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Ang digest ni koia Rej

COCA-COLA BOTTLERS PHILIPPINES, INC., ​Petitioner​, ​v. SPOUSES JOSE R. BERNARDO AND LILIBETH R.
BERNARDO, DOING BUSINESS UNDER THE NAME AND STYLE "JOLLY BEVERAGE ENTERPRISES,"
Respondents​.

[Abuse of Rights. Art. 19, 20, 21. And Art. 28-Unfair Competition]
|This is a Petition for Review1​ filed by Coca-Cola Bottlers Philippines, Inc. (petitioner), from the Court of Appeals (CA) Decision2​ and
Resolution3​ in CA-GR. CV No. 91096. The CA affirmed in toto the Decision4​ of Regional Trial Court (RTC) Branch 88 in Quezon City in Civil Case
No. Q-00-42320.|

The Parties:
Petitioner, ​Coca-cola Bottlers Philippines Inc.​, is a domestic corporation engaged in the large-scale
manufacture, sale, and distribution of beverages around the country.

Respondents, ​Bernardo Spouses “Jolly Beverage Enterprises”, ​on the other hand, are doing business under
the name "Jolly Beverage Enterprises,". They are wholesalers of softdrinks in Quezon City, particularly in the
vicinities of Bulacan Street, V. Luna Road, Katipunan Avenue, and Timog Avenue.

The Facts:
The business relationship between the parties commenced in 1987 when petitioner designated respondents
as its distributor.

On 22 March 1994, the parties formally entered into an exclusive dealership contract for three years.
Under the agreement, petitioner would extend developmental assistance to respondents in the form of cash
assistance and trade discount incentives. For their part, respondents undertook to sell petitioner's products
exclusively, meet the sales quota of 7,000 cases per month, and assist petitioner in its marketing efforts.

For 13 years, the parties enjoyed a good and harmonious business partnership. ​While the contracts
contained a clause for breach, it was never enforced.

Sometime in late 1998 or early 1999​, before the contract expired, petitioner required respondents to
submit a list of their customers on the pretext that it would formulate a policy defining its territorial
dealership in Quezon City.

It assured respondents that their contract would be renewed for a longer period, provided that they would
submit the list. However, despite their compliance, the promise did not materialize.

February 1999, ​the Bernardo spouses learned that​:

-Coca cola bottlers started to reach out to the persons whose names were on the list.

-The Bernardo spouses also received reports that their delivery trucks were being trailed by petitioner's
agents; and that as soon as the trucks left, the latter would approach the former's customers.

-That Coca Cola Bottlers had employed a different pricing scheme, such that the price given to distributors
was significantly higher than that given to supermarkets.

-It also enticed direct buyers and ​sari-sari store owners in the area with its "​Coke Alok​" promo, in which it
gave away one free bottle for every case purchased.

-It further engaged a store adjacent to respondents' warehouse to sell the former's products at a
substantially lower price.

The Bernardo spouses claimed that b


​ ecause of these schemes by coca-cola bottlers, they lost not
only their major customers - such as Peach Blossoms, May Flower Restaurant, Saisaki
Restaurant, and Kim Hong Restaurant, but also small stores​, such as the canteen in the hospital
where respondent Jose Bernardo worked.

They (Bernardo Spouses) admitted that they were unable to pay deliveries worth P449,154.1 ​(Check the
footnote for court’s elaboration rej hehehehehehe.)

The Complaint:

Respondents filed a ​Complaint for damages​, alleging that the ​acts of petitioner constituted
dishonesty, bad faith, gross negligence, fraud, and unfair competition in commercial enterprise​.
(The Complaint was later amended to implead petitioner's officers and personnel, include additional factual
allegations, and increase the amount of damages prayed for. They were dismissed however.)

The Defense:

Petitioner denied the allegations. It maintained that it had obtained a list of clients through surveys,
and that promotional activities or developmental strategies were implemented only after the
expiration of the Agreements​. It opined that the ​filing of the complaint was a mere ploy resorted to
by respondents to evade the payment of the deliveries​.

RTC ruling:

The ​RTC held petitioner liable for damages for abuse of rights in violation of Articles 19, 20, and
21 of the Civil Code and for unfair competition under Article 28. It found that petitioner's agents solicited
the list of clients in order to penetrate the market and directly supply customers with its products. ​Moreover,
the trial court found that petitioner had recklessly ignored the rights of respondents to have a fair chance to
engage in business or earn a living when it deliberately used oppressive methods to deprive them of their
business. Its officers were, however, absolved of liability, as there was no showing that they had acted in
their individual and personal capacities.

Court of Appeals affirmed the RTC Decision ​in toto.

ISSUE:

Whether or not Coca Cola Bottlers violated Articles 19, 20, and 21 or 28 of the New Civil Code.

Ruling:

Yes. The court of appeals didn’t erred in affirming the finding that petitioner was liable for for abuse of rights
and unfair competition.

Both the RTC and the CA found that petitioner had employed oppressive and high-handed schemes to
unjustly limit the market coverage and diminish the investment returns of respondents.

“This [cut-throat competition] is precisely what appellant did in order to take over the market: directly sell its
products to or deal them off to competing stores at a price substantially lower than those imposed on its
wholesalers. As a result, the wholesalers suffered losses, and in [respondents'] case, laid of a number of employees
and alienated the patronage of its major customers including small-scale stores.”

The petitioner is not only a beverage giant, but also the manufacturer of the products; hence, it sets the
price. It took advantage of the information provided by respondents to facilitate its takeover of the latter's
usual business area. Distributors like respondents, who had assisted petitioner in its marketing efforts,
suddenly found themselves with fewer customers. Other distributors were left with no choice but to fold.

1
​NOTE: ​The ​Court is not unmindful of the undisputed fact that plaintiffs have an outstanding obligation with
CCBPI in the amount of ​P449,154.00​. However, ​record shows that said outstanding obligation was
incurred by the plaintiffs at the time the afore-said marketing strategies were already employed by
CCBPI and the wholesalers' grievances including that of the plaintiffs were already aired by them. ​Hence, it is not
amiss to deduce that these obligations arose as a result of CCBPI's machinations leading to plaintiff's
business reversals​. The Court thus finds, as justice and fair play require, that plaintiff's outstanding obligation be
offset by the temperate damages CCBPI caused to plaintiffs and is held liable for as a consequence of its unfair
marketing strategies.
The act of "​a merchant [who] puts up a store near the store of another and in this way attracts
some of the latter's patrons" is not an abuse of a right. The scenario in the ​present case is vastly
different: ​the merchant was also the producer who, with the use of a list provided by its
distributor, knocked on the doors of the latter's customers and offered the products at a
substantially lower price. Unsatisfied, the merchant even sold its products at a preferential rate
to another store within the vicinity. Jurisprudence holds that when a person starts an opposing place of
business, not for the sake of profit, but regardless of Joss and for the sole purpose of driving a competitor
out of business, in order to take advantage of the effects of a malevolent purpose, that person is guilty of a
wanton wrong.

Rej, Analyze!:

Here, the three requisites of abuse of rights are present:


1.] That there is a legal right or duty.
2.] That such right or duty is exercised in bad faith.
3.] For the sole intent of prejudicing or injuring another.

Coca-cola bottlers has a right. That is, to put up a store and promote and distribute their product to
customers. It is their right as merchants in order to obtain profit.

However, such a right ends when there is an abuse of right.

In this case, the coca-cola bottlers has abused that right by, while being a producer who can control the
price, 1.] Stealing the patrons of one of their former distributors by using the lists that has been provided by
the latter supposedly for a promise of defining territorial dealership, 2.] Offering such patrons substantially
lower prices and 3.] selling its products at a significantly preferential rate to another store within the vicinity,
which left the spouses’ business at a substantial disadvantage and loss. Not only that, they did so
deliberately in order to gain and steal customers from the territory in which the Jolly Beverage Enterprises
business was operating, as evidenced by the failed promise of renewal of the contract and the use of the list
provided by Jolly Beverage Enterprises in order to supposedly define a territorial Dealership (which the
petitioners did not fulfill as well).

The substantial loss of ​P449,154 was also incurred after coca-cola bottlers already implemented their
promotional activities (information found under the footnote of the case). Thus, it can be deduced that such
loss was a result of their activities and that they were really prejudiced because of that.

------------------------------------------------------------------------------------------------------
NOEL BUENAVENTURA, petitioner, vs. COURT OF APPEALS and ISABEL LUCIA SINGH BUENAVENTURA,
respondents.

[Article 21, Contra Bonus Mores: harmful to the moral welfare of society]

The Parties and Facts:

Petitioner​, ​Noel Buenaventura​, on July 12, 1992, filed the declaration of nullity of marriage on the ground
of the alleged psychological incapacity of his wife (Isabel). After his wife filed an answer to the said petition,
he amended his petition by stating that both he and his wife were psychologically incapacitated to comply
with the essential obligations of marriage

Respondent​, ​Court of Appeals and Isabel Buenaventura​, in response to the petition and amendment of her
husband Noel, she filed an amended answer denying the allegation that she was psychologically
incapacitated.

RTC Ruling:

RTC ​Declared and decreed the marriage entered into between plaintiff Noel A. Buenaventura and
defendant Isabel Lucia Singh Buenaventura on July 4, 1979, ​null and void ab initio (Anuled)

Ruling was based on ​article 36 of the Family code on the ​grounds of psychological incapacity of Noel
Buenaventura​.

Damages were awarded ​by the RTC in favor of Isabel Buenaventura based on ​Article 2217 (Moral
damages) Article 2229 (Exemplary Damages) through Article 21 of the Civil Code (Contra Bonos
Mores)​.

Awards for Damages:


-Noel Buenaventura to pay the defendant ​expenses of litigation​ of P50,000.00, plus costs
-Noel Buenaventura to pay defendant ​moral damages in the amount of 2.5 million pesos and ​exemplary
damages ​of 1 million pesos with 6% interest from the date of this decision plus attorneys fees of
P100,000.00

On October 8, 1996​, the ​Appellate court ​dismissed petitioners appeal for lack of merit and
affirming in toto the trial court’s decision​.

ISSUE:

Whether or not damages should be awarded by reason of performance or non-performance of a marital


obligations.

Ruling:

No. Psychological Incapacity means that a person’s inability to discharge his marital obligations are
BEYOND his control ​while the grant of damages based on Article 21 of the civil code is for ​WILLFUL ACTS
(Intentional dapat diba? Ang article 19 ug 21)​. Thus, the two concepts are incompatible with each
other.

The trial court referred to Article 21 because Article 2219 of the Civil Code enumerates the cases in which
moral damages may be recovered and it mentions Article 21 as one of the instances.

It must be noted that Article 21 states that the individual must ​willfully cause loss or injury to another​.
There is a need that the act is willful and hence done in complete freedom​.
The Court of Appeals and the trial court considered the acts of the petitioner after the marriage as proof of
his ​psychological incapacity​, and therefore a ​product of his incapacity or inability to comply with
the essential obligations of marriage​.

It is ​contradictory to characterize acts as a product of psychological incapacity, ​and hence beyond


the control of the party because of an innate inability​, while at the same time considering the
same set of acts as willful​.

By declaring the petitioner as psychologically incapacitated​, the possibility of ​awarding moral


damages on the same set of facts was negated​.

The ​award of moral damages should be predicated ​on specific evidence that it was done
deliberately and with malice by a party who had knowledge of his or her disability and yet
willfully concealed the same​. No such evidence appears to have been adduced in this case.

For the same reason, since psychological incapacity means that one is truly incognitive of the basic marital
covenants that one must assume and discharge as a consequence of marriage, it removes the basis for the
contention that the petitioner purposely deceived the private respondent. If the private respondent was
deceived, it was not due to a willful act on the part of the petitioner. Therefore, the award of moral damages
was without basis in law and in fact.

Since the grant of moral damages was not proper, it follows that the grant of exemplary damages cannot
stand since the Civil Code provides that exemplary damages are imposed in addition to moral, temperate,
liquidated or compensatory damages.

Rej, analyze!:

Simply state, according to the court, psychological incapacity follows that one has an ‘innate ​inability​’ or is
“​truly incognitive of basic marital covenants to perform or satisfy marital obligations”. Article 21 requires
that one should have the “Intention” or have done the injury “Willfully”. Thus, in this case, Noel cannot be
held liable under Article 21 since he didn’t willfully cause loss or injury to another (Isabel) by not performing
his marital obligations due to psychological incapacity. As such, he cannot be charged with damages for
non-performance of marital obligation.
FILINVEST LAND, INC., ​Petitioner​, v
​ .N
​ gilay,​ ​Respondent.​

[Unjust Enrichment, Article 22]

|For this Court's consideration is the Petition for Review on Certiorari under Rule 45, dated November 9, 2006, of petitioner Filinvest Land,
Inc., which seeks to set aside the Decision dated March 30, 2006 and Resolution dated September 18, 2006 of the Court of Appeals (CA)
partially reversing the Decision​3​ςrνll dated October 1, 2003 of the Regional Trial Court, Las Pis, Branch 253 (RTC).|

The Parties:

Respondents​, were grantees of agricultural public lands located in Tambler, General Santos City through
Homestead and Fee patents sometime in 1986 and 1991 which are covered by, and specifically described in,
17 original certificates issued by the register of deeds of General Santos City.

Petitioners​, Filinvest Land, Inc., represented by Lina de Guzman-Ferrer, negotiated with Hadji Gulam
Ngilay, patriarch of Ngilays, sometime in 1995. Eventually, a Deed of Conditional Sale of the
above-mentioned 17 properties in favor of petitioner Filinvest Land, Inc. was executed. Upon its execution,
respondents were asked to deliver to petitioner the original owner's duplicate copy of the certificates of title
of their respective properties. Respondents received the downpayment for the properties on October 28,
1995.

Facts:

A few days after the execution of the aforestated deeds and the delivery of the corresponding documents to
Filinvest Land Inc., the Ngilays came to know that the ​sale of their properties was null and void​,
because it was:

1.] done within the period that they were not allowed to do so (prohibition period)​ ​and;

2.] ​the sale did not have the approval of the Secretary of the Department of Environment and
Natural Resources (DENR).

The Complaint

The aforementioned prompted the Ngilays (Respondents) to file a c


​ ase for the declaration of nullity of
the deeds of conditional and absolute sale of the questioned properties and the grant of right of way
with the RTC, Las Pinas, Branch 253.

The Defense

Filinvest Land, Inc., claims that sometime in 1995, the representative of Hadji Ngilay ​approached
them to propose the sale of a portion of his properties​. Thereafter, representatives of Filinvest Land,
inc. flew to General Santos City from Manila to conduct an ocular inspection of the subject properties. They
were willing to purchase the properties but seeing that some of the properties were registered as land
grants through homestead patents, representatives of Filinvest Land, Inc. informed Ngilay that ​they would
return to General Santos City in a few months to finalize the sale as ​ten (10) certificates of title
were issued on November 24, 1991.

Ngilay and his children prevailed (persuaded or asked) upon the representatives of ​Filinvest land to make
an advance payment (For the 10 certificates rani siya nga 1991 gi-issue. Kay good naman tong
other 7 since dili siya within the 5-year prohibition period)​. To accommodate the Ngilays, Filinvest
acceded (nisugot, agreed) ​to making an advance payment (P14,000.000.00) with the understanding
that Filinvest could demand anytime the return of the advance payment should Ngilay not be able to comply
with the conditions of the sale. The Ngilays likewise undertook to secure the necessary approvals of the
DENR before the consummation of the sale.

RTC Ruling:

The RTC ruled in favor of Filinvest Land, Inc. and upheld the sale of ​all the properties​ in litigation.
It found that the sale of those properties whose original certificates of title were issued by virtue of the 1986
(7 ka titles) Patents was valid, considering that the prohibitory period ended in 1991, or way before the
transaction took place.

As to those patents awarded in 1991, the same court opined that since those properties were the subject of
a deed of conditional sale, compliance with those conditions is necessary for there to be a perfected contract
between the parties.

Pero tanan gihapon gi-uphold sa RTC na mabaligya or valid.

Court of Appeals Ruling:

Affirmed the validity of contracts for 1986 titles.

However, as for those patents awarded in 1991, it declared:

The Deed of Conditional Sale and Deed of Absolute Sale for the properties covered by the "1991 Patents", as
well as the Right of Way Agreement thereto, are declared null and void.

Issue:

(Remember the downpayment nga 14 million? Mao toy issue na concerned ta sa lesson Art. 22.)

A.] (Article 22 issue) Whether or not the downpayment given by Filinvest Land to Ngilay should
be returned.

Pero before we can answer this, we should answer this question first:

B.] Whether or not there was a perfected contract between the parties during the period of
prohibition.

Ngano? Kay kung walay void nga kontrata, ibig sabihin dili na lalisan kung dapat pa ba ibalik ang
downpayment kay mahitabo man jud ang kontrata, mabaligya man jud ang yuta. Pero pag naa gani void
nga kontrata, ibig sabihin ang katong downpayment nga gihatag ni filinvest ibalik dapat to kay kanse kaayo
ang Filinvest, hayahay kaayo ang mga Ngilay diba? (Unjust enrichment)

Ruling:

Issue B:

No. There cannot be a perfected contract during the prohibition imposed by law, even if it is only a deed of
conditional sale.

The ​five-year prohibitory period following the issuance of the homestead patent is ​provided under
Section 118 of Commonwealth Act No. 141, as amended by Commonwealth Act No. 456,
otherwise known as the Public Land Act​.

It bears stressing that ​the law was enacted (section 118: five-year prohibitory period) to give the
homesteader or patentee every chance to preserve for himself and his family the land that the
State had gratuitously given to him as a reward for his labour in cleaning and cultivating it... Hence, ​any
act which would have the effect of removing the property subject of the patent from the hands of
a grantee will be struck down for being violative of the law​.

In the present case, ​the negotiations for the purchase of the properties ​covered by the patents issued
in 1991 ​were made in 1995 and, eventually, an undated Deed of Conditional Sale was executed. ​On
October 28, 1995​, ​respondents received the downpayment of P14,000.000.00 for the properties
covered by the patents issued in 1991. ​Applying the five-year prohibition, the properties covered by
the patent issued on November 24, 1991 could only be alienated after November 24, 1996.
Therefore, ​the sale, having been consummated on October 28, 1995, or within the five-year
prohibition, is as ruled by the CA, void​.
Filinvest: But but, the law doesn’t necessary say “When there was a perfected contract between the
parties” but when there is “Disposal or Encumberance” Meaning, dili sa pagkaperfect sa kontrata (Tong nag
downpayment si Filinvest.) pero pag nahatag na ang yuta diba? Wala pa man nahatag, so dili pami
maapektuhan atong prohibition period diba?

Court: No. The prohibition does not distinguish between consummated and executory sale. The conditional
sale entered into by the parties is still a conveyance of the homestead patent.

Even assuming that the disputed sale was not yet perfected or consummated, still, the transaction cannot be
validated. ​The prohibition of the law on the sale or encumbrance of the homestead within five
years after the grant is MANDATORY. The ​purpose of the law is to promote a definite policy, i.e.,
"to preserve and keep in the family of the homesteader that portion of the public land which the
State has gratuitously given to him." ​Thus, the law does not distinguish between executory and
consummated sales. Where the sale of a homestead was perfected within the prohibitory period of five
years, the fact that the ​formal deed of sale was executed after the expiration of the said period DID
NOT and COULD NOT legalize a contract that was void from its inception.

So bisa pag naa nay sabot or naperfect na ang kontrata pero wala pa nadispose ang yuta, dili
gihapon na pwede kay pasok man sa prohibition period ang pag enter sa kontrata. Void gihapon
ang kontrata from the start.

