its effectivity.
The publication of all presidential issuances of a public nature or of general applicability is mandated by law. Obviously,
presidential decrees that provide for fines, forfeitures or penalties for their violation or otherwise impose a burden or. the people,
such as tax and revenue measures, fall within this category. Other presidential issuances which apply only to particular persons or
class of persons such as administrative and executive orders need not be published on the assumption that they have been
circularized to all concerned.
Publication is, therefore, mandatory.

G.R. No. 103144

April 4, 2001

PHILSA INTERNATIONAL PLACEMENT and SERVICES CORPORATION, petitioner, vs. THE HON. SECRETARY OF LABOR AND
EMPLOYMENT, VIVENCIO DE MESA, RODRIGO MIKIN and CEDRIC LEYSON, respondents.
This is a petition for certiorari from the Order dated November 25, 1991 issued by public respondent Secretary of Labor and
Employment. The November 25, 1991 Order affirmed in toto the August 29, 1988 Order of the Philippine Overseas Employment
Administration (hereinafter the "POEA") which found petitioner liable for three (3) counts of illegal exaction, two (2) counts of
contract substitution and one count of withholding or unlawful deduction from salaries of workers in POEA Case No. (L) 85-05-0370.
Petitioner Philsa International Placement and Services Corporation (hereinafter referred to as "Philsa") is a domestic corporation
engaged in the recruitment of workers for overseas employment. Sometime in January 1985, private respondents, who were
recruited by petitioner for employment in Saudi Arabia, were required to pay placement fees in the amount of P5,000.00 for private
respondent Rodrigo L. Mikin and P6,500.00 each for private respondents Vivencio A. de Mesa and Cedric P. Leyson.1
After the execution of their respective work contracts, private respondents left for Saudi Arabia on January 29, 1985. They then
began work for Al-Hejailan Consultants A/E, the foreign principal of petitioner.
While in Saudi Arabia, private respondents were allegedly made to sign a second contract on February 4, 1985 which changed
some of the provisions of their original contract resulting in the reduction of some of their benefits and privileges.2 On April 1, 1985,
their foreign employer allegedly forced them to sign a third contract which increased their work hours from 48 hours to 60 hours a
week without any corresponding increase in their basic monthly salary. When they refused to sign this third contract, the services of
private respondents were terminated by Al-Hejailan and they were repatriated to the Philippines.3
Upon their arrival in the Philippines, private respondents demanded from petitioner Philsa the return of their placement fees and for
the payment of their salaries for the unexpired portion of their contract. When petitioner refused, they filed a case before the POEA
against petitioner Philsa and its foreign principal, Al-Hejailan., with the following causes of action:
1. Illegal dismissal;
2. Payment of salary differentials;
3. Illegal deduction/withholding of salaries;
4. Illegal exactions/refund of placement fees; and
5. Contract substitution. 4
The case was docketed as POEA Case No. (L) 85-05 0370.
Under the rules of the POEA dated May 21, 1985, complaints involving employer-employee relations arising out of or by virtue of
any law or contract involving Filipino workers for overseas employment, including money claims, are adjudicated by the Workers'
Assistance and Adjudication Office (hereinafter the "WAAO") thru the POEA Hearing Officers.5 On the other hand, complaints
involving recruitment violations warranting suspension or cancellation of the license of recruiting agencies are cognizable by the
POEA thru its Licensing and Recruitment Office (hereinafter the "LRO"). 6 In cases where a complaint partakes of the nature of both
an employer-employee relationship case and a recruitment regulation case, the POEA Hearing Officer shall act as representative of
both the WAAO and the LRO and both cases shall be heard simultaneously. In such cases, the Hearing Officer shall submit two
separate recommendations for the two aspects of the case. 7
In the case at bench, the first two causes of action were in the nature of money claims arising from the employer-employee relations
and were properly cognizable by the WAAO. The last two causes of action were in the nature of recruitment violations and may be
investigated by the LRO. The third cause of action, illegal deduction/withholding of salary, is both a money claim and a violation of
recruitment regulations and is thus under the investigatory jurisdiction of both the WAAO and the LRO.
Several hearings were conducted before the POEA Hearing Officer on the two aspects of private respondents' complaint. During
these hearings, private respondents supported their complaint with the presentation of both documentary and testimonial evidence.
When it was its turn to present its evidence, petitioner failed to do so and consequently, private respondents filed a motion to decide
the case on the basis of the evidence on record. 8
On the aspects of the case involving money claims arising from the employer-employee relations and illegal dismissal, the POEA
rendered a decision dated August 31, 1988 9 , the dispositive portion of which reads:
"CONFORMABLY TO THE FOREGOING, judgment is hereby rendered ordering respondent PHILSA INTERNATIONAL
PLACEMENT AND SERVICE CORPORATION to pay complainants, jointly and severally with its principal Al-Hejailan, the following
amounts, to wit:

1. TWO THOUSAND TWO HUNDRED TWENTY FIVE SAUDI RIYALS (SR2,225.00) to each complainant, representing the refund
of their unpaid separation pay;
2. ONE THOUSAND SAUDI RIYALS (SR1,000.00) for V.A. de Mesa alone, representing the salary deduction from his March salary;
3. TWO THOUSAND SAUDI RIYALS (SR2,000.00) each for R.I. Mikin and C.A.P. Leyson only, representing their differential pay for
the months of February and March, 1985; and
4. Five percent (5%) of the total awards as and by way of attorney's fees.
All payments of the abovestated awards shall be made in Philippine Currency equivalent to the prevailing exchange rate according
to the Central Bank at the time of payment.
All other claims of complainants as well as the counterclaims of respondent are dismissed for lack of merit.
SO ORDERED." 10
Under the Rules and Regulations of the POEA, the decision of the POEA-Adjudication Office on matters involving money claims
arising from the employer-employee relationship of overseas Filipino workers may be appealed to the National Labor Relations
Commission (hereinafter the "NLRC)11 . Thus, as both felt aggrieved by the said POEA Decision, petitioner and private respondents
filed separate appeals from the August 31, 1988 POEA Decision to the NLRC.
In a decision dated July 26, 1989 12 , the NLRC modified the appealed decision of the POEA Adjudication Office by deleting the
award of salary deductions and differentials. These awards to private respondents were deleted by the NLRC considering that these
were not raised in the complaint filed by private respondents. The NLRC likewise stated that there was nothing in the text of the
decision which would justify the award.
Private respondents filed a Motion for Reconsideration but the same was denied by the NLRC in a Resolution dated October 25;
1989.
Private respondents then elevated the July 26, 1989 decision of the NLRC to the Supreme Court in a petition for review for certiorari
where it was docketed as G.R. No. 89089. However, in a Resolution dated October 25, 1989, the petition was dismissed outright for
"insufficiency in form and substance, having failed to comply with the Rules of Court and Circular No. 1-88 requiring submission of a
certified true copy of the questioned resolution dated August 23, 1989." 13
Almost simultaneous with the promulgation of the August 31, 1988 decision of the POEA on private respondents' money claims, the
POEA issued a separate Order dated August 29, 1988 14 resolving the recruitment violations aspect of private respondents'
complaint. In this Order, the POEA found petitioner guilty of illegal exaction, contract substitution, and unlawful deduction. The
dispositive portion of this August 29, 1988 POEA Order reads:
"WHEREFORE, premises considered, this Office finds herein respondent PHILSA International Placement and Services Corporation
liable for three (3) counts of illegal exaction, two (2) counts of contract substitution and one count of withholding or unlawful
deduction from salaries of workers.
Accordingly, respondent is hereby ordered to refund the placement fees in the amount of P2,500.00 to Rodrigo L. Mikin, P4,000.00,
each, to Vivencio A. de Mesa and Cedric A.P. Leyson plus restitution of the salaries withheld in the amount of SR1,000.00 to
Vivencio A. de Mesa.
Moreover, respondent's license is hereby suspended for eight (8) months to take effect immediately and to remain as such until full
refund and restitution of the above-stated amounts have been effected or in lieu thereof, it is fined the amount of SIXTY THOUSAND
(P60,000.00) PESOS plus restitution.
SO ORDERED."
In line with this August 29, 1988 Order, petitioner deposited the check equivalent to the claims of private respondents and paid the
corresponding fine under protest. From the said Order, petitioner filed a Motion for Reconsideration which was subsequently denied
in an Order dated October 10, 1989.
Under the POEA Rules and Regulations, the decision of the POEA thru the LRO suspending or canceling a license or authority to
act as a recruitment agency may be appealed to the Ministry (now Department) of Labor and Employment. 15 Accordingly, after the
denial of its motion for reconsideration, petitioner appealed the August 21, 1988 Order to the Secretary of Labor and Employment.
However, in an Order dated September 13, 1991,16 public respondent Secretary of Labor and Employment affirmed in toto the
assailed Order. Petitioner filed a Motion for Reconsideration but this was likewise denied in an Order dated November 25, 1991.
Hence, the instant Petition for Certiorari where petitioner raises the following grounds for the reversal of the questioned Orders:

I THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION IN HOLDING PETITIONER GUILTY OF ILLEGAL EXACTIONS. THE FINDING IS NOT SUPPORTED BY EVIDENCE
AND IN ANY EVENT, THE LAW ON WHICH THE CONVICTION IS BASED IS VOID.
II THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION IN PENALIZING PETITIONER WITH CONTRACT SUBSTITUTION. IN THE PREMISES, THE CONTRACT
SUBSTITUTION IS VALID AS IT IMPROVED THE TERMS AND CONDITIONS OF PRIVATE RESPONDENTS' EMPLOYMENT.
III.THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION, OR WITH GRAVE ABUSE OF
DISCRETION IN HOLDING PETITIONER LIABLE FOR ILLEGAL DEDUCTIONS/WITHHOLDING OF SALARIES FOR THE
SUPREME COURT ITSELF HAS ALREADY ABSOLVED PETITIONER FROM THIS CHARGE.
With respect to the first ground, petitioner would want us to overturn the findings of the POEA, subsequently affirmed by the
Secretary of the Department of Labor and Employment, that it is guilty of illegal exaction committed by collecting placement fees in
excess of the amounts allowed by law. This issue, however, is a question of fact which cannot be raised in a petition for certiorari
under Rule 65. 17 As we have previously held:
"It should be noted, in the first place, that the instant petition is a special civil action for certiorari under Rule 65 of the Revised Rules
of Court. An extraordinary remedy, its use is available only and restrictively in truly exceptional cases wherein the action of an
inferior court, board or officer performing judicial or quasi-judicial acts is challenged for being wholly void on grounds of jurisdiction.
The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion
amounting to lack or excess of jurisdiction. It does not include correction of public respondent NLRC's evaluation of the evidence
and factual findings based thereon, which are generally accorded not only great respect but even finality." 18
The question of whether or not petitioner charged private respondents placement fees in excess of that allowed by law is clearly a
question of fact which is for public respondent POEA, as a trier of facts, to determine. As stated above, the settled rule is that the
factual findings of quasi-judicial agencies like the POEA, which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but at times even finality if such findings are supported by substantial
evidence. 19
On this point, we have carefully examined the records of the case and it is clear that the ruling of public respondent POEA that
petitioner is guilty of illegal exaction is supported by substantial evidence. Aside from the testimonial evidence offered by private
respondents, they also presented documentary evidence consisting of receipts issued by a duly authorized representative of
petitioner which show the payment of amounts in excess of those allowed by the POEA. In contrast, petitioner did not present any
evidence whatsoever to rebut the claims of private respondents despite the many opportunities for them to do so.
Petitioner insists, however, that it cannot be held liable for illegal exaction as POEA Memorandum Circular No. 11, Series of 1983,
which enumerated the allowable fees which may be collected from applicants, is void for lack of publication.
There is merit in the argument.
In Taada vs. Tuvera 20 , the Court held, as follows:
"We hold therefore that all statutes, including those of local application and private laws, shall be published as a condition for their
effectivity, which shall begin fifteen days after publication unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative
powers whenever the same are validly delegated by the legislature or, at present, directly conferred by the Constitution:
Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law pursuant to a
valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and
the public, need not be published. Neither is publication required of the so-called letter of instructions issued by the administrative
superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties."
Applying this doctrine, we have previously declared as having no force and effect the following administrative issuances: a) Rules
and Regulations issued by the Joint Ministry of Health-Ministry of Labor and Employment Accreditation Committee regarding the
accreditation of hospitals, medical clinics and laboratories; 21 b) Letter of Instruction No. 416 ordering the suspension of payments
due and payable by distressed copper mining companies to the national government; 22 c) Memorandum Circulars issued by the
POEA regulating the recruitment of domestic helpers to Hong Kong; 23 d) Administrative Order No. SOCPEC 89-08-01 issued by
the Philippine International Trading Corporation regulating applications for importation from the People's Republic of China;24 and
e) Corporate Compensation Circular No. 10 issued by the Department of Budget and Management discontinuing the payment of
other allowances and fringe benefits to government officials and employees. 25 In all these cited cases, the administrative
issuances questioned therein were uniformly struck down as they were not published or filed with the National Administrative
Register as required by the Administrative Code of 1987. 26
POEA Memorandum Circular No. 2, Series of 1983 must likewise be declared ineffective as the same was never published or filed
with the National Administrative Register.

POEA Memorandum Order No. 2, Series of 1983 provides for the applicable schedule of placement and documentation fees for
private employment agencies or authority holders. Under the said Order, the maximum amount which may be collected from
prospective Filipino overseas workers is P2,500.00. The said circular was apparently issued in compliance with the provisions of
Article 32 of the Labor Code which provides, as follows:
"ARTICLE 32. Fees to be paid by workers. Any person applying with a private fee-charging employment agency for employment
assistance shall not be charged any fee until he has obtained employment through its efforts or has actually commenced
employment. Such fee shall be always covered with the approved receipt clearly showing the amount paid. The Secretary of Labor
shall promulgate a schedule of allowable fees." (italic supplied)
It is thus clear that the administrative circular under consideration is one of those issuances which should be published for its
effectivity, since its purpose is to enforce and implement an existing law pursuant to a valid delegation. 27 Considering that POEA
Administrative Circular No. 2, Series of 1983 has not as yet been published or filed with the National Administrative Register, the
same is ineffective and may not be enforced.
The Office of the Solicitor General argues however that the imposition of administrative sanctions on petitioner was based not on the
questioned administrative circular but on Article 32 and Article 34 (a) 28 of the Labor Code.
The argument is not meritorious. The said articles of the Labor Code were never cited, much less discussed, in the body of the
questioned Orders of the POEA and Secretary of Labor and Employment. In fact, the said Orders were consistent in mentioning that
petitioner's violation of Administrative Circular No. 2, Series of 1983 was the basis for the imposition of administrative sanctions
against petitioner. Furthermore, even assuming that petitioner was held liable under the said provisions of the Labor Code, Articles
32 and 34 (a) of the Labor Code presupposes the promulgation of a valid schedule of fees by the Department of Labor and
Employment. Considering that, as, previously discussed, Administrative Circular No. 2, Series of 1983 embodying such a schedule
of fees never took effect, there is thus no basis for the imposition of the administrative sanctions against petitioner. Moreover, under
Book VI, Chapter II, Section 3 of the Administrative Code of 1987, "(r)ules in force on the date of the effectivity of this Code which
are not filed within three (3) months from that date shall not thereafter be the basis of any sanction against any party or persons."
Considering that POEA Administrative Circular No. 2 was never filed with the National Administrative Register, the same cannot be
used as basis for the imposition of administrative sanctions against petitioner.
The Office of the Solicitor General likewise argues that the questioned administrative circular is not among those requiring
publication contemplated by Taada vs. Tuvera as it is addressed only to a specific group of persons and not to the general public.
Again, there is no merit in this argument.
The fact that the said circular is addressed only to a specified group, namely private employment agencies or authority holders,
does not take it away from the ambit of our ruling in Taada vs. Tuvera. In the case of Phil. Association of Service Exporters vs.
Torres,29 the administrative circulars questioned therein were addressed to an even smaller group, namely Philippine and Hong
Kong agencies engaged in the recruitment of workers for Hong Kong, and still the Court ruled therein that, for lack of proper
publication, the said circulars may not be enforced or implemented.
Our pronouncement in Taada vs. Tuvera is clear and categorical. Administrative rules and regulations must be published if their
purpose is to enforce or implement existing law pursuant to a valid delegation., The only exceptions are interpretative regulations,
those merely internal in nature, or those so-called letters of instructions issued by administrative superiors concerning the rules and
guidelines to be followed by their subordinates in the performance of their duties. Administrative Circular No. 2, Series of 1983 has
not been shown to fall under any of these exceptions.
In this regard, the Solicitor General's reliance on the case of Yaokasin vs. Commissioner of Customs 30 is misplaced. In the said
case, the validity of certain Customs Memorandum Orders were upheld despite their lack of publication as they were addressed to a
particular class of persons, the customs collectors, who were also the subordinates of the Commissioner of the Bureau of Customs.
As such, the said Memorandum Orders clearly fall under one of the exceptions to the publication requirement, namely those dealing
with instructions from an administrative superior to a subordinate regarding the performance of their duties, a circumstance which
does not obtain in the case at bench.
With respect to the second ground, petitioner would want us to review the findings of fact of the POEA regarding the two counts of
alleged contract substitution. Again, this is a question of fact which may not be disturbed if the same is supported by substantial
evidence. A reading of the August 29, 1988 Order of the POEA shows that, indeed, the ruling that petitioner is guilty of two (2)
counts of prohibited contract substitution is supported by substantial evidence. Thus:
"2. As admitted by respondent, there was definitely a contract of substitution in the first count. The first contract was duly approved
by the Administration and, therefore, the parties are bound by the terms and condition thereof until its expiration. The mere intention
of respondents to increase the number of hours of work, even if there was a corresponding increase in wage is clear violation of the
contract as approved by the Administration, and notwithstanding the same, the amendment is evidently contrary to law, morals,
good customs and public policy and hence, must be shunned (Art. 1306, Civil Code of the Philippines, Book III, Title I, Chapter 1,
Article 83, Labor Code of the Philippines, as amended). Moreover, it would appear that the proposed salary increase corresponding

to the increase in number of work bonus may just have been a ploy as complainant were (sic) thereafter not paid at the increased
rate.

As to contract substitution in the second part, a third contract was emphatically intended by respondent to be signed by
complainants which, however, was not consummated due to the adamant refusal of complainants to sign thereon. Mere intention of
the respondent to commit contract substitution for a second time should not be left unpunished. It is the duty of this Office to repress
such acts by teaching agencies a lesson to avoid repetition of the same violation." 31
With respect to the third ground, petitioner argues that the public respondent committed grave abuse of discretion in holding
petitioner liable for illegal deductions/withholding of salaries considering that the Supreme Court itself has already absolved
petitioner from this charge. Petitioner premises its argument on the fact that the July 26, 1989 Decision of the NLRC absolving it
from private respondent de Mesa's claim for salary deduction has already attained finality by reason of the dismissal of private
respondents' petition for certiorari of the said NLRC decision by the Supreme Court.
Petitioner is correct in stating that the July 26, 1989 Decision of the NLRC has attained finality by reason of the dismissal of the
petition for certiorari assailing the same. However, the said NLRC Decision dealt only with the money claims of private respondents
arising from employer-employee relations and illegal dismissal and as such, it is only for the payment of the said money claims that
petitioner is absolved. The administrative sanctions, which are distinct and separate from the money claims of private respondents,
may still be properly imposed by the POEA. In fact, in the August 31, 1988 Decision of the POEA dealing with the money claims of
private respondents, the POEA Adjudication Office precisely declared that "respondent's liability for said money claims is without
prejudice to and independent of its liabilities for the recruitment violations aspect of the case which is the subject of a separate
Order." 32
The NLRC Decision absolving petitioner from paying private respondent de Mesa's claim for salary deduction based its ruling on a
finding that the said money claim was not raised in the complaint. 33 While there may be questions regarding such finding of the
NLRC, the finality of the said NLRC Decision prevents us from modifying or reviewing the same. But the fact that the claim for salary
deduction was not raised by private respondents in their complaint will not bar the POEA from holding petitioner liable for illegal
deduction or withholding of salaries as a ground for the suspension or cancellation of petitioner's license.
Under the POEA Rules and Regulations, the POEA, on its own initiative, may conduct the necessary proceeding for the suspension
or cancellation of the license of any private placement agency on any of the grounds mentioned therein. 34 As such, even without a
written complaint from an aggrieved party, the POEA can initiate proceedings against an erring private placement agency and, if the
result of its investigation so warrants, impose the corresponding administrative sanction thereof. Moreover, the POEA, in an
investigation of an employer-employee relationship case, may still hold a respondent liable for administrative sanctions if, in the
course of its investigation, violations of recruitment regulations are uncovered. 35 It is thus clear that even if recruitment violations
were not included in a complaint for money claims initiated by a private complainant, the POEA, under its rules, may still take
cognizance of the same and impose administrative sanctions if the evidence so warrants.
As such, the fact that petitioner has been absolved by final judgment for the payment of the money claim to private respondent de
Mesa does not mean that it is likewise absolved from the administrative sanctions which may be imposed as a result of the unlawful
deduction or withholding of private respondents' salary. The POEA thus committed no grave abuse of discretion in finding petitioner
administratively liable of one count of unlawful deduction/withholding of salary.
To summarize, petitioner should be absolved from the three (3) counts of illegal exaction as POEA Administrative Circular No. 2,
Series of 1983 could not be the basis of administrative sanctions against petitioner for lack of publication. However, we affirm the
ruling of the POEA and the Secretary of Labor and Employment that petitioner should be held administratively liable for two (2)
counts of contract substitution and one (1) count of withholding or unlawful deduction of salary.
Under the applicable schedule of penalties imposed by the POEA, the penalty for each count of contract substitution is suspension
of license for two (2) months or a fine of P10,000.00 while the penalty for withholding or unlawful deduction of salaries is suspension
of license for two (2) months or fine equal to the salary withheld but not less than P10,000.00 plus restitution of the amount in both
instances.36 Applying the said schedule on the instant case, the license of petitioner should be suspended for six (6) months or, in
lieu thereof, it should be ordered to pay fine in the amount of P30,000.00. Petitioner should likewise pay the amount of SR1,000.00
to private respondent Vivencio A. de Mesa as restitution for the amount withheld from his salary.
WHEREFORE, premises considered, the September 13, 1991 and November 25, 1991 Orders of public respondent Secretary of
Labor and Employment are hereby MODIFIED. As modified, the license of private respondent Philsa International Placement and
Services Corporation is hereby suspended for six (6) months or, in lieu thereof, it is hereby ordered to pay the amount of P30,000.00
as fine. Petitioner is likewise ordered to pay the amount of SR1,000.00 to private respondent Vivencio A. de Mesa. All other
monetary awards are deleted.
SO ORDERED.

UNCIANO PARAMEDICAL COLLEGE vs. COURT OF APPEALS

221 SCRA 285 (1993)
FACTS: Some nursing students were not admitted for the second semester for organizing a student body council which was not
allowed by the school which was allegedly a violation of the school regulations. The school argued that under the ALCUAZ
DOCTRINE, schools have the discretion to admit students for the second semester because upon enrolment of a student in the first
semester, the contract was for that semester only. However a new doctrine was later on promulgated which abandoned the
Alcuaz doctrine which is now the NON doctrine.
ISSUE:
Whether or not the new Non doctrine be applied retroactively to the case.
HELD:
No. The new doctrine shall be applied prospectively and should not apply to parties who relied on the old doctrine and acted on faith
thereof.
G.R. No. 100335. April 7, 1993.
UNCIANO PARAMEDICAL COLLEGE, INC. (now UNCIANO COLLEGES & GENERAL HOSPITAL, INC.); MIRANDO C. UNCIANO,
SR., DOMINADOR SANTOS AND EDITHA MORA, petitioners, vs. THE COURT OF APPEALS, Honorable LOURDES K. TAYAOJAGUROS, in her capacity as Presiding Judge, Regional Trial Court, Branch 21, Manila; ELENA VILLEGAS thru VICTORIA
VILLEGAS; and TED MAGALLANES thru JACINTA MAGALLANES, respondents.
1. STATUTORY CONSTRUCTION; RULE WHEN A DOCTRINE OF THE SUPREME COURT IS OVERRULED AND A DIFFERENT
VIEW IS ADOPTED. In the case of People v. Jabinal, (G.R. No. 82499, 178 SCRA 493 [1989]), it is a settled rule that when a
doctrine of this Court is overruled and a different view is adopted, the new doctrine should be applied prospectively, and should not
apply to parties who had relied on the old doctrine and acted on the faith thereof.
2. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; PURPOSE. As to the question on the propriety
of the issuance of the writ of preliminary mandatory injunction, the case of Capitol Medical Center, Inc., et al. v. Court of Appeals, et
al. discussed exhaustively the purpose in issuing said writ: "The sole object of a preliminary injunction, whether prohibitory or
mandatory, is to preserve the status quo until the merits of the case can be heard. The status quo is the last actual peaceable
uncontested status which preceded the controversy (Rodulfa vs. Alfonso, 76 Phil. 225). It may only be resorted to by a litigant for the
preservation or protection of his rights or interests and for no other purpose during the pendency of the principal action (Calo vs.
Roldan, 76 Phil. 445). It should only be granted if the party asking for it is clearly entitled thereto (Climaco vs. Macaraeg, 4 SCRA
930; Subido vs. Gopengco, 27 SCRA 455; Police Commission vs. Bello, 37 SCRA 230). Inasmuch as a mandatory injunction tends
to do more than to maintain the status quo, it is generally improper to issue such an injunction prior to the final hearing (Manila
Electric Railroad and Light Co. vs. Del Rosario, 22 Phil. 433). It may, however, issue 'in cases of extreme urgency; where the right is
very clear; where considerations of relative inconvenience bear strongly in complainant's favor; where there is a willful and unlawful
invasion of plaintiff's right against his protest and remonstrance, the injury being a continuing one; and where the effect of the
mandatory injunction is rather to reestablish and maintain a preexisting continuing relation between the parties, recently and
arbitrarily interrupted by the defendant, than to establish a new relation. Indeed, the writ should not be denied the complainant when
he makes out a clear case, free from doubt and dispute.' (Commissioner of Customs vs. Cloribel, et al., 19 SCRA 235)."
This is a petition for review on certiorari seeking reversal of the decision 1 of public respondent Court of Appeals dated February 7,
1991, in CA-G.R. SP No. 21020; and its resolution dated June 3, 1991.
The antecedent facts are, as follows:
On April 16, 1990, private respondents Elena Villegas and Ted Magallanes, thru their mothers, Victoria Villegas and Jacinta
Magallanes, respectively, filed before the Regional Trial Court, National Capital Judicial Region, Branch 21, a petition for injunction
and damages with prayer for a writ of preliminary mandatory injunction against petitioners Unciano Paramedical College, Inc. (now
Unciano Colleges and General Hospital, Inc.), Mirando C. Unciano, Sr., Dominador Santos, Editha Mora, Dr. Evelyn Moral and
Laureana Vitug, docketed as Civil Case No. 90-52745. Among other things, they alleged therein that:
"6.01. Around the latter part of July 1989, the above-named students initiated a petition proposing to the school authorities the
organization of a student council in the school. They solicited support of their petition from the studentry by asking the students to
endorse the same with their signatures. They were able to get at least 180 signatures.

"6.02. On August 18, 1989, Elena Villegas and a certain student named Solomon Barroa were summoned to the Office of Dr. Moral
and were admonished not to proceed with the proposal because, according to her, the school does not allow and had never allowed
such an organization.
"6.03. On September 12, 1989, when news leaked out that the above-named students would be barred from enrollment, they sought
confirmation with respondent Dr. Moral, Dean of Discipline, who told them 'it's not true unless you violate the rules and regulations of
the school and if you still insist with your student council.'
"6.04. On October 28, 1989, in compliance with an announcement to see the Dean of Nursing, the above-named students met with
Dean Vitug and Dr. Moral who informed them that they would be barred from enrollment for the second semester because they
supposedly harassed a female student, invited an outsider to the school to speak before the students, and also because the school
has an arrangement with the Department of Education, Culture and Sports not to allow their students to put up a student council. Dr.
Moral advised them to get their Honorable Dismissal, and warned them that if she herself were to give it, it would be marked
`expelled.'
"6.05. On November 6, 1989, the students again approached Dr. Moral who informed them that they were no longer allowed to
enroll because they are allegedly members of the National Union of Students of the Philippines (NUSP) and the League of Filipino
Students (LFS), officers of the student organization they organized, and, moreover 'drug addicts.' The students asked for proof of
these accusations but were not given any, and were told by Dr. Moral that the school has people investigating for (sic) them but she
did not disclose their identities nor provide any proof to support her allegations.
"6.06. On November 13, 1989, a few days after petitioners retained the services of counsel FREE LEGAL ASSISTANCE GROUP
(FLAG), counsel sent a letter to Mr. Mirando Unciano, President of the College, demanding that the constitutional requirements of
due process be complied with prior to unilaterally dismissing the students, and requesting that a conference be held prior to 17
November 1989, as the enrollment deadline was fast approaching . . .:
"6.07. On 17 November 1989, acceding to the demand, a meeting was held, attended by Dr. Moral, Dean Vitug, Mr. Rustico Lopez,
the students, and their counsel. Due, however, to the inability of Dr. Moral to resolve the problem in the absence of the College
President and their legal counsel, the meeting was reset to November 22, 1989 upon Dr. Moral's request. However, notice was sent
to the students' counsel from Unciano Paramedical College resetting the meeting to November 27, 1989 stating that the President
will attend personally therein . . .
"6.08. On 27 November 1989, due to the absence of the school's legal counsel and the President who allegedly just arrived from the
United States, Dr. Moral again requested that the meeting be reset. A verbal altercation occurred between the parties due to the
delaying tactics of the school officials and the failure to resolve the problem by their continuous refusal to discuss the merits of the
accusations against the students. The meeting, attended by Dr. Moral, Dean Vitug and Dean Dominador Santos, ended with the
school officials' request that it be reset for 29 November 19B9 and that the students bring their parents or guardian with them at said
meeting. The students agreed to this request and their counsel prepared a written summary of the matters discussed and agreed
during the meeting. The school officials refused to sign it, however . . .
"6.09. On 29 November 1989, the students were informed that the President had unilaterally refused to allow them to enroll and it
was up to their parents to request or appeal to the school officials to change their decision. Mrs. Victoria Villegas and Mrs. Jacinta
Magallanes wrote to the school officials to request that their children be allowed to enroll . . . Dr. Moral informed them that the Board
of Trustees will have to decide on these requests.
"6.10. On 11 December 1989, the students were informed that the Board of Trustees had refused to grant the parents' request." 2
On May 16, 1990, the trial court issued a temporary restraining order effective May 17, 1990, enjoining petitioner school from not
enrolling private respondents in its College of Nursing and setting the hearing for the issuance of the writ of preliminary injunction on
June 4, 1990. 3
Petitioners filed an opposition to the prayer for a preliminary mandatory injunction on the ground that private respondents are not
entitled thereto and have no clear legal right to the relief demanded. On the same date, the trial court issued an order, the pertinent
parts of which, read:
"xxx xxx xxx
"It is the opinion of the Court that there will be irreparable injury to the petitioners if they are not allowed to enroll. At least they will
miss another semester.
"On the other hand, the injuries mentioned by Dr. Unciano, in particular the withdrawal of the other students and the school will lose
money if the petitioners are allowed to enroll is still a speculation, and may not take place.
"In view thereof, the Court hereby GRANTS the petition for issuance of a preliminary mandatory injunction, ordering the respondents
to allow petitioners to enroll for the first semester of school year 1990-1991, upon filing by petitioners of a bond in the amount of
P2,000.00 each.
"xxx xxx xxx

"SO ORDERED." 4
On June 11. 1990, the writ of preliminary mandatory injunction was issued. 5
On June 13, 1990, petitioners' motion for reconsideration of the Order of June 4, 1990 was denied. 6
Elevating the matter to the Court of Appeals in a petition for certiorari and prohibition with preliminary injunction, the same was
dismissed on February 7, 1991 for lack of merit. 7 Said the court:
"The arguments advanced in support of the petition are mainly anchored on the decision of the Supreme Court in the case of
ALCUAZ, et al. vs. Philippine School of Business Administration, Quezon City Branch (PSBA), et al., L-76353, May 2, 1988; 161
SCRA 7 where it was held that
'It is beyond dispute that a student once admitted by the school is considered enrolled for one semester. It is provided in Paragraph
137 (of the) Manual of Regulations for Private Schools, that when a college student registers in a school, it is understood that he is
enrolling for the entire semester. Likewise, it is provided in the Manual, that the 'written contracts' required for college teachers are
for 'one semester.' It is thus evident that after the close of the first semester, the PSBA-QC no longer has any existing contract either
with the students or with the intervening teachers . . .
"However, in the more recent case of Ariel Non, et al. vs. Hon. Sancho Dames II, et al., G.R. No. 89317, May 20, 1990 (185 SCRA
523), the Supreme Court, abandoned and overruled its decision in Alcuaz and declared thus:
The Court, in Alcuaz, anchored its decision on the 'termination of contract' theory. But it must be repeatedly emphasized that the
contract between the school and the student is not an ordinary contract. It is imbued with public interest, considering the high priority
given by the Constitution to education and the grant to the State of supervisory and regulatory powers over all educational
institutions [See Art. XIV, Secs. 1-2, 4(1).]
'Respondent school cannot justify its actions by relying on Paragraph 137 of the Manual of Regulations for Private School which
provides that '(w)hen a student registers in a school, it is understood that he is enrolling for the entire semester for collegiate
courses,' which the Court in Alcuaz construed as authority for schools to refuse enrollment to a student on the ground that his
contract, which has a term of one semester, has already expired.
'The 'termination of contract' theory does not even find support in the Manual. Paragraph 137 merely clarifies that a college student
enrolls for the entire semester. It serves to protect schools wherein tuition fees are collected and paid on an installment basis, i.e.
collection and payment of the downpayment upon enrollment and the balance before examinations. Thus, even if a student does not
complete the semester for which he was enrolled, but has stayed on for more than two weeks, he may be required to pay his tuition
fees for the whole semester before he is given his credentials for transfer. This is the import of Paragraph 137, subsumed under
Section VII on Tuition and Other Fees, which in its totality provides:
'137. When a student registers in a school, it is understood that he is enrolling for the entire school year for elementary and
secondary courses, and for the entire semester for collegiate courses. A student who transfers or otherwise withdraws, in writing,
within two weeks after the beginning of classes and who has already paid the pertinent tuition and other school fees in full or for any
length of time longer than one month may be charged ten per cent of the total amount due for the term if he withdraws within the
first week of classes, or twenty per cent if within the second week of classes, regardless of whether or not he has actually attended
classes. The student may be charged all the school fees in full if he withdraws anytime after the second week of classes. However, if
the transfer or withdrawal is due to a justifiable reason, the student shall be charged the pertinent fees only up to and including the
last month of attendance.'
'Clearly, in no way may Paragraph 137 be construed to mean that the student shall be enrolled for only one semester, and that after
the semester is over his re-enrollment is dependent solely on the sound discretion of the school. On the contrary, the Manual
recognizes the right of the student to be enrolled in his course for the entire period he is expected to complete it. Thus, Paragraph
107 states:
'Every student has the right to enroll in any school, college or university upon meeting its specific requirement and reasonable
regulation: Provided, that except in the case of academic delinquency and violation of disciplinary regulation, the student is
presumed to be qualified for enrollment for the entire period he is expected to his (sic) complete his course without prejudice to his
right to transfer.'
'This 'presumption' has been translated into a right in Batas Pambansa Blg. 232, the 'Education Act of 1982.' Section 9 of this act
provides:
'SEC. 9. Rights of Students in School. In addition to other rights, and subject to the limitations prescribed by law and regulations,
students and pupils in all schools shall enjoy the following rights:
xxx xxx xxx
12. The right to freely choose their field of study subject to existing curricula and to continue their course therein up to graduation,
except in cases of academic deficiency, or violation of disciplinary regulations.' " 8

On June 3, 1991, the motion for reconsideration was denied, again, for lack of merit. 9 Hence, the present petition.
Petitioners raise this lone issue:
"WHETHER OR NOT THE NON DOCTRINE SHOULD BE APPLIED RETROACTIVELY TO GOVERN AND INVALIDATE THE
LEGAL EFFECTS OF INCIDENTS THAT TOOK PLACE PRIOR TO ITS ADOPTION AND WHICH INCIDENTS WERE PROPER
AND VALID UNDER THE ALCUAZ DOCTRINE PREVAILING AT THE TIME SAID INCIDENTS TOOK PLACE." 10
Petitioners argue that under the then prevailing Alcuaz doctrine which was promulgated on May 2, 1988, the contract between them
and private respondents was validly terminated upon the end of the first semester of school year 1989-1990. Although said doctrine
was later abandoned in Non, et al. v. Dames II, et al., supra, this case was promulgated much later, or on May 20, 1990, when the
termination of the contract between them had long become fait accompli. Settled is the rule that when a doctrine of this Court is
overruled and a different view is adopted, the new doctrine is applied prospectively, and should not apply to parties who relied on
the old doctrine and acted on the faith thereof, conformably with the case of People v. Jabinal, G.R. No. L-30061, 55 SCRA 607
(1974). Thus, the writ of preliminary mandatory injunction was issued by the trial court with grave abuse of discretion.
We agree with the arguments of petitioners.
The ruling in the Non case should not be given a retroactive effect to cases that arose before its promulgation on May 20, 1990, as
in this case, which was filed on April 16, 1990. If it were otherwise, it would result in oppression to petitioners and other schools
similarly situated who relied on the ruling in the Alcuaz case, promulgated on May 2, 1988, which recognized the termination of
contract theory. We had an opportunity to resolve a similar issue in National Service Corporation, et al. v. NLRC. 11 In this case,
petitioner claimed that as a government corporation (by virtue of its being a subsidiary of the National Investment and Development
Corporation, a subsidiary wholly owned by the Philippine National Bank, which in turn is a government owned corporation), the
terms and conditions of employment of its employees are governed by the civil service law, rules and regulations. In support thereof,
petitioner cited the ruling in National Housing Corporation v. Juco, 12 that employees of government owned or controlled
corporations are governed by the civil service law, rules and regulations, we rejected this claim of petitioner and held that:
"It would appear that, in the interest of justice, the holding in said case should not be given retroactive effect, that is, to cases that
arose before its promulgation on 17 January 1985. To do otherwise would be oppressive to Credo and other employees similarly
situated, because under the same 1973 Constitution but prior to the ruling in National Housing Corporation vs. Juco, this Court had
recognized the applicability of the Labor Code to, and the authority of the NLRC to exercise jurisdiction over, disputes involving
terms and conditions of employment in government-owned or controlled corporations, among them, the National Service
Corporation (NASECO)." 13
In addition, We reiterate Our earlier pronouncement in the case of People v. Jabinal, supra, that it is a settled rule that when a
doctrine of this Court is overruled and a different view is adopted, the new doctrine should be applied prospectively, and should not
apply to parties who had relied on the old doctrine and acted on the faith thereof.
Coming now to the question on the propriety of the issuance of the writ of preliminary mandatory injunction, the case of Capitol
Medical Center, Inc., et al. v. Court of Appeals, et al. 14 discussed exhaustively the purpose in issuing said writ:
"The sole object of a preliminary injunction, whether prohibitory or mandatory, is to preserve the status quo until the merits of the
case can be heard. The status quo is the last actual peaceable uncontested status which preceded the controversy (Rodulfa vs.
Alfonso, 76 Phil. 225). It may only be resorted to by a litigant for the preservation or protection of his rights or interests and for no
other purpose during the pendency of the principal action (Calo vs. Roldan, 76 Phil. 445). It should only be granted if the party
asking for it is clearly entitled thereto (Climaco vs. Macaraeg, 4 SCRA 930; Subido vs. Gopengco, 27 SCRA 455; Police
Commission vs. Bello, 37 SCRA 230).
Inasmuch as a mandatory injunction tends to do more than to maintain the status quo, it is generally improper to issue such an
injunction prior to the final hearing (Manila Electric Railroad and Light Co. vs. Del Rosario, 22 Phil. 433). It may, however, issue 'in
cases of extreme urgency; where the right is very clear; where considerations of relative inconvenience bear strongly in
complainant's favor where there is a willful and unlawful invasion of plaintiff's right against his protest and remonstrance, the injury
being a continuing one and where the effect of the mandatory injunction is rather to re-establish and maintain a pre-existing
continuing relation between the parties, recently and arbitrarily interrupted by the defendant, than to establish a new relation.
Indeed, the writ should not be denied the complainant when he makes out a clear case, free from doubt and dispute.'
(Commissioner of Customs vs. Cloribel, et al., 19 SCRA 235.)." 15
In the present case, the contract between the parties was validly terminated upon the end of the first semester of school year 19891990, or in October, 1989. This is the status quo. The trial court gravely abused its discretion in issuing the writ of preliminary
mandatory injunction which ordered petitioners to allow private respondents "to enroll for the first semester of school year 19901190." 16 Guided by the Capitol case, certainly, this writ will not restore the status quo but will go a step backward, then restore the
condition preceding the status quo. Private respondents do not possess any clear legal right to re-enroll, corollarily, petitioners are
not obliged legally to re-admit them.

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated February 7, 1991 and its resolution
dated June 3, 1991 are SET ASIDE. The orders of the trial court dated June 4, 1990 and June 13, 1990 and the writ of preliminary
mandatory injunction are likewise SET ASIDE.
SO ORDERED.
EMETRIO CUI vs. ARELLANO UNIVERSITY
2 SCRA 205
May 30, 1961
Facts:
Cui was a law scholar at the Arellano University; he paid the tuition fees but it was returned to him at the end of every
semester. Before Arellano awarded the scholarship grant, Cui was made to sign a contract covenant and agreement saying that he
waives his right to transfer to another school in consideration of the scholarship grant and if he transfers, he shall pay the tuition fees
awarded to him while being a scholar. He transferred to another school to finish his last term in law school. When he was about to
take the Bar, his TOR at Arellano was not issued unless he pays the amount of the tuition fees that were returned to him when he
was still their scholar. He paid under protest.

Issue:
Whether or not the provision of the contract between plaintiff and the defendant, whereby the former waived his right to
transfer to another school without refunding to the latter the equivalent of his scholarship grants in cash, is valid or not.

Held:
The waiver signed by Cui was void as it was contrary to public policy; it was null and void.
Scholarship grants, as pointed out by the Director of the Bureau of Private Schools in Memorandum No. 38, are awarded in
recognition of merit and not to attract and keep brilliant students in school for their propaganda value. To look at such grants as a
business scheme designed to increase the business potential of an educational institution is not only inconsistent with sound public
policy but also good morals. Consequently, the waiver signed by the student, waiving his right to transfer to another school unless
he refunds to the university the equivalent of his scholarship grants, is null and void.
WHEREFORE, the decision appealed from is hereby reverse and another one shall be entered sentencing the defendant to
pay to the plaintiff the sum of P1,033.87, with interest thereon at the legal rate from September 1, 1954, date of the institution of this
case, as well as the costs, and dismissing defendants counterclaim. It is so ordered.

People vs. Jabinal

55 SCRA 607 27 February 1974

Antonio J.

Facts:
The instant case was an appeal form the judgment of the Municipal Court of Batangas finding the accused guilty of the crime of
illegal possession of firearm and ammunition. The validity of the conviction was based upon a retroactive application of the
Supreme Courts ruling in People vs. Mapa.
As to the facts, a determined by the trial court, the accused admitted that on September 5, 1964, he was in possession of the
revolver and the ammunition described in the complaint was without the requisite license a permit. He however, contended that he
was a SECRET AGENT appointed by the governor, and was likewise subsequently appended as Confidential Agent, which granted
him the authority to possess fire arm in the performance of his official duties as peace officer. Relying on the Supreme Courts
decision in People vs. Macarandang and People vs. Lucero, the accused sought for his aquittal.
Noting and agreeing to the evidence presented by the accused, the trial court nonetheless decided otherwise, citing that People vs.
Macarandang and People vs. Lucero were reversed and subsequently abandoned in people vs. mapa.

Issue:
Should appellant be acquitted on the bases of Supreme Court rulings in Macarandana and Lucero, or should his conviction stand in
view of the completer reversal of Macarandang and Lucero doctrine in Mapa?

Ruling:
The judgment appealed was reversed, and the appellant was acquitted.

Reason:
The doctrine laid down in lucero and Macarandang was part of the jurisprudence, hence, of the law, at the time appellant was found
in possession of fire arm in question and he was arraigned by the trial court. It is true that the doctrine was overruled in Mapa case
in 1967, but when a doctrine of the Supreme Court is overruled and a new one is adopted, the new doctrine should be applied
prospectively, and should not apply to partres who had relied on the old doctrine and acted on the faith thereof.

G.R. No. L-30061 February 27, 1974

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellees,vs. JOSE JABINAL Y CARMEN, defendant-appellant.

Appeal from the judgment of the Municipal Court of Batangas (provincial capital), Batangas, in Criminal Case No. 889, finding the
accused guilty of the crime of Illegal Possession of Firearm and Ammunition and sentencing him to suffer an indeterminate penalty
ranging from one (1) year and one (1) day to two (2) years imprisonment, with the accessories provided by law, which raises in issue
the validity of his conviction based on a retroactive application of Our ruling in People v. Mapa. 1
The complaint filed against the accused reads:

That on or about 9:00 o'clock, p.m., the 5th day of September, 1964, in the poblacion, Municipality of Batangas, Province of
Batangas, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, a person not authorized by
law, did then and there wilfully, unlawfully and feloniously keep in his possession, custody and direct control a revolver Cal. .22, RG8
German Made with one (1) live ammunition and four (4) empty shells without first securing the necessary permit or license to
possess the same.

