II

G.R. No. L-26001            October 29, 1968

PHILIPPINE NATIONAL BANK, petitioner, 
vs.
THE COURT OF APPEALS and PHILIPPINE COMMERCIAL AND INDUSTRIAL
BANK, respondents.
Tomas Besa, Jose B. Galang and Juan C. Jimenez for petitioner.
San Juan, Africa & Benedicto for respondents.
CONCEPCION, C.J.:
The Philippine National Bank — hereinafter referred to as the PNB — seeks the review
by certiorari of a decision of the Court of Appeals, which affirmed that of the Court of First
Instance of Manila, dismissing plaintiff's complaint against the Philippine Commercial and
Industrial Bank — hereinafter referred to as the PCIB — for the recovery of P57,415.00.
A partial stipulation of facts entered into by the parties and the decision of the Court of
Appeals show that, on about January 15, 1962, one Augusto Lim deposited in his current
account with the PCIB branch at Padre Faura, Manila, GSIS Check No. 645915- B, in the
sum of P57,415.00, drawn against the PNB; that, following an established banking practice in
the Philippines, the check was, on the same date, forwarded, for clearing, through the
Central Bank, to the PNB, which did not return said check the next day, or at any other time,
but retained it and paid its amount to the PCIB, as well as debited it against the account of
the GSIS in the PNB; that, subsequently, or on January 31, 1962, upon demand from the
GSIS, said sum of P57,415.00 was re-credited to the latter's account, for the reason that the
signatures of its officers on the check were forged; and that, thereupon, or on February 2,
1962, the PNB demanded from the PCIB the refund of said sum, which the PCIB refused to
do. Hence, the present action against the PCIB, which was dismissed by the Court of First
Instance of Manila, whose decision was, in turn, affirmed by the Court of Appeals.
It is not disputed that the signatures of the General Manager and the Auditor of the GSIS on
the check, as drawer thereof, are forged; that the person named in the check as its payee
was one Mariano D. Pulido, who purportedly indorsed it to one Manuel Go; that the check
purports to have been indorsed by Manuel Go to Augusto Lim, who, in turn, deposited it with
the PCIB, on January 15, 1962; that, thereupon, the PCIB stamped the following on the back
of the check: "All prior indorsements and/or Lack of Endorsement Guaranteed, Philippine
Commercial and Industrial Bank," Padre Faura Branch, Manila; that, on the same date, the
PCIB sent the check to the PNB, for clearance, through the Central Bank; and that, over two
(2) months before, or on November 13, 1961, the GSIS had notified the PNB, which
acknowledged receipt of the notice, that said check had been lost, and, accordingly,
requested that its payment be stopped.
In its brief, the PNB maintains that the lower court erred: (1) in not finding the PCIB guilty of
negligence; (2) in not finding that the indorsements at the back of the check are forged; (3) in
not finding the PCIB liable to the PNB by virtue of the former's warranty on the back of the
check; (4) in not holding that "clearing" is not "acceptance", in contemplation of the
Negotiable Instruments law; (5) in not finding that, since the check had not been accepted by
the PNB, the latter is entitled to reimbursement therefor; and (6) in denying the PNB's right to
recover from the PCIB.
The first assignment of error will be discussed later, together with the last,with which it is
interrelated.
As regards the second assignment of error, the PNB argues that, since the signatures of the
drawer are forged, so must the signatures of the supposed indorsers be; but this conclusion
does not necessarily follow from said premise. Besides, there is absolutely no evidence, and
the PNB has not even tried to prove that the aforementioned indorsements are spurious.
Again, the PNB refunded the amount of the check to the GSIS, on account of the forgery in
the signatures, not of the indorsers or supposed indorsers, but of the officers of the GSIS as
drawer of the instrument. In other words, the question whether or not the indorsements have
been falsified is immaterial to the PNB's liability as a drawee, or to its right to recover from
the PCIB,1 for, as against the drawee, the indorsement of an intermediate bank does not
guarantee the signature of the drawer,2 since the forgery of the indorsement is notthe cause
of the loss.3
With respect to the warranty on the back of the check, to which the third assignment of error
refers, it should be noted that the PCIB thereby guaranteed "all prior indorsements," not the
authenticity of the signatures of the officers of the GSIS who signed on its behalf, because
the GSIS is not an indorser of the check, but its drawer.4 Said warranty is irrelevant,
therefore, to the PNB's alleged right to recover from the PCIB. It could have been availed of
by a subsequent indorsee5 or a holder in due course6 subsequent to the PCIB, but, the PNB
is neither.7 Indeed, upon payment by the PNB, as drawee, the check ceased to be a
negotiable instrument, and became a mere voucher or proof of payment.8
Referring to the fourth and fifth assignments of error, we must bear in mind that, in general,
"acceptance", in the sense in which this term is used in the Negotiable Instruments Law9 is
not required for checks, for the same are payable on demand.10 Indeed, "acceptance" and
"payment" are, within the purview of said Law, essentially different things, for the former is
"a promise to perform an act," whereas the latter is the "actual performance" thereof.11 In the
words of the Law,12 "the acceptance of a bill is the signification by the drawee of his assent to
the order of the drawer," which, in the case of checks, is the payment, on demand, of a given
sum of money. Upon the other hand, actual payment of the amount of a check implies not
only an assent to said order of the drawer and a recognition of the drawer's obligation to pay
the aforementioned sum, but, also, a compliance with such obligation.
Let us now consider the first and the last assignments of error. The PNB maintains that the
lower court erred in not finding that the PCIB had been guilty of negligence in not discovering
that the check was forged. Assuming that there had been such negligence on the part of the
PCIB, it is undeniable, however, that the PNB has, also, been negligent, with the particularity
that the PNB had been guilty of a greater degree of negligence, because it had a previous
and formal notice from the GSIS that the check had been lost, with the request that payment
thereof be stopped. Just as important, if not more important and decisive, is the fact that the
PNB's negligence was the main or proximate cause for the corresponding loss.
In this connection, it will be recalled that the PCIB did not cash the check upon its
presentation by Augusto Lim; that the latter had merely deposited it in his current account
with the PCIB; that, on the same day, the PCIB sent it, through the Central Bank, to the PNB,
for clearing; that the PNB did not return the check to the PCIB the next day or at any other
time; that said failure to return the check to the PCIB implied, under the current banking
practice, that the PNB considered the check good and would honor it; that, in fact, the PNB
honored the check and paid its amount to the PCIB; and that only then did the PCIB allow
Augusto Lim to draw said amount from his aforementioned current account.
Thus, by not returning the check to the PCIB, by thereby indicating that the PNB had found
nothing wrong with the check and would honor the same, and by actually paying its amount
to the PCIB, the PNB induced the latter, not only to believe that the check was genuine and
good in every respect, but, also, to pay its amount to Augusto Lim. In other words, the PNB
was the primary or proximate cause of the loss, and, hence, may not recover from the
PCIB.13
It is a well-settled maxim of law and equity that when one of two (2) innocent persons must
suffer by the wrongful act of a third person, the loss must be borne by the one whose
negligence was the proximate cause of the loss or who put it into the power of the third
person to perpetrate the wrong.14
Then, again, it has, likewise, been held that, where the collecting (PCIB) and the drawee
(PNB) banks are equally at fault, the court will leave the parties where it finds them.15
Lastly, Section 62 of Act No. 2031 provides:
The acceptor by accepting the instrument engages that he will pay it according to the tenor of
his acceptance; and admits:
(a) The existence of the drawer, the genuineness of his signature, and his capacity and
authority to draw the instrument; and
(b) The existence of the payee and his then capacity to indorse.
The prevailing view is that the same rule applies in the case of a drawee who pays a bill
without having previously accepted it.16
WHEREFORE, the decision appealed from is hereby affirmed, with costs against the
Philippine National Bank. It is so ordered.
Reyes, J.B.L., Dizon, Makalintal, Sanchez, Castro, Angeles, Fernando and Capistrano,
JJ., concur.
Zaldivar, J., took no part.

Footnotes
1
 First National Bank of Wichita Falls v. First National Bank of Borger, 37 S.W. (2d) 802.
2
 VI Banks & Banking, Zollmann, 378.
3
 First National Bank of Marshalltown v. Marshalltown State Bank, 77 N.W. 1045.
4
 First National Bank of Wichita Falls v. First National Bank of Borger, supra.
5
 American Hominy Co. v. Millikin National Bank, 273 F. 550, 556.
6
 Wells Fargo Bank & Union Trust Co. v. Bank of Italy, 4 P (2d) 781, 784-785.
7
 The PNB had previous notice of the infirmity of the check when it came into its possession.
Art. 52 (d), Act No. 2031.
8
 National Bank of Commerce of Seattle v. Seattle Nat. Bank, 187 P. 342, 346.
9
 Section 132, Act No. 2031.
10
 Sections 143 and 185, Act No. 2031; Phil. Nat. Bank v. Nat. City Bank of New York, 63
Phil. 711; I Morse on Banks and Banking, 6th ed. 898, 899; Wachtel v. Rosen, 249 N. Y. 386,
164 N.E. 326.
11
 First National Bank of Washington v. Whitman, 94 U.S. 343, 347, 24 L. ed. 229.
12
 Section 132 thereof.
13
 Marlin National Bank v. Reed, 164 S.W. (2d) 260; First National Bank of Wichita Falls v.
First National Bank of Borger, 37 S.W. (2d) 802. See, also, Commerce-Guardian Bank v.
Toledo Trust Co., 21 N.E. (2d) 173, 176; National Bank of Rolla v. First National Bank of
Salem, 125 S.W. 513, 516; Philippine National Bank v. National City Bank of NY, supra; VIII
Banks and Banking, Zollman, 421.
14
 Blondeau v. Nano, 61 Phil. 625, 631, 632.
15
 VI Banks and Banking by Zollman, 416.
16
 First National Bank of Portland v. United States National Bank of Portland, 197 P. 547;
Fidelity & Casualty Co. of New York v. Planenscheck, 227 NW 387; US v. Bank of NY,
National Banking Association, 219 F. 648; US Fidelity & Guaranty Co. v. First Nat. Bank of
Omaha, 260 NW 798; First National Bank of Cottage Grove v. Bank of Cottage Grove, 117 F.
293.

G.R. No. L-8883             July 14, 1959

ALFREDO M. VELAYO, ETC., plaintiff, 
vs.
SHELL COMPANY OF THE PHILIPPINES ISLANDS, LTD., defendant-appellee.
ALFONSO Z. SYCIP, ET. AL., intervenors-appellants.
Sycip, Quisumbing, Salazar and Associates for appellants.
Ozaeta, Lichauco and Picazo for appellee.
BAUTISTA ANGELO, J.:
On December 17, 1948, Alfredo M. Velayo as assignees of the insolvent Commercial
Airlines, Inc., instituted an action against Shell Company of the Philippine Islands, Ltd., in the
Court of First Instance of Manila for injunction and damages (Civil Case No. 6966). On
October 26, 1951, a complaint in intervention was filed by Alfonso Sycip, Paul Sycip, and
Yek Trading Corporation, and on November 14, 1951, by Mabasa & Company.
After trial wherein plaintiff presented evidence in his behalf, but none in behalf of intervenors,
the court rendered decision dismissing plaintiff's complaint as well as those filed by the
intervenors. On March 31, 1954, counsel for plaintiff filed a notice of appeal, appeal bond,
and record on appeal in behalf only of plaintiff even if they also represent the intervenors,
which in due time were approved, the Court instructing its clerk to forward the record on
appeal to the Supreme Court together with all the evidence presented in the case. This
instruction was actually complied with.
On August 31, 1954, the Deputy Clerk of the Supreme Court notified counsel of plaintiff that
the record as well as the evidence have already been received and that they should file their
brief within 45 days from receipt of the notice. On November 2, 1954, counsel filed their brief
for appellants. On November 6, 1954, or 7 months after the judgment had become final as
against the intervenors, and 4 days after counsel for appellants had submitted the latter's
brief, counsel for intervenors filed with the Supreme Court a petition for correction of the
record on appeal in order to enable them to insert therein the names of the intervenors as
appellants, the petition being based, among others, on the ground that the omission of the
names of the intervenors in said record on appeal was due to the mistake of the typist who
prepared it while the attorney in charge was on vacation. The petition was vigorously
opposed by counsel for defendant, contending that the same would serve no purpose,
whatsoever considering that the intervenors had not presented any evidence in support of
their claim, aside from the fact that the alleged absence of the attorney of the intervenors
cannot constitute a justification for the alleged omission of the intervenors as appellants. On
November 12, 1954, the Court denied the petition. Counsel intervenors moved for a
reconsideration of the order, but the same was denied.
On November 19, 1954, counsel for intervenors filed with the lower court a petition for relief
under Rule 38 of the Rules of Court, wherein he reiterated the same grounds they alleged in
the petition for correction filed by them in the Supreme Court, which petition was denied on
November 27, 1954, for having been filed outside the reglementary period fixed in said Rule
38. Counsel filed a motion for reconsideration, which was again denied, the Court stating that
"no judgment or order has been rendered, nor any other proceeding taken by this Court on
the right of the intervenors to appeal."
On December 20, 1954, counsel filed once more a motion to amend the record on appeal
based on grounds identical with those alleged in the petition for correction filed before the
Supreme Court. On December 27, 1954, the lower court denied the motion. On January 6,
1955, counsel filed a petition for relief from this last order entered on December 27, 1954, to
which counsel for defendant filed an opposition. On February 5, 1955, hearing was had on
both the petition for relief and the opposition, and on February 9, 1955, the petition was
denied on the ground that the case is already before the Supreme Court on appeal. It is from
this order that the counsel for intervenors has taken the appeal now before us.
The instant appeal has no merit.
To begin with, the only remedy which appellants now seek in this appeal is the inclusion of
the intervenors as appellants in the appeal from the decision rendered in the main case, but
this remedy has already been denied twice by this Court, first, in its resolution of November
12, 1954 denying their petition for correction of the record on appeal, and, second, in denying
their motion for reconsideration of said resolution. It should be noted that the grounds relied
upon in this appeal are the same grounds alleged in said petition for correction.
In the second place, the intervenors have no right or reason to appeal from the decision in
the main case, it appearing that they did not introduce any evidence during the trial in
support of their complaint, which shows that their appeal would be merely pro-forma. And, in
any event, they made the attempt to amend the record on appeal seven (7) months after the
decision had become final against them.
In the third place, the intervenors have no right or reason to file a petition for relief under Rule
38 of the Rules of Court from the order of the lower court issued on December 27, 1954, for
the reason that the same was entered upon a motion filed by them. Indeed they cannot
reasonably assert that the order was entered against them through fraud, accident, mistake,
or negligence. The fraud mentioned in Rule 38 is the fraud committed by the adverse party
and certainly the same cannot be attributed to the Court.
Finally, it appears that the main case has already been decided by this Court on the merits
on October 31, 1956, reversing the decision of the lower court and awarding damages to
plaintiff, which apparently is the very purpose which the intervenors seek to accomplish in
joining the appeal as co-appellants. This appeal, therefore, has already become moot.
Wherefore, the order appealed from is affirmed, with costs against appellants.
Paras, C.J., Bengzon, Padilla, Montemayor, Labrador, Concepcion, Endencia and Barrera,
JJ., concur.

January 20, 2016

G.R. No. 171303
ELIZABETH L. DIAZ, Petitioner, 
vs.
GEORGINA R. EN CANTO, ERNESTO G. TABUJARA, GEMINO H. ABAD and
UNIVERSITY OF THE PHILIPPINES, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Court, as
amended, which seeks to reverse and set aside the April 28, 2005 Decision1 and January 20,
2006 Resolution2 of the Court of Appeals in CA-G.R. CV No. 55165,3 which reversed the
April 17, 1996 Decision4 and September 1 7, 1996 Order5 of the Regional Trial Court (RTC),
Branch 71, Pasig City, in Civil Case No. 58397.
The undisputed facts as narrated by the Court of Appeals are as follows:
Plaintiff-appellant [Elizabeth L. Diaz] has been in the service of [the University of the
Philippines] U.P. since 1963. In 1987, she was an associate professor in the College of Mass
Communication (CMC). During the second semester for Academic Year (A Y) 1987-1988,
she was a full time member of the faculty and taught 12 units on full load. After 2 to 3 weeks
of teaching, she applied for sick leave effective November 23, 1987 until March 1, 1988. She
returned on March 2, 1988 and submitted a Report for Duty Form.
On May 3, 1988, Diaz filed a letter-application directly with U.P.'s "Office of the President
(Abueva) for sabbatical leave with pay for one (1) year effective June 1988 to May 1989, for
"rest, renewal and study." Cecilia Lazaro, Chair of the Broadcast Department, initially
recommended to CMC Dean Encanto that Diaz's sabbatical application be granted. After
they discussed the options available to the CMC, Lazaro, on May 10, 1988, recommended
instead that Diaz be granted any leave of absence she may be qualified for. In her May 2,
1988 letter, Diaz indicated her unwillingness to teach. Considering the CMC's experience
with Diaz who dropped her courses in the previous semester, Lazaro deleted Diaz's name in
the final schedule of classes for the 1st semester of A Y 1988-89 beginning June 6, 1988.
Incidentally, Diaz received her salary for June 1988, indicating that her sabbatical might be
approved.
Thereafter, Encanto referred Diaz's sabbatical application to the Secretary of U.P.,
recommending its denial. When requested by (Chancellor) Tabujara, Encanto transmitted to
the former a Reference Slip together with her comments thereon. Meanwhile, Encanto
requested Ermelina Kalagayan to hold Diaz's salary effective July 1, 1988 until further notice
considering that her sabbatical application has not yet been approved and that she did not
teach that semester. Consequently, Diaz's name was deleted in the payroll from September
1988 to January 1989.
On July 4, 1988, Tabujara recommended instead that Diaz be granted a leave without pay in
order to enable the CMC to hire a substitute. The next day, the U.P.'s Secretary referred to
Abad, VicePresident (VP) for Academic Affairs, the fact of denial of such sabbatical request,
for his own comment/recommendation to the U.P. President. Meantime, Diaz confessed her
problems to Abad. On July 8, 1988, Abad returned the Reference Slip indicating therein that
Diaz had promised him earlier "to put down in writing, from her point of view, the historical
backdrop as it were to the latest denial of her sabbatical leave." With comments, Abad then
referred the matter to the U .P. President.
Pursuant to Administrative Order No. 42 issued by the U.P. President, the Academic Policy
Coordinating Committee (APCC), on July 21, 1988, reviewed the case of Diaz. When
reminded by Abad, Diaz again promised to give the background information.
On Diaz's request to teach for that semester, AY 1988-89, the Vice Chancellor for Academic
Affairs, Edgardo Pacheco, and the HRDO Director, Atty. Pio Frago, instructed Encanto that
"Until Prof. Diaz officially reports for duty, accomplishes the Certificate of Report for Duty,
and the Dean of CMC confirms her date of actual report for duty, she is considered absent
without official leave (AWOL) for the University."
On November 8, 1988, Abad, then as OIC, issued a Memorandum to Diaz to confirm as valid
Encanto' s reason of shortage of teaching staff in denying her sabbatical. Later, he also
informed Diaz of her lack of service during the first semester of A Y 1988-89, hence, she is
not entitled to be paid and asked her to clarify her status of being on leave without pay.
[While Diaz was able to teach during the second semester of AY 1988-89, she was not able
to claim her salaries for her refusal to submit the Report for Duty Form.6 She received her
salaries for June to July 15, 1989, but could no longer claim her salary after July 15, 1989,
when Encanto reminded the University Cashier, in a letter dated July 26, 1989,7 that Diaz
had to "accomplish the Report for Duty Form to entitle her to salaries and make official her
return to the service of the University."8 Diaz's name was subsequently included in the payroll
starting July 1990, when she submitted a Report for Duty after her return from compulsory
summer leave.9]
xxxx
In the meantime, on January 3, 1989, Diaz filed a complaint with the Office of the
Ombudsman (OMB-00-89-0049), against Gemino H. Abad, Ernesto G. Tabujara and
Georgina R. Encanto, all officials of the University of the Philippines, for the alleged violation
of Section 3(e) of R.A. 3019, involving the legality of a Report for Duty Form as a prerequisite
to the payment of her salary.
On May 4, 1989, the Ombudsman dismissed the said complaint and ruled, inter alia:
Considering that Prof. Diaz was rightfully considered on leave without pay during the first
semester of A Y 1988-1989, to make official her return to the service of the University, it is
advised that she accomplish the Report for Duty Form which will then be the basis to
establish the date of her actual return to the service. However, if possible, the University
authorities can perhaps dispense with the requirement and pay her salaries for actual
services rendered from November 3, 1988.
Diaz's initial Petition for Certiorari in the Supreme Court (G.R. No. 88834) assailing the
above-quoted Ombudsman's ruling was subsequently dismissed. She filed another Petition
(G.R. No. 89207) raising exactly the same issued found in G.R. No. 88834.
Meanwhile, on July 18, 1989, Diaz instituted a complaint against the U.P., Abueva, Encanto,
Tabujara and Abad with the Regional Trial Court, Pasig, Metro Manila praying that the latter
be adjudged, jointly and severally to pay her damages. She claimed, among others, that
[respondents] conspired together as joint tortfeasors, in not paying her salaries from July 1,
1988 in the first semester of academic year 1988-89, for the entire period when her
sabbatical application was left unresolved, as well as the salaries she earned from teaching
in the second semester from November 1988 to May 1989. She likewise claimed moral and
exemplary damages and attorney's fees.
On August 31, 1989, the Supreme Court En Banc dismissed Diaz's Petition in G.R. No.
89207, viz.:
It is noted that the Ombudsman found no manifest partiality, evident bad faith, or gross
inexcusable negligence on the part of the private respondents in denying the application for
sabbatical leave of petitioner (Diaz) and in requiring her to fill up a Report for Duty Form as a
requisite for her entitlement to salary.
To the petitioner's contentions, the Ombudsman observed, among others, the following: that,
the denial of her sabbatical leave application was due to the exigencies of the service; that
petitioner was not given a teaching assignment for the first semester of A Y 1988-1989,
because she did not want to teach then; that the delay in action on her leave application was
due to petitioner's own fault for not following the usual procedures in the processing of her
application; and that there is no malice on the part of the private respondents in requiring
petitioner to accomplish the Report for Duty Form which is the basis of the date of her actual
return to the service.10 (Citations omitted.)
In a Decision dated April 1 7, 1996, the R TC ruled in favor of petitioner Diaz, the dispositive
portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants:
1. Ordering defendants, except Abueva, to pay plaintiff, jointly and severally, the amount of
P133,665.50 representing the total unpaid salaries from July 1, 1988 to May 31, 1989 and
from July 16, 1989 to May 31, 1990 to be covered by corresponding certificate of service,
with legal rate of interest from the date of this Decision until its full payment.
2. Ordering defendants, except the University and Abueva, to pay plaintiff, jointly and
severally, the amount of P300,000.00 as moral damages.
3. Ordering defendants, except the University and Abueva, to pay plaintiff, jointly and
severally, the amount of P60,000.00 as exemplary damages.
4. Ordering defendants, except the University and Abueva, to pay plaintiff, jointly and
severally, the reduced amount of PS0,000.00 as and by way of attorney's fees.
5. Costs of suit.
The counterclaims filed by defendant Tabujara are DISMISSED.11
The RTC, ruling that a sabbatical leave is not a right but a privilege, held that petitioner Diaz
was entitled to such privilege and found that the delay in the_resolution of her application
was unreasonable and unconscionable.
However, on September 17, 1996, the RTC, in denying the Motions for Reconsideration of
the respondents in said case, also amended its earlier decision by absolving respondent
Encanto from any liability, to wit:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants:
1. Ordering defendants, except Abueva and Encanto, to pay plaintiff, jointly and severally,
the amount of P133,665.50 representing the total unpaid salaries from July 1, 1988 to May
31, 1989 and from July 16, 1989 to May 31, 1990 to be covered by corresponding certificate
of service, with legal rate of interest from the date of this Decision until its full payment.
2. Ordering defendants, except the University, Abueva and Encanto, to pay plaintiff, jointly
and severally, the amount of P300,000.00 as moral damages.
3. Ordering defendants, except the University, Abueva and Encanto, to pay plaintiff, jointly
and severally, the amount of P60,000.00 as exemplary damages.
4. Ordering defendants, except University, Abueva and Encanto, to pay plaintiff, jointly and
severally, the reduced amount of P50,000.00 as and by way of attorney's fees.
5. Costs of suit.
The counterclaims filed by defendant Tabujara are DISMISSED.12
The RTC dismissed the claim of petitioner Diaz against respondent Encanto on the ground
that her function was purely recommendatory in nature. It held that she was not instrumental
in the unreasonable and unconscionable delay in the resolution of petitioner Diaz's sabbatical
application as she transmitted her recommendation to Abueva within eighteen days from her
receipt of such application.13
Petitioner Diaz14 and respondents Tabujara,15 U.P., Abad16 and even Encanto17 appealed the
RTC's ruling to the Court of Appeals.
As respondent Encanto was absolved of liability by the R TC in its September 1 7, 1996
Order, the Court of Appeals admitted her Brief,18 as an incorporation to the other
respondents' Brief,19 and as a comment on petitioner Diaz's appeal.20
The respondents mainly argued that the R TC erred in holding them liable for damages
despite the absence of bad faith on their part, as held by both the Ombudsman in OMB-00-
89-0049 and the Supreme Court in G.R. No. 89207.
Petitioner Diaz, on the other hand, questioned the reversal of the R TC ruling only with
respect to the liability of respondent Encanto, in a lone assignment of error, viz.:
THE LOWER COURT GRAVELY ERRED IN REVERSING ITS ORIGINAL DECISION WITH
REGARD TO PRINCIPAL DEFENDANT GEORGINA R. ENCANTO BY ABSOLVING HER
OF LIABILITY FOR DAMAGES TO PLAINTIFF-APPELLANT ELIZABETH L. DIAZ
WITHOUT ALTERING IN ANY MATERIAL RESPECT WHATSOEVER THE FINDINGS OF
FACT IN THE ORIGINAL DECISION SHOWING CLEARLY THE RESPONSIBILITY OF
DEFENDANT ENCANTO FOR (I) THE WRONGFUL DISAPPROVAL OF PLAINTIFF'S
SABBATICAL APPLICATION; (II) THE UNJUST DEPRIVATION OF SALARIES DUE THE
PLAINTIFF FOR ALMOST ONE WHOLE SEMESTER DURING WHICH HER
SABBATICAL APPLICATION REMAINED UNRESOLVED; AND (III) THE WRONGFUL
WITHHOLDING OF PLAINTIFF'S EARNED SALARIES IN THE THREE SUCCEEDING
SEMESTERS DURING WHICH THE PLAINTIFF TAUGHT WITHOUT BEING PAID. 21
Ruling of the Court of Appeals
The Court of Appeals trimmed down the issue to whether or not respondents U.P., Tabujara
and Abad were negligent or acted in bad faith in denying petitioner Diaz's application for
sabbatical leave and in withholding her salaries. In its Decision promulgated on April 28,
2005, it effectively reversed the decision of the R TC, viz.:
WHEREFORE, the appealed Decision is REVERSED and SET ASIDE and a NEW
JUDGMENT is RENDERED, as follows: (1) defendant-appellant University of the Philippines,
through its appropriate officials, is DIRECTED to pay plaintiff-appellant Elizabeth Diaz the
sum of Twenty-One Thousand, Eight Hundred Seventy-Nine and 64/100 (P21,879.64) as
unpaid salaries and allowances, and (2) the sums awarded as moral and exemplary
damages and attorney's fees are hereby DELETED. This is without prejudice to the
enforcement of valid rules and regulations of the University of the Philippines pertaining to
Diaz's employment status.22
The Court of Appeals found neither negligence nor bad faith on the part of the respondents in
their denial of petitioner Diaz's sabbatical leave application and in withholding her salaries.
The Court of Appeals emphasized that a sabbatical leave is not a right which could be
demanded at will, even by petitioner Diaz who has been a veteran professor of 24 years at
U.P. Moreover, the Court of Appeals said that the eventual denial of her sabbatical leave
application was not actionable in view of the fact that (i) it would be unfair to impute
negligence to respondents in the regular discharge of their functions; and (ii) assuming that
there was delay in the resolution of her application, she herself caused such delay.23
The Court of Appeals also held that petitioner Diaz's own recalcitrance and defiance to
comply with certain documentary requirements was the reason her salaries were withheld.24
Petitioner Diaz filed a Motion for Reconsideration to the aforementioned decision, which was
subsequently denied for lack of merit in a Resolution dated January 20, 2006.
Issues
Undaunted, petitioner Diaz is again before this Court, with the following Assignments of
Error:
FIRST ASSIGNMENT OF ERROR
WITHOUT DISTURBING THE FINDINGS OF FACT OF. THE TRIAL COURT BASED ON
OVERWHELMING EVIDENCE REVEALING THE COMMISSION BY RESPONDENTS OF
THE TORTIOUS ACTS COMPLAINED OF BY PETITIONER IN DENYING HER
SABBATICAL LEA VE, THE COURT OF APPEALS GRIEVOUSLY ERRED IN IGNORING
THOSE FINDINGS AND ADOPTING AND TREATING AS VALID THE FLIMSY EXCUSES
OF RESPONDENTS TO A VOID THE LEGAL CONSEQUENCES OF THEIR ACTS.
SECOND ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED IN HOLDING CONTRARY TO THE EVIDENCE ON
RECORD, THAT "THERE WAS JUDICIOUS EXERCISE" BY RESPONDENTS "OF THEIR
DISCRETIONARY POWER WITH RESPECT TO THE DENIAL OF THE SUBJECT
SABBATICAL LEAVE."
THIRD ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED IN TREATING AS LAWFUL THE WITHHOLDING OF
PETITIONER'S SALARIES, CONTRARY TO THE EVIDENCE ON RECORD.
FOURTH ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED IN CONCLUDING, CONTRARY TO THE EVIDENCE
ON RECORD, THAT PETITIONER "FAILED TO SHOW BY A PREPONDERANCE OF
EVIDENCE THE NEGLIGENCE OF RESPONDENTS SO AS TO BE ENTITLED TO THE
DAMAGES SOUGHT."
FIFTH ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED IN NOT CORRECTLY COMPUTING THE SUM OF
PETITIONER'S UNPAID AND EARNED SALARIES, IN UTTER DISREGARD OF THE
EVIDENCE ON RECORD.
SIXTH ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED IN NOT FINDING, CONTRARY TO THE EVIDENCE
ON RECORD, THAT RESPONDENTS EN CANTO, TABUJARA AND ABAD ARE JOINTLY
AND SEVERALLY LIABLE TO PETITIONER FOR ACTUAL, MORAL AND EXEMPLARY
DAMAGES AS JOINT TORTFEASORS UNDER THE LAW.25
The issue in this case boils down to whether or not the respondents acted in bad faith when
they resolved petitioner Diaz's application for sabbatical leave and withheld her salaries.
Ruling of the Court
The resolution of this case hinges on the question of bad faith on the part of the respondents
in denying petitioner Diaz's sabbatical leave application and withholding of her salaries. Bad
faith, however, is a question of fact and is evidentiary.26 Thus, contrary to petitioner Diaz's
belief that " [ w ]hat is involved in this stage of the case is the legal interpretation or the legal
consequence of the material facts of this case," the resolution of the issue at hand involves a
question of fact, which the respondents rightly assert, is not within the province of a Rule 45
petition.27Nonetheless, the Court makes an exception in this case especially so that both the
RTC and the Court of Appeals have the same findings of fact, but they arrived at different
conclusions.28
Application for Sabbatical Leave
Petitioner Diaz's complaint29 for recovery of damages before the RTC was based on the
alleged bad faith of the respondents in denying her application for sabbatical leave vis-a-
vis Articles 19 and 20 of the Civil Code.30
Articles 19 and 20 read as follows:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith.
Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another,
shall indemnify the latter for the same.
Article 19 of the Civil Code "prescribes a 'primordial limitation on all rights' by setting certain
standards that must be observed in the exercise thereof."31 Abuse of right under Article 19
exists when the following elements are present: (1) there is a legal right or duty; (2) which is
exercised in bad faith; (3) for the sole intent of prejudicing or injuring another.32
This Court, expounding on the concept of bad faith under Article 19, held:
Malice or bad faith is at the core of Article 19 of the Civil Code. Good faith refers to the state
of mind which is manifested by the acts of the individual concerned. It consists of the
intention to abstain from taking an unconscionable and unscrupulous advantage of another.
It is presumed. Thus, he who alleges bad faith has the duty to prove the same. Bad faith
does not simply connote bad judgment or simple negligence; it involves a dishonest purpose
or some moral obloquy and conscious doing of a wrong, a breach of known duty due to some
motives or interest or ill will that partakes of the nature of fraud. Malice connotes ill will or
spite and speaks not in response to duty. It implies an intention to do ulterior and unjustifiable
harm. Malice is bad faith or bad motive.33(Citations omitted.)
Undoubtedly, the respondents had a duty to resolve petitioner Diaz's sabbatical leave
application. The crucial question is if they did so with the intention of prejudicing or injuring
petitioner Diaz.
We hold in the negative.
There is no dispute, and both the RTC and the Court of Appeals agree, that the grant of a
sabbatical leave is not a matter of right, but a privilege. Moreover, the issue of whether or not
the respondents acted in bad faith when they denied petitioner Diaz's application for
sabbatical leave has been answered several times, in separate jurisdictions.
On May 4, 1989, the Ombudsman issued a Resolution34 in Case No. OMB-0-89-0049 on the
complaint filed by petitioner Diaz against respondents Encanto, Tabujara, and Abad for
violation of Section 3(e) of Republic Act No. 3019, recommending the dismissal of the
complaint for lack of merit. It found no manifest partiality, evident bad faith, or gross
inexcusable negligence on the part of the respondents in their denial of petitioner Diaz's
application for sabbatical leave and in requiring her to accomplish a Report for Duty form as
a prerequisite for her entitlement to salary.
Petitioner Diaz protested the outcome of this resolution by filing a special civil action
for certiorari with this Court, on two occasions. When G.R. No. 88834 was dismissed for non-
compliance with Circular No. 1-88,35 petitioner Diaz re-filed her petition, raising exactly the
same issues, and this was docketed as G.R. No. 89207.36
On August 31, 1989, this Court issued a Resolution,37 dismissing petitioner Diaz's petition in
G.R. No. 89207. This Court noted the Ombudsman's findings and observations and found
them to be supported by substantial evidence.
On April 28, 2005, the Court of Appeals had the same findings and held that the denial of
petitioner Diaz's application for sabbatical leave was "a collegial decision based on UP. 's
established rules, the grant of which is subject to the exigencies of the service, like acute
shortage in teaching staff" It added that "the UP. officials' eventual denial of [Diaz's}
application is not actionable xx x it is unfair to impute negligence to [respondents] in the
regular discharge of their official functions. "38
The Ombudsman and all three courts, starting from the R TC to this Court, have already
established that a sabbatical leave is not a right and therefore petitioner Diaz cannot demand
its grant. It does not matter that there was only one reason for the denial of her application,
as the approving authorities found that such reason was enough. Moreover, not only the
Court of Appeals but also the Ombudsman, and this Court, have ruled that the respondents
did not act in bad faith when petitioner Diaz's sabbatical leave application was denied. Those
three separate rulings verily must be given great weight in the case at bar.
The Court does not find any reason to disregard those findings, especially when our own
perusal of the evidence showed no traces of bad faith or malice in the respondents' denial of
petitioner Diaz's application for sabbatical leave. They processed her application in
accordance with their usual procedure - with more leeway, in fact, since petitioner Diaz was
given the chance to support her application when she was asked to submit a historical
background; and the denial was based on the recommendation of respondent Encanto, who
was in the best position to know whether petitioner Diaz's application should be granted or
not.
While the RTC declared that petitioner Diaz should have been granted a sabbatical leave, it
is important to note that the RTC awarded damages to petitioner Diaz merely for the
unreasonable and unconscionable delay in the resolution of her sabbatical leave
application,39 and not its denial per se. Thus, petitioner Diaz's entitlement to a sabbatical
leave should no longer be an issue in this case. This is supported by petitioner Diaz's own
action when she did not move for the reconsideration of the April 17, 1996 Decision of the
RTC for awarding her damages due only to the delay in the resolution of her sabbatical
leave application and not for its denial; and more so by the prayer in her petition to this Court
wherein she asked that the April 17, 1996 Decision of the RTC be "reinstated and affirmed in
toto."40
Nevertheless, on the question of whether or not there was bad faith in the delay of the
resolution of petitioner Diaz's sabbatical leave application, the Court still rules in the negative.
"It is an elementary rule in this jurisdiction that good faith is presumed and that the burden of
proving bad faith rests upon the party alleging the same."41 Petitioner Diaz has failed to prove
bad faith on the part of the respondents. There is nothing in the records to show that the
respondents purposely delayed the resolution of her application to prejudice and injure her.
She has not even shown that the delay of six months in resolving a sabbatical leave
application has never happened prior to her case. On the contrary, any delay that occurred
was due to the fact that petitioner Diaz's application for sabbatical leave did not follow the
usual procedure; hence, the processing of said application took time.42
In petitioner Diaz's petition, she criticized the Court of Appeals for imputing the cause of
delay to her, arguing that as the requirement that a sabbatical leave application be filed at
least one semester before its intended date of effectivity was only imposed in 1990, long
after she had filed hers in 1988.43 But, precisely, this rule may have been imposed by U.P. to
address any untoward delays and to likewise provide a time frame for the approving
authorities in resolving sabbatical leave applications.
This Court understands petitioner Diaz's frustration, but she cannot keep on arguing that the
facts, as established, and which she herself does not dispute, had been misappreciated.in
different occasions.
Petitioner Diaz's Withheld Salaries
Petitioner Diaz is entitled to her withheld salaries from July 1, 1988 to October 31, 1988, and
from November 1, 1988 to May 31, 1989, and July 16, 1989 to May 31, 1990, upon
submission of the required documents.
The denial of petitioner Diaz's salaries during the first semester of Academic Year (AY) 1988-
1989 was due to the fact that she did not teach that semester. But when respondent Lazaro
removed petitioner Diaz's name from the final schedule of teaching assignments in CMC for
the first semester of AY 1988-89, it was without petitioner Diaz's prior knowledge, as
admitted by respondent Lazaro herself, to wit:
ATTY. DIAZ: Now, did Prof. Diaz ask you to remove her from [the] schedule of classes?
LAZARO: I did it.
Q: Because you said you did it on your own?
A: Yes.
xxxx
Q: She did not [ask] you?
A: No.44
The Court, however, observes that respondent Lazaro, in so doing, did not act in bad faith as
she expected petitioner Diaz's application for leave, of whatever nature, to be granted. As
such, she did not want Diaz to have to drop the classes she was already handling once her
sabbatical leave was approved, as was the case the semester before, when petitioner Diaz
dropped her classes, three weeks into the start of the semester, when her application for sick
leave was approved, viz.:
ATTY. GUNO: You mentioned a while ago that you deleted the name of Professor Diaz from
this final schedule of classes.1âwphi1 Why did you delete it?
LAZARO: I presumed in good faith that based on the letter she sent which was routed to me
where she stated she could no longer be efficient and effective as a teacher and she was
suffering from fatigue and that she could no longer work under those circumstances, I felt, as
a gesture of sympathy to her that this should be granted suggesting that she be given a
leave of absence of whatever kind she was qualified for and based on my previous
experience on the second semester where two to three weeks into the course she dropped
her courses, I did not want that to happen again.45
ATTY. GUNO: You also testified that because of the application for sabbatical leave and the
reasons she gave in that letter, you deleted her name in the final list of class schedule for
school year 1988-89 first semester?
LAZARO: Yes.
Q: Why did you delete her name, will you tell the Court?
A: She had applied for sabbatical leave for the whole year of 1988-89 and based on the
experience of her sick leave during the previous semester which was the second semester of
the previous school year where three (3) weeks into classes she filed for a sick leave and did
not teach, based on that experience, I did not include her name in the class list because the
same thing could happen again.46
While petitioner Diaz was not consulted about the removal of her name from the class
schedule, she did not contest such upon the belief that her application for sabbatical leave
would be approved, as in fact, she was given her salary in June 1988. As such, this Court
believes, in the interest of equity and fairness, that petitioner Diaz should be entitled to her
salary during the semester when her name was dropped from the final list of schedule of
classes, without her knowledge and consent, and while action on her application for
sabbatical leave was still pending.47
On the matter of her salaries from the second semester of A Y 1988-89 up until A Y 1989-
1990, the respondents legally withheld such, as found by the Ombudsman and the Court of
Appeals for petitioner Diaz's own refusal to comply with the documentary requirements of
U.P. Even the RTC, in its Omnibus Order of January 12, 1990, denied petitioner Diaz's
petition for mandatory injunction upon the finding that the Report for Duty Form required of
her is a basic and standard requirement that is asked from all employees of U.P. The RTC
held:
It is therefore clear that the acts sought to be enjoined [by Diaz] are in fact pursuant to the
proper observance of administrative or internal rules of the University. This Court
sympathizes with [Diaz] for not being able to receive her salaries after July 15, 1989.
However, such predicament cannot be outrightly attributable to the defendants, as their
withholding of her salaries appears to be in accordance with existing University regulations.
Apart from such reasons, this Court believes that petitioner Diaz failed to show why she
should be spared from the Report for Duty requirement, which remains a standard practice
even in other offices or institutions. To be entitled to an injunctive writ, one must show an
unquestionable right and/or blatant violation of said right to be entitled to its issuance.48
But it cannot be denied that during the periods of November 1, 1988 to May 31, 1988 and
July 16, 1989 to May 31, 1990, petitioner Diaz rendered service to U.P. for which she should
be compensated.
Given the foregoing, petitioner Diaz should be paid, as the RTC had computed, her salaries
from July l, 1988 to October 1988, the semester when petitioner Diaz's name was dropped
from the final list of schedule of classes, without her prior knowledge and consent; and for
the periods of November 1, 1988 to May 31, 1989 and July 16, 1989 to May 31, 1990, for
the work she rendered during said periods, but upon petitioner Diaz's submission of
the documents required by U.P.
No Payment of Other Damages
Given that the respondents have not abused their rights, they should not be held liable for
any damages sustained by petitioner Diaz. "The law affords no remedy for damages resulting
from an act which does not amount to a legal wrong. Situations like this have been
appropriately denominated damnum absque injuria."49 Similarly, the Court cannot grant
petitioner Diaz's claim for attorney's fees as no premium should be placed on the right to
litigate. "Even when a claimant is compelled to litigate or to incur expenses to protect his
rights, still attorney's fees may not be awarded where there is no sufficient showing of bad
faith in a party's persistence in a case other than an erroneous conviction of the
righteousness of his cause."50
Legal Interest Due on the Salaries Withheld
Pursuant to Nacar v. Gallery Frames,51 the applicable rate of legal interest due on petitioner
Diaz's withheld salaries - (i) from July 1, 1988 to October 31, 1988, the period corresponding
to the first semester of A Y 1988-89, when her name was removed from the final list of class
schedule without her prior knowledge and consent, less the amount she had received in
June 1988 - will be from April 17, 1996, the date of the Decision of the RTC, up to the full
satisfaction thereof, is 6% per annum; and (ii) from November 1, 1988 to May 31, 1989, and
July 16, 1989 to May 31, 1990, the periods when she was refused payment of her salaries
for not accomplishing a Report for Duty Form - will be from the time petitioner Diaz submits
the required Report for Duty Form up to the full satisfaction thereof, is 6% per annum.
WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals
in CA-G.R. CV No. 55165 is hereby AFFIRMED with MODIFICATION in that the University
of the Philippines, through its appropriate officials, is directed to pay petitioner Elizabeth L.
Diaz her withheld salaries 1) from July 1, 1988 to October 31, 1988, with legal interest at the
rate of six percent (6%) per annum, computed from the date of the Decision of the R TC on
April 17, 1996 until fully paid; and 2) from November 1, 1988 to May 31, 1989 and July 16,
1989 to May 31, 1990, with legal interest at the rate of six percent (6%) per annum computed
from the date petitioner Elizabeth L. Diaz submits the documents required by the University
of the Philippines until fully paid.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
Acting Chairperson
WE CONCUR:
DIOSDADO M. PERALTA*
Associate Justice
LUCAS P. BERSAMIN ESTELA M. PERLAS-BERNABE
Associate Justice Associate Justice
FRANCIS H. JARDELEZA
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Acting Chairperson's
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Court's Division.
MARIA LOURDES P.A. SERENO
Chief Justice