Now, since it is clear that the contract was really void. We can answer the second, main issue.

A.] (Article 22 issue) Whether or not the downpayment given by Filinvest Land to Ngilay should
be returned.

Yes. Filinvest Land does not err in seeking the return of the down payment as a consequence of the sale
having been declared void. ​The rule is settled that the declaration of nullity of a contract which is
void ab initio operates to restore things to the state and condition in which they were found
before the execution thereof​.

Allowing respondents to keep the amount received from petitioner is tantamount to judicial
acquiescence to ​unjust enrichment​. Unjust enrichment exists "when a person unjustly retains a benefit to
the loss of another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience."​
ςrνll

There is unjust enrichment under Article 22 of the Civil Code when


(1) a person is unjustly benefited, and
(2) such benefit is derived at the expense of or with damages to another.​ςrνl

Thus, the sale which created the obligation of petitioner to pay the agreed amount having been declared
l​

void, ​respondents have the duty to return the down payment as they no longer have the right to
keep it​. ​The principle of unjust enrichment essentially contemplates payment when there is no
duty to pay, and the person who receives the payment has no right to receive it​.

Rej, Analyze!​:

According to the court’s ruling, the contract is void because it was perfected during the 5-year prohibition
period in which such lands cannot be sold or disposed yet. Now, since there’s no longer a contract to fulfill
(kay void na gani), and hence no land to give, it is just right to return the downpayment given by Filinvest.
Letting the Ngilays keep it would be tantamount to unjust enrichment. It’s like giving them 14 million in
exchange for nothing.
DOMINGO GONZALO, ​Petitioner​, vs. JOHN TARNATE, JR., ​Respondent

[Unjust Enrichment, Article 22]

Parties:

Petitioner, ​Domingo Gonzalo​, owner of Gonzalo Construction, in July 22, 1997, ​had been awarded the
contract for the improvement of the Sadsadan-Maba-ay Section of the Mountain
Province-Benguet Road in the total amount of 7,014,963.33 the Department of Public Works and
Highways (DPWH). He subcontracted to:

Respondent, ​John Tarnate, Jr. (Tarnate)​, on October 15, 1997, ​the supply of materials and labor for
the project, ​under the Tarnate’s business known as JNT Aggregates. Their agreement stipulated, among
others, that Tarnate would pay to Gonzalo eight percent for the first billing and four percent for the second
billing of the contract price, Tarnate’s first and second billing in the project.

Facts:

In furtherance of their agreement, ​Gonzalo executed on April 6, 1999 ​a deed of assignment whereby
he, ​as the contractor, was assigning to Tarnate an amount equivalent to 10% of the total
collection from the DPWH for the project​. ​This 10% retention fee (equivalent to ₱233,526.13)
was the rent for Tarnate’s equipment that had been utilized in the project​.

In the deed of assignment, Gonzalo further authorized Tarnate to use the official receipt of Gonzalo
Construction in the processing of the documents relative to the collection of the 10% retention fee and in
encashing the check to be issued by the DPWH for that purpose.

The deed of assignment was submitted to the DPWH on April 15, 1999.

During the processing of the documents for the retention fee, ​Tarnate learned that Gonzalo had
unilaterally rescinded the deed of assignment by means of an affidavit of cancellation of deed of
assignment dated April 19, 1999 filed in the DPWH on April 22, 1999 and that ​the disbursement
voucher for the 10% retention fee had then been issued in the name of Gonzalo, and the
retention fee released to him.

The Complaint (Tarnate):

Tarnate demanded the payment of the retention fee from Gonzalo, but to no avail.

Thus, he brought this suit against Gonzalo on September 13, 1999 in the Regional Trial Court (RTC) in
Mountain Province to recover the retention fee(₱233,526.13), moral and exemplary damages for breach of
contract, and attorney’s fees.

The Defense (Gonzalo):

1.] Gonzalo admitted the deed of assignment and the authority given therein to Tarnate, but averred that
the project had not been fully implemented because of its cancellation by the DPWH, and that he had then
revoked the deed of assignment.

2.] [Relevant for me lol] ​He insisted that the assignment could not stand independently due to its
being a mere product of the subcontract that had been based on his contract with the DPWH; and
that Tarnate, having been fully aware of the illegality and ineffectuality of the deed of
assignment from the time of its execution, could not go to court with unclean hands to invoke
any right based on the invalid deed of assignment or on the product of such deed of assignment.
The Issues:

A.] Whether or not Gonzalo and Tornate enter into a contract in violation of law?

B.] Does the principle of in pari delicto apply in this case?

C.] Is there unjust enrichment in this case? (Main issue of the lesson, Article 22)

Ruling:

Issue A:

Yes. The subcontract and the deed of assignment in this case are both illegal.

There is no question that every contractor is prohibited from subcontracting with or assigning to another
person any contract or project that he has with the DPWH, unless the DPWH Secretary has approved the
subcontracting or assignment. This is ​pursuant to Section 6 of Presidential Decree No. 1594​, which
provides:

“Section 6. Assignment and Subcontract. – The contractor shall not assign, transfer, pledge, subcontract or
make any other disposition of the contract or any part or interest therein except with the approval of the
Minister of Public Works, Transportation and Communications, the Minister of Public Highways, or the
Minister of Energy, as the case may be. Approval of the subcontract shall not relieve the main contractor
from any liability or obligation under his contract with the Government nor shall it create any contractual
relation between the subcontractor and the Government.”

Gonzalo​, who was the sole contractor of the project in question, ​subcontracted the implementation of
the project to Tarnate in violation of the statutory prohibition​. ​Their subcontract was illegal,
therefore, because it did not bear the approval of the DPWH Secretary. Necessarily, ​the deed of
assignment was also illegal, because it sprung from the subcontract. “An illegal agreement cannot
give birth to a valid contract.

Issue B (principle of in pari delicto, in equal fault):

(Side question: What is In Pari Delicto?)

In pari delicto​ is a universal doctrine that holds that:

1.] ​No action arises, in equity or at law, from an illegal contract​;

2.] No suit can be maintained for its specific performance, or to recover property agreed to be
sold or delivered, or the money agreed to be paid, or damages for its violation​; and

3.] ​Where the parties are in pari delicto, no affirmative relief of any kind will be given to one
against the other.

Now, the court do not concur with the CA’s finding that the guilt of Tarnate for violation of Section 6 of
Presidential Decree No. 1594 was lesser than that of Gonzalo, for, as the CA itself observed, Tarnate had
voluntarily entered into the agreements with Gonzalo.

Tarnate also admitted that he did not participate in the bidding for the project because he knew that he was
not authorized to contract with the DPWH.

Furthermore, he is justifiably presumed to be aware of the illegality of his agreements with Gonzalo when he
represented represented himself in the subcontract as "being financially and organizationally sound and
established, with the necessary personnel and equipment for the performance of the project,"

For these reasons, Tarnate was not less guilty than Gonzalo.​ He is in pari delicto with Gonzalo.

However, there’s the question, ​is this applicable in this case​? ​The court said No​. The application of the
doctrine of in pari delicto is not always rigid. An accepted exception arises when its application contravenes
well-established public policy. In this jurisdiction, public policy has been defined as "that principle of the law
which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public
or against the public good." In this case, the principle of pari delicto should yield against the principle of
unjust enrichment.

Ibig sabihin, if there’s a well-established policy and that this principle’s (Pari delicto’s) application goes
against that policy, the latter (Well-established Policy, for example Unjust Enrichment) shall govern.

Which leads to:

Issue C (Is there unjust enrichment in this case? [Main issue of the lesson, Article 22])

Unjust enrichment exists​, according to Hulst v. PR Builders, Inc., ​"when a person unjustly retains a
benefit at the loss of another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience."

There is no question that Tarnate provided the equipment, labor and materials for the project in compliance
with his obligations under the subcontract and the deed of assignment; and that it was Gonzalo as the
contractor who received the payment for his contract with the DPWH as well as the 10% retention fee that
should have been paid to Tarnate pursuant to the deed of assignment.

Considering that Gonzalo refused despite demands to deliver to Tarnate the stipulated 10%
retention fee that would have compensated the latter for the use of his equipment in the project​,
Gonzalo would be unjustly enriched at the expense of Tarnate if the latter was to be barred from
recovering because of the rigid application of the doctrine of in pari delicto​. The prevention of
unjust enrichment (Due to the ​principle of in pari delicto​) called for the exception to apply in Tarnate’s favor.
Thus, the RTC and the CA properly adjudged Gonzalo liable to pay Tarnate the equivalent amount of the
10% retention fee (i.e., ₱233,526.13).

The prevention of unjust enrichment is a ​recognized public policy of the State​, for Article 22 of the
Civil Code explicitly provides that

"[e]very person who through an act of performance by another, or any other means, acquires or comes into
possession of something at the expense of the latter without just or legal ground, shall return the same to
him." It is well to note that Article 22 "

It is a part of the chapter of the Civil Code on Human Relations, the provisions of which were formulated as
basic principles to be observed for the rightful relationship between human beings and for the stability of the
social order; designed to indicate certain norms that spring from the fountain of good conscience; guides for
human conduct that should run as golden threads through society to the end that law may approach its
supreme ideal which is the sway and dominance of justice."

Thus, the policy of Unjust Enrichment can be considered a “Well-established policy” which shall override the
principle of pari delicto as explained in the previous issue and as justified by the court.

Rej, Analyze!:

Basically, here is a case of an ​illegal contract entered into, knowingly and intentionally, by two parties. As
such, since both of them are equally at fault according to the court, ​by virtue of in pari delicto​, there can be
no suit to be maintained for damages it results nor can there be any affirmative relief that can be given, of
any kind, to one against the other (Like Tarnate asking to be paid for the retention fee). However, since the
application of principle of pari delicto is ​not always rigid​, in that if such principle goes against a
‘well-established policy’, it can be overridden by such a policy. In this case, prevention of Unjust enrichment
is a well-established policy, enshrined in Article 22 of the new civil code. Since the application of pari delicto
can unjustly enrich gonzalo, it (pari delicto principle) cannot be applied in this case and it has to yield to the
policy against unjust enrichment.

JEROME CASTRO​, Petitioner, Vs​ PEOPLE OF THE PHILIPPINES,​ Respondent.


Parties:

Petitioner​, ​Jerome Castro,​

Private responden​t, ​Albert P. Tan


Facts:

November 11, 2002​, Reedley International School (RIS) dismissed Tans son, Justin Albert (then a Grade
12 student), for violating the terms of his disciplinary probation. Upon Tans request, RIS reconsidered its
decision but imposed non-appealable conditions such as excluding Justin Albert from participating in the
graduation ceremonies.

Later​, aggrieved, Tan filed a complaint in the Department of Education (Dep-Ed) for violation of the Manual
of Regulation of Private Schools, Education Act of 1982 and Article 19 of the Civil Code against RIS.

He alleged that the dismissal of his son was undertaken with malice, bad faith and evident premeditation.

After investigation, the Dep-Ed found that RIS code violation point system violated due process. Hence, the
Dep-Ed nullified it.

November 20, 2002​, the Dep-Ed ordered RIS to readmit Justin Albert without any condition. Thus, he was
able to graduate from RIS and participate in the ​commencement ceremonies held on March 30, 2003​.

After the graduation ceremonies​, Tan met Bernice C. Ching, a fellow parent at RIS. In the course of their
conversation, ​Tan intimated that he was contemplating a suit against the officers of RIS in their
personal capacities, including Castro who was the assistant headmaster​.

Ching telephoned Castro and ​told him that Tan was planning to sue the officers of RIS in their
personal capacities​. Before they hung up, Castro told Ching:

“Okay, you too, take care and be careful talking to [Tan], that’s dangerous.”

Ching​ then​ called Tan and informed him that Castro said talking to him (Tan) was dangerous​.

Insulted, Tan filed a complaint for grave oral defamation in the Office of the City Prosecutor of Mandaluyong
City against petitioner on August 21, 2003.

The Complaint

November 3, 2003, ​Castro (Petitioner) was charged with grave oral defamation in the Metropolitan Trial
Court (MeTC) of Mandaluyong City, Branch 60.

Prosecution tried to establish that petitioner depicted Tan as a dangerous person.

Ching testified that petitioner warned her that talking to Tan was dangerous.

Tan, on the other hand, testified that Castro’s statement shocked him as it portrayed him as someone
capable of committing undesirable acts. He added that petitioner probably took offense because of the
complaint he filed against RIS in the Dep-Ed.

The Defense:

Castro denied harboring ill-feelings against Tan despite the latters complaint against RIS in the Dep-Ed.
Although he admitted conversing with Ching (whom he considered as a close acquaintance) on the
telephone a few days after RIS 2003 commencement exercises ,he asserted that he never said or insinuated
that Tan or talking to Tan was dangerous.

Issue:​ Whether or not Castro is liable for Grave Oral Defamation?


Ruling:
No. He is not Liable for grave oral defamation due to rules of criminal procedure, but he may be liable for
damages under Article 26 of the Civil Code.

The OSG merely assailed the RTC’s finding on the nature of petitioners statement, that is, whether it
constituted grave or slight oral defamation. The OSG premised its allegation of grave abuse of discretion on
the RTCs erroneous evaluation and assessment of the evidence presented by the parties.

What the OSG questioned were errors of judgment (or those involving misappreciation of evidence or errors
of law). However, a court, in a petition for certiorari, cannot review the public respondents’ evaluation of the
evidence and factual findings. Errors of judgment cannot be raised in a Rule 65 petition as a writ of certiorari
can only correct errors of jurisdiction (or those involving the commission of grave abuse of discretion).

Because the OSG did not raise errors of jurisdiction, the CA erred in taking cognizance of its petition and,
worse, in reviewing the factual findings of the RTC. We therefore reinstate the RTC decision so as not to
offend the constitutional prohibition against double jeopardy.

Nonetheless, ​at most, petitioner could have been liable for damages under Article 26 of the Civil
Code​[21]​:

“Article 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors
and other persons. The following and similar acts, though they may not constitute a criminal offense, shall
produce a cause of action for damages, prevention and other relief:

(3) Intriguing to cause another to be alienated from his friends​;”

Petitioner is reminded that, as an educator, he is supposed to be a role model for the youth. As such, he
should always act with justice, give everyone his due and observe honesty and good faith.
JOSE B. LEDESMA​, ​petitioner,​ vs. ​HON. COURT OF APPEALS​, ​Spouses PACIFICO DELMO and SANCHA
DELMO​ (as private respondents)

[Article 27, Liability of public servant or employee]

|This petition seeks to reverse the decision of the respondent Court of Appeals which afirmed the decision of the Court of First Instance of Iloilo,
adjudging the petitioner, who was then the President of the West Visayas College liable for damages under Article 27 of the Civil Code of the
Philippines for failure to graduate a student with honors.|

Parties:

Petitioner, ​JOSE B. LEDESMA, P


​ resident of the school.

Private respondents,​ Spouses ​Pacifico Delmo and Sancha Delmo, ​mom and dad of the late Violet Delmo.

Facts:

An organization named ​Student Leadership Club was formed by some students of the ​West Visayas
College​. They elected the late Violets Delmo as the treasurer.

In that capacity, Delmo extended loans from the funds of the club to some of the students of the school.

Ledesma claims that the said act of extending loans was against school rules and regulations. Thus,
Ledesma, as President of the School, sent a letter to Delmo informing her that she was being dropped from
the membership of the club and that she would not be a candidate for any award or citation from the school.

Delmo asked for a reconsideration of the decision but Ledesma denied it. Delmo, thus, appealed to the
Office of the Director of the Bureau of Public Schools.

The Director, after due investigation, rendered a decison on April 13, 1966 which provided:

“In view of all the foregoing, this Office believes and so holds and hereby directs that appellant Violeta. M.
Delmo, and for that matter all other Club members or officers involved in this case, be not deprived of any
award, citation or honor from the school, if they are otherwise entitled thereto. “

On April 27, 1966​, the Ledesma, the school president, received by mail the decision of the Director and all
the records of the case. On the same day, petitioner received a telegram stating the following:

"AIRMAIL RECORDS DELMO CASE MISSENT THAT OFFICE"

The Director asked for the return only of the records but the ​Ledesma allegedly mistook the
telegram as ordering him to also send the decision back​.

On the same day​, Ledesma returned by mail all the records plus the decision of the Director to the Bureau
of Public Schools.

The next day​, the petitioner received ​another telegram from the Director order him to furnish
Delmo with a copy of the decision​. Ledesma, in turn, sent a night letter to the Director informing the
latter that he had sent the decision back and that he had not retained a copy thereof..

On May 3, 1966​, ​the day of the graduation​, Ledesma received another telegram from the Director
ordering him not to deprive Delmo of any honors due her. ​As it was impossible by this time to include
Delmo's name in the program as one of the honor students, the petitioner let her graduate as a
plain student instead of being awarded the Latin honor of Magna Cum Laude.

To delay the matter further, Ledesma, ​on May 5, 1966​, wrote the Director for a reconsideration of the
latters" decision because he believed that Delmo should not be allowed to graduate with honors.

The Director denied the petitioner's request.


On July 12, 1966​, Ledesma finally instructed the Registrar of the school to enter into the scholastic records
of Delmo the honor, "Magna Cum Laude."

On July 30, 1966​, Delmo, then a minor, was joined by her parents in flag action for damages against the
petitioner. During the pendency of the action, however, Delmo passed away, and thus, an Amended and
Supplemental Complaint was filed by her parents as her sole and only heirs.

Trial Court’s Decision:

The trial court awarded P20,000.00 to the estate of Violeta Delmo and P10,000.00 to her parents for moral
damages; P5,000.00 for nominal damages to Violeta's estate; exemplary damages of P10,000.00 and
P2,000.00 attorney's fees.

CA Affirmed Trial Court’s Decision.

Issue:

Whether or not Ledesma is liable for damages under Article 27 of the New Civil Code.

Held:

Yes. The court finds no reason why the findings of the trial and appellate courts should be reversed. It
cannot be disputed that Violeta Delmo went through a painful ordeal which was brought about by the
petitioner's neglect of duty and callousness. Thus, moral damages are but proper.

The ​Solicitor-General ​tries to cover-up Ledesma’s deliberate omission to inform Miss Delmo by
stating that it was not the duty of Ledesma to furnish her a copy of the Director's decision.
Granting this to be true, it was nevertheless the Ledesma’s duty to enforce the said decision. He
could have done so considering that he received the decision on April 27, 1966 and even though he sent it
back with the records of the case, he undoubtedly read the whole of it which consisted of only three pages.

Moreover, the petitioner should have had the decency to meet with Mr. Delmo, the girl's father, and inform
the latter, at the very least of the decision. This, the petitioner likewise failed to do, and not without the
attendant bad faith which the appellate court correctly pointed out in its decision.
Dy v. People
|Article 33, CIVIL LIABILITY ARISING FROM A CRIMINAL OFFENSE|

|This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioner Gloria S. Dy (petitioner) seeks the reversal
of the decision of the Court of Appeals (CA) dated February 25, 2009 (Assailed Decision)2 ordering her to pay Mandy Commodities
Company, Inc. (MCCI) in the amount of P21,706,281.00.|

Parties:

Petitioner, ​Glora S. Dy​, was the former General Manager of MCCL. In the course of her employment, Dy
assisted MCCI in its business involving several properties. One such business pertained to the construction
of warehouses over a property (Numancia Property) that MCCI leased from the Philippine National Bank
(PNB).