At the arraignment on September 11, 1964, the accused entered a plea of not guilty, after which trial was accordingly held.
The accused admitted that on September 5, 1964, he was in possession of the revolver and the ammunition described in the
complaint, without the requisite license or permit. He, however, claimed to be entitled to exoneration because, although he had no
license or permit, he had an appointment as Secret Agent from the Provincial Governor of Batangas and an appointment as
Confidential Agent from the PC Provincial Commander, and the said appointments expressly carried with them the authority to
possess and carry the firearm in question.
Indeed, the accused had appointments from the above-mentioned officials as claimed by him. His appointment from Governor
Feliciano Leviste, dated December 10, 1962, reads:
Reposing special trust and confidence in your civic spirit, and trusting that you will be an effective agent in the detection of crimes
and in the preservation of peace and order in the province of Batangas, especially with respect to the suppression of trafficking in
explosives, jueteng, illegal cockfighting, cattle rustling, robbery and the detection of unlicensed firearms, you are hereby appointed a
SECRET AGENT of the undersigned, the appointment to take effect immediately, or as soon as you have qualified for the position.
As such Secret Agent, your duties shall be those generally of a peace officer and particularly to help in the preservation of peace
and order in this province and to make reports thereon to me once or twice a month. It should be clearly understood that any abuse
of authority on your part shall be considered sufficient ground for the automatic cancellation of your appointment and immediate
separation from the service. In accordance with the decision of the Supreme Court in G.R. No. L-12088 dated December 23, 1959,
you will have the right to bear a firearm, particularly described below, for use in connection with the performance of your duties.
By virtue hereof, you may qualify and enter upon the performance of your duties by taking your oath of office and filing the original
thereof with us.
Very truly yours,
(Sgd.) FELICIANO LEVISTE
Provincial Governor
FIREARM AUTHORIZED TO CARRY:
On March 15, 1964, the accused was also appointed by the PC Provincial Commander of Batangas as Confidential Agent with
duties to furnish information regarding smuggling activities, wanted persons, loose firearms, subversives and other similar subjects
that might affect the peace and order condition in Batangas province, and in connection with these duties he was temporarily
authorized to possess a ROHM revolver, Cal. .22 RG-8 SN-64, for his personal protection while in the performance of his duties.
The accused contended before the court a quo that in view of his above-mentioned appointments as Secret Agent and Confidential
Agent, with authority to possess the firearm subject matter of the prosecution, he was entitled to acquittal on the basis of the
Supreme Court's decision in People vs. Macarandang 2 and People vs. Lucero. 3 The trial court, while conceding on the basis of the
evidence of record the accused had really been appointed Secret Agent and Confidential Agent by the Provincial Governor and the
PC Provincial Commander of Batangas, respectively, with authority to possess and carry the firearm described in the complaint,
nevertheless held the accused in its decision dated December 27, 1968, criminally liable for illegal possession of a firearm and
ammunition on the ground that the rulings of the Supreme Court in the cases of Macarandang and Lucero were reversed and
abandoned in People vs. Mapa, supra. The court considered as mitigating circumstances the appointments of the accused as
Secret Agent and Confidential Agent.
Let us advert to Our decisions in People v. Macarandang, supra, People v. Lucero, supra, and People v. Mapa, supra. In
Macarandang, We reversed the trial court's judgment of conviction against the accused because it was shown that at the time he
was found to possess a certain firearm and ammunition without license or permit, he had an appointment from the Provincial
Governor as Secret Agent to assist in the maintenance of peace and order and in the detection of crimes, with authority to hold and
carry the said firearm and ammunition. We therefore held that while it is true that the Governor has no authority to issue any firearm
license or permit, nevertheless, section 879 of the Revised Administrative Code provides that "peace officers" are exempted from
the requirements relating to the issuance of license to possess firearms; and Macarandang's appointment as Secret Agent to assist
in the maintenance of peace and order and detection of crimes, sufficiently placed him in the category of a "peace officer" equivalent
even to a member of the municipal police who under section 879 of the Revised Administrative Code are exempted from the
requirements relating to the issuance of license to possess firearms. In Lucero, We held that under the circumstances of the case,
the granting of the temporary use of the firearm to the accused was a necessary means to carry out the lawful purpose of the
batallion commander to effect the capture of a Huk leader. In Mapa, expressly abandoning the doctrine in Macarandang, and by
implication, that in Lucero, We sustained the judgment of conviction on the following ground:

The law is explicit that except as thereafter specifically allowed, "it shall be unlawful for any person to ... possess any firearm,
detached parts of firearms or ammunition therefor, or any instrument or implement used or intended to be used in the manufacture
of firearms, parts of firearms, or ammunition." (Sec. 878, as amended by Republic Act No. 4, Revised Administrative Code.) The
next section provides that "firearms and ammunition regularly and lawfully issued to officers, soldiers, sailors, or marines [of the
Armed Forces of the Philippines], the Philippine Constabulary, guards in the employment of the Bureau of Prisons, municipal police,
provincial governors, lieutenant governors, provincial treasurers, municipal treasurers, municipal mayors, and guards of provincial
prisoners and jails," are not covered "when such firearms are in possession of such officials and public servants for use in the
performance of their official duties." (Sec. 879, Revised Administrative Code.)
The law cannot be any clearer. No provision is made for a secret agent. As such he is not exempt. ... .
It will be noted that when appellant was appointed Secret Agent by the Provincial Government in 1962, and Confidential Agent by
the Provincial Commander in 1964, the prevailing doctrine on the matter was that laid down by Us in People v. Macarandang (1959)
and People v. Lucero (1958). Our decision in People v. Mapa reversing the aforesaid doctrine came only in 1967. The sole question
in this appeal is: Should appellant be acquitted on the basis of Our rulings in Macarandang and Lucero, or should his conviction
stand in view of the complete reversal of the Macarandang and Lucero doctrine in Mapa? The Solicitor General is of the first view,
and he accordingly recommends reversal of the appealed judgment.
Decisions of this Court, although in themselves not laws, are nevertheless evidence of what the laws mean, and this is the reason
why under Article 8 of the New Civil Code "Judicial decisions applying or interpreting the laws or the Constitution shall form a part of
the legal system ... ." The interpretation upon a law by this Court constitutes, in a way, a part of the law as of the date that law
originally passed, since this Court's construction merely establishes the contemporaneous legislative intent that law thus construed
intends to effectuate. The settled rule supported by numerous authorities is a restatement of legal maxim "legis interpretatio legis
vim obtinet" the interpretation placed upon the written law by a competent court has the force of law. The doctrine laid down in
Lucero and Macarandang was part of the jurisprudence, hence of the law, of the land, at the time appellant was found in possession
of the firearm in question and when he arraigned by the trial court. It is true that the doctrine was overruled in the Mapa case in
1967, but when a doctrine of this Court is overruled and a different view is adopted, the new doctrine should be applied
prospectively, and should not apply to parties who had relied on the old doctrine and acted on the faith thereof. This is especially
true in the construction and application of criminal laws, where it is necessary that the punishability of an act be reasonably foreseen
for the guidance of society.
It follows, therefore, that considering that appellant conferred his appointments as Secret Agent and Confidential Agent and
authorized to possess a firearm pursuant to the prevailing doctrine enunciated in Macarandang and Lucero, under which no criminal
liability would attach to his possession of said firearm in spite of the absence of a license and permit therefor, appellant must be
absolved. Certainly, appellant may not be punished for an act which at the time it was done was held not to be punishable.
WHEREFORE, the judgment appealed from is hereby reversed, and appellant is acquitted, with costs de oficio.
Zaldivar (Chairman), Barredo, Fernandez and Aquino, JJ., concur.
Fernando, J., took no part.

Van Dorn vs. Romillo

139 SCRA 139

FACTS:
Alice Reyes Van Dorn, a Filipino Citizen and private respondent, Richard Upton, a US citizen, was married in Hong Kong in 1979.
They established their residence in the Philippines and had 2 children. They were divorced in Nevada, USA in 1982 and petitioner
remarried, this time with Theodore Van Dorn. A suit against petitioner was filed on June 8, 1983, stating that petitioners business in
Ermita Manila, the Galleon Shop, is a conjugal property with Upton and prayed therein that Alice be ordered to render an accounting
of the business and he be declared as the administrator of the said property.

ISSUE: Whether or not the foreign divorce between the petitioner and private respondent in Nevada is binding in the Philippines
where petitioner is a Filipino citizen.

HELD:
Private respondent is no longer the husband of the petitioner. He would have no standing to sue petitioner to exercise control over
conjugal assets. He is estopped by his own representation before the court from asserting his right over the alleged conjugal
property. Furthermore, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid
according to their national law. Petitioner is not bound to her marital obligations to respondent by virtue of her nationality laws. She
should not be discriminated against her own country if the end of justice is to be served.
G.R. No. L-68470 October 8, 1985
ALICE REYES VAN DORN, petitioner,vs. HON. MANUEL V. ROMILLO, JR., as Presiding Judge of Branch CX, Regional Trial Court
of the National Capital Region Pasay City and RICHARD UPTON respondents.
In this Petition for certiorari and Prohibition, petitioner Alice Reyes Van Dorn seeks to set aside the Orders, dated September 15,
1983 and August 3, 1984, in Civil Case No. 1075-P, issued by respondent Judge, which denied her Motion to Dismiss said case,
and her Motion for Reconsideration of the Dismissal Order, respectively.
The basic background facts are that petitioner is a citizen of the Philippines while private respondent is a citizen of the United
States; that they were married in Hongkong in 1972; that, after the marriage, they established their residence in the Philippines; that
they begot two children born on April 4, 1973 and December 18, 1975, respectively; that the parties were divorced in Nevada,
United States, in 1982; and that petitioner has re-married also in Nevada, this time to Theodore Van Dorn.
Dated June 8, 1983, private respondent filed suit against petitioner in Civil Case No. 1075-P of the Regional Trial Court, Branch
CXV, in Pasay City, stating that petitioner's business in Ermita, Manila, (the Galleon Shop, for short), is conjugal property of the
parties, and asking that petitioner be ordered to render an accounting of that business, and that private respondent be declared with
right to manage the conjugal property. Petitioner moved to dismiss the case on the ground that the cause of action is barred by
previous judgment in the divorce proceedings before the Nevada Court wherein respondent had acknowledged that he and
petitioner had "no community property" as of June 11, 1982. The Court below denied the Motion to Dismiss in the mentioned case
on the ground that the property involved is located in the Philippines so that the Divorce Decree has no bearing in the case. The
denial is now the subject of this certiorari proceeding.
Generally, the denial of a Motion to Dismiss in a civil case is interlocutory and is not subject to appeal. certiorari and Prohibition are
neither the remedies to question the propriety of an interlocutory order of the trial Court. However, when a grave abuse of discretion
was patently committed, or the lower Court acted capriciously and whimsically, then it devolves upon this Court in a certiorari
proceeding to exercise its supervisory authority and to correct the error committed which, in such a case, is equivalent to lack of
jurisdiction. 1 Prohibition would then lie since it would be useless and a waste of time to go ahead with the proceedings. 2
Weconsider the petition filed in this case within the exception, and we have given it due course.
For resolution is the effect of the foreign divorce on the parties and their alleged conjugal property in the Philippines.

Petitioner contends that respondent is estopped from laying claim on the alleged conjugal property because of the representation he
made in the divorce proceedings before the American Court that they had no community of property; that the Galleon Shop was not
established through conjugal funds, and that respondent's claim is barred by prior judgment.

For his part, respondent avers that the Divorce Decree issued by the Nevada Court cannot prevail over the prohibitive laws of the
Philippines and its declared national policy; that the acts and declaration of a foreign Court cannot, especially if the same is contrary
to public policy, divest Philippine Courts of jurisdiction to entertain matters within its jurisdiction.
For the resolution of this case, it is not necessary to determine whether the property relations between petitioner and private
respondent, after their marriage, were upon absolute or relative community property, upon complete separation of property, or upon
any other regime. The pivotal fact in this case is the Nevada divorce of the parties.
The Nevada District Court, which decreed the divorce, had obtained jurisdiction over petitioner who appeared in person before the
Court during the trial of the case. It also obtained jurisdiction over private respondent who, giving his address as No. 381 Bush
Street, San Francisco, California, authorized his attorneys in the divorce case, Karp & Gradt Ltd., to agree to the divorce on the
ground of incompatibility in the understanding that there were neither community property nor community obligations. 3 As explicitly
stated in the Power of Attorney he executed in favor of the law firm of KARP & GRAD LTD., 336 W. Liberty, Reno, Nevada, to
represent him in the divorce proceedings:
xxx xxx xxx
You are hereby authorized to accept service of Summons, to file an Answer, appear on my behalf and do an things necessary and
proper to represent me, without further contesting, subject to the following:
1. That my spouse seeks a divorce on the ground of incompatibility.
2. That there is no community of property to be adjudicated by the Court.
3. 'I'hat there are no community obligations to be adjudicated by the court.
xxx xxx xxx 4
There can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on
private respondent as an American citizen. For instance, private respondent cannot sue petitioner, as her husband, in any State of
the Union. What he is contending in this case is that the divorce is not valid and binding in this jurisdiction, the same being contrary
to local law and public policy.
It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, 5 only Philippine nationals are covered by the
policy against absolute divorces the same being considered contrary to our concept of public police and morality. However, aliens
may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. 6 In
this case, the divorce in Nevada released private respondent from the marriage from the standards of American law, under which
divorce dissolves the marriage. As stated by the Federal Supreme Court of the United States in Atherton vs. Atherton, 45 L. Ed. 794,
799:
The purpose and effect of a decree of divorce from the bond of matrimony by a court of competent jurisdiction are to change the
existing status or domestic relation of husband and wife, and to free them both from the bond. The marriage tie when thus severed
as to one party, ceases to bind either. A husband without a wife, or a wife without a husband, is unknown to the law. When the law
provides, in the nature of a penalty. that the guilty party shall not marry again, that party, as well as the other, is still absolutely freed
from the bond of the former marriage.
Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in
the case below as petitioner's husband entitled to exercise control over conjugal assets. As he is bound by the Decision of his own
country's Court, which validly exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his own
representation before said Court from asserting his right over the alleged conjugal property.
To maintain, as private respondent does, that, under our laws, petitioner has to be considered still married to private respondent and
still subject to a wife's obligations under Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live
together with, observe respect and fidelity, and render support to private respondent. The latter should not continue to be one of her
heirs with possible rights to conjugal property. She should not be discriminated against in her own country if the ends of justice are
to be served.
WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to dismiss the Complaint filed in Civil Case No.
1075-P of his Court.
Without costs.

SO ORDERED.

FE D. QUITA, petitioner, VS. COURT OF APPEALS and BLANDINA DANDAN, respondents

December 22, 1998

Facts:
Fe D. Quita and Arturo T. Padlan, both Filipinos, were married in the Philippines on May 18, 1941. No children were born out of their
marriage. On July 23, 1954, petitioner obtained a final judgment of divorce in San Francisco, California, U.S.A. On April 16, 1972,
Arturo died leaving no will. On August 31, 1972, Lino Javier Inciong filed a petition with the RTC for issuance of letters of
administration concerning the estate of Arturo in favor of the Philippine Trust Company. Respondent Blandina Dandan, claiming to
be the surviving spouse of Arturo Dandan and the surviving children, all surnamed Padlan, opposed the petition. The RTC
expressed that the marriage between Antonio and petitioner subsisted until the death of Arturo in 1972, that the marriage existed
between private respondent and Arturo was clearly void since it was celebrated during the existence of his previous marriage to
petitioner. The Court of Appeals remanded the case to the trial court for further proceedings.

Issues:
1. Should the case be remanded to the lower court?
2. Who between the petitioner and private respondent is the proper heir of the decedent?

Held:
If there is a controversy before the court as to who are the lawful heirs of the deceased person or as to the distributive shares to
which each person is entitled under the law, the controversy shall be heard and decided as in ordinary cases.
No dispute exists as to the right of the six Padlan children to inherit from the decedent because there are proofs that they have been
duly acknowledged by him and petitioner herself even recognizes them as heirs of Arturo Padlan, nor as to their respective
hereditary shares.
Private respondent is not a surviving spouse that can inherit from him as this status presupposes a legitimate relationship. Her
marriage to Arturo being a bigamous marriage considered void ab inito under Articles 80 and 83 of the Civil Code renders her not a
surviving spouse.
The decision of the Court of Appeals ordering the remand of the case is affirmed.

G.R. No. 124862 December 22, 1998

FE D. QUITA, petitioner, vs. COURT OF APPEALS and BLANDINA DANDAN, * respondents.
FE D. QUITA and Arturo T. Padlan, both Filipinos, were married in the Philippines on 18 May 1941. They were not however blessed
with children. Somewhere along the way their relationship soured. Eventually Fe sued Arturo for divorce in San Francisco,
California, U.S.A. She submitted in the divorce proceedings a private writing dated 19 July 1950 evidencing their agreement to live
separately from each other and a settlement of their conjugal properties. On 23 July 1954 she obtained a final judgment of divorce.
Three (3) weeks thereafter she married a certain Felix Tupaz in the same locality but their relationship also ended in a divorce. Still
in the U.S.A., she married for the third time, to a certain Wernimont.
On 16 April 1972 Arturo died. He left no will. On 31 August 1972 Lino Javier Inciong filed a petition with the Regional Trial Court of
Quezon City for issuance of letters of administration concerning the estate of Arturo in favor of the Philippine Trust Company.
Respondent Blandina Dandan (also referred to as Blandina Padlan), claiming to be the surviving spouse of Arturo Padlan, and
Claro, Alexis, Ricardo, Emmanuel, Zenaida and Yolanda, all surnamed Padlan, named in the children of Arturo Padlan opposed the
petition and prayed for the appointment instead of Atty. Leonardo Casaba, which was resolved in favor of the latter. Upon motion of
the oppositors themselves, Atty. Cabasal was later replaced by Higino Castillon. On 30 April 1973 the oppositors (Blandina and

Padlan children) submitted certified photocopies of the 19 July 1950 private writing and the final judgment of divorce between
petitioner and Arturo. Later Ruperto T. Padlan, claiming to be the sole surviving brother of the deceased Arturo, intervened.
On 7 October 1987 petitioner moved for the immediate declaration of heirs of the decedent and the distribution of his estate. At the
scheduled hearing on 23 October 1987, private respondent as well as the six (6) Padlan children and Ruperto failed to appear
despite due notice. On the same day, the trial court required the submission of the records of birth of the Padlan children within ten
(10) days from receipt thereof, after which, with or without the documents, the issue on the declaration of heirs would be considered
submitted for resolution. The prescribed period lapsed without the required documents being submitted.

The trial court invoking Tenchavez v. Escao 1 which held that "a foreign divorce between Filipino citizens sought and decreed after
the effectivity of the present Civil Code (Rep. Act 386) was not entitled to recognition as valid in this jurisdiction," 2 disregarded the
divorce between petitioner and Arturo. Consecuently, it expressed the view that their marriage subsisted until the death of Arturo in
1972. Neither did it consider valid their extrajudicial settlement of conjugal properties due to lack of judicial approval. 3 On the other
hand, it opined that there was no showing that marriage existed between private respondent and Arturo, much less was it shown
that the alleged Padlan children had been acknowledged by the deceased as his children with her. As regards Ruperto, it found that
he was a brother of Arturo. On 27 November 1987 4 only petitioner and Ruperto were declared the intestate heirs of Arturo.
Accordingly, equal adjudication of the net hereditary estate was ordered in favor of the two intestate heirs. 5
On motion for reconsideration, Blandina and the Padlan children were allowed to present proofs that the recognition of the children
by the deceased as his legitimate children, except Alexis who was recognized as his illegitimate child, had been made in their
respective records of birth. Thus on 15 February 1988 6 partial reconsideration was granted declaring the Padlan children, with the
exception of Alexis, entitled to one-half of the estate to the exclusion of Ruperto Padlan, and petitioner to the other half. 7 Private
respondent was not declared an heir. Although it was stated in the aforementioned records of birth that she and Arturo were married
on 22 April 1947, their marriage was clearly void since it was celebrated during the existence of his previous marriage to petitioner.
In their appeal to the Court of Appeals, Blandina and her children assigned as one of the errors allegedly committed by the trial court
the circumstance that the case was decided without a hearing, in violation of Sec. 1, Rule 90, of the Rules of Court, which provides
that if there is a controversy before the court as to who are the lawful heirs of the deceased person or as to the distributive shares to
which each person is entitled under the law, the controversy shall be heard and decided as in ordinary cases.
Respondent appellate court found this ground alone sufficient to sustain the appeal; hence, on 11 September 1995 it declared null
and void the 27 November 1987 decision and 15 February 1988 order of the trial court, and directed the remand of the case to the
trial court for further proceedings. 8 On 18 April 1996 it denied reconsideration. 9
Should this case be remanded to the lower court for further proceedings? Petitioner insists that there is no need because, first, no
legal or factual issue obtains for resolution either as to the heirship of the Padlan children or as to the decedent; and, second, the
issue as to who between petitioner and private respondent is the proper hier of the decedent is one of law which can be resolved in
the present petition based on establish facts and admissions of the parties.
We cannot sustain petitioner. The provision relied upon by respondent court is clear: If there is a controversy before the court as to
who are the lawful heirs of the deceased person or as to the distributive shares to which each person is entitled under the law, the
controversy shall be heard and decided as in ordinary cases.
We agree with petitioner that no dispute exists either as to the right of the six (6) Padlan children to inherit from the decedent
because there are proofs that they have been duly acknowledged by him and petitioner herself even recognizes them as heirs of
Arturo Padlan; 10 nor as to their respective hereditary shares. But controversy remains as to who is the legitimate surviving spouse
of Arturo. The trial court, after the parties other than petitioner failed to appear during the scheduled hearing on 23 October 1987 of
the motion for immediate declaration of heirs and distribution of estate, simply issued an order requiring the submission of the
records of birth of the Padlan children within ten (10) days from receipt thereof, after which, with or without the documents, the issue
on declaration of heirs would be deemed submitted for resolution.
We note that in her comment to petitioner's motion private respondent raised, among others, the issue as to whether petitioner was
still entitled to inherit from the decedent considering that she had secured a divorce in the U.S.A. and in fact had twice remarried.
She also invoked the above quoted procedural rule. 11 To this, petitioner replied that Arturo was a Filipino and as such remained
legally married to her in spite of the divorce they obtained. 12 Reading between the lines, the implication is that petitioner was no
longer a Filipino citizen at the time of her divorce from Arturo. This should have prompted the trial court to conduct a hearing to
establish her citizenship. The purpose of a hearing is to ascertain the truth of the matters in issue with the aid of documentary and
testimonial evidence as well as the arguments of the parties either supporting or opposing the evidence. Instead, the lower court
perfunctorily settled her claim in her favor by merely applying the ruling in Tenchavez v. Escao.
Then in private respondent's motion to set aside and/or reconsider the lower court's decision she stressed that the citizenship of
petitioner was relevant in the light of the ruling in Van Dorn v. Romillo Jr. 13 that aliens may obtain divorces abroad, which may be
recognized in the Philippines, provided they are valid according to their national law. She prayed therefore that the case be set for
hearing. 14 Petitioner opposed the motion but failed to squarely address the issue on her citizenship. 15 The trial court did not grant
private respondent's prayer for a hearing but proceeded to resolve her motion with the finding that both petitioner and Arturo were

"Filipino citizens and were married in the Philippines." 16 It maintained that their divorce obtained in 1954 in San Francisco,
California, U.S.A., was not valid in Philippine jurisdiction. We deduce that the finding on their citizenship pertained solely to the time
of their marriage as the trial court was not supplied with a basis to determine petitioner's citizenship at the time of their divorce. The
doubt persisted as to whether she was still a Filipino citizen when their divorce was decreed. The trial court must have overlooked
the materiality of this aspect. Once proved that she was no longer a Filipino citizen at the time of their divorce, Van Dorn would
become applicable and petitioner could very well lose her right to inherit from Arturo.

Respondent again raised in her appeal the issue on petitioner's citizenship; 17 it did not merit enlightenment however from
petitioner. 18 In the present proceeding, petitioner's citizenship is brought anew to the fore by private respondent. She even
furnishes the Court with the transcript of stenographic notes taken on 5 May 1995 during the hearing for the reconstitution of the
original of a certain transfer certificate title as well as the issuance of new owner's duplicate copy thereof before another trial court.
When asked whether she was an American citizen petitioner answered that she was since 1954. 19 Significantly, the decree of
divorce of petitioner and Arturo was obtained in the same year. Petitioner however did not bother to file a reply memorandum to
erase the uncertainty about her citizenship at the time of their divorce, a factual issue requiring hearings to be conducted by the trial
court. Consequently, respondent appellate court did not err in ordering the case returned to the trial court for further proceedings.
We emphasize however that the question to be determined by the trial court should be limited only to the right of petitioner to inherit
from Arturo as his surviving spouse. Private respondent's claim to heirship was already resolved by the trial court. She and Arturo
were married on 22 April 1947 while the prior marriage of petitioner and Arturo was subsisting thereby resulting in a bigamous
marriage considered void from the beginning under Arts. 80 and 83 of the Civil Code. Consequently, she is not a surviving spouse
that can inherit from him as this status presupposes a legitimate relationship. 20
As regards the motion of private respondent for petitioner and a her counsel to be declared in contempt of court and that the present
petition be dismissed for forum shopping, 21 the same lacks merit. For forum shopping to exist the actions must involve the same
transactions and same essential facts and circumstances. There must also be identical causes of action, subject matter and issue.
22 The present petition deals with declaration of heirship while the subsequent petitions filed before the three (3) trial courts concern
the issuance of new owner's duplicate copies of titles of certain properties belonging to the estate of Arturo. Obviously, there is no
reason to declare the existence of forum shopping.
WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals ordering the remand of the case to the court of
origin for further proceedings and declaring null and void its decision holding petitioner Fe D. Quita and Ruperto T. Padlan as
intestate heirs is AFFIRMED. The order of the appellate court modifying its previous decision by granting one-half (1/2) of the net
hereditary estate to the Padlan children, namely, Claro, Ricardo, Emmanuel, Zenaida and Yolanda, with the exception of Alexis, all
surnamed Padlan, instead of Arturo's brother Ruperto Padlan, is likewise AFFIRMED. The Court however emphasizes that the
reception of evidence by the trial court should he limited to the hereditary rights of petitioner as the surviving spouse of Arturo
Padlan.
The motion to declare petitioner and her counsel in contempt of court and to dismiss the present petition for forum shopping is
DENIED.
SO ORDERED.

Amor-Catalan v CA (Conflict of Laws)

Amor-Catalan v CA
2007
Article 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon
citizens of the Philippines, even though living abroad. (9a)
Article 17. The forms and solemnities of contracts, wills, and other public instruments shall be governed by the laws of the country in
which they are executed.
When the acts referred to are executed before the diplomatic or consular officials of the Republic of the Philippines in a foreign
country, the solemnities established by Philippine laws shall be observed in their execution.
Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, public 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.

G.R. No. 167109 February 6, 2007

FELICITAS AMOR-CATALAN, Petitioner,vs.COURT OF APPEALS, MANILA, ORLANDO B. CATALAN and MEROPE E.
BRAGANZA, Respondents.
FACTS:
Petitioner Felicitas Amor-Catalan married respondent Orlando on June 4, 1950 in Mabini, Pangasinan. Thereafter, they migrated to
the United States of America and allegedly became naturalized citizens thereof. After 38 years of marriage, Felicitas and Orlando
divorced in April 1988. Two months after the divorce, or on June 16, 1988, Orlando married respondent Merope in Calasiao,
Pangasinan. Contending that said marriage was bigamous since Merope had a prior subsisting marriage with Eusebio Bristol,
petitioner Amor-Catalan filed a petition for declaration of nullity of marriage with damages in the RTC of Dagupan City against
Orlando and Merope.
Respondents filed a motion to dismiss on the ground of lack of cause of action as petitioner was allegedly not a real party-ininterest, but it was denied.
DECISION OF LOWER COURTS:
(1) RTC Dagupan: declaring the marriage between respondents Orlando B. Catalan and Merope E. Braganza void on the ground
of bigamy.
(2) CA: reversed RTC.
ISSUES:
(1) Whether the petitioner and respondent Orlando had indeed become naturalized American citizens and whether they had actually
been judicially granted a divorce decree.
(2) Whether petitioner has the personality to file a petition for the declaration of nullity of marriage of the respondents on the ground
of bigamy
RULING:
(1) The records are bereft of competent evidence to prove their naturalization and divorce. Before it can be recognized by our
courts, the party pleading it must prove the divorce as a fact and demonstrate its conformity to the foreign law allowing it, which
must be proved considering that our courts cannot take judicial notice of foreign laws.

(2) Without the divorce decree and foreign law as part of the evidence, we cannot rule on the issue of whether petitioner has the
personality to file the petition for declaration of nullity of marriage. After all, she may have the personality to file the petition if the
divorce decree obtained was a limited divorce or a mensa et thoro; or the foreign law may restrict remarriage even after the divorce
decree becomes absolute.

FELICITAS AMOR-CATALAN, Petitioner, vs. COURT OF APPEALS, MANILA, ORLANDO B. CATALAN and MEROPE E.
BRAGANZA, Respondents.
This petition for review assails the Decision1 of the Court of Appeals in CA-G.R. CV No. 69875 dated August 6, 2004, which
reversed the Decision2 of the Regional Trial Court (RTC) of Dagupan City, Branch 44, in Civil Case No. D-10636, declaring the
marriage between respondents Orlando B. Catalan and Merope E. Braganza void on the ground of bigamy, as well as the
Resolution3 dated January 27, 2005, which denied the motion for reconsideration.
Petitioner Felicitas Amor-Catalan married respondent Orlando on June 4, 1950 in Mabini, Pangasinan.4 Thereafter, they migrated to
the United States of America and allegedly became naturalized citizens thereof. After 38 years of marriage, Felicitas and Orlando
divorced in April 1988.5
Two months after the divorce, or on June 16, 1988, Orlando married respondent Merope in Calasiao, Pangasinan.6 Contending that
said marriage was bigamous since Merope had a prior subsisting marriage with Eusebio Bristol, petitioner filed a petition for
declaration of nullity of marriage with damages in the RTC of Dagupan City7 against Orlando and Merope.
Respondents filed a motion to dismiss8 on the ground of lack of cause of action as petitioner was allegedly not a real party-ininterest, but it was denied.9 Trial on the merits ensued.
On October 10, 2000, the RTC rendered judgment in favor of the petitioner, the dispositive portion of which reads:
WHEREFORE, judgment is declared in favor of plaintiff Felicitas Amor Catalan and against defendants Orlando B. Catalan and
Merope E. Braganza, as follows:
1) The subsequent marriage of Merope Braganza with Orlando B. Catalan is declared null and void ab initio;
2) The defendants are ordered jointly and severally to pay plaintiff by way of moral damages the amount of P300,000.00, exemplary
damages in the amount of P200,000.00 and attorneys fees in the amount of P50,000.00, including costs of this suit; and
3) The donation in consideration of marriage is ordered revoked and the property donated is ordered awarded to the heirs of Juliana
Braganza.
Furnish copies of this Decision to Atty. Napoleon B. Arenas, Jr. and Atty. Nolan Evangelista.
SO ORDERED.10
Respondents appealed the decision to the Court of Appeals, which reversed the decision of the RTC, thus:
WHEREFORE, premises considered, we hereby GRANT the appeal and consequently REVERSE and SET ASIDE the appealed
decision. We likewise DISMISS Civil Case No. D-10636, RTC, Branch 44, Dagupan City. No costs.
SO ORDERED.11
After the motion for reconsideration was denied, petitioner filed the instant petition for review raising the following issues:
I.

WHETHER PETITIONER HAS THE REQUIRED STANDING IN COURT TO QUESTION THE NULLITY OF THE
MARRIAGE BETWEEN RESPONDENTS;

II.

WHETHER THE FAILURE OF THE COURT OF APPEALS TO DECLARE THE QUESTIONED MARRIAGE VOID
CONSTITUTES REVERSIBLE ERROR.12

Petitioner contends that the bigamous marriage of the respondents, which brought embarrassment to her and her children, confers
upon her an interest to seek judicial remedy to address her grievances and to protect her family from further embarrassment and
humiliation. She claims that the Court of Appeals committed reversible error in not declaring the marriage void despite overwhelming
evidence and the state policy discouraging illegal and immoral marriages.13

The main issue to be resolved is whether petitioner has the personality to file a petition for the declaration of nullity of marriage of
the respondents on the ground of bigamy. However, this issue may not be resolved without first determining the corollary factual
issues of whether the petitioner and respondent Orlando had indeed become naturalized American citizens and whether they had
actually been judicially granted a divorce decree.
While it is a settled rule that the Court is not a trier of facts and does not normally undertake the re-examination of the evidence
presented by the contending parties during the trial of the case,14 there are, however, exceptions to this rule, like when the findings
of facts of the RTC and the Court of Appeals are conflicting, or when the findings are conclusions without citation of specific
evidence on which they are based.15
Both the RTC and the Court of Appeals found that petitioner and respondent Orlando were naturalized American citizens and that
they obtained a divorce decree in April 1988. However, after a careful review of the records, we note that other than the allegations
in the complaint and the testimony during the trial, the records are bereft of competent evidence to prove their naturalization and
divorce.
The Court of Appeals therefore had no basis when it held:
In light of the allegations of Felicitas complaint and the documentary and testimonial evidence she presented, we deem it
undisputed that Orlando and Felicitas are American citizens and had this citizenship status when they secured their divorce decree
in April 1988. We are not therefore dealing in this case with Filipino citizens whose marital status is governed by the Family Code
and our Civil Code, but with American citizens who secured their divorce in the U.S. and who are considered by their national law to
be free to contract another marriage. x x x16
Further, the Court of Appeals mistakenly considered the failure of the petitioner to refute or contest the allegation in respondents
brief, that she and respondent Orlando were American citizens at the time they secured their divorce in April 1988, as sufficient to
establish the fact of naturalization and divorce.17 We note that it was the petitioner who alleged in her complaint that they acquired
American citizenship and that respondent Orlando obtained a judicial divorce decree.18 It is settled rule that one who alleges a fact
has the burden of proving it and mere allegation is not evidence.19
Divorce means the legal dissolution of a lawful union for a cause arising after marriage. But divorces are of different types. The two
basic ones are (1) absolute divorce or a vinculo matrimonii and (2) limited divorce or a mensa et thoro. The first kind terminates the
marriage, while the second suspends it and leaves the bond in full force.20 A divorce obtained abroad by an alien may be
recognized in our jurisdiction, provided such decree is valid according to the national law of the foreigner.21 However, before it can
be recognized by our courts, the party pleading it must prove the divorce as a fact and demonstrate its conformity to the foreign law
allowing it, which must be proved considering that our courts cannot take judicial notice of foreign laws.22
Without the divorce decree and foreign law as part of the evidence, we cannot rule on the issue of whether petitioner has the
personality to file the petition for declaration of nullity of marriage. After all, she may have the personality to file the petition if the
divorce decree obtained was a limited divorce or a mensa et thoro; or the foreign law may restrict remarriage even after the divorce
decree becomes absolute.23 In such case, the RTC would be correct to declare the marriage of the respondents void for being
bigamous, there being already in evidence two existing marriage certificates, which were both obtained in the Philippines, one in
Mabini, Pangasinan dated December 21, 1959 between Eusebio Bristol and respondent Merope,24 and the other, in Calasiao,
Pangasinan dated June 16, 1988 between the respondents.25
However, if there was indeed a divorce decree obtained and which, following the national law of Orlando, does not restrict
remarriage, the Court of Appeals would be correct in ruling that petitioner has no legal personality to file a petition to declare the
nullity of marriage, thus:
Freed from their existing marital bond, each of the former spouses no longer has any interest nor should each have the personality
to inquire into the marriage that the other might subsequently contract. x x x Viewed from another perspective, Felicitas has no
existing interest in Orlandos subsequent marriage since the validity, as well as any defect or infirmity, of this subsequent marriage
will not affect the divorced status of Orlando and Felicitas. x x x26
True, under the New Civil Code which is the law in force at the time the respondents were married, or even in the Family Code,
there is no specific provision as to who can file a petition to declare the nullity of marriage; however, only a party who can
demonstrate "proper interest" can file the same. A petition to declare the nullity of marriage, like any other actions, must be
prosecuted or defended in the name of the real party in interest27 and must be based on a cause of action.28 Thus, in Nial v.
Bayadog,29 the Court held that the children have the personality to file the petition to declare the nullity of the marriage of their
deceased father to their stepmother as it affects their successional rights.1awphi1.net
Significantly, Section 2(a) of The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages,
which took effect on March 15, 2003, now specifically provides:
SECTION 2. Petition for declaration of absolute nullity of void marriages.
(a) Who may file. A petition for declaration of absolute nullity of void marriage may be filed solely by the husband or the wife.

In fine, petitioners personality to file the petition to declare the nullity of marriage cannot be ascertained because of the absence of
the divorce decree and the foreign law allowing it. Hence, a remand of the case to the trial court for reception of additional evidence
is necessary to determine whether respondent Orlando was granted a divorce decree and whether the foreign law which granted the
same allows or restricts remarriage. If it is proved that a valid divorce decree was obtained and the same did not allow respondent
Orlandos remarriage, then the trial court should declare respondents marriage as bigamous and void ab initio but reduce the
amount of moral damages from P300,000.00 to P50,000.00 and exemplary damages from P200,000.00 to P25,000.00. On the
contrary, if it is proved that a valid divorce decree was obtained which allowed Orlando to remarry, then the trial court must dismiss
the instant petition to declare nullity of marriage on the ground that petitioner Felicitas Amor-Catalan lacks legal personality to file the
same.
WHEREFORE, in view of the foregoing, let this case be REMANDED to the trial court for its proper disposition. No costs.
SO ORDERED.
G.R. No. 133743 February 6, 2007
EDGAR SAN LUIS, Petitioner,vs.FELICIDAD SAN LUIS, Respondent.
x ---------------------------------------------------- x
G.R. No. 134029 February 6, 2007
RODOLFO SAN LUIS, Petitioner,vs.FELICIDAD SAGALONGOS alias FELICIDAD SAN LUIS, Respondent.
FACTS:
During his lifetime, Felicisimo contracted three marriages. His first marriage was with Virginia Sulit on March 17, 1942 out of which
were born six children, namely: Rodolfo, Mila, Edgar, Linda, Emilita and Manuel. On August 11, 1963, Virginia predeceased
Felicisimo.
Five years later, on May 1, 1968, Felicisimo married Merry Lee Corwin, with whom he had a son, Tobias. However, on October 15,
1971, Merry Lee, an American citizen, filed a Complaint for Divorce before the Family Court of the First Circuit, State of Hawaii,
United States of America (U.S.A.), which issued a Decree Granting Absolute Divorce and Awarding Child Custody on December 14,
1973. On June 20, 1974, Felicisimo married respondent Felicidad San Luis, then surnamed Sagalongos, before Rev. Fr.
William Meyer, Minister of the United Presbyterian at Wilshire Boulevard, Los Angeles, California, U.S.A. He had no children with
respondent but lived with her for 18 years from the time of their marriage up to his death on December 18, 1992.
Thereafter, respondent sought the dissolution of their conjugal partnership assets and the settlement of Felicisimos estate. On
December 17, 1993, she filed a petition for letters of administration before the Regional Trial Court
On February 4, 1994, petitioner Rodolfo San Luis, one of the children of Felicisimo by his first marriage, filed a motion to dismiss on
the grounds of improper venue and failure to state a cause of action. Rodolfo claimed that the petition for letters of administration
should have been filed in the Province of Laguna because this was Felicisimos place of residence prior to his death. He further
claimed that respondent has no legal personality to file the petition because she was only a mistress of Felicisimo since the latter, at
the time of his death, was still legally married to Merry Lee.

DECISION OF LOWER COURTS:

(1) Trial Court: denied the motion to dismiss, ruled that respondent, as widow of the decedent, possessed the legal standing to file
the petition and that venue was properly laid. Mila filed a motion for inhibition against Judge Tensuan on November 16, 1994. Thus,
a new trial ensued.
(2) Trial Court (new): dismissed the petition for letters of administration. It held that, at the time of his death, Felicisimo was the duly
elected governor and a resident of the Province of Laguna. Hence, the petition should have been filed in Sta. Cruz, Laguna and not
in Makati City. It found that the decree of absolute divorce dissolving Felicisimos marriage to Merry Lee was not valid in the
Philippines and did not bind Felicisimo who was a Filipino citizen. It also ruled that paragraph 2, Article 26 of the Family Code cannot
be retroactively applied because it would impair the vested rights of Felicisimos legitimate children.
(3) CA: reversed and set aside the orders of the trial court
ISSUES:
(1) Whether venue was properly laid, and
(2) Whether a Filipino who is divorced by his alien spouse abroad may validly remarry under the Civil Code, considering that
Felicidads marriage to Felicisimo was solemnized on June 20, 1974, or before the Family Code took effect on August 3, 1988.

(3) Whether respondent has legal capacity to file the subject petition for letters of administration.

RULING:
(1) Yes, the venue was proper. Section 1, Rule 73 of the Rules of Court, the petition for letters of administration of the estate of
Felicisimo should be filed in the Regional Trial Court of the province "in which he resides at the time of his death."
For purposes of fixing venue under the Rules of Court, the "residence" of a person is his personal, actual or physical habitation, or
actual residence or place of abode, which may not necessarily be his legal residence or domicile provided he resides therein with
continuity and consistency. While petitioners established that Felicisimo was domiciled in Sta. Cruz, Laguna, respondent proved that
he also maintained a residence in Alabang, Muntinlupa from 1982 up to the time of his death. From the foregoing, we find that
Felicisimo was a resident of Alabang, Muntinlupa for purposes of fixing the venue of the settlement of his estate.
(2) Yes. Paragraph 2 of Article 26 traces its origin to the 1985 case of Van Dorn v. Romillo, Jr. The Van Dorn case involved a
marriage between a Filipino citizen and a foreigner. The Court held therein that a divorce decree validly obtained by the alien
spouse is valid in the Philippines, and consequently, the Filipino spouse is capacitated to remarry under Philippine law. As such, the
Van Dorn case is sufficient basis in resolving a situation where a divorce is validly obtained abroad by the alien spouse. With the
enactment of the Family Code and paragraph 2, Article 26 thereof, our lawmakers codified the law already established through
judicial precedent.
The divorce decree allegedly obtained by Merry Lee which absolutely allowed Felicisimo to remarry, would have vested Felicidad
with the legal personality to file the present petition as Felicisimos surviving spouse. However, the records show that there is
insufficient evidence to prove the validity of the divorce obtained by Merry Lee as well as the marriage of respondent and Felicisimo
under the laws of the U.S.A.
With regard to respondents marriage to Felicisimo allegedly solemnized in California, U.S.A., she submitted photocopies of the
Marriage Certificate and the annotated text of the Family Law Act of California which purportedly show that their marriage was done
in accordance with the said law. As stated in Garcia, however, the Court cannot take judicial notice of foreign laws as they must be
alleged and proved.Therefore, this case should be remanded to the trial court for further reception of evidence on the divorce decree
obtained by Merry Lee and the marriage of respondent and Felicisimo.
(3) Yes. Respondents legal capacity to file the subject petition for letters of administration may arise from her status as the surviving
wife of Felicisimo or as his co-owner under Article 144 of the Civil Code or Article 148 of the Family Code.
Even assuming that Felicisimo was not capacitated to marry respondent in 1974, nevertheless, we find that the latter has the legal
personality to file the subject petition for letters of administration, as she may be considered the co-owner of Felicisimo as regards
the properties that were acquired through their joint efforts during their cohabitation.

G.R. No. 155635 November 7, 2008

BAYOT VS BAYOT
FACTS:
On April 20, 1979, Vicente, a Filipino, and Rebecca, an American, were married in Muntinlupa. They had a child name Alix, born in
November 27, 1982 in California.
In February 22, 1996, Rebecca initiated divorce proceedings in Dominican Republic, which was docketed as Civil Decree No.
362/96 ordering the dissolution of the marriage. The same court also issued Civil Decree No. 406/97 settling the couple's conjugal
property in Muntinlupa in March 4, 1997.
She then filed a declaration of absolute nullity of marriage on the ground of Vicente's alleged psychological incapacity,
docketed as Civil Case No. 01-094. She sought dissolution of the conjugal partnerships of gains with application for support
pendente lite for her and Alix. She also prayed that Vicente be ordered to pay a permanent monthly support for their daughter Alix in
the amount of P 220,000.00.
On June 8, 2001, Vicente filed a Motion to Dismiss on the grounds of lack of cause of action and that the petition is barred by the
prior judgment of divorce.
RTC denied Vicente's motion to dismiss. CA dismissed Civil Case No. 01-094 and set aside RTC's incidental orders. According the
the CA, RTC ought to have granted Vicente's motion to dismiss, since the marriage between the spouses is already dissolved when
the divorce decree was granted since Rebecca was an American citizen when she applied for the decree.

Issue:
Whether or not the divorce decree obtained by Rebecca in Dominican Republic is valid.

Ruling:
Yes. Civil Decrees No. 362/96 and 406/97 are valid.
Rebecca at that time she applied and obtained her divorce was an American citizen and remains to be one, being born to American
parents in Guam, an American territory which follows the principle of jus soli granting American citizenship to those who are born
there. She was, and still may be, a holder of American passport.
She had consistently professed, asserted and represented herself as an American citizen, as shown in her marriage certificate, in
Alix's birth certificate, when she secured divorce in Dominican Republic.
Being an American citizen, Rebecca was bound by the national laws of the United States of America, a country which allows
divorce.
The Civil Decree No. 406/97 issued by the Dominican Republic court properly adjudicated the ex-couple's property relations.
The Court said, in order that a foreign divorce can be recognized here, the divorce decree must be proven as a fact and as valid
under the national law of the alien spouse.

The fact that Rebecca was clearly an American citizen when she secured the divorce and that divorce is recognized and allowed in
any of the States of the Union, the presentation of a copy of foreign divorce decree duly authenticated by the foreign court issuing
said decree is, as here, sufficient.
Thus the foreign decrees rendered and issued by the Dominican Republic court are valid, and consequently, bind both Rebecca and
Vicente.
The fact that Rebecca may have been duly recognised as a Filipino citizen by force of the June 8, 2000 affirmation by the DOJ
Secretary of the October 6, 1995 Bureau Order of Recognition will not, stand alone, work to nullify or invalidate the foreign divorce
secured by Rebecca as an American citizen in 1996. In determining whether or not a divorce is secured abroad would come within
the pale of the country's policy against absolute divorce, the reckoning point is the citizenship of the parties at the time a valid
divorce is obtained.

AZNAR VS GARCIA
Facts:

Edward S. Christensen, though born in New York, migrated to California where he resided and consequently was
considered a California Citizen for a period of nine years to 1913. He came to the Philippines where he became a domiciliary until
the time of his death. However, during the entire period of his residence in this country, he had always considered himself as a
citizen of California.
In his will, executed on March 5, 1951, he instituted an acknowledged natural daughter, Maria Lucy Christensen as his
only heir but left a legacy of some money in favor of Helen Christensen Garcia who, in a decision rendered by the Supreme Court
had been declared as an acknowledged natural daughter of his. Counsel of Helen claims that under Art. 16 (2) of the civil code,
California law should be applied, the matter is returned back to the law of domicile, that Philippine law is ultimately applicable, that
the share of Helen must be increased in view of successional rights of illegitimate children under Philippine laws. On the other hand,
counsel for daughter Maria , in as much that it is clear under Art, 16 (2) of the Mew Civil Code, the national of the deceased must
apply, our courts must apply internal law of California on the matter. Under California law, there are no compulsory heirs and
consequently a testator should dispose any property possessed by him in absolute dominion.

Issue:
Whether Philippine Law or California Law should apply.
Held:
The Supreme Court deciding to grant more successional rights to Helen Christensen Garcia said in effect that there be
two rules in California on the matter.
1.

The conflict rule which should apply to Californians outside the California, and

2.

The internal Law which should apply to California domiciles in califronia.

The California conflict rule, found on Art. 946 of the California Civil code States that if there is no law to the contrary in the place
where personal property is situated, it is deemed to follow the decree of its owner and is governed by the law of the domicile.
Christensen being domiciled outside california, the law of his domicile, the Philippines is ought to be followed.
Wherefore, the decision appealed is reversed and case is remanded to the lower court with instructions that partition be made as
that of the Philippine law provides.

G.R. No. L-16749

January 31, 1963

IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN, DECEASED. ADOLFO C. AZNAR, Executor and
LUCY CHRISTENSEN, Heir of the deceased, Executor and Heir-appellees, vs. HELEN CHRISTENSEN GARCIA, oppositorappellant.

This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N. Cusi, Jr., presiding, in Special Proceeding
No. 622 of said court, dated September 14, 1949, approving among things the final accounts of the executor, directing the executor
to reimburse Maria Lucy Christensen the amount of P3,600 paid by her to Helen Christensen Garcia as her legacy, and declaring
Maria Lucy Christensen entitled to the residue of the property to be enjoyed during her lifetime, and in case of death without issue,
one-half of said residue to be payable to Mrs. Carrie Louise C. Borton, etc., in accordance with the provisions of the will of the
testator Edward E. Christensen. The will was executed in Manila on March 5, 1951 and contains the following provisions:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY CHRISTENSEN (now Mrs. Bernard Daney), who was born in the
Philippines about twenty-eight years ago, and who is now residing at No. 665 Rodger Young Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no descendants except my above named daughter, MARIA LUCY
CHRISTENSEN DANEY.
7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN, now married to Eduardo Garcia, about eighteen years of age
and who, notwithstanding the fact that she was baptized Christensen, is not in any way related to me, nor has she been at any time
adopted by me, and who, from all information I have now resides in Egpit, Digos, Davao, Philippines, the sum of THREE
THOUSAND SIX HUNDRED PESOS (P3,600.00), Philippine Currency the same to be deposited in trust for the said Maria Helen
Christensen with the Davao Branch of the Philippine National Bank, and paid to her at the rate of One Hundred Pesos (P100.00),
Philippine Currency per month until the principal thereof as well as any interest which may have accrued thereon, is exhausted..
12. I hereby give, devise and bequeath, unto my well-beloved daughter, the said MARIA LUCY CHRISTENSEN DANEY (Mrs.
Bernard Daney), now residing as aforesaid at No. 665 Rodger Young Village, Los Angeles, California, U.S.A., all the income from
the rest, remainder, and residue of my property and estate, real, personal and/or mixed, of whatsoever kind or character, and
wheresoever situated, of which I may be possessed at my death and which may have come to me from any source whatsoever,
during her lifetime: ....
It is in accordance with the above-quoted provisions that the executor in his final account and project of partition ratified the payment
of only P3,600 to Helen Christensen Garcia and proposed that the residue of the estate be transferred to his daughter, Maria Lucy
Christensen.
Opposition to the approval of the project of partition was filed by Helen Christensen Garcia, insofar as it deprives her (Helen) of her
legitime as an acknowledged natural child, she having been declared by Us in G.R. Nos. L-11483-84 an acknowledged natural child
of the deceased Edward E. Christensen. The legal grounds of opposition are (a) that the distribution should be governed by the laws
of the Philippines, and (b) that said order of distribution is contrary thereto insofar as it denies to Helen Christensen, one of two
acknowledged natural children, one-half of the estate in full ownership. In amplification of the above grounds it was alleged that the
law that should govern the estate of the deceased Christensen should not be the internal law of California alone, but the entire law
thereof because several foreign elements are involved, that the forum is the Philippines and even if the case were decided in
California, Section 946 of the California Civil Code, which requires that the domicile of the decedent should apply, should be
applicable. It was also alleged that Maria Helen Christensen having been declared an acknowledged natural child of the decedent,
she is deemed for all purposes legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the United States and of the State of California at the time of
his death, the successional rights and intrinsic validity of the provisions in his will are to be governed by the law of California, in
accordance with which a testator has the right to dispose of his property in the way he desires, because the right of absolute
dominion over his property is sacred and inviolable (In re McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re
Kaufman, 117 Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal). Oppositor Maria Helen Christensen, through counsel,
filed various motions for reconsideration, but these were denied. Hence, this appeal.
The most important assignments of error are as follows:
I THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE HONORABLE SUPREME COURT THAT HELEN IS
THE ACKNOWLEDGED NATURAL CHILD OF EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN DEPRIVING HER OF
HER JUST SHARE IN THE INHERITANCE.

II THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO RECOGNIZE THE EXISTENCE OF SEVERAL
FACTORS, ELEMENTS AND CIRCUMSTANCES CALLING FOR THE APPLICATION OF INTERNAL LAW.

III THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER INTERNATIONAL LAW, PARTICULARLY UNDER
THE RENVOI DOCTRINE, THE INTRINSIC VALIDITY OF THE TESTAMENTARY DISPOSITION OF THE DISTRIBUTION OF THE
ESTATE OF THE DECEASED EDWARD E. CHRISTENSEN SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES.

IV THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF DISTRIBUTION SUBMITTED BY THE
EXECUTOR IS CONTRARY TO THE PHILIPPINE LAWS.

V THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE PHILIPPINE LAWS HELEN CHRISTENSEN GARCIA
IS ENTITLED TO ONE-HALF (1/2) OF THE ESTATE IN FULL OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United States and of the State of California at the time of his
death. But there is also no question that at the time of his death he was domiciled in the Philippines, as witness the following facts
admitted by the executor himself in appellee's brief:
In the proceedings for admission of the will to probate, the facts of record show that the deceased Edward E. Christensen was born
on November 29, 1875 in New York City, N.Y., U.S.A.; his first arrival in the Philippines, as an appointed school teacher, was on July
1, 1901, on board the U.S. Army Transport "Sheridan" with Port of Embarkation as the City of San Francisco, in the State of
California, U.S.A. He stayed in the Philippines until 1904.
In December, 1904, Mr. Christensen returned to the United States and stayed there for the following nine years until 1913, during
which time he resided in, and was teaching school in Sacramento, California.

Mr. Christensen's next arrival in the Philippines was in July of the year 1913. However, in 1928, he again departed the Philippines
for the United States and came back here the following year, 1929. Some nine years later, in 1938, he again returned to his own
country, and came back to the Philippines the following year, 1939.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court,
without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. 1wph1.t
Being an American citizen, Mr. Christensen was interned by the Japanese Military Forces in the Philippines during World War II.
Upon liberation, in April 1945, he left for the United States but returned to the Philippines in December, 1945. Appellees Collective
Exhibits "6", CFI Davao, Sp. Proc. 622, as Exhibits "AA", "BB" and "CC-Daney"; Exhs. "MM", "MM-l", "MM-2-Daney" and p. 473,
t.s.n., July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more to California shortly after the making of his last will and testament (now in
question herein) which he executed at his lawyers' offices in Manila on March 5, 1951. He died at the St. Luke's Hospital in the City
of Manila on April 30, 1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are persuaded by the fact that he was born in
New York, migrated to California and resided there for nine years, and since he came to the Philippines in 1913 he returned to
California very rarely and only for short visits (perhaps to relatives), and considering that he appears never to have owned or
acquired a home or properties in that state, which would indicate that he would ultimately abandon the Philippines and make home
in the State of California.
Sec. 16. Residence is a term used with many shades of meaning from mere temporary presence to the most permanent abode.
Generally, however, it is used to denote something more than mere physical presence. (Goodrich on Conflict of Laws, p. 29)
As to his citizenship, however, We find that the citizenship that he acquired in California when he resided in Sacramento, California
from 1904 to 1913, was never lost by his stay in the Philippines, for the latter was a territory of the United States (not a state) until
1946 and the deceased appears to have considered himself as a citizen of California by the fact that when he executed his will in
1951 he declared that he was a citizen of that State; so that he appears never to have intended to abandon his California citizenship
by acquiring another. This conclusion is in accordance with the following principle expounded by Goodrich in his Conflict of Laws.
The terms "'residence" and "domicile" might well be taken to mean the same thing, a place of permanent abode. But domicile, as
has been shown, has acquired a technical meaning. Thus one may be domiciled in a place where he has never been. And he may
reside in a place where he has no domicile. The man with two homes, between which he divides his time, certainly resides in each
one, while living in it. But if he went on business which would require his presence for several weeks or months, he might properly
be said to have sufficient connection with the place to be called a resident. It is clear, however, that, if he treated his settlement as
continuing only for the particular business in hand, not giving up his former "home," he could not be a domiciled New Yorker.
Acquisition of a domicile of choice requires the exercise of intention as well as physical presence. "Residence simply requires bodily
presence of an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it
one's domicile." Residence, however, is a term used with many shades of meaning, from the merest temporary presence to the
most permanent abode, and it is not safe to insist that any one use et the only proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in Article 16 of the Civil Code of the Philippines, which is
as follows:
ART. 16. Real property as well as personal property is subject to the law of the country where it is situated.

However, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional
rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession
is under consideration, whatever may be the nature of the property and regardless of the country where said property may be found.
The application of this article in the case at bar requires the determination of the meaning of the term "national law" is used therein.
There is no single American law governing the validity of testamentary provisions in the United States, each state of the Union
having its own private law applicable to its citizens only and in force only within the state. The "national law" indicated in Article 16 of
the Civil Code above quoted can not, therefore, possibly mean or apply to any general American law. So it can refer to no other than
the private law of the State of California.
The next question is: What is the law in California governing the disposition of personal property? The decision of the court below,
sustains the contention of the executor-appellee that under the California Probate Code, a testator may dispose of his property by
will in the form and manner he desires, citing the case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176 P. 2d 952. But appellant
invokes the provisions of Article 946 of the Civil Code of California, which is as follows:
If there is no law to the contrary, in the place where personal property is situated, it is deemed to follow the person of its owner, and
is governed by the law of his domicile.

The existence of this provision is alleged in appellant's opposition and is not denied. We have checked it in the California Civil Code
and it is there. Appellee, on the other hand, relies on the case cited in the decision and testified to by a witness. (Only the case of
Kaufman is correctly cited.) It is argued on executor's behalf that as the deceased Christensen was a citizen of the State of
California, the internal law thereof, which is that given in the abovecited case, should govern the determination of the validity of the
testamentary provisions of Christensen's will, such law being in force in the State of California of which Christensen was a citizen.
Appellant, on the other hand, insists that Article 946 should be applicable, and in accordance therewith and following the doctrine of
the renvoi, the question of the validity of the testamentary provision in question should be referred back to the law of the decedent's
domicile, which is the Philippines.
The theory of doctrine of renvoi has been defined by various authors, thus:
The problem has been stated in this way: "When the Conflict of Laws rule of the forum refers a jural matter to a foreign law for
decision, is the reference to the purely internal rules of law of the foreign system; i.e., to the totality of the foreign law minus its
Conflict of Laws rules?"
On logic, the solution is not an easy one. The Michigan court chose to accept the renvoi, that is, applied the Conflict of Laws rule of
Illinois which referred the matter back to Michigan law. But once having determined the the Conflict of Laws principle is the rule
looked to, it is difficult to see why the reference back should not have been to Michigan Conflict of Laws. This would have resulted in
the "endless chain of references" which has so often been criticized be legal writers. The opponents of the renvoi would have looked
merely to the internal law of Illinois, thus rejecting the renvoi or the reference back. Yet there seems no compelling logical reason
why the original reference should be the internal law rather than to the Conflict of Laws rule. It is true that such a solution avoids
going on a merry-go-round, but those who have accepted the renvoi theory avoid this inextricabilis circulas by getting off at the
second reference and at that point applying internal law. Perhaps the opponents of the renvoi are a bit more consistent for they look
always to internal law as the rule of reference.
Strangely enough, both the advocates for and the objectors to the renvoi plead that greater uniformity will result from adoption of
their respective views. And still more strange is the fact that the only way to achieve uniformity in this choice-of-law problem is if in
the dispute the two states whose laws form the legal basis of the litigation disagree as to whether the renvoi should be accepted. If
both reject, or both accept the doctrine, the result of the litigation will vary with the choice of the forum. In the case stated above, had
the Michigan court rejected the renvoi, judgment would have been against the woman; if the suit had been brought in the Illinois
courts, and they too rejected the renvoi, judgment would be for the woman. The same result would happen, though the courts would
switch with respect to which would hold liability, if both courts accepted the renvoi.
The Restatement accepts the renvoi theory in two instances: where the title to land is in question, and where the validity of a decree
of divorce is challenged. In these cases the Conflict of Laws rule of the situs of the land, or the domicile of the parties in the divorce
case, is applied by the forum, but any further reference goes only to the internal law. Thus, a person's title to land, recognized by the
situs, will be recognized by every court; and every divorce, valid by the domicile of the parties, will be valid everywhere. (Goodrich,
Conflict of Laws, Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving movable property in Massachusetts, England, and France.
The question arises as to how this property is to be distributed among X's next of kin.
Assume (1) that this question arises in a Massachusetts court. There the rule of the conflict of laws as to intestate succession to
movables calls for an application of the law of the deceased's last domicile. Since by hypothesis X's last domicile was France, the
natural thing for the Massachusetts court to do would be to turn to French statute of distributions, or whatever corresponds thereto in
French law, and decree a distribution accordingly. An examination of French law, however, would show that if a French court were
called upon to determine how this property should be distributed, it would refer the distribution to the national law of the deceased,

thus applying the Massachusetts statute of distributions. So on the surface of things the Massachusetts court has open to it
alternative course of action: (a) either to apply the French law is to intestate succession, or (b) to resolve itself into a French court
and apply the Massachusetts statute of distributions, on the assumption that this is what a French court would do. If it accepts the
so-called renvoi doctrine, it will follow the latter course, thus applying its own law.
This is one type of renvoi. A jural matter is presented which the conflict-of-laws rule of the forum refers to a foreign law, the conflictof-laws rule of which, in turn, refers the matter back again to the law of the forum. This is renvoi in the narrower sense. The German
term for this judicial process is 'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523-571.)
After a decision has been arrived at that a foreign law is to be resorted to as governing a particular case, the further question may
arise: Are the rules as to the conflict of laws contained in such foreign law also to be resorted to? This is a question which, while it
has been considered by the courts in but a few instances, has been the subject of frequent discussion by textwriters and essayists;
and the doctrine involved has been descriptively designated by them as the "Renvoyer" to send back, or the "Ruchversweisung", or
the "Weiterverweisung", since an affirmative answer to the question postulated and the operation of the adoption of the foreign law
in toto would in many cases result in returning the main controversy to be decided according to the law of the forum. ... (16 C.J.S.
872.)
Another theory, known as the "doctrine of renvoi", has been advanced. The theory of the doctrine of renvoi is that the court of the
forum, in determining the question before it, must take into account the whole law of the other jurisdiction, but also its rules as to
conflict of laws, and then apply the law to the actual question which the rules of the other jurisdiction prescribe. This may be the law
of the forum. The doctrine of the renvoi has generally been repudiated by the American authorities. (2 Am. Jur. 296)

The scope of the theory of renvoi has also been defined and the reasons for its application in a country explained by Prof. Lorenzen
in an article in the Yale Law Journal, Vol. 27, 1917-1918, pp. 529-531. The pertinent parts of the article are quoted herein below:
The recognition of the renvoi theory implies that the rules of the conflict of laws are to be understood as incorporating not only the
ordinary or internal law of the foreign state or country, but its rules of the conflict of laws as well. According to this theory 'the law of a
country' means the whole of its law.
Von Bar presented his views at the meeting of the Institute of International Law, at Neuchatel, in 1900, in the form of the following
theses:
(1) Every court shall observe the law of its country as regards the application of foreign laws.
(2) Provided that no express provision to the contrary exists, the court shall respect:
(a) The provisions of a foreign law which disclaims the right to bind its nationals abroad as regards their personal statute, and
desires that said personal statute shall be determined by the law of the domicile, or even by the law of the place where the act in
question occurred.
(b) The decision of two or more foreign systems of law, provided it be certain that one of them is necessarily competent, which agree
in attributing the determination of a question to the same system of law.
If, for example, the English law directs its judge to distribute the personal estate of an Englishman who has died domiciled in
Belgium in accordance with the law of his domicile, he must first inquire whether the law of Belgium would distribute personal
property upon death in accordance with the law of domicile, and if he finds that the Belgian law would make the distribution in
accordance with the law of nationality that is the English law he must accept this reference back to his own law.
We note that Article 946 of the California Civil Code is its conflict of laws rule, while the rule applied in In re Kaufman, Supra, its
internal law. If the law on succession and the conflict of laws rules of California are to be enforced jointly, each in its own intended
and appropriate sphere, the principle cited In re Kaufman should apply to citizens living in the State, but Article 946 should apply to
such of its citizens as are not domiciled in California but in other jurisdictions. The rule laid down of resorting to the law of the
domicile in the determination of matters with foreign element involved is in accord with the general principle of American law that the
domiciliary law should govern in most matters or rights which follow the person of the owner.
When a man dies leaving personal property in one or more states, and leaves a will directing the manner of distribution of the
property, the law of the state where he was domiciled at the time of his death will be looked to in deciding legal questions about the
will, almost as completely as the law of situs is consulted in questions about the devise of land. It is logical that, since the domiciliary
rules control devolution of the personal estate in case of intestate succession, the same rules should determine the validity of an
attempted testamentary dispostion of the property. Here, also, it is not that the domiciliary has effect beyond the borders of the
domiciliary state. The rules of the domicile are recognized as controlling by the Conflict of Laws rules at the situs property, and the
reason for the recognition as in the case of intestate succession, is the general convenience of the doctrine. The New York court has
said on the point: 'The general principle that a dispostiton of a personal property, valid at the domicile of the owner, is valid
anywhere, is one of the universal application. It had its origin in that international comity which was one of the first fruits of
civilization, and it this age, when business intercourse and the process of accumulating property take but little notice of boundary
lines, the practical wisdom and justice of the rule is more apparent than ever. (Goodrich, Conflict of Laws, Sec. 164, pp. 442-443.)

Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as the national law is the internal law of
California. But as above explained the laws of California have prescribed two sets of laws for its citizens, one for residents therein
and another for those domiciled in other jurisdictions. Reason demands that We should enforce the California internal law
prescribed for its citizens residing therein, and enforce the conflict of laws rules for the citizens domiciled abroad. If we must enforce
the law of California as in comity we are bound to go, as so declared in Article 16 of our Civil Code, then we must enforce the law of
California in accordance with the express mandate thereof and as above explained, i.e., apply the internal law for residents therein,
and its conflict-of-laws rule for those domiciled abroad.
It is argued on appellees' behalf that the clause "if there is no law to the contrary in the place where the property is situated" in Sec.
946 of the California Civil Code refers to Article 16 of the Civil Code of the Philippines and that the law to the contrary in the
Philippines is the provision in said Article 16 that the national law of the deceased should govern. This contention can not be
sustained. As explained in the various authorities cited above the national law mentioned in Article 16 of our Civil Code is the law on
conflict of laws in the California Civil Code, i.e., Article 946, which authorizes the reference or return of the question to the law of the
testator's domicile. The conflict of laws rule in California, Article 946, Civil Code, precisely refers back the case, when a decedent is
not domiciled in California, to the law of his domicile, the Philippines in the case at bar. The court of the domicile can not and should
not refer the case back to California; such action would leave the issue incapable of determination because the case will then be like
a football, tossed back and forth between the two states, between the country of which the decedent was a citizen and the country
of his domicile. The Philippine court must apply its own law as directed in the conflict of laws rule of the state of the decedent, if the
question has to be decided, especially as the application of the internal law of California provides no legitime for children while the
Philippine law, Arts. 887(4) and 894, Civil Code of the Philippines, makes natural children legally acknowledged forced heirs of the
parent recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40 Phil. 105; Miciano vs. Brimo, 50 Phil. 867;
Babcock Templeton vs. Rider Babcock, 52 Phil. 130; and Gibbs vs. Government, 59 Phil. 293.) cited by appellees to support the
decision can not possibly apply in the case at bar, for two important reasons, i.e., the subject in each case does not appear to be a
citizen of a state in the United States but with domicile in the Philippines, and it does not appear in each case that there exists in the
state of which the subject is a citizen, a law similar to or identical with Art. 946 of the California Civil Code.
We therefore find that as the domicile of the deceased Christensen, a citizen of California, is the Philippines, the validity of the
provisions of his will depriving his acknowledged natural child, the appellant, should be governed by the Philippine Law, the
domicile, pursuant to Art. 946 of the Civil Code of California, not by the internal law of California..
WHEREFORE, the decision appealed from is hereby reversed and the case returned to the lower court with instructions that the
partition be made as the Philippine law on succession provides. Judgment reversed, with costs against appellees.

G.R. No. L-23678 (June 6, 1967)

Bellis vs. Bellis
FACTS:
Amos G. Bellis was a citizen of the State of Texas and of the United States. He had five legitimate children with his first wife (whom
he divorced), three legitimate children with his second wife (who survived him) and, finally, three illegitimate children.
6 years prior Amos Bellis death, he executed two(2) wills, apportioning the remainder of his estate and properties to his seven
surviving children. The appellants filed their oppositions to the project of partition claiming that they have been deprived of their
legitimes to which they were entitled according to the Philippine law. Appellants argued that the deceased wanted his Philippine
estate to be governed by the Philippine law, thus the creation of two separate wills.
ISSUE:
Whether or not the Philippine law be applied in the case in the determination of the illegitimate childrens successional rights
RULING:
Court ruled that provision in a foreigners will to the effect that his properties shall be distributed in accordance with Philippine law
and not with his national law, is illegal and void, for his national law cannot be ignored in view of those matters that Article 10 now
Article 16 of the Civil Code states said national law should govern.
Where the testator was a citizen of Texas and domiciled in Texas, the intrinsic validity of his will should be governed by his national
law. Since Texas law does not require legitimes, then his will, which deprived his illegitimate children of the legitimes, is valid.
The Supreme Court held that the illegitimate children are not entitled to the legitimes under the texas law, which is the national law
of the deceased.
G.R. No. L-23678

June 6, 1967

This is a direct appeal to Us, upon a question purely of law, from an order of the Court of First Instance of Manila dated April 30,
1964, approving the project of partition filed by the executor in Civil Case No. 37089 therein.1wph1.t
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United States." By his first wife, Mary E. Mallen, whom
he divorced, he had five legitimate children: Edward A. Bellis, George Bellis (who pre-deceased him in infancy), Henry A. Bellis,
Alexander Bellis and Anna Bellis Allsman; by his second wife, Violet Kennedy, who survived him, he had three legitimate children:
Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he had three illegitimate children: Amos Bellis, Jr., Maria Cristina
Bellis and Miriam Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he directed that after all taxes, obligations, and
expenses of administration are paid for, his distributable estate should be divided, in trust, in the following order and manner: (a)
$240,000.00 to his first wife, Mary E. Mallen; (b) P120,000.00 to his three illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis,
Miriam Palma Bellis, or P40,000.00 each and (c) after the foregoing two items have been satisfied, the remainder shall go to his

seven surviving children by his first and second wives, namely: Edward A. Bellis, Henry A. Bellis, Alexander Bellis and Anna Bellis
Allsman, Edwin G. Bellis, Walter S. Bellis, and Dorothy E. Bellis, in equal shares.1wph1.t
Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas, U.S.A. His will was admitted to probate in
the Court of First Instance of Manila on September 15, 1958.
The People's Bank and Trust Company, as executor of the will, paid all the bequests therein including the amount of $240,000.00 in
the form of shares of stock to Mary E. Mallen and to the three (3) illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis and
Miriam Palma Bellis, various amounts totalling P40,000.00 each in satisfaction of their respective legacies, or a total of P120,000.00,
which it released from time to time according as the lower court approved and allowed the various motions or petitions filed by the
latter three requesting partial advances on account of their respective legacies.

On January 8, 1964, preparatory to closing its administration, the executor submitted and filed its "Executor's Final Account, Report
of Administration and Project of Partition" wherein it reported, inter alia, the satisfaction of the legacy of Mary E. Mallen by the
delivery to her of shares of stock amounting to $240,000.00, and the legacies of Amos Bellis, Jr., Maria Cristina Bellis and Miriam
Palma Bellis in the amount of P40,000.00 each or a total of P120,000.00. In the project of partition, the executor pursuant to the
"Twelfth" clause of the testator's Last Will and Testament divided the residuary estate into seven equal portions for the benefit of
the testator's seven legitimate children by his first and second marriages.
On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective oppositions to the project of partition on the
ground that they were deprived of their legitimes as illegitimate children and, therefore, compulsory heirs of the deceased.
Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of which is evidenced by the registry receipt
submitted on April 27, 1964 by the executor.1
After the parties filed their respective memoranda and other pertinent pleadings, the lower court, on April 30, 1964, issued an order
overruling the oppositions and approving the executor's final account, report and administration and project of partition. Relying
upon Art. 16 of the Civil Code, it applied the national law of the decedent, which in this case is Texas law, which did not provide for
legitimes.
Their respective motions for reconsideration having been denied by the lower court on June 11, 1964, oppositors-appellants
appealed to this Court to raise the issue of which law must apply Texas law or Philippine law.
In this regard, the parties do not submit the case on, nor even discuss, the doctrine of renvoi, applied by this Court in Aznar v.
Christensen Garcia, L-16749, January 31, 1963. Said doctrine is usually pertinent where the decedent is a national of one country,
and a domicile of another. In the present case, it is not disputed that the decedent was both a national of Texas and a domicile
thereof at the time of his death.2 So that even assuming Texas has a conflict of law rule providing that the domiciliary system (law of
the domicile) should govern, the same would not result in a reference back (renvoi) to Philippine law, but would still refer to Texas
law. Nonetheless, if Texas has a conflicts rule adopting the situs theory (lex rei sitae) calling for the application of the law of the
place where the properties are situated, renvoi would arise, since the properties here involved are found in the Philippines. In the
absence, however, of proof as to the conflict of law rule of Texas, it should not be presumed different from ours.3 Appellants' position
is therefore not rested on the doctrine of renvoi. As stated, they never invoked nor even mentioned it in their arguments. Rather, they
argue that their case falls under the circumstances mentioned in the third paragraph of Article 17 in relation to Article 16 of the Civil
Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the decedent, in intestate or testamentary
successions, with regard to four items: (a) the order of succession; (b) the amount of successional rights; (e) the intrinsic validity of
the provisions of the will; and (d) the capacity to succeed. They provide that
ART. 16. Real property as well as personal property is subject to the law of the country where it is situated.
However, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional
rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession
is under consideration, whatever may he the nature of the property and regardless of the country wherein said property may be
found.
ART. 1039. Capacity to succeed is governed by the law of the nation of the decedent.
Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating that
Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, public 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.
prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not correct. Precisely, Congress deleted the
phrase, "notwithstanding the provisions of this and the next preceding article" when they incorporated Art. 11 of the old Civil Code as

Art. 17 of the new Civil Code, while reproducing without substantial change the second paragraph of Art. 10 of the old Civil Code as
Art. 16 in the new. It must have been their purpose to make the second paragraph of Art. 16 a specific provision in itself which must
be applied in testate and intestate succession. As further indication of this legislative intent, Congress added a new provision, under
Art. 1039, which decrees that capacity to succeed is to be governed by the national law of the decedent.
It is therefore evident that whatever public policy or good customs may be involved in our System of legitimes, Congress has not
intended to extend the same to the succession of foreign nationals. For it has specifically chosen to leave, inter alia, the amount of
successional rights, to the decedent's national law. Specific provisions must prevail over general ones.
Appellants would also point out that the decedent executed two wills one to govern his Texas estate and the other his Philippine
estate arguing from this that he intended Philippine law to govern his Philippine estate. Assuming that such was the decedent's
intention in executing a separate Philippine will, it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil. 867,
870, a provision in a foreigner's will to the effect that his properties shall be distributed in accordance with Philippine law and not with
his national law, is illegal and void, for his national law cannot be ignored in regard to those matters that Article 10 now Article 16
of the Civil Code states said national law should govern.
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and that under the laws of Texas,
there are no forced heirs or legitimes. Accordingly, since the intrinsic validity of the provision of the will and the amount of
successional rights are to be determined under Texas law, the Philippine law on legitimes cannot be applied to the testacy of Amos
G. Bellis.
Wherefore, the order of the probate court is hereby affirmed in toto, with costs against appellants. So ordered.

LLORENTE vs. CA, G.R. No. 124371. November 23, 2000

PAULA T. LLORENTE, petitioner, VS. COURT OF APPEALS and ALICIA F. LLORENTE,
respondents

FACTS:
Lorenzo Llorente and petitioner Paula Llorente were married in 1937 in the Philippines. Lorenzo was an enlisted serviceman of the
US Navy. Soon after, he left for the US where through naturalization, he became a US Citizen. Upon his visitation of his wife, he
discovered that she was living with his brother and a child was born. The child was registered as legitimate but the name of the
father was left blank. Llorente filed a divorce in California, which later on became final. He married Alicia and they lived together for
25 years bringing 3 children. He made his last will and testament stating that all his properties will be given to his second marriage.
He filed a petition of probate that made or appointed Alicia his special administrator of his estate. Before the
proceeding could be terminated, Lorenzo died. Paula filed a letter of administration over Llorentes estate. The trial granted the letter
and denied the motion for reconsideration. An appeal was made to the Court of Appeals, which affirmed and modified the judgment
of the Trial Court that she be declared co-owner of whatever properties, she and the deceased, may have acquired during their 25
years of cohabitation.
ISSUE:
Whether or not the National Law shall apply.
RULING:
Lorenzo Llorente was already an American citizen when he divorced Paula. Such was also the situation when he married Alicia and
executed his will. As stated in Article 15 of the civil code, aliens may obtain divorces abroad, provided that they are validly required
in their National Law. Thus the divorce obtained by Llorente is valid because the law that governs him is not Philippine Law but his
National Law since the divorce was contracted after he became an American citizen. Furthermore, his National Law allowed divorce.
The case was remanded to the court of origin for determination of the intrinsic validity of Lorenzo Llorentes will and determination of
the parties successional rights allowing proof of foreign law.
G.R. No. 124371

November 23, 2000

PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS and ALICIA F. LLORENTE, respondents.
The case raises a conflict of laws issue.
What is before us is an appeal from the decision of the Court of Appeals1 modifying that of the Regional Trial Court, Camarines Sur,
Branch 35, Iriga City2 declaring respondent Alicia F. Llorente (herinafter referred to as "Alicia"), as co-owners of whatever property

she and the deceased Lorenzo N. Llorente (hereinafter referred to as "Lorenzo") may have acquired during the twenty-five (25)
years that they lived together as husband and wife.
The Facts
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy from March 10, 1927 to September 30,
1957.3
On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter referred to as "Paula") were married before a parish
priest, Roman Catholic Church, in Nabua, Camarines Sur.4
Before the outbreak of the Pacific War, Lorenzo departed for the United States and Paula stayed in the conjugal home in barrio
Antipolo, Nabua, Camarines Sur.5
On November 30, 1943, Lorenzo was admitted to United States citizenship and Certificate of Naturalization No. 5579816 was
issued in his favor by the United States District Court, Southern District of New York.6
Upon the liberation of the Philippines by the American Forces in 1945, Lorenzo was granted an accrued leave by the U. S. Navy, to
visit his wife and he visited the Philippines.7 He discovered that his wife Paula was pregnant and was "living in" and having an
adulterous relationship with his brother, Ceferino Llorente.8
On December 4, 1945, Paula gave birth to a boy registered in the Office of the Registrar of Nabua as "Crisologo Llorente," with the
certificate stating that the child was not legitimate and the line for the fathers name was left blank.9

Lorenzo refused to forgive Paula and live with her. In fact, on February 2, 1946, the couple drew a written agreement to the effect
that (1) all the family allowances allotted by the United States Navy as part of Lorenzos salary and all other obligations for Paulas
daily maintenance and support would be suspended; (2) they would dissolve their marital union in accordance with judicial
proceedings; (3) they would make a separate agreement regarding their conjugal property acquired during their marital life; and (4)
Lorenzo would not prosecute Paula for her adulterous act since she voluntarily admitted her fault and agreed to separate from
Lorenzo peacefully. The agreement was signed by both Lorenzo and Paula and was witnessed by Paulas father and stepmother.
The agreement was notarized by Notary Public Pedro Osabel.10
Lorenzo returned to the United States and on November 16, 1951 filed for divorce with the Superior Court of the State of California
in and for the County of San Diego. Paula was represented by counsel, John Riley, and actively participated in the proceedings. On
November 27, 1951, the Superior Court of the State of California, for the County of San Diego found all factual allegations to be true
and issued an interlocutory judgment of divorce.11
On December 4, 1952, the divorce decree became final.12
In the meantime, Lorenzo returned to the Philippines.
On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila.13 Apparently, Alicia had no knowledge of the first marriage even
if they resided in the same town as Paula, who did not oppose the marriage or cohabitation.14
From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife.15 Their twenty-five (25) year union produced three
children, Raul, Luz and Beverly, all surnamed Llorente.16
On March 13, 1981, Lorenzo executed a Last Will and Testament. The will was notarized by Notary Public Salvador M. Occiano,
duly signed by Lorenzo with attesting witnesses Francisco Hugo, Francisco Neibres and Tito Trajano. In the will, Lorenzo
bequeathed all his property to Alicia and their three children, to wit:
"(1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively my residential house and lot, located at San Francisco, Nabua,
Camarines Sur, Philippines, including ALL the personal properties and other movables or belongings that may be found or existing
therein;
"(2) I give and bequeath exclusively to my wife Alicia R. Fortuno and to my children, Raul F. Llorente, Luz F. Llorente and Beverly F.
Llorente, in equal shares, all my real properties whatsoever and wheresoever located, specifically my real properties located at
Barangay Aro-Aldao, Nabua, Camarines Sur; Barangay Paloyon, Nabua, Camarines Sur; Barangay Baras, Sitio Puga, Nabua,
Camarines Sur; and Barangay Paloyon, Sitio Nalilidong, Nabua, Camarines Sur;
"(3) I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno and unto my children, Raul F. Llorente, Luz F. Llorente
and Beverly F. Llorente, in equal shares, my real properties located in Quezon City Philippines, and covered by Transfer Certificate
of Title No. 188652; and my lands in Antipolo, Rizal, Philippines, covered by Transfer Certificate of Title Nos. 124196 and 165188,
both of the Registry of Deeds of the province of Rizal, Philippines;

"(4) That their respective shares in the above-mentioned properties, whether real or personal properties, shall not be disposed of,
ceded, sold and conveyed to any other persons, but could only be sold, ceded, conveyed and disposed of by and among
themselves;
"(5) I designate my wife ALICIA R. FORTUNO to be the sole executor of this my Last Will and Testament, and in her default or
incapacity of the latter to act, any of my children in the order of age, if of age;
"(6) I hereby direct that the executor named herein or her lawful substitute should served (sic) without bond;
"(7) I hereby revoke any and all my other wills, codicils, or testamentary dispositions heretofore executed, signed, or published, by
me;
"(8) It is my final wish and desire that if I die, no relatives of mine in any degree in the Llorentes Side should ever bother and disturb
in any manner whatsoever my wife Alicia R. Fortunato and my children with respect to any real or personal properties I gave and
bequeathed respectively to each one of them by virtue of this Last Will and Testament."17
On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga, Camarines Sur, a petition for the probate and allowance of
his last will and testament wherein Lorenzo moved that Alicia be appointed Special Administratrix of his estate.18
On January 18, 1984, the trial court denied the motion for the reason that the testator Lorenzo was still alive.19
On January 24, 1984, finding that the will was duly executed, the trial court admitted the will to probate.20
On June 11, 1985, before the proceedings could be terminated, Lorenzo died.21
On September 4, 1985, Paula filed with the same court a petition22 for letters of administration over Lorenzos estate in her favor.
Paula contended (1) that she was Lorenzos surviving spouse, (2) that the various property were acquired during their marriage, (3)
that Lorenzos will disposed of all his property in favor of Alicia and her children, encroaching on her legitime and 1/2 share in the
conjugal property.23

On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR-755), a petition for the issuance of letters
testamentary.24
On October 14, 1985, without terminating the testate proceedings, the trial court gave due course to Paulas petition in Sp. Proc. No.
IR-888.25
On November 6, 13 and 20, 1985, the order was published in the newspaper "Bicol Star".26
On May 18, 1987, the Regional Trial Court issued a joint decision, thus:
"Wherefore, considering that this court has so found that the divorce decree granted to the late Lorenzo Llorente is void and
inapplicable in the Philippines, therefore the marriage he contracted with Alicia Fortunato on January 16, 1958 at Manila is likewise
void. This being so the petition of Alicia F. Llorente for the issuance of letters testamentary is denied. Likewise, she is not entitled to
receive any share from the estate even if the will especially said so her relationship with Lorenzo having gained the status of
paramour which is under Art. 739 (1).
"On the other hand, the court finds the petition of Paula Titular Llorente, meritorious, and so declares the intrinsic disposition of the
will of Lorenzo Llorente dated March 13, 1981 as void and declares her entitled as conjugal partner and entitled to one-half of their
conjugal properties, and as primary compulsory heir, Paula T. Llorente is also entitled to one-third of the estate and then one-third
should go to the illegitimate children, Raul, Luz and Beverly, all surname (sic) Llorente, for them to partition in equal shares and also
entitled to the remaining free portion in equal shares.
"Petitioner, Paula Llorente is appointed legal administrator of the estate of the deceased, Lorenzo Llorente. As such let the
corresponding letters of administration issue in her favor upon her filing a bond in the amount (sic) of P100,000.00 conditioned for
her to make a return to the court within three (3) months a true and complete inventory of all goods, chattels, rights, and credits, and
estate which shall at any time come to her possession or to the possession of any other person for her, and from the proceeds to
pay and discharge all debts, legacies and charges on the same, or such dividends thereon as shall be decreed or required by this
court; to render a true and just account of her administration to the court within one (1) year, and at any other time when required by
the court and to perform all orders of this court by her to be performed.
"On the other matters prayed for in respective petitions for want of evidence could not be granted.
"SO ORDERED."27
In time, Alicia filed with the trial court a motion for reconsideration of the aforequoted decision.28

On September 14, 1987, the trial court denied Alicias motion for reconsideration but modified its earlier decision, stating that Raul
and Luz Llorente are not children "legitimate or otherwise" of Lorenzo since they were not legally adopted by him.29 Amending its
decision of May 18, 1987, the trial court declared Beverly Llorente as the only illegitimate child of Lorenzo, entitling her to one-third
(1/3) of the estate and one-third (1/3) of the free portion of the estate.30
On September 28, 1987, respondent appealed to the Court of Appeals.31
On July 31, 1995, the Court of Appeals promulgated its decision, affirming with modification the decision of the trial court in this
wise:
"WHEREFORE, the decision appealed from is hereby AFFIRMED with the MODIFICATION that Alicia is declared as co-owner of
whatever properties she and the deceased may have acquired during the twenty-five (25) years of cohabitation.
"SO ORDERED."32
On August 25, 1995, petitioner filed with the Court of Appeals a motion for reconsideration of the decision.33
On March 21, 1996, the Court of Appeals,34 denied the motion for lack of merit.
Hence, this petition.35
The Issue
Stripping the petition of its legalese and sorting through the various arguments raised,36 the issue is simple. Who are entitled to
inherit from the late Lorenzo N. Llorente?
We do not agree with the decision of the Court of Appeals. We remand the case to the trial court for ruling on the intrinsic validity of
the will of the deceased.
The Applicable Law

The fact that the late Lorenzo N. Llorente became an American citizen long before and at the time of: (1) his divorce from Paula; (2)
marriage to Alicia; (3) execution of his will; and (4) death, is duly established, admitted and undisputed.
Thus, as a rule, issues arising from these incidents are necessarily governed by foreign law.
The Civil Code clearly provides:
"Art. 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens
of the Philippines, even though living abroad.
"Art. 16. Real property as well as personal property is subject to the law of the country where it is situated.
"However, intestate and testamentary succession, both with respect to the order of succession and to the amount of successional
rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession
is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be
found." (emphasis ours)
True, foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to take judicial notice of them. Like
any other fact, they must be alleged and proved.37
While the substance of the foreign law was pleaded, the Court of Appeals did not admit the foreign law. The Court of Appeals and
the trial court called to the fore the renvoi doctrine, where the case was "referred back" to the law of the decedents domicile, in this
case, Philippine law.
We note that while the trial court stated that the law of New York was not sufficiently proven, in the same breath it made the
categorical, albeit equally unproven statement that "American law follows the domiciliary theory hence, Philippine law applies when
determining the validity of Lorenzos will.38
First, there is no such thing as one American law.1wph!1 The "national law" indicated in Article 16 of the Civil Code cannot possibly
apply to general American law. There is no such law governing the validity of testamentary provisions in the United States. Each
State of the union has its own law applicable to its citizens and in force only within the State. It can therefore refer to no other than
the law of the State of which the decedent was a resident.39 Second, there is no showing that the application of the renvoi doctrine
is called for or required by New York State law.
The trial court held that the will was intrinsically invalid since it contained dispositions in favor of Alice, who in the trial courts opinion
was a mere paramour. The trial court threw the will out, leaving Alice, and her two children, Raul and Luz, with nothing.

The Court of Appeals also disregarded the will. It declared Alice entitled to one half (1/2) of whatever property she and Lorenzo
acquired during their cohabitation, applying Article 144 of the Civil Code of the Philippines.
The hasty application of Philippine law and the complete disregard of the will, already probated as duly executed in accordance with
the formalities of Philippine law, is fatal, especially in light of the factual and legal circumstances here obtaining.
Validity of the Foreign Divorce
In Van Dorn v. Romillo, Jr.40 we held that owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine
nationals are covered by the policy against absolute divorces, the same being considered contrary to our concept of public policy
and morality. In the same case, the Court ruled that aliens may obtain divorces abroad, provided they are valid according to their
national law.
Citing this landmark case, the Court held in Quita v. Court of Appeals,41 that once proven that respondent was no longer a Filipino
citizen when he obtained the divorce from petitioner, the ruling in Van Dorn would become applicable and petitioner could "very well
lose her right to inherit" from him.
In Pilapil v. Ibay-Somera,42 we recognized the divorce obtained by the respondent in his country, the Federal Republic of Germany.
There, we stated that divorce and its legal effects may be recognized in the Philippines insofar as respondent is concerned in view
of the nationality principle in our civil law on the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals must be reversed.43 We hold that the divorce obtained by
Lorenzo H. Llorente from his first wife Paula was valid and recognized in this jurisdiction as a matter of comity. Now, the effects of
this divorce (as to the succession to the estate of the decedent) are matters best left to the determination of the trial court.
Validity of the Will
The Civil Code provides:

"Art. 17. The forms and solemnities of contracts, wills, and other public instruments shall be governed by the laws of the country in
which they are executed.
"When the acts referred to are executed before the diplomatic or consular officials of the Republic of the Philippines in a foreign
country, the solemnities established by Philippine laws shall be observed in their execution." (underscoring ours)
The clear intent of Lorenzo to bequeath his property to his second wife and children by her is glaringly shown in the will he
executed. We do not wish to frustrate his wishes, since he was a foreigner, not covered by our laws on "family rights and duties,
status, condition and legal capacity."44
Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best proved by foreign law which must be pleaded
and proved. Whether the will was executed in accordance with the formalities required is answered by referring to Philippine law. In
fact, the will was duly probated.
As a guide however, the trial court should note that whatever public policy or good customs may be involved in our system of
legitimes, Congress did not intend to extend the same to the succession of foreign nationals. Congress specifically left the amount
of successional rights to the decedent's national law.45
Having thus ruled, we find it unnecessary to pass upon the other issues raised.
The Fallo
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G. R. SP No. 17446 promulgated on July 31,
1995 is SET ASIDE.
In lieu thereof, the Court REVERSES the decision of the Regional Trial Court and RECOGNIZES as VALID the decree of divorce
granted in favor of the deceased Lorenzo N. Llorente by the Superior Court of the State of California in and for the County of San
Diego, made final on December 4, 1952.
Further, the Court REMANDS the cases to the court of origin for determination of the intrinsic validity of Lorenzo N. Llorentes will
and determination of the parties successional rights allowing proof of foreign law with instructions that the trial court shall proceed
with all deliberate dispatch to settle the estate of the deceased within the framework of the Rules of Court.
No costs.
SO ORDERED.

Velayo vs. Shell Company of the Philippine Islands 100 Phil. 186
Facts:
Herein defendant Shell Company of the Philippine Islands is the official supplier of gasoline of Commercial Airlines, Inc. (CALI). The
latter has an existing debt of P170,162.58 to the former. In 1948, the management of CALI called a meeting of all its major creditors
and announced that it was in a state of insolvency and will stop its operations. The said creditors all agreed to proceed with a prorata division of the assets of CALI. The defendant then assigned its credit to the Shell Oil Company in the United States. The latter
then filed an action in a California court for the collection of the credit and for a writ of attachment, which was granted, of a C-54
plane belonging to CALI. As a result of the defendants action, CALI filed in the Philippines a petition for voluntary insolvency. During
the proceedings of the case, the creditors of CALI unanimously elected herein plaintiff Alfredo Velayo as assignee. The latter then
filed an action for recovery of damages against the defendant.
Issue: Whether or not the defendant acted in bad faith and is therefore liable for damages?
Held:
The Supreme Court ruled in the Affirmative. The defendant clearly acted in bad faith when it schemed and effected the attachment
of the C-54 plane of its debtor CALI by assigning its credit to its sister company in the United States. It took advantage of its
knowledge that insolvency proceedings would most probably be instituted by CALI if its creditors fail to come up with an
understanding as to the manner of distribution of the assets. According to Article 21 of the New Civil Code, Any person who willfully
causes loss and injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter
for the damage. A moral wrong or injury, even if it does not constitute a violation of a statute or law, should be compensated by
damages. Therefore, the defendant is liable to pay damages in an amount double the value of the attached aircraft
100 Phil 168 Civil Law Torts and Damages Obligations arising from human relations
Prior to 1948, Commercial Airlines (CALI) owed P170k (abt. $79k) to Shell Company. CAL offered its C-54 plane as payment to
Shell Company (the plane was in California) but Shell at that time declined as it thought CALI had sufficient money to pay its debt.
In 1948 however, CALI was going bankrupt so it called upon an informal meeting of its creditors. In that meeting, the creditors
agreed to appoint representatives to a working committee that would determine the order of preference as to how each creditor
should be paid. They also agreed not to file suit against CALI but CALI did reserve that it will file insolvency proceedings should its
assets be not enough to pay them up. Shell Company was represented by a certain Fitzgerald to the three man working committee.
Later, the working committee convened to discuss how CALIs asset should be divided amongst the creditors but while such was
pending, Fitzgerald sent a telegraph message to Shell USA advising the latter that Shell Philippines is assigning its credit to Shell
USA in the amount of $79k, thereby effectively collecting almost all if not the entire indebtedness of CALI to Shell Philippines. Shell

USA got wind of the fact that CALI has a C-54 plane is California and so Shell USA petitioned before a California court to have the
plane be the subject of a writ of attachment which was granted.
Meanwhile, the stockholders of CALI were unaware of the assignment of credit made by Shell Philippines to Shell USA and they
went on to approve the sale of CALIs asset to the Philippine Airlines. In September 1948, the other creditors learned of the
assignment made by Shell. This prompted these other creditors to file their own complaint of attachment against CALIs assets.
CALI then filed for insolvency proceedings to protect its assets in the Philippines from being attached. Alfredo Velayos appointment
as CALIs assignee was approved in lieu of the insolvency proceeding. In order for him to recover the C-54 plane in California, it
filed for a writ of injunction against Shell Philippines in order for the latter to restrain Shell USA from proceeding with the attachment
and in the alternative that judgment be awarded in favor of CALI for damages double the amount of the C-54 plane. The C-54 plane
was not recovered. Shell Company argued it is not liable for damages because there is nothing in the law which prohibits a
company from assigning its credit, it being a common practice.

ISSUE: Whether or not Shell is liable for damages considering that it did not violate any law.

HELD: Yes. The basis of such liability, in the absence of law, is Article 21 of the Civil Code which 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.
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. 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.

Globe Mackay vs.CA 176 SCRA 778

GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners vs. THE HONORABLE COURT OF
APPEALS and RESTITUTO M. TOBIAS, respondents.
FACTS:
Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay in dual capacity as purchasing agent and
administrative assistant to the engineering operations manager. In 1972, the respondent discovered fraudulent anomalies and
transactions in the said corporation for which it lost several hundred thousands of pesos. The private respondent reported to his
superiors including Henry, the petitioner. However, he was confronted by Hendry stating that Tobias was the number one suspect.
He was ordered to take a one week forced leave. When he returned to work, Hendry called him crook and swindler, and left a
scornful remark to the Filipinos. The petitioners also charged six criminal cases against the respondentfive cases of estafa and
one for violating Article 290 of the RPC (Discovering Secrets through Seizure of Correspondence). The petitioner also sent a poison
letter to RETELCO causing the respondent to be unemployed.

ISSUE: Whether or not the petitioners are liable for damages to the respondent.

HELD:
Petitioners invoked the right of damnun absque injuria or the damage or loss which does not constitute a violation of legal right or
amount to a legal wrong is not actionable. However, this is not applicable in this case. It bears repeating that even granting that
petitioners might have had the right to dismiss Tobias from work, the abusive manner in which that right was exercised amounted to
a legal wrong for which petitioners must be held liable.
The court awarded Tobias the following: Php 80, 000 as actual damages, Php 200, 000 as moral damages, Php 20, 0000 as
exemplary damages; Php 30, 000 as attorneys fees; and, costs. Petition was denied and the decision of CA is AFFIRMED.

G.R. No. 81262 August 25, 1989

GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners ,vs. THE HONORABLE COURT OF

Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and Radio Corporation (GLOBE MACKAY)
in a dual capacity as a purchasing agent and administrative assistant to the engineering operations manager. In 1972, GLOBE
MACKAY discovered fictitious purchases and other fraudulent transactions for which it lost several thousands of pesos.
According to private respondent it was he who actually discovered the anomalies and reported them on November 10, 1972 to his
immediate superior Eduardo T. Ferraren and to petitioner Herbert C. Hendry who was then the Executive Vice-President and
General Manager of GLOBE MACKAY.
On November 11, 1972, one day after private respondent Tobias made the report, petitioner Hendry confronted him by stating that
he was the number one suspect, and ordered him to take a one week forced leave, not to communicate with the office, to leave his
table drawers open, and to leave the office keys.
On November 20, 1972, when private respondent Tobias returned to work after the forced leave, petitioner Hendry went up to him
and called him a "crook" and a "swindler." Tobias was then ordered to take a lie detector test. He was also instructed to submit
specimen of his handwriting, signature, and initials for examination by the police investigators to determine his complicity in the
anomalies.
On December 6,1972, the Manila police investigators submitted a laboratory crime report (Exh. "A") clearing private respondent of
participation in the anomalies.
Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G. Fernandez, who on December 10,
1972, submitted a report (Exh. "2") finding Tobias guilty. This report however expressly stated that further investigation was still to be
conducted.
Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending Tobias from work preparatory to the
filing of criminal charges against him.
On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document Examiner, after investigating other documents
pertaining to the alleged anomalous transactions, submitted a second laboratory crime report (Exh. "B") reiterating his previous
finding that the handwritings, signatures, and initials appearing in the checks and other documents involved in the fraudulent
transactions were not those of Tobias. The lie detector tests conducted on Tobias also yielded negative results.

Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact that the report of the private investigator,
was, by its own terms, not yet complete, petitioners filed with the City Fiscal of Manila a complaint for estafa through falsification of
commercial documents, later amended to just estafa. Subsequently five other criminal complaints were filed against Tobias, four of
which were for estafa through Falsification of commercial document while the fifth was for of Article 290 of' the Revised Penal Code
(Discovering Secrets Through Seizure of Correspondence).lwph1.t Two of these complaints were refiled with the Judge
Advocate General's Office, which however, remanded them to the fiscal's office. All of the six criminal complaints were dismissed by
the fiscal. Petitioners appealed four of the fiscal's resolutions dismissing the criminal complaints with the Secretary of Justice, who,
however, affirmed their dismissal.
In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners that his employment has been terminated
effective December 13, 1972. Whereupon, Tobias filed a complaint for illegal dismissal. The labor arbiter dismissed the complaint.
On appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiter's decision. However, the Secretary of Labor,
acting on petitioners' appeal from the NLRC ruling, reinstated the labor arbiter's decision. Tobias appealed the Secretary of Labor's
order with the Office of the President. During the pendency of the appeal with said office, petitioners and private respondent Tobias
entered into a compromise agreement regarding the latter's complaint for illegal dismissal.
Unemployed, Tobias sought employment with the Republic Telephone Company (RETELCO). However, petitioner Hendry, without
being asked by RETELCO, wrote a letter to the latter stating that Tobias was dismissed by GLOBE MACKAY due to dishonesty.
Private respondent Tobias filed a civil case for damages anchored on alleged unlawful, malicious, oppressive, and abusive acts of
petitioners. Petitioner Hendry, claiming illness, did not testify during the hearings. The Regional Trial Court (RTC) of Manila, Branch
IX, through Judge Manuel T. Reyes rendered judgment in favor of private respondent by ordering petitioners to pay him eighty
thousand pesos (P80,000.00) as actual damages, two hundred thousand pesos (P200,000.00) as moral damages, twenty thousand
pesos (P20,000.00) as exemplary damages, thirty thousand pesos (P30,000.00) as attorney's fees, and costs. Petitioners appealed
the RTC decision to the Court of Appeals. On the other hand, Tobias appealed as to the amount of damages. However, the Court of
Appeals, an a decision dated August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion for reconsideration having been
denied, the instant petition for review on certiorari was filed.
The main issue in this case is whether or not petitioners are liable for damages to private respondent.
Petitioners contend that they could not be made liable for damages in the lawful exercise of their right to dismiss private respondent.
On the other hand, private respondent contends that because of petitioners' abusive manner in dismissing him as well as for the
inhuman treatment he got from them, the Petitioners must indemnify him for the damage that he had suffered.