Footnotes
*
 Per Raffle dated January 18, 2016.
1
 Rollo, pp. 70-88; penned by Associate Justice Magdangal M. de Leon with Associate
Justices Mariano C. de! Castillo (now a member of this Court) and Regalado E. Maambong
concurring.
2
 Id. at 106-107.
3
 Entitled Elizabeth Diaz v. Georgina R. Encanto, Ernesto G. Tabujara, Gemino H. Abad,
Jose V. Abueva and University of the Philippines.
4
 Rollo, pp. 109-167.
5
 Id. at 168-170.
6
 Id. at 124-125.
7
 Exhibits of Defendants, Exh. 69, p. 2251.
8
 Id.
9
 Rollo, p. 73.
10
 Id. at 71-75.
11
 Id. at 166-167.
12
 Id. at 169-170.
13
 Id. at 169.
14
 Records, pp. 2,575-2,576.
15
 Id. at 2,361-2,362.
16
 Id. at 2,577-2,576.
17
 Id. at 2,580-2,581.
18
 CA rollo, pp. 62-174.
19
 Id. at 251-326.
20
 Rollo, p. 71.
21
 CA rollo, pp. 421-422.
22
 Rollo, p. 87.
23
 Id. at 81.
24
 Id. at 84.
25
 Id. at 21-22.
26
 Mcleod v. National labor Relations Commission, 541 Phil. 214, 242 (2007).
27
 Rollo, pp. 204; 239.
28
 Jarantilla, Jr. v. Jarantilla, 651 Phil. 13, 26 (2010).
29
 Records, pp. 1-13.
30
 Id. at 85.
31
 Barons Marketing Corp. v. Court of Appeals and Phelps Dodge Phils., Inc., 349 Phil. 769,
775 (1998).
32
 Dart Philippines, Inc. v. Calogcog, 613 Phil. 224, 234 (2009).
33
 Id. at 235.
34
 Records, pp. 1077-1083.
35
 Implementation of Sec. 12, Art. XVIII of the 1987 Constitution and complementing
Administrative Circular No. 1 of January 28, 1988 on Expeditious Disposition of Cases
Pending in the Supreme Court; November 8, 1988.
36
 Records, p. 177.
37
 Id. at 175-179.
38
 Rollo, pp. 80-81.
39
 Id. at 164 and 169.
40
 Id. at 66.
41
 Barons Marketing Corp. v. Court of Appeals and Phelps Dodge Phils., Inc., supra note 31
at 778.
42
 Rollo, p. 81; Records, p. 178.
43
 Id. at 32.
44
 TSN, September 13, 1994, p. 31.
45
 TSN, August 24, 1994, pp. 35-36.
46
 TSN, September27, 1994, pp. 6-7.
47
 Rollo, pp. 46-47.
48
 Records, p. 289.
49
 Dart Philippines, Inc. v. Calogcog, supra note 32 at 237.
50
 Id. at 238.
51
 G.R. No. 189871, August 13, 2013, 703 SCRA 439.
G.R. No. 88694 January 11, 1993
ALBENSON ENTERPRISES CORP., JESSE YAP, AND BENJAMIN
MENDIONA, petitioners, 
vs.
THE COURT OF APPEALS AND EUGENIO S. BALTAO, respondents.
Puruganan, Chato, Chato & Tan for petitioners.
Lino M. Patajo, Francisco Ma. Chanco, Ananiano Desierto and Segundo Mangohig for
private respondent.

BIDIN, J.:
This petition assails the decision of respondent Court of Appeals in
CA-GR CV No. 14948 entitled "Eugenio S. Baltao, plaintiff-appellee vs. Albenson Enterprises
Corporation, et al, defendants-appellants", which modified the judgment of the Regional Trial
Court of Quezon City, Branch XCVIII in Civil Case No. Q-40920 and ordered petitioner to pay
private respondent, among others, the sum of P500,000.00 as moral damages and attorney's
fees in the amount of P50,000.00.
The facts are not disputed.
In September, October, and November 1980, petitioner Albenson Enterprises Corporation
(Albenson for short) delivered to Guaranteed Industries, Inc. (Guaranteed for short) located
at 3267 V. Mapa Street, Sta. Mesa, Manila, the mild steel plates which the latter ordered. As
part payment thereof, Albenson was given Pacific Banking Corporation Check No. 136361 in
the amount of P2,575.00 and drawn against the account of E.L. Woodworks (Rollo, p. 148).
When presented for payment, the check was dishonored for the reason "Account Closed."
Thereafter, petitioner Albenson, through counsel, traced the origin of the dishonored check.
From the records of the Securities and Exchange Commission (SEC), Albenson discovered
that the president of Guaranteed, the recipient of the unpaid mild steel plates, was one
"Eugenio S. Baltao." Upon further inquiry, Albenson was informed by the Ministry of Trade
and Industry that E.L. Woodworks, a single proprietorship business, was registered in the
name of one "Eugenio Baltao". In addition, upon verification with the drawee bank, Pacific
Banking Corporation, Albenson was advised that the signature appearing on the subject
check belonged to one "Eugenio Baltao."
After obtaining the foregoing information, Albenson, through counsel, made an extrajudicial
demand upon private respondent Eugenio S. Baltao, president of Guaranteed, to replace
and/or make good the dishonored check.
Respondent Baltao, through counsel, denied that he issued the check, or that the signature
appearing thereon is his. He further alleged that Guaranteed was a defunct entity and hence,
could not have transacted business with Albenson.
On February 14, 1983, Albenson filed with the Office of the Provincial Fiscal of Rizal a
complaint against Eugenio S. Baltao for violation of Batas Pambansa Bilang 22. Submitted to
support said charges was an affidavit of petitioner Benjamin Mendiona, an employee of
Albenson. In said affidavit, the above-mentioned circumstances were stated.
It appears, however, that private respondent has a namesake, his son Eugenio Baltao III,
who manages a business establishment, E.L. Woodworks, on the ground floor of the Baltao
Building, 3267 V. Mapa Street, Sta. Mesa, Manila, the very same business address of
Guaranteed.
On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an information against
Eugenio S. Baltao for Violation of Batas Pambansa Bilang 22. In filing said information,
Fiscal Sumaway claimed that he had given Eugenio S. Baltao opportunity to submit
controverting evidence, but the latter failed to do so and therefore, was deemed to have
waived his right.
Respondent Baltao, claiming ignorance of the complaint against him, immediately filed with
the Provincial Fiscal of Rizal a motion for reinvestigation, alleging that it was not true that he
had been given an opportunity to be heard in the preliminary investigation conducted by
Fiscal Sumaway, and that he never had any dealings with Albenson or Benjamin Mendiona,
consequently, the check for which he has been accused of having issued without funds was
not issued by him and the signature in said check was not his.
On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal reversed the finding of
Fiscal Sumaway and exonerated respondent Baltao. He also instructed the Trial Fiscal to
move for dismissal of the information filed against Eugenio S. Baltao. Fiscal Castro found
that the signature in PBC Check No. 136361 is not the signature of Eugenio S. Baltao. He
also found that there is no showing in the records of the preliminary investigation that
Eugenio S. Baltao actually received notice of the said investigation. Fiscal Castro then
castigated Fiscal Sumaway for failing to exercise care and prudence in the performance of
his duties, thereby causing injustice to respondent who was not properly notified of the
complaint against him and of the requirement to submit his counter evidence.
Because of the alleged unjust filing of a criminal case against him for allegedly issuing a
check which bounced in violation of Batas Pambansa Bilang 22 for a measly amount of
P2,575.00, respondent Baltao filed before the Regional Trial Court of Quezon City a
complaint for damages against herein petitioners Albenson Enterprises, Jesse Yap, its
owner, and Benjamin Mendiona, its employee.
In its decision, the lower court observed that "the check is drawn against the account of "E.L.
Woodworks," not of Guaranteed Industries of which plaintiff used to be President.
Guaranteed Industries had been inactive and had ceased to exist as a corporation since
1975. . . . . The possibility is that it was with Gene Baltao or Eugenio Baltao III, a son of
plaintiff who had a business on the ground floor of Baltao Building located on V. Mapa Street,
that the defendants may have been dealing with . . . ." (Rollo, pp. 41-42).
The dispositive portion of the trial court 's decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants
ordering the latter to pay plaintiff jointly and severally:
1. actual or compensatory damages of P133,350.00;
2. moral damages of P1,000,000.00 (1 million pesos);
3. exemplary damages of P200,000.00;
4. attorney's fees of P100,000.00;
5 costs.
Defendants' counterclaim against plaintiff and claim for damages against Mercantile
Insurance Co. on the bond for the issuance of the writ of attachment at the instance of
plaintiff are hereby dismissed for lack of merit. (Rollo, pp. 38-39).
On appeal, respondent court modified the trial court's decision as follows:
WHEREFORE, the decision appealed from is MODIFIED by reducing the moral damages
awarded therein from P1,000,000.00 to P500,000.00 and the attorney's fees from
P100,000.00 to P50,000.00, said decision being hereby affirmed in all its other aspects. With
costs against appellants. (Rollo, pp. 50-51)
Dissatisfied with the above ruling, petitioners Albenson Enterprises Corp., Jesse Yap, and
Benjamin Mendiona filed the instant Petition, alleging that the appellate court erred in:
1. Concluding that private respondent's cause of action is not one based on malicious
prosecution but one for abuse of rights under Article 21 of the Civil Code notwithstanding the
fact that the basis of a civil action for malicious prosecution is Article 2219 in relation to
Article 21 or Article 2176 of the Civil Code . . . .
2. Concluding that "hitting at and in effect maligning (private respondent) with an unjust
criminal case was, without more, a plain case of abuse of rights by misdirection" and "was
therefore, actionable by itself," and which "became inordinately blatant and grossly
aggravated when . . . (private respondent) was deprived of his basic right to notice and a fair
hearing in the so-called preliminary investigation . . . . "
3. Concluding that petitioner's "actuations in this case were coldly deliberate and calculated",
no evidence having been adduced to support such a sweeping statement.
4. Holding the petitioner corporation, petitioner Yap and petitioner Mendiona jointly and
severally liable without sufficient basis in law and in fact.
5. Awarding respondents —
5.1. P133,350.00 as actual or compensatory damages, even in the absence of sufficient
evidence to show that such was actually suffered.
5.2. P500,000.00 as moral damages considering that the evidence in this connection merely
involved private respondent's alleged celebrated status as a businessman, there being no
showing that the act complained of adversely affected private respondent's reputation or that
it resulted to material loss.
5.3. P200,000.00 as exemplary damages despite the fact that petitioners were duly advised
by counsel of their legal recourse.
5.4. P50,000.00 as attorney's fees, no evidence having been adduced to justify such an
award (Rollo, pp. 4-6).
Petitioners contend that the civil case filed in the lower court was one for malicious
prosecution. Citing the case of Madera vs. Lopez (102 SCRA 700 [1981]), they assert that
the absence of malice on their part absolves them from any liability for malicious prosecution.
Private respondent, on the other hand, anchored his complaint for Damages on Articles 19,
20, and 21 ** of the Civil Code.
Article 19, known to contain what is commonly referred to as the principle of abuse of rights,
sets certain standards which may be observed not only in the exercise of one's rights but
also in the performance of one's duties. These standards are the following: to act with justice;
to give everyone his due; and to observe honesty and good faith. The law, therefore,
recognizes the primordial limitation on all rights: that in their exercise, the norms of human
conduct set forth in Article 19 must be observed. A right, though by itself legal because
recognized or granted by law as such, may nevertheless become the source of some
illegality. When a right is exercised in a manner which does not conform with the norms
enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed
for which the wrongdoer must be held responsible. Although the requirements of each
provision is different, these three (3) articles are all related to each other. As the eminent
Civilist Senator Arturo Tolentino puts it: "With this article (Article 21), combined with articles
19 and 20, the scope of our law on civil wrongs has been very greatly broadened; it has
become much more supple and adaptable than the Anglo-American law on torts. It is now
difficult to conceive of any malevolent exercise of a right which could not be checked by the
application of these articles" (Tolentino, 1 Civil Code of the Philippines 72).
There is however, no hard and fast rule which can be applied to determine whether or not the
principle of abuse of rights may be invoked. The question of whether or not the principle of
abuse of rights has been violated, resulting in damages under Articles 20 and 21 or other
applicable provision of law, depends on the circumstances of each case. (Globe Mackay
Cable and Radio Corporation vs. Court of Appeals, 176 SCRA 778 [1989]).
The elements of an abuse of right under Article 19 are the following: (1) There is a legal right
or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring
another. Article 20 speaks of the general sanction for all other provisions of law which do not
especially provide for their own sanction (Tolentino, supra, p. 71). Thus, anyone who,
whether willfully or negligently, in the exercise of his legal right or duty, causes damage to
another, shall indemnify his victim for injuries suffered thereby. Article 21 deals with
acts contra bonus mores, and has the following elements: 1) There is an act which is legal;
2) but which is contrary to morals, good custom, public order, or public policy; 3) and it is
done with intent to injure.
Thus, under any of these three (3) provisions of law, an act which causes injury to another
may be made the basis for an award of damages.
There is a common element under Articles 19 and 21, and that is, the act must be intentional.
However, Article 20 does not distinguish: the act may be done either "willfully", or
"negligently". The trial court as well as the respondent appellate court mistakenly lumped
these three (3) articles together, and cited the same as the bases for the award of damages
in the civil complaint filed against petitioners, thus:
With the foregoing legal provisions (Articles 19, 20, and 21) in focus, there is not much
difficulty in ascertaining the means by which appellants' first assigned error should be
resolved, given the admitted fact that when there was an attempt to collect the amount of
P2,575.00, the defendants were explicitly warned that plaintiff Eugenio S. Baltao is not the
Eugenio Baltao defendants had been dealing with (supra, p. 5). When the defendants
nevertheless insisted and persisted in filing a case — a criminal case no less — against
plaintiff, said defendants ran afoul of the legal provisions (Articles 19, 20, and 21 of the Civil
Code) cited by the lower court and heretofore quoted (supra).
Defendants, not having been paid the amount of P2,575.00, certainly had the right to
complain. But that right is limited by certain constraints. Beyond that limit is the area of
excess, of abuse of rights. (Rollo, pp.
44-45).
Assuming, arguendo, that all the three (3) articles, together and not independently of each
one, could be validly made the bases for an award of damages based on the principle of
"abuse of right", under the circumstances, We see no cogent reason for such an award of
damages to be made in favor of private respondent.
Certainly, petitioners could not be said to have violated the aforestated principle of abuse of
right. What prompted petitioners to file the case for violation of Batas Pambansa Bilang 22
against private respondent was their failure to collect the amount of P2,575.00 due on a
bounced check which they honestly believed was issued to them by private respondent.
Petitioners had conducted inquiries regarding the origin of the check, and yielded the
following results: from the records of the Securities and Exchange Commission, it was
discovered that the President of Guaranteed (the recipient of the unpaid mild steel plates),
was one "Eugenio S. Baltao"; an inquiry with the Ministry of Trade and Industry revealed that
E.L. Woodworks, against whose account the check was drawn, was registered in the name
of one "Eugenio Baltao"; verification with the drawee bank, the Pacific Banking Corporation,
revealed that the signature appearing on the check belonged to one "Eugenio Baltao".
In a letter dated December 16, 1983, counsel for petitioners wrote private respondent
demanding that he make good the amount of the check. Counsel for private respondent
wrote back and denied, among others, that private respondent ever transacted business with
Albenson Enterprises Corporation; that he ever issued the check in question. Private
respondent's counsel even went further: he made a warning to defendants to check the
veracity of their claim. It is pivotal to note at this juncture that in this same letter, if indeed
private respondent wanted to clear himself from the baseless accusation made against his
person, he should have made mention of the fact that there are three (3) persons with the
same name, i.e.: Eugenio Baltao, Sr., Eugenio S. Baltao, Jr. (private respondent), and
Eugenio Baltao III (private respondent's son, who as it turned out later, was the issuer of the
check). He, however, failed to do this. The last two Baltaos were doing business in the same
building — Baltao Building — located at 3267 V. Mapa Street, Sta. Mesa, Manila. The mild
steel plates were ordered in the name of Guaranteed of which respondent Eugenio S. Baltao
is the president and delivered to Guaranteed at Baltao building. Thus, petitioners had every
reason to believe that the Eugenio Baltao who issued the bouncing check is respondent
Eugenio S. Baltao when their counsel wrote respondent to make good the amount of the
check and upon refusal, filed the complaint for violation of BP Blg. 22.
Private respondent, however, did nothing to clarify the case of mistaken identity at first hand.
Instead, private respondent waited in ambush and thereafter pounced on the hapless
petitioners at a time he thought was propitious by filing an action for damages. The Court will
not countenance this devious scheme.
The criminal complaint filed against private respondent after the latter refused to make good
the amount of the bouncing check despite demand was a sincere attempt on the part of
petitioners to find the best possible means by which they could collect the sum of money due
them. A person who has not been paid an obligation owed to him will naturally seek ways to
compel the debtor to pay him. It was normal for petitioners to find means to make the issuer
of the check pay the amount thereof. In the absence of a wrongful act or omission or of fraud
or bad faith, moral damages cannot be awarded and that the adverse result of an action
does not per se make the action wrongful and subject the actor to the payment of damages,
for the law could not have meant to impose a penalty on the right to litigate (Rubio vs. Court
of Appeals, 141 SCRA 488 [1986]).
In the case at bar, private respondent does not deny that the mild steel plates were ordered
by and delivered to Guaranteed at Baltao building and as part payment thereof, the bouncing
check was issued by one Eugenio Baltao. Neither had private respondent conveyed to
petitioner that there are two Eugenio Baltaos conducting business in the same building — he
and his son Eugenio Baltao III. Considering that Guaranteed, which received the goods in
payment of which the bouncing check was issued is owned by respondent, petitioner acted in
good faith and probable cause in filing the complaint before the provincial fiscal.
To constitute malicious prosecution, there must be proof that the prosecution was prompted
by a sinister design to vex and humiliate a person, and that it was initiated deliberately by the
defendant knowing that his charges were false and groundless. Concededly, the mere act of
submitting a case to the authorities for prosecution does not make one liable for malicious
prosecution. (Manila Gas Corporation vs. Court of Appeals, 100 SCRA 602 [1980]). Still,
private respondent argues that liability under Articles 19, 20, and 21 of the Civil Code is so
encompassing that it likewise includes liability for damages for malicious prosecution under
Article 2219 (8). True, a civil action for damages for malicious prosecution is allowed under
the New Civil Code, more specifically Articles 19, 20, 26, 29, 32, 33, 35, and 2219 (8)
thereof. In order that such a case can prosper, however, the following three (3) elements
must be present, to wit: (1) The fact of the prosecution and the further fact that the defendant
was himself the prosecutor, and that the action was finally terminated with an acquittal; (2)
That in bringing the action, the prosecutor acted without probable cause; (3) The prosecutor
was actuated or impelled by legal malice (Lao vs. Court of Appeals, 199 SCRA 58, [1991]).
Thus, a party injured by the filing of a court case against him, even if he is later on absolved,
may file a case for damages grounded either on the principle of abuse of rights, or on
malicious prosecution. As earlier stated, a complaint for damages based on malicious
prosecution will prosper only if the three (3) elements aforecited are shown to exist. In the
case at bar, the second and third elements were not shown to exist. It is well-settled that one
cannot be held liable for maliciously instituting a prosecution where one has acted with
probable cause. "Probable cause is the existence of such facts and circumstances as would
excite the belief, in a reasonable mind, acting on the facts within the knowledge of the
prosecutor, that the person charged was guilty of the crime for which he was prosecuted. In
other words, a suit will lie only in cases where a legal prosecution has been carried on
without probable cause. The reason for this rule is that it would be a very great
discouragement to public justice, if prosecutors, who had tolerable ground of suspicion, were
liable to be sued at law when their indictment miscarried" (Que vs. Intermediate Appellate
Court, 169 SCRA 137 [1989]).
The presence of probable cause signifies, as a legal consequence, the absence of malice. In
the instant case, it is evident that petitioners were not motivated by malicious intent or by
sinister design to unduly harass private respondent, but only by a well-founded anxiety to
protect their rights when they filed the criminal complaint against private respondent.
To constitute malicious prosecution, there must be proof that the prosecution was prompted
by a sinister design to vex and humiliate a person, that it was initiated deliberately by the
defendant knowing that his charges were false and groundless. Concededly, the mere act of
submitting a case to the authorities for prosecution does not make one liable for malicious
prosecution. Proof and motive that the institution of the action was prompted by a sinister
design to vex and humiliate a person must be clearly and preponderantly established to
entitle the victims to damages (Ibid.).
In the case at bar, there is no proof of a sinister design on the part of petitioners to vex or
humiliate private respondent by instituting the criminal case against him. While petitioners
may have been negligent to some extent in determining the liability of private respondent for
the dishonored check, the same is not so gross or reckless as to amount to bad faith
warranting an award of damages.
The root of the controversy in this case is founded on a case of mistaken identity. It is
possible that with a more assiduous investigation, petitioners would have eventually
discovered that private respondent Eugenio S. Baltao is not the "Eugenio Baltao" responsible
for the dishonored check. However, the record shows that petitioners did exert considerable
effort in order to determine the liability of private respondent. Their investigation pointed to
private respondent as the "Eugenio Baltao" who issued and signed the dishonored check as
the president of the debtor-corporation Guaranteed Enterprises. Their error in proceeding
against the wrong individual was obviously in the nature of an innocent mistake, and cannot
be characterized as having been committed in bad faith. This error could have been
discovered if respondent had submitted his counter-affidavit before investigating fiscal
Sumaway and was immediately rectified by Provincial Fiscal Mauro Castro upon discovery
thereof, i.e., during the reinvestigation resulting in the dismissal of the complaint.
Furthermore, the adverse result of an action does not per se make the act wrongful and
subject the actor to the payment of moral damages. The law could not have meant to impose
a penalty on the right to litigate, such right is so precious that moral damages may not be
charged on those who may even exercise it erroneously. And an adverse decision does
not ipso facto justify the award of attorney's fees to the winning party (Garcia vs. Gonzales,
183 SCRA 72 [1990]).
Thus, an award of damages and attorney's fees is unwarranted where the action was filed in
good faith. If damage results from a person's exercising his legal rights, it is damnum absque
injuria (Ilocos Norte Electric Company vs. Court of Appeals, 179 SCRA 5 [1989]).
Coming now to the claim of private respondent for actual or compensatory damages, the
records show that the same was based solely on his allegations without proof to substantiate
the same. He did not present proof of the cost of the medical treatment which he claimed to
have undergone as a result of the nervous breakdown he suffered, nor did he present proof
of the actual loss to his business caused by the unjust litigation against him. In determining
actual damages, the court cannot rely on speculation, conjectures or guesswork as to the
amount. Without the actual proof of loss, the award of actual damages becomes erroneous
(Guilatco vs. City of Dagupan, 171 SCRA 382 [1989]).
Actual and compensatory damages are those recoverable because of pecuniary loss — in
business, trade, property, profession, job or occupation — and the same must be proved,
otherwise, if the proof is flimsy and unsubstantiated, no damages will be given (Rubio vs.
Court of Appeals, 141 SCRA 488 [1986]). For these reasons, it was gravely erroneous for
respondent court to have affirmed the award of actual damages in favor of private
respondent in the absence of proof thereof.
Where there is no evidence of the other party having acted in wanton, fraudulent or reckless,
or oppressive manner, neither may exemplary damages be awarded (Dee Hua Liong
Electrical Equipment Corporation vs. Reyes, 145 SCRA 488 [1986]).
As to the award of attorney's fees, it is well-settled that the same is the exception rather than
the general rule. Needless to say, the award of attorney's fees must be disallowed where the
award of exemplary damages is eliminated (Article 2208, Civil Code; Agustin vs. Court of
Appeals, 186 SCRA 375 [1990]). Moreover, in view of the fact that there was no malicious
prosecution against private respondent, attorney's fees cannot be awarded him on that
ground.
In the final analysis, there is no proof or showing that petitioners acted maliciously or in bad
faith in the filing of the case against private respondent. Consequently, in the absence of
proof of fraud and bad faith committed by petitioners, they cannot be held liable for damages
(Escritor, Jr. vs. Intermediate Appellate Court, 155 SCRA 577 [1987]). No damages can be
awarded in the instant case, whether based on the principle of abuse of rights, or for
malicious prosecution. The questioned judgment in the instant case attests to the propensity
of trial judges to award damages without basis. Lower courts are hereby cautioned anew
against awarding unconscionable sums as damages without bases therefor.
WHEREFORE, the petition is GRANTED and the decision of the Court of Appeals in C.A.
G.R. C.V. No. 14948 dated May 13, 1989, is hereby REVERSED and SET ASIDE. Costs
against respondent Baltao.
SO ORDERED.
Gutierrez, Jr., Davide, Jr., Romero and Melo, JJ., concur.
 