The Facts:

-Sometime in May 1996​, in pursuit of MCCI's business, petitioner proposed to William Mandy (Mandy),
President of MCCI, the purchase of a property owned by Pantranco. As the transaction involved a large
amount of money, Mandy agreed to obtain a loan from the International China Bank of Commerce (ICBC).

-Dy represented that she could facilitate the approval of the loan. True enough, ICBC granted a loan to MCCI
in the amount of P20,000,000.00, evidenced by a promissory note. As security, MCCI also executed a
chattel mortgage over the warehouses in the Numancia Property. Mandy entrusted petitioner with the
obligation to manage the payment of the loan.

-In February 1999,​ MCCI received a notice of foreclosure over the mortgaged property due to its default in
paying the loan obligation.

-In order to prevent the foreclosure,​ Mandy instructed Dy to facilitate the payment of the loan.​ ​MCCI,
through Mandy, issued 13 Allied Bank checks and 12 Asia Trust Bank checks in varying amounts
and in different dates ​covering the period from May 18, 1999 to April 4, 2000. ​The total amount of the
checks, which were all payable to cash, was P21,706,281.00.

Mandy delivered the checks to Dy.

Mandy claims that he delivered the checks with the instruction that Dy use the checks to pay the loan.

Dy, on the other hand, testified that she encashed the checks and returned the money to Mandy.

ICBC eventually foreclosed the mortgaged property as MCCI continued to default in its obligation to pay.

Mandy claims that it was only at this point in time that he discovered that not a check was paid to ICBC.

The Complaint:

Thus, on October 7, 2002, MCCI, represented by Mandy​, ​filed a Complaint-Affidavit for Estafa before
the Office of the City Prosecutor of Manila​.

On March 3, 2004, an Information was filed against Dy before the Regional Trial Court (RTC) Manila.

RTC Ruling:

After a full-blown trial, the RTC Manila rendered a decision, dated November 11, 2005 (RTC Decision)
acquitting Dy.

The RTC Manila found that while Dy admitted that she received the checks, the prosecution failed to
establish that she was under any obligation to deliver them to ICBC in payment of MCCFs loan.

The trial court further made a finding that Mandy and Dy entered into a contract of loan. Thus, it held that
the prosecution failed to establish an important element of the crime of estafa: misappropriation or
conversion.
However, ​while the RTC Manila acquitted petitioner, it ordered her to pay the amount of the
checks.

CA:

CA found the appeal without merit. It held that the acquittal of petitioner does not necessarily
absolve her of civil liability.

The CA explained that the ​evidence on record adequately prove that Dy received the checks as a loan
from MCCI. Thus, preventing the latter from recovering the amount of the checks would constitute unjust
enrichment.

Issues:

The central issue is the propriety of making a finding of civil liability in a criminal case for estafa when the
accused is acquitted for failure of the prosecution to prove all the elements of the crime charged.

Ruling:

Our laws recognize a bright line distinction between criminal and civil liabilities. A crime is a liability against
the state. It is prosecuted by and for the state. Acts considered criminal are penalized by law as a means to
protect the society from dangerous transgressions. As criminal liability involves a penalty affecting a
person's liberty, acts are only treated criminal when the law clearly says so. On the other hand, civil
liabilities take a less public and more private nature. Civil liabilities are claimed through civil actions as a
means to enforce or protect a right or prevent or redress a wrong. They do not carry with them the
imposition of imprisonment as a penalty. Instead, civil liabilities are compensated in the form of damages.

Nevertheless, our jurisdiction recognizes that a crime has a private civil component. Thus, while an act
considered criminal is a breach of law against the State, our legal system allows for the recovery of civil
damages where there is a private person injured by a criminal act. It is in recognition of this dual nature of a
criminal act that our Revised Penal Code provides that every person criminally liable is also civilly liable. This
is the concept of civil liability ex delicto.

This is echoed by the New Civil Code when it recognizes acts or omissions punished by law as a separate
source of obligation. This is reinforced by Article 30 of the same code which refers to the filing of a separate
civil action to demand civil liability arising from a criminal offense.

The Revised Penal Code fleshes out this civil liability in Article 104 which states that it includes restitution,
reparation of damage caused and indemnification for consequential damages.

Hence,

The lower courts erred when they ordered petitioner to pay her civil obligation arising from a contract of loan
in the same criminal case where she was acquitted on the ground that there was no crime. ​Any
contractual obligation she may have must be litigated in a separate civil action involving the
contract of loan. ​We clarify that in cases where the accused is acquitted on the ground that there
is no crime, the civil action deemed instituted with the criminal case cannot prosper precisely
because there is no delict from which any civil obligation may be sourced. The peculiarity of this
case is the finding that petitioner, in fact, has an obligation arising from a contract. This civil action arising
from the contract is not necessarily extinguished. It can be instituted in the proper court through the proper
civil action.

We note that while there is no written contract of loan in this case, there is an oral contract of loan which
must be brought within six years. Under the facts of the case, it appears that any breach in the obligation to
pay the loan may have happened between 1996 and 1999, or more than six years since this case has been
instituted. This notwithstanding, we find that the civil action arising from the contract of loan has not yet
prescribed.

PEOPLE v. BAYOTAS
|Article 33, CIVIL LIABILITY ARISING FROM A CRIMINAL OFFENSE|
Party Relevant to the case:

Respondent,​ Rogelio Bayotas y Cordova, was ​charged with Rape​ and eventually convicted thereof on
June 19, 1991 in a decision penned by Judge Manuel E. Autajay.

|Solicitor General,​ representative of the state (Thus, “People”)​|

The Facts:

-While the appeal of his conviction is pending, ​Bayotas died on February 4, 1992 at the National
Bilibid Hospital due to cardio respiratory arrest secondary to hepatic encephalopathy secondary to
hipato carcinoma gastric malingering.

-Consequently, ​the Supreme Court in its Resolution of May 20, 1992 dismissed the criminal aspect
of the appeal.

However, ​it required the ​Solicitor General to file its comment with regard to Bayotas' civil liability
arising from his commission of the offense charged.

The Comment of Solicitor General:​ ​(Regarding the Civil Liability arising from commission of rape by
Bayotas)

-In his comment, ​the Solicitor General expressed his view that the death of accused-appellant ​did
not extinguish his civil liability as a result of his commission of the offense charged​. The Solicitor
General, relying on the case of People v. Sendaydiego, insists that the appeal should still be resolved for the
purpose of reviewing his conviction by the lower court on which the civil liability is based.

The Contention by the Counsel of Bayotas: ​(Against the comment of Solicitor General about the civil
liability arising from commission of rape by Bayotas)

-Counsel for Bayotas​, on the other hand, ​opposed the view of the Solicitor General arguing that the
death of the accused, while judgment of conviction is pending appeal, extinguishes both his
criminal and civil penalties​. ​In support of his position, said counsel invoked the ruling of the Court of
Appeals in People v. Castillo and Ocfemia ​2​ which held that the civil obligation in a criminal case takes root
in the criminal liability and, therefore, civil liability is extinguished if accused should die before final
judgment is rendered.

Hence, here comes the issue...

Issue:

Whether or not the death of the accused pending appeal of his conviction extinguish his civil
liability?

Held:

Yes, the death of appellant Bayotas extinguished his criminal liability and the civil liability based
solely on the act complained of, i.e., rape.

The death of the accused prior to final judgment ​terminates his​ ​criminal liability and​ ​only the civil
liability​ ​directly arising from, and based solely on, the offense committed​.

Accordingly, the Court rules: if the private offended party, upon extinction of the civil liability arising from
the crime desires to recover damages from the same act or omission complained of, ​he must file a
separate civil action​, this time ​predicated not on the felony previously charged but on other
sources of obligation​. The source of obligation upon which the separate civil action is premised
determines against whom the same shall be enforced. This may be enforced against the
executor/administrator or the estate of the accused, depending on the source of obligation upon which the
same is based.
Rej, Analyze!:

Remember the lesson during the Make-up Class? Yung different sources of obligation?
Here are the following:
1.] Law
2.] Contracts
3.] Quasi-contracts
4.]​ ​Delicts ​- Obligations resulting from the commission of a crime.
5.] Quasi-Delicts

This is very relevant in this case.


According to Article 31 of the Civil Code:

“When the civil action is based on an obligation not arising from the act or omission complained of as a
felony (example yung other 4: Law, Contracts, Quasi-Contracts, and Quasi-Delicts), such civil action may
proceed independently of the criminal proceedings and regardless of the result of the latter.”

Now, according to the court’s ruling:

“The death of the accused prior to final judgment terminates his criminal liability and only the civil liability
directly arising from, and based solely on, the offense committed.”

Thus, ​only the civil liability arising from the “Delict” or offense is extinguished​. IF there are other
obligations or civil liabilities arising from ​other sources of obligations (Like Law, Contracts,
Quasi-Contracts or Quasi-Delicts), those liabilities ARE NOT extinguished upon the death of the
accused​. And, in such a case, the offended party should ​FILE A SEPARATE CIVIL ACTION ​predicated on
those other sources of obligation, not on delict or the crime committed.

Nganong relevant mani sa Article 31 of the civil code?

It’s because according to article 31, civil actions which are ​NOT BASED from the ​act or omission complained
of as a FELONY ​MAY PROCEED INDEPENDENTLY of the criminal proceedings and REGARDLESS OF
THE RESULT OF THE LATTER(Criminal proceedings)​.

In this case, the civil actions arising from rape by bayotas are extinguished, but any other civil actions
arising from other sources of obligation (The other 4, aside from delicts) MAY PROCEED INDEPENDENTLY
AND REGARDLESS OF THE RESULT OF THE CRIMINAL PROCEEDINGS.

-------------------------------------------------------------------------------------------------------------------
Side question:​ Since patay naman siya, asa kuhaon ang ipang bayad?

Ana ang korte:

“This may be enforced against the executor/administrator or the estate of the accused, depending on the
source of obligation upon which the same is based.”
FRIAS v. SAN DIEGO-SISON
|Article 33, CIVIL LIABILITY ARISING FROM A CRIMINAL OFFENSE|

Parties:

Petitioner​, ​BOBIE ROSE V. FRIAS, represented by her Attorney-in-fact, Marie Regine F. Fujita​, is the owner
of a house and lot located at No. 589 Batangas East, Ayala Alabang, Muntinlupa, Metro Manila, which she
acquired from Island Masters Realty and Development Corporation (IMRDC) by virtue of a Deed of Sale
dated Nov. 16, 1990.

Respondent​, ​FLORA SAN DIEGO-SISON​.

The Facts:

On December 7, 1990​, ​Frias​, as the ​FIRST PARTY​, and ​Dra. Flora San Diego-Sison (respondent), as
the ​SECOND PARTY​, entered into a Memorandum of Agreement over the property with the following
terms:
===================================================================
==
NOW, THEREFORE, for and in consideration of the sum of THREE MILLION PESOS (P3,000,000.00) receipt of which is hereby
acknowledged by the FIRST PARTY from the SECOND PARTY, the parties have agreed as follows:

1. That the SECOND PARTY has a period of Six (6) months from the date of the execution of this contract within which to notify
the FIRST PARTY of her intention to purchase the aforementioned parcel of land together within (sic) the improvements thereon at
the price of SIX MILLION FOUR HUNDRED THOUSAND PESOS (P6,400,000.00). Upon notice to the FIRST PARTY of the SECOND
PARTYs intention to purchase the same, the latter has a period of another six months within which to pay the remaining balance of
P3.4 million.

2. That prior to the six months period given to the SECOND PARTY within which to decide whether or not to purchase the
above-mentioned property, the FIRST PARTY may still offer the said property to other persons who may be interested to buy the
same provided that the amount of P3,000,000.00 given to the FIRST PARTY BY THE SECOND PARTY shall be paid to the latter
including interest based on prevailing compounded bank interest plus the amount of the sale in excess of P7,000,000.00 should the
property be sold at a price more than P7 million.

3. That in case the FIRST PARTY has no other buyer within the first six months from the execution of this
contract, no interest shall be charged by the SECOND PARTY on the P3 million however, ​in the event that on the
sixth month the SECOND PARTY would decide not to purchase the aforementioned property, the FIRST
PARTY has a period of another six months within which to pay the sum of P3 million pesos provided
that the said amount shall earn compounded bank interest for the last six months only. ​Under this
circumstance, the amount of P3 million given by the SECOND PARTY shall be treated as [a] loan and the
property shall be considered as the security for the mortgage which can be enforced in accordance with
law.
-------------------------------------------------------------------------------------------------------

Frias received from Diego-Sison two million pesos in cash and one million pesos in a post-dated check dated
February 28, 1990, instead of 1991, which rendered said check stale [So, 2 million nlng ang nahatag ni
Sison or ang nareceive ni Frias].

Frias then gave respondent TCT No. 168173 in the name of IMRDC and the Deed of Absolute Sale over the
property between Frias and IMRDC.

Diego-Sison decided not to purchase the property and notified petitioner through a letter dated March 20,
1991, which Frias received only on June 11, 1991, reminding Frias of their agreement that the amount of
two million pesos which Frias received from Diego-Sison should be considered as a loan payable within six
months.

Frias subsequently failed to pay respondent the amount of two million pesos.

The Complaint:

On April 1, 1993​, Diego-Sison filed with the Regional Trial Court (RTC) of Manila, a complaint for sum of
money with preliminary attachment against Frias.

Diego-Sison alleged the foregoing facts, and in addition thereto averred:


1.] That ​Frias tried to deprive her of the security for the loan by making a false report of the loss
of her owners copy of TCT No. 168173 to the Taguig Police Station on June 3, 1991​, ​executing an
affidavit of loss and by filing a petition for the issuance of a new owners duplicate copy​ of said
title with the RTC of Makati, Branch 142;

2.] That the petition was granted in an Order dated August 31, 1991;

3.] That said Order was subsequently set aside in an Order dated April 10, 1992 where the ​RTC Makati
granted Diego-Sison petition for relief from judgment due to the fact that Diego-Sison is in
possession of the owners duplicate copy of TCT No. 168173, and ordered the provincial public
prosecutor to conduct an investigation of Frias for perjury and false testimony​.

Diego-Sison prayed for the ex-parte issuance of a writ of preliminary attachment and payment of two million
pesos with interest at 36% per annum from December 7, 1991, P100,000.00 moral, corrective and
exemplary damages and P200,000.00 for attorneys fees.

The Defense:

Frias filed an Amended Answer alleging that:

1.] ​The Memorandum of Agreement was conceived and arranged by her lawyer, Atty. Carmelita
Lozada, who is also Diego-Sison’s lawyer​;

2.] That she was asked to sign the agreement without being given the chance to read the same;

3.] That the title to the property and the Deed of Sale between her and the IMRDC were entrusted to Atty.
Lozada for safekeeping and were never turned over to respondent as there was no consummated sale yet;

4.] That out of the two million pesos cash paid, Atty. Lozada took the one million pesos which has not been
returned, thus petitioner had filed a civil case against her;

5.] That she was never informed of respondents decision not to purchase the property within the six month
period fixed in the agreement;

6.] ​That when she demanded the return of TCT No. 168173 and the Deed of Sale between her and
the IMRDC from Atty. Lozada, the latter gave her these documents in a brown envelope on May 5,
1991 which her secretary placed in her attache case​;

7.] ​That the envelope together with her other personal things were lost when her car was forcibly
opened the following day​;

8.] ​That she sought the help of Atty. Lozada who advised her to secure a police report, to execute
an affidavit of loss and to get the services of another lawyer to file a petition for the issuance of
an owners duplicate copy​;

9.] ​That the petition for the issuance of a new owners duplicate copy was filed on her behalf
without her knowledge and neither did she sign the petition nor testify in court as falsely claimed
for she was abroad​;

10.] ​That she was a victim of the manipulations of Atty. Lozada and respondent as shown by the
filing of criminal charges for perjury and false testimony against her​;

11.] That no interest could be due as there was no valid mortgage over the property as the principal
obligation is vitiated with fraud and deception.

She prayed for the dismissal of the complaint, counter-claim for damages and attorneys fees.
RTC Ruling:

The RTC found that:


Among others, ​[Moral damages, relevant] t​ he ​fraudulent scheme employed by Frias to deprive
Diego-Sison of her only security to her loaned money when Frias executed an affidavit of loss and
instituted a petition for the issuance of an owners duplicate title knowing the same was in
respondents possession, entitled Diego-Sison to moral damages​;

CA affirmed the RTC decision with modification

Issues:

Whether or not the award of moral damages is in order considering the fact that Frias was
acquitted in the case of perjury and false testimony filed by Diego-Sison against her.

Ruling:

Yes, the award of moral damages is in order.

Article 31 of the Civil Code provides:

“When the civil action is based on an obligation not arising from the act or omission complained of as a
felony, such civil action may proceed independently of the criminal proceedings and regardless of the result
of the latter.”

While Frias was acquitted in the false testimony and perjury cases filed by Diego-Sison against her,
those actions are entirely distinct from the collection of sum of money with damages filed by
Diego-Sison against Frias.

Moral damages may be awarded in culpa contractual or breach of contract cases when the
defendant acted fraudulently or in bad faith. Bad faith does not simply connote bad judgment or
negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong. It
partakes of the nature of fraud.

In the case at bar, Frias’ ​act of trying to deprive Diego-Sison of the security of her loan by
executing an affidavit of loss of the title and instituting a petition for the issuance of a new
owners duplicate copy of TCT No. 168173 entitles Diego-Sison to moral damages.

The Memorandum of Agreement provides that in the event that respondent opts not to buy the
property, the money given by respondent to petitioner shall be treated as a loan and the property
shall be considered as the security for the mortgage. It was testified to by Diego-Sison that after they
executed the agreement on December 7, 1990, Frias gave her the owners copy of the title to the property,
the Deed of Sale between Frias and IMRDC, the certificate of occupancy, and the certificate of the Secretary
of the IMRDC who signed the Deed of Sale. ​However, notwithstanding that all those documents were
in Diego-Sison’s possession, Frias executed an affidavit of loss that the owners copy of the title
and the Deed of Sale were lost.

Although ​Frias testified that her execution of the affidavit of loss was due to the fact that she was
of the belief that since she had demanded from Atty. Lozada the return of the title, she thought
that the brown envelope with markings which Atty. Lozada gave her on May 5, 1991 already
contained the title and the Deed of Sale as those documents were in the same brown envelope
which she gave to Atty. Lozada prior to the transaction with respondent​. ​Such statement remained
a bare statement. It was not proven at all since Atty. Lozada had not taken the stand to corroborate her
claim. In fact, even petitioners own witness, Benilda Ynfante (Ynfante), was not able to establish petitioner's
claim that the title was returned by Atty. Lozada in view of Ynfante's testimony that after the brown
envelope was given to petitioner, the latter passed it on to her and she placed it in petitioners attach case
and did not bother to look at the envelope.
It is clear therefrom that ​Frias’ execution of the affidavit of loss became the basis of the filing of the
petition with the RTC ​for the issuance of new owners duplicate copy of TCT No. 168173​. ​Frias’
actuation would have deprived respondent of the security for her loan were it not for
respondents timely filing of a petition for relief whereby the RTC set aside its previous order
granting the issuance of new title.

Rej, Analyze!:

So unsa man jud ang pasabot ani nga kaso?

Here is a memorandum of agreement stating that if second party decides not to buy the property, the
money given as an initial consideration (Yung 3 million pesos) should be treated as a loan and the property
shall be considered as the security for such mortgage which can be enforced in accordance with the law. The
two parties had their exchange: From Diego-sison, 3 million (2 million pesos in cash, 1 million in stale-check
which therefore means 2 million lang ang nabigay and nareceive ni Frias) and From Frias, the TCT and deed
of absolute sale. Now, Diego-Sison decided not to buy it. Therefore, Frias has to pay the 2 million (2 million
nlng not 3 million, remember?) in six months under the agreement. Frias was not able to pay the two
million.

