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2. Globe Mackay vs CA about Filipinos (“You Filipinos cannot be trusted.

”) as well as against Tobias (“crook”,

and “swindler”); the writing of a letter to RETELCO stating that Tobias was dismissed
Facts: Restituto Tobias, a purchasing agent and administrative assistant to the by Globe Mackay due to dishonesty; and the filing of six criminal cases by petitioners
engineering operations manager, discovered fictitious purchases and other fraudulent against private respondent. All these reveal that petitioners are motivated by malicious
transactions, which caused Globe Mackay Cable and Radio Corp loss of several and unlawful intent to harass, oppress, and cause damage to private respondent. The
thousands of pesos. He reported it to his immediate superior Eduardo T. Ferraren and imputation of guilt without basis and the pattern of harassment during the investigations
to the Executive Vice President and General Manager Herbert Hendry. A day after the of Tobias transgress the standards of human conduct set forth in Article 19 of the Civil
report, Hendry told Tobias that he was number one suspect and ordered him one week Code.
forced leave. When Tobias returned to work after said leave, Hendry called him a
“crook” and a “swindler”, ordered him to take a lie detector test, and to submit specimen
of his handwriting, signature and initials for police investigation. Moreover, petitioners
hired a private investigator. Private investigation was still incomplete; the lie detector The Court has already ruled that the right of the employer to dismiss an employee
tests yielded negative results; reports from Manila police investigators and from the should not be confused with the manner in which the right is exercised and the effects
Metro Manila Police Chief Document Examiner are in favor of Tobias. Petitioners filed flowing therefrom. If the dismissal is done abusively, then the employer is liable for
with the Fiscal’s Office of Manila a total of six (6) criminal cases against private damages to the employee. Under the circumstances of the instant case, the petitioners
respondent Tobias, but were dismissed. clearly failed to exercise in a legitimate manner their right to dismiss Tobias, giving the
latter the right to recover damages under Article 19 in relation to Article 21 of the Civil
Tobias received a notice of termination of his employment from petitioners in January
1973, effective December 1972. He sought employment with the Republic Telephone
Company (RETELCO); but Hendry wrote a letter to RETELCO stating that Tobias was 3. Barons vs CA
dismissed by Globe Mackay due to dishonesty. Tobias, then, filed a civil case for August 31, 1973. Phelps Dodge appointed Barons Marketing as one of its dealers of
damages anchored on alleged unlawful, malicious, oppressive, and abusive acts of electrical wires and cables effective Sept. 1, 1973. Defendant was given 60 days credit
petitioners. The Regional Trial Court of Manila, Branch IX, through Judge Manuel T. for its purchases of Phelps Dodge’s electrical products
Reyes rendered judgment in favor of private respondent, ordering petitioners to pay · Barons Marketing purchased, on credit, from Phelps Dodge’s electrical wires and
him eighty thousand pesos (P80,000.00) as actual damages, two hundred thousand cable in the total amount of P4,102,483.30. This was then sold to MERALCO, Baron
pesos (P200,000.00) as moral damages, twenty thousand pesos (P20,000.00) as Mktg being the accredited supplier of the electrical requirements of MERALCO.
exemplary damages, thirty thousand pesos (P30,000.00) as attorney’s fees, and costs; · Under the sales invoices issued by Phelps Dodge to Barons Mktg for the subject
hence, this petition for review on certiorari. purchases, it is stipulated that interest at 12% on the amount of atty’s fees and
collection. Baron’s Mktg paid P300,000 out of its total purchases leaving an unpaid
account of P3,802,478.20. Phelps Dodge wrote Barons Mktg demanding payment of
Issue: Whether petitioners are liable for damages to private respondent. its outstanding obligations due Phelps Dodge. Baron Mktg responded by requesting if
it could pay its outstanding account in monthly installments of P500,000 plus
1%interest per month until full payment, this request was rejected and Phelps Dodge
Held: Yes. The Court, after examining the record and considering certain significant demanded full payment
circumstances, finds that all petitioners have indeed abused the right that they invoke, · Phelps Dodge then filed a complaint before the Pasig Trial Court for the recovery of
causing damage to private respondent and for which the latter must now be P3,802,478.20 and it also prayed to be awarded with attorney’s fee at the rate of 25%
indemnified: when Hendry told Tobias to just confess or else the company would file a of the amount demanded, exemplary damages in the amount of P100,000, the
hundred more cases against him until he landed in jail; his (Hendry) scornful remarks expenses of litigation and the costs of suit.
· The court ruled in favor of Phelps Dodge with the exemplary damages of P10,000
and recovery of P3,108,000
· Both parties appealed. Phelps Dodge claimed that court should have awarded the
sum of P3,802,478.20. It also said that the amount awarded was a result of a
typographical error.
· Barons Mktg claimed that Phelps Dodge’s claim for damages is a result of “creditor’s
abuse” and it also claimed that Phelps Dodge failed to prove its cause of action against
· CoA ruled in favor of Phelps Dodge with the correct amount but only with the 5% for
the Atty’s fee. No costs.
· Barons Mktg then alleged that the Coa erred its decision

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

Held: No. a creditor cannot be considered in delay if he refuses to accept partial

performance because, unless otherwise provided by law or stipulated by the parties, a
creditor cannot be compelled to accept
partial performance; however, if good faith necessitates acceptance or if the creditor
abuses his right in not accepting, the creditor will incur in delay if he does not accept
such partial performance.
4. MWSS vs Arts Theater In Civil Case No. Q-88-768
Before the Court is a petition for review on certiorari filed by the Metropolitan
Waterworks and Sewerage System (MWSS), seeking to reverse and set aside the
Decision[1]dated January 31, 2001 of the Court of Appeals in CA-G.R. CV No. 58581,
which affirmed the civil aspect of the Decision[2] dated May 5, 1997 of the Regional 1. Ordering defendant MWSS to pay plaintiff actual or compensatory
Trial Court of Quezon City, Branch 77, directing the petitioner MWSS to pay the damages in the amount of P25,000.00; and to return the sum
respondent Act Theater, Inc. damages and attorneys fees. of P200,000.00 deposited by the plaintiff for the restoration of its water
services after its disconnection on September 23, 1988;
The present case stemmed from the consolidated cases of Criminal Case No. Q-
89-2412 entitled People of the Philippines v. Rodolfo Tabian, et al., for violation of 2. Defendants counterclaim for undercollection of P530,759.96 is dismissed
Presidential Decree (P.D.) No. 401, as amended by Batas Pambansa Blg. 876, and for lack of merit;
Civil Case No. Q-88-768 entitled Act Theater, Inc. v. Metropolitan Waterworks and
Sewerage System. The two cases were jointly tried in the court a quo as they arose
3. Ordering defendant MWSS to pay costs of suit;
from the same factual circumstances, to wit:
On September 22, 1988, four employees of the respondent Act Theater, Inc., 4. Ordering defendant MWSS to pay plaintiff the amount of P5,000.00 as
namely, Rodolfo Tabian, Armando Aguilar, Arnel Concha and Modesto Ruales, were attorneys fees;
apprehended by members of the Quezon City police force for allegedly tampering a
water meter in violation of P.D. No. 401, as amended by B.P. Blg. 876. The 5. Making the mandatory injunction earlier issued to plaintiff Act Theater, Inc.
respondents employees were subsequently criminally charged (Criminal Case No. Q- permanent.
89-2412) before the court a quo. On account of the incident, the respondents water
service connection was cut off. Consequently, the respondent filed a complaint for
injunction with damages (Civil Case No. Q-88-768) against the petitioner MWSS. SO ORDERED.[4]

In the civil case, the respondent alleged in its complaint filed with the court a Aggrieved, the petitioner appealed the civil aspect of the aforesaid decision to the
quo that the petitioner acted arbitrarily, whimsically and capriciously, in cutting off the CA. The appellate court, however, dismissed the appeal. According to the CA, the
respondents water service connection without prior notice. Due to lack of water, the court a quo correctly found that the petitioners act of cutting off the respondents water
health and sanitation, not only of the respondents patrons but in the surrounding service connection without prior notice was arbitrary, injurious and prejudicial to the
premises as well, were adversely affected. The respondent prayed that the petitioner latter justifying the award of damages under Article 19 of the Civil Code.
be directed to pay damages.
Undaunted, the petitioner now comes to this Court alleging as follows:
After due trial, the court a quo rendered its decision, the dispositive portion of
which reads: I

WHEREFORE, for failure of the prosecution to prove the guilt of the accused beyond THE PETITIONERS APPEAL;
reasonable doubt, the four (4) above-named Accused are hereby ACQUITTED of the
crime charged.[3] II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS VALIDLY UPHELD Art. 19. Every person must, in the exercise of his rights and in the performance of his
THE AWARD OF ATTORNEYS FEES; duties, act with justice, give everyone his due, and observe honesty and good faith.

III When a right is exercised in a manner which discards these norms resulting in
damage to another, a legal wrong is committed for which actor can be held
WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] CORRECTLY accountable.[9] In this case, the petitioner failed to act with justice and give the
APPLIED THE PROVISION OF ARTICLE 19 OF THE NEW CIVIL CODE WITHOUT respondent what is due to it when the petitioner unceremoniously cut off the
CONSIDERING THE APPLICABLE PROVISION OF ARTICLE 429 OF THE SAME respondents water service connection.As correctly found by the appellate court:
While it is true that MWSS had sent a notice of investigation to plaintiff-appellee prior
Preliminarily, the petitioner harps on the fact that, in quoting the decretal portion to the disconnection of the latters water services, this was done only a few hours before
of the court a quos decision, the CA erroneously typed P500,000 as the attorneys fees the actual disconnection. Upon receipt of the notice and in order to ascertain the
awarded in favor of the respondent when the same should only be P5,000. In any case, matter, Act sent its assistant manager Teodulo Gumalid, Jr. to the MWSS office but he
according to the petitioner, whether the amount is P500,000 or P5,000, the award of was treated badly on the flimsy excuse that he had no authority to represent Act. Acts
attorneys fees is improper considering that there was no discussion or statement in the water services were cut at midnight of the day following the apprehension of the
body of the assailed decision justifying such award. The petitioner insists that in cutting employees. Clearly, the plaintiff-appellee was denied due process when it was
off the respondents water service connection, the petitioner merely exercised its deprived of the water services. As a consequence thereof, Act had to contract another
proprietary right under Article 429 of the Civil Code. source to provide water for a number of days. Plaintiff-appellee was also compelled to
deposit with MWSS the sum of P200,000.00 for the restoration of their water
The petition is devoid of merit. services.[10]
Article 429 of the Civil Code, relied upon by the petitioner in justifying its act of
disconnecting the water supply of the respondent without prior notice, reads: There is, thus, no reason to deviate from the uniform findings and conclusion of
the court a quo and the appellate court that the petitioners act was arbitrary, injurious
and prejudicial to the respondent, justifying the award of damages under Article 19 of
Art. 429. The owner or lawful possessor of a thing has the right to exclude any person
the Civil Code.
from the enjoyment and disposal thereof. For this purpose, he may use such force as
may be reasonable to repel or prevent an actual or threatened unlawful physical Finally, the amount of P500,000 as attorneys fees in that portion of the assailed
invasion or usurpation of his property. decision which quoted the fallo of the court a quos decision was obviously a
typographical error. As attorneys fees, the court a quo awarded the amount of P5,000
A right is a power, privilege, or immunity guaranteed under a constitution, statute only. It was this amount, as well as actual and compensatory damages of P25,000 and
or decisional law, or recognized as a result of long usage, [6] constitutive of a legally the reimbursement of P200,000 deposited by the respondent for the restoration of its
enforceable claim of one person against the other.[7] water supply, that the CA affirmed, as it expressly stated in its dispositive portion that
finding no cogent reason to reverse the appealed Decision which is in conformity with
Concededly, the petitioner, as the owner of the utility providing water supply to the law and evidence, the same is hereby AFFIRMED.[11]
certain consumers including the respondent, had the right to exclude any person from
the enjoyment and disposal thereof. However, the exercise of rights is not without The award of P5,000 as attorneys fees is reasonable and warranted. Attorneys
limitations. Having the right should not be confused with the manner by which such fees may be awarded when a party is compelled to litigate or incur expenses to protect
right is to be exercised.[8] his interest by reason of an unjustified act of the other party. [12]
Article 19 of the Civil Code precisely sets the norms for the exercise of ones rights: WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals
dated January 31, 2001 in CA-G.R. CV No. 58581 is AFFIRMED in toto.
5. Carpio vs Valmonte 20 February 1997, Valmonte filed a suit for damages against her before the Regional
Trial Court (RTC) of Pasig City, Branch 268. In her complaint, Valmonte prayed that
Assailed in the instant petition for review is the Decision of the Court of Appeals petitioner be ordered to pay actual, moral and exemplary damages, as well as
in C.A.-G.R. CV No. 69537,[1] promulgated on 17 January 2002.[2] The appellate court attorneys fees.
reversed the trial courts decision denying respondents claim for damages against
petitioner and ordered the latter to pay moral damages to the former in the amount Responding to the complaint, petitioner denied having uttered words or done any
ofP100,000.00. act to confront or single out Valmonte during the investigation and claimed that
everything that transpired after the theft incident was purely a police matter in which
Respondent Leonora Valmonte is a wedding coordinator. Michelle del Rosario she had no participation. Petitioner prayed for the dismissal of the complaint and for
and Jon Sierra engaged her services for their church wedding on 10 October 1996. At the court to adjudge Valmonte liable on her counterclaim.
about 4:30 p.m. on that day, Valmonte went to the Manila Hotel where the bride and
her family were billeted. When she arrived at Suite 326-A, several persons were The trial court rendered its Decision on 21 August 2000, dismissing Valmontes
already there including the bride, the brides parents and relatives, the make-up artist complaint for damages. It ruled that when petitioner sought investigation for the loss of
and his assistant, the official photographers, and the fashion designer. Among those her jewelry, she was merely exercising her right and if damage results from a person
present was petitioner Soledad Carpio, an aunt of the bride who was preparing to dress exercising his legal right, it is damnum absque injuria. It added that no proof was
up for the occasion. presented by Valmonte to show that petitioner acted maliciously and in bad faith in
pointing to her as the culprit. The court said that Valmonte failed to show that she
After reporting to the bride, Valmonte went out of the suite carrying the items suffered serious anxiety, moral shock, social humiliation, or that her reputation was
needed for the wedding rites and the gifts from the principal sponsors. She proceeded besmirched due to petitioners wrongful act.
to the Maynila Restaurant where the reception was to be held. She paid the suppliers,
gave the meal allowance to the band, and went back to the suite. Upon entering the Respondent appealed to the Court of Appeals alleging that the trial court erred in
suite, Valmonte noticed the people staring at her. It was at this juncture that petitioner finding that petitioner did not slander her good name and reputation and in disregarding
allegedly uttered the following words to Valmonte: Ikaw lang ang lumabas ng kwarto, the evidence she presented.
nasaan ang dala mong bag? Saan ka pumunta? Ikaw lang and lumabas ng kwarto,
ikaw ang kumuha. Petitioner then ordered one of the ladies to search Valmontes bag. It The Court of Appeals ruled differently. It opined that Valmonte has clearly
established that she was singled out by petitioner as the one responsible for the loss
turned out that after Valmonte left the room to attend to her duties, petitioner
of her jewelry. It cited the testimony of Serena Manding, corroborating Valmontes claim
discovered that the pieces of jewelry which she placed inside the comfort room in a
that petitioner confronted her and uttered words to the effect that she was the only one
paper bag were lost. The jewelry pieces consist of two (2) diamond rings, one (1) set
who went out of the room and that she was the one who took the jewelry. The appellate
of diamond earrings, bracelet and necklace with a total value of about one million
court held that Valmontes claim for damages is not predicated on the fact that she was
pesos. The hotel security was called in to help in the search. The bags and personal
subjected to body search and interrogation by the police but rather petitioners act of
belongings of all the people inside the room were searched. Valmonte was allegedly
publicly accusing her of taking the missing jewelry. It categorized petitioners utterance
bodily searched, interrogated and trailed by a security guard throughout the
defamatory considering that it imputed upon Valmonte the crime of theft. The court
evening. Later, police officers arrived and interviewed all persons who had access to
concluded that petitioners verbal assault upon Valmonte was done with malice and in
the suite and fingerprinted them including Valmonte. During all the time Valmonte was
bad faith since it was made in the presence of many people without any solid proof
being interrogated by the police officers, petitioner kept on saying the words Siya lang
except petitioners suspicion. Such unfounded accusation entitles Valmonte to an
ang lumabas ng kwarto. Valmontes car which was parked at the hotel premises was
award of moral damages in the amount of P100,000.00 for she was publicly humiliated,
also searched but the search yielded nothing.
deeply insulted, and embarrassed. However, the court found no sufficient evidence to
A few days after the incident, petitioner received a letter from Valmonte justify the award of actual damages.
demanding a formal letter of apology which she wanted to be circulated to the
Hence, this petition.
newlyweds relatives and guests to redeem her smeared reputation as a result of
petitioners imputations against her. Petitioner did not respond to the letter. Thus, on
Petitioner contends that the appellate courts conclusion that she publicly assertion that she did not utter the accusatory remarks in question publicly and with
humiliated respondent does not conform to the evidence presented. She adds that malice, Mandings testimony on the point deserves to be reproduced. Thus,
even on the assumption that she uttered the words complained of, it was not shown Q After that what did she do?
that she did so with malice and in bad faith.
A Then Leo came out from the other room she said, she is (sic) the one I only saw from the comfort room.

In essence, petitioner would want this Court to review the factual conclusions Q Now, what exact word (sic) were said by Mrs. Carpio on that matter?
reached by the appellate court. The cardinal rule adhered to in this jurisdiction is that A She said siya lang yung nakita kong galing sa C.R.
a petition for review must raise only questions of law,[3] and judicial review under Rule
Q And who was Mrs. Carpio or the defendant referring to?
45 does not extend to an evaluation of the sufficiency of evidence unless there is a
showing that the findings complained of are totally devoid of support in the record or A Leo Valmonte.

that they are so glaringly erroneous as to constitute serious abuse of discretion. [4] This Q Did she say anything else, the defendant?
Court, while not a trier of facts, may review the evidence in order to arrive at the correct A Her jewelry were lost and Leo was the only one she saw in the C.R. After that she get (sic) the paper bag then the jewelry
factual conclusion based on the record especially so when the findings of fact of the were already gone.

Court of Appeals are at variance with those of the trial court, or when the inference Q Did she confront the plaintiff Mrs. Valmonte regarding that fact?
drawn by the Court of Appeals from the facts is manifestly mistaken.[5] A Yes.

Contrary to the trial courts finding, we find sufficient evidence on record tending Q What did the defendant Mrs. Carpio tell the plaintiff, Mrs. Valmonte?

to prove that petitioners imputations against respondent was made with malice and in A Ikaw yung nakita ko sa C.R. nawawala yung alahas ko.
bad faith. Q When the defendant Mrs. Carpio said that to plaintiff Mrs. Valmonte were there other people inside the room?

Petitioners testimony was shorn of substance and consists mainly of denials. She A Yes, sir.
claimed not to have uttered the words imputing the crime of theft to respondent or to Q Were they able to hear what Mrs. Carpio said to Mrs. Valmonte?
have mentioned the latters name to the authorities as the one responsible for the loss A Yes, sir.
of her jewelry. Well-settled is the rule that denials, if unsubstantiated by clear and
Q What was your thinking at that time that Mrs. Carpio said that to Mrs. Valmonte?
convincing evidence, are negative and self-serving which merit no weight in law and
cannot be given greater evidentiary value over the testimony of credible witnesses who A Nakakahiya kasi akala ng iba doon na talagang magnanakaw siya. Kasi marami na kaming nandodoon, dumating na yung
couturier pati yung video man and we sir.
testify on affirmative matters.[6]
Q Who was the person you [were] alleging na nakakahiya whose (sic) being accused or being somebody who stole those item
of jewelry?
Respondent, however, has successfully refuted petitioners testimony. Quite
credibly, she has narrated in great detail her distressing experience on that fateful day. A Nakakahiya para kay Leo kasi pinagbibintangan siya. Sa dami namin doon siya yung napagbintangan.

She testified as to how rudely she was treated by petitioner right after she returned to Q And who is Leo, what is her full name?
the room. Petitioner immediately confronted her and uttered the words Ikaw lang ang A Leo Valmonte.
lumabas ng kwarto. Nasaan ang dala mong bag? Saan ka pumunta? Ikaw ang
Q Did the defendant tell this matter to other people inside the room?
kumuha. Thereafter, her body was searched including her bag and her car. Worse,
during the reception, she was once more asked by the hotel security to go to the ladies A Yes, the mother of the bride.

room and she was again bodily searched.[7] Q And who else did she talk to?

A The father of the bride also.

Serea Manding, a make-up artist, corroborated respondents testimony. She
testified that petitioner confronted respondent in the presence of all the people inside Q And what did the defendant tell the mother regarding this matter?