# Footnotes
** "Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
"Art. 20. Every person who, contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.
"Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary
to morals, good customs or public policy shall compensate the latter for the damage.

G.R. No. 81262 August 25, 1989

GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners, 
vs.
THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS, respondents. 
Atencia & Arias Law Offices for petitioners.
Romulo C. Felizmena for private respondent. 

CORTES, J.:
Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and
Radio Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and
administrative assistant to the engineering operations manager. In 1972, GLOBE MACKAY
discovered fictitious purchases and other fraudulent transactions for which it lost several
thousands of pesos.
According to private respondent it was he who actually discovered the anomalies and
reported them on November 10, 1972 to his immediate superior Eduardo T. Ferraren and to
petitioner Herbert C. Hendry who was then the Executive Vice-President and General
Manager of GLOBE MACKAY. 
On November 11, 1972, one day after private respondent Tobias made the report, petitioner
Hendry confronted him by stating that he was the number one suspect, and ordered him to
take a one week forced leave, not to communicate with the office, to leave his table drawers
open, and to leave the office keys. 
On November 20, 1972, when private respondent Tobias returned to work after the forced
leave, petitioner Hendry went up to him and called him a "crook" and a "swindler." Tobias
was then ordered to take a lie detector test. He was also instructed to submit specimen of his
handwriting, signature, and initials for examination by the police investigators to determine
his complicity in the anomalies. 
On December 6,1972, the Manila police investigators submitted a laboratory crime report
(Exh. "A") clearing private respondent of participation in the anomalies. 
Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose
G. Fernandez, who on December 10, 1972, submitted a report (Exh. "2") finding Tobias
guilty. This report however expressly stated that further investigation was still to be
conducted.
Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending
Tobias from work preparatory to the filing of criminal charges against him. 
On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document
Examiner, after investigating other documents pertaining to the alleged anomalous
transactions, submitted a second laboratory crime report (Exh. "B") reiterating his previous
finding that the handwritings, signatures, and initials appearing in the checks and other
documents involved in the fraudulent transactions were not those of Tobias. The lie detector
tests conducted on Tobias also yielded negative results. 
Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact
that the report of the private investigator, was, by its own terms, not yet complete, petitioners
filed with the City Fiscal of Manila a complaint for estafa through falsification of commercial
documents, later amended to just estafa. Subsequently five other criminal complaints were
filed against Tobias, four of which were for estafa through Falsification of commercial
document while the fifth was for of Article 290 of' the Revised Penal Code (Discovering
Secrets Through Seizure of Correspondence).lâwphî1.ñèt Two of these complaints were
refiled with the Judge Advocate General's Office, which however, remanded them to the
fiscal's office. All of the six criminal complaints were dismissed by the fiscal. Petitioners
appealed four of the fiscal's resolutions dismissing the criminal complaints with the Secretary
of Justice, who, however, affirmed their dismissal. 
In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners
that his employment has been terminated effective December 13, 1972. Whereupon, Tobias
filed a complaint for illegal dismissal. The labor arbiter dismissed the complaint. On appeal,
the National Labor Relations Commission (NLRC) reversed the labor arbiter's decision.
However, the Secretary of Labor, acting on petitioners' appeal from the NLRC ruling,
reinstated the labor arbiter's decision. Tobias appealed the Secretary of Labor's order with
the Office of the President. During the pendency of the appeal with said office, petitioners
and private respondent Tobias entered into a compromise agreement regarding the latter's
complaint for illegal dismissal. 
Unemployed, Tobias sought employment with the Republic Telephone Company
(RETELCO). However, petitioner Hendry, without being asked by RETELCO, wrote a letter
to the latter stating that Tobias was dismissed by GLOBE MACKAY due to dishonesty. 
Private respondent Tobias filed a civil case for damages anchored on alleged unlawful,
malicious, oppressive, and abusive acts of petitioners. Petitioner Hendry, claiming illness, did
not testify during the hearings. The Regional Trial Court (RTC) of Manila, Branch IX, through
Judge Manuel T. Reyes rendered judgment in favor of private respondent by ordering
petitioners to pay him eighty thousand pesos (P80,000.00) as actual damages, two hundred
thousand pesos (P200,000.00) as moral damages, twenty thousand pesos (P20,000.00) as
exemplary damages, thirty thousand pesos (P30,000.00) as attorney's fees, and costs.
Petitioners appealed the RTC decision to the Court of Appeals. On the other hand, Tobias
appealed as to the amount of damages. However, the Court of Appeals, an a decision dated
August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion for reconsideration
having been denied, the instant petition for review on certiorari was filed. 
The main issue in this case is whether or not petitioners are liable for damages to private
respondent. 
Petitioners contend that they could not be made liable for damages in the lawful exercise of
their right to dismiss private respondent.
On the other hand, private respondent contends that because of petitioners' abusive manner
in dismissing him as well as for the inhuman treatment he got from them, the Petitioners
must indemnify him for the damage that he had suffered. 
One of the more notable innovations of the New Civil Code is the codification of "some basic
principles that are to be observed for the rightful relationship between human beings and for
the stability of the social order." [REPORT ON THE CODE COMMISSION ON THE
PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking
to remedy the defect of the old Code which merely stated the effects of the law, but failed to
draw out its spirit, incorporated certain fundamental precepts which were "designed to
indicate certain norms that spring from the fountain of good conscience" and which were also
meant to serve as "guides for human conduct [that] should run as golden threads through
society, to the end that law may approach its supreme ideal, which is the sway and
dominance of justice" (Id.) Foremost among these principles is that pronounced in Article 19
which provides: 
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith. 
This article, known to contain what is commonly referred to as the principle of abuse of
rights, sets certain standards which must be observed not only in the exercise of one's rights
but also in the performance of one's duties. These standards are the following: to act with
justice; to give everyone his due; and to observe honesty and good faith. The law, therefore,
recognizes a primordial limitation on all rights; that in their exercise, the norms of human
conduct set forth in Article 19 must be observed. A right, though by itself legal because
recognized or granted by law as such, may nevertheless become the source of some
illegality. When a right is exercised in a manner which does not conform with the norms
enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed
for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of
conduct for the government of human relations and for the maintenance of social order, it
does not provide a remedy for its violation. Generally, an action for damages under either
Article 20 or Article 21 would be proper. 
Article 20, which pertains to damage arising from a violation of law, provides that: 
Art. 20. Every person who contrary to law, wilfully or negligently causes damage to another,
shall indemnify the latter for the same. 
However, in the case at bar, petitioners claim that they did not violate any provision of law
since they were merely exercising their legal right to dismiss private respondent. This does
not, however, leave private respondent with no relief because Article 21 of the Civil Code
provides that: 
Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary
to morals, good customs or public policy shall compensate the latter for the damage. 
This article, adopted to remedy the "countless gaps in the statutes, which leave so many
victims of moral wrongs helpless, even though they have actually suffered material and moral
injury" [Id.] should "vouchsafe adequate legal remedy for that untold number of moral wrongs
which it is impossible for human foresight to provide for specifically in the statutes" [Id. it p.
40; See also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247]. 
In determining whether or not the principle of abuse of rights may be invoked, there is no
rigid test which can be applied. While the Court has not hesitated to apply Article 19 whether
the legal and factual circumstances called for its application [See for e.g., Velayo v. Shell Co.
of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra; Grand Union Supermarket, Inc. v.
Espino, Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L-
46558, July 31,1981,106 SCRA 391; United General Industries, Inc, v. Paler G.R. No. L-
30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21, 1987, 153
SCRA 183] the question of whether or not the principle of abuse of rights has been violated
resulting in damages under Article 20 or Article 21 or other applicable provision of law,
depends on the circumstances of each case. And in the instant case, the Court, after
examining the record and considering certain significant circumstances, finds that all
petitioners have indeed abused the right that they invoke, causing damage to private
respondent and for which the latter must now be indemnified. 
The trial court made a finding that notwithstanding the fact that it was private respondent
Tobias who reported the possible existence of anomalous transactions, petitioner Hendry
"showed belligerence and told plaintiff (private respondent herein) that he was the number
one suspect and to take a one week vacation leave, not to communicate with the office, to
leave his table drawers open, and to leave his keys to said defendant (petitioner Hendry)"
[RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But regardless of
whether or not it was private respondent Tobias who reported the anomalies to petitioners,
the latter's reaction towards the former upon uncovering the anomalies was less than civil.
An employer who harbors suspicions that an employee has committed dishonesty might be
justified in taking the appropriate action such as ordering an investigation and directing the
employee to go on a leave. Firmness and the resolve to uncover the truth would also be
expected from such employer. But the high-handed treatment accorded Tobias by petitioners
was certainly uncalled for. And this reprehensible attitude of petitioners was to continue when
private respondent returned to work on November 20, 1972 after his one week forced leave.
Upon reporting for work, Tobias was confronted by Hendry who said. "Tobby, you are the
crook and swindler in this company." Considering that the first report made by the police
investigators was submitted only on December 10, 1972 [See Exh. A] the statement made by
petitioner Hendry was baseless. The imputation of guilt without basis and the pattern of
harassment during the investigations of Tobias transgress the standards of human conduct
set forth in Article 19 of the Civil Code. The Court has already ruled that the right of the
employer to dismiss an employee should not be confused with the manner in which the right
is exercised and the effects flowing therefrom. If the dismissal is done abusively, then the
employer is liable for damages to the employee [Quisaba v. Sta. Ines-Melale Veneer and
Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA 771; See also Philippine
Refining Co., Inc. v. Garcia, G.R. No. L-21871, September 27,1966, 18 SCRA 107] Under
the circumstances of the instant case, the petitioners clearly failed to exercise in a legitimate
manner their right to dismiss Tobias, giving the latter the right to recover damages under
Article 19 in relation to Article 21 of the Civil Code. 
But petitioners were not content with just dismissing Tobias. Several other tortious acts were
committed by petitioners against Tobias after the latter's termination from work. Towards the
latter part of January, 1973, after the filing of the first of six criminal complaints against
Tobias, the latter talked to Hendry to protest the actions taken against him. In response,
Hendry cut short Tobias' protestations by telling him to just confess or else the company
would file a hundred more cases against him until he landed in jail. Hendry added that, "You
Filipinos cannot be trusted." The threat unmasked petitioner's bad faith in the various actions
taken against Tobias. On the other hand, the scornful remark about Filipinos as well as
Hendry's earlier statements about Tobias being a "crook" and "swindler" are clear violations
of 'Tobias' personal dignity [See Article 26, Civil Code]. 
The next tortious act committed by petitioners was the writing of a letter to RETELCO
sometime in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY due
to dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO and as
a result of which, Tobias remained unemployed for a longer period of time. For this further
damage suffered by Tobias, petitioners must likewise be held liable for damages consistent
with Article 2176 of the Civil Code. Petitioners, however, contend that they have a "moral, if
not legal, duty to forewarn other employers of the kind of employee the plaintiff (private
respondent herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that "it is the
accepted moral and societal obligation of every man to advise or warn his fellowmen of any
threat or danger to the latter's life, honor or property. And this includes warning one's
brethren of the possible dangers involved in dealing with, or accepting into confidence, a
man whose honesty and integrity is suspect" [Id.]. These arguments, rather than justify
petitioners' act, reveal a seeming obsession to prevent Tobias from getting a job, even after
almost two years from the time Tobias was dismissed.
Finally, there is the matter of the filing by petitioners of six criminal complaints against
Tobias. Petitioners contend that there is no case against them for malicious prosecution and
that they cannot be "penalized for exercising their right and prerogative of seeking justice by
filing criminal complaints against an employee who was their principal suspect in the
commission of forgeries and in the perpetration of anomalous transactions which defrauded
them of substantial sums of money" [Petition, p. 10, Rollo, p. 11].
While sound principles of justice and public policy dictate that persons shall have free resort
to the courts for redress of wrongs and vindication of their rights [Buenaventura v. Sto.
Domingo, 103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be
exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971,
38 SCRA 5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2
SCRA 337, the Court held that the right to file criminal complaints should not be used as a
weapon to force an alleged debtor to pay an indebtedness. To do so would be a clear
perversion of the function of the criminal processes and of the courts of justice. And
in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court upheld the
judgment against the petitioner for actual and moral damages and attorney's fees after
making a finding that petitioner, with persistence, filed at least six criminal complaints against
respondent, all of which were dismissed. 
To constitute malicious prosecution, there must be proof that the prosecution was prompted
by a design to vex and humiliate a person and that it was initiated deliberately by the
defendant knowing that the charges were false and groundless [Manila Gas Corporation v.
CA, G.R. No. L-44190, October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by
itself, does not render a person liable for malicious prosecution [Inhelder Corporation v. CA,
G.R. No. 52358, May 301983122 SCRA 576]. The mere dismissal by the fiscal of the
criminal complaint is not a ground for an award of damages for malicious prosecution if there
is no competent evidence to show that the complainant had acted in bad faith [Sison v.
David, G.R. No. L-11268, January 28,1961, 1 SCRA 60]. 
In the instant case, however, the trial court made a finding that petitioners acted in bad faith
in filing the criminal complaints against Tobias, observing that: 
xxx
Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6) criminal
cases, five (5) of which were for estafa thru falsification of commercial document and one for
violation of Art. 290 of the Revised Penal Code "discovering secrets thru seizure of
correspondence," and all were dismissed for insufficiency or lack of evidence." The dismissal
of four (4) of the cases was appealed to the Ministry of Justice, but said Ministry invariably
sustained the dismissal of the cases. As above adverted to, two of these cases were refiled
with the Judge Advocate General's Office of the Armed Forces of the Philippines to railroad
plaintiffs arrest and detention in the military stockade, but this was frustrated by a presidential
decree transferring criminal cases involving civilians to the civil courts.
x x x 
To be sure, when despite the two (2) police reports embodying the findings of Lt. Dioscoro
Tagle, Chief Document Examiner of the Manila Police Department, clearing plaintiff of
participation or involvement in the fraudulent transactions complained of, despite the
negative results of the lie detector tests which defendants compelled plaintiff to undergo, and
although the police investigation was "still under follow-up and a supplementary report will be
submitted after all the evidence has been gathered," defendants hastily filed six (6) criminal
cases with the city Fiscal's Office of Manila, five (5) for estafa thru falsification of commercial
document and one (1) for violation of Art. 290 of the Revised Penal Code, so much so that as
was to be expected, all six (6) cases were dismissed, with one of the investigating fiscals,
Asst. Fiscal de Guia, commenting in one case that, "Indeed, the haphazard way this case
was investigated is evident. Evident likewise is the flurry and haste in the filing of this case
against respondent Tobias," there can be no mistaking that defendants would not but be
motivated by malicious and unlawful intent to harass, oppress, and cause damage to
plaintiff. 
x x x 
[RTC Decision, pp. 5-6; Rollo, pp. 235-236]. 
In addition to the observations made by the trial court, the Court finds it significant that the
criminal complaints were filed during the pendency of the illegal dismissal case filed by
Tobias against petitioners. This explains the haste in which the complaints were filed, which
the trial court earlier noted. But petitioners, to prove their good faith, point to the fact that only
six complaints were filed against Tobias when they could have allegedly filed one hundred
cases, considering the number of anomalous transactions committed against GLOBE
MACKAY. However, petitioners' good faith is belied by the threat made by Hendry after the
filing of the first complaint that one hundred more cases would be filed against Tobias. In
effect, the possible filing of one hundred more cases was made to hang like the sword of
Damocles over the head of Tobias. In fine, considering the haste in which the criminal
complaints were filed, the fact that they were filed during the pendency of the illegal dismissal
case against petitioners, the threat made by Hendry, the fact that the cases were filed
notwithstanding the two police reports exculpating Tobias from involvement in the anomalies
committed against GLOBE MACKAY, coupled by the eventual dismissal of all the cases, the
Court is led into no other conclusion than that petitioners were motivated by malicious intent
in filing the six criminal complaints against Tobias. 
Petitioners next contend that the award of damages was excessive. In the complaint filed
against petitioners, Tobias prayed for the following: one hundred thousand pesos
(P100,000.00) as actual damages; fifty thousand pesos (P50,000.00) as exemplary
damages; eight hundred thousand pesos (P800,000.00) as moral damages; fifty thousand
pesos (P50,000.00) as attorney's fees; and costs. The trial court, after making a computation
of the damages incurred by Tobias [See RTC Decision, pp. 7-8; Rollo, pp. 154-1551,
awarded him the following: eighty thousand pesos (P80,000.00) as actual damages; two
hundred thousand pesos (P200,000.00) as moral damages; twenty thousand pesos
(P20,000.00) as exemplary damages; thirty thousand pesos (P30,000.00) as attorney's fees;
and, costs. It must be underscored that petitioners have been guilty of committing several
actionable tortious acts, i.e., the abusive manner in which they dismissed Tobias from work
including the baseless imputation of guilt and the harassment during the investigations; the
defamatory language heaped on Tobias as well as the scornful remark on Filipinos; the
poison letter sent to RETELCO which resulted in Tobias' loss of possible employment; and,
the malicious filing of the criminal complaints. Considering the extent of the damage wrought
on Tobias, the Court finds that, contrary to petitioners' contention, the amount of damages
awarded to Tobias was reasonable under the circumstances. 
Yet, petitioners still insist that the award of damages was improper, invoking the principle of
damnum absque injuria. It is argued that "[t]he only probable actual damage that plaintiff
(private respondent herein) could have suffered was a direct result of his having been
dismissed from his employment, which was a valid and legal act of the defendants-appellants
(petitioners herein).lâwphî1.ñèt " [Petition, p. 17; Rollo, p. 18]. 
According to the principle of damnum absque injuria, damage or loss which does not
constitute a violation of a legal right or amount to a legal wrong is not actionable [Escano v.
CA, G.R. No. L-47207, September 25, 1980, 100 SCRA 197; See also Gilchrist v. Cuddy 29
Phil, 542 (1915); The Board of Liquidators v. Kalaw, G.R. No. L-18805, August 14, 1967, 20
SCRA 987]. This principle finds no application in this case. It bears repeating that even
granting that petitioners might have had the right to dismiss Tobias from work, the abusive
manner in which that right was exercised amounted to a legal wrong for which petitioners
must now be held liable. Moreover, the damage incurred by Tobias was not only in
connection with the abusive manner in which he was dismissed but was also the result of
several other quasi-delictual acts committed by petitioners.
Petitioners next question the award of moral damages. However, the Court has already ruled
in Wassmer v. Velez, G.R. No. L-20089, December 26, 1964, 12 SCRA 648, 653, that [p]er
express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable
in the cases mentioned in Article 21 of said Code." Hence, the Court of Appeals committed
no error in awarding moral damages to Tobias. 
Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of
the Civil Code provides that "[i]n quasi-delicts, exemplary damages may be granted if the
defendant acted with gross negligence," the Court, in Zulueta v. Pan American World
Airways, Inc., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled that if gross negligence
warrants the award of exemplary damages, with more reason is its imposition justified when
the act performed is deliberate, malicious and tainted with bad faith. As in the Zulueta case,
the nature of the wrongful acts shown to have been committed by petitioners against Tobias
is sufficient basis for the award of exemplary damages to the latter. 
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in
CA-G.R. CV No. 09055 is AFFIRMED. 
SO ORDERED. 
Fernan, C.J., Gutierrez, Jr. and Bidin, JJ., concur. 
Feliciano, J., took no part. 
 
Footnotes
** Penned by Justice Jorge R. Coquia and concurred in be Justice Josue N. Bellosillo and
Justice Venancio D. Aldecoa Jr.

G.R. No. 126486 February 9, 1998

BARONS MARKETING CORP., petitioner, 
vs.
COURT OF APPEALS and PHELPS DODGE PHILS., INC. respondents.