So, there were two cases filed here:

1.] A perjury and false testimony charge, which Frias was eventually acquitted; and

2.] A complaint for sum of money with preliminary attachment against Frias.

Frias then executed an affidavit of loss and filed for petition to be issued another owner’s duplicate copy of
the TCT and Deed of Absolute sale. This is when the conflict comes. By executing an affidavit of loss, Frias is
trying to get the documents (TCT and deed of sale) without satisfying her still pending obligation to
Diego-Sison, which is to pay the two million (Remember, the documents were SECURITIES para mabalik jud
ni Frias ang 2 million). In effect, were it not for the timely filing of a petition for relief whereby the RTC set
aside its previous order of granting the issuance of a new owners duplicate copy, Frias’ action would have
deprived Diego-Sison of the security for the loan. (basaha nalang sa facts kung unsay depensa ni Frias
ngano kuno siya nag file ug affidavit of loss, but regardless daw ana ang korte kay walay ebidensa nga mag
corroborate and the attorney did not stand as a witness.)

Hence (eto na yung Article 31 analysis, remember the sources of obligation), although Frias has been freed
from the criminal charge of perjury and false testimony and that all the other civil liabilities that comes with
it are also extinguished, the ​complaint for sum of money and damages is entirely distinct from the
criminal charge of perjury and false testimony​. Why? Because the complaint for sum of money and
damages (such civil action) were brought about by the Contract (memorandum of agreement) as a source of
obligation, not from the Criminal action of perjury and false testimony. ​Moral damage​, as mentioned, ​may
be awarded in culpa contractual or breach of contract cases when the defendant acted
fraudulently or in bad faith. ​Hence, the award of Moral damages is in order.
TUANDA​ v ​ .​ ​SANDIGANBAYAN
|Article 36 – PREJUDICIAL QUESTION|

Parties and respective Facts:

Private Respondents, ​Delia Estrellanes and Bartolome Binaohan​, were designated as industrial labor
sectoral representative and agricultural labor sectoral representative respectively, for the Sangguniang
Bayan of Jimalalud, Province of Negros Oriental by then Secretary Luis T. Santos of the Department of Local
Government. They took their oath of office on 16 February 1989 and 17 February 1989, respectively.

Petitioner, Mayor Reynaldo Tuanda​, filed an undated petition with the Office of the President for review
and recall of said designations. The Office of the President, however, in a letter dated 20 March 1989, denied
the petition and enjoined Mayor Reynaldo Tuanda to recognize private respondents as sectoral
representatives.

The Complaint:

-On 20 June 1991, Mayor Reynaldo ​filed an action with the Regional Trial Court of Dumaguete City ​to
declare null and void the designations of Delia and Bartolome as sectoral representatives​, entitled
"Reynaldo Tuanda, et al. versus Secretary of the Department of Local Government, et al." (Civil Case)

While the case is ongoing,

-On 21 July 1991, an information was filed before the Sandiganbayan, docketed as ​Criminal Case No.
16936 entitled "People of the Philippines versus Reynaldo Tuanda, et al." ​charging Mayor Tuanda of
undue injury to Sectoral Members Bartolome M. Binaohan and Delia T. Estrellanes by refusing to
pay, despite demand, the amount of P95,350 and P108,900 representing respectively their ​per
diems s​ alaries and other privileges and benefits, and such undue injury continuing to the present
to the prejudice and damage of Bartolome and Delia​. (Criminal Case)

Mayor Tuanda’s motion for suspension of the Criminal Case:

-​On 9 September 1991​, Tuanda ​filed a motion with the Sandiganbayan for suspension of the
proceedings in Criminal Case ​No. 16936 on the ground that a ​prejudicial question exists in Civil
Case No. 9955 pending before the Regional Trial Court of Dumaguete City ​(referring to the Civil
Case).

RTC Ruling:

-On 16 January 1992​, the ​Regional Trial Court rendered ​a decision declaring null and void ab initio
the designations issued by the Department of Local Government to the private respondents as
sectoral representatives ​for having been done in violation of Section 146 (2) of B.P. Blg. 337, otherwise
known as the Local Government Code.

Sandiganbayan Decision on Tuanda’s motion for suspension on the ground of Prejudicial


question:

-Sandiganbayan issued a resolution ​denying the motion for suspension of proceedings​ filed by Tuanda.

Tuanda filed a motion for reconsideration of the aforementioned resolution in view of the decision
promulgated by the trial court nullifying the appointments of private respondents but ​it was, likewise,
denied on the justification that the grounds stated in the said motion were a mere rehash of petitioners'
original motion to hold the case in abeyance.

Hence, this special civil action for certiorari and prohibition.

Meanwhile, Court of Appeals:


-Delia and Bartolome appealed the aforestated decision to the Court of Appeals, docketed as ​CA-G.R. CV
No. 36769​, where ​the same is currently pending resolution​.

Issues:

Whether or not the legality or validity of private respondents' designation as sectoral


representatives which is pending resolution in CA-G.R. No. 36769 is a prejudicial question
justifying suspension of the proceedings in the criminal case against petitioners.

Ruling:

Yes. The legality or validity of Delia Estrellanes and Bartolome Binaohan’s designation as sectoral
representatives, which is pending resolution in CA-G.R. No. 36769, is a prejudicial question
justifying suspension of the proceedings in the criminal case against Tuanda.

A prejudicial question is one that must be decided before any criminal prosecution may be instituted or
before it may proceed (Art. 36, Civil Code) because a decision on that point is vital to the eventual judgment
in the criminal case. Thus, the ​resolution of the prejudicial question is a logical antecedent of the
issues involved in said criminal case​.

The rationale behind the principle of prejudicial question is to avoid two conflicting decisions.

It has two essential elements:

1.] The civil action involves an issue similar or intimately related to the issue raised in the criminal action;
and

2.] The resolution of such issue determines whether or not the criminal action may proceed.

All the elements of a prejudicial question are clearly and unmistakably present in this case. There
is no doubt that the facts and issues involved in the civil action (No. 36769) and the criminal case (No.
16936) are closely related.

On ‘closely-related’: ​{First requisite}

The filing of the criminal case was premised on Tuanda’s alleged partiality and evident bad faith
in not paying Delia and Bartolome's salaries and per diems as sectoral representatives, while the
civil action was instituted precisely to resolve whether or not the designations of Delia and
Bartolome as sectoral representatives were made in accordance with law.

More importantly, the resolution of the civil case will certainly determine if there will still be any reason to
proceed with the criminal action.

Resolution determines Criminal action may proceed or not: ​{Second Requisite}

Tuanda was criminally charged under the Anti-Graft & Corrupt Practices Act (RA 3019, sec, 3[e])
due to his refusal, allegedly in bad faith and with manifest partiality, to pay Delia and Bartolome
salaries as sectoral representatives. ​This refusal, however, was anchored on Tuanda’s assertion
that said designations were made in violation of the Local Government Code (B.P. Blg. 337) and
thus, were null and void.

Therefore, should the Court of Appeals uphold the trial court's decision declaring null and void
Delia and Bartolome’s designations as sectoral representatives for failure to comply with the
provisions of the Local Government Code (B.P. Blg. 337, sec. 146[2]), the charges against
Tuanda would no longer, so to speak, have a leg to stand on.

Tuanda cannot be accused of bad faith and partiality there being in the first place no obligation
on their part to pay private respondents' claims. Delia and Bartolome do not have any legal right to
demand salaries, per diems and other benefits. In other words, the Court of Appeals' resolution of the issues
raised in the civil action will ultimately determine whether or not there is basis to proceed with the criminal
case.
Rej, Analyze!:

Here, the case is about Delia and Bartolome who were designated as sectoral representatives. However,
Mayor Tuanda disagreed and filed an action with the RTC to declare the designations of the private
respondents as null and void. While such civil case was pending, an information was filed before the
sandiganbayan charging Mayor Tuanda of undue injury. The actions of Tuanda which caused the said charge
is a result of Tuanda’s assertion that their designation is in violation of Local Government code and thus
were null and void. Meanwhile, the civil case against Delia and Bartolome’s designation has reached the
court of appeals and is pending. Tuanda then filed for motion with the sandiganbayan for suspension, which
was dismissed together with its motion for reconsideration. Hence, the case. The issue is whether or not the
civil case pending in the court of appeals is a prejudicial question justifying the suspension of the criminal
case. The court ruled that yes, it is. Since the criminal case was premised on the fact that the reasons (not
giving what is due for the private respondents’ labor) for the charge of “undue injury” were committed by
Tuanda under the presumption that Delia and Bartolome’s designation is not lawful, the civil case which will
indeed confirm whether or not Delia and Bartolome’s designation is lawful, will resolve, at the same time,
whether or not Tuanda’s actions are lawful. If Delia and Bartolome’s designation is not lawful, then it follows
that Tuanda was just performing a lawful act. On the other hand, if Delia and Bartolome’s designation is
lawful, it follows that Tuanda is not performing a lawful act and hence guilty of the criminal charge.
BELTRAN​ ​v.​ ​PEOPLE
|Article 36 – PREJUDICIAL QUESTION|
Parties:

Petitioner,​ ​Meynardo Beltran, a


​ nd wife Charmaine E. Felix were married on June 16, 1973 at the
Immaculate Concepcion Parish Church in Cubao, Quezon City.

The Civil Case:

-On February 7, 1997, after twenty-four years of marriage and four children, Beltran filed a petition for
nullity of marriage on the ground of psychological incapacity under Article 36 of the Family Code before
Branch 87 of the Regional Trial Court of Quezon City. The case was docketed as ​Civil Case No.
Q-97-30192​.

In her Answer to the said petition, petitioner's wife Charmaine Felix alleged that it was petitioner who
abandoned the conjugal home and lived with a certain woman named Milagros Salting.

The Criminal Case:

-​Charmaine subsequently filed a criminal complaint for concubinage under Article 334 of the
Revised Penal Code against petitioner and his paramour before the City Prosecutor's Office of
Makati who, in a Resolution dated ​September 16, 1997​, found probable cause and ordered the filing of an
Information against them. The case, docketed as ​Criminal Case No. 236176​, was filed before the
Metropolitan Trial Court of Makati City, Branch 61.

The Motion to Defer Proceeding and the issuance of the warrant of arrest in the criminal case:

-On March 20, 1998, ​Beltran​, in Metropolitan Trial Court, in order to forestall the issuance of a warrant
for his arrest, ​filed a Motion to Defer Proceedings Including the Issuance of the Warrant of Arrest
in the criminal case​. ​Beltran argued that the pendency of the civil case for declaration of nullity
of his marriage posed a prejudicial question to the determination of the criminal cas​e​.

-Judge Alden Vasquez Cervantes ​denied the foregoing motion in the Order dated August 31, 1998.
Petitioner's motion for reconsideration of the said Order of denial was likewise denied in an Order dated
December 9, 1998.

In view of the denial of his motion to defer the proceedings in the concubinage case,​ ​Beltran went to the
Regional Trial Court of Makati City ​questioning the Orders dated August 31, 1998 and December 9, 1998
issued by Judge Cervantes ​and praying for the issuance of a writ of preliminary injunction.

RTC Ruling:

In an Order dated January 28, 1999, the Regional Trial Court of Makati denied the petition for certiorari.
Said Court subsequently issued another Order dated February 23, 1999, denying his motion for
reconsideration of the dismissal of his petition.

Undaunted, petitioner filed the instant petition for review.

Issue:

Whether or not the pendency of the petition for declaration of nullity of his marriage based on
psychological incapacity is a prejudicial question.

Ruling:

No. the pendency of the petition for declaration of nullity of Beltran’s marriage based on
psychological incapacity is not a prejudicial question which will resolve the criminal charge of
concubinage against him.
The rationale behind the principle of prejudicial question is to avoid two conflicting decisions. It has two
essential elements:

(a) the civil action involves an issue similar or intimately related to the issue raised in the
criminal action​; and

(b) the resolution of such issue determines whether or not the criminal action may proceed.

For a civil case to be considered prejudicial to a criminal action as to cause the suspension of the latter
pending the final determination of the civil case, it must appear not only that the said civil case involves the
same facts upon which the criminal prosecution would be based, but also that in the resolution of the issue
or issues raised in the aforesaid civil action, the guilt or innocence of the accused would necessarily be
determined.

In a case for concubinage, the accused, like the herein petitioner need not present a final judgment
declaring his marriage void for he can adduce evidence in the criminal case of the nullity of his marriage
other than proof of a final judgment declaring his marriage void.

With regard to petitioner's ​argument that he could be acquitted of the charge of concubinage should
his marriage be declared null and void, ​suffice it to state that even a subsequent pronouncement
that his marriage is void from the beginning is not a defense.

In the case at bar, it must also be held that parties to the marriage should not be permitted to judge for
themselves its nullity, for the same must be submitted to judgment of the competent courts and ​only when
the nullity of the marriage is so declared can it be held as void, and so long as there is no such
declaration the presumption is that the marriage exists for all intents and purposes​. ​Therefore, he
who cohabits with a woman not his wife before the judicial declaration of nullity of the marriage assumes the
risk of being prosecuted for concubinage.

The lower court therefore, has not erred in affirming the Orders of the judge of the Metropolitan Trial Court
ruling that pendency of a civil action for nullity of marriage does not pose a prejudicial question in a criminal
case for concubinage.

Jurisprudence:

Landicho vs. Relova, cited in Donato vs. Luna

“xxx Assuming that the first marriage was null and void on the ground alleged by petitioner, that fact would
not be material to the outcome of the criminal case. Parties to the marriage should not be permitted to
judge for themselves its nullity, for the same must be submitted to the judgment of the competent courts
and only when the nullity of the marriage is so declared can it be held as void, and so long as there is no
such declaration the presumption is that the marriage exists. Therefore, he who contracts a second marriage
before the judicial declaration of nullity of the first marriage assumes the risk of being prosecuted for
bigamy."

Rej, Analyze!:

Simply say, Annulment of Marriage, at the time of the proceedings for the criminal case of concubinage,
cannot be a valid defense for concubinage. As long as there’s no annulment of Marriage yet, the marriage is
assumed to be in effect. Thus, he who cohabits a woman not his wife “Before” the judicial declaration of
nullity of the marriage assumes the risk of being prosecuted for concubinage. Hence, the civil case of
annulment cannot be a prejudicial question in the criminal case of concubinage filed against Beltran because
the two elements of prejudicial question is not present: that it isn’t intimately related with the criminal case
and that its resolution would not determine whether or not the criminal action of concubinage may proceed.
The two cases can independently proceed.
PASI V. LICHAUCO
|Article 36 – PREJUDICIAL QUESTION|
Parties:

A consortium of private telecommunications carriers formed a corporation and adopted the corporate name
Philippine Agila Satellite, Inc. (PASI)​, herein ​Petitioner​, ​represented by De Guzman.​

Respondent,​ SEC. JOSEFINA TRINIDAD LICHAUCO,​ DOTC Undersecretary.

The Facts:

-By letter dated June 28, 1996, PASI president Rodrigo A. Silverio (Silverio) requested the then DOTC
Secretary Amado S. Lagdameo, Jr. for official government confirmation of the assignment of Philippine
orbital slots 161E and 153E to PASI for its AGILA satellites.

-In response to Silverios letter, Secretary Lagdameo, by letter dated July 3, 1996, confirmed the
governments assignment of Philippine orbital slots 161E and 153E to PASI for its AGILA satellites.

-PASI thereupon undertook preparations for the launching, operation and management of its satellites by,
among other things, obtaining loans, increasing its capital, conducting negotiations with its business
partners.

-Michael de Guzman (de Guzman), PASI President and Chief Executive Officer (CEO), later informed Jesli
Lapuz (Lapuz), President and CEO of the Landbank of the Philippines, by letter of December 3, 1996, of the
governments assignment to PASI of orbital slots 161E and 153E and requested the banks confirmation of its
participation in a club loan in the amount of US$ 11 million, the proceeds of which would be applied to PASIs
interim satellite.

It appears that Lapuz sent a copy of De Guzman’s letter to then DOTC Undersecretary Josefina T. Lichauco.
Lichauco, on December 5, 1996, wrote Lapuz as follows:

“1. Kindly be informed that there is simply ​no basis for Michael de Guzman to allege that the DOTC has
assigned two (2) slots to PASI. He conveniently neglected to attach as another annex, in addition to Sec.
Lagdameos letter of 3 July 1996 (Annex A) the letter of 28 June (Annex B) in response to which the July 3rd
letter had been sent to PASI. Annex B precisely provides that one slot (153 E, to which the interim satellite
was supposed to migrate) was to be used for the migration of the Russian satellite in time for the APEC
Leaders Summit. This particular endeavor was not successful. The interim satellite Gorizont never moved
from its orbital location of 130E Longitude. Annex C is a letter from an official of the Subic Bay Satellite
Systems Inc., with its attachments, addressed to me stating that as of the 13th of November, no such
voyage to 153E orbital slot had been commenced. In fact DHI hid this fact from me, and in fact stated that
Gorizont had already moved and was on its way to 153E.

Since this timely migration did not happen in time for the APEC Leaders Meeting on 24 November, this 153E
Longitude slot can no longer be assigned to PASI.

The other slot 161E Longitude is the one that can be made available for PASIs eventual launch, in 1998
most likely, in exchange for one free satellite transponder unit utilization, for all requirements of
Government. These have yet to be embodied in a contract between PASI and the DOTC.

2. I understand from my meeting with DHI/PASI this morning, and from the de Guzman letter you sent
to me, that the latter are still interested in pursuing their interim satellite project and are applying for a loan
with your bank. Of course they can always pursue this as a business venture of DHI/PASI which is their own
corporate business decision. The DOTC supports this venture but they will be getting only one orbital slot for
both the Interim Satellite Project and for the Launch Project. I understand from todays meeting with them
that this is technically feasible.

3. As regards ​the use of the name Agila, Mr. de Guzmans allegation that DHI/PASI has registered Agila as a
corporate alias/trademark is FALSE. There is no such thing as registration of a corporate alias. Nor for that
matter can the trade name of a satellite be registered for just any satellite, where it was the President who
chose the name for the first Philippine satellite in orbit. No one else coined that name but he. He has
therefore given the name Agila I to the Mabuhay satellite now in orbit at 144E, being the first Philippine
satellite in orbit. He made this announcement in the presence of all the APEC Heads of State just before the
presentation to him of the Manila Action Plan for APEC.”

Lichauco subsequently issued, in December 1997, a Notice of Offer for several orbital slots including 153E.

The Complaints:

-(The Civil Case) PASI​, claiming that the offer was without its knowledge and that it subsequently came to
learn that another company whose identity had not been disclosed had submitted a bid and won the award
for orbital slot 153E, ​filed on January 23, 1998 a complaint ​before the Regional Trial Court (RTC) of
Mandaluyong City against Lichauco and the Unknown Awardee, for injunction to enjoin the award
of orbital slot 153E, declare its nullity, and for damages.

-(The Criminal Case) PASI also ​filed on February 23, 1998 a complaint, before the Office of the
Ombudsman, ​against Secretary Josefina Trinidad Lichauco. In his affidavit-complaint, de Guzman
charged Lichauco with gross violation of Section 3(e) of Republic Act No. 3019, otherwise known
as the Anti-Graft and Corrupt Practices Act, as amended:

(e.) “Causing any undue injury to any party, including the Government, or giving any private party any
unwarranted benefits, advantage or preference in the discharge of his official, administrative or judicial
functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall
apply to officers and employees of officers or government corporations charged with the grant of licenses or
permits or other concessions.”