One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to be observed for
the rightful relationship between human beings and for the stability of the social order." [REPORT ON THE CODE COMMISSION
ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the old
Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated certain fundamental precepts which
were "designed to indicate certain norms that spring from the fountain of good conscience" and which were also meant to serve as
"guides for human conduct [that] should run as golden threads through society, to the end that law may approach its supreme ideal,
which is the sway and dominance of justice" (Id.) Foremost among these principles is that pronounced in Article 19 which provides:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due,
and observe honesty and good faith.
This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be
observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following: to
act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial
limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by
itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is
exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal
wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for
the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally,
an action for damages under either Article 20 or Article 21 would be proper.
Article 20, which pertains to damage arising from a violation of law, provides that:
Art. 20. Every person who contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.
However, in the case at bar, petitioners claim that they did not violate any provision of law since they were merely exercising their
legal right to dismiss private respondent. This does not, however, leave private respondent with no relief because Article 21 of the
Civil Code provides that:

Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy
shall compensate the latter for the damage.
This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even
though they have actually suffered material and moral injury" [Id.] should "vouchsafe adequate legal remedy for that untold number
of moral wrongs which it is impossible for human foresight to provide for specifically in the statutes" [Id. it p. 40; See also PNB v. CA,
G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247].
In determining whether or not the principle of abuse of rights may be invoked, there is no rigid test which can be applied. While the
Court has not hesitated to apply Article 19 whether the legal and factual circumstances called for its application [See for e.g., Velayo
v. Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra; Grand Union Supermarket, Inc. v. Espino, Jr., G.R. No. L48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L-46558, July 31,1981,106 SCRA 391; United General Industries,
Inc, v. Paler G.R. No. L-30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21, 1987, 153 SCRA 183] the
question of whether or not the principle of abuse of rights has been violated resulting in damages under Article 20 or Article 21 or
other applicable provision of law, depends on the circumstances of each case. And in the instant case, the Court, after examining
the record and considering certain significant circumstances, finds that all petitioners have indeed abused the right that they invoke,
causing damage to private respondent and for which the latter must now be indemnified.
The trial court made a finding that notwithstanding the fact that it was private respondent Tobias who reported the possible existence
of anomalous transactions, petitioner Hendry "showed belligerence and told plaintiff (private respondent herein) that he was the
number one suspect and to take a one week vacation leave, not to communicate with the office, to leave his table drawers open,
and to leave his keys to said defendant (petitioner Hendry)" [RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But
regardless of whether or not it was private respondent Tobias who reported the anomalies to petitioners, the latter's reaction towards
the former upon uncovering the anomalies was less than civil. An employer who harbors suspicions that an employee has
committed dishonesty might be justified in taking the appropriate action such as ordering an investigation and directing the
employee to go on a leave. Firmness and the resolve to uncover the truth would also be expected from such employer. But the highhanded treatment accorded Tobias by petitioners was certainly uncalled for. And this reprehensible attitude of petitioners was to
continue when private respondent returned to work on November 20, 1972 after his one week forced leave. Upon reporting for work,
Tobias was confronted by Hendry who said. "Tobby, you are the crook and swindler in this company." Considering that the first report
made by the police investigators was submitted only on December 10, 1972 [See Exh. A] the statement made by petitioner Hendry
was baseless. The imputation of guilt without basis and the pattern of harassment during the investigations of Tobias transgress the
standards of human conduct set forth in Article 19 of the Civil Code. The Court has already ruled that the right of the employer to
dismiss an employee should not be confused with the manner in which the right is exercised and the effects flowing therefrom. If the
dismissal is done abusively, then the employer is liable for damages to the employee [Quisaba v. Sta. Ines-Melale Veneer and
Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA 771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L-21871,
September 27,1966, 18 SCRA 107] Under the circumstances of the instant case, the petitioners clearly failed to exercise in a

legitimate manner their right to dismiss Tobias, giving the latter the right to recover damages under Article 19 in relation to Article 21
of the Civil Code.
But petitioners were not content with just dismissing Tobias. Several other tortious acts were committed by petitioners against Tobias
after the latter's termination from work. Towards the latter part of January, 1973, after the filing of the first of six criminal complaints
against Tobias, the latter talked to Hendry to protest the actions taken against him. In response, Hendry cut short Tobias'
protestations by telling him to just confess or else the company would file a hundred more cases against him until he landed in jail.
Hendry added that, "You Filipinos cannot be trusted." The threat unmasked petitioner's bad faith in the various actions taken against
Tobias. On the other hand, the scornful remark about Filipinos as well as Hendry's earlier statements about Tobias being a "crook"
and "swindler" are clear violations of 'Tobias' personal dignity [See Article 26, Civil Code].
The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime in October 1974, stating that Tobias
had been dismissed by GLOBE MACKAY due to dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO
and as a result of which, Tobias remained unemployed for a longer period of time. For this further damage suffered by Tobias,
petitioners must likewise be held liable for damages consistent with Article 2176 of the Civil Code. Petitioners, however, contend that
they have a "moral, if not legal, duty to forewarn other employers of the kind of employee the plaintiff (private respondent herein)
was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that "it is the accepted moral and societal obligation of every man to
advise or warn his fellowmen of any threat or danger to the latter's life, honor or property. And this includes warning one's brethren
of the possible dangers involved in dealing with, or accepting into confidence, a man whose honesty and integrity is suspect" [Id.].
These arguments, rather than justify petitioners' act, reveal a seeming obsession to prevent Tobias from getting a job, even after
almost two years from the time Tobias was dismissed.
Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias. Petitioners contend that there is no
case against them for malicious prosecution and that they cannot be "penalized for exercising their right and prerogative of seeking
justice by filing criminal complaints against an employee who was their principal suspect in the commission of forgeries and in the
perpetration of anomalous transactions which defrauded them of substantial sums of money" [Petition, p. 10, Rollo, p. 11].
While sound principles of justice and public policy dictate that persons shall have free resort to the courts for redress of wrongs and
vindication of their rights [Buenaventura v. Sto. Domingo, 103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be
exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 5871.] Hence, in Yutuk V.
Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2 SCRA 337, the Court held that the right to file criminal complaints should not
be used as a weapon to force an alleged debtor to pay an indebtedness. To do so would be a clear perversion of the function of the
criminal processes and of the courts of justice. And in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court upheld
the judgment against the petitioner for actual and moral damages and attorney's fees after making a finding that petitioner, with
persistence, filed at least six criminal complaints against respondent, all of which were dismissed.
To constitute malicious prosecution, there must be proof that the prosecution was prompted by a design to vex and humiliate a
person and that it was initiated deliberately by the defendant knowing that the charges were false and groundless [Manila Gas
Corporation v. CA, G.R. No. L-44190, October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by itself, does not render a
person liable for malicious prosecution [Inhelder Corporation v. CA, G.R. No. 52358, May 301983122 SCRA 576]. The mere
dismissal by the fiscal of the criminal complaint is not a ground for an award of damages for malicious prosecution if there is no
competent evidence to show that the complainant had acted in bad faith [Sison v. David, G.R. No. L-11268, January 28,1961, 1
SCRA 60].
In the instant case, however, the trial court made a finding that petitioners acted in bad faith in filing the criminal complaints against
Tobias, observing that:
xxx
Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6) criminal cases, five (5) of which were for
estafa thru falsification of commercial document and one for violation of Art. 290 of the Revised Penal Code "discovering secrets
thru seizure of correspondence," and all were dismissed for insufficiency or lack of evidence." The dismissal of four (4) of the cases
was appealed to the Ministry of Justice, but said Ministry invariably sustained the dismissal of the cases. As above adverted to, two
of these cases were refiled with the Judge Advocate General's Office of the Armed Forces of the Philippines to railroad plaintiffs
arrest and detention in the military stockade, but this was frustrated by a presidential decree transferring criminal cases involving
civilians to the civil courts.
xxx
To be sure, when despite the two (2) police reports embodying the findings of Lt. Dioscoro Tagle, Chief Document Examiner of the
Manila Police Department, clearing plaintiff of participation or involvement in the fraudulent transactions complained of, despite the
negative results of the lie detector tests which defendants compelled plaintiff to undergo, and although the police investigation was
"still under follow-up and a supplementary report will be submitted after all the evidence has been gathered," defendants hastily filed
six (6) criminal cases with the city Fiscal's Office of Manila, five (5) for estafa thru falsification of commercial document and one (1)
for violation of Art. 290 of the Revised Penal Code, so much so that as was to be expected, all six (6) cases were dismissed, with
one of the investigating fiscals, Asst. Fiscal de Guia, commenting in one case that, "Indeed, the haphazard way this case was
investigated is evident. Evident likewise is the flurry and haste in the filing of this case against respondent Tobias," there can be no

mistaking that defendants would not but be motivated by malicious and unlawful intent to harass, oppress, and cause damage to
plaintiff.
xxx
[RTC Decision, pp. 5-6; Rollo, pp. 235-236].
In addition to the observations made by the trial court, the Court finds it significant that the criminal complaints were filed during the
pendency of the illegal dismissal case filed by Tobias against petitioners. This explains the haste in which the complaints were filed,
which the trial court earlier noted. But petitioners, to prove their good faith, point to the fact that only six complaints were filed
against Tobias when they could have allegedly filed one hundred cases, considering the number of anomalous transactions
committed against GLOBE MACKAY. However, petitioners' good faith is belied by the threat made by Hendry after the filing of the
first complaint that one hundred more cases would be filed against Tobias. In effect, the possible filing of one hundred more cases
was made to hang like the sword of Damocles over the head of Tobias. In fine, considering the haste in which the criminal
complaints were filed, the fact that they were filed during the pendency of the illegal dismissal case against petitioners, the threat
made by Hendry, the fact that the cases were filed notwithstanding the two police reports exculpating Tobias from involvement in the
anomalies committed against GLOBE MACKAY, coupled by the eventual dismissal of all the cases, the Court is led into no other
conclusion than that petitioners were motivated by malicious intent in filing the six criminal complaints against Tobias.
Petitioners next contend that the award of damages was excessive. In the complaint filed against petitioners, Tobias prayed for the
following: one hundred thousand pesos (P100,000.00) as actual damages; fifty thousand pesos (P50,000.00) as exemplary
damages; eight hundred thousand pesos (P800,000.00) as moral damages; fifty thousand pesos (P50,000.00) as attorney's fees;
and costs. The trial court, after making a computation of the damages incurred by Tobias [See RTC Decision, pp. 7-8; Rollo, pp.
154-1551, awarded him the following: eighty thousand pesos (P80,000.00) as actual damages; two hundred thousand pesos
(P200,000.00) as moral damages; twenty thousand pesos (P20,000.00) as exemplary damages; thirty thousand pesos (P30,000.00)
as attorney's fees; and, costs. It must be underscored that petitioners have been guilty of committing several actionable tortious
acts, i.e., the abusive manner in which they dismissed Tobias from work including the baseless imputation of guilt and the
harassment during the investigations; the defamatory language heaped on Tobias as well as the scornful remark on Filipinos; the
poison letter sent to RETELCO which resulted in Tobias' loss of possible employment; and, the malicious filing of the criminal
complaints. Considering the extent of the damage wrought on Tobias, the Court finds that, contrary to petitioners' contention, the
amount of damages awarded to Tobias was reasonable under the circumstances.

Yet, petitioners still insist that the award of damages was improper, invoking the principle of damnum absque injuria. It is argued that
"[t]he only probable actual damage that plaintiff (private respondent herein) could have suffered was a direct result of his having
been dismissed from his employment, which was a valid and legal act of the defendants-appellants (petitioners herein).lwph1.t "
[Petition, p. 17; Rollo, p. 18].
According to the principle of damnum absque injuria, damage or loss which does not constitute a violation of a legal right or amount
to a legal wrong is not actionable [Escano v. CA, G.R. No. L-47207, September 25, 1980, 100 SCRA 197; See also Gilchrist v.
Cuddy 29 Phil, 542 (1915); The Board of Liquidators v. Kalaw, G.R. No. L-18805, August 14, 1967, 20 SCRA 987]. This principle
finds no application in this case. It bears repeating that even granting that petitioners might have had the right to dismiss Tobias from
work, the abusive manner in which that right was exercised amounted to a legal wrong for which petitioners must now be held liable.
Moreover, the damage incurred by Tobias was not only in connection with the abusive manner in which he was dismissed but was
also the result of several other quasi-delictual acts committed by petitioners.
Petitioners next question the award of moral damages. However, the Court has already ruled in Wassmer v. Velez, G.R. No. L20089, December 26, 1964, 12 SCRA 648, 653, that [p]er express provision of Article 2219 (10) of the New Civil Code, moral
damages are recoverable in the cases mentioned in Article 21 of said Code." Hence, the Court of Appeals committed no error in
awarding moral damages to Tobias.
Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of the Civil Code provides that "[i]n quasidelicts, exemplary damages may be granted if the defendant acted with gross negligence," the Court, in Zulueta v. Pan American
World Airways, Inc., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled that if gross negligence warrants the award of
exemplary damages, with more reason is its imposition justified when the act performed is deliberate, malicious and tainted with bad
faith. As in the Zulueta case, the nature of the wrongful acts shown to have been committed by petitioners against Tobias is
sufficient basis for the award of exemplary damages to the latter.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in CA-G.R. CV No. 09055 is AFFIRMED.
SO ORDERED.

Barons Marketing Corp vs Court of Appeals and Phelp Dodge Phils Inc [G. R. No. 126486. February 9, 1998] 286 SCRA 96 Case
Digest

Concept:
Article 1248. Unless there is an express stipulation to that effect, the creditor cannot be compelled partially to receive the prestation
in which the obligation consists. Neither may the debtor be required to make partial payments. However, when the debt is in part
liquidated and in part unliquidated, the creditor may demand and the debtor may effect the payment of the former without waiting for
the liquidation of the latter.
Facts:

August 31, 1973. Phelps Dodge appointed Barons Marketing as one of its dealers of electrical wires and cables effective
Sept. 1, 1973. Defendant was given 60 days credit for its purchases of Phelps Dodges electrical products

Barons Marketing purchased, on credit, from Phelps Dodges electrical wires and cable in the total amount of P4,102,483.30.
This was then sold to MERALCO, Baron Mktg being the accredited supplier of the electrical requirements of MERALCO.

Under the sales invoices issued by Phelps Dodge to Barons Mktg for the subject purchases, it is stipulated that interest at
12% on the amount of attys fees and collection. Barons Mktg paid P300,000 out of its total purchases leaving an unpaid account of
P3,802,478.20. Phelps Dodge wrote Barons Mktg demanding payment of its outstanding obligations due Phelps Dodge. Baron Mktg
responded by requesting if it could pay its outstanding account in monthly installments of P500,000 plus 1%interest per month until
full payment, this request was rejected and Phelps Dodge demanded full payment

Phelps Dodge then filed a complaint before the Pasig Trial Court for the recovery of P3,802,478.20 and it also prayed to be
awarded with attorneys fee at the rate of 25% of the amount demanded, exemplary damages in the amount of P100,000, the
expenses of litigation and the costs of suit.

The court ruled in favor of Phelps Dodge with the exemplary damages of P10,000 and recovery of P3,108,000

Both parties appealed. Phelps Dodge claimed that court should have awarded the sum of P3,802,478.20. It also said that the
amount awarded was a result of a typographical error.


Barons Mktg claimed that Phelps Dodges claim for damages is a result of creditors abuse and it also claimed that Phelps
Dodge failed to prove its cause of action against it.

CoA ruled in favor of Phelps Dodge with the correct amount but only with the 5% for the Attys fee. No costs.

Barons Mktg then alleged that the Coa erred its decision

Issue: W/ON private respondent is guilty of abuse of right

Held: No. a creditor cannot be considered in delay if he refuses to accept partial performance because, unless otherwise provided
by law or stipulated by the parties, a creditor cannot be compelled to accept
partial performance; however, if good faith necessitates acceptance or if the creditor abuses his right in not accepting, the creditor
will incur in delay if he does not accept such partial performance.

G.R. No. 126486 February 9, 1998

BARONS MARKETING CORP., petitioner, vs. COURT OF APPEALS and PHELPS DODGE PHILS., INC. respondents.
The instant petition raises two issues: (1) whether or not private respondent is guilty of abuse of right; and (2) whether or not private
respondent is entitled to interest and attorney's fees.
The facts are undisputed:
On August 31, 1973, plaintiff [Phelps Dodge, Philippines, Inc. private respondent herein] appointed defendant [petitioner Barons
Marketing, Corporation] as one of its dealers of electrical wires and cables effective September 1, 1973 (Exh. A). As such dealer,
defendant was given by plaintiff 60 days credit for its purchases of plaintiff's electrical products. This credit term was to be reckoned
from the date of delivery by plaintiff of its products to defendant (Exh. 1).

During the period covering December 1986 to August 17, 1987, defendant purchased, on credit, from plaintiff various electrical wires
and cables in the total amount of P4,102,438.30 (Exh. B to K). These wires and cables were in turn sold, pursuant to previous
arrangements, by defendant to MERALCO, the former being the accredited supplier of the electrical requirements of the latter.
Under the sales invoices issued by plaintiff to defendant for the subject purchases, it is stipulated that interest at 12% on the amount
due for attorney's fees and collection (Exh. BB). 1 On September 7, 1987, defendant paid plaintiff the amount of P300,000.00 out of
its total purchases as above-stated (Exh. S), thereby leaving an unpaid account on the aforesaid deliveries of P3,802,478.20. On
several occasions, plaintiff wrote defendant demanding payment of its outstanding obligations due plaintiff (Exhs. L, M, N, and P). In
response, defendant wrote plaintiff on October 5, 1987 requesting the latter if it could pay its outstanding account in monthly
installments of P500,000.00 plus 1% interest per month commencing on October 15, 1987 until full payment (Exh. O and O-4).
Plaintiff, however, rejected defendant's offer and accordingly reiterated its demand for the full payment of defendant's account (Exh.
P). 2
On 29 October 1987, private respondent Phelps Dodge Phils., Inc. filed a complaint before the Pasig Regional Trial Court against
petitioner Barons Marketing Corporation for the recovery of P3,802,478.20 representing the value of the wires and cables the former
had delivered to the latter, including interest. Phelps Dodge likewise prayed that it be awarded attorney's fees at the rate of 25% of
the amount demanded, exemplary damages amounting to at least P100,000.00, the expenses of litigation and the costs of suit.
Petitioner, in its answer, admitted purchasing the wires and cables from private respondent but disputed the amount claimed by the
latter. Petitioner likewise interposed a counterclaim against private respondent, alleging that it suffered injury to its reputation due to
Phelps Dodge's acts. Such acts were purportedly calculated to humiliate petitioner and constituted an abuse of rights.
After hearing, the trial court on 17 June 1991 rendered its decision, the dispositive portion of which reads:
WHEREFORE, from all the foregoing considerations, the Court finds Phelps Dodge Phils., Inc. to have preponderantly proven its
case and hereby orders Barons Marketing, Inc. to pay Phelps Dodge the following:
1. P3,108,000.00 constituting the unpaid balance of defendant's purchases from plaintiff and interest thereon at 12% per annum
computed from the respective expiration of the 60 day credit term, vis-a-vis the various sales invoices and/or delivery receipts;
2. 25% of the preceding obligation for and as attorney's fees;
3. P10,000.00 as exemplary damages;

4. Costs of suit. 3
Both parties appealed to respondent court. Private respondent claimed that the trial court should have awarded it the sum of
P3,802,478.20, the amount which appeared in the body of the complaint and proven during the trial rather than P3,1081000.00 The
latter amount appears in petitioner's prayer supposedly as a result of a typographical error.
On the other hand, petitioner reiterated its claims for damages as a result of "creditor's abuse." It also alleged that private
respondent failed to prove its cause of action against it.
On 25 June 1996, the Court of Appeals rendered a decision modifying the decision of the trial court, thus:
WHEREFORE, from all the foregoing considerations, the Court finds Phelps Dodge Phils., Inc. to have preponderantly proven its
case and hereby orders Barons Marketing, Inc. to pay Phelps Dodge the following:
1. P3,802,478.20 constituting the unpaid balance of defendant's purchases from plaintiff and interest thereon at 12% per annum
computed from the respective expiration of the 60 day credit term, vis-a-vis the various sales invoices and/or delivery receipts; and
2. 5% of the preceding obligation for and as attorney's fees.
No costs. 4
Petitioner Barons Marketing is now before this Court alleging that respondent court erred when it held (1) private respondent Phelps
Dodge not guilty of "creditor's abuse," and (2) petitioner liable to private respondent for interest and attorney's fees.
I Petitioner does not deny private respondent's rights to institute an action for collection and to claim full payment. Indeed,
petitioner's right to file an action for collection is beyond cavil. 5 Likewise, private respondent's right to reject petitioner's offer to pay
in installments is guaranteed by Article 1248 of the Civil Code which states:
Art. 1248. Unless there is an express stipulation to that effect, the creditor cannot be compelled partially to receive the prestations in
which the obligation consists. Neither may the debtor be required to make partial payments.

However, when the debt is in part liquidated and in part unliquidated, the creditor may demand and the debtor may effect the
payment of the former without waiting for the liquidation of the latter.

Under this provision, the prestation, i.e., the object of the obligation, must be performed in one act, not in parts.
Tolentino concedes that the right has its limitations:
Partial Prestations. Since the creditor cannot be compelled to accept partial performance, unless otherwise stipulated, the
creditor who refuses to accept partial prestations does not incur in delay or mora accipiendi, except when there is abuse of right or if
good faith requires acceptance. 6
Indeed, the law, as set forth in Article 19 of the Civil Code, prescribes a "primordial limitation on all rights" by setting certain
standards that must be observed in the exercise thereof. 7 Thus:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due,
and observe honesty and good faith.
Petitioner now invokes Article 19 and Article 21 8 of the Civil Code, claiming that private respondent abused its rights when it
rejected petitioner's offer of settlement and subsequently filed the action for collection considering:
. . . that the relationship between the parties started in 1973 spanning more than 13 years before the complaint was filed, that the
petitioner had been a good and reliable dealer enjoying a good credit standing during the period before it became delinquent in
1987, that the relationship between the parties had been a fruitful one especially for the private respondent, that the petitioner
exerted its outmost efforts to settle its obligations and avoid a suit, that the petitioner did not evade in the payment of its obligation to
the private respondent, and that the petitioner was just asking a small concession that it be allowed to liquidate its obligation to eight
(8) monthly installments of P500,000.00 plus 1% interest per month on the balance which proposal was supported by post-dated
checks. 9
Expounding on its theory, petitioner states:
In the ordinary course of events, a suit for collection of a sum of money filed in court is done for the primary purpose of collecting a
debt or obligation. If there is an offer by the debtor to pay its debt or obligation supported by post-dated checks and with provision
for interests, the normal response of a creditor would be to accept the offer of compromise and not file the suit for collection. It is of
common knowledge that proceedings in our courts would normally take years before an action is finally settled. It is always wiser

and more prudent to accept an offer of payment in installment rather than file an action in court to compel the debtor to settle his
obligation in full in a single payment.
xxx xxx xxx
. . . Why then did private respondent elect to file a suit for collection rather than accept petitioner's offer of settlement, supported by
post-dated checks, by paying monthly installments of P500,000.00 plus 1% per month commencing on October 15, 1987 until full
payment? The answer is obvious. The action of private respondent in filling a suit for collection was an abuse of right and exercised
for the sole purpose of prejudicing and injuring the petitioner. 10
Petitioner prays that the Court order private respondent to pay petitioner moral and exemplary damages, attorney's fees, as well as
the costs of suit. It likewise asks that it be allowed to liquidate its obligation to private respondent, without interests, in eight equal
monthly installments.
Petitioner's theory is untenable.
Both parties agree that to constitute an abuse of rights under Article 19 the defendant must act with bad faith or intent to prejudice
the plaintiff. They cite the following comments of Tolentino as their authority:
Test of Abuse of Right. Modern jurisprudence does not permit acts which, although not unlawful, are anti-social. There is
undoubtedly an abuse of right when it is exercised for the only purpose of prejudicing or injuring another. When the objective of the
actor is illegitimate, the illicit act cannot be concealed under the guise of exercising a right. The principle does not permit acts which,
without utility or legitimate purpose cause damage to another, because they violate the concept of social solidarity which considers
law as rational and just. Hence, every abnormal exercise of a right, contrary to its socio-economic purpose, is an abuse that will give
rise to liability. The exercise of a right must be in accordance with the purpose for which it was established, and must not be
excessive or unduly harsh; there must be no intention to injure another. Ultimately, however, and in practice, courts, in the sound
exercise of their discretion, will have to determine all the facts and circumstances when the exercise of a right is unjust, or when
there has been an abuse of right. 11
The question, therefore, is whether private respondent intended to prejudice or injure petitioner when it rejected petitioner's offer and
filed the action for collection.
We hold in the negative. It is an elementary rule in this jurisdiction that good faith is presumed and that the burden of proving bad
faith rests upon the party alleging the same. 12 In the case at bar, petitioner has failed to prove bad faith on the part of private
respondent. Petitioner's allegation that private respondent was motivated by a desire to terminate its agency relationship with
petitioner so that private respondent itself may deal directly with Meralco is simply not supported by the evidence. At most, such
supposition is merely speculative.
Moreover, we find that private respondent was driven by very legitimate reasons for rejecting petitioner's offer and instituting the
action for collection before the trial court. As pointed out by private respondent, the corporation had its own "cash position to protect
in order for it to pay its own obligations." This is not such "a lame and poor rationalization" as petitioner purports it to be. For if
private respondent were to be required to accept petitioner's offer, there would be no reason for the latter to reject similar offers from
its other debtors. Clearly, this would be inimical to the interests of any enterprise, especially a profit-oriented one like private
respondent. It is plain to see that what we have here is a mere exercise of rights, not an abuse thereof Under these circumstances,
we do not deem private respondent to have acted in a manner contrary to morals, good customs or public policy as to violate the
provisions of Article 21 of the Civil Code.
Consequently, petitioner's prayer for moral and exemplary damages must thus be rejected. Petitioner's claim for moral damages is
anchored on Article 2219 (10) of the Civil Code which states:
Art. 2219. Moral damages may be recovered in the following and analogous cases:
xxx xxx xxx
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
xxx xxx xxx
Having ruled that private respondent's acts did not transgress the provisions of Article 21, petitioner cannot be entitled to moral
damages or, for that matter, exemplary damages. While the amount of exemplary damages need not be proved, petitioner must
show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not
exemplary damages should be awarded. 13 As we have observed above; petitioner has failed to discharge this burden.
It may not be amiss to state that petitioner's contract with private respondent has the force of law between them. 14 Petitioner is
thus bound to fulfill what has been expressly stipulated therein. 15 In the absence of any abuse of right, private respondent cannot
be allowed to perform its obligation under such contract in parts. Otherwise, private respondent's right under Article 1248 will be
negated, the sanctity of its contract with petitioner defiled. The principle of autonomy of contracts 16 must be respected.

II
Under said contract, petitioner is liable to private respondent for the unpaid balance of its purchases from private respondent plus
12% interest. Private respondent's sales invoices expressly provide that:
. . . Interest at 12% per annum will be charged on all overdue account plus 25% on said amount for attorney's fees and collection. . .
. 17
It may also be noted that the above stipulation, insofar as it provides for the payment of "25% on said amount for attorney's fees and
collection (sic)," constitutes what is known as a penal clause. 18 Petitioner is thus obliged to pay such penalty in addition to the 12%
annual interest, there being an express stipulation to that effect.
Petitioner nevertheless urges this Court to reduce the attorney's fees for being "grossly excessive," "considering the nature of the
case which is a mere action for collection of a sum of money." It may be pointed out however that the above penalty is supposed to
answer not only for attorney's fees but for collection fees as well. Moreover:
. . . the attorneys' fees here provided is not, strictly speaking, the attorneys' fees recoverable as between attorney and client spoken
of and regulated by the Rules of Court. Rather, the attorneys' fees here are in the nature of liquidated damages and the stipulation
therefor is aptly called a penal clause. It has been said that so long as such stipulation does not contravene law, morals, or public
order, it is strictly binding upon defendant. The attorneys' fees so provided are awarded in favor of the litigant, not his counsel. It is
the litigant, not counsel, who is the judgment creditor entitled to enforce the judgment by execution. 19
Nonetheless, courts are empowered to reduce such penalty if the same is "iniquitous or unconscionable." Article 1229 of the Civil
Code states thus:
Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or been irregularly complied
with by the debtor. Even if there has no performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable. (Emphasis supplied.)
The sentiments of the law are echoed in Article 2227 of the same Code:
Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or
unconscionable.

It is true that we have upheld the reasonableness of penalties in the form of attorney's fees consisting of twenty-five percent (25%)
of the principal debt plus interest. 20 In the case at bar, however, the interest alone runs to some four and a half million pesos
(P4.5M), even exceeding the principal debt amounting to almost four million pesos (P4.0M). Twenty five percent (25%) of the
principal and interest amounts to roughly two million pesos (P2M). In real terms, therefore, the attorney's fees and collection fees
are manifestly exorbitant. Accordingly, we reduce the same to ten percent (10%) of the principal.
Private respondent, however, argues that petitioner failed to question the award of attorney's fees on appeal before respondent
court and raised the issue only in its motion for reconsideration. Consequently, petitioner should be deemed to have waived its right
to question such award.
Private respondent's attempts to dissuade us from reducing the penalty are futile. The Court is clothed with ample authority to
review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary in arriving at a
just decision of the case. 21
WHEREFORE, the decision of the Court of Appeals is hereby MODIFIED in that the attorney's and collection fees are reduced to
ten percent (10%) of the principal but is AFFIRMED in all other respects.
SO ORDERED.

G.R. No. 147076

June 17, 2004

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner, vs. ACT THEATER, INC., respondent.
Before the Court is a petition for review on certiorari filed by the Metropolitan Waterworks and Sewerage System (MWSS), seeking
to reverse and set aside the Decision1 dated January 31, 2001 of the Court of Appeals in CA-G.R. CV No. 58581, which affirmed
the civil aspect of the Decision2 dated May 5, 1997 of the Regional Trial Court of Quezon City, Branch 77, directing the petitioner
MWSS to pay the respondent Act Theater, Inc. damages and attorneys fees.
The present case stemmed from the consolidated cases of Criminal Case No. Q-89-2412 entitled People of the Philippines v.
Rodolfo Tabian, et al., for violation of Presidential Decree (P.D.) No. 401, as amended by Batas Pambansa Blg. 876, and Civil Case
No. Q-88-768 entitled Act Theater, Inc. v. Metropolitan Waterworks and Sewerage System. The two cases were jointly tried in the
court a quo as they arose from the same factual circumstances, to wit:
On September 22, 1988, four employees of the respondent Act Theater, Inc., namely, Rodolfo Tabian, Armando Aguilar, Arnel
Concha and Modesto Ruales, were apprehended by members of the Quezon City police force for allegedly tampering a water meter
in violation of P.D. No. 401, as amended by B.P. Blg. 876. The respondents employees were subsequently criminally charged
(Criminal Case No. Q-89-2412) before the court a quo. On account of the incident, the respondents water service connection was
cut off. Consequently, the respondent filed a complaint for injunction with damages (Civil Case No. Q-88-768) against the petitioner
MWSS.
In the civil case, the respondent alleged in its complaint filed with the court a quo that the petitioner acted arbitrarily, whimsically and
capriciously, in cutting off the respondents water service connection without prior notice. Due to lack of water, the health and
sanitation, not only of the respondents patrons but in the surrounding premises as well, were adversely affected. The respondent
prayed that the petitioner be directed to pay damages.
After due trial, the court a quo rendered its decision, the dispositive portion of which reads:
In Criminal Case No. Q-89-2412
WHEREFORE, for failure of the prosecution to prove the guilt of the accused beyond reasonable doubt, the four (4) above-named
Accused are hereby ACQUITTED of the crime charged.3

In Civil Case No. Q-88-768

...
1. Ordering defendant MWSS to pay plaintiff actual or compensatory damages in the amount of P25,000.00; and to return the sum
of P200,000.00 deposited by the plaintiff for the restoration of its water services after its disconnection on September 23, 1988;
2. Defendants counterclaim for undercollection of P530,759.96 is dismissed for lack of merit;
3. Ordering defendant MWSS to pay costs of suit;
4. Ordering defendant MWSS to pay plaintiff the amount of P5,000.00 as attorneys fees;
5. Making the mandatory injunction earlier issued to plaintiff Act Theater, Inc. permanent.
SO ORDERED.4
Aggrieved, the petitioner appealed the civil aspect of the aforesaid decision to the CA. The appellate court, however, dismissed the
appeal. According to the CA, the court a quo correctly found that the petitioners act of cutting off the respondents water service
connection without prior notice was arbitrary, injurious and prejudicial to the latter justifying the award of damages under Article 19 of
the Civil Code.
Undaunted, the petitioner now comes to this Court alleging as follows:
IWHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] VALIDLY AFFIRMED THE DECISION OF THE REGIONAL TRIAL
COURT IN RESOLVING THE PETITIONERS APPEAL;
IIWHETHER OR NOT THE HONORABLE COURT OF APPEALS VALIDLY UPHELD THE AWARD OF ATTORNEYS FEES;
IIIWHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] CORRECTLY APPLIED THE PROVISION OF ARTICLE 19 OF
THE NEW CIVIL CODE WITHOUT CONSIDERING THE APPLICABLE PROVISION OF ARTICLE 429 OF THE SAME CODE.5
Preliminarily, the petitioner harps on the fact that, in quoting the decretal portion of the court a quos decision, the CA erroneously
typed P500,000 as the attorneys fees awarded in favor of the respondent when the same should only be P5,000. In any case,
according to the petitioner, whether the amount is P500,000 or P5,000, the award of attorneys fees is improper considering that
there was no discussion or statement in the body of the assailed decision justifying such award. The petitioner insists that in cutting
off the respondents water service connection, the petitioner merely exercised its proprietary right under Article 429 of the Civil Code.

The petition is devoid of merit.

Article 429 of the Civil Code, relied upon by the petitioner in justifying its act of disconnecting the water supply of the respondent
without prior notice, reads:
Art. 429. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For
this purpose, he may use such force as may be reasonable to repel or prevent an actual or threatened unlawful physical invasion or
usurpation of his property.
A right is a power, privilege, or immunity guaranteed under a constitution, statute or decisional law, or recognized as a result of long
usage,6 constitutive of a legally enforceable claim of one person against the other.7
Concededly, the petitioner, as the owner of the utility providing water supply to certain consumers including the respondent, had the
right to exclude any person from the enjoyment and disposal thereof. However, the exercise of rights is not without limitations.
Having the right should not be confused with the manner by which such right is to be exercised.8
Article 19 of the Civil Code precisely sets the norms for the exercise of ones rights:
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.
When a right is exercised in a manner which discards these norms resulting in damage to another, a legal wrong is committed for
which actor can be held accountable.9 In this case, the petitioner failed to act with justice and give the respondent what is due to it
when the petitioner unceremoniously cut off the respondents water service connection. As correctly found by the appellate court:
While it is true that MWSS had sent a notice of investigation to plaintiff-appellee prior to the disconnection of the latters water
services, this was done only a few hours before the actual disconnection. Upon receipt of the notice and in order to ascertain the
matter, Act sent its assistant manager Teodulo Gumalid, Jr. to the MWSS office but he was treated badly on the flimsy excuse that
he had no authority to represent Act. Acts water services were cut at midnight of the day following the apprehension of the

employees. Clearly, the plaintiff-appellee was denied due process when it was deprived of the water services. As a consequence
thereof, Act had to contract another source to provide water for a number of days. Plaintiff-appellee was also compelled to deposit
with MWSS the sum of P200,000.00 for the restoration of their water services.10
There is, thus, no reason to deviate from the uniform findings and conclusion of the court a quo and the appellate court that the
petitioners act was arbitrary, injurious and prejudicial to the respondent, justifying the award of damages under Article 19 of the Civil
Code.
Finally, the amount of P500,000 as attorneys fees in that portion of the assailed decision which quoted the fallo of the court a quos
decision was obviously a typographical error. As attorneys fees, the court a quo awarded the amount of P5,000 only. It was this
amount, as well as actual and compensatory damages of P25,000 and the reimbursement of P200,000 deposited by the respondent
for the restoration of its water supply, that the CA affirmed, as it expressly stated in its dispositive portion that "finding no cogent
reason to reverse the appealed Decision which is in conformity with the law and evidence, the same is hereby AFFIRMED."11
The award of P5,000 as attorneys fees is reasonable and warranted. Attorneys fees may be awarded when a party is compelled to
litigate or incur expenses to protect his interest by reason of an unjustified act of the other party.12
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated January 31, 2001 in CA-G.R. CV No. 58581 is
AFFIRMED in toto.
SO ORDERED.

CARPIO v. VALMONTE
G.R. No. 151866; September 9, 2004; Tinga, J.
FACTS:
Respondent Valmonte is a wedding coordinator. Michelle del Rosario and Jon Sierra engaged her services for their church wedding.
On that day, Valmonte went to the Manila Hotel to where the bride and her family were billeted. When she arrived at the Suite,
several persons were already there including the petitioner Soledad Carpio, an aunt of the bride who was preparing
to dress up for the occasion. After reporting to the bride, Valmonte went out of the suite carrying the items needed for the
wedding rites and the gifts from the principal sponsors. She proceeded to the Maynila Restaurant where the reception
was to be held. She went back to the suite after, and found several people staring at her when she entered. . It was at this juncture
that petitioner allegedly uttered the following words to Valmonte: Ikaw lang ang lumabas ng kwarto, nasaan ang dala
mong bag? Saan ka pumunta? Ikaw lang and lumabas ng kwarto, ikaw ang kumuha. Petitioner then ordered one of the
ladies to search Valmontes bag. It turned out that after Valmonte left the room to attend to her duties, petitioner discovered that the
pieces of jewelry which she placed inside the comfort room in a paper bag were lost.
A few days after the incident, petitioner received a letter from Valmonte demanding a formal letter of apology which she wanted to
be circulated to the newlyweds relatives and guests to redeem her smeared reputation as a result of petitioners imputations against
her. Petitioner did not respond to the letter. Thus, on 20February 1997, Valmonte filed a suit for damages against petitioner.

ISSUE: W/N respondent Valmonte is entitled to damages

RULING:

Valmonte is entitled to damages. In the case at bar, petitioners verbal reproach against respondent was certainly
uncalled for considering that by her own account nobody knew that she brought such kind and amount of jewelry inside the paper
bag. True, petitioner had the right o ascertain the identity of the malefactor, but to malign respondent without an iota of proof that
she was the one who actually stole the jewelry is an act which, by any standard or principle of law is impermissible. Petitioner had
willfully caused injury to respondent in a manner which is contrary to morals and good customs. She did not act with justice and
good faith for apparently, she had no other purpose in mind but to prejudice respondent. Certainly, petitioner transgressed the
provisions of Article 19 in relation to Article 21 for which she should be held accountable

G.R. No. 151866

September 9, 2004

SOLEDAD CARPIO, petitioner, vs. LEONORA A. VALMONTE, respondent.

Assailed in the instant petition for review is the Decision of the Court of Appeals in C.A.-G.R. CV No. 69537,1 promulgated on 17
January 2002.2 The appellate court reversed the trial courts decision denying respondents claim for damages against petitioner
and ordered the latter to pay moral damages to the former in the amount of P100,000.00.
Respondent Leonora Valmonte is a wedding coordinator. Michelle del Rosario and Jon Sierra engaged her services for their church
wedding on 10 October 1996. At about 4:30 p.m. on that day, Valmonte went to the Manila Hotel where the bride and her family
were billeted. When she arrived at Suite 326-A, several persons were already there including the bride, the brides parents and
relatives, the make-up artist and his assistant, the official photographers, and the fashion designer. Among those present was
petitioner Soledad Carpio, an aunt of the bride who was preparing to dress up for the occasion.
After reporting to the bride, Valmonte went out of the suite carrying the items needed for the wedding rites and the gifts from the
principal sponsors. She proceeded to the Maynila Restaurant where the reception was to be held. She paid the suppliers, gave the
meal allowance to the band, and went back to the suite. Upon entering the suite, Valmonte noticed the people staring at her. It was
at this juncture that petitioner allegedly uttered the following words to Valmonte: "Ikaw lang ang lumabas ng kwarto, nasaan ang dala
mong bag? Saan ka pumunta? Ikaw lang and lumabas ng kwarto, ikaw ang kumuha." Petitioner then ordered one of the ladies to
search Valmontes bag. It turned out that after Valmonte left the room to attend to her duties, petitioner discovered that the pieces of
jewelry which she placed inside the comfort room in a paper bag were lost. The jewelry pieces consist of two (2) diamond rings, one
(1) set of diamond earrings, bracelet and necklace with a total value of about one million pesos. The hotel security was called in to
help in the search. The bags and personal belongings of all the people inside the room were searched. Valmonte was allegedly
bodily searched, interrogated and trailed by a security guard throughout the evening. Later, police officers arrived and interviewed all
persons who had access to the suite and fingerprinted them including Valmonte. During all the time Valmonte was being
interrogated by the police officers, petitioner kept on saying the words "Siya lang ang lumabas ng kwarto." Valmontes car which was
parked at the hotel premises was also searched but the search yielded nothing.

A few days after the incident, petitioner received a letter from Valmonte demanding a formal letter of apology which she wanted to
be circulated to the newlyweds relatives and guests to redeem her smeared reputation as a result of petitioners imputations against
her. Petitioner did not respond to the letter. Thus, on 20 February 1997, Valmonte filed a suit for damages against her before the
Regional Trial Court (RTC) of Pasig City, Branch 268. In her complaint, Valmonte prayed that petitioner be ordered to pay actual,
moral and exemplary damages, as well as attorneys fees.
Responding to the complaint, petitioner denied having uttered words or done any act to confront or single out Valmonte during the
investigation and claimed that everything that transpired after the theft incident was purely a police matter in which she had no
participation. Petitioner prayed for the dismissal of the complaint and for the court to adjudge Valmonte liable on her counterclaim.
The trial court rendered its Decision on 21 August 2000, dismissing Valmontes complaint for damages. It ruled that when petitioner
sought investigation for the loss of her jewelry, she was merely exercising her right and if damage results from a person exercising
his legal right, it is damnum absque injuria. It added that no proof was presented by Valmonte to show that petitioner acted
maliciously and in bad faith in pointing to her as the culprit. The court said that Valmonte failed to show that she suffered serious
anxiety, moral shock, social humiliation, or that her reputation was besmirched due to petitioners wrongful act.
Respondent appealed to the Court of Appeals alleging that the trial court erred in finding that petitioner did not slander her good
name and reputation and in disregarding the evidence she presented.
The Court of Appeals ruled differently. It opined that Valmonte has clearly established that she was singled out by petitioner as the
one responsible for the loss of her jewelry. It cited the testimony of Serena Manding, corroborating Valmontes claim that petitioner
confronted her and uttered words to the effect that she was the only one who went out of the room and that she was the one who
took the jewelry. The appellate court held that Valmontes claim for damages is not predicated on the fact that she was subjected to
body search and interrogation by the police but rather petitioners act of publicly accusing her of taking the missing jewelry. It
categorized petitioners utterance defamatory considering that it imputed upon Valmonte the crime of theft. The court concluded that
petitioners verbal assault upon Valmonte was done with malice and in bad faith since it was made in the presence of many people
without any solid proof except petitioners suspicion. Such unfounded accusation entitles Valmonte to an award of moral damages in

the amount of P100,000.00 for she was publicly humiliated, deeply insulted, and embarrassed. However, the court found no
sufficient evidence to justify the award of actual damages.
Hence, this petition.
Petitioner contends that the appellate courts conclusion that she publicly humiliated respondent does not conform to the evidence
presented. She adds that even on the assumption that she uttered the words complained of, it was not shown that she did so with
malice and in bad faith.
In essence, petitioner would want this Court to review the factual conclusions reached by the appellate court. The cardinal rule
adhered to in this jurisdiction is that a petition for review must raise only questions of law,3 and judicial review under Rule 45 does
not extend to an evaluation of the sufficiency of evidence unless there is a showing that the findings complained of are totally devoid
of support in the record or that they are so glaringly erroneous as to constitute serious abuse of discretion.4 This Court, while not a
trier of facts, may review the evidence in order to arrive at the correct factual conclusion based on the record especially so when the
findings of fact of the Court of Appeals are at variance with those of the trial court, or when the inference drawn by the Court of
Appeals from the facts is manifestly mistaken.5
Contrary to the trial courts finding, we find sufficient evidence on record tending to prove that petitioners imputations against
respondent was made with malice and in bad faith.
Petitioners testimony was shorn of substance and consists mainly of denials. She claimed not to have uttered the words imputing
the crime of theft to respondent or to have mentioned the latters name to the authorities as the one responsible for the loss of her
jewelry. Well-settled is the rule that denials, if unsubstantiated by clear and convincing evidence, are negative and self-serving which
merit no weight in law and cannot be given greater evidentiary value over the testimony of credible witnesses who testify on
affirmative matters.6
Respondent, however, has successfully refuted petitioners testimony. Quite credibly, she has narrated in great detail her distressing
experience on that fateful day. She testified as to how rudely she was treated by petitioner right after she returned to the room.
Petitioner immediately confronted her and uttered the words "Ikaw lang ang lumabas ng kwarto. Nasaan ang dala mong bag? Saan
ka pumunta? Ikaw ang kumuha." Thereafter, her body was searched including her bag and her car. Worse, during the reception, she
was once more asked by the hotel security to go to the ladies room and she was again bodily searched.7
Serea Manding, a make-up artist, corroborated respondents testimony. She testified that petitioner confronted respondent in the
presence of all the people inside the suite accusing her of being the only one who went out of the comfort room before the loss of
the jewelry. Manding added that respondent was embarrassed because everybody else in the room thought she was a thief.8 If only
to debunk petitioners assertion that she did not utter the accusatory remarks in question publicly and with malice, Mandings
testimony on the point deserves to be reproduced. Thus,

Q After that what did she do?

A Then Leo came out from the other room she said, she is (sic) the one I only saw from the comfort room.
Q Now, what exact word (sic) were said by Mrs. Carpio on that matter?
A She said "siya lang yung nakita kong galing sa C.R."
Q And who was Mrs. Carpio or the defendant referring to?
A Leo Valmonte.
Q Did she say anything else, the defendant?
A Her jewelry were lost and Leo was the only one she saw in the C.R. After that she get (sic) the paper bag then the jewelry were
already gone.
Q Did she confront the plaintiff Mrs. Valmonte regarding that fact?
A Yes.
Q What did the defendant Mrs. Carpio tell the plaintiff, Mrs. Valmonte?
A "Ikaw yung nakita ko sa C.R. nawawala yung alahas ko."
Q When the defendant Mrs. Carpio said that to plaintiff Mrs. Valmonte were there other people inside the room?
A Yes, sir.

Q Were they able to hear what Mrs. Carpio said to Mrs. Valmonte?
A Yes, sir.
Q What was your thinking at that time that Mrs. Carpio said that to Mrs. Valmonte?
A "Nakakahiya kasi akala ng iba doon na talagang magnanakaw siya. Kasi marami na kaming nandodoon, dumating na yung
couturier pati yung video man and we sir.
Q Who was the person you [were] alleging "na nakakahiya" whose (sic) being accused or being somebody who stole those item of
jewelry?
A "Nakakahiya para kay Leo kasi pinagbibintangan siya. Sa dami namin doon siya yung napagbintangan."
Q And who is Leo, what is her full name?
A Leo Valmonte.
Q Did the defendant tell this matter to other people inside the room?
A Yes, the mother of the bride.
Q And who else did she talk to?
A The father of the bride also.
Q And what did the defendant tell the mother regarding this matter?
A "Nawawala yung alahas ko." Sabi naman nung mother baka naman hindi mo dala tignan mo munang mabuti.
Q Who was that other person that she talked to?
A Father of the bride.9
Significantly, petitioners counsel elected not to pursue her cross-examination of the witness on this point following her terse and firm
declaration that she remembered petitioners exact defamatory words in answer to the counsels question.10

Jaime Papio, Security Supervisor at Manila Hotel, likewise contradicted petitioners allegation that she did not suspect or mention
the name of respondent as her suspect in the loss of the jewelry.11
To warrant recovery of damages, there must be both a right of action, for a wrong inflicted by the defendant, and the damage
resulting therefrom to the plaintiff. Wrong without damage, or damage without wrong, does not constitute a cause of action.12
In the sphere of our law on human relations, the victim of a wrongful act or omission, whether done willfully or negligently, is not left
without any remedy or recourse to obtain relief for the damage or injury he sustained. Incorporated into our civil law are not only
principles of equity but also universal moral precepts which are designed to indicate certain norms that spring from the fountain of
good conscience and which are meant to serve as guides for human conduct.13 First of these fundamental precepts is the principle
commonly known as "abuse of rights" under Article 19 of the Civil Code. It provides that "Every person must, in the exercise of his
rights and in the performance of his duties, act with justice, give everyone his due and observe honesty and good faith." To find the
existence of an abuse of right, the following elements must be present: (1) there is a legal right or duty; (2) which is exercised in bad
faith; (3) for the sole intent or prejudicing or injuring another.14 When a right is exercised in a manner which discards these norms
resulting in damage to another, a legal wrong is committed for which the actor can be held accountable.15 One is not allowed to
exercise his right in a manner which would cause unnecessary prejudice to another or if he would thereby offend morals or good
customs. Thus, a person should be protected only when he acts in the legitimate exercise of his right, that is when he acts with
prudence and good faith; but not when he acts with negligence or abuse.16
Complementing the principle of abuse of rights are the provisions of Articles 20 and 21 of the Civil Code which read, thus:
Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.
Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals or good customs or public
policy shall compensate the latter for the damage.
The foregoing rules provide the legal bedrock for the award of damages to a party who suffers damage whenever one commits an
act in violation of some legal provision, or an act which though not constituting a transgression of positive law, nevertheless violates
certain rudimentary rights of the party aggrieved.