KAPUNAN, J.:
The instant petition raises two issues: (1) whether or not private respondent is guilty of abuse
of right; and (2) whether or not private respondent is entitled to interest and attorney's fees.
The facts are undisputed:
On August 31, 1973, plaintiff [Phelps Dodge, Philippines, Inc. private respondent herein]
appointed defendant [petitioner Barons Marketing, Corporation] as one of its dealers of
electrical wires and cables effective September 1, 1973 (Exh. A). As such dealer, defendant
was given by plaintiff 60 days credit for its purchases of plaintiff's electrical products. This
credit term was to be reckoned from the date of delivery by plaintiff of its products to
defendant (Exh. 1).
During the period covering December 1986 to August 17, 1987, defendant purchased, on
credit, from plaintiff various electrical wires and cables in the total amount of P4,102,438.30
(Exh. B to K). These wires and cables were in turn sold, pursuant to previous arrangements,
by defendant to MERALCO, the former being the accredited supplier of the electrical
requirements of the latter. Under the sales invoices issued by plaintiff to defendant for the
subject purchases, it is stipulated that interest at 12% on the amount due for attorney's fees
and collection (Exh. BB).1 On September 7, 1987, defendant paid plaintiff the amount of
P300,000.00 out of its total purchases as above-stated (Exh. S), thereby leaving an unpaid
account on the aforesaid deliveries of P3,802,478.20. On several occasions, plaintiff wrote
defendant demanding payment of its outstanding obligations due plaintiff (Exhs. L, M, N, and
P). In response, defendant wrote plaintiff on October 5, 1987 requesting the latter if it could
pay its outstanding account in monthly installments of P500,000.00 plus 1% interest per
month commencing on October 15, 1987 until full payment (Exh. O and O-4). Plaintiff,
however, rejected defendant's offer and accordingly reiterated its demand for the full
payment of defendant's account (Exh. P).2
On 29 October 1987, private respondent Phelps Dodge Phils., Inc. filed a complaint before
the Pasig Regional Trial Court against petitioner Barons Marketing Corporation for the
recovery of P3,802,478.20 representing the value of the wires and cables the former had
delivered to the latter, including interest. Phelps Dodge likewise prayed that it be awarded
attorney's fees at the rate of 25% of the amount demanded, exemplary damages amounting
to at least P100,000.00, the expenses of litigation and the costs of suit.
Petitioner, in its answer, admitted purchasing the wires and cables from private respondent
but disputed the amount claimed by the latter. Petitioner likewise interposed a counterclaim
against private respondent, alleging that it suffered injury to its reputation due to Phelps
Dodge's acts. Such acts were purportedly calculated to humiliate petitioner and constituted
an abuse of rights.
After hearing, the trial court on 17 June 1991 rendered its decision, the dispositive portion of
which reads:
WHEREFORE, from all the foregoing considerations, the Court finds Phelps Dodge Phils.,
Inc. to have preponderantly proven its case and hereby orders Barons Marketing, Inc. to pay
Phelps Dodge the following:
1. P3,108,000.00 constituting the unpaid balance of defendant's purchases from plaintiff and
interest thereon at 12% per annum computed from the respective expiration of the 60 day
credit term, vis-a-vis the various sales invoices and/or delivery receipts;
2. 25% of the preceding obligation for and as attorney's fees;
3. P10,000.00 as exemplary damages;
4. Costs of suit.3
Both parties appealed to respondent court. Private respondent claimed that the trial court
should have awarded it the sum of P3,802,478.20, the amount which appeared in the body of
the complaint and proven during the trial rather than P3,1081000.00 The latter amount
appears in petitioner's prayer supposedly as a result of a typographical error.
On the other hand, petitioner reiterated its claims for damages as a result of "creditor's
abuse." It also alleged that private respondent failed to prove its cause of action against it.
On 25 June 1996, the Court of Appeals rendered a decision modifying the decision of the
trial court, thus:
WHEREFORE, from all the foregoing considerations, the Court finds Phelps Dodge Phils.,
Inc. to have preponderantly proven its case and hereby orders Barons Marketing, Inc. to pay
Phelps Dodge the following:
1. P3,802,478.20 constituting the unpaid balance of defendant's purchases from plaintiff and
interest thereon at 12% per annum computed from the respective expiration of the 60 day
credit term, vis-a-vis the various sales invoices and/or delivery receipts; and
2. 5% of the preceding obligation for and as attorney's fees.
No costs.4
Petitioner Barons Marketing is now before this Court alleging that respondent court erred
when it held (1) private respondent Phelps Dodge not guilty of "creditor's abuse," and (2)
petitioner liable to private respondent for interest and attorney's fees.
I
Petitioner does not deny private respondent's rights to institute an action for collection and to
claim full payment. Indeed, petitioner's right to file an action for collection is beyond
cavil.5 Likewise, private respondent's right to reject petitioner's offer to pay in installments is
guaranteed by Article 1248 of the Civil Code which states:
Art. 1248. Unless there is an express stipulation to that effect, the creditor cannot be
compelled partially to receive the prestations in which the obligation consists. Neither may
the debtor be required to make partial payments.
However, when the debt is in part liquidated and in part unliquidated, the creditor may
demand and the debtor may effect the payment of the former without waiting for the
liquidation of the latter.
Under this provision, the prestation, i.e., the object of the obligation, must be performed in
one act, not in parts.
Tolentino concedes that the right has its limitations:
Partial Prestations. — Since the creditor cannot be compelled to accept partial performance,
unless otherwise stipulated, the creditor who refuses to accept partial prestations does not
incur in delay or mora accipiendi, except when there is abuse of right or if good faith requires
acceptance.6
Indeed, the law, as set forth in Article 19 of the Civil Code, prescribes a "primordial limitation
on all rights" by setting certain standards that must be observed in the exercise
thereof.7 Thus:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith.
Petitioner now invokes Article 19 and Article 218 of the Civil Code, claiming that private
respondent abused its rights when it rejected petitioner's offer of settlement and
subsequently filed the action for collection considering:
. . . that the relationship between the parties started in 1973 spanning more than 13 years
before the complaint was filed, that the petitioner had been a good and reliable dealer
enjoying a good credit standing during the period before it became delinquent in 1987, that
the relationship between the parties had been a fruitful one especially for the private
respondent, that the petitioner exerted its outmost efforts to settle its obligations and avoid a
suit, that the petitioner did not evade in the payment of its obligation to the private
respondent, and that the petitioner was just asking a small concession that it be allowed to
liquidate its obligation to eight (8) monthly installments of P500,000.00 plus 1% interest per
month on the balance which proposal was supported by post-dated checks.9
Expounding on its theory, petitioner states:
In the ordinary course of events, a suit for collection of a sum of money filed in court is done
for the primary purpose of collecting a debt or obligation. If there is an offer by the debtor to
pay its debt or obligation supported by post-dated checks and with provision for interests, the
normal response of a creditor would be to accept the offer of compromise and not file the suit
for collection. It is of common knowledge that proceedings in our courts would normally take
years before an action is finally settled. It is always wiser and more prudent to accept an offer
of payment in installment rather than file an action in court to compel the debtor to settle his
obligation in full in a single payment.
x x x           x x x          x x x
. . . Why then did private respondent elect to file a suit for collection rather than accept
petitioner's offer of settlement, supported by post-dated checks, by paying monthly
installments of P500,000.00 plus 1% per month commencing on October 15, 1987 until full
payment? The answer is obvious. The action of private respondent in filling a suit for
collection was an abuse of right and exercised for the sole purpose of prejudicing and
injuring the petitioner.10
Petitioner prays that the Court order private respondent to pay petitioner moral and
exemplary damages, attorney's fees, as well as the costs of suit. It likewise asks that it be
allowed to liquidate its obligation to private respondent, without interests, in eight equal
monthly installments.
Petitioner's theory is untenable.
Both parties agree that to constitute an abuse of rights under Article 19 the defendant must
act with bad faith or intent to prejudice the plaintiff. They cite the following comments of
Tolentino as their authority:
Test of Abuse of Right. — Modern jurisprudence does not permit acts which, although not
unlawful, are anti-social. There is undoubtedly an abuse of right when it is exercised for the
only purpose of prejudicing or injuring another. When the objective of the actor is illegitimate,
the illicit act cannot be concealed under the guise of exercising a right. The principle does not
permit acts which, without utility or legitimate purpose cause damage to another, because
they violate the concept of social solidarity which considers law as rational and just. Hence,
every abnormal exercise of a right, contrary to its socio-economic purpose, is an abuse that
will give rise to liability. The exercise of a right must be in accordance with the purpose for
which it was established, and must not be excessive or unduly harsh; there must be no
intention to injure another. Ultimately, however, and in practice, courts, in the sound exercise
of their discretion, will have to determine all the facts and circumstances when the exercise
of a right is unjust, or when there has been an abuse of right.11
The question, therefore, is whether private respondent intended to prejudice or injure
petitioner when it rejected petitioner's offer and filed the action for collection.
We hold in the negative. It is an elementary rule in this jurisdiction that good faith is
presumed and that the burden of proving bad faith rests upon the party alleging the
same.12 In the case at bar, petitioner has failed to prove bad faith on the part of private
respondent. Petitioner's allegation that private respondent was motivated by a desire to
terminate its agency relationship with petitioner so that private respondent itself may deal
directly with Meralco is simply not supported by the evidence. At most, such supposition is
merely speculative.
Moreover, we find that private respondent was driven by very legitimate reasons for rejecting
petitioner's offer and instituting the action for collection before the trial court. As pointed out
by private respondent, the corporation had its own "cash position to protect in order for it to
pay its own obligations." This is not such "a lame and poor rationalization" as petitioner
purports it to be. For if private respondent were to be required to accept petitioner's offer,
there would be no reason for the latter to reject similar offers from its other debtors. Clearly,
this would be inimical to the interests of any enterprise, especially a profit-oriented one like
private respondent. It is plain to see that what we have here is a mere exercise of rights, not
an abuse thereof Under these circumstances, we do not deem private respondent to have
acted in a manner contrary to morals, good customs or public policy as to violate the
provisions of Article 21 of the Civil Code.
Consequently, petitioner's prayer for moral and exemplary damages must thus be rejected.
Petitioner's claim for moral damages is anchored on Article 2219 (10) of the Civil Code which
states:
Art. 2219. Moral damages may be recovered in the following and analogous cases:
x x x           x x x          x x x
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
x x x           x x x          x x x
Having ruled that private respondent's acts did not transgress the provisions of Article 21,
petitioner cannot be entitled to moral damages or, for that matter, exemplary damages. While
the amount of exemplary damages need not be proved, petitioner must show that he is
entitled to moral, temperate or compensatory damages before the court may consider the
question of whether or not exemplary damages should be awarded.13 As we have observed
above; petitioner has failed to discharge this burden.
It may not be amiss to state that petitioner's contract with private respondent has the force of
law between them.14Petitioner is thus bound to fulfill what has been expressly stipulated
therein.15 In the absence of any abuse of right, private respondent cannot be allowed to
perform its obligation under such contract in parts. Otherwise, private respondent's right
under Article 1248 will be negated, the sanctity of its contract with petitioner defiled. The
principle of autonomy of contracts16 must be respected.
II
Under said contract, petitioner is liable to private respondent for the unpaid balance of its
purchases from private respondent plus 12% interest. Private respondent's sales invoices
expressly provide that:
. . . Interest at 12% per annum will be charged on all overdue account plus 25% on said
amount for attorney's fees and collection. . . .17
It may also be noted that the above stipulation, insofar as it provides for the payment of "25%
on said amount for attorney's fees and collection (sic)," constitutes what is known as a penal
clause.18 Petitioner is thus obliged to pay such penalty in addition to the 12% annual interest,
there being an express stipulation to that effect.
Petitioner nevertheless urges this Court to reduce the attorney's fees for being "grossly
excessive," "considering the nature of the case which is a mere action for collection of a sum
of money." It may be pointed out however that the above penalty is supposed to answer not
only for attorney's fees but for collection fees as well. Moreover:
. . . the attorneys' fees here provided is not, strictly speaking, the attorneys' fees recoverable
as between attorney and client spoken of and regulated by the Rules of Court. Rather, the
attorneys' fees here are in the nature of liquidated damages and the stipulation therefor is
aptly called a penal clause. It has been said that so long as such stipulation does not
contravene law, morals, or public order, it is strictly binding upon defendant. The attorneys'
fees so provided are awarded in favor of the litigant, not his counsel. It is the litigant, not
counsel, who is the judgment creditor entitled to enforce the judgment by execution. 19
Nonetheless, courts are empowered to reduce such penalty if the same is "iniquitous or
unconscionable." Article 1229 of the Civil Code states thus:
Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has
been partly or been irregularly complied with by the debtor. Even if there has no
performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable. (Emphasis supplied.)
The sentiments of the law are echoed in Article 2227 of the same Code:
Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be
equitably reduced if they are iniquitous or unconscionable.
It is true that we have upheld the reasonableness of penalties in the form of attorney's fees
consisting of twenty-five percent (25%) of the principal debt plus interest.20 In the case at bar,
however, the interest alone runs to some four and a half million pesos (P4.5M), even
exceeding the principal debt amounting to almost four million pesos (P4.0M). Twenty five
percent (25%) of the principal and interest amounts to roughly two million pesos (P2M). In
real terms, therefore, the attorney's fees and collection fees are manifestly exorbitant.
Accordingly, we reduce the same to ten percent (10%) of the principal.
Private respondent, however, argues that petitioner failed to question the award of attorney's
fees on appeal before respondent court and raised the issue only in its motion for
reconsideration. Consequently, petitioner should be deemed to have waived its right to
question such award.
Private respondent's attempts to dissuade us from reducing the penalty are futile. The Court
is clothed with ample authority to review matters, even if they are not assigned as errors in
their appeal, if it finds that their consideration is necessary in arriving at a just decision of the
case.21
WHEREFORE, the decision of the Court of Appeals is hereby MODIFIED in that the
attorney's and collection fees are reduced to ten percent (10%) of the principal but is
AFFIRMED in all other respects.
SO ORDERED.
Narvasa, C.J., Romero, Francisco and Purisima, JJ., concur.
Footnotes
1 More accurately, the invoices state:
. . . Interest at 12% per annum will be charged on all overdue account plus 25% on said
amount for attorney's fees and collection. . . .
2 Rollo, p. 51.
3 Id., at 54.
4 Id., at 43; emphasis in the original.
5 See Melendez v. Lavarias, 9 SCRA 548 (1963).
6 IV Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, 1990
ed., p. 298; emphasis supplied.
7 Globe Mackay Cable and Radio Corp. v. Court of Appeals, 176 SCRA 778 (1989).
8 Art. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals, goods customs or public policy shall compensate the latter for the
damage.
9 Rollo, p. 137.
10 Id., at 18-20.
11 I Tolentino, pp. 61-62; emphasis supplied.
12 Ford Philippines v. Court of Appeals, G.R. No. 99039, February 3, 1997.
13 Art. 2234, Civil Code.
14 Art. 1158, Civil Code.
15 Art. 1315, Civil Code.
16 Art. 1306, Civil Code.
17 Exhibit "BB;" emphasis supplied.
18 See Luneta Motor Co. v. Mora, 73 Phil. 80 (1941).
19 Polytrade Corporation v. Blanco, 30 SCRA 187 (1969).
20 See Polytrade v. Blanco, supra, note 1.
21 Korean Airlines Co., Ltd. v. Court of Appeals, 234 SCRA 717 (1994); see also: Asset
Privatization Trust v. CA, 214 SCRA 400 (1994).
G.R. No. 175822               October 23, 2013
CALIFORNIA CLOTHING INC. and MICHELLE S. YBAÑEZ, Petitioners, 
vs.
SHIRLEY G. QUIÑONES, Respondent.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the ; Rules of Court are the
Court of Appeals Decision1 dated August 3, 2006 and Resolution2 dated November 14, 2006
in CA-G.R. CV No. 80309. The assailed decision reversed and set aside the June 20, 2003
Decision3 of the Regional Trial Court of Cebu City (RTC), Branch 58, in Civil Case No. CEB-
26984; while the assailed resolution denied the motion for reconsideration filed by petitioner
Michelle Ybañez (Ybañez).
The facts of the case, as culled from the records, are as follows:
On July 25, 2001, respondent Shirley G. Quiñones, a Reservation Ticketing Agent of Cebu
Pacific Air in Lapu Lapu City, went inside the Guess USA Boutique at the second floor of
Robinson’s Department Store (Robinson’s) in Cebu City. She fitted four items: two jeans, a
blouse and a shorts, then decided to purchase the black jeans worth
₱2,098.00.4 Respondent allegedly paid to the cashier evidenced by a receipt5 issued by the
store.6
While she was walking through the skywalk connecting Robinson’s and Mercury Drug Store
(Mercury) where she was heading next, a Guess employee approached and informed her
that she failed to pay the item she got. She, however, insisted that she paid and showed the
employee the receipt issued in her favor.7 She then suggested that they talk about it at the
Cebu Pacific Office located at the basement of the mall. She first went to Mercury then met
the Guess employees as agreed upon.8
When she arrived at the Cebu Pacific Office, the Guess employees allegedly subjected her
to humiliation in front of the clients of Cebu Pacific and repeatedly demanded payment for
the black jeans.9 They supposedly even searched her wallet to check how much money she
had, followed by another argument. Respondent, thereafter, went home.10
On the same day, the Guess employees allegedly gave a letter to the Director of Cebu
Pacific Air narrating the incident, but the latter refused to receive it as it did not concern the
office and the same took place while respondent was off duty.11 Another letter was allegedly
prepared and was supposed to be sent to the Cebu Pacific Office in Robinson’s, but the
latter again refused to receive it.12 Respondent also claimed that the Human Resource
Department (HRD) of Robinson’s was furnished said letter and the latter in fact conducted an
investigation for purposes of canceling respondent’s Robinson’s credit card. Respondent
further claimed that she was not given a copy of said damaging letter.13 With the above
experience, respondent claimed to have suffered physical anxiety, sleepless nights, mental
anguish, fright, serious apprehension, besmirched reputation, moral shock and social
humiliation.14 She thus filed the Complaint for Damages15 before the RTC against petitioners
California Clothing, Inc. (California Clothing), Excelsis Villagonzalo (Villagonzalo), Imelda
Hawayon (Hawayon) and Ybañez. She demanded the payment of moral, nominal, and
exemplary damages, plus attorney’s fees and litigation expenses.16
In their Answer,17 petitioners and the other defendants admitted the issuance of the receipt of
payment. They claimed, however, that instead of the cashier (Hawayon) issuing the official
receipt, it was the invoicer (Villagonzalo) who did it manually. They explained that there was
miscommunication between the employees at that time because prior to the issuance of the
receipt, Villagonzalo asked Hawayon " Ok na ?," and the latter replied " Ok na ," which the
former believed to mean that the item has already been paid.18 Realizing the mistake,
Villagonzalo rushed outside to look for respondent and when he saw the latter, he invited her
to go back to the shop to make clarifications as to whether or not payment was indeed made.
Instead, however, of going back to the shop, respondent suggested that they meet at the
Cebu Pacific Office. Villagonzalo, Hawayon and Ybañez thus went to the agreed venue
where they talked to respondent.19 They pointed out that it appeared in their conversation
that respondent could not recall whom she gave the payment.20 They emphasized that they
were gentle and polite in talking to respondent and it was the latter who was arrogant in
answering their questions.21 As counterclaim, petitioners and the other defendants sought the
payment of moral and exemplary damages, plus attorney’s fees and litigation expenses.22
On June 20, 2003, the RTC rendered a Decision dismissing both the complaint and
counterclaim of the parties. From the evidence presented, the trial court concluded that the
petitioners and the other defendants believed in good faith that respondent failed to make
payment. Considering that no motive to fabricate a lie could be attributed to the Guess
employees, the court held that when they demanded payment from respondent, they merely
exercised a right under the honest belief that no payment was made. The RTC likewise did
not find it damaging for respondent when the confrontation took place in front of Cebu Pacific
clients, because it was respondent herself who put herself in that situation by choosing the
venue for discussion. As to the letter sent to Cebu Pacific Air, the trial court also did not take
it against the Guess employees, because they merely asked for assistance and not to
embarrass or humiliate respondent. In other words, the RTC found no evidence to prove bad
faith on the part of the Guess employees to warrant the award of damages.23
On appeal, the CA reversed and set aside the RTC decision, the dispositive portion of which
reads:
WHEREFORE, the instant appeal is GRANTED. The decision of the Regional Trial Court of
Cebu City, Branch 58, in Civil Case No. CEB-26984 (for: Damages) is hereby REVERSED
and SET ASIDE. Defendants Michelle Ybañez and California Clothing, Inc. are hereby
ordered to pay plaintiff-appellant Shirley G. Quiñones jointly and solidarily moral damages in
the amount of Fifty Thousand Pesos (₱50,000.00) and attorney’s fees in the amount of
Twenty Thousand Pesos (₱20,000.00).
SO ORDERED.24
While agreeing with the trial court that the Guess employees were in good faith when they
confronted respondent inside the Cebu Pacific Office about the alleged non-payment, the
CA, however, found preponderance of evidence showing that they acted in bad faith in
sending the demand letter to respondent’s employer. It found respondent’s possession of
both the official receipt and the subject black jeans as evidence of payment.25 Contrary to the
findings of the RTC, the CA opined that the letter addressed to Cebu Pacific’s director was
sent to respondent’s employer not merely to ask for assistance for the collection of the
disputed payment but to subject her to ridicule, humiliation and similar injury such that she
would be pressured to pay.26 Considering that Guess already started its investigation on the
incident, there was a taint of bad faith and malice when it dragged respondent’s employer
who was not privy to the transaction. This is especially true in this case since the purported
letter contained not only a narrative of the incident but accusations as to the alleged acts of
respondent in trying to evade payment.27 The appellate court thus held that petitioners are
guilty of abuse of right entitling respondent to collect moral damages and attorney’s fees.
Petitioner California Clothing Inc. was made liable for its failure to exercise extraordinary
diligence in the hiring and selection of its employees; while Ybañez’s liability stemmed from
her act of signing the demand letter sent to respondent’s employer. In view of Hawayon and
Villagonzalo’s good faith, however, they were exonerated from liability.28
Ybañez moved for the reconsideration29 of the aforesaid decision, but the same was denied
in the assailed November 14, 2006 CA Resolution.
Petitioners now come before the Court in this petition for review on certiorari under Rule 45
of the Rules of Court based on the following grounds:
I.
THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE LETTER SENT
TO THE CEBU PACIFIC OFFICE WAS MADE TO SUBJECT HEREIN RESPONDENT TO
RIDICULE, HUMILIATION AND SIMILAR INJURY.
II.
THE HONORABLE COURT OF APPEALS ERRED IN AWARDING MORAL DAMAGES AND
ATTORNEY’S FEES.30
The petition is without merit.
Respondent’s complaint against petitioners stemmed from the principle of abuse of rights
provided for in the Civil Code on the chapter of human relations. Respondent cried foul when
petitioners allegedly embarrassed her when they insisted that she did not pay for the black
jeans she purchased from their shop despite the evidence of payment which is the official
receipt issued by the shop. The issuance of the receipt notwithstanding, petitioners had the
right to verify from respondent whether she indeed made payment if they had reason to
believe that she did not. However, the exercise of such right is not without limitations. Any
abuse in the exercise of such right and in the performance of duty causing damage or injury
to another is actionable under the Civil Code. The Court’s pronouncement in Carpio v.
Valmonte31 is noteworthy:
In the sphere of our law on human relations, the victim of a wrongful act or omission, whether
done willfully or negligently, is not left without any remedy or recourse to obtain relief for the
damage or injury he sustained. Incorporated into our civil law are not only principles of equity
but also universal moral precepts which are designed to indicate certain norms that spring
from the fountain of good conscience and which are meant to serve as guides for human
conduct. First of these fundamental precepts is the principle commonly known as "abuse of
rights" under Article 19 of the Civil Code. It provides that " Every person must, in the exercise
of his rights and in the performance of his duties, act with justice, give everyone his due and
observe honesty and good faith."x x x32 The elements of abuse of rights are as follows: (1)
there is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of
prejudicing or injuring another.33
In this case, petitioners claimed that there was a miscommunication between the cashier and
the invoicer leading to the erroneous issuance of the receipt to respondent. When they
realized the mistake, they made a cash count and discovered that the amount which is
equivalent to the price of the black jeans was missing. They, thus, concluded that it was
respondent who failed to make such payment. It was, therefore, within their right to verify
from respondent whether she indeed paid or not and collect from her if she did not. However,
the question now is whether such right was exercised in good faith or they went overboard
giving respondent a cause of action against them.
Under the abuse of rights principle found in Article 19 of the Civil Code, a person must, in the
exercise of legal right or duty, act in good faith. He would be liable if he instead acted in bad
faith, with intent to prejudice another.34 Good faith refers to the state of mind which is
manifested by the acts of the individual concerned. It consists of the intention to abstain from
taking an unconscionable and unscrupulous advantage of another.35 Malice or bad faith, on
the other hand, implies a conscious and intentional design to do a wrongful act for a
dishonest purpose or moral obliquity.36
Initially, there was nothing wrong with petitioners asking respondent whether she paid or not.
The Guess employees were able to talk to respondent at the Cebu Pacific Office. The
confrontation started well, but it eventually turned sour when voices were raised by both
parties. As aptly held by both the RTC and the CA, such was the natural consequence of two
parties with conflicting views insisting on their respective beliefs. Considering, however, that
respondent was in possession of the item purchased from the shop, together with the official
receipt of payment issued by petitioners, the latter cannot insist that no such payment was
made on the basis of a mere speculation. Their claim should have been proven by
substantial evidence in the proper forum.
It is evident from the circumstances of the case that petitioners went overboard and tried to
force respondent to pay the amount they were demanding. In the guise of asking for
assistance, petitioners even sent a demand letter to respondent’s employer not only
informing it of the incident but obviously imputing bad acts on the part of
respondent.1âwphi1 Petitioners claimed that after receiving the receipt of payment and the
item purchased, respondent "was noted to hurriedly left (sic) the store." They also accused
respondent that she was not completely being honest when she was asked about the
circumstances of payment, thus:
x x x After receiving the OR and the item, Ms. Gutierrez was noted to hurriedly left (sic) the
store. x x x
When I asked her about to whom she gave the money, she gave out a blank expression and
told me, "I can’t remember." Then I asked her how much money she gave, she answered,
"₱2,100; 2 pcs 1,000 and 1 pc 100 bill." Then I told her that that would (sic) impossible since
we have no such denomination in our cash fund at that moment. Finally, I asked her if how
much change and if she received change from the cashier, she then answered, "I don’t
remember." After asking these simple questions, I am very certain that she is not completely
being honest about this. In fact, we invited her to come to our boutique to clear these matters
but she vehemently refused saying that she’s in a hurry and very busy.37
Clearly, these statements are outrightly accusatory. Petitioners accused respondent that not
only did she fail to pay for the jeans she purchased but that she deliberately took the same
without paying for it and later hurriedly left the shop to evade payment. These accusations
were made despite the issuance of the receipt of payment and the release of the item
purchased. There was, likewise, no showing that respondent had the intention to evade
payment. Contrary to petitioners’ claim, respondent was not in a rush in leaving the shop or
the mall. This is evidenced by the fact that the Guess employees did not have a hard time
looking for her when they realized the supposed non-payment.
It can be inferred from the foregoing that in sending the demand letter to respondent’s
employer, petitioners intended not only to ask for assistance in collecting the disputed
amount but to tarnish respondent’s reputation in the eyes of her employer. To malign
respondent without substantial evidence and despite the latter’s possession of enough
evidence in her favor, is clearly impermissible. A person should not use his right unjustly or
contrary to honesty and good faith, otherwise, he opens himself to liability.38
The exercise of a right must be in accordance with the purpose for which it was established
and must not be excessive or unduly harsh.39 In this case, petitioners obviously abused their
rights.
Complementing the principle of abuse of rights are the provisions of Articles 20 and 2 of the
Civil Code which read:40
Article 20. Every person who, contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.
Article 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals or good customs, or public policy shall compensate the latter for the
damage.
In view of the foregoing, respondent is entitled to an award of moral damages and attorney s
fees. Moral damages may be awarded whenever the defendant s wrongful act or omission is
the proximate cause of the plaintiffs physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar
injury in the cases specified or analogous to those provided in Article 2219 of the Civil
Code.41 Moral damages are not a bonanza. They are given to ease the defendant s grief and
suffering. They should, thus, reasonably approximate the extent of hurt caused and the
gravity of the wrong done.42 They are awarded not to enrich the complainant but to enable
the latter to obtain means, diversions, or amusements that will serve to alleviate the moral
suffering he has undergone.43 We find that the amount of ₱50,000.00 as moral damages
awarded by the CA is reasonable under the circumstances. Considering that respondent was
compelled to litigate to protect her interest, attorney s fees in the amount of of₱20,000.00 is
likewise just and proper.
WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of
Appeals Decision dated August 3, 2006 and Resolution dated November 14, 2006 in CA-
G.R. CV No. 80309, are AFFIRMED.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
ROBERTO A. ABAD JOSE CATRAL MENDOZA
Associate Justice Associate Justice
MARVIC MARIO VICTOR F. LEONEN
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Court s Division.
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the , Division Chairperson s
Attestation, I certify that the conclusions n the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Court s Division.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
1
 Penned by Associate Justice Agustin S. Dizon, with Associate Justices Isaias P. Dicdican
and Apolinario D. Bruselas, Jr., concurring; rollo pp. 52-62.
2
 Penned by Associate Justice Agustin S. Dizon, with Associate Justices Isaias P. Dicdican
and Pampio A. Abarintos, concurring; rollo pp. 70-71.
3
 Penned by Presiding Judge Gabriel T. Ingles; rollo pp. 40-51.
4
 Rollo, pp. 52-53.
5
 Records, p. 8.
6
 Id. at 2.
7
 Id.
8
 Id.
9
 Id.
10
 Id. at 3.
11
 Id.
12
 Id.
13
 Id. at 4.
14
 Id. at 5.
15
 Id. at 1-7.
16
 Id. at 5.
17
 Id. at 38-46.
18
 Id. at 41-42.
19
 Id. at 42.
20
 Id. at 43.
21
 Id.
22
 Id. at 43-44.
23
 Rollo, pp. 49-51.
24
 Id. at 61. (Italics and emphasis in the original)
25
 Id. at 56.
26
 Id. at 57.
27
 Id. at 58.
28
 Id. at 61.
29
 CA rollo, pp. 84-90.
30
 Rollo, p. 14.
31
 481 Phil. 352 (2004).
32
 Carpio v. Valmonte, supra, at 361-362.
33
 Dart Philippines, Inc. v. Calogcog, G.R. No. 149241, August 24, 2009, 596 SCRA 614,
624; Carpio v. Valmonte, supra note 31, at 362.
34
 Villanueva v. Rosqueta, G.R. No. 180764, January 19, 2010, 610 SCRA 334, 339.
35
 Dart Philippines, Inc. v. Calogcog, supra note 33.
36
 Gonzales v. Philippine Commercial and International Bank, G.R. No. 180257, February 23,
2011, 644 SCRA 180, 202.
37
 Rollo, p. 59. (Emphasis and italics in the original)
38
 Uypitching v. Quiamco, G.R. No. 146322, December 6, 2006, 510 SCRA 172, 179.
39
 Dart Philippines, Inc. v. Calogcog, supra note 33; id.
40
 Carpio v. Valmonte, supra note 31, at 362.
41
 Id. at 364.
42
 Villanueva v. Rosqueta, supra note 34, at 341.
43
 Carpio v. Valmonte, supra note 31, at 365.

G.R. No. 138964            August 9, 2001

VICENTE RELLOSA, CYNTHIA ORTEGA assisted by husband Roberto
Ortega, petitioner, 
vs.
GONZALO PELLOSIS, INESITA MOSTE, and DANILO RADAM, respondents.
VITUG, J.:
"Every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith." 1 This provision in our
law is not just a declaration of principle for it can in itself constitute, when unduly ignored or
violated, a valid source of a cause of action or defense.
The case seeks to reverse the Court of Appeals in not countenancing an attempt to abridge
and render inutile a legal right to contest an adverse ruling of an agency of government.
Respondents were lessees of a parcel of land, owned by one Marta Reyes, located at San
Pascual Street, Malate, Manila. Respondents had built their houses on the land which, over
the years, underwent continuous improvements. After the demise of Marta, the land was
inherited by her son Victor Reyes. Sometime in 1986, Victor informed respondents that, for
being lessees of the land for more than twenty (20) years, they would have a right of first
refusal to buy the land. Sometime in the early part of 1989, without the knowledge of
respondents, the land occupied by them was sold to petitioner Cynthia Ortega who was able
to ultimately secure title to the property in her name.
On 25 May 1989, Cynthia Ortega, filed a petition for condemnation, docketed Condemnation
Case No. 89-05-007, with the Office of the Building Official, City of Manila, of the structures
on the land.
On 31 May 1989, respondents filed with the Regional Trial Court of Manila a suit for the
"Declaration of Nullity of the Sale," docketed as Civil Case No. 89-49176, made in favor of
petitioner Cynthia Ortega predicated upon their right of first refusal which was claimed to
have been impinged upon the sale of the land to petitioner Ortega without their knowledge.
After due hearing in the condemnation case, the Office of the Building Official issued a
resolution, dated 27 November 1989, ordering the demolition of the houses of respondents.
Copies of the resolution were served upon respondents and their counsel on 07 December
1989. The following day, or on 08 December 1989, Cynthia Ortega, together with her father
and co-petitioner, Vicente Rellosa, hired workers to commence the demolition of
respondents' houses. Due to the timely intervention of a mobile unit of the Western Police
District, the intended demolition did not take place following talks between petitioner Rellosa
and counsel who pleaded that the demolition be suspended since the order sought to be
implemented was not yet final and executory. On 11 December 1989, respondents filed their
appeal contesting the order of the Office of the Building Official. On 12 December 1989,
petitioners once again hired workers and proceeded with the demolition of respondents'
houses.
Resultantly, respondents filed Civil Case No. 89-49176 before the Regional Trial Court of
Manila, Branch 54, praying that petitioners be ordered to pay moral and exemplary damages,
as well as attorney's fee, for the untimely demolition of the houses. After trial, the court
dismissed the complaint of respondents and instead ordered them to pay petitioners moral
damages. On appeal, the Court of Appeals, on the basis of its findings and conclusions,
reversed the decision of the trial court and ordered petitioners to pay respondents the
following sums:
"1) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five Thousand Pesos
(P25,000.00) for each appellant, by way of moral damages;"
"2) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five thousand Pesos
(P25,000.00) for each appellant, by way of exemplary damages;"
"3) Fifteen Thousand Pesos (P15,000.00) as and for attorney's fees; and
"4) The costs of suit."2 
The appellate court ruled:
"Thus, by the clear provisions of paragraph 23 of the Implementing Rules and Regulations of
PD 1096 (otherwise known as the Building Code), above, appellants, being the parties
adversely affected by the November 27, 1989 Resolution of the Office of the Building Official,
had fifteen (15) days from receipt of a copy of the same within which to perfect an
administrative appeal. Thus, since appellants received a copy of the Resolution on
December 7, 1989, they had until December 22, 1989 within which to perfect an
administrative appeal and until such time, the said Resolution was not yet final and
executory."
xxx           xxx           xxx
"It cannot be denied, therefore, that when appellees commenced to demolish appellants'
houses as early as December 8, 1989 and eventually on December 12, 1989, neither the
Resolution of the Building Official nor the Demolition Order itself were final and executory."3 
Petitioners filed the instant petition contending that the appellate court gravely erred in ruling
that the premature demolition of respondents' houses entitled them to the award of damages.
Petitioners pointed out that the order of the Office of the Building Official was eventually
upheld on appeal by the Department of Public Works and Highways in its decision of 14
March 1990. Furthermore, petitioners added, the structures subject matter of the demolition
order were declared to be dangerous structures by the Office of the Building Official and, as
such, could be abated to avoid danger to the public.
The Court rules for affirmance of the assailed decision.
A right is a power, privilege, or immunity guaranteed under a constitution, statute or
decisional law, or recognized as a result of long usage,4 constitutive of a legally enforceable
claim of one person against another.
Petitioner might verily be the owner of the land, with the right to enjoy5 and to exclude any
person from the enjoyment and disposal thereof,6 but the exercise of these rights is not
without limitations. The abuse of rights rule established in Article 19 of the Civil Code
requires every person to act with justice, to give everyone his due; and to observe honesty
and good faith.7 When a right is exercised in a manner which discards these norms resulting
in damage to another, a legal wrong is committed for which the actor can be held
accountable. In this instance, the issue is not so much about the existence of the right or
validity of the order of demolition as the question of whether or not petitioners have acted in
conformity with, and not in disregard of, the standard set by Article 19 of the Civil Code.
At the time petitioners implemented the order of demolition, barely five days after
respondents received a copy thereof, the same was not yet final and executory. The law
provided for a fifteen-day appeal period in favor of a party aggrieved by an adverse ruling of
the Office of the Building Official but by the precipitate action of petitioners in demolishing the
houses of respondents (prior to the expiration of the period to appeal), the latter were
effectively deprived of this recourse. The fact that the order of demolition was later affirmed
by the Department of Public Works and Highways was of no moment. The action of
petitioners up to the point where they were able to secure an order of demolition was not
condemnable but implementing the order unmindful of the right of respondents to contest the
ruling was a different matter and could only be held utterly indefensible.
The Court, however, finds the award of P75,000.00 exemplary damages and another of
P75,000.00 moral damages for each respondent to be rather excessive given the
circumstances; the awards must be reduced to the reasonable amounts of P20,000.00
exemplary damages and P20,000.00 moral damages.
WHEREFORE, the assailed decision of the Court of Appeals is MODIFIED by reducing the
awards of P75,000.00 exemplary damages and of P75,000.00 moral damages to each
respondent reduced to P20,000.00 exemplary damages and P20,000.00 moral damages for
each respondent. In all other respects, the decision of the appellate court is AFFIRMED. No
costs.
SO ORDERED.
Melo, Panganiban and Gonzaga-Reyes, JJ ., concur.
Sandoval-Gutierrez, J ., is on leave.

Footnotes
1 
Art 19, Civil Code.
2 
Rollo, p. 128.
3 
Rollo, pp. 123-124.
4 
Black's Law Dictionary, 6th Ed., p. 1324.
5 
Art 428, New Civil Code.
6 
Art. 429, New Civil Code.
7 
Albenson Enterprises Corporation vs. Court of Appeals, 217 SCRA 16.

