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G.R. No.

161921 July 17, 2013

JOYCE V. ARDIENTE, PETITIONER, vs.


SPOUSES JAVIER AND MA. THERESA PASTORFIDE, CAGAYAN DE ORO WATER DISTRICT AND GASPAR
GONZALEZ,* JR., RESPONDENTS.

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and
set aside the Decision1 and Resolution2 of the Court of Appeals (CA), dated August 28, 2003 and December 17,
2003, respectively, in CA-G.R. CV No. 73000. The CA Decision affirmed with modification the August 15, 2001
Decision3of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 24, while the CA Resolution denied
petitioner's Motion for Reconsideration.

The facts, as summarized by the CA, are as follows:

[Herein petitioner] Joyce V. Ardiente and her husband Dr. Roberto S. Ardiente are owners of a housing unit at
Emily Homes, Balulang, Cagayan de Oro City with a lot area of one hundred fifty-three (153) square meters and
covered by Transfer Certificate of Title No. 69905.

On June 2, 1994, Joyce Ardiente entered into a Memorandum of Agreement (Exh. "B", pp. 470-473, Records)
selling, transferring and conveying in favor of [respondent] Ma. Theresa Pastorfide all their rights and interests in
the housing unit at Emily Homes in consideration of ₱70,000.00. The Memorandum of Agreement carries a
stipulation:

"4. That the water and power bill of the subject property shall be for the account of the Second Party (Ma. Theresa
Pastorfide) effective June 1, 1994." (Records, p. 47)

vis-a-vis Ma. Theresa Pastorfide's assumption of the payment of the mortgage loan secured by Joyce Ardiente
from the National Home Mortgage (Records, Exh. "A", pp. 468-469)

For four (4) years, Ma. Theresa's use of the water connection in the name of Joyce Ardiente was never
questioned nor perturbed (T.S.N., October 31, 2000, pp. 7-8) until on March 12, 1999, without notice, the water
connection of Ma. Theresa was cut off. Proceeding to the office of the Cagayan de Oro Water District (COWD) to
complain, a certain Mrs. Madjos told Ma. Theresa that she was delinquent for three (3) months corresponding to
the months of December 1998, January 1999, and February 1999. Ma. Theresa argued that the due date of her
payment was March 18, 1999 yet (T.S.N., October 31, 2000, pp. 11-12). Mrs. Madjos later told her that it was at
the instance of Joyce Ardiente that the water line was cut off (T.S.N., February 5, 2001, p. 31).

On March 15, 1999, Ma. Theresa paid the delinquent bills (T.S.N., October 31, 2000, p. 12). On the same date,
through her lawyer, Ma. Theresa wrote a letter to the COWD to explain who authorized the cutting of the water
line (Records, p. 160).

On March 18, 1999, COWD, through the general manager, [respondent] Gaspar Gonzalez, Jr., answered the
letter dated March 15, 1999 and reiterated that it was at the instance of Joyce Ardiente that the water line was cut
off (Records, p. 161).

Aggrieved, on April 14, 1999, Ma. Theresa Pastorfide [and her husband] filed [a] complaint for damages [against
petitioner, COWD and its manager Gaspar Gonzalez] (Records, pp. 2-6).

In the meantime, Ma. Theresa Pastorfide's water line was only restored and reconnected when the [trial] court
issued a writ of preliminary mandatory injunction on December 14, 1999 (Records, p. 237). 4
After trial, the RTC rendered judgment holding as follows:

xxxx

In the exercise of their rights and performance of their duties, defendants did not act with justice, gave plaintiffs
their due and observe honesty and good faith. Before disconnecting the water supply, defendants COWD and
Engr. Gaspar Gonzales did not even send a disconnection notice to plaintiffs as testified to by Engr. Bienvenido
Batar, in-charge of the Commercial Department of defendant COWD. There was one though, but only three (3)
days after the actual disconnection on March 12, 1999. The due date for payment was yet on March 15. Clearly,
they did not act with justice. Neither did they observe honesty.

They should not have been swayed by the prodding of Joyce V. Ardiente. They should have investigated first as to
the present ownership of the house. For doing the act because Ardiente told them, they were negligent.
Defendant Joyce Ardiente should have requested before the cutting off of the water supply, plaintiffs to pay. While
she attempted to tell plaintiffs but she did not have the patience of seeing them. She knew that it was plaintiffs
who had been using the water four (4) years ago and not hers. She should have been very careful. x x x 5

The dispositive portion of the trial court's Decision reads, thus:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendants [Ardiente, COWD and
Gonzalez] to pay jointly and severally plaintiffs, the following sums:

(a) ₱200,000.00 for moral damages;

(b) 200,000.00 for exemplary damages; and

(c) 50,000.00 for attorney's fee.

The cross-claim of Cagayan de Oro Water District and Engr. Gaspar Gonzales is hereby dismissed. The Court is
not swayed that the cutting off of the water supply of plaintiffs was because they were influenced by defendant
Joyce Ardiente. They were negligent too for which they should be liable.

SO ORDERED.6

Petitioner, COWD and Gonzalez filed an appeal with the CA.

On August 28, 2003, the CA promulgated its assailed Decision disposing as follows:

IN VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED, with the modification that the awarded
damages is reduced to ₱100,000.00 each for moral and exemplary damages, while attorney's fees is lowered to
₱25,000.00. Costs against appellants.

SO ORDERED.7

The CA ruled, with respect to petitioner, that she has a "legal duty to honor the possession and use of water line
by Ma. Theresa Pastorfide pursuant to their Memorandum of Agreement" and "that when [petitioner] applied for its
disconnection, she acted in bad faith causing prejudice and [injury to] Ma. Theresa Pastorfide." 8

As to COWD and Gonzalez, the CA held that they "failed to give a notice of disconnection and derelicted in
reconnecting the water line despite payment of the unpaid bills by the [respondent spouses Pastorfide]." 9

Petitioner, COWD and Gonzalez filed their respective Motions for Reconsideration, but these were denied by the
CA in its Resolution dated December 17, 2003.
COWD and Gonzalez filed a petition for review on certiorari with this Court, which was docketed as G.R. No.
161802. However, based on technical grounds and on the finding that the CA did not commit any reversible error
in its assailed Decision, the petition was denied via a Resolution 10 issued by this Court on March 24, 2004. COWD
and Gonzalez filed a motion for reconsideration, but the same was denied with finality through this Court's
Resolution11 dated June 28, 2004.

Petitioner, on the other hand, timely filed the instant petition with the following Assignment of Errors:

7.1 HONORABLE COURT OF APPEALS (ALTHOUGH IT HAS REDUCED THE LIABILITY INTO HALF) HAS
STILL COMMITTED GRAVE AND SERIOUS ERROR WHEN IT UPHELD THE JOINT AND SOLIDARY LIABILITY
OF PETITIONER JOYCE V. ARDIENTE WITH CAGAYAN DE ORO WATER DISTRICT (COWD) AND ENGR.
GASPAR D. GONZALES FOR THE LATTER'S FAILURE TO SERVE NOTICE UPON RESPONDENTS
SPOUSES PASTORFIDE PRIOR TO THE ACTUAL DISCONNECTION DESPITE EVIDENCE ADDUCED
DURING TRIAL THAT EVEN WITHOUT PETITIONER'S REQUEST, COWD WAS ALREADY SET TO EFFECT
DISCONNECTION OF RESPONDENTS' WATER SUPPLY DUE TO NON-PAYMENT OF ACCOUNT FOR
THREE (3) MONTHS.

7.2 THE HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS ERROR WHEN IT RULED
TOTALLY AGAINST PETITIONER AND FAILED TO FIND THAT RESPONDENTS ARE GUILTY OF
CONTRIBUTORY NEGLIGENCE WHEN THEY FAILED TO PAY THEIR WATER BILLS FOR THREE MONTHS
AND TO MOVE FOR THE TRANSFER OF THE COWD ACCOUNT IN THEIR NAME, WHICH WAS A VIOLATION
OF THEIR MEMORANDUM OF AGREEMENT WITH PETITIONER JOYCE V. ARDIENTE. RESPONDENTS
LIKEWISE DELIBERATELY FAILED TO EXERCISE DILIGENCE OF A GOOD FATHER OF THE FAMILY TO
MINIMIZE THE DAMAGE UNDER ART. 2203 OF THE NEW CIVIL CODE.

7.3 THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DISREGARDED THE FACT THAT
RESPONDENT SPOUSES PASTORFIDE ARE LIKEWISE BOUND TO OBSERVE ARTICLE 19 OF THE NEW
CIVIL CODE, i.e., IN THE EXERCISE OF THEIR RIGHTS AND IN THE PERFORMANCE OF THEIR DUTIES TO
ACT WITH JUSTICE, GIVE EVERYONE HIS DUE AND OBSERVE HONESTY AND GOOD FAITH.

7.4 THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT GRANTED AN AWARD OF MORAL
AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES AS AGAINST PETITIONER ARDIENTE. 12

At the outset, the Court noticed that COWD and Gonzalez, who were petitioner's co-defendants before the RTC
and her co-appellants in the CA, were impleaded as respondents in the instant petition. This cannot be done.
Being her co-parties before the RTC and the CA, petitioner cannot, in the instant petition for review on certiorari,
make COWD and Gonzalez, adversary parties. It is a grave mistake on the part of petitioner's counsel to treat
COWD and Gonzalez as respondents. There is no basis to do so, considering that, in the first place, there is no
showing that petitioner filed a cross-claim against COWD and Gonzalez. Under Section 2, Rule 9 of the Rules of
Court, a cross-claim which is not set up shall be barred. Thus, for failing to set up a cross-claim against COWD
and Gonzalez before the RTC, petitioner is already barred from doing so in the present petition.

More importantly, as shown above, COWD and Gonzalez's petition for review on certiorari filed with this Court
was already denied with finality on June 28, 2004, making the presently assailed CA Decision final and executory
insofar as COWD and Gonzalez are concerned. Thus, COWD and Gonzalez are already precluded from
participating in the present petition. They cannot resurrect their lost cause by filing pleadings this time as
respondents but, nonetheless, reiterating the same prayer in their previous pleadings filed with the RTC and the
CA.

As to the merits of the instant petition, the Court likewise noticed that the main issues raised by petitioner are
factual and it is settled that the resolution of factual issues is the function of lower courts, whose findings on these
matters are received with respect and considered binding by the Supreme Court subject only to certain
exceptions, none of which is present in this instant petition. 13 This is especially true when the findings of the RTC
have been affirmed by the CA as in this case.14

In any case, a perusal of the records at hand would readily show that the instant petition lacks merit.

Petitioner insists that she should not be held liable for the disconnection of respondent spouses' water supply,
because she had no participation in the actual disconnection. However, she admitted in the present petition that it
was she who requested COWD to disconnect the Spouses Pastorfide's water supply. This was confirmed by
COWD and Gonzalez in their cross-claim against petitioner. While it was COWD which actually discontinued
respondent spouses' water supply, it cannot be denied that it was through the instance of petitioner that the
Spouses Pastorfide's water supply was disconnected in the first place.

It is true that it is within petitioner's right to ask and even require the Spouses Pastorfide to cause the transfer of
the former's account with COWD to the latter's name pursuant to their Memorandum of Agreement. However, the
remedy to enforce such right is not to cause the disconnection of the respondent spouses' water supply. 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 harm another. 15 Otherwise, liability for damages to the injured party
will attach.16 In the present case, intention to harm was evident on the part of petitioner when she requested for
the disconnection of respondent spouses’ water supply without warning or informing the latter of such request.
Petitioner claims that her request for disconnection was based on the advise of COWD personnel and that her
intention was just to compel the Spouses Pastorfide to comply with their agreement that petitioner's account with
COWD be transferred in respondent spouses' name. If such was petitioner's only intention, then she should have
advised respondent spouses before or immediately after submitting her request for disconnection, telling them
that her request was simply to force them to comply with their obligation under their Memorandum of Agreement.
But she did not. What made matters worse is the fact that COWD undertook the disconnection also without prior
notice and even failed to reconnect the Spouses Pastorfide’s water supply despite payment of their arrears. There
was clearly an abuse of right on the part of petitioner, COWD and Gonzalez. They are guilty of bad faith.

The principle of abuse of rights as enshrined in Article 19 of the Civil Code 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.

In this regard, the Court's ruling in Yuchengco v. The Manila Chronicle Publishing Corporation 17 is instructive, to
wit:

xxxx

This provision of law sets standards which must be observed in the exercise of one’s rights as well as in the
performance of its duties, to wit: to act with justice; give everyone his due; and observe honesty and good faith.

In Globe Mackay Cable and Radio Corporation v. Court of Appeals, it was elucidated that 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." The Court said:

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 x x x.

xxxx

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.

Corollarilly, Article 20 provides that "every person who, contrary to law, willfully or negligently causes damage to
another shall indemnify the latter for the same." It speaks of the general sanctions of all other provisions of law
which do not especially provide for its own sanction. When a right is exercised in a manner which does not
conform to the standards set forth in the said provision and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be responsible. Thus, if the provision does not provide a remedy for its
violation, an action for damages under either Article 20 or Article 21 of the Civil Code would be proper.

The question of whether or not the principle of abuse of rights has been violated resulting in damages under
Article 20 or other applicable provision of law, depends on the circumstances of each case. x x x 18

To recapitulate, petitioner's acts which violated the abovementioned provisions of law is her unjustifiable act of
having the respondent spouses' water supply disconnected, coupled with her failure to warn or at least notify
respondent spouses of such intention. On the part of COWD and Gonzalez, it is their failure to give prior notice of
the impending disconnection and their subsequent neglect to reconnect respondent spouses' water supply
despite the latter's settlement of their delinquent account.

On the basis of the foregoing, the Court finds no cogent reason to depart from the ruling of both the RTC and the
CA that petitioner, COWD and Gonzalez are solidarily liable.

The Spouses Pastorfide are entitled to moral damages based on the provisions of Article 2219, 19 in connection
with Articles 2020 and 2121 of the Civil Code.

As for exemplary damages, Article 2229 provides that exemplary damages may be imposed by way of example or
correction for the public good. Nonetheless, exemplary damages are imposed not to enrich one party or
impoverish another, but to serve as a deterrent against or as a negative incentive to curb socially deleterious
actions.22 In the instant case, the Court agrees with the CA in sustaining the award of exemplary damages,
although it reduced the amount granted, considering that respondent spouses were deprived of their water supply
for more than nine (9) months, and such deprivation would have continued were it not for the relief granted by the
RTC.

With respect to the award of attorney's fees, Article 2208 of the Civil Code provides, among others, that such fees
may be recovered when exemplary damages are awarded, when the defendant's act or omission has compelled
the plaintiff to litigate with third persons or to incur expenses to protect his interest, and where the defendant acted
in gross and evident bad faith in refusing to satisfy the plaintiffs’ plainly valid, just and demandable claim.
WHEREFORE, instant petition for review on certiorari is DENIED. The Decision and Resolution of the Court of
Appeals, dated August 28, 2003 and December 17, 2003, respectively, in CA-G.R. CV No. 73000 are AFFIRMED.

SO ORDERED.

G.R. No. 184315 November 28, 2011

ALFONSO T. YUCHENGCO, Petitioner, vs.


THE MANILA CHRONICLE PUBLISHING CORPORATION, NOEL CABRERA, GERRY ZARAGOZA, DONNA
GATDULA, RODNEY P. DIOLA, RAUL VALINO, THELMA SAN JUAN and ROBERT COYIUTO,
JR.,Respondents.

R E S O L U T I ON

PERALTA, J.:

For resolution is the Motion for Reconsideration1 dated January 15, 2010, filed by the respondents, and the
Supplemental Motion for Reconsideration2 of respondent Robert Coyiuto, Jr., dated March 17, 2010, from the
Decision rendered in favor of petitioner Alfonso T. Yuchengco, dated November 25, 2009.

At the outset, a brief narration of the factual and procedural antecedents that transpired and led to the filing of the
motions is in order.

The present controversy arose when in the last quarter of 1993, several allegedly defamatory articles against
petitioner were published in The Manila Chronicle by Chronicle Publishing Corporation. Consequently, petitioner
filed a complaint against respondents before the Regional Trial Court (RTC) of Makati City, Branch 136, docketed
as Civil Case No. 94-1114, under three separate causes of action, namely: (1) for damages due to libelous
publication against Neal H. Cruz, Ernesto Tolentino, Noel Cabrera, Thelma San Juan, Gerry Zaragoza, Donna
Gatdula, Raul Valino, Rodney P. Diola, all members of the editorial staff and writers of The Manila Chronicle, and
Chronicle Publishing; (2) for damages due to abuse of right against Robert Coyiuto, Jr. and Chronicle Publishing;
and (3) for attorney’s fees and costs against all the respondents.

On November 8, 2002, the trial court rendered a Decision 3 in favor of petitioner.

Aggrieved, respondents sought recourse before the Court of Appeals (CA). On March 18, 2008, the CA rendered
a Decision4 affirming in toto the decision of the RTC.

Respondents then filed a Motion for Reconsideration 5 praying that the CA reconsider its earlier decision and
reverse the decision of the trial court. On August 28, 2008, the CA rendered an Amended Decision 6 reversing the
earlier Decision.

Subsequently, petitioner filed the present recourse before this Court which puts forth the following assignment of
errors:

A. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN RULING THAT
THE CASE OF ARTURO BORJAL, ET AL. V. COURT OF APPEALS, ET AL., CITED BY RESPONDENTS IN
THEIR MOTION FOR RECONSIDERATION, WARRANTED THE REVERSAL OF THE CA DECISION DATED
MARCH 18, 2008.

B. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN RULING THAT
THE SUBJECT ARTICLES IN THE COMPLAINT FALL WITHIN THE CONCEPT OF PRIVILEGED
COMMUNICATION.
C. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN RULING THAT
PETITIONER IS A PUBLIC OFFICIAL OR PUBLIC FIGURE.7

On November 25, 2009, this Court rendered a Decision partially granting the petition.

Respondents later filed a Motion for Reconsideration dated January 15, 2010, which the Court denied in the
Resolution8 dated March 3, 2010.

Meanwhile, respondent Coyiuto, Jr. also filed a Motion for Leave to File Supplemental Motion for Reconsideration
with Attached Supplemental Motion, both dated March 17, 2010.

On April 21, 2010, this Court issued a Resolution9 resolving to recall the Resolution dated March 3, 2010; grant
Coyiuto, Jr.’s motion for leave to file supplemental motion for reconsideration; note the supplemental motion for
reconsideration; and require petitioner to comment on the motion for reconsideration and supplemental motion for
reconsideration.

On June 22, 2010, petitioner filed his Comment on the Motion for Reconsideration 10 dated January 15, 2010 and
Comment on respondent Coyiuto, Jr.’s Supplemental Motion for Reconsideration 11 dated 17 March 2010.

In the Motion for Reconsideration, respondents moved for a reconsideration of the earlier decision on the
following grounds:

1. MALICE-IN-FACT HAS NOT BEEN PROVEN.

2. PETITIONER IS A "PUBLIC FIGURE."

3. THE SUBJECT OF THE PUBLICATIONS CONSTITUTES FAIR COMMENTS, ON PUBLIC ISSUES, ON


MATTERS OF PUBLIC INTEREST AND NATIONAL CONCERN.

4. RESPONDENTS DID NOT ACT IN A RECKLESS MANNER OR IN COMPLETE DISREGARD OF THE TRUTH
OF THE MATTERS COVERED BY THE SUBJECT PUBLICATIONS.

5. THE PROTECTIVE MANTLE OF QUALIFIED PRIVILEGED COMMUNICATIONS PROTECTS THE SUBJECT


PUBLICATIONS.

6. THERE IS NO LEGAL OR EVIDENTIARY BASIS TO HOLD DONNA GATDULA, JOINTLY AND SEVERALLY,
LIABLE FOR THE SUBJECT PUBLICATIONS, TOGETHER WITH THE EDITORS AND STAFF OF THE
NEWSPAPER.

7. THERE IS NO EVIDENCE TO HOLD THELMA SAN JUAN RESPONSIBLE FOR THE SUBJECT
PUBLICATIONS.

8. THE "QUICK NOTES" COLUMN OF MR. RAUL VALINO ARE BASED ON FACTS; THUS, NOT LIBELOUS.

9. ROBERT COYIUTO, JR. IS NOT IMPLEADED WITH THE EDITORS AND STAFF MEMBERS OF THE
MANILA CHRONICLE, BUT IS SUED IN "HIS PERSONAL CAPACITY" FOR AN "ABUSE OF RIGHT" AND NO
EVIDENCE LINKS HIM TO THE SUBJECT PUBLICATIONS.

10. THE AWARDED DAMAGES ARE EXCESSIVE, EQUITABLE AND UNJUSTIFIED. 12

In his Supplemental Motion for Reconsideration, Coyiuto, Jr. raises the following arguments:

I.
WITH ALL DUE RESPECT, THIS HONORABLE COURT OBVIOUSLY OVERLOOKED THE FACT THAT IN
PETITIONER’S AMENDED COMPLAINT (DATED OCTOBER 17, 1994), RESPONDENT ROBERT COYIUTO,
JR. WAS NOT SUED FOR DAMAGES ALLEGEDLY DUE TO "LIBELOUS PUBLICATIONS" (FIRST CAUSE OF
ACTION). HE WAS SUED, HOWEVER, IN HIS PERSONAL CAPACITY FOR "ABUSE OF RIGHT" (SECOND
CAUSE OF ACTION) ALLEGEDLY, AS "CHAIRMAN" OF THE BOARD, "OFFICER," "PRINCIPAL OWNER," OF
THE MANILA CHRONICLE PUBLISHING CORPORATION UNDER ARTICLES 19 AND 20 OF THE CIVIL CODE.
AS SUCH, THE IMPOSITION OF MORAL (₱25 MILLION PESOS) AND EXEMPLARY (₱10 MILLION PESOS)
DAMAGES AGAINST RESPONDENT COYIUTO, JR. HAS NO BASIS IN LAW AND CONTRARY TO THE
SPECIFIC PROVISIONS OF ARTICLES 2219 AND 2229, IN RELATION TO ARTICLE 2233, RESPECTIVELY, OF
THE CIVIL CODE AS WILL BE ELUCIDATED HEREUNDER.

II.

WITH ALL DUE RESPECT, APART FROM THE SELF-SERVING/UNILATERAL ALLEGATION IN PARAGRAPH
3.11 OF THE AMENDED COMPLAINT (ANNEX "C" OF PETITION FOR REVIEW), NO IOTA OF EVIDENCE
WAS ADDUCED ON TRIAL IN SUPPORT OF THE ALLEGATION THAT RESPONDENT COYIUTO, JR. WAS
"CHAIRMAN", "PRINCIPAL OWNER" AND "OFFICER" OF RESPONDENT MANILA CHRONICLE PUBLISHING
CORPORATION. SEC DOCUMENTS SHOW THE CONTRARY, AS WILL BE DISCUSSED HEREUNDER. SO
HOW COULD RESPONDENT COYIUTO, JR. BE IMPLEADED TO HAVE "ABUSED HIS RIGHT AS A NON-
CHAIRMAN, NON-STOCKHOLDER, NON-OFFICER OF RESPONDENT MANILA CHRONICLE PUBLISHING
CORPORATION? IT IS FUNDAMENTAL THAT THE BURDEN OF PROOF RESTS ON THE PARTY ASSERTING
A FACT OR ESTABLISHING A CLAIM (RULE 131, REVISED RULES OF COURT). 13

From the foregoing, it is apparent that the motion for reconsideration generally restates and reiterates the
arguments, which were previously advanced by respondents and does not present any substantial reasons, which
were not formerly invoked and passed upon by the Court.

However, from the supplemental motion for reconsideration, it is apparent that Coyiuto, Jr. raises a new matter
which has not been raised in the proceedings below. This notwithstanding, basic equity dictates that Coyiuto, Jr.
should be given all the opportunity to ventilate his arguments in the present action, but more importantly, in order
to write finis to the present controversy. It should be noted that the Resolution denying the Motion for
Reconsideration was later recalled by this Court in the Resolution dated March 3, 2010, and therein, petitioner
was given the opportunity to refute Coyiuto, Jr.’s arguments by filing his comment on the motion for
reconsideration and the supplemental motion for reconsideration, which petitioner complied with.

From these Comments and contrary to Coyiuto, Jr.’s contention, it was substantially established that he was the
Chairman of Manila Chronicle Publishing Corporation when the subject articles were published. Coyiuto, Jr. even
admitted this fact in his Reply and Comment on Request for Admission, 14 to wit:

4. Defendant Robert Coyiuto Jr. ADMITS that he was the Chairman of the Board but not President of the Manila
Chronicle during the period Novemeber (sic) to December 1993.

5. Defendant Robert Coyiuto Jr. DENIES paragraph 11. He has already conveyed such denial to plaintiff in the
course of the pre-trial. It was The Manila Chronicle, a newspaper of general circulation, of which he is, admittedly
Chairman of the Board, that published the items marked as plaintiff’s Exhibits A, B, C, D, E, F, and G.

xxxx

12. This case, based on plaintiff’s Amended Complaint, is limited to the publications in The Manila Chronicle
marked plaintiff’s Exhibits "A" to "G", consecutively, published by defendant Manila Chronicle. Thus, only the
question of whether Mr. Robert Coyiuto, Jr. was Chairman and President of defendant Manila Chronicle, during
these publications and whether he caused these publications, among all of plaintiffs’ queries, are relevant and
material to this case. And defendant Robert Coyiuto, Jr. has answered that: "Yes", he was Chairman of the Board.
"No", he was never President of The Manila Chronicle. "No", he did not cause the publications in The Manila
Chronicle: it was the Manila Chronicle that published the news items adverted to. 15

Both the trial court and the CA affirmed this fact. We reiterate that factual findings of the trial court, when adopted
and confirmed by the CA, are binding and conclusive on this Court and will generally not be reviewed on appeal.
While this Court has recognized several exceptions16 to this rule, none of these exceptions exists in the present
case. Accordingly, this Court finds no reason to depart from the findings of fact of the trial court and the CA.

More importantly and contrary again to Coyiuto, Jr.’s contention, the cause of action of petitioner based on "abuse
of rights," or Article 19, in relation to Article 20 of the Civil Code, warrants the award of damages.

The principle of abuse of rights as enshrined in Article 19 of the Civil Code provides:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.

This provision of law sets standards which must be observed in the exercise of one’s rights as well as in the
performance of its duties, to wit: to act with justice; give everyone his due; and observe honesty and good faith. 17

In Globe Mackay Cable and Radio Corporation v. Court of Appeals,18 it was elucidated that 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." The Court said:

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. 19

Corollarilly, Article 20 provides that "every person who, contrary to law, willfully or negligently causes damage to
another shall indemnify the latter for the same." It speaks of the general sanctions of all other provisions of law
which do not especially provide for its own sanction. When a right is exercised in a manner which does not
conform to the standards set forth in the said provision and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be responsible.20 Thus, if the provision does not provide a remedy for its
violation, an action for damages under either Article 20 or Article 21 of the Civil Code would be proper.

The question of whether or not the principle of abuse of rights has been violated resulting in damages under
Article 20 or other applicable provision of law, depends on the circumstances of each case. In the present case, it
was found that Coyiuto, Jr. indeed abused his rights as Chairman of The Manila Chronicle, which led to the
publication of the libelous articles in the said newspaper, thus, entitling petitioner to damages under Article 19, in
relation to Article 20.

Consequently, the trial court and the CA correctly awarded moral damages to petitioner. Such damages may be
awarded when the transgression is the cause of petitioner’s anguish. 21 Further, converse to Coyiuto, Jr.’s
argument, although petitioner is claiming damages for violation of Articles 19 and 20 of the Civil Code, still such
violations directly resulted in the publication of the libelous articles in the newspaper, which, by analogy, is one of
the ground for the recovery of moral damages under (7) of Article 2219. 22

However, despite the foregoing, the damages awarded to petitioner appear to be too excessive and warrants a
second hard look by the Court.

While there is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral
damages, the same should not be palpably and scandalously excessive. Moral damages are not intended to
impose a penalty to the wrongdoer, neither to enrich the claimant at the expense of the defendant. 23

Even petitioner, in his Comment24 dated June 21, 2010, agree that moral damages "are not awarded in order to
punish the respondents or to make the petitioner any richer than he already is, but to enable the latter to find
some cure for the moral anguish and distress he has undergone by reason of the defamatory and damaging
articles which the respondents wrote and published." 25 Further, petitioner cites as sufficient basis for the award of
damages the plain reason that he had to "go through the ordeal of defending himself everytime someone
approached him to ask whether or not the statements in the defamatory article are true."

In Philippine Journalists, Inc. (People’s Journal) v. Thoenen, 26 citing Guevarra v. Almario,27 We noted that the
damages in a libel case must depend upon the facts of the particular case and the sound discretion of the court,
although appellate courts were "more likely to reduce damages for libel than to increase them." So it must be in
this case.

Moral damages are not a bonanza. They are given to ease the defendant’s grief and suffering. Moral damages
should be reasonably approximate to the extent of the hurt caused and the gravity of the wrong done. 28 The Court,
therefore, finds the award of moral damages in the first and second cause of action in the amount of
₱2,000,000.00 and ₱25,000,000.00, respectively, to be too excessive and holds that an award of ₱1,000,000.00
and ₱10,000,000.00, respectively, as moral damages are more reasonable.

As for exemplary damages, Article 2229 provides that exemplary damages may be imposed by way of example or
correction for the public good. Nonetheless, exemplary damages are imposed not to enrich one party or
impoverish another, but to serve as a deterrent against or as a negative incentive to curb socially deleterious
actions.29 On this basis, the award of exemplary damages in the first and second cause of action in the amount of
₱500,000.00 and ₱10,000,000.00, respectively, is reduced to ₱200,000.00 and ₱1,000,000.00, respectively.

On the matter of attorney’s fees and costs of suit, Article 2208 of the same Code provides, among others, that
attorney’s fees and expenses of litigation may be recovered in cases when exemplary damages are awarded and
where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered. In
any event, however, such award must be reasonable, just and equitable. 30 Thus, the award of attorney’s fees and
costs is reduced from ₱1,000,000.00 to ₱200,000.00.
One final note, the case against respondent was one for damages based on the publication of libelous articles
against petitioner; hence, only civil in nature. The rule is that a party who has the burden of proof in a civil case
must establish his cause of action by a preponderance of evidence. Thus, respondents’ liability was proven only
on the basis of preponderance of evidence, which is quite different from a criminal case for libel where proof
beyond reasonable doubt must be established.

Corollarilly, under Article 360 of the Revised Penal Code, the person who "caused the publication" of a defamatory
article shall be responsible for the same. Hence, Coyiuto, Jr. should have been held jointly and solidarily liable
with the other respondents in the first cause of action under this article and not on the basis of violation of the
principle of abuse of rights founded on Articles 19 and 20 of the Civil Code. Because of the exclusion of Coyiuto,
Jr. in the first cause of action for libel, he cannot be held solidarily liable with the other respondents in the first
cause of action. Nonetheless, since damage to petitioner was in fact established warranting the award of moral
and exemplary damages, the same could only be awarded based on petitioner’s second cause of action
impleading Coyiuto, Jr. for violation of the principle of abuse of right.

It did not escape the attention of the Court that in filing two different causes of action based on the same
published articles, petitioner intended the liability of Coyiuto, Jr. to be different from the other respondents. It can
be inferred that if Coyiuto, Jr. was impleaded in the first cause of action for recovery of the civil liability in libel,
petitioner could not have prayed for higher damages, considering that the other respondents, who are jointly and
severally liable with one another, are not in the same financial standing as Coyiuto, Jr. Petitioner, in effect, had
spared the other respondents from paying such steep amount of damages, while at the same time prayed that
Coyiuto, Jr. pay millions of pesos by way of moral and exemplary damages in the second cause of action.