In the case at bar, petitioners verbal reproach against respondent was certainly uncalled for considering that by her own account
nobody knew that she brought such kind and amount of jewelry inside the paper bag.17 This being the case, she had no right to
attack respondent with her innuendos which were not merely inquisitive but outrightly accusatory. By openly accusing respondent as
the only person who went out of the room before the loss of the jewelry in the presence of all the guests therein, and ordering that
she be immediately bodily searched, petitioner virtually branded respondent as the thief. True, petitioner had the right to ascertain
the identity of the malefactor, but to malign respondent without an iota of proof that she was the one who actually stole the jewelry is
an act which, by any standard or principle of law is impermissible. Petitioner had willfully caused injury to respondent in a manner
which is contrary to morals and good customs. Her firmness and resolve to find her missing jewelry cannot justify her acts toward
respondent. She did not act with justice and good faith for apparently, she had no other purpose in mind but to prejudice respondent.
Certainly, petitioner transgressed the provisions of Article 19 in relation to Article 21 for which she should be held accountable.
Owing to the rule that great weight and even finality is given to factual conclusions of the Court of Appeals which affirm those of the
trial court,18 we sustain the findings of the trial court and the appellate court that respondents claim for actual damages has not
been substantiated with satisfactory evidence during the trial and must therefore be denied. To be recoverable, actual damages
must be duly proved with reasonable degree of certainty and the courts cannot rely on speculation, conjecture or guesswork.19
Respondent, however, is clearly entitled to an award of moral damages. Moral damages may be awarded whenever the defendants
wrongful act or omission is the proximate cause of the plaintiffs physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury20 in the cases specified or analogous
to those provided in Article 2219 of the Civil Code.21 Though no proof of pecuniary loss is necessary in order that moral damages
may be adjudicated, courts are mandated to take into account all the circumstances obtaining in the case and assess damages
according to their discretion.22 Worthy of note is that moral damages are not awarded to penalize the defendant,23 or to enrich a
complainant, but to enable the latter to obtain means, diversions or amusements that will serve to alleviate the moral suffering he
has undergone, by reason of defendants culpable action. In any case, award of moral damages must be proportionate to the
sufferings inflicted.24
Based on the foregoing jurisprudential pronouncements, we rule that the appellate court did not err in awarding moral damages.
Considering respondents social standing, and the fact that her profession is based primarily on trust reposed in her by her clients,
the seriousness of the imputations made by petitioner has greatly tarnished her reputation and will in one way or the other, affect her
future dealings with her clients, the award of P100,000.00 as moral damages appears to be a fair and reasonable assessment of
respondents damages.
WHEREFORE, the instant Petition is DENIED. Costs against petitioner.
SO ORDERED.

G.R. No. 168512

March 20, 2007

ORLANDO D. GARCIA, JR., doing business under the name and style COMMUNITY DIAGNOSTIC CENTER and BU CASTRO,1
Petitioners, vs. RANIDA D. SALVADOR and RAMON SALVADOR, Respondents.
This is a petition for review2 under Rule 45 of the Rules of Court assailing the February 27, 2004 Decision3 of the Court of Appeals
in CA-G.R. CV No. 58668 finding petitioner Orlando D. Garcia liable for gross negligence; and its June 16, 2005 Resolution4
denying petitioners motion for reconsideration.
On October 1, 1993, respondent Ranida D. Salvador started working as a trainee in the Accounting Department of Limay Bulk
Handling Terminal, Inc. (the Company). As a prerequisite for regular employment, she underwent a medical examination at the
Community Diagnostic Center (CDC). Garcia who is a medical technologist, conducted the HBs Ag (Hepatitis B Surface Antigen)
test and on October 22, 1993, CDC issued the test result5 indicating that Ranida was "HBs Ag: Reactive." The result bore the name
and signature of Garcia as examiner and the rubber stamp signature of Castro as pathologist.
When Ranida submitted the test result to Dr. Sto. Domingo, the Company physician, the latter apprised her that the findings
indicated that she is suffering from Hepatitis B, a liver disease. Thus, based on the medical report6 submitted by Sto. Domingo, the
Company terminated Ranidas employment for failing the physical examination.7
When Ranida informed her father, Ramon, about her ailment, the latter suffered a heart attack and was confined at the Bataan
Doctors Hospital. During Ramons confinement, Ranida underwent another HBs Ag test at the said hospital and the result8 indicated
that she is non-reactive. She informed Sto. Domingo of this development but was told that the test conducted by CDC was more
reliable because it used the Micro-Elisa Method.
Thus, Ranida went back to CDC for confirmatory testing, and this time, the Anti-HBs test conducted on her indicated a "Negative"
result.9

Ranida also underwent another HBs Ag test at the Bataan Doctors Hospital using the Micro-Elisa Method. The result indicated that
she was non-reactive.10
Ranida submitted the test results from Bataan Doctors Hospital and CDC to the Executive Officer of the Company who requested
her to undergo another similar test before her re-employment would be considered. Thus, CDC conducted another HBs Ag test on
Ranida which indicated a "Negative" result.11 Ma. Ruby G. Calderon, Med-Tech Officer-in-Charge of CDC, issued a Certification
correcting the initial result and explaining that the examining medical technologist (Garcia) interpreted the delayed reaction as
positive or reactive.12
Thereafter, the Company rehired Ranida.
On July 25, 1994, Ranida and Ramon filed a complaint13 for damages against petitioner Garcia and a purportedly unknown
pathologist of CDC, claiming that, by reason of the erroneous interpretation of the results of Ranidas examination, she lost her job
and suffered serious mental anxiety, trauma and sleepless nights, while Ramon was hospitalized and lost business opportunities.
On September 26, 1994, respondents amended their complaint14 by naming Castro as the "unknown pathologist."
Garcia denied the allegations of gross negligence and incompetence and reiterated the scientific explanation for the "false positive"
result of the first HBs Ag test in his December 7, 1993 letter to the respondents.15
For his part, Castro claimed that as pathologist, he rarely went to CDC and only when a case was referred to him; that he did not
examine Ranida; and that the test results bore only his rubber-stamp signature.
On September 1, 1997,16 the trial court dismissed the complaint for failure of the respondents to present sufficient evidence to
prove the liability of Garcia and Castro. It held that respondents should have presented Sto. Domingo because he was the one who
interpreted the test result issued by CDC. Likewise, respondents should have presented a medical expert to refute the testimonies
of Garcia and Castro regarding the medical explanation behind the conflicting test results on Ranida.17
Respondents appealed to the Court of Appeals which reversed the trial courts findings, the dispositive portion of which states:
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE and another one entered ORDERING defendantappellee Orlando D. Garcia, Jr. to pay plaintiff-appellant Ranida D. Salvador moral damages in the amount of P50,000.00,
exemplary damages in the amount of P50,000.00 and attorneys fees in the amount of P25,000.00.
SO ORDERED.18
The appellate court found Garcia liable for damages for negligently issuing an erroneous HBs Ag result. On the other hand, it
exonerated Castro for lack of participation in the issuance of the results.
After the denial of his motion for reconsideration, Garcia filed the instant petition.

The main issue for resolution is whether the Court of Appeals, in reversing the decision of the trial court, correctly found petitioner
liable for damages to the respondents for issuing an incorrect HBsAG test result.
Garcia maintains he is not negligent, thus not liable for damages, because he followed the appropriate laboratory measures and
procedures as dictated by his training and experience; and that he did everything within his professional competence to arrive at an
objective, impartial and impersonal result.
At the outset, we note that the issues raised are factual in nature. Whether a person is negligent or not is a question of fact which we
cannot pass upon in a petition for review on certiorari which is limited to reviewing errors of law.19
Negligence is the failure to observe for the protection of the interest of another person that degree of care, precaution and vigilance
which the circumstances justly demand,20 whereby such other person suffers injury. For health care providers, the test of the
existence of negligence is: did the health care provider either fail to do something which a reasonably prudent health care provider
would have done, or that he or she did something that a reasonably prudent health care provider would not have done; and that
failure or action caused injury to the patient;21 if yes, then he is guilty of negligence.
Thus, the elements of an actionable conduct are: 1) duty, 2) breach, 3) injury, and 4) proximate causation.
All the elements are present in the case at bar.
Owners and operators of clinical laboratories have the duty to comply with statutes, as well as rules and regulations, purposely
promulgated to protect and promote the health of the people by preventing the operation of substandard, improperly managed and
inadequately supported clinical laboratories and by improving the quality of performance of clinical laboratory examinations.22 Their
business is impressed with public interest, as such, high standards of performance are expected from them.

In F.F. Cruz and Co., Inc. v. Court of Appeals, we found the owner of a furniture shop liable for the destruction of the plaintiffs house
in a fire which started in his establishment in view of his failure to comply with an ordinance which required the construction of a
firewall. In Teague v. Fernandez, we stated that where the very injury which was intended to be prevented by the ordinance has
happened, non-compliance with the ordinance was not only an act of negligence, but also the proximate cause of the death.23
In fine, violation of a statutory duty is negligence. Where the law imposes upon a person the duty to do something, his omission or
non-performance will render him liable to whoever may be injured thereby.
Section 2 of Republic Act (R.A.) No. 4688, otherwise known as The Clinical Laboratory Law, provides:
Sec. 2. It shall be unlawful for any person to be professionally in-charge of a registered clinical laboratory unless he is a licensed
physician duly qualified in laboratory medicine and authorized by the Secretary of Health, such authorization to be renewed
annually.
No license shall be granted or renewed by the Secretary of Health for the operation and maintenance of a clinical laboratory unless
such laboratory is under the administration, direction and supervision of an authorized physician, as provided for in the preceding
paragraph.
Corollarily, Sections 9(9.1)(1), 11 and 25(25.1)(1) of the DOH Administrative Order No. 49-B Series of 1988, otherwise known as the
Revised Rules and Regulations Governing the Registration, Operation and Maintenance of Clinical Laboratories in the Philippines,
read:
Sec. 9. Management of the Clinical Laboratory:
9.1 Head of the Clinical Laboratory: The head is that person who assumes technical and administrative supervision and control of
the activities in the laboratory.
For all categories of clinical laboratories, the head shall be a licensed physician certified by the Philippine Board of Pathology in
either Anatomic or Clinical Pathology or both provided that:
(1) This shall be mandatory for all categories of free-standing clinical laboratories; all tertiary category hospital laboratories and for
all secondary category hospital laboratories located in areas with sufficient available pathologist.
xxxx
Sec. 11. Reporting: All laboratory requests shall be considered as consultations between the requesting physician and pathologist of
the laboratory. As such all laboratory reports on various examinations of human specimens shall be construed as consultation report
and shall bear the name of the pathologist or his associate. No person in clinical laboratory shall issue a report, orally or in writing,
whole portions thereof without a directive from the pathologist or his authorized associate and only to the requesting physician or his
authorized representative except in emergencies when the results may be released as authorized by the pathologist.
xxxx

Sec. 25. Violations:

25.1 The license to operate a clinical laboratory may be suspended or revoked by the Undersecretary of Health for Standards and
Regulation upon violation of R.A. 4688 or the rules and regulations issued in pursuance thereto or the commission of the following
acts by the persons owning or operating a clinical laboratory and the persons under their authority.
(1) Operation of a Clinical Laboratory without a certified pathologist or qualified licensed physician authorized by the Undersecretary
of Health or without employing a registered medical technologist or a person not registered as a medical technologist in such a
position.
And Section 29(b) of R.A. No. 5527, otherwise known as The Philippine Medical Technology Act of 1969, reads:
Section 29. Penal Provisions.- Without prejudice to the provision of the Medical Act of 1959, as amended relating to illegal practice
of Medicine, the following shall be punished by a fine of not less than two thousand pesos nor more than five thousand pesos, or
imprisonment for not less than six months nor more than two years, or both, in the discretion of the court:
xxxx
(b) Any medical technologist, even if duly registered, who shall practice medical technology in the Philippines without the necessary
supervision of a qualified pathologist or physician authorized by the Department of Health;
From the foregoing laws and rules, it is clear that a clinical laboratory must be administered, directed and supervised by a licensed
physician authorized by the Secretary of Health, like a pathologist who is specially trained in methods of laboratory medicine; that
the medical technologist must be under the supervision of the pathologist or a licensed physician; and that the results of any

examination may be released only to the requesting physician or his authorized representative upon the direction of the laboratory
pathologist.
These rules are intended for the protection of the public by preventing performance of substandard clinical examinations by
laboratories whose personnel are not properly supervised. The public demands no less than an effective and efficient performance
of clinical laboratory examinations through compliance with the quality standards set by laws and regulations.
We find that petitioner Garcia failed to comply with these standards.
First, CDC is not administered, directed and supervised by a licensed physician as required by law, but by Ma. Ruby C. Calderon, a
licensed Medical Technologist.24 In the License to Open and Operate a Clinical Laboratory for the years 1993 and 1996 issued by
Dr. Juan R. Naagas, M.D., Undersecretary for Health Facilities, Standards and Regulation, defendant-appellee Castro was named
as the head of CDC.25 However, in his Answer with Counterclaim, he stated:
3. By way of affirmative and special defenses, defendant pathologist further avers and plead as follows:
Defendant pathologist is not the owner of the Community Diagnostic Center nor an employee of the same nor the employer of its
employees. Defendant pathologist comes to the Community Diagnostic Center when and where a problem is referred to him. Its
employees are licensed under the Medical Technology Law (Republic Act No. 5527) and are certified by, and registered with, the
Professional Regulation Commission after having passed their Board Examinations. They are competent within the sphere of their
own profession in so far as conducting laboratory examinations and are allowed to sign for and in behalf of the clinical laboratory.
The defendant pathologist, and all pathologists in general, are hired by laboratories for purposes of complying with the rules and
regulations and orders issued by the Department of Health through the Bureau of Research and Laboratories. Defendant pathologist
does not stay that long period of time at the Community Diagnostic Center but only periodically or whenever a case is referred to
him by the laboratory. Defendant pathologist does not appoint or select the employees of the laboratory nor does he arrange or
approve their schedules of duty.26
Castros infrequent visit to the clinical laboratory barely qualifies as an effective administrative supervision and control over the
activities in the laboratory. "Supervision and control" means the authority to act directly whenever a specific function is entrusted by
law or regulation to a subordinate; direct the performance of duty; restrain the commission of acts; review, approve, revise or modify
acts and decisions of subordinate officials or units.27
Second, Garcia conducted the HBsAG test of respondent Ranida without the supervision of defendant-appellee Castro, who
admitted that:
[He] does not know, and has never known or met, the plaintiff-patient even up to this time nor has he personally examined any
specimen, blood, urine or any other tissue, from the plaintiff-patient otherwise his own handwritten signature would have appeared
in the result and not merely stamped as shown in Annex "B" of the Amended Complaint.28
Last, the disputed HBsAG test result was released to respondent Ranida without the authorization of defendant-appellee Castro.29
Garcia may not have intended to cause the consequences which followed after the release of the HBsAG test result. However, his
failure to comply with the laws and rules promulgated and issued for the protection of public safety and interest is failure to observe
that care which a reasonably prudent health care provider would observe. Thus, his act or omission constitutes a breach of duty.

Indubitably, Ranida suffered injury as a direct consequence of Garcias failure to comply with the mandate of the laws and rules
aforequoted. She was terminated from the service for failing the physical examination; suffered anxiety because of the diagnosis;
and was compelled to undergo several more tests. All these could have been avoided had the proper safeguards been scrupulously
followed in conducting the clinical examination and releasing the clinical report.
Article 20 of the New Civil Code provides:
Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.
The foregoing provision provides the legal basis for the award of damages to a party who suffers damage whenever one commits an
act in violation of some legal provision.30 This was incorporated by the Code Commission to provide relief to a person who suffers
damage because another has violated some legal provision.31
We find the Court of Appeals award of moral damages reasonable under the circumstances bearing in mind the mental trauma
suffered by respondent Ranida who thought she was afflicted by Hepatitis B, making her "unfit or unsafe for any type of
employment."32 Having established her right to moral damages, we see no reason to disturb the award of exemplary damages and
attorneys fees. Exemplary damages are imposed, by way of example or correction for the public good, in addition to moral,
temperate, liquidated or compensatory damages,33 and attorneys fees may be recovered when, as in the instant case, exemplary
damages are awarded.34

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 58668 dated February 27, 2004 finding petitioner Orlando
D. Garcia, Jr. guilty of gross negligence and liable to pay to respondents P50,000.00 as moral damages, P50,000.00 as exemplary
damages, and P25,000.00 as attorneys fees, is AFFIRMED.
SO ORDERED.

G.R. No. L-39019 January 22, 1988

MANILA ELECTRIC COMPANY and PEDRO YAMBAO, petitioners-appellants, vs. THE HONORABLE COURT OF APPEALS and
ISAAC CHAVEZ, SR., ISAAC O. CHAVEZ, JR., ROSENDO O. CHAVES, and JUAN O. CHAVES, respondents-appellees.
In an action for recovery of damages for embarassment, humiliation, wounded feelings and hurt pride, caused to herein private
respondents, by reason of the disconnection of their electrical service by the petitioners, the then Court of First Instance of Manila,
Sixth Judicial District, Branch XXIV, rendered a decision dated December 13,1967, ordering herein petitioners jointly and severally
to pay private respondents the sum of Ten Thousand (P10,000.00) Pesos as moral damages, Two Thousand (P2,000.00) Pesos as
exemplary damages and, One Thousand (P1,000.00) Pesos as attorney's fees, and dismissing petitioners' counterclaim.
On appeal, the Court of Appeals and in toto the trial court's decision. Their Motion for Reconsideration having been denied,
petitioners filed the instant petition for certiorari.
Petitioner Manila Electric Company (MERALCO) is a public utility corporation providing electric power for the consumption of the
general public in Metro Manila. Petitioner Pedro Yambao is a bill collector of MERALCO.
Private respondents Isaac Chaves and Juana O. Chaves, husband and wife, filed the complaint for damages, together with their
children, Isaac O. Chaves, Jr. and Rosendo O. Chaves. Isaac Sr. and Isaac Jr. and Rosendo were members of the Philippine Bar;

Isaac, Sr. and Isaac, Jr. were practicing lawyers and Rosendo was a Legal Officer at the Agricultural Productivity Commission.
Juana O. Chaves was a public school teacher.
The facts as found by the trial court and adopted by the Court of Appeals are as follows:
Plaintiff Isaac Chaves became a customer of defendant MERALCO in the year 1953 when he and his family were residing at No.
211-D Rubi, Manila. In connection with the contract for electrical service, he deposited the sum of P5.00 (Exh. "A") with defendant
MERALCO on February 12, 1953. This deposit in the name of plaintiff Isaac Chaves was retained by MERALCO and made to apply
to subsequent contracts for electrical service entered into after subsequent transfers of the Chaves family to other residences and
up to the time this family went to reside at the place aforementioned, at No. 2656 Mercedes Street, Singalong, Manila. ...
At or about the end of March, 1965, defendant Pedro Yambao went to the residence of plaintiffs and presented two overdue bills,
one for January 11 to February 9,1965, for the sum of P7.90 (Exhibit "C"), and the other for February 9 to March 10, 1965, for the
amount of P7.20 (Exhibit "C"). Juana O. Chaves, however, informed Yambao that these bills would be paid at the MERALCO main
office.
Accordingly, on April 2, 1965, Isaac Chaves went to the defendant's main office at San Marcelino, Manila, but paid only the bill
marked as Exhibit 'C" leaving the other bill Identified as Exhibit "C-l" unpaid.
Past 2:30 o'clock in the afternoon of April 21,1965, MERALCO caused the electric service in plaintiff's residence to be discontinued
and the power line cut off.
The next day, April 22, 1965, at about 9:00 a.m., plaintiff Rosendo O. Chaves went to the MERALCO main office and paid the
amount of P7.20 for the bill marked as Exhibit "C-l", and the sum of P7.00 for the subsequent bill corresponding to the period from
March 10 up to April 8, 1965 (Exhibit "C-2") after his attention was called to the latter account. Rosendo O. Chaves then sought the
help of Atty. Lourdy Torres, one of the defendants' counsel, and, thereafter, the power line was reconnected and electric service
restored to the Chaves residence at about 7:00 p.m. of that same day. 1
Petitioners dispute the finding that there was no notice given to herein respondent. However, since only questions of law may be
raised in a petition for certiorari under Rule 45 of the Revised Rules of Court, petitioners, 'for the sake of argument and for the
purpose of giving focus on the legal issues', do not take issue with such finding.
Petitioners contend that in the absence of bad faith, they could not be held liable for moral and exemplary damages as well as
attorney's fees. The failure to give a notice of disconnection to private respondents might have been a breach of duty or breach of
contract, but by itself does not constitute bad faith or fraud; it must be shown that such a failure was motivated by in or done with
fraudulent intent.Petitioners also maintain that ' private respondents were in arrears in the payment of their electricity bills when their
electric service was connected, no moral damages may be recovered by them under the 'clean hands' doctrine enunciated in
Mabutas vs. Calapan Electric Company, CA-G.R. No. L-9683-R, May 26, 1964.
In its decision, the respondent Court of Appeals held that MERALCO's right to disconnect the electric service of a delinquent
customer "is an absolute one, subject only to the requirement that defendant MERALCO should give the customer a written notice
of disconnection 48 hours in advance." This requirement is embodied in Section 97 of the Revised Order No. 1 of the Public Service
Commission which provides as follows:
Section 97. Payment of bills. A public service, may require that bills for service be paid within a specified time after rendition.
When the billing period covers a month or more, the minimum time allowed will be ten days and upon expiration of the specified
time, service may be discontinued for the non-payment of bills, provided that a 48 hours' written notice of such disconnection has
been given the customer: Provided, however, that disconnections of service shall not be made on Sundays and official holidays and
never after 2 p.m. of any working day: Provided, further, that if at the moment the disconnection is to be made the customer tenders
payment of the unpaid bill to the agent or employee of the operator who is to effect the disconnection, the said agent or employee
shall be obliged to accept tender of payment and issue a temporary receipt for the amount and shall desist from disconnecting the
service. 2
The respondent court stressed the importance and necessity of the 48-hour advance written notification before a disconnection of
service may be effected. Said the court:
... It sets in motion the disconnection of an electrical service of the customer by giving the notice, determining the expiration date
thereof, and executing the disconnection. It, therefore, behooves the defendant MERALCO that before it disconnects a customer's
electrical service, there should be sufficient evidence that the requirements for the disconnection had been duly complied with,
otherwise, the poor consumer can be subjected to the whims and caprices of the defendant, by the mere pretension that the written
notice had been duly served upon the customer. 3
We find no reversible error in the decision appealed from. One can not deny the vital role which a public utility such as MERALCO,
having a monopoly of the supply of electrical power in Metro Manila and some nearby municipalities, plays in the life of people living
in such areas. Electricity has become a necessity to most people in these areas justifying the exercise by the State of its regulatory
power over the business of supplying electrical service to the public, in which petitioner MERALCO is engaged. Thus, the state may
regulate, as it has done through Section 97 of the Revised Order No. 1 of the Public Service Commission, the conditions under
which and the manner by which a public utility such as MERALCO may effect a disconnection of service to a delinquent customer.

Among others, a prior written notice to the customer is required before disconnection of the service. Failure to give such prior notice
amounts to a tort, as held by us in a similar case, 4 where we said:
... petitioner's act in 'disconnecting respondent Ongsip's gas service without prior notice constitutes breach of contract amounting to
an independent tort. The prematurity of the action is indicative of an intent to cause additional mental and moral suffering to private
respondent. This is a clear violation of Article 21 of the Civil Code which provides that any person who wilfully causes loss or injury
to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for damages. This is
reiterated by paragraph 10 of Article 2219 of the Code. Moreover, the award of moral damages is sanctioned by Article 2220 which
provides that wilfull injury to property may be a legal ground for awarding moral damages if the court should find that, under the
circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently
or in bad faith.
Likewise, we find no merit in petitioners' contention that being in arrears in the payment of their bills, the private respondents are not
entitled to moral damages under the doctrine that "he who comes to court in demand of equity, must come with clean hands." We
rejected this argument in the Manila Gas Corporation case, supra, wherein we held that respondents' default in the payment of his
bills "cannot be utilized by petitioner to defeat or null the claim for damages. At most, this circumstance can be considered as a
mitigating factor in ascertaining the amount of damages to which respondent ... is entitled."
Accordingly, we find no grave abuse of discretion committed by respondent court in affirming the trial court's decision. The petition is
hereby DISMISSED for lack of merit.
SO ORDERED.

Custodio vs Court of Appeals, 253 SCRA 483

By LLBe:LawLifeBuzzEtcetera

Facts:
Respondents owned a parcel of land wherein a two-door apartment was erected. Said property was surrounded by other
immovables owned by petitioners, spouses Custodio and spouses Santos. As an access to P. Burgos Street from the subject
property, there are two possible passageways. The first passageway is approximately one meter wide and is about 20 meters
distant from Mabasas residence to P. Burgos Street. Such path is passing in between the previously mentioned row of houses. The
second passageway is about 3 meters in width and length from plaintiff Mabasas residence to P. Burgos Street; it is about 26
meters. In passing thru said passageway, a less than a meter wide path through the septic tank and with 5-6 meters in length, has to
be traversed. Petitioners constructed an adobe fence in the first passageway making it narrower in width. Said adobe fence was first
constructed by defendants Santoses along their property which is also along the first passageway. Defendant Morato constructed
her adobe fence and even extended said fence in such a way that the entire passageway was enclosed. As a result, the tenants left
the apartment because there was no longer a permanent access to the public street. Respondents then filed an action for the grant

of an easement of right of way. The trial court ordered the petitioner to give respondents a permanent access to the public street and
that in turn, the respondent will pay a sum of Php 8,000.00 to the petitioner as an indemnity for the permanent use of the
passageway. On appeal by the respondent to the CA, the decision of the trial court was affirmed, such that a right of way and an
award of actual, moral and exemplary damages were given to the respondents. Hence, this petition.

Issue:
Whether or not the award of damages is proper?

Held:
No. To warrant the recovery of damages, there must be both a right of action for a legal wrong inflicted by the defendant, and
damage resulting to the plaintiff therefrom. Wrong without damage, or damage without wrong, does not constitute a cause of action,
since damages are merely part of the remedy allowed for the injury caused by a breach or wrong. There is a material distinction
between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the
injury, and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without
injury in those instances in which the loss or harm was not the result of a violation of a legal duty. These situations are often called
damnum absque injuria. 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. There must be a concurrence of injury to the
plaintiff and legal responsibility by the person causing it.
In the instant case, although there was damage, there was no legal injury. Contrary to the claim of respondents, petitioners could not
be said to have violated the principle of abuse of right. In order that the principle of abuse of right provided in Article 21 of the Civil
Code can be applied, it is essential that the following requisites concur: (1) The defendant should have acted in a manner that is
contrary to morals, good customs or public policy; (2) The acts should be willful; and (3) There was damage or injury to the plaintiff.
The act of petitioners in constructing a fence within their lot is a valid exercise of their right as owners, hence not contrary to morals,
good customs or public policy. The law recognizes in the owner the right to enjoy and dispose of a thing, without other limitations
than those established by law. It is within the right of petitioners, as owners, to enclose and fence their property. Article 430 of the
Civil Code provides that (e)very owner may enclose or fence his land or tenements by means of walls, ditches, live or dead hedges,
or by any other means without detriment to servitudes constituted thereon.
At the time of the construction of the fence, the lot was not subject to any servitudes. There was no easement of way existing in
favor of private respondents, either by law or by contract. The fact that respondents had no existing right over the said passageway
is confirmed by the very decision of the trial court granting a compulsory right of way in their favor after payment of just
compensation. It was only that decision which gave private respondents the right to use the said passageway after payment of the
compensation and imposed a corresponding duty on petitioners not to interfere in the exercise of said right. The proper exercise of a
lawful right cannot constitute a legal wrong for which an action will lie, although the act may result in damage to another, for no legal
right has been invaded. One may use any lawful means to accomplish a lawful purpose and though the means adopted may cause
damage to another, no cause of action arises in the latters favor. An injury or damage occasioned thereby is damnum absque
injuria. The courts can give no redress for hardship to an individual resulting from action reasonably calculated to achieve a lawful
means.

GASHEM SHOOKAT BAKSH vs. CA 219 SCRA 115

GASHEM SHOOKAT BAKSH, petitioner vs. HON. COURT OF APPEALS and MARILOU T. GONZALES, respondents. 219 SCRA
115

FACTS: Private respondent Marilou Gonzales filed a complaint for damages against Gasheem Shookat, an Iranian Citizen, of
breach of promise to marry. She said that both of them agreed to marry after the end of the school semester and the petitioner
asked the approval of her parents. She stated that the petitioner forced to live with him in his apartments. Respondent was a virgin
before she was forced to live with the Iranian (petitioner). A week before she filed her complaint, petitioner maltreated, assaulted
and asked not to live with him anymore and; the petitioner is already married to someone living in Bacolod City.
On the petitioners counterclaim, he said that he never proposed marriage with the private respondent; he neither forced
her to live with him and he did not maltreat her but only told her to stop from coming into his apartment because he discovered that

she had deceived him by stealing his money and passport. He insisted that he must be awarded for damages for he suffered mental
anxiety and a besmirched reputation due to the complaint of the private respondent.

ISSUE: Whether or not the petitioner is to be held liable for damages for breach of promise to marry.

HELD: A breach of promise to marry per se is not an actionable wrong. This court held that where a mans promise to marry is in
fact the proximate cause of the acceptance of his love by a woman and his representation to fulfill that promise thereafter becomes
the proximate cause of the giving of herself in a sexual congress, proof that he had, in reality, no intention of marrying her and that
the promise was only a subtle scheme or deceptive device to entice or inveigle her to accept him and to obtain her consent to the
sexual act, could justify the award of damages pursuant to Article 21 not because of such promise to marry but because of fraud and
deceit and the willful injury to her honor and reputation which followed thereafter. Such act done by the petitioner is contrary to
morals, good customs or public policy.
Petitioner even committed deplorable acts in disregard of the laws of the country. The court ordered that the petition be denied with
costs against the petitioner.

G.R. No. 97336 February 19, 1993

GASHEM SHOOKAT BAKSH, petitioner, vs. HON. COURT OF APPEALS and MARILOU T. GONZALES, respondents.
This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to review and set aside the Decision 1 of the respondent
Court of Appeals in CA-G.R. CV No. 24256 which affirmed in toto the 16 October 1939 Decision of Branch 38 (Lingayen) of the
Regional Trial Court (RTC) of Pangasinan in Civil Case No. 16503. Presented is the issue of whether or not damages may be
recovered for a breach of promise to marry on the basis of Article 21 of the Civil Code of the Philippines.
The antecedents of this case are not complicated:
On 27 October 1987, private respondent, without the assistance of counsel, filed with the aforesaid trial court a complaint 2 for
damages against the petitioner for the alleged violation of their agreement to get married. She alleges in said complaint that: she is
twenty-two (22) years old, single, Filipino and a pretty lass of good moral character and reputation duly respected in her community;
petitioner, on the other hand, is an Iranian citizen residing at the Lozano Apartments, Guilig, Dagupan City, and is an exchange
student taking a medical course at the Lyceum Northwestern Colleges in Dagupan City; before 20 August 1987, the latter courted
and proposed to marry her; she accepted his love on the condition that they would get married; they therefore agreed to get married
after the end of the school semester, which was in October of that year; petitioner then visited the private respondent's parents in
Baaga, Bugallon, Pangasinan to secure their approval to the marriage; sometime in 20 August 1987, the petitioner forced her to
live with him in the Lozano Apartments; she was a virgin before she began living with him; a week before the filing of the complaint,
petitioner's attitude towards her started to change; he maltreated and threatened to kill her; as a result of such maltreatment, she
sustained injuries; during a confrontation with a representative of the barangay captain of Guilig a day before the filing of the
complaint, petitioner repudiated their marriage agreement and asked her not to live with him anymore and; the petitioner is already
married to someone living in Bacolod City. Private respondent then prayed for judgment ordering the petitioner to pay her damages
in the amount of not less than P45,000.00, reimbursement for actual expenses amounting to P600.00, attorney's fees and costs,
and granting her such other relief and remedies as may be just and equitable. The complaint was docketed as Civil Case No.
16503.

In his Answer with Counterclaim, 3 petitioner admitted only the personal circumstances of the parties as averred in the complaint
and denied the rest of the allegations either for lack of knowledge or information sufficient to form a belief as to the truth thereof or
because the true facts are those alleged as his Special and Affirmative Defenses. He thus claimed that he never proposed marriage
to or agreed to be married with the private respondent; he neither sought the consent and approval of her parents nor forced her to
live in his apartment; he did not maltreat her, but only told her to stop coming to his place because he discovered that she had
deceived him by stealing his money and passport; and finally, no confrontation took place with a representative of the barangay
captain. Insisting, in his Counterclaim, that the complaint is baseless and unfounded and that as a result thereof, he was
unnecessarily dragged into court and compelled to incur expenses, and has suffered mental anxiety and a besmirched reputation,
he prayed for an award of P5,000.00 for miscellaneous expenses and P25,000.00 as moral damages.
After conducting a pre-trial on 25 January 1988, the trial court issued a Pre-Trial Order 4 embodying the stipulated facts which the
parties had agreed upon, to wit:

1. That the plaintiff is single and resident (sic) of Baaga, Bugallon, Pangasinan, while the defendant is single, Iranian citizen and
resident (sic) of Lozano Apartment, Guilig, Dagupan City since September 1, 1987 up to the present;
2. That the defendant is presently studying at Lyceum Northwestern, Dagupan City, College of Medicine, second year medicine
proper;
3. That the plaintiff is (sic) an employee at Mabuhay Luncheonette , Fernandez Avenue, Dagupan City since July, 1986 up to the
present and a (sic) high school graduate;
4. That the parties happened to know each other when the manager of the Mabuhay Luncheonette, Johhny Rabino introduced the
defendant to the plaintiff on August 3, 1986.
After trial on the merits, the lower court, applying Article 21 of the Civil Code, rendered on 16 October 1989 a decision 5 favoring the
private respondent. The petitioner was thus ordered to pay the latter damages and attorney's fees; the dispositive portion of the
decision reads:
IN THE LIGHT of the foregoing consideration, judgment is hereby rendered in favor of the plaintiff and against the defendant.
1. Condemning (sic) the defendant to pay the plaintiff the sum of twenty thousand (P20,000.00) pesos as moral damages.
2. Condemning further the defendant to play the plaintiff the sum of three thousand (P3,000.00) pesos as atty's fees and two
thousand (P2,000.00) pesos at (sic) litigation expenses and to pay the costs.
3. All other claims are denied. 6
The decision is anchored on the trial court's findings and conclusions that (a) petitioner and private respondent were lovers, (b)
private respondent is not a woman of loose morals or questionable virtue who readily submits to sexual advances, (c) petitioner,
through machinations, deceit and false pretenses, promised to marry private respondent, d) because of his persuasive promise to
marry her, she allowed herself to be deflowered by him, (e) by reason of that deceitful promise, private respondent and her parents
in accordance with Filipino customs and traditions made some preparations for the wedding that was to be held at the end of
October 1987 by looking for pigs and chickens, inviting friends and relatives and contracting sponsors, (f) petitioner did not fulfill his
promise to marry her and (g) such acts of the petitioner, who is a foreigner and who has abused Philippine hospitality, have offended
our sense of morality, good customs, culture and traditions. The trial court gave full credit to the private respondent's testimony
because, inter alia, she would not have had the temerity and courage to come to court and expose her honor and reputation to
public scrutiny and ridicule if her claim was false. 7
The above findings and conclusions were culled from the detailed summary of the evidence for the private respondent in the
foregoing decision, digested by the respondent Court as follows:
According to plaintiff, who claimed that she was a virgin at the time and that she never had a boyfriend before, defendant started
courting her just a few days after they first met. He later proposed marriage to her several times and she accepted his love as well
as his proposal of marriage on August 20, 1987, on which same day he went with her to her hometown of Baaga, Bugallon,
Pangasinan, as he wanted to meet her parents and inform them of their relationship and their intention to get married. The
photographs Exhs. "A" to "E" (and their submarkings) of defendant with members of plaintiff's family or with plaintiff, were taken that
day. Also on that occasion, defendant told plaintiffs parents and brothers and sisters that he intended to marry her during the
semestral break in October, 1987, and because plaintiff's parents thought he was good and trusted him, they agreed to his proposal
for him to marry their daughter, and they likewise allowed him to stay in their house and sleep with plaintiff during the few days that
they were in Bugallon. When plaintiff and defendant later returned to Dagupan City, they continued to live together in defendant's
apartment. However, in the early days of October, 1987, defendant would tie plaintiff's hands and feet while he went to school, and
he even gave her medicine at 4 o'clock in the morning that made her sleep the whole day and night until the following day. As a
result of this live-in relationship, plaintiff became pregnant, but defendant gave her some medicine to abort the fetus. Still plaintiff
continued to live with defendant and kept reminding him of his promise to marry her until he told her that he could not do so because
he was already married to a girl in Bacolod City. That was the time plaintiff left defendant, went home to her parents, and thereafter
consulted a lawyer who accompanied her to the barangay captain in Dagupan City. Plaintiff, her lawyer, her godmother, and a
barangay tanod sent by the barangay captain went to talk to defendant to still convince him to marry plaintiff, but defendant insisted
that he could not do so because he was already married to a girl in Bacolod City, although the truth, as stipulated by the parties at
the pre-trial, is that defendant is still single.
Plaintiff's father, a tricycle driver, also claimed that after defendant had informed them of his desire to marry Marilou, he already
looked for sponsors for the wedding, started preparing for the reception by looking for pigs and chickens, and even already invited
many relatives and friends to the forthcoming wedding. 8
Petitioner appealed the trial court's decision to the respondent Court of Appeals which docketed the case as CA-G.R. CV No.
24256. In his Brief, 9 he contended that the trial court erred (a) in not dismissing the case for lack of factual and legal basis and (b)
in ordering him to pay moral damages, attorney's fees, litigation expenses and costs.
On 18 February 1991, respondent Court promulgated the challenged decision 10 affirming in toto the trial court's ruling of 16
October 1989. In sustaining the trial court's findings of fact, respondent Court made the following analysis:

First of all, plaintiff, then only 21 years old when she met defendant who was already 29 years old at the time, does not appear to be
a girl of loose morals. It is uncontradicted that she was a virgin prior to her unfortunate experience with defendant and never had
boyfriend. She is, as described by the lower court, a barrio lass "not used and accustomed to trend of modern urban life", and
certainly would (sic) not have allowed
"herself to be deflowered by the defendant if there was no persuasive promise made by the defendant to marry her." In fact, we
agree with the lower court that plaintiff and defendant must have been sweethearts or so the plaintiff must have thought because of
the deception of defendant, for otherwise, she would not have allowed herself to be photographed with defendant in public in so (sic)
loving and tender poses as those depicted in the pictures Exhs. "D" and "E". We cannot believe, therefore, defendant's pretense that
plaintiff was a nobody to him except a waitress at the restaurant where he usually ate. Defendant in fact admitted that he went to
plaintiff's hometown of Baaga, Bugallon, Pangasinan, at least thrice; at (sic) the town fiesta on February 27, 1987 (p. 54, tsn May
18, 1988), at (sic) a beach party together with the manager and employees of the Mabuhay Luncheonette on March 3, 1987 (p. 50,
tsn id.), and on April 1, 1987 when he allegedly talked to plaintiff's mother who told him to marry her daughter (pp. 55-56, tsn id.).
Would defendant have left Dagupan City where he was involved in the serious study of medicine to go to plaintiff's hometown in
Baaga, Bugallon, unless there was (sic) some kind of special relationship between them? And this special relationship must indeed
have led to defendant's insincere proposal of marriage to plaintiff, communicated not only to her but also to her parents, and (sic)
Marites Rabino, the owner of the restaurant where plaintiff was working and where defendant first proposed marriage to her, also
knew of this love affair and defendant's proposal of marriage to plaintiff, which she declared was the reason why plaintiff resigned
from her job at the restaurant after she had accepted defendant's proposal (pp. 6-7, tsn March 7, 1988).
Upon the other hand, appellant does not appear to be a man of good moral character and must think so low and have so little
respect and regard for Filipino women that he openly admitted that when he studied in Bacolod City for several years where he
finished his B.S. Biology before he came to Dagupan City to study medicine, he had a common-law wife in Bacolod City. In other
words, he also lived with another woman in Bacolod City but did not marry that woman, just like what he did to plaintiff. It is not
surprising, then, that he felt so little compunction or remorse in pretending to love and promising to marry plaintiff, a young, innocent,
trustful country girl, in order to satisfy his lust on her. 11
and then concluded:
In sum, we are strongly convinced and so hold that it was defendant-appellant's fraudulent and deceptive protestations of love for
and promise to marry plaintiff that made her surrender her virtue and womanhood to him and to live with him on the honest and
sincere belief that he would keep said promise, and it was likewise these (sic) fraud and deception on appellant's part that made
plaintiff's parents agree to their daughter's living-in with him preparatory to their supposed marriage. And as these acts of appellant
are palpably and undoubtedly against morals, good customs, and public policy, and are even gravely and deeply derogatory and
insulting to our women, coming as they do from a foreigner who has been enjoying the hospitality of our people and taking
advantage of the opportunity to study in one of our institutions of learning, defendant-appellant should indeed be made, under Art.
21 of the Civil Code of the Philippines, to compensate for the moral damages and injury that he had caused plaintiff, as the lower
court ordered him to do in its decision in this case. 12
Unfazed by his second defeat, petitioner filed the instant petition on 26 March 1991; he raises therein the single issue of whether or
not Article 21 of the Civil Code applies to the case at bar. 13
It is petitioner's thesis that said Article 21 is not applicable because he had not committed any moral wrong or injury or violated any
good custom or public policy; he has not professed love or proposed marriage to the private respondent; and he has never
maltreated her. He criticizes the trial court for liberally invoking Filipino customs, traditions and culture, and ignoring the fact that
since he is a foreigner, he is not conversant with such Filipino customs, traditions and culture. As an Iranian Moslem, he is not
familiar with Catholic and Christian ways. He stresses that even if he had made a promise to marry, the subsequent failure to fulfill
the same is excusable or tolerable because of his Moslem upbringing; he then alludes to the Muslim Code which purportedly allows
a Muslim to take four (4) wives and concludes that on the basis thereof, the trial court erred in ruling that he does not posses good
moral character. Moreover, his controversial "common law life" is now his legal wife as their marriage had been solemnized in civil
ceremonies in the Iranian Embassy. As to his unlawful cohabitation with the private respondent, petitioner claims that even if
responsibility could be pinned on him for the live-in relationship, the private respondent should also be faulted for consenting to an
illicit arrangement. Finally, petitioner asseverates that even if it was to be assumed arguendo that he had professed his love to the
private respondent and had also promised to marry her, such acts would not be actionable in view of the special circumstances of
the case. The mere breach of promise is not actionable. 14
On 26 August 1991, after the private respondent had filed her Comment to the petition and the petitioner had filed his Reply thereto,
this Court gave due course to the petition and required the parties to submit their respective Memoranda, which they subsequently
complied with.
As may be gleaned from the foregoing summation of the petitioner's arguments in support of his thesis, it is clear that questions of
fact, which boil down to the issue of the credibility of witnesses, are also raised. It is the rule in this jurisdiction that appellate courts
will not disturb the trial court's findings as to the credibility of witnesses, the latter court having heard the witnesses and having had
the opportunity to observe closely their deportment and manner of testifying, unless the trial court had plainly overlooked facts of
substance or value which, if considered, might affect the result of the case. 15

Petitioner has miserably failed to convince Us that both the appellate and trial courts had overlooked any fact of substance or values
which could alter the result of the case.
Equally settled is the rule that only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of
Court. It is not the function of this Court to analyze or weigh all over again the evidence introduced by the parties before the lower
court. There are, however, recognized exceptions to this rule. Thus, in Medina vs. Asistio, Jr., 16 this Court took the time, again, to
enumerate these exceptions:
xxx xxx xxx
(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures (Joaquin v. Navarro, 93 Phil. 257
[1953]); (2) When the inference made is manifestly mistaken, absurb or impossible (Luna v. Linatok, 74 Phil. 15 [1942]); (3) Where
there is a grave abuse of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4) When the judgment is based on a misapprehension
of facts (Cruz v. Sosing,
L-4875, Nov. 27, 1953); (5) When the findings of fact are conflicting (Casica v. Villaseca, L-9590 Ap. 30, 1957; unrep.) (6) When the
Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both
appellate and appellee (Evangelista v. Alto Surety and Insurance Co., 103 Phil. 401 [1958]);
(7) The findings of the Court of Appeals are contrary to those of the trial court (Garcia v. Court of Appeals, 33 SCRA 622 [1970];
Sacay v. Sandiganbayan, 142 SCRA 593 [1986]); (8) When the findings of fact are conclusions without citation of specific evidence
on which they are based (Ibid.,); (9) When the facts set forth in the petition as well as in the petitioners main and reply briefs are not
disputed by the respondents (Ibid.,); and (10) The finding of fact of the Court of Appeals is premised on the supposed absence of
evidence and is contradicted by the evidence on record (Salazar v. Gutierrez, 33 SCRA 242 [1970]).
Petitioner has not endeavored to joint out to Us the existence of any of the above quoted exceptions in this case. Consequently, the
factual findings of the trial and appellate courts must be respected.
And now to the legal issue.
The existing rule is that a breach of promise to marry per se is not an actionable wrong. 17 Congress deliberately eliminated from
the draft of the New Civil Code the provisions that would have made it so. The reason therefor is set forth in the report of the Senate
Committees on the Proposed Civil Code, from which We quote:
The elimination of this chapter is proposed. That breach of promise to marry is not actionable has been definitely decided in the
case of De Jesus vs. Syquia. 18 The history of breach of promise suits in the United States and in England has shown that no other
action lends itself more readily to abuse by designing women and unscrupulous men. It is this experience which has led to the
abolition of rights of action in the so-called Heart Balm suits in many of the American states. . . . 19
This notwithstanding, the said Code contains a provision, Article 21, which is designed to expand the concept of torts or quasi-delict
in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight
to specifically enumerate and punish in the statute books. 20
As the Code Commission itself stated in its Report:
But the Code Commission had gone farther than the sphere of wrongs defined or determined by positive law. Fully sensible that
there are countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they have actually
suffered material and moral injury, the Commission has deemed it necessary, in the interest of justice, to incorporate in the proposed
Civil Code the following rule:
Art. 23. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy
shall compensate the latter for the damage.