G.R. No. 126204            November 20, 2001

NATIONAL POWER CORPORATION, petitioner, 
vs.
PHILIPP BROTHERS OCEANIC, INC., respondent.
SANDOVAL-GUTIERREZ, J.:
Where a person merely uses a right pertaining to him, without bad faith or intent to injure, the
fact that damages are thereby suffered by another will not make him liable.1
This principle finds useful application to the present case.
Before us is a petition for review of the Decision2 dated August 27, 1996 of the Court of
Appeals affirming in toto the Decision3 dated January 16, 1992 of the Regional Trial Court,
Branch 57, Makati City.
The facts are:
On May 14, 1987, the National Power Corporation (NAPOCOR) issued invitations to bid for
the supply and delivery of 120,000 metric tons of imported coal for its Batangas Coal-Fired
Thermal Power Plant in Calaca, Batangas. The Philipp Brothers Oceanic, Inc. (PHIBRO)
prequalified and was allowed to participate as one of the bidders. After the public bidding
was conducted, PHIBRO's bid was accepted. NAPOCOR's acceptance was conveyed in a
letter dated July 8, 1987, which was received by PHIBRO on July 15, 1987.The "Bidding
Terms and Specifications"4provide for the manner of shipment of coals, thus:
"SECTION V
SHIPMENT
The winning TENDERER who then becomes the SELLER shall arrange and provide
gearless bulk carrier for the shipment of coal to arrive at discharging port on or before thirty
(30) calendar days after receipt of the Letter of Credit by the SELLER or its nominee as per
Section XIV hereof to meet the vessel arrival schedules at Calaca, Batangas, Philippines as
follows:
60,000 +/ - 10 % July 20, 1987
60,000 +/ - 10% September 4, 1987"5
On July 10, 1987, PHIBRO sent word to NAPOCOR that industrial disputes might soon
plague Australia, the shipment's point of origin, which could seriously hamper PHIBRO's
ability to supply the needed coal.6 From July 23 to July 31, 1987, PHIBRO again apprised
NAPOCOR of the situation in Australia, particularly informing the latter that the ship owners
therein are not willing to load cargo unless a "strike-free" clause is incorporated in the charter
party or the contract of carriage.7 In order to hasten the transfer of coal, PHIBRO proposed to
NAPOCOR that they equally share the burden of a "strike-free" clause. NAPOCOR refused.
On August 6, 1987, PHIBRO received from NAPOCOR a confirmed and workable letter of
credit. Instead of delivering the coal on or before the thirtieth day after receipt of the Letter of
Credit, as agreed upon by the parties in the July contract, PHIBRO effected its first shipment
only on November 17, 1987.
Consequently, in October 1987, NAPOCOR once more advertised for the delivery of coal to
its Calaca thermal plant. PHIBRO participated anew in this subsequent bidding. On
November 24, 1987, NAPOCOR disapproved PHIBRO's application for pre-qualification to
bid for not meeting the minimum requirements.8 Upon further inquiry, PHIBRO found that the
real reason for the disapproval was its purported failure to satisfy NAPOCOR's demand for
damages due to the delay in the delivery of the first coal shipment.
This prompted PHIBRO to file an action for damages with application for injunction against
NAPOCOR with the Regional Trial Court, Branch 57, Makati City.9 In its complaint, PHIBRO
alleged that NAPOCOR's act of disqualifying it in the October 1987 bidding and in all
subsequent biddings was tainted with malice and bad faith. PHIBRO prayed for actual, moral
and exemplary damages and attorney's fees.
In its answer, NAPOCOR averred that the strikes in Australia could not be invoked as reason
for the delay in the delivery of coal because PHIBRO itself admitted that as of July 28, 1987
those strikes had already ceased. And, even assuming that the strikes were still ongoing,
PHIBRO should have shouldered the burden of a "strike-free" clause because their contract
was "C and F Calaca, Batangas, Philippines," meaning, the cost and freight from the point of
origin until the point of destination would be for the account of PHIBRO. Furthermore,
NAPOCOR claimed that due to PHIBRO's failure to deliver the coal on time, it was compelled
to purchase coal from ASEA at a higher price. NAPOCOR claimed for actual damages in the
amount of P12,436,185.73, representing the increase in the price of coal, and a claim of
P500,000.00 as litigation expenses.10
Thereafter, trial on the merits ensued.
On January 16, 1992, the trial court rendered a decision in favor of PHIBRO, the dispositive
portion of which reads:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff Philipp Brothers Oceanic
Inc. (PHIBRO) and against the defendant National Power Corporation (NAPOCOR) ordering
the said defendant NAPOCOR:
1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the defendant National Power
Corporation's list of accredited bidders and allow PHIBRO to participate in any and all future
tenders of National Power Corporation for the supply and delivery of imported steam coal;
2. To pay Philipp Brothers Oceanic, Inc. (PHIBRO);
a. The peso equivalent at the time of payment of $864,000 as actual damages,
b. The peso equivalent at the time of payment of $100,000 as moral damages;
c. The peso equivalent at the time of payment of $50,000 as exemplary damages;
d. The peso equivalent at the time of payment of $73,231.91 as reimbursement for
expenses, cost of litigation and attorney's fees;
3. To pay the costs of suit;
4. The counterclaims of defendant NAPOCOR are dismissed for lack of merit.
SO ORDERED."11
Unsatisfied, NAPOCOR, through the Solicitor General, elevated the case to the Court of
Appeals. On August 27, 1996, the Court of Appeals rendered a Decision affirming in toto the
Decision of the Regional Trial Court. It ratiocinated that:
"There is ample evidence to show that although PHIBRO's delivery of the shipment of coal
was delayed, the delay was in fact caused by a) Napocor's own delay in opening a workable
letter of credit; and b) the strikes which plaqued the Australian coal industry from the first
week of July to the third week of September 1987. Strikes are included in the definition of
force majeure in Section XVII of the Bidding Terms and Specifications, (supra), so Phibro is
not liable for any delay caused thereby.
Phibro was informed of the acceptance of its bid on July 8, 1987. Delivery of coal was to be
effected thirty (30) days from Napocor's opening of a confirmed and workable letter of credit.
Napocor was only able to do so on August 6, 1987.
By that time, Australia's coal industry was in the middle of a seething controversy and unrest,
occasioned by strikes, overtime bans, mine stoppages. The origin, the scope and the effects
of this industrial unrest are lucidly described in the uncontroverted testimony of James
Archibald, an employee of Phibro and member of the Export Committee of the Australian
Coal Association during the time these events transpired.
xxx           xxx           xxx
The records also attest that Phibro periodically informed Napocor of these developments as
early as July 1, 1987, even before the bid was approved. Yet, Napocor did not forthwith open
the letter of credit in order to avoid delay which might be caused by the strikes and their
after-effects.
"Strikes" are undoubtedly included in the force majeure clause of the Bidding Terms and
Specifications (supra). The renowned civilist, Prof. Arturo Tolentino, defines force majeure as
"an event which takes place by accident and could not have been foreseen." (Civil Code of
the Philippines, Volume IV, Obligations and Contracts, 126, [1991]) He further states:
"Fortuitous events may be produced by two general causes: (1) by Nature, such as
earthquakes, storms, floods, epidemics, fires, etc., and (2) by the act of man, such as an
armed invasion, attack by bandits, governmental prohibitions, robbery, etc."
Tolentino adds that the term generally applies, broadly speaking, to natural accidents. In
order that acts of man such as a strike, may constitute fortuitous event, it is necessary that
they have the force of an imposition which the debtor could not have resisted. He cites a
parallel example in the case of Philippine National Bank v. Court of Appeals, 94 SCRA 357
(1979), wherein the Supreme Court said that the outbreak of war which prevents
performance exempts a party from liability.
Hence, by law and by stipulation of the parties, the strikes which took place in Australia from
the first week of July to the third week of September, 1987, exempted Phibro from the effects
of delay of the delivery of the shipment of coal."12
Twice thwarted, NAPOCOR comes to us via a petition for review ascribing to the Court of
Appeals the following errors:
I
"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that
PHIBRO's delay in the delivery of imported coal was due to NAPOCOR's alleged delay in
opening a letter of credit and to force majeure, and not to PHIBRO's own deliberate acts and
faults."13
II
"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that
NAPOCOR acted maliciously and unjustifiably in disqualifying PHIBRO from participating in
the December 8, 1987 and future biddings for the supply of imported coal despite the
existence of valid grounds therefor such as serious impairment of its track record."14
III
"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that
PHIBRO was entitled to injunctive relief, to actual or compensatory, moral and exemplary
damages, attorney's fees and litigation expenses despite the clear absence of legal and
factual bases for such award."15
IV
"Respondent Court of Appeals gravely and seriously erred in absolving PHIBRO from any
liability for damages to NAPOCOR for its unjustified and deliberate refusal and/or failure to
deliver the contracted imported coal within the stipulated period."16
V
"Respondent Court of Appeals gravely and seriously erred in dismissing NAPOCOR's
counterclaims for damages and litigation expenses."17
It is axiomatic that only questions of law, not questions of fact, may be raised before this
Court in a petition for review under Rule 45 of the Rules of Court.18 The findings of facts of
the Court of Appeals are conclusive and binding on this Court19 and they carry even more
weight when the said court affirms the factual findings of the trial court.20 Stated differently,
the findings of the Court of .Appeals, by itself, which are supported by substantial evidence,
are almost beyond the power of review by this Court.21
With the foregoing settled jurisprudence, we find it pointless to delve lengthily on the factual
issues raised by petitioner. The existence of strikes in Australia having been duly established
in the lower courts, we are left only with the burden of determining whether or not NAPOCOR
acted wrongfully or with bad faith in disqualifying PHIBRO from participating in the
subsequent public bidding.
Let us consider the case in its proper perspective.
The Court of Appeals is justified in sustaining the Regional Trial Court's decision exonerating
PHIBRO from any liability for damages to NAPOCOR as it was clearly established from the
evidence, testimonial and documentary, that what prevented PHIBRO from complying with its
obligation under the July 1987 contract was the industrial disputes which besieged Australia
during that time. Extant in our Civil Code is the rule that no person shall be responsible for
those events which could not be foreseen, or which, though foreseen, were inevitable.22 This
means that when an obligor is unable to fulfill his obligation because of a fortuitous event or
force majeure, he cannot be held liable for damages for non-performance.23
In addition to the above legal precept, it is worthy to note that PHIBRO and NAPOCOR
explicitly agreed in Section XVII of the "Bidding Terms and Specifications"24 that "neither
seller (PHIBRO) nor buyer (NAPOCOR) shall be liable for any delay in or failure of the
performance of its obligations, other than the payment of money due, if any such delay or
failure is due to Force Majeure." Specifically, they defined force majeure as "any disabling
cause beyond the control of and without fault or negligence of the party, which causes may
include but are not restricted to Acts of God or of the public enemy; acts of the Government
in either its sovereign or contractual capacity; governmental restrictions; strikes, fires, floods,
wars, typhoons, storms, epidemics and quarantine restrictions."
The law is clear and so is the contract between NAPOCOR and PHIBRO. Therefore, we
have no reason to rule otherwise.
However, proceeding from the premise that PHIBRO was prevented by force majeure from
complying with its obligation, does it necessarily follow that NAPOCOR acted unjustly,
capriciously, and unfairly in disapproving PHIBRO's application for pre-qualification to bid?
First, it must be stressed that NAPOCOR was not bound under any contract to approve
PHIBRO's pre-qualification requirements. In fact, NAPOCOR had expressly reserved its right
to reject bids. The Instruction to Bidders found in the "Post-Qualification
Documents/Specifications for the Supply and Delivery of Coal for the Batangas Coal-Fired
Thermal Power Plant I at Calaca, Batangas Philippines,"25 is explicit, thus:
"IB-17 RESERVATION OF NAPOCOR TO REJECT BIDS
NAPOCOR reserves the right to reject any or all bids, to waive any minor informality in the
bids received. The right is also reserved to reject the bids of any bidder who has previously
failed to properly perform or complete on time any and all contracts for delivery of coal or any
supply undertaken by a bidder."26(Emphasis supplied)
This Court has held that where the right to reject is so reserved, the lowest bid or any bid for
that matter may be rejected on a mere technicality.27 And where the government as
advertiser, availing itself of that right, makes its choice in rejecting any or all bids, the losing
bidder has no cause to complain nor right to dispute that choice unless an unfairness or
injustice is shown. Accordingly, a bidder has no ground of action to compel the Government
to award the contract in his favor, nor to compel it to accept his bid. Even the lowest bid or
any bid may be rejected.28In Celeste v. Court of Appeals,29 we had the occasion to rule:
"Moreover, paragraph 15 of the Instructions to Bidders states that 'the Government hereby
reserves the right to reject any or all bids submitted.' In the case of A.C. Esguerra and Sons
v. Aytona, 4 SCRA 1245, 1249 (1962), we held:
'x x x [I]n the invitation to bid, there is a condition imposed upon the bidders to the effect that
the bidders shall be subject to the right of the government to reject any and all bids subject to
its discretion. Here the government has made its choice, and unless an unfairness or
injustice is shown, the losing bidders have no cause to complain, nor right to dispute that
choice.'
Since there is no evidence to prove bad faith and arbitrariness on the part of the petitioners
in evaluating the bids, we rule that the private respondents are not entitled to damages
representing lost profits." (Emphasis supplied)
Verily, a reservation of the government of its right to reject any bid, generally vests in the
authorities a wide discretion as to who is the best and most advantageous bidder. The
exercise of such discretion involves inquiry, investigation, comparison, deliberation and
decision, which are quasi-judicial functions, and when honestly exercised, may not be
reviewed by the court.30 In Bureau Veritas v. Office of the President,31 we decreed:
"The discretion to accept or reject a bid and award contracts is vested in the Government
agencies entrusted with that function. The discretion given to the authorities on this matter is
of such wide latitude that the Courts will not interfere therewith, unless it is apparent that it is
used as a shield to a fraudulent award. (Jalandoni v. NARRA, 108 Phil. 486 [1960]) x x x.
The exercise of this discretion is a policy decision that necessitates prior inquiry,
investigation, comparison, evaluation, and deliberation. This task can best be discharged by
the Government agencies concerned, not by the Courts. The role of the Courts is to
ascertain whether a branch or instrumentality of the Government has transgresses its
constitutional boundaries. But the Courts will not interfere with executive or legislative
discretion exercised within those boundaries. Otherwise, it strays into the realm of policy
decision-making. x x x." (Emphasis supplied)
Owing to the discretionary character of the right involved in this case, the propriety of
NAPOCOR's act should therefore be judged on the basis of the general principles regulating
human relations, the forefront provision of which is Article 19 of the Civil Code which
provides that "every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good
faith."32Accordingly, a person will be protected only when he acts in the legitimate exercise of
his right, that is, when he acts with prudence and in good faith; but not when he acts with
negligence or abuse.33
Did NAPOCOR abuse its right or act unjustly in disqualifying PHIBRO from the public
bidding?
We rule in the negative.
In practice, courts, in the sound exercise of their discretion, will have to determine under all
the facts and circumstances when the exercise of a right is unjust, or when there has been
an abuse of right.34
We went over the record of the case with painstaking solicitude and we are convinced that
NAPOCOR's act of disapproving PHIBRO's application for pre-qualification to bid was
without any intent to injure or a purposive motive to perpetrate damage. Apparently,
NAPOCOR acted on the strong conviction that PHIBRO had a "seriously-impaired" track
record. NAPOCOR cannot be faulted from believing so. At this juncture, it is worth
mentioning that at the time NAPOCOR issued its subsequent Invitation to Bid, i.e., October
1987, PHIBRO had not yet delivered the first shipment of coal under the July 1987 contract,
which was due on or before September 5, 1987. Naturally, NAPOCOR is justified in
entertaining doubts on PHIBRO's qualification or capability to assume an obligation under a
new contract.
Moreover, PHIBRO's actuation in 1987 raised doubts as to the real situation of the coal
industry in Australia. It appears from the records that when NAPOCOR was constrained to
consider an offer from another coal supplier (ASEA) at a price of US$33.44 per metric ton,
PHIBRO unexpectedly offered the immediate delivery of 60,000 metric tons of Ulan steam
coal at US$31.00 per metric ton for arrival at Calaca, Batangas on September 20-21,
1987."35 Of course, NAPOCOR had reason to ponder — how come PHIBRO could assure
the immediate delivery of 60,000 metric tons of coal from the same source to arrive at
Calaca not later than September 20/21, 1987 but it could not deliver the coal it had
undertaken under its contract?
Significantly, one characteristic of a fortuitous event, in a legal sense, and consequently in
relations to contracts, is that "the concurrence must be such as to render it impossible for the
debtor to fulfill his obligation in a normal manner."36 Faced with the above circumstance,
NAPOCOR is justified in assuming that, may be, there was really no fortuitous event or
force majeure which could render it impossible for PHIBRO to effect the delivery of coal.
Correspondingly, it is also justified in treating PHIBRO's failure to deliver a serious
impairment of its track record. That the trial court, thereafter, found PHIBRO's unexpected
offer actually a result of its desire to minimize losses on the part of NAPOCOR is
inconsequential. In determining the existence of good faith, the yardstick is the frame of mind
of the actor at the time he committed the act, disregarding actualities or facts outside his
knowledge. We cannot fault NAPOCOR if it mistook PHIBRO's unexpected offer a mere
attempt on the latter's part to undercut ASEA or an indication of PHIBRO's inconsistency.
The circumstances warrant such contemplation.
That NAPOCOR believed all along that PHIBRO's failure to deliver on time was unfounded is
manifest from its letters37 reminding PHIBRO that it was bound to deliver the coal within 30
days from its (PHIBRO's) receipt of the Letter of Credit, otherwise it would be constrained to
take legal action. The same honest belief can be deduced from NAPOCOR's Board
Resolution, thus:
"On the legal aspect, Management stressed that failure of PBO to deliver under the contract
makes them liable for damages, considering that the reasons invoked were not valid. The
measure of the damages will be limited to actual and compensatory damages. However, it
was reported that Philipp Brothers advised they would like to have continuous business
relation with NPC so they are willing to sit down or even proposed that the case be submitted
to the Department of Justice as to avoid a court action or arbitration.
xxx           xxx           xxx
On the technical-economic aspect, Management claims that if PBO delivers in November
1987 and January 1988, there are some advantages. If PBO reacts to any legal action and
fails to deliver, the options are: one, to use 100% Semirara and second, to go into urgent
coal order. The first option will result in a 75 MW derating and oil will be needed as
supplement. We will stand to lose around P30 M. On the other hand, if NPC goes into an
urgent coal order, there will be an additional expense of $786,000 or P16.11 M, considering
the price of the latest purchase with ASEA. On both points, reliability is decreased."38
The very purpose of requiring a bidder to furnish the awarding authority its pre-qualification
documents is to ensure that only those "responsible" and "qualified" bidders could bid and be
awarded with government contracts. It bears stressing that the award of a contract is
measured not solely by the smallest amount of bid for its performance, but also by the
"responsibility" of the bidder. Consequently, the integrity, honesty, and trustworthiness of the
bidder is to be considered. An awarding official is justified in considering a bidder not
qualified or not responsible if he has previously defrauded the public in such contracts or if,
on the evidence before him, the official bona fide believes the bidder has committed such
fraud, despite the fact that there is yet no judicial determination to that effect.39Otherwise
stated, if the awarding body bona fide believes that a bidder has seriously impaired its track
record because of a particular conduct, it is justified in disqualifying the bidder. This policy is
necessary to protect the interest of the awarding body against irresponsible bidders.
Thus, one who acted pursuant to the sincere belief that another willfully committed an act
prejudicial to the interest of the government cannot be considered to have acted in bad faith.
Bad faith has always been a question of intention. It is that corrupt motive that operates in
the mind. As understood in law, it contemplates a state of mind affirmatively operating with
furtive design or with some motive of self-interest or ill-will or for ulterior purpose.40While
confined in the realm of thought, its presence may be ascertained through the party's
actuation or through circumstantial evidence.41 The circumstances under which NAPOCOR
disapproved PHIBRO's pre-qualification to bid do not show an intention to cause damage to
the latter. The measure it adopted was one of self-protection. Consequently, we cannot
penalize NAPOCOR for the course of action it took. NAPOCOR cannot be made liable for
actual, moral and exemplary damages.
Corollarily, in awarding to PHIBRO actual damages in the amount of $864,000, the Regional
Trial Court computed what could have been the profits of PHIBRO had NAPOCOR allowed it
to participate in the subsequent public bidding. It ruled that "PHIBRO would have won the
tenders for the supply of about 960,000 metric tons out of at least 1,200,000 metric tons"
from the public bidding of December 1987 to 1990. We quote the trial court's ruling, thus:
". . . PHIBRO was unjustly excluded from participating in at least five (5) tenders beginning
December 1987 to 1990, for the supply and delivery of imported coal with a total volume of
about 1,200,000 metric tons valued at no less than US$32 Million. (Exhs. "AA," "AA-1-1," to
"AA-2"). The price of imported coal for delivery in 1988 was quoted in June 1988 by bidders
at US$41.35 to US$43.95 per metric ton (Exh. "JJ"); in September 1988 at US$41.50 to
US$49.50 per metric ton (Exh. "J-1"); in November 1988 at US$39.00 to US$48.50 per
metric ton (Exh. "J-2") and for the 1989 deliveries, at US$44.35 to US$47.35 per metric ton
(Exh. "J-3") and US$38.00 to US$48.25 per metric ton in September 1990 (Exh. "JJ-6" and
"JJ-7"). PHIBRO would have won the tenders for the supply and delivery of about 960,000
metric tons of coal out of at least 1,200,000 metric tons awarded during said period based on
its proven track record of 80%. The Court, therefore finds that as a result of its
disqualification, PHIBRO suffered damages equivalent to its standard 3% margin in 960,000
metric tons of coal at the most conservative price of US$30,000 per metric ton, or the total of
US$864,000 which PHIBRO would have earned had it been allowed to participate in
biddings in which it was disqualified and in subsequent tenders for supply and delivery of
imported coal."
We find this to be erroneous.
Basic is the rule that to recover actual damages, the amount of loss must not only be capable
of proof but must actually be proven with reasonable degree of certainty, premised upon
competent proof or best evidence obtainable of the actual amount thereof.42 A court cannot
merely rely on speculations, conjectures, or guesswork as to the fact and amount of
damages. Thus, while indemnification for damages shall comprehend not only the value of
the loss suffered, but also that of the profits which the obligee failed to obtain,43 it is
imperative that the basis of the alleged unearned profits is not too speculative and
conjectural as to show the actual damages which may be suffered on a future period.
In Pantranco North Express, Inc. v. Court of Appeals,44 this Court denied the plaintiff's claim
for actual damages which was premised on a contract he was about to negotiate on the
ground that there was still the requisite public bidding to be complied with, thus:
"As to the alleged contract he was about to negotiate with Minister Hipolito, there is no
showing that the same has been awarded to him. If Tandoc was about to negotiate a
contract with Minister Hipolito, there was no assurance that the former would get it or that the
latter would award the contract to him since there was the requisite public bidding. The
claimed loss of profit arising out of that alleged contract which was still to be negotiated is a
mere expectancy. Tandoc's claim that he could have earned P2 million in profits is highly
speculative and no concrete evidence was presented to prove the same. The only unearned
income to which Tandoc is entitled to from the evidence presented is that for the one-month
period, during which his business was interrupted, which is P6,125.00, considering that his
annual net income was P73,500.00."
In Lufthansa German Airlines v. Court of Appeals,45 this Court likewise disallowed the trial
court's award of actual damages for unrealized profits in the amount of US$75,000.00 for
being highly speculative. It was held that "the realization of profits by respondent . . . was not
a certainty, but depended on a number of factors, foremost of which was his ability to invite
investors and to win the bid." This Court went further saying that actual or compensatory
damages cannot be presumed, but must be duly proved, and proved with reasonable degree
of certainty.
And in National Power Corporation v. Court of Appeals,46 the Court, in denying the bidder's
claim for unrealized commissions, ruled that even if NAPOCOR does not deny its (bidder's)
claims for unrealized commissions, and that these claims have been transmuted into judicial
admissions, these admissions cannot prevail over the rules and regulations governing the
bidding for NAPOCOR contracts, which necessarily and inherently include the reservation by
the NAPOCOR of its right to reject any or all bids.
The award of moral damages is likewise improper. To reiterate, NAPOCOR did not act in bad
faith. Moreover, moral damages are not, as a general rule, granted to a corporation.47 While it
is true that besmirched reputation is included in moral damages, it cannot cause mental
anguish to a corporation, unlike in the case of a natural person, for a corporation has no
reputation in the sense that an individual has, and besides, it is inherently impossible for a
corporation to suffer mental anguish.48 In LBC Express, Inc. v. Court of Appeals,49 we ruled:
"Moral damages are granted in recompense for physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury. A corporation, being an artificial person and having existence only in legal
contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience
physical suffering and mental anguish. Mental suffering can be experienced only by one
having a nervous system and it flows from real ills, sorrows, and griefs of life — all of which
cannot be suffered by respondent bank as an artificial person."
Neither can we award exemplary damages under Article 2234 of the Civil Code. Before the
court may consider the question of whether or not exemplary damages should be awarded,
the plaintiff must show that he is entitled to moral, temperate, or compensatory damages.
NAPOCOR, in this petition, likewise contests the judgment of the lower courts awarding
PHIBRO the amount of $73,231.91 as reimbursement for expenses, cost of litigation and
attorney's fees.
We agree with NAPOCOR.
This Court has laid down the rule that in the absence of stipulation, a winning party may be
awarded attorney's fees only in case plaintiff's action or defendant's stand is so untenable as
to amount to gross and evident bad faith.50This cannot be said of the case at bar. NAPOCOR
is justified in resisting PHIBRO's claim for damages. As a matter of fact, we partially grant the
prayer of NAPOCOR as we find that it did not act in bad faith in disapproving PHIBRO's pre-
qualification to bid.
Trial courts must be reminded that attorney's fees may not be awarded to a party simply
because the judgment is favorable to him, for it may amount to imposing a premium on the
right to redress grievances in court. We adopt the same policy with respect to the expenses
of litigation. A winning party may be entitled to expenses of litigation only where he, by
reason of plaintiff's clearly unjustifiable claims or defendant's unreasonable refusal to his
demands, was compelled to incur said expenditures. Evidently, the facts of this case do not
warrant the granting of such litigation expenses to PHIBRO.
At this point, we believe that, in the interest of fairness, NAPOCOR should give PHIBRO
another opportunity to participate in future public bidding. As earlier mentioned, the delay on
its part was due to a fortuitous event.
But before we dispose of this case, we take this occasion to remind PHIBRO of the
indispensability of coal to a coal-fired thermal plant. With households and businesses being
entirely dependent on the electricity supplied by NAPOCOR, the delivery of coal cannot be
venturesome. Indeed, public interest demands that one who offers to deliver coal at an
appointed time must give a reasonable assurance that it can carry through. With the
deleterious possible consequences that may result from failure to deliver the needed coal,
we believe there is greater strain of commitment in this kind of obligation.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 126204 dated
August 27, 1996 is hereby MODIFIED. The award, in favor of PHIBRO, of actual, moral and
exemplary damages, reimbursement for expenses, cost of litigation and attorney's fees, and
costs of suit, is DELETED.
SO ORDERED.
Vitug, Panganiban and Carpio, JJ., concur.

Dissenting Opinions
MELO, J., dissenting:
While I agree with the majority opinion insofar as it finds that the delay in delivery of coal by
respondent Philipp Brothers Oceanic, Inc. (hereafter PHIBRO) to petitioner National Power
Corporation (hereafter NAPOCOR) was not due to the former's fault, I have to dissent from
the majority insofar as it denies the award of actual, moral, and exemplary damages to
PHIBRO for the latter's act of excluding PHIBRO from participating in biddings conducted by
NAPOCOR.
The facts are undisputed.
On July 8, 1987, private respondent PHIBRO, one of the largest trading firms in energy
worldwide, was awarded by NAPOCOR the contract to supply 120,000 MT of steam coal for
the Batangas Coal Fired Thermal Power Plant, the same to be delivered in two (2) equal
shipments on July 20 and September 14, 1987.
However, while the contract provided for the arrival schedule of the two coal shipments, it
also provided that PHIBRO had to effect delivery not later than 30 days from receipt of the
letter of credit to be opened by NAPOCOR. Petitioner NAPOCOR was able to open its letter
of credit only on August 6, 1987. Moreover, the contract had a clause which excused any
delay occasioned by force majeure. This clause included strikes as one of the events to be
considered as constituting force majeure.
From July to September 1987, a series of strikes in the collieries in New South Wales
(NSW), Australia, and the coal loading facility at Newcastle Port took place, which adversely
affected PHIBRO's ability to deliver the first shipment on time.
Pursuant to the contract, PHIBRO notified NAPOCOR of these force majeure conditions and
that as a result of the strikes, vessels were not readily available and shipowners were
unwilling to load cargo unless a strike-free risk was incorporated in the charter party.
PHIBRO proposed an equal sharing in the strike-free risk, but NAPOCOR refused. Instead, it
demanded delivery of the first shipment not later than 30 days from the opening of its letter of
credit.
In the meantime, NAPOCOR negotiated to buy from a company called ASEA 60,000MT
imported steam coal at US$33.00/MT. This higher priced coal was purchased by NAPOCOR
despite PHIBRO's offer for the same tonnage and delivery date at only US$31.00/MT, a price
differential of US$2.00/MT. The PHIBRO offer was with the understanding that the existing
120,000MT contract would be delivered in accordance with a shipping schedule to be
mutually agreed between PHIBRO and NAPOCOR, taking into account the strikes and
NAPOCOR's needs. NAPOCOR ignored the offer and bought the higher priced material from
ASEA.
In October 1987, NAPOCOR conducted a tender for the supply of 180,000 MT imported coal.
PHIBRO, as in prior tenders, complied with all prequalification requirements of the tender.
However, NAPOCOR disqualified PHIBRO allegedly for "not meeting the minimum
prequalification requirements." PHIBRO was also refused the tender documents. In addition,
NAPOCOR, in total disregard of the force majeure clause incorporated in the July 8, 1987
contract, demanded that unless its claims for damages due to the delayed delivery of the
coal in said contract were first settled, PHIBRO would not be allowed to participate in any
and all subsequent tenders to be conducted by NAPOCOR for the supply of imported coal.
On November 25, 1987, PHIBRO protested the wrongful and unjust action taken by
NAPOCOR inasmuch as PHIBRO had all the qualifications and none of the disqualifications.
PHIBRO demanded that it be provided with tender and post qualification documents but
NAPOCOR withheld the release of tender documents to PHIBRO. After, inquiry, PHIBRO
was told that the real reason for the disqualification was not its "failure to meet the minimum
prequalification requirements," but was principally the claim of NAPOCOR for alleged
damages due to the delayed delivery of the first shipment of the July 8, 1987 contract.
PHIBRO, on the other hand, maintained that its delayed deliveries were due to force
majeure and NAPOCOR's delayed opening of its letter of credit. Despite this, however,
NAPOCOR continued to bar PHIBRO from participating in tenders.
Consequently, PHIBRO initiated suit before the Makati Regional Trial Court on December 4,
1987 against NAPOCOR, docketed therein as Civil Case No. 18473, complaining against the
latter's alleged capricious, malevolent, iniquitous, discriminatory, oppressive and unjustified
disqualification of PHIBRO, and asking for damages and that NAPOCOR be enjoined from
blacklisting PHIBRO in the subsequent NAPOCOR tenders.
After trial on the merits, the Makati Regional Trial Court, Branch 57, rendered its Decision on
January 16, 1992 in favor of PHIBRO and against NAPOCOR, the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff Philipp Brothers Oceanic,
Inc. (PHIBRO) and against the defendant National Power Corporation (NAPOCOR) ordering
the said defendant NAPOCOR:
1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the defendant National Power
Corporation's list of accredited bidders and allow PHIBRO to participate in any and all future
tenders of National Power Corporation for the supply and delivery of imported steam coal;
2. To pay Philipp Brothers Oceanic, Inc. (PHIBRO):
a) The peso equivalent at the time of payment of $864,000 actual damages;
b) The peso equivalent at the time of payment of $100,000 as moral damages;
c) The peso equivalent at the time of payment of $50,000 as exemplary damages;
d) The peso equivalent at the time of payment of $73,231.91 as reimbursement for
expenses, cost of litigation and attorney's fees;
3. To pay the costs of suit;
4. The counterclaim of defendant NAPOCOR are dismissed for lack of merit.
On January 27, 1992, the Office of the Solicitor General appealed the lower court's decision
to the Court of Appeals. The appeal, docketed therein as CA-G.R. CV No. 37906, was
decided on August 27, 1996 with the appellate court handing down an affirmance of the
decision.
Petitioner NAPOCOR now comes to this Court by way of a petition for review by certiorari
under Rule 45 of the Rules of Court seeking to review, reverse, and set aside the
aforementioned decision.
Petitioner alleges that the Court of Appeals committed serious errors of law, overlooked
certain substantial facts which if properly considered would affect the results of the case,
drew incorrect conclusions from facts established by evidence or based on misapprehension
of facts, its factual findings being incomplete and do not reflect the actual events that,
transpired and the important points were left out and decided the case in a way not in accord
with law or the applicable decisions of this Court, which collectively amount to grave abuse of
discretion, to the damage and prejudice of petitioner's right to due process. Specifically,
petitioner maintains that the Court of Appeals gravely and seriously erred:
(1) in concluding and so holding that PHIBRO's delay in the delivery of imported coal was
due to NAPOCOR's alleged delay in opening letter of credit to force majeure, and not to
PHIBRO's own deliberate acts and faults;
(2) in concluding and so holding that NAPOCOR acted maliciously and unjustifiably in
disqualifying PHIBRO from participating in the December 8, 1987 and future biddings for the
supply of imported coal despite the existence of valid grounds therefore such as serious
impairment of its track record;
(3) in concluding and so holding that PHIBRO was entitled to injunctive relief, to actual or
compensatory, moral and exemplary damages, attorney's fees and litigation expenses
despite the clear absence of legal and factual bases for such award;
(4) in absolving PHIBRO from any liability for damages to NAPOCOR for its unjustified and
deliberate refusal and/or failure to deliver the contracted imported coal within the stipulated
period; and
(5) in dismissing NAPOCOR's counterclaims for damages and litigation expenses.
As correctly pointed out in the majority opinion, the rules are explicit that a petition under
Rule 45 of the Rules of Court can raise only questions of law (Section 1, Rule 45, 1997 Rules
of Civil Procedure). PHIBRO's delay in the delivery of imported coal was found by both the
trial court and the Court of Appeals to have been due to the industrial unrest, occasioned by
strikes and work stoppages, that occurred in Australia from the first week of July to the third
week of September, 1987. As aptly observed by the Court of Appeals:
There is ample evidence to show that although PHIBRO's delivery of the shipment of coal
was delayed, the delay was in fact caused by a) NAPOCOR's own delay in opening a
workable letter of credit; and b) the strikes which plagued the Australian coal industry from
the first week of July to the week of September, 1987. Strikes are included in the definition
of force majeure in Section XVII of the Bidding Terms and Specifications, (supra), so
PHIBRO is not liable for any delay caused thereby.
PHIBRO was informed of the acceptance of its bid on July 8, 1987. Delivery of coal was to
be effected thirty (30) days from NAPOCOR's opening of a confirmed and workable letter of
credit. NAPOCOR was only able to do so on August 6, 1987.
By that time, Australia's coal industry was in the middle of a seething controversy and unrest,
occasioned by strikes, overtime bans, and mine stoppages.
The general rule is that findings of fact of the Court of Appeals are binding and conclusive
upon this Court (DBP vs. CA, 302 SCRA 362 [1999]). These factual findings carry even more
weight when said court affirms the factual findings of the trial court (Lagrosa vs. CA, 312
SCRA 298 [1999]). Thus, it is beyond question that PHIBRO's delay in the delivery of coal is
not attributable to its fault or negligence, these being the factual findings of both the trial court
and the appellate court.
However, despite this finding, the majority would find NAPOCOR free from liability to
PHIBRO for its act of excluding the PHIBRO from NAPOCOR's subsequent biddings on the
ground that the exclusion is merely the legitimate exercise of a right vested in NAPOCOR. In
fine, The majority opinion would characterize PHIBRO's exclusion as damnum absque
injuria. I beg to disagree.
The majority opinion anchors its thesis on the Instruction to Bidders found in the "Post-
Qualification Documents/Specifications for the Supply and Delivery of Coal for the Batangas
Coal-Fired Thermal Power Plant I at Calaca, Batangas, Philippines" providing that:
NAPOCOR reserves the right to reject any and all bids, to waive any minor informality in the
bids received. The right is also reserved to reject the bids of any bidder who has previously
failed to properly perform or complete on time any and all contracts for delivery of coal or any
supply undertaken by a bidder.

(Original Records, p. 250.)

My esteemed colleagues declare that since NAPOCOR has reserved the right to reject the
bid of any bidder, the exclusion of PHIBRO was, in effect, only the use by NAPOCOR of a
right pertaining to it, without bad faith or intent to injure and that the fact that PHIBRO may
have suffered injuries thereby would not make NAPOCOR liable. The majority opinion goes
on to state that where the government rejects any or all bids, the losing bidder has no cause
to complain and that accordingly, "a bidder has no ground of action to compel the
Government to award the contract in his favor, nor to compel it to accept his bid."
I would wish to point out the following circumstances which I believe were ignored by the
majority.
Firstly, the instant case does not involve the rejection of PHIBRO's bid by NAPOCOR. The
fact is that PHIBRO was not even allowed to bid by NAPOCOR. While it may be true that any
bid may be rejected on a mere technicality if the right to reject is reserved, there is a whale of
a difference between rejecting a bid and excluding a prospective bidder from participating in
tenders, more so in this case where the prospective bidder has complied with all the
prequalification requirements. Indubitably, the reservation of the right to reject any and all
bids does not include the right to exclude a prospective bidder, perforce a qualified one at
that.
Secondly, the reservation of the right to reject bids contained in the Instruction to Bidders is
of doubtful applicability in this case since PHIBRO was not even allowed to submit a bid by
NAPOCOR. The right to reject a bid implies that there was a bid submitted. In this case,
PHIBRO was barred from submitting bids for subsequent tenders of NAPOCOR.
Thirdly, this is not a simple case of rejecting a bid but one of barring participation in any and
all subsequent bids for the supply of coal. This barring of PHIBRO caused the latter to incur
damages, all because of what both the trial court and the Court of Appeals viewed to be an
unfounded imputation of delay to PHIBRO in the July 8, 1987 contract for delivery of coal.
As adverted to earlier, this delay was covered by the force majeure clause of the contract
which validly excused the non-compliance with the specified delivery date. The situation was
further exacerbated to private respondent's disadvantage when NAPOCOR, instead of
accepting PHIBRO's offer to shoulder half the burden of a strike free clause, used the non-
delivery on time of the coal as an excuse to exclude private respondent from future bidding
processes at NAPOCOR. Thus, the Court of Appeals correctly found that:
Under the factual milieu, the. court a quo correctly made an award of damages to PHIBRO
for Napocor's malicious and unjustified act of disqualifying it from any and all subsequent
bids for the supply of coal. It was sufficiently established that Phibro was entitled to an
amount of US$864,000.00 representing unrealized profits or lucro cessante. Article 2200 of
the Civil Code provides:
"Article 2200. Indemnification for damages shall comprehend not only the value for the loss
suffered, but also that of the profits when the obligee failed to obtain."
Undoubtedly, PHIBRO could have earned the questioned amount if NAPOCOR did not
unjustly discriminate against it during the October, 1987 bidding and all other bidding
subsequent thereto. . . .
Moreover, private respondent's business reputation and credibility in the market greatly
suffered because of this malicious act of petitioner. As attested to by Vicente del Castillo:
Q.       In addition to loss of earnings and opportunity loss which you quantified earlier to be in
the range of 770,000.00, what other damage, if any, did Philip Brothers incur?
A.       Well, when we were blacklisted by the National Power Corporation, it became known
to the international market, and with such an unfair reputation, we had difficulty in obtaining
business, new clients since our old clients know what kind of company we are and they
continued to do business with us, and our business with Ulan Coal Mines for market other
than the Philippines became difficult and we could no longer do business that we used to
before this problem came about.

(TSN, January 31, 1989, pp. 50-51.)

Furthermore, James Archibald, an employee of PHIBRO and a member of the Export

Committee of the Australia Coal Association, stated in his deposition, thus:
NBP Can you please state what affect the banning of NPC of PHIBRO tendering a supply of
coal has had on PHIBRO?
JMA Well, it ended the special relationship between Phibro and Ulan for a start out now I am
in the cost trading business and I can tell you that when you loss a significant portion of your
throughout like that the industry is extremely incestuous and everybody known very quickly
that you have not been so successful as your past years which makes it that much more
difficult to gain support from supplier in bidding for other spot contracts.
NBP Can you explain what you mean by incestuous?
JMA It is a very tight industry. Most people have worked in it in a number of companies such
as myself, with deals with some markets such as Japan, we have actually joint negotiations
and we actually go in to customers, on a collective needs. It is inevitable that we get to know
each other very well. Also at the port of Newcastle, ten per cent of the coal shipped is
actually traded amongst the various shippers because often one shipper maybe short say ten
thousand tonnes for a particular cargo and they would buy in or swap coal with other
shippers. A very common port practice. So you know everybody quite well. And also I am a
representative of the Coal Association so I may have had a lot more exposure to the people
in the industry.

(Exh. (CC-30, 30-31.)