the suite accusing her of being the only one who went out of the comfort room before A Nawawala yung alahas ko. Sabi naman nung mother baka naman hindi mo dala tignan mo munang mabuti.
the loss of the jewelry. Manding added that respondent was embarrassed because Q Who was that other person that she talked to?
everybody else in the room thought she was a thief.[8] If only to debunk petitioners
A Father of the bride.[9]
Significantly, petitioners counsel elected not to pursue her cross-examination of the The foregoing rules provide the legal bedrock for the award of damages to a party
witness on this point following her terse and firm declaration that she remembered who suffers damage whenever one commits an act in violation of some legal provision,
petitioners exact defamatory words in answer to the counsels question. [10] or an act which though not constituting a transgression of positive law, nevertheless
violates certain rudimentary rights of the party aggrieved.
Jaime Papio, Security Supervisor at Manila Hotel, likewise contradicted
petitioners allegation that she did not suspect or mention the name of respondent as In the case at bar, petitioners verbal reproach against respondent was certainly
her suspect in the loss of the jewelry.[11] uncalled for considering that by her own account nobody knew that she brought such
kind and amount of jewelry inside the paper bag. [17] This being the case, she had no
To warrant recovery of damages, there must be both a right of action, for a wrong right to attack respondent with her innuendos which were not merely inquisitive but
inflicted by the defendant, and the damage resulting therefrom to the plaintiff. Wrong outrightly accusatory. By openly accusing respondent as the only person who went out
without damage, or damage without wrong, does not constitute a cause of action. [12] of the room before the loss of the jewelry in the presence of all the guests therein, and
In the sphere of our law on human relations, the victim of a wrongful act or ordering that she be immediately bodily searched, petitioner virtually branded
omission, whether done willfully or negligently, is not left without any remedy or respondent as the thief. True, petitioner had the right to ascertain the identity of the
recourse to obtain relief for the damage or injury he sustained. Incorporated into our malefactor, but to malign respondent without an iota of proof that she was the one who
civil law are not only principles of equity but also universal moral precepts which are actually stole the jewelry is an act which, by any standard or principle of law is
designed to indicate certain norms that spring from the fountain of good conscience impermissible. Petitioner had willfully caused injury to respondent in a manner which
and which are meant to serve as guides for human conduct. [13] First of these is contrary to morals and good customs. Her firmness and resolve to find her missing
fundamental precepts is the principle commonly known as abuse of rights under Article jewelry cannot justify her acts toward respondent. She did not act with justice and good
19 of the Civil Code. It provides that Every person must, in the exercise of his rights faith for apparently, she had no other purpose in mind but to prejudice
and in the performance of his duties, act with justice, give everyone his due and respondent. Certainly, petitioner transgressed the provisions of Article 19 in relation to
observe honesty and good faith. To find the existence of an abuse of right, the following Article 21 for which she should be held accountable.
elements must be present: (1) there is a legal right or duty; (2) which is exercised in Owing to the rule that great weight and even finality is given to factual conclusions
bad faith; (3) for the sole intent or prejudicing or injuring another. [14] When a right is of the Court of Appeals which affirm those of the trial court,[18] we sustain the findings
exercised in a manner which discards these norms resulting in damage to another, a of the trial court and the appellate court that respondents claim for actual damages has
legal wrong is committed for which the actor can be held accountable. [15] One is not not been substantiated with satisfactory evidence during the trial and must therefore
allowed to exercise his right in a manner which would cause unnecessary prejudice to be denied. To be recoverable, actual damages must be duly proved with reasonable
another or if he would thereby offend morals or good customs. Thus, a person should degree of certainty and the courts cannot rely on speculation, conjecture or
be protected only when he acts in the legitimate exercise of his right, that is when he guesswork.[19]
acts with prudence and good faith; but not when he acts with negligence or abuse. [16]
Respondent, however, is clearly entitled to an award of moral damages. Moral
Complementing the principle of abuse of rights are the provisions of Articles 20 damages may be awarded whenever the defendants wrongful act or omission is the
and 21 of the Civil Code which read, thus: proximate cause of the plaintiffs physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and
Art. 20. Every person who, contrary to law, willfully or negligently causes damage to similar injury[20] in the cases specified or analogous to those provided in Article 2219
another, shall indemnify the latter for the same. of the Civil Code.[21] Though no proof of pecuniary loss is necessary in order that moral
damages may be adjudicated, courts are mandated to take into account all the
Art. 21. Any person who willfully causes loss or injury to another in a manner that is circumstances obtaining in the case and assess damages according to their
contrary to morals or good customs or public policy shall compensate the latter for the discretion.[22] Worthy of note is that moral damages are not awarded to penalize the
damage. defendant,[23] or to enrich a complainant, but to enable the latter to obtain means,
diversions or amusements that will serve to alleviate the moral suffering he has
undergone, by reason of defendants culpable action. In any case, award of moral
damages must be proportionate to the sufferings inflicted.[24]
Based on the foregoing jurisprudential pronouncements, we rule that the appellate
court did not err in awarding moral damages. Considering respondents social standing,
and the fact that her profession is based primarily on trust reposed in her by her clients,
the seriousness of the imputations made by petitioner has greatly tarnished her
reputation and will in one way or the other, affect her future dealings with her clients,
the award of P100,000.00 as moral damages appears to be a fair and reasonable
assessment of respondents damages.
WHEREFORE, the instant Petition is DENIED. Costs against petitioner.
8. Custodio vs CA constructed by defendants Santoses along their property which is also along the first
passageway. Defendant Morato constructed her adobe fence and even extended said
This petition for review on certiorari assails the decision of respondent Court of fence in such a way that the entire passageway was enclosed (Exhibit 1-Santoses and
Appeals in CA-G.R. CV No. 29115, promulgated on November 10, 1993, which Custodios, Exh. D for plaintiff, Exhs. 1-C, 1-D and I -E) And it was then that the
affirmed with modification the decision of the trial court, as well as its resolution remaining tenants of said apartment vacated the area. Defendant Ma. Cristina Santos
dated July 8, 1994 denying petitioners motion for reconsideration.[1] testified that she constructed said fence because there was an incident when her
On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right daughter was dragged by a bicycle pedalled by a son of one of the tenants in said
of way was filed by Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio, apartment along the first passageway. She also mentioned some other inconveniences
Rosalina R. Morato, Lito Santos and Maria Cristina C. Santos before the Regional Trial of having (at) the front of her house a pathway such as when some of the tenants were
Court of Pasig and assigned to Branch 22 thereof.[2] drunk and would bang their doors and windows. Some of their footwear were even lost.
x x x[3] (Italics in original text; corrections in parentheses supplied)
The generative facts of the case, as synthesized by the trial court and adopted by
the Court of Appeals, are as follows: On February 27, 1990, a decision was rendered by the trial court, with this
dispositive part:
Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died
during the pendency of this case and was substituted by Ofelia Mabasa, his surviving Accordingly, judgment is hereby rendered as follows:
spouse [and children].
1) Ordering defendants Custodios and Santoses to give plaintiff permanent access -
The plaintiff owns a parcel of land with a two-door apartment erected thereon situated ingress and egress, to the public street;
at Interior P. Burgos St., Palingon, Tipas, Taguig, Metro Manila. The plaintiff was able
to acquire said property through a contract of sale with spouses Mamerto Rayos and 2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight
Teodora Quintero as vendors last September 1981. Said property may be described Thousand Pesos (P8,000) as indemnity for the permanent use of the passageway.
to be surrounded by other immovables pertaining to defendants herein. Taking P.
Burgos Street as the point of reference, on the left side, going to plaintiffs property, the The parties to shoulder their respective litigation expenses.[4]
row of houses will be as follows: That of defendants Cristino and Brigido Custodio, then
that of Lito and Maria Cristina Santos and then that of Ofelia Mabasa. On the right side Not satisfied therewith, therein plaintiff represented by his heirs, herein private
(is) that of defendant Rosalina Morato and then a Septic Tank (Exhibit D). As an access respondents, went to the Court of Appeals raising the sole issue of whether or not the
to P. Burgos Street from plaintiffs property, there are two possible passageways. The lower court erred in not awarding damages in their favor. On November 10, 1993, as
first passageway is approximately one meter wide and is about 20 meters distan(t) earlier stated, the Court of Appeals rendered its decision affirming the judgment of the
from Mabasas residence to P. Burgos Street. Such path is passing in between the trial court with modification, the decretal portion of which disposes as follows:
previously mentioned row of houses. The second passageway is about 3 meters in
width and length from plaintiff Mabasas residence to P. Burgos Street; it is about 26
WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH
meters. In passing thru said passageway, a less than a meter wide path through the
MODIFICATION only insofar as the herein grant of damages to plaintiffs-appellants.
septic tank and with 5-6 meters in length has to be traversed.
The Court hereby orders defendants-appellees to pay plaintiffs-appellants the sum of
Sixty Five Thousand (P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000)
When said property was purchased by Mabasa, there were tenants occupying the Pesos as Moral Damages, and Ten Thousand (P10,000) Pesos as Exemplary
premises and who were acknowledged by plaintiff Mabasa as tenants. However, Damages. The rest of the appealed decision is affirmed to all respects. [5]
sometime in February, 1982. one of said tenants vacated the apartment and when
plaintiff Mabasa went to see the premises, he saw that there had been built an adobe
fence in the first passageway making it narrower in width.Said adobe fence was first
On July 8, 1994, the Court of Appeals denied petitioners motion for and damages are the recompense or compensation awarded for the damage
reconsideration.[6] Petitioners then took the present recourse to us, raising two issues, suffered. Thus, there can be damage without injury in those instances in which the loss
namely, whether or not the grant of right of way to herein private respondents is proper, or harm was not the result of a violation of a legal duty. These situations are often
and whether or not the award of damages is in order. called damnum absque injuria.[9] in order that a plaintiff may maintain an action for the
injuries of which he complains, he must establish that such injuries resulted from a
With respect to the first issue, herein petitioners are already barred from raising breach of duty which the defendant owed to the plaintiff - a concurrence of injury to the
the same. Petitioners did not appeal from the decision of the court a quo granting plaintiff and legal responsibility by the person causing it. [10] The underlying basis for the
private respondents the right of way, hence they are presumed to be satisfied with the award of tort damages is the premise that an individual was injured in contemplation
adjudication therein. With the finality of the judgment of the trial court as to petitioners, of law. Thus, there must first be the breach of some duty and the imposition of liability
the issue of propriety of the grant of right of way has already been laid to rest. for that breach before damages may be awarded; it is not sufficient to state that there
For failure to appeal the decision of the trial court to the Court of Appeals, should be tort liability merely because the plaintiff suffered some pain and suffering) [11]
petitioners cannot obtain any affirmative relief other than those granted in the decision Many accidents occur and many injuries are inflicted by acts or omissions which
of the trial court. That decision of the court below has become final as against them cause damage or loss to another but which violate no legal duty to such other person,
and can no longer be reviewed, much less reversed, by this Court. The rule in this and consequently create no cause of action in his favor. In such cases, the
jurisdiction is that whenever an appeal is taken in a civil case, an appellee who has not consequences must be borne by the injured person alone. The law affords no remedy
himself appealed may not obtain from the appellate court any affirmative relief other for damages resulting from an act which does not amount to a legal injury or wrong. [12]
than what was granted in the decision of the lower court. The appellee can only
advance any argument that he may deem necessary to defeat the appellants claim or In other words, in order that the law will give redress for an act causing damage,
to uphold the decision that is being disputed, and he can assign errors in his brief if that act must be not only hurtful, but wrongful. There must be damnum et injuria.[13] If,
such is required to strengthen the views expressed by the court a quo. These assigned as may happen in many cases, a person sustains actual damage, that is, harm or loss
errors, in turn, may be considered by the appellate court solely to maintain the to his person or property, without sustaining any legal injury, that is, an act or omission
appealed decision on other grounds, but not for the purpose of reversing or modifying which the law does not deem an injury, the damage is regarded as damnum absque
the judgment in the appellees favor and giving him other affirmative reliefs. [7] injuria.[14]
However, with respect to the second issue, we agree with petitioners that the In the case at bar, although there was damage, there was no legal injury. Contrary
Court of Appeals erred in awarding damages in favor of private respondents. The to the claim of private respondents, petitioners could not be said to have violated the
award of damages has no substantial legal basis. A reading of the decision of the Court principle of abuse of right. In order that the principle of abuse of right provided in Article
of Appeals will show that the award of damages was based solely on the fact that the 21 of the Civil Code can be applied, it is essential that the following requisites concur:
original plaintiff, Pacifico Mabasa, incurred losses in the form of unrealized rentals (1) The defendant should have acted in a manner that is contrary to morals, good
when the tenants vacated the leased premises by reason of the closure of the customs or public policy; (2) The acts should be willful; and (3) There was damage or
passageway. injury to the plaintiff.[15]
However, the mere fact that the plaintiff suffered losses does not give rise to a The act of petitioners in constructing a fence within their lot is a valid exercise of
right to recover damages. To warrant the recovery of damages, there must be both a their right as owners, hence not contrary to morals, good customs or public policy. The
right of action for a legal wrong inflicted by the defendant, and damage resulting to the law recognizes in the owner the right to enjoy and dispose of a thing, without other
plaintiff therefrom. Wrong without damage, or damage without wrong, does not limitations than those established by law.[16] It is within the right of petitioners, as
constitute a cause of action, since damages are merely part of the remedy allowed for owners, to enclose and fence their property. Article 430 of the Civil Code provides that
the injury caused by a breach or wrong.[8] (e)very owner may enclose or fence his land or tenements by means of walls, ditches,
live or dead hedges, or by any other means without detriment to servitudes constituted
There is a material distinction between damages and injury. Injury is the illegal thereon.
invasion of a legal right; damage is the loss, hurt, or harm which results from the injury;
At the time of the construction of the fence, the lot was not subject to any
servitudes. There was no easement of way existing in favor of private respondents,
either by law or by contract. The fact that private respondents had no existing right over
the said passageway is confirmed by the very decision of the trial court granting a
compulsory right of way in their favor after payment of just compensation. It was only
that decision which gave private respondents the right to use the said passageway
after payment of the compensation and imposed a corresponding duty on petitioners
not to interfere in the exercise of said right.
Hence, prior to said decision, petitioners had an absolute right over their property
and their act of fencing and enclosing the same was an act which they may lawfully
perform in the employment and exercise of said right. To repeat, whatever injury or
damage may have been sustained by private respondents by reason of the rightful use
of the said land by petitioners is damnum absque injuria.[17]
A person has a right to the natural use and enjoyment of his own property,
according to his pleasure, for all the purposes to which such property is usually
applied. As a general rule, therefore, there is no cause of action for acts done by one
person upon his own property in a lawful and proper manner, although such acts
incidentally cause damage or an unavoidable loss to another, as such damage or loss
is damnum absque injuria.[18] When the owner of property makes use thereof in the
general and ordinary manner in which the property is used, such as fencing or
enclosing the same as in this case, nobody can complain of having been injured,
because the inconvenience arising from said use can be considered as a mere
consequence of community life.[19]
The proper exercise of a lawful right cannot constitute a legal wrong for which an
action will lie,[20] although the act may result in damage to another, for no legal right
has been invaded[21] One may use any lawful means to accomplish a lawful purpose
and though the means adopted may cause damage to another, no cause of action
arises in the latters favor. Any injury or damage occasioned thereby is damnum absque
injuria. The courts can give no redress for hardship to an individual resulting from action
reasonably calculated to achieve a lawful end by lawful means. [22]
WHEREFORE, under the compulsion of the foregoing premises, the appealed
decision of respondent Court of Appeals is hereby REVERSED and SET ASIDE and
the judgment of the trial court is correspondingly REINSTATED.
9. Gasham vs VA thus claimed that he never proposed marriage to or agreed to be married with the
private respondent; he neither sought the consent and approval of her parents nor
This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to review forced her to live in his apartment; he did not maltreat her, but only told her to stop
and set aside the Decision1 of the respondent Court of Appeals in CA-G.R. CV No. coming to his place because he discovered that she had deceived him by stealing his
24256 which affirmed in toto the 16 October 1939 Decision of Branch 38 (Lingayen) of money and passport; and finally, no confrontation took place with a representative of
the Regional Trial Court (RTC) of Pangasinan in Civil Case No. 16503. Presented is the barangay captain. Insisting, in his Counterclaim, that the complaint is baseless and
the issue of whether or not damages may be recovered for a breach of promise to unfounded and that as a result thereof, he was unnecessarily dragged into court and
marry on the basis of Article 21 of the Civil Code of the Philippines. compelled to incur expenses, and has suffered mental anxiety and a besmirched
reputation, he prayed for an award of P5,000.00 for miscellaneous expenses and
P25,000.00 as moral damages.
The antecedents of this case are not complicated:

After conducting a pre-trial on 25 January 1988, the trial court issued a Pre-Trial
On 27 October 1987, private respondent, without the assistance of counsel, filed with
the aforesaid trial court a complaint2 for damages against the petitioner for the alleged Order4 embodying the stipulated facts which the parties had agreed upon, to wit:
violation of their agreement to get married. She alleges in said complaint that: she is
twenty-two (22) years old, single, Filipino and a pretty lass of good moral character and 1. That the plaintiff is single and resident (sic) of Bañaga, Bugallon,
reputation duly respected in her community; petitioner, on the other hand, is an Iranian Pangasinan, while the defendant is single, Iranian citizen and resident
citizen residing at the Lozano Apartments, Guilig, Dagupan City, and is an exchange (sic) of Lozano Apartment, Guilig, Dagupan City since September 1,
student taking a medical course at the Lyceum Northwestern Colleges in Dagupan 1987 up to the present;
City; before 20 August 1987, the latter courted and proposed to marry her; she
accepted his love on the condition that they would get married; they therefore agreed 2. That the defendant is presently studying at Lyceum Northwestern,
to get married after the end of the school semester, which was in October of that year; Dagupan City, College of Medicine, second year medicine proper;
petitioner then visited the private respondent's parents in Bañaga, Bugallon,
Pangasinan to secure their approval to the marriage; sometime in 20 August 1987, the 3. That the plaintiff is (sic) an employee at Mabuhay Luncheonette ,
petitioner forced her to live with him in the Lozano Apartments; she was a virgin before Fernandez Avenue, Dagupan City since July, 1986 up to the present
she began living with him; a week before the filing of the complaint, petitioner's attitude and a (sic) high school graduate;
towards her started to change; he maltreated and threatened to kill her; as a result of
such maltreatment, she sustained injuries; during a confrontation with a representative
4. That the parties happened to know each other when the manager
of the barangay captain of Guilig a day before the filing of the complaint, petitioner of the Mabuhay Luncheonette, Johhny Rabino introduced the
repudiated their marriage agreement and asked her not to live with him anymore and; defendant to the plaintiff on August 3, 1986.
the petitioner is already married to someone living in Bacolod City. Private respondent
then prayed for judgment ordering the petitioner to pay her damages in the amount of
not less than P45,000.00, reimbursement for actual expenses amounting to P600.00, After trial on the merits, the lower court, applying Article 21 of the Civil Code, rendered
attorney's fees and costs, and granting her such other relief and remedies as may be on 16 October 1989 a decision5 favoring the private respondent. The petitioner was
just and equitable. The complaint was docketed as Civil Case No. 16503. thus ordered to pay the latter damages and attorney's fees; the dispositive portion of
the decision reads:
In his Answer with Counterclaim,3 petitioner admitted only the personal circumstances
of the parties as averred in the complaint and denied the rest of the allegations either IN THE LIGHT of the foregoing consideration, judgment is hereby
for lack of knowledge or information sufficient to form a belief as to the truth thereof or rendered in favor of the plaintiff and against the defendant.
because the true facts are those alleged as his Special and Affirmative Defenses. He
1. Condemning (sic) the defendant to pay the plaintiff the sum of plaintiffs parents and brothers and sisters that he intended to marry
twenty thousand (P20,000.00) pesos as moral damages. her during the semestral break in October, 1987, and because
plaintiff's parents thought he was good and trusted him, they agreed
2. Condemning further the defendant to play the plaintiff the sum of to his proposal for him to marry their daughter, and they likewise
three thousand (P3,000.00) pesos as atty's fees and two thousand allowed him to stay in their house and sleep with plaintiff during the
(P2,000.00) pesos at (sic) litigation expenses and to pay the costs. few days that they were in Bugallon. When plaintiff and defendant later
returned to Dagupan City, they continued to live together in
3. All other claims are denied.6 defendant's apartment. However, in the early days of October, 1987,
defendant would tie plaintiff's hands and feet while he went to school,
and he even gave her medicine at 4 o'clock in the morning that made
The decision is anchored on the trial court's findings and conclusions that (a) petitioner her sleep the whole day and night until the following day. As a result
and private respondent were lovers, (b) private respondent is not a woman of loose of this live-in relationship, plaintiff became pregnant, but defendant
morals or questionable virtue who readily submits to sexual advances, (c) petitioner, gave her some medicine to abort the fetus. Still plaintiff continued to
through machinations, deceit and false pretenses, promised to marry private live with defendant and kept reminding him of his promise to marry her
respondent, d) because of his persuasive promise to marry her, she allowed herself to until he told her that he could not do so because he was already
be deflowered by him, (e) by reason of that deceitful promise, private respondent and married to a girl in Bacolod City. That was the time plaintiff left
her parents — in accordance with Filipino customs and traditions — made some defendant, went home to her parents, and thereafter consulted a
preparations for the wedding that was to be held at the end of October 1987 by looking lawyer who accompanied her to the barangay captain in Dagupan
for pigs and chickens, inviting friends and relatives and contracting sponsors, (f) City. Plaintiff, her lawyer, her godmother, and a barangay tanod sent
petitioner did not fulfill his promise to marry her and (g) such acts of the petitioner, who by the barangay captain went to talk to defendant to still convince him
is a foreigner and who has abused Philippine hospitality, have offended our sense of to marry plaintiff, but defendant insisted that he could not do so
morality, good customs, culture and traditions. The trial court gave full credit to the because he was already married to a girl in Bacolod City, although the
private respondent's testimony because, inter alia, she would not have had the temerity truth, as stipulated by the parties at the pre-trial, is that defendant is
and courage to come to court and expose her honor and reputation to public scrutiny still single.
and ridicule if her claim was false.7
Plaintiff's father, a tricycle driver, also claimed that after defendant had
The above findings and conclusions were culled from the detailed summary of the informed them of his desire to marry Marilou, he already looked for
evidence for the private respondent in the foregoing decision, digested by the sponsors for the wedding, started preparing for the reception by
respondent Court as follows: looking for pigs and chickens, and even already invited many relatives
and friends to the forthcoming wedding. 8
According to plaintiff, who claimed that she was a virgin at the time
and that she never had a boyfriend before, defendant started courting Petitioner appealed the trial court's decision to the respondent Court of Appeals which
her just a few days after they first met. He later proposed marriage to docketed the case as CA-G.R. CV No. 24256. In his Brief,9 he contended that the trial
her several times and she accepted his love as well as his proposal of court erred (a) in not dismissing the case for lack of factual and legal basis and (b) in
marriage on August 20, 1987, on which same day he went with her to ordering him to pay moral damages, attorney's fees, litigation expenses and costs.
her hometown of Bañaga, Bugallon, Pangasinan, as he wanted to
meet her parents and inform them of their relationship and their
On 18 February 1991, respondent Court promulgated the challenged
intention to get married. The photographs Exhs. "A" to "E" (and their
decision 10 affirming in toto the trial court's ruling of 16 October 1989. In sustaining the
submarkings) of defendant with members of plaintiff's family or with
trial court's findings of fact, respondent Court made the following analysis:
plaintiff, were taken that day. Also on that occasion, defendant told
First of all, plaintiff, then only 21 years old when she met defendant common-law wife in Bacolod City. In other words, he also lived with
who was already 29 years old at the time, does not appear to be a girl another woman in Bacolod City but did not marry that woman, just like
of loose morals. It is uncontradicted that she was a virgin prior to her what he did to plaintiff. It is not surprising, then, that he felt so little
unfortunate experience with defendant and never had boyfriend. She compunction or remorse in pretending to love and promising to marry
is, as described by the lower court, a barrio lass "not used and plaintiff, a young, innocent, trustful country girl, in order to satisfy his
accustomed to trend of modern urban life", and certainly would (sic) lust on her. 11
not have allowed
"herself to be deflowered by the defendant if there was no persuasive and then concluded:
promise made by the defendant to marry her." In fact, we agree with
the lower court that plaintiff and defendant must have been
In sum, we are strongly convinced and so hold that it was defendant-
sweethearts or so the plaintiff must have thought because of the
appellant's fraudulent and deceptive protestations of love for and
deception of defendant, for otherwise, she would not have allowed
promise to marry plaintiff that made her surrender her virtue and
herself to be photographed with defendant in public in so (sic) loving
womanhood to him and to live with him on the honest and sincere
and tender poses as those depicted in the pictures Exhs. "D" and "E". belief that he would keep said promise, and it was likewise these (sic)
We cannot believe, therefore, defendant's pretense that plaintiff was fraud and deception on appellant's part that made plaintiff's parents
a nobody to him except a waitress at the restaurant where he usually
agree to their daughter's living-in with him preparatory to their
ate. Defendant in fact admitted that he went to plaintiff's hometown of
supposed marriage. And as these acts of appellant are palpably and
Bañaga, Bugallon, Pangasinan, at least thrice; at (sic) the town fiesta
undoubtedly against morals, good customs, and public policy, and are
on February 27, 1987 (p. 54, tsn May 18, 1988), at (sic) a beach party
even gravely and deeply derogatory and insulting to our women,
together with the manager and employees of the Mabuhay coming as they do from a foreigner who has been enjoying the
Luncheonette on March 3, 1987 (p. 50, tsn id.), and on April 1, 1987
hospitality of our people and taking advantage of the opportunity to
when he allegedly talked to plaintiff's mother who told him to marry her
study in one of our institutions of learning, defendant-appellant should
daughter (pp. 55-56, tsn id.). Would defendant have left Dagupan City
indeed be made, under Art. 21 of the Civil Code of the Philippines, to
where he was involved in the serious study of medicine to go to
compensate for the moral damages and injury that he had caused
plaintiff's hometown in Bañaga, Bugallon, unless there was (sic) some
plaintiff, as the lower court ordered him to do in its decision in this
kind of special relationship between them? And this special case. 12
relationship must indeed have led to defendant's insincere proposal of
marriage to plaintiff, communicated not only to her but also to her
parents, and (sic) Marites Rabino, the owner of the restaurant where Unfazed by his second defeat, petitioner filed the instant petition on 26 March 1991;
plaintiff was working and where defendant first proposed marriage to he raises therein the single issue of whether or not Article 21 of the Civil Code applies
her, also knew of this love affair and defendant's proposal of marriage to the case at bar. 13
to plaintiff, which she declared was the reason why plaintiff resigned
from her job at the restaurant after she had accepted defendant's It is petitioner's thesis that said Article 21 is not applicable because he had not
proposal (pp. 6-7, tsn March 7, 1988). committed any moral wrong or injury or violated any good custom or public policy; he
has not professed love or proposed marriage to the private respondent; and he has
Upon the other hand, appellant does not appear to be a man of good never maltreated her. He criticizes the trial court for liberally invoking Filipino customs,
moral character and must think so low and have so little respect and traditions and culture, and ignoring the fact that since he is a foreigner, he is not
regard for Filipino women that he openly admitted that when he conversant with such Filipino customs, traditions and culture. As an Iranian Moslem,
studied in Bacolod City for several years where he finished his B.S. he is not familiar with Catholic and Christian ways. He stresses that even if he had
Biology before he came to Dagupan City to study medicine, he had a made a promise to marry, the subsequent failure to fulfill the same is excusable or
tolerable because of his Moslem upbringing; he then alludes to the Muslim Code which (1) When the conclusion is a finding grounded entirely on speculation,
purportedly allows a Muslim to take four (4) wives and concludes that on the basis surmises or conjectures (Joaquin v. Navarro, 93 Phil. 257 [1953]); (2)
thereof, the trial court erred in ruling that he does not posses good moral character. When the inference made is manifestly mistaken, absurb or
Moreover, his controversial "common law life" is now his legal wife as their marriage impossible (Luna v. Linatok, 74 Phil. 15 [1942]); (3) Where there is a
had been solemnized in civil ceremonies in the Iranian Embassy. As to his unlawful grave abuse of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4)
cohabitation with the private respondent, petitioner claims that even if responsibility When the judgment is based on a misapprehension of facts (Cruz v.
could be pinned on him for the live-in relationship, the private respondent should also Sosing,
be faulted for consenting to an illicit arrangement. Finally, petitioner asseverates that L-4875, Nov. 27, 1953); (5) When the findings of fact are conflicting
even if it was to be assumed arguendo that he had professed his love to the private (Casica v. Villaseca, L-9590 Ap. 30, 1957; unrep.) (6) When the Court
respondent and had also promised to marry her, such acts would not be actionable in of Appeals, in making its findings, went beyond the issues of the case
view of the special circumstances of the case. The mere breach of promise is not and the same is contrary to the admissions of both appellate and
actionable. 14 appellee (Evangelista v. Alto Surety and Insurance Co., 103 Phil. 401
On 26 August 1991, after the private respondent had filed her Comment to the petition (7) The findings of the Court of Appeals are contrary to those of the
and the petitioner had filed his Reply thereto, this Court gave due course to the petition trial court (Garcia v. Court of Appeals, 33 SCRA 622 [1970]; Sacay v.
and required the parties to submit their respective Memoranda, which they Sandiganbayan, 142 SCRA 593 [1986]); (8) When the findings of fact
subsequently complied with. are conclusions without citation of specific evidence on which they are
based (Ibid.,); (9) When the facts set forth in the petition as well as in
the petitioners main and reply briefs are not disputed by the
As may be gleaned from the foregoing summation of the petitioner's arguments in
respondents (Ibid.,); and (10) The finding of fact of the Court of
support of his thesis, it is clear that questions of fact, which boil down to the issue of
the credibility of witnesses, are also raised. It is the rule in this jurisdiction that appellate Appeals is premised on the supposed absence of evidence and is
contradicted by the evidence on record (Salazar v. Gutierrez, 33
courts will not disturb the trial court's findings as to the credibility of witnesses, the latter
SCRA 242 [1970]).
court having heard the witnesses and having had the opportunity to observe closely
their deportment and manner of testifying, unless the trial court had plainly overlooked
facts of substance or value which, if considered, might affect the result of the case. 15 Petitioner has not endeavored to joint out to Us the existence of any of the above
quoted exceptions in this case. Consequently, the factual findings of the trial and
appellate courts must be respected.
Petitioner has miserably failed to convince Us that both the appellate and trial courts
had overlooked any fact of substance or values which could alter the result of the case.
And now to the legal issue.
Equally settled is the rule that only questions of law may be raised in a petition for
review on certiorari under Rule 45 of the Rules of Court. It is not the function of this The existing rule is that a breach of promise to marry per se is not an actionable
Court to analyze or weigh all over again the evidence introduced by the parties before wrong. 17 Congress deliberately eliminated from the draft of the New Civil Code the
the lower court. There are, however, recognized exceptions to this rule. Thus, provisions that would have made it so. The reason therefor is set forth in the report of
in Medina vs.Asistio, Jr., 16 this Court took the time, again, to enumerate these the Senate Committees on the Proposed Civil Code, from which We quote:
The elimination of this chapter is proposed. That breach of promise to
xxx xxx xxx marry is not actionable has been definitely decided in the case of De
Jesus vs. Syquia. 18 The history of breach of promise suits in the
United States and in England has shown that no other action lends
itself more readily to abuse by designing women and unscrupulous Article 2176 of the Civil Code, which defines a quasi-delict thus:
men. It is this experience which has led to the abolition of rights of
action in the so-called Heart Balm suits in many of the American Whoever by act or omission causes damage to another, there being
states. . . . 19 fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between
This notwithstanding, the said Code contains a provision, Article 21, which is designed the parties, is called a quasi-delict and is governed by the provisions
to expand the concept of torts or quasi-delict in this jurisdiction by granting adequate of this Chapter.
legal remedy for the untold number of moral wrongs which is impossible for human
foresight to specifically enumerate and punish in the statute books. 20 is limited to negligent acts or omissions and excludes the notion of willfulness
or intent. Quasi-delict, known in Spanish legal treatises as culpa aquiliana, is
As the Code Commission itself stated in its Report: a civil law concept while torts is an Anglo-American or common law
concept. Torts is much broader than culpa aquiliana because it includes not
But the Code Commission had gone farther than the sphere of wrongs only negligence, but international criminal acts as well such as assault and
defined or determined by positive law. Fully sensible that there are battery, false imprisonment and deceit. In the general scheme of the Philippine
countless gaps in the statutes, which leave so many victims of moral legal system envisioned by the Commission responsible for drafting the New
wrongs helpless, even though they have actually suffered material and Civil Code, intentional and malicious acts, with certain exceptions, are to be
moral injury, the Commission has deemed it necessary, in the interest governed by the Revised Penal Code while negligent acts or omissions are to
of justice, to incorporate in the proposed Civil Code the following rule: be covered by Article 2176 of the Civil Code. 22 In between these opposite
spectrums are injurious acts which, in the absence of Article 21, would have
been beyond redress. Thus, Article 21 fills that vacuum. It is even postulated
Art. 23. Any person who wilfully causes loss or injury
that together with Articles 19 and 20 of the Civil Code, Article 21 has greatly
to another in a manner that is contrary to morals, good
broadened the scope of the law on civil wrongs; it has become much more
customs or public policy shall compensate the latter
supple and adaptable than the Anglo-American law on torts. 23
for the damage.