WHEREFORE, the Motion for Reconsideration and Supplemental Motion for Reconsideration are PARTIALLY
GRANTED.1âwphi1 The Decision of this Court, dated November 25, 2009, is MODIFIED to read as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered as follows:

1. On the First Cause of Action, ordering defendants Chronicle Publishing, Neil H. Cruz, Ernesto Tolentino, Noel
Cabrera, Thelma San Juan, Gerry Zaragoza, Donna Gatdula, Raul Valino and Rodney Diola, to pay plaintiff
Yuchengco, jointly and severally:

a. the amount of One Million Pesos (₱1,000,000.00) as moral damages; and

b. the amount of Two Hundred Thousand Pesos (₱200,000.00) as exemplary damages;

2. On the Second Cause of Action, ordering defendants Robert Coyiuto, Jr. and Chronicle Publishing to pay
plaintiff Yuchengco, jointly and severally:

a. the amount of Ten Million Pesos (₱10,000,000.00) as moral damages; and

b. the amount of One Million Pesos (₱1,000,000.00) as exemplary damages;

3. On the Third Cause of Action, ordering all defendants to pay plaintiff Yuchengco, jointly and severally, the
amount of Two Hundred Thousand Pesos (₱200,000.00) as attorney’s fee and legal costs.

Costs against respondents.

SO ORDERED.

G.R. No. 164703 May 4, 2010


ALLAN C. GO, doing business under the name and style "ACG Express Liner," Petitioner, vs.
MORTIMER F. CORDERO, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 164747

MORTIMER F. CORDERO, Petitioner, vs.


ALLAN C. GO, doing business under the name and style "ACG Express Liner," FELIPE M. LANDICHO and
VINCENT D. TECSON, Respondents.

DECISION

VILLARAMA, JR., J.:

For review is the Decision1 dated March 16, 2004 as modified by the Resolution 2 dated July 22, 2004 of the Court
of Appeals (CA) in CA-G.R. CV No. 69113, which affirmed with modifications the Decision 3 dated May 31, 2000 of
the Regional Trial Court (RTC) of Quezon City, Branch 85 in Civil Case No. 98-35332.

The factual antecedents:

Sometime in 1996, Mortimer F. Cordero, Vice-President of Pamana Marketing Corporation (Pamana), ventured
into the business of marketing inter-island passenger vessels. After contacting various overseas fast ferry
manufacturers from all over the world, he came to meet Tony Robinson, an Australian national based in Brisbane,
Australia, who is the Managing Director of Aluminium Fast Ferries Australia (AFFA).

Between June and August 1997, Robinson signed documents appointing Cordero as the exclusive distributor of
AFFA catamaran and other fast ferry vessels in the Philippines. As such exclusive distributor, Cordero offered for
sale to prospective buyers the 25-meter Aluminium Passenger catamaran known as the SEACAT 25. 4

After negotiations with Felipe Landicho and Vincent Tecson, lawyers of Allan C. Go who is the owner/operator of
ACG Express Liner of Cebu City, a single proprietorship, Cordero was able to close a deal for the purchase of two
(2) SEACAT 25 as evidenced by the Memorandum of Agreement dated August 7, 1997. 5 Accordingly, the parties
executed Shipbuilding Contract No. 7825 for one (1) high-speed catamaran (SEACAT 25) for the price of
US$1,465,512.00.6 Per agreement between Robinson and Cordero, the latter shall receive commissions totalling
US$328,742.00, or 22.43% of the purchase price, from the sale of each vessel. 7

Cordero made two (2) trips to the AFFA Shipyard in Brisbane, Australia, and on one (1) occasion even
accompanied Go and his family and Landicho, to monitor the progress of the building of the vessel. He
shouldered all the expenses for airfare, food, hotel accommodations, transportation and entertainment during
these trips. He also spent for long distance telephone calls to communicate regularly with Robinson, Go, Tecson
and Landicho.

However, Cordero later discovered that Go was dealing directly with Robinson when he was informed by Dennis
Padua of Wartsila Philippines that Go was canvassing for a second catamaran engine from their company which
provided the ship engine for the first SEACAT 25. Padua told Cordero that Go instructed him to fax the requested
quotation of the second engine to the Park Royal Hotel in Brisbane where Go was then staying. Cordero tried to
contact Go and Landicho to confirm the matter but they were nowhere to be found, while Robinson refused to
answer his calls. Cordero immediately flew to Brisbane to clarify matters with Robinson, only to find out that Go
and Landicho were already there in Brisbane negotiating for the sale of the second SEACAT 25. Despite repeated
follow-up calls, no explanation was given by Robinson, Go, Landicho and Tecson who even made Cordero
believe there would be no further sale between AFFA and ACG Express Liner.
In a handwritten letter dated June 24, 1998, Cordero informed Go that such act of dealing directly with Robinson
violated his exclusive distributorship and demanded that they respect the same, without prejudice to legal action
against him and Robinson should they fail to heed the same. 8 Cordero’s lawyer, Atty. Ernesto A. Tabujara, Jr. of
ACCRA law firm, also wrote ACG Express Liner assailing the fraudulent actuations and misrepresentations
committed by Go in connivance with his lawyers (Landicho and Tecson) in breach of Cordero’s exclusive
distributorship appointment.9

Having been apprised of Cordero’s demand letter, Thyne & Macartney, the lawyer of AFFA and Robinson, faxed a
letter to ACCRA law firm asserting that the appointment of Cordero as AFFA’s distributor was for the purpose of
one (1) transaction only, that is, the purchase of a high-speed catamaran vessel by ACG Express Liner in August
1997. The letter further stated that Cordero was offered the exclusive distributorship, the terms of which were
contained in a draft agreement which Cordero allegedly failed to return to AFFA within a reasonable time, and
which offer is already being revoked by AFFA.10

As to the response of Go, Landicho and Tecson to his demand letter, Cordero testified before the trial court that
on the same day, Landicho, acting on behalf of Go, talked to him over the telephone and offered to amicably settle
their dispute. Tecson and Landicho offered to convince Go to honor his exclusive distributorship with AFFA and to
purchase all vessels for ACG Express Liner through him for the next three (3) years. In an effort to amicably settle
the matter, Landicho, acting in behalf of Go, set up a meeting with Cordero on June 29, 1998 between 9:30 p.m.
to 10:30 p.m. at the Mactan Island Resort Hotel lobby. On said date, however, only Landicho and Tecson came
and no reason was given for Go’s absence. Tecson and Landicho proposed that they will convince Go to pay him
US$1,500,000.00 on the condition that they will get a cut of 20%. And so it was agreed between him, Landicho
and Tecson that the latter would give him a weekly status report and that the matter will be settled in three (3) to
four (4) weeks and neither party will file an action against each other until a final report on the proposed
settlement. No such report was made by either Tecson or Landicho who, it turned out, had no intention to do so
and were just buying time as the catamaran vessel was due to arrive from Australia. Cordero then filed a
complaint with the Bureau of Customs (BOC) to prohibit the entry of SEACAT 25 from Australia based on
misdeclaration and undervaluation. Consequently, an Alert Order was issued by Acting BOC Commissioner
Nelson Tan for the vessel which in fact arrived on July 17, 1998. Cordero claimed that Go and Robinson had
conspired to undervalue the vessel by around US$500,000.00. 11

On August 21, 1998, Cordero instituted Civil Case No. 98-35332 seeking to hold Robinson, Go, Tecson and
Landicho liable jointly and solidarily for conniving and conspiring together in violating his exclusive distributorship
in bad faith and wanton disregard of his rights, thus depriving him of his due commissions (balance of unpaid
commission from the sale of the first vessel in the amount of US$31,522.01 and unpaid commission for the sale of
the second vessel in the amount of US$328,742.00) and causing him actual, moral and exemplary damages,
including ₱800,000.00 representing expenses for airplane travel to Australia, telecommunications bills and
entertainment, on account of AFFA’s untimely cancellation of the exclusive distributorship agreement. Cordero
also prayed for the award of moral and exemplary damages, as well as attorney’s fees and litigation expenses. 12

Robinson filed a motion to dismiss grounded on lack of jurisdiction over his person and failure to state a cause of
action, asserting that there was no act committed in violation of the distributorship agreement. Said motion was
denied by the trial court on December 20, 1999. Robinson was likewise declared in default for failure to file his
answer within the period granted by the trial court. 13 As for Go and Tecson, their motion to dismiss based on
failure to state a cause of action was likewise denied by the trial court on February 26, 1999. 14 Subsequently, they
filed their Answer denying that they have anything to do with the termination by AFFA of Cordero’s authority as
exclusive distributor in the Philippines. On the contrary, they averred it was Cordero who stopped communicating
with Go in connection with the purchase of the first vessel from AFFA and was not doing his part in making
progress status reports and airing the client’s grievances to his principal, AFFA, such that Go engaged the
services of Landicho to fly to Australia and attend to the documents needed for shipment of the vessel to the
Philippines. As to the inquiry for the Philippine price for a Wartsila ship engine for AFFA’s other on-going vessel
construction, this was merely requested by Robinson but which Cordero misinterpreted as indication that Go was
buying a second vessel. Moreover, Landicho and Tecson had no transaction whatsoever with Cordero who had no
document to show any such shipbuilding contract. As to the supposed meeting to settle their dispute, this was due
to the malicious demand of Cordero to be given US$3,000,000 as otherwise he will expose in the media the
alleged undervaluation of the vessel with the BOC. In any case, Cordero no longer had cause of action for his
commission for the sale of the second vessel under the memorandum of agreement dated August 7, 1997
considering the termination of his authority by AFFA’s lawyers on June 26, 1998. 15

Pre-trial was reset twice to afford the parties opportunity to reach a settlement. However, on motion filed by
Cordero through counsel, the trial court reconsidered the resetting of the pre-trial to another date for the third time
as requested by Go, Tecson and Landicho, in view of the latter’s failure to appear at the pre-trial conference on
January 7, 2000 despite due notice. The trial court further confirmed that said defendants misled the trial court in
moving for continuance during the pre-trial conference held on December 10, 1999, purportedly to go abroad for
the holiday season when in truth a Hold-Departure Order had been issued against them. 16 Accordingly, plaintiff
Cordero was allowed to present his evidence ex parte.

Cordero’s testimony regarding his transaction with defendants Go, Landicho and Tecson, and the latter’s offer of
settlement, was corroborated by his counsel who also took the witness stand. Further, documentary evidence
including photographs taken of the June 29, 1998 meeting with Landicho, Tecson and Atty. Tabujara at Shangri-
la’s Mactan Island Resort, photographs taken in Brisbane showing Cordero, Go with his family, Robinson and
Landicho, and also various documents, communications, vouchers and bank transmittals were presented to prove
that: (1) Cordero was properly authorized and actually transacted in behalf of AFFA as exclusive distributor in the
Philippines; (2) Cordero spent considerable sums of money in pursuance of the contract with Go and ACG
Express Liner; and (3) AFFA through Robinson paid Cordero his commissions from each scheduled payment
made by Go for the first SEACAT 25 purchased from AFFA pursuant to Shipbuilding Contract No. 7825. 17

On May 31, 2000, the trial court rendered its decision, the dispositive portion of which reads as follows:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of Plaintiff and against
defendants Allan C. Go, Tony Robinson, Felipe Landicho, and Vincent Tecson. As prayed for, defendants are
hereby ordered to pay Plaintiff jointly and solidarily, the following:

1. On the First Cause of Action, the sum total of SIXTEEN MILLION TWO HUNDRED NINETY ONE THOUSAND
THREE HUNDRED FIFTY TWO AND FORTY THREE CENTAVOS (P16,291,352.43) as actual damages with
legal interest from 25 June 1998 until fully paid;

2. On the Second Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as moral damages;

3. On the Third Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as exemplary damages; and

4. On the Fourth Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as attorney’s fees;

Costs against the defendants.

SO ORDERED.18

Go, Robinson, Landicho and Tecson filed a motion for new trial, claiming that they have been unduly prejudiced
by the negligence of their counsel who was allegedly unaware that the pre-trial conference on January 28, 2000
did not push through for the reason that Cordero was then allowed to present his evidence ex-parte, as he had
assumed that the said ex-parte hearing was being conducted only against Robinson who was earlier declared in
default.19 In its Order dated July 28, 2000, the trial court denied the motion for new trial. 20 In the same order,
Cordero’s motion for execution pending appeal was granted. Defendants moved to reconsider the said order
insofar as it granted the motion for execution pending appeal. 21 On August 8, 2000, they filed a notice of appeal. 22
On August 18, 2000, the trial court denied the motion for reconsideration and on August 21, 2000, the writ of
execution pending appeal was issued.23 Meanwhile, the notice of appeal was denied for failure to pay the
appellate court docket fee within the prescribed period. 24 Defendants filed a motion for reconsideration and to
transmit the case records to the CA.25

On September 29, 2000, the CA issued a temporary restraining order at the instance of defendants in the
certiorari case they filed with said court docketed as CA-G.R. SP No. 60354 questioning the execution orders
issued by the trial court. Consequently, as requested by the defendants, the trial court recalled and set aside its
November 6, 2000 Order granting the ex-parte motion for release of garnished funds, cancelled the scheduled
public auction sale of levied real properties, and denied the ex-parte Motion for Break-Open Order and Ex-Parte
Motion for Encashment of Check filed by Cordero.26 On November 29, 2000, the trial court reconsidered its Order
dated August 21, 2000 denying due course to the notice of appeal and forthwith directed the transmittal of the
records to the CA.27

On January 29, 2001, the CA rendered judgment granting the petition for certiorari in CA-G.R. SP No. 60354 and
setting aside the trial court’s orders of execution pending appeal. Cordero appealed the said judgment in a petition
for review filed with this Court which was eventually denied under our Decision dated September 17, 2002. 28

On March 16, 2004, the CA in CA-G.R. CV No. 69113 affirmed the trial court (1) in allowing Cordero to present his
evidence ex-parte after the unjustified failure of appellants (Go, Tecson and Landicho) to appear at the pre-trial
conference despite due notice; (2) in finding that it was Cordero and not Pamana who was appointed by AFFA as
the exclusive distributor in the Philippines of its SEACAT 25 and other fast ferry vessels, which is not limited to the
sale of one (1) such catamaran to Go on August 7, 1997; and (3) in finding that Cordero is entitled to a
commission per vessel sold for AFFA through his efforts in the amount equivalent to 22.43% of the price of each
vessel or US$328,742.00, and with payments of US$297,219.91 having been made to Cordero, there remained a
balance of US$31,522.09 still due to him. The CA sustained the trial court in ruling that Cordero is entitled to
damages for the breach of his exclusive distributorship agreement with AFFA. However, it held that Cordero is
entitled only to commission for the sale of the first catamaran obtained through his efforts with the remaining
unpaid sum of US$31,522.09 or ₱1,355,449.90 (on the basis of US$1.00=₱43.00 rate) with interest at 6% per
annum from the time of the filing of the complaint until the same is fully paid. As to the ₱800,000.00 representing
expenses incurred by Cordero for transportation, phone bills, entertainment, food and lodging, the CA declared
there was no basis for such award, the same being the logical and necessary consequences of the exclusive
distributorship agreement which are normal in the field of sales and distribution, and the expenditures having
redounded to the benefit of the distributor (Cordero).

On the amounts awarded by the trial court as moral and exemplary damages, as well as attorney’s fees, the CA
reduced the same to ₱500,000.00, ₱300,000.00 and ₱50,000.00, respectively. Appellants were held solidarily
liable pursuant to the provisions of Article 1207 in relation to Articles 19, 20, 21 and 22 of the New Civil Code. The
CA further ruled that no error was committed by the trial court in denying their motion for new trial, which said
court found to be pro forma and did not raise any substantial matter as to warrant the conduct of another trial.

By Resolution dated July 22, 2004, the CA denied the motions for reconsideration respectively filed by the
appellants and appellee, and affirmed the Decision dated March 16, 2004 with the sole modification that the legal
interest of 6% per annum shall start to run from June 24, 1998 until the finality of the decision, and the rate of 12%
interest per annum shall apply once the decision becomes final and executory until the judgment has been
satisfied.

The case before us is a consolidation of the petitions for review under Rule 45 separately filed by Go (G.R. No.
164703) and Cordero (G.R. No. 164747) in which petitioners raised the following arguments:

G.R. No. 164703


(Petitioner Go)

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

II. THE HONORABLE COURT OF APPEALS IGNORED THE LAW AND JURISPRUDENCE AND ACTED WITH
GRAVE ABUSE OF DISCRETION IN HOLDING HEREIN PETITIONER RESPONSIBLE FOR THE BREACH IN
THE ALLEGED EXCLUSIVE DISTRIBUTORSHIP AGREEMENT WITH ALUMINIUM FAST FERRIES
AUSTRALIA;

III. THE HONORABLE APPELLATE COURT MISAPPLIED THE LAW ND ACTED WITH GRAVE ABUSE OF
DISCRETION IN FINDING PETITIONER LIABLE IN SOLIDUM WITH THE CO-DEFENDANTS WITH RESPECT
TO THE CLAIMS OF RESPONDENT;

IV. THE HONORABLE COURT OF APPEALS MISAPPLIED LAW AND JURISPRUDENCE AND GRAVELY
ABUSED ITS DISCRETION WHEN IT FOUND PETITIONER LIABLE FOR UNPAID COMMISSIONS, DAMAGES,
ATTORNEY’S FEES, AND LITIGATION EXPENSES; and

V. THE HONORABLE APPELLATE COURT ACTED CONTRARY TO LAW AND JURISPRUDENCE AND
GRAVELY ABUSED ITS DISCRETION WHEN IT EFFECTIVELY DEPRIVED HEREIN PETITIONER OF HIS
RIGHT TO DUE PROCESS BY AFFIRMING THE LOWER COURT’S DENIAL OF PETITIONER’S MOTION FOR
NEW TRIAL.29

G.R. No. 164747

(Petitioner Cordero)

I.

THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE JUDGMENT OF THE TRIAL COURT
AWARDING PETITIONER ACTUAL DAMAGES FOR HIS COMMISSION FOR THE SALE OF THE SECOND
VESSEL, SINCE THERE IS SUFFICIENT EVIDENCE ON RECORD WHICH PROVES THAT THERE WAS A
SECOND SALE OF A VESSEL.

A. THE MEMORANDUM OF AGREEMENT DATED 7 AUGUST 1997 PROVIDES THAT RESPONDENT GO WAS
CONTRACTUALLY BOUND TO BUY TWO (2) VESSELS FROM AFFA.

B. RESPONDENT GO’S POSITION PAPER AND COUNTER-AFFIDAVIT/POSITION PAPER THAT WERE FILED
BEFORE THE BUREAU OF CUSTOMS, ADMITS UNDER OATH THAT HE HAD INDEED PURCHASED A
SECOND VESSEL FROM AFFA.

C. RESPONDENTS ADMITTED IN THEIR PRE-TRIAL BRIEF THAT THEY HAD PURCHASED A SECOND
VESSEL.

II.

THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER IS NOT ENTITLED TO HIS COMMISSIONS
FOR THE PURCHASE OF A SECOND VESSEL, SINCE IT WAS PETITIONER’S EFFORTS WHICH ACTUALLY
FACILITATED AND SET-UP THE TRANSACTION FOR RESPONDENTS.

III.
THE COURT OF APPEALS ERRED IN NOT IMPOSING THE PROPER LEGAL INTEREST RATE ON
RESPONDENTS’ UNPAID OBLIGATION WHICH SHOULD BE TWELVE PERCENT (12%) FROM THE TIME OF
THE BREACH OF THE OBLIGATION.

IV.

THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE ORIGINAL AMOUNT OF CONSEQUENTIAL
DAMAGES AWARDED TO PETITIONER BY THE TRIAL COURT CONSIDERING THE BAD FAITH AND
FRAUDULENT CONDUCT OF RESPONDENTS IN MISAPPROPRIATING THE MONEY OF PETITIONER. 30

The controversy boils down to two (2) main issues: (1) whether petitioner Cordero has the legal personality to sue
the respondents for breach of contract; and (2) whether the respondents may be held liable for damages to
Cordero for his unpaid commissions and termination of his exclusive distributorship appointment by the principal,
AFFA.

I. Real Party-in-Interest

First, on the issue of whether the case had been filed by the real party-in-interest as required by Section 2, Rule 3
of the Rules of Court, which defines such party as the one (1) to be benefited or injured by the judgment in the
suit, or the party entitled to the avails of the suit. The purposes of this provision are: 1) to prevent the prosecution
of actions by persons without any right, title or interest in the case; 2) to require that the actual party entitled to
legal relief be the one to prosecute the action; 3) to avoid a multiplicity of suits; and 4) to discourage litigation and
keep it within certain bounds, pursuant to sound public policy. 31 A case is dismissible for lack of personality to sue
upon proof that the plaintiff is not the real party-in-interest, hence grounded on failure to state a cause of action. 32

On this issue, we agree with the CA in ruling that it was Cordero and not Pamana who is the exclusive distributor
of AFFA in the Philippines as shown by the Certification dated June 1, 1997 issued by Tony Robinson. 33 Petitioner
Go mentions the following documents also signed by respondent Robinson which state that "Pamana Marketing
Corporation represented by Mr. Mortimer F. Cordero" was actually the exclusive distributor: (1) letter dated 1 June
199734; (2) certification dated 5 August 199735; and (3) letter dated 5 August 1997 addressed to petitioner Cordero
concerning "commissions to be paid to Pamana Marketing Corporation." 36 Such apparent inconsistency in naming
AFFA’s exclusive distributor in the Philippines is of no moment. For all intents and purposes, Robinson and AFFA
dealt only with Cordero who alone made decisions in the performance of the exclusive distributorship, as with
other clients to whom he had similarly offered AFFA’s fast ferry vessels. Moreover, the stipulated commissions
from each progress payments made by Go were directly paid by Robinson to Cordero. 37 Respondents Landicho
and Tecson were only too aware of Cordero’s authority as the person who was appointed and acted as exclusive
distributor of AFFA, which can be gleaned from their act of immediately furnishing him with copies of bank
transmittals everytime Go remits payment to Robinson, who in turn transfers a portion of funds received to the
bank account of Cordero in the Philippines as his commission. Out of these partial payments of his commission,
Cordero would still give Landicho and Tecson their respective "commission," or "cuts" from his own commission.
Respondents Landicho and Tecson failed to refute the evidence submitted by Cordero consisting of receipts
signed by them. Said amounts were apart from the earlier expenses shouldered by Cordero for Landicho’s airline
tickets, transportation, food and hotel accommodations for the trip to Australia. 38

Moreover, petitioner Go, Landicho and Tecson never raised petitioner Cordero’s lack of personality to sue on
behalf of Pamana,39 and did so only before the CA when they contended that it is Pamana and not Cordero, who
was appointed and acted as exclusive distributor for AFFA. 40 It was Robinson who argued in support of his motion
to dismiss that as far as said defendant is concerned, the real party plaintiff appears to be Pamana, against the
real party defendant which is AFFA.41 As already mentioned, the trial court denied the motion to dismiss filed by
Robinson.
We find no error committed by the trial court in overruling Robinson’s objection over the improper resort to
summons by publication upon a foreign national like him and in an action in personam, notwithstanding that he
raised it in a special appearance specifically raising the issue of lack of jurisdiction over his person. Courts acquire
jurisdiction over the plaintiffs upon the filing of the complaint, while jurisdiction over the defendants in a civil case
is acquired either through the service of summons upon them in the manner required by law or through their
voluntary appearance in court and their submission to its authority. 42 A party who makes a special appearance in
court challenging the jurisdiction of said court based on the ground of invalid service of summons is not deemed
to have submitted himself to the jurisdiction of the court. 43

In this case, however, although the Motion to Dismiss filed by Robinson specifically stated as one (1) of the
grounds the lack of "personal jurisdiction," it must be noted that he had earlier filed a Motion for Time to file an
appropriate responsive pleading even beyond the time provided in the summons by publication. 44 Such motion did
not state that it was a conditional appearance entered to question the regularity of the service of summons, but an
appearance submitting to the jurisdiction of the court by acknowledging the summons by publication issued by the
court and praying for additional time to file a responsive pleading. Consequently, Robinson having acknowledged
the summons by publication and also having invoked the jurisdiction of the trial court to secure affirmative relief in
his motion for additional time, he effectively submitted voluntarily to the trial court’s jurisdiction. He is now
estopped from asserting otherwise, even before this Court. 45

II. Breach of Exclusive Distributorship, Contractual Interference and Respondents’ Liability for Damages

In Yu v. Court of Appeals,46 this Court ruled that the right to perform an exclusive distributorship agreement and to
reap the profits resulting from such performance are proprietary rights which a party may protect. Thus, injunction
is the appropriate remedy to prevent a wrongful interference with contracts by strangers to such contracts where
the legal remedy is insufficient and the resulting injury is irreparable. In that case, the former dealer of the same
goods purchased the merchandise from the manufacturer in England through a trading firm in West Germany and
sold these in the Philippines. We held that the rights granted to the petitioner under the exclusive distributorship
agreement may not be diminished nor rendered illusory by the expedient act of utilizing or interposing a person or
firm to obtain goods for which the exclusive distributorship was conceptualized, at the expense of the sole
authorized distributor.47

In the case at bar, it was established that petitioner Cordero was not paid the balance of his commission by
respondent Robinson. From the time petitioner Go and respondent Landicho directly dealt with respondent
Robinson in Brisbane, and ceased communicating through petitioner Cordero as the exclusive distributor of AFFA
in the Philippines, Cordero was no longer informed of payments remitted to AFFA in Brisbane. In other words,
Cordero had clearly been cut off from the transaction until the arrival of the first SEACAT 25 which was sold
through his efforts. When Cordero complained to Go, Robinson, Landicho and Tecson about their acts prejudicial
to his rights and demanded that they respect his exclusive distributorship, Go simply let his lawyers led by
Landicho and Tecson handle the matter and tried to settle it by promising to pay a certain amount and to purchase
high-speed catamarans through Cordero. However, Cordero was not paid anything and worse, AFFA through its
lawyer in Australia even terminated his exclusive dealership insisting that his services were engaged for only one
(1) transaction, that is, the purchase of the first SEACAT 25 in August 1997.

Petitioner Go argues that unlike in Yu v. Court of Appeals48 there is no conclusive proof adduced by petitioner
Cordero that they actually purchased a second SEACAT 25 directly from AFFA and hence there was no violation
of the exclusive distributorship agreement. Further, he contends that the CA gravely abused its discretion in
holding them solidarily liable to Cordero, relying on Articles 1207, 19 and 21 of the Civil Code despite absence of
evidence, documentary or testimonial, showing that they conspired to defeat the very purpose of the exclusive
distributorship agreement.49

We find that contrary to the claims of petitioner Cordero, there was indeed no sufficient evidence that respondents
actually purchased a second SEACAT 25 directly from AFFA. But this circumstance will not absolve respondents
from liability for invading Cordero’s rights under the exclusive distributorship. Respondents clearly acted in bad
faith in bypassing Cordero as they completed the remaining payments to AFFA without advising him and
furnishing him with copies of the bank transmittals as they previously did, and directly dealt with AFFA through
Robinson regarding arrangements for the arrival of the first SEACAT 25 in Manila and negotiations for the
purchase of the second vessel pursuant to the Memorandum of Agreement which Cordero signed in behalf of
AFFA. As a result of respondents’ actuations, Cordero incurred losses as he was not paid the balance of his
commission from the sale of the first vessel and his exclusive distributorship revoked by AFFA.

Petitioner Go contends that the trial and appellate courts erred in holding them solidarily liable for Cordero’s
unpaid commission, which is the sole obligation of the principal AFFA. It was Robinson on behalf of AFFA who, in
the letter dated August 5, 1997 addressed to Cordero, undertook to pay commission payments to Pamana on a
staggered progress payment plan in the form of percentage of the commission per payment. AFFA explicitly
committed that it will, "upon receipt of progress payments, pay to Pamana their full commission by telegraphic
transfer to an account nominated by Pamana within one to two days of [AFFA] receiving such
payments."50 Petitioner Go further maintains that he had not in any way violated or caused the termination of the
exclusive distributorship agreement between Cordero and AFFA; he had also paid in full the first and only vessel
he purchased from AFFA.51

While it is true that a third person cannot possibly be sued for breach of contract because only parties can breach
contractual provisions, a contracting party may sue a third person not for breach but for inducing another to
commit such breach.

Article 1314 of the Civil Code provides:

Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to the other
contracting party.

The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the part of the third
person of the existence of a contract; and (3) interference of the third person is without legal justification. 52

The presence of the first and second elements is not disputed. Through the letters issued by Robinson attesting
that Cordero is the exclusive distributor of AFFA in the Philippines, respondents were clearly aware of the contract
between Cordero and AFFA represented by Robinson. In fact, evidence on record showed that respondents
initially dealt with and recognized Cordero as such exclusive dealer of AFFA high-speed catamaran vessels in the
Philippines. In that capacity as exclusive distributor, petitioner Go entered into the Memorandum of Agreement
and Shipbuilding Contract No. 7825 with Cordero in behalf of AFFA.

As to the third element, our ruling in the case of So Ping Bun v. Court of Appeals 53 is instructive, to wit:

A duty which the law of torts is concerned with is respect for the property of others, and a cause of action ex
delicto may be predicated upon an unlawful interference by one person of the enjoyment by the other of his
private property. This may pertain to a situation where a third person induces a party to renege on or violate his
undertaking under a contract. In the case before us, petitioner’s Trendsetter Marketing asked DCCSI to execute
lease contracts in its favor, and as a result petitioner deprived respondent corporation of the latter’s property right.
Clearly, and as correctly viewed by the appellate court, the three elements of tort interference above-mentioned
are present in the instant case.

Authorities debate on whether interference may be justified where the defendant acts for the sole purpose of
furthering his own financial or economic interest. One view is that, as a general rule, justification for interfering
with the business relations of another exists where the actor’s motive is to benefit himself. Such justification does
not exist where his sole motive is to cause harm to the other. Added to this, some authorities believe that it is not
necessary that the interferer’s interest outweigh that of the party whose rights are invaded, and that an individual
acts under an economic interest that is substantial, not merely de minimis, such that wrongful and malicious
motives are negatived, for he acts in self-protection. Moreover, justification for protecting one’s financial position
should not be made to depend on a comparison of his economic interest in the subject matter with that of others.
It is sufficient if the impetus of his conduct lies in a proper business interest rather than in wrongful motives.

As early as Gilchrist vs. Cuddy, we held that where there was no malice in the interference of a contract, and the
impulse behind one’s conduct lies in a proper business interest rather than in wrongful motives, a party cannot be
a malicious interferer. Where the alleged interferer is financially interested, and such interest motivates his
conduct, it cannot be said that he is an officious or malicious intermeddler.

In the instant case, it is clear that petitioner So Ping Bun prevailed upon DCCSI to lease the warehouse to his
enterprise at the expense of respondent corporation. Though petitioner took interest in the property of respondent
corporation and benefited from it, nothing on record imputes deliberate wrongful motives or malice in him.

xxx

While we do not encourage tort interferers seeking their economic interest to intrude into existing contracts at the
expense of others, however, we find that the conduct herein complained of did not transcend the limits forbidding
an obligatory award for damages in the absence of any malice. The business desire is there to make some gain to
the detriment of the contracting parties. Lack of malice, however, precludes damages. But it does not relieve
petitioner of the legal liability for entering into contracts and causing breach of existing ones. The respondent
appellate court correctly confirmed the permanent injunction and nullification of the lease contracts between
DCCSI and Trendsetter Marketing, without awarding damages. The injunction saved the respondents from further
damage or injury caused by petitioner’s interference. 54 [emphasis supplied.]