An example will illustrate the purview of the foregoing norm: "A" seduces the nineteen-year old daughter of "X". A promise of
marriage either has not been made, or can not be proved. The girl becomes pregnant. Under the present laws, there is no crime, as
the girl is above nineteen years of age. Neither can any civil action for breach of promise of marriage be filed. Therefore, though the
grievous moral wrong has been committed, and though the girl and family have suffered incalculable moral damage, she and her
parents cannot bring action for damages. But under the proposed article, she and her parents would have such a right of action.
Thus at one stroke, the legislator, if the forgoing rule is approved, would vouchsafe adequate legal remedy for that untold number of
moral wrongs which it is impossible for human foresight to provide for specifically in the statutes. 21
Article 2176 of the Civil Code, which defines a quasi-delict thus:

Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed
by the provisions of this Chapter.
is limited to negligent acts or omissions and excludes the notion of willfulness or intent. Quasi-delict, known in Spanish legal
treatises as culpa aquiliana, is a civil law concept while torts is an Anglo-American or common law concept. Torts is much broader
than culpa aquiliana because it includes not only negligence, but international criminal acts as well such as assault and battery, false
imprisonment and deceit. In the general scheme of the Philippine legal system envisioned by the Commission responsible for
drafting the New Civil Code, intentional and malicious acts, with certain exceptions, are to be governed by the Revised Penal Code
while negligent acts or omissions are to be covered by Article 2176 of the Civil Code. 22 In between these opposite spectrums are
injurious acts which, in the absence of Article 21, would have been beyond redress. Thus, Article 21 fills that vacuum. It is even
postulated that together with Articles 19 and 20 of the Civil Code, Article 21 has greatly broadened the scope of the law on civil
wrongs; it has become much more supple and adaptable than the Anglo-American law on torts. 23
In the light of the above laudable purpose of Article 21, We are of the opinion, and so hold, that where a man's promise to marry is in
fact the proximate cause of the acceptance of his love by a woman and his representation to fulfill that promise thereafter becomes
the proximate cause of the giving of herself unto him in a sexual congress, proof that he had, in reality, no intention of marrying her
and that the promise was only a subtle scheme or deceptive device to entice or inveigle her to accept him and to obtain her consent
to the sexual act, could justify the award of damages pursuant to Article 21 not because of such promise to marry but because of the
fraud and deceit behind it and the willful injury to her honor and reputation which followed thereafter. It is essential, however, that
such injury should have been committed in a manner contrary to morals, good customs or public policy.
In the instant case, respondent Court found that it was the petitioner's "fraudulent and deceptive protestations of love for and
promise to marry plaintiff that made her surrender her virtue and womanhood to him and to live with him on the honest and sincere
belief that he would keep said promise, and it was likewise these fraud and deception on appellant's part that made plaintiff's
parents agree to their daughter's living-in with him preparatory to their supposed marriage." 24 In short, the private respondent
surrendered her virginity, the cherished possession of every single Filipina, not because of lust but because of moral seduction
the kind illustrated by the Code Commission in its example earlier adverted to. The petitioner could not be held liable for criminal
seduction punished under either Article 337 or Article 338 of the Revised Penal Code because the private respondent was above
eighteen (18) years of age at the time of the seduction.
Prior decisions of this Court clearly suggest that Article 21 may be applied in a breach of promise to marry where the woman is a
victim of moral seduction. Thus, in Hermosisima vs. Court of Appeals, 25 this Court denied recovery of damages to the woman
because:
. . . we find ourselves unable to say that petitioner is morally guilty of seduction, not only because he is approximately ten (10) years
younger than the complainant who was around thirty-six (36) years of age, and as highly enlightened as a former high school
teacher and a life insurance agent are supposed to be when she became intimate with petitioner, then a mere apprentice pilot,
but, also, because the court of first instance found that, complainant "surrendered herself" to petitioner because, "overwhelmed by
her love" for him, she "wanted to bind" him by having a fruit of their engagement even before they had the benefit of clergy.
In Tanjanco vs. Court of Appeals, 26 while this Court likewise hinted at possible recovery if there had been moral seduction,
recovery was eventually denied because We were not convinced that such seduction existed. The following enlightening disquisition
and conclusion were made in the said case:
The Court of Appeals seem to have overlooked that the example set forth in the Code Commission's memorandum refers to a tort
upon a minor who had been seduced. The essential feature is seduction, that in law is more than mere sexual intercourse, or a
breach of a promise of marriage; it connotes essentially the idea of deceit, enticement, superior power or abuse of confidence on the
part of the seducer to which the woman has yielded (U.S. vs. Buenaventura, 27 Phil. 121; U.S. vs. Arlante, 9 Phil. 595).
It has been ruled in the Buenaventura case (supra) that
To constitute seduction there must in all cases be some sufficient promise or inducement and the woman must yield because of the
promise or other inducement. If she consents merely from carnal lust and the intercourse is from mutual desire, there is no
seduction (43 Cent. Dig. tit. Seduction, par. 56) She must be induced to depart from the path of virtue by the use of some species of
arts, persuasions and wiles, which are calculated to have and do have that effect, and which result in her person to ultimately
submitting her person to the sexual embraces of her seducer (27 Phil. 123).
And in American Jurisprudence we find:
On the other hand, in an action by the woman, the enticement, persuasion or deception is the essence of the injury; and a mere
proof of intercourse is insufficient to warrant a recovery.
Accordingly it is not seduction where the willingness arises out of sexual desire of curiosity of the female, and the defendant merely
affords her the needed opportunity for the commission of the act. It has been emphasized that to allow a recovery in all such cases
would tend to the demoralization of the female sex, and would be a reward for unchastity by which a class of adventuresses would
be swift to profit. (47 Am. Jur. 662)

xxx xxx xxx

Over and above the partisan allegations, the fact stand out that for one whole year, from 1958 to 1959, the plaintiff-appellee, a
woman of adult age, maintain intimate sexual relations with appellant, with repeated acts of intercourse. Such conduct is
incompatible with the idea of seduction. Plainly there is here voluntariness and mutual passion; for had the appellant been deceived,
had she surrendered exclusively because of the deceit, artful persuasions and wiles of the defendant, she would not have again
yielded to his embraces, much less for one year, without exacting early fulfillment of the alleged promises of marriage, and would
have cut short all sexual relations upon finding that defendant did not intend to fulfill his defendant did not intend to fulfill his promise.
Hence, we conclude that no case is made under article 21 of the Civil Code, and no other cause of action being alleged, no error
was committed by the Court of First Instance in dismissing the complaint. 27
In his annotations on the Civil Code, 28 Associate Justice Edgardo L. Paras, who recently retired from this Court, opined that in a
breach of promise to marry where there had been carnal knowledge, moral damages may be recovered:
. . . if there be criminal or moral seduction, but not if the intercourse was due to mutual lust. (Hermosisima vs. Court of Appeals,
L-14628, Sept. 30, 1960; Estopa vs. Piansay, Jr., L-14733, Sept. 30, 1960; Batarra vs. Marcos, 7 Phil. 56 (sic); Beatriz Galang vs.
Court of Appeals, et al., L-17248, Jan. 29, 1962). (In other words, if the CAUSE be the promise to marry, and the EFFECT be the
carnal knowledge, there is a chance that there was criminal or moral seduction, hence recovery of moral damages will prosper. If it
be the other way around, there can be no recovery of moral damages, because here mutual lust has intervened). . . .
together with "ACTUAL damages, should there be any, such as the expenses for the wedding presentations (See Domalagon v.
Bolifer, 33 Phil. 471).
Senator Arturo M. Tolentino 29 is also of the same persuasion:
It is submitted that the rule in Batarra vs. Marcos, 30 still subsists, notwithstanding the incorporation of the present article 31 in the
Code. The example given by the Code Commission is correct, if there was seduction, not necessarily in the legal sense, but in the
vulgar sense of deception. But when the sexual act is accomplished without any deceit or qualifying circumstance of abuse of
authority or influence, but the woman, already of age, has knowingly given herself to a man, it cannot be said that there is an injury
which can be the basis for indemnity.
But so long as there is fraud, which is characterized by willfulness (sic), the action lies. The court, however, must weigh the degree
of fraud, if it is sufficient to deceive the woman under the circumstances, because an act which would deceive a girl sixteen years of
age may not constitute deceit as to an experienced woman thirty years of age. But so long as there is a wrongful act and a resulting
injury, there should be civil liability, even if the act is not punishable under the criminal law and there should have been an acquittal
or dismissal of the criminal case for that reason.
We are unable to agree with the petitioner's alternative proposition to the effect that granting, for argument's sake, that he did
promise to marry the private respondent, the latter is nevertheless also at fault. According to him, both parties are in pari delicto;
hence, pursuant to Article 1412(1) of the Civil Code and the doctrine laid down in Batarra vs. Marcos, 32 the private respondent
cannot recover damages from the petitioner. The latter even goes as far as stating that if the private respondent had "sustained any
injury or damage in their relationship, it is primarily because of her own doing, 33 for:
. . . She is also interested in the petitioner as the latter will become a doctor sooner or later. Take notice that she is a plain high
school graduate and a mere employee . . . (Annex "C") or a waitress (TSN, p. 51, January 25, 1988) in a luncheonette and without
doubt, is in need of a man who can give her economic security. Her family is in dire need of financial assistance. (TSN, pp. 51-53,
May 18, 1988). And this predicament prompted her to accept a proposition that may have been offered by the petitioner. 34
These statements reveal the true character and motive of the petitioner. It is clear that he harbors a condescending, if not sarcastic,
regard for the private respondent on account of the latter's ignoble birth, inferior educational background, poverty and, as perceived
by him, dishonorable employment. Obviously then, from the very beginning, he was not at all moved by good faith and an honest
motive. Marrying with a woman so circumstances could not have even remotely occurred to him. Thus, his profession of love and
promise to marry were empty words directly intended to fool, dupe, entice, beguile and deceive the poor woman into believing that
indeed, he loved her and would want her to be his life's partner. His was nothing but pure lust which he wanted satisfied by a Filipina
who honestly believed that by accepting his proffer of love and proposal of marriage, she would be able to enjoy a life of ease and
security. Petitioner clearly violated the Filipino's concept of morality and brazenly defied the traditional respect Filipinos have for their
women. It can even be said that the petitioner committed such deplorable acts in blatant disregard of Article 19 of the Civil Code
which directs every person to act with justice, give everyone his due and observe honesty and good faith in the exercise of his rights
and in the performance of his obligations.
No foreigner must be allowed to make a mockery of our laws, customs and traditions.
The pari delicto rule does not apply in this case for while indeed, the private respondent may not have been impelled by the purest
of intentions, she eventually submitted to the petitioner in sexual congress not out of lust, but because of moral seduction. In fact, it
is apparent that she had qualms of conscience about the entire episode for as soon as she found out that the petitioner was not
going to marry her after all, she left him. She is not, therefore, in pari delicto with the petitioner. Pari delicto means "in equal fault; in
a similar offense or crime; equal in guilt or in legal fault." 35 At most, it could be conceded that she is merely in delicto.

Equity often interferes for the relief of the less guilty of the parties, where his transgression has been brought about by the
imposition of undue influence of the party on whom the burden of the original wrong principally rests, or where his consent to the
transaction was itself procured by fraud. 36
In Mangayao vs. Lasud, 37 We declared:
Appellants likewise stress that both parties being at fault, there should be no action by one against the other (Art. 1412, New Civil
Code). This rule, however, has been interpreted as applicable only where the fault on both sides is, more or less, equivalent. It does
not apply where one party is literate or intelligent and the other one is not. (c.f. Bough vs. Cantiveros, 40 Phil. 209).
We should stress, however, that while We find for the private respondent, let it not be said that this Court condones the deplorable
behavior of her parents in letting her and the petitioner stay together in the same room in their house after giving approval to their
marriage. It is the solemn duty of parents to protect the honor of their daughters and infuse upon them the higher values of morality
and dignity.
WHEREFORE, finding no reversible error in the challenged decision, the instant petition is hereby DENIED, with costs against the
petitioner.
SO ORDERED.

RELLOSA vs. PELLOSIS

GR # 138964 Aug 9, 2001

FACTS:
Respondents were lessees of a panel of land owned by Marta Reyes located at San Pascual St., Malate, Manila. After the demise of
Marta, Victor Reyes, her son, inherited the land. Victor informed the respondents that they would have a right of first refusal to buy
the land. In 1989, without the knowledge of respondents, the land was sold to petitioner Cynthia Ortega who was able to ultimately
secure title to the property in her name.
On May 25, 1989, Cynthia Ortega filed petition for condemnation of the structures on the land. The office of building Official issued a
resolution ordering the demolition of the houses of respondents on November 27, 1989. Copies were received by respondents on

December 7, 1989 and on December 12, the day respondents filed an appeal contesting the order, petitioners proceeded with the
demolition of the house.
Respondents filed case before Manila RTC which was dismissed. On appeal, CA reversed the decision and ordered petitioners to
pay respondents for moral and exemplary damages and attorneys fees.

ISSUE:
Whether the CA ruling in favor of respondents tenable.

RULING:
The court rules for affirmance of the assailed decision.
A right to power, privilege or immunity guaranteed under a constitution, statute or decisional law or recognized as a result of long
usage constitute of a legally enforceable claim of one person against another.
The decision of CA was MODIFIED by reducing the awards for exemplary and moral damages to P20,000 to each respondent. The
decision of the appellate court is affirmed.
G.R. No. 138964

August 9, 2001

"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." 1 This provision in our law is not just a declaration of principle for it can in itself constitute, when
unduly ignored or violated, a valid source of a cause of action or defense.
The case seeks to reverse the Court of Appeals in not countenancing an attempt to abridge and render inutile a legal right to contest
an adverse ruling of an agency of government.
Respondents were lessees of a parcel of land, owned by one Marta Reyes, located at San Pascual Street, Malate, Manila.
Respondents had built their houses on the land which, over the years, underwent continuous improvements. After the demise of
Marta, the land was inherited by her son Victor Reyes. Sometime in 1986, Victor informed respondents that, for being lessees of the
land for more than twenty (20) years, they would have a right of first refusal to buy the land. Sometime in the early part of 1989,
without the knowledge of respondents, the land occupied by them was sold to petitioner Cynthia Ortega who was able to ultimately
secure title to the property in her name.
On 25 May 1989, Cynthia Ortega, filed a petition for condemnation, docketed Condemnation Case No. 89-05-007, with the Office of
the Building Official, City of Manila, of the structures on the land.
On 31 May 1989, respondents filed with the Regional Trial Court of Manila a suit for the "Declaration of Nullity of the Sale," docketed
as Civil Case No. 89-49176, made in favor of petitioner Cynthia Ortega predicated upon their right of first refusal which was claimed
to have been impinged upon the sale of the land to petitioner Ortega without their knowledge.
After due hearing in the condemnation case, the Office of the Building Official issued a resolution, dated 27 November 1989,
ordering the demolition of the houses of respondents. Copies of the resolution were served upon respondents and their counsel on
07 December 1989. The following day, or on 08 December 1989, Cynthia Ortega, together with her father and co-petitioner, Vicente
Rellosa, hired workers to commence the demolition of respondents' houses. Due to the timely intervention of a mobile unit of the
Western Police District, the intended demolition did not take place following talks between petitioner Rellosa and counsel who
pleaded that the demolition be suspended since the order sought to be implemented was not yet final and executory. On 11
December 1989, respondents filed their appeal contesting the order of the Office of the Building Official. On 12 December 1989,
petitioners once again hired workers and proceeded with the demolition of respondents' houses.
Resultantly, respondents filed Civil Case No. 89-49176 before the Regional Trial Court of Manila, Branch 54, praying that petitioners
be ordered to pay moral and exemplary damages, as well as attorney's fee, for the untimely demolition of the houses. After trial, the
court dismissed the complaint of respondents and instead ordered them to pay petitioners moral damages. On appeal, the Court of
Appeals, on the basis of its findings and conclusions, reversed the decision of the trial court and ordered petitioners to pay
respondents the following sums:
"1) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five Thousand Pesos (P25,000.00) for each appellant, by way of moral
damages;"
"2) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five thousand Pesos (P25,000.00) for each appellant, by way of
exemplary damages;"
"3) Fifteen Thousand Pesos (P15,000.00) as and for attorney's fees; and

"4) The costs of suit."2

The appellate court ruled:
"Thus, by the clear provisions of paragraph 23 of the Implementing Rules and Regulations of PD 1096 (otherwise known as the
Building Code), above, appellants, being the parties adversely affected by the November 27, 1989 Resolution of the Office of the
Building Official, had fifteen (15) days from receipt of a copy of the same within which to perfect an administrative appeal. Thus,
since appellants received a copy of the Resolution on December 7, 1989, they had until December 22, 1989 within which to perfect
an administrative appeal and until such time, the said Resolution was not yet final and executory."
xxx

xxx

xxx

"It cannot be denied, therefore, that when appellees commenced to demolish appellants' houses as early as December 8, 1989 and
eventually on December 12, 1989, neither the Resolution of the Building Official nor the Demolition Order itself were final and
executory."3
Petitioners filed the instant petition contending that the appellate court gravely erred in ruling that the premature demolition of
respondents' houses entitled them to the award of damages. Petitioners pointed out that the order of the Office of the Building
Official was eventually upheld on appeal by the Department of Public Works and Highways in its decision of 14 March 1990.
Furthermore, petitioners added, the structures subject matter of the demolition order were declared to be dangerous structures by
the Office of the Building Official and, as such, could be abated to avoid danger to the public.
The Court rules for affirmance of the assailed decision.
A right is a power, privilege, or immunity guaranteed under a constitution, statute or decisional law, or recognized as a result of long
usage,4 constitutive of a legally enforceable claim of one person against another.
Petitioner might verily be the owner of the land, with the right to enjoy5 and to exclude any person from the enjoyment and disposal
thereof,6 but the exercise of these rights is not without limitations. The abuse of rights rule established in Article 19 of the Civil Code
requires every person to act with justice, to give everyone his due; and to observe honesty and good faith.7 When a right is
exercised in a manner which discards these norms resulting in damage to another, a legal wrong is committed for which the actor
can be held accountable. In this instance, the issue is not so much about the existence of the right or validity of the order of
demolition as the question of whether or not petitioners have acted in conformity with, and not in disregard of, the standard set by
Article 19 of the Civil Code.
At the time petitioners implemented the order of demolition, barely five days after respondents received a copy thereof, the same
was not yet final and executory. The law provided for a fifteen-day appeal period in favor of a party aggrieved by an adverse ruling of
the Office of the Building Official but by the precipitate action of petitioners in demolishing the houses of respondents (prior to the
expiration of the period to appeal), the latter were effectively deprived of this recourse. The fact that the order of demolition was later
affirmed by the Department of Public Works and Highways was of no moment. The action of petitioners up to the point where they
were able to secure an order of demolition was not condemnable but implementing the order unmindful of the right of respondents
to contest the ruling was a different matter and could only be held utterly indefensible.
The Court, however, finds the award of P75,000.00 exemplary damages and another of P75,000.00 moral damages for each
respondent to be rather excessive given the circumstances; the awards must be reduced to the reasonable amounts of P20,000.00
exemplary damages and P20,000.00 moral damages.
WHEREFORE, the assailed decision of the Court of Appeals is MODIFIED by reducing the awards of P75,000.00 exemplary
damages and of P75,000.00 moral damages to each respondent reduced to P20,000.00 exemplary damages and P20,000.00 moral
damages for each respondent. In all other respects, the decision of the appellate court is AFFIRMED. No costs. SO ORDERED.
NATIONAL POWER CORPORATION VS. PHILIPP BROTHERS OCEANIC, INC.
369 SCRA 629 (2001)

FACTS OF THE CASE

National Power Corporation (NAPOCOR) issued invitations to bid for the supply and delivery of 120,000 metric tons of imported coal
for its Batangas Coal-Fired Thermal Power Plant of which Philipp Brothers Oceanic, Inc. (PHIBRO) bidded and was accepted.
On July 10, 1987, PHIBRO told NAPOCOR that disputes might soon plague Australia that will seriously hamper its ability to supply
coal. On July 23 to July 31, 1987, PHIBRO informed NAPOCOR that unless a "strike-free" clause is incorporated in the charter party
or the contract of carriage, the ship owners are unwilling to load their cargo. In order to hasten the transfer of coal, they should share
the burden of the "strike-free" clause but NAPOCOR refused.

PHIBRO effected its first shipment only on November 17, 1987 which was supposed to be on the 30th day after receipt of the letter
of credit of which it received on August 6, 1987.
Consequently, In October 1987: NAPOCOR once more advertised for the delivery of coal to its Calaca thermal plant of which
PHIBRO applied but was rejected since it was not able to satisfy the demand for damages on its delay. PHIBRO filed for damages in
the RTC alleging that the rejection was tainted with malice and bad faith.
After the trial, the trial court rendered a decision in favor of PHIBRO, ordering the defendant NAPOCOR to reinstate PHIBRO in the
defendant National Power Corporations list of accredited bidders and indemnify the same actual, moral and exemplary damages.
On appeal, the CA affirmed in toto the decision of RTC.

ISSUE
Whether the Trial Court erred in awarding moral damages to PHIBRO.

RULING
The award of moral damages is improper. To reiterate, NAPOCOR did not act in bad faith. Moreover, moral damages are not, as a
general rule, granted to a corporation. While it is true that besmirched reputation is included in moral damages, it cannot cause
mental anguish to a corporation, unlike in the case of a natural person, for a corporation has no reputation in the sense that an
individual has, and besides, it is inherently impossible for a corporation to suffer mental anguish.
In LBC Express, Inc. v. Court of Appeals, we ruled:
Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury.
A corporation, being an artificial person and having existence only in legal contemplation, has no feelings, no emotions, no senses;
therefore, it cannot experience physical suffering and mental anguish. Mental suffering can be experienced only by one having a
nervous system and it flows from real ills, sorrows, and griefs of life all of which cannot be suffered by respondent bank as an
artificial person.

G.R. No. 126204

November 20, 2001

NATIONAL POWER CORPORATION, petitioner, vs. PHILIPP BROTHERS OCEANIC, INC., respondent.
Where a person merely uses a right pertaining to him, without bad faith or intent to injure, the fact that damages are thereby suffered
by another will not make him liable.1
This principle finds useful application to the present case.
Before us is a petition for review of the Decision2 dated August 27, 1996 of the Court of Appeals affirming in toto the Decision3
dated January 16, 1992 of the Regional Trial Court, Branch 57, Makati City.
The facts are:

On May 14, 1987, the National Power Corporation (NAPOCOR) issued invitations to bid for the supply and delivery of 120,000
metric tons of imported coal for its Batangas Coal-Fired Thermal Power Plant in Calaca, Batangas. The Philipp Brothers Oceanic,
Inc. (PHIBRO) prequalified and was allowed to participate as one of the bidders. After the public bidding was conducted, PHIBRO's
bid was accepted. NAPOCOR's acceptance was conveyed in a letter dated July 8, 1987, which was received by PHIBRO on July
15, 1987.The "Bidding Terms and Specifications"4 provide for the manner of shipment of coals, thus:
"SECTION V
SHIPMENT
The winning TENDERER who then becomes the SELLER shall arrange and provide gearless bulk carrier for the shipment of coal to
arrive at discharging port on or before thirty (30) calendar days after receipt of the Letter of Credit by the SELLER or its nominee as
per Section XIV hereof to meet the vessel arrival schedules at Calaca, Batangas, Philippines as follows:
60,000 +/ - 10 % July 20, 1987

60,000 +/ - 10% September 4, 1987"5

On July 10, 1987, PHIBRO sent word to NAPOCOR that industrial disputes might soon plague Australia, the shipment's point of
origin, which could seriously hamper PHIBRO's ability to supply the needed coal.6 From July 23 to July 31, 1987, PHIBRO again
apprised NAPOCOR of the situation in Australia, particularly informing the latter that the ship owners therein are not willing to load
cargo unless a "strike-free" clause is incorporated in the charter party or the contract of carriage.7 In order to hasten the transfer of
coal, PHIBRO proposed to NAPOCOR that they equally share the burden of a "strike-free" clause. NAPOCOR refused.
On August 6, 1987, PHIBRO received from NAPOCOR a confirmed and workable letter of credit. Instead of delivering the coal on or
before the thirtieth day after receipt of the Letter of Credit, as agreed upon by the parties in the July contract, PHIBRO effected its
first shipment only on November 17, 1987.
Consequently, in October 1987, NAPOCOR once more advertised for the delivery of coal to its Calaca thermal plant. PHIBRO
participated anew in this subsequent bidding. On November 24, 1987, NAPOCOR disapproved PHIBRO's application for prequalification to bid for not meeting the minimum requirements.8 Upon further inquiry, PHIBRO found that the real reason for the
disapproval was its purported failure to satisfy NAPOCOR's demand for damages due to the delay in the delivery of the first coal
shipment.
This prompted PHIBRO to file an action for damages with application for injunction against NAPOCOR with the Regional Trial Court,
Branch 57, Makati City.9 In its complaint, PHIBRO alleged that NAPOCOR's act of disqualifying it in the October 1987 bidding and in
all subsequent biddings was tainted with malice and bad faith. PHIBRO prayed for actual, moral and exemplary damages and
attorney's fees.
In its answer, NAPOCOR averred that the strikes in Australia could not be invoked as reason for the delay in the delivery of coal
because PHIBRO itself admitted that as of July 28, 1987 those strikes had already ceased. And, even assuming that the strikes
were still ongoing, PHIBRO should have shouldered the burden of a "strike-free" clause because their contract was "C and F
Calaca, Batangas, Philippines," meaning, the cost and freight from the point of origin until the point of destination would be for the
account of PHIBRO. Furthermore, NAPOCOR claimed that due to PHIBRO's failure to deliver the coal on time, it was compelled to
purchase coal from ASEA at a higher price. NAPOCOR claimed for actual damages in the amount of P12,436,185.73, representing
the increase in the price of coal, and a claim of P500,000.00 as litigation expenses.10
Thereafter, trial on the merits ensued.
On January 16, 1992, the trial court rendered a decision in favor of PHIBRO, the dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff Philipp Brothers Oceanic Inc. (PHIBRO) and against the defendant
National Power Corporation (NAPOCOR) ordering the said defendant NAPOCOR:
1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the defendant National Power Corporation's list of accredited bidders and
allow PHIBRO to participate in any and all future tenders of National Power Corporation for the supply and delivery of imported
steam coal;
2. To pay Philipp Brothers Oceanic, Inc. (PHIBRO);
a. The peso equivalent at the time of payment of $864,000 as actual damages,
b. The peso equivalent at the time of payment of $100,000 as moral damages;
c. The peso equivalent at the time of payment of $50,000 as exemplary damages;
d. The peso equivalent at the time of payment of $73,231.91 as reimbursement for expenses, cost of litigation and attorney's fees;

3. To pay the costs of suit;

4. The counterclaims of defendant NAPOCOR are dismissed for lack of merit.
SO ORDERED."11
Unsatisfied, NAPOCOR, through the Solicitor General, elevated the case to the Court of Appeals. On August 27, 1996, the Court of
Appeals rendered a Decision affirming in toto the Decision of the Regional Trial Court. It ratiocinated that:
"There is ample evidence to show that although PHIBRO's delivery of the shipment of coal was delayed, the delay was in fact
caused by a) Napocor's own delay in opening a workable letter of credit; and b) the strikes which plaqued the Australian coal
industry from the first week of July to the third week of September 1987. Strikes are included in the definition of force majeure in
Section XVII of the Bidding Terms and Specifications, (supra), so Phibro is not liable for any delay caused thereby.

Phibro was informed of the acceptance of its bid on July 8, 1987. Delivery of coal was to be effected thirty (30) days from Napocor's
opening of a confirmed and workable letter of credit. Napocor was only able to do so on August 6, 1987.
By that time, Australia's coal industry was in the middle of a seething controversy and unrest, occasioned by strikes, overtime bans,
mine stoppages. The origin, the scope and the effects of this industrial unrest are lucidly described in the uncontroverted testimony
of James Archibald, an employee of Phibro and member of the Export Committee of the Australian Coal Association during the time
these events transpired.
xxx

xxx

xxx

The records also attest that Phibro periodically informed Napocor of these developments as early as July 1, 1987, even before the
bid was approved. Yet, Napocor did not forthwith open the letter of credit in order to avoid delay which might be caused by the
strikes and their after-effects.
"Strikes" are undoubtedly included in the force majeure clause of the Bidding Terms and Specifications (supra). The renowned
civilist, Prof. Arturo Tolentino, defines force majeure as "an event which takes place by accident and could not have been foreseen."
(Civil Code of the Philippines, Volume IV, Obligations and Contracts, 126, [1991]) He further states:
"Fortuitous events may be produced by two general causes: (1) by Nature, such as earthquakes, storms, floods, epidemics, fires,
etc., and (2) by the act of man, such as an armed invasion, attack by bandits, governmental prohibitions, robbery, etc."
Tolentino adds that the term generally applies, broadly speaking, to natural accidents. In order that acts of man such as a strike,
may constitute fortuitous event, it is necessary that they have the force of an imposition which the debtor could not have resisted. He
cites a parallel example in the case of Philippine National Bank v. Court of Appeals, 94 SCRA 357 (1979), wherein the Supreme
Court said that the outbreak of war which prevents performance exempts a party from liability.
Hence, by law and by stipulation of the parties, the strikes which took place in Australia from the first week of July to the third week
of September, 1987, exempted Phibro from the effects of delay of the delivery of the shipment of coal."12
Twice thwarted, NAPOCOR comes to us via a petition for review ascribing to the Court of Appeals the following errors:
I
"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that PHIBRO's delay in the delivery of
imported coal was due to NAPOCOR's alleged delay in opening a letter of credit and to force majeure, and not to PHIBRO's own
deliberate acts and faults."13
II
"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that NAPOCOR acted maliciously and
unjustifiably in disqualifying PHIBRO from participating in the December 8, 1987 and future biddings for the supply of imported coal
despite the existence of valid grounds therefor such as serious impairment of its track record."14
III
"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that PHIBRO was entitled to injunctive
relief, to actual or compensatory, moral and exemplary damages, attorney's fees and litigation expenses despite the clear absence
of legal and factual bases for such award."15
IV
"Respondent Court of Appeals gravely and seriously erred in absolving PHIBRO from any liability for damages to NAPOCOR for its
unjustified and deliberate refusal and/or failure to deliver the contracted imported coal within the stipulated period."16

V
"Respondent Court of Appeals gravely and seriously erred in dismissing NAPOCOR's counterclaims for damages and litigation
expenses."17
It is axiomatic that only questions of law, not questions of fact, may be raised before this Court in a petition for review under Rule 45
of the Rules of Court.18 The findings of facts of the Court of Appeals are conclusive and binding on this Court19 and they carry even
more weight when the said court affirms the factual findings of the trial court.20 Stated differently, the findings of the Court of
.Appeals, by itself, which are supported by substantial evidence, are almost beyond the power of review by this Court.21
With the foregoing settled jurisprudence, we find it pointless to delve lengthily on the factual issues raised by petitioner. The
existence of strikes in Australia having been duly established in the lower courts, we are left only with the burden of determining

whether or not NAPOCOR acted wrongfully or with bad faith in disqualifying PHIBRO from participating in the subsequent public
bidding.
Let us consider the case in its proper perspective.
The Court of Appeals is justified in sustaining the Regional Trial Court's decision exonerating PHIBRO from any liability for damages
to NAPOCOR as it was clearly established from the evidence, testimonial and documentary, that what prevented PHIBRO from
complying with its obligation under the July 1987 contract was the industrial disputes which besieged Australia during that time.
Extant in our Civil Code is the rule that no person shall be responsible for those events which could not be foreseen, or which,
though foreseen, were inevitable.22 This means that when an obligor is unable to fulfill his obligation because of a fortuitous event
or force majeure, he cannot be held liable for damages for non-performance.23
In addition to the above legal precept, it is worthy to note that PHIBRO and NAPOCOR explicitly agreed in Section XVII of the
"Bidding Terms and Specifications"24 that "neither seller (PHIBRO) nor buyer (NAPOCOR) shall be liable for any delay in or failure
of the performance of its obligations, other than the payment of money due, if any such delay or failure is due to Force Majeure."
Specifically, they defined force majeure as "any disabling cause beyond the control of and without fault or negligence of the party,
which causes may include but are not restricted to Acts of God or of the public enemy; acts of the Government in either its sovereign
or contractual capacity; governmental restrictions; strikes, fires, floods, wars, typhoons, storms, epidemics and quarantine
restrictions."
The law is clear and so is the contract between NAPOCOR and PHIBRO. Therefore, we have no reason to rule otherwise.
However, proceeding from the premise that PHIBRO was prevented by force majeure from complying with its obligation, does it
necessarily follow that NAPOCOR acted unjustly, capriciously, and unfairly in disapproving PHIBRO's application for prequalification to bid?
First, it must be stressed that NAPOCOR was not bound under any contract to approve PHIBRO's pre-qualification requirements. In
fact, NAPOCOR had expressly reserved its right to reject bids. The Instruction to Bidders found in the "Post-Qualification
Documents/Specifications for the Supply and Delivery of Coal for the Batangas Coal-Fired Thermal Power Plant I at Calaca,
Batangas Philippines,"25 is explicit, thus:
"IB-17 RESERVATION OF NAPOCOR TO REJECT BIDS
NAPOCOR reserves the right to reject any or all bids, to waive any minor informality in the bids received. The right is also reserved
to reject the bids of any bidder who has previously failed to properly perform or complete on time any and all contracts for delivery of
coal or any supply undertaken by a bidder."26 (Emphasis supplied)
This Court has held that where the right to reject is so reserved, the lowest bid or any bid for that matter may be rejected on a mere
technicality.27 And where the government as advertiser, availing itself of that right, makes its choice in rejecting any or all bids, the
losing bidder has no cause to complain nor right to dispute that choice unless an unfairness or injustice is shown. Accordingly, a
bidder has no ground of action to compel the Government to award the contract in his favor, nor to compel it to accept his bid. Even
the lowest bid or any bid may be rejected.28 In Celeste v. Court of Appeals,29 we had the occasion to rule:
"Moreover, paragraph 15 of the Instructions to Bidders states that 'the Government hereby reserves the right to reject any or all bids
submitted.' In the case of A.C. Esguerra and Sons v. Aytona, 4 SCRA 1245, 1249 (1962), we held:
'x x x [I]n the invitation to bid, there is a condition imposed upon the bidders to the effect that the bidders shall be subject to the right
of the government to reject any and all bids subject to its discretion. Here the government has made its choice, and unless an
unfairness or injustice is shown, the losing bidders have no cause to complain, nor right to dispute that choice.'
Since there is no evidence to prove bad faith and arbitrariness on the part of the petitioners in evaluating the bids, we rule that the
private respondents are not entitled to damages representing lost profits." (Emphasis supplied)
Verily, a reservation of the government of its right to reject any bid, generally vests in the authorities a wide discretion as to who is
the best and most advantageous bidder. The exercise of such discretion involves inquiry, investigation, comparison, deliberation and
decision, which are quasi-judicial functions, and when honestly exercised, may not be reviewed by the court.30 In Bureau Veritas v.
Office of the President,31 we decreed:

"The discretion to accept or reject a bid and award contracts is vested in the Government agencies entrusted with that function. The
discretion given to the authorities on this matter is of such wide latitude that the Courts will not interfere therewith, unless it is
apparent that it is used as a shield to a fraudulent award. (Jalandoni v. NARRA, 108 Phil. 486 [1960]) x x x. The exercise of this
discretion is a policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This task can
best be discharged by the Government agencies concerned, not by the Courts. The role of the Courts is to ascertain whether a
branch or instrumentality of the Government has transgresses its constitutional boundaries. But the Courts will not interfere with
executive or legislative discretion exercised within those boundaries. Otherwise, it strays into the realm of policy decision-making. x
x x." (Emphasis supplied)

Owing to the discretionary character of the right involved in this case, the propriety of NAPOCOR's act should therefore be judged
on the basis of the general principles regulating human relations, the forefront provision of which is Article 19 of the Civil Code which
provides that "every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone
his due, and observe honesty and good faith."32 Accordingly, a person will be protected only when he acts in the legitimate exercise
of his right, that is, when he acts with prudence and in good faith; but not when he acts with negligence or abuse.33
Did NAPOCOR abuse its right or act unjustly in disqualifying PHIBRO from the public bidding?
We rule in the negative.
In practice, courts, in the sound exercise of their discretion, will have to determine under all the facts and circumstances when the
exercise of a right is unjust, or when there has been an abuse of right.34
We went over the record of the case with painstaking solicitude and we are convinced that NAPOCOR's act of disapproving
PHIBRO's application for pre-qualification to bid was without any intent to injure or a purposive motive to perpetrate damage.
Apparently, NAPOCOR acted on the strong conviction that PHIBRO had a "seriously-impaired" track record. NAPOCOR cannot be
faulted from believing so. At this juncture, it is worth mentioning that at the time NAPOCOR issued its subsequent Invitation to Bid,
i.e., October 1987, PHIBRO had not yet delivered the first shipment of coal under the July 1987 contract, which was due on or
before September 5, 1987. Naturally, NAPOCOR is justified in entertaining doubts on PHIBRO's qualification or capability to assume
an obligation under a new contract.
Moreover, PHIBRO's actuation in 1987 raised doubts as to the real situation of the coal industry in Australia. It appears from the
records that when NAPOCOR was constrained to consider an offer from another coal supplier (ASEA) at a price of US$33.44 per
metric ton, PHIBRO unexpectedly offered the immediate delivery of 60,000 metric tons of Ulan steam coal at US$31.00 per metric
ton for arrival at Calaca, Batangas on September 20-21, 1987."35 Of course, NAPOCOR had reason to ponder how come
PHIBRO could assure the immediate delivery of 60,000 metric tons of coal from the same source to arrive at Calaca not later than
September 20/21, 1987 but it could not deliver the coal it had undertaken under its contract?
Significantly, one characteristic of a fortuitous event, in a legal sense, and consequently in relations to contracts, is that "the
concurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner."36 Faced with the
above circumstance, NAPOCOR is justified in assuming that, may be, there was really no fortuitous event or force majeure which
could render it impossible for PHIBRO to effect the delivery of coal. Correspondingly, it is also justified in treating PHIBRO's failure
to deliver a serious impairment of its track record. That the trial court, thereafter, found PHIBRO's unexpected offer actually a result
of its desire to minimize losses on the part of NAPOCOR is inconsequential. In determining the existence of good faith, the yardstick
is the frame of mind of the actor at the time he committed the act, disregarding actualities or facts outside his knowledge. We cannot
fault NAPOCOR if it mistook PHIBRO's unexpected offer a mere attempt on the latter's part to undercut ASEA or an indication of
PHIBRO's inconsistency. The circumstances warrant such contemplation.
That NAPOCOR believed all along that PHIBRO's failure to deliver on time was unfounded is manifest from its letters37 reminding
PHIBRO that it was bound to deliver the coal within 30 days from its (PHIBRO's) receipt of the Letter of Credit, otherwise it would be
constrained to take legal action. The same honest belief can be deduced from NAPOCOR's Board Resolution, thus:
"On the legal aspect, Management stressed that failure of PBO to deliver under the contract makes them liable for damages,
considering that the reasons invoked were not valid. The measure of the damages will be limited to actual and compensatory
damages. However, it was reported that Philipp Brothers advised they would like to have continuous business relation with NPC so
they are willing to sit down or even proposed that the case be submitted to the Department of Justice as to avoid a court action or
arbitration.
xxx

xxx

xxx

On the technical-economic aspect, Management claims that if PBO delivers in November 1987 and January 1988, there are some
advantages. If PBO reacts to any legal action and fails to deliver, the options are: one, to use 100% Semirara and second, to go into
urgent coal order. The first option will result in a 75 MW derating and oil will be needed as supplement. We will stand to lose around
P30 M. On the other hand, if NPC goes into an urgent coal order, there will be an additional expense of $786,000 or P16.11 M,
considering the price of the latest purchase with ASEA. On both points, reliability is decreased."38

The very purpose of requiring a bidder to furnish the awarding authority its pre-qualification documents is to ensure that only those
"responsible" and "qualified" bidders could bid and be awarded with government contracts. It bears stressing that the award of a
contract is measured not solely by the smallest amount of bid for its performance, but also by the "responsibility" of the bidder.
Consequently, the integrity, honesty, and trustworthiness of the bidder is to be considered. An awarding official is justified in
considering a bidder not qualified or not responsible if he has previously defrauded the public in such contracts or if, on the evidence
before him, the official bona fide believes the bidder has committed such fraud, despite the fact that there is yet no judicial
determination to that effect.39 Otherwise stated, if the awarding body bona fide believes that a bidder has seriously impaired its
track record because of a particular conduct, it is justified in disqualifying the bidder. This policy is necessary to protect the interest
of the awarding body against irresponsible bidders.

Thus, one who acted pursuant to the sincere belief that another willfully committed an act prejudicial to the interest of the
government cannot be considered to have acted in bad faith. Bad faith has always been a question of intention. It is that corrupt
motive that operates in the mind. As understood in law, it contemplates a state of mind affirmatively operating with furtive design or
with some motive of self-interest or ill-will or for ulterior purpose.40 While confined in the realm of thought, its presence may be
ascertained through the party's actuation or through circumstantial evidence.41 The circumstances under which NAPOCOR
disapproved PHIBRO's pre-qualification to bid do not show an intention to cause damage to the latter. The measure it adopted was
one of self-protection. Consequently, we cannot penalize NAPOCOR for the course of action it took. NAPOCOR cannot be made
liable for actual, moral and exemplary damages.
Corollarily, in awarding to PHIBRO actual damages in the amount of $864,000, the Regional Trial Court computed what could have
been the profits of PHIBRO had NAPOCOR allowed it to participate in the subsequent public bidding. It ruled that "PHIBRO would
have won the tenders for the supply of about 960,000 metric tons out of at least 1,200,000 metric tons" from the public bidding of
December 1987 to 1990. We quote the trial court's ruling, thus:
". . . PHIBRO was unjustly excluded from participating in at least five (5) tenders beginning December 1987 to 1990, for the supply
and delivery of imported coal with a total volume of about 1,200,000 metric tons valued at no less than US$32 Million. (Exhs. "AA,"
"AA-1-1," to "AA-2"). The price of imported coal for delivery in 1988 was quoted in June 1988 by bidders at US$41.35 to US$43.95
per metric ton (Exh. "JJ"); in September 1988 at US$41.50 to US$49.50 per metric ton (Exh. "J-1"); in November 1988 at US$39.00
to US$48.50 per metric ton (Exh. "J-2") and for the 1989 deliveries, at US$44.35 to US$47.35 per metric ton (Exh. "J-3") and
US$38.00 to US$48.25 per metric ton in September 1990 (Exh. "JJ-6" and "JJ-7"). PHIBRO would have won the tenders for the
supply and delivery of about 960,000 metric tons of coal out of at least 1,200,000 metric tons awarded during said period based on
its proven track record of 80%. The Court, therefore finds that as a result of its disqualification, PHIBRO suffered damages
equivalent to its standard 3% margin in 960,000 metric tons of coal at the most conservative price of US$30,000 per metric ton, or
the total of US$864,000 which PHIBRO would have earned had it been allowed to participate in biddings in which it was disqualified
and in subsequent tenders for supply and delivery of imported coal."
We find this to be erroneous.
Basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof but must actually be proven
with reasonable degree of certainty, premised upon competent proof or best evidence obtainable of the actual amount thereof.42 A
court cannot merely rely on speculations, conjectures, or guesswork as to the fact and amount of damages. Thus, while
indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee
failed to obtain,43 it is imperative that the basis of the alleged unearned profits is not too speculative and conjectural as to show the
actual damages which may be suffered on a future period.
In Pantranco North Express, Inc. v. Court of Appeals,44 this Court denied the plaintiff's claim for actual damages which was
premised on a contract he was about to negotiate on the ground that there was still the requisite public bidding to be complied with,
thus:
"As to the alleged contract he was about to negotiate with Minister Hipolito, there is no showing that the same has been awarded to
him. If Tandoc was about to negotiate a contract with Minister Hipolito, there was no assurance that the former would get it or that
the latter would award the contract to him since there was the requisite public bidding. The claimed loss of profit arising out of that
alleged contract which was still to be negotiated is a mere expectancy. Tandoc's claim that he could have earned P2 million in profits
is highly speculative and no concrete evidence was presented to prove the same. The only unearned income to which Tandoc is
entitled to from the evidence presented is that for the one-month period, during which his business was interrupted, which is
P6,125.00, considering that his annual net income was P73,500.00."
In Lufthansa German Airlines v. Court of Appeals,45 this Court likewise disallowed the trial court's award of actual damages for
unrealized profits in the amount of US$75,000.00 for being highly speculative. It was held that "the realization of profits by
respondent . . . was not a certainty, but depended on a number of factors, foremost of which was his ability to invite investors and to
win the bid." This Court went further saying that actual or compensatory damages cannot be presumed, but must be duly proved,
and proved with reasonable degree of certainty.
And in National Power Corporation v. Court of Appeals,46 the Court, in denying the bidder's claim for unrealized commissions, ruled
that even if NAPOCOR does not deny its (bidder's) claims for unrealized commissions, and that these claims have been transmuted
into judicial admissions, these admissions cannot prevail over the rules and regulations governing the bidding for NAPOCOR
contracts, which necessarily and inherently include the reservation by the NAPOCOR of its right to reject any or all bids.

The award of moral damages is likewise improper. To reiterate, NAPOCOR did not act in bad faith. Moreover, moral damages are
not, as a general rule, granted to a corporation.47 While it is true that besmirched reputation is included in moral damages, it cannot
cause mental anguish to a corporation, unlike in the case of a natural person, for a corporation has no reputation in the sense that
an individual has, and besides, it is inherently impossible for a corporation to suffer mental anguish.48 In LBC Express, Inc. v. Court
of Appeals,49 we ruled:

"Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury. A corporation, being an artificial person and having existence
only in legal contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental
anguish. Mental suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and griefs of
life all of which cannot be suffered by respondent bank as an artificial person."
Neither can we award exemplary damages under Article 2234 of the Civil Code. Before the court may consider the question of
whether or not exemplary damages should be awarded, the plaintiff must show that he is entitled to moral, temperate, or
compensatory damages.
NAPOCOR, in this petition, likewise contests the judgment of the lower courts awarding PHIBRO the amount of $73,231.91 as
reimbursement for expenses, cost of litigation and attorney's fees.
We agree with NAPOCOR.
This Court has laid down the rule that in the absence of stipulation, a winning party may be awarded attorney's fees only in case
plaintiff's action or defendant's stand is so untenable as to amount to gross and evident bad faith.50 This cannot be said of the case
at bar. NAPOCOR is justified in resisting PHIBRO's claim for damages. As a matter of fact, we partially grant the prayer of
NAPOCOR as we find that it did not act in bad faith in disapproving PHIBRO's pre-qualification to bid.
Trial courts must be reminded that attorney's fees may not be awarded to a party simply because the judgment is favorable to him,
for it may amount to imposing a premium on the right to redress grievances in court. We adopt the same policy with respect to the
expenses of litigation. A winning party may be entitled to expenses of litigation only where he, by reason of plaintiff's clearly
unjustifiable claims or defendant's unreasonable refusal to his demands, was compelled to incur said expenditures. Evidently, the
facts of this case do not warrant the granting of such litigation expenses to PHIBRO.
At this point, we believe that, in the interest of fairness, NAPOCOR should give PHIBRO another opportunity to participate in future
public bidding. As earlier mentioned, the delay on its part was due to a fortuitous event.
But before we dispose of this case, we take this occasion to remind PHIBRO of the indispensability of coal to a coal-fired thermal
plant. With households and businesses being entirely dependent on the electricity supplied by NAPOCOR, the delivery of coal
cannot be venturesome. Indeed, public interest demands that one who offers to deliver coal at an appointed time must give a
reasonable assurance that it can carry through. With the deleterious possible consequences that may result from failure to deliver
the needed coal, we believe there is greater strain of commitment in this kind of obligation.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 126204 dated August 27, 1996 is hereby MODIFIED. The
award, in favor of PHIBRO, of actual, moral and exemplary damages, reimbursement for expenses, cost of litigation and attorney's
fees, and costs of suit, is DELETED.
SO ORDERED.

G.R. No. 143958

July 11, 2003

ALFRED FRITZ FRENZEL, petitioner vs. EDERLINA P. CATITO, respondent.

Before us is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. CV No. 53485 which affirmed the Decision2 of
the Regional Trial Court of Davao City, Branch 14, in Civil Case No. 17,817 dismissing the petitioner's complaint, and the resolution
of the Court of Appeals denying his motion for reconsideration of the said decision.