In the light of the above laudable purpose of Article 21, We are of the opinion, and so
An example will illustrate the purview of the foregoing norm: "A"
hold, that where a man's promise to marry is in fact the proximate cause of the
seduces the nineteen-year old daughter of "X". A promise of marriage
acceptance of his love by a woman and his representation to fulfill that promise
either has not been made, or can not be proved. The girl becomes
pregnant. Under the present laws, there is no crime, as the girl is thereafter becomes the proximate cause of the giving of herself unto him in a sexual
above nineteen years of age. Neither can any civil action for breach of congress, proof that he had, in reality, no intention of marrying her and that the promise
was only a subtle scheme or deceptive device to entice or inveigle her to accept him
promise of marriage be filed. Therefore, though the grievous moral
and to obtain her consent to the sexual act, could justify the award of damages
wrong has been committed, and though the girl and family have
pursuant to Article 21 not because of such promise to marry but because of the fraud
suffered incalculable moral damage, she and her parents cannot bring
and deceit behind it and the willful injury to her honor and reputation which followed
action for damages. But under the proposed article, she and her
parents would have such a right of action. thereafter. It is essential, however, that such injury should have been committed in a
manner contrary to morals, good customs or public policy.
Thus at one stroke, the legislator, if the forgoing rule is approved,
In the instant case, respondent Court found that it was the petitioner's "fraudulent and
would vouchsafe adequate legal remedy for that untold number of
deceptive protestations of love for and promise to marry plaintiff that made her
moral wrongs which it is impossible for human foresight to provide for
specifically in the statutes. 21 surrender her virtue and womanhood to him and to live with him on the honest and
sincere belief that he would keep said promise, and it was likewise these fraud and It has been ruled in the Buenaventura case (supra) that —
deception on appellant's part that made plaintiff's parents agree to their daughter's
living-in with him preparatory to their supposed marriage." 24 In short, the private To constitute seduction there must in all cases be
respondent surrendered her virginity, the cherished possession of every single Filipina, some sufficient promise or inducement and the
not because of lust but because of moral seduction — the kind illustrated by the Code woman must yield because of the promise or other
Commission in its example earlier adverted to. The petitioner could not be held liable inducement. If she consents merely from carnal lust
for criminal seduction punished under either Article 337 or Article 338 of the Revised and the intercourse is from mutual desire, there is no
Penal Code because the private respondent was above eighteen (18) years of age at seduction (43 Cent. Dig. tit. Seduction, par. 56) She
the time of the seduction. must be induced to depart from the path of virtue by
the use of some species of arts, persuasions and
Prior decisions of this Court clearly suggest that Article 21 may be applied in a breach wiles, which are calculated to have and do have that
of promise to marry where the woman is a victim of moral seduction. Thus, effect, and which result in her person to ultimately
in Hermosisima vs. Court of Appeals,25 this Court denied recovery of damages to the submitting her person to the sexual embraces of her
woman because: seducer (27 Phil. 123).

. . . we find ourselves unable to say that petitioner is morally guilty of And in American Jurisprudence we find:
seduction, not only because he is approximately ten (10) years
younger than the complainant — who was around thirty-six (36) years On the other hand, in an action by the woman, the
of age, and as highly enlightened as a former high school teacher and enticement, persuasion or deception is the essence
a life insurance agent are supposed to be — when she became of the injury; and a mere proof of intercourse is
intimate with petitioner, then a mere apprentice pilot, but, also, insufficient to warrant a recovery.
because the court of first instance found that, complainant
"surrendered herself" to petitioner because, "overwhelmed by her
Accordingly it is not seduction where the willingness
love" for him, she "wanted to bind" him by having a fruit of their
arises out of sexual desire of curiosity of the female,
engagement even before they had the benefit of clergy.
and the defendant merely affords her the needed
opportunity for the commission of the act. It has been
In Tanjanco vs. Court of Appeals, 26 while this Court likewise hinted at possible emphasized that to allow a recovery in all such cases
recovery if there had been moral seduction, recovery was eventually denied because would tend to the demoralization of the female sex,
We were not convinced that such seduction existed. The following enlightening and would be a reward for unchastity by which a class
disquisition and conclusion were made in the said case: of adventuresses would be swift to profit. (47 Am. Jur.
The Court of Appeals seem to have overlooked that the example set
forth in the Code Commission's memorandum refers to a tort upon a xxx xxx xxx
minor who had been seduced. The essential feature is seduction, that
in law is more than mere sexual intercourse, or a breach of a promise
Over and above the partisan allegations, the fact stand out that for one
of marriage; it connotes essentially the idea of deceit, enticement,
whole year, from 1958 to 1959, the plaintiff-appellee, a woman of adult
superior power or abuse of confidence on the part of the seducer to
age, maintain intimate sexual relations with appellant, with repeated
which the woman has yielded (U.S. vs. Buenaventura, 27 Phil. 121;
acts of intercourse. Such conduct is incompatible with the idea of
U.S. vs. Arlante, 9 Phil. 595). seduction. Plainly there is here voluntariness and mutual passion; for
had the appellant been deceived, had she surrendered exclusively to a man, it cannot be said that there is an injury which can be the
because of the deceit, artful persuasions and wiles of the defendant, basis for indemnity.
she would not have again yielded to his embraces, much less for one
year, without exacting early fulfillment of the alleged promises of But so long as there is fraud, which is characterized by willfulness
marriage, and would have cut short all sexual relations upon finding (sic), the action lies. The court, however, must weigh the degree of
that defendant did not intend to fulfill his defendant did not intend to fraud, if it is sufficient to deceive the woman under the circumstances,
fulfill his promise. Hence, we conclude that no case is made under because an act which would deceive a girl sixteen years of age may
article 21 of the Civil Code, and no other cause of action being alleged, not constitute deceit as to an experienced woman thirty years of age.
no error was committed by the Court of First Instance in dismissing But so long as there is a wrongful act and a resulting injury, there
the complaint. 27 should be civil liability, even if the act is not punishable under the
criminal law and there should have been an acquittal or dismissal of
In his annotations on the Civil Code, 28 Associate Justice Edgardo L. Paras, who the criminal case for that reason.
recently retired from this Court, opined that in a breach of promise to marry where there
had been carnal knowledge, moral damages may be recovered: We are unable to agree with the petitioner's alternative proposition to the effect that
granting, for argument's sake, that he did promise to marry the private respondent, the
. . . if there be criminal or moral seduction, but not if the intercourse latter is nevertheless also at fault. According to him, both parties are in pari delicto;
was due to mutual lust. (Hermosisima vs. Court of Appeals, hence, pursuant to Article 1412(1) of the Civil Code and the doctrine laid down
L-14628, Sept. 30, 1960; Estopa vs. Piansay, Jr., L-14733, Sept. 30, in Batarra vs. Marcos, 32 the private respondent cannot recover damages from the
1960; Batarra vs. Marcos, 7 Phil. 56 (sic); Beatriz Galang vs. Court of petitioner. The latter even goes as far as stating that if the private respondent had
Appeals, et al., L-17248, Jan. 29, 1962). (In other words, if the CAUSE "sustained any injury or damage in their relationship, it is primarily because of her own
be the promise to marry, and the EFFECT be the carnal knowledge, doing, 33 for:
there is a chance that there was criminal or moral seduction, hence
recovery of moral damages will prosper. If it be the other way around, . . . She is also interested in the petitioner as the latter will become a
there can be no recovery of moral damages, because here mutual lust doctor sooner or later. Take notice that she is a plain high school
has intervened). . . . graduate and a mere employee . . . (Annex "C") or a waitress (TSN,
p. 51, January 25, 1988) in a luncheonette and without doubt, is in
together with "ACTUAL damages, should there be any, such as the expenses need of a man who can give her economic security. Her family is in
for the wedding presentations (See Domalagon v. Bolifer, 33 Phil. 471). dire need of financial assistance. (TSN, pp. 51-53, May 18, 1988). And
this predicament prompted her to accept a proposition that may have
Senator Arturo M. Tolentino 29 is also of the same persuasion: been offered by the petitioner. 34

It is submitted that the rule in Batarra vs. Marcos, 30 still subsists, These statements reveal the true character and motive of the petitioner. It is clear that
notwithstanding the incorporation of the present article 31 in the Code. he harbors a condescending, if not sarcastic, regard for the private respondent on
The example given by the Code Commission is correct, if there account of the latter's ignoble birth, inferior educational background, poverty and, as
was seduction, not necessarily in the legal sense, but in the vulgar perceived by him, dishonorable employment. Obviously then, from the very beginning,
sense of deception. But when the sexual act is accomplished without he was not at all moved by good faith and an honest motive. Marrying with a woman
any deceit or qualifying circumstance of abuse of authority or so circumstances could not have even remotely occurred to him. Thus, his profession
influence, but the woman, already of age, has knowingly given herself of love and promise to marry were empty words directly intended to fool, dupe, entice,
beguile and deceive the poor woman into believing that indeed, he loved her and would
want her to be his life's partner. His was nothing but pure lust which he wanted satisfied their marriage. It is the solemn duty of parents to protect the honor of their daughters
by a Filipina who honestly believed that by accepting his proffer of love and proposal and infuse upon them the higher values of morality and dignity.
of marriage, she would be able to enjoy a life of ease and security. Petitioner clearly
violated the Filipino's concept of morality and brazenly defied the traditional respect WHEREFORE, finding no reversible error in the challenged decision, the instant
Filipinos have for their women. It can even be said that the petitioner committed such petition is hereby DENIED, with costs against the petitioner.
deplorable acts in blatant disregard of Article 19 of the Civil Code which directs every
person to act with justice, give everyone his due and observe honesty and good faith
in the exercise of his rights and in the performance of his obligations.

No foreigner must be allowed to make a mockery of our laws, customs and traditions.

The pari delicto rule does not apply in this case for while indeed, the private respondent
may not have been impelled by the purest of intentions, she eventually submitted to
the petitioner in sexual congress not out of lust, but because of moral seduction. In
fact, it is apparent that she had qualms of conscience about the entire episode for as
soon as she found out that the petitioner was not going to marry her after all, she left
him. She is not, therefore, in pari delicto with the petitioner. Pari delicto means "in equal
fault; in a similar offense or crime; equal in guilt or in legal fault." 35At most, it could be
conceded that she is merely in delicto.

Equity often interferes for the relief of the less guilty of the parties,
where his transgression has been brought about by the imposition of
undue influence of the party on whom the burden of the original wrong
principally rests, or where his consent to the transaction was itself
procured by
fraud. 36

In Mangayao vs. Lasud, 37 We declared:

Appellants likewise stress that both parties being at fault, there should
be no action by one against the other (Art. 1412, New Civil Code). This
rule, however, has been interpreted as applicable only where the fault
on both sides is, more or less, equivalent. It does not apply where one
party is literate or intelligent and the other one is not. (c.f. Bough vs.
Cantiveros, 40 Phil. 209).

We should stress, however, that while We find for the private respondent, let it not be
said that this Court condones the deplorable behavior of her parents in letting her and
the petitioner stay together in the same room in their house after giving approval to
10. Rellosa vs. Pellosis of the Office of the Building Official. On 12 December 1989, petitioners once again
hired workers and proceeded with the demolition of respondents' houses.
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 Resultantly, respondents filed Civil Case No. 89-49176 before the Regional Trial
faith.[1] This provision in our law is not just a declaration of principle for it can in itself Court of Manila, Branch 54, praying that petitioners be ordered to pay moral and
constitute, when unduly ignored or violated, a valid source of a cause of action or exemplary damages, as well as attorneys fees, for the untimely demolition of the
defense. houses. After trial, the court dismissed the complaint of respondents and instead
ordered them to pay petitioners moral damages. On appeal, the Court of Appeals, on
The case seeks to reverse the Court of Appeals in not countenancing an attempt the basis of its findings and conclusions, reversed the decision of the trial court and
to abridge and render inutile a legal right to contest an adverse ruling of an agency of ordered petitioners to pay respondents the following sums:
Respondents were lessees of a parcel of land, owned by one Marta Reyes, "1) Seventy Five Thousand Pesos (P75,000.00) , or Twenty Five Thousand Pesos
located at San Pascual Street, Malate, Manila. Respondents had built their houses on (P25,000.00) for each appellant, by way of moral damages;"
the land which, over the years, underwent continuous improvements. After the demise
of Marta, the land was inherited by her son Victor Reyes. Sometime in 1986, Victor "2) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five thousand Pesos
informed respondents that, for being lessees of the land for more than twenty (20) (P25,000.00) for each appellant, by way of exemplary damages;"
years, they would have a right of first refusal to buy the land. Sometime in the early
part of 1989, without the knowledge of respondents, the land occupied by them was "3) Fifteen Thousand Pesos (P15,000.00) as and for attorney's fees; and
sold to petitioner Cynthia Ortega who was able to ultimately secure title to the property
in her name.
"4) The costs of suit."[2]
On 25 May 1989, Cynthia Ortega, filed a petition for condemnation, docketed
Condemnation Case No. 89-05-007, with the Office of the Building Official, City of The appellate court ruled:
Manila, of the structures on the land.
On 31 May 1989, respondents filed with the Regional Trial Court of Manila a suit "Thus, by the clear provisions of paragraph 23 of the Implementing Rules and
for the Declaration of Nullity of the Sale, docketed as Civil Case No. 89-49176, made Regulations of PD 1096 (otherwise known as the Building Code), above, appellants,
in favor of petitioner Cynthia Ortega predicated upon their right of first refusal which being the parties adversely affected by the November 27, 1989 Resolution of the Office
was claimed to have been impinged upon the sale of the land to petitioner Ortega of the Building Official, had fifteen (15) days from receipt of a copy of the same within
without their knowledge. which to perfect an administrative appeal.Thus, since appellants received a copy of
the Resolution on December 7, 1989, they had until December 22, 1989 within which
After due hearing in the condemnation case, the Office of the Building Official to perfect an administrative appeal and until such time, the said Resolution was not yet
issued a resolution, dated 27 November 1989, ordering the demolition of the houses final and executory."
of respondents. Copies of the resolution were served upon respondents and their
counsel on 07 December 1989. The following day, or on 08 December 1989, Cynthia xxxxxxxxx
Ortega, together with her father and co-petitioner, Vicente Rellosa, hired workers to
commence the demolition of respondents' houses. Due to the timely intervention of a
"It cannot be denied, therefore, that when appellees commenced to demolish
mobile unit of the Western Police District, the intended demolition did not take place
appellants' houses as early as December 8, 1989 and eventually on December 12,
following talks between petitioner Rellosa and counsel who pleaded that the demolition
1989, neither the Resolution of the Building Official nor the Demolition Order itself were
be suspended since the order sought to be implemented was not yet final and
final and executory."[3]
executory. On 11 December 1989, respondents filed their appeal contesting the order
Petitioners filed the instant petition contending that the appellate court gravely WHEREFORE, the assailed decision of the Court of Appeals is MODIFIED by
erred in ruling that the premature demolition of respondents' houses entitled them to reducing the awards of P75,000.00 exemplary damages and of P75,000.00 moral
the award of damages.Petitioners pointed out that the order of the Office of the Building damages to each respondent reduced to P20,000.00 exemplary damages and
Official was eventually upheld on appeal by the Department of Public Works and P20,000.00 moral damages for each respondent. In all other respe
Highways in its decision of 14 March 1990.Furthermore, petitioners added, the
structures subject matter of the demolition order were declared to be dangerous
structures by the Office of the Building Official and, as such, could be abated to avoid
danger to the public.
The Court rules for affirmance of the assailed decision.
A right is a power, privilege, or immunity guaranteed under a constitution, statute
or decisional law, or recognized as a result of long usage, [4] constitutive of a legally
enforceable claim of one person against another.
Petitioner might verily be the owner of the land, with the right to enjoy[5] and to
exclude any person from the enjoyment and disposal thereof,[6] but the exercise of
these rights is not without limitations. The abuse of rights rule established in Article 19
of the Civil Code requires every person to act with justice, to give everyone his due; and
to observe honesty and good faith.[7] When a right is exercised in a manner which
discards these norms resulting in damage to another, a legal wrong is committed for
which the actor can be held accountable. In this instance, the issue is not so much
about the existence of the right or validity of the order of demolition as the question of
whether or not petitioners have acted in conformity with, and not in disregard of, the
standard set by Article 19 of the Civil Code.
At the time petitioners implemented the order of demolition, barely five days after
respondents received a copy thereof, the same was not yet final and executory. The
law provided for a fifteen-day appeal period in favor of a party aggrieved by an adverse
ruling of the Office of the Building Official but by the precipitate action of petitioners in
demolishing the houses of respondents (prior to the expiration of the period to appeal),
the latter were effectively deprived of this recourse. The fact that the order of demolition
was later affirmed by the Department of Public Works and Highways was of no
moment. The action of petitioners up to the point where they were able to secure an
order of demolition was not condemnable but implementing the order unmindful of the
right of respondents to contest the ruling was a different matter and could only be held
utterly indefensible.
The Court, however, finds the award of P75,000.00 exemplary damages and
another of P75,000.00 moral damages for each respondent to be rather excessive
given the circumstances; the awards must be reduced to the reasonable amounts of
P20,000.00 exemplary damages and P20,000.00 moral damages.
11. NPC vs Phillipp Bros PHIBROs ability to supply the needed coal.[6] From July 23 to July 31, 1987, PHIBRO
again apprised NAPOCOR of the situation in Australia, particularly informing the latter
Where a person merely uses a right pertaining to him, without bad faith or intent that the ship owners therein are not willing to load cargo unless a strike-free clause is
to injure, the fact that damages are thereby suffered by another will not make him incorporated in the charter party or the contract of carriage. [7] In order to hasten the
liable.[1] transfer of coal, PHIBRO proposed to NAPOCOR that they equally share the burden
This principle finds useful application to the present case. of a strike-free clause. NAPOCOR refused.