Malice connotes ill will or spite, and speaks not in response to duty. It implies an intention to do ulterior and
unjustifiable harm. Malice is bad faith or bad motive. 55 In the case of Lagon v. Court of Appeals,56 we held that to
sustain a case for tortuous interference, the defendant must have acted with malice or must have been driven by
purely impure reasons to injure the plaintiff; in other words, his act of interference cannot be justified. We further
explained that the word "induce" refers to situations where a person causes another to choose one course of
conduct by persuasion or intimidation. As to the allegation of private respondent in said case that petitioner
induced the heirs of the late Bai Tonina Sepi to sell the property to petitioner despite an alleged renewal of the
original lease contract with the deceased landowner, we ruled as follows:

Assuming ex gratia argumenti that petitioner knew of the contract, such knowledge alone was not sufficient to
make him liable for tortuous interference. x x x

Furthermore, the records do not support the allegation of private respondent that petitioner induced the heirs of
Bai Tonina Sepi to sell the property to him. The word "induce" refers to situations where a person causes another
to choose one course of conduct by persuasion or intimidation. The records show that the decision of the heirs of
the late Bai Tonina Sepi to sell the property was completely of their own volition and that petitioner did absolutely
nothing to influence their judgment. Private respondent himself did not proffer any evidence to support his claim.
In short, even assuming that private respondent was able to prove the renewal of his lease contract with Bai
Tonina Sepi, the fact was that he was unable to prove malice or bad faith on the part of petitioner in purchasing
the property. Therefore, the claim of tortuous interference was never established. 57

In their Answer, respondents denied having anything to do with the unpaid balance of the commission due to
Cordero and the eventual termination of his exclusive distributorship by AFFA. They gave a different version of the
events that transpired following the signing of Shipbuilding Contract No. 7825. According to them, several builder-
competitors still entered the picture after the said contract for the purchase of one (1) SEACAT 25 was sent to
Brisbane in July 1997 for authentication, adding that the contract was to be effective on August 7, 1997, the time
when their funds was to become available. Go admitted he called the attention of AFFA if it can compete with the
prices of other builders, and upon mutual agreement, AFFA agreed to give them a discounted price under the
following terms and conditions: (1) that the contract price be lowered; (2) that Go will obtain another vessel; (3)
that to secure compliance of such conditions, Go must make an advance payment for the building of the second
vessel; and (4) that the payment scheme formerly agreed upon as stipulated in the first contract shall still be the
basis and used as the guiding factor in remitting money for the building of the first vessel. This led to the signing
of another contract superseding the first one (1), still to be dated 07 August 1997. Attached to the answer were
photocopies of the second contract stating a lower purchase price (US$1,150,000.00) and facsimile transmission
of AFFA to Go confirming the transaction.58

As to the cessation of communication with Cordero, Go averred it was Cordero who was nowhere to be contacted
at the time the shipbuilding progress did not turn good as promised, and it was always Landicho and Tecson who,
after several attempts, were able to locate him only to obtain unsatisfactory reports such that it was Go who would
still call up Robinson regarding any progress status report, lacking documents for MARINA, etc., and go to
Australia for ocular inspection. Hence, in May 1998 on the scheduled launching of the ship in Australia, Go
engaged the services of Landicho who went to Australia to see to it that all documents needed for the shipment of
the vessel to the Philippines would be in order. It was also during this time that Robinson’s request for inquiry on
the Philippine price of a Wartsila engine for AFFA’s then on-going vessel construction, was misinterpreted by
Cordero as indicating that Go was buying a second vessel. 59

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

8. As elsewhere stated, the total remittances made by herein Importer to AFFA does not alone represent the
purchase price for Seacat 25. It includes advance payment for the acquisition of another vessel as part of the deal
due to the discounted price.62

which even gives credence to the claim of Cordero that respondents negotiated for the sale of the second vessel
and that the nonpayment of the remaining two (2) instalments of his commission for the sale of the first SEACAT
25 was a result of Go and Landicho’s directly dealing with Robinson, obviously to obtain a lower price for the
second vessel at the expense of Cordero.

The act of Go, Landicho and Tecson in inducing Robinson and AFFA to enter into another contract directly with
ACG Express Liner to obtain a lower price for the second vessel resulted in AFFA’s breach of its contractual
obligation to pay in full the commission due to Cordero and unceremonious termination of Cordero’s appointment
as exclusive distributor. Following our pronouncement in Gilchrist v. Cuddy (supra), such act may not be deemed
malicious if impelled by a proper business interest rather than in wrongful motives. The attendant circumstances,
however, demonstrated that respondents transgressed the bounds of permissible financial interest to benefit
themselves at the expense of Cordero. Respondents furtively went directly to Robinson after Cordero had worked
hard to close the deal for them to purchase from AFFA two (2) SEACAT 25, closely monitored the progress of
building the first vessel sold, attended to their concerns and spent no measly sum for the trip to Australia with Go,
Landicho and Go’s family members. But what is appalling is the fact that even as Go, Landicho and Tecson
secretly negotiated with Robinson for the purchase of a second vessel, Landicho and Tecson continued to
demand and receive from Cordero their "commission" or "cut" from Cordero’s earned commission from the sale of
the first SEACAT 25.

Cordero was practically excluded from the transaction when Go, Robinson, Tecson and Landicho suddenly
ceased communicating with him, without giving him any explanation. While there was nothing objectionable in
negotiating for a lower price in the second purchase of SEACAT 25, which is not prohibited by the Memorandum
of Agreement, Go, Robinson, Tecson and Landicho clearly connived not only in ensuring that Cordero would have
no participation in the contract for sale of the second SEACAT 25, but also that Cordero would not be paid the
balance of his commission from the sale of the first SEACAT 25. This, despite their knowledge that it was
commission already earned by and due to Cordero. Thus, the trial and appellate courts correctly ruled that the
actuations of Go, Robinson, Tecson and Landicho were without legal justification and intended solely to prejudice
Cordero.

The existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of the trial court, when
affirmed by the appellate court, are conclusive on this Court. 63 We see no compelling reason to reverse the
findings of the RTC and the CA that respondents acted in bad faith and in utter disregard of the rights of Cordero
under the exclusive distributorship agreement.

The failure of Robinson, Go, Tecson and Landico to act with fairness, honesty and good faith in securing better
terms for the purchase of high-speed catamarans from AFFA, to the prejudice of Cordero as the duly appointed
exclusive distributor, is further proscribed by Article 19 of the Civil Code:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.

As we have expounded in another case:

Elsewhere, we explained that when "a right is exercised in a manner which does not conform with the norms
enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the
wrongdoer must be responsible." The object of this article, therefore, is to set certain standards which must be
observed not only in the exercise of one’s rights but also in the performance of one’s duties. These standards are
the following: act with justice, give everyone his due and observe honesty and good faith. Its antithesis,
necessarily, is any act evincing bad faith or intent to injure. Its elements are the following: (1) There is a legal right
or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another. When Article 19
is violated, an action for damages is proper under Articles 20 or 21 of the Civil Code. Article 20 pertains to
damages arising from a violation of law x x x. Article 21, on the other hand, states:

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage.

Article 21 refers to acts contra bonus mores and has the following elements: (1) There is an act which is legal; (2)
but which is contrary to morals, good custom, public order, or public policy; and (3) it is done with intent to injure.

A common theme runs through Articles 19 and 21, and that is, the act complained of must be intentional. 64

Petitioner Go’s argument that he, Landicho and Tecson cannot be held liable solidarily with Robinson for actual,
moral and exemplary damages, as well as attorney’s fees awarded to Cordero since no law or contract provided
for solidary obligation in these cases, is equally bereft of merit. Conformably with Article 2194 of the Civil Code,
the responsibility of two or more persons who are liable for the quasi-delict is solidary. 65 In Lafarge Cement
Philippines, Inc. v. Continental Cement Corporation, 66 we held:
[O]bligations arising from tort are, by their nature, always solidary. We have assiduously maintained this legal
principle as early as 1912 in Worcester v. Ocampo, in which we held:

x x x The difficulty in the contention of the appellants is that they fail to recognize that the basis of the present
action is tort. They fail to recognize the universal doctrine that each joint tort feasor is not only individually liable
for the tort in which he participates, but is also jointly liable with his tort feasors. x x x

It may be stated as a general rule that joint tort feasors are all the persons who command, instigate, promote,
encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is
done, if done for their benefit. They are each liable as principals, to the same extent and in the same manner as if
they had performed the wrongful act themselves. x x x

Joint tort feasors are jointly and severally liable for the tort which they commit.1avvphi1 The persons injured may
sue all of them or any number less than all. Each is liable for the whole damages caused by all, and all together
are jointly liable for the whole damage. It is no defense for one sued alone, that the others who participated in the
wrongful act are not joined with him as defendants; nor is it any excuse for him that his participation in the tort was
insignificant as compared to that of the others. x x x

Joint tort feasors are not liable pro rata. The damages can not be apportioned among them, except among
themselves. They cannot insist upon an apportionment, for the purpose of each paying an aliquot part. They are
jointly and severally liable for the whole amount. x x x

A payment in full for the damage done, by one of the joint tort feasors, of course satisfies any claim which might
exist against the others. There can be but satisfaction. The release of one of the joint tort feasors by agreement
generally operates to discharge all. x x x

Of course, the court during trial may find that some of the alleged tort feasors are liable and that others are not
liable. The courts may release some for lack of evidence while condemning others of the alleged tort feasors. And
this is true even though they are charged jointly and severally. 67 [emphasis supplied.]

The rule is that the defendant found guilty of interference with contractual relations cannot be held liable for more
than the amount for which the party who was inducted to break the contract can be held liable. 68 Respondents Go,
Landicho and Tecson were therefore correctly held liable for the balance of petitioner Cordero’s commission from
the sale of the first SEACAT 25, in the amount of US$31,522.09 or its peso equivalent, which AFFA/Robinson did
not pay in violation of the exclusive distributorship agreement, with interest at the rate of 6% per annum from June
24, 1998 until the same is fully paid.

Respondents having acted in bad faith, moral damages may be recovered under Article 2219 of the Civil
Code.69On the other hand, the requirements of an award of exemplary damages are: (1) they may be imposed by
way of example in addition to compensatory damages, and only after the claimant’s right to them has been
established; (2) that they cannot be recovered as a matter of right, their determination depending upon the
amount of compensatory damages that may be awarded to the claimant; and (3) the act must be accompanied by
bad faith or done in a wanton, fraudulent, oppressive or malevolent manner. 70 The award of exemplary damages
is thus in order. However, we find the sums awarded by the trial court as moral and exemplary damages as
reduced by the CA, still excessive under the circumstances.

Moral damages are meant to compensate and alleviate the physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injuries unjustly
caused. Although incapable of pecuniary estimation, the amount must somehow be proportional to and in
approximation of the suffering inflicted. Moral damages are not punitive in nature and were never intended to
enrich the claimant at the expense of the defendant. There is no hard-and-fast rule in determining what would be
a fair and reasonable amount of moral damages, since each case must be governed by its own peculiar facts.
Trial courts are given discretion in determining the amount, with the limitation that it "should not be palpably and
scandalously excessive." Indeed, it must be commensurate to the loss or injury suffered. 71

We believe that the amounts of ₱300,000.00 and ₱200,000.00 as moral and exemplary damages, respectively,
would be sufficient and reasonable. Because exemplary damages are awarded, attorney’s fees may also be
awarded in consonance with Article 2208 (1).72 We affirm the appellate court’s award of attorney’s fees in the
amount of ₱50,000.00.

WHEREFORE, the petitions are DENIED. The Decision dated March 16, 2004 as modified by the Resolution
dated July 22, 2004 of the Court of Appeals in CA-G.R. CV No. 69113 are hereby AFFIRMED with
MODIFICATION in that the awards of moral and exemplary damages are hereby reduced to ₱300,000.00 and
₱200,000.00, respectively.

With costs against the petitioner in G.R. No. 164703.

SO ORDERED.

G.R. No. 161075 July 15, 2013

RAFAEL JOSE-CONSING, JR., Petitioner, vs.


PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

BERSAMIN, J.:

An independent civil action based on fraud initiated by the defrauded party does not raise a prejudicial question to
stop the proceedings in a pending criminal prosecution of the defendant for estafa through falsification. This is
because the result of the independent civil action is irrelevant to the issue of guilt or innocence of the accused.

The Case

On appeal is the amended decision promulgated on August 18, 2003, 1 whereby the Court of Appeals (CA) granted
the writ of certiorari upon petition by the State in C.A.-G.R. No. 71252 entitled People v. Han. Winlove M
Dumayas, Presiding Judge, Branch 59, Regional Trial Court, Makati City and Rafael Consing, Jr., and set aside
the assailed order issued on November 26, 2001 by the Regional Trial Court (RTC), Branch 59, in Makati City
deferring the arraignment of petitioner in Criminal Case No. 00-120 entitled People v. Rafael Consing, Jr. upon his
motion on the ground of the existence of a prejudicial question in the civil cases pending between him and the
complainant in the trial courts in Pasig City and Makati City.

Antecedents

Petitioner negotiated with and obtained for himself and his mother, Cecilia de la Cruz (de la Cruz) various loans
totaling ₱18,000,000.00 from Unicapital Inc. (Unicapital). The loans were secured by a real estate mortgage
constituted on a parcel of land (property) covered by Transfer Certificate of Title (TCT) No. T-687599 of the
Registry of Deeds for the Province of Cavite registered under the name of de la Cruz. 2 In accordance with its
option to purchase the mortgaged property, Unicapital agreed to purchase one-half of the property for a total
consideration of ₱21,221,500.00. Payment was effected by off-setting the amounts due to

Unicapital under the promissory notes of de la Cruz and Consing in the amount of ₱18,000,000.00 and paying an
additional amount of ₱3,145,946.50. The other half of the property was purchased by Plus Builders, Inc. (Plus
Builders), a joint venture partner of Unicapital.3
Before Unicapital and Plus Builders could develop the property, they learned that the title to the property was
really TCT No. 114708 in the names of Po Willie Yu and Juanito Tan Teng, the parties from whom the property had
been allegedly acquired by de la Cruz. TCT No. 687599 held by De la Cruz appeared to be spurious. 4

On its part, Unicapital demanded the return of the total amount of ₱41,377,851.48 as of April 19, 1999 that had
been paid to and received by de la Cruz and Consing, but the latter ignored the demands. 5

On July 22, 1999, Consing filed Civil Case No. 1759 in the Pasig City Regional Trial Court (RTC) (Pasig civil case)
for injunctive relief, thereby seeking to enjoin Unicapital from proceeding against him for the collection of the
₱41,377,851.48 on the ground that he had acted as a mere agent of his mother.

On the same date, Unicapital initiated a criminal complaint for estafa through falsification of public document
against Consing and de la Cruz in the Makati City Prosecutor’s Office. 6

On August 6, 1999, Unicapital sued Consing in the RTC in Makati City (Civil Case No. 99-1418) for the recovery
of a sum of money and damages, with an application for a writ of preliminary attachment (Makati civil case). 7

On January 27, 2000, the Office of the City Prosecutor of Makati City filed against Consing and De la Cruz an
information for estafa through falsification of public document in the RTC in Makati City (Criminal Case No. 00-
120), which was assigned to Branch 60 (Makati criminal case). 8

On February 15, 2001, Consing moved to defer his arraignment in the Makati criminal case on the ground of
existence of a prejudicial question due to the pendency of the Pasig and Makati civil cases. On September 25,
2001, Consing reiterated his motion for deferment of his arraignment, citing the additional ground of pendency of
CA-G.R. SP No. 63712 in the CA. On November 19, 2001, the Prosecution opposed the motion. 9

On November 26, 2001, the RTC issued an order suspending the proceedings in the Makati criminal case on the
ground of the existence of a prejudicial question, and on March 18, 2001, the RTC denied the Prosecution’s
motion for reconsideration.10

The State thus assailed in the CA the last two orders of the RTC in the Makati criminal case via petition for
certiorari (C.A.-G.R. SP No. 71252).

On May 20, 2003, the CA promulgated its decision in C.A.-G.R. SP No. 71252, 11 dismissing the petition for
certiorari and upholding the RTC’s questioned orders, explaining:

Is the resolution of the Pasig civil case prejudicial to the Cavite and Makati criminal cases?

We hold that it is. The resolution of the issue in the Pasig case, i.e. whether or not private respondent may be held
liable in the questioned transaction, will determine the guilt or innocence of private respondent Consing in both
the Cavite and Makati criminal cases.

The analysis and comparison of the Pasig civil case, Makati criminal case, Makati civil case and Cavite criminal
case show that: (1) the parties are identical; (2) the transactions in controversy are identical; (3) the Transfer
Certificate of Titles (TCT) involved are identical; (4) the questioned Deeds of Sale/Mortgage are identical; (5) the
dates in question are identical; and (6) the issue of private respondent’s culpability for the questioned transactions
is identical in all the proceedings.

As discussed earlier, not only was the issue raised in the Pasig civil case identical to or intimately related to the
criminal cases in Cavite and Makati. The similarities also extend to the parties in the cases and the TCT and Deed
of Sale/ Mortgage involved in the questioned transactions.
The respondent Judge, in ordering the suspension of the arraignment of private respondent in the Makati case, in
view of CA-G.R. SP No. 63712, where Unicapital was not a party thereto, did so pursuant to its mandatory power
to take judicial notice of an official act of another judicial authority. It was also a better legal tack to prevent
multiplicity of action, to which our legal system abhors.

Applying the Tuanda ruling, the pendency of CA-G.R. SP No. 63712 may be validly invoked to suspend private
respondent’s arraignment in the Makati City criminal case, notwithstanding the fact that CA-G.R. SP No. 63712
was an offshoot, merely, in the Cavite criminal case.12

In the meanwhile, on October 13, 1999, Plus Builders commenced its own suit for damages against Consing (Civil
Case No. 99-95381) in the RTC in Manila (Manila civil case). 13

On January 21, 2000, an information for estafa through falsification of public document was filed against Consing
and De la Cruz in the RTC in Imus, Cavite, docketed as Criminal Case No. 7668-00 and assigned to Branch 21
(Cavite criminal case). Consing filed a motion to defer the arraignment on the ground of the existence of a
prejudicial question, i.e., the pendency of the Pasig and Manila civil cases. On January 27, 2000, however, the
RTC handling the Cavite criminal case denied Consing’s motion. Later on, it also denied his motion for
reconsideration. Thereafter, Consing commenced in the CA a special civil action for certiorari with prayer for the
issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction (C.A.-G.R. SP No. 63712),
seeking to enjoin his arraignment and trial in the Cavite criminal case. The CA granted the TRO on March 19,
2001, and later promulgated its decision on May 31, 2001, granting Consing’ petition for certiorari and setting
aside the January 27, 2000 order of the RTC, and permanently enjoining the RTC from proceeding with the
arraignment and trial until the Pasig and Manila civil cases had been finally decided.

Not satisfied, the State assailed the decision of the CA in this Court (G.R. No. 148193), praying for the reversal of
the May 31, 2001 decision of the CA. On January 16, 2003, the Court granted the petition for review in G.R. No.
148193, and reversed and set aside the May 31, 2001 decision of the CA, 14 viz:

In the case at bar, we find no prejudicial question that would justify the suspension of the proceedings in the
criminal case (the Cavite criminal case). The issue in Civil Case No. SCA 1759 (the Pasig civil case) for Injunctive
Relief is whether or not respondent (Consing) merely acted as an agent of his mother, Cecilia de la Cruz; while in
Civil Case No. 99-95381 (the Manila civil case), for Damages and Attachment, the question is whether respondent
and his mother are liable to pay damages and to return the amount paid by PBI for the purchase of the disputed
lot. Even if respondent is declared merely an agent of his mother in the transaction involving the sale of the
questioned lot, he cannot be adjudged free from criminal liability. An agent or any person may be held liable for
conspiring to falsify public documents. Hence, the determination of the issue involved in Civil Case No. SCA 1759
for Injunctive Relief is irrelevant to the guilt or innocence of the respondent in the criminal case for estafa through
falsification of public document.

Likewise, the resolution of PBI’s right to be paid damages and the purchase price of the lot in question will not be
determinative of the culpability of the respondent in the criminal case for even if PBI is held entitled to the return of
the purchase price plus damages, it does not ipso facto follow that respondent should be held guilty of estafa
through falsification of public document. Stated differently, a ruling of the court in the civil case that PBI should not
be paid the purchase price plus damages will not necessarily absolve respondent of liability in the criminal case
where his guilt may still be established under penal laws as determined by other evidence.

Moreover, neither is there a prejudicial question if the civil and the criminal action can, according to law, proceed
independently of each other. Under Rule 111, Section 3 of the Revised Rules on Criminal Procedure, in the cases
provided in Articles 32, 33, 34 and 2176 of the Civil Code, the independent civil action may be brought by the
offended party. It shall proceed independently of the criminal action and shall require only a preponderance of
evidence. In no case, however, may the offended party recover damages twice for the same act or omission
charged in the criminal action.
Thus, in Rojas v. People, the petitioner was accused in a criminal case for violation of Article 319 of the Revised
Penal Code, for executing a new chattel mortgage on personal property in favor of another party without consent
of the previous mortgagee. Thereafter, the offended party filed a civil case for termination of management
contract, one of the causes of action of which consisted of petitioner having executed a chattel mortgage while the
previous chattel mortgage was still valid and subsisting. Petitioner moved that the arraignment and trial of the
criminal case be held in abeyance on the ground that the civil case was a prejudicial question, the resolution of
which was necessary before the criminal proceedings could proceed. The trial court denied the suspension of the
criminal case on the ground that no prejudicial question exist. We affirmed the order of the trial court and ruled
that:

… the resolution of the liability of the defendant in the civil case on the eleventh cause of action based on the
fraudulent misrepresentation that the chattel mortgage the defendant executed in favor of the said CMS Estate,
Inc. on February 20, 1957, that his D-6 "Caterpillar" Tractor with Serial No. 9-U-6565 was "free from all liens and
encumbrances" will not determine the criminal liability of the accused in the said Criminal Case No. 56042 for
violation of paragraph 2 of Article 319 of the Revised Penal Code. . . . (i) That, even granting for the sake of
argument, a prejudicial question is involved in this case, the fact remains that both the crime charged in the
information in the criminal case and the eleventh cause of action in the civil case are based upon fraud, hence
both the civil and criminal cases could proceed independently of the other pursuant to Article 33 of the new Civil
Code which provides: "In cases of defamation, fraud and physical injuries, a civil action for damages, entirely
separate and distinct from the criminal action shall proceed independently of the criminal prosecution, and shall
require only a preponderance of evidence." (j) That, therefore, the act of respondent judge in issuing the orders
referred to in the instant petition was not made with "grave abuse of discretion."

In the instant case, Civil Case No. 99-95381, for Damages and Attachment on account of the alleged fraud
committed by respondent and his mother in selling the disputed lot to PBI is an independent civil action under
Article 33 of the Civil Code. As such, it will not operate as a prejudicial question that will justify the suspension of
the criminal case at bar.15

Turning back to the Makati criminal case, the State moved for the reconsideration of the adverse decision of the
CA, citing the ruling in G.R. No. 148193, supra, to the effect that the Pasig and Manila civil cases did not present
a prejudicial question that justified the suspension of the proceedings in the Cavite criminal case, and claiming
that under the ruling in G.R. No. 148193, the Pasig and Makati civil cases did not raise a prejudicial question that
would cause the suspension of the Makati criminal case.

In his opposition to the State’s motion for reconsideration, Consing contended that the ruling in G.R. No. 148193
was not binding because G.R. No. 148193 involved Plus Builders, which was different from Unicapital, the
complainant in the Makati criminal case. He added that the decision in G.R. No. 148193 did not yet become final
and executory, and could still be reversed at any time, and thus should not control as a precedent to be relied
upon; and that he had acted as an innocent attorney-in-fact for his mother, and should not be held personally
liable under a contract that had involved property belonging to his mother as his principal.

On August 18, 2003, the CA amended its decision, reversing itself. It relied upon the ruling in G.R. No. 148193,
and held thusly:

CA-G.R. SP No. 63712 is similar with the case at bench. The transactions in controversy, the documents involved;
the issue of the respondent’s culpability for the questioned transactions are all identical in all the proceedings; and
it deals with the same parties with the exception of private complainant Unicapital.

However, the Supreme Court, upon review of CA-G.R. SP No. 63712, People of the Philippines vs. Rafael Jose
Consing, Jr. (G.R. No. 148193, January 16, 2003) held that "Civil Case No. 99-95381, for Damages and
attachment on account of alleged fraud committed by respondent and his mother in selling the disputed lot to Plus
Builders, Inc. is an independent civil action under Article 33 of the Civil Code. As such, it will not operate as a
prejudicial question that will justify the suspension of the criminal case at bar." In view of the aforementioned
decision of the Supreme Court, We are thus amending Our May 20, 2003 decision.

WHEREFORE, the petitioner’s motion for reconsideration is GRANTED. The Orders dated November 26, 2001
and March 18, 2002 issued by the respondent Judge are hereby REVERSED and SET ASIDE. Respondent
Judge is hereby ordered to proceed with the hearing of Criminal Case No. 00-120 with dispatch.

SO ORDERED.16

Consing filed a motion for reconsideration,17 but the CA denied the motion through the second assailed resolution
of December 11, 2003.18

Hence, this appeal by petition for review on certiorari.

Issue

Petitioner reiterates his contention that the decision in G.R. No. 148193 was not controlling in relation to C.A.-G.R.
No. 71252, which involved Plus Builders, not Unicapital, the complainant in Criminal Case No. 00-120. He posits
that in arriving at its amended decision, the CA did not consider the pendency of the Makati civil case (Civil Case
No. 99-1418), which raised a prejudicial question, considering that the resolution of such civil action would include
the issue of whether he had falsified a certificate of title or had willfully defrauded Unicapital, the resolution of
either of which would determine his guilt or innocence in Criminal Case No. 00-120.

In its comment,19 the Office of the Solicitor General (OSG) counters that Unicapital brought the Makati civil case
as an independent civil action intended to exact civil liability separately from Criminal Case No. 00-120 in a
manner fully authorized under Section 1(a) and Section 2, Rule 111 of the Rules of Court. 20 It argues that the CA
correctly took cognizance of the ruling in G.R. No. 148193, holding in its challenged amended decision that the
Makati civil case, just like the Manila civil case, was an independent civil action instituted by virtue of Article 33 of
the Civil Code; that the Makati civil case did not raise a prejudicial question that justified the suspension of
Criminal Case No. 00-120; and that as finally settled in G.R. No. 148193, the Pasig civil case did not also raise
any prejudicial question, because the sole issue thereat was whether Consing, as the mere agent of his mother,
had any obligation or liability toward Unicapital.

In his reply,21 Consing submits that the Pasig civil case that he filed and Unicapital’s Makati civil case were not
intended to delay the resolution of Criminal Case No. 00-120, nor to pre-empt such resolution; and that such civil
cases could be validly considered determinative of whether a prejudicial question existed to warrant the
suspension of Criminal Case No. 00-120.

Did the CA err in reversing itself on the issue of the existence of a prejudicial question that warranted the
suspension of the proceedings in the Makati criminal case?

Ruling

The petition for review on certiorari is absolutely meritless.

Consing has hereby deliberately chosen to ignore the firm holding in the ruling in G.R. No. 148193 to the effect
that the proceedings in Criminal Case No. 00-120 could not be suspended because the Makati civil case was an
independent civil action, while the Pasig civil case raised no prejudicial question. That was wrong for him to do
considering that the ruling fully applied to him due to the similarity between his case with Plus Builders and his
case with Unicapital.

A perusal of Unicapital’s complaint in the Makati civil case reveals that the action was predicated on fraud. This
was apparent from the allegations of Unicapital in its complaint to the effect that Consing and de la Cruz had
acted in a "wanton, fraudulent, oppressive, or malevolent manner in offering as security and later object of sale, a
property which they do not own, and foisting to the public a spurious title." 22 As such, the action was one that
could proceed independently of Criminal Case No. 00-120 pursuant to Article 33 of the Civil Code, which states as
follows:

Article 33. In cases of defamation, fraud, and physical injuries a civil action for damages, entirely separate and
distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently
of the criminal prosecution, and shall require only a preponderance of evidence.

It is well settled that a civil action based on defamation, fraud and physical injuries may be independently
instituted pursuant to Article 33 of the Civil Code, and does not operate as a prejudicial question that will justify the
suspension of a criminal case.23 This was precisely the Court’s thrust in G.R. No. 148193, thus:

Moreover, neither is there a prejudicial question if the civil and the criminal action can, according to law, proceed
independently of each other. Under Rule 111, Section 3 of the Revised Rules on Criminal Procedure, in the cases
provided in Articles 32, 33, 34 and 2176 of the Civil Code, the independent civil action may be brought by the
offended party. It shall proceed independently of the criminal action and shall require only a preponderance of
evidence. In no case, however, may the offended party recover damages twice for the same act or omission
charged in the criminal action.

xxxx

In the instant case, Civil Case No. 99-95381, for Damages and Attachment on account of the alleged fraud
committed by respondent and his mother in selling the disputed lot to PBI is an independent civil action under
Article 33 of the Civil Code. As such, it will not operate as a prejudicial question that will justify the suspension of
the criminal case at bar.24

Contrary to Consing’s stance, it was not improper for the CA to apply the ruling in G.R. No. 148193 to his case
with Unicapital, for, although the Manila and Makati civil cases involved different complainants (i.e., Plus Builders
and Unicapital), the civil actions Plus Builders and Unicapital had separately instituted against him were
undeniably of similar mold, i.e., they were both based on fraud, and were thus covered by Article 33 of the Civil
Code. Clearly, the Makati criminal case could not be suspended pending the resolution of the Makati civil case
that Unicapital had filed.

As far as the Pasig civil case is concerned, the issue of Consing’s being a mere agent of his mother who should
not be criminally liable for having so acted due to the property involved having belonged to his mother as principal
has also been settled in G.R. No. 148193, to wit:

In the case at bar, we find no prejudicial question that would justify the suspension of the proceedings in the
criminal case (the Cavite criminal case). The issue in Civil Case No. SCA 1759 (the Pasig civil case) for Injunctive
Relief is whether or not respondent (Consing) merely acted as an agent of his mother, Cecilia de la Cruz; while in
Civil Case No. 99-95381 (the Manila civil case), for Damages and Attachment, the question is whether respondent
and his mother are liable to pay damages and to return the amount paid by PBI for the purchase of the disputed
lot. Even if respondent is declared merely an agent of his mother in the transaction involving the sale of the
questioned lot, he cannot be adjudged free from criminal liability. An agent or any person may be held liable for
conspiring to falsify public documents. Hence, the determination of the issue involved in Civil Case No. SCA 1759
for Injunctive Relief is irrelevant to the guilt or innocence of the respondent in the criminal case for estafa through
falsification of public document.25 (Words in parentheses supplied; bold underscoring supplied for emphasis)

WHEREFORE, the Court AFFIRMS the amended decision promulgated on August 18, 2003; and ORDERS
petitioner to pay the costs of suit.
SO ORDERED.