Despite the favorable findings of the lower court and the Court of Appeals attributing no fault
to PHIBRO, the harm done to PHIBRO's good standing in the market by the blacklisting of
NAPOCOR, at least as far as Philippine setting is concerned, has already beer done. Thus, I
believe that the court a quo, as sustained by the Court of Appeals, correctly made the
following findings:
PHIBRO is therefore entitled to damages for the discriminatory, oppressive and unjustified
disqualification imposed upon it by NAPOCOR. PHIBRO was unjustly excluded from
participating in at least five (5) tenders beginning December 1987 to 1990, for the supply and
delivery of imported coal with a total volume of about 1,200,00 metric tons valued at no less
than US$32 Million (Exhs. "AA", "AA-1", to "AA-2"). The price of imported coal for delivery in
1988 was quoted in June 1988 by bidders at US$41.35 to US$43.95 per metric ton (Exh.
"JJ"); in September 1988 at US$41.50 to US$49.50 per metric ton (Exh. J-1); in November
1988 at US$39.00 to US$48.50 per metric ton (Exh. "J-2"); and for the 1989 deliveries, at
US$44.35 to US$47.35 per metric ton (Exh. "J-3") and US$38.00 to US$48.25 per metric ton
in September 1990 (Exhs. "JJ-6" and "JJ-7"). PHIBRO would have won the tenders for the
supply and delivery of about 960,000 metric tons of coal out of at least 1,200,000 metric tons
awarded during said period based on its proven track record of 80%. The Court, therefore,
finds that as a result of its disqualification, PHIBRO suffered damages equivalent to its
standard 3% margin in 960,000 metric tons of coal at the most conservative price of
US$30.00 per metric ton, or the total of US$864,000 which PHIBRO would have earned had
it been allowed to participate in biddings in which it was disqualified and in subsequent
tenders for supply and delivery of imported coal.
There is likewise uncontested or unrefuted evidence that as a result of PHIBRO's
disqualification by NAPOCOR, PHIBRO suffered damages in its international reputation and
lost credibility in Government and business circle, and hence an award is authorized by Art.
2205 of our Civil Code.
For the damage done to the business reputation of PHIBRO, I respectfully submit that the
Court of Appeals was likewise correct in sustaining the award of US$100,000.00 as moral
damages to private respondent — a corporate body — under Article 2217 of the Civil Code.
The Court, in a number of cases (i.e. Asset Privatization Trust vs. CA, 300 SCRA 579 [1998];
Maersk Tabacalera Shipping Agency (Filipina), Inc. vs. CA, 197 SCRA 646 [1991]), has
sustained the award of moral damages to a corporation despite the general rule that moral
damages cannot be awarded to an artificial person which has no feelings, emotions or
senses, and which cannot experience physical suffering and mental anguish (LBC Express
Inc. vs. CA, 236 SCRA 602 [1994]; see also Solid Homes, Inc. vs. CA, 275 SCRA 267
[1997]) because a corporation may have a good reputation which, if besmirched, may also
be a ground for the award of moral damages (Mambulao Lumber Co. vs. PNB, 22 SCRA 359
[1968]). Thus, in the case of Simex International (Manila), Inc. vs. CA (183 SCRA 360
[1990]), the Court held:
From every viewpoint except that of the petitioner's, its claim of moral damages in the
amount of Php1,000,000.00 is nothing short of preposterous. Its business certainly is not that
big, or its name that prestigious, to sustain such an extravagant pretense. Moreover, a
corporation is not as a rule entitled to moral damages because, not being a natural person, it
cannot experience physical suffering or such sentiments as wounded feelings, serious
anxiety, mental anguish and moral shock. The only exception to this rule is where the
corporation has a good reputation that is debased, resulting in its social humiliation.
We shall recognize that the petitioner did suffer injury because of the private respondent's
negligence that caused the dishonor of the checks issued by it. The immediate consequence
was that its prestige was impaired because of the bouncing checks and confidence in it as a
reliable debtor was diminished. The private respondent makes much of the one instance
when the petitioner was sued in a collection case, but that did not prove that it did not have a
good reputation that could not be marred, more so since that case was ultimately settled. It
does not appear that, as the private respondent would portray it, the petitioner is an unsavory
and disreputable entity that has no good name to protect.
Considering all this, we feel that the award of nominal damages in the sum of Php20,000.00
was not the proper relief to which the petitioner was entitled. Under Article 2221 of the Civil
Code, "nominal damages are adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him." As we have found that the
petitioner has indeed incurred loss through the fault of the private respondent, the proper
remedy is the award to it of moral damages, which we impose, in our discretion, in the same
amount of Php20,000.00.
It must be noted that trial courts are generally given discretion to determine the amount of
moral damages, the same being incapable of pecuniary estimation. The Court of Appeals
can only modify or change the amount awarded when they are palpably or scandalously
excessive so as to indicate that it was the result of passion, prejudice or corruption on the
part of the trial court. In the case at bar, the conclusive finding of the Court of Appeals of
petitioner's malice and bad faith justify the award of both moral and exemplary damages. As
held in De Guzman vs. NLRC, (211 SCRA 723 [1992]):
When moral damages are awarded, exemplary damages may also be decreed. Exemplary
damages are imposed by way of example or correction for the public good, in addition to
moral, temperate, liquidated or compensatory damages. According to the Code Commission,
"exemplary damages are required by public policy, for wanton acts must be suppressed.
They are an antidote so that the poison of wickedness may not run through the body politic."
These damages are legally assessible against him.
In addition, NAPOCOR's baseless and unwarranted discrimination against PHIBRO
constrained the latter to seek the aid of the courts in order to obtain redress. This calls for an
award of attorney's fees, which the lower court correctly made.
Consequently, I vote to dismiss the petition and to affirm the decision of the Court of
Appeals.

Footnotes
1
 Tolentino, Civil Code of the Philippines, Vol. I, 1997, p. 67.
2
 Rollo, pp. 53-69.
3
 Rollo, pp. 70-80.
4
 Records, pp. 86-110.
5
 Records. p. 90.
6
 Plaintiff's Exhibits, Part I, Exhibit "C," p. 66.
7
 Ibid., Exhibits "D," "E," "F," "G," "H," "I," pp. 67-73.
8
 Records, p. 180.
9
 Records, pp. 6-23.
10
 Records, pp. 187-197.
11
 Rollo, p. 80.
12
 Rollo, pp. 59-63.
13
 Rollo, p. 27.
14
 Rollo, pp. 37-38.
15
 Rollo, p.42.
16
 Rollo, p.45.
17
 Rollo, p. 47.
18
 Tinio v. Manzano, 307 SCRA 460 (1999); Siguan v. Lim, 318 SCRA 725 (1999);
and National Steel Corporation v. Court of Appeals, 283 SCRA 45 (1997).
19
 Security Bank and Trust Company v. Triumph Lumber and Construction Corporation, 301
SCRA 537 (1999) American Express International, Inc. v. Court of Appeals, 308 SCRA 65
(1999).
20
 Borromeo v. Sun, 317 SCRA 176 (1999); Boneng v. People, 304 SCRA 252 (1999).
21
 Pimentel v. Court of Appeals, 307 SCRA 38 (1999).
22
 Article 1174 of the Civil Code.
23
 Tolentino, Civil Code of the Philippines, Volume IV, 1997 Ed., p. 128.
24
 Records, p. 24.
25
 Records, p. 234, 279.
26
 Records, p. 250.
27
 A Treatise on Government Contracts Under Philippine Law, Fernandez, Jr., 1996 Ed. p.
28.
28
 A.C. Esguerra & Sons v. Aytona, 4 SCRA 1245 (1962).
29
 209 SCRA 79 (1992).
30
 Virata v. Bocar, 50 SCRA 468 (1973); Jalandoni v. NARRA, 108 Phil. 486 (1960).
31
 205 SCRA 705 (1992).
32
 The classical theory is that "he who uses a right inures no one." Traditionally, therefore, it
has been a settled doctrine that no person can be held liable for damages occasioned to
another by the exercise of a right. The modern tendency, therefore, is to depart from the
classical and traditional theory, and to grant indemnity for damages in cases where there is
an abuse of right, even when the act is not illicit. Law cannot be given an anti-social effect. If
mere fault or negligence in one's act can make him liable for damages for injury caused
thereby, with more reason should abuse or bad faith make him liable.
33
 Tolentino, Civil Code of the Philippines, Vol. I, 1997, pp. 61-62.
There is an abuse of right when it is exercised only for the purpose of prejudicing or injuring
another. When the objective of the actor is illegitimate, the illicit act cannot be concealed
under the guise of exercising a right.
34
 Ibid., p. 62.
35
 Plaintiff's Exhibit, Part I, p. 120.
36
 Tolentino, Civil Code of the Philippines, Vol. IV, 1997, p. 128.
37
 Dated August 11, 1987, August 27, 1987, September 8, 1987 and September 14, 1987,
Defendant's Exhibits, p. 27.
38
 Part I, Plaintiff's Exhibit, pp. 178-179.
39
 Cobach, Lucenario, Law on Public Bidding and Government Contracts, pp. 92-93. Citing
28 Corn. L.Q. 44; Douglas v. Commonwealth, 108 Pa. 559 (1885); Jacobson v. Board of
Education, 64 A. 609 (N.J. 1906).
40
 Air France v. Carrascoso, 18 SCRA 155 (1966).
41
 Vda. de Laig v. Court of Appeals, 82 SCRA 294 (1978).
42
 PNOC Shipping and Transport Corporation v. Court of Appeals, 297 SCRA 402 (1998).
43
 Article 2200 of the Civil Code of the Philippines.
44
 224 SCRA 477 (1993).
45
 243 SCRA 600 (1995).
46
 273 SCRA 420 (1997).
47
 Sea Commercial Company, Inc. v. Court of Appeals; (G.R. No. 122823, November 25,
1999).
48
 Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the Philippines,
1996 Edition, Vol. 3, p. 17; Tamayo v. University of Negros Occidental, 58 OG No. 37, p.
6023, September 10, 1962, citing Memphis Telephone Co. v. Cumberland Telephone and
Telegraph Co., 145 Fed. 906 and other cases cited in 52 ALR 1192-3 and 90 ALR 1180-1.
49
 236 SCRA 602 (1994); See also Acme Shoe, Rubber & Plastic Corp. v. Court of Appeals,
260 SCRA 714 (1996).
50
 Jimenez v. Bucoy, 103 Phil. 40 (1958); Castillo v. Samonte, 106 Phil. 1023 (1960).
G.R. No. 151866             September 9, 2004
SOLEDAD CARPIO, petitioner, 
vs.
LEONORA A. VALMONTE, respondent.
DECISION
TINGA, J.:
Assailed in the instant petition for review is the Decision of the Court of Appeals in C.A.-G.R.
CV No. 69537,1promulgated on 17 January 2002.2 The appellate court reversed the trial
court’s decision denying respondent’s claim for damages against petitioner and ordered the
latter to pay moral damages to the former in the amount ofP100,000.00.
Respondent Leonora Valmonte is a wedding coordinator. Michelle del Rosario and Jon
Sierra engaged her services for their church wedding on 10 October 1996. At about 4:30
p.m. on that day, Valmonte went to the Manila Hotel where the bride and her family were
billeted. When she arrived at Suite 326-A, several persons were already there including the
bride, the bride’s parents and relatives, the make-up artist and his assistant, the official
photographers, and the fashion designer. Among those present was petitioner Soledad
Carpio, an aunt of the bride who was preparing to dress up for the occasion. 
After reporting to the bride, Valmonte went out of the suite carrying the items needed for the
wedding rites and the gifts from the principal sponsors. She proceeded to the Maynila
Restaurant where the reception was to be held. She paid the suppliers, gave the meal
allowance to the band, and went back to the suite. Upon entering the suite, Valmonte noticed
the people staring at her. It was at this juncture that petitioner allegedly uttered the following
words to Valmonte: "Ikaw lang ang lumabas ng kwarto, nasaan ang dala mong bag? Saan
ka pumunta? Ikaw lang and lumabas ng kwarto, ikaw ang kumuha." Petitioner then ordered
one of the ladies to search Valmonte’s bag. It turned out that after Valmonte left the room to
attend to her duties, petitioner discovered that the pieces of jewelry which she placed inside
the comfort room in a paper bag were lost. The jewelry pieces consist of two (2) diamond
rings, one (1) set of diamond earrings, bracelet and necklace with a total value of about one
million pesos. The hotel security was called in to help in the search. The bags and personal
belongings of all the people inside the room were searched. Valmonte was allegedly bodily
searched, interrogated and trailed by a security guard throughout the evening. Later, police
officers arrived and interviewed all persons who had access to the suite and fingerprinted
them including Valmonte. During all the time Valmonte was being interrogated by the police
officers, petitioner kept on saying the words "Siya lang ang lumabas ng kwarto." Valmonte’s
car which was parked at the hotel premises was also searched but the search yielded
nothing. 
A few days after the incident, petitioner received a letter from Valmonte demanding a formal
letter of apology which she wanted to be circulated to the newlyweds’ relatives and guests to
redeem her smeared reputation as a result of petitioner’s imputations against her. Petitioner
did not respond to the letter. Thus, on 20 February 1997, Valmonte filed a suit for damages
against her before the Regional Trial Court (RTC) of Pasig City, Branch 268. In her
complaint, Valmonte prayed that petitioner be ordered to pay actual, moral and exemplary
damages, as well as attorney’s fees. 
Responding to the complaint, petitioner denied having uttered words or done any act to
confront or single out Valmonte during the investigation and claimed that everything that
transpired after the theft incident was purely a police matter in which she had no
participation. Petitioner prayed for the dismissal of the complaint and for the court to adjudge
Valmonte liable on her counterclaim. 
The trial court rendered its Decision on 21 August 2000, dismissing Valmonte’s complaint for
damages. It ruled that when petitioner sought investigation for the loss of her jewelry, she
was merely exercising her right and if damage results from a person exercising his legal
right, it is damnum absque injuria. It added that no proof was presented by Valmonte to show
that petitioner acted maliciously and in bad faith in pointing to her as the culprit. The court
said that Valmonte failed to show that she suffered serious anxiety, moral shock, social
humiliation, or that her reputation was besmirched due to petitioner’s wrongful act. 
Respondent appealed to the Court of Appeals alleging that the trial court erred in finding that
petitioner did not slander her good name and reputation and in disregarding the evidence
she presented. 
The Court of Appeals ruled differently. It opined that Valmonte has clearly established that
she was singled out by petitioner as the one responsible for the loss of her jewelry. It cited
the testimony of Serena Manding, corroborating Valmonte’s claim that petitioner confronted
her and uttered words to the effect that she was the only one who went out of the room and
that she was the one who took the jewelry. The appellate court held that Valmonte’s claim for
damages is not predicated on the fact that she was subjected to body search and
interrogation by the police but rather petitioner’s act of publicly accusing her of taking the
missing jewelry. It categorized petitioner’s utterance defamatory considering that it imputed
upon Valmonte the crime of theft. The court concluded that petitioner’s verbal assault upon
Valmonte was done with malice and in bad faith since it was made in the presence of many
people without any solid proof except petitioner’s suspicion. Such unfounded accusation
entitles Valmonte to an award of moral damages in the amount of ₱100,000.00 for she was
publicly humiliated, deeply insulted, and embarrassed. However, the court found no sufficient
evidence to justify the award of actual damages. 
Hence, this petition. 
Petitioner contends that the appellate court’s conclusion that she publicly humiliated
respondent does not conform to the evidence presented. She adds that even on the
assumption that she uttered the words complained of, it was not shown that she did so with
malice and in bad faith. 
In essence, petitioner would want this Court to review the factual conclusions reached by the
appellate court. The cardinal rule adhered to in this jurisdiction is that a petition for review
must raise only questions of law,3 and judicial review under Rule 45 does not extend to an
evaluation of the sufficiency of evidence unless there is a showing that the findings
complained of are totally devoid of support in the record or that they are so glaringly
erroneous as to constitute serious abuse of discretion.4 This Court, while not a trier of facts,
may review the evidence in order to arrive at the correct factual conclusion based on the
record especially so when the findings of fact of the Court of Appeals are at variance with
those of the trial court, or when the inference drawn by the Court of Appeals from the facts is
manifestly mistaken.5
Contrary to the trial court’s finding, we find sufficient evidence on record tending to prove that
petitioner’s imputations against respondent was made with malice and in bad faith. 
Petitioner’s testimony was shorn of substance and consists mainly of denials. She claimed
not to have uttered the words imputing the crime of theft to respondent or to have mentioned
the latter’s name to the authorities as the one responsible for the loss of her jewelry. Well-
settled is the rule that denials, if unsubstantiated by clear and convincing evidence, are
negative and self-serving which merit no weight in law and cannot be given greater
evidentiary value over the testimony of credible witnesses who testify on affirmative matters.6
Respondent, however, has successfully refuted petitioner’s testimony. Quite credibly, she
has narrated in great detail her distressing experience on that fateful day. She testified as to
how rudely she was treated by petitioner right after she returned to the room. Petitioner
immediately confronted her and uttered the words "Ikaw lang ang lumabas ng kwarto.
Nasaan ang dala mong bag? Saan ka pumunta? Ikaw ang kumuha." Thereafter, her body
was searched including her bag and her car. Worse, during the reception, she was once
more asked by the hotel security to go to the ladies room and she was again bodily
searched.7
Sereña Manding, a make-up artist, corroborated respondent’s testimony. She testified that
petitioner confronted respondent in the presence of all the people inside the suite accusing
her of being the only one who went out of the comfort room before the loss of the jewelry.
Manding added that respondent was embarrassed because everybody else in the room
thought she was a thief.8 If only to debunk petitioner’s assertion that she did not utter the
accusatory remarks in question publicly and with malice, Manding’s testimony on the point
deserves to be reproduced. Thus,
Q After that what did she do?
A Then Leo came out from the other room she said, she is (sic) the one I only saw from the
comfort room.
Q Now, what exact word (sic) were said by Mrs. Carpio on that matter?
A She said "siya lang yung nakita kong galing sa C.R."
Q And who was Mrs. Carpio or the defendant referring to?
A Leo Valmonte.
Q Did she say anything else, the defendant?
A Her jewelry were lost and Leo was the only one she saw in the C.R. After that she get (sic)
the paper bag then the jewelry were already gone.
Q Did she confront the plaintiff Mrs. Valmonte regarding that fact?
A Yes.
Q What did the defendant Mrs. Carpio tell the plaintiff, Mrs. Valmonte?
A "Ikaw yung nakita ko sa C.R. nawawala yung alahas ko."
Q When the defendant Mrs. Carpio said that to plaintiff Mrs. Valmonte were there other
people inside the room?
A Yes, sir.
Q Were they able to hear what Mrs. Carpio said to Mrs. Valmonte?
A Yes, sir.
Q What was your thinking at that time that Mrs. Carpio said that to Mrs. Valmonte?
A "Nakakahiya kasi akala ng iba doon na talagang magnanakaw siya. Kasi marami na
kaming nandodoon, dumating na yung couturier pati yung video man and we sir.
Q Who was the person you [were] alleging "na nakakahiya" whose (sic) being accused or
being somebody who stole those item of jewelry?
A "Nakakahiya para kay Leo kasi pinagbibintangan siya. Sa dami namin doon siya yung
napagbintangan."
Q And who is Leo, what is her full name?
A Leo Valmonte.
Q Did the defendant tell this matter to other people inside the room?
A Yes, the mother of the bride.
Q And who else did she talk to?
A The father of the bride also.
Q And what did the defendant tell the mother regarding this matter?
A "Nawawala yung alahas ko." Sabi naman nung mother baka naman hindi mo dala tignan
mo munang mabuti.
Q Who was that other person that she talked to?
A Father of the bride.9
Significantly, petitioner’s counsel elected not to pursue her cross-examination of the witness
on this point following her terse and firm declaration that she remembered petitioner’s exact
defamatory words in answer to the counsel’s question.10
Jaime Papio, Security Supervisor at Manila Hotel, likewise contradicted petitioner’s allegation
that she did not suspect or mention the name of respondent as her suspect in the loss of the
jewelry.11
To warrant recovery of damages, there must be both a right of action, for a wrong inflicted by
the defendant, and the damage resulting therefrom to the plaintiff. Wrong without damage, or
damage without wrong, does not constitute a cause of action.12
In the sphere of our law on human relations, the victim of a wrongful act or omission, whether
done willfully or negligently, is not left without any remedy or recourse to obtain relief for the
damage or injury he sustained. Incorporated into our civil law are not only principles of equity
but also universal moral precepts which are designed to indicate certain norms that spring
from the fountain of good conscience and which are meant to serve as guides for human
conduct.13 First of these fundamental precepts is the principle commonly known as "abuse of
rights" under Article 19 of the Civil Code. It provides that "Every person must, in the exercise
of his rights and in the performance of his duties, act with justice, give everyone his due and
observe honesty and good faith." To find the existence of an abuse of right, the following
elements must be present: (1) there is a legal right or duty; (2) which is exercised in bad
faith; (3) for the sole intent or prejudicing or injuring another.14 When a right is exercised in a
manner which discards these norms resulting in damage to another, a legal wrong is
committed for which the actor can be held accountable.15 One is not allowed to exercise his
right in a manner which would cause unnecessary prejudice to another or if he would thereby
offend morals or good customs. Thus, a person should be protected only when he acts in the
legitimate exercise of his right, that is when he acts with prudence and good faith; but not
when he acts with negligence or abuse.16
Complementing the principle of abuse of rights are the provisions of Articles 20 and 21 of the
Civil Code which read, thus:
Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another,
shall indemnify the latter for the same.
Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary
to morals or good customs or public policy shall compensate the latter for the damage.
The foregoing rules provide the legal bedrock for the award of damages to a party who
suffers damage whenever one commits an act in violation of some legal provision, or an act
which though not constituting a transgression of positive law, nevertheless violates certain
rudimentary rights of the party aggrieved. 
In the case at bar, petitioner’s verbal reproach against respondent was certainly uncalled for
considering that by her own account nobody knew that she brought such kind and amount of
jewelry inside the paper bag.17 This being the case, she had no right to attack respondent
with her innuendos which were not merely inquisitive but outrightly accusatory. By openly
accusing respondent as the only person who went out of the room before the loss of the
jewelry in the presence of all the guests therein, and ordering that she be immediately bodily
searched, petitioner virtually branded respondent as the thief. True, petitioner had the right to
ascertain the identity of the malefactor, but to malign respondent without an iota of proof that
she was the one who actually stole the jewelry is an act which, by any standard or principle
of law is impermissible. Petitioner had willfully caused injury to respondent in a manner which
is contrary to morals and good customs. Her firmness and resolve to find her missing jewelry
cannot justify her acts toward respondent. She did not act with justice and good faith for
apparently, she had no other purpose in mind but to prejudice respondent. Certainly,
petitioner transgressed the provisions of Article 19 in relation to Article 21 for which she
should be held accountable. 
Owing to the rule that great weight and even finality is given to factual conclusions of the
Court of Appeals which affirm those of the trial court,18 we sustain the findings of the trial
court and the appellate court that respondent’s claim for actual damages has not been
substantiated with satisfactory evidence during the trial and must therefore be denied. To be
recoverable, actual damages must be duly proved with reasonable degree of certainty and
the courts cannot rely on speculation, conjecture or guesswork.19
Respondent, however, is clearly entitled to an award of moral damages. Moral damages may
be awarded whenever the defendant’s wrongful act or omission is the proximate cause of the
plaintiff’s physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury20in the cases specified
or analogous to those provided in Article 2219 of the Civil Code.21 Though no proof of
pecuniary loss is necessary in order that moral damages may be adjudicated, courts are
mandated to take into account all the circumstances obtaining in the case and assess
damages according to their discretion.22 Worthy of note is that moral damages are not
awarded to penalize the defendant,23 or to enrich a complainant, but to enable the latter to
obtain means, diversions or amusements that will serve to alleviate the moral suffering he
has undergone, by reason of defendant’s culpable action. In any case, award of moral
damages must be proportionate to the sufferings inflicted.24
Based on the foregoing jurisprudential pronouncements, we rule that the appellate court did
not err in awarding moral damages. Considering respondent’s social standing, and the fact
that her profession is based primarily on trust reposed in her by her clients, the seriousness
of the imputations made by petitioner has greatly tarnished her reputation and will in one way
or the other, affect her future dealings with her clients, the award of ₱100,000.00 as moral
damages appears to be a fair and reasonable assessment of respondent’s damages.
WHEREFORE, the instant Petition is DENIED. Costs against petitioner.
SO ORDERED.
Puno, Austria-Martinez*, Callejo, Sr., and Chico-Nazario, JJ., concur.
Footnotes
* On Official Leave.
1
 Penned by Justice Martin S. Villarama, Jr. concurred in by Justices Conchita Carpio-
Morales and Sergio L. Pestaño. 
2
 Rollo, pp. 32-37.
3
 Abalos v. Court of Appeals, 375 Phil. 419 (1999]; Viloria v. Court of Appeals, 368 Phil. 851
(1999].
4
 Lagrosa v. Court of Appeals, 371 Phil. 225 (1999). 
5
 Roman Catholic Bishop of Malolos, Inc. v. Intermediate Appellate Court, G.R. No. 72110,
November 16, 1990, 191 SCRA 411; Ferrer v. Court of Appeals, G.R. No. 98182, March 1,
1993, 219 SCRA 302.
6
 People v. Sernadilla, G.R. No. 137696, January 24, 2001, 350 SCRA 243; People v.
Preciados, G.R. No. 122934, January 5, 2001, 349 SCRA 1; People v. Baway, G.R. No.
130406, January 22, 2001, 350 SCRA 29.
7
 TSN, October 22, 1997, pp. 6, 13-19.
8
 TSN, December 15, 1998, pp. 10-12.
9
 TSN, December 15, 1998, pp. 9-12. 
10
 TSN, February 9, 1999, p. 14. 
11
 TSN, May 27, 1998, pp. 9,12, and 16. 
12
 Sangco, Torts and Damages, Vol. II, 1994 Edition, p. 941. 
13
 Report on the Code Commission on the Proposed Civil Code of the Philippines, p.
39 cited in Globe Mackay Cable and Radio Corporation v. Court of Appeals, G.R. No. 81262,
August 25, 1989, 176 SCRA 779. 
14
 BPI Express Card Corporation v. Court of Appeals, 357 Phil. 262 (1998); Globe Mackay v.
Court of Appeals, G.R. No. 81262, August 25, 1989, 176 SCRA 779; NPC v. Philipp Brothers
Oceanic, Inc., , G.R. No. 126204, November 20, 2001, 369 SCRA 629. 
15
 Rellosa v. Pellosis, 414 Phil. 786 [2001].
16
 See 1 Tolentino, The Civil Code, 1990 Ed. p. 61.
17
 TSN, March 17, 1998, pp. 15-16; p. 26.
18
 Bañas Jr., v. Court of Appeals, 382 Phil. 144 [2000]; Compania Maritima, Inc. v. Court of
Appeals, 376 Phil. 278 [1999]; Borromeo v. Sun, 375 Phil. 595 [1999].
19
 Bayer Philippines, Inc. v. Court of Appeals, G.R. No. 109269, September 15, 2000, 340
SCRA 437; Congregation of the Religious of the Virgin Mary v. Court of Appeals, 353 Phil.
591 [1998]; Marina Properties Corporation v. Court of Appeals, 355 Phil. 705 [1998].
20
 Art. 2217, Civil Code. 
21
 Art.2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in article 309;
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
xxxx
22
 Fule v. Court of Appeals, 350 Phil. 349 [1998]; Zulueta v. Pan American Airways, Inc., 151
Phil. 1 (1973).
23
 Simex International, Inc. v. Court of Appeals, G.R. No. 88013, March 19, 1990, 183 SCRA
360.
24
 Llorente, Jr. v. Sandiganbayan, 350 Phil. 820 [1998]; Radio Communications of the Phils.,
Inc. v. Rodriguez , G.R. No. 83768, February 28, 1990, 182 SCRA 899.

G.R. No. 147076             June 17, 2004

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner, 
vs.
ACT THEATER, INC., respondent.
DECISION
CALLEJO, SR., J.:
Before the Court is a petition for review on certiorari filed by the Metropolitan Waterworks
and Sewerage System (MWSS), seeking to reverse and set aside the Decision1 dated
January 31, 2001 of the Court of Appeals in CA-G.R. CV No. 58581, which affirmed the civil
aspect of the Decision2 dated May 5, 1997 of the Regional Trial Court of Quezon City,
Branch 77, directing the petitioner MWSS to pay the respondent Act Theater, Inc. damages
and attorney’s fees.
The present case stemmed from the consolidated cases of Criminal Case No. Q-89-2412
entitled People of the Philippines v. Rodolfo Tabian, et al., for violation of Presidential Decree
(P.D.) No. 401, as amended by Batas Pambansa Blg. 876, and Civil Case No. Q-88-768
entitled Act Theater, Inc. v. Metropolitan Waterworks and Sewerage System. The two cases
were jointly tried in the court a quo as they arose from the same factual circumstances, to
wit:
On September 22, 1988, four employees of the respondent Act Theater, Inc., namely,
Rodolfo Tabian, Armando Aguilar, Arnel Concha and Modesto Ruales, were apprehended by
members of the Quezon City police force for allegedly tampering a water meter in violation of
P.D. No. 401, as amended by B.P. Blg. 876. The respondent’s employees were
subsequently criminally charged (Criminal Case No. Q-89-2412) before the court a quo. On
account of the incident, the respondent’s water service connection was cut off.
Consequently, the respondent filed a complaint for injunction with damages (Civil Case No.
Q-88-768) against the petitioner MWSS.
In the civil case, the respondent alleged in its complaint filed with the court a quo that the
petitioner acted arbitrarily, whimsically and capriciously, in cutting off the respondent’s water
service connection without prior notice. Due to lack of water, the health and sanitation, not
only of the respondent’s patrons but in the surrounding premises as well, were adversely
affected. The respondent prayed that the petitioner be directed to pay damages. 
After due trial, the court a quo rendered its decision, the dispositive portion of which reads:
In Criminal Case No. Q-89-2412
WHEREFORE, for failure of the prosecution to prove the guilt of the accused beyond
reasonable doubt, the four (4) above-named Accused are hereby ACQUITTED of the crime
charged.3
In Civil Case No. Q-88-768
...
1. Ordering defendant MWSS to pay plaintiff actual or compensatory damages in the amount
of ₱25,000.00; and to return the sum of ₱200,000.00 deposited by the plaintiff for the
restoration of its water services after its disconnection on September 23, 1988;
2. Defendant’s counterclaim for undercollection of ₱530,759.96 is dismissed for lack of merit;
3. Ordering defendant MWSS to pay costs of suit;
4. Ordering defendant MWSS to pay plaintiff the amount of ₱5,000.00 as attorney’s fees;
5. Making the mandatory injunction earlier issued to plaintiff Act Theater, Inc. permanent.
SO ORDERED.4
Aggrieved, the petitioner appealed the civil aspect of the aforesaid decision to the CA. The
appellate court, however, dismissed the appeal. According to the CA, the court a
quo correctly found that the petitioner’s act of cutting off the respondent’s water service
connection without prior notice was arbitrary, injurious and prejudicial to the latter justifying
the award of damages under Article 19 of the Civil Code.
Undaunted, the petitioner now comes to this Court alleging as follows:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] VALIDLY AFFIRMED THE
DECISION OF THE REGIONAL TRIAL COURT IN RESOLVING THE PETITIONER’S
APPEAL;
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS VALIDLY UPHELD THE
AWARD OF ATTORNEY’S FEES;
III
WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] CORRECTLY APPLIED
THE PROVISION OF ARTICLE 19 OF THE NEW CIVIL CODE WITHOUT CONSIDERING
THE APPLICABLE PROVISION OF ARTICLE 429 OF THE SAME CODE.5
Preliminarily, the petitioner harps on the fact that, in quoting the decretal portion of the
court a quo’s decision, the CA erroneously typed ₱500,000 as the attorney’s fees awarded in
favor of the respondent when the same should only be ₱5,000. In any case, according to the
petitioner, whether the amount is ₱500,000 or ₱5,000, the award of attorney’s fees is
improper considering that there was no discussion or statement in the body of the assailed
decision justifying such award. The petitioner insists that in cutting off the respondent’s water
service connection, the petitioner merely exercised its proprietary right under Article 429 of
the Civil Code.
The petition is devoid of merit.
Article 429 of the Civil Code, relied upon by the petitioner in justifying its act of disconnecting
the water supply of the respondent without prior notice, reads:
Art. 429. The owner or lawful possessor of a thing has the right to exclude any person from
the enjoyment and disposal thereof. For this purpose, he may use such force as may be
reasonable to repel or prevent an actual or threatened unlawful physical invasion or
usurpation of his property.
A right is a power, privilege, or immunity guaranteed under a constitution, statute or
decisional law, or recognized as a result of long usage,6 constitutive of a legally enforceable
claim of one person against the other.7
Concededly, the petitioner, as the owner of the utility providing water supply to certain
consumers including the respondent, had the right to exclude any person from the enjoyment
and disposal thereof. However, the exercise of rights is not without limitations. Having the
right should not be confused with the manner by which such right is to be exercised.8
Article 19 of the Civil Code precisely sets the norms for the exercise of one’s rights:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith.
When a right is exercised in a manner which discards these norms resulting in damage to
another, a legal wrong is committed for which actor can be held accountable.9 In this case,
the petitioner failed to act with justice and give the respondent what is due to it when the
petitioner unceremoniously cut off the respondent’s water service connection. As correctly
found by the appellate court:
While it is true that MWSS had sent a notice of investigation to plaintiff-appellee prior to the
disconnection of the latter’s water services, this was done only a few hours before the actual
disconnection. Upon receipt of the notice and in order to ascertain the matter, Act sent its
assistant manager Teodulo Gumalid, Jr. to the MWSS office but he was treated badly on the
flimsy excuse that he had no authority to represent Act. Act’s water services were cut at
midnight of the day following the apprehension of the employees. Clearly, the plaintiff-
appellee was denied due process when it was deprived of the water services. As a
consequence thereof, Act had to contract another source to provide water for a number of
days. Plaintiff-appellee was also compelled to deposit with MWSS the sum of ₱200,000.00
for the restoration of their water services.10
There is, thus, no reason to deviate from the uniform findings and conclusion of the court a
quo and the appellate court that the petitioner’s act was arbitrary, injurious and prejudicial to
the respondent, justifying the award of damages under Article 19 of the Civil Code.
Finally, the amount of ₱500,000 as attorney’s fees in that portion of the assailed decision
which quoted the fallo of the court a quo’s decision was obviously a typographical error. As
attorney’s fees, the court a quo awarded the amount of ₱5,000 only. It was this amount, as
well as actual and compensatory damages of ₱25,000 and the reimbursement of ₱200,000
deposited by the respondent for the restoration of its water supply, that the CA affirmed, as it
expressly stated in its dispositive portion that "finding no cogent reason to reverse the
appealed Decision which is in conformity with the law and evidence, the same is hereby
AFFIRMED."11
The award of ₱5,000 as attorney’s fees is reasonable and warranted. Attorney’s fees may be
awarded when a party is compelled to litigate or incur expenses to protect his interest by
reason of an unjustified act of the other party.12
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated January
31, 2001 in CA-G.R. CV No. 58581 is AFFIRMED in toto.
SO ORDERED.
Puno, Quisumbing, Austria-Martinez, and Tinga, JJ., concur.