Before us is a petition for review of the Decision[2] dated August 27, 1996 of the On August 6, 1987, PHIBRO received from NAPOCOR a confirmed and workable
Court of Appeals affirming in toto the Decision[3] dated January 16, 1992 of the letter of credit. Instead of delivering the coal on or before the thirtieth day after receipt
Regional Trial Court, Branch 57, Makati City. of the Letter of Credit, as agreed upon by the parties in the July contract, PHIBRO
effected its first shipment only on November 17, 1987.
The facts are:
Consequently, in October 1987, NAPOCOR once more advertised for the delivery
On May 14, 1987, the National Power Corporation (NAPOCOR) issued invitations of coal to its Calaca thermal plant. PHIBRO participated anew in this subsequent
to bid for the supply and delivery of 120,000 metric tons of imported coal for its bidding. On November 24, 1987, NAPOCOR disapproved PHIBROs application for
Batangas Coal-Fired Thermal Power Plant in Calaca, Batangas. The Philipp Brothers pre-qualification to bid for not meeting the minimum requirements. [8] Upon further
Oceanic, Inc. (PHIBRO) prequalified and was allowed to participate as one of the inquiry, PHIBRO found that the real reason for the disapproval was its purported failure
bidders. After the public bidding was conducted, PHIBROs bid was accepted. to satisfy NAPOCORs demand for damages due to the delay in the delivery of the first
NAPOCORs acceptance was conveyed in a letter dated July 8, 1987, which was coal shipment.
received by PHIBRO on July 15, 1987.
This prompted PHIBRO to file an action for damages with application for injunction
The Bidding Terms and Specifications[4] provide for the manner of shipment of against NAPOCOR with the Regional Trial Court, Branch 57, Makati City. [9] In its
coals, thus: complaint, PHIBRO alleged that NAPOCORs act of disqualifying it in the October 1987
bidding and in all subsequent biddings was tainted with malice and bad faith. PHIBRO
SECTION V prayed for actual, moral and exemplary damages and attorneys fees.
In its answer, NAPOCOR averred that the strikes in Australia could not be invoked
SHIPMENT as reason for the delay in the delivery of coal because PHIBRO itself admitted that as
of July 28, 1987 those strikes had already ceased. And, even assuming that the strikes
The winning TENDERER who then becomes the SELLER shall arrange and provide were still ongoing, PHIBRO should have shouldered the burden of a strike-free clause
gearless bulk carrier for the shipment of coal to arrive at discharging port on or because their contract was C and F Calaca, Batangas, Philippines, meaning,
before thirty (30) calendar days after receipt of the Letter of Credit by the SELLER the cost and freight from the point of origin until the point of destination would be for
or its nominee as per Section XIV hereof to meet the vessel arrival schedules at the account of PHIBRO. Furthermore, NAPOCOR claimed that due to PHIBROs failure
Calaca, Batangas, Philippines as follows: to deliver the coal on time, it was compelled to purchase coal from ASEA at a higher
price. NAPOCOR claimed for actual damages in the amount of P12,436,185.73,
60,000 +/ - 10 % July 20, 1987 representing the increase in the price of coal, and a claim of P500,000.00 as litigation
60,000 +/ - 10% September 4, 1987[5] Thereafter, trial on the merits ensued.

On July 10, 1987, PHIBRO sent word to NAPOCOR that industrial disputes might On January 16, 1992, the trial court rendered a decision in favor of PHIBRO, the
soon plague Australia, the shipments point of origin, which could seriously hamper dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff Philipp Brothers the definition of force majeure in Section XVII of the Bidding Terms and Specifications,
Oceanic Inc. (PHIBRO) and against the defendant National Power Corporation (supra), so Phibro is not liable for any delay caused thereby.
(NAPOCOR) ordering the said defendant NAPOCOR:
Phibro was informed of the acceptance of its bid on July 8, 1987. Delivery of coal was
1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the defendant to be effected thirty (30) days from Napocors opening of a confirmed and workable
National Power Corporations list of accredited bidders and allow PHIBRO letter of credit. Napocor was only able to do so on August 6, 1987.
to participate in any and all future tenders of National Power Corporation
for the supply and delivery of imported steam coal; By that time, Australias coal industry was in the middle of a seething controversy and
2 To pay Philipp Brothers Oceanic, Inc. (PHIBRO); unrest, occasioned by strikes, overtime bans, mine stoppages. The origin, the scope
and the effects of this industrial unrest are lucidly described in the uncontroverted
testimony of James Archibald, an employee of Phibro and member of the Export
a. The peso equivalent at the time of payment of $864,000 as actual Committee of the Australian Coal Association during the time these events transpired.
b. The peso equivalent at the time of payment of $100,000 as moral
The records also attest that Phibro periodically informed Napocor of these
developments as early as July 1, 1987, even before the bid was approved. Yet,
c. The peso equivalent at the time of payment of $ 50,000 as exemplary Napocor did not forthwith open the letter of credit in order to avoid delay which might
damages; be caused by the strikes and their after-effects.

d. The peso equivalent at the time of payment of $73,231.91 as Strikes are undoubtedly included in the force majeure clause of the Bidding Terms and
reimbursement for expenses, cost of litigation and attorneys Specifications (supra). The renowned civilist, Prof. Arturo Tolentino, defines
fees; force majeure as an event which takes place by accident and could not have been
foreseen. (Civil Code of the Philippines, Volume IV, Obligations and Constracts, 126,
3. To pay the costs of suit; [1991]) He further states:
4. The counterclaims of defendant NAPOCOR are dismissed for lack of
merit. Fortuitous events may be produced by two general causes: (1) by Nature, such as
earthquakes, storms, floods, epidemics, fires, etc., and (2) by the act of man, such as
an armed invasion, attack by bandits, governmental prohibitions, robbery, etc.

Tolentino adds that the term generally applies, broadly speaking, to natural
Unsatisfied, NAPOCOR, through the Solicitor General, elevated the case to the
accidents. In order that acts of man such as a strike, may constitute fortuitous event, it
Court of Appeals. On August 27, 1996, the Court of Appeals rendered a Decision
is necessary that they have the force of an imposition which the debtor could not have
affirming in toto the Decision of the Regional Trial Court. It ratiocinated that:
resisted. He cites a parallel example in the case of Philippine National Bank v. Court
of Appeals, 94 SCRA 357 (1979), wherein the Supreme Court said that the outbreak
There is ample evidence to show that although PHIBROs delivery of the shipment of of war which prevents performance exempts a party from liability.
coal was delayed, the delay was in fact caused by a) Napocors own delay in opening
a workable letter of credit; and b) the strikes which plaqued the Australian coal industry
from the first week of July to the third week of September 1987. Strikes are included in
Hence, by law and by stipulation of the parties, the strikes which took place in Australia Respondent Court of Appeals gravely and seriously erred in dismissing
from the first week of July to the third week of September, 1987, exempted Phibro from NAPOCORs counterclaims for damages and litigation expenses.[17]
the effects of delay of the delivery of the shipment of coal.[12]
It is axiomatic that only questions of law, not questions of fact, may be raised
Twice thwarted, NAPOCOR comes to us via a petition for review ascribing to the before this Court in a petition for review under Rule 45 of the Rules of Court. [18] The
Court of Appeals the following errors: findings of facts of the Court of Appeals are conclusive and binding on this Court [19] and
they carry even more weight when the said court affirms the factual findings of the trial
I court.[20] Stated differently, the findings of the Court of Appeals, by itself, which are
supported by substantial evidence, are almost beyond the power of review by this
Respondent Court of Appeals gravely and seriously erred in concluding and so Court.[21]
holding that PHIBROs delay in the delivery of imported coal was due to
NAPOCORs alleged delay in opening a letter of credit and to force majeure, and With the foregoing settled jurisprudence, we find it pointless to delve lengthily on
not to PHIBROs own deliberate acts and faults.[13] the factual issues raised by petitioner. The existence of strikes in Australia having been
duly established in the lower courts, we are left only with the burden of
II determining whether or not NAPOCOR acted wrongfully or with bad faith in
disqualifying PHIBRO from participating in the subsequent public bidding.
Respondent Court of Appeals gravely and seriously erred in concluding and so Let us consider the case in its proper perspective.
holding that NAPOCOR acted maliciously and unjustifiably in disqualifying
PHIBRO from participating in the December 8, 1987 and future biddings for the The Court of Appeals is justified in sustaining the Regional Trial Courts decision
supply of imported coal despite the existence of valid grounds therefor such as exonerating PHIBRO from any liability for damages to NAPOCOR as it was clearly
serious impairment of its track record.[14] established from the evidence, testimonial and documentary, that what prevented
PHIBRO from complying with its obligation under the July 1987 contract was the
industrial disputes which besieged Australia during that time. Extant in our Civil Code
III is the rule that no person shall be responsible for those events which could not be
foreseeen, or which, though foreseen, were inevitable.[22] This means that when an
Respondent Court of Appeals gravely and seriously erred in concluding and so obligor is unable to fulfill his obligation because of a fortuitous event or
holding that PHIBRO was entitled to injunctive relief, to actual or compensatory, force majeure, he cannot be held liable for damages for non-performance.[23]
moral and exemplary damages, attorneys fees and litigation expenses despite
the clear absence of legal and factual bases for such award.[15] In addition to the above legal precept, it is worthy to note that PHIBRO and
NAPOCOR explicitly agreed in Section XVII of the Bidding Terms and
IV Specifications[24] that neither seller (PHIBRO) nor buyer (NAPOCOR) shall be liable for
any delay in or failure of the performance of its obligations, other than the payment of
money due, if any such delay or failure is due to Force Majeure. Specifically,
Respondent Court of Appeals gravely and seriously erred in absolving PHIBRO they defined force majeure as any disabling cause beyond the control of and without
from any liability for damages to NAPOCOR for its unjustified and deliberate fault or negligence of the party, which causes may include but are not restricted to Acts
refusal and/or failure to deliver the contracted imported coal within the stipulated of God or of the public enemy; acts of the Government in either its sovereign or
period.[16] contractual capacity; governmental restrictions; strikes, fires, floods, wars, typhoons,
storms, epidemics and quarantine restrictions.
The law is clear and so is the contract between NAPOCOR and
PHIBRO. Therefore, we have no reason to rule otherwise.
However, proceeding from the premise that PHIBRO was prevented by Since there is no evidence to prove bad faith and arbitrariness on the part of the
force majeure from complying with its obligation, does it necessarily follow that petitioners in evaluating the bids, we rule that the private respondents are not
NAPOCOR acted unjustly, capriciously, and unfairly in disapproving PHIBROs entitled to damages representing lost profits. (Emphasis supplied)
application for pre-qualification to bid?
First, it must be stressed that NAPOCOR was not bound under any contract to Verily, a reservation of the government of its right to reject any bid, generally vests
approve PHIBROs pre-qualification requirements. In fact, NAPOCOR had expressly in the authorities a wide discretion as to who is the best and most advantageous
reserved its right to reject bids. The Instruction to Bidders found in the Post- bidder. The exercise of such discretion involves inquiry, investigation, comparison,
Qualification Documents/ Specifications for the Supply and Delivery of Coal for the deliberation and decision, which are quasi-judicial functions, and when honestly
Batangas Coal-Fired Thermal Power Plant I at Calaca, Batangas Philippines,[25] is exercised, may not be reviewed by the court.[30] In Bureau Veritas v. Office of the
explicit, thus: President,[31] we decreed:

IB-17 RESERVATION OF NAPOCOR TO REJECT BIDS The discretion to accept or reject a bid and award contracts is vested in the
Government agencies entrusted with that function. The discretion given to the
authorities on this matter is of such wide latitude that the Courts will not interfere
NAPOCOR reserves the right to reject any or all bids, to waive any therewith, unless it is apparent that it is used as a shield to a fraudulent
minor informality in the bids received. The right is also reserved to award. (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x.The exercise of this
reject the bids of any bidder who has previously failed to properly discretion is a policy decision that necessitates prior inquiry, investigation, comparison,
perform or complete on time any and all contracts for delivery of evaluation, and deliberation. This task can best be discharged by the Government
coal or any supply undertaken by a bidder.[26] (Emphasis supplied) agencies concerned, not by the Courts. The role of the Courts is to ascertain whether
a branch or instrumentality of the Government has transgresses its constitutional
This Court has held that where the right to reject is so reserved, the lowest bid or boundaries. But the Courts will not interfere with executive or legislative discretion
any bid for that matter may be rejected on a mere technicality. [27] And where the exercised within those boundaries. Otherwise, it strays into the realm of policy
government as advertiser, availing itself of that right, makes its choice in rejecting any decision-making. x x x. (Emphasis supplied)
or all bids, the losing bidder has no cause to complain nor right to dispute that choice
unless an unfairness or injustice is shown. Accordingly, a bidder has no ground of Owing to the discretionary character of the right involved in this case, the propriety
action to compel the Government to award the contract in his favor, nor to of NAPOCORs act should therefore be judged on the basis of the general principles
compel it to accept his bid. Even the lowest bid or any bid may be regulating human relations, the forefront provision of which is Article 19 of the Civil
rejected.[28] In Celeste v. Court of Appeals,[29] we had the occasion to rule: Code which provides that every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe honesty
Moreover, paragraph 15 of the Instructions to Bidders states that the Government and good faith.[32] Accordingly, a person will be protected only when he acts in the
hereby reserves the right to reject any or all bids submitted. In the case of A.C. legitimate exercise of his right, that is, when he acts with prudence and in good faith;
Esguerra and Sons v. Aytona, 4 SCRA 1245, 1249 (1962), we held: but not when he acts with negligence or abuse.[33]
Did NAPOCOR abuse its right or act unjustly in disqualifying PHIBRO from the
x x x [I]n the invitation to bid, there is a condition imposed upon the bidders to the effect
that the bidders shall be subject to the right of the government to reject any and all bids public bidding?
subject to its discretion. Here the government has made its choice, and unless an We rule in the negative.
unfairness or injustice is shown, the losing bidders have no cause to complain,
nor right to dispute that choice. In practice, courts, in the sound exercise of their discretion, will have to determine
under all the facts and circumstances when the exercise of a right is unjust, or when
there has been an abuse of right.[34]
We went over the record of the case with painstaking solicitude and we are On the legal aspect, Management stressed that failure of PBO to deliver under
convinced that NAPOCORs act of disapproving PHIBRO's application for pre- the contract makes them liable for damages, considering that the reasons
qualification to bid was without any intent to injure or a purposive motive to perpetrate invoked were not valid. The measure of the damages will be limited to actual and
damage. Apparently, NAPOCOR acted on the strong conviction that PHIBRO had a compensatory damages. However, it was reported that Philipp Brothers advised they
seriously-impaired track record. NAPOCOR cannot be faulted from believing so. At this would like to have continuous business relation with NPC so they are willing to sit down
juncture, it is worth mentioning that at the time NAPOCOR issued its subsequent or even proposed that the case be submitted to the Department of Justice as to avoid
Invitation to Bid, i.e., October 1987, PHIBRO had not yet delivered the first shipment a court action or arbitration.
of coal under the July 1987 contract, which was due on or before September 5,
1987. Naturally, NAPOCOR is justified in entertaining doubts on PHIBROs qualification xxxxxx
or capability to assume an obligation under a new contract.
Moreover, PHIBROs actuation in 1987 raised doubts as to the real situation of the On the technical-economic aspect, Management claims that if PBO delivers in
coal industry in Australia. It appears from the records that when NAPOCOR was November 1987 and January 1988, there are some advantages. If PBO reacts to any
constrained to consider an offer from another coal supplier (ASEA) at a price of legal action and fails to deliver, the options are: one, to use 100% Semirara and
US$33.44 per metric ton, PHIBRO unexpectedly offered the immediate delivery of second, to go into urgent coal order. The first option will result in a 75 MW derating and
60,000 metric tons of Ulan steam coal at US$31.00 per metric ton for arrival at Calaca, oil will be needed as supplement. We will stand to lose around P30 M. On the other
Batangas on September 20-21, 1987.[35] Of course, NAPOCOR had reason to ponder- hand, if NPC goes into an urgent coal order, there will be an additional expense of
- how come PHIBRO could assure the immediate delivery of 60,000 metric tons $786,000 or P16.11 M, considering the price of the latest purchase with ASEA. On
of coal from the same source to arrive at Calaca not later than September 20/21, both points, reliability is decreased. [38]
1987 but it could not deliver the coal it had undertaken under its contract?
The very purpose of requiring a bidder to furnish the awarding authority its pre-
Significantly, one characteristic of a fortuitous event, in a legal sense, and qualification documents is to ensure that only those responsible and qualified bidders
consequently in relations to contracts, is that the concurrence must be such as to could bid and be awarded with government contracts. It bears stressing that the award
render it impossible for the debtor to fulfill his obligation in a normal manner. [36] Faced of a contract is measured not solely by the smallest amount of bid for its performance,
with the above circumstance, NAPOCOR is justified in assuming that, may be, there but also by the responsibility of the bidder. Consequently, the integrity, honesty, and
was really no fortuitous event or force majeure which could render it impossible for trustworthiness of the bidder is to be considered. An awarding official is justified in
PHIBRO to effect the delivery of coal. Correspondingly, it is also justified in treating considering a bidder not qualified or not responsible if he has previously defrauded the
PHIBROs failure to deliver a serious impairment of its track record. That the trial court, public in such contracts or if, on the evidence before him, the official bona fide believes
thereafter, found PHIBROs unexpected offer actually a result of its desire to minimize the bidder has committed such fraud, despite the fact that there is yet no judicial
losses on the part of NAPOCOR is inconsequential. In determining the existence of determination to that effect.[39] Otherwise stated, if the awarding body bona
good faith, the yardstick is the frame of mind of the actor at the time he committed the fide believes that a bidder has seriously impaired its track record because of a
act, disregarding actualities or facts outside his knowledge. We cannot fault particular conduct, it is justified in disqualifying the bidder. This policy is necessary to
NAPOCOR if it mistook PHIBROs unexpected offer a mere attempt on the latters part protect the interest of the awarding body against irresponsible bidders.
to undercut ASEA or an indication of PHIBROs inconsistency. The circumstances
warrant such contemplation. Thus, one who acted pursuant to the sincere belief that another willfully committed
an act prejudicial to the interest of the government cannot be considered to have acted
That NAPOCOR believed all along that PHIBROs failure to deliver on time was in bad faith. Bad faith has always been a question of intention. It is that corrupt motive
unfounded is manifest from its letters[37] reminding PHIBRO that it was bound to deliver that operates in the mind. As understood in law, it contemplates a state of mind
the coal within 30 days from its (PHIBROs) receipt of the Letter of Credit, otherwise it affirmatively operating with furtive design or with some motive of self-interest or ill-will
would be constrained to take legal action. The same honest belief can be deduced or for ulterior purpose.[40] While confined in the realm of thought, its presence may be
from NAPOCORs Board Resolution, thus: ascertained through the partys actuation or through circumstantial evidence. [41] The
circumstances under which NAPOCOR disapproved PHIBRO's pre-qualification to bid profits is not too speculative and conjectural as to show the actual damages which may
do not show an intention to cause damage to the latter. The measure it adopted was be suffered on a future period.
one of self-protection. Consequently, we cannot penalize NAPOCOR for the course of
action it took. NAPOCOR cannot be made liable for actual, moral and exemplary In Pantranco North Express, Inc. v. Court of Appeals,[44] this Court denied the
damages. plaintiffs claim for actual damages which was premised on a contract he was about to
negotiate on the ground that there was still the requisite public bidding to be complied
Corollarily, in awarding to PHIBRO actual damages in the amount of $864,000, with, thus:
the Regional Trial Court computed what could have been the profits of PHIBRO had
NAPOCOR allowed it to participate in the subsequent public bidding. It ruled that As to the alleged contract he was about to negotiate with Minister Hipolito, there is no
PHIBRO would have won the tenders for the supply of about 960,000 metric tons out showing that the same has been awarded to him. If Tandoc was about to negotiate a
of at least 1,200,000 metric tons from the public bidding of December 1987 to 1990. We contract with Minister Hipolito, there was no assurance that the former would get it or
quote the trial courts ruling, thus: that the latter would award the contract to him since there was the requisite public
bidding. The claimed loss of profit arising out of that alleged contract which was
x x x. PHIBRO was unjustly excluded from participating in at least five (5) tenders still to be negotiated is a mere expectancy. Tandocs claim that he could have
beginning December 1987 to 1990, for the supply and delivery of imported coal with a earned P2 million in profits is highly speculative and no concrete evidence was
total volume of about 1,200,000 metric tons valued at no less than US$32 Million. presented to prove the same. The only unearned income to which Tandoc is entitled
(Exhs. AA, AA-1, to AA-2). The price of imported coal for delivery in 1988 was quoted to from the evidence presented is that for the one-month period, during which his
in June 1988 by bidders at US$ 41.35 to US $ 43.95 per metric ton (Exh. JJ); in business was interrupted, which is P6,125.00, considering that his annual net income
September 1988 at US$41.50 to US$49.50 per metric ton (Exh. J-1); in November was P73, 500.00.
1988 at US$ 39.00 to US$ 48.50 per metric ton (Exh. J-2) and for the 1989 deliveries,
at US$ 44.35 to US$ 47.35 per metric ton (Exh. J-3) and US$38.00 to US$48.25 per In Lufthansa German Airlines v. Court of Appeals,[45] this Court likewise disallowed
metric ton in September 1990 (Exh. JJ-6 and JJ-7). PHIBRO would have won the the trial court's award of actual damages for unrealized profits in the amount of
tenders for the supply and delivery of about 960,000 metric tons of coal out of at least US$75,000.00 for being highly speculative. It was held that the realization of profits by
1,200,000 metric tons awarded during said period based on its proven track record of respondent x x x was not a certainty, but depended on a number of factors, foremost
80%. The Court, therefore finds that as a result of its disqualification, PHIBRO of which was his ability to invite investors and to win the bid. This Court went further
suffered damages equivalent to its standard 3% margin in 960,000 metric tons saying that actual or compensatory damages cannot be presumed, but must be duly
of coal at the most conservative price of US$ 30.000 per metric ton, or the total proved, and proved with reasonable degree of certainty.
of US$ 864,000 which PHIBRO would have earned had it been allowed to
participate in biddings in which it was disqualified and in subsequent tenders And in National Power Corporation v. Court of Appeals,[46] the Court, in denying
for supply and delivery of imported coal. the bidders claim for unrealized commissions, ruled that even if NAPOCOR does not
deny its (bidder's) claims for unrealized commissions, and that these claims have been
We find this to be erroneous. transmuted into judicial admissions, these admissions cannot prevail over the rules
and regulations governing the bidding for NAPOCOR contracts, which necessarily and
Basic is the rule that to recover actual damages, the amount of loss must not only inherently include the reservation by the NAPOCOR of its right to reject any or all bids.
be capable of proof but must actually be proven with reasonable degree of certainty,
premised upon competent proof or best evidence obtainable of the actual amount The award of moral damages is likewise improper. To reiterate, NAPOCOR did
thereof.[42] A court cannot merely rely on speculations, conjectures, or guesswork as not act in bad faith. Moreover, moral damages are not, as a general rule, granted to a
to the fact and amount of damages. Thus, while indemnification for damages shall corporation.[47] While it is true that besmirched reputation is included in moral damages,
comprehend not only the value of the loss suffered, but also that of the profits which it cannot cause mental anguish to a corporation, unlike in the case of a natural person,
the obligee failed to obtain,[43] it is imperative that the basis of the alleged unearned for a corporation has no reputation in the sense that an individual has, and besides, it
is inherently impossible for a corporation to suffer mental anguish.[48] In LBC Express, But before we dispose of this case, we take this occasion to remind PHIBRO of
Inc. v. Court of Appeals,[49] we ruled: the indispensability of coal to a coal-fired thermal plant. With households and
businesses being entirely dependent on the electricity supplied by NAPOCOR, the
Moral damages are granted in recompense for physical suffering, mental anguish, delivery of coal cannot be venturesome. Indeed, public interest demands that one who
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social offers to deliver coal at an appointed time must give a reasonable assurance that it can
humiliation, and similar injury. A corporation, being an artificial person and having carry through. With the deleterious possible consequences that may result from failure
existence only in legal contemplation, has no feelings, no emotions, no senses; to deliver the needed coal, we believe there is greater strain of commitment in this kind
therefore, it cannot experience physical suffering and mental anguish. Mental suffering of obligation.
can be experienced only by one having a nervous system and it flows from real ills, WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 126204
sorrows, and griefs of life all of which cannot be suffered by respondent bank as an dated August 27, 1996 is hereby MODIFIED. The award, in favor of PHIBRO, of actual,
artificial person. moral and exemplary damages, reimbursement for expenses, cost of litigation and
attorneys fees, and costs of suit, is DELETED.
Neither can we award exemplary damages under Article 2234 of the Civil Code.
Before the court may consider the question of whether or not exemplary damages SO ORDERED.
should be awarded, the plaintiff must show that he is entitled to moral, temperate, or
compensatory damages.
NAPOCOR, in this petition, likewise contests the judgment of the lower courts
awarding PHIBRO the amount of $73,231.91 as reimbursement for expenses, cost of
litigation and attorneys fees.
We agree with NAPOCOR.
This Court has laid down the rule that in the absence of stipulation, a winning
party may be awarded attorney's fees only in case plaintiff's action or defendant's stand
is so untenable as to amount to gross and evident bad faith. [50] This cannot be said of
the case at bar. NAPOCOR is justified in resisting PHIBROs claim for damages. As a
matter of fact, we partially grant the prayer of NAPOCOR as we find that it did not act
in bad faith in disapproving PHIBRO's pre-qualification to bid.
Trial courts must be reminded that attorney's fees may not be awarded to a party
simply because the judgment is favorable to him, for it may amount to imposing a
premium on the right to redress grievances in court. We adopt the same policy with
respect to the expenses of litigation. A winning party may be entitled to expenses of
litigation only where he, by reason of plaintiff's clearly unjustifiable claims or
defendant's unreasonable refusal to his demands, was compelled to incur said
expenditures. Evidently, the facts of this case do not warrant the granting of such
litigation expenses to PHIBRO.
At this point, we believe that, in the interest of fairness, NAPOCOR should give
PHIBRO another opportunity to participate in future public bidding. As earlier
mentioned, the delay on its part was due to a fortuitous event.
12. Frenzel vs Catito Alfred told Ederlina that he was married but that he was eager to divorce his wife
in Australia. Alfred proposed marriage to Ederlina, but she replied that they should wait
Before us is a petition for review of the Decision[1] of the Court of Appeals in CA- a little bit longer.
G.R. CV No. 53485 which affirmed the Decision[2] of the Regional Trial Court of Davao
City, Branch 14, in Civil Case No. 17,817 dismissing the petitioners complaint, and the Ederlina found a building at No. 444 M.H. del Pilar corner Arquiza Street, Ermita,
resolution of the Court of Appeals denying his motion for reconsideration of the said Manila, owned by one Atty. Jose Hidalgo who offered to convey his rights over the
decision. property for P18,000.00. Alfred and Ederlina accepted the offer. Ederlina put up a
beauty parlor on the property under the business name Edorial Beauty Salon, and had
it registered with the Department of Trade and Industry under her name. Alfred paid
Atty. Hidalgo P20,000.00 for his right over the property and gave P300,000.00 to
The Antecedents[3] Ederlina for the purchase of equipment and furnitures for the parlor. As Ederlina was
going to Germany, she executed a special power of attorney on December 13,
1983[5] appointing her brother, Aser Catito, as her attorney-in-fact in managing the
As gleaned from the evidence of the petitioner, the case at bar stemmed from the
beauty parlor business. She stated in the said deed that she was married to Klaus
following factual backdrop:
Muller. Alfred went back to Papua New Guinea to resume his work as a pilot.
Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He is
When Alfred returned to the Philippines, he visited Ederlina in her Manila
an electrical engineer by profession, but worked as a pilot with the New Guinea
residence and found it unsuitable for her. He decided to purchase a house and lot
Airlines. He arrived in the Philippines in 1974, started engaging in business in the
owned byVictoria Binuya Steckel in San Francisco del Monte, Quezon City, covered
country two years thereafter, and married Teresita Santos, a Filipino citizen. In 1981,
by Transfer Certificate of Title No. 218429 for US$20,000.00. Since Alfred knew that
Alfred and Teresita separated from bed and board without obtaining a divorce.
as an alien he was disqualified from owning lands in the Philippines, he agreed that
Sometime in February 1983, Alfred arrived in Sydney, Australia for a vacation. He only Ederlinas name would appear in the deed of sale as the buyer of the property, as
went to Kings Cross, a night spot in Sydney, for a massage where he met Ederlina well as in the title covering the same. After all, he was planning to marry Ederlina and
Catito, a Filipina and a native of Bajada, Davao City. Unknown to Alfred, she resided he believed that after their marriage, the two of them would jointly own the property.
for a time in Germany and was married to Klaus Muller, a German national. She left On January 23, 1984, a Contract to Sell was entered into between Victoria Binuya
Germany and tried her luck in Sydney, Australia, where she found employment as Steckel as the vendor and Ederlina as the sole vendee. Alfred signed therein as a
a masseuse in the Kings Cross nightclub. She was fluent in German, and Alfred witness.[6] Victoria received from Alfred, for and in behalf of Ederlina, the amount of
enjoyed talking with her. The two saw each other again; this time Ederlina ended up US$10,000.00 as partial payment, for which Victoria issued a receipt. [7] When Victoria
staying in Alfreds hotel for three days. Alfred gave Ederlina sums of money for her executed the deed of absolute sale over the property on March 6, 1984,[8] she received
services.[4] from Alfred, for and in behalf of Ederlina, the amount of US$10,000.00 as final and full
payment. Victoria likewise issued a receipt for the said amount.[9] After Victoria had
Alfred was so enamored with Ederlina that he persuaded her to stop working at vacated the property, Ederlina moved into her new house. When she left for Germany
Kings Cross, return to the Philippines, and engage in a wholesome business of her to visit Klaus, she had her father Narciso Catito and her two sisters occupy the
own. He also proposed that they meet in Manila, to which she assented. Alfred gave property.
her money for her plane fare to the Philippines. Within two weeks of Ederlinas arrival
in Manila, Alfred joined her. Alfred reiterated his proposal for Ederlina to stay in the Alfred decided to stay in the Philippines for good and live with Ederlina. He
Philippines and engage in business, even offering to finance her business returned to Australia and sold his fiber glass pleasure boat to John Reid for $7,500.00
venture. Ederlina was delighted at the idea and proposed to put up a beauty on May 4, 1984.[10] He also sold his television and video business in Papua New
parlor. Alfred happily agreed. Guinea for K135,000.00 to Tekeraoi Pty. Ltd.[11] He had his personal properties shipped
to the Philippines and stored at No. 14 Fernandez Street, San Francisco del Monte,
Quezon City. The proceeds of the sale were deposited in Alfreds account with the
Hong Kong Shanghai Banking Corporation (HSBC), Kowloon Branch under Bank Alfred once more agreed for the name of Ederlina to appear as the sole vendee in the
Account No. 018-2-807016.[12] When Alfred was in Papua New Guinea selling his other deed of sale. On December 31, 1984, Atty. Camporedondo executed a deed of sale
properties, the bank sent telegraphic letters updating him of his account.[13] Several over the property for P65,000.00 in favor of Ederlina as the sole vendee.[21] Alfred,
checks were credited to his HSBC bank account from Papua New Guinea Banking through Ederlina, paid the lot at the cost of P33,682.00 and US$7,000.00, respectively,
Corporation, Westpac Bank of Australia and New Zealand Banking Group Limited and for which the vendor signed receipts.[22] On August 14, 1985, TCT No. 47246 was
Westpac BankPNG-Limited. Alfred also had a peso savings account with HSBC, issued to Ederlina as the sole owner of the said property.[23]
Manila, under Savings Account No. 01-725-183-01.[14]
Meanwhile, Ederlina deposited on December 27, 1985, the total amount of
Once, when Alfred and Ederlina were in Hong Kong, they opened another account US$250,000 with the HSBC Kowloon under Joint Deposit Account No. 018-462341-
with HSBC, Kowloon, this time in the name of Ederlina, under Savings Account No. 145.[24]
018-0-807950.[15] Alfred transferred his deposits in Savings Account No. 018-2-807016
with the said bank to this new account. Ederlina also opened a savings account with The couple decided to put up a beach resort on a four-hectare land in Camudmud,
the Bank of America Kowloon Main Office under Account No. 30069016. [16] Babak, Davao, owned by spouses Enrique and Rosela Serrano. Alfred purchased the
property from the spouses for P90,000.00, and the latter issued a receipt therefor.[25] A
On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter draftsman commissioned by the couple submitted a sketch of the beach
dated December 7, 1983 from Klaus Muller who was then residing in Berlin, Germany. resort.[26] Beach houses were forthwith constructed on a portion of the property and
Klaus informed Alfred that he and Ederlina had been married on October 16, 1978 and were eventually rented out by Ederlinas father, Narciso Catito. The rentals were
had a blissful married life until Alfred intruded therein. Klaus stated that he knew of collected by Narciso, while Ederlina kept the proceeds of the sale of copra from the
Alfred and Ederlinas amorous relationship, and discovered the same sometime in coconut trees in the property. By this time, Alfred had already spent P200,000.00 for
November 1983 when he arrived in Manila. He also begged Alfred to leave Ederlina the purchase, construction and upkeep of the property.
alone and to return her to him, saying that Alfred could not possibly build his future on
his (Klaus) misfortune.[17] Ederlina often wrote letters to her family informing them of her life with Alfred. In
a Letter dated January 21, 1985, she wrote about how Alfred had financed the
Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He purchases of some real properties, the establishment of her beauty parlor business,
inquired if there was any truth to Klaus statements and Sally confirmed that Klaus was and her petition to divorce Klaus.[27]
married to Ederlina. When Alfred confronted Ederlina, she admitted that she and Klaus
were, indeed, married. But she assured Alfred that she would divorce Klaus. Alfred Because Ederlina was preoccupied with her business in Manila, she executed on
was appeased. He agreed to continue the amorous relationship and wait for the July 8, 1985, two special powers of attorney[28] appointing Alfred as attorney-in-fact to
outcome of Ederlinas petition for divorce. After all, he intended to marry her. He receive in her behalf the title and the deed of sale over the property sold by the spouses
retained the services of Rechtsanwltin Banzhaf with offices in Berlin, as her counsel Enrique Serrano.
who informed her of the progress of the proceedings.[18] Alfred paid for the services of In the meantime, Ederlinas petition for divorce was denied because Klaus
the lawyer. opposed the same. A second petition filed by her met the same fate. Klaus wanted half
In the meantime, Alfred decided to purchase another house and lot, owned by of all the properties owned by Ederlina in the Philippines before he would agree to a
Rodolfo Morelos covered by TCT No. 92456 located in Pea Street, Bajada, Davao divorce. Worse, Klaus threatened to file a bigamy case against Ederlina.[29]
City.[19]Alfred again agreed to have the deed of sale made out in the name of Ederlina. Alfred proposed the creation of a partnership to Ederlina, or as an alternative, the
On September 7, 1984, Rodolfo Morelos executed a deed of absolute sale over the establishment of a corporation, with Ederlina owning 30% of the equity thereof. She
said property in favor of Ederlina as the sole vendee for the amount initially agreed to put up a corporation and contacted Atty. Armando Dominguez to
of P80,000.00.[20] Alfred paid US$12,500.00 for the property. prepare the necessary documents. Ederlina changed her mind at the last minute when
Alfred purchased another parcel of land from one Atty. Mardoecheo she was advised to insist on claiming ownership over the properties acquired by them
Camporedondo, located in Moncado, Babak, Davao, covered by TCT No. 35251. during their coverture.
Alfred and Ederlinas relationship started deteriorating. Ederlina had not been able partner did not contribute anything financially to the acquisition of the said real and
to secure a divorce from Klaus. The latter could charge her for bigamy and could even personal properties. These properties are as follows:
involve Alfred, who himself was still married. To avoid complications, Alfred decided to
live separately from Ederlina and cut off all contacts with her. In one of her letters to
Alfred, Ederlina complained that he had ruined her life. She admitted that the money
I. Real Properties
used for the purchase of the properties in Davao were his. She offered to convey the
properties deeded to her by Atty. Mardoecheo Camporedondo and Rodolfo Morelos,
asking Alfred to prepare her affidavit for the said purpose and send it to her for her a. TCT No. T-92456 located at Bajada, Davao City, consisting of 286 square
signature.[30] The last straw for Alfred came on September 2, 1985, when someone meters, (with residential house) registered in the name of the original title
smashed the front and rear windshields of Alfreds car and damaged the windows. owner Rodolfo M. Morelos but already fully paid by plaintiff. Valued
Alfred thereafter executed an affidavit-complaint charging Ederlina and Sally at P342,000.00;
MacCarron with malicious mischief.[31]
b. TCT No. T-47246 (with residential house) located at Babak, Samal,
On October 15, 1985, Alfred wrote to Ederlinas father, complaining that Ederlina Davao, consisting of 600 square meters, registered in the name of
had taken all his life savings and because of this, he was virtually penniless. He further Ederlina Catito, with the Register of Deeds of Tagum, Davao del Norte
accused the Catito family of acquiring for themselves the properties he had purchased valued at P144,000.00;
with his own money. He demanded the return of all the amounts that Ederlina and her
family had stolen and turn over all the properties acquired by him and Ederlina during c. A parcel of agricultural land located at Camudmud, Babak, Samal, Davao
their coverture.[32] del Norte, consisting of 4.2936 hectares purchased from Enrique Serrano
and Rosela B. Serrano. Already paid in full by plaintiff. Valued at
Shortly thereafter, Alfred filed a Complaint[33] dated October 28, 1985, against P228,608.32;
Ederlina, with the Regional Trial Court of Quezon City, for recovery of real and personal
properties located in Quezon City and Manila. In his complaint, Alfred alleged, inter
alia, that Ederlina, without his knowledge and consent, managed to transfer funds from
their joint account in HSBC Hong Kong, to her own account with the same bank. Using II. Personal Properties:
the said funds, Ederlina was able to purchase the properties subject of the complaints.
He also alleged that the beauty parlor in Ermita was established with his own funds,
and that the Quezon City property was likewise acquired by him with his personal a. Furniture valued at P10,000.00.
Ederlina failed to file her answer and was declared in default. Alfred adduced his
evidence ex-parte.
5. That defendant made no contribution at all to the acquisition of the above-mentioned
In the meantime, on November 7, 1985, Alfred also filed a complaint [35] against properties as all the monies (sic) used in acquiring said properties belonged solely to
Ederlina with the Regional Trial Court, Davao City, for specific performance, plaintiff;[36]
declaration of ownership of real and personal properties, sum of money, and damages.
He alleged, inter alia, in his complaint: Alfred prayed that after hearing, judgment be rendered in his favor:

4. That during the period of their common-law relationship, plaintiff solely through his WHEREFORE, in view of the foregoing premises, it is respectfully prayed that
own efforts and resources acquired in the Philippines real and personal properties judgment be rendered in favor of plaintiff and against defendant:
valued more or less at P724,000.00; The defendants common-law wife or live-in
a) Ordering the defendant to execute the corresponding deeds of transfer such, Alfred had no right to the same. She alleged that the deeds of sale, the receipts,
and/or conveyances in favor of plaintiff over those real and personal and certificates of titles of the subject properties were all made out in her name. [38] By
properties enumerated in Paragraph 4 of this complaint; way of special and affirmative defense, she alleged that Alfred had no cause of action
against her. She interposed counterclaims against the petitioner. [39]
b) Ordering the defendant to deliver to the plaintiff all the above real and
personal properties or their money value, which are in defendants name In the meantime, the petitioner filed a Complaint dated August 25, 1987, against
and custody because these were acquired solely with plaintiffs money the HSBC in the Regional Trial Court of Davao City[40] for recovery of bank deposits
and resources during the duration of the common-law relationship and damages.[41] He prayed that after due proceedings, judgment be rendered in his
between plaintiff and defendant, the description of which are as follows: favor, thus:
(1) TCT No. T-92456 (with residential house) located at Bajada, Davao City,
consisting of 286 square meters, registered in the name of the original WHEREFORE, plaintiff respectfully prays that the Honorable Court adjudge defendant
title owner Rodolfo Morelos but already fully paid by plaintiff. Valued at bank, upon hearing the evidence that the parties might present, to pay plaintiff:
plus legal interests, either of Hong Kong or of the Philippines, from 20 December 1984 up to the date of execution or satisfaction of judgment,
(2) TCT No. T-47246 (with residential house) located at Babak, Samal, as actual damages or in restoration of plaintiffs lost dollar savings;
Davao, consisting of 600 square meters, registered in the name of
Ederlina Catito, with the Register of Deeds of Tagum, Davao del Norte, 2.The same amount in (1) above as moral damages;

valued at P144,000.00;
3. Attorneys fees in the amount equivalent to TWENTY FIVE PER CENT (25%) of (1) and (2) above;
(3) A parcel of agricultural land located at Camudmud, Babak, Samal, Davao
del Norte, consisting of 4.2936 hectares purchased from Enrique Serrano 4. Litigation expenses in the amount equivalent to TEN PER CENT (10%) of the amount in (1) above; and

and Rosela B. Serrano. Already fully paid by plaintiff. Valued at

5. For such other reliefs as are just and equitable under the circumstances.[42]
c) Declaring the plaintiff to be the sole and absolute owner of the above- On April 28, 1986, the RTC of Quezon City rendered its decision in Civil Case No. Q-46350, in favor of Alfred, the decretal portion of
which reads as follows:
mentioned real and personal properties;
WHEREFORE, premises considered, judgment is hereby rendered ordering the defendant to perform the following:
d) Awarding moral damages to plaintiff in an amount deemed reasonable by
the trial court;
(1) To execute a document waiving her claim to the house and lot in No. 14 Fernandez St., San Francisco Del Monte, Quezon City in favor of
plaintiff or to return to the plaintiff the acquisition cost of the same in the amount of $20,000.00, or to sell the said property and turn over the
e) To reimburse plaintiff the sum of P12,000.00 as attorneys fees for having proceeds thereof to the plaintiff;
compelled the plaintiff to litigate;
(2) To deliver to the plaintiff the rights of ownership and management of the beauty parlor located at 444 Arquiza St., Ermita, Manila, including
f) To reimburse plaintiff the sum of P5,000.00 incurred as litigation expenses the equipment and fixtures therein;

also for having compelled the plaintiff to litigate; and

(3) To account for the earnings of rental of the house and lot in No. 14 Fernandez St., San Francisco Del Monte, Quezon City, as well as the
earnings in the beauty parlor at 444 Arquiza St., Ermita, Manila and turn over one-half of the net earnings of both properties to the plaintiff;
g) To pay the costs of this suit;
(4) To surrender or return to the plaintiff the personal properties of the latter left in the house at San Francisco Del Monte, to wit:
Plaintiff prays for other reliefs just and equitable in the premises.[37]
(1) Mamya automatic camera
(1) 12 inch Sonny T.V. set, colored with remote control.
In her answer, Ederlina denied all the material allegations in the complaint, (1) Micro oven
(1) Electric fan (tall, adjustable stand)
insisting that she acquired the said properties with her personal funds, and as (1) Office safe with (2) drawers and safe
(1) Electric Washing Machine
(1) Office desk and chair
On March 8, 2000, the CA rendered a decision affirming in toto the decision of the
(1) Double bed suits RTC. The appellate court ruled that the petitioner knowingly violated the Constitution;
(1) Mirror/dresser
(1) Heavy duty voice/working mechanic hence, was barred from recovering the money used in the purchase of the three
(1) Sony Beta-Movie camera
(1) Suitcase with personal belongings
parcels of land. It held that to allow the petitioner to recover the money used for the
(1) Cardboard box with belongings purchase of the properties would embolden aliens to violate the Constitution, and
(1) Guitar Amplifier
(1) Hanger with mens suit (white). defeat, rather than enhance, the public policy.[46]

To return to the plaintiff, (1) Hi-Fi Stereo equipment left at 444 Arquiza Street, Ermita, Manila, as well as the Fronte Suzuki car. Hence, the petition at bar.
The petitioner assails the decision of the court contending that:
(4) To account for the monies (sic) deposited with the joint account of the plaintiff and defendant (Account No. 018-0-807950); and to restore to
the plaintiff all the monies (sic) spent by the defendant without proper authority;


(5) To pay the amount of P5,000.00 by way of attorneys fees, and the costs of suit.
However, after due proceedings in the RTC of Davao City, in Civil Case No. TO ANOTHER GERMAN NATIONAL AND WITHOUT SUCH FRAUDULENT DESIGN
17,817, the trial court rendered judgment on September 28, 1995 in favor of Ederlina, PETITIONER COULD NOT HAVE PARTED WITH HIS MONEY FOR THE
the dispositive portion of which reads: PURCHASE OF THE PROPERTIES.[47]

WHEREFORE, the Court cannot give due course to the complaint and hereby orders and
its dismissal. The counterclaims of the defendant are likewise dismissed.
The trial court ruled that based on documentary evidence, the purchaser of the RECOVER HIS MONEY USED IN PURCHASING THEM.[48]
three parcels of land subject of the complaint was Ederlina. The court further stated
that even if Alfred was the buyer of the properties, he had no cause of action against Since the assignment of errors are intertwined with each other, the Court shall
Ederlina for the recovery of the same because as an alien, he was disqualified from resolve the same simultaneously.
acquiring and owning lands in the Philippines. The sale of the three parcels of land to
the petitioner was null and void ab initio. Applying the pari delicto doctrine, the The petitioner contends that he purchased the three parcels of land subject of his
petitioner was precluded from recovering the properties from the respondent. complaint because of his desire to marry the respondent, and not to violate the
Philippine Constitution. He was, however, deceived by the respondent when the latter
Alfred appealed the decision to the Court of Appeals [45] in which the petitioner failed to disclose her previous marriage to Klaus Muller. It cannot, thus, be said that he
posited the view that although he prayed in his complaint in the court a quo that he be and the respondent are equally guilty; as such, the pari delicto doctrine is not applicable
declared the owner of the three parcels of land, he had no intention of owning the same to him. He acted in good faith, on the advice of the respondents uncle, Atty.
permanently. His principal intention therein was to be declared the transient owner for Mardoecheo Camporedondo. There is no evidence on record that he was aware of the
the purpose of selling the properties at public auction, ultimately enabling him to constitutional prohibition against aliens acquiring real property in the Philippines when
recover the money he had spent for the purchase thereof. he purchased the real properties subject of his complaint with his own funds. The
transactions were not illegal per se but merely prohibited, and under Article 1416 of
the New Civil Code, he is entitled to recover the money used for the purchase of the administer a remedy.[58] The rule is expressed in the maxims: EX DOLO MALO NON
properties. At any rate, the petitioner avers, he filed his complaint in the court a ORITUR ACTIO and IN PARI DELICTO POTIOR EST CONDITIO DEFENDENTIS.[59]
quo merely for the purpose of having him declared as the owner of the properties, to
enable him to sell the same at public auction. Applying by analogy Republic Act No. The petitioner cannot feign ignorance of the constitutional proscription, nor claim
133[49] as amended by Rep. Act No. 4381 and Rep. Act No. 4882, the proceeds of the that he acted in good faith, let alone assert that he is less guilty than the respondent.
sale would be remitted to him, by way of refund for the money he used to purchase the The petitioner is charged with knowledge of the constitutional prohibition.[60] As can be
said properties. To bar the petitioner from recovering the subject properties, or at the gleaned from the decision of the trial court, the petitioner was fully aware that he was
very least, the money used for the purchase thereof, is to allow the respondent to disqualified from acquiring and owning lands under Philippine law even before he
enrich herself at the expense of the petitioner in violation of Article 22 of the New Civil purchased the properties in question; and, to skirt the constitutional prohibition, the
Code. petitioner had the deed of sale placed under the respondents name as the sole vendee
The petition is bereft of merit.
Section 14, Article XIV of the 1973 Constitution provides, as follows: Such being the case, the plaintiff is subject to the constitutional restrictions governing
the acquisition of real properties in the Philippines by aliens.
Save in cases of hereditary succession, no private land shall be transferred or
conveyed except to individuals, corporations, or associations qualified to acquire or From the plaintiffs complaint before the Regional Trial Court, National Capital Judicial
hold lands in the public domain.[50] Region, Branch 84, Quezon City in Civil Case No. Q-46350 he alleged:

Lands of the public domain, which include private lands, may be transferred or xxx That on account that foreigners are not allowed by the Philippine laws to acquire
conveyed only to individuals or entities qualified to acquire or hold private lands or real properties in their name as in the case of my vendor Miss Victoria Vinuya (sic)
lands of the public domain. Aliens, whether individuals or corporations, have been although married to a foreigner, we agreed and I consented in having the title to subject
disqualified from acquiring lands of the public domain. Hence, they have also been property placed in defendants name alone although I paid for the whole price out of my
disqualified from acquiring private lands.[51] own exclusive funds. (paragraph IV, Exhibit W.)

Even if, as claimed by the petitioner, the sales in question were entered into by and his testimony before this Court which is hereby quoted:
him as the real vendee, the said transactions are in violation of the Constitution; hence,
are null and void ab initio.[52] A contract that violates the Constitution and the law, is ATTY. ABARQUEZ:
null and void and vests no rights and creates no obligations. It produces no legal effect Q. In whose name the said house and lot placed, by the way, where is his house and lot located?
at all.[53]The petitioner, being a party to an illegal contract, cannot come into a court of
A. In 14 Fernandez St., San Francisco, del Monte, Manila.
law and ask to have his illegal objective carried out. One who loses his money or
property by knowingly engaging in a contract or transaction which involves his own Q. In whose name was the house placed?

moral turpitude may not maintain an action for his losses. To him who moves in A. Ederlina Catito because I was informed being not a Filipino, I cannot own the property. (tsn, p. 11, August 27, 1986).
deliberation and premeditation, the law is unyielding.[54] The law will not aid either party xxx xxx xxx
to an illegal contract or agreement; it leaves the parties where it finds them.[55] Under
Article 1412 of the New Civil Code, the petitioner cannot have the subject properties
Q. So you understand that you are a foreigner that you cannot buy land in the Philippines?
deeded to him or allow him to recover the money he had spent for the purchase
thereof.[56] Equity as a rule will follow the law and will not permit that to be A. That is correct but as she would eventually be my wife that would be owned by us later on. (tsn, p. 5, September 3, 1986)

done indirectly which, because of public policy, cannot be done directly.[57] Where the xxx xxx xxx
wrong of one party equals that of the other, the defendant is in the stronger position ... Q. What happened after that?
it signifies that in such a situation, neither a court of equity nor a court of law will
A. She said you foreigner you are using Filipinos to buy property.
The petitioner cannot find solace in Article 1416 of the New Civil Code which
Q. And what did you answer? reads:
A. I said thank you very much for the property I bought because I gave you a lot of money (tsn., p. 14, ibid).