[G.R. No. 122150. March 17, 2003]

George (Culhi) Hambon, petitioner, vs. Court of Appeals and Valentino U. Carantes, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Petitioner George (Culhi) Hambon filed herein petition for review on certiorari, raising the following issues:

WHETHER OR NOT A CIVIL CASE FOR DAMAGES BASED ON AN INDEPENDENT CIVIL ACTION FALLING
UNDER ARTICLE 32, 33, 34 AND 2176 OF THE NEW CIVIL CODE BE DULY DISMISSED FOR FAILURE TO
MAKE RESERVATION TO FILE A SEPARATE CIVIL ACTION IN A CRIMINAL CASE FILED ARISING FROM THE
SAME ACT OR OMISSION OF THE ACCUSED PURSUANT TO RULE 111, SECTION 1 OF THE RULES OF
COURT, THE FAILURE TO MAKE RESERVATION BEING DUE TO THE FACT THAT THE CRIMINAL CASE
WAS DISMISSED BEFORE THE PROSECUTION STARTED TO PRESENT EVIDENCE FOR FAILURE OF THE
PRIVATE COMPLAINANT TO APPEAR DESPITE NOTICE

SHOULD A STRICT INTERPRETATION OF RULE 111, SECTION 1 OF THE RULES OF COURT WHICH
INFRINGES ON A RIGHT OF A PARTY BASED ON A SUBSTANTIVE LAW BE PERMITTED WHEN TO DO SO
WOULD DIMINISH, MODIFY AND/OR AMEND A SUBSTANTIVE RIGHT CONTRARY TO LAW. [1]

The factual background that led to the filing of the petition is as follows:

On June 6, 1989, the petitioner filed before the Regional Trial Court of Baguio (Branch 6), a complaint for
damages[2] for the injuries and expenses he sustained after the truck driven by the respondent bumped him on the
night of December 9, 1985.[3] In answer thereto, respondent contended that the criminal case arising from the
same incident, Criminal Case No. 2049 for Serious Physical Injuries thru Reckless Imprudence, earlier filed on
January 8, 1986,[4] had already been provisionally dismissed by the Municipal Trial Court of Tuba, Benguet on
March 23, 1987, due to petitioners lack of interest; [5] and that the dismissal was with respect to both criminal and
civil liabilities of respondent.[6]

After trial, the Regional Trial Court rendered a decision, dated December 18, 1991, ruling that the civil case was
not barred by the dismissal of the criminal case, and that petitioner is entitled to damages. The dispositive portion
of the RTC decision reads:

WHEREFORE, Judgment is hereby rendered, sentencing defendant Valentino Cerantes to pay plaintiff George
Hambon the sum of P60,000.00 for hospitalization and medical expenses and P10,000.00 for native rituals, as
Actual Damages; the sum of P10,000.00 as Moral Damages, P5,000.00 as Exemplary Damages and P5,000.00
as Attorneys fees and costs.

SO ORDERED.[7]

On appeal,[8] the Court of Appeals, in its decision promulgated on March 8, 1995, [9] reversed and set aside the
decision of the trial court, and dismissed petitioners complaint for damages.

According to the appellate court, since the petitioner did not make any reservation to institute a separate civil
action for damages, it was impliedly instituted with the criminal case, and the dismissal of the criminal case carried
with it the dismissal of the suit for damages, notwithstanding the fact that the dismissal was provisional as it
amounted to an acquittal and had the effect of an adjudication on the merits. [10]
Hence, herein petition for review on certiorari under Rule 45 of the Rules of Court.

Petitioner argues that the ruling in the case of Abellana v. Marave[11] should be observed, i.e., a civil action for
damages may be filed and proceed independently of the criminal action even without reservation to file the same
has been made;[12] and that the requirement of reservation, as provided in Rule 111 of the Rules of Court,
practically diminished/amended/modified his substantial right. [13]

The petition must be denied.

Petitioner filed the complaint for damages on June 6, 1989. Hence, Section 1, Rule 111 of the 1985 Rules on
Criminal Procedure, as amended in 1988,[14] is the prevailing and governing law in this case, viz.:

SECTION 1. Institution of criminal and civil actions. When a criminal action is instituted, the civil action for the
recovery of civil liability is impliedly instituted with the criminal action, unless the offended party waives the civil
action, reserves his right to institute it separately, or institutes the civil action prior to the criminal action.

Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under Article 32,
33, 34 and 2176 of the Civil Code of the Philippines arising from the same act or omission of the accused.

...

Under the foregoing rule, civil actions to recover liability arising from crime (ex delicto) and under Articles 32, 33,
34 and 2176 of the Civil Code (quasi-delict) are deemed impliedly instituted with the criminal action unless
waived, reserved or previously instituted.

Thus, in Maniago v. Court of Appeals,[15] the Court ruled that the right to bring an action for damages under the
Civil Code must be reserved, as required by Section 1, Rule 111, otherwise it should be dismissed; [16] and that the
reservation requirement does not impair, diminish or defeat substantive rights, but only regulates their exercise in
the general interest of orderly procedure.[17]

In the Maniago case, petitioner Ruben Maniago was the owner of the bus driven by Herminio Andaya that figured
in a vehicular accident with the jeepney owned by respondent Alfredo Boado. The petitioner therein initially sought
for the suspension of the civil case for damages filed against him in view of the pendency of the criminal case for
reckless imprudence resulting in damage to property and multiple physical injuries filed against his driver. The
respondent, in the criminal case, did not reserve the right to bring the separate civil action against the petitioner or
his driver. The criminal case was later dismissed for the failure of the prosecution to prosecute its case. On
appeal, the Court identified the issues as (1) whether the respondent can file a civil action for damages despite
the absence of reservation; (2) whether the dismissal of the criminal case brought with it the dismissal of the civil
action; and (3) whether the reservation requirement is substantive in character and beyond the rule-making power
of the Court.[18]

The Court expounded:

. . . 1quite clearly requires that a reservation must be made to institute separately all civil actions for the recovery
of civil liability, otherwise they will de deemed to have been instituted with the criminal case. In other words the
right of the injured party to sue separately for the recovery of the civil liability whether arising from crimes (ex
delicto) or from quasi-delict under Art. 2176 of the Civil Code must be reserved otherwise they will de deemed
instituted with the criminal action.

...

Contrary to private respondents contention, the requirement that before a separate civil action may be brought it
must be reserved does not impair, diminish or defeat substantive rights, but only regulates their exercise in the
general interest of procedure. The requirement is merely procedural in nature. For that matter the Revised Penal
Code, by providing in Art. 100 that any person criminally liable is also civilly liable, gives the offended party the
right to bring a separate civil action, yet no one has ever questioned the rule that such action must be reserved
before it may be brought separately.[19]

While the Abellana case ruled that a reservation is not necessary, the 1988 amendment of the rule explicitly
requires reservation of the civil action.

x x x Prior reservation is a condition sine qua non before any of these independent civil actions can be instituted
and thereafter have a continuous determination apart from or simultaneous with the criminal action.

. . . Far from altering substantive rights, the primary purpose of the reservation is, to borrow the words of the Court
in "Caos v. Peralta":

. . . to avoid multiplicity of suits, to guard against oppression and abuse, to prevent delays, to clear congested
dockets, to simplify the work of the trial court; in short, the attainment of justice with the least expense and
vexation to the parties-litigants.[20]

Thus, herein petitioner Hambon should have reserved his right to separately institute the civil action for damages
in Criminal Case No. 2049. Having failed to do so, Civil Case No. 1761-R for damages subsequently filed by him
without prior reservation should be dismissed. With the dismissal of Criminal Case No. 2049, whatever civil action
for the recovery of civil liability that was impliedly instituted therein was likewise dismissed.

WHEREFORE, the instant petition for review on certiorari is hereby DENIED for lack of merit, and the decision of
the Court of Appeals dated March 8, 1995, is AFFIRMED in toto.

SO ORDERED.

G.R. No. 192861 June 30, 2014

LINDA RANA, Petitioner, vs.


TERESITA LEE WONG, SPS. SHIRLEY LEE ONG and RUBEN ANG ONG, represented by their Attorney-in-
fact WILSON UY, and SPS. ROSARIO and.WILSON UY, Respondents.

x-----------------------x

G.R. No. 192862

SPS. ROSARIO and WILSON UY, WILSON UY as attorney-in-fact of TERESITA LEE WONG, and SPS.
SHIRLEY LEE ONG and RUBEN ANG ONG, Petitioners, vs.
SPS. REYNALDO. and LINDA RANA, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in these consolidated petitions for review on certiorari 1 are the Decision2 dated July 13, 2005 and the
Resolution3 dated June 18, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 78463 which affirmed the
Decision4 dated December 20, 2002 of the Regional Trial Court of Cebu City, 7th Judicial Region, Branch 22
(RTC) in Civil Case Nos. CEB-20893 and CEB-21296.

The Facts
Teresita Lee Wong (Wong) and Spouses Shirley and Ruben Ang Ong (Sps. Ong) are co-owners pro-indivisoof a
residential land situated in Peace Valley Subdivision, Lahug, Cebu City, covered by Transfer Certificate of Title
(TCT) No. 1391605 (Wong-Ong property), abutting6 a 10-meter7 wide subdivision road (subject road).

On the opposite side of the subject road, across the Wong-Ong property, are the adjacent lots of Spouses Wilson
and Rosario Uy (Sps. Uy) and Spouses Reynaldo and Linda Rana (Sps. Rana), respectively covered by TCT
Nos. 1240958 (Uy property) and T-1155699 (Rana property). The said lots follow a rolling terrain 10 with the Rana
property standing about two (2) meters11 higher than and overlooking the Uy property, while the Wong-Ong
property is at the same level with the subject road. 12

Sometime in 1997, Sps. Rana elevated and cemented a portion of the subject road that runs between the Rana
and Wong-Ong properties (subject portion) in order to level the said portion with their gate. 13 Sps. Rana likewise
backfilled a portion (subject backfilling) of the perimeter fence separating the Rana and Uyproperties without
erecting a retaining wall that would hold the weight of the added filling materials. The matter was referred to the
Office of the Barangay Captain of Lahug14 as well as the Office of the Building Official of Cebu City (OBO), 15 but to
no avail.16

The RTC Proceedings

On September 19, 1997, Wong, Sps. Ong, and Sps. Uy (Wong, et al.) filed a Complaint 17 for Abatement of
Nuisance with Damages against Sps. Rana before the RTC, docketed as Civil Case No. CEB-20893, seeking to:
(a) declare the subject portion as a nuisance which affected the ingress and egress of Wong and Sps. Ong to
their lot "in the usual and [normal] manner, such that they now have to practically jump from the elevated road to
gain access to their lot and scale the same elevation in order to get out"; 18 (b) declare the subject backfilling as a
nuisance considering that it poses a clear and present danger to the life and limb of the Uy family arising from the
premature weakening of Sps. Uy’s perimeter fence due to the seeping of rain water from the Rana property that
could cause its sudden collapse;19 (c) compel Sps. Rana to restore the subject portion to its original condition; (d)
compel Sps. Rana to remove the backfilling materials along Sps. Uy’s perimeter fence and repair the damage to
the fence; and (e) pay moral and exemplary damages, attorney’s fees, litigation expenses, and costs of suit. 20

In their Answer dated October 23, 1997,21 Sps. Rana countered that prior to the construction of their residence,
there was no existing road and they merely developed the subject portion which abuts their gate in view of the
rolling terrain. They claimed thatWong and Sps. Ong do not have any need for the subject portion because their
property is facing an existing road, i.e., Justice Street. They likewise denied having undertaken any backfilling
along the boundary of the Uy property considering the natural elevation of their own property, which renders
backfilling unnecessary.22

After the filing of Sps. Rana’s Answer, Wong, et al., in turn, filed a Motion for Leave to be Allowed to Bring in
Heavy Equipment23 for the intermediate development of the Wong-Ong property with a view to the use of the
subject road as access to their lot. Notwithstanding Sps. Rana’s opposition, the RTC granted Wong,et al.’s motion
in an Order24dated November 27, 1997 (November 27, 1997 Order), the dispositive portion of which reads as
follows: WHEREFORE, as prayed for, the motion is hereby GRANTED. Consequently, the plaintiffs are hereby
allowed to use heavy equipments/machineries in order to develop the area and make use of the right of way
which is located between the [Wong-Ong and Rana properties]. (Emphasis supplied)

Despite the limited tenor of the November 27, 1997 Order, Wong, et al., on May 23 and 24, 1998, proceeded to
level the subject portion, which, in the process, hampered Sps. Rana’s ingress and egress to their residence,
resulting too to the entrapment of their vehicle inside their garage. 25 Feeling aggrieved, Sps. Rana, on June 19,
1998, filed a Supplemental Answer,26 praying for: (a) the restoration of the soil, boulders, grade, contour, and level
of the subject portion; and (b) payment of moral damages, actual and consequential damages, and exemplary
damages.
Meanwhile, on December 8, 1997, Sps. Rana filed with another branch of the same trial court a Complaint 27 for
Recovery of Property and Damages against Sps. Uy, docketed as Civil Case No. CEB-21296. They alleged that in
October 1997, theycaused a resurvey of their property which purportedly showed that Sps. Uyencroached upon
an11-square meter (sq. m.) portion along the common boundary of their properties. Their demands for rectification
as well as barangay conciliation efforts were, however, ignored. Thus, they prayed that Sps. Uy be ordered to
remove their fence along the common boundary and return the encroached portion, as well as to pay moral
damages, attorney’s fees, and litigation expenses. After the filing of Sps. Rana’s complaint, Civil Case No. CEB-
21296 was consolidated with Civil Case No. CEB-20893. 28

In response thereto, Sps. Uy filed an Answer with Counterclaim, 29 averring that prior to putting up their fence, they
caused a relocation survey of their property and were, thus, confident that their fence did not encroach upon the
Rana property. In view of Sps.Rana’s complaint, they then caused another relocation survey which allegedly
showed, however, that while they encroached around 3 sq. m. of the Rana property, Sps. Rana intruded into 7 sq.
m. of their property. Hence, theyposited that they had "a bigger cause than that of [Sps. Rana] in [so] far as
encroachment is concerned."30 Accordingly, they prayed for the dismissal of Sps. Rana’s complaint with
counterclaim for damages, attorney’s fees, and litigation expenses.

In light of the foregoing, the RTC appointed three (3) commissioners to conduct a resurvey of the Uy and Rana
properties for the purpose of determining if any encroachment occurred whatsoever. 31

The RTC Ruling

On December 20, 2002, the RTC rendered a Decision32 in the consolidated cases.

In Civil Case No. CEB-20893, the RTC found that: (a) Sps. Rana, without prior consultation with the subdivision
owner or their neighbors, developed to their sole advantage the subject portion consisting of one-half of the width
of the 10-meter subject road by introducing filling materials, and rip rapping the side of the road; (b) the said act
denied Wong and Sps. Ong the use of the subject portion and affected the market value of their property; (c) Sps.
Uy have no intention of using the subject portion for ingress or egress considering that theybuilt a wall fronting the
same; and (d) Wong, et al.’s manner of enforcing the November 27, 1997 Order caused damage and injury to
Sps. Rana and amounted to bad faith. In view of these findings, the RTC declared that the parties all acted in bad
faith, and, therefore, no relief can be granted to them against each other. 33

Separately, however, the RTC found that the backfilling done by Sps. Rana on their property exerted pressure on
the perimeter fence of the Uy property, thereby constituting a nuisance. As such, the former were directed to
construct a retaining wall at their own expense.34 Meanwhile, in Civil Case No. CEB-21296, the RTC, despite
having adopted the findings of Atty. Reuel T. Pintor (Atty. Pintor) – a court-appointed commissioner who
determined that Sps. Uy encroached the Rana property by 2 sq. m 35 – dismissed both the complaint and
counterclaim for damages because of the failure ofboth parties to substantiate their respective claims of bad faith
against each other.36

Dissatisfied with the RTC’s verdict, the parties filed separate appeals with the CA.

The CA Ruling

On July 13, 2005, the CA rendered a Decision37 affirming the RTC.

With respect to Civil Case No. CEB-20893, the CA found that (a) Sps. Rana’s act of elevating and cementing the
subject portion curtailed the use and enjoyment by Wong and Sps. Ong of their properties; (b) the undue
demolition of the subject portion by Wong, et al.hampered Sps. Rana’s ingress and egress to their residence and
deprived them of the use of their vehicle which was entrapped in their garage; and (c) both parties were equally at
fault in causingdamage and injury to each other and, thus, are not entitled to the reliefs sought for. 38
On the other hand, the CA found that the backfilling done by Sps. Rana on their property requires necessary
works to prevent it from jeopardizing someone’s life or limb. 39

As for Civil Case No. CEB-21296, the CA sustained the dismissal of the complaint as well as the parties’
respective claims for damages for lack of legal and factual bases. 40

The parties filed separate motions for reconsideration 41 which were, however, denied in the Resolution42 dated
June 18, 2010, hence, the instant petitions.

The Issues Before the Court

In G.R. No. 192861, petitioner Linda Rana (Linda Rana) 43 faults the RTC in (a) not finding Wong and Sps. Uyguilty
of malice and bad faith both in instituting Civil Case No. CEB-20893 and in erroneously implementing the
November 27, 1997 Order, and (b) failing or refusing to grant the reliefs initially prayed for,among others, the
reconveyance of the encroached property.44

On the other hand, in G.R. No. 192862, petitioners Wong, et al. fault the RTC in (a) applying the in pari
delictodoctrine against them and failing to abate the nuisance 45 which still continues and actually exists as Sps.
Rana caused the same to be reconstructed and restored to their prejudice, 46 and (b) not finding Sps. Rana guilty
of bad faith in instituting Civil Case No. CEB-21296 and ordering them to pay damages to petitioners Wong, et
al.47

The Court’s Ruling

The petitions are partly meritorious.

As both petitions traverse the issues intersectingly, the Court deems it apt to proceed with its disquisition
according to the subject matters of the cases as originally filed before the RTC.

A. Civil Case No. CEB-20893

For Abatement of Nuisance and Damages.

Under Article 694 of the Civil Code, a nuisance is defined as "any act, omission, establishment, business,
condition of property, or anything else which: (1) Injures or endangers the healthor safety of others; or (2) Annoys
or offends the senses; or(3) Shocks, defies or disregards decency or morality; or (4) Obstructs or interferes with
the free passage of any public highway or street, or any body of water;or (5) Hinders or impairs the use of
property." Based on case law, however, the term "nuisance" is deemed to be "so comprehensive that it has been
applied to almost all ways which have interfered with the rights of the citizens, either in person, property, the
enjoyment of his property, or his comfort."48

Article 695 of the Civil Code classifies nuisances with respect to the object or objects that they affect. In this
regard, a nuisance may either be: (a) a public nuisance (or one which "affects a community or neighborhood or
any considerable number of persons, although the extent of the annoyance, danger or damage upon individuals
may be unequal"); or (b) a private nuisance (or one "that is not included in the foregoing definition" [or, as case
law puts it, one which "violates only private rights and produces damages to but one or a few persons"]). 49

Jurisprudence further classifies nuisances in relation to their legal susceptibility to summary abatement (that is,
corrective action without prior judicial permission). In this regard, a nuisance may either be: (a) a nuisance per
se(or one which "affects the immediate safety of persons and property and may be summarily abated under the
undefined law of necessity");50 or (b) a nuisance per accidens(or that which "depends upon certain conditions and
circumstances, and its existence being a question of fact, it cannot be abated without due hearing thereon ina
tribunal authorized to decide whether such a thing does in law constitute a nuisance.") 51
It is a standing jurisprudentialrule that unless a nuisance is a nuisance per se, it may not be summarily abated. In
Lucena Grand Central Terminal, Inc. v. Jac Liner, Inc., 52 the Court, citing other cases on the matter, emphasized
the need for judicial intervention when the nuisance is not a nuisance per se, to wit:

In Estate of Gregoria Francisco v. Court of Appeals, this Court held:

Respondents can not seek cover under the general welfare clause authorizing the abatement of nuisances
without judicial proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of
persons and property and may be summarily abated under the undefined law of necessity. The storage of copra in
the quonset building is a legitimate business. By its nature, it can not be said to be injurious to rights of property,
of health or of comfort of the community. If it be a nuisance per accidensit may be so proven in a hearing
conducted for thatpurpose. It is not per sea nuisance warranting its summary abatement without judicial
intervention.

In Pampanga Bus Co., Inc. v. Municipality of Tarlacwhere the appellant-municipality similarly argued that the
terminal involved therein is a nuisance that may be abated by the Municipal Council viaan ordinance, this Court
held: "Suffice it to say that in the abatement of nuisances the provisions of the Civil Code (Articles 694-707) must
be observed and followed. This appellant failed to do." 53 (Emphases supplied; citations omitted)

Aside from the remedy of summary abatement which should be taken under the parameters stated in Articles
70454(for public nuisances) and 70655 (for private nuisances) of the Civil Code, a private person whose property
right was invaded or unreasonably interfered with by the act, omission, establishment, business or condition of the
property of another may file a civil action to recover personal damages. 56 Abatement may be judicially sought
through a civil action therefor57 if the pertinent requirements under the Civil Code for summary abatement, or the
requisite that the nuisance is a nuisance per se, do not concur. To note, the remedies of abatement and damages
are cumulative; hence, both may be demanded.58

In the present cases, Wong, et al. availed of the remedy of judicial abatement and damages against Sps.Rana,
claiming that both the elevated and cemented subject portionand the subject backfillingare "nuisances"
caused/created by the latter which curtailed their use and enjoyment of their properties.

With respect to the elevated and cemented subject portion, the Court finds that the same is not a nuisance per se.
By its nature, it is not injurious to the health or comfort of the community. It was built primarily to facilitate the
ingress and egress of Sps. Rana from their house which was admittedly located on a higher elevation than the
subject road and the adjoining Uy and Wong-Ong properties.Since the subject portion is not a nuisance per se(but
actually a nuisance per accidensas will be later discussed) it cannot be summarily abated. As such, Wong, et al.’s
demolition of Sps. Rana’s subject portion, which was not sanctioned under the RTC’s November 27, 1997
Order,remains unwarranted. Resultantly, damages ought to be awarded in favor of Sps. Rana particularly that of
(a) nominal damages59 – for the vindication and recognition of Sps. Rana’s right to be heard before the court prior
to Wong, et al.’sabatement of the subject portion (erroneously perceived as a nuisance per se) – and (b)
temperate damages60 – for the pecuniary loss owing to the demolition of the subject portion, which had been
established albeit uncertain as to the actual amount of loss.

Sps. Rana’s entitlement to the above-mentioned damages, however, only stands in theory.1âwphi1 This is
because the actual award thereof is precluded by the damage they themselves have caused Wong, et al. in view
of their construction of the subject portion. As the records establish, Sps. Rana, without prior consultation with
Wong, et al. and to their sole advantage, elevated and cemented almost half 61 of the 10-meter wide subject road.
As homeowners of Peace Valley Subdivision, Wong, et al. maintain the rights to the unobstructed use of and free
passage over the subject road. By constructing the subject portion, Sps. Rana introduced a nuisance per
accidensthat particularly transgressed the aforesaid rights. Thus, for the vindication and recognition of Wong, et
al.’srights, Sps. Rana should be similarly held liable for nominal damages. Under Article 2216 of the Civil
Code,62courts have the discretion to determine awards of nominal and temperate damages without actual proof of
pecuniary loss, as in this case. Assessing the respective infractions of the parties herein, the Court finds it prudent
to sustain the CA’s verdict offsetting the damage caused by said parties against each other. The Court can,
however, only concur with the CA in result since the latter inaccurately applied, 63 as basis for its ruling, the in pari
delictoprinciple enunciated in the case of Yu Bun Guan v. Ong 64 (Yu Guan).In said case, the Court discussed the
in pari delicto principle with respect to the subject matter ofinexistent and void contracts, viz.:

Inapplicability of the in Pari Delicto Principle

The principle of in pari delictoprovides that when two parties are equally at fault, the law leaves them as they are
and denies recovery by either one of them. However, this principle does not apply with respect to inexistent and
void contracts. Said this Court in Modina v. Court of Appeals:

"The principle of in pari delicto non oritur actio denies all recovery to the guilty parties inter se. It applies to cases
where the nullity arises from the illegality of the consideration orthe purpose of the contract. When two persons
are equally at fault, the law does not relieve them. The exception to this general rule is when the principle is
invoked with respect to inexistent contracts."65 (emphasis supplied; citations omitted)

Clearly, no void or inexistent contract is hereinat issue, hence, the Court’s disagreement with the CA’s invocation
of Yu Guanin this respect.

As for the subject backfillingtouching the perimeter fence of the Uy property, records show that the said fence was
not designed to act as a retaining wall66 but merely to withhold windload and its own load.67 Both the RTC and the
CA found the subject backfilling to have added pressure on the fence, 68 consequently endangering the safety of
the occupants of the Uy property, especially considering the higher elevation of the Rana property. With these
findings, the Court thus agrees with the courts a quothat there is a need for Linda Rana to construct a retaining
wall69 which would bear the weight and pressure of the filling materials introduced on their property. The Court,
however, observed that neither the RTC nor the CA specified in their respective decisions the backfilled areas
which would require the retaining wall. Due to the technicality of the matter, and considering that the due
authenticity and genuineness of the findings/recommendation 70 of the OBO and the accompanying
sketch71 thereto were not specifically denied by Sps. Rana, 72 the required retaining wall shall beconstructed in
accordance with the said sketch which showed the area backfilled.

B. Civil Case No. CEB-21296

For Recovery of Property.

Now, with respect to Civil Case No. CEB-21296, the Court finds that the CA erred in affirming the RTC’s dismissal
thereof considering that it was determined that Sps. Uy had actually encroached upon the Rana property to the
extent of 2 sq. m.

Settled is the rule that in order that an action for the recovery of property may prosper, the party prosecuting the
same need only prove the identity of the thing and his ownership thereof. 73 In the present cases, the Report74 of
the court-appointed commissioner, Atty. Pintor, who conducted a relocation survey 75 of the Rana and Uy
properties identified and delineated the boundaries of the two properties and showed that Sps. Uy’s perimeter
fence intruded on 2 sq. m.of the Rana property. 76 Both the RTC and the CA relied upon the said report; thus,
absent any competent showing that the said finding was erroneous, the Court sees no reason to deviate from the
conclusions reached by the courts a quo. Having sufficiently proven their claim, Sps. Rana are, therefore entitled
to the return of the 2 sq.m. encroached portion. Corollary thereto, compliance by Linda Rana with the directive in
Civil Case No. CEB-20893to build a retaining wall on their property shall be held in abeyance pending return of
the encroached portion.
C. Claims Common to Both Civil Case No. CEB-20893 and Civil Case No. CEB-21296: Malicious Prosecution of
Both Cases, Moral and Exemplary Damages, Attorney’s Fees, and Litigation

Expenses.

As a final matter, the Court resolvesthe claims common to both Civil Case No. CEB-20893 and Civil Case No.
CEB-21296, particularly those on malicious prosecution, as well asmoral and exemplary damages, attorney’s
fees, and litigation expenses.

As the Court sees it, the filing bythe parties of their respective complaints against each other was notclearly and
convincingly shown to have been precipitated by any maliceor bad faith, sufficient enough to warrant the payment
of damages in favor of either party. As correctly pointed out by the CA, malicious prosecution, both in criminal and
civil cases, requires the presence oftwo (2) elements, namely: (a) malice; and (b) absence of probable cause.
Moreover, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a
person; and that it was initiated deliberately knowing that the charge was false and baseless. 77 Hence, the mere
filing of a suitwhich subsequently turns out to be unsuccessful does not render a person liable for malicious
prosecution, for the law could not have meant toimpose a penalty on the right to litigate. 78 As the aforementioned
elements were not duly proven, the claims for malicious prosecution are hereby denied.

With respect to the claims for moral damages, although the Court found the parties to have sustained nominal
damages as a result of the other parties’ acts, an award of moral damages would nonetheless be improper in this
case. Article 2217 of the Civil Code states that "[m]oral damages include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of
the defendant's wrongful act for omission." Corollary thereto, Article 2219 of the same code (Article 2219) states
that "[m]oral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in
physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious
acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or
any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in Article 309; [and] (10) Actsand
actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35."

Here, it was not proven thatthe damage caused by (a) Sps. Rana against Wong, et al., arising from the elevation
and cementing of the subject portion and the subject backfilling, and (b) Sps. Uy against Sps. Rana, by virtue of
their 2 sq. m. encroachment, could be characterized as a form of or had resulted in physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, or any
other similar injury. Neitherwas it convincingly shown that the present controversies fall within the class of cases
enumerated under Article 2219. Therefore, no moral damages should be awarded.

Similarly, the Court deems that an award of exemplary damages would be inappropriate since these damages are
imposed only "by way of example or correction for the publicgood, in addition to the moral, temperate, liquidated
or compensatory damages."79 Bluntly placed, the Court does not view the present matters of such caliber. Hence,
there is no reason to grant the parties’ claims for the same.

Lastly, considering that neither of the parties was able to successfully prove (a) their claims for malicious
prosecution,80 (b) their entitlement to moral and exemplary damages, 81 and (c) the attendance of any of the
circumstances under Article 220882 of the Civil Code, their respective claims for attorney’s fees and litigation
expensesagainst each other are also denied. WHEREFORE, the Decision dated July 13, 2005 and the Resolution
dated June 18, 2010 in CA-G.R. CV No. 78463 are SET ASIDE and a new one is entered as follows:

In Civil Case No. CEB-20893:

(a) The awards of damages in favor of each party are OFFSETagainst each other as herein discussed;
(b) Linda Rana is hereby ORDEREDto build, at her own expense, a retaining wall on the property covered by TCT
No. 124095 in accordance with the sketch of the Office of the Building Official of Cebu City attached to the
records of the case, subject to the condition as shall be hereunder set; and

(c) All other claims and counterclaims are DISMISSED for lack of legal and factual bases.

In Civil Case No. CEB-21296:

(a) Spouses Rosario and Wilson Uy are DIRECTED to return to Linda Rana the 2-square meter encroached
portion as reflected in the relocation survey conducted by court-appointed commissioner Atty. Reuel T. Pintor,
after which Linda Rana shall be OBLIGED to build the retaining wall as directed by the Court; and

(b) All other claims and counterclaims are DISMISSED for lack of merit.

SO ORDERED.

G.R. No. 177807 October 11, 2011

EMILIO GANCAYCO, Petitioner, vs.


CITY GOVERNMENT OF QUEZON CITY AND METRO MANILA DEVELOPMENT AUTHORITY, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 177933

METRO MANILA DEVELOPMENT AUTHORITY, Petitioner, vs.


JUSTICE EMILIO A. GANCAYCO (Retired), Respondent,

SERENO, J.:

Before us are consolidated Petitions for Review under Rule 45 of the Rules of Court assailing the
Decision1promulgated on 18 July 2006 and the Resolution2 dated 10 May 2007 of the Court of Appeals in CA-G.R.
SP No. 84648.

The Facts

In the early 1950s, retired Justice Emilio A. Gancayco bought a parcel of land located at 746 Epifanio delos
Santos Avenue (EDSA),3 Quezon City with an area of 375 square meters and covered by Transfer Certificate of
Title (TCT) No. RT114558.

On 27 March 1956, the Quezon City Council issued Ordinance No. 2904, entitled "An Ordinance Requiring the
Construction of Arcades, for Commercial Buildings to be Constructed in Zones Designated as Business Zones in
the Zoning Plan of Quezon City, and Providing Penalties in Violation Thereof." 4

An arcade is defined as any portion of a building above the first floor projecting over the sidewalk beyond the first
storey wall used as protection for pedestrians against rain or sun. 5

Ordinance No. 2904 required the relevant property owner to construct an arcade with a width of 4.50 meters and
height of 5.00 meters along EDSA, from the north side of Santolan Road to one lot after Liberty Avenue, and from
one lot before Central Boulevard to the Botocan transmission line.
At the outset, it bears emphasis that at the time Ordinance No. 2904 was passed by the city council, there was yet
no building code passed by the national legislature. Thus, the regulation of the construction of buildings was left to
the discretion of local government units. Under this particular ordinance, the city council required that the arcade
is to be created by constructing the wall of the ground floor facing the sidewalk a few meters away from the
property line. Thus, the building owner is not allowed to construct his wall up to the edge of the property line,
thereby creating a space or shelter under the first floor. In effect, property owners relinquish the use of the space
for use as an arcade for pedestrians, instead of using it for their own purposes.

The ordinance was amended several times. On 8 August 1960, properties located at the Quezon City-San Juan
boundary were exempted by Ordinance No. 60-4477 from the construction of arcades. This ordinance was further
amended by Ordinance No. 60-4513, extending the exemption to commercial buildings from Balete Street to
Seattle Street. Ordinance No. 6603 dated 1 March 1966 meanwhile reduced the width of the arcades to three
meters for buildings along V. Luna Road, Central District, Quezon City.

The ordinance covered the property of Justice Gancayco. Subsequently, sometime in 1965, Justice Gancayco
sought the exemption of a two-storey building being constructed on his property from the application of Ordinance
No. 2904 that he be exempted from constructing an arcade on his property.