Footnotes
1
 Penned by Associate Justice Portia Aliño-Hormachuelos, with Associate Justices Fermin A.
Martin, Jr. and Mercedes Gozo-Dadole concurring.
2
 Penned by Judge Normandie B. Pizarro.
3
 Rollo, p. 35.
4
 Id. at 37.
5
 Id. at 13-14.
6
 BLACK’S LAW DICTIONARY, 6th Ed., p. 1324.
7
 Rellosa v. Pellosis, 362 SCRA 486 (2001).
8
 Paguio v. Philippine Long Distance Telephone Co., Inc., 393 SCRA 379 (2002).
9
 Rellosa v. Pellosis, supra.
10
 Rollo, p. 26.
11
 Id. at 27.
12
 Terminal Facilities and Services Corporation vs. Philippine Ports Authority, 378 SCRA 82
(2002).
G.R. No. 161921               July 17, 2013
JOYCE V. ARDIENTE, PETITIONER, 
vs.
SPOUSES JAVIER AND MA. THERESA PASTORFIDE, CAGAYAN DE ORO WATER
DISTRICT AND GASPAR GONZALEZ,* JR., RESPONDENTS.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to reverse and set aside the Decision1 and Resolution2 of the Court of Appeals (CA),
dated August 28, 2003 and December 17, 2003, respectively, in CA-G.R. CV No. 73000. The
CA Decision affirmed with modification the August 15, 2001 Decision3of the Regional Trial
Court (RTC) of Cagayan de Oro City, Branch 24, while the CA Resolution denied petitioner's
Motion for Reconsideration.
The facts, as summarized by the CA, are as follows:
[Herein petitioner] Joyce V. Ardiente and her husband Dr. Roberto S. Ardiente are owners of
a housing unit at Emily Homes, Balulang, Cagayan de Oro City with a lot area of one
hundred fifty-three (153) square meters and covered by Transfer Certificate of Title No.
69905.
On June 2, 1994, Joyce Ardiente entered into a Memorandum of Agreement (Exh. "B", pp.
470-473, Records) selling, transferring and conveying in favor of [respondent] Ma. Theresa
Pastorfide all their rights and interests in the housing unit at Emily Homes in consideration of
₱70,000.00. The Memorandum of Agreement carries a stipulation:
"4. That the water and power bill of the subject property shall be for the account of the
Second Party (Ma. Theresa Pastorfide) effective June 1, 1994." (Records, p. 47)
vis-a-vis Ma. Theresa Pastorfide's assumption of the payment of the mortgage loan secured
by Joyce Ardiente from the National Home Mortgage (Records, Exh. "A", pp. 468-469)
For four (4) years, Ma. Theresa's use of the water connection in the name of Joyce Ardiente
was never questioned nor perturbed (T.S.N., October 31, 2000, pp. 7-8) until on March 12,
1999, without notice, the water connection of Ma. Theresa was cut off. Proceeding to the
office of the Cagayan de Oro Water District (COWD) to complain, a certain Mrs. Madjos told
Ma. Theresa that she was delinquent for three (3) months corresponding to the months of
December 1998, January 1999, and February 1999. Ma. Theresa argued that the due date of
her payment was March 18, 1999 yet (T.S.N., October 31, 2000, pp. 11-12). Mrs. Madjos
later told her that it was at the instance of Joyce Ardiente that the water line was cut off
(T.S.N., February 5, 2001, p. 31).
On March 15, 1999, Ma. Theresa paid the delinquent bills (T.S.N., October 31, 2000, p. 12).
On the same date, through her lawyer, Ma. Theresa wrote a letter to the COWD to explain
who authorized the cutting of the water line (Records, p. 160).
On March 18, 1999, COWD, through the general manager, [respondent] Gaspar Gonzalez,
Jr., answered the letter dated March 15, 1999 and reiterated that it was at the instance of
Joyce Ardiente that the water line was cut off (Records, p. 161).
Aggrieved, on April 14, 1999, Ma. Theresa Pastorfide [and her husband] filed [a] complaint
for damages [against petitioner, COWD and its manager Gaspar Gonzalez] (Records, pp. 2-
6).
In the meantime, Ma. Theresa Pastorfide's water line was only restored and reconnected
when the [trial] court issued a writ of preliminary mandatory injunction on December 14, 1999
(Records, p. 237).4
After trial, the RTC rendered judgment holding as follows:
xxxx
In the exercise of their rights and performance of their duties, defendants did not act with
justice, gave plaintiffs their due and observe honesty and good faith. Before disconnecting
the water supply, defendants COWD and Engr. Gaspar Gonzales did not even send a
disconnection notice to plaintiffs as testified to by Engr. Bienvenido Batar, in-charge of the
Commercial Department of defendant COWD. There was one though, but only three (3) days
after the actual disconnection on March 12, 1999. The due date for payment was yet on
March 15. Clearly, they did not act with justice. Neither did they observe honesty.
They should not have been swayed by the prodding of Joyce V. Ardiente. They should have
investigated first as to the present ownership of the house. For doing the act because
Ardiente told them, they were negligent. Defendant Joyce Ardiente should have requested
before the cutting off of the water supply, plaintiffs to pay. While she attempted to tell
plaintiffs but she did not have the patience of seeing them. She knew that it was plaintiffs
who had been using the water four (4) years ago and not hers. She should have been very
careful. x x x5
The dispositive portion of the trial court's Decision reads, thus:
WHEREFORE, premises considered, judgment is hereby rendered ordering defendants
[Ardiente, COWD and Gonzalez] to pay jointly and severally plaintiffs, the following sums:
(a) ₱200,000.00 for moral damages;
(b) 200,000.00 for exemplary damages; and
(c) 50,000.00 for attorney's fee.
The cross-claim of Cagayan de Oro Water District and Engr. Gaspar Gonzales is hereby
dismissed. The Court is not swayed that the cutting off of the water supply of plaintiffs was
because they were influenced by defendant Joyce Ardiente. They were negligent too for
which they should be liable.
SO ORDERED.6
Petitioner, COWD and Gonzalez filed an appeal with the CA.
On August 28, 2003, the CA promulgated its assailed Decision disposing as follows:
IN VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED, with the
modification that the awarded damages is reduced to ₱100,000.00 each for moral and
exemplary damages, while attorney's fees is lowered to ₱25,000.00. Costs against
appellants.
SO ORDERED.7
The CA ruled, with respect to petitioner, that she has a "legal duty to honor the possession
and use of water line by Ma. Theresa Pastorfide pursuant to their Memorandum of
Agreement" and "that when [petitioner] applied for its disconnection, she acted in bad faith
causing prejudice and [injury to] Ma. Theresa Pastorfide."8
As to COWD and Gonzalez, the CA held that they "failed to give a notice of disconnection
and derelicted in reconnecting the water line despite payment of the unpaid bills by the
[respondent spouses Pastorfide]."9
Petitioner, COWD and Gonzalez filed their respective Motions for Reconsideration, but these
were denied by the CA in its Resolution dated December 17, 2003.
COWD and Gonzalez filed a petition for review on certiorari with this Court, which was
docketed as G.R. No. 161802. However, based on technical grounds and on the finding that
the CA did not commit any reversible error in its assailed Decision, the petition was denied
via a Resolution10 issued by this Court on March 24, 2004. COWD and Gonzalez filed a
motion for reconsideration, but the same was denied with finality through this Court's
Resolution11 dated June 28, 2004.
Petitioner, on the other hand, timely filed the instant petition with the following Assignment of
Errors:
7.1 HONORABLE COURT OF APPEALS (ALTHOUGH IT HAS REDUCED THE LIABILITY
INTO HALF) HAS STILL COMMITTED GRAVE AND SERIOUS ERROR WHEN IT UPHELD
THE JOINT AND SOLIDARY LIABILITY OF PETITIONER JOYCE V. ARDIENTE WITH
CAGAYAN DE ORO WATER DISTRICT (COWD) AND ENGR. GASPAR D. GONZALES
FOR THE LATTER'S FAILURE TO SERVE NOTICE UPON RESPONDENTS SPOUSES
PASTORFIDE PRIOR TO THE ACTUAL DISCONNECTION DESPITE EVIDENCE
ADDUCED DURING TRIAL THAT EVEN WITHOUT PETITIONER'S REQUEST, COWD
WAS ALREADY SET TO EFFECT DISCONNECTION OF RESPONDENTS' WATER
SUPPLY DUE TO NON-PAYMENT OF ACCOUNT FOR THREE (3) MONTHS.
7.2 THE HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS
ERROR WHEN IT RULED TOTALLY AGAINST PETITIONER AND FAILED TO FIND THAT
RESPONDENTS ARE GUILTY OF CONTRIBUTORY NEGLIGENCE WHEN THEY FAILED
TO PAY THEIR WATER BILLS FOR THREE MONTHS AND TO MOVE FOR THE
TRANSFER OF THE COWD ACCOUNT IN THEIR NAME, WHICH WAS A VIOLATION OF
THEIR MEMORANDUM OF AGREEMENT WITH PETITIONER JOYCE V. ARDIENTE.
RESPONDENTS LIKEWISE DELIBERATELY FAILED TO EXERCISE DILIGENCE OF A
GOOD FATHER OF THE FAMILY TO MINIMIZE THE DAMAGE UNDER ART. 2203 OF
THE NEW CIVIL CODE.
7.3 THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT
DISREGARDED THE FACT THAT RESPONDENT SPOUSES PASTORFIDE ARE
LIKEWISE BOUND TO OBSERVE ARTICLE 19 OF THE NEW CIVIL CODE, i.e., IN THE
EXERCISE OF THEIR RIGHTS AND IN THE PERFORMANCE OF THEIR DUTIES TO ACT
WITH JUSTICE, GIVE EVERYONE HIS DUE AND OBSERVE HONESTY AND GOOD
FAITH.
7.4 THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT GRANTED AN
AWARD OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES AS
AGAINST PETITIONER ARDIENTE.12
At the outset, the Court noticed that COWD and Gonzalez, who were petitioner's co-
defendants before the RTC and her co-appellants in the CA, were impleaded as respondents
in the instant petition. This cannot be done. Being her co-parties before the RTC and the CA,
petitioner cannot, in the instant petition for review on certiorari, make COWD and Gonzalez,
adversary parties. It is a grave mistake on the part of petitioner's counsel to treat COWD and
Gonzalez as respondents. There is no basis to do so, considering that, in the first place,
there is no showing that petitioner filed a cross-claim against COWD and Gonzalez. Under
Section 2, Rule 9 of the Rules of Court, a cross-claim which is not set up shall be barred.
Thus, for failing to set up a cross-claim against COWD and Gonzalez before the RTC,
petitioner is already barred from doing so in the present petition.
More importantly, as shown above, COWD and Gonzalez's petition for review on certiorari
filed with this Court was already denied with finality on June 28, 2004, making the presently
assailed CA Decision final and executory insofar as COWD and Gonzalez are concerned.
Thus, COWD and Gonzalez are already precluded from participating in the present petition.
They cannot resurrect their lost cause by filing pleadings this time as respondents but,
nonetheless, reiterating the same prayer in their previous pleadings filed with the RTC and
the CA.
As to the merits of the instant petition, the Court likewise noticed that the main issues raised
by petitioner are factual and it is settled that the resolution of factual issues is the function of
lower courts, whose findings on these matters are received with respect and considered
binding by the Supreme Court subject only to certain exceptions, none of which is present in
this instant petition.13 This is especially true when the findings of the RTC have been affirmed
by the CA as in this case.14
In any case, a perusal of the records at hand would readily show that the instant petition
lacks merit.
Petitioner insists that she should not be held liable for the disconnection of respondent
spouses' water supply, because she had no participation in the actual disconnection.
However, she admitted in the present petition that it was she who requested COWD to
disconnect the Spouses Pastorfide's water supply. This was confirmed by COWD and
Gonzalez in their cross-claim against petitioner. While it was COWD which actually
discontinued respondent spouses' water supply, it cannot be denied that it was through the
instance of petitioner that the Spouses Pastorfide's water supply was disconnected in the first
place.
It is true that it is within petitioner's right to ask and even require the Spouses Pastorfide to
cause the transfer of the former's account with COWD to the latter's name pursuant to their
Memorandum of Agreement. However, the remedy to enforce such right is not to cause the
disconnection of the respondent spouses' water supply. The exercise of a right must be in
accordance with the purpose for which it was established and must not be excessive or
unduly harsh; there must be no intention to harm another.15 Otherwise, liability for damages
to the injured party will attach.16 In the present case, intention to harm was evident on the
part of petitioner when she requested for the disconnection of respondent spouses’ water
supply without warning or informing the latter of such request. Petitioner claims that her
request for disconnection was based on the advise of COWD personnel and that her
intention was just to compel the Spouses Pastorfide to comply with their agreement that
petitioner's account with COWD be transferred in respondent spouses' name. If such was
petitioner's only intention, then she should have advised respondent spouses before or
immediately after submitting her request for disconnection, telling them that her request was
simply to force them to comply with their obligation under their Memorandum of Agreement.
But she did not. What made matters worse is the fact that COWD undertook the
disconnection also without prior notice and even failed to reconnect the Spouses Pastorfide’s
water supply despite payment of their arrears. There was clearly an abuse of right on the part
of petitioner, COWD and Gonzalez. They are guilty of bad faith.
The principle of abuse of rights as enshrined in Article 19 of the Civil Code provides that
every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.
In this regard, the Court's ruling in Yuchengco v. The Manila Chronicle Publishing
Corporation17 is instructive, to wit:
xxxx
This provision of law sets standards which must be observed in the exercise of one’s rights
as well as in the performance of its duties, to wit: to act with justice; give everyone his due;
and observe honesty and good faith.
In Globe Mackay Cable and Radio Corporation v. Court of Appeals, it was elucidated that
while Article 19 "lays down a rule of conduct for the government of human relations and for
the maintenance of social order, it does not provide a remedy for its violation. Generally, an
action for damages under either Article 20 or Article 21 would be proper." The Court said:
One of the more notable innovations of the New Civil Code is the codification of "some basic
principles that are to be observed for the rightful relationship between human beings and for
the stability of the social order." [REPORT ON THE CODE COMMISSION ON THE
PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking
to remedy the defect of the old Code which merely stated the effects of the law, but failed to
draw out its spirit, incorporated certain fundamental precepts which were "designed to
indicate certain norms that spring from the fountain of good conscience" and which were also
meant to serve as "guides for human conduct [that] should run as golden threads through
society, to the end that law may approach its supreme ideal, which is the sway and
dominance of justice." (Id.) Foremost among these principles is that pronounced in Article 19
x x x.
xxxx
This article, known to contain what is commonly referred to as the principle of abuse of
rights, sets certain standards which must be observed not only in the exercise of one's rights,
but also in the performance of one's duties. These standards are the following: to act with
justice; to give everyone his due; and to observe honesty and good faith. The law, therefore,
recognizes a primordial limitation on all rights; that in their exercise, the norms of human
conduct set forth in Article 19 must be observed. A right, though by itself legal because
recognized or granted by law as such, may nevertheless become the source of some
illegality. When a right is exercised in a manner which does not conform with the norms
enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed
for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of
conduct for the government of human relations and for the maintenance of social order, it
does not provide a remedy for its violation. Generally, an action for damages under either
Article 20 or Article 21 would be proper.
Corollarilly, Article 20 provides that "every person who, contrary to law, willfully or negligently
causes damage to another shall indemnify the latter for the same." It speaks of the general
sanctions of all other provisions of law which do not especially provide for its own sanction.
When a right is exercised in a manner which does not conform to the standards set forth in
the said provision and results in damage to another, a legal wrong is thereby committed for
which the wrongdoer must be responsible. Thus, if the provision does not provide a remedy
for its violation, an action for damages under either Article 20 or Article 21 of the Civil Code
would be proper.
The question of whether or not the principle of abuse of rights has been violated resulting in
damages under Article 20 or other applicable provision of law, depends on the circumstances
of each case. x x x18
To recapitulate, petitioner's acts which violated the abovementioned provisions of law is her
unjustifiable act of having the respondent spouses' water supply disconnected, coupled with
her failure to warn or at least notify respondent spouses of such intention. On the part of
COWD and Gonzalez, it is their failure to give prior notice of the impending disconnection
and their subsequent neglect to reconnect respondent spouses' water supply despite the
latter's settlement of their delinquent account.
On the basis of the foregoing, the Court finds no cogent reason to depart from the ruling of
both the RTC and the CA that petitioner, COWD and Gonzalez are solidarily liable.
The Spouses Pastorfide are entitled to moral damages based on the provisions of Article
2219,19 in connection with Articles 2020 and 2121 of the Civil Code.
As for exemplary damages, Article 2229 provides that exemplary damages may be imposed
by way of example or correction for the public good. Nonetheless, exemplary damages are
imposed not to enrich one party or impoverish another, but to serve as a deterrent against or
as a negative incentive to curb socially deleterious actions.22 In the instant case, the Court
agrees with the CA in sustaining the award of exemplary damages, although it reduced the
amount granted, considering that respondent spouses were deprived of their water supply for
more than nine (9) months, and such deprivation would have continued were it not for the
relief granted by the RTC.
With respect to the award of attorney's fees, Article 2208 of the Civil Code provides, among
others, that such fees may be recovered when exemplary damages are awarded, when the
defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest, and where the defendant acted in gross and evident bad
faith in refusing to satisfy the plaintiffs’ plainly valid, just and demandable claim.
WHEREFORE, instant petition for review on certiorari is DENIED. The Decision and
Resolution of the Court of Appeals, dated August 28, 2003 and December 17, 2003,
respectively, in CA-G.R. CV No. 73000 are AFFIRMED.
SO ORDERED.
Velasco, Jr., (Chairperson), Abad, Mendoza, and Leonen, JJ., concur.
July 24, 2013
N O T I C E OF J U D G M E N T
Sirs/Mesdames:
Please take notice that on ___July 17, 2013___ a Decision, copy attached herewith, was
rendered by the Supreme Court in the above-entitled case, the original of which was
received by this Office on July 19, 2013 at 2:25 p.m.
Very truly yours,
(SGD)
LUCITA ABJELINA SORIANO
Division Clerk of Court

Footnotes
* Spelled as Gonzales in other parts of the rollo and records.
1
 Penned by Associate Justice Conrado M. Vasquez, Jr., with Associate Justices Edgardo P.
Cruz and Noel G. Tijam, concurring; rollo, pp. 60-67.
2
 Id. at 68.
3
 Penned by Judge Leonardo N. Demecillo, id. at 27-37.
4
 Rollo, pp. 60-62.
5
 Id. at 35-36.
6
 Id. at 37.
7
 Id. at 67. (Emphasis in the original)
8
 Id. at 65.
9
 Id. at 64.
10
 Id. at 219.
11
 Id. at 220.
12
 Id. at 14.
13
 Philippine National Bank v. DKS International, Inc., G.R. No. 179161, January 22, 2010,
610 SCRA 603, 621.
14
 Id.
15
 Uypitching v. Quiamco, G.R. No. 146322, December 6, 2006, 510 SCRA 172, 179.
16
 Id.
17
 G.R. No. 184315, November 28, 2011, 661 SCRA 392.
18
 Id. at 402-404. (Emphasis supplied)
19
 Art. 2219. Moral damages may be recovered in the following and analogous cases:
xxxx
(10) Acts and actions referred to in Articles 21, 26, 27, 28. 29, 30, 32, 34 and 35.
xxxx
20
 Every person who, contrary to law, willfully or negligently causes damage to another, shall
indemnify the latter for the same.
21
 Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.
22
 Yuchengco v. The Manila Chronicle Publishing Corporation, supra note 17, at 405.

G.R. No. 168512             March 20, 2007

ORLANDO D. GARCIA, JR., doing business under the name and style COMMUNITY
DIAGNOSTIC CENTER and BU CASTRO,1 Petitioners, 
vs.
RANIDA D. SALVADOR and RAMON SALVADOR, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review2 under Rule 45 of the Rules of Court assailing the February 27,
2004 Decision3 of the Court of Appeals in CA-G.R. CV No. 58668 finding petitioner Orlando
D. Garcia liable for gross negligence; and its June 16, 2005 Resolution4 denying petitioner’s
motion for reconsideration.
On October 1, 1993, respondent Ranida D. Salvador started working as a trainee in the
Accounting Department of Limay Bulk Handling Terminal, Inc. (the Company). As a
prerequisite for regular employment, she underwent a medical examination at the
Community Diagnostic Center (CDC). Garcia who is a medical technologist, conducted the
HBs Ag (Hepatitis B Surface Antigen) test and on October 22, 1993, CDC issued the test
result5 indicating that Ranida was "HBs Ag: Reactive." The result bore the name and
signature of Garcia as examiner and the rubber stamp signature of Castro as pathologist.
When Ranida submitted the test result to Dr. Sto. Domingo, the Company physician, the
latter apprised her that the findings indicated that she is suffering from Hepatitis B, a liver
disease. Thus, based on the medical report6submitted by Sto. Domingo, the Company
terminated Ranida’s employment for failing the physical examination.7
When Ranida informed her father, Ramon, about her ailment, the latter suffered a heart
attack and was confined at the Bataan Doctors Hospital. During Ramon’s confinement,
Ranida underwent another HBs Ag test at the said hospital and the result8 indicated that she
is non-reactive. She informed Sto. Domingo of this development but was told that the test
conducted by CDC was more reliable because it used the Micro-Elisa Method.
Thus, Ranida went back to CDC for confirmatory testing, and this time, the Anti-HBs test
conducted on her indicated a "Negative" result.9
Ranida also underwent another HBs Ag test at the Bataan Doctors Hospital using the Micro-
Elisa Method. The result indicated that she was non-reactive.10
Ranida submitted the test results from Bataan Doctors Hospital and CDC to the Executive
Officer of the Company who requested her to undergo another similar test before her re-
employment would be considered. Thus, CDC conducted another HBs Ag test on Ranida
which indicated a "Negative" result.11 Ma. Ruby G. Calderon, Med-Tech Officer-in-Charge of
CDC, issued a Certification correcting the initial result and explaining that the examining
medical technologist (Garcia) interpreted the delayed reaction as positive or reactive.12
Thereafter, the Company rehired Ranida.
On July 25, 1994, Ranida and Ramon filed a complaint13 for damages against petitioner
Garcia and a purportedly unknown pathologist of CDC, claiming that, by reason of the
erroneous interpretation of the results of Ranida’s examination, she lost her job and suffered
serious mental anxiety, trauma and sleepless nights, while Ramon was hospitalized and lost
business opportunities.
On September 26, 1994, respondents amended their complaint14 by naming Castro as the
"unknown pathologist."
Garcia denied the allegations of gross negligence and incompetence and reiterated the
scientific explanation for the "false positive" result of the first HBs Ag test in his December 7,
1993 letter to the respondents.15
For his part, Castro claimed that as pathologist, he rarely went to CDC and only when a case
was referred to him; that he did not examine Ranida; and that the test results bore only his
rubber-stamp signature.
On September 1, 1997,16 the trial court dismissed the complaint for failure of the respondents
to present sufficient evidence to prove the liability of Garcia and Castro. It held that
respondents should have presented Sto. Domingo because he was the one who interpreted
the test result issued by CDC. Likewise, respondents should have presented a medical
expert to refute the testimonies of Garcia and Castro regarding the medical explanation
behind the conflicting test results on Ranida.17
Respondents appealed to the Court of Appeals which reversed the trial court’s findings, the
dispositive portion of which states:
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE and another one
entered ORDERING defendant-appellee Orlando D. Garcia, Jr. to pay plaintiff-appellant
Ranida D. Salvador moral damages in the amount of P50,000.00, exemplary damages in the
amount of P50,000.00 and attorney’s fees in the amount of P25,000.00.
SO ORDERED.18
The appellate court found Garcia liable for damages for negligently issuing an erroneous
HBs Ag result. On the other hand, it exonerated Castro for lack of participation in the
issuance of the results.
After the denial of his motion for reconsideration, Garcia filed the instant petition.
The main issue for resolution is whether the Court of Appeals, in reversing the decision of the
trial court, correctly found petitioner liable for damages to the respondents for issuing an
incorrect HBsAG test result.
Garcia maintains he is not negligent, thus not liable for damages, because he followed the
appropriate laboratory measures and procedures as dictated by his training and experience;
and that he did everything within his professional competence to arrive at an objective,
impartial and impersonal result.
At the outset, we note that the issues raised are factual in nature. Whether a person is
negligent or not is a question of fact which we cannot pass upon in a petition for review
on certiorari which is limited to reviewing errors of law.19
Negligence is the failure to observe for the protection of the interest of another person that
degree of care, precaution and vigilance which the circumstances justly demand,20 whereby
such other person suffers injury. For health care providers, the test of the existence of
negligence is: did the health care provider either fail to do something which a reasonably
prudent health care provider would have done, or that he or she did something that a
reasonably prudent health care provider would not have done; and that failure or action
caused injury to the patient;21 if yes, then he is guilty of negligence.
Thus, the elements of an actionable conduct are: 1) duty, 2) breach, 3) injury, and 4)
proximate causation.
All the elements are present in the case at bar.
Owners and operators of clinical laboratories have the duty to comply with statutes, as well
as rules and regulations, purposely promulgated to protect and promote the health of the
people by preventing the operation of substandard, improperly managed and inadequately
supported clinical laboratories and by improving the quality of performance of clinical
laboratory examinations.22 Their business is impressed with public interest, as such, high
standards of performance are expected from them.
In F.F. Cruz and Co., Inc. v. Court of Appeals, we found the owner of a furniture shop liable
for the destruction of the plaintiff’s house in a fire which started in his establishment in view of
his failure to comply with an ordinance which required the construction of a firewall.
In Teague v. Fernandez, we stated that where the very injury which was intended to be
prevented by the ordinance has happened, non-compliance with the ordinance was not only
an act of negligence, but also the proximate cause of the death.23
In fine, violation of a statutory duty is negligence. Where the law imposes upon a person the
duty to do something, his omission or non-performance will render him liable to whoever may
be injured thereby.
Section 2 of Republic Act (R.A.) No. 4688, otherwise known as The Clinical Laboratory Law,
provides:
Sec. 2. It shall be unlawful for any person to be professionally in-charge of a registered
clinical laboratory unless he is a licensed physician duly qualified in laboratory medicine and
authorized by the Secretary of Health, such authorization to be renewed annually.
No license shall be granted or renewed by the Secretary of Health for the operation and
maintenance of a clinical laboratory unless such laboratory is under the administration,
direction and supervision of an authorized physician, as provided for in the preceding
paragraph.
Corollarily, Sections 9(9.1)(1), 11 and 25(25.1)(1) of the DOH Administrative Order No. 49-B
Series of 1988, otherwise known as the Revised Rules and Regulations Governing the
Registration, Operation and Maintenance of Clinical Laboratories in the Philippines, read:
Sec. 9. Management of the Clinical Laboratory:
9.1 Head of the Clinical Laboratory: The head is that person who assumes technical and
administrative supervision and control of the activities in the laboratory.
For all categories of clinical laboratories, the head shall be a licensed physician certified by
the Philippine Board of Pathology in either Anatomic or Clinical Pathology or both provided
that:
(1) This shall be mandatory for all categories of free-standing clinical laboratories; all tertiary
category hospital laboratories and for all secondary category hospital laboratories located in
areas with sufficient available pathologist.
xxxx
Sec. 11. Reporting: All laboratory requests shall be considered as consultations between the
requesting physician and pathologist of the laboratory. As such all laboratory reports on
various examinations of human specimens shall be construed as consultation report and
shall bear the name of the pathologist or his associate. No person in clinical laboratory shall
issue a report, orally or in writing, whole portions thereof without a directive from the
pathologist or his authorized associate and only to the requesting physician or his authorized
representative except in emergencies when the results may be released as authorized by the
pathologist.
xxxx
Sec. 25. Violations:
25.1 The license to operate a clinical laboratory may be suspended or revoked by the
Undersecretary of Health for Standards and Regulation upon violation of R.A. 4688 or the
rules and regulations issued in pursuance thereto or the commission of the following acts by
the persons owning or operating a clinical laboratory and the persons under their authority.
(1) Operation of a Clinical Laboratory without a certified pathologist or qualified licensed
physician authorized by the Undersecretary of Health or without employing a registered
medical technologist or a person not registered as a medical technologist in such a position.
And Section 29(b) of R.A. No. 5527, otherwise known as The Philippine Medical Technology
Act of 1969, reads:
Section 29. Penal Provisions.- Without prejudice to the provision of the Medical Act of 1959,
as amended relating to illegal practice of Medicine, the following shall be punished by a fine
of not less than two thousand pesos nor more than five thousand pesos, or imprisonment for
not less than six months nor more than two years, or both, in the discretion of the court:
xxxx
(b) Any medical technologist, even if duly registered, who shall practice medical technology
in the Philippines without the necessary supervision of a qualified pathologist or physician
authorized by the Department of Health;
From the foregoing laws and rules, it is clear that a clinical laboratory must be administered,
directed and supervised by a licensed physician authorized by the Secretary of Health, like a
pathologist who is specially trained in methods of laboratory medicine; that the medical
technologist must be under the supervision of the pathologist or a licensed physician; and
that the results of any examination may be released only to the requesting physician or his
authorized representative upon the direction of the laboratory pathologist.
These rules are intended for the protection of the public by preventing performance of
substandard clinical examinations by laboratories whose personnel are not properly
supervised. The public demands no less than an effective and efficient performance of
clinical laboratory examinations through compliance with the quality standards set by laws
and regulations.
We find that petitioner Garcia failed to comply with these standards.
First, CDC is not administered, directed and supervised by a licensed physician as required
by law, but by Ma. Ruby C. Calderon, a licensed Medical Technologist.24 In the License to
Open and Operate a Clinical Laboratory for the years 1993 and 1996 issued by Dr. Juan R.
Nañagas, M.D., Undersecretary for Health Facilities, Standards and Regulation, defendant-
appellee Castro was named as the head of CDC.25 However, in his Answer with
Counterclaim, he stated:
3. By way of affirmative and special defenses, defendant pathologist further avers and plead
as follows:
Defendant pathologist is not the owner of the Community Diagnostic Center nor an employee
of the same nor the employer of its employees. Defendant pathologist comes to the
Community Diagnostic Center when and where a problem is referred to him. Its employees
are licensed under the Medical Technology Law (Republic Act No. 5527) and are certified by,
and registered with, the Professional Regulation Commission after having passed their Board
Examinations. They are competent within the sphere of their own profession in so far as
conducting laboratory examinations and are allowed to sign for and in behalf of the clinical
laboratory. The defendant pathologist, and all pathologists in general, are hired by
laboratories for purposes of complying with the rules and regulations and orders issued by
the Department of Health through the Bureau of Research and Laboratories. Defendant
pathologist does not stay that long period of time at the Community Diagnostic Center but
only periodically or whenever a case is referred to him by the laboratory. Defendant
pathologist does not appoint or select the employees of the laboratory nor does he arrange
or approve their schedules of duty.26
Castro’s infrequent visit to the clinical laboratory barely qualifies as an effective
administrative supervision and control over the activities in the laboratory. "Supervision and
control" means the authority to act directly whenever a specific function is entrusted by law or
regulation to a subordinate; direct the performance of duty; restrain the commission of acts;
review, approve, revise or modify acts and decisions of subordinate officials or units.27
Second, Garcia conducted the HBsAG test of respondent Ranida without the supervision of
defendant-appellee Castro, who admitted that:
[He] does not know, and has never known or met, the plaintiff-patient even up to this time nor
has he personally examined any specimen, blood, urine or any other tissue, from the plaintiff-
patient otherwise his own handwritten signature would have appeared in the result and not
merely stamped as shown in Annex "B" of the Amended Complaint.28
Last, the disputed HBsAG test result was released to respondent Ranida without the
authorization of defendant-appellee Castro.29
Garcia may not have intended to cause the consequences which followed after the release of
the HBsAG test result. However, his failure to comply with the laws and rules promulgated
and issued for the protection of public safety and interest is failure to observe that care which
a reasonably prudent health care provider would observe. Thus, his act or omission
constitutes a breach of duty.
Indubitably, Ranida suffered injury as a direct consequence of Garcia’s failure to comply with
the mandate of the laws and rules aforequoted. She was terminated from the service for
failing the physical examination; suffered anxiety because of the diagnosis; and was
compelled to undergo several more tests. All these could have been avoided had the proper
safeguards been scrupulously followed in conducting the clinical examination and releasing
the clinical report.
Article 20 of the New Civil Code provides:
Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another,
shall indemnify the latter for the same.
The foregoing provision provides the legal basis for the award of damages to a party who
suffers damage whenever one commits an act in violation of some legal provision.30 This was
incorporated by the Code Commission to provide relief to a person who suffers damage
because another has violated some legal provision.31
We find the Court of Appeals’ award of moral damages reasonable under the circumstances
bearing in mind the mental trauma suffered by respondent Ranida who thought she was
afflicted by Hepatitis B, making her "unfit or unsafe for any type of employment."32 Having
established her right to moral damages, we see no reason to disturb the award of exemplary
damages and attorney’s fees. Exemplary damages are imposed, by way of example or
correction for the public good, in addition to moral, temperate, liquidated or compensatory
damages,33 and attorney’s fees may be recovered when, as in the instant case, exemplary
damages are awarded.34
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 58668 dated
February 27, 2004 finding petitioner Orlando D. Garcia, Jr. guilty of gross negligence and
liable to pay to respondents ₱50,000.00 as moral damages, ₱50,000.00 as exemplary
damages, and ₱25,000.00 as attorney’s fees, is AFFIRMED.
SO ORDERED.
CONSUELO YNARES-SANTIAGO
Associate Justice
WE CONCUR:
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
ROMEO J. CALLEJO, SR. MINITA V. CHICO-NAZARIO
Associate Justice Asscociate Justice
ANTONIO EDUARDO B. NACHURA
Associate Justice
ATTESTATION
I attest that the conclusions in the above decision were reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s
Attestation, it is hereby certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice

Foonotes
1
 Did not appeal from the Decision of the Court of Appeals.
2
 Rollo, pp. 7-45.
3
 Id. at 48-63. Penned by Associate Justice Marina L. Buzon and concurred in by Associate
Justices Sergio L. Pestaño and Aurora Santiago-Lagman.
4
 Id. at 46-47.
5
 Records, p. 186.
6
 Id. at 199.
7
 Id. at 187.
8
 Id. at 188.
9
 Id. at 189.
10
 Id. at 190.
11
 Id. at 192.
12
 Id. at 209.
13
 Id. at 1-7.
14
 Id. at 45-51.
15
 Id. at 31-41.
16
 CA Rollo, pp. 51-61. Penned by Judge Lorenzo R. Silva, Jr.
17
 Id. at 59.
18
 Rollo, p. 63.
19
 Estacion v. Bernardo, G.R. No. 144723, February 27, 2006, 483 SCRA 222, 231.
20
 Child Learning Center, Inc. v. Tagorio, G.R. No. 150920, November 25, 2005, 476 SCRA
236, 242.
21
 Garcia-Rueda v. Pascasio, 344 Phil. 323, 331 (1997).
22
 Department of Health (DOH) Administrative Order 49-B (1988), Sec. 3.
23
 Cipriano v. Court of Appeals, 331 Phil. 1019, 1025 (1996).
24
 Records, p. 193.
25
 Id. at 456-457.
26
 Id. at 72-73.
27
 Jalandoni v. Drilon, 383 Phil. 855, 868 (2000).
28
 Records, p. 73.
29
 Id.
30
 Carpio v. Valmonte, G.R. No. 151866, September 9, 2004, 438 SCRA 38, 47-48.
31
 Sanco, Cezar S., Torts and Damages (1994), Volume II, p. 748.
32
 Records, p. 199.
33
 Civil Code, Article 2229.
34
 Civil Code, Article 2208.
G.R. No. L-39019 January 22, 1988 
MANILA ELECTRIC COMPANY and PEDRO YAMBAO, petitioners-appellants, 
vs.
THE HONORABLE COURT OF APPEALS and ISAAC CHAVEZ, SR., ISAAC O. CHAVEZ,
JR., ROSENDO O. CHAVES, and JUAN O. CHAVES, respondents-appellees.