It is evident that the plaintiff was fully aware that as a non-citizen of the Philippines, he was disqualified from validly Art. 1416. When the agreement is not illegal per se but is merely prohibited, and the
purchasing any land within the country.[61] prohibition by the law is designed for the protection of the plaintiff, he may, if public
The petitioners claim that he acquired the subject properties because of his desire policy is thereby enhanced, recover what he has paid or delivered.[64]
to marry the respondent, believing that both of them would thereafter jointly own the
said properties, is belied by his own evidence. It is merely an afterthought to salvage The provision applies only to those contracts which are merely prohibited, in order
a lost cause. The petitioner admitted on cross-examination that he was all along legally to benefit private interests. It does not apply to contracts void ab initio. The sales of
married to Teresita Santos Frenzel, while he was having an amorous relationship with three parcels of land in favor of the petitioner who is a foreigner is illegal per se. The
the respondent: transactions are void ab initio because they were entered into in violation of the
Constitution. Thus, to allow the petitioner to recover the properties or the money used
in the purchase of the parcels of land would be subversive of public policy.
Q When you were asked to identify yourself on direct examination you claimed before this Honorable Court that your status is
that of being married, do you confirm that?
Neither may the petitioner find solace in Rep. Act No. 133, as amended by Rep.
A Yes, sir. Act No. 4882, which reads:
Q To whom are you married?

A To a Filipina, since 1976. SEC. 1. Any provision of law to the contrary notwithstanding, private real property may
Q Would you tell us who is that particular person you are married since 1976? be mortgaged in favor of any individual, corporation, or association, but the mortgagee
or his successor-in- interest, if disqualified to acquire or hold lands of the public domain
A Teresita Santos Frenzel.
in the Philippines, shall not take possession of the mortgaged property during the
Q Where is she now?
existence of the mortgage and shall not take possession of mortgaged property except
A In Australia. after default and for the sole purpose of foreclosure, receivership, enforcement or other
Q Is this not the person of Teresita Frenzel who became an Australian citizen? proceedings and in no case for a period of more than five years from actual possession
A I am not sure, since 1981 we were separated.
and shall not bid or take part in any sale of such real property in case of
foreclosure: Provided, That said mortgagee or successor-in-interest may take
Q You were only separated, in fact, but not legally separated?
possession of said property after default in accordance with the prescribed judicial
A Thru my counsel in Australia I filed a separation case. procedures for foreclosure and receivership and in no case exceeding five years from
Q As of the present you are not legally divorce[d]? actual possession.[65]
A I am still legally married.[62]
From the evidence on record, the three parcels of land subject of the complaint
The respondent was herself married to Klaus Muller, a German citizen. Thus, the were not mortgaged to the petitioner by the owners thereof but were sold to the
petitioner and the respondent could not lawfully join in wedlock. The evidence on respondent as the vendee, albeit with the use of the petitioners personal funds.
record shows that the petitioner in fact knew of the respondents marriage to another
man, but nonetheless purchased the subject properties under the name of the Futile, too, is petitioners reliance on Article 22 of the New Civil Code which reads:
respondent and paid the purchase prices therefor. Even if it is assumed gratia
arguendi that the respondent and the petitioner were capacitated to marry, the Art. 22. Every person who through an act of performance by another, or any other
petitioner is still disqualified to own the properties in tandem with the respondent. [63] means, acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him.[66]
The provision is expressed in the maxim: MEMO CUM ALTERIUS DETER
DETREMENTO PROTEST (No person should unjustly enrich himself at the expense
of another). An action for recovery of what has been paid without just cause has been
designated as an accion in rem verso.[67] This provision does not apply if, as in this
case, the action is proscribed by the Constitution or by the application of the pari
delicto doctrine.[68] It may be unfair and unjust to bar the petitioner from filing an accion
in rem verso over the subject properties, or from recovering the money he paid for the
said properties, but, as Lord Mansfield stated in the early case of Holman vs.
Johnson:[69] The objection that a contract is immoral or illegal as between the plaintiff
and the defendant, sounds at all times very ill in the mouth of the defendant. It is not
for his sake, however, that the objection is ever allowed; but it is founded in general
principles of policy, which the defendant has the advantage of, contrary to the real
justice, as between him and the plaintiff.
IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The decision
of the Court of Appeals is AFFIRMED in toto.
Costs against the petitioner.
13. Reyes vs Lim On 3 May 1995, Keng and Harrison Lumber filed their Answer [6] denying they
connived with Lim to defraud Reyes. Keng and Harrison Lumber alleged that Reyes
On 23 March 1995, petitioner David Reyes (Reyes) filed before the trial court a approved their request for an extension of time to vacate the Property due to their
complaint for annulment of contract and damages against respondents Jose Lim (Lim), difficulty in finding a new location for their business. Harrison Lumber claimed that as
Chuy Cheng Keng (Keng) and Harrison Lumber, Inc. (Harrison Lumber). of March 1995, it had already started transferring some of its merchandise to its new
The complaint[3] alleged that on 7 November 1994, Reyes as seller and Lim as business location in Malabon.[7]
buyer entered into a contract to sell (Contract to Sell) a parcel of land (Property) located On 31 May 1995, Lim filed his Answer[8] stating that he was ready and willing to
along F.B. Harrison Street, Pasay City. Harrison Lumber occupied the Property as pay the balance of the purchase price on or before 8 March 1995. Lim requested a
lessee with a monthly rental of P35,000. The Contract to Sell provided for the following meeting with Reyes through the latters daughter on the signing of the Deed of Absolute
terms and conditions: Sale and the payment of the balance but Reyes kept postponing their meeting. On 9
March 1995, Reyes offered to return the P10 million down payment to Lim because
1. The total consideration for the purchase of the aforedescribed parcel of land together Reyes was having problems in removing the lessee from the Property. Lim rejected
with the perimeter walls found therein is TWENTY EIGHT MILLION (P28,000,000.00) Reyes offer and proceeded to verify the status of Reyes title to the Property. Lim
PESOS payable as follows: learned that Reyes had already sold the Property to Line One Foods Corporation (Line
One) on 1 March 1995 for P16,782,840. After the registration of the Deed of Absolute
(a) TEN MILLION (P10,000,000.00) PESOS upon signing of this Contract to Sell; Sale, the Register of Deeds issued to Line One TCT No. 134767 covering the Property.
Lim denied conniving with Keng and Harrison Lumber to defraud Reyes.
(b) The balance of EIGHTEEN MILLION (P18,000,000.00) PESOS shall be paid on or On 2 November 1995, Reyes filed a Motion for Leave to File Amended Complaint
before March 8, 1995 at 9:30 A.M. at a bank to be designated by the Buyer but upon due to supervening facts. These included the filing by Lim of a complaint for estafa
the complete vacation of all the tenants or occupants of the property and execution of against Reyes as well as an action for specific performance and nullification of sale
the Deed of Absolute Sale. However, if the tenants or occupants have vacated the and title plus damages before another trial court.[9] The trial court granted the motion
premises earlier than March 8, 1995, the VENDOR shall give the VENDEE at least one in an Order dated 23 November 1995.
week advance notice for the payment of the balance and execution of the Deed of
Absolute Sale. In his Amended Answer dated 18 January 1996,[10] Lim prayed for the cancellation
of the Contract to Sell and for the issuance of a writ of preliminary attachment against
2. That in the event, the tenants or occupants of the premises subject of this sale shall Reyes. The trial court denied the prayer for a writ of preliminary attachment in an Order
not vacate the premises on March 8, 1995 as stated above, the VENDEE shall withhold dated 7 October 1996.
the payment of the balance of P18,000,000.00 and the VENDOR agrees to pay a On 6 March 1997, Lim requested in open court that Reyes be ordered to deposit
penalty of Four percent (4%) per month to the herein VENDEE based on the amount the P10 million down payment with the cashier of the Regional Trial Court of Paraaque.
of the downpayment of TEN MILLION (P10,000,000.00) PESOS until the complete The trial court granted this motion.
vacation of the premises by the tenants therein.[4]
On 25 March 1997, Reyes filed a Motion to Set Aside the Order dated 6 March
The complaint claimed that Reyes had informed Harrison Lumber to vacate the 1997 on the ground the Order practically granted the reliefs Lim prayed for in his
Property before the end of January 1995. Reyes also informed Keng [5] and Harrison Amended Answer.[11] The trial court denied Reyes motion in an Order [12] dated 3 July
Lumber that if they failed to vacate by 8 March 1995, he would hold them liable for the 1997. Citing Article 1385 of the Civil Code, the trial court ruled that an action for
penalty of P400,000 a month as provided in the Contract to Sell. The complaint further rescission could prosper only if the party demanding rescission can return whatever
alleged that Lim connived with Harrison Lumber not to vacate the Property until the he may be obliged to restore should the court grant the rescission.
P400,000 monthly penalty would have accumulated and equaled the unpaid purchase
price of P18,000,000.
The trial court denied Reyes Motion for Reconsideration in its Order [13] dated 3 2. Whether the Court of Appeals erred in finding the trial court could issue
October 1997. In the same order, the trial court directed Reyes to deposit the P10 the questioned Orders on grounds of equity when there is an
million down payment with the Clerk of Court on or before 30 October 1997. applicable law on the matter, that is, Rules 57 to 61 of the 1997 Rules
on Civil Procedure.[17]
On 8 December 1997, Reyes[14] filed a Petition for Certiorari[15] with the Court of
Appeals. Reyes prayed that the Orders of the trial court dated 6 March 1997, 3 July
1997 and 3 October 1997 be set aside for having been issued with grave abuse of
discretion amounting to lack of jurisdiction. On 12 May 1998, the Court of Appeals The Courts Ruling
dismissed the petition for lack of merit.
Hence, this petition for review. Reyes contentions are without merit.
Reyes points out that deposit is not among the provisional remedies enumerated
in the 1997 Rules of Civil Procedure. Reyes stresses the enumeration in the Rules is
The Ruling of the Court of Appeals exclusive. Not one of the provisional remedies in Rules 57 to 61[18] applies to this case.
Reyes argues that a court cannot apply equity and require deposit if the law already
prescribes the specific provisional remedies which do not include deposit. Reyes
The Court of Appeals ruled the trial court could validly issue the assailed orders invokes the principle that equity is applied only in the absence of, and never against,
in the exercise of its equity jurisdiction. The court may grant equitable reliefs to breathe statutory law or x x x judicial rules of procedure.[19] Reyes adds the fact that the
life and force to substantive law such as Article 1385 [16] of the Civil Code since the provisional remedies do not include deposit is a matter of dura lex sed lex.[20]
provisional remedies under the Rules of Court do not apply to this case.
The instant case, however, is precisely one where there is a hiatus in the law and
The Court of Appeals held the assailed orders merely directed Reyes to deposit in the Rules of Court. If left alone, the hiatus will result in unjust enrichment to Reyes
the P10 million to the custody of the trial court to protect the interest of Lim who paid at the expense of Lim. The hiatus may also imperil restitution, which is a precondition
the amount to Reyes as down payment. This did not mean the money would be to the rescission of the Contract to Sell that Reyes himself seeks. This is not a case of
returned automatically to Lim. equity overruling a positive provision of law or judicial rule for there is none that governs
this particular case. This is a case of silence or insufficiency of the law and the Rules
of Court. In this case, Article 9 of the Civil Code expressly mandates the courts to make
The Issues a ruling despite the silence, obscurity or insufficiency of the laws.[21] This calls for the
application of equity,[22] which fills the open spaces in the law.[23]

Reyes raises the following issues: Thus, the trial court in the exercise of its equity jurisdiction may validly order the
deposit of the P10 million down payment in court. The purpose of the exercise of equity
jurisdiction in this case is to prevent unjust enrichment and to ensure restitution. Equity
1. Whether the Court of Appeals erred in holding the trial court could issue jurisdiction aims to do complete justice in cases where a court of law is unable to adapt
the questioned Orders dated March 6, 1997, July 3, 1997 and October its judgments to the special circumstances of a case because of the inflexibility of its
3, 1997, requiring petitioner David Reyes to deposit the amount of Ten statutory or legal jurisdiction.[24] Equity is the principle by which substantial justice may
Million Pesos (P10,000,000.00) during the pendency of the action, be attained in cases where the prescribed or customary forms of ordinary law are
when deposit is not among the provisional remedies enumerated in inadequate.[25]
Rule 57 to 61 of the 1997 Rules on Civil Procedure.
Reyes is seeking rescission of the Contract to Sell. In his amended answer, Lim
is also seeking cancellation of the Contract to Sell. The trial court then ordered Reyes
to deposit in court the P10 million down payment that Lim made under the Contract to enforced because Reyes himself subsequently sold the Property to Line One. Both
Sell. Reyes admits receipt of the P10 million down payment but opposes the order to Reyes and Lim are now seeking rescission of the Contract to Sell. Under Article 1385
deposit the amount in court. Reyes contends that prior to a judgment annulling the of the Civil Code, rescission creates the obligation to return the things that are the
Contract to Sell, he has the right to use, possess and enjoy[26] the P10 million as its object of the contract. Rescission is possible only when the person demanding
owner[27] unless the court orders its preliminary attachment.[28] rescission can return whatever he may be obliged to restore. A court of equity will not
rescind a contract unless there is restitution, that is, the parties are restored to
To subscribe to Reyes contention will unjustly enrich Reyes at the expense of the status quo ante.[34]
Lim. Reyes sold to Line One the Property even before the balance of P18 million under
the Contract to Sell with Lim became due on 8 March 1995. On 1 March 1995, Reyes Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot refuse
signed a Deed of Absolute Sale[29] in favor of Line One. On 3 March 1995, the Register to deposit the P10 million down payment in court.[35] Such deposit will ensure restitution
of Deeds issued TCT No. 134767[30] in the name of Line One.[31] Reyes cannot claim of the P10 million to its rightful owner. Lim, on the other hand, has nothing to refund,
ownership of the P10 million down payment because Reyes had already sold to as he has not received anything under the Contract to Sell.[36]
another buyer the Property for which Lim made the down payment. In fact, in his
Comment[32] dated 20 March 1996, Reyes reiterated his offer to return to Lim the P10 In Government of the Philippine Islands v. Wagner and Cleland
million down payment. Wagner,[37] the Court ruled the refund of amounts received under a contract is a
precondition to the rescission of the contract. The Court declared:
On balance, it is unreasonable and unjust for Reyes to object to the deposit of the
P10 million down payment. The application of equity always involves a balancing of The Government, having asked for rescission, must restore to the defendants
the equities in a particular case, a matter addressed to the sound discretion of the whatever it has received under the contract. It will only be just if, as a condition to
court. Here, we find the equities weigh heavily in favor of Lim, who paid the P10 million rescission, the Government be required to refund to the defendants an amount equal
down payment in good faith only to discover later that Reyes had subsequently sold to the purchase price, plus the sums expended by them in improving the land. (Civil
the Property to another buyer. Code, art. 1295.)
In Eternal Gardens Memorial Parks Corp. v. IAC,[33] this Court held the plaintiff
could not continue to benefit from the property or funds in litigation during the pendency The principle that no person may unjustly enrich himself at the expense of another
of the suit at the expense of whomever the court might ultimately adjudge as the lawful is embodied in Article 22[38] of the Civil Code. This principle applies not only to
owner. The Court declared: substantive rights but also to procedural remedies. One condition for invoking this
principle is that the aggrieved party has no other action based on contract, quasi-
In the case at bar, a careful analysis of the records will show that petitioner admitted contract, crime, quasi-delict or any other provision of law.[39] Courts can extend this
among others in its complaint in Interpleader that it is still obligated to pay certain condition to the hiatus in the Rules of Court where the aggrieved party, during the
amounts to private respondent; that it claims no interest in such amounts due and is pendency of the case, has no other recourse based on the provisional remedies of the
willing to pay whoever is declared entitled to said amounts. x x x Rules of Court.
Thus, a court may not permit a seller to retain, pendente lite, money paid by a
Under the circumstances, there appears to be no plausible reason for petitioners buyer if the seller himself seeks rescission of the sale because he has subsequently
objections to the deposit of the amounts in litigation after having asked for the sold the same property to another buyer.[40] By seeking rescission, a seller necessarily
assistance of the lower court by filing a complaint for interpleader where the deposit of offers to return what he has received from the buyer. Such a seller may not take back
aforesaid amounts is not only required by the nature of the action but is a contractual his offer if the court deems it equitable, to prevent unjust enrichment and ensure
obligation of the petitioner under the Land Development Program (Rollo, p. 252). restitution, to put the money in judicial deposit.
There is unjust enrichment when a person unjustly retains a benefit to the loss of
There is also no plausible or justifiable reason for Reyes to object to the deposit another, or when a person retains money or property of another against the
of the P10 million down payment in court. The Contract to Sell can no longer be
fundamental principles of justice, equity and good conscience. [41] In this case, it was
just, equitable and proper for the trial court to order the deposit of the P10 million down
payment to prevent unjust enrichment by Reyes at the expense of Lim. [42]
WHEREFORE, we AFFIRM the Decision of the Court of Appeals.
14. NDC vs Madrigal which was accepted by petitioner. The negotiated sale was then approved by
petitioners Board of Directors on August 26, 1993, the President of the Philippines on
Before us is a petition for review on certiorari[1] assailing the Decision of the Court September 28, 1993, the Committee on Privatization on October 7, 1993, and the
of Appeals dated May 21, 2001 in CA-G.R. CV No. 66026, affirming with modification Commission on Audit on February 2, 1994.[10]
the Decision dated August 6, 1999 of the Regional Trial Court, Branch 62, Makati City,
in Civil Case No. 96-558 for sum of money and damages. Accordingly, on February 11, 1994, petitioner issued a Notice of Award to
respondent of the sale of the NSCP shares and vessels for $18.5 million.[11] On March
The factual antecedents are: 14, 1994, petitioner and respondent executed the corresponding Contract of
The National Development Company, petitioner, is a government-owned and Sale,[12] and the latter acquired NSCP, its assets, personnel, records and its three
controlled corporation created and existing under Commonwealth Act No. 182, as (3) vessels.[13]
amended by Presidential Decree No. 1648. The National Shipping Corporation of the On September 22, 1994, respondent was surprised to receive from the US
Philippines (NSCP) is a wholly-owned subsidiary of petitioner offering shipping Department of Treasury, Internal Revenue Service (US IRS), a Notice of Final
services for containerized cargo between the Far East ports and the U.S. West Coast. [2] Assessment against NSCP for deficiency taxes on gross transportation income
On March 1, 1993, petitioners Board of Directors approved the privatization plan derived from US sources for the years ending 1990, 1991 and 1992.[14] The tax
of the NSCP.[3] In May 1993, the Board offered for sale to the public its one hundred assessment was based on Section 887 of the US Internal Revenue Code imposing a
percent (100%) stock ownership in NSCP worth P150,000.00, as well as its three (3) 4% tax on gross transportation income of any foreign corporation derived from US
ocean-going vessels (M/V National Honor, M/V National Pride and M/V National sources.[15]
Dignity).[4] Anxious that the delay in the payment of the deficiency taxes may hamper its
Consequently, petitioner released to the public an Information shipping operations overseas, respondent, on October 14, 1994, assumed and paid
Package[5] containing NSCPs background, assets, operational and financial petitioners tax liabilities, including the tax due for the year 1993, in the total
status. Attached thereto is NSCPs Financial Statements covering the period from amount of $671,653.00. These taxes were incurred prior to respondents take-
December 1990 up to 1992. over of NSCPs management.[16] Respondent likewise paid the additional amount
of $16,533.10 as penalty for late payment.[17]
The Information Package likewise contained the Negotiated Sale
Guidelines which embodied the terms and conditions of the proposed Eventually, respondent demanded from petitioner reimbursement for the amounts
sale. Attached thereto is a Proposal Letter Form[6] wherein bidders were advised to it paid to the US IRS. But petitioner refused despite repeated demands. Hence, on
submit their bids to be specified in the same form. Petitioners desired price for the March 20, 1996, respondent filed with the Regional Trial Court (RTC), Branch 62,
NSCP shares of stock and the vessels was Twenty-Six Million Seven Hundred Fifty Makati City a complaint[18] against petitioner for reimbursement and damages,
Thousand US Dollars ($26,750,000.00).[7] docketed as Civil Case No. 96-558.

During the public bidding on May 7, 1993, the lone bidder was herein respondent, On August 6, 1999, the RTC rendered a Decision[19] in favor of respondent and
Madrigal Wan Hai Lines Corporation, a domestic private corporation duly organized against petitioner. The trial court found, among others, that even before the sale,
and existing under the Philippine laws with principal office in Manila. Mr. Willie J. Uy, petitioner knew that NSCP had tax liabilities with the US IRS, yet it did not inform
respondents Consultant, submitted a bid of $15 million through the Proposal Letter respondent about it. The dispositive portion of the RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
The respondents bid was rejected by petitioner and the Commission on Audit.
But since there was no other bidder, petitioner entered into a negotiated sale with (1) defendant (now petitioner) to pay plaintiff (now respondent), to wit:
respondent.[9] After several negotiations, respondent increased its offer to $18.5 million
a. US $671,653, US $14,415.87, and US $2,117.23 or their peso preparation of which was left entirely to the NSCP.Their nature is that of a contract of
equivalent at the time of payment; adhesion. A contract of adhesion may be struck down as void and unenforceable, for
being subversive of public policy, when the weaker party is imposed upon in dealing
b. 6% interest of the above-mentioned amounts per annum from the with the dominant bargaining party and is reduced to the alternative of taking it or
time of the filing of the complaint until the same shall have leaving it, completely deprived of the opportunity to bargain on equal footing (Saludo,
been fully paid; Jr. vs. Court of Appeals, 207 SCRA 498 [1992]). In the case at bar, the acceptance of
the Negotiated Sale Guidelines and submission thereof together with the Proposal
c. P100,000.00 as exemplary damages; Letter Form by a prospective buyer is a required formality of the bidding. Under the
circumstance, the plaintiff, in taking such contracts, may not be deemed to have been
given the opportunity to bargain on equal footing.[23]
d. P100,000.00 as attorneys fees;
Petitioner now comes to us via the instant petition, ascribing to the Court of
(2) The Counterclaims of the defendant dated August 20, 1996 is DISMISSED. [20] Appeals the following error:

Upon appeal, the Court of Appeals rendered a Decision[21] on May 21, 2001 THE COURT OF APPEALS ERRED IN CONCURRING WITH THE TRIAL COURT IN
affirming the trial courts judgment with modification, thus: ORDERING HEREIN PETITIONER TO REIMBURSE RESPONDENT THE
WHEREFORE, upon the premises, the Decision appealed from is AFFIRMED with
the MODIFICATION that the award of exemplary damages is DELETED and the award Petitioner contends that contrary to the findings of both lower courts, the
of attorneys fees is REDUCED to P20,000.00. Negotiated Sale Guidelines and the Proposal Letter Form are mere invitations to
bid. As such, they are not contracts and should be treated as mere offer or proposal to
SO ORDERED.[22] prospective buyers of the NSCP shares and marine vessels.[25]
Petitioner further stresses that the sale was on an AS IS, WHERE IS basis.[26] By
The Court of Appeals held:
accepting the terms and conditions of the sale, respondent, in effect, accepted the risk
of an AS IS, WHERE IS arrangement wherein the latter is charged with caution under
We concur with the trial court in ordering defendant-appellant (now petitioner) to the principle of caveat emptor.[27] Pursuant to the Negotiated Sale Guidelines and the
reimburse plaintiff-appellee (now respondent) the deficiency taxes it paid to the US Proposal Letter Form, respondent should have apprised itself of the financial status
IRS, and quote with favor its well-written ratiocination as follows: and liabilities of NSCP and its marine vessels. Therefore, for its predicament,
respondent should not fault petitioner.[28]
In its effort to extricate itself from liability, defendant further argues that the sale with
the plaintiff was on CASH, AS-WHERE-IS basis and that plaintiff, as an offeror, was For its part, respondent maintains that the Court of Appeals did not commit any
responsible for informing itself with respect to any and all conditions regarding the error in its challenged Decision. The Negotiated Sale Guidelines and the Proposal
NSCP shares and vessels which may in any manner affect the offer price or the nature Letter Form constitute a contract of adhesion because the buyer was required to submit
of offerors proposal (Exhs. 8, 8-A to A-B). its bid through a pro-forma proposal letter.[29] The offer to bidders was on a take it, or
leave it basis, leaving no room for argument or negotiation, except as to the
price.[30] Being a contract of adhesion, it should be strictly construed against the seller,
The above-mentioned contracts form part of the NSCPs Negotiated Sale Guidelines
herein petitioner.[31]
dated March 1993 prepared by NSCP and required by NDC (now petitioner) to be
attached with the Proposal Letter Form, which was also prepared by NSCP, and Respondent also contends that under Articles 19,[32] 20[33] and 21[34] of the Civil
submitted to NDC by bidders. These contracts are ready-made form of contracts, the Code, petitioner had then the legal duty to disclose its tax liabilities. Records show that
respondent repeatedly inquired from petitioner about such matter. [35] Instead of telling 4.0 PREPARATION OF OFFERS
the truth, petitioner made several assurances that the NSCP was a clean, lien-free
going concern and profitable entity.[36] In fact, under Section 7.01 of the Negotiated 4.01 Offerors shall use the Proposal Letter Form for Sale of NSCP
Sale Guidelines, petitioner made a warranty against any lien or encumbrance.[37] and Vessels provided herein.
In this petition, the issues for our resolution are:
4.02 All offers should be accompanied by: x x x (b) the Negotiated
(1) Whether the Negotiated Sale Guidelines and the Proposal Letter Form constitute a Sale Guidelines duly signed by the offeror or authorized
contract of adhesion; and representative in every page thereof x x x.