On 2 February 1966, the City Council acted favorably on Justice Gancayco’s request and issued Resolution No.
7161, S-66, "subject to the condition that upon notice by the City Engineer, the owner shall, within reasonable
time, demolish the enclosure of said arcade at his own expense when public interest so demands." 6

Decades after, in March 2003, the Metropolitan Manila Development Authority (MMDA) conducted operations to
clear obstructions along the sidewalk of EDSA in Quezon City pursuant to Metro Manila Council’s (MMC)
Resolution No. 02-28, Series of 2002.7 The resolution authorized the MMDA and local government units to "clear
the sidewalks, streets, avenues, alleys, bridges, parks and other public places in Metro Manila of all illegal
structures and obstructions."8

On 28 April 2003, the MMDA sent a notice of demolition to Justice Gancayco alleging that a portion of his building
violated the National Building Code of the Philippines (Building Code) 9 in relation to Ordinance No. 2904. The
MMDA gave Justice Gancayco fifteen (15) days to clear the portion of the building that was supposed to be an
arcade along EDSA.10

Justice Gancayco did not comply with the notice. Soon after the lapse of the fifteen (15) days, the MMDA
proceeded to demolish the party wall, or what was referred to as the "wing walls," of the ground floor structure.
The records of the present case are not entirely clear on the extent of the demolition; nevertheless, the fact of
demolition was not disputed. At the time of the demolition, the affected portion of the building was being used as a
restaurant.

On 29 May 2003, Justice Gancayco filed a Petition 11 with prayer for a temporary restraining order and/or writ of
preliminary injunction before the Regional Trial Court (RTC) of Quezon City, docketed as Civil Case No. Q03-
49693, seeking to prohibit the MMDA and the City Government of Quezon City from demolishing his property. In
his Petition,12 he alleged that the ordinance authorized the taking of private property without due process of law
and just compensation, because the construction of an arcade will require 67.5 square meters from the 375
square meter property. In addition, he claimed that the ordinance was selective and discriminatory in its scope
and application when it allowed the owners of the buildings located in the Quezon City-San Juan boundary to
Cubao Rotonda, and Balete to Seattle Streets to construct arcades at their option. He thus sought the declaration
of nullity of Ordinance No. 2904 and the payment of damages. Alternately, he prayed for the payment of just
compensation should the court hold the ordinance valid.
The City Government of Quezon City claimed that the ordinance was a valid exercise of police power, regulating
the use of property in a business zone. In addition, it pointed out that Justice Gancayco was already barred by
estoppel, laches and prescription.

Similarly, the MMDA alleged that Justice Gancayco could not seek the nullification of an ordinance that he had
already violated, and that the ordinance enjoyed the presumption of constitutionality. It further stated that the
questioned property was a public nuisance impeding the safe passage of pedestrians. Finally, the MMDA claimed
that it was merely implementing the legal easement established by Ordinance No. 2904. 13

The RTC rendered its Decision on 30 September 2003 in favor of Justice Gancayco. 14 It held that the questioned
ordinance was unconstitutional, ruling that it allowed the taking of private property for public use without just
compensation. The RTC said that because 67.5 square meters out of Justice Gancayco’s 375 square meters of
property were being taken without compensation for the public’s benefit, the ordinance was confiscatory and
oppressive. It likewise held that the ordinance violated owners’ right to equal protection of laws. The dispositive
portion thus states:

WHEREFORE, the petition is hereby granted and the Court hereby declares Quezon City Ordinance No.
2094,15Series of 1956 to be unconstitutional, invalid and void ab initio. The respondents are hereby permanently
enjoined from enforcing and implementing the said ordinance, and the respondent MMDA is hereby directed to
immediately restore the portion of the party wall or wing wall of the building of the petitioner it destroyed to its
original condition.

IT IS SO ORDERED.

The MMDA thereafter appealed from the Decision of the trial court. On 18 July 2006, the Court of Appeals (CA)
partly granted the appeal.16 The CA upheld the validity of Ordinance No. 2904 and lifted the injunction against the
enforcement and implementation of the ordinance. In so doing, it held that the ordinance was a valid exercise of
the right of the local government unit to promote the general welfare of its constituents pursuant to its police
powers. The CA also ruled that the ordinance established a valid classification of property owners with regard to
the construction of arcades in their respective properties depending on the location. The CA further stated that
there was no taking of private property, since the owner still enjoyed the beneficial ownership of the property, to
wit:

Even with the requirement of the construction of arcaded sidewalks within his commercial lot, appellee still retains
the beneficial ownership of the said property. Thus, there is no "taking" for public use which must be subject to
just compensation. While the arcaded sidewalks contribute to the public good, for providing safety and comfort to
passersby, the ultimate benefit from the same still redounds to appellee, his commercial establishment being at
the forefront of a busy thoroughfare like EDSA. The arcaded sidewalks, by their nature, assure clients of the
commercial establishments thereat some kind of protection from accidents and other hazards. Without doubt, this
sense of protection can be a boon to the business activity therein engaged. 17

Nevertheless, the CA held that the MMDA went beyond its powers when it demolished the subject property. It
further found that Resolution No. 02-28 only refers to sidewalks, streets, avenues, alleys, bridges, parks and other
public places in Metro Manila, thus excluding Justice Gancayco’s private property. Lastly, the CA stated that the
MMDA is not clothed with the authority to declare, prevent or abate nuisances. Thus, the dispositive portion
stated:

WHEREFORE, the appeals are PARTLY GRANTED. The Decision dated September 30, 2003 of the Regional
Trial Court, Branch 224, Quezon City, is MODIFIED, as follows:

1) The validity and constitutionality of Ordinance No. 2094, 18 Series of 1956, issued by the City Council of Quezon
City, is UPHELD; and
2) The injunction against the enforcement and implementation of the said Ordinance is LIFTED.

SO ORDERED.

This ruling prompted the MMDA and Justice Gancayco to file their respective Motions for Partial
Reconsideration.19

On 10 May 2007, the CA denied the motions stating that the parties did not present new issues nor offer grounds
that would merit the reconsideration of the Court. 20

Dissatisfied with the ruling of the CA, Justice Gancayco and the MMDA filed their respective Petitions for Review
before this Court. The issues raised by the parties are summarized as follows:

I. WHETHER OR NOT JUSTICE GANCAYCO WAS ESTOPPED FROM ASSAILING THE VALIDITY OF
ORDINANCE NO. 2904.

II. WHETHER OR NOT ORDINANCE NO. 2904 IS CONSTITUTIONAL.

III. WHETHER OR NOT THE WING WALL OF JUSTICE GANCAYCO’S BUILDING IS A PUBLIC NUISANCE.

IV. WHETHER OR NOT THE MMDA LEGALLY DEMOLISHED THE PROPERTY OF JUSTICE GANCAYCO.

The Court’s Ruling

Estoppel

The MMDA and the City Government of Quezon City both claim that Justice Gancayco was estopped from
challenging the ordinance, because, in 1965, he asked for an exemption from the application of the ordinance.
According to them, Justice Gancayco thereby recognized the power of the city government to regulate the
construction of buildings.

To recall, Justice Gancayco questioned the constitutionality of the ordinance on two grounds: (1) whether the
ordinance "takes" private property without due process of law and just compensation; and (2) whether the
ordinance violates the equal protection of rights because it allowed exemptions from its application.

On the first ground, we find that Justice Gancayco may still question the constitutionality of the ordinance to
determine whether or not the ordinance constitutes a "taking" of private property without due process of law and
just compensation. It was only in 2003 when he was allegedly deprived of his property when the MMDA
demolished a portion of the building. Because he was granted an exemption in 1966, there was no "taking" yet to
speak of.

Moreover, in Acebedo Optical Company, Inc. v. Court of Appeals, 21 we held:

It is therefore decisively clear that estoppel cannot apply in this case. The fact that petitioner acquiesced in the
special conditions imposed by the City Mayor in subject business permit does not preclude it from challenging the
said imposition, which is ultra vires or beyond the ambit of authority of respondent City Mayor. Ultra vires acts or
acts which are clearly beyond the scope of one's authority are null and void and cannot be given any effect. The
doctrine of estoppel cannot operate to give effect to an act which is otherwise null and void or ultra vires.
(Emphasis supplied.)

Recently, in British American Tobacco v. Camacho,22 we likewise held:


We find that petitioner was not guilty of estoppel. When it made the undertaking to comply with all issuances of
the BIR, which at that time it considered as valid, petitioner did not commit any false misrepresentation or
misleading act. Indeed, petitioner cannot be faulted for initially undertaking to comply with, and subjecting itself to
the operation of Section 145(C), and only later on filing the subject case praying for the declaration of its
unconstitutionality when the circumstances change and the law results in what it perceives to be unlawful
discrimination. The mere fact that a law has been relied upon in the past and all that time has not been attacked
as unconstitutional is not a ground for considering petitioner estopped from assailing its validity. For courts will
pass upon a constitutional question only when presented before it in bona fide cases for determination, and the
fact that the question has not been raised before is not a valid reason for refusing to allow it to be raised later.
(Emphasis supplied.)

Anent the second ground, we find that Justice Gancayco may not question the ordinance on the ground of equal
protection when he also benefited from the exemption. It bears emphasis that Justice Gancayco himself
requested for an exemption from the application of the ordinance in 1965 and was eventually granted one.
Moreover, he was still enjoying the exemption at the time of the demolition as there was yet no valid notice from
the city engineer. Thus, while the ordinance may be attacked with regard to its different treatment of properties
that appears to be similarly situated, Justice Gancayco is not the proper person to do so.

Zoning and the regulation of the

construction of buildings are valid

exercises of police power .

In MMDA v. Bel-Air Village Association,23 we discussed the nature of police powers exercised by local government
units, to wit:

Police power is an inherent attribute of sovereignty. It has been defined as the power vested by the Constitution in
the legislature to make, ordain, and establish all manner of wholesome and reasonable laws, statutes and
ordinances, either with penalties or without, not repugnant to the Constitution, as they shall judge to be for the
good and welfare of the commonwealth, and for the subjects of the same. The power is plenary and its scope is
vast and pervasive, reaching and justifying measures for public health, public safety, public morals, and the
general welfare.

It bears stressing that police power is lodged primarily in the National Legislature. It cannot be exercised by any
group or body of individuals not possessing legislative power. The National Legislature, however, may delegate
this power to the President and administrative boards as well as the lawmaking bodies of municipal corporations
or local government units. Once delegated, the agents can exercise only such legislative powers as are conferred
on them by the national lawmaking body.

To resolve the issue on the constitutionality of the ordinance, we must first determine whether there was a valid
delegation of police power. Then we can determine whether the City Government of Quezon City acted within the
limits of the delegation.

It is clear that Congress expressly granted the city government, through the city council, police power by virtue of
Section 12(oo) of Republic Act No. 537, or the Revised Charter of Quezon City, 24 which states:

To make such further ordinances and regulations not repugnant to law as may be necessary to carry into effect
and discharge the powers and duties conferred by this Act and such as it shall deem necessary and proper to
provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort, and
convenience of the city and the inhabitants thereof, and for the protection of property therein; and enforce
obedience thereto with such lawful fines or penalties as the City Council may prescribe under the provisions of
subsection (jj) of this section.

Specifically, on the powers of the city government to regulate the construction of buildings, the Charter also
expressly provided that the city government had the power to regulate the kinds of buildings and structures that
may be erected within fire limits and the manner of constructing and repairing them. 25

With regard meanwhile to the power of the local government units to issue zoning ordinances, we apply Social
Justice Society v. Atienza.26 In that case, the Sangguniang Panlungsod of Manila City enacted an ordinance on 28
November 2001 reclassifying certain areas of the city from industrial to commercial. As a result of the zoning
ordinance, the oil terminals located in those areas were no longer allowed. Though the oil companies contended
that they stood to lose billions of pesos, this Court upheld the power of the city government to pass the assailed
ordinance, stating:

In the exercise of police power, property rights of individuals may be subjected to restraints and burdens in order
to fulfil the objectives of the government. Otherwise stated, the government may enact legislation that may
interfere with personal liberty, property, lawful businesses and occupations to promote the general
welfare. However, the interference must be reasonable and not arbitrary. And to forestall arbitrariness, the
methods or means used to protect public health, morals, safety or welfare must have a reasonable relation to the
end in view.

The means adopted by the Sanggunian was the enactment of a zoning ordinance which reclassified the area
where the depot is situated from industrial to commercial. A zoning ordinance is defined as a local city or
municipal legislation which logically arranges, prescribes, defines and apportions a given political subdivision into
specific land uses as present and future projection of needs. As a result of the zoning, the continued operation of
the businesses of the oil companies in their present location will no longer be permitted. The power to establish
zones for industrial, commercial and residential uses is derived from the police power itself and is exercised for
the protection and benefit of the residents of a locality. Consequently, the enactment of Ordinance No. 8027 is
within the power of the Sangguniang Panlungsod of the City of Manila and any resulting burden on those affected
cannot be said to be unjust... (Emphasis supplied)

In Carlos Superdrug v. Department of Social Welfare and Development, 27 we also held:

For this reason, when the conditions so demand as determined by the legislature, property rights must bow to the
primacy of police power because property rights, though sheltered by due process, must yield to general welfare.

Police power as an attribute to promote the common good would be diluted considerably if on the mere plea of
petitioners that they will suffer loss of earnings and capital, the questioned provision is invalidated. Moreover, in
the absence of evidence demonstrating the alleged confiscatory effect of the provision in question, there is no
basis for its nullification in view of the presumption of validity which every law has in its favor. (Emphasis
supplied.)

In the case at bar, it is clear that the primary objectives of the city council of Quezon City when it issued the
questioned ordinance ordering the construction of arcades were the health and safety of the city and its
inhabitants; the promotion of their prosperity; and the improvement of their morals, peace, good order, comfort,
and the convenience. These arcades provide safe and convenient passage along the sidewalk for commuters and
pedestrians, not just the residents of Quezon City. More especially so because the contested portion of the
building is located on a busy segment of the city, in a business zone along EDSA.

Corollarily, the policy of the Building Code,28 which was passed after the Quezon City Ordinance, supports the
purpose for the enactment of Ordinance No. 2904. The Building Code states:
Section 102. Declaration of Policy. – It is hereby declared to be the policy of the State to safeguard life, health,
property, and public welfare, consistent with the principles of sound environmental management and control; and
to this end, make it the purpose of this Code to provide for all buildings and structures, a framework of minimum
standards and requirements to regulate and control their location, site, design quality of materials, construction,
occupancy, and maintenance.

Section 1004 likewise requires the construction of arcades whenever existing or zoning ordinances require it.
Apparently, the law allows the local government units to determine whether arcades are necessary within their
respective jurisdictions.

Justice Gancayco argues that there is a three-meter sidewalk in front of his property line, and the arcade should
be constructed above that sidewalk rather than within his property line. We do not need to address this argument
inasmuch as it raises the issue of the wisdom of the city ordinance, a matter we will not and need not delve into.

To reiterate, at the time that the ordinance was passed, there was no national building code enforced to guide the
city council; thus, there was no law of national application that prohibited the city council from regulating the
construction of buildings, arcades and sidewalks in their jurisdiction.

The "wing walls" of the building are not nuisances per se.

The MMDA claims that the portion of the building in question is a nuisance per se.

We disagree.

The fact that in 1966 the City Council gave Justice Gancayco an exemption from constructing an arcade is an
indication that the wing walls of the building are not nuisances per se. The wing walls do not per se immediately
and adversely affect the safety of persons and property. The fact that an ordinance may declare a structure illegal
does not necessarily make that structure a nuisance.

Article 694 of the Civil Code defines nuisance as any act, omission, establishment, business, condition or
property, or anything else that (1) injures or endangers the health or safety of others; (2) annoys or offends the
senses; (3) shocks, defies or disregards decency or morality; (4) obstructs or interferes with the free passage of
any public highway or street, or any body of water; or, (5) hinders or impairs the use of property. A nuisance may
be per se or per accidens. A nuisance per se is that which affects the immediate safety of persons and property
and may summarily be abated under the undefined law of necessity. 29

Clearly, when Justice Gancayco was given a permit to construct the building, the city council or the city engineer
did not consider the building, or its demolished portion, to be a threat to the safety of persons and property. This
fact alone should have warned the MMDA against summarily demolishing the structure.

Neither does the MMDA have the power to declare a thing a nuisance. Only courts of law have the power to
determine whether a thing is a nuisance. In AC Enterprises v. Frabelle Properties Corp., 30 we held:

We agree with petitioner's contention that, under Section 447(a)(3)(i) of R.A. No. 7160, otherwise known as the
Local Government Code, the Sangguniang Panglungsod is empowered to enact ordinances declaring, preventing
or abating noise and other forms of nuisance. It bears stressing, however, that the Sangguniang Bayan cannot
declare a particular thing as a nuisance per se and order its condemnation. It does not have the power to find, as
a fact, that a particular thing is a nuisance when such thing is not a nuisance per se; nor can it authorize the
extrajudicial condemnation and destruction of that as a nuisance which in its nature, situation or use is not such.
Those things must be determined and resolved in the ordinary courts of law. If a thing be in fact, a nuisance due
to the manner of its operation, that question cannot be determined by a mere resolution of the Sangguniang
Bayan. (Emphasis supplied.)
MMDA illegally demolished the property of Justice Gancayco.

MMDA alleges that by virtue of MMDA Resolution No. 02-28, Series of 2002, it is empowered to demolish Justice
Gancayco’s property. It insists that the Metro Manila Council authorized the MMDA and the local government units
to clear the sidewalks, streets, avenues, alleys, bridges, parks and other public places in Metro Manila of all illegal
structures and obstructions. It further alleges that it demolished the property pursuant to the Building Code in
relation to Ordinance No. 2904 as amended.

However, the Building Code clearly provides the process by which a building may be demolished. The authority to
order the demolition of any structure lies with the Building Official. The pertinent provisions of the Building Code
provide:

SECTION 205. Building Officials. — Except as otherwise provided herein, the Building Official shall be
responsible for carrying out the provisions of this Code in the field as well as the enforcement of orders and
decisions made pursuant thereto.

Due to the exigencies of the service, the Secretary may designate incumbent Public Works District Engineers,
City Engineers and Municipal Engineers act as Building Officials in their respective areas of jurisdiction.

The designation made by the Secretary under this Section shall continue until regular positions of Building Official
are provided or unless sooner terminated for causes provided by law or decree.

xxx xxx xxx

SECTION 207. Duties of a Building Official. — In his respective territorial jurisdiction, the Building Official shall be
primarily responsible for the enforcement of the provisions of this Code as well as of the implementing rules and
regulations issued therefor. He is the official charged with the duties of issuing building permits.

In the performance of his duties, a Building Official may enter any building or its premises at all reasonable times
to inspect and determine compliance with the requirements of this Code, and the terms and conditions provided
for in the building permit as issued.

When any building work is found to be contrary to the provisions of this Code, the Building Official may order the
work stopped and prescribe the terms and/or conditions when the work will be allowed to resume. Likewise, the
Building Official is authorized to order the discontinuance of the occupancy or use of any building or structure or
portion thereof found to be occupied or used contrary to the provisions of this Code.

xxx xxx xxx

SECTION 215. Abatement of Dangerous Buildings. — When any building or structure is found or declared to be
dangerous or ruinous, the Building Official shall order its repair, vacation or demolition depending upon the degree
of danger to life, health, or safety. This is without prejudice to further action that may be taken under the
provisions of Articles 482 and 694 to 707 of the Civil Code of the Philippines. (Emphasis supplied.)

MMDA v. Trackworks Rail Transit Advertising, Vending and Promotions, Inc. 31 is applicable to the case at bar. In
that case, MMDA, invoking its charter and the Building Code, summarily dismantled the advertising media
installed on the Metro Rail Transit (MRT) 3. This Court held:

It is futile for MMDA to simply invoke its legal mandate to justify the dismantling of Trackworks' billboards,
signages and other advertising media. MMDA simply had no power on its own to dismantle, remove, or destroy
the billboards, signages and other advertising media installed on the MRT3 structure by Trackworks.
In Metropolitan Manila Development Authority v. Bel-Air Village Association, Inc., Metropolitan Manila
Development Authority v. Viron Transportation Co., Inc., and Metropolitan Manila Development Authority v. Garin,
the Court had the occasion to rule that MMDA's powers were limited to the formulation, coordination, regulation,
implementation, preparation, management, monitoring, setting of policies, installing a system, and administration.
Nothing in Republic Act No. 7924 granted MMDA police power, let alone legislative power.

Clarifying the real nature of MMDA, the Court held:

...The MMDA is, as termed in the charter itself, a "development authority". It is an agency created for the purpose
of laying down policies and coordinating with the various national government agencies, people's organizations,
non-governmental organizations and the private sector for the efficient and expeditious delivery of basic services
in the vast metropolitan area. All its functions are administrative in nature and these are actually summed up in
the charter itself, viz:

Sec.2. Creation of the Metropolitan Manila Development Authority.- xxx.

The MMDA shall perform planning, monitoring and coordinative functions, and in the process exercise regulatory
and supervisory authority over the delivery of metro-wide services within Metro Manila, without diminution of the
autonomy of local government units concerning purely local matters.

The Court also agrees with the CA's ruling that MMDA Regulation No. 96-009 and MMC Memorandum Circular
No. 88-09 did not apply to Trackworks' billboards, signages and other advertising media. The prohibition against
posting, installation and display of billboards, signages and other advertising media applied only to public areas,
but MRT3, being private property pursuant to the BLT agreement between the Government and MRTC, was not
one of the areas as to which the prohibition applied. Moreover, MMC Memorandum Circular No. 88-09 did not
apply to Trackworks' billboards, signages and other advertising media in MRT3, because it did not specifically
cover MRT3, and because it was issued a year prior to the construction of MRT3 on the center island of EDSA.
Clearly, MMC Memorandum Circular No. 88-09 could not have included MRT3 in its prohibition.

MMDA's insistence that it was only implementing Presidential Decree No. 1096 (Building Code) and its
implementing rules and regulations is not persuasive. The power to enforce the provisions of the Building Code
was lodged in the Department of Public Works and Highways (DPWH), not in MMDA, considering the law's
following provision, thus:

Sec. 201. Responsibility for Administration and Enforcement. -


The administration and enforcement of the provisions of this Code including the imposition of penalties for
administrative violations thereof is hereby vested in the Secretary of Public Works, Transportation and
Communications, hereinafter referred to as the "Secretary."

There is also no evidence showing that MMDA had been delegated by DPWH to implement the Building Code.
(Emphasis supplied.)

Additionally, the penalty prescribed by Ordinance No. 2904 itself does not include the demolition of illegally
constructed buildings in case of violations. Instead, it merely prescribes a punishment of "a fine of not more than
two hundred pesos (₱200.00) or by imprisonment of not more than thirty (30) days, or by both such fine and
imprisonment at the discretion of the Court, Provided, that if the violation is committed by a corporation,
partnership, or any juridical entity, the Manager, managing partner, or any person charged with the management
thereof shall be held responsible therefor." The ordinance itself also clearly states that it is the regular courts that
will determine whether there was a violation of the ordinance.

As pointed out in Trackworks, the MMDA does not have the power to enact ordinances. Thus, it cannot
supplement the provisions of Quezon City Ordinance No. 2904 merely through its Resolution No. 02-28.
Lastly, the MMDA claims that the City Government of Quezon City may be considered to have approved the
demolition of the structure, simply because then Quezon City Mayor Feliciano R. Belmonte signed MMDA
Resolution No. 02-28. In effect, the city government delegated these powers to the MMDA. The powers referred
to are those that include the power to declare, prevent and abate a nuisance 32 and to further impose the penalty of
removal or demolition of the building or structure by the owner or by the city at the expense of the owner. 33

MMDA’s argument does not hold water. There was no valid delegation of powers to the MMDA. Contrary to the
claim of the MMDA, the City Government of Quezon City washed its hands off the acts of the former. In its
Answer,34 the city government stated that "the demolition was undertaken by the MMDA only, without the
participation and/or consent of Quezon City." Therefore, the MMDA acted on its own and should be held solely
liable for the destruction of the portion of Justice Gancayco’s building.

WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals in CA-G.R. SP No. 84648 is
AFFIRMED.

SO ORDERED.

G.R. No. 190755 November 24, 2010

LAND BANK OF THE PHILIPPINES, vs. ALFREDO ONG,

VELASCO, JR., J.:

This is an appeal from the October 20, 2009 Decision of the Court of Appeals (CA) in CA-G.R. CR-CV No. 84445
entitled Alfredo Ong v. Land Bank of the Philippines, which affirmed the Decision of the Regional Trial Court
(RTC), Branch 17 in Tabaco City.

The Facts

On March 18, 1996, spouses Johnson and Evangeline Sy secured a loan from Land Bank Legazpi City in the
amount of PhP 16 million. The loan was secured by three (3) residential lots, five (5) cargo trucks, and a
warehouse. Under the loan agreement, PhP 6 million of the loan would be short-term and would mature on
February 28, 1997, while the balance of PhP 10 million would be payable in seven (7) years. The Notice of Loan
Approval dated February 22, 1996 contained an acceleration clause wherein any default in payment of
amortizations or other charges would accelerate the maturity of the loan. [1]

Subsequently, however, the Spouses Sy found they could no longer pay their loan. On December 9, 1996, they
sold three (3) of their mortgaged parcels of land for PhP 150,000 to Angelina Gloria Ong, Evangelines mother,
under a Deed of Sale with Assumption of Mortgage. The relevant portion of the document [2] is quoted as follows:

WHEREAS, we are no longer in a position to settle our obligation with the bank;

NOW THEREFORE, for and in consideration of the sum of ONE HUNDRED FIFTY THOUSAND PESOS
(P150,000.00) Philippine Currency, we hereby these presents SELL, CEDE, TRANSFER and CONVEY, by way of
sale unto ANGELINA GLORIA ONG, also of legal age, Filipino citizen, married to Alfredo Ong, and also a resident
of Tabaco, Albay, Philippines, their heirs and assigns, the above-mentioned debt with the said LAND BANK OF
THE PHILIPPINES, and by reason hereof they can make the necessary representation with the bank for the
proper restructuring of the loan with the said bank in their favor;

That as soon as our obligation has been duly settled, the bank is authorized to release the mortgage in favor of
the vendees and for this purpose VENDEES can register this instrument with the Register of Deeds for the
issuance of the titles already in their names.
IN WITNESS WHEREOF, we have hereunto affixed our signatures this 9 th day of December 1996 at Tabaco,
Albay, Philippines.
(signed) (signed)
EVANGELINE O. SY JOHNSON B. SY
Vendor Vendor

Evangelines father, petitioner Alfredo Ong, later went to Land Bank to inform it about the sale and assumption of
mortgage.[3] Atty. Edna Hingco, the Legazpi City Land Bank Branch Head, told Alfredo and his counsel Atty. Ireneo
de Lumen that there was nothing wrong with the agreement with the Spouses Sy but provided them with
requirements for the assumption of mortgage. They were also told that Alfredo should pay part of the principal
which was computed at PhP 750,000 and to update due or accrued interests on the promissory notes so that Atty.
Hingco could easily approve the assumption of mortgage. Two weeks later, Alfredo issued a check for PhP
750,000 and personally gave it to Atty. Hingco. A receipt was issued for his payment. He also submitted the other
documents required by Land Bank, such as financial statements for 1994 and 1995. Atty. Hingco then informed
Alfredo that the certificate of title of the Spouses Sy would be transferred in his name but this never materialized.
No notice of transfer was sent to him.[4]

Alfredo later found out that his application for assumption of mortgage was not approved by Land Bank. The bank
learned from its credit investigation report that the Ongs had a real estate mortgage in the amount of PhP
18,300,000 with another bank that was past due. Alfredo claimed that this was fully paid later on. Nonetheless,
Land Bank foreclosed the mortgage of the Spouses Sy after several months. Alfredo only learned of the
foreclosure when he saw the subject mortgage properties included in a Notice of Foreclosure of Mortgage and
Auction Sale at the RTC in Tabaco, Albay. Alfredos other counsel, Atty. Madrilejos, subsequently talked to Land
Banks lawyer and was told that the PhP 750,000 he paid would be returned to him. [5]

On December 12, 1997, Alfredo initiated an action for recovery of sum of money with damages against Land Bank
in Civil Case No. T-1941, as Alfredos payment was not returned by Land Bank.Alfredo maintained that Land
Banks foreclosure without informing him of the denial of his assumption of the mortgage was done in bad faith. He
argued that he was lured into believing that his payment of PhP 750,000 would cause Land Bank to approve his
assumption of the loan of the Spouses Sy and the transfer of the mortgaged properties in his and his wifes name.
[6]
He also claimed incurring expenses for attorneys fees of PhP 150,000, filing fee of PhP 15,000, and PhP
250,000 in moral damages.[7]

Testifying for Land Bank, Atty. Hingco claimed during trial that as branch manager she had no authority to approve
loans and could not assure anybody that their assumption of mortgage would be approved. She testified that the
breakdown of Alfredos payment was as follows:
PhP 101,409.59 applied to principal
216,246.56 accrued interests receivable
396,571.77 interests
18,766.10 penalties
16,805.98 accounts receivable
----------------
Total: 750,000.00

According to Atty. Hingco, the bank processes an assumption of mortgage as a new loan, since the new borrower
is considered a new client. They used character, capacity, capital, collateral, and conditions in determining who
can qualify to assume a loan. Alfredos proposal to assume the loan, she explained, was referred to a separate
office, the Lending Center. [8]

During cross-examination, Atty. Hingco testified that several months after Alfredo made the tender of payment,
she received word that the Lending Center rejected Alfredos loan application. She stated that it was the Lending
Center and not her that should have informed Alfredo about the denial of his and his wifes assumption of
mortgage. She added that although she told Alfredo that the agreement between the spouses Sy and Alfredo was
valid between them and that the bank would accept payments from him, Alfredo did not pay any further amount so
the foreclosure of the loan collaterals ensued. She admitted that Alfredo demanded the return of the PhP 750,000
but said that there was no written demand before the case against the bank was filed in court. She said that
Alfredo had made the payment of PhP 750,000 even before he applied for the assumption of mortgage and that
the bank received the said amount because the subject account was past due and demandable; and the Deed of
Assumption of Mortgage was not used as the basis for the payment. [9]

The Ruling of the Trial Court

The RTC held that the contract approving the assumption of mortgage was not perfected as a result of the credit
investigation conducted on Alfredo. It noted that Alfredo was not even informed of the disapproval of the
assumption of mortgage but was just told that the accounts of the spouses Sy had matured and gone unpaid. It
ruled that under the principle of equity and justice, the bank should return the amount Alfredo had paid with
interest at 12% per annum computed from the filing of the complaint. The RTC further held that Alfredo was
entitled to attorneys fees and litigation expenses for being compelled to litigate. [10]

The dispositive portion of the RTC Decision reads:

WHEREFORE, premises considered, a decision is rendered, ordering defendant bank to pay plaintiff, Alfredo Ong
the amount of P750,000.00 with interest at 12% per annum computed from Dec. 12, 1997 and attorneys fees and
litigation expenses of P50,000.00.

Costs against defendant bank.

SO ORDERED.[11]

The Ruling of the Appellate Court

On appeal, Land Bank faulted the trial court for (1) holding that the payment of PhP 750,000 made by Ong was
one of the requirements for the approval of his proposal to assume the mortgage of the Sy spouses; (2)
erroneously ordering Land Bank to return the amount of PhP 750,000 to Ong on the ground of its failure to effect
novation; and (3) erroneously affirming the award of PhP 50,000 to Ong as attorneys fees and litigation expenses.

The CA affirmed the RTC Decision.[12] It held that Alfredos recourse is not against the Sy spouses. According to
the appellate court, the payment of PhP 750,000 was for the approval of his assumption of mortgage and not for
payment of arrears incurred by the Sy spouses. As such, it ruled that it would be incorrect to consider Alfredo a
third person with no interest in the fulfillment of the obligation under Article 1236 of the Civil Code. Although Land
Bank was not bound by the Deed between Alfredo and the Spouses Sy, the appellate court found that Alfredo and
Land Banks active preparations for Alfredos assumption of mortgage essentially novated the agreement.