The Evaluation and Preliminary Investigation Bureau (EPIB) of the Office of the Ombudsman found the
existence of a prejudicial question ​after considering that the case filed with the RTC involves facts
intimately related to those upon which the criminal prosecution would be based and that the
guilt or the innocence of the accused would necessarily be determined in the resolution of the
issues raised in the civil case. It thus concluded that the filing of the complaint before the Ombudsman is
premature since the issues involved herein are now subject of litigation in the case filed with the RTC, and
accordingly recommended its dismissal.

Then Ombudsman Aniano A. Desierto approved the recommendation of the EPIB.

PASI moved to reconsider, but was dismissed.

RTC Ruling:

In the meantime, A motion to dismiss the civil case against Lichauco was denied by the trial court.

CA:

On elevation of the order of denial to the Court of Appeals, said court, by Decision dated February 21, 2000,
ordered the dismissal of the case.

This Court, by Decision dated May 3, 2006, ordered the reinstatement of the case, however.

Issue:

Whether or not there exists a prejudicial question which would determine whether or not the criminal action
may proceed.

Ruling:

Yes, there exist a prejudicial question.

In order to better understand how is there a Prejudicial question, we have to go back again to its elements.
Elements of Prejudicial Question:

(1.) the previously instituted civil action involves an issue similar or intimately related to the issue raised in
the subsequent criminal action, and

(2.) the resolution of such issue determines whether or not the criminal action may proceed.

PASI concedes that the issues in the civil case are similar or intimately related to the issue raised in the
criminal case.​ (So the first element is present.)

PASI contends that the resolution of the issues in the civil case is not determinative of the guilt
or innocence of Lichauco

To determine the existence of a prejudicial question ​(specifically second element) in the case before the
Ombudsman, it is ​necessary to examine the ​elements of Section 3(e) of R.A. 3019 for which
Lichauco was charged​ and the ​causes of action in the civil case​.

Section 3(e) of R.A. 3019 which was earlier quoted has the following elements:

1. The accused is a public officer discharging administrative or official functions or


private persons charged in conspiracy with them;

2. The public officer committed the prohibited act during the performance of his
official duty or in relation to his public position;

3. The public officer acted with manifest partiality, evident bad faith or gross,
inexcusable negligence; and

4. His action caused undue injury to the Government or any private party, or gave
any party any unwarranted benefit, advantage or preference to such parties.

The civil case against Lichauco on the other hand involves three causes of action:

1.] For injunction, seeks to enjoin the award of orbital slot 153E, the DOTC having previously
assigned the same to PASI;

2.] For declaration of nullity of award, seeks to nullify the award given to the undisclosed bidder for
being beyond Lichaucos authority;

3.] For damages arising from Lichaucos questioned acts.

Therefore:

If the award to the undisclosed bidder of orbital slot 153E is, in the civil case, declared
valid for being within Lichaucos scope of authority to thus free her from liability for
damages, there would be no prohibited act to speak of (as in those acts under the
elements of Section 3(e) of R.A. 3019 because Lichauco was doing it within her scope of
authority) nor would there be basis for undue injury claimed to have been suffered by
PASI. ​Hence, the second element of a prejudicial question is present as well.

The finding by the Ombudsman of the existence of a prejudicial question is thus


well-taken.

The order dismissing OMB case dated July 17, 1998 against Lichauco was set aside.

Ombudsman was ordered to reinstate the case for further proceedings.


Rationale for the principle of Prejudicial Question:

The rationale for the principle of prejudicial question is that ​although it does not conclusively resolve
the guilt or innocence of the accused, it tests the sufficiency of the allegations in the complaint or
information in order to sustain the further prosecution of the criminal case.​ Hence, the need for its
prior resolution before further proceedings in the criminal action may be had.

Rej, Analyze!:

Here is a case of PASI who was initially given two orbital slots, one of which was later on, without their
knowledge, awarded to an unknown bidder who won the bidding of Orbital slot 153E. Now, PASI filed a civil
action with three causes of action, for injunction, for declaration of nullity of the award, and for damages.

Consequently, they also filed for a criminal charge of Anti-Graft and Corrupt Practices against Lichauco.

The Ombudsman, upon investigation, found the existence of a prejudicial question. So, the Ombudsman
dismissed the case as it was prematurely filed since the issue involved therein is subject to the litigation in
the RTC (the civil action). Meanwhile, the Civil case has reached the supreme court and the decision of the
Court of appeals to dismiss the civil case has been reversed and the case has been reinstated.

The issue, then, is whether or not there is a prejudicial question in this case.

The court said yes, there is because the civil case will also decide whether or not Lichauco has operated
within her scope of authority and, at the same time, such determination will also determine whether or not
she is guilty of the criminal charge filed against her (Anti Graft and Corrupt Practices Act) since it also
involves operating within or beyond one’s legitimate exercise or scope of authority (Answers the question is
giving preferential bias to others while being charged with the power to confer awards a lawful act given his
authority?).
YAP​ ​V.​ ​CABALES
|Article 36 – PREJUDICIAL QUESTION|

|This is a petition for review on certiorari under Rule 45 of the Rules of Court with prayer for the issuance of a writ of preliminary
injunction and/or issuance of status quo order seeking to annul and set aside the Resolution of the Court of Appeals (CA) dated July
17, 2003 denying petitioner's motion for reconsideration of the Decision dated April 30, 2003 in CA-G.R. SP No. 68250.|

Parties:

Petitioner​, ​JESSE Y. YAP,​ and his spouse Bessie Yap are engaged in the real estate business through their
company Primetown Property Group.

Private Respondents, ​spouses Orlando and Mergyl Mirabueno and spouses Charlie and Jovita Dimalanta.​

The Facts:

Sometime in 1996, petitioner purchased several real properties from a certain Evelyn Te (Evelyn). In
consideration of said purchases, Yap issued several Bank of the Philippine Islands (BPI) postdated checks to
Evelyn. Thereafter, spouses Orlando and Mergyl Mirabueno and spouses Charlie and Jovita Dimalanta,
rediscounted the checks from Evelyn.

In the beginning, the first few checks were honored by the bank, but ​in the early part of 1997, when the
remaining checks were deposited with the drawee bank, they were dishonored for the reason
that the "Account is Closed."

Demands were made by Spouses Mirabueno and Spouses Dimalanta to Yap to make good the checks.
Despite this, however, the latter failed to pay the amounts represented by the said checks.

The Civil Cases:

-On December 8, 1997​, ​Spouses Mirabueno​ filed a civil action for collection of sum of money,
damages and attorney's fee with prayer for the issuance of a writ of preliminary attachment
against petitioner​ before the Regional Trial Court (RTC) of General Santos City, docketed as Civil Case No.
6231.3

-On December 15, 1997​, ​Spouses Dimalanta​ ​followed suit and instituted a similar action​, which was
docketed as Civil Case No. 6238.

So there were two civil cases filed against Yap.

The Criminal Case:

-Subsequently, on various dates, the ​Office of the City Prosecutor of General Santos City filed several
informations for violation of Batas Pambansa Bilang (B.P. Blg.) 22 against Yap​ with the Municipal
Trial Court in Cities (MTCC), General Santos City. The criminal complaints were docketed as Criminal Case
Nos. 34873, 34874, 34862 to 34869, and Criminal Case No. 35522-I.

Yap filed motion to suspend proceedings due to prejudicial question:

Municipal Trial Court in Cities (MTCC)

-In the criminal cases, Yap filed separate motions to suspend proceedings on account of the existence of a
prejudicial question and motion to exclude the private prosecutor from participating in the proceedings.

-Yap prayed that the proceedings in the criminal cases be suspended until the civil cases pending before the
RTC were finally resolved.

MTCC denied it as well as the following motion for reconsideration.


RTC:

Yap filed a Petition for Certiorari with a Prayer for the Issuance of a Writ of Preliminary Injunction.
RTC denied the petition as well as the subsequent motion for reconsideration.

CA:

Yap filed with the CA a Petition for Certiorari Prohibition and Mandamus with Urgent Prayer for the Issuance
of Status Quo Order and Writ of Preliminary Injunction.

CA dismissed it for lack of merit. A motion of reconsideration has also been filed, but has also been denied.

Issues:

Whether or not there exists a prejudicial question that necessitates the suspension of the
criminal proceeding.

Ruling:

No. There is no prejudicial question in this case.

A prejudicial question generally exists in a situation where a civil action and a criminal action are both
pending, and there exists in the former an issue that must be preemptively resolved before the latter may
proceed, because howsoever the issue raised in the civil action is resolved would be determinative juris et
de jure of the guilt or innocence of the accused in the criminal case.

The rationale behind the principle of prejudicial question is to avoid two conflicting decisions.

The elements of prejudicial question:

1.] the civil action involves an issue similar or intimately related to the issue raised in the criminal action;

2.] the resolution of such issue determines whether or not the criminal action may proceed.

If both civil and criminal cases have similar issues, or the issue in one is intimately related to the issues
raised in the other, then a prejudicial question would likely exist, provided the other element or
characteristic is satisfied.

If the resolution of the issue in the civil action will not determine the criminal responsibility of
the accused in the criminal action based on the same facts, or if there is no necessity that the
civil case be determined first before taking up the criminal case, the civil case does not involve a
prejudicial question. ​Neither is there a prejudicial question if the civil and the criminal action can,
according to law, proceed independently of each other.

The issue in the criminal cases filed against Yap is whether he is guilty of violating B.P. Blg. 22, while in the
civil case, it is whether the Spouses Mirabueno and Dimalanta are entitled to collect from Yap the sum or the
value of the checks that they have rediscounted from Evelyn.

The resolution of the issue raised in the civil action is not determinative of the guilt or innocence of
the accused in the criminal cases against him, and there is ​no necessity that the civil case be
determined first before taking up the criminal cases​.

In the aforementioned civil actions, ​even if Yap is declared not liable for the payment of the value of the
checks and damages, he cannot be adjudged free from criminal liability for violation of B.P. Blg. 22. ​The
mere issuance of worthless checks with knowledge of the insufficiency of funds to support the
checks is in itself an offense.

The determination of whether Yap is liable to pay the spouses Mirabueno and Dimalanta the value of the
checks and damages, ​will not affect the guilt or innocence of the petitioner because the material question in
the criminal cases is whether petitioner had issued bad checks, regardless of the purpose or condition of its
issuance.
Guided by the following legal precepts, it is clear that the determination of the issues involved in Civil Case
Nos. 6231 and 6238 for collection of sum of money and damages is irrelevant to the guilt or innocence of
the petitioner in the criminal cases for violation of B.P. Blg. 22.

Hence, no prejudicial question exists in this case.

In addition, petitioner's claim of lack of consideration may be raised as a defense during the trial of the
criminal cases against him. The validity and merits of a party’s defense and accusation, as well as the
admissibility and weight of testimonies and evidence brought before the court, are better ventilated during
trial proper.

Rej, Analyze!:

BP. 22 only requires mere issuance of bad checks with knowledge of the insufficiency of funds to support the
checks. It is a ​Mala Prohibitum ​law (remember crim? hehe) which means that the mere commission or
performance is in itself the crime. Thus, the criminal proceedings filed herein can proceed independently
from the results of the civil case and, thus, there is no prejudicial question in this case.
DREAMWORK​ ​v.​ ​JANIOLA
|Article 36 – PREJUDICIAL QUESTION|

|Petitioner Dreamwork Construction, Inc. seeks the reversal of the August 26, 2008 Decision in SCA No. 08-0005 of the Regional
Trial Court (RTC), Branch 253 in Las Piñas City. The Decision affirmed the Orders dated October 16, 2007​2 and March 12, 2008​3 in
Criminal Case Nos. 55554-61 issued by the Metropolitan Trial Court (MTC), Branch 79 in Las Piñas City.|

Parties:

Petitioner, ​Dreamwork Construction, Inc. ​through its President, Roberto S. Concepcion, and Vice-President
for Finance and Marketing, Normandy P. Amora,​

Private respondent,​ ​Cleofe S. Janiola,​

The Criminal Case:

On October 18, 2004, ​Dreamwork ​filed a Complaint Affidavit dated October 5, 2004 ​for violation of
Batas Pambansa Bilang 22 (BP 22) ​against Janiola with the Office of the City Prosecutor of Las Piñas
City.

Correspondingly, ​Dreamwork ​filed a criminal information for violation of BP 22 against Janiola with
the MTC on February 2, 2005, entitled People of the Philippines v. Cleofe S. Janiola.

The Civil Case:

On September 20, 2006, ​Janiola​, joined by her husband, instituted a civil complaint against Dreamwork by
filing a Complaint dated August 2006​5 ​for the rescission (Cancellation) of an alleged construction
agreement between the parties, as well as for damages. The case was filed with the RTC, Branch 197
in Las Piñas City. ​Notably, the checks, subject of the criminal cases before the MTC, were issued in
consideration of the construction agreement.

The Motion to Suspend Proceedings:

Thereafter, on July 25, 2007, ​Janiola ​filed a Motion to Suspend Proceedings alleging that the civil and
criminal cases involved facts and issues similar or intimately related such that in the resolution of the issues
in the civil case, the guilt or innocence of the accused would necessarily be determined. In other words,
Janiola claimed that the civil case posed a prejudicial question as against the criminal cases​.

Petitioner opposed the suspension of the proceedings in the criminal cases in an undated
Comment/Opposition to Accused’s Motion to Suspend Proceedings based on Prejudicial Question on the
grounds that:

(1) ​there is no prejudicial question in this case as the rescission of the contract upon which the
bouncing checks were issued is a separate and distinct issue from the issue of whether private
respondent violated BP 22​; and

(2) Section 7, Rule 111 of the Rules of Court states that one of the elements of a prejudicial question is that
"the ​previously instituted civil action involves an issue similar or intimately related to the issue
raised in the subsequent criminal action"; thus, this element is missing in this case, the criminal
case having preceded the civil case.”

MTC Ruling:

MTC Granted the motion to suspend proceedings.

MTC denied Dreamwork’s motion for reconsideration.

RTC Ruling:

RTC denied Dreamwork’s petition.


On the issue of the existence of prejudicial question, it ruled:

“Additionally, it must be stressed that the requirement of a "previously" filed civil case is intended merely to
obviate delays in the conduct of the criminal proceedings. Incidentally, no clear evidence of any intent to
delay by private respondent was shown. The criminal proceedings are still in their initial stages when the
civil action was instituted. And, the fact that the civil action was filed after the criminal action was instituted
does not render the issues in the civil action any less prejudicial in character.”

Issues:

A.] [Main issue] Whether or not the proceeding in the criminal case must be suspended on the
basis of prejudicial question in the civil case.

B.] Whether or not the Civil Action Must Precede the Filing of the Criminal Action for a Prejudicial
Question to Exist.

Ruling:

No. A prejudicial question does not exist in this case.

Before we can answer the main issue, we should answer first this question: In order for a prejudicial
question to exist, is it necessary for the Civil Action to Precede the filing of the Criminal Action?

Under the 1985 Rules on Criminal Procedure, as amended by Supreme Court Resolutions dated June 17,
1988 and July 7, 1988​, the elements of a prejudicial question are contained in Rule 111, Sec. 5, which
states:

“SEC. 5. Elements of prejudicial question. — The two (2) essential elements of a prejudicial question are:
1.] the civil action involves an issue similar or intimately related to the issue raised in the criminal action;
and
2.] the resolution of such issue determines whether or not the criminal action may proceed.”

However,

On December 1, 2000, the 2000 Rules on Criminal Procedure, however, became effective and the above
provision was amended by Sec. 7 of Rule 111​, which applies here and now provides:

“SEC. 7. Elements of prejudicial question.—The elements of a prejudicial question are:


1.] The ​previously instituted civil action involves an issue similar or intimately related to the issue raised in
the subsequent criminal action;
and
2.] The resolution of such issue determines whether or not the criminal action may proceed.”

There are two contentions as to the interpretation of the law here, always remember this dahil important to
para maresolve tong issue ng interpretation:

Dreamwork’s Interpretation:

Dreamworks Inc. interprets Sec. 7(a) to mean that ​in order for a civil case to create a prejudicial
question and, thus, suspend a criminal case​, it must first be established that ​the civil case was
filed previous to the filing of the criminal case​.

This, Dreamwork argues, is specifically to guard against the situation wherein a party would belatedly file a
civil action that is related to a pending criminal action in order to delay the proceedings in the latter.
Janiola’s Interpretation:

On the other hand, Janiola ​cites Article 36 of the Civil Code​ which provides:

“Art. 36. Pre-judicial questions which must be decided before any criminal prosecution may be instituted or
may proceed, shall be governed by rules of court which the Supreme Court shall promulgate and which shall
not be in conflict with the provisions of this Code.”

The phrase "before any criminal prosecution may be instituted or may proceed" ​must be
interpreted to mean that a prejudicial question exists when the civil action is filed either ​before
the institution of the criminal action or during the pendency of the criminal action. Janiola
concludes that there is an apparent conflict in the provisions of the Rules of Court and the Civil Code in that
the latter considers a civil case to have presented a prejudicial question even if the criminal case preceded
the filing of the civil case.

Court:

The court disagrees with Janiola’s argument.

First off, it is a basic precept in statutory construction that a ​"change in phraseology by amendment of
a provision of law ​indicates a legislative intent to change the meaning of the provision from that
it originally had." In the instant case, ​the phrase, ​"previously instituted," was inserted to qualify
the nature of the civil action involved in a prejudicial question in relation to the criminal action​.
This interpretation is further buttressed by the insertion of "subsequent" directly before the term
criminal action.

Hence, there is no other logical explanation for the amendments except to qualify the relationship of the civil
and criminal actions, that the civil action must precede the criminal action.

Under the amendment, ​a prejudicial question is understood in law as that which must precede the criminal
action and which requires a decision before a final judgment can be rendered in the criminal action with
which said question is closely connected. ​The civil action must be instituted prior to the institution of
the criminal action.

Statute must be construed and harmonized with other statutes:

Additionally, it is a principle in statutory construction that ​"a statute should be construed not only to be
consistent with itself but also to harmonize with other laws on the same subject matter, as to
form a complete, coherent and intelligible system."

This principle is every statute must be so construed and harmonized with other statutes as to form a
uniform system of jurisprudence.

In other words, every effort must be made to harmonize seemingly conflicting laws. ​It is only when
harmonization is impossible that resort must be made to choosing which law to apply.

In the instant case, ​Art. 36 of the Civil Code and Sec. 7 of Rule 111 of the Rules of Court are
susceptible of an interpretation that would harmonize both provisions of law​.

On one hand, The phrase "previously instituted civil action" in ​Sec. 7 of Rule 111 is ​plainly worded and is
not susceptible of alternative interpretations​.

On the other hand, the clause "before any criminal prosecution may be instituted or may proceed" in ​Art. 36
of the Civil Code​ may, however, be interpreted to mean that:

1.] The motion to suspend the criminal action may be filed during the preliminary investigation with the
public prosecutor or court conducting the investigation,

2.] or during the trial with the court hearing the case.
Now, Dreamwork’s interpretation would harmonize Art. 36 of the Civil Code with Sec. 7 of Rule 111 of the
Rules of Court and also Sec. 6 of Rule 111, which provides for the situations when the motion to suspend
the criminal action during the preliminary investigation or during the trial may be filed.