(2) Whether petitioner is legally bound to reimburse respondent for the amounts it paid xxxxxxxxx
corresponding to the formers tax liabilities to the US IRS.
On the first issue, we agree with both lower courts that the Negotiated Sale
Guidelines and the Proposal Letter Form constitute a contract of adhesion. 14.01 NDC and APT reserve the right in their discretion to reject any
and all offers, to waive any formality therein and of these
A contract of adhesion is one in which one of the parties imposes a ready-made guidelines, and to consider only such offer as may be
form of contract, which the other party may accept or reject, but which the latter cannot advantageous to the National Government.
modify. In other words, in such contract, the terms therein are fixed by one party, and
the other party has merely to take it, or leave it.[38] Thus, it can be struck down as void NDC and APT may, at their discretion require additional
and unenforceable for being subversive of public policy, especially when the will of the information and/or documents from any offeror.
dominant party is imposed upon the weaker party and the latter is denied the
opportunity to bargain on equal footing.[39]
14.02 NDC and APT reserve the right to amend the Guidelines prior
It must be stressed, however, that contracts of adhesion are not strictly against to the submission of offers x x x.
the law. In Ong Yiu vs. Court of Appeals[40] and Pan American World Airways, Inc. vs.
Intermediate Appellate Court,[41] we held that contracts of adhesion wherein one party xxxxxxxxx
imposes a ready-made form of contract on the other are not entirely prohibited. The
other party is free to reject it entirely; if he adheres, he gives his consent. 14.05 Violation of any of these terms and conditions shall cause
Nevertheless, the inequality of bargaining positions and the resulting impairment the cancellation of the award and the automatic forfeiture
of the other partys freedom to contract necessarily call upon us to exercise our of the deposit.[43] (Underscoring ours)
mandate as a court of justice and equity. Indeed, we have ruled that contracts of such
nature obviously call for greater strictness and vigilance on the part of the courts of The Proposal Letter Form provides that the bidder is bound by the Negotiated
justice with a view to protecting the weaker party from abuses and imposition and Sale Guidelines, thus:
prevent their becoming traps for the unwary.[42]
In the case at bar, the Negotiated Sale Guidelines and Proposal Letter Form fit It is understood that:
the characteristics of a contract of adhesion. On their very face, these documents show
that petitioner NDC had control over the terms and conditions of the sale. The 1. We accept and undertake without any reservations whatsoever that, if this
Negotiated Sale Guidelines provides: offer to purchase the vessels and NSCP shares is accepted, we shall be
subjected to all the terms and conditions issued by the NDC and APT including
those outlined in the March, 1993 Information Memorandum and the Negotiated incorporated herein by reference and shall insofar as they are not inconsistent
Sale Guidelines for the sale of NSCP and the three vessels. with the terms and conditions hereof, be applicable to this
Contract.[50] (Underscoring ours)
We now determine whether petitioner is obliged under the law and the contract to
5. We represent and warrant that: (i) we have examined and understood the reimburse respondent for the amounts it paid corresponding to the formers US tax
Information Package, (ii) we accept the conditions of the March, 1993 Negotiated liabilities. We quote with approval the trial courts findings affirmed by the Court of
Sale Guidelines, including the right of NDC and APT to reject any and all offers Appeals, thus:
without thereby creating any liability in our favor x x x.[44] (Underscoring ours)
From the foregoing facts, there is no doubt that during the negotiation for the sale of
Clearly, respondent had hardly any say in the terms and conditions expressed in defendants (now petitioners) shares of stocks and three (3) ocean-going vessels,
the Negotiated Sale Guidelines. Other than the price of the offer, respondent was left NSCP was already aware of an impending assessment by the US government on
with little or no alternative at all but to comply with its terms. Thus, the trial court NSCPs gross transportation income derived from US sources. The exchanges of
correctly found: communications (Exhibits D, E, F, G, H and I) between NSCP and US IRS are
glaring proof of NSCPs prior knowledge of a possible assessment or additional
taxes. Moreover, in the Partial Printout of NSCPs Unaudited Financial
The above-mentioned contracts form part of NSCPs Negotiated Sale Guidelines dated
Statements for the Year ending December 31, 1993 (Exhibit V), NSCP made
March 1993 prepared by NSCP and required by NDC to be attached with the Proposal
provisions for US taxes as follows: for the year ending 1993, US $3,919,018.81 (Exh.
Letter Form, which was also prepared by NSCP, and submitted to NDC by
bidders. These contracts are ready-made form of contracts, the preparation of V-2), and for the years ending 1990-1992, US $11,736,192.64 (Exh. V-3). Exhibit V is
which was left entirely to the NSCP. Their nature is that of a contract of a clear indication that, indeed, NSCP had prior knowledge of such deficiency taxes,
adhesion. x x x. In the case at bar, the acceptance of the Negotiated Sale Guidelines and in fact, recognized the same even though there was no final assessment yet from
the US IRS.[51]
and submission thereof together with the Proposal Letter Form by a prospective buyer
is a required formality of the bidding. Under this circumstance, the plaintiff, in taking
such contracts, may not be deemed to have been given the opportunity to bargain on xxxxxxxxx
equal footing.[45](Underscoring ours)
The Partial Printout of NSCPs Unaudited Financial Statements for the Year ending
Being a contract of adhesion, we reiterate that it is our duty to apply a strict December 1993 (Exhs. 2, 2-A to 2-B or Exhs. V, V-2 to V-3), true to the word of the
construction of its terms upon the party who made the same [46] and to construe any defendant (now petitioner), carries provisions for US taxes. The problem, however,
ambiguity in such contract against its author.[47] It is public policy to protect a party with this evidence is there is no showing that this had been furnished the
(herein respondent) against oppressive and onerous conditions.[48] plaintiff (now respondent). On the contrary, plaintiff vehemently asserts having been
denied by defendant access to the latters accounting books and financial
We are not impressed by petitioners argument that the Negotiated Sale statements. Basic in the law of evidence that he who asserts the affirmative of the
Guidelines was a mere invitation to bid.[49] On the contrary, the Contract of Sale itself allegation has the burden of proving it (Geraldez vs. CA, 230 SCRA 320). The
provides that it is an integral part or applicable to this Contract, thus: defendant has failed to prove that the pertinent statement made in this document
or the document itself had been disclosed to the plaintiff.
8. All of the terms and conditions of (a) the March 1993 NDC Information
Memorandum and Negotiated Sale Guidelines, including the amendments thereto, The Unaudited Financial Statements of NSCP (Exhs. 3, 3-A and 3-B), which allegedly
more particularly those contained in NDCs letter to A. P. Madrigal Steamship Co. Inc. includes the subject US taxes among NSCPs Trade Payable and Accrued Expenses
dated May 4, 1993, and (b) the Notice of Award dated February 11, 1993 are hereby and Dividends, does not clearly indicate the said taxes. The Trade Payable and
Accrued Expenses and Dividends as including the said taxes is vague or The Negotiated Sale Guidelines further provides:
unequivocal on the matter. By mere reading of it, one would not have the
slightest inkling or suspicion that such taxes exist as among NSCPs 2.0 TERMS OF SALE
liabilities.[52] (Underscoring ours)
2.01 The sale of the NSCP and the three vessels shall be strictly on
There is no dispute that petitioner was aware of its US tax liabilities considering CASH, AS IS-WHERE IS basis.[59] (Underscoring ours)
its numerous communications with the agents of the United States Internal Revenue
Service, just prior to the sale of NSCP and the marine vessels to respondent. [53] The In Hian vs. Court of Tax Appeals,[60] we had the occasion to construe the phrase as is,
NSCP itself made an ambiguous contingent provision in its Unaudited Financial
where is basis, thus:
Statements for the year ending December 1993, thereby indicating its awareness of a
possible US tax assessment.[54] It bears stressing that petitioner did not convey such
information to respondent despite its inquiries.[55] Obviously, such concealment We cannot accept the contention in the Governments Memorandum of March 31, 1976
constitutes bad faith on its part. Bad faith implies a conscious and intentional design to that Condition No. 5 in the Notice of Sale to the effect that The above-mentioned
do a wrongful act for a dishonest purpose or moral obliquity; it x x x contemplates a articles (the tobacco) are offered for sale AS IS and the Bureau of Customs gives no
state of mind affirmatively operating with furtive design or ill will.[56] warranty as to their condition relieves the Bureau of Customs of liability for the storage
fees in dispute. As we understand said Condition No. 5, it refers to the physical
We see no reason to disturb the factual findings of both the trial court and Court condition of the tobacco and not to the legal situation in which it was at the time
of Appeals which petitioner does not dispute. Absent any showing that such findings of the sale, as could be implied from the right of inspection to prospective bidders
were reached arbitrarily or without sufficient basis, the same must be respected and under Condition No. 1. x x x. (Underscoring ours)
binding upon us.[57]
That petitioner has the obligation to reimburse respondent is likewise clear under The phrase as is, where is basis pertains solely to the physical condition of the
the Negotiated Sale Guidelines, which provides: thing sold, not to its legal situation. In the case at bar, the US tax liabilities constitute
a potential lien which applies to NSCPs legal situation, not to its physical aspect. Thus,
respondent as a buyer, has no obligation to shoulder the same.
The case at bar calls to mind the principle of unjust enrichment Nemo cum alterius
7.01 x x x. Seller gives no warranty regarding the sale of the shares detrimento locupletari potest. No person shall be allowed to enrich himself unjustly at
and assets except for a warranty on ownership and against any the expense of others. This principle of equity has been enshrined in our Civil Code,
liens or encumbrances, and the offeror shall not be relieved of his Article 22 of which provides:
obligation to make the aforesaid examinations and
verifications.[58] (Underscoring ours) Art. 22. Every person who through an act or performance by another or by any other
means, acquires or comes into possession of something at the expense of the latter
The terms of the parties contract are clear and unequivocal. The seller (petitioner without just or legal ground, shall return the same to him.
NDC) gives a warranty as to the ownership of the object of sale and against any lien
and encumbrance. A tax liability of $688,186.10 was then a potential lien upon NSCPs Justice and equity thus oblige that petitioner be held liable for NSCPs tax liabilities
marine vessels. Being in bad faith for having failed to inform the buyer, herein and reimburse respondent for the amounts it paid. It would be unjust enrichment on
respondent, of such potential lien, petitioner breached its warranty and should, the part of petitioner to be relieved of that obligation.
therefore, be held liable for the resulting damage, i.e., reimbursement for the amounts
paid by petitioner to the US IRS.
The deletion of the award of exemplary damages and reduction of the attorneys
fees by the Court of Appeals are not challenged by either of the parties. At any rate,
we find no error in its ruling quoted hereunder:

However, we find no basis for the grant of exemplary damages which can be granted
only in addition to moral, temperate, liquidated or compensatory damages (Art. 2229,
Civil Code of the Philippines), none of which was awarded or deserved in this case.
The trial court merely granted plaintiffs prayer in its main cause of action for
reimbursement of taxes plaintiff paid to the U.S.Since no actual or moral damages was
awarded, there is no legal basis for the award of exemplary damages which may only
be granted in addition thereto (Scott Consultants and Resources Development Corp.
Inc. vs. CA, 242 SCRA 393).


Anent the award of attorneys fees, we find it excessive, considering that the instant
case is a simple action for reimbursement and did not involve extensive litigation.
Nothing precludes the appellate courts from reducing the award of attorneys fees when
it is found to be unconscionable or excessive under the circumstances (Brahm
Industries Inc. vs. NLRC, 280 SCRA 828). Thus, the award of attorneys fees is reduced
to P20,000.00.[61]

WHEREFORE, the petition is DENIED and the assailed Decision of the Court of
Appeals is AFFIRMED.
Appeals,[13] the Solicitor-General, convinced that the conviction shows strong evidence
of guilt, filed on December 2, 1994 a motion to cancel petitioner's bail bond. The
15. Padilla vs CA resolution of this motion was incorporated in the now assailed respondent court's
On October 26, 1992, high-powered firearms with live ammunitions were found in decision sustaining petitioner's conviction,[14] the dispositive portion of which reads:
the possession of petitioner Robin Padilla @ Robinhood Padilla, i.e.: "WHEREFORE, the foregoing circumstances considered, the appealed
"(1) One .357 Caliber revolver, Smith and Wesson, SN-32919 with six (6) live decision is hereby AFFIRMED, and furthermore, the P200,000.00 bailbond
ammunitions; posted by accused-appellant for his provisional liberty, FGU Insurance
Corporation Bond No. JCR (2) 6523, is hereby cancelled. The Regional Trial
"(2) One M-16 Baby Armalite rifle, SN-RP 131120 with four (4) long and Court, Branch 61, Angeles City, is directed to issue the Order of Arrest of
one (1) short magazine with ammunitions; accused-appellant and thereafter his transmittal to the National Bureau of
Prisons thru the Philippine National Police where the said accused-appellant
"(3) One .380 Pietro Beretta, SN-A 35723 Y with clip and eight (8) shall remain under confinement pending resolution of his appeal, should he
ammunitions; and appeal to the Supreme Court. This shall be immediately executory. The
"(4) Six additional live double action ammunitions of .38 caliber revolver."[1] Regional Trial Court is further directed to submit a report of compliance
Petitioner was correspondingly charged on December 3, 1992, before the
Regional Trial Court (RTC) of Angeles City with illegal possession of firearms and SO ORDERED."[15]
ammunitions under P.D. 1866[2] thru the following Information:[3]
"That on or about the 26th day of October, 1992, in the City of Angeles, Petitioner received a copy of this decision on July 26, 1995. [16] On August 9, 1995 he
Philippines, and within the jurisdiction of this Honorable Court, the above- filed a "motion for reconsideration (and to recall the warrant of arrest)"[17] but the same
named accused, did then and there willfully, unlawfully and feloniously have was denied by respondent court in its September 20, 1995 Resolution, [18] copy of which
in his possession and under his custody and control one (1) M-16 Baby was received by petitioner on September 27, 1995. The next day, September 28,
Armalite rifle, SN-RP 131120 with four (4) long and one (1) short magazines petitioner filed the instant petition for review on certiorari with application for
with ammunitions, one (1) .357 caliber revolver Smith and Wesson, SN- bail[19] followed by two "supplemental petitions" filed by different counsels, [20] a "second
32919 with six (6) live ammunitions and one (1) .380 Pietro Beretta, SN- supplemental petition"[21] and an urgent motion for the separate resolution of
A35723Y with clip and eight (8) ammunitions, without having the necessary his application for bail. Again, the Solicitor-General[22] sought the denial of the
authority and permit to carry and possess the same. application for bail, to which the Court agreed in a Resolution promulgated on July 31,
1996.[23] The Court also granted the Solicitor-General's motion to file a consolidated
ALL CONTRARY TO LAW."[4] comment on the petitions and thereafter required the petitioner to file his
The lower court then ordered the arrest of petitioner,[5] but granted his application for reply.[24] However, after his vigorous resistance and success on the intramural of bail
bail.[6] During the arraignment on January 20, 1993, a plea of not guilty was entered for (both in the respondent court and this Court) and thorough exposition of petitioner's
petitioner after he refused,[7] upon advice of counsel,[8] to make any plea.[9] Petitioner guilt in his 55-page Brief in the respondent court, the Solicitor-General now makes a
waived in writing his right to be present in any and all stages of the case.[10] complete turnabout by filing a "Manifestation In Lieu Of Comment" praying for
petitioner's acquittal.[25]
After trial, Angeles City RTC Judge David Rosete rendered judgment dated April
25, 1994 convicting petitioner of the crime charged and sentenced him to an The People's detailed narration of facts, well-supported by evidence on record
"indeterminate penalty from 17 years, 4 months and 1 day of reclusion temporal as and given credence by respondent court, is as follows:[26]
minimum, to 21 years of reclusion perpetua, as maximum".[11] Petitioner filed his notice "At about 8:00 o'clock in the evening of October 26, 1992, Enrique Manarang
of appeal on April 28, 1994.[12] Pending the appeal in the respondent Court of and his compadre Danny Perez were inside the Manukan sa Highway
Restaurant in Sto. Kristo, Angeles City where they took shelter from the 9, ibid). It took them about ten (10) seconds to cover the distance between
heavy downpour (pp. 5-6, TSN, February 15, 1993) that had interrupted their their office and the Abacan bridge (p. 9, ibid).
ride on motorcycles (pp. 5-6, ibid.) along McArthur Highway (ibid). While
inside the restaurant, Manarang noticed a vehicle, a Mitsubishi Pajero, "Another PNP mobile patrol vehicle that responded to the flash message
running fast down the highway prompting him to remark that the vehicle might from SPO2 Buan was Mobile No. 7 of the Pulongmaragal Detachment which
get into an accident considering the inclement weather. (p. 7, Ibid) In the local was then conducting patrol along Don Juico Avenue (pp. 8-9, TSN, March 8,
vernacular, he said thus: 'Ka bilis na, mumuran pa naman pota 1993). On board were SPO Ruben Mercado and SPO3 Tan and SPO2
makaaksidente ya.' (p. 7, ibid). True enough, immediately after the vehicle Odejar (p. 8, ibid). SPO Ruben Mercado immediately told SPO3 Tan to
had passed the restaurant, Manarang and Perez heard a screeching sound proceed to the MacArthur Highway to intercept the vehicle with plate number
produced by the sudden and hard braking of a vehicle running very fast (pp. PMA 777 (p. 10, ibid).
7-8, ibid) followed by a sickening sound of the vehicle hitting something (p. "In the meantime, Manarang continued to chase the vehicle which figured in
8, ibid). Danny Cruz, quite sure of what had happened, remarked 'oy ta na' the hit and run incident, even passing through a flooded portion of the
signifying that Manarang had been right in his observation (pp. 8-9, ibid). MacArthur Highway two (2) feet deep in front of the Iglesia ni Kristo church
"Manarang and Cruz went out to investigate and immediately saw the vehicle but he could not catch up with the same vehicle (pp. 11-12, February 15,
occupying the edge or shoulder of the highway giving it a slight tilt to its side 1993). When he saw that the car he was chasing went towards Magalang,
(pp. 9-10, ibid). Manarang, being a member of both the Spectrum, a civic he proceeded to Abacan bridge because he knew Pulongmaragal was not
group and the Barangay Disaster Coordinating Council, decided to report the passable (pp. 12-14, ibid). When he reached the Abacan bridge, he found
incident to the Philippine National Police of Angeles City (p. 10, ibid). He took Mobile No. 3 and SPO2 Borja and SPO2 Miranda watching all vehicles
out his radio and called the Viper, the radio controller of the Philippine coming their way (p. 10, TSN, February 23, 1993). He approached them and
National Police of Angeles City (p. 10, ibid). By the time Manarang completed informed them that there was a hit and run incident (p. 10,ibid). Upon learning
the call, the vehicle had started to leave the place of the accident taking the that the two police officers already knew about the incident, Manarang went
general direction to the north (p. 11, ibid). back to where he came from (pp. 10-11; ibid). When Manarang was in front
of Tina's Restaurant, he saw the vehicle that had figured in the hit and run
"Manarang went to the location of the accident and found out that the vehicle incident emerging from the corner adjoining Tina's Restaurant (p. 15, TSN,
had hit somebody (p. 11, ibid). February 15, 1993). He saw that the license plate hanging in front of the
vehicle bore the identifying number PMA 777 and he followed it (p. 15, ibid)
"He asked Cruz to look after the victim while he went back to the restaurant, towards the Abacan bridge.
rode on his motorcycle and chased the vehicle (p. 11 ibid). During the chase
he was able to make out the plate number of the vehicle as PMA 777 (p. 33, "Soon the vehicle was within sight of SPO2 Borja and SPO2 Miranda of
TSN, February 15, 1993). He called the Viper through the radio once again Mobile No. 3 (p. 10, TSN, February 23, 1993). When the vehicle was about
(p. 34, ibid) reporting that a vehicle heading north with plate number PMA twelve (12) meters away from their position, the two police officers boarded
777 was involved in a hit and run accident (p. 20, TSN, June 8, 1993). The their Mobile car, switched on the engine, operated the siren and strobe light
Viper, in the person of SPO2 Ruby Buan, upon receipt of the second radio and drove out to intercept the vehicle (p. 11, ibid). They cut into the path of
call flashed the message to all units of PNP Angeles City with the order to the vehicle forcing it to stop (p. 11, ibid).
apprehend the vehicle (p. 20, ibid). One of the units of the PNP Angeles City
reached by the alarm was its Patrol Division at Jake Gonzales Street near "SPO2 Borja and SPO2 Miranda alighted from Mobile No. 3 (P. 12, TSN,
the Traffic Division (pp. 5-7, TSN, February 23, 1993). SPO2 Juan C. Borja February 23, 1993). SPO2 Miranda went to the vehicle with plate number
III and SPO2 Emerlito Miranda immediately borded a mobile patrol vehicle PMA 777 and instructed its driver to alight (p. 12, ibid). The driver rolled down
(Mobile No. 3) and positioned themselves near the south approach of the window and put his head out while raising both his hands. They
Abacan bridge since it was the only passable way going to the north (pp. 8- recognized the driver as Robin C. Padilla, appellant in this case (p.
13, ibid). There was no one else with him inside the vehicle (p. 24). At that
moment, Borja noticed that Manarang arrived and stopped his motorcycle "The police officers brought appellant to the Traffic Division at Jake Gonzales
behind the vehicle of appellant (p. 14, ibid). SPO2 Miranda told appellant to Boulevard (pp. 31-32, ibid) where appellant voluntarily surrendered a third
alight to which appellant complied. Appellant was wearing a short leather firearm, a pietro berreta pistol(Exhibit 'L') with a single round in its chamber
jacket (p. 16, TSN, March 8, 1993) such that when he alighted with both his and a magazine (pp. 33-35, ibid) loaded with seven (7) other live
hands raised, a gun (Exhibit 'C') tucked on the left side of his waist was bullets. Appellant also voluntarily surrendered a black bag containing two
revealed (p. 15, TSN, February 23, 1993), its butt protruding (p. additional long magazines and one short magazine (Exhibits M, N, and O,
15, ibid). SPO2 Borja made the move to confiscate the gun but appellant held pp. 36-37, ibid). After appellant had been interrogated by the Chief of the
the former's hand alleging that the gun was covered by legal papers (p. Traffic Division, he was transferred to the Police Investigation Division at Sto.
16, ibid). SPO2 Borja, however, insisted that if the gun really was covered by Rosario Street beside the City Hall Building where he and the firearms and
legal papers, it would have to be shown in the office (p. 16, ibid). After ammunitions were turned over to SPO2 Rene Jesus Gregorio (pp. 5-10,
disarming appellant, SPO2 Borja told him about the hit and run incident which TSN, July 13, 1993). During the investigation, appellant admitted possession
was angrily denied by appellant (p. 17, ibid). By that time, a crowd had formed of the firearms stating that he used them for shooting (p. 14, ibid). He was
at the place (p. 19, ibid). SPO2 Borja checked the cylinder of the gun and not able to produce any permit to carry or memorandum receipt to cover the
find six (6) live bullets inside (p. 20, ibid). three firearms (pp. 16-18, TSN, January 25, 1994).
"While SPO2 Borja and appellant were arguing, Mobile No. 7 with SPO "On November 28, 1992, a certification (Exhibit 'F') was issued by Captain,
Ruben Mercado, SPO3 Tan and SPO2 Odejar on board arrived (pp. 11-12, Senior Inspector Mario Espino, PNP, Chief, Record Branch of the Firearms
TSN, March 8, 1993). As the most senior police officer in the group, SPO and Explosives Office (pp. 7-8, TSN, March 4, 1993). The Certification stated
Mercado took over the matter and informed appellant that he was being that the three firearms confiscated from appellant, an M-16 Baby armalite
arrested for the hit and run incident (p. 13, ibid). He pointed out to appellant rifle SN-RP 131280, a .357 caliber revolver Smith and Wesson SN 32919
the fact that the plate number of his vehicle was dangling and the railing and and a .380 Pietro Beretta SN-A35720, were not registered in the name of
the hood were dented (p. 12, ibid). Appellant, however, arrogantly denied his Robin C. Padilla (p. 6, ibid). A second Certification dated December 11, 1992
misdeed and, instead, played with the crowd by holding their hands with one issued by Captain Espino stated that the three firearms were not also
hand and pointing to SPO3 Borja with his right hand saying 'iyan, kinuha ang registered in the name of Robinhood C. Padilla (p. 10, ibid)."
baril ko' (pp. 13-15, ibid). Because appellant's jacket was short, his gesture
exposed a long magazine of an armalite rifle tucked in appellant's back right Petitioner's defenses are as follows: (1) that his arrest was illegal and
pocket (p. 16, ibid). SPO Mercado saw this and so when appellant turned consequently, the firearms and ammunitions taken in the course thereof are
around as he was talking and proceeding to his vehicle, Mercado confiscated inadmissible in evidence under the exclusionary rule; (2) that he is a confidential agent
the magazine from appellant (pp. 16-17, ibid). Suspecting that appellant authorized, under a Mission Order and Memorandum Receipt, to carry the subject
could also be carrying a rifle inside the vehicle since he had a magazine, firearms; and (3) that the penalty for simple illegal possession constitutes excessive
SPO2 Mercado prevented appellant from going back to his vehicle by and cruel punishment proscribed by the 1987 Constitution.
opening himself the door of appellant's vehicle (16-17, ibid). He saw a baby After a careful review of the records[27]of this case, the Court is convinced that
armalite rifle (Exhibit D) lying horizontally at the front by the driver's seat. It petitioner's guilt of the crime charged stands on terra firma, notwithstanding the
had a long magazine filled with live bullets in a semi-automatic mode (pp. 17- Solicitor-General's change of heart.
21, ibid). He asked appellant for the papers covering the rifle and appellant
answered angrily that they were at his home (pp. 26-27, ibid). SPO Mercado Anent the first defense, petitioner questions the legality of his arrest. There is no
modified the arrest of appellant by including as its ground illegal possession dispute that no warrant was issued for the arrest of petitioner, but that per se did not
of firearms (p. 28, ibid). SPO Mercado then read to appellant his make his apprehension at the Abacan bridge illegal.
constitutional rights (pp. 28-29, ibid).
Warrantless arrests are sanctioned in the following instances:[28]
"Sec. 5. Arrest without warrant; when lawful. - A peace officer or a private fortunately did not become an additional entry to the long list of unreported and
person may, without a warrant, arrest a person: unsolved crimes.
(a) When, in his presence, the person to be arrested has committed, It is appropriate to state at this juncture that a suspect, like petitioner herein,
is actually committing, or is attempting to commit an offense; cannot defeat the arrest which has been set in motion in a public place for want of a
warrant as the police was confronted by an urgent need to render aid or take
(b) When an offense has in fact just been committed, and he has action.[33] The exigent circumstances of - hot pursuit,[34] a fleeing suspect, a moving
personal knowledge of facts indicating that the person to be arrested vehicle, the public place and the raining nighttime - all created a situation in which
has committed it. speed is essential and delay improvident. [35] The Court acknowledges police authority
(c) When the person to be arrested is a prisoner who has escaped to make the forcible stop since they had more than mere "reasonable and
from a penal establishment or place where he is serving final articulable" suspicion that the occupant of the vehicle has been engaged in criminal
judgment or temporarily confined while his case is pending, or has activity.[36] Moreover, when caught in flagrante delicto with possession of an unlicensed
escaped while being transferred from one confinement to another. firearm (Smith & Wesson) and ammunition (M-16 magazine), petitioner's warrantless
arrest was proper as he was again actually committing another offense (illegal
Paragraph (a) requires that the person be arrested (i) after he has committed or while possession of firearm and ammunitions) and this time in the presence of a peace
he is actually committing or is at least attempting to commit an offense, (ii) in the officer.[37]
presence of the arresting officer or private person.[29] Both elements concurred here,
as it has been established that petitioner's vehicle figured in a hit and run - an offense Besides, the policemen's warrantless arrest of petitioner could likewise be justified
committed in the "presence" of Manarang, a private person, who then sought to arrest under paragraph (b) as he had in fact just committed an offense. There was no
petitioner. It must be stressed at this point that "presence" does not only require that supervening event or a considerable lapse of time between the hit and run and the
the arresting person sees the offense, but also when he "hears the disturbance created actual apprehension. Moreover, after having stationed themselves at the Abacan
thereby AND proceeds at once to the scene."[30] As testified to by Manarang, he heard bridge in response to Manarang's report, the policemen saw for themselves the fast
the screeching of tires followed by a thud, saw the sideswiped victim (balut vendor), approaching Pajero of petitioner,[38] its dangling plate number (PMA 777 as reported
reported the incident to the police and thereafter gave chase to the erring Pajero by Manarang), and the dented hood and railings thereof. [39] These formed part of the
vehicle using his motorcycle in order to apprehend its driver. After having sent a radio arresting police officer's personal knowledge of the facts indicating that petitioner's
report to the PNP for assistance, Manarang proceeded to the Abacan bridge where he Pajero was indeed the vehicle involved in the hit and run incident. Verily then, the
found responding policemen SPO2 Borja and SPO2 Miranda already positioned near arresting police officers acted upon verified personal knowledge and not on unreliable
the bridge who effected the actual arrest of petitioner.[31] hearsay information.[40]