On January 5, 2010, the CA denied Land Banks motion for reconsideration for lack of merit. Hence, Land Bank
appealed to us.

The Issues

I. Whether the Court of Appeals erred in holding that Art. 1236 of the Civil Code does not apply and in finding that
there is no novation.
II. Whether the Court of Appeals misconstrued the evidence and the law when it affirmed the trial court decisions
ordering Land Bank to pay Ong the amount of Php750,000.00 with interest at 12% annum.

III. Whether the Court of Appeals committed reversible error when it affirmed the award of Php50,000.00 to Ong
as attorneys fees and expenses of litigation.

The Ruling of this Court

We affirm with modification the appealed decision.

Recourse is against Land Bank

Land Bank contends that Art. 1236 of the Civil Code backs their claim that Alfredo should have sought recourse
against the Spouses Sy instead of Land Bank. Art. 1236 provides:

The creditor is not bound to accept payment or performance by a third person who has no interest in the
fulfillment of the obligation, unless there is a stipulation to the contrary.

Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the
knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the
debtor.

We agree with Land Bank on this point as to the first part of paragraph 1 of Art. 1236. Land Bank was not bound
to accept Alfredos payment, since as far as the former was concerned, he did not have an interest in the payment
of the loan of the Spouses Sy. However, in the context of the second part of said paragraph, Alfredo was not
making payment to fulfill the obligation of the Spouses Sy. Alfredo made a conditional payment so that the
properties subject of the Deed of Sale with Assumption of Mortgage would be titled in his name. It is clear from the
records that Land Bank required Alfredo to make payment before his assumption of mortgage would be
approved. He was informed that the certificate of title would be transferred accordingly. He, thus, made payment
not as a debtor but as a prospective mortgagor.But the trial court stated:

[T]he contract was not perfected or consummated because of the adverse finding in the credit investigation which
led to the disapproval of the proposed assumption. There was no evidence presented that plaintiff was informed
of the disapproval. What he received was a letter dated May 22, 1997 informing him that the account of spouses
Sy had matured but there [were] no payments. This was sent even before the conduct of the credit investigation
on June 20, 1997 which led to the disapproval of the proposed assumption of the loans of spouses Sy. [13]

Alfredo, as a third person, did not, therefore, have an interest in the fulfillment of the obligation of the Spouses Sy,
since his interest hinged on Land Banks approval of his application, which was denied. The circumstances of the
instant case show that the second paragraph of Art. 1236 does not apply. As Alfredo made the payment for his
own interest and not on behalf of the Spouses Sy, recourse is not against the latter. And as Alfredo was not
paying for another, he cannot demand from the debtors, the Spouses Sy, what he has paid.

Novation of the loan agreement


Land Bank also faults the CA for finding that novation applies to the instant case. It reasons that a substitution of
debtors was made without its consent; thus, it was not bound to recognize the substitution under the rules on
novation.

On the matter of novation, Spouses Benjamin and Agrifina Lim v. M.B. Finance Corporation [14] provides the
following discussion:

Novation, in its broad concept, may either be extinctive or modificatory. It is extinctive when an old obligation is
terminated by the creation of a new obligation that takes the place of the former; it is merely modificatory when the
old obligation subsists to the extent it remains compatible with the amendatory agreement. An extinctive novation
results either by changing the object or principal conditions (objective or real), or by substituting the person of the
debtor or subrogating a third person in the rights of the creditor (subjective or personal). Under this mode,
novation would have dual functions ─ one to extinguish an existing obligation, the other to substitute a new one in
its place ─ requiring a conflux of four essential requisites: (1) a previous valid obligation; (2) an agreement of
all parties concerned to a new contract; (3) the extinguishment of the old obligation; and (4) the birth of a
valid new obligation. x x x

In order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be
so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each
other. The test of incompatibility is whether or not the two obligations can stand together, each one having its
independent existence. x x x (Emphasis supplied.)

Furthermore, Art. 1293 of the Civil Code states:

Novation which consists in substituting a new debtor in the place of the original one, may be made even without
the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new
debtor gives him rights mentioned in articles 1236 and 1237.

We do not agree, then, with the CA in holding that there was a novation in the contract between the parties. Not
all the elements of novation were present. Novation must be expressly consented to. Moreover, the conflicting
intention and acts of the parties underscore the absence of any express disclosure or circumstances with which to
deduce a clear and unequivocal intent by the parties to novate the old agreement. [15] Land Bank is thus correct
when it argues that there was no novation in the following:

[W]hether or not Alfredo Ong has an interest in the obligation and payment was made with the knowledge or
consent of Spouses Sy, he may still pay the obligation for the reason that even before he paid the amount of
P750,000.00 on January 31, 1997, the substitution of debtors was already perfected by and between Spouses Sy
and Spouses Ong as evidenced by a Deed of Sale with Assumption of Mortgage executed by them on December
9, 1996. And since the substitution of debtors was made without the consent of Land Bank a requirement which is
indispensable in order to effect a novation of the obligation, it is therefore not bound to recognize the substitution
of debtors. Land Bank did not intervene in the contract between Spouses Sy and Spouses Ong and did not
expressly give its consent to this substitution.[16]

Unjust enrichment

Land Bank maintains that the trial court erroneously applied the principle of equity and justice in ordering it to
return the PhP 750,000 paid by Alfredo. Alfredo was allegedly in bad faith and in estoppel. Land Bank contends
that it enjoyed the presumption of regularity and was in good faith when it accepted Alfredos tender of PhP
750,000. It reasons that it did not unduly enrich itself at Alfredos expense during the foreclosure of the mortgaged
properties, since it tendered its bid by subtracting PhP 750,000 from the Spouses Sys outstanding loan obligation.
Alfredos recourse then, according to Land Bank, is to have his payment reimbursed by the Spouses Sy.

We rule that Land Bank is still liable for the return of the PhP 750,000 based on the principle of unjust enrichment.
Land Bank is correct in arguing that it has no obligation as creditor to recognize Alfredo as a person with interest
in the fulfillment of the obligation. But while Land Bank is not bound to accept the substitution of debtors in the
subject real estate mortgage, it is estopped by its action of accepting Alfredos payment from arguing that it does
not have to recognize Alfredo as the new debtor. The elements of estoppel are:

First, the actor who usually must have knowledge, notice or suspicion of the true facts, communicates something
to another in a misleading way, either by words, conduct or silence; second, the other in fact relies, and relies
reasonably or justifiably, upon that communication; third, the other would be harmed materially if the actor is later
permitted to assert any claim inconsistent with his earlier conduct; and fourth, the actor knows, expects or
foresees that the other would act upon the information given or that a reasonable person in the actors position
would expect or foresee such action.[17]

By accepting Alfredos payment and keeping silent on the status of Alfredos application, Land Bank misled Alfredo
to believe that he had for all intents and purposes stepped into the shoes of the Spouses Sy.

The defense of Land Bank Legazpi City Branch Manager Atty. Hingco that it was the banks Lending Center that
should have notified Alfredo of his assumption of mortgage disapproval is unavailing. The Lending Centers lack of
notice of disapproval, the Tabaco Branchs silence on the disapproval, and the banks subsequent actions show a
failure of the bank as a whole, first, to notify Alfredo that he is not a recognized debtor in the eyes of the bank;
and second, to apprise him of how and when he could collect on the payment that the bank no longer had a right
to keep.

We turn then on the principle upon which Land Bank must return Alfredos payment. Unjust enrichment exists
when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of
another against the fundamental principles of justice, equity and good conscience. [18] There is unjust enrichment
under Art. 22 of the Civil Code when (1) a person is unjustly benefited, and (2) such benefit is derived at the
expense of or with damages to another. [19]

Additionally, unjust enrichment has been applied to actions called accion in rem verso. In order that the accion in
rem verso may prosper, the following conditions must concur: (1) that the defendant has been enriched; (2) that
the plaintiff has suffered a loss; (3) that the enrichment of the defendant is without just or legal ground; and (4)
that the plaintiff has no other action based on contract, quasi-contract, crime, or quasi-delict. [20] The principle of
unjust enrichment essentially contemplates payment when there is no duty to pay, and the person who receives
the payment has no right to receive it.[21]

The principle applies to the parties in the instant case, as, Alfredo, having been deemed disqualified from
assuming the loan, had no duty to pay petitioner bank and the latter had no right to receive it.

Moreover, the Civil Code likewise requires under Art. 19 that [e]very person must, in the exercise of his rights and
in the performance of his duties, act with justice, give everyone his due, and observe honesty and good
faith. Land Bank, however, did not even bother to inform Alfredo that it was no longer approving his assumption of
the Spouses Sys mortgage. Yet it acknowledged his interest in the loan when the branch head of the bank wrote
to tell him that his daughters loan had not been paid. [22] Land Bank made Alfredo believe that with the payment of
PhP 750,000, he would be able to assume the mortgage of the Spouses Sy. The act of receiving payment without
returning it when demanded is contrary to the adage of giving someone what is due to him. The outcome of the
application would have been different had Land Bank first conducted the credit investigation before accepting
Alfredos payment. He would have been notified that his assumption of mortgage had been disapproved; and he
would not have taken the futile action of paying PhP 750,000. The procedure Land Bank took in acting on Alfredos
application cannot be said to have been fair and proper.

As to the claim that the trial court erred in applying equity to Alfredos case, we hold that Alfredo had no other
remedy to recover from Land Bank and the lower court properly exercised its equity jurisdiction in resolving the
collection suit. As we have held in one case:

Equity, as the complement of legal jurisdiction, seeks to reach and complete justice where courts of law, through
the inflexibility of their rules and want of power to adapt their judgments to the special circumstances of cases, are
incompetent to do so. Equity regards the spirit and not the letter, the intent and not the form, the substance rather
than the circumstance, as it is variously expressed by different courts. [23]

Another claim made by Land Bank is the presumption of regularity it enjoys and that it was in good faith when it
accepted Alfredos tender of PhP 750,000.

The defense of good faith fails to convince given Land Banks actions. Alfredo was not treated as a mere
prospective borrower. After he had paid PhP 750,000, he was made to sign bank documents including a
promissory note and real estate mortgage. He was assured by Atty. Hingco that the titles to the properties covered
by the Spouses Sys real estate mortgage would be transferred in his name, and upon payment of the PhP
750,000, the account would be considered current and renewed in his name. [24]

Land Bank posits as a defense that it did not unduly enrich itself at Alfredos expense during the foreclosure of the
mortgaged properties, since it tendered its bid by subtracting PhP 750,000 from the Spouses Sys outstanding
loan obligation. It is observed that this is the first time Land Bank is revealing this defense. However, issues,
arguments, theories, and causes not raised below may no longer be posed on appeal. [25] Land Banks contention,
thus, cannot be entertained at this point.

Land Bank further questions the lower courts decision on the basis of the inconsistencies made by Alfredo on the
witness stand. It argues that Alfredo was not a credible witness and his testimony failed to overcome the
presumption of regularity in the performance of regular duties on the part of Land Bank.

This claim, however, touches on factual findings by the trial court, and we defer to these findings of the trial court
as sustained by the appellate court. These are generally binding on us. While there are exceptions to this rule,
Land Bank has not satisfactorily shown that any of them is applicable to this issue.[26] Hence, the rule that the trial
court is in a unique position to observe the demeanor of witnesses should be applied and respected [27] in the
instant case.

In sum, we hold that Land Bank may not keep the PhP 750,000 paid by Alfredo as it had already foreclosed on
the mortgaged lands.

Interest and attorneys fees

As to the applicable interest rate, we reiterate the guidelines found in Eastern Shipping Lines, Inc. v. Court of
Appeals:[28]

II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of
interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance
of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of
damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest,
however, shall be adjudged on unliquidated claims or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but
when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin
to run only from the date the judgment of the court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any
case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of
credit.

No evidence was presented by Alfredo that he had sent a written demand to Land Bank before he filed the
collection suit. Only the verbal agreement between the lawyers of the parties on the return of the payment was
mentioned.[29] Consequently, the obligation of Land Bank to return the payment made by Alfredo upon the formers
denial of the latters application for assumption of mortgage must be reckoned from the date of judicial demand on
December 12, 1997, as correctly determined by the trial court and affirmed by the appellate court.

The next question is the propriety of the imposition of interest and the proper imposable rate of applicable
interest. The RTC granted the rate of 12% per annum which was affirmed by the CA. From the above-quoted
guidelines, however, the proper imposable interest rate is 6% per annum pursuant to Art. 2209 of the Civil
Code. Sunga-Chan v. Court of Appeals is illuminating in this regard:

In Reformina v. Tomol, Jr., the Court held that the legal interest at 12% per annum under Central Bank (CB)
Circular No. 416 shall be adjudged only in cases involving the loan or forbearance of money. And for
transactions involving payment of indemnities in the concept of damages arising from default in the
performance of obligations in general and/or for money judgment not involving a loan or forbearance of money,
goods, or credit, the governing provision is Art. 2209 of the Civil Code prescribing a yearly 6% interest. Art. 2209
pertinently provides:

Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the
indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed
upon, and in the absence of stipulation, the legal interest, which is six per cent per annum.

The term forbearance, within the context of usury law, has been described as a contractual obligation of a lender
or creditor to refrain, during a given period of time, from requiring the borrower or debtor to repay the loan or debt
then due and payable.

Eastern Shipping Lines, Inc. synthesized the rules on the imposition of interest, if proper, and the applicable rate,
as follows: The 12% per annum rate under CB Circular No. 416 shall apply only to loans or forbearance of money,
goods, or credits, as well as to judgments involving such loan or forbearance of money, goods, or credit, while
the 6% per annum under Art. 2209 of the Civil Code applies when the transaction involves the payment of
indemnities in the concept of damage arising from the breach or a delay in the performance of obligations
in general, with the application of both rates reckoned from the time the complaint was filed until the [adjudged]
amount is fully paid. In either instance, the reckoning period for the commencement of the running of the legal
interest shall be subject to the condition that the courts are vested with discretion, depending on the equities of
each case, on the award of interest.[30] (Emphasis supplied.)

Based on our ruling above, forbearance of money refers to the contractual obligation of the lender or creditor to
desist for a fixed period from requiring the borrower or debtor to repay the loan or debt then due and for which
12% per annum is imposed as interest in the absence of a stipulated rate. In the instant case, Alfredos conditional
payment to Land Bank does not constitute forbearance of money, since there was no agreement or obligation for
Alfredo to pay Land Bank the amount of PhP 750,000, and the obligation of Land Bank to return what Alfredo has
conditionally paid is still in dispute and has not yet been determined. Thus, it cannot be said that Land Banks
alleged obligation has become a forbearance of money.

On the award of attorneys fees, attorneys fees and expenses of litigation were awarded because Alfredo was
compelled to litigate due to the unjust refusal of Land Bank to refund the amount he paid. There are instances
when it is just and equitable to award attorneys fees and expenses of litigation. [31] Art. 2208 of the Civil Code
pertinently states:

In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be
recovered, except:

(2) When the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest.

Given that Alfredo was indeed compelled to litigate against Land Bank and incur expenses to protect his interest,
we find that the award falls under the exception above and is, thus, proper given the circumstances.

On a final note. The instant case would not have been litigated had Land Bank been more circumspect in dealing
with Alfredo. The bank chose to accept payment from Alfredo even before a credit investigation was underway, a
procedure worsened by the failure to even inform him of his credit standings impact on his assumption of
mortgage. It was, therefore, negligent to a certain degree in handling the transaction with Alfredo. It should be
remembered that the business of a bank is affected with public interest and it should observe a higher standard of
diligence when dealing with the public.[32]

WHEREFORE, the appeal is DENIED. The CA Decision in CA-G.R. CR-CV No. 84445
is AFFIRMED with MODIFICATION in that the amount of PhP 750,000 will earn interest at 6% per annum
reckoned from December 12, 1997, and the total aggregate monetary awards will in turn earn 12% per annum
from the finality of this Decision until fully paid.

SO ORDERED.

DAMAGES
G.R. No. 212375

KABISIG REAL WEALTH DEV., INC. and FERNANDO C. TIO,, Petitioners


vs.
YOUNG BUILDERS CORPORATION, Respondent
DECISION

PERALTA, J.:

This is a Petition for Review which petitioners Kabisig Real Wealth Dev., Inc. and Fernando C. Tio filed assailing
the Court of Appeals (CA) Decision1 dated June 28, 2013 and Resolution2 dated March 28, 2014 in CAG.R. CV
No. 02945, affirming the Decision of the Regional Trial Court (RTC) of Cebu City, Branch 12, dated July 31, 2008
in Civil Case No. CEB- 27950.

The following are the pertinent antecedents of the case, as shown by the records:

Sometime in April 2001, Kabisig Real Wealth Dev., Inc. (Kabisig), through Ferdinand Tio (Tio), contracted the
services of Young Builders Corporation (Young Builders) to supply labor, tools, equipment, and materials for the
renovation of its building in Cebu City. Young Builders then finished the work in September 2001 and billed
Kabisig for P4,123,320.95. However, despite numerous demands, Kabisig failed to pay. It contended that no
written contract was ever entered into between the parties and it was never informed of the estimated cost of the
renovation. Thus, Young Builders filed an action for Collection of Sum of Money against Kabisig.

On July 31, 2008, the RTC of Cebu City rendered a Decision finding for Young Builders, thus:

WHEREFORE, judgment is hereby rendered ordering the defendants to pay plaintiff P4,123,320.95 representing
the value of services rendered and materials used in the renovation of the building of defendant Kabisig Real
Wealth Dev., Inc. into a restaurant of defendant Ferdinand Tio, by way of actual damages, plus 12% per
annum from September 11, 2001 until it is fully paid. Costs against defendants.

SO ORDERED.3

Therefore, Kabisig elevated the case to the CA. On June 28, 2013, the appellate court affirmed the RTC Decision,
with modification, viz.:

WHEREFORE, foregoing premises considered, the Decision dated July 31, 2008 rendered by the Regional Trial
Court of Cebu City, Branch 12 in Civil Case No. CEB-27950 is hereby AFFIRMED with MODIFICATION, deleting
the award for actual damages. As modified, the defendants Kabisig Real Wealth Dev., Inc. and Ferdinand Tio are
ordered to jointly pay the plaintiff Young Builders Corporation Two Million Four Hundred Thousand
(₱2,400,000.00) Pesos as TEMPERATE DAMAGES for the value of services, rendered and materials used in the
renovation of defendants-appellants building. In addition, the total amount adjudged shall earn interest at the rate
of 12% per annum from September 11, 2001, until it is fully paid. Costs against defendants.

SO ORDERED.4

Subsequently, Young Builders and Kabisig moved for reconsideration, but both were denied by the CA. 5

Hence, Kabisig filed the instant petition.

The sole issue is whether or not Kabisig is liable to Young Builders for the damages claimed:

Under the Civil Code, a contract is a meeting of minds, with respect to the other, to give something or to render
some service. Article 1318 reads:

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;


(2) Object certain which is the subject matter of the contract; and

(3) Cause of the obligation which is established.

Accordingly, for a contract to be valid, it must have the following essential elements: (1) consent of the contracting
parties; (2) object certain, which is the subject matter of the contract; and (3) cause of the obligation which is
established. Consent must exist, otherwise, the contract is nonexistent. Consent is manifested by the meeting of
the offer and the acceptance of the thing and the cause, which are to constitute the contract. By law, a contract of
sale, is perfected at the moment there is a meeting of the minds upon the thing that is the object of the contract
and upon the price. Indeed, it is a consensual contract which is perfected by mere consent. 6

Through the testimonies of both Young Builders' and Kabisig's witnesses, Tio commissioned the company of his
friend, Nelson Yu, to supply labor, tools, equipment, and materials for the renovation of Kabisig's building into a
restaurant. While Tio argues that the renovation was actually for the benefit of his partners, Fernando Congmon,
Gold En Burst Foods Co., and Sunburst Fried Chicken, Inc., and therefore, they should be the ones who must
shoulder the cost of the renovation, said persons were never impleaded in the instant case. Moreover, all the
documents pertaining to the project, such as official receipts of payment for the building permit application, are
under the names of Kabisig and Tio.

Further, Kabisig's claim as to the absence of a written contract between it and Young Builders simply does not
hold water.1avvphi1 It is settled that once perfected, a contract is generally binding in whatever form, whether
written or oral, it may have been entered into, provided the aforementioned essential requisites for its validity are
present.7 Article 1356 of the Civil Code provides:

Art. 1356. Contracts shall be obligatory in whatever form they may have been entered into, provided all the
essential requisites for their validity are present.

xxxx

There is nothing in the law that requires a written contract for the agreement in question to be valid and
enforceable. Also, the Court notes that neither Kabisig nor Tio had objected to the renovation work, until it was
already time to settle the bill.

Likewise, the appellate court aptly reduced the amount of damages awarded by the RTC. Under Article 2199 of
the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or in recompense for, loss
or injury sustained. They proceed from a sense of natural justice and are designed to repair the wrong that has
been done, to compensate for the injury inflicted. They either refer to the loss of what a person already possesses
(dano emergente ), or the failure to receive as a benefit that which would have pertained to him (lucro
cesante ),8 as in this case.

For an injured party to recover actual damages, however, he is required to prove the actual amount of loss with
reasonable degree of certainty premised upon competent proof and on the best evidence available. The burden of
proof is on the party who would be defeated if no evidence would be presented on either side. He must establish
his case by a preponderance of evidence, which means that the evidence adduced by one side is superior to that
of the other. In other words, damages cannot be presumed and courts, in making an award, must point out
specific facts that could afford a basis for measuring compensatory damages. A court cannot merely rely on
speculations, conjectures, or guesswork as to the fact and amount of damages as well as hearsay or
uncorroborated testimony whose truth is suspect. A party is entitled to adequate compensation only for such
pecuniary loss actually suffered and duly proved. Indeed, to recover actual damages, the amount of loss must not
only be capable of proof but must actually be proven with a reasonable degree of certainty, premised upon
competent proof or best evidence obtainable of its actual amount. 9 Here, the evidence reveals that Young Builders
failed to submit any competent proof of the specific amount of actual damages being claimed. The documents
submitted by Young Builders either do not bear the name of Kabisig or Tio, their conformity, or signature, or do not
indicate in any way that the amount reflected on its face actually refers to the renovation project.

Notwithstanding the absence of sufficient proof, Young Builders still deserves to be recompensed for actually
completing the work. In the absence of competent proof on the amount of actual damages, the courts allow the
party to receive temperate damages. Temperate or moderate damages, which are more than nominal but less
than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered
but its amount cannot, from the nature of the case, be proved with certainty. 10

To determine the compensation due and to avoid unjust enrichment from resulting out of a fulfilled contract, the
principle of quantum meruit may be used. Under this principle, a contractor is allowed to recover the reasonable
value of the services rendered despite the lack of a written contract. The measure of recovery under the principle
should relate to the reasonable value of the services performed. The principle prevents undue enrichment based
on the equitable postulate that it is unjust for a person to retain any benefit without paying for it. Being predicated
on equity, said principle should only be applied if no express contract was entered into, and no specific statutory
provision was applicable.11

The principle of quantum meruit justifies the payment of the reasonable value of the services rendered and should
apply in the absence of an express agreement on the fees. It is notable that the issue revolves around the parties'
inability to agree on the fees that Young Builders should receive. Considering the absence of an agreement, and
in view of the completion of the renovation, the Court has to apply the principle of quantum meruit in determining
how much is due to Young Builders. Under the established circumstances, the total amount of ₱2,400,000.00
which the CA awarded is deemed to be a reasonable compensation under the principle of quantum meruit since
the renovation of Kabisig's building had already been completed in 2001. 12

Finally, the rate of interest should be modified. When the obligation is breached, and it consists in the payment of
a sum of money, as in this case, the interest due should be that which may have been stipulated in writing. In the
absence of stipulation, the rate of interest shall be 12%, later reduced to 6%, 13 per annum to be computed from
default, i.e., from judicial or extrajudicial demand, subject to the provisions of Article 1169 14 of the Civil Code.
Here, the records would show that Young Builders made the demand on September 11, 2001. Also, the rate of
legal interest for a judgment awarding a sum of money shall be 6% per annum from the time such judgment
becomes final and executory until its satisfaction, this interim period being deemed to be by then an equivalent to
a forbearance of credit.15

WHEREFORE, PREMISES CONSIDERED, the Court DISMISSES the petition for lack of merit and AFFIRMS the
Decision of the Court of Appeals dated June 28, 2013, and its Resolution dated March 28, 2014, in CA-G.R. CV
No. 02945, with MODIFICATION as to the interest which must be twelve percent (12%) per annum of the amount
awarded from the time of demand on September 11, 2001 to June 30, 2013, and six percent (6%) per annum from
July 1, 2013 until its full satisfaction. SO ORDERED.

G.R. No. 186976, December 07, 2016

PRYCE PROPERTIES CORPORATION, Petitioner, v. SPOUSES SOTERO OCTOBRE, JR. AND HENRISSA A.
OCTOBRE, AND CHINA BANKING CORPORATION, Respondents.

DECISION

JARDELEZA, J.:
The primary question is whether a breach of contract automatically triggers the award of actual or compensatory
damages.

On July 22, 1997, respondent Spouses Sotero Octobre, Jr. and Henrissa A. Octobre (Spouses Octobre) signed a
Reservation Agreement with petitioner Pryce Properties Corporation (Pryce) for the purchase of two lots with a
total of 742 square meters located in Puerto Heights Village, Puerto Heights, Cagayan de Oro City. 1 The parties
subsequently executed a Contract to Sell over the lot for the price of P2,897,510.00 on January 7, 1998. 2

On February 4, 2004, Pryce issued a certification that Spouses Octobre had fully paid the purchase price and
amortization interests, as well as the transfer fees and other charges in relation to the property, amounting to a
total of P4,292,297.92.3 But Pryce had yet to deliver the certificates of title, which prompted Spouses Octobre to
formally demand its delivery. Despite repeated demands, Pryce failed to comply. 4 Thus, on May 18, 2004,
Spouses Octobre filed a complaint before the Housing and Land Use Regulatory Board (HLURB), Regional Office
No. 10 for specific performance, revocation of certificate of registration, refund of payments, damages and
attorney's fees.5

It appears that the reason why Pryce was unable to deliver the titles to Spouses Octobre is because it had
previously transferred custody of the titles, along with others pertaining to the same development project, to China
Banking Corporation (China Bank) as part of the Deed of Assignment 6 executed on June 27, 1996.7 Under this
deed, Pryce agreed to assign and transfer its accounts receivables, in the form of contracts to sell, in the Puerto
Heights development project to China Bank as security for the P200 Million credit facility extended by the latter.
Pryce obligated itself to deliver to China Bank the "contracts to sell and the corresponding owner's duplicate
copies of the transfer certificates of title, tax declaration, real estate tax receipts and all other documents and
papers"8 relating to the assigned receivables until such receivables are paid or repurchased by Pryce. The titles to
the lots purchased by Spouses Octobre were among those held in custody by China Bank. 9 When Pryce
defaulted in its loan obligations to China Bank sometime in May 2002, China Bank refused to return the titles to
Pryce.10 For this reason, China Bank was also impleaded in the HLURB complaint.

The HLURB Arbiter rendered a Decision11 dated March 31, 2005 finding that Spouses Octobre had no cause of
action against China Bank and rescinding the contract between Pryce and Spouses Octobre. It ordered Pryce to
refund the payments made by the spouses with legal interest and to pay the latter compensatory damages
amounting to P30,000.00, attorney's fees and costs of suit. 12

On appeal, the HLURB Board of Commissioners modified the Decision by ordering Pryce to pay the redemption
value to China Bank so that the latter may release the titles covering the lots purchased by Spouses Octobre. In
default thereof, Pryce shall refund the payments with legal interest. The HLURB Board upheld the grant of
compensatory damages, attorney's fees and costs to Spouses Octobre. 13 Pryce moved for reconsideration and to
stay the proceedings on account of Pryce's ongoing corporate rehabilitation. 14 The HLURB Board, however,
denied Pryce's motion considering that the stay order of the rehabilitation court had already been reversed by the
Court of Appeals. 15

Thereafter, Pryce appealed the case to the Office of the President, which affirmed 16 in full the HLURB Board's
Decision. Undeterred, Pryce elevated the case to the Court of Appeals which denied the petition for review and
affirmed the Office of the President's Decision. The Court of Appeals found that Pryce acted in bad faith because
it "did not disclose [that the titles were in the custody of China Bank] to respondents Spouses Octobre until the
latter demanded delivery of the titles."17 The Court of Appeals held that Pryce's contractual breach justified the
award of compensatory damages as well as the payment of attorney's fees and costs of suit. 18

Pryce is now before this Court primarily arguing that the Court of Appeals erred in upholding the award of
compensatory damages because Spouses Octobre failed to present competent proof of the actual amount of
loss.19 It also questions the award of attorney's fees and litigation costs because there was allegedly no finding of
bad faith.20 Additionally, as side issues, Pryce questions the Court of Appeals' finding that the stay order had been
reversed and its decision to uphold the finding by the HLURB Board and Office of the President that the subject
properties were mortgaged to China Bank.21

In response, Spouses Octobre maintain that the award of compensatory damages, attorney's fees and costs were
proper because they were forced to litigate to enforce their contractual right as a result of Pryce's breach. 22 With
respect to the stay order, Spouses Octobre cite this Court's February 4, 2008 Decision in G.R. No.
17230223 which affirmed the appellate court's reversal of the stay order. Finally, Spouses Octobre note that the
characterization of the Deed of Assignment as a mortgage came from Pryce's own appeal memorandum filed with
the HLURB Board, and that, in any event, whether it is an assignment or mortgage, the decisive fact is that the
titles were delivered by Pryce to China Bank.24

In its comment, China Bank insists that Pryce only has itself to blame for failing to comply with its obligation to
remit the payments received from the various contracts to sell, including its obligation to Spouses Octobre. Under
the Deed of Assignment, China Bank is entitled to hold custody of the titles surrendered by Pryce until the
assigned receivables are paid or repurchased by Pryce, which to date the latter has failed to do. 25

II

Article 2199 of the Civil Code defines actual or compensatory damages: 26

Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such
pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or
compensatory damages. (Emphasis supplied.)

To be entitled to compensatory damages, the amount of loss must therefore be capable of proof and must be
actually proven with a reasonable degree of certainty, premised upon competent proof or the best evidence
obtainable. The burden of proof of the damage suffered is imposed on the party claiming the same, who should
adduce the best evidence available in support thereof. 27 Its award must be based on the evidence presented, not
on the personal knowledge of the court; and certainly not on flimsy, remote, speculative and non-substantial
proof.28

It is clear that the amount paid by Spouses Octobre to Pryce as purchase price for the lots has been adequately
proved. There is no dispute that Spouses Octobre are entitled to such amount with legal interest. The issue being
raised by Pryce is only with respect to the P30,000.00 awarded as compensatory damages. 29

The records of this case are bereft of any evidentiary basis for the award of P30,000.00 as compensatory
damages. When the HLURB Arbiter initially awarded the amount, it merely mentioned that "[Spouses Octobre] are
entitled to compensatory damages, which is just and equitable in the circumstances, even against an obligor in
good faith since said damages are the natural and probable consequences of the contractual breach
committed."30 On the other hand, the Court of Appeals justified the award of compensatory damages by stating
that "it is undisputed that petitioner Pryce committed breach of contract in failing to deliver the titles to
respondents [Spouses] Octobre which necessitated the award of compensatory damages." 31 In their comment,
Spouses Octobre emphasized that they were "forced to litigate and seek the intervention of the courts because of
Pryce's failure to comply with its contractual and legal obligation" 32 without so much as mentioning any proof that
would tend to prove any pecuniary loss they suffered.