Therefore, ​under the principles of statutory construction, it is this (Dreamwork’s) interpretation of Art. 36 of
the Civil Code that should govern in order to give effect to all the relevant provisions of law.

Motion to suspend on the grounds of Prejudicial question filed to delay criminal proceedings.

It bears pointing out that the circumstances present in the instant case indicate that the filing of the civil
action and the subsequent move to suspend the criminal proceedings by reason of the presence of a
prejudicial question were a mere afterthought and instituted to delay the criminal proceedings.

Here, ​the civil case was filed two (2) years ​after the institution of the criminal complaint and from
the time that private respondent allegedly withdrew its equipment from the job site.

ISSUE A (Main Issue)

Now, since it is evident that the civil case should be filed first prior to the criminal case. Assuming the civil
action was indeed filed before the criminal action, will there still be a prejudicial question?

No. The court said that even if the civil case in this case was instituted prior to the criminal
action, there is still no prejudicial question to speak of to justify the suspension of the
proceedings in the criminal case.

Dreamworks Inc. argues​ ​that the second element of a prejudicial question is absent in this case.

Janiola argues, on the other hand, that if the construction agreement between the parties is declared null
and void (in the civil case) for want of consideration, the checks issued in consideration of such contract
would become mere scraps of paper and cannot be the basis of criminal prosecution.

Undeniable, the fact that there exists a valid (or invalid) contract or agreement to support (or not support)
the issuance of the check/s or that the checks were issued for valuable consideration does not make up the
elements of the crime.

Thus, the court held in a long line of cases that the agreement surrounding the issuance of dishonored
checks is irrelevant to the prosecution for violation of BP 22.

Therefore, it is clear that the second element for the existence of a prejudicial question, that the resolution
of the issue in the civil action would determine whether the criminal action may proceed, is absent in the
instant case.

Thus, no prejudicial question exists and the rules on it are inapplicable to this case.

Court ordered MTC to continue with the proceedings in Criminal Case Nos. 55554-61 with dispatch.

Rej, Analyze!:
PIMENTEL v. PIMENTEL
|Article 36 – PREJUDICIAL QUESTION|
Parties:

Maria Chrysantine Pimentel y Lacap (private respondent), filed a criminal action of frustrated parricide
against Joselito R. Pimentel.

Joselito R. Pimentel (Petitioner), filed a civil action for Declaration of Nullity of Marriage on the ground of
psychological incapacity.

The Criminal Case:

On 25 October 2004, Maria Chrysantine Pimentel y Lacap (private respondent) filed an action for frustrated
parricide against Joselito R. Pimentel (petitioner), docketed as Criminal Case No. Q-04-130415, before the Regional
Trial Court of Quezon City, which was raffled to Branch 223 (RTC Quezon City).

The Civil Case:

On 7 February 2005, Joselito received summons to appear before the Regional Trial Court of Antipolo City, Branch
72 (RTC Antipolo) for the pre-trial and trial of Civil Case No. 04-7392 (​Maria Chrysantine Lorenza L. Pimentel v.
Joselito Pimentel)​ for Declaration of Nullity of Marriage under Section 36 of the Family Code on the ground of
psychological incapacity.

Motion to suspend the proceedings before the RTC:

On 11 February 2005, Joselito filed an urgent motion to suspend the proceedings before the RTC Quezon City on
the ground of the existence of a prejudicial question.Petitioner asserted that since the relationship between the
offender and the victim is a key element in parricide, the outcome of Civil Case No. 04-7392 would have a bearing
in the criminal case filed against him before the RTC Quezon City.

RTC Ruling:

RTC denied the motion to suspend the proceedings on the ground of the existence of a prejudicial question.

RTC denied the subsequent motion for reconsideration as well.

CA:

The Court of Appeals dismissed the petition.

Issues:

Whether or not the resolution of the action for annulment of marriage is a prejudicial question
that warrants the suspension of the criminal case for frustrated parricide against petitioner.

Ruling:

No. Civil case must be instituted BEFORE the criminal case and Annulment of Marriage is not a
Prejudicial question in Criminal Case for Parricide.

Civil case instituted before the criminal case:

In this case, the ​Information for Frustrated Parricide was dated 30 August 2004​. It was raffled to
RTC Quezon City on ​25 October 2004 as per the stamped date of receipt on the Information. The RTC
Quezon City set Criminal Case for pre-trial and trial on 14 February 2005. Petitioner was served summons in
Civil Case on 7 February 2005.

On the other hand, the Civil Case was ​dated 4 November 2004​ ​and was ​filed on 5 November 2004​.
Clearly, ​the civil case for annulment was filed after the filing of the criminal case for frustrated
parricide.​ As such, the requirement of Section 7, Rule 111 of the 2000 Rules on Criminal Procedure was not
met since the civil action was filed subsequent to the filing of the criminal action.

Annulment of Marriage is not a Prejudicial question in Criminal Case for Parricide:

There is a prejudicial question when a civil action and a criminal action are both pending, and there exists in
the civil action an issue which must be preemptively resolved before the criminal action may proceed
because howsoever the issue raised in the civil action is resolved would be determinative of the guilt or
innocence of the accused in the criminal case.

The relationship between the offender and the victim is a key element in the crime of parricide, which
punishes any person who shall kill his father, mother, or child, whether legitimate or illegitimate, or any of
his ascendants or descendants, or his spouse.

The relationship between the offender and the victim distinguishes the crime of parricide from murder or
homicide.

However, the issue in the annulment of marriage is not similar or intimately related to the issue in the
criminal case for parricide. Further, the relationship between the offender and the victim is not
determinative of the guilt or innocence of the accused.

The issue in the civil case for annulment of marriage under Article 36 of the Family Code is whether
petitioner is psychologically incapacitated to comply with the essential marital obligations. The issue in
parricide is whether the accused killed the victim.

In this case, since petitioner was charged with frustrated parricide, the issue is whether he performed all the
acts of execution which would have killed respondent as a consequence but which, nevertheless, did not
produce it by reason of causes independent of petitioners will.

At the time of the commission of the alleged crime, petitioner and respondent were married. The
subsequent dissolution of their marriage, in case the petition in Civil Case No. 04-7392 is
granted, will have no effect on the alleged crime that was committed at the time of the
subsistence of the marriage. In short, even if the marriage between petitioner and respondent is
annulled, petitioner could still be held criminally liable since at the time of the commission of the
alleged crime, he was still married to respondent.

The two elements of a Prejudicial Question is herein, thus, not present.

Rej, Analyze!:
CONSING JR. v. PEOPLE
|Article 36 – PREJUDICIAL QUESTION|
The Facts:

Petitioner negotiated with and obtained for himself and his mother, Cecilia de la Cruz (de la Cruz) various
loans totaling ₱18,000,000.00 from Unicapital Inc. (Unicapital).

The loans were secured by a real estate mortgage constituted on a parcel of land (property) covered by
Transfer Certificate of Title (TCT) No. T-687599 of the Registry of Deeds for the Province of Cavite registered
under the name of de la Cruz. In accordance with its option to purchase the mortgaged property, Unicapital
agreed to purchase one-half of the property for a total consideration of ₱21,221,500.00. Payment was
effected by off-setting the amounts due to Unicapital under the promissory notes of de la Cruz and Consing
in the amount of ₱18,000,000.00 and paying an additional amount of ₱3,145,946.50.

The other half of the property was purchased by Plus Builders, Inc. (Plus Builders), a joint venture partner of
Unicapital.

Before Unicapital and Plus Builders could develop the property, they learned that the title to the property
was really TCT No. 114708 in the names of Po Willie Yu and Juanito Tan Teng, the parties from whom the
property had been allegedly acquired by de la Cruz. TCT No. 687599 held by De la Cruz appeared to be
spurious. On its part, Unicapital demanded the return of the total amount of ₱41,377,851.48 as of April 19,
1999 that had been paid to and received by de la Cruz and Consing, but the latter ignored the demands.

The Civil Case:

Consing

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

Unicapital

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

Plus Builders

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

The Criminal Case:

On the same date (of Pasig Civil Case, july 22,1999), Unicapital initiated a criminal complaint for estafa
through falsification of public document against Consing and de la Cruz in the Makati City Prosecutor’s
Office.

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

On February 15, 2001, Consing moved to defer his arraignment in the Makati criminal case on the ground of
existence of a prejudicial question due to the pendency of the Pasig and Makati civil cases. On September
25, 2001, Consing reiterated his motion for deferment of his arraignment, citing the additional ground of
pendency of CA-G.R. SP No. 63712 in the CA. On November 19, 2001, the Prosecution opposed the motion.
2.] (Cavite Criminal Case) On January 21, 2000, an information for estafa through falsification of public
document was filed against Consing and De la Cruz in the RTC in Imus, Cavite, docketed as Criminal Case
No. 7668-00 and assigned to Branch 21 (Cavite criminal case).

Consing filed a motion to defer the arraignment on the ground of the existence of a prejudicial question, i.e.,
the pendency of the Pasig and Manila civil cases.

RTC Ruling:

1.] On the motion of suspension on the ground of the existence of a prejudicial question
(For Makati Criminal Case)

On November 26, 2001, the RTC issued an order suspending the proceedings in the Makati criminal case on
the ground of the existence of a prejudicial question, and on March 18, 2001, the RTC denied the
Prosecution’s motion for reconsideration.
2.] On the motion of suspension on the ground of the existence of a prejudicial question (For
Cavite Criminal Case)

On January 27, 2000, however, the RTC handling the Cavite criminal case denied Consing’s motion. Later
on, it also denied his motion for reconsideration.

CA

1.] On the motion of suspension on the ground of the existence of a prejudicial question
(For Makati Criminal Case)

The CA promulgated its decision in C.A.-G.R. SP No. 71252, dismissing the petition for certiorari and
upholding the RTC’s questioned orders.

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

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

(1) the parties are identical;


(2) the transactions in controversy are identical;
(3) the Transfer Certificate of Titles (TCT) involved are identical;
(4) the questioned Deeds of Sale/Mortgage are identical;
(5) the dates in question are identical; and
(6) the issue of private respondent’s culpability for the questioned transactions is identical in all the
proceedings.

As discussed earlier, not only was the issue raised in the Pasig civil case identical to or intimately related to
the criminal cases in Cavite and Makati. The similarities also extend to the parties in the cases and the TCT
and Deed of Sale/ Mortgage involved in the questioned transactions.”

X. After the Cavite Criminal (See below first) Case suspension on the grounds of prejudicial
question has been decided by the Supreme Court.

State moved for reconsideration of the following the Decision of the Supreme court that the Pasig and Manila
Civil Cases did not raise prejudicial questions that would cause suspension of the Cavite Criminal Case.

Thus, following the decision in G.R. No. 148193, the Pasig and Manila Civil Cases should apply in
the Makati Criminal Case as well.

Consing’s contention in invoking the recent decision of the court (G.R. No. 148193):

In his opposition to the State’s motion for reconsideration, Consing contended that
1.] the ruling in G.R. No. 148193 was not binding because G.R. No. 148193 involved Plus Builders, which
was different from Unicapital, the complainant in the Makati criminal case.

2.] the decision in G.R. No. 148193 did not yet become final and executory, and could still be reversed at
any time, and thus should not control as a precedent to be relied upon; and

3.] that he had acted as an innocent attorney-in-fact for his mother, and should not be held personally liable
under a contract that had involved property belonging to his mother as his principal.

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

CA-G.R. SP No. 63712 is similar with the case at bench. The transactions in controversy, the documents
involved; the issue of the respondent’s culpability for the questioned transactions are all identical in all the
proceedings; and it deals with the same parties with the exception of private complainant Unicapital.
However, the Supreme Court, upon review of CA-G.R. SP No. 63712, People of the Philippines vs. Rafael
Jose Consing, Jr. (G.R. No. 148193, January 16, 2003) held that "Civil Case No. 99-95381, for Damages and
attachment on account of alleged fraud committed by respondent and his mother in selling the disputed lot
to Plus Builders, Inc. is an independent civil action under Article 33 of the Civil Code. As such, it will not
operate as a prejudicial question that will justify the suspension of the criminal case at bar." In view of the
aforementioned decision of the Supreme Court, We are thus amending Our May 20, 2003 decision.

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

Consing filed a motion for reconsideration, the CA denied the motion.

Hence, this appeal by petition for review on certiorari.

2.] On the motion of suspension on the ground of the existence of a prejudicial question
(For Cavite Criminal Case) (Sub)

Consing commenced in the CA a special civil action for certiorari with prayer for the issuance of a temporary
restraining order (TRO) and/or writ of preliminary injunction (C.A.-G.R. SP No. 63712), seeking to enjoin his
arraignment and trial in the Cavite criminal case.

The CA granted the TRO on March 19, 2001, and later promulgated its decision on May 31, 2001, granting
Consing’ petition for certiorari and setting aside the January 27, 2000 order of the RTC, and permanently
enjoining the RTC from proceeding with the arraignment and trial until the Pasig and Manila civil cases had
been finally decided.

COURT:

2.] ​On the motion of suspension on the ground of the existence of a prejudicial question
(For Cavite Criminal Case) (Sub)

Not satisfied, the State assailed the decision of the CA in this Court (G.R. No. 148193), praying for the
reversal of the May 31, 2001 decision of the CA.

On January 16, 2003, the Court granted the petition for review in G.R. No. 148193, and reversed
and set aside the May 31, 2001 decision of the CA.

Ruling for the ​Cavite Criminal Case on prejudicial question​: (Sub)

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

(Pasig Civil Case is not a prejudicial question to Cavite Criminal Case) Hence, the determination of
the issue involved in Civil Case No. SCA 1759 for Injunctive Relief is irrelevant to the guilt or innocence of
Consing in the criminal case for estafa through falsification of public document.

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

If the civil and criminal action can proceed independently - No prejudicial question.

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

Article 33 of the new Civil Code which provides:

"In cases of defamation, fraud and physical injuries, a civil action for damages, entirely separate and distinct
from the criminal action shall proceed independently of the criminal prosecution, and shall require only a
preponderance of evidence."

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

Issues:

Whether or not the Court of Appeals err in reversing itself on the issue of the existence of a
prejudicial question that warranted the suspension of the proceedings in Makati criminal case

Held:

No. The petition for review on certiorari is absolutely meritless.

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

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

“Article 33. In cases of defamation, fraud, and physical injuries a civil action for damages, entirely separate
and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed
independently of the criminal prosecution, and shall require only a preponderance of evidence.”
It is well settled that a civil action based on defamation, fraud and physical injuries may be independently
instituted pursuant to Article 33 of the Civil Code, and does not operate as a prejudicial question that will
justify the suspension of a criminal case.

This was precisely the Court’s thrust in G.R. No. 148193, thus:

“Moreover, neither is there a prejudicial question if the civil and the criminal action can, according to law,
proceed independently of each other. Under Rule 111, Section 3 of the Revised Rules on Criminal Procedure,
in the cases provided in Articles 32, 33, 34 and 2176 of the Civil Code, the independent civil action may be
brought by the offended party. It shall proceed independently of the criminal action and shall require only a
preponderance of evidence. In no case, however, may the offended party recover damages twice for the
same act or omission charged in the criminal action.”
xxxx
In the instant case, Civil Case No. 99-95381 ​(Manila Civil Case), for Damages and Attachment ​on
account of the alleged fraud committed by respondent and his mother in selling the disputed lot to PBI ​is
an independent civil action under Article 33 of the Civil Code. As such, it will not operate as a
prejudicial question that will justify the suspension of the criminal case at bar.

Consing’s Contention:​ ​But there were two different parties involved!

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

Clearly, the Makati criminal case could not be suspended pending the resolution of the Makati civil case that
Unicapital had filed.

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

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

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

Rej, Analyze!:

In short, there are two criminal cases and, thus, two issues of suspension on the grounds of prejudicial
question being considered here: 1.] for the Cavite Criminal Case and 2.] for the Makati Criminal Case.

There were three civil cases instituted which were being considered by the Court in this case in deciding
whether or not there’s such prejudicial question which shall cause the suspension of the two criminal cases:

Pasig civil case - Of which the court said: Cannot be a prejudicial question to both Makati and Cavite
Criminal Cases because it is only concerned with whether or not Consing acted merely as an agent.

Note that whether he is or is not acting as a mere agent of his mother, it won’t affect the criminal
cases.
Situation 1: Even if he was just an agent, he can still be held liable because of conspiring to commit a
felony, decided to commit it and it did happen, in this case the commission of estafa through falsification of
public documents. (act of one is an act of all)
Situation 2: On the other hand, even if he was not acting merely as an agent of his mother, he can still be
held liable for, again, estafa through falsification of public documents (act of one is an act of all).
Thus, any decision in this civil case won’t really affect the criminal cases.

Makati civil case and Manila civil case ​- ​Of which ​the court said: It cannot be a prejudicial question to
both Makati and Cavite Criminal Cases. Although these cases involve different parties, they still have a
significant resemblance: that ​the causes of action in these cases are based upon fraud. Since they are
based on fraud, ​in pursuant to article 33 of the new civil code, they should proceed independently
of the criminal cases. ​Accordingly, there could be no prejudicial question if a civil action can proceed
independently of the criminal action.
QUIMIGING v. ICAO

|JURIDICAL CAPACITY / CAPACITY TO ACT RESTRICTIONS / MODIFICATIONS RE CAPACTITY TO ACT


PERSONALITY SPRINGS FROM BIRTH |
Parties:

The Complaint:

Appellant, Carmen Quimiguing, assisted by her parents, sued Felix Icao in the court below. In her complaint
it was averred that the parties were neighbors in Dapitan City, and had close and confidential relations; that
defendant Icao, although married, succeeded in having carnal intercourse with plaintiff several times by
force and intimidation, and without her consent; that as a result she became pregnant, despite efforts and
drugs supplied by defendant, and plaintiff had to stop studying. Hence, she claimed support at P120.00 per
month, damages and attorney's fees.

The Defense:

Duly summoned, defendant Icao moved to dismiss for lack of cause of action since the complaint did not
allege that the child had been born.

RTC Ruling:

After hearing arguments, The trial judge sustained defendant's motion and dismissed the complaint.

Thereafter, plaintiff moved to amend the complaint to allege that as a result of the intercourse, plaintiff had
later given birth to a baby girl; but the court, sustaining defendant's objection, ruled that no amendment
was allowable, since the original complaint averred no cause of action. Wherefore, the plaintiff appealed
directly to this Court.

Issues:

Whether or not the order of the Court of First instance of Zamboanga Del Norte, in dismissing a
complaint for support and damages, and another order denying amendment of the same pleading
is proper.

Ruling:

No. The court orders are untenable. There are mainly two reasons:

First, a conceived child, although as yet unborn, ​is given by law a provisional personality of its own
for all purposes favorable to it, ​as explicitly provided in Article 40 of the Civil Code of the
Philippines.

The unborn child, therefore, has a right to support from its progenitors, particularly of Icao
(whose paternity is deemed admitted for the purpose of the motion to dismiss), even if the said child is only
"en ventre de sa mere;" just as a conceived child, ​even if as yet unborn, may receive donations as
prescribed by Article 742 of the same Code, and its being ignored by the parent in his testament
may result in preterition of a forced heir that annuls the institution of the testamentary heir,
even if such child should be born after the death of the testator​ Article 854, Civil Code).

“ART. 742. Donations made to conceived and unborn children may be accepted by those persons who would
legally represent them if they were already born.

ART. 854. The preterition or omission of one, some, or all of the compulsory heirs in the direct line, whether
living at the time of the execution of the will or born after the death of the testator, shall annul the
institution of heir; but the devises and legacies shall be valid insofar as they are not inofficious.
If the omitted compulsory heirs should die before the testator, the institution shall be effectual, without
prejudice to the right of 'representation.”