The Antecedents3
As gleaned from the evidence of the petitioner, the case at bar stemmed from the following factual backdrop:
Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He is an electrical engineer by profession, but worked as a
pilot with the New Guinea Airlines. He arrived in the Philippines in 1974, started engaging in business in the country two years
thereafter, and married Teresita Santos, a Filipino citizen. In 1981, Alfred and Teresita separated from bed and board without
obtaining a divorce.
Sometime in February 1983, Alfred arrived in Sydney, Australia for a vacation. He went to King's Cross, a night spot in Sydney, for a
massage where he met Ederlina Catito, a Filipina and a native of Bajada, Davao City. Unknown to Alfred, she resided for a time in
Germany and was married to Klaus Muller, a German national. She left Germany and tried her luck in Sydney, Australia, where she
found employment as a masseuse in the King's Cross nightclub. She was fluent in German, and Alfred enjoyed talking with her. The
two saw each other again; this time Ederlina ended up staying in Alfred's hotel for three days. Alfred gave Ederlina sums of money
for her services.4
Alfred was so enamored with Ederlina that he persuaded her to stop working at King's Cross, return to the Philippines, and engage
in a wholesome business of her own. He also proposed that they meet in Manila, to which she assented. Alfred gave her money for
her plane fare to the Philippines. Within two weeks of Ederlina's arrival in Manila, Alfred joined her. Alfred reiterated his proposal for
Ederlina to stay in the Philippines and engage in business, even offering to finance her business venture. Ederlina was delighted at
the idea and proposed to put up a beauty parlor. Alfred happily agreed.
Alfred told Ederlina that he was married but that he was eager to divorce his wife in Australia. Alfred proposed marriage to Ederlina,
but she replied that they should wait a little bit longer.
Ederlina found a building at No. 444 M.H. del Pilar corner Arquiza Street, Ermita, Manila, owned by one Atty. Jose Hidalgo who
offered to convey his rights over the property for P18,000.00. Alfred and Ederlina accepted the offer. Ederlina put up a beauty parlor
on the property under the business name Edorial Beauty Salon, and had it registered with the Department of Trade and Industry
under her name. Alfred paid Atty. Hidalgo P20,000.00 for his right over the property and gave P300,000.00 to Ederlina for the
purchase of equipment and furniture for the parlor. As Ederlina was going to Germany, she executed a special power of attorney on
December 13, 19835 appointing her brother, Aser Catito, as her attorney-in-fact in managing the beauty parlor business. She stated
in the said deed that she was married to Klaus Muller. Alfred went back to Papua New Guinea to resume his work as a pilot.
When Alfred returned to the Philippines, he visited Ederlina in her Manila residence and found it unsuitable for her. He decided to
purchase a house and lot owned by Victoria Binuya Steckel in San Francisco del Monte, Quezon City, covered by Transfer
Certificate of Title No. 218429 for US$20,000.00. Since Alfred knew that as an alien he was disqualified from owning lands in the
Philippines, he agreed that only Ederlina's name would appear in the deed of sale as the buyer of the property, as well as in the title
covering the same. After all, he was planning to marry Ederlina and he believed that after their marriage, the two of them would
jointly own the property. On January 23, 1984, a Contract to Sell was entered into between Victoria Binuya Steckel as the vendor
and Ederlina as the sole vendee. Alfred signed therein as a witness.6 Victoria received from Alfred, for and in behalf of Ederlina, the
amount of US$10,000.00 as partial payment, for which Victoria issued a receipt.7 When Victoria executed the deed of absolute sale
over the property on March 6, 1984,8 she received from Alfred, for and in behalf of Ederlina, the amount of US$10,000.00 as final
and full payment. Victoria likewise issued a receipt for the said amount.9 After Victoria had vacated the property, Ederlina moved
into her new house. When she left for Germany to visit Klaus, she had her father Narciso Catito and her two sisters occupy the
property.
Alfred decided to stay in the Philippines for good and live with Ederlina. He returned to Australia and sold his fiber glass pleasure
boat to John Reid for $7,500.00 on May 4, 1984.10 He also sold his television and video business in Papua New Guinea for
K135,000.00 to Tekeraoi Pty. Ltd.11 He had his personal properties shipped to the Philippines and stored at No. 14 Fernandez
Street, San Francisco del Monte, Quezon City. The proceeds of the sale were deposited in Alfred's account with the Hong Kong
Shanghai Banking Corporation (HSBC), Kowloon Branch under Bank Account No. 018-2-807016.12 When Alfred was in Papua New
Guinea selling his other properties, the bank sent telegraphic letters updating him of his account.13 Several checks were credited to
his HSBC bank account from Papua New Guinea Banking Corporation, Westpac Bank of Australia and New Zealand Banking Group
Limited and Westpac Bank-PNG-Limited. Alfred also had a peso savings account with HSBC, Manila, under Savings Account No.
01-725-183-01.14
Once, when Alfred and Ederlina were in Hong Kong, they opened another account with HSBC, Kowloon, this time in the name of
Ederlina, under Savings Account No. 018-0-807950.15 Alfred transferred his deposits in Savings Account No. 018-2-807016 with the
said bank to this new account. Ederlina also opened a savings account with the Bank of America Kowloon Main Office under
Account No. 30069016.16

On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter dated December 7, 1983 from Klaus Muller who was
then residing in Berlin, Germany. Klaus informed Alfred that he and Ederlina had been married on October 16, 1978 and had a
blissful married life until Alfred intruded therein. Klaus stated that he knew of Alfred and Ederlina's amorous relationship, and

discovered the same sometime in November 1983 when he arrived in Manila. He also begged Alfred to leave Ederlina alone and to
return her to him, saying that Alfred could not possibly build his future on his (Klaus') misfortune.17
Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He inquired if there was any truth to Klaus' statements
and Sally confirmed that Klaus was married to Ederlina. When Alfred confronted Ederlina, she admitted that she and Klaus were,
indeed, married. But she assured Alfred that she would divorce Klaus. Alfred was appeased. He agreed to continue the amorous
relationship and wait for the outcome of Ederlina's petition for divorce. After all, he intended to marry her. He retained the services of
Rechtsanwaltin Banzhaf with offices in Berlin, as her counsel who informed her of the progress of the proceedings.18 Alfred paid for
the services of the lawyer.
In the meantime, Alfred decided to purchase another house and lot, owned by Rodolfo Morelos covered by TCT No. 92456 located
in Pea Street, Bajada, Davao City.19 Alfred again agreed to have the deed of sale made out in the name of Ederlina. On
September 7, 1984, Rodolfo Morelos executed a deed of absolute sale over the said property in favor of Ederlina as the sole
vendee for the amount of P80,000.00.20 Alfred paid US$12,500.00 for the property.
Alfred purchased another parcel of land from one Atty. Mardoecheo Camporedondo, located in Moncado, Babak, Davao, covered by
TCT No. 35251. Alfred once more agreed for the name of Ederlina to appear as the sole vendee in the deed of sale. On December
31, 1984, Atty. Camporedondo executed a deed of sale over the property for P65,000.00 in favor of Ederlina as the sole vendee.21
Alfred, through Ederlina, paid the lot at the cost of P33,682.00 and US$7,000.00, respectively, for which the vendor signed
receipts.22 On August 14, 1985, TCT No. 47246 was issued to Ederlina as the sole owner of the said property.23
Meanwhile, Ederlina deposited on December 27, 1985, the total amount of US$250,000 with the HSBC Kowloon under Joint
Deposit Account No. 018-462341-145.24
The couple decided to put up a beach resort on a four-hectare land in Camudmud, Babak, Davao, owned by spouses Enrique and
Rosela Serrano. Alfred purchased the property from the spouses for P90,000.00, and the latter issued a receipt therefor.25 A
draftsman commissioned by the couple submitted a sketch of the beach resort.26 Beach houses were forthwith constructed on a
portion of the property and were eventually rented out by Ederlina's father, Narciso Catito. The rentals were collected by Narciso,
while Ederlina kept the proceeds of the sale of copra from the coconut trees in the property. By this time, Alfred had already spent
P200,000.00 for the purchase, construction and upkeep of the property.
Ederlina often wrote letters to her family informing them of her life with Alfred. In a Letter dated January 21, 1985, she wrote about
how Alfred had financed the purchases of some real properties, the establishment of her beauty parlor business, and her petition to
divorce Klaus.27
Because Ederlina was preoccupied with her business in Manila, she executed on July 8, 1985, two special powers of attorney28
appointing Alfred as attorney-in-fact to receive in her behalf the title and the deed of sale over the property sold by the spouses
Enrique Serrano.
In the meantime, Ederlina's petition for divorce was denied because Klaus opposed the same. A second petition filed by her met the
same fate. Klaus wanted half of all the properties owned by Ederlina in the Philippines before he would agree to a divorce. Worse,
Klaus threatened to file a bigamy case against Ederlina.29
Alfred proposed the creation of a partnership to Ederlina, or as an alternative, the establishment of a corporation, with Ederlina
owning 30% of the equity thereof. She initially agreed to put up a corporation and contacted Atty. Armando Dominguez to prepare
the necessary documents. Ederlina changed her mind at the last minute when she was advised to insist on claiming ownership over
the properties acquired by them during their coverture.
Alfred and Ederlina's relationship started deteriorating. Ederlina had not been able to secure a divorce from Klaus. The latter could
charge her for bigamy and could even involve Alfred, who himself was still married. To avoid complications, Alfred decided to live
separately from Ederlina and cut off all contacts with her. In one of her letters to Alfred, Ederlina complained that he had ruined her
life. She admitted that the money used for the purchase of the properties in Davao were his. She offered to convey the properties
deeded to her by Atty. Mardoecheo Camporedondo and Rodolfo Morelos, asking Alfred to prepare her affidavit for the said purpose
and send it to her for her signature.30 The last straw for Alfred came on September 2, 1985, when someone smashed the front and
rear windshields of Alfred's car and damaged the windows. Alfred thereafter executed an affidavit-complaint charging Ederlina and
Sally MacCarron with malicious mischief.31
On October 15, 1985, Alfred wrote to Ederlina's father, complaining that Ederlina had taken all his life savings and because of this,
he was virtually penniless. He further accused the Catito family of acquiring for themselves the properties he had purchased with his
own money. He demanded the return of all the amounts that Ederlina and her family had "stolen" and turn over all the properties
acquired by him and Ederlina during their coverture.32

Shortly thereafter, Alfred filed a Complaint33 dated October 28, 1985, against Ederlina, with the Regional Trial Court of Quezon City,
for recovery of real and personal properties located in Quezon City and Manila. In his complaint, Alfred alleged, inter alia, that
Ederlina, without his knowledge and consent, managed to transfer funds from their joint account in HSBC Hong Kong, to her own
account with the same bank. Using the said funds, Ederlina was able to purchase the properties subject of the complaints. He also

alleged that the beauty parlor in Ermita was established with his own funds, and that the Quezon City property was likewise
acquired by him with his personal funds.34
Ederlina failed to file her answer and was declared in default. Alfred adduced his evidence ex parte.
In the meantime, on November 7, 1985, Alfred also filed a complaint35 against Ederlina with the Regional Trial Court, Davao City,
for specific performance, declaration of ownership of real and personal properties, sum of money, and damages. He alleged, inter
alia, in his complaint:
4. That during the period of their common-law relationship, plaintiff solely through his own efforts and resources acquired in the
Philippines real and personal properties valued more or less at P724,000.00; The defendant's common-law wife or live-in partner did
not contribute anything financially to the acquisition of the said real and personal properties. These properties are as follows:
I. Real Properties
a. TCT No. T-92456 located at Bajada, Davao City, consisting of 286 square meters, (with residential house) registered in the name
of the original title owner Rodolfo M. Morelos but already fully paid by plaintiff. Valued at P342,000.00;
b. TCT No. T-47246 (with residential house) located at Babak, Samal, Davao, consisting of 600 square meters, registered in the
name of Ederlina Catito, with the Register of Deeds of Tagum, Davao del Norte valued at P144,000.00;
c. A parcel of agricultural land located at Camudmud, Babak, Samal, Davao del Norte, consisting of 4.2936 hectares purchased from
Enrique Serrano and Rosela B. Serrano. Already paid in full by plaintiff. Valued at P228,608.32;
II. Personal Properties:
a. Furniture valued at P10,000.00.
...
5. That defendant made no contribution at all to the acquisition, of the above-mentioned properties as all the monies (sic) used in
acquiring said properties belonged solely to plaintiff;36
Alfred prayed that after hearing, judgment be rendered in his favor:
WHEREFORE, in view of the foregoing premises, it is respectfully prayed that judgment be rendered in favor of plaintiff and against
defendant:
a) Ordering the defendant to execute the corresponding deeds of transfer and/or conveyances in favor of plaintiff over those real
and personal properties enumerated in Paragraph 4 of this complaint;
b) Ordering the defendant to deliver to the plaintiff all the above real and personal properties or their money value, which are in
defendant's name and custody because these were acquired solely with plaintiffs money and resources during the duration of the
common-law relationship between plaintiff and defendant, the description of which are as follows:
(1) TCT No. T-92456 (with residential house) located at Bajada, Davao City, consisting of 286 square meters, registered in the name
of the original title owner Rodolfo Morelos but already fully paid by plaintiff. Valued at P342,000.00;
(2) TCT No. T-47246 (with residential house) located at Babak, Samal, Davao, consisting of 600 square meters, registered in the
name of Ederlina Catito, with the Register of Deeds of Tagum, Davao del Norte, valued at P144,000.00;
(3) A parcel of agricultural land located at Camudmud, Babak, Samal, Davao del Norte, consisting of 4.2936 hectares purchased
from Enrique Serrano and Rosela B. Serrano. Already fully paid by plaintiff. Valued at P228,608.32;
c) Declaring the plaintiff to be the sole and absolute owner of the above-mentioned real and personal properties;
d) Awarding moral damages to plaintiff in an amount deemed reasonable by the trial court;
e) To reimburse plaintiff the sum of P12,000.00 as attorney's fees for having compelled the plaintiff to litigate;
f) To reimburse plaintiff the sum of P5,000.00 incurred as litigation expenses also for having compelled the plaintiff to litigate; and

g) To pay the costs of this suit;

Plaintiff prays other reliefs just and equitable in the premises.37
In her answer, Ederlina denied all the material allegations in the complaint, insisting that she acquired the said properties with her
personal funds, and as such, Alfred had no right to the same. She alleged that the deeds of sale, the receipts, and certificates of

titles of the subject properties were all made out in her name.38 By way of special and affirmative defense, she alleged that Alfred
had no cause of action against her. She interposed counterclaims against the petitioner.39
In the meantime, the petitioner filed a Complaint dated August 25, 1987, against the HSBC in the Regional Trial Court of Davao
City40 for recovery of bank deposits and damages.41 He prayed that after due proceedings, judgment be rendered in his favor,
thus:
WHEREFORE, plaintiff respectfully prays that the Honorable Court adjudge defendant bank, upon hearing the evidence that the
parties might present, to pay plaintiff:
1. ONE HUNDRED TWENTY SIX THOUSAND TWO HUNDRED AND THIRTY U.S. DOLLARS AND NINETY EIGHT CENTS
(US$126,230.98) plus legal interests, either of Hong Kong or of the Philippines, from 20 December 1984 up to the date of execution
or satisfaction of judgment, as actual damages or in restoration of plaintiffs lost dollar savings;
2. The same amount in (1) above as moral damages;
3. Attorney's fees in the amount equivalent to TWENTY FIVE PER CENT (25%) of (1) and (2) above;
4. Litigation expenses in the amount equivalent to TEN PER CENT (10%) of the amount in (1) above; and
5. For such other reliefs as are just and equitable under the circumstances.42
On April 28, 1986, the RTC of Quezon City rendered its decision in Civil Case No. Q-46350, in favor of Alfred, the decretal portion of
which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered ordering the defendant to perform the following:
(1) To execute a document waiving her claim to the house and lot in No. 14 Fernandez St., San Francisco Del Monte, Quezon City
in favor of plaintiff or to return to the plaintiff the acquisition cost of the same in the amount of $20,000.00, or to sell the said property
and turn over the proceeds thereof to the plaintiff;
(2) To deliver to the plaintiff the rights of ownership and management of the beauty parlor located at 444 Arquiza St., Ermita, Manila,
including the equipment and fixtures therein;
(3) To account for the earnings of rental of the house and lot in No. 14 Fernandez St., San Francisco Del Monte, Quezon City, as
well as the earnings in the beauty parlor at 444 Arquiza St., Ermita, Manila and turn over one-half of the net earnings of both
properties to the plaintiff;
(4) To surrender or return to the plaintiff the personal properties of the latter left in the house at San Francisco Del Monte, to wit:
"(1) Mamya automatic camera
(1) 12 inch "Sonny" T.V. set, colored with remote control.
(1) Micro oven
(1) Electric fan (tall, adjustable stand)
(1) Office safe with (2) drawers and safe
(1) Electric Washing Machine
(1) Office desk and chair
(1) Double bed suits
(1) Mirror/dresser
(1) Heavy duty voice/working mechanic
(1) "Sony" Beta-Movie camera
(1) Suitcase with personal belongings

(1) Cardboard box with belongings

(1) Guitar Amplifier
(1) Hanger with men's suit (white)."

To return to the plaintiff, (1) Hi-Fi Stereo equipment left at 444 Arquiza Street, Ermita, Manila, as well as the Fronte Suzuki car.
(4) To account for the monies (sic) deposited with the joint account of the plaintiff and defendant (Account No. 018-0-807950); and to
restore to the plaintiff all the monies (sic) spent by the defendant without proper authority;
(5) To pay the amount of P5,000.00 by way of attorney's fees, and the costs of suit.
SO ORDERED.43
However, after due proceedings in the RTC of Davao City, in Civil Case No. 17,817, the trial court rendered judgment on September
28, 1995 in favor of Ederlina, the dispositive portion of which reads:
WHEREFORE, the Court cannot give due course to the complaint and hereby orders its dismissal. The counterclaims of the
defendant are likewise dismissed.
SO ORDERED.44
The trial court ruled that based on documentary evidence, the purchaser of the three parcels of land subject of the complaint was
Ederlina. The court further stated that even if Alfred was the buyer of the properties; he had no cause of action against Ederlina for
the recovery of the same because as an alien, he was disqualified from acquiring and owning lands in the Philippines. The sale of
the three parcels of land to the petitioner was null and void ab initio. Applying the pari delicto doctrine, the petitioner was precluded
from recovering the properties from the respondent.
Alfred appealed the decision to the Court of Appeals45 in which the petitioner posited the view that although he prayed in his
complaint in the court a quo that he be declared the owner of the three parcels of land, he had no intention of owning the same
permanently. His principal intention therein was to be declared the transient owner for the purpose of selling the properties at public
auction, ultimately enabling him to recover the money he had spent for the purchase thereof.
On March 8, 2000, the CA rendered a decision affirming in toto the decision of the RTC. The appellate court ruled that the petitioner
knowingly violated the Constitution; hence, was barred from recovering the money used in the purchase of the three parcels of land.
It held that to allow the petitioner to recover the money used for the purchase of the properties would embolden aliens to violate the
Constitution, and defeat, rather than enhance, the public policy.46
Hence, the petition at bar.
The petitioner assails the decision of the court contending that:
THE HONORABLE COURT OF APPEALS ERRED IN APPLYING THE RULE OF IN PARI DELICTO IN THE INSTANT CASE
BECAUSE BY THE FACTS AS NARRATED IN THE DECISION IT IS APPARENT THAT THE PARTIES ARE NOT EQUALLY
GUILTY BUT RATHER IT WAS THE RESPONDENT WHO EMPLOYED FRAUD AS WHEN SHE DID NOT INFORM PETITIONER
THAT SHE WAS ALREADY MARRIED TO ANOTHER GERMAN NATIONAL AND WITHOUT SUCH FRAUDULENT DESIGN
PETITIONER COULD NOT HAVE PARTED WITH HIS MONEY FOR THE PURCHASE OF THE PROPERTIES.47
and
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE INTENTION OF THE PETITIONER IS NOT TO
OWN REAL PROPERTIES IN THE PHILIPPINES BUT TO SELL THEM AT PUBLIC AUCTION TO BE ABLE TO RECOVER HIS
MONEY USED IN PURCHASING THEM.48
Since the assignment of errors are intertwined with each other, the Court shall resolve the same simultaneously.
The petitioner contends that he purchased the three parcels of land subject of his complaint because of his desire to marry the
respondent, and not to violate the Philippine Constitution. He was, however, deceived by the respondent when the latter failed to
disclose her previous marriage to Klaus Muller. It cannot, thus, be said that he and the respondent are "equally guilty;" as such, the
pari delicto doctrine is not applicable to him. He acted in good faith, on the advice of the respondent's uncle, Atty. Mardoecheo
Camporedondo. There is no evidence on record that he was aware of the constitutional prohibition against aliens acquiring real
property in the Philippines when he purchased the real properties subject of his complaint with his own funds. The transactions were
not illegal per se but merely prohibited, and under Article 1416 of the New Civil Code, he is entitled to recover the money used for
the purchase of the properties. At any rate, the petitioner avers, he filed his complaint in the court a quo merely for the purpose of
having him declared as the owner of the properties, to enable him to sell the same at public auction. Applying by analogy Republic
Act No. 13349 as amended by Rep. Act No. 4381 and Rep. Act No. 4882, the proceeds of the sale would be remitted to him, by way
of refund for the money he used to purchase the said properties. To bar the petitioner from recovering the subject properties, or at
the very least, the money used for the purchase thereof, is to allow the respondent to enrich herself at the expense of the petitioner
in violation of Article 22 of the New Civil Code.
The petition is bereft of merit.
Section 14, Article XIV of the 1973 Constitution provides, as follows:

Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands in the public domain.50
Lands of the public domain, which include private lands, may be transferred or conveyed only to individuals or entities qualified to
acquire or hold private lands or lands of the public domain. Aliens, whether individuals or corporations, have been disqualified from
acquiring lands of the public domain. Hence, they have also been disqualified from acquiring private lands.51
Even if, as claimed by the petitioner, the sales in question were entered into by him as the real vendee, the said transactions are in
violation of the Constitution; hence, are null and void ab initio.52 A contract that violates the Constitution and the law, is null and void
and vests no rights and creates no obligations. It produces no legal effect at all.53 The petitioner, being a party to an illegal contract,
cannot come into a court of law and ask to have his illegal objective carried out. One who loses his money or property by knowingly
engaging in a contract or transaction which involves his own moral turpitude may not maintain an action for his losses. To him who
moves in deliberation and premeditation, the law is unyielding.54 The law will not aid either party to an illegal contract or agreement;
it leaves the parties where it finds them.55 Under Article 1412 of the New Civil Code, the petitioner cannot have the subject
properties deeded to him or allow him to recover the money he had spent for the purchase thereof.56 Equity as a rule will follow the
law and will not permit that to be done indirectly which, because of public policy, cannot be done directly.57 Where the wrong of one
party equals that of the other, the defendant is in the stronger position . . . it signifies that in such a situation, neither a court of equity
nor a court of law will administer a remedy.58 The rule is expressed. in the maxims: EX DOLO ORITUR ACTIO and IN PARI
DELICTO POTIOR EST CONDITIO DEFENDENTIS.59
The petitioner cannot feign ignorance of the constitutional proscription, nor claim that he acted in good faith, let alone assert that he
is less guilty than the respondent. The petitioner is charged with knowledge of the constitutional prohibition.60 As can be gleaned
from the decision of the trial court, the petitioner was fully aware that he was disqualified from acquiring and owning lands under
Philippine law even before he purchased the properties in question; and, to skirt the constitutional prohibition, the petitioner had the
deed of sale placed under the respondent's name as the sole vendee thereof:
Such being the case, the plaintiff is subject to the constitutional restrictions governing the acquisition of real properties in the
Philippines by aliens.
From the plaintiff's complaint before the Regional Trial Court, National Capital Judicial Region, Branch 84, Quezon City in Civil Case
No. Q-46350 he alleged:
x x x "That on account that foreigners are not allowed by the Philippine laws to acquire real properties in their name as in the case of
my vendor Miss Victoria Vinuya (sic) although married to a foreigner, we agreed and I consented in having the title to subject
property placed in defendant's name alone although I paid for the whole price out of my own exclusive funds." (paragraph IV, Exhibit
"W.")
and his testimony before this Court which is hereby quoted:
ATTY. ABARQUEZ:
Q.

In whose name the said house and lot placed, by the way, where is his house and lot located?

A.

In 14 Fernandez St., San Francisco, del Monte, Manila.

Q.

In whose name was the house placed?

A.

Ederlina Catito because I was informed being not a Filipino, I cannot own the property. (tsn, p. 11, August 27, 1986).

xxx

xxx

xxx

COURT:
Q.

So you understand that you are a foreigner that you cannot buy land in the Philippines?

A.

That is correct but as she would eventually be my wife that would be owned by us later on. (tsn, p. 5, September 3, 1986)

xxx

xxx

xxx

Q.

What happened after that?

A.

She said you foreigner you are using Filipinos to buy property.

Q.

And what did you answer?

A:

I said thank you very much for the property I bought because I gave you a lot of money (tsn., p. 14, ibid).

It is evident that the plaintiff was fully aware that as a non-citizen of the Philippines, he was disqualified from validly purchasing any
land within the country.61
The petitioner's claim that he acquired the subject properties because of his desire to marry the respondent, believing that both of
them would thereafter jointly own the said properties, is belied by his own evidence. It is merely an afterthought to salvage a lost
cause. The petitioner admitted on cross-examination that he was all along legally married to Teresita Santos Frenzel, while he was
having an amorous relationship with the respondent:
ATTY. YAP:
Q
When you were asked to identify yourself on direct examination you claimed before this Honorable Court that your status is
that of being married, do you confirm that?
A

Yes, sir.

To whom are you married?

To a Filipina, since 1976.

Would you tell us who is that particular person you are married since 1976?

Teresita Santos Frenzel.

Where is she now?

In Australia.

Is this not the person of Teresita Frenzel who became an Australian citizen?

I am not sure, since 1981 we were separated.

You were only separated, in fact, but not legally separated?

Thru my counsel in Australia I filed a separation case.

As of the present you are not legally divorce[d]?

I am still legally married.62

The respondent was herself married to Klaus Muller, a German citizen. Thus, the petitioner and the respondent could not lawfully
join in wedlock. The evidence on record shows that the petitioner in fact knew of the respondent's marriage to another man, but
nonetheless purchased the subject properties under the name of the respondent and paid the purchase prices therefor. Even if it is
assumed gratia arguendi that the respondent and the petitioner were capacitated to marry, the petitioner is still disqualified to own
the properties in tandem with the respondent.63
The petitioner cannot find solace in Article 1416 of the New Civil Code which reads:
Art. 1416. When the agreement is not illegal per se but is merely prohibited, and the prohibition by the law is designed for the
protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid or delivered.64
The provision applies only to those contracts which are merely prohibited, in order to benefit private interests. It does not apply to
contracts void ab initio. The sales of three parcels of land in favor of the petitioner who is a foreigner is illegal per se. The
transactions are void ab initio because they were entered into in violation of the Constitution. Thus, to allow the petitioner to recover
the properties or the money used in the purchase of the parcels of land would be subversive of public policy.
Neither may the petitioner find solace in Rep. Act No. 133, as amended by Rep. Act No. 4882, which reads:
SEC. 1. Any provision of law to the contrary notwithstanding, private real property may be mortgaged in favor of any individual,
corporation, or association, but the mortgagee or his successor-in-interest, if disqualified to acquire or hold lands of the public
domain in the Philippines, shall not take possession of the mortgaged property during the existence of the mortgage and shall not
take possession of mortgaged property except after default and for the sole purpose of foreclosure, receivership, enforcement or
other proceedings and in no case for a period of more than five years from actual possession and shall not bid or take part in any
sale of such real property in case of foreclosure: Provided, That said mortgagee or successor-in-interest may take possession of
said property after default in accordance with the prescribed judicial procedures for foreclosure and receivership and in no case
exceeding five years from actual possession.65
From the evidence on record, the three parcels of land subject of the complaint were not mortgaged to the petitioner by the owners
thereof but were sold to the respondent as the vendee, albeit with the use of the petitioner's personal funds.
Futile, too, is petitioner's reliance on Article 22 of the New Civil Code which reads:

Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the same to him.66
The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER DETREMENTO PROTEST" (No person should unjustly
enrich himself at the expense of another). An action for recovery of what has been paid without just cause has been designated as
an accion in rem verso.67 This provision does not apply if, as in this case, the action is proscribed by the Constitution or by the
application of the pari delicto doctrine. 68 It may be unfair and unjust to bar the petitioner from filing an accion in rem verso over the
subject properties, or from recovering the money he paid for the said properties, but, as Lord Mansfield stated in the early case of
Holman vs. Johnson:69 "The objection that a contract is immoral or illegal as between the plaintiff and the defendant, sounds at all
times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in
general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff."
IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The decision of the Court of Appeals is AFFIRMED in toto.
Costs against the petitioner.
SO ORDERED.

A Digest of David Reyes vs. Jose Lim, G.R. No. 134241, August 11, 2003
Facts:
Petitioner David Reyes filed a complaint for annulment of contract and damages against respondents. The complaint alleged that
Reyes as seller and Lim as buyer entered into a contract to sell a parcel of land located along F.B. Harrison Street, Pasay City with a
monthly rental of P35,000.

The complaint claimed that Reyes had informed Harrison Lumber to vacate the Property before the end of January 1995. Reyes
also informed Keng and Harrison Lumber that if they failed to vacate by 8 March 1995, he would hold them liable for the penalty of
P400,000 a month as provided in the Contract to Sell. It was also alleged that Lim connived with Harrison Lumber not to vacate the
Property until the P400,000 monthly penalty would have accumulated and equaled the unpaid purchase price of P18,000,000.
Keng and Harrison Lumber denied that they connived with Lim to defraud Reyes, and that Reyes approved their request for an
extension of time to vacate the Property due to their difficulty in finding a new location for their business. Harrison Lumber claimed
that it had already started transferring some of its merchandise to its new business location in Malabon.
Lim filed his Answer stating that he was ready and willing to pay the balance of the purchase price. Lim requested a meeting with
Reyes through the latters daughter on the signing of the Deed of Absolute Sale and the payment of the balance but Reyes kept
postponing their meeting. Reyes offered to return the P10 million down payment to Lim because Reyes was having problems in
removing the lessee from the Property. Lim rejected Reyes offer and proceeded to verify the status of Reyes title to the Property.
Lim learned that Reyes had already sold the Property to Line One Foods Corporation Lim denied conniving with Keng and Harrison
Lumber to defraud Reyes.Reyes filed a Motion for Leave to File Amended Complaint due to supervening facts. These included the
filing by Lim of a complaint for estafa against Reyes as well as an action for specific performance and nullification of sale and title
plus damages before another trial court. The trial court granted the motion.
In his Amended Answer Lim prayed for the cancellation of the Contract to Sell and for the issuance of a writ of preliminary
attachment against Reyes. The trial court denied the prayer for a writ of preliminary attachment.
Lim requested in open court that Reyes be ordered to deposit the P10 million down payment with the cashier of the Regional Trial
Court of Paraaque. The trial court granted this motion.
Reyes filed a Motion to Set Aside the Order on the ground the Order practically granted the reliefs Lim prayed for in his Amended
Answer. The trial court denied Reyes motion.
The trial court denied Reyes Motion for Reconsideration. In the same order, the trial court directed Reyes to deposit the P10 million
down payment with the Clerk of Court.
Reyes filed a Petition for Certiorari with the Court of Appeals and prayed that the orders of the trial court be set aside for having
been issued with grave abuse of discretion amounting to lack of jurisdiction. But the Court of Appeals dismissed the petition for lack
of merit.
Hence, this petition for review.
Issue: Whether on not the equity jurisdiction is an applicable law on the matter?
Held:
The instant case, the Supreme Court held that if this was a case where there is hiatus in the law and in the Rules of Court. If this
case was left alone, the hiatus will result in unjust enrichment to Reyes at the expense of Lim. Here the court excercised equity
jurisdiction.The purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to ensure restitution so
that substantial justice may be attained in cases where the prescribed or customary forms of ordinary law are inadequate.
The Supreme Court also state that rescission is possible only when the person demanding rescission can return whatever he may
be obliged to restore. A court of equity will not rescind a contract unless there is restitution, that is, the parties are restored to the
status quo ante.
In this case, it was just, equitable and proper for the trial court to order the deposit of the P10 million down payment. The decision of
the Court of Appeals.was affirmed.

NATIONAL DEVELOPMENT COMPANY, petitioner, vs. MADRIGAL WAN HAI LINES CORPORATION, respondent.
Before us is a petition for review on certiorari[1] assailing the Decision of the Court of Appeals dated May 21, 2001 in CA-G.R. CV
No. 66026, affirming with modification the Decision dated August 6, 1999 of the Regional Trial Court, Branch 62, Makati City, in Civil
Case No. 96-558 for sum of money and damages.
The factual antecedents are:

The National Development Company, petitioner, is a government-owned and controlled corporation created and existing under
Commonwealth Act No. 182, as amended by Presidential Decree No. 1648. The National Shipping Corporation of the Philippines
(NSCP) is a wholly-owned subsidiary of petitioner offering shipping services for containerized cargo between the Far East ports and
the U.S. West Coast.[2]
On March 1, 1993, petitioners Board of Directors approved the privatization plan of the NSCP.[3] In May 1993, the Board offered for
sale to the public its one hundred percent (100%) stock ownership in NSCP worth P150,000.00, as well as its three (3) ocean-going
vessels (M/V National Honor, M/V National Pride and M/V National Dignity).[4]
Consequently, petitioner released to the public an Information Package[5] containing NSCPs background, assets, operational and
financial status. Attached thereto is NSCPs Financial Statements covering the period from December 1990 up to 1992.
The Information Package likewise contained the Negotiated Sale Guidelines which embodied the terms and conditions of the
proposed sale. Attached thereto is a Proposal Letter Form[6] wherein bidders were advised to submit their bids to be specified in the
same form. Petitioners desired price for the NSCP shares of stock and the vessels was Twenty-Six Million Seven Hundred Fifty
Thousand US Dollars ($26,750,000.00).[7]
During the public bidding on May 7, 1993, the lone bidder was herein respondent, Madrigal Wan Hai Lines Corporation, a domestic
private corporation duly organized and existing under the Philippine laws with principal office in Manila. Mr. Willie J. Uy, respondents
Consultant, submitted a bid of $15 million through the Proposal Letter Form.[8]
The respondents bid was rejected by petitioner and the Commission on Audit.
But since there was no other bidder, petitioner entered into a negotiated sale with respondent.[9] After several negotiations,
respondent increased its offer to $18.5 million which was accepted by petitioner. The negotiated sale was then approved by
petitioners Board of Directors on August 26, 1993, the President of the Philippines on September 28, 1993, the Committee on
Privatization on October 7, 1993, and the Commission on Audit on February 2, 1994.[10]
Accordingly, on February 11, 1994, petitioner issued a Notice of Award to respondent of the sale of the NSCP shares and vessels for
$18.5 million.[11] On March 14, 1994, petitioner and respondent executed the corresponding Contract of Sale,[12] and the latter
acquired NSCP, its assets, personnel, records and its three (3) vessels.[13]
On September 22, 1994, respondent was surprised to receive from the US Department of Treasury, Internal Revenue Service (US
IRS), a Notice of Final Assessment against NSCP for deficiency taxes on gross transportation income derived from US sources for
the years ending 1990, 1991 and 1992.[14] The tax assessment was based on Section 887 of the US Internal Revenue Code
imposing a 4% tax on gross transportation income of any foreign corporation derived from US sources.[15]
Anxious that the delay in the payment of the deficiency taxes may hamper its shipping operations overseas, respondent, on October
14, 1994, assumed and paid petitioners tax liabilities, including the tax due for the year 1993, in the total amount of $671,653.00.
These taxes were incurred prior to respondents take-over of NSCPs management.[16] Respondent likewise paid the additional
amount of $16,533.10 as penalty for late payment.[17]
Eventually, respondent demanded from petitioner reimbursement for the amounts it paid to the US IRS. But petitioner refused
despite repeated demands. Hence, on March 20, 1996, respondent filed with the Regional Trial Court (RTC), Branch 62, Makati City
a complaint[18] against petitioner for reimbursement and damages, docketed as Civil Case No. 96-558.
On August 6, 1999, the RTC rendered a Decision[19] in favor of respondent and against petitioner. The trial court found, among
others, that even before the sale, petitioner knew that NSCP had tax liabilities with the US IRS, yet it did not inform respondent
about it. The dispositive portion of the RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
(1) defendant (now petitioner) to pay plaintiff (now respondent), to wit:
a. US $671,653, US $14,415.87, and US $2,117.23 or their peso equivalent at the time of payment;
b. 6% interest of the above-mentioned amounts per annum from the time of the filing of the complaint until the same shall have been
fully paid;

c. P100,000.00 as exemplary damages;

d. P100,000.00 as attorneys fees;
(2) The Counterclaims of the defendant dated August 20, 1996 is DISMISSED.[20]
Upon appeal, the Court of Appeals rendered a Decision[21] on May 21, 2001 affirming the trial courts judgment with modification,
thus:

WHEREFORE, upon the premises, the Decision appealed from is AFFIRMED with the MODIFICATION that the award of exemplary
damages is DELETED and the award of attorneys fees is REDUCED to P20,000.00.
SO ORDERED.[22]
The Court of Appeals held:
We concur with the trial court in ordering defendant-appellant (now petitioner) to reimburse plaintiff-appellee (now respondent) the
deficiency taxes it paid to the US IRS, and quote with favor its well-written ratiocination as follows:
In its effort to extricate itself from liability, defendant further argues that the sale with the plaintiff was on CASH, AS-WHERE-IS basis
and that plaintiff, as an offeror, was responsible for informing itself with respect to any and all conditions regarding the NSCP shares
and vessels which may in any manner affect the offer price or the nature of offerors proposal (Exhs. 8, 8-A to A-B).
The above-mentioned contracts form part of the NSCPs Negotiated Sale Guidelines dated March 1993 prepared by NSCP and
required by NDC (now petitioner) to be attached with the Proposal Letter Form, which was also prepared by NSCP, and submitted to
NDC by bidders. These contracts are ready-made form of contracts, the preparation of which was left entirely to the NSCP. Their
nature is that of a contract of adhesion. A contract of adhesion may be struck down as void and unenforceable, for being subversive
of public policy, when the weaker party is imposed upon in dealing with the dominant bargaining party and is reduced to the
alternative of taking it or leaving it, completely deprived of the opportunity to bargain on equal footing (Saludo, Jr. vs. Court of
Appeals, 207 SCRA 498 [1992]). In the case at bar, the acceptance of the Negotiated Sale Guidelines and submission thereof
together with the Proposal Letter Form by a prospective buyer is a required formality of the bidding. Under the circumstance, the
plaintiff, in taking such contracts, may not be deemed to have been given the opportunity to bargain on equal footing.[23]
Petitioner now comes to us via the instant petition, ascribing to the Court of Appeals the following error:
THE COURT OF APPEALS ERRED IN CONCURRING WITH THE TRIAL COURT IN ORDERING HEREIN PETITIONER TO
REIMBURSE RESPONDENT THE DEFICIENCY TAXES IT PAID TO THE US IRS.[24]
Petitioner contends that contrary to the findings of both lower courts, the Negotiated Sale Guidelines and the Proposal Letter Form
are mere invitations to bid. As such, they are not contracts and should be treated as mere offer or proposal to prospective buyers of
the NSCP shares and marine vessels.[25]
Petitioner further stresses that the sale was on an AS IS, WHERE IS basis.[26] By accepting the terms and conditions of the sale,
respondent, in effect, accepted the risk of an AS IS, WHERE IS arrangement wherein the latter is charged with caution under the
principle of caveat emptor.[27] Pursuant to the Negotiated Sale Guidelines and the Proposal Letter Form, respondent should have
apprised itself of the financial status and liabilities of NSCP and its marine vessels. Therefore, for its predicament, respondent
should not fault petitioner.[28]
For its part, respondent maintains that the Court of Appeals did not commit any error in its challenged Decision. The Negotiated Sale
Guidelines and the Proposal Letter Form constitute a contract of adhesion because the buyer was required to submit its bid through
a pro-forma proposal letter.[29] The offer to bidders was on a take it, or leave it basis, leaving no room for argument or negotiation,
except as to the price.[30] Being a contract of adhesion, it should be strictly construed against the seller, herein petitioner.[31]
Respondent also contends that under Articles 19,[32] 20[33] and 21[34] of the Civil Code, petitioner had then the legal duty to
disclose its tax liabilities. Records show that respondent repeatedly inquired from petitioner about such matter.[35] Instead of telling
the truth, petitioner made several assurances that the NSCP was a clean, lien-free going concern and profitable entity.[36] In fact,
under Section 7.01 of the Negotiated Sale Guidelines, petitioner made a warranty against any lien or encumbrance.[37]
In this petition, the issues for our resolution are:
(1) Whether the Negotiated Sale Guidelines and the Proposal Letter Form constitute a contract of adhesion; and
(2) Whether petitioner is legally bound to reimburse respondent for the amounts it paid corresponding to the formers tax liabilities to
the US IRS.
On the first issue, we agree with both lower courts that the Negotiated Sale Guidelines and the Proposal Letter Form constitute a
contract of adhesion.

A contract of adhesion is one in which one of the parties imposes a ready-made form of contract, which the other party may accept
or reject, but which the latter cannot modify. In other words, in such contract, the terms therein are fixed by one party, and the other
party has merely to take it, or leave it.[38] Thus, it can be struck down as void and unenforceable for being subversive of public
policy, especially when the will of the dominant party is imposed upon the weaker party and the latter is denied the opportunity to
bargain on equal footing.[39]

It must be stressed, however, that contracts of adhesion are not strictly against the law. In Ong Yiu vs. Court of Appeals[40] and Pan
American World Airways, Inc. vs. Intermediate Appellate Court,[41] we held that contracts of adhesion wherein one party imposes a
ready-made form of contract on the other are not entirely prohibited. The other party is free to reject it entirely; if he adheres, he
gives his consent.
Nevertheless, the inequality of bargaining positions and the resulting impairment of the other partys freedom to contract necessarily
call upon us to exercise our mandate as a court of justice and equity. Indeed, we have ruled that contracts of such nature obviously
call for greater strictness and vigilance on the part of the courts of justice with a view to protecting the weaker party from abuses and
imposition and prevent their becoming traps for the unwary.[42]
In the case at bar, the Negotiated Sale Guidelines and Proposal Letter Form fit the characteristics of a contract of adhesion. On their
very face, these documents show that petitioner NDC had control over the terms and conditions of the sale. The Negotiated Sale
Guidelines provides:
4.0 PREPARATION OF OFFERS
4.01 Offerors shall use the Proposal Letter Form for Sale of NSCP and Vessels provided herein.
4.02 All offers should be accompanied by: x x x (b) the Negotiated Sale Guidelines duly signed by the offeror or authorized
representative in every page thereof x x x.
xxxxxxxxx
14.0 OTHER PROVISIONS
14.01 NDC and APT reserve the right in their discretion to reject any and all offers, to waive any formality therein and of these
guidelines, and to consider only such offer as may be advantageous to the National Government.
NDC and APT may, at their discretion require additional information and/or documents from any offeror.
14.02 NDC and APT reserve the right to amend the Guidelines prior to the submission of offers x x x.
xxxxxxxxx
14.05 Violation of any of these terms and conditions shall cause the cancellation of the award and the automatic forfeiture of the
deposit.[43] (Underscoring ours)
The Proposal Letter Form provides that the bidder is bound by the Negotiated Sale Guidelines, thus:
It is understood that:
1. We accept and undertake without any reservations whatsoever that, if this offer to purchase the vessels and NSCP shares is
accepted, we shall be subjected to all the terms and conditions issued by the NDC and APT including those outlined in the March,
1993 Information Memorandum and the Negotiated Sale Guidelines for the sale of NSCP and the three vessels.
xxxxxxxxx
5. We represent and warrant that: (i) we have examined and understood the Information Package, (ii) we accept the conditions of
the March, 1993 Negotiated Sale Guidelines, including the right of NDC and APT to reject any and all offers without thereby creating
any liability in our favor x x x.[44] (Underscoring ours)
Clearly, respondent had hardly any say in the terms and conditions expressed in the Negotiated Sale Guidelines. Other than the
price of the offer, respondent was left with little or no alternative at all but to comply with its terms. Thus, the trial court correctly
found:
The above-mentioned contracts form part of NSCPs Negotiated Sale Guidelines dated March 1993 prepared by NSCP and required
by NDC to be attached with the Proposal Letter Form, which was also prepared by NSCP, and submitted to NDC by bidders. These
contracts are ready-made form of contracts, the preparation of which was left entirely to the NSCP. Their nature is that of a contract
of adhesion. x x x. In the case at bar, the acceptance of the Negotiated Sale Guidelines and submission thereof together with the
Proposal Letter Form by a prospective buyer is a required formality of the bidding. Under this circumstance, the plaintiff, in taking
such contracts, may not be deemed to have been given the opportunity to bargain on equal footing.[45] (Underscoring ours)

Being a contract of adhesion, we reiterate that it is our duty to apply a strict construction of its terms upon the party who made the
same[46] and to construe any ambiguity in such contract against its author.[47] It is public policy to protect a party (herein
respondent) against oppressive and onerous conditions.[48]

We are not impressed by petitioners argument that the Negotiated Sale Guidelines was a mere invitation to bid.[49] On the contrary,
the Contract of Sale itself provides that it is an integral part or applicable to this Contract, thus:
8. All of the terms and conditions of (a) the March 1993 NDC Information Memorandum and Negotiated Sale Guidelines, including
the amendments thereto, more particularly those contained in NDCs letter to A. P. Madrigal Steamship Co. Inc. dated May 4, 1993,
and (b) the Notice of Award dated February 11, 1993 are hereby incorporated herein by reference and shall insofar as they are not
inconsistent with the terms and conditions hereof, be applicable to this Contract.[50] (Underscoring ours)
We now determine whether petitioner is obliged under the law and the contract to reimburse respondent for the amounts it paid
corresponding to the formers US tax liabilities. We quote with approval the trial courts findings affirmed by the Court of Appeals,
thus:
From the foregoing facts, there is no doubt that during the negotiation for the sale of defendants (now petitioners) shares of stocks
and three (3) ocean-going vessels, NSCP was already aware of an impending assessment by the US government on NSCPs gross
transportation income derived from US sources. The exchanges of communications (Exhibits D, E, F, G, H and I) between NSCP
and US IRS are glaring proof of NSCPs prior knowledge of a possible assessment or additional taxes. Moreover, in the Partial
Printout of NSCPs Unaudited Financial Statements for the Year ending December 31, 1993 (Exhibit V), NSCP made provisions for
US taxes as follows: for the year ending 1993, US $3,919,018.81 (Exh. V-2), and for the years ending 1990-1992, US
$11,736,192.64 (Exh. V-3). Exhibit V is a clear indication that, indeed, NSCP had prior knowledge of such deficiency taxes, and in
fact, recognized the same even though there was no final assessment yet from the US IRS.[51]
xxxxxxxxx
The Partial Printout of NSCPs Unaudited Financial Statements for the Year ending December 1993 (Exhs. 2, 2-A to 2-B or Exhs. V,
V-2 to V-3), true to the word of the defendant (now petitioner), carries provisions for US taxes. The problem, however, with this
evidence is there is no showing that this had been furnished the plaintiff (now respondent). On the contrary, plaintiff vehemently
asserts having been denied by defendant access to the latters accounting books and financial statements. Basic in the law of
evidence that he who asserts the affirmative of the allegation has the burden of proving it (Geraldez vs. CA, 230 SCRA 320). The
defendant has failed to prove that the pertinent statement made in this document or the document itself had been disclosed to the
plaintiff.
The Unaudited Financial Statements of NSCP (Exhs. 3, 3-A and 3-B), which allegedly includes the subject US taxes among NSCPs
Trade Payable and Accrued Expenses and Dividends, does not clearly indicate the said taxes. The Trade Payable and Accrued
Expenses and Dividends as including the said taxes is vague or unequivocal on the matter. By mere reading of it, one would not
have the slightest inkling or suspicion that such taxes exist as among NSCPs liabilities.[52] (Underscoring ours)
There is no dispute that petitioner was aware of its US tax liabilities considering its numerous communications with the agents of the
United States Internal Revenue Service, just prior to the sale of NSCP and the marine vessels to respondent.[53] The NSCP itself
made an ambiguous contingent provision in its Unaudited Financial Statements for the year ending December 1993, thereby
indicating its awareness of a possible US tax assessment.[54] It bears stressing that petitioner did not convey such information to
respondent despite its inquiries.[55] Obviously, such concealment constitutes bad faith on its part. Bad faith implies a conscious and
intentional design to do a wrongful act for a dishonest purpose or moral obliquity; it x x x contemplates a state of mind affirmatively
operating with furtive design or ill will.[56]
We see no reason to disturb the factual findings of both the trial court and Court of Appeals which petitioner does not dispute.
Absent any showing that such findings were reached arbitrarily or without sufficient basis, the same must be respected and binding
upon us.[57]
That petitioner has the obligation to reimburse respondent is likewise clear under the Negotiated Sale Guidelines, which provides:
7.0 OFFERORS RESPONSIBILITY
7.01 x x x. Seller gives no warranty regarding the sale of the shares and assets except for a warranty on ownership and against any
liens or encumbrances, and the offeror shall not be relieved of his obligation to make the aforesaid examinations and verifications.
[58] (Undersoring ours)
The terms of the parties contract are clear and unequivocal. The seller (petitioner NDC) gives a warranty as to the ownership of the
object of sale and against any lien and encumbrance. A tax liability of $688,186.10 was then a potential lien upon NSCPs marine
vessels. Being in bad faith for having failed to inform the buyer, herein respondent, of such potential lien, petitioner breached its
warranty and should, therefore, be held liable for the resulting damage, i.e., reimbursement for the amounts paid by petitioner to the
US IRS.
The Negotiated Sale Guidelines further provides:

2.0 TERMS OF SALE

2.01 The sale of the NSCP and the three vessels shall be strictly on CASH, AS IS-WHERE IS basis.[59] (Underscoring ours)
In Hian vs. Court of Tax Appeals,[60] we had the occasion to construe the phrase as is, where is basis, thus:
We cannot accept the contention in the Governments Memorandum of March 31, 1976 that Condition No. 5 in the Notice of Sale to
the effect that The above-mentioned articles (the tobacco) are offered for sale AS IS and the Bureau of Customs gives no warranty
as to their condition relieves the Bureau of Customs of liability for the storage fees in dispute. As we understand said Condition No.
5, it refers to the physical condition of the tobacco and not to the legal situation in which it was at the time of the sale, as could be
implied from the right of inspection to prospective bidders under Condition No. 1. x x x. (Underscoring ours)
The phrase as is, where is basis pertains solely to the physical condition of the thing sold, not to its legal situation. In the case at bar,
the US tax liabilities constitute a potential lien which applies to NSCPs legal situation, not to its physical aspect. Thus, respondent as
a buyer, has no obligation to shoulder the same.
The case at bar calls to mind the principle of unjust enrichment Nemo cum alterius detrimento locupletari potest. No person shall be
allowed to enrich himself unjustly at the expense of others. This principle of equity has been enshrined in our Civil Code, Article 22
of which provides:
Art. 22. Every person who through an act or performance by another or by any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the same to him.
Justice and equity thus oblige that petitioner be held liable for NSCPs tax liabilities and reimburse respondent for the amounts it
paid. It would be unjust enrichment on the part of petitioner to be relieved of that obligation.
The deletion of the award of exemplary damages and reduction of the attorneys fees by the Court of Appeals are not challenged by
either of the parties. At any rate, we find no error in its ruling quoted hereunder:
However, we find no basis for the grant of exemplary damages which can be granted only in addition to moral, temperate, liquidated
or compensatory damages (Art. 2229, Civil Code of the Philippines), none of which was awarded or deserved in this case. The trial
court merely granted plaintiffs prayer in its main cause of action for reimbursement of taxes plaintiff paid to the U.S. Since no actual
or moral damages was awarded, there is no legal basis for the award of exemplary damages which may only be granted in addition
thereto (Scott Consultants and Resources Development Corp. Inc. vs. CA, 242 SCRA 393).
xxxxxxxxx
Anent the award of attorneys fees, we find it excessive, considering that the instant case is a simple action for reimbursement and
did not involve extensive litigation. Nothing precludes the appellate courts from reducing the award of attorneys fees when it is found
to be unconscionable or excessive under the circumstances (Brahm Industries Inc. vs. NLRC, 280 SCRA 828). Thus, the award of
attorneys fees is reduced to P20,000.00.[61]
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals is AFFIRMED.
SO ORDERED.