Petitioner would nonetheless insist on the illegality of his arrest by arguing that Furthermore, in accordance with settled jurisprudence, any objection, defect or
the policemen who actually arrested him were not at the scene of the hit and run.[32] We irregularity attending an arrest must be made before the accused enters his
beg to disagree. That Manarang decided to seek the aid of the policemen (who plea.[41]Petitioner's belated challenge thereto aside from his failure to quash the
admittedly were nowhere in the vicinity of the hit and run) in effecting petitioner's arrest, information, his participation in the trial and by presenting his evidence, placed him
did not in any way affect the propriety of the apprehension. It was in fact the most in estoppel to assail the legality of his arrest.[42] Likewise, by applying for bail, petitioner
prudent action Manarang could have taken rather than collaring petitioner by himself, patently waived such irregularities and defects.[43]
inasmuch as policemen are unquestionably better trained and well-equipped in We now go to the firearms and ammunitions seized from petitioner without a
effecting an arrest of a suspect (like herein petitioner) who , in all probability, could search warrant, the admissibility in evidence of which, we uphold.
have put up a degree of resistance which an untrained civilian may not be able to
contain without endangering his own life. Moreover, it is a reality that curbing The five (5) well-settled instances when a warrantless search and seizure of
lawlessness gains more success when law enforcers function in collaboration with property is valid,[44] are as follows:
private citizens. It is precisely through this cooperation, that the offense herein involved
1. warrantless search incidental to a lawful arrest recognized under being committed by any person, they are not precluded from performing their
Section 12, Rule 126 of the Rules of Court [45] and by prevailing duties as police officers for the apprehension of the guilty person and the
jurisprudence[46], taking of the corpus delicti."[53]
2. Seizure of evidence in "plain view", the elements of which are:[47] "Objects whose possession are prohibited by law inadvertently found in plain
view are subject to seizure even without a warrant."[54]
(a). a prior valid intrusion based on the valid warrantless
arrest in which the police are legally present in the pursuit of With respect to the Berreta pistol and a black bag containing assorted magazines,
their official duties; petitioner voluntarily surrendered them to the police.[55] This latter gesture of petitioner
indicated a waiver of his right against the alleged search and seizure[56], and that his
(b). the evidence was inadvertently discovered by the police failure to quash the information estopped him from assailing any purported defect. [57]
who had the right to be where they are;
Even assuming that the firearms and ammunitions were products of an active
(c). the evidence must be immediately apparent, and search done by the authorities on the person and vehicle of petitioner, their seizure
(d). "plain view" justified mere seizure of evidence without without a search warrant nonetheless can still be justified under a search incidental to
further search.[48] a lawful arrest (first instance). Once the lawful arrest was effected, the police may
undertake a protective search[58] of the passenger compartment and containers in the
3. search of a moving vehicle.[49] Highly regulated by the government, vehicle[59] which are within petitioner's grabbing distance regardless of the nature of
the vehicle's inherent mobility reduces expectation of privacy especially the offense.[60] This satisfied the two-tiered test of an incidental search: (i) the item to
when its transit in public thoroughfares furnishes a highly reasonable be searched (vehicle) was within the arrestee's custody or area of immediate
suspicion amounting to probable cause that the occupant committed a control[61] and (ii) the search was contemporaneous with the arrest.[62] The products of
criminal activity.[50] that search are admissible evidence not excluded by the exclusionary rule. Another
justification is a search of a moving vehicle (third instance). In connection therewith, a
4. consented warrantless search, and warrantless search is constitutionally permissible when, as in this case, the officers
conducting the search have reasonable or probable cause to believe, before the
5. customs search. search, that either the motorist is a law-offender (like herein petitioner with respect to
the hit and run) or the contents or cargo of the vehicle are or have been instruments or
the subject matter or the proceeds of some criminal offense.[63]
In conformity with respondent court's observation, it indeed appears that the
authorities stumbled upon petitioner's firearms and ammunitions without even Anent his second defense, petitioner contends that he could not be convicted of
undertaking any active search which, as it is commonly understood, is a prying into violating P.D. 1866 because he is an appointed civilian agent authorized to possess
hidden places for that which is concealed.[51] The seizure of the Smith & Wesson and carry the subject firearms and ammunition as evidenced by a Mission Order [64] and
revolver and an M-16 rifle magazine was justified for they came within "plain view" of Memorandum Receipt duly issued by PNP Supt. Rodialo Gumtang, the deputy
the policemen who inadvertently discovered the revolver and magazine tucked in commander of Task Force Aguila, Lianga, Surigao del Sur. The contention lacks merit.
petitioner's waist and back pocket respectively, when he raised his hands after
alighting from his Pajero. The same justification applies to the confiscation of the M-16 In crimes involving illegal possession of firearm, two requisites must be
armalite rifle which was immediately apparent to the policemen as they took a casual established, viz.: (1) the existence of the subject firearm and, (2) the fact that the
glance at the Pajero and saw said rifle lying horizontally near the driver's seat.[52] Thus accused who owned or possessed the firearm does not have the corresponding license
it has been held that: or permit to possess.[65] The first element is beyond dispute as the subject firearms and
ammunitions[66] were seized from petitioner's possession via a valid warrantless
"(W)hen in pursuing an illegal action or in the commission of a criminal search, identified and offered in evidence during trial. As to the second element, the
offense, the . . . police officers should happen to discover a criminal offense same was convincingly proven by the prosecution. Indeed, petitioner's purported
Mission Order and Memorandum Receipt are inferior in the face of the more formidable that his Mission Order and Memorandum Receipt were left at home, further compound
evidence for the prosecution as our meticulous review of the records reveals that the their irregularity. As to be reasonably expected, an accused claiming innocence, like
Mission Order and Memorandum Receipt were mere afterthoughts contrived and herein petitioner, would grab the earliest opportunity to present the Mission Order and
issued under suspicious circumstances. On this score, we lift from respondent court's Memorandum Receipt in question and save himself from the long and agonizing public
incisive observation. Thus: trial and spare him from proffering inconsistent excuses. In fact, the Mission Order
itself, as well as the Letter-Directive of the AFP Chief of Staff, is explicit in providing
"Appellant's contention is predicated on the assumption that the that:
Memorandum Receipts and Mission Order were issued before the subject
firearms were seized and confiscated from him by the police officers in "VIII. c. When a Mission Order is requested for verification by
Angeles City. That is not so. The evidence adduced indicate that the enforcement units/personnels such as PNP, Military Brigade and other
Memorandum Receipts and Mission Order were prepared and executed long Military Police Units of AFP, the Mission Order should be shown without
after appellant had been apprehended on October 26, 1992. resentment to avoid embarrassment and/or misunderstanding.
"Appellant, when apprehended, could not show any document as proof of his "IX. d. Implicit to this Mission Order is the injunction that the confidential
authority to possess and carry the subject firearms. During the preliminary instruction will be carried out through all legal means and do not cover
investigation of the charge against him for illegal possession of firearms and an actuation in violation of laws. In the latter event, this Mission Order
ammunitions he could not, despite the ample time given him, present any is rendered inoperative in respect to such violation."[68]
proper document showing his authority. If he had, in actuality, the
Memorandum Receipts and Missions Order, he could have produced those which directive petitioner failed to heed without cogent explanation.
documents easily, if not at the time of apprehension, at least during the The authenticity and validity of the Mission Order and Memorandum Receipt,
preliminary investigation. But neither appellant nor his counsel inform the moreover, were ably controverted. Witness for the prosecution Police Supt. Durendes
prosecutor that appellant is authorized to possess and carry the subject denied under oath his signature on the dorsal side of the Mission Order and declared
firearms under Memorandum Receipt and Mission Order. At the initial further that he did not authorize anyone to sign in his behalf. [69] His surname thereon,
presentation of his evidence in court, appellant could have produced these we note, was glaringly misspelled as "Durembes."[70] In addition, only Unit
documents to belie the charged against him. Appellant did not. He did not Commanders and Chief of Offices have the authority to issue Mission Orders and
even take the witness stand to explain his possession of the subject firearms. Memorandum Receipts under the Guidelines on the Issuance of MOs, MRs, &
"Even in appellant's Demurrer to Evidence filed after the prosecution rested PCFORs.[71] PNP Supt. Rodialo Gumtang who issued petitioner's Mission Order and
contain no allegation of a Memorandum Receipts and Mission Order Memorandum Receipt is neither a Unit Commander nor the Chief of Office, but a mere
authorizing appellant to possess and carry the subject firearms. deputy commander. Having emanated from an unauthorized source, petitioner's
Mission Order and Memorandum Receipt are infirm and lacking in force and
"At the initial presentation of appellant's evidence, the witness cited was one effect. Besides, the Mission Order covers "Recom 1-12-Baguio City,"[72] areas outside
James Neneng to whom a subpoena was issued. Superintendent Gumtang Supt. Gumtang's area of responsibility thereby needing prior approval "by next higher
was not even mentioned. James Neneng appeared in court but was not Headquarters"[73] which is absent in this case. The Memorandum Receipt is also
presented by the defense. Subsequent hearings were reset until the defense unsupported by a certification as required by the March 5, 1988 Memorandum of the
found Superintendent Gumtang who appeared in court without subpoena on Secretary of Defense which pertinently provides that:
January 13, 1994."[67]
"No memorandum receipt shall be issued for a CCS firearms without
The Court is baffled why petitioner failed to produce and present the Mission corresponding certification from the corresponding Responsible
Order and Memorandum Receipt if they were really issued and existing before his Supply Officer of the appropriate AFP unit that such firearm has been
apprehension. Petitioner's alternative excuses that the subject firearms were intended officially taken up in that units property book, and that report of such
for theatrical purposes, or that they were owned by the Presidential Security Group, or action has been reported to higher AFP authority."
Had petitioner's Memorandum Receipt been authentic, we see no reason why he same as that licensed and/or registered in the name of one Albert
cannot present the corresponding certification as well. Villanueva Fallorina.
What is even more peculiar is that petitioner's name, as certified to by the Director "Q. So in short, the only licensed firearms in the name of accused Robin
for Personnel of the PNP, does not even appear in the Plantilla of Non-Uniform C. Padilla is a pistol, Smith and Wesson, caliber 9 mm with Serial
Personnel or in the list of Civilian Agents or Employees of the PNP which could justify No. TCT 8214?
the issuance of a Mission Order, a fact admitted by petitioner's counsel. [74] The
implementing rules of P.D. 1866 issued by the then PC-INP Chief and Director-General "A. Yes, sir.
Lt. Gen. Fidel V. Ramos are clear and unambiguous, thus: "Q. And the firearms that were the subject of this case are not listed in
"No Mission Order shall be issued to any civilian agent authorizing the the names of the accused in this case?
same to carry firearms outside residence unless he/she is included in "A. Yes, sir.[77]
the regular plantilla of the government agency involved in law
enforcement and is receiving regular compensation for the services xxx xxx xxx
he/she is rendering in the agency. Further, the civilian agent must be
And the certification which provides as follows:
included in a specific law enforcement/police/intelligence project proposal or
special project which specifically required the use of firearms(s) to insure its
accomplishment and that the project is duly approved at the PC Regional Republic of the Philippines
Command level or its equivalent level in other major services of the AFP, INP Department of the Interior and Local Government
and NBI, or at higher levels of command."[75] GENERAL HEADQUARTERS PHILIPPINE NATIONAL POLICE
Circular No. 1, dated January 6, 1986, of the then Ministry of Justice likewise provides Camp Crame, Quezon City
as follows:
"If mission orders are issued to civilians (not members of the uniformed "PNPFEO5 28 November 1992
service), they must be civilian agents included in the regular plantilla of the
government agency involved in law enforcement and are receiving regular "C E R T I F I C A T I O N
compensation for the service they are rendering."
That petitioner's Mission Order and Memorandum Receipt were fabricated pieces of
evidence is accentuated all the more by the testimony and certification of the Chief of
the Records Branch of the firearms and Explosives Office of the PNP declaring that "THIS IS TO CERTIFY that Robin C. Padilla of 59 Labo St., Quezon City is a
petitioner's confiscated firearms are not licensed or registered in the name of the licensed/registered holder of Pistol Smith and Wesson Cal 9mm with serial number
petitioner.[76]Thus: TCT8214 covered by License No. RL M76C4476687.

"Q. In all these files that you have just mentioned Mr. Witness, what did you "Further certify that the following firearms are not registered with this Office per
find, if any? verification from available records on file this Office as of this date:
"A. I found that a certain Robin C. Padilla is a licensed registered owner of
one 9 mm pistol, Smith and Wesson with Serial No. TCT 8214 and the M16 Baby Armalite SN-RP131120
following firearms being asked whether it is registered or not, I did Revolver Cal 357 SN-3219
not find any records, the M-16 and the caliber .357 and the caliber Pistol Cal 380 Pietro Beretta SN-35723
.380 but there is a firearm with the same serial number which is the
"However, we have on file one Pistol Cal 380, Beretta with serial number 35723Y, to appellant's erroneous averment. The severity of a penalty does not ipso facto make
licensed/registered to one Albert Villanueva Fallorina of 29 San Juan St., Capitol Pasig, the same cruel and excessive.
MM under Re-Registered License.
"It takes more than merely being harsh, excessive, out of proportion, or severe for a
"This certification is issued pursuant to Subpoena from City of Angeles. penalty to be obnoxious to the Constitution. 'The fact that the punishment authorized
by the statute is severe does not make it cruel and unusual.' (24 C.J.S., 1187-
"FOR THE CHIEF, FEO: 1188). Expressed in other terms, it has been held that to come under the ban, the
punishment must be 'flagrantly and plainly oppressive','wholly disproportionate to the
nature of the offense as to shock the moral sense of the community' "[88]
In several occasions, the Court has ruled that either the testimony of a
representative of, or a certification from, the PNP Firearms and Explosives Office
(FEO) attesting that a person is not a licensee of any firearm would suffice to prove It is well-settled that as far as the constitutional prohibition goes, it is not so much the
beyond reasonable doubt the second element of illegal possession of extent as the nature of the punishment that determines whether it is, or is not, cruel
firearm.[79] In People vs. Tobias,[80] we reiterated that such certification is sufficient to and unusual and that sentences of imprisonment, though perceived to be harsh, are
show that a person has in fact no license. From the foregoing discussion, the fact that not cruel or unusual if within statutory limits.[89]
petitioner does not have the license or permit to possess was overwhelmingly proven Moreover, every law has in its favor the presumption of constitutionality. The
by the prosecution. The certification may even be dispensed with in the light of the burden of proving the invalidity of the statute in question lies with the appellant which
evidence[81] that an M-16 rifle and any short firearm higher than a .38 caliber pistol, burden, we note, was not convincingly discharged. To justify nullification of the law,
akin to the confiscated firearms, cannot be licensed to a civilian, [82] as in the case of there must be a clear and unequivocal breach of the Constitution, not a doubtful and
petitioner. The Court, therefore, entertains no doubt in affirming petitioner's conviction argumentative implication,[90] as in this case. In fact, the constitutionality of P.D. 1866
especially as we find no plausible reason, and none was presented, to depart from the has been upheld twice by this Court.[91] Just recently, the Court declared that "the
factual findings of both the trial court and respondent court which, as a rule, are pertinent laws on illegalpossession of firearms [are not] contrary to any provision of
accorded by the Court with respect and finality.[83] the Constitution. . ."[92] Appellant's grievance on the wisdom of the prescribed penalty
Anent his third defense, petitioner faults respondent court "in applying P.D. 1866 should not be addressed to us. Courts are not concerned with the wisdom, efficacy or
in a democratic ambience (sic) and a non-subversive context" and adds that morality of laws. That question falls exclusively within the province of Congress which
respondent court should have applied instead the previous laws on illegal possession enacts them and the Chief Executive who approves or vetoes them. The only function
of firearms since the reason for the penalty imposed under P.D. 1866 no longer of the courts, we reiterate, is to interpret and apply the laws.
exists.[84] He stresses that the penalty of 17 years and 4 months to 21 years for simple With respect to the penalty imposed by the trial court as affirmed by respondent
illegal possession of firearm is cruel and excessive in contravention of the court (17 years 4 months and 1 day of reclusion temporal, as minimum, to 21 years
Constitution.[85] of reclusion perpetua, as maximum), we reduce the same in line with the fairly recent
The contentions do not merit serious consideration. The trial court and the case of People v. Lian[93] where the Court en banc provided that the indeterminate
respondent court are bound to apply the governing law at the time of appellant's penalty imposable for simple illegal possession of firearm, without any mitigating or
commission of the offense for it is a rule that laws are repealed only by subsequent aggravating circumstance, should be within the range of ten (10) years and one (1)
ones.[86] Indeed, it is the duty of judicial officers to respect and apply the law as it day to twelve years (12) of prision mayor, as minimum, to eighteen (18) years, eight
stands.[87] And until its repeal, respondent court can not be faulted for applying P.D. (8) months and one (1) day to twenty (20) of reclusion temporal, as maximum. This is
1866 which abrogated the previous statutes adverted to by petitioner. discernible from the following explanation by the Court:

Equally lacking in merit is appellant's allegation that the penalty for simple illegal "In the case at bar, no mitigating or aggravating circumstances have been alleged or
possession is unconstitutional. The penalty for simple possession of firearm, it should proved, In accordance with the doctrine regarding special laws explained in People v.
be stressed, ranges from reclusion temporal maximum to reclusion perpetua contrary
Simon,[94] although Presidential Decree No. 1866 is a special law, the penalties therein
were taken from the Revised Penal Code, hence the rules in said Code for graduating
by degrees or determining the proper period should be applied. Consequently, the
penalty for the offense of simple illegal possession of firearm is the medium period of
the complex penalty in said Section 1, that is, 18 years, 8 months and 1 day to 20

"This penalty, being that which is to be actually imposed in accordance with the rules
therefor and not merely imposable as a general prescription under the law, shall be the
maximum of the range of the indeterminate sentence. The minimum thereof shall be
taken, as aforesaid, from any period of the penalty next lower in degree, which
is, prision mayor in its maximum period to reclusion temporal in its medium period.[95]

WHEREFORE, premises considered, the decision of the Court of Appeals

sustaining petitioner's conviction by the lower court of the crime of simple illegal
possession of firearms and ammunitions is AFFIRMED EXCEPT that petitioner's
indeterminate penalty is MODIFIED to ten (10) years and one (1) day, as minimum, to
eighteen (18) years, eight (8) months and one (1) day, as maximum.