It is thus clear that the lower court's theory that Article 291 of the Civil Code declaring that support is an
obligation of parents and illegitimate children "does not contemplate support to children as yet unborn,"
violates Article 40 aforesaid, besides imposing a condition that nowhere appears in the text of Article 291. It
is true that Article 40 prescribing that "the conceived child shall be considered born for all purposes that are
favorable to it" adds further "provided it be born later with the conditions specified in the following article"
(i.e., that the foetus be alive at the time it is completely delivered from the mother's womb). This proviso,
however, is not a condition precedent to the right of the conceived child; for if it were, the first part of
Article 40 would become entirely useless and ineffective.

Second reason: Article 21

A second reason for reversing the orders appealed from is that for a married man to force a woman not his
wife to yield to his lust (as averred in the original complaint in this case) constitutes a clear violation of the
rights of his victim that entitles her to claim compensation for the damage caused. Says Article 21 of the
Civil Code of the Philippines:

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

The rule of Article 21 is supported by Article 2219 of the same Code:

ART 2219. Moral damages may be recovered in the following and analogous cases:
(3) Seduction, abduction, rape or other lascivious acts:
xxx xxx xxx
(10) Acts and actions referred to in Articles 21, 26, 27, 28 ....

Thus, independently of the right to Support of the child she was carrying, plaintiff herself had a cause of
action for damages under the terms of the complaint; and the order dismissing it for failure to state a cause
of action was doubly in error.

WHEREFORE, the orders under appeal are reversed and set aside. Let the case be remanded to the court of
origin for further proceedings conformable to this decision. Costs against appellee Felix Icao. So ordered.

Rej, Analyze!:
CONTINENTAL STEEL v. MONTANO

|JURIDICAL CAPACITY / CAPACITY TO ACT RESTRICTIONS / MODIFICATIONS RE CAPACTITY TO ACT


PERSONALITY SPRINGS FROM BIRTH |
Parties:

The Facts:

Hortillano​, an employee of petitioner Continental Steel Manufacturing Corporation (Continental Steel) and a
member of respondent Nagkakaisang Manggagawa ng Centro Steel Corporation-Solidarity of Trade Unions in
the Philippines for Empowerment and Reforms (Union), filed on 9 January 2006, a claim for Paternity
Leave, Bereavement Leave and Death and Accident Insurance for dependent, pursuant to the
Collective Bargaining Agreement (CBA) concluded between Continental and the Union.

The claim was based on the death of Hortillanos unborn child. Hortillanos wife, Marife V. Hortillano, had a
premature delivery on 5 January 2006 while she was in the 38th week of pregnancy. According to the
Certificate of Fetal Death dated 7 January 2006, the female fetus died during labor due to fetal Anoxia
secondary to uteroplacental insufficiency.

Continental Steel immediately granted Hortillanos claim for paternity leave but denied his claims for
bereavement leave and other death benefits, consisting of the death and accident insurance.

Despite the series of conferences held, the parties still failed to settle their dispute, prompting the Union to
file a Notice to Arbitrate before the National Conciliation and Mediation Board (NCMB) of the Department of
Labor and Employment (DOLE). The parties mutually chose Atty. Montao, an Accredited Voluntary
Arbitrator, to resolve said issue.

NCMB Arbitration:

Hortillano, through the Union argued:

The Union argued that Hortillano was entitled to bereavement leave and other death benefits
pursuant to the CBA. The Union maintained that Article X, Section 2 and Article XVIII, Section 4.3 of the
CBA did not specifically state that the dependent should have first been born alive or must have acquired
juridical personality so that his/her subsequent death could be covered by the CBA death benefits.

Continental Steel argued:

Continental Steel posited that the express provision of the CBA did not contemplate the death of
an unborn child, a fetus, without legal personality.

It claimed that there are two elements for the entitlement to the benefits, namely:

(1) death and


(2) status as legitimate dependent,

none of which existed in Hortillanos case. ​Continental Steel, relying on Articles 40, 41 and 42​[16] of
the Civil Code, contended that only one with civil personality could die. Hence, the unborn child
never died because it never acquired juridical personality. Proceeding from the same line of
thought, Continental Steel reasoned that a fetus that was dead from the moment of delivery was
not a person at all. Hence, the term dependent could not be applied to a fetus that never acquired juridical
personality. A fetus that was delivered dead could not be considered a dependent, since it never needed any
support, nor did it ever acquire the right to be supported.

Continental Steel maintained that the wording of the CBA was clear and unambiguous. Since neither of the
parties qualified the terms used in the CBA, the legally accepted definitions thereof were deemed
automatically accepted by both parties. The failure of the Union to have unborn child included in the
definition of dependent, as used in the CBA the death of whom would have qualified the parent-employee for
bereavement leave and other death benefits bound the Union to the legally accepted definition of the latter
term.
Court of Appeals:

Continental Steel filed with the Court of Appeals a Petition for Review on Certiorari​.

The Court of Appeals, in its Decision dated 27 February 2008, affirmed Atty. Montaos Resolution dated 20
November 2007. The appellate court interpreted death to mean as follows:

[Herein petitioner Continental Steels] exposition on the legal sense in which the term death is used in the
CBA fails to impress the Court, and the same is irrelevant for ascertaining the purpose, which the grant of
bereavement leave and death benefits thereunder, is intended to serve.

“While there is no arguing with [Continental Steel] that the acquisition of civil personality of a child or fetus
is conditioned on being born alive upon delivery, it does not follow that such event of premature delivery of
a fetus could never be contemplated as a death as to be covered by the CBA provision, undoubtedly an
event causing loss and grief to the affected employee, with whom the dead fetus stands in a legitimate
relation. [Continental Steel] has proposed a narrow and technical significance to the term death of a
legitimate dependent as condition for granting bereavement leave and death benefits under the CBA.
Following [Continental Steels] theory, there can be no experience of death to speak of. The Court, however,
does not share this view. A dead fetus simply cannot be equated with anything less than loss of human life,
especially for the expectant parents. In this light, bereavement leave and death benefits are meant to
assuage the employee and the latters immediate family, extend to them solace and support, rather than an
act conferring legal status or personality upon the unborn child. [Continental Steels] insistence that the
certificate of fetal death is for statistical purposes only sadly misses this crucial point.”

In a Resolution dated 9 May 2008, the Court of Appeals denied the Motion for Reconsideration of Continental
Steel.

Issue:

Whether or not only one with juridical personality can die and a dead fetus never acquired a
juridical personality.

No. The court is not persuaded by the arguments of Continental Steel.

As Atty. Montao identified, the elements for bereavement leave under Article X, Section 2 of the CBA are:
(1) death; (2) the death must be of a dependent, i.e., parent, spouse, child, brother, or sister, of an
employee; and (3) legitimate relations of the dependent to the employee. The requisites for death and
accident insurance under Article XVIII, Section 4(3) of the CBA are: (1) death; (2) the death must be of a
dependent, who could be a parent, spouse, or child of a married employee; or a parent, brother, or sister of
a single employee; and (4) presentation of the proper legal document to prove such death, e.g., death
certificate.

It is worthy to note that despite the repeated assertion of Continental Steel that the provisions of the CBA
are clear and unambiguous, its fundamental argument for denying Hortillanos claim for bereavement leave
and other death benefits rests on the purportedly proper interpretation of the terms death and dependent as
used in the CBA. If the provisions of the CBA are indeed clear and unambiguous, then there is no need to
resort to the interpretation or construction of the same. Moreover, Continental Steel itself admitted that
neither management nor the Union sought to define the pertinent terms for bereavement leave and other
death benefits during the negotiation of the CBA.

The reliance of Continental Steel on Articles 40, 41 and 42 of the Civil Code for the legal definition of death
is misplaced. Article 40 provides that a conceived child acquires personality only when it is born, and Article
41 defines when a child is considered born. Article 42 plainly states that civil personality is extinguished by
death.

First, the issue of civil personality is not relevant herein. Articles 40, 41 and 42 of the Civil Code on natural
persons, must be applied in relation to Article 37 of the same Code, the very first of the general provisions
on civil personality, which reads:
Art. 37. Juridical capacity, which is the fitness to be the subject of legal relations, is inherent in
every natural person and is lost only through death. Capacity to act, which is the power to do acts
with legal effect, is acquired and may be lost.

We need not establish civil personality of the unborn child herein since his/her juridical capacity and capacity
to act as a person are not in issue. It is not a question before us whether the unborn child acquired any
rights or incurred any obligations prior to his/her death that were passed on to or assumed by the childs
parents. The rights to bereavement leave and other death benefits in the instant case pertain directly to the
parents of the unborn child upon the latters death.

Second, Sections 40, 41 and 42 of the Civil Code do not provide at all a definition of death. Moreover, while
the Civil Code expressly provides that civil personality may be extinguished by death, it does not explicitly
state that only those who have acquired juridical personality could die.

And third, death has been defined as the cessation of life. Life is not synonymous with civil personality. One
need not acquire civil personality first before he/she could die.Even a child inside the womb already has life.
No less than the Constitution recognizes the life of the unborn from conception, that the State must protect
equally with the life of the mother. If the unborn already has life, then the cessation thereof even prior to
the child being delivered, qualifies as death.

Likewise, the unborn child can be considered a dependent under the CBA. As Continental Steel itself defines,
a dependent is one who relies on another for support; one not able to exist or sustain oneself without the
power or aid of someone else. Under said general definition,​[26] even an unborn child is a dependent of its
parents. Hortillanos child could not have reached 38-39 weeks of its gestational life without depending upon
its mother, Hortillanos wife, for sustenance. Additionally, it is explicit in the CBA provisions in question that
the dependent may be the parent, spouse, or child of a married employee; or the parent, brother, or sister
of a single employee. The CBA did not provide a qualification for the child dependent, such that the child
must have been born or must have acquired civil personality, as Continental Steel avers. Without such
qualification, then child shall be understood in its more general sense, which includes the unborn fetus in the
mothers womb.

The term legitimate merely addresses the dependent childs status in relation to his/her parents. In Angeles
v. Maglaya,​[27]​ we have expounded on who is a legitimate child, viz:
“A legitimate child is a product of, and, therefore, implies a valid and lawful marriage. Remove the element of lawful union and there is
strictly no legitimate filiation between parents and child. Article 164 of the Family Code cannot be more emphatic on the matter:
Children ​conceived​ or born during the marriage of the parents are legitimate. (Emphasis ours.)”

Conversely, in Briones v. Miguel, we identified an illegitimate child to be as follows:

The fine distinctions among the various types of illegitimate children have been eliminated in the Family Code. Now, there are only two
classes of children -- legitimate (and those who, like the legally adopted, have the rights of legitimate children) and illegitimate. All
children ​conceived​ and born outside a valid marriage are illegitimate, unless the law itself gives them legitimate status. (Emphasis ours.)

It is apparent that according to the Family Code and the afore-cited jurisprudence, the legitimacy or
illegitimacy of a child attaches upon his/her conception. In the present case, it was not disputed that
Hortillano and his wife were validly married and that their child was conceived during said marriage, hence,
making said child legitimate upon her conception.
Also incontestable is the fact that Hortillano was able to comply with the fourth element entitling him to
death and accident insurance under the CBA, i.e., presentation of the death certificate of his unborn child.

Given the existence of all the requisites for bereavement leave and other death benefits under the CBA,
Hortillanos claims for the same should have been granted by Continental Steel.

We emphasize that bereavement leave and other death benefits are granted to an employee to give aid to,
and if possible, lessen the grief of, the said employee and his family who suffered the loss of a loved one. It
cannot be said that the parents grief and sense of loss arising from the death of their unborn child, who, in
this case, had a gestational life of 38-39 weeks but died during delivery, is any less than that of parents
whose child was born alive but died subsequently.

Being for the benefit of the employee, CBA provisions on bereavement leave and other death benefits should
be interpreted liberally to give life to the intentions thereof. Time and again, the Labor Code is specific in
enunciating that in case of doubt in the interpretation of any law or provision affecting labor, such should be
interpreted in favor of labor.​[29] In the same way, the CBA and CBA provisions should be interpreted in
favor of labor. In Marcopper Mining v. National Labor Relations Commission,​[30]​ we pronounced:

Finally, petitioner misinterprets the declaration of the Labor Arbiter in the assailed decision that "when the pendulum of judgment swings
to and fro and the forces are equal on both sides, the same must be stilled in favor of labor." While petitioner acknowledges that all
doubts in the interpretation of the Labor Code shall be resolved in favor of labor, it insists that what is involved-here is the amended
CBA which is essentially a contract between private persons. What petitioner has lost sight of is the avowed policy of the State,
enshrined in our Constitution, to accord utmost protection and justice to labor, a policy, we are, likewise, sworn to uphold.

In Philippine Telegraph & Telephone Corporation v. NLRC [183 SCRA 451 (1990)], we categorically stated
that:

When conflicting interests of labor and capital are to be weighed on the scales of social justice, the heavier
influence of the latter should be counter-balanced by sympathy and compassion the law must accord the
underprivileged worker.

Likewise, in Terminal Facilities and Services Corporation v. NLRC [199 SCRA 265 (1991)], we declared:

Any doubt concerning the rights of labor should be resolved in its favor pursuant to the social justice policy.

IN VIEW WHEREOF, the Petition is DENIED. The Decision dated 27 February 2008 and Resolution dated 9
May 2008 of the Court of Appeals in CA-G.R. SP No. 101697, affirming the Resolution dated 20 November
2007 of Accredited Voluntary Arbitrator Atty. Allan S. Montao, which granted to Rolando P. Hortillano
bereavement leave pay and other death benefits in the amounts of Four Thousand Nine Hundred Thirty-Nine
Pesos (P4,939.00) and Eleven Thousand Five Hundred Fifty Pesos (P11,550.00), respectively, grounded on
the death of his unborn child, are AFFIRMED. Costs against Continental Steel Manufacturing Corporation.
MAYOR v. TIU
|Article 44, JURIDICAL PERSONS|
Parties:

The Facts:

On May 25, 2008, Rosario Guy-Juco Villasin Casilan (Rosario), the widow of the late Primo Villasin (Primo),
passed away and left a holographic Last Will and Testament, wherein she named her sister, Remedios Tiu
(Remedios), and her niece, Manuela Azucena Mayor (Manuela), as executors.

Immediately thereafter, Remedios and Manuela filed a petition for the probate of Rosario's holographic will
with prayer for the issuance of letters testamentary (probate proceedings). The petition was raffled to the
Regional Trial Court, Branch 9, Tacloban City (RTC-Br. 9) and docketed as Sp. Proc. No. 2008-05-30. They
averred that Rosario left properties valued at approximately P2.5 million.

On May 29, 2008, respondent Damiana Charito Marty (Marty) claiming to be the adopted daughter of
Rosario, filed a petition for letters of administration before the RTC, Branch 34, Tacloban City (RTC-Br. 34),
docketed as Sp. Proc. No. 2008-05-32, but it was not given due course because of the probate proceedings.
Per records, this dismissal is subject of a separate proceeding filed by Marty with the CA Cebu City, docketed
as CA G.R. SP No. 04003.

The Motion by Marty:

Consequently, Marty filed her Verified Urgent Manifestation and Motion,9 dated June 23, 2008, stating that
Remedios kept the decedent Rosario a virtual hostage for the past ten (10) years and her family was
financially dependent on her which led to the wastage and disposal of the properties owned by her and her
husband, Primo. Marty averred that until the alleged will of the decedent could be probated and admitted,
Remedios and her ten (10) children had no standing to either possess or control the properties comprising
the estate of the Villasins.

She prayed for the probate court to:

1) Order an immediate inventory of all the properties subject of the proceedings;

2) Direct the tenants of the estate, namely, Mercury Drug and Chowking, located at Primrose Hotel, to
deposit their rentals with the court;

3) Direct Metrobank, P. Burgos Branch, to freeze the accounts in the name of Rosario, Primrose
Development Corporation (Primrose) or Remedios; and

4) Lock up the Primrose Hotel in order to preserve the property until final disposition by the court.

Opposition of Remedios and Manuela on the motion:

1.] They averred that Marty was not an adopted child of the Villasins based on a certification issued by the
Office of the Clerk of Court of Tacloban City, attesting that no record of any adoption proceedings involving
Marty existed in their records.

2.] They also argued that the probate court had no jurisdiction over the properties mistakenly claimed by
Marty as part of Rosario's estate because these properties were actually owned by, and titled in the name
of, Primrose.

Hence, concerning the prayer to direct the tenants to deposit the rentals to the probate court, Remedios and
Manuela countered that the probate court had no jurisdiction over properties owned by third persons,
particularly by Primrose, the latter having a separate and distinct personality from the decedent's estate.
Marty’s Reply and Marty and Edwin Tiu’s opposition:

(on veil of corporate entity)​Marty cited an order of the Court of First Instance of Leyte (​CFI Leyte)​ in SP
No. 1239, claiming that as early as March 3, 1981, ​the veil of corporate entity of Primrose was pierced on
the ground that it was a closed family corporation controlled by Rosario after Primo's death​. Thus, Marty
alleged that "piercing" was proper in the case of Rosario's estate because the incorporation of Primrose was
founded on a fraudulent consideration, having been done in contemplation of Primo's death.

In her Opposition to the Petition for the Approval of the Will of the Late Rosario Guy-Juco Villasin Casilan,
Marty impugned the authenticity of her holographic will.

Meanwhile, Edwin Tiu (​Edwin)​ , a son of Remedios, also filed his Opposition, dated June 13, 2008​.

After a protracted exchange of pleadings, the parties submitted their respective memoranda.

RTC’s Order:

The January 14, 2009 Order

The RTC-Br. 9 granted the motion of Marty and appointed the OIC Clerk of Court as special administrator of
the Estate. The Probate Court also ordered Mercury Drug and Chowking to deposit the rental income to the
court and Metrobank to freeze the bank accounts mentioned in the motion of Marty. The doctrine of piercing
the corporate veil was applied in the case considering that Rosario had no other properties that comprised
her estate other than Primrose. According to the probate court, for the best interest of whoever would be
adjudged as the legal heirs of the Estate, it was best to preserve the properties from dissipation.

Remedios and Manuela’s motion with regards to the RTC’s Order:

Remedios and Manuela filed their Motion for Inhibition on the ground of their loss of trust and confidence in
RTC-Br. 9 Presiding Judge Rogelio C. Sescon (​Judge Sescon)​ to dispense justice.

(On veil of corporate entity) Later, they also filed their Motion for Reconsideration ​Ad Cautelam (for
security),​ dated February 3, 2009, arguing that Rosario's estate consisted only of shares of stock in Primrose
and not the corporation itself. Thus, the probate court could not order the lessees of the corporation to remit
the rentals to the Estate's administrator.

(On Appointment of a special administrator) With regard to the appointment of a special administrator,
Remedios and Manuela insisted that it be recalled. They claimed that if ever there was a need to appoint
one, it should be the two of them because it was the desire of the decedent in the will subject of the
probation proceedings.

RTC’s denial of the motion and re-raffling of the case:

March 27, 2009 order:

RTC-Br. 9 denied the motion for reconsideration for lack of merit and affirmed its January 14, 2009 Order.

The presiding judge, Judge Sescon, also granted the motion for inhibition and ordered that the records of
the case be referred to the RTC Executive Judge for re-raffling. The case was later re-raffled to RTC-Br.6,
Judge Alphinor C. Serrano, presiding judge.