G.R. No. L-39999 May 31, 1984

ROY PADILLA, FILOMENO GALDONES, ISMAEL GONZALGO and JOSE FARLEY BEDENIA, petitioners, vs. COURT OF
APPEALS, respondent.
This is a petition for review on certiorari of a Court of Appeals' decision which reversed the trial court's judgment of conviction and
acquitted the petitioners of the crime of grave coercion on the ground of reasonable doubt but inspite of the acquittal ordered them
to pay jointly and severally the amount of P9,000.00 to the complainants as actual damages.
The petitioners were charged under the following information:
The undersigned Fiscal accused ROY PADILLA, FILOMENO GALDONES, PEPITO BEDENIA, YOLLY RICO, DAVID BERMUNDO,
VILLANOAC, ROBERTO ROSALES, VILLANIA, ROMEO GARRIDO, JOSE ORTEGA, JR., RICARDO CELESTINO, REALINGO
alias "KAMLON", JOHN DOE alias TATO, and FOURTEEN (14) RICARDO DOES of the crime of GRAVE COERCION, committed
as follows:
That on or about February 8, 1964 at around 9:00 o'clock in the morning, in the municipality of Jose Panganiban, province of
Camarines Norte, Philippines, and within the jurisdiction of this Honorable Court, the above- named accused, Roy Padilla, Filomeno
Galdones, Pepito Bedenia, Yolly Rico, David Bermundo, Villanoac, Roberto Rosales, Villania, Romeo Garrido, Jose Ortega, Jr.,
Ricardo Celestino, Realingo alias Kamlon, John Doe alias Tato, and Fourteen Richard Does, by confederating and mutually helping
one another, and acting without any authority of law, did then and there wilfully, unlawfully, and feloniously, by means of threats,
force and violence prevent Antonio Vergara and his family to close their stall located at the Public Market, Building No. 3, Jose
Panganiban, Camarines Norte, and by subsequently forcibly opening the door of said stall and thereafter brutally demolishing and
destroying said stall and the furnitures therein by axes and other massive instruments, and carrying away the goods, wares and
merchandise, to the damage and prejudice of the said Antonio Vergara and his family in the amount of P30,000.00 in concept of
actual or compensatory and moral damages, and further the sum of P20,000.00 as exemplary damages.
That in committing the offense, the accused took advantage of their public positions: Roy Padilla, being the incumbent municipal
mayor, and the rest of the accused being policemen, except Ricardo Celestino who is a civilian, all of Jose Panganiban, Camarines
Norte, and that it was committed with evident premeditation.
The Court of First Instance of Camarines Norte, Tenth Judicial District rendered a decision, the dispositive portion of which states
that:
IN VIEW OF THE FOREGOING, the Court finds the accused Roy Padilla, Filomeno Galdonez, Ismael Gonzalgo and Jose Parley
Bedenia guilty beyond reasonable doubt of the crime of grave coercion, and hereby imposes upon them to suffer an imprisonment
of FIVE (5) months and One (1) day; to pay a fine of P500.00 each; to pay actual and compensatory damages in the amount of
P10,000.00; moral damages in the amount of P30,000.00; and another P10,000.00 for exemplary damages, jointly and severally,
and all the accessory penalties provided for by law; and to pay the proportionate costs of this proceedings.
The accused Federico Realingo alias 'Kamlon', David Bermundo, Christopher Villanoac, Godofredo Villania, Romeo Garrido,
Roberto Rosales, Ricardo Celestino and Jose Ortega, are hereby ordered acquitted on grounds of reasonable doubt for their
criminal participation in the crime charged.
The petitioners appealed the judgment of conviction to the Court of Appeals. They contended that the trial court's finding of grave
coercion was not supported by the evidence. According to the petitioners, the town mayor had the power to order the clearance of
market premises and the removal of the complainants' stall because the municipality had enacted municipal ordinances pursuant to
which the market stall was a nuisance per se. The petitioners stated that the lower court erred in finding that the demolition of the
complainants' stall was a violation of the very directive of the petitioner Mayor which gave the stall owners seventy two (72) hours to
vacate the market premises. The petitioners questioned the imposition of prison terms of five months and one day and of accessory
penalties provided by law. They also challenged the order to pay fines of P500.00 each, P10,000.00 actual and compensatory
damages, P30,000.00 moral damages, P10,000.00 exemplary damages, and the costs of the suit.
The dispositive portion of the decision of the respondent Court of Appeals states:
WHEREFORE, we hereby modify the judgment appealed from in the sense that the appellants are acquitted on ground of
reasonable doubt. but they are ordered to pay jointly and severally to complainants the amount of P9,600.00, as actual damages.
The petitioners filed a motion for reconsideration contending that the acquittal of the defendants-appellants as to criminal liability
results in the extinction of their civil liability. The Court of Appeals denied the motion holding that:
xxx xxx xxx

... appellants' acquittal was based on reasonable doubt whether the crime of coercion was committed, not on facts that no unlawful
act was committed; as their taking the law into their hands, destructing (sic) complainants' properties is unlawful, and, as evidence
on record established that complainants suffered actual damages, the imposition of actual damages is correct.

Consequently, the petitioners filed this special civil action, contending that:
I
THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW OR GRAVELY ABUSED ITS DISCRETION IN IMPOSING
UPON PETITIONERS PAYMENT OF DAMAGES TO COMPLAINANTS AFTER ACQUITTING PETITIONERS OF THE CRIME
CHARGED FROM WHICH SAID LIABILITY AROSE.
II
THE COURT OF APPEALS ERRED IN HOLDING IN ITS RESOLUTION DATED DECEMBER 26, 1974 THAT SINCE
APPELLANTS' ACQUITTAL WAS BASED ON REASONABLE DOUBT, NOT ON FACTS THAT NO UNLAWFUL ACT WAS
COMMITTED, THE IMPOSITION OF ACTUAL DAMAGES IS CORRECT.
III
THE COURT OF APPEALS COMMITTED A LEGAL INCONSISTENCY, IF NOT PLAIN JUDICIAL ERROR, IN HOLDING IN ITS
APPEALED RESOLUTION THAT PETITIONERS COMMITTED AN UNLAWFUL ACT, THAT IS TAKING THE LAW INTO THEIR
HANDS, DESTRUCTING (sic) 'COMPLAINANTS' PROPERTIES', AFTER HOLDING IN ITS MAIN DECISION OF NOVEMBER
6,1974 THAT THE ACTS FOR WHICH THEY WERE CHARGED DID NOT CONSTITUTE GRAVE COERCION AND THEY WERE
NOT CHARGED OF ANY OTHER CRIME.
IV
THE COURT OF APPEALS ERRED IN ORDERING THE PETITIONERS HEREIN, APPELLANTS IN CA-G.R. NO. 13456CR,
JOINTLY AND SEVERALLY, TO PAY COMPLAINANTS P9,600.00 IN SUPPOSED ACTUAL DAMAGES.
The issue posed in the instant proceeding is whether or not the respondent court committed a reversible error in requiring the
petitioners to pay civil indemnity to the complainants after acquitting them from the criminal charge.
Petitioners maintain the view that where the civil liability which is included in the criminal action is that arising from and as a
consequence of the criminal act, and the defendant was acquitted in the criminal case, (no civil liability arising from the criminal
case), no civil liability arising from the criminal charge could be imposed upon him. They cite precedents to the effect that the liability
of the defendant for the return of the amount received by him may not be enforced in the criminal case but must be raised in a
separate civil action for the recovery of the said amount (People v. Pantig, 97 Phil. 748; following the doctrine laid down in Manila
Railroad Co. v. Honorable Rodolfo Baltazar, 49 O.G. 3874; Pueblo contra Abellera, 69 Phil. 623; People v. Maniago 69 Phil. 496;
People v. Miranda, 5 SCRA 1067; Aldaba v. Elepafio 116 Phil. 457). In the case before us, the petitioners were acquitted not
because they did not commit the acts stated in the charge against them. There is no dispute over the forcible opening of the market
stall, its demolition with axes and other instruments, and the carting away of the merchandize. The petitioners were acquitted
because these acts were denominated coercion when they properly constituted some other offense such as threat or malicious
mischief.
The respondent Court of Appeals stated in its decision:
For a complaint to prosper under the foregoing provision, the violence must be employed against the person, not against property as
what happened in the case at bar. ...
xxx xxx xxx
The next problem is: May the accused be convicted of an offense other than coercion?
From all appearances, they should have been prosecuted either for threats or malicious mischief. But the law does not allow us to
render judgment of conviction for either of these offenses for the reason that they were not indicted for, these offenses. The
information under which they were prosecuted does not allege the elements of either threats or malicious mischief. Although the
information mentions that the act was by means of threats', it does not allege the particular threat made. An accused person is
entitled to be informed of the nature of the acts imputed to him before he can be made to enter into trial upon a valid information.
We rule that the crime of grave coercion has not been proved in accordance with law.
While appellants are entitled to acquittal they nevertheless are liable for the actual damages suffered by the complainants by reason
of the demolition of the stall and loss of some of their properties. The extinction of the penal action does not carry with it that of the
civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist.
(Rule 111, Sec. 3 (c), Rev. Rules of Court; Laperal v. Aliza, 51 OG.R. 1311, People v. Velez, 44 OG. 1811). In the instant case, the
fact from which the civil might arise, namely, the demolition of the stall and loss of the properties contained therein; exists, and this is
not denied by the accused. And since there is no showing that the complainants have reserved or waived their right to institute a
separate civil action, the civil aspect therein is deemed instituted with the criminal action. (Rule 111, Sec. 1, Rev. Rules of Court).
xxx xxx xxx

Section 1 of Rule 111 of the Rules of Court states the fundamental proposition that when a criminal action is instituted, the civil
action for recovery of civil liability arising from the offense charged is impliedly instituted with it. There is no implied institution when
the offended party expressly waives the civil action or reserves his right to institute it separately. (Morte Sr. v. Alvizo, Jr., 101 SCRA
221).
The extinction of the civil action by reason of acquittal in the criminal case refers exclusively to civil liability ex delicto founded on
Article 100 of the Revised Penal Code. (Elcano v. Hill, 77 SCRA 98; Virata v. Ochoa, 81 SCRA 472). In other words, the civil liability
which is also extinguished upon acquittal of the accused is the civil liability arising from the act as a crime.
As easily as 1942, the Supreme Court speaking through Justice Jorge Bocobo in Barredo v. Garcia, et at. 73 Phil. 607 laid down the
rule that the same punishable act or omission can create two kinds of civil liabilities against the accused and, where provided by law,
his employer. 'There is the civil liability arising from the act as a crime and the liability arising from the same act as a quasi-delict.
Either one of these two types of civil liability may be enforced against the accused, However, the offended party cannot recover
damages under both types of liability. For instance, in cases of criminal negligence or crimes due to reckless imprudence, Article
2177 of the Civil Code provides:
Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from
negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant.
Section 3 (c) of Rule 111 specifically provides that:
Sec. 3. Other civil actions arising from offenses. In all cases not included in the preceding section the following rules shall be
observed:
xxx xxx xxx
xxx xxx xxx
(c) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a
final judgment that the fact from which the civil might arise did not exist. In other cases, the person entitled to the civil action may
institute it in the Jurisdiction and in the manner provided by law against the person who may be liable for restitution of the thing and
reparation or indemnity for the damage suffered.
The judgment of acquittal extinguishes the liability of the accused for damages only when it includes a declaration that the facts from
which the civil might arise did not exist. Thus, the civil liability is not extinguished by acquittal where the acquittal is based on
reasonable doubt (PNB v. Catipon, 98 Phil. 286) as only preponderance of evidence is required in civil cases; where the court
expressly declares that the liability of the accused is not criminal but only civil in nature (De Guzman v. Alvia, 96 Phil. 558; People v.
Pantig, supra) as, for instance, in the felonies of estafa, theft, and malicious mischief committed by certain relatives who thereby
incur only civil liability (See Art. 332, Revised Penal Code); and, where the civil liability does not arise from or is not based upon the
criminal act of which the accused was acquitted (Castro v. Collector of Internal Revenue, 4 SCRA 1093; See Regalado, Remedial
Law Compendium, 1983 ed., p. 623). Article 29 of the Civil Code also provides that:
When the accused in a criminal prosecution is acquitted on the ground that his guilt has not been proved beyond reasonable doubt,
a civil action for damages for the same act or omission may be instituted. Such action requires only a preponderance of evidence.
Upon motion of the defendant, the court may require the plaintiff to file a bond to answer for damages in case the complaint should
be found to be malicious.
If in a criminal case the judgment of acquittal is based upon reasonable doubt, the court shall so declare. In the absence of any
declaration to that effect, it may be inferred from the text of the decision whether or not the acquittal is due to that ground.
More recently, we held that the acquittal of the defendant in the criminal case would not constitute an obstacle to the filing of a civil
case based on the same acts which led to the criminal prosecution:
... The finding by the respondent court that he spent said sum for and in the interest of the Capiz Agricultural and Fishery School and
for his personal benefit is not a declaration that the fact upon which Civil Case No. V-3339 is based does not exist. The civil action
barred by such a declaration is the civil liability arising from the offense charged, which is the one impliedly instituted with the
criminal action. (Section 1, Rule III, Rules of Court.) Such a declaration would not bar a civil action filed against an accused who had
been acquitted in the criminal case if the criminal action is predicated on factual or legal considerations other than the commission of
the offense charged. A person may be acquitted of malversation where, as in the case at bar, he could show that he did not
misappropriate the public funds in his possession, but he could be rendered liable to restore said funds or at least to make a proper
accounting thereof if he shall spend the same for purposes which are not authorized nor intended, and in a manner not permitted by
applicable rules and regulations. (Republic v. Bello, 120 SCRA 203)

There appear to be no sound reasons to require a separate civil action to still be filed considering that the facts to be proved in the
civil case have already been established in the criminal proceedings where the accused was acquitted. Due process has been
accorded the accused. He was, in fact, exonerated of the criminal charged. The constitutional presumption of innocence called for

more vigilant efforts on the part of prosecuting attorneys and defense counsel, a keener awareness by all witnesses of the serious
implications of perjury, and a more studied consideration by the judge of the entire records and of applicable statutes and
precedents. To require a separate civil action simply because the accused was acquitted would mean needless clogging of court
dockets and unnecessary duplication of litigation with all its attendant loss of time, effort, and money on the part of all concerned.
The trial court found the following facts clearly established by the evidence adduced by both the prosecution and the defense:
xxx xxx xxx
(9) In the morning of February 8, 1964, then Chief Galdones, complying with the instructions contained in said Memorandum No. 32
of the Mayor, and upon seeing that Antonio Vergara had not vacated the premises in question, with the aid of his policemen, forced
upon the store or stall and ordered the removal of the goods inside the store of Vergara, at the same time taking inventory of the
goods taken out, piled them outside in front of the store and had it cordoned with a rope, and after all the goods were taken out from
the store, ordered the demolition of said stall of Antonio Vergara. Since then up to the trial of this case, the whereabouts of the
goods taken out from the store nor the materials of the demolished stall have not been made known.
The respondent Court of Appeals made a similar finding that:
On the morning of February 8th, because the said Vergaras had not up to that time complied with the order to vacate, the coaccused Chief of Police Galdones and some members of his police force, went to the market and, using ax, crowbars and hammers,
demolished the stall of the Vergaras who were not present or around, and after having first inventoried the goods and merchandise
found therein, they had them brought to the municipal building for safekeeping. Inspite of notice served upon the Vergaras to take
possession of the goods and merchandise thus taken away, the latter refused to do so.
The loss and damage to the Vergaras as they evaluated them were:
Cost of stall construction P1,300.00
Value of furniture and equipment
judgment destroyed 300.00
Value of goods and equipment taken 8,000.00
P9,600.00
It is not disputed that the accused demolished the grocery stall of the complainants Vergaras and carted away its contents. The
defense that they did so in order to abate what they considered a nuisance per se is untenable, This finds no support in law and in
fact. The couple has been paying rentals for the premises to the government which allowed them to lease the stall. It is, therefore,
farfetched to say that the stall was a nuisance per se which could be summarily abated.
The petitioners, themselves, do not deny the fact that they caused the destruction of the complainant's market stall and had its
contents carted away. They state:
On February 8, 1964, despite personal pleas on Vergaras by the Mayor to vacate the passageways of Market Building No. 3, the
Vergaras were still in the premises, so the petitioners Chief of Police and members of the Police Force of Jose Panganiban,
pursuant to the Mayor' 6 directives, demolished the store of the Vergaras, made an inventory of the goods found in said store, and
brought these goods to the municipal building under the custody of the Municipal Treasurer, ...
The only supposed obstacle is the provision of Article 29 of the Civil Code, earlier cited, that "when the accused in a criminal
prosecution is acquitted on the ground that his guilt has not been proved beyond reasonable doubt, a civil action for damages for the
same act or omission may be instituted." According to some scholars, this provision of substantive law calls for a separate civil
action and cannot be modified by a rule of remedial law even in the interests of economy and simplicity and following the dictates of
logic and common sense.
As stated by retired Judge J. Cezar Sangco:
... if the Court finds the evidence sufficient to sustain the civil action but inadequate to justify a conviction in the criminal action, may
it render judgment acquitting the accused on reasonable doubt, but hold him civilly liable nonetheless? An affirmative answer to this
question would be consistent with the doctrine that the two are distinct and separate actions, and win (a) dispense with the
reinstituting of the same civil action, or one based on quasi-delict or other independent civil action, and of presenting the same
evidence: (b) save the injured party unnecessary expenses in the prosecution of the civil action or enable him to take advantage of
the free services of the fiscal; and (c) otherwise resolve the unsettling implications of permitting the reinstitution of a separate civil
action whether based on delict, or quasi-delict, or other independent civil actions.

... But for the court to be able to adjudicate in the manner here suggested, Art. 29 of the Civil Code should be amended because it
clearly and expressly provides that the civil action based on the same act or omission may only be instituted in a separate action,

and therefore, may not inferentially be resolved in the same criminal action. To dismiss the civil action upon acquittal of the accused
and disallow the reinstitution of any other civil action, would likewise render, unjustifiably, the acquittal on reasonable doubt without
any significance, and would violate the doctrine that the two actions are distinct and separate.
In the light of the foregoing exposition, it seems evident that there is much sophistry and no pragmatism in the doctrine that it is
inconsistent to award in the same proceedings damages against the accused after acquitting him on reasonable doubt. Such
doctrine must recognize the distinct and separate character of the two actions, the nature of an acquittal on reasonable doubt, the
vexatious and oppressive effects of a reservation or institution of a separate civil action, and that the injured party is entitled to
damages not because the act or omission is punishable but because he was damaged or injured thereby (Sangco, Philippine Law
on Torts and Damages, pp. 288-289).
We see no need to amend Article 29 of the Civil Code in order to allow a court to grant damages despite a judgment of acquittal
based on reasonable doubt. What Article 29 clearly and expressly provides is a remedy for the plaintiff in case the defendant has
been acquitted in a criminal prosecution on the ground that his guilt has not been proved beyond reasonable doubt. It merely
emphasizes that a civil action for damages is not precluded by an acquittal for the same criminal act or omission. The Civil Code
provision does not state that the remedy can be availed of only in a separate civil action. A separate civil case may be filed but there
is no statement that such separate filing is the only and exclusive permissible mode of recovering damages.
There is nothing contrary to the Civil Code provision in the rendition of a judgment of acquittal and a judgment awarding damages in
the same criminal action. The two can stand side by side. A judgment of acquittal operates to extinguish the criminal liability. It does
not, however, extinguish the civil liability unless there is clear showing that the act from which civil liability might arise did not exist.
A different conclusion would be attributing to the Civil Code a trivial requirement, a provision which imposes an uncalled for burden
before one who has already been the victim of a condemnable, yet non-criminal, act may be accorded the justice which he seeks.
We further note the rationale behind Art. 29 of the Civil Code in arriving at the intent of the legislator that they could not possibly
have intended to make it more difficult for the aggrieved party to recover just compensation by making a separate civil action
mandatory and exclusive:
The old rule that the acquittal of the accused in a criminal case also releases him from civil liability is one of the most serious flaws
in the Philippine legal system. It has given rise to numberless instances of miscarriage of justice, where the acquittal was due to a
reasonable doubt in the mind of the court as to the guilt of the accused. The reasoning followed is that inasmuch as the civil
responsibility is derived from the the criminal offense, when the latter is not proved, civil liability cannot be demanded.
This is one of those cases where confused thinking leads to unfortunate and deplorable consequences. Such reasoning fails to draw
a clear line of demarcation between criminal liability and civil responsibility, and to determine the logical result of the distinction. The
two liabilities are separate and distinct from each other. One affects the social order and the other, private rights. One is for the
punishment or correction of the offender while the other is for reparation of damages suffered by the aggrieved party... it is just and
proper that, for the purposes of the imprisonment of or fine upon the accused, the offense should be proved beyond reasonable
doubt. But for the purpose of indemnifying the complaining party, why should the offense also be proved beyond reasonable doubt?
Is not the invasion or violation of every private right to be proved only by preponderance of evidence? Is the right of the aggrieved
person any less private because the wrongful act is also punishable by the criminal law? (Code Commission, pp. 45-46).
A separate civil action may be warranted where additional facts have to be established or more evidence must be adduced or where
the criminal case has been fully terminated and a separate complaint would be just as efficacious or even more expedient than a
timely remand to the trial court where the criminal action was decided for further hearings on the civil aspects of the case. The
offended party may, of course, choose to file a separate action. These do not exist in this case. Considering moreover the delays
suffered by the case in the trial, appellate, and review stages, it would be unjust to the complainants in this case to require at this
time a separate civil action to be filed.
With this in mind, we therefore hold that the respondent Court of Appeals did not err in awarding damages despite a judgment of
acquittal.
WHEREFORE, we hereby AFFIRM the decision of the respondent Court of Appeals and dismiss the petition for lack of merit.

Donato vs Luna
TITLE: Donato vs. Luna

CITATION: GR No. 53642, April 15, 1988

FACTS:
An information for bigamy against petitioner Leonilo Donato was filed on January 23, 1979 with the lower court in Manila. This was
based on the complaint of private respondent Paz Abayan. Before the petitioners arraignment on September 28, 1979, Paz filed
with Juvenile and Domestic Relations Court of Manila, a civil action for declaration of nullity of her marriage with petitioner
contracted on September 26, 1978. Said civil case was based on the ground that Paz consented to entering into the marriage
which was Donatos second since she had no previous knowledge that Donato was already married to a certain Rosalinda Maluping
on June 30, 1978. Donato defensed that his second marriage was void since it was solemnized without a marriage license and that
force, violence, intimidation and undue influence were employed by private respondent to obtain petitioner's consent to the
marriage. Prior to the solemnization of the second marriage, Paz and Donato had lived together as husband and wife without the
benefit of wedlock for 5 years proven by a joint affidavit executed by them on September 26, 1978 for which reason, the requisite
marriage license was dispensed with pursuant to Article 76 of the Civil Code. Donato continued to live with Paz until November
1978 where Paz left their home upon learning that Donato already previously married.

ISSUE: Whether or not a criminal case for bigamy pending before the lower court be suspended in view of a civil case for annulment
of marriage pending before the juvenile and domestic relations court on the ground that latter constitutes a prejudicial question.

HELD:
Petitioner Leonilo Donato cant apply rule on prejudicial question since a case for annulment of marriage can only be considered as
a prejudicial question to the bigamy case against the accused if it was proved that petitioners consent to such marriage and was
obtained by means of duress violence and intimidation to show that his act in the second marriage must be involuntary and cannot
be the basis of his conviction for the crime of bigamy.
Accordingly, there being no prejudicial question shown to exit the order of denial issued by the respondent judge dated April 14,
1980 should be sustained.
WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED for lack of merit. We make no pronouncement as
to costs.

QUIAMBAO v. OSORIO
GR No. L-48157 March 16, 1988

FACTS:

Ejectment Case. Private Respondent claims to own the land and Petitioner through force, intimidation, strategy and stealth entered
their property. Petitioner raised in his affirmative defense and as a ground for dismissing the case that an administrative case is
pending before the Office of Land Authority between the same parties and involving the same piece of land.
In the administrative case Petitioner dispute the right of the Private Respondent over the property for default in payments for the
purchase of the lot. Petitioner argue that the administrative case was determinative of private respondents right toe eject petitioner
from the from the lot in question; hence a prejudicial question which bars a judicial action until after its termination.
The Municipal Court denied the Motion to Dismiss contained in the Petitioners affirmative defenses. Petitioner appealed to the
Court of First Instance. Private Respondent filed a Motion to Dismiss arguing there is no Prejudicial Question.
The Land Authority filed and Urgent Motion for Leave to Intervene in the CFI praying that the Petition for Certiorari be granted and
the ejectment case be dismissed and the Office of the Land Authority be allowed to decide the matter exclusively.
The Petition was denied by the CFI finding the issue involved in the ejectment case to be one of prior possession and Motion to
Intervene was denied for lack of merit.
Petitioner and Intervenor raised the case to the Supreme Court.

ISSUE: WHETHER THE ADMINISTRATIVE CASE BETWEEN THE PRIVATE PARTIES INVOLVING THE LOT SUBJECT MATTER
OF THE EJECTMENT CASE CONSTITUTES A PREJUDICIAL QUESTION WHICH WOULD OPERATE AS A BAR TO SAID
EJECTMENT CASE.

DECISION: PETITION IS GRANTED. CIVIL CASE No. 2526 of the then MUNICIPAL COURT OF MALABON RIZAL IS HEREBY
ORDERED DISMISSED. No Costs.

Technically, No prejudicial question.

A prejudicial question is understood in law to be that which arises in a case the resolution of which is a logical antecedent of the
issue involved in said case and the cognizance of which pertains to another tribunal. (Zapata v. Montessa 4 SCRA 510 (1962); Pp v.
Aragon, 500 G. No. 10, 4863) The Doctrine of Prejudicial Question comes into play generally in a situation where civil and criminal
actions are pending and the issues involved in both cases are similar or so closely related that an issue must be pre-emptively
resolved in the civil case before the criminal action can proceed. Thus, the existence of a prejudicial question in a civil case is
alleged in the criminal case to cause the suspension of the latter pending final determination of the former.
The essential elements of a prejudicial question as provided under Section 5, Rule 111 of the Revised Rules of Court are:
the Civil Action involves an issue similar or intimately related to the issue in the criminal action
the resolution of such issue determines whether or not the criminal action may proceed.
However because of intimate correlation of the two proceedings and the possibility of the Land Authority in deciding in favor of
Petitioner which will terminate or suspend Private Respondents Right to Eject Petitioner, the SC gave the lower court and advise.
This advise became the which became the basis for deciding the case.
Faced with these distinct possibilities, the more prudent course for the trial court to have taken is to hold the ejectment proceedings
in abeyance until after a determination of the administrative case. Indeed, logic and pragmatism, if not jurisprudence dictate such
move. To allow the parties to undergo trial notwithstanding the possibility of petitioners right of possession being upheld in the
pending administrative case is to needlessly require not only the parties but the court as well to expend time, effort and money in
what may turn out to be a sheer exercise of futility. Thus, 1 AM Jur 2d tells us:

The court in which an action is pending may, in the exercise of a sound discretion, upon proper application for a stay of that
action, hold the action in abeyance to abide the outcome of another pending in another court, especially where the parties and the
issues are the same, for there is power inherent in every court to control the disposition of cases on its dockets with economy of

time and effort for itself, for counsel, and for litigants. Where the rights parties to the second action cannot be properly determined
until the questions raised in the first action are settled the second action should be stayed. (at page 622)
While the rule is properly applicable for instances involving two [2] court actions, the existence in the instant case of the same
consideration of identity of parties and issues, economy of time and effort for the court, the counsels and the parties as well as the
need to resolve the parties right of possession before the ejectment case may be properly determined, justifies the rules analogous
application to the case at bar.
Fortich-Celdran, et al vs. Caldran, et al, 19 SCRA 502, provides another analogous situation. In sustaining the assailed order of the
then CFI of Misamis Oriental ordering the suspension of the criminal case for falsification of public document against several
persons, among them the subscribing officer Santiago Catane until the civil case involving the issue of the genuineness of the
alleged forged document shall have been decided, this Court cited as a reason therefor its own action on administrative charges
against said Santiago Catane, as follows:
It should be mentioned here also that an administrative case filed in this Court against Santiago Catane upon the same charge
was held by Us in Abeyance, thus:
As it appears that the genuineness of the document allegedly forged by respondent attorneys in Administrative Case No. 77
(Richard Ignacio Celdran vs. Santiago Catane, etc, et al.) is necessarily involved in Civil Case No. R-3397 of the Cebu CFI, action
on the herein complaint is withheld until that litigation has finally been decided. Complainant Celdran shall inform the Court about
such decision.(SC minute resolution April 27, 1962 in Adm Case No. 77, Richard Ignacio Celdran vs. Santiago Catane, etc. et. al)
If a pending civil case may be considered to be in the nature of a prejudicial question to an administrative case. We see no reason
why the reverse may bot be so considered in the proper case, such as in the petition at bar.
The SC even noted the Wisdom of Its advice.
Finally, events occurring during the pendency of the petition attest to the wisdom of the conclusion herein reached. For in the
Manifestation filed by counsel for petitioner, it was stated that he intervenor Land Authority which later became the Department of
Agrarian REform had promulgated a decision in the administrative case affirming the cancellation of Agreement to Sell issued in
favor of the private respondent. Wit this development, the folly of allowing the ejectment case to proceed is too evident to need
further elaboration.

Prejudicial Question: Apa, Apa, Jacalan vs Fernandez et. al. G.R. No. 112381 March 20, 1995

Isabelo Apa, Manuel Apa and Leonilo Jacalan, petitioners, vs. Hon. Rumoldo R. Fernandez, Hon. Celso V. Espinosa, And Sps.
Felixberto Tigol, Jr. And Rosita Taghoy Tigol, respondents
G.R. No. 112381 March 20, 1995

Prejudicial Question

Facts: This is a special civil action of certiorari to set aside orders of respondent Judge Romuldo Fernandez of RTC, Branch 54 of
Lapu-Lapu City denying petitioners motion for suspension of arraignment and motion for reconsideration in a criminal case filed
against them. Petitioners anchor their claim on a prior case regarding ownership. Petitioners allege that the civil case filed in 1990
seeking declaration for nullity of land title of the owner which had been filed three years before May 27, 1993 when the criminal case
for squatting was filed against them constitutes a prejudicial question.

Issue: Whether the question of ownership is a prejudicial question justifying the suspension of the criminal case against petitioners.

Ruling: Petition to suspend Criminal Case No. 012489 based on the prejudicial question presented was granted on basis that;
the prejudicial question is a question based on a fact distinct and separate from the crime but so intimately connected with it that
its resolution is determinative of the guilt or innocence of the accused.
elements of prejudicial question - (1) the civil action involves an issue similar or intimately related to the issue raised in the
criminal action; and (2) the resolution of such issue determines whether or not the criminal action may proceed.
the criminal case alleges that petitioners squatted without the knowledge and consent of the owner, which, in 1994 the civil case
rendered the nullity of the title of the owner and declared both petitioners and respondents as co-owners of the land.
respondents argue that owners can be ejected from his property only if for some reason, that is, he has let it to some other
person. However, both case of respondents and petitioners are based on ownership.

Beltran vs people

FACTS

Petitioner was married to Charmaine Felix on June 16, 1973. After 24 years of marriage and having four children, petitioner filed a
petition for nullity of marriage on ground of psychological incapacity. Charmaine on the other hand filed a criminal complaint for
concubinage against petitioner and his paramour. To forestall the issuance of a warrant of arrest from the criminal complaint,
petitioner filed for the suspension of the criminal case on concubinage arguing that the civil case for the nullification of their marriage
is a prejudicial question.
ISSUE

Whether or not the civil case for nullity of marriage under psychological incapacity is a prejudicial question to the criminal case of
concubinage.
RULING

The rationale on the existence of prejudicial questions is to avoid two conflicting issues. Its requisites are 1) that a civil action
involves an issue similar or intimately related to the issue in the criminal action and 2) the resolution of the issue determines whether
or not the criminal action will proceed. In the present case, the accused need not present a final judgment declaring his marriage
void for he can adduce evidence in the criminal case of the nullity of his marriage other than the proof of a final judgment. More
importantly, parties to a marriage should not be allowed to judge for themselves its nullity, for the same must be submitted to the
competent courts. So long as there is no such final judgment the presumption is that the marriage exists for all intents and purposes.
Therefore he who cohabits with a woman not his wife risks being prosecuted for concubinage.

\
G.R. No. 148595

July 12, 2004

SPOUSES ANTONIO S. PAHANG and LOLITA T. PAHANG, petitioners, vs. HON. AUGUSTINE A. VESTIL, Presiding Judge of
Regional Trial Court- Branch 56, Mandaue City, DEPUTY SHERIFF, Regional Trial Court-Branch 56 and METROPOLITAN BANK
and TRUST COMPANY, respondents.
Before us is a petition for review on certiorari filed by the Spouses Antonio and Lolita Pahang, for the nullification of the Decision1
and Resolution2 of the Court of Appeals in CA-G.R. SP No. 59157.
The Antecedents
On January 5, 1996, the petitioners, Spouses Antonio and Lolita Pahang, received a short-term loan of one million five hundred
thousand pesos (P1,500,000.00) from the respondent Metropolitan Bank & Trust Company payable on December 27, 1996. The
loan was covered by Non-Negotiable Promissory Note No. 1906013 and was, likewise, secured by a real estate mortgage on a
parcel of land covered by Transfer Certificate of Title (TCT) No. 29607.4 As the petitioners failed to pay the loan, the interest and the
penalties due thereon, the respondent foreclosed the real estate mortgage extrajudicially. As a consequence, the mortgaged
property was sold at public auction on January 8, 1998 to the respondent bank as the highest bidder. A certificate of sale was
executed by Pasnonito D. Antiporda as Ex-Officio Sheriff in favor of the respondent on January 14, 1998 and was registered with the
Register of Deeds of Mandaue City on January 27, 1998.
On December 29, 1998, the respondent wrote the petitioners that the one-year redemption period of the property would expire on
January 27, 1999.5 Instead of redeeming the property, the petitioners filed, on January 19, 1999, a complaint for annulment of
extrajudicial sale against the respondent bank and the Sheriff in the Regional Trial Court of Cebu (Mandaue City), Branch 56,
docketed as Civil Case No. MAN-3454.6 Therein, the petitioners alleged that the respondent bloated their obligation of
P1,500,000.00 to P2,403,770.73 by including excessive past due interest, penalty charges, attorneys fees and sheriffs expense.
They claimed that such exorbitant charges were made to frustrate their chance to pay the loan, and to ensure that the respondent
bank would be the highest bidder during the auction sale. They also asserted that the respondent failed to remit to the Sheriff the
purchase price of the property and was, likewise, guilty of fraud, collusion, breach of trust or misconduct in the conduct of the
auction sale of their property. Besides praying for injunctive relief, the petitioners prayed for the following alternative reliefs:
3. After trial on the merits, and after determination of plaintiffs true obligation with defendant bank, to declare the foreclosure on the
subject property as null and void, and to allow the plaintiffs to pay the same; as alternative prayer, to allow the plaintiffs to redeem
the subject real property based on the amount determined and established as true and exact obligation of plaintiffs to defendant
bank.7
After the expiration of the one-year redemption period, the respondent consolidated its ownership over the foreclosed property.
Consequently, TCT No. 44668 was issued by the Register of Deeds in its name. On July 23, 1999, the respondent filed a Petition for
Writ of Possession before the RTC of Mandaue City (Branch 56), docketed as LRC Case No. 3.8
The petitioners, citing the ruling of this Court in Belisario v. The Intermediate Appellate Court,9 opposed the petition on the ground
that the core issue in their complaint in Civil Case No. MAN-3454 constituted a prejudicial question, which warranted a suspension
of the proceedings before the court. The petitioners averred that the filing of their complaint within the period to redeem the
foreclosed property was equivalent to an offer to redeem the same, and had the effect of preserving such right. They also asserted
that the respondent acted in bad faith in procuring the title over the property despite the pendency of their complaint in Civil Case
No. MAN-3454.
On March 28, 2000, the RTC of Mandaue City, Branch 56, rendered a decision in LRC Case No. 3 granting the petition and ordering
the issuance of a writ of possession in favor of the respondent.10
Citing the case of Javelosa v. Court of Appeals,11 and Gawaran v. Court of Appeals,12 the RTC ruled that since the petitioners
failed to redeem the property within one year from the foreclosure, the respondent was entitled to a writ of possession as a
necessary consequence of the readjudication of ownership and the corresponding issuance of the original certificate.13 The
petitioners filed a motion for reconsideration of the decision, but the court issued an order denying the motion, stating that it was
merely its ministerial function to issue a writ of possession.14
The petitioners filed a petition for certiorari before the Court of Appeals, docketed as CA-G.R. SP No. 59157 for the nullification of
the March 28, 2000 Decision and the May 19, 2000 Order of the RTC. Thepetitioners alleged that the RTC committed a grave abuse
of its discretion amounting to excess or lack of jurisdiction in granting the petition of the respondent bank for a writ of possession in
LRC Case No. 3 instead of suspending the proceedings therein based on the ruling of this Court in Belisario vs. The Intermediate
Appellate Court.15
The Ruling of the Court of Appeals
Finding that the RTC did not act with grave abuse of discretion in ordering the issuance of the writ of possession, the CA rendered a
decision on March 2, 2001, dismissing the petition.16 Citing the rulings of this Court in Vda. de Jacob v. Court of Appeals17 and
Navarra v. Court of Appeals,18 the CA explained that the pendency of a separate proceeding questioning the validity of the
mortgage and the extrajudicial foreclosure thereof cannot bar the issuance of a writ of possession in favor of the purchaser at public
auction. The appellate court ruled that after a title on the property has been consolidated in the mortgagee, the issuance of a writ of

possession becomes a ministerial act of the trial court. Furthermore, the right of the respondent bank to possess the property was
based on its right of ownership as a purchaser of the properties in the foreclosure sale. The CA explained that the ruling in the
Belisario case was inapplicable because it involved a complaint to enforce the repurchase of the foreclosed property within the
period of redemption, whereas, the complaint filed by the petitioners in Civil Case No. MAN-3454 was for the annulment of the
mortgage or extrajudicial sale which was not equivalent to an offer to redeem the property.19
The Present Petition
The motion for reconsideration of the petitioners of the decision, having been denied by the appellate court, the petitioners filed this
instant petition, assigning the following errors:
1. THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONERS RIGHT OF REDEMPTION OVER THEIR
FORECLOSED PROPERTY AS HAVING EXPIRED ON JANUARY 26, 1999, IN THE LIGHT OF THEIR PENDING COMPLAINT TO
ANNUL THE FORECLOSURE FILED BEFORE THE EXPIRATION OF THE ONE-YEAR REDEMPTION PERIOD, ON THE
GROUND OF FRAUD, AND CONSIDERING FURTHER THEIR SPECIFIC PRAYER THEREOF FOR DETERMINATION OF THEIR
TRUE OBLIGATION WITH PRIVATE RESPONDENT, AND TO ALLOW THEM TO PAY THE SAME AND/OR TO REDEEM THEIR
FORECLOSED PROPERTY.20
2. PETITIONERS COMPLAINT FOR ANNULMENT OF THE FORECLOSURE OF THEIR PROPERTY WITH A PRAYER FOR
TEMPORARY RESTRAINING ORDER AND INJUNCTION TO STOP THE ISSUANCE OF A DEFINITE DEED OF SALE AND
CONSOLIDATION OF TITLE OF THEIR PROPERTY IN FAVOR OF PRIVATE RESPONDENT, WHILE GIVING PREFERENCE
AND ACTING WITH DISPATCH ON PRIVATE RESPONDENTS PETITION FOR ISSUANCE OF WRIT OF POSSESSION ON THE
SAME PROPERTY, BY GRANTING THE WRIT OF POSSESSION THEREON THEREBY RENDERING MOOT AND ACADEMIC
PETITIONERS PRAYERS IN THEIR COMPLAINT FOR ANNULMENT OF FORECLOSURE.21
3. THE HONORABLE COURT OF APPEALS ERRED IN FINDING THE DECISION OF THIS HONORABLE SUPREME COURT IN
THE CASE OF BELISARIO VS. THE INTERMEDIATE APPELLATE COURT, G.R. NO. L-73503, WHEREBY "THE FILING OF THE
COMPLAINT TO ENFORCE REPURCHASE WITHIN THE PERIOD FOR REDEMPTION IS EQUIVALENT TO AN OFFER TO
REDEEM AND HAS THE EFFECT OF PRESERVING THE RIGHT OF REDEMPTION" INAPPLICABLE TO THE CASE OF
PETITIONERS.22
4. THE HONORABLE COURT OF APPEALS ERRED IN NOT APPRECIATING THE FACT THAT THE ISSUE OR ISSUES JOINED
IN THE COMPLAINT FOR ANNULMENT BEFORE RESPONDENT JUDGE DOCKETED AS CIVIL CASE NO. MAN-4353 (sic) IS A
PREJUDICIAL QUESTION TO THE ISSUE RAISED IN THE PETITION FOR WRIT OF POSSESSION IN LRC CASE NO. 3.23
5. THE HONORABLE COURT OF APPEALS ERRED IN HAVING FAILED TO CONSIDER THE VALID CAUSES OF ACTION OF
PETITIONERS IN THEIR COMPLAINT FOR ANNULMENT IN CIVIL CASE NO. MAN-4354 (sic).24
The threshold issues are as follows: (a) whether or not the complaint of the petitioners in Civil Case No. MAN-3454 for annulment of
extrajudicial sale is a prejudicial question to the petition of the respondent bank for the issuance of a writ of possession in LRC Case
No. 3; and, (b) whether or not the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in
granting the petition of the respondent in LRC Case No. 3 and in issuing the writ of possession in its favor.
The issues being interrelated, the Court shall resolve the same simultaneously.
The petitioners contend that their complaint in Civil Case No. MAN-3454 and the respondents petition for a writ of possession in
LRC Case No. 3 were raffled to Branch 56 of the RTC. Although their complaint in Civil Case No. MAN-3454 was for the nullification
of the extrajudicial sale at public auction on the ground of fraud, they also prayed, as an alternative remedy, that they be allowed to
redeem the property based on the amount to be determined by the court after trial. Hence, they assert, the filing of their complaint
before the expiry of the redemption period to enforce their right of redemption was equivalent to a formal offer to redeem the
property and had the effect of preserving their right of redemption. They argue that the RTC should have suspended the
proceedings in LRC Case No. 3 pending the final resolution of Civil Case No. MAN-3454 so as not to render moot and academic the
latter case, conformably with the ruling of the Court in Belisario vs. The Intermediate Appellate Court,25 after all, the two cases were
pending before the same court. The petitioners, thus, aver that the trial court committed grave abuse of discretion amounting to
excess or lack of jurisdiction in granting the petition of the respondent bank for a writ of possession in LRC Case No. 3. They,
likewise, aver that the Court of Appeals erred when it affirmed the decision of the trial court and declared, thus:
Further, as to the applicability of the case of Belisario vs. Intermediate Appellate Court (G.R. No. L-73503, Aug. 30, 1988, 165 SCRA
101, 108), suffice it to say, that the cause of action therein was to enforce the repurchase of the foreclosed property within the period
of redemption, which the Supreme Court held that it has the effect of preserving the right of redemption. Whereas, Civil Case No.
MAN-3454 filed by the petitioners is for the annulment of mortgage or extrajudicial sale, which is not in effect an offer to redeem.
Verily, the pendency of said civil case does not preserve the right of redemption of the petitioners after the period of redemption.26
The Courts Ruling

The contentions of the petitioners have no merit.

A prejudicial question is one that arises in a case the resolution of which is a logical antecedent of the issue involved therein, and
the cognizance of which pertains to another tribunal. It generally comes into play in a situation where a civil action and a criminal
action are both pending and there exists in the former an issue that must be preemptively resolved before the criminal action may
proceed, because howsoever the issue raised in the civil action is resolved would be determinative juris et de jure of the guilt or
innocence of the accused in the criminal case. The rationale behind the principle of prejudicial question is to avoid two conflicting
decisions.27
In the present case, the complaint of the petitioners for Annulment of Extrajudicial Sale is a civil action and the respondents petition
for the issuance of a writ of possession of Lot No. 3-A, Block 1, Psd-07-021410, TCT No. 44668 is but an incident in the land
registration case and, therefore, no prejudicial question can arise from the existence of the two actions.28 A similar issue was raised
in Manalo vs. Court of Appeals,29 where we held that:
At any rate, it taxes our imagination why the questions raised in Case No. 98-0868 must be considered determinative of Case No.
9011. The basic issue in the former is whether the respondent, as the purchaser in the extrajudicial foreclosure proceedings, may be
compelled to have the property repurchased or resold to a mortgagors successor-in-interest (petitioner); while that in the latter is
merely whether the respondent, as the purchaser in the extrajudicial foreclosure proceedings, is entitled to a writ of possession after
the statutory period for redemption has expired. The two cases, assuming both are pending, can proceed separately and take their
own direction independent of each other.30
The focal issue in Civil Case No. MAN-3454 was whether the extrajudicial foreclosure of the real estate mortgage executed by the
petitioners in favor of the respondent bank and the sale of their property at public auction for P2,403,770.73 are null and void,
whereas, the issue in LRC Case No. 3 was whether the respondent bank was entitled to the possession of the property after the
statutory period for redemption had lapsed and title was issued .
Our ruling in Belisario has no application in this case because in the said case, no prejudicial question was involved. We merely held
therein that the filing of an action to enforce redemption within the period of redemption is equivalent to a formal offer to redeem,
and should the Court allow the redemption, the redemptioner should then pay the amount already determined. In fine, the filing of an
action by the redemptioner to enforce his right to redeem does not suspend the running of the statutory period to redeem the
property, nor bar the purchaser at public auction from procuring a writ of possession after the statutory period of redemption had
lapsed, without prejudice to the final outcome of such complaint to enforce the right of redemption.31
The remedy of the petitioners from the assailed decision of the RTC in LRC Case No. 3 was to appeal by writ of error to the Court of
Appeals.32 However, instead of appealing by writ of error, the petitioners filed their petition for certiorari. Certiorari is not proper
where the aggrieved party has a plain, speedy and adequate remedy at law. Moreover, the error of the trial court in granting the
respondent bank a writ of possession, if at all, was an error of judgment correctible only by an ordinary appeal.
It bears stressing that the proceedings in a petition and/or motion for the issuance of a writ of possession, after the lapse of the
statutory period for redemption, is summary in nature.33 The trial court is mandated to issue a writ of possession upon a finding of
the lapse of the statutory period for redemption without the redemptioner having redeemed the property. It cannot be validly argued
that the trial court abused its discretion when it merely complied with its ministerial duty to issue the said writ of possession.34
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED DUE COURSE. The assailed decision of the Court of Appeals in CAG.R. SP No. 59157 is AFFIRMED.
Cost against the petitioners.
SO ORDERED.