In the absence of adequate proof, compensatory damages should not have been awarded. Nonetheless, we find
that nominal damages, in lieu of compensatory damages, are proper in this case. Under Article 2221, nominal
damages may be awarded in order that the plaintiff’s right, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered.
Nominal damages are "recoverable where a legal right is technically violated and must be vindicated against an
invasion that has produced no actual present loss of any kind or where there has been a breach of contract and
no substantial injury or actual damages whatsoever have been or can be shown." 33 So long as there is a violation
of the right of the plaintiff—whether based on law, contract, or other sources of obligations 34—an award of nominal
damages is proper.35 Proof of bad faith is not required.36 The HLURB Arbiter and the Court of Appeals appear to
have confused nominal damages with compensatory damages, since their justifications more closely fit the
former.

It is undisputed that Pryce failed to deliver the titles to the lots subject of the Contract to Sell even as Spouses
Octobre had already fully settled the purchase price. Its inability to deliver the titles despite repeated demands
undoubtedly constitutes a violation of Spouses Octobre's right under their contract. That Pryce had transferred
custody of the titles to China Bank pursuant to a Deed of Assignment is irrelevant, considering that Spouses
Octobre were not privy to such agreement.

In fine, contractual breach is sufficient to justify an award for nominal damages but not compensatory damages.

III

Pryce questions the award of attorney's fees and costs of suit because no exemplary damages were awarded.
This contention, however, is clearly unmeritorious because under Article 2208, 37 the award of exemplary damages
is just one of 11 instances where attorney's fees and expenses of litigation are recoverable.

Article 2208(2) allows the award of attorney's fees when the defendant's act or omission has compelled the
plaintiff to litigate with third persons or to incur expenses to protect his interest. The Court has interpreted that this
provision requires a showing of bad faith and not mere erroneous conviction of the righteousness of a defendant's
cause.38 In this case, the Court of Appeals found that Pryce acted in bad faith when it did not disclose to Spouses
Octobre the fact that the certificates of title to the properties purchased were in the custody of China Bank until
Spouses Octobre had fully paid the price and had demanded delivery of the titles. We agree with this finding and
therefore sustain the award of attorney's fees and costs of suit in favor of Spouses Octobre.

IV

The other side issues raised by Pryce shall be disposed of swiftly since they have no substantial bearing on the
merits of this case. As admitted by Pryce itself, "it is not the entire Decision that is being assailed" 39 but only the
portion regarding the award of compensatory damages, attorney's fees and costs of suit.

When the stay order being invoked by Pryce was reversed and set aside at the first instance by the Court of
Appeals in CA-G.R. SP No. 88479, that stay order was automatically deemed vacated. 40 By reversing the stay
order of the rehabilitation court, the Court of Appeals effectively enjoined the execution of such order as allowed
by the 2000 Interim Rules of Procedure on Corporate Rehabilitation 41 (which was then in effect when Pryce filed
its petition for rehabilitation in 2004). We affirmed the Court of Appeals' decision to set aside the stay order in the
Decision dated February 4, 200842 and Resolution dated June 16, 2008.43 Although we later reconsidered the
Decision on February 18, 2014,44 the same does not affect the validity of the proceedings already conducted
before the HLURB, Office of the President, and Court of Appeals during the intermediate period that the stay order
was vacated. Neither does it affect our resolution of this petition for review because under the Financial
Rehabilitation and Insolvency Act of 201045 (FRIA), the stay order shall not apply to cases already pending appeal
in the Supreme Court.46Section 146 of the FRIA expressly allows the application of its provisions to pending
rehabilitation cases, except to the extent that their application would not be feasible or would work injustice. 47

B
The characterization of the Deed of Assignment between Pryce and China Bank as either an assignment of
receivables or a mortgage of real property is irrelevant to Pryce's obligation to Spouses Octobre. The principal
reason why Pryce raises this argument is to elude the applicability of Section 18 of Presidential Decree No.
957.48 But Spouses Octobre's claim is precisely premised on its contract with Pryce, not this specific provision of
law. Hence, even if the provision is inapplicable, Pryce's contractual liability to deliver the titles to Spouses
Octobre remains.

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R.
SP N9. 103615 are MODIFIED in that nominal damages in the amount of P30,000.00 are awarded in lieu of
compensatory damages.

SO ORDERED.

G.R. No. 202124

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,


vs.
IRENEO JUGUETA, Accused-Appellant.

DECISION

PERALTA, J.:

This resolves the appeal from the Decision 1 of the Court of Appeals (CA) dated January 30, 2012 in CA-G.R. CR
HC No. 03252. The CA affirmed the judgments of the Regional Trial Court (RTC), Branch 61, Gumaca, Quezon,
finding accused-appellant Ireneo Jugueta y Flores guilty beyond reasonable doubt of Double Murder in Criminal
Case No. 7698-G and Multiple Attempted Murder in Criminal Case No. 7702-G.

In Criminal Case No. 7698-G, appellant was charged with Double Murder, defined and penalized under Article
248 of the Revised Penal Code, allegedly committed as follows:

That on or about the 6th day of June 2002, at about 9:00 o'clock in the evening, at Barangay Caridad Ilaya,
Municipality of Atimonan, Province of Quezon, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused, armed with a caliber.22 firearm, with intent to kill, qualified by treachery and evident
premeditation, did then and there willfully, unlawfully and feloniously attack, assault and shoot with said firearm
Mary Grace Divina, a minor, 13 years old, who suffered the following:

"Gunshot wound -

Point of Entry – lower abdomen, right, 2 cm. from the midline and 6 cm. from the level of the umbilicus, directed
upward toward the left upper abdomen."

and Claudine Divina, a minor, 3 ½ years of age, who suffered the following:

"Gunshot wound -

Point of Entry - 9th ICS along the mid-axillary line, right, 1 cm. diameter

Point of Exit - 7th ICS mid-axillary line, left;"

which directly caused their instant death.


That the crime committed in the dwelling of the offended party who had not given provocation for the attack and
the accused took advantage of nighttime to facilitate the commission of the offense.

Contrary to law.2

In Criminal Case No. 7702-G, appellant, together with Gilbert Estores and Roger San Miguel, was charged with
Multiple Attempted Murder, allegedly committed as follows:

That on or about 9:00 o’clock in the evening of 6th day of June, 2002, at Barangay Caridad Ilaya, Municipality of
Atimonan, Province of Quezon, Philippines and within the jurisdiction of this Honorable Court, the above-named
accused, conspiring and confederating together and mutually helping one another, armed with short firearms of
undetermined calibres, with intent to kill, qualified by treachery, with evident premeditation and abuse of superior
strength, did then and there wilfully, unlawfully and feloniously attack, assault, and shoot with the said firearms the
house occupied by the family of Norberto Divina, thereby commencing the commission of the crime of Murder,
directly by overt acts, but did not perform all the acts of execution which would have produced it by reason of
some cause or accident other than the spontaneous desistance of the accused, that is, the occupants Norberto
Divina, his wife Maricel Divina and children Elizabeth Divina and Judy Ann Divina, both elementary pupils and
who are minors, were not hit.

CONTRARY TO LAW.3

Roger San Miguel, however, moved for reinvestigation of the case against them. At said proceedings, one Danilo
Fajarillo submitted his sworn statement stating that on June 6, 2002, he saw appellant with a certain "Hapon" and
Gilbert Estores at the crime scene, but it was only appellant who was carrying a firearm while the other two had
no participation in the shooting incident. Fajarillo further stated that Roger San Miguel was not present at the
crime scene. Based on the sworn statement of Fajarillo, the Provincial Prosecutor found no prima facie case
against Gilbert Estores and Roger San Miguel.4 Thus, upon motion of the prosecution, the case for Attempted
Murder against Gilbert Estores and Roger San Miguel was dismissed, and trial proceeded only as to appellant. 5

At the trial, the prosecution presented the testimonies of Norberto Divina, the victim, and Dr. Lourdes Taguinod
who executed the Medico-Legal Certificate and confirmed that the children of Norberto, namely, Mary Grace and
Claudine, died from gunshot wounds. Dr. Taguinod noted that the trajectory of the bullet wounds showed that the
victims were at a higher location than the shooter, but she could not tell what kind of ammunitions were used. 6

Norberto testified that the appellant is his brother-in-law. He recounted that in the evening of June 6, 2002, as his
entire family lay down on the floor of their one-room nipa hut to sleep, the "sack" walling of their hut was suddenly
stripped off, and only the supporting bamboo (fences) remained. With the covering of the wall gone, the three (3)
men responsible for the deed came into view. Norberto clearly saw their faces which were illuminated by the light
of a gas lamp hanging in their small hut. Norberto identified the 3 men as appellant, Gilbert Estores and Roger
San Miguel.

The 3 men ordered Norberto to come down from his house, but he refused to do so. The men then uttered,
"Magdasal ka na at katapusan mo na ngayon." Norberto pleaded with them, saying, "Maawa kayo sa amin,
matanda na ako at marami akong anak. Anong kasalanan ko sa inyo?" Despite such plea for mercy, a gunshot
was fired, and Norberto immediately threw his body over his children and wife in an attempt to protect them from
being hit. Thereafter, he heard successive gunshots being fired in the direction where his family huddled together
in their hut.7

When the volley of shots ceased and the three (3) men left, Norberto saw that his two (2) young daughters were
wounded. His wife went out of their house to ask for help from neighbors, while he and his older daughter carried
the two (2) wounded children out to the street. His daughter Mary Grace died on the way to the hospital, while
Claudine expired at the hospital despite the doctors' attempts to revive her. 8
In answer to questions of what could have prompted such an attack from appellant, Norberto replied that he had a
previous altercation with appellant who was angered by the fact that he (Norberto) filed a case against appellant's
two other brothers for molesting his daughter.9

On the other hand, appellant was only able to proffer denial and alibi as his defense. Appellant's testimony, along
with those of Gilbert Estores, Roger San Miguel, Isidro San Miguel and Ruben Alegre, was that he (appellant) was
just watching TV at the house of Isidro San Miguel, where he had been living for several years, at the time the
shooting incident occurred. However, he and the other witnesses admitted that said house was a mere five-minute
walk away from the crime scene.10

Finding appellant’s defense to be weak, and ascribing more credence to the testimony of Norberto, the trial court
ruled that the evidence clearly established that appellant, together with two other assailants, conspired to shoot
and kill the family of Norberto. Appellant was then convicted of Double Murder in Criminal Case No. 7698-G and
Multiple Attempted Murder in Criminal Case No. 7702-G.

The dispositive portion of the trial court’s judgment in Criminal Case No. 7698-G reads:

WHEREFORE and in view of all the foregoing, the Court finds accused Ireneo Jugueta guilty beyond reasonable
doubt for Double Murder defined and punished under Article 248 of the Revised Penal Code and is hereby
sentenced to suffer Reclusion Perpetua for the death of Mary Grace Divina and to indemnify her heirs in the
amount of Php50,000.00 and another to suffer Reclusion Perpetua for the death of Claudine Divina and accused
is further ordered to indemnify the heirs of Claudine Divina in the sum of Php50,000.00. In addition, he is hereby
ordered to pay the heirs of the victims actual damages in the amount of Php16,150.00 and to pay for the costs.

SO ORDERED.11

On the other hand, the dispositive portion of the trial court’s judgment in Criminal Case No. 7702-G, reads:

WHEREFORE and in view of all the foregoing, the Court finds accused Ireneo Jugueta guilty beyond reasonable
doubt for Multiple Attempted Murder defined and penalized under Article 248 in relation to Article 51 of the
Revised Penal Code and is hereby sentenced to suffer the penalty of FOUR (4) YEARS and TWO (2) MONTHS
of Prision Correccional as minimum to EIGHT (8) YEARS and ONE (1) DAY of Prision Mayor as maximum for
each of the offended parties; Norberto Divina, Maricel Divina, Elizabeth Divina and Judy Ann Divina. Further,
accused is ordered to pay for the costs of the suit.

SO ORDERED.12

Aggrieved by the trial court's judgments, appellant appealed to the CA. On January 30, 2012, the CA rendered a
Decision affirming appellant's conviction for the crimes charged. 13

Dissatisfied with the CA Decision, appellant elevated the case to this Court. On July 30, 2012, the Court issued a
Resolution14 notifying the parties that they may submit their respective Supplemental Briefs. Both parties
manifested that they will no longer submit supplemental briefs since they had exhaustively discussed their
positions before the CA.15

The main issue advanced in the Appellant's Brief deals with the inconsistencies in Norberto's testimony, such as
his failure to state from the beginning that all three assailants had guns, and to categorically identify appellant as
the one holding the gun used to kill Norberto’s children.

The appeal is unmeritorious.

At the outset, it must be stressed that factual findings of the trial court, its assessment of the credibility of
witnesses and the probative weight of their testimonies, and the conclusions based on these factual findings are
to be given the highest respect. Thus, generally, the Court will not recalibrate and re-examine evidence that had
been analyzed and ruled upon by the trial court and affirmed by the CA. 16

The evidence on record fully supports the trial court's factual finding, as affirmed by the CA, that appellant acted in
concert with two other individuals, all three of them carrying firearms and simultaneously firing at Norberto and his
family, killing his two young daughters. Norberto clearly saw all of the three assailants with their firearms as there
is illumination coming from a lamp inside their house that had been laid bare after its walling was stripped off, to
wit:

Q: When the wall of your house was stripped off by these three persons at the same time, do you have light in
your house?

A: Yes, sir.

Q: What kind of light was there?

A: A gas lamp.

Q: Where was the gas lamp placed at that time?

A: In the middle of our house.

xxxx

Q: when did they fire a shot?

A: On the same night, when they had stripped off the wallings.

Q: How many gunshots did you hear?

A: Only one.

Q: Do you know the sound of a gunshot? A firearm?

A: Yes, sir, it is loud? (sic)

xxxx

Q: After the first shot, was there any second shot?

A: After that, successive fire shot (sic) followed and my youngest and eldest daughters were hit.

xxxx

Q: How many of the three were holding guns at that time?

A: All of them.

Q: You mean to tell the honorable court that these three persons were

having one firearm each?

A: Yes, sir.
Q: And they fired shots at the same time?

A: Yes, sir.

Q: To what direction these three persons fired (sic) their firearms during that night?

A: To the place where we were.

Q: When those three persons were firing their respective firearms, what was your position then?

A: I ordered my children to lie down.

Q: How about you, what was your position when you were ordering your children to lie down?

A: (witness demonstrated his position as if covering his children with his body and ordering them to line (sic) down
face down)

Q: Mr. Witness, for how long did these three persons fire shots at your house?

A: Less than five minutes, sir.

Q: After they fired their shots, they left your house?

A: Yes, sir.

Q: And when these persons left your house, you inspected your children to see what happened to them?

A: Yes, sir, they were hit.

x x x17

Appellant and the two other malefactors are equally responsible for the death of Norberto's daughters because,
as ruled by the trial court, they clearly conspired to kill Norberto's family. Conspiracy exists when two or more
persons come to an agreement regarding the commission of a crime and decide to commit it. Proof of a prior
meeting between the perpetrators to discuss the commission of the crime is not necessary as long as their
concerted acts reveal a common design and unity of purpose. In such case, the act of one is the act of all.18
Here, the three men undoubtedly acted in concert as they went to the house of Norberto together, each with his
own firearm. It is, therefore, no longer necessary to identify and prove that it is the bullet particularly fired from
appellant's firearm that killed the children.

Murder is defined under Article 248 of the Revised Penal Code as the unlawful killing of a person, which is not
parricide or infanticide, attended by circumstances such as treachery or evident premeditation. 19 The presence of
any one of the circumstances enumerated in Article 248 of the Code is sufficient to qualify a killing as
murder.20 The trial court correctly ruled that appellant is liable for murder because treachery attended the killing of
Norberto’s two children, thus:

x x x Evidence adduced show that the family of Norberto Divina, were all lying down side by side about to sleep
on June 6, 2002 at around 9:00 o’clock in the evening, when suddenly their wall made of sack was stripped off by
[appellant] Ireneo Jugueta, Roger San Miguel and Gilberto Alegre (sic) [Gilbert Estores]. They ordered him to go
out of their house and when he refused despite his plea for mercy, they fired at them having hit and killed his two
(2) daughters. The family of Norberto Divina were unarmed and his children were at very tender ages. Mary
Grace Divina and Claudine who were shot and killed were 13 years old and 3 ½ years old respectively. In this
case, the victims were defenseless and manifestly overpowered by armed assailants when they were gunned
down. There was clear showing that the attack was made suddenly and unexpectedly as to render the victims
helpless and unable to defend themselves. Norberto and his wife and his children could have already been asleep
at that time of the night. x x x 21

Verily, the presence of treachery qualified the killing of the hapless children to murder. As held in People v.
Fallorina,22 the essence of treachery is the sudden and unexpected attack on an unsuspecting victim without the
slightest provocation on his part. Minor children, who by reason of their tender years, cannot be expected to put
up a defense. When an adult person illegally attacks a child, treachery exists.

As to the charge of multiple attempted murder, the last paragraph of Article 6 of the Revised Penal Code states
that a felony is attempted when the offender commences the commission of a felony directly by overt acts, and
does not perform all the acts of execution which should produce the felony by reason of some cause or accident
other than his own spontaneous desistance. In Esqueda v. People,23 the Court held:

If one inflicts physical injuries on another but the latter survives, the crime committed is either consummated
physical injuries, if the offender had no intention to kill the victim, or frustrated or attempted homicide or frustrated
murder or attempted murder if the offender intends to kill the victim. Intent to kill may be proved by evidence of:
(a) motive; (b) the nature or number of weapons used in the commission of the crime; (c) the nature and number
of wounds inflicted on the victim; (d) the manner the crime was committed; and (e) the words uttered by the
offender at the time the injuries are inflicted by him on the victim.

In this case, the prosecution has clearly established the intent to kill on the part of appellant as shown by the use
of firearms, the words uttered24during, as well as the manner of, the commission of the crime. The Court thus
quotes with approval the trial court’s finding that appellant is liable for attempted murder, viz.:

In the case at bar, the perpetrators who acted in concert commenced the felony of murder first by suddenly
stripping off the wall of their house, followed by successive firing at the intended victims when Norberto Divina
refused to go out of the house as ordered by them. If only there were good in aiming their target, not only Mary
Grace and Claudine had been killed but surely all the rest of the family would surely have died. Hence,
perpetrators were liable for Murder of Mary Grace Divina and Claudine Divina but for Multiple Attempted Murder
for Norberto Divina, Maricel Divina, Elizabeth Divina and Judy Ann Divina. But as [appellant] Ireneo Jugueta was
the only one charged in this case, he alone is liable for the crime committed. 25

Meanwhile, the supposed inconsistencies in Norberto's testimony, i.e., that he failed to state from the very
beginning that all three assailants were carrying firearms, and that it was the shots from appellant’s firearm that
killed the children, are too trivial and inconsequential to put a dent on said witness's credibility. An examination of
Norberto's testimony would show that there are no real inconsistencies to speak of. As ruled in People v.
Cabtalan,26 "[m]inor inconsistencies and discrepancies pertaining to trivial matters do not affect the credibility of
witnesses, as well as their positive identification of the accused as the perpetrators of the crime." 27 Both the trial
court and the CA found Norberto's candid and straightforward testimony to be worthy of belief and this Court sees
no reason why it should not conform to the principle reiterated in Medina, Jr. v. People28 that:

Time and again, this Court has deferred to the trial court's factual findings and evaluation of the credibility of
witnesses, especially when affirmed by the CA, in the absence of any clear showing that the trial court overlooked
or misconstrued cogent facts and circumstances that would justify altering or revising such findings and
evaluation. This is because the trial court's determination proceeds from its first-hand opportunity to observe the
demeanor of the witnesses, their conduct and attitude under grilling examination, thereby placing the trial court in
unique position to assess the witnesses' credibility and to appreciate their truthfulness, honesty and candor x x
x.29

The records of this case, particularly the testimonies of the witnesses, reveal no outstanding or exceptional
circumstance to justify a deviation from such long-standing principle. There is no cogent reason to overturn the
trial court's ruling that the prosecution evidence, particularly the testimony of Norberto Divina identifying appellant
as one of the assailants, is worthy of belief. Thus, the prosecution evidence established beyond any reasonable
doubt that appellant is one of the perpetrators of the crime.

However, the Court must make a clarification as to the nomenclature used by the trial court to identify the crimes
for which appellant was penalized. There is some confusion caused by the trial court's use of the terms "Double
Murder" and "Multiple Attempted Murder" in convicting appellant, and yet imposing penalties which nevertheless
show that the trial court meant to penalize appellant for two (2) separate counts of Murder and four (4) counts of
Attempted Murder.

The facts, as alleged in the Information in Criminal Case No. 7698-G, and as proven during trial, show that
appellant is guilty of 2 counts of the crime of Murder and not Double Murder, as the killing of the victims was not
the result of a single act but of several acts of appellant and his cohorts. In the same vein, appellant is also guilty
of 4 counts of the crime of Attempted Murder and not Multiple Attempted Murder in Criminal Case No. 7702-G. It
bears stressing that the Informations in this case failed to comply with the requirement in Section 13, Rule 110 of
the Revised Rules of Court that an information must charge only one offense.

As a general rule, a complaint or information must charge only one offense, otherwise, the same is defective. The
reason for the rule is stated in People of the Philippines and AAA v. Court of Appeals, 21st Division, Mindanao
Station, et al.,30 thus:

The rationale behind this rule prohibiting duplicitous complaints or informations is to give the accused the
necessary knowledge of the charge against him and enable him to sufficiently prepare for his defense. The State
should not heap upon the accused two or more charges which might confuse him in his defense. Non-compliance
with this rule is a ground for quashing the duplicitous complaint or information under Rule 117 of the Rules on
Criminal Procedure and the accused may raise the same in a motion to quash before he enters his plea,
otherwise, the defect is deemed waived.

However, since appellant entered a plea of not guilty during arraignment and failed to move for the quashal of the
Informations, he is deemed to have waived his right to question the same. Section 9 of Rule 117 provides that
"[t]he failure of the accused to assert any ground of a motion to quash before he pleads to the complaint or
information, either because he did not file a motion to quash or failed to allege the same in said motion, shall be
deemed a waiver of any objections except those based on the grounds provided for in paragraphs (a), (b), (g),
and (i) of Section 3 of this Rule."

It is also well-settled that when two or more offenses are charged in a single complaint or information but the
accused fails to object to it before trial, the court may convict him of as many offenses as are charged and proved,
and impose upon him the proper penalty for each offense. 31

Appellant can therefore be held liable for all the crimes alleged in the Informations in Criminal Case Nos. 7698-G
and 7702-G, i.e., 2 counts of murder and 4 counts of attempted murder, respectively, and proven during trial.

Meanwhile, in People v. Nelmida,32 the Court explained the concept of a complex crime as defined in Article 4833
of the Revised Penal Code, thus:

In a complex crime, two or more crimes are actually committed, however, in the eyes of the law and in the
conscience of the offender they constitute only one crime, thus, only one penalty is imposed. There are two kinds
of complex crime. The first is known as a compound crime, or when a single act constitutes two or more grave or
less grave felonies while the other is known as a complex crime proper, or when an offense is a necessary means
for committing the other. The classic example of the first kind is when a single bullet results in the death of two or
more persons. A different rule governs where separate and distinct acts result in a number killed. Deeply rooted is
the doctrine that when various victims expire from separate shot, such acts constitute separate and distinct
crimes.34

Here, the facts surrounding the shooting incident clearly show that appellant and the two others, in firing
successive and indiscriminate shots at the family of Norberto from their respective firearms, intended to kill not
only Norberto, but his entire family. When several gunmen, as in this case, indiscriminately fire a series of shots at
a group of people, it shows their intention to kill several individuals. Hence, they are committing not only one
crime. What appellant and his cohorts committed cannot be classified as a complex crime because as held
in People v. Nelmida,35 "each act by each gunman pulling the trigger of their respective firearms, aiming each
particular moment at different persons constitute distinct and individual acts which cannot give rise to a complex
crime."36

Furthermore, the Court notes that both the trial court and the CA failed to take into account dwelling as an
ordinary, aggravating circumstance, despite the fact that the Informations in Criminal Case Nos. 7698-G and
7702-G contain sufficient allegations to that effect, to wit:

Criminal Case No. 7698-G for Double Murder:

That the crime was committed in the dwelling of the offended party who had not given provocation for the attack
and the accused took advantage of nighttime to facilitate the commission of the offense. 37

Criminal Case No. 7702-G for Multiple Attempted Murder:

x x x the above-named accused, conspiring and confederating together and mutually helping one another, armed
with short firearms of undetermined calibres, with intent to kill, qualified by treachery, with evident premeditation
and abuse of superior strength, did then and there wilfully, unlawfully and feloniously attack, assault, and shoot
with the said firearms the house occupied by the family of Norberto Divina, thereby commencing the commission
of the crime of Murder, directly by overt acts, but did not perform all the acts of execution which would have
produced it by reason of some cause or accident other than the spontaneous desistance of the accused x x x 38

In People v. Agcanas,39 the Court stressed that "[i]t has been held in a long line of cases that dwelling is
aggravating because of the sanctity of privacy which the law accords to human abode. He who goes to another's
house to hurt him or do him wrong is more guilty than he who offends him elsewhere." Dwelling aggravates a
felony where the crime is committed in the dwelling of the offended party provided that the latter has not given
provocation therefor.40The testimony of Norberto established the fact that the group of appellant violated the
victims' home by destroying the same and attacking his entire family therein, without provocation on the part of
the latter. Hence, the trial court should have appreciated dwelling as an ordinary aggravating circumstance.

In view of the attendant ordinary aggravating circumstance, the Court must modify the penalties imposed on
appellant. Murder is punishable by reclusion perpetua to death, thus, with an ordinary aggravating circumstance
of dwelling, the imposable penalty is death for each of two (2) counts of murder. 41 However, pursuant to Republic
Act (RA) No. 9346, proscribing the imposition of the death penalty, the penalty to be imposed on appellant should
be reclusion perpetua for each of the two (2) counts of murder without eligibility for parole. With regard to the four
(4) counts of attempted murder, the penalty prescribed for each count is prision mayor. With one ordinary
aggravating circumstance, the penalty should be imposed in its maximum period. Applying the Indeterminate
Sentence Law, the maximum penalty should be from ten (10) years and one (1) day to twelve (12) years of prision
mayor, while the minimum shall be taken from the penalty next lower in degree, i.e., prision correccional, in any of
its periods, or anywhere from six (6) months and one (1) day to six (6) years. This Court finds it apt to impose on
appellant the indeterminate penalty of four (4) years, two (2) months and one (1) day of prision correccional, as
minimum, to ten (10) years and one (1) day of prision mayor, as minimum, for each of the four (4) counts of
attempted murder.
Anent the award of damages, the Court deems it proper to address the matter in detail as regards criminal cases
where the imposable penalty is reclusion perpetua to death. Generally, in these types of criminal cases, there are
three kinds of damages awarded by the Court; namely: civil indemnity, moral, and exemplary damages. Likewise,
actual damages may be awarded or temperate damages in some instances.

First, civil indemnity ex delicto is the indemnity authorized in our criminal law for the offended party, in the amount
authorized by the prevailing judicial policy and apart from other proven actual damages, which itself is equivalent
to actual or compensatory damages in civil law. 42 This award stems from Article 100 of the RPC which states,
"Every person criminally liable for a felony is also civilly liable."

It is to be noted that civil indemnity is, technically, not a penalty or a fine; hence, it can be increased by the Court
when appropriate.43 Article 2206 of the Civil Code provides:

Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand
pesos, even though there may have been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be
paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless
the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity
at the time of his death;

(2) If the deceased was obliged to give support according to the provisions of Article 291, the recipient who is not
an heir called to the decedent's inheritance by the law of testate or intestate succession, may demand support
from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the
court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of the deceased.

In our jurisdiction, civil indemnity is awarded to the offended party as a kind of monetary restitution or
compensation to the victim for the damage or infraction that was done to the latter by the accused, which in a
sense only covers the civil aspect. Precisely, it is civil indemnity. Thus, in a crime where a person dies, in addition
to the penalty of imprisonment imposed to the offender, the accused is also ordered to pay the victim a sum of
money as restitution. Also, it is apparent from Article 2206 that the law only imposes a minimum amount for
awards of civil indemnity, which is ₱3,000.00. The law did not provide for a ceiling. Thus, although the minimum
amount for the award cannot be changed, increasing the amount awarded as civil indemnity can be validly
modified and increased when the present circumstance warrants it. 44

The second type of damages the Court awards are moral damages, which are also compensatory in nature. Del
Mundo v. Court of Appeals45 expounded on the nature and purpose of moral damages, viz.:

Moral damages, upon the other hand, may be awarded to compensate one for manifold injuries such as physical
suffering, mental anguish, serious anxiety, besmirched reputation, wounded feelings and social humiliation. These
damages must be understood to be in the concept of grants, not punitive or corrective in nature, calculated to
compensate the claimant for the injury suffered. Although incapable of exactness and no proof of pecuniary loss is
necessary in order that moral damages may be awarded, the amount of indemnity being left to the discretion of
the court, it is imperative, nevertheless, that (1) injury must have been suffered by the claimant, and (2) such
injury must have sprung from any of the cases expressed in Article 2219 46 and Article 222047 of the Civil Code. x x
x.

Similarly, in American jurisprudence, moral damages are treated as "compensatory damages awarded for mental
pain and suffering or mental anguish resulting from a wrong." 48 They may also be considered and allowed "for
resulting pain and suffering, and for humiliation, indignity, and vexation suffered by the plaintiff as result of his or
her assailant's conduct, as well as the factors of provocation, the reasonableness of the force used, the attendant
humiliating circumstances, the sex of the victim, [and] mental distress." 49

The rationale for awarding moral damages has been explained in Lambert v. Heirs of Rey Castillon: "[T]he award
of moral damages is aimed at a restoration, within the limits possible, of the spiritual status quo ante; and
therefore, it must be proportionate to the suffering inflicted." 50

Corollarily, moral damages under Article 222051 of the Civil Code also does not fix the amount of damages that
can be awarded. It is discretionary upon the court, depending on the mental anguish or the suffering of the private
offended party. The amount of moral damages can, in relation to civil indemnity, be adjusted so long as it does not
exceed the award of civil indemnity.52

Finally, the Civil Code of the Philippines provides, in respect to exemplary damages, thus:

ART. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in
addition to the moral, temperate, liquidated or compensatory damages.

ART. 2230. In criminal offenses, exemplary damages as a part of the civil liability may be imposed when the crime
was committed with one or more aggravating circumstances. Such damages are separate and distinct from fines
and shall be paid to the offended party.