Court of Appeals:

Aggrieved by the denial of their motion for reconsideration, Remedios and Manuela filed a petition for
certiorari with the CA in Cebu City, assailing the ​January 14, 2009 and March 27, 2009 Orders of the
RTC-Br. 9.
Ruling of the CA:

In its October 16, 2009 Decision, ​the CA ​reversed the assailed orders of the RTC Br. 9, except as to the
appointment of a special administrator insofar as this relates to properties specifically belonging to the
"Estate."

It held that Primrose had a personality separate and distinct from the estate of the decedent and that the
probate court had no jurisdiction to apply the doctrine of piercing the corporate veil.

According to the CA, nowhere in the assailed orders of the probate court was it stated that its determination
of the title of the questioned properties was only for the purpose of determining whether such properties
ought to be included in the inventory. When the probate court applied the doctrine of "piercing," in effect, it
adjudicated with finality the ownership of the properties in favor of the Estate. The CA stated that RTC-Br. 9
had no jurisdiction to adjudicate ownership of a property claimed by another based on adverse title; and
that questions like this must be submitted to a court of general jurisdiction and not to a probate court.

The CA added that assuming that the probate court's determination on the issue of ownership was merely
intended to be provisional, Marty's contentions still had no merit. The properties, which she claimed to be
part of the estate of Rosario and over which she claimed co-ownership, comprised of real properties
registered under the Torrens system. As such, Primrose was considered the owner until the titles to those
properties were nullified in an appropriate ordinary action. The CA further stated that the RTC erroneously
relied on the order issued by the CFI Leyte in 1981, in the probate proceedings involving the estate of
Primo. Whatever determination the CFI made at the time regarding the title of the properties was merely
provisional, hence, not conclusive as to the ownership.

Motion to Partially Revoke the Writ of Execution (of January 14, 2009 orders)
due to above Court of Appeal’s decision:

By reason of the favorable decision by the CA, Remedios and Manuela filed their Motion to Partially Revoke
the Writ of Execution Enforcing the January 14, 2009 Order of the Honorable Court and Manifestation in
Compliance with the October 21, 2009 Order (​Ad Cautelam​), dated October 27, 2009.

In its Order, dated November 17, 2009, the RTC-Br. 6 (probate court) ​partially granted the motion as it
revoked:

1.] The power of the special administrator to oversee the day-to-day operations of Primrose.

2.] It also revoked the order with respect to Mercury Drug and Chowking, reasoning out that the said
establishments dealt with Primrose, which had a personality distinct and separate from the estate of the
decedent. In the said order, Atty. Blanche, nominated by oppositors Marty and Edwin, was appointed special
administrator to oversee the day-to-day operations of the estate.

However, the same order also upheld the January 14, 2009 Order, as to the conduct and inventory of all the
properties comprising the estate.

This order was not questioned or appealed by the parties.

Omnibus Motion by Marty together with her new counsel:

On September 24, 2010, or almost ten (10) months after the November 17, 2009 Order of the probate court
was issued, Marty, together with her new counsel, filed her Omnibus Motion, praying for the probate court
to:

1) order Remedios and Manuela to render an accounting of all the properties and assets comprising the
estate of the decedent;

2) deposit or consign all rental payments or other passive income derived from the properties comprising
the estate; and

3) prohibit the disbursement of funds comprising the estate of the decedent without formal motion and
approval by the probate court.
Ruling of the RTC-Br. 6:

In its January 20, 2011 Order, t​he RTC-Br. 6 granted Marty's Omnibus Motion.

Although it agreed with the October 16, 2009 CA Decision reversing the January 14, 2009 Order of the
RTC-Br. 9, nonetheless, it acknowledged the urgency and necessity of appointing a special administrator.

According to the probate court, considering that there was clear evidence of a significant decrease of
Rosario's shares in the outstanding capital stock of Primrose, prudence dictated that an inquiry into the
validity of the transfers should be made. A final determination of this matter would be outside the limited
jurisdiction of the probate court, but it was likewise settled that the power to institute an action for the
recovery of a property claimed to be part of the estate was normally lodged with the executor or
administrator. Thus, the probate court disposed:

WHEREFORE, for the reasons aforestated, and so as not to render moot any action that the special
administrator, or the regular administrator upon the latter's qualification and appointment, may deem
appropriate to take on the matter (i.e. Whether or not to institute in the name of the estate the appropriate
action for the recovery of the shares of stock), this Court hereby GRANTS Oppositor Marty's Omnibus
Motion, dated September 24, 2010, and thus hereby:

1. DIRECTS petitioners(Remedios and Mayor), either individually or jointly, to:

(a) RENDER AN ACCOUNTING of all the properties and assets comprising the estate of the decedent that
may have come into their possession; and,

(b) DEPOSIT OR CONSIGN all the rentals payments or such other ​passive incomes from the properties and
assets registered in the name of Primrose Development Corporation, including all income derived from the
Primrose Hotel and the lease contracts with Mercury Drug and Chowking Restaurant​, both within fifteen (15)
days from receipt of this Order;

2. DIRECTS the Special Administrator to take possession and charge of the properties comprising the
decedent's estate, especially those pertaining to the shareholding of the decedent in Primrose Development
Corporation, to determine whether or not action for the recovery of the shares of stock supposedly
transferred from the decedent to petitioners Remedios Tiu, Manuela Azucena Mayor should be instituted in
the name of the estate against the said transferees and to submit a Report on the foregoing matters to this
Court, within fifteen (15) days from receipt of this Order; and,

3. ORDERS that no funds comprising the estate of the decedent shall be disbursed without formal Motion
therefor, with the conformity of the Special Administrator, duly approved by this Court.

SO ORDERED. ​ cralawlawlibrcralawred

The partial motion for reconsideration of the above order filed by Remedios and Manuela was denied in the
other assailed order of the RTC�-Br. 6, dated June 10, 2011.

Court of Appeals, with respect to the above decision:

Dissatisfied, Remedios and Manuela availed of the special civil action of ​certiorari under Rule 65, and filed a
petition before the CA.

Action by the CA

The CA, however, in its October 5, 2011 Resolution, dismissed the same​ based on the following infirmities:

1) there was no proper proof of service of a copy of the petition on the respondents which was sent by
registered mail;

2) petitioners failed to indicate on the petition the material date when the motion for reconsideration was
filed;
3) the copy of the assailed order was not certified true and correct by the officer having custody of the
original copy; and
4) the serial number of the commission of the notary public, the province-city where he was commissioned,
the office address of the notary public and the roll of attorney's number were not properly indicated on the
verification and certification of non-forum shopping.

Remedios and Manuela ​moved for reconsideration of the assailed CA resolution, but to no avail, as the
appellate court denied the motion​ in its September 24, 2012 Resolution.

Hence, this petition before the Court, filed only by Manuela Mayor as Remedios had also passed
away.

Petition for injunctive relief:

The Court (Supreme court) ordered them to file their comments/replies. One of which is a motion by
Manuela for Issuance of Temporary Restraining Order and a writ of preliminary injunction, stated below:

On June 18, 2014, Manuela filed her Motion for Issuance of Temporary Restraining Order and
Writ of Preliminary Injunction on the ground that a flurry of orders had been issued by the
RTC-Br. 6 in the implementation of the assailed January 20, 2011 Order​, such as the Order, dated
May 27, 2013, wherein the probate court vaguely ordered "the inventory of the exact extent of the
'decedent's estate.'" Then another order was issued appointing an auditing firm to conduct an
inventory/audit of the Estate including the rentals and earnings derived from the lease of Mercury Drug and
Chowking Restaurant, as tenants of Primrose. According to petitioner Manuela, although an inventory of the
assets of the decedent was proper, the probate court ordered an inventory of the assets of Primrose, a
separate and distinct entity. Manuela asserts that it was clearly in error.

In her Supplement to the Motion for Issuance of Temporary Restraining Order and Writ of Preliminary
Injunction, dated June 17, 2013, Manuela informed the Court that the inventory and accounting of Primrose
would already commence on June 19, 2013.

Marty filed her Opposition, dated July 3, 2013, stating that the petition of Manuela had been rendered moot
and academic as the probate court had declared her as the sole heir of Rosario and appointed her
administrator of the estate. She argued that an injunctive relief would work injustice to the estate because
of the total assimilation by petitioner of the shareholdings of the decedent in Primrose and her share in the
corporation's income corresponding to her shareholdings.

Finding that the requisites for preliminary injunctive relief were present, the Court issued the TRO in favor of
Manuela on October 14, 2013. At the outset, the Court was convinced that the rights of Primrose
sought to be protected by the grant of injunctive relief were material and substantial and the
TRO was issued in order to prevent any irreparable damage to a corporate entity that could arise
from the conduct of an accounting by the court-appointed inventory.

Issues:

A.] Whether or not the consignment of all the rentals, payments, or such other passive incomes
from the properties and assets registered in the name of Primrose Development Corporation
should be included in the accounting of the “estate” of the late Rosario considering that it is a
Corporation with a separate and distinct personality.

Ruling:

No, the trial court ordering the consignment had no authority to deprive such corporation of its
possession and ownership of the property even if Rosario has shares therein. Hence, a
permanent injunction preventing the trial court from enforcing its January 20, 2011 and June 10,
2011 Orders​ ​is proper.

The Court now resolves the subject case by the issuance of a permanent injunction, as prayed for by
petitioner Manuela. This position is supported by law and jurisprudence, as follows:

First.​ Artificial persons include:


(1) a collection or succession of natural persons forming a corporation; and
(2) a collection of property to which the law attributes the capacity of having rights and duties.

This class of artificial persons is recognized only to a limited extent in our law. Example (of the second
artificial persons) is the estate of a bankrupt or deceased person.

From this pronouncement, it can be gleaned that the estate of the deceased person is a juridical person
separate and distinct from the person of the decedent and any other corporation. This status of an estate
comes about by operation of law. This is in consonance with the basic tenet under corporation law that a
corporation has a separate personality distinct from its stockholders and from other corporations to which it
may be connected.

Second. ​The doctrine of piercing the corporate veil has no relevant application in this case. Under
this doctrine, the court looks at the corporation as a mere collection of individuals or an aggregation of
persons undertaking business as a group, disregarding the separate juridical personality of the corporation
unifying the group. Another formulation of this doctrine is that when two business enterprises are owned,
conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights
of third parties, disregard the legal fiction that two corporations are distinct entities and treat them as
identical or as one and the same. The purpose behind piercing a corporation's identity is to remove the
barrier between the corporation and the persons comprising it to thwart the fraudulent and illegal schemes
of those who use the corporate personality as a shield for undertaking certain proscribed activities.

Here, instead of holding the decedent's interest in the corporation separately as a stockholder, the situation
was reversed. Instead, the probate court ordered the lessees of the corporation to remit rentals to the
estate's administrator without taking note of the fact that the decedent was not the absolute owner of
Primrose but only an owner of shares thereof. Mere ownership by a single stockholder or by another
corporation of all or nearly all of the capital stocks of a corporation is not of itself a sufficient reason for
disregarding the fiction of separate corporate personalities. Moreover, to disregard the separate juridical
personality of a corporation, the wrongdoing cannot be presumed, but must be clearly and convincingly
established.

Third. A probate court is not without limits in the determination of the scope of property covered in probate
proceedings. In a litany of cases, the Court had defined the parameters by which a probate court may
extend its probing arms in the determination of the question of title in probate proceedings. In Pastor, Jr. vs.
Court of Appeals,51 the Court explained that, as a rule, the question of ownership was an extraneous matter
which the probate court could not resolve with finality. Thus, for the purpose of determining whether a
certain property should, or should not, be included in the inventory of estate properties, the probate court
may pass upon the title thereto, but such determination is provisional, not conclusive, and is subject to the
final decision in a separate action to resolve title. It is a well-settled rule that a probate court or one in
charge of proceedings, whether testate or intestate, cannot adjudicate or determine title to properties
claimed to be part of the estate but which are equally claimed to belong to outside parties. It can only
determine whether they should, or should not, be included in the inventory or list of properties to be
overseen by the administrator. If there is no dispute, well and good; but if there is, then the parties, the
administrator and the opposing parties have to resort to an ordinary action for a final determination of the
conflicting claims of title because the probate court cannot do so.52

In this case, respondent Marty argues that the subject properties and the parcel of land on which these were
erected should be included in the inventory of Rosario's estate. More so, the arrears from the rental of these
properties were later on ordered to be remitted to the administrator of the estate grounded on the allegation
that Rosario had no other properties other than her interests in Primrose. To the Court's mind, this holding
of the probate court was in utter disregard of the undisputed fact the subject land is registered under the
Torrens system in the name of Primrose, a third person who may be prejudiced by the orders of the probate
court. In Valera vs. Inserto:53 the Court stated:

x x x, settled is the rule that a Court of First Instance (now Regional Trial Court), acting as a probate court,
exercises but limited jurisdiction, and thus has no power to take cognizance of and determine the issue of
title to property claimed by a third person adversely to the decedent, unless the claimant and all the other
parties having legal interest in the property consent, expressly or impliedly, to the submission of the
question to the probate court for adjudgment, or the interests of third persons are not thereby prejudiced,
the reason for the exception being that the question of whether or not a particular matter should be resolved
by the Court in the exercise of its general jurisdiction or of its limited jurisdiction as a special court (e.g.
probate, land registration, etc.), is in reality not a jurisdictional but in essence of procedural one, involving a
mode of practice which may be waived.

xxxx

x x x These considerations assume greater cogency where, as here, the Torrens title to the property is not in
the decedent's names but in others, a situation on which this Court has already had occasion to rule.54
[Emphasis and underscoring supplied]

Thus, the probate court should have recognized the incontestability accorded to the Torrens title of Primrose
over Marty's arguments of possible dissipation of properties. In fact, in the given setting, even evidence
purporting to support a claim of ownership has to yield to the incontestability of a Torrens title, until after
the same has been set aside in the manner indicated in the law itself. In other words, the existence of a
Torrens title may not be discounted as a mere incident in special proceedings for the settlement of the
estate of deceased persons. Put clearly, if a property covered by Torrens title is involved, "the presumptive
conclusiveness of such title should be given due weight, and in the absence of strong compelling evidence to
the contrary, the holder thereof should be considered as the owner of the property in controversy until his
title is nullified or modified in an appropriate ordinary action, particularly, when as in the case at bar,
possession of the property itself is in the persons named in the title."55

Additionally, Presidential Decree (P.D.) No. 152956 proscribes a collateral attack on a Torrens title:
Sec. 48. Certificate not subject to collateral attack. - A certificate of title shall not be subject to collateral
attack. It cannot be altered, modified or cancelled except in a direct proceeding in accordance with law.
In Cuizon vs. Ramolete,57 the property subject of the controversy was duly registered under the Torrens
system. To this, Court categorically stated:

Having been apprised of the fact that the property in question was in the possession of third parties and
more important, covered by a transfer certificate of title issued in the name of such third parties, the
respondent court should have denied the motion of the respondent administrator and excluded the property
in question from the inventory of the property of the estate. It had no authority to deprive such third
persons of their possession and ownership of the property

A perusal of the records of this case would show that that no compelling evidence was ever presented to
substantiate the position of Marty that Rosario and Primrose were one and the same, justifying the inclusion
of the latter's properties in the inventory of the decedent's properties. This has remained a vacant assertion.
At most, what Rosario owned were shares of stock in Primrose. In turn, this boldly underscores the fact that
Primrose is a separate and distinct personality from the estate of the decedent. Inasmuch as the real
properties included in the inventory of the estate of Rosario are in the possession of, and are registered in
the name of, Primrose, Marty's claims are bereft of any logical reason and conclusion to pierce the veil of
corporate fiction.

Fourth. The probate court in this case has not acquired jurisdiction over Primrose and its properties.
Piercing the veil of corporate entity applies to determination of liability not of jurisdiction; it is basically
applied only to determine established liability. It is not available to confer on the court a jurisdiction it has
not acquired, in the first place, over a party not impleaded in a case. This is so because the doctrine of
piercing the veil of corporate fiction comes to play only during the trial of the case after the court has
already acquired jurisdiction over the corporation. Hence, before this doctrine can be even applied, based on
the evidence presented, it is imperative that the court must first have jurisdiction over the corporation.

Hence, a corporation not impleaded in a suit cannot be subject to the court's process of piercing the veil of
its corporate fiction. Resultantly, any proceedings taken against the corporation and its properties would
infringe on its right to due process.

In the case at bench, the probate court applied the doctrine of piercing the corporate veil ratiocinating that
Rosario had no other properties that comprise her estate other than her shares in Primrose. Although the
probate court's intention to protect the decedent's shares of stock in Primrose from dissipation is laudable, it
is still.an error to order the corporation's tenants to remit their rental payments to the estate of Rosario.

Considering the above disquisition, the Court holds that a permanent and final injunction is in order in
accordance with Section 9, Rule 58 of the Rules of Court which provides that "[i]f after the trial of the action
it appears that the applicant is entitled to have the act or acts complained of permanently enjoined, the
court shall grant a final injunction perpetually restraining the party or person enjoined from the commission
or continuance of the act or acts or confirming the preliminary mandatory injunction." Undoubtedly,
Primrose stands to suffer an irreparable injury from the subject order of the probate court.

WHEREFORE​, the petition is ​GRANTED​. The Temporary Restraining Order, dated June 14, 2013, is hereby
made ​PERMANENT​, effective immediately. The Regional Trial Court, Branch 6, Tacloban City, is ​ENJOINED
from enforcing and implementing its January 20, 2011 and June 10, 2011 Orders, insofar as the corporate
properties of Primrose Development Corporation are concerned, to avert irreparable damage to a corporate
entity, separate and distinct from the Estate of Rosario Guy-Juco Villasin Casilan

Probate Proceedings
A probate proceeding may involve either formal or informal procedures. Traditionally, probate
proceedings were governed by formal procedures that required the probate court to hold hearings
and issue orders involving routine matters. Consequently,the legal costs of probating an estate
could be substantial. States that have adopted the UPC provisions on probate procedures allow
informal probate proceedings that remove the probate court from most stages of the process,
with the result that informal probate is cheaper and quicker than formal probate. Most small
estates benefit from an informal probate proceeding.

The probate process begins when the personal representative files with the clerk of the probate
court a copy of the death certificate along with the will and a petition to admit the will to probate
and to grant letters testamentary, which authorize himor her to distribute the estate. Although the
personal representative usually files the probate petition, it can be filed by any person who has a
pecuniary interest in the will. In states governed by the UPC, the personal representative must
elect whether to proceed with formal or informal probate at the time of filing. However, a probate
proceeding may be switched from informal to formal during the course of administration, if issues
so warrant.

In a formal probate proceeding, a hearing must be held to establish the death of the testator, the
residency of the decedent, the genuineness of the will, its conformance with statutory
requirements for its execution, and the competency of the testator at the time the will was made.
These requirements are usually fulfilled by the attesting witnesses who were present at the time
the will was made and who certify that it was properly executed. The number of attesting
witnesses is prescribed by law. If fewer than the required number witness a will, it will be declared
void, and the testator's property will pass according to the laws of descent and distribution.

When some or all of the witnesses to a will are unavailable, special steps are taken. If the required
witnesses have died before the testator, the person offering the will must offer proof of death, in
addition to evidence of the genuineness of the signatures and any other proof of execution
available. The UPC simplifies witness issues by permitting the admission of "self-authenticating"
wills. These wills contain a statement signed by the witnesses that attests to the competency of
the testator and other statutory requirements. Self-authentication relieves the witnesses of the
burden of appearing in court and the personal representative of costly procedures if the
witnesses are unavailable.

If no one objects to the will at the hearing, it will be admitted to probate.