Also known as "punitive" or "vindictive" damages, exemplary or corrective damages are intended to serve as a
deterrent to serious wrong doings, and as a vindication of undue sufferings and wanton invasion of the rights of an
injured or a punishment for those guilty of outrageous conduct. These terms are generally, but not always, used
interchangeably. In common law, there is preference in the use of exemplary damages when the award is to
account for injury to feelings and for the sense of indignity and humiliation suffered by a person as a result of an
injury that has been maliciously and wantonly inflicted,53 the theory being that there should be compensation for
the hurt caused by the highly reprehensible conduct of the defendant – associated with such circumstances as
willfulness, wantonness, malice, gross negligence or recklessness, oppression, insult or fraud or gross fraud 54 –
that intensifies the injury. The terms punitive or vindictive damages are often used to refer to those species of
damages that may be awarded against a person to punish him for his outrageous conduct. In either case, these
damages are intended in good measure to deter the wrongdoer and others like him from similar conduct in the
future.55

The term aggravating circumstances used by the Civil Code, the law not having specified otherwise, is to be
understood in its broad or generic sense. The commission of an offense has a two-pronged effect, one on the
public as it breaches the social order and the other upon the private victim as it causes personal sufferings, each
of which is addressed by, respectively, the prescription of heavier punishment for the accused and by an award of
additional damages to the victim. The increase of the penalty or a shift to a graver felony underscores the
exacerbation of the offense by the attendance of aggravating circumstances, whether ordinary or qualifying, in its
commission. Unlike the criminal liability which is basically a State concern, the award of damages, however, is
likewise, if not primarily, intended for the offended party who suffers thereby. It would make little sense for an
award of exemplary damages to be due the private offended party when the aggravating circumstance is ordinary
but to be withheld when it is qualifying. Withal, the ordinary or qualifying nature of an aggravating circumstance is
a distinction that should only be of consequence to the criminal, rather than to the civil, liability of the offender. In
fine, relative to the civil aspect of the case, an aggravating circumstance, whether ordinary or qualifying, should
entitle the offended party to an award of exemplary damages within the unbridled meaning of Article 2230 of the
Civil Code. 56

The reason is fairly obvious as to why the Revised Rules of Criminal Procedure 57 requires aggravating
circumstances, whether ordinary or qualifying, to be stated in the complaint or information. It is in order not to
trample on the constitutional right of an accused to be informed of the nature of the alleged offense that he or she
has committed. A criminal complaint or information should basically contain the elements of the crime, as well as
its qualifying and ordinary aggravating circumstances, for the court to effectively determine the proper penalty it
should impose. This, however, is not similar in the recovery of civil liability. In the civil aspect, the presence of an
aggravating circumstance, even if not alleged in the information but proven during trial would entitle the victim to
an award of exemplary damages.

Being corrective in nature, exemplary damages, therefore, can be awarded, not only due to the presence of an
aggravating circumstance, but also where the circumstances of the case show the highly reprehensible or
outrageous conduct of the offender. In much the same way as Article 2230 prescribes an instance when
exemplary damages may be awarded, Article 2229, the main provision, lays down the very basis of the award.
Thus, in People v. Matrimonio,58 the Court imposed exemplary damages to deter other fathers with perverse
tendencies or aberrant sexual behavior from sexually abusing their own daughters. Also, in People v.
Cristobal,59 the Court awarded exemplary damages on account of the moral corruption, perversity and wickedness
of the accused in sexually assaulting a pregnant married woman. In People v. Cañada,60 People v.
Neverio61 and People v. Layco, Sr.,62 the Court awarded exemplary damages to set a public example, to serve as
deterrent to elders who abuse and corrupt the youth, and to protect the latter from sexual abuse.

Existing jurisprudence pegs the award of exemplary damages at ₱30,000.00, 63 despite the lack of any
aggravating circumstance. The Court finds it proper to increase the amount to ₱50,000.00 in order to deter similar
conduct.

If, however, the penalty for the crime committed is death, which cannot be imposed because of the provisions of
R.A. No. 9346, prevailing jurisprudence64 sets the amount of ₱100,000.00 as exemplary damages.

Before awarding any of the above mentioned damages, the Court, however, must first consider the penalty
imposed by law. Under RA 7659 or An Act to Impose the Death Penalty on Certain Heinous Crimes, Amending for
that Purpose the Revised Penal Laws, and for Other Purposes, certain crimes under the RPC and special penal
laws were amended to impose the death penalty under certain circumstances. 65 Under the same law, the following
crimes are punishable by reclusion perpetua: piracy in general,66 mutiny on the high seas,67 and simple rape.68 For
the following crimes, RA 7659 has imposed the penalty of reclusion perpetua to death: qualified piracy;69 qualified
bribery under certain circumstances;70 parricide;71 murder;72 infanticide, except when committed by the mother of
the child for the purpose of concealing her dishonor or either of the maternal grandparents for the same
purpose;73kidnapping and serious illegal detention under certain circumstances; 74 robbery with violence against or
intimidation of persons under certain circumstances;75 destructive arson, except when death results as a
consequence of the commission of any of the acts penalized under the article; 76 attempted or frustrated rape,
when a homicide is committed by reason or on occasion thereof; plunder; 77 and carnapping, when the driver or
occupant of the carnapped motor vehicle is killed or raped in the course of the commission of the carnapping or
on the occasion thereof.78 Finally, RA 7659 imposes the death penalty on the following crimes:

(a) In qualified bribery, when it is the public officer who asks or demands the gift or present.

(b) In kidnapping and serious illegal detention: (i) when the kidnapping or detention was committed for the
purpose of extorting ransom from the victim or any other person; (ii) when the victim is killed or dies as a
consequence of the detention; (iii) when the victim is raped, subjected to torture or dehumanizing acts.

(c) In destructive arson, when as a consequence of the commission of any of the acts penalized under Article 320,
death results.

(d) In rape: (i) when by reason or on occasion of the rape, the victim becomes insane or homicide is committed;
(ii) when committed with any of the following attendant circumstances: (1) when the victim is under eighteen (18)
years of age and the offender is a parent, ascendant, step-parent, guardian, relative by consanguinity or affinity
within the third civil degree, or the common-law-spouse of the parent of the victim; (2) when the victim is under the
custody of the police or military authorities; (3) when the rape is committed in full view of the husband, parent, any
of the children or other relatives within the third degree of consanguinity; (4) when the victim is a religious or a
child below seven years old; (5) when the offender knows that he is afflicted with Acquired Immune Deficiency
Syndrome (AIDS) disease; (6) when committed by any member of the Armed Forces of the Philippines or the
Philippine National Police or any law enforcement agency; and (7) when by reason or on the occasion of the rape,
the victim has suffered permanent physical mutilation.

From these heinous crimes, where the imposable penalties consist of two (2) indivisible penalties or single
indivisible penalty, all of them must be taken in relation to Article 63 of the RPC, which provides:

Article 63. Rules for the application of indivisible penalties. - In all cases in which the law prescribes a single
indivisible penalty, it shall be applied by the courts regardless of any mitigating or aggravating circumstances that
may have attended the commission of the deed.

In all cases in which the law prescribes a penalty composed of two indivisible penalties, the following rules shall
be observed in the application thereof:

1. when in the commission of the deed there is present only one aggravating circumstance, the greater penalty
shall be applied.

2. when there are neither mitigating nor aggravating circumstances in the commission of the deed, the lesser
penalty shall be applied.

3. when the commission of the act is attended by some mitigating circumstance and there is no aggravating
circumstance, the lesser penalty shall be applied.

4. when both mitigating and aggravating circumstances attended the commission of the act, the courts shall
reasonably allow them to offset one another in consideration of their number and importance, for the purpose of
applying the penalty in accordance with the preceding rules, according to the result of such compensation.
(Revised Penal Code, Art. 63)

Thus, in order to impose the proper penalty, especially in cases of indivisible penalties, the court has the duty to
ascertain the presence of any mitigating or aggravating circumstances. Accordingly, in crimes where the
imposable penalty is reclusion perpetua to death, the court can impose either reclusion perpetua or death,
depending on the mitigating or aggravating circumstances present.

But with the enactment of RA 9346 or An Act Prohibiting the Imposition of Death Penalty in the Philippines, the
imposition of death penalty is now prohibited. It provides that in lieu of the death penalty, the penalty of reclusion
perpetua shall be imposed when the law violated makes use of the nomenclature of the penalties of the RPC. 79

As a result, the death penalty can no longer be imposed. Instead, they have to impose reclusion perpetua.
Despite this, the principal consideration for the award of damages, following the ruling in People v.
Salome80 and People v. Quiachon,81 is "the penalty provided by law or imposable for the offense because of its
heinousness, not the public penalty actually imposed on the offender." 82

When the circumstances surrounding the crime would justify the imposition of the death penalty were it not for RA
9346, the Court has ruled, as early as July 9, 1998 in People v. Victor,83 that the award of civil indemnity for the
crime of rape when punishable by death should be ₱75,000.00 We reasoned that "[t]his is not only a reaction to
the apathetic societal perception of the penal law and the financial fluctuations over time, but also an expression
of the displeasure of the Court over the incidence of heinous crimes against chastity." 84 Such reasoning also
applies to all heinous crimes found in RA 7659. The amount was later increased to ₱100,000.00. 85
In addition to this, the Court likewise awards moral damages. In People v. Arizapa,86 ₱50,000.00 was awarded as
moral damages without need of pleading or proving them, for in rape cases, it is recognized that the victim's injury
is concomitant with and necessarily results from the odious crime of rape to warrant per se the award of moral
damages.87 Subsequently, the amount was increased to ₱75,000.00 in People v. Soriano88 and P100,000.00
in People v. Gambao.89

Essentially, despite the fact that the death penalty cannot be imposed because of RA 9346, the imposable penalty
as provided by the law for the crime, such as those found in RA 7569, must be used as the basis for awarding
damages and not the actual penalty imposed.1avvphi1

Again, for crimes where the imposable penalty is death in view of the attendance of an ordinary aggravating
circumstance but due to the prohibition to impose the death penalty, the actual penalty imposed is reclusion
perpetua, the latest jurisprudence90 pegs the amount of ₱100,000.00 as civil indemnity and ₱100,0000.00 as
moral damages. For the qualifying aggravating circumstance and/or the ordinary aggravating circumstances
present, the amount of ₱100,000.00 is awarded as exemplary damages aside from civil indemnity and moral
damages. Regardless of the attendance of qualifying aggravating circumstance, the exemplary damages shall be
fixed at ₱100,000.00. "[T]his is not only a reaction to the apathetic societal perception of the penal law and the
financial fluctuation over time, but also an expression of the displeasure of the Court over the incidence of heinous
crimes x x x."91

When the circumstances surrounding the crime call for the imposition of reclusion perpetua only, there being no
ordinary aggravating circumstance, the Court rules that the proper amounts should be ₱75,000.00 as civil
indemnity, ₱75,000.00 as moral damages and ₱75,000.00 exemplary damages, regardless of the number of
qualifying aggravating circumstances present.

When it comes to compound and complex crimes, although the single act done by the offender caused several
crimes, the fact that those were the result of a single design, the amount of civil indemnity and moral damages will
depend on the penalty and the number of victims. For each of the victims, the heirs should be properly
compensated. If it is multiple murder without any ordinary aggravating circumstance but merely a qualifying
aggravating circumstance, but the penalty imposed is death because of Art. 48 of the RPC wherein the maximum
penalty shall be imposed,92 then, for every victim who dies, the heirs shall be indemnified with ₱100,000.00 as
civil indemnity, ₱100,000.00 as moral damages and ₱100,000.00 as exemplary damages.

In case of a special complex crime, which is different from a complex crime under Article 48 of the RPC, the
following doctrines are noteworthy:

In People of the Philippines v. Conrado Laog,93 this Court ruled that special complex crime, or more properly, a
composite crime, has its own definition and special penalty in the Revised Penal Code, as amended. Justice
Regalado, in his Separate Opinion in the case of People v. Barros,94 explained that composite crimes are "neither
of the same legal basis as nor subject to the rules on complex crimes in Article 48 [of the Revised Penal Code],
since they do not consist of a single act giving rise to two or more grave or less grave felonies [compound crimes]
nor do they involve an offense being a necessary means to commit another [complex crime proper]. However, just
like the regular complex crimes and the present case of aggravated illegal possession of firearms, only a single
penalty is imposed for each of such composite crimes although composed of two or more offenses." 95

In People v. De Leon,96 we expounded on the special complex crime of robbery with homicide, as follows:

In robbery with homicide, the original criminal design of the malefactor is to commit robbery, with homicide
perpetrated on the occasion or by reason of the robbery. The intent to commit robbery must precede the taking of
human life. The homicide may take place before, during or after the robbery. It is only the result obtained, without
reference or distinction as to the circumstances, causes or modes or persons intervening in the commission of the
crime that has to be taken into consideration. There is no such felony of robbery with homicide through reckless
imprudence or simple negligence. The constitutive elements of the crime, namely, robbery with homicide, must be
consummated.

It is immaterial that the death would supervene by mere accident; or that the victim of homicide is other than the
victim of robbery, or that two or more persons are killed, or that aside from the homicide, rape, intentional
mutilation, or usurpation of authority, is committed by reason or on the occasion of the crime. Likewise immaterial
is the fact that the victim of homicide is one of the robbers; the felony would still be robbery with homicide. Once a
homicide is committed by or on the occasion of the robbery, the felony committed is robbery with homicide. All the
felonies committed by reason of or on the occasion of the robbery are integrated into one and indivisible felony of
robbery with homicide. The word "homicide" is used in its generic sense. Homicide, thus, includes murder,
parricide, and infanticide.97

In the special complex crime of rape with homicide, the term "homicide" is to be understood in its generic sense,
and includes murder and slight physical injuries committed by reason or on occasion of the rape. 98 Hence, even if
any or all of the circumstances (treachery, abuse of superior strength and evident premeditation) alleged in the
information have been duly established by the prosecution, the same would not qualify the killing to murder and
the crime committed by appellant is still rape with homicide. As in the case of robbery with homicide, the
aggravating circumstance of treachery is to be considered as a generic aggravating circumstance only. Thus we
ruled in People v. Macabales:99

Finally, appellants contend that the trial court erred in concluding that the aggravating circumstance of treachery is
present. They aver that treachery applies to crimes against persons and not to crimes against property. However,
we find that the trial court in this case correctly characterized treachery as a generic aggravating, rather than
qualifying, circumstance. Miguel was rendered helpless by appellants in defending himself when his arms were
held by two of the attackers before he was stabbed with a knife by appellant Macabales, as their other
companions surrounded them. In People v. Salvatierra, we ruled that when alevosia (treachery) obtains in the
special complex crime of robbery with homicide, such treachery is to be regarded as a generic aggravating
circumstance.

Robbery with homicide is a composite crime with its own definition and special penalty in the Revised Penal
Code. There is no special complex crime of robbery with murder under the Revised Penal Code. Here, treachery
forms part of the circumstances proven concerning the actual commission of the complex crime. Logically it could
not qualify the homicide to murder but, as generic aggravating circumstance, it helps determine the penalty to be
imposed.100

Applying the above discussion on special complex crimes, if the penalty is death but it cannot be imposed due to
RA 9346 and what is actually imposed is the penalty of reclusion perpetua, the civil indemnity and moral damages
will be ₱100,000.00 each, and another ₱100,000.00 as exemplary damages in view of the heinousness of the
crime and to set an example. If there is another composite crime included in a special complex crime and the
penalty imposed is death, an additional ₱100,000.00 as civil indemnity, ₱100,000.00 moral damages and
₱100,000.00 exemplary damages shall be awarded for each composite crime committed.

For example, in case of Robbery with Homicide101 wherein three (3) people died as a consequence of the crime,
the heirs of the victims shall be entitled to the award of damages as discussed earlier. This is true, however, only if
those who were killed were the victims of the robbery or mere bystanders and not when those who died were the
perpetrators or robbers themselves because the crime of robbery with homicide may still be committed even if
one of the robbers dies.102 This is also applicable in robbery with rape where there is more than one victim of rape.

In awarding civil indemnity and moral damages, it is also important to determine the stage in which the crime was
committed and proven during the trial. Article 6 of the RPC provides:
Art. 6. Consummated, frustrated, and attempted felonies. - Consummated felonies, as well as those which are
frustrated and attempted, are punishable.

A felony is consummated when all the elements necessary for its execution and accomplishment are present; and
it is frustrated when an offender performs all the acts of execution which would produce the felony as a
consequence but which, nevertheless, do not produce it by reason of causes independent of the will of the
perpetrator.

There is an attempt when the offender commences the commission of a felony directly by overt acts, and does not
perform all the acts of execution which should produce the felony by reason of some cause or accident other than
his own spontaneous desistance.

As discussed earlier, when the crime proven is consummated and the penalty imposed is death but reduced
to reclusion perpetua because of R.A. 9346, the civil indemnity and moral damages that should be awarded will
each be ₱100,000.00 and another ₱100,000.00 for exemplary damages or when the circumstances of the crime
call for the imposition of reclusion perpetua only, the civil indemnity and moral damages should be ₱75,000.00
each, as well as exemplary damages in the amount of ₱75,000.00. If, however, the crime proven is in its
frustrated stage, the civil indemnity and moral damages that should be awarded will each be ₱50,000.00, and an
award of ₱25,000.00 civil indemnity and ₱25,000.00 moral damages when the crime proven is in its attempted
stage. The difference in the amounts awarded for the stages is mainly due to the disparity in the outcome of the
crime committed, in the same way that the imposable penalty varies for each stage of the crime. The said
amounts of civil indemnity and moral damages awarded in cases of felonies in their frustrated or attempted stages
shall be the bases when the crimes committed constitute complex crime under Article 48 of the RPC. For
example, in a crime of murder with attempted murder, the amount of civil indemnity, moral damages and
exemplary damages is ₱100,000.00 each, while in the attempted murder, the civil indemnity, moral damages and
exemplary damages is ₱25,000.00 each.

In a special complex crime, like robbery with homicide, if, aside from homicide, several victims (except the
robbers) sustained injuries, they shall likewise be indemnified. It must be remembered that in a special complex
crime, unlike in a complex crime, the component crimes have no attempted or frustrated stages because the
intention of the offender/s is to commit the principal crime which is to rob but in the process of committing the said
crime, another crime is committed. For example, if on the occasion of a robbery with homicide, other victims
sustained injuries, regardless of the severity, the crime committed is still robbery with homicide as the injuries
become part of the crime, "Homicide", in the special complex crime of robbery with homicide, is understood in its
generic sense and now forms part of the essential element of robbery, 103 which is the use of violence or the use of
force upon anything. Hence, the nature and severity of the injuries sustained by the victims must still be
determined for the purpose of awarding civil indemnity and damages. If a victim suffered mortal wounds and could
have died if not for a timely medical intervention, the victim should be awarded civil indemnity, moral damages,
and exemplary damages equivalent to the damages awarded in a frustrated stage, and if a victim suffered injuries
that are not fatal, an award of civil indemnity, moral damages and exemplary damages should likewise be
awarded equivalent to the damages awarded in an attempted stage.

In other crimes that resulted in the death of a victim and the penalty consists of divisible penalties, like homicide,
death under tumultuous affray, reckless imprudence resulting to homicide, the civil indemnity awarded to the heirs
of the victim shall be ₱50,000.00 and ₱50,000.00 moral damages without exemplary damages being awarded.
However, an award of ₱50,000.00 exemplary damages in a crime of homicide shall be added if there is an
aggravating circumstance present that has been proven but not alleged in the information.

Aside from those discussed earlier, the Court also awards temperate damages in certain cases. The award of
₱25,000.00 as temperate damages in homicide or murder cases is proper when no evidence of burial and funeral
expenses is presented in the trial court.104 Under Article 2224 of the Civil Code, temperate damages may be
recovered, as it cannot be denied that the heirs of the victims suffered pecuniary loss although the exact amount
was not proved.105 In this case, the Court now increases the amount to be awarded as temperate damages to
₱50,000.00.

In the case at bar, the crimes were aggravated by dwelling, and the murders committed were further made
atrocious by the fact that the victims are innocent, defenseless minors – one is a mere 3½-year-old toddler, and
the other a 13-year-old girl. The increase in the amount of awards for damages is befitting to show not only the
Court's, but all of society's outrage over such crimes and wastage of lives.

In summary:

I. For those crimes106 like, Murder,107 Parricide,108 Serious Intentional Mutilation,109 Infanticide,110 and other crimes
involving death of a victim where the penalty consists of indivisible penalties:

1.1 Where the penalty imposed is death but reduced to reclusion perpetua because of RA 9346:

a. Civil indemnity – ₱100,000.00

b. Moral damages – ₱100,000.00

c. Exemplary damages – ₱100,000.00

1.2 Where the crime committed was not consummated:

a. Frustrated:

i. Civil indemnity – ₱75,000.00

ii. Moral damages – ₱75,000.00

iii. Exemplary damages – ₱75,000.00

b. Attempted:

i. Civil indemnity – ₱50,000.00

ii. Exemplary damages – ₱50,000.00

iii. Exemplary damages – ₱50,000.00

2.1 Where the penalty imposed is reclusion perpetua, other than the above-mentioned:

a. Civil indemnity – ₱75,000.00

b. Moral damages – ₱75,000.00

c. Exemplary damages – ₱75,000.00

2.2 Where the crime committed was not consummated:

a. Frustrated:

i. Civil indemnity – ₱50,000.00

ii. Moral damages – ₱50,000.00


iii. Exemplary damages – ₱50,000.00

b. Attempted:

i. Civil indemnity – ₱25,000.00

ii. Moral damages – ₱25,000.00

iii. Exemplary damages – ₱25,000.00

II. For Simple Rape/Qualified Rape:

1.1 Where the penalty imposed is Death but reduced to reclusion perpetua because of RA 9346:

a. Civil indemnity – ₱100,000.00

b. Moral damages – ₱100,000.00

c. Exemplary damages111 – ₱100,000.00

1.2 Where the crime committed was not consummated but merely attempted: 112

a. Civil indemnity – ₱50,000.00

b. Moral damages – ₱50,000.00

c. Exemplary damages – ₱50,000.00

2.1 Where the penalty imposed is reclusion perpetua, other than the above-mentioned:

a. Civil indemnity – ₱75,000.00

b. Moral damages – ₱75,000.00

c. Exemplary damages – ₱75,000.00

2.2 Where the crime committed was not consummated, but merely attempted:

a. Civil indemnity – ₱25,000.00

b. Moral damages – ₱25,000.00

c. Exemplary damages – ₱25,000.00

III. For Complex crimes under Article 48 of the Revised Penal Code where death, injuries, or sexual abuse results,
the civil indemnity, moral damages and exemplary damages will depend on the penalty, extent of violence and
sexual abuse; and the number of victims where the penalty consists of indivisible penalties:

1.1 Where the penalty imposed is Death but reduced to reclusion perpetua because of RA 9346:

a. Civil indemnity – ₱100,000.00

b. Moral damages – ₱100,000.00


c. Exemplary damages – ₱100,000.00

1.2 Where the penalty imposed is reclusion perpetua, other than the above-mentioned:

a. Civil indemnity – ₱75,000.00

b. Moral damages – ₱75,000.00

c. Exemplary damages – ₱75,000.00

The above Rules apply to every victim who dies as a result of the crime committed. In other complex crimes
where death does not result, like in Forcible Abduction with Rape, the civil indemnity, moral and exemplary
damages depend on the prescribed penalty and the penalty imposed, as the case may be.

IV. For Special Complex Crimes like Robbery with Homicide,113 Robbery with Rape,114 Robbery with Intentional
Mutilation,115 Robbery with

Arson,116 Rape with Homicide,117 Kidnapping with Murder,118 Carnapping with Homicide119 or Carnapping with
Rape,120 Highway Robbery with Homicide,121 Qualified Piracy,122 Arson with Homicide,123 Hazing with Death, Rape,
Sodomy or Mutilation124 and other crimes with death, injuries, and sexual abuse as the composite crimes, where
the penalty consists of indivisible penalties:

1.1 Where the penalty imposed is Death but reduced to reclusion perpetua because of RA 9346:

a. Civil indemnity – ₱100,000.00

b. Moral damages – ₱100,000.00

c. Exemplary damages – ₱100,000.00

In Robbery with Intentional Mutilation, the amount of damages is the same as the above if the penalty imposed is
Death but reduced to reclusion perpetua although death did not occur.

1.2 For the victims who suffered mortal/fatal wounds125 and could have died if not for a timely medical intervention,
the following shall be awarded:

a. Civil indemnity – ₱75,000.00

b. Moral damages – ₱75,000.00

c. Exemplary damages – ₱75,000.00

1.3 For the victims who suffered non-mortal/non-fatal injuries:

a. Civil indemnity – ₱50,000.00

b. Moral damages – ₱50,000.00

c. Exemplary damages – ₱50,000.00

2.1 Where the penalty imposed is reclusion perpetua, other than the above-mentioned:

a. Civil indemnity – ₱75,000.00


b. Moral damages – ₱75,000.00

c. Exemplary damages – ₱75,000.00

In Robbery with Intentional Mutilation, the amount of damages is the same as the above if the penalty imposed
is reclusion perpetua.

2.2 For the victims who suffered mortal/fatal wounds and could have died if not for a timely medical intervention,
the following shall be awarded:

a. Civil indemnity – ₱50,000.00

b. Moral damages – ₱50,000.00

c. Exemplary damages – ₱50,000.00

2.3 For the victims who suffered non-mortal/non-fatal injuries:

a. Civil indemnity – ₱25,000.00

b. Moral damages – ₱25,000.00

c. Exemplary damages – ₱25,000.00

In Robbery with Physical Injuries,126 the amount of damages shall likewise be dependent on the nature/severity of
the wounds sustained, whether fatal or non-fatal.

The above Rules do not apply if in the crime of Robbery with Homicide, the robber/s or perpetrator/s are
themselves killed or injured in the incident.1âwphi1

Where the component crime is rape, the above Rules shall likewise apply, and that for every additional rape
committed, whether against the same victim or other victims, the victims shall be entitled to the same damages
unless the other crimes of rape are treated as separate crimes, in which case, the damages awarded to simple
rape/qualified rape shall apply.

V. In other crimes that result in the death of a victim and the penalty consists of divisible penalties, i.e., Homicide,
Death under Tumultuous Affray, Infanticide to conceal the dishonour of the offender, 127 Reckless Imprudence
Resulting to Homicide, Duel, Intentional Abortion and Unintentional Abortion, etc.:

1.1 Where the crime was consummated:

a. Civil indemnity – ₱50,000.00

b. Moral damages – ₱50,000.00

1.2 Where the crime committed was not consummated, except those crimes where there are no stages, i.e.,
Reckless Imprudence and Death under tumultuous affray:

a. Frustrated:

i. Civil indemnity – ₱30,000.00

ii. Moral damages – ₱30,000.00


b. Attempted:

i. Civil indemnity – ₱20,000.00

ii. Moral damages – ₱20,000.00

If an aggravating circumstance was proven during the trial, even if not alleged in the Information, 128 in addition to
the above mentioned amounts as civil indemnity and moral damages, the amount of ₱50,000.00 exemplary
damages for consummated; ₱30,000.00 for frustrated; and ₱20,000.00 for attempted, shall be awarded.

VI. A. In the crime of Rebellion where the imposable penalty is reclusion perpetua and death occurs in the course
of the rebellion, the heirs of those who died are entitled to the following: 129

a. Civil indemnity – ₱100,000.00

b. Moral damages – ₱100,000.00

c. Exemplary damages – ₱100,000.00130

B. For the victims who suffered mortal/fatal wounds in the course of the rebellion and could have died if not for a
timely medical intervention, the following shall be awarded:

a. Civil indemnity – ₱75,000.00

b. Moral damages – ₱75,000.00

c. Exemplary damages – ₱75,000.00

C. For the victims who suffered non-mortal/non-fatal injuries:

a. Civil indemnity – ₱50,000.00

b. Moral damages – ₱50,000.00

c. Exemplary damages – ₱50,000.00

VII. In all of the above instances, when no documentary evidence of burial or funeral expenses is presented in
court, the amount of ₱50,000.00 as temperate damages shall be awarded.

To reiterate, Article 2206 of the Civil Code provides that the minimum amount for awards of civil indemnity is
P3,000.00, but does not provide for a ceiling. Thus, although the minimum amount cannot be changed, increasing
the amount awarded as civil indemnity can be validly modified and increased when the present circumstance
warrants it.131

Prescinding from the foregoing, for the two (2) counts of murder, attended by the ordinary aggravating
circumstance of dwelling, appellant should be ordered to pay the heirs of the victims the following damages: (1)
₱100,000.00 as civil indemnity for each of the two children who died; (2) ₱100,000.00 as moral damages for each
of the two victims; (3) another ₱100,000.00 as exemplary damages for each of the two victims; and (4) temperate
damages in the amount of ₱50,000.00 for each of the two deceased. For the four (4) counts of Attempted Murder,
appellant should pay ₱50,000.00 as civil indemnity, ₱50,000.00 as moral damages and ₱50,000.00 as exemplary
damages for each of the four victims. In addition, the civil indemnity, moral damages, exemplary damages and
temperate damages payable by the appellant are subject to interest at the rate of six percent (6%) per annum
from the finality of this decision until fully paid.132
Lastly, this Court echoes the concern of the trial court regarding the dismissal of the charges against Gilberto
Estores and Roger San Miguel who had been identified by Norberto Divina as the companions of appellant on the
night the shooting occurred. Norberto had been very straightforward and unwavering in his identification of
Estores and San Miguel as the two other people who fired the gunshots at his family. More significantly, as noted
by the prosecutor, the testimonies of Estores and San Miguel, who insisted they were not at the crime scene,
tended to conflict with the sworn statement of Danilo Fajarillo, which was the basis for the Provincial Prosecutor's
ruling that he finds no probable cause against the two. Danilo Fajarillo's sworn statement said that on June 6,
2002, he saw appellant with a certain "Hapon" and Gilbert Estores at the crime scene, but it was only appellant
who was carrying a firearm and the two other people with him had no participation in the shooting incident. Said
circumstances bolster the credibility of Norberto Divina's testimony that Estores and San Miguel may have been
involved in the killing of his two young daughters.

After all, such reinvestigation would not subject Estores and San Miguel to double jeopardy because the same
only attaches if the following requisites are present: (1) a first jeopardy has attached before the second; (2) the
first jeopardy has been validly terminated; and (3) a second jeopardy is for the same offense as in the first. In turn,
a first jeopardy attaches only (a) after a valid indictment; (b) before a competent court; (c) after arraignment; (d)
when a valid plea has been entered; and (e) when the accused has been acquitted or convicted, or the case
dismissed or otherwise terminated without his express consent. 133 In this case, the case against Estores and San
Miguel was dismissed before they were arraigned. Thus, there can be no double jeopardy to speak of. Let true
justice be served by reinvestigating the real participation, if any, of Estores and San Miguel in the killing of Mary
Grace and Claudine Divina.

WHEREFORE, the instant appeal is DISMISSED. The Decision of the Court of Appeals dated January 30, 2012 in
CA-G.R. CR HC No. 03252 is AFFIRMED with the following MODIFICATIONS:

(1) In Criminal Case No. 7698-G, the Court finds accused-appellant Ireneo Jugueta GUILTY beyond reasonable
doubt of two (2) counts of the crime of murder defined under Article 248 of the Revised Penal Code, attended by
the aggravating circumstance of dwelling, and hereby sentences him to suffer two (2) terms of reclusion
perpetua without eligibility for parole under R.A. 9346. He is ORDERED to PAY the heirs of Mary Grace Divina
and Claudine Divina the following amounts for each of the two victims: (a) ₱100,000.00 as civil indemnity; (b)
₱100,000.00 as moral damages; (c) ₱100,000.00 as exemplary damages; and (d) ₱50,000.00 as temperate
damages.

(2) In Criminal Case No. 7702-G, the Court finds accused-appellant Ireneo Jugueta GUILTY beyond reasonable
doubt of four (4) counts of the crime of attempted murder defined and penalized under Article 248 in relation to
Article 51 of the Revised Penal Code, attended by the aggravating circumstance of dwelling, and sentences him
to suffer the indeterminate penalty of four (4) years, two (2) months and one (1) day of prision correccional, as
minimum, to ten (10) years and one (1) day of prision mayor, as maximum, for each of the four (4) counts of
attempted murder. He is ORDERED to PAY moral damages in the amount of P50,000.00, civil indemnity of
P50,000.00 and exemplary damages of PS0,000.00 to each of the four victims, namely, Norberto Divina, Maricel
Divina, Elizabeth Divina and Judy Ann Divina.

(3) Accused-appellant Ireneo Jugueta is also ORDERED to PAY interest at the rate of six percent (6%) per
annum from the time of finality of this decision until fully paid, to be imposed on the civil indemnity, moral
damages, exemplary damages and temperate damages.

(4) Let the Office of the Prosecutor General, through the Department of Justice, be FURNISHED a copy of this
Decision. The Prosecutor General is DIRECTED to immediately conduct a REINVESTIGATION on the possible
criminal liability of Gilbert Estores and Roger San Miguel regarding this case. Likewise, let a copy of this Decision
be furnished the Secretary of Justice for his information and guidance.

SO ORDERED.