YAP, J.:
In an action for recovery of damages for embarassment, humiliation, wounded feelings and
hurt pride, caused to herein private respondents, by reason of the disconnection of their
electrical service by the petitioners, the then Court of First Instance of Manila, Sixth Judicial
District, Branch XXIV, rendered a decision dated December 13,1967, ordering herein
petitioners jointly and severally to pay private respondents the sum of Ten Thousand
(P10,000.00) Pesos as moral damages, Two Thousand (P2,000.00) Pesos as exemplary
damages and, One Thousand (P1,000.00) Pesos as attorney's fees, and dismissing
petitioners' counterclaim. 
On appeal, the Court of Appeals and in toto the trial court's decision. Their Motion for
Reconsideration having been denied, petitioners filed the instant petition for certiorari. 
Petitioner Manila Electric Company (MERALCO) is a public utility corporation providing
electric power for the consumption of the general public in Metro Manila. Petitioner Pedro
Yambao is a bill collector of MERALCO. 
Private respondents Isaac Chaves and Juana O. Chaves, husband and wife, filed the
complaint for damages, together with their children, Isaac O. Chaves, Jr. and Rosendo O.
Chaves. Isaac Sr. and Isaac Jr. and Rosendo were members of the Philippine Bar; Isaac, Sr.
and Isaac, Jr. were practicing lawyers and Rosendo was a Legal Officer at the Agricultural
Productivity Commission. Juana O. Chaves was a public school teacher. 
The facts as found by the trial court and adopted by the Court of Appeals are as follows: 
Plaintiff Isaac Chaves became a customer of defendant MERALCO in the year 1953 when
he and his family were residing at No. 211-D Rubi, Manila. In connection with the contract for
electrical service, he deposited the sum of P5.00 (Exh. "A") with defendant MERALCO on
February 12, 1953. This deposit in the name of plaintiff Isaac Chaves was retained by
MERALCO and made to apply to subsequent contracts for electrical service entered into
after subsequent transfers of the Chaves family to other residences and up to the time this
family went to reside at the place aforementioned, at No. 2656 Mercedes Street, Singalong,
Manila. ... 
At or about the end of March, 1965, defendant Pedro Yambao went to the residence of
plaintiffs and presented two overdue bills, one for January 11 to February 9,1965, for the
sum of P7.90 (Exhibit "C"), and the other for February 9 to March 10, 1965, for the amount of
P7.20 (Exhibit "C"). Juana O. Chaves, however, informed Yambao that these bills would be
paid at the MERALCO main office. 
Accordingly, on April 2, 1965, Isaac Chaves went to the defendant's main office at San
Marcelino, Manila, but paid only the bill marked as Exhibit 'C" leaving the other bill Identified
as Exhibit "C-l" unpaid. 
Past 2:30 o'clock in the afternoon of April 21,1965, MERALCO caused the electric service in
plaintiff's residence to be discontinued and the power line cut off. 
The next day, April 22, 1965, at about 9:00 a.m., plaintiff Rosendo O. Chaves went to the
MERALCO main office and paid the amount of P7.20 for the bill marked as Exhibit "C-l", and
the sum of P7.00 for the subsequent bill corresponding to the period from March 10 up to
April 8, 1965 (Exhibit "C-2") after his attention was called to the latter account. Rosendo O.
Chaves then sought the help of Atty. Lourdy Torres, one of the defendants' counsel, and,
thereafter, the power line was reconnected and electric service restored to the Chaves
residence at about 7:00 p.m. of that same day. 1
Petitioners dispute the finding that there was no notice given to herein respondent. However,
since only questions of law may be raised in a petition for certiorari under Rule 45 of the
Revised Rules of Court, petitioners, 'for the sake of argument and for the purpose of giving
focus on the legal issues', do not take issue with such finding. 
Petitioners contend that in the absence of bad faith, they could not be held liable for moral
and exemplary damages as well as attorney's fees. The failure to give a notice of
disconnection to private respondents might have been a breach of duty or breach of contract,
but by itself does not constitute bad faith or fraud; it must be shown that such a failure was
motivated by in or done with fraudulent intent.Petitioners also maintain that ' private
respondents were in arrears in the payment of their electricity bills when their electric service
was connected, no moral damages may be recovered by them under the 'clean hands'
doctrine enunciated in Mabutas vs. Calapan Electric Company, CA-G.R. No. L-9683-R, May
26, 1964. 
In its decision, the respondent Court of Appeals held that MERALCO's right to disconnect the
electric service of a delinquent customer "is an absolute one, subject only to the requirement
that defendant MERALCO should give the customer a written notice of disconnection 48
hours in advance." This requirement is embodied in Section 97 of the Revised Order No. 1 of
the Public Service Commission which provides as follows: 
Section 97. Payment of bills. — A public service, may require that bills for service be paid
within a specified time after rendition. When the billing period covers a month or more, the
minimum time allowed will be ten days and upon expiration of the specified time, service may
be discontinued for the non-payment of bills, provided that a 48 hours' written notice of such
disconnection has been given the customer: Provided, however, that disconnections of
service shall not be made on Sundays and official holidays and never after 2 p.m. of any
working day: Provided, further, that if at the moment the disconnection is to be made the
customer tenders payment of the unpaid bill to the agent or employee of the operator who is
to effect the disconnection, the said agent or employee shall be obliged to accept tender of
payment and issue a temporary receipt for the amount and shall desist from disconnecting
the service. 2
The respondent court stressed the importance and necessity of the 48-hour advance written
notification before a disconnection of service may be effected. Said the court: 
... It sets in motion the disconnection of an electrical service of the customer by giving the
notice, determining the expiration date thereof, and executing the disconnection. It, therefore,
behooves the defendant MERALCO that before it disconnects a customer's electrical service,
there should be sufficient evidence that the requirements for the disconnection had been duly
complied with, otherwise, the poor consumer can be subjected to the whims and caprices of
the defendant, by the mere pretension that the written notice had been duly served upon the
customer. 3
We find no reversible error in the decision appealed from. One can not deny the vital role
which a public utility such as MERALCO, having a monopoly of the supply of electrical power
in Metro Manila and some nearby municipalities, plays in the life of people living in such
areas. Electricity has become a necessity to most people in these areas justifying the
exercise by the State of its regulatory power over the business of supplying electrical service
to the public, in which petitioner MERALCO is engaged. Thus, the state may regulate, as it
has done through Section 97 of the Revised Order No. 1 of the Public Service Commission,
the conditions under which and the manner by which a public utility such as MERALCO may
effect a disconnection of service to a delinquent customer. Among others, a prior written
notice to the customer is required before disconnection of the service. Failure to give such
prior notice amounts to a tort, as held by us in a similar case, 4 where we said: 
... petitioner's act in 'disconnecting respondent Ongsip's gas service without prior notice
constitutes breach of contract amounting to an independent tort. The prematurity of the
action is indicative of an intent to cause additional mental and moral suffering to private
respondent. This is a clear violation of Article 21 of the Civil Code which provides that any
person who wilfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for damages. This is reiterated by
paragraph 10 of Article 2219 of the Code. Moreover, the award of moral damages is
sanctioned by Article 2220 which provides that wilfull injury to property may be a legal ground
for awarding moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract where the defendant
acted fraudulently or in bad faith. 
Likewise, we find no merit in petitioners' contention that being in arrears in the payment of
their bills, the private respondents are not entitled to moral damages under the doctrine that
"he who comes to court in demand of equity, must come with clean hands." We rejected this
argument in the Manila Gas Corporation case, supra, wherein we held that respondents'
default in the payment of his bills "cannot be utilized by petitioner to defeat or null the claim
for damages. At most, this circumstance can be considered as a mitigating factor in
ascertaining the amount of damages to which respondent ... is entitled."
Accordingly, we find no grave abuse of discretion committed by respondent court in affirming
the trial court's decision. The petition is hereby DISMISSED for lack of merit. 
SO ORDERED. 
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur. 
 
Footnotes
1 Rollo, p. 
2 Rollo pp. 35-36. 
3 Ibid., p. 39. 
4 Manila Gas Corporation vs. Court of Appeals, 100 SCRA 602. 

G.R. No. 116100             February 9, 1996

SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and MARIA
CRISTINA SANTOS,petitioners, 
vs.
COURT OF APPEALS, HEIRS OF PACIFICO C. MABASA and REGIONAL TRIAL COURT
OF PASIG, METRO MANILA, BRANCH 181, respondents.
DECISION
REGALADO, J.:
This petition for review on certiorari assails the decision of respondent Court of Appeals in
CA-G.R. CV No. 29115, promulgated on November 10, 1993, which affirmed with
modification the decision of the trial court, as well as its resolution dated July 8, 1994 denying
petitioner's motion for reconsideration.1 
On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right of way was
filed by Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio, Rosalina R. Morato,
Lito Santos and Maria Cristina C. Santos before the Regional Trial Court of Pasig and
assigned to Branch 22 thereof.2 
The generative facts of the case, as synthesized by the trial court and adopted by the Court
of Appeals, are as follows:
Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died during the
pendency of this case and was substituted by Ofelia Mabasa, his surviving spouse [and
children].
The plaintiff owns a parcel of land with a two-door apartment erected thereon situated at
Interior P. Burgos St., Palingon, Tipas, Tagig, Metro Manila. The plaintiff was able to acquire
said property through a contract of sale with spouses Mamerto Rayos and Teodora Quintero
as vendors last September 1981. Said property may be described to be surrounded by other
immovables pertaining to defendants herein. Taking P. Burgos Street as the point of
reference, on the left side, going to plaintiff's property, the row of houses will be as follows:
That of defendants Cristino and Brigido Custodio, then that of Lito and Maria Cristina Santos
and then that of Ofelia Mabasa. On the right side (is) that of defendant Rosalina Morato and
then a Septic Tank (Exhibit "D"). As an access to P. Burgos Street from plaintiff's property,
there are two possible passageways. The first passageway is approximately one meter wide
and is about 20 meters distan(t) from Mabasa's residence to P. Burgos Street. Such path is
passing in between the previously mentioned row of houses. The second passageway is
about 3 meters in width and length from plaintiff Mabasa's residence to P. Burgos Street; it is
about 26 meters. In passing thru said passageway, a less than a meter wide path through
the septic tank and with 5-6 meters in length, has to be traversed.
When said property was purchased by Mabasa, there were tenants occupying the remises
and who were acknowledged by plaintiff Mabasa as tenants. However, sometime in
February, 1982, one of said tenants vacated the apartment and when plaintiff Mabasa went
to see the premises, he saw that there had been built an adobe fence in the first passageway
making it narrower in width. Said adobe fence was first constructed by defendants Santoses
along their property which is also along the first passageway. Defendant Morato constructed
her adobe fence and even extended said fence in such a way that the entire passageway
was enclosed. (Exhibit "1-Santoses and Custodios, Exh. "D" for plaintiff, Exhs. "1-C", "1-D"
and "1-E") And it was then that the remaining tenants of said apartment vacated the area.
Defendant Ma. Cristina Santos testified that she constructed said fence because there was
an incident when her daughter was dragged by a bicycle pedalled by a son of one of the
tenants in said apartment along the first passageway. She also mentioned some other
inconveniences of having (at) the front of her house a pathway such as when some of the
tenants were drunk and would bang their doors and windows. Some of their footwear were
even lost. . . .3 (Emphasis in original text; corrections in parentheses supplied)
On February 27, 1990, a decision was rendered by the trial court, with this dispositive part:
Accordingly, judgment is hereby rendered as follows:
1) Ordering defendants Custodios and Santoses to give plaintiff permanent access ingress
and egress, to the public street;
2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight
Thousand Pesos (P8,000) as indemnity for the permanent use of the passageway.
The parties to shoulder their respective litigation expenses.4 
Not satisfied therewith, therein plaintiff represented by his heirs, herein private respondents,
went to the Court of Appeals raising the sole issue of whether or not the lower court erred in
not awarding damages in their favor. On November 10, 1993, as earlier stated, the Court of
Appeals rendered its decision affirming the judgment of the trial court with modification, the
decretal portion of which disposes as follows:
WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH
MODIFICATION only insofar as the herein grant of damages to plaintiffs-appellants. The
Court hereby orders defendants-appellees to pay plaintiffs-appellants the sum of Sixty Five
Thousand (P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000) Pesos as Moral
Damages, and Ten Thousand (P10,000) Pesos as Exemplary Damages. The rest of the
appealed decision is affirmed to all respects.5 
On July 8, 1994, the Court of Appeals denied petitioner's motion for
reconsideration.6 Petitioners then took the present recourse to us, raising two issues, namely,
whether or not the grant of right of way to herein private respondents is proper, and whether
or not the award of damages is in order.
With respect to the first issue, herein petitioners are already barred from raising the same.
Petitioners did not appeal from the decision of the court a quo granting private respondents
the right of way, hence they are presumed to be satisfied with the adjudication therein. With
the finality of the judgment of the trial court as to petitioners, the issue of propriety of the
grant of right of way has already been laid to rest.
For failure to appeal the decision of the trial court to the Court of Appeals, petitioners cannot
obtain any affirmative relief other than those granted in the decision of the trial court. That
decision of the court below has become final as against them and can no longer be
reviewed, much less reversed, by this Court. The rule in this jurisdiction is that whenever an
appeal is taken in a civil case, an appellee who has not himself appealed may not obtain
from the appellate court any affirmative relief other than what was granted in the decision of
the lower court. The appellee can only advance any argument that he may deem necessary
to defeat the appellant's claim or to uphold the decision that is being disputed, and he can
assign errors in his brief if such is required to strengthen the views expressed by the court a
quo. These assigned errors, in turn, may be considered by the appellate court solely to
maintain the appealed decision on other grounds, but not for the purpose of reversing or
modifying the judgment in the appellee's favor and giving him other affirmative reliefs.7 
However, with respect to the second issue, we agree with petitioners that the Court of
Appeals erred in awarding damages in favor of private respondents. The award of damages
has no substantial legal basis. A reading of the decision of the Court of Appeals will show
that the award of damages was based solely on the fact that the original plaintiff, Pacifico
Mabasa, incurred losses in the form of unrealized rentals when the tenants vacated the
leased premises by reason of the closure of the passageway.
However, the mere fact that the plaintiff suffered losses does not give rise to a right to
recover damages. To warrant the recovery of damages, there must be both a right of action
for a legal wrong inflicted by the defendant, and damage resulting to the plaintiff therefrom.
Wrong without damage, or damage without wrong, does not constitute a cause of action,
since damages are merely part of the remedy allowed for the injury caused by a breach or
wrong.8 
There is a material distinction between damages and injury. Injury is the illegal invasion of a
legal right; damage is the loss, hurt, or harm which results from the injury; and damages are
the recompense or compensation awarded for the damage suffered. Thus, there can be
damage without injury in those instances in which the loss or harm was not the result of a
violation of a legal duty. These situations are often called damnum absque injuria.9 
In order that a plaintiff may maintain an action for the injuries of which he complains, he must
establish that such injuries resulted from a breach of duty which the defendant owed to the
plaintiff a concurrence of injury to the plaintiff and legal responsibility by the person causing
it.10 The underlying basis for the award of tort damages is the premise that an individual was
injured in contemplation of law. Thus, there must first be the breach of some duty and the
imposition of liability for that breach before damages may be awarded; it is not sufficient to
state that there should be tort liability merely because the plaintiff suffered some pain and
suffering.11 
Many accidents occur and many injuries are inflicted by acts or omissions which cause
damage or loss to another but which violate no legal duty to such other person, and
consequently create no cause of action in his favor. In such cases, the consequences must
be borne by the injured person alone. The law affords no remedy for damages resulting from
an act which does not amount to a legal injury or wrong.12 
In other words, in order that the law will give redress for an act causing damage, that act
must be not only hurtful, but wrongful. There must be damnum et injuria.13 If, as may happen
in many cases, a person sustains actual damage, that is, harm or loss to his person or
property, without sustaining any legal injury, that is, an act or omission which the law does
not deem an injury, the damage is regarded as damnum absque injuria.14 
In the case at bar, although there was damage, there was no legal injury. Contrary to the
claim of private respondents, petitioners could not be said to have violated the principle of
abuse of right. In order that the principle of abuse of right provided in Article 21 of the Civil
Code can be applied, it is essential that the following requisites concur: (1) The defendant
should have acted in a manner that is contrary to morals, good customs or public policy; (2)
The acts should be willful; and (3) There was damage or injury to the plaintiff.15 
The act of petitioners in constructing a fence within their lot is a valid exercise of their right as
owners, hence not contrary to morals, good customs or public policy. The law recognizes in
the owner the right to enjoy and dispose of a thing, without other limitations than those
established by law.16 It is within the right of petitioners, as owners, to enclose and fence their
property. Article 430 of the Civil Code provides that "(e)very owner may enclose or fence his
land or tenements by means of walls, ditches, live or dead hedges, or by any other means
without detriment to servitudes constituted thereon."
At the time of the construction of the fence, the lot was not subject to any servitudes. There
was no easement of way existing in favor of private respondents, either by law or by contract.
The fact that private respondents had no existing right over the said passageway is
confirmed by the very decision of the trial court granting a compulsory right of way in their
favor after payment of just compensation. It was only that decision which gave private
respondents the right to use the said passageway after payment of the compensation and
imposed a corresponding duty on petitioners not to interfere in the exercise of said right.
Hence, prior to said decision, petitioners had an absolute right over their property and their
act of fencing and enclosing the same was an act which they may lawfully perform in the
employment and exercise of said right. To repeat, whatever injury or damage may have been
sustained by private respondents by reason of the rightful use of the said land by petitioners
is damnum absque injuria.17 
A person has a right to the natural use and enjoyment of his own property, according to his
pleasure, for all the purposes to which such property is usually applied. As a general rule,
therefore, there is no cause of action for acts done by one person upon his own property in a
lawful and proper manner, although such acts incidentally cause damage or an unavoidable
loss to another, as such damage or loss is damnum absque injuria. 18 When the owner of
property makes use thereof in the general and ordinary manner in which the property is
used, such as fencing or enclosing the same as in this case, nobody can complain of having
been injured, because the incovenience arising from said use can be considered as a mere
consequence of community life. 19 
The proper exercise of a lawful right cannot constitute a legal wrong for which an action will
lie, 20 although the act may result in damage to another, for no legal right has been
invaded. 21 One may use any lawful means to accomplish a lawful purpose and though the
means adopted may cause damage to another, no cause of action arises in the latter's favor.
An injury or damage occasioned thereby is damnum absque injuria. The courts can give no
redress for hardship to an individual resulting from action reasonably calculated to achieve a
lawful means. 22 
WHEREFORE, under the compulsion of the foregoing premises, the appealed decision of
respondent Court of Appeals is hereby REVERSED and SET ASIDE and the judgment of the
trial court is correspondingly REINSTATED.
Romero and Puno, JJ., concur.
Mendoza, J., took no part.

Footnotes
1 
Penned by Justice Lourdes K. Tayao-Jaguros, with Justices Vicente V. Mendoza and Jesus
M. Elbinias, concurring.
2 
Original Record, 1.
3 
Rollo, 28-29.
4 
Ibid., 38.
5 
Ibid., 31.
6 
Ibid., 34.
7 
See Lumibao vs. Intermediate Appellate Court, et al., G.R. No. 64677, September 13, 1990,
189 SCRA 469; SMI Fish Industries, Inc., et al. vs. National Labor Relations Commission, et
al., G.R. Nos. 96952-56, September 2, 1992, 213 SCRA 444; Heirs of Juan Oclarit, et al. vs.
Court of Appeals, et al., G.R. No. 96644, June 17, 1994, 233 SCRA 239.
8 
22 Am Jur 2d, Damages, Sec. 4, 35-36.
9 
Ibid., 13.
10 
1 Am Jur 2d, Actions, Sec. 65, 595; see The Board of Liquidators vs. Kalaw, et al., L-
18805, August 14, 1967, 20 SCRA 987.
11 
Plummer vs. Abbott Laboratories (DC RI), 568, F Supp. 920, CCH Prod Liab Rep 9878.
12 
Ibid., 598.
13 
Comstock vs. Wilson, 257 NY 231, 177 NE 421, 76 ALR 676; Haldeman vs. Bruckhart, 45,
45 Pa 514.
14 
U.S.-Premier Malt Roducts Co. vs. Kasser, 23 F. (2d) 98.
15 
Jurado, D.P., Personal and Family Law, 1984 ed., 41.
16 
Jovellanos, et al., vs. Court of Appeals, et al., G.R. No. 100728, June 18, 1992, 210 SCRA
126.
17 
See Escano, et al. vs. Court of Appeals, et al., L-47207, September 25, 1980, 100 SCRA
197; Ilocos Norte Electric Co. vs. Court of Appeals, et al., G.R. No. 53401, November 6,
1989, 179 SCRA 5; Albenson Enterprises Corporation, et al. vs. Court of Appeals, et
al., G.R. No. 88694, January 11, 1993, 217 SCRA 16.
18 
1 C.J.S., Actions, Sec. 15, 1007-1008.
19 
Tolentino, A.M., Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol.
II (1987), 59, citing 8 Salvat 614.
20 
Coyne vs. Mississippi & R.R. Boom Co., 72, 533, 75 NW 748.
21 
White vs. Kincaid, 149 NC 415, 63 SE 109; Fahn vs. Reichart, 8 Wis 255.
22 
O'Keefee vs. Local 463, United Asso. P. & G. 277 NY 300, 14 NE 300, 14 NE 2d 77, 117
ALR 817.

G.R. No. 97336 February 19, 1993

GASHEM SHOOKAT BAKSH, petitioner, 
vs.
HON. COURT OF APPEALS and MARILOU T. GONZALES, respondents.
Public Attorney's Office for petitioner.
Corleto R. Castro for private respondent.

DAVIDE, JR., J.:
This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to review and set
aside the Decision1 of the respondent Court of Appeals in CA-G.R. CV No. 24256 which
affirmed in toto the 16 October 1939 Decision of Branch 38 (Lingayen) of the Regional Trial
Court (RTC) of Pangasinan in Civil Case No. 16503. Presented is the issue of whether or not
damages may be recovered for a breach of promise to marry on the basis of Article 21 of the
Civil Code of the Philippines.
The antecedents of this case are not complicated:
On 27 October 1987, private respondent, without the assistance of counsel, filed with the
aforesaid trial court a complaint2 for damages against the petitioner for the alleged violation
of their agreement to get married. She alleges in said complaint that: she is twenty-two (22)
years old, single, Filipino and a pretty lass of good moral character and reputation duly
respected in her community; petitioner, on the other hand, is an Iranian citizen residing at the
Lozano Apartments, Guilig, Dagupan City, and is an exchange student taking a medical
course at the Lyceum Northwestern Colleges in Dagupan City; before 20 August 1987, the
latter courted and proposed to marry her; she accepted his love on the condition that they
would get married; they therefore agreed to get married after the end of the school semester,
which was in October of that year; petitioner then visited the private respondent's parents in
Bañaga, Bugallon, Pangasinan to secure their approval to the marriage; sometime in 20
August 1987, the petitioner forced her to live with him in the Lozano Apartments; she was a
virgin before she began living with him; a week before the filing of the complaint, petitioner's
attitude towards her started to change; he maltreated and threatened to kill her; as a result of
such maltreatment, she sustained injuries; during a confrontation with a representative of the
barangay captain of Guilig a day before the filing of the complaint, petitioner repudiated their
marriage agreement and asked her not to live with him anymore and; the petitioner is already
married to someone living in Bacolod City. Private respondent then prayed for judgment
ordering the petitioner to pay her damages in the amount of not less than P45,000.00,
reimbursement for actual expenses amounting to P600.00, attorney's fees and costs, and
granting her such other relief and remedies as may be just and equitable. The complaint was
docketed as Civil Case No. 16503.
In his Answer with Counterclaim,3 petitioner admitted only the personal circumstances of the
parties as averred in the complaint and denied the rest of the allegations either for lack of
knowledge or information sufficient to form a belief as to the truth thereof or because the true
facts are those alleged as his Special and Affirmative Defenses. He thus claimed that he
never proposed marriage to or agreed to be married with the private respondent; he neither
sought the consent and approval of her parents nor forced her to live in his apartment; he did
not maltreat her, but only told her to stop coming to his place because he discovered that she
had deceived him by stealing his money and passport; and finally, no confrontation took
place with a representative of the barangay captain. Insisting, in his Counterclaim, that the
complaint is baseless and unfounded and that as a result thereof, he was unnecessarily
dragged into court and compelled to incur expenses, and has suffered mental anxiety and a
besmirched reputation, he prayed for an award of P5,000.00 for miscellaneous expenses
and P25,000.00 as moral damages.
After conducting a pre-trial on 25 January 1988, the trial court issued a Pre-Trial
Order4 embodying the stipulated facts which the parties had agreed upon, to wit:
1. That the plaintiff is single and resident (sic) of Bañaga, Bugallon, Pangasinan, while the
defendant is single, Iranian citizen and resident (sic) of Lozano Apartment, Guilig, Dagupan
City since September 1, 1987 up to the present;
2. That the defendant is presently studying at Lyceum Northwestern, Dagupan City, College
of Medicine, second year medicine proper;
3. That the plaintiff is (sic) an employee at Mabuhay Luncheonette , Fernandez Avenue,
Dagupan City since July, 1986 up to the present and a (sic) high school graduate;
4. That the parties happened to know each other when the manager of the Mabuhay
Luncheonette, Johhny Rabino introduced the defendant to the plaintiff on August 3, 1986.
After trial on the merits, the lower court, applying Article 21 of the Civil Code, rendered on 16
October 1989 a decision5 favoring the private respondent. The petitioner was thus ordered to
pay the latter damages and attorney's fees; the dispositive portion of the decision reads:
IN THE LIGHT of the foregoing consideration, judgment is hereby rendered in favor of the
plaintiff and against the defendant.
1. Condemning (sic) the defendant to pay the plaintiff the sum of twenty thousand
(P20,000.00) pesos as moral damages.
2. Condemning further the defendant to play the plaintiff the sum of three thousand
(P3,000.00) pesos as atty's fees and two thousand (P2,000.00) pesos at (sic) litigation
expenses and to pay the costs.
3. All other claims are denied.6
The decision is anchored on the trial court's findings and conclusions that (a) petitioner and
private respondent were lovers, (b) private respondent is not a woman of loose morals or
questionable virtue who readily submits to sexual advances, (c) petitioner, through
machinations, deceit and false pretenses, promised to marry private respondent, d) because
of his persuasive promise to marry her, she allowed herself to be deflowered by him, (e) by
reason of that deceitful promise, private respondent and her parents — in accordance with
Filipino customs and traditions — made some preparations for the wedding that was to be
held at the end of October 1987 by looking for pigs and chickens, inviting friends and
relatives and contracting sponsors, (f) petitioner did not fulfill his promise to marry her and (g)
such acts of the petitioner, who is a foreigner and who has abused Philippine hospitality,
have offended our sense of morality, good customs, culture and traditions. The trial court
gave full credit to the private respondent's testimony because, inter alia, she would not have
had the temerity and courage to come to court and expose her honor and reputation to public
scrutiny and ridicule if her claim was false.7
The above findings and conclusions were culled from the detailed summary of the evidence
for the private respondent in the foregoing decision, digested by the respondent Court as
follows:
According to plaintiff, who claimed that she was a virgin at the time and that she never had a
boyfriend before, defendant started courting her just a few days after they first met. He later
proposed marriage to her several times and she accepted his love as well as his proposal of
marriage on August 20, 1987, on which same day he went with her to her hometown of
Bañaga, Bugallon, Pangasinan, as he wanted to meet her parents and inform them of their
relationship and their intention to get married. The photographs Exhs. "A" to "E" (and their
submarkings) of defendant with members of plaintiff's family or with plaintiff, were taken that
day. Also on that occasion, defendant told plaintiffs parents and brothers and sisters that he
intended to marry her during the semestral break in October, 1987, and because plaintiff's
parents thought he was good and trusted him, they agreed to his proposal for him to marry
their daughter, and they likewise allowed him to stay in their house and sleep with plaintiff
during the few days that they were in Bugallon. When plaintiff and defendant later returned to
Dagupan City, they continued to live together in defendant's apartment. However, in the early
days of October, 1987, defendant would tie plaintiff's hands and feet while he went to school,
and he even gave her medicine at 4 o'clock in the morning that made her sleep the whole
day and night until the following day. As a result of this live-in relationship, plaintiff became
pregnant, but defendant gave her some medicine to abort the fetus. Still plaintiff continued to
live with defendant and kept reminding him of his promise to marry her until he told her that
he could not do so because he was already married to a girl in Bacolod City. That was the
time plaintiff left defendant, went home to her parents, and thereafter consulted a lawyer who
accompanied her to the barangay captain in Dagupan City. Plaintiff, her lawyer, her
godmother, and a barangay tanod sent by the barangay captain went to talk to defendant to
still convince him to marry plaintiff, but defendant insisted that he could not do so because he
was already married to a girl in Bacolod City, although the truth, as stipulated by the parties
at the pre-trial, is that defendant is still single.
Plaintiff's father, a tricycle driver, also claimed that after defendant had informed them of his
desire to marry Marilou, he already looked for sponsors for the wedding, started preparing for
the reception by looking for pigs and chickens, and even already invited many relatives and
friends to the forthcoming wedding. 8
Petitioner appealed the trial court's decision to the respondent Court of Appeals which
docketed the case as CA-G.R. CV No. 24256. In his Brief,9 he contended that the trial court
erred (a) in not dismissing the case for lack of factual and legal basis and (b) in ordering him
to pay moral damages, attorney's fees, litigation expenses and costs.
On 18 February 1991, respondent Court promulgated the challenged decision 10 affirming in
toto the trial court's ruling of 16 October 1989. In sustaining the trial court's findings of fact,
respondent Court made the following analysis:
First of all, plaintiff, then only 21 years old when she met defendant who was already 29
years old at the time, does not appear to be a girl of loose morals. It is uncontradicted that
she was a virgin prior to her unfortunate experience with defendant and never had boyfriend.
She is, as described by the lower court, a barrio lass "not used and accustomed to trend of
modern urban life", and certainly would (sic) not have allowed 
"herself to be deflowered by the defendant if there was no persuasive promise made by the
defendant to marry her." In fact, we agree with the lower court that plaintiff and defendant
must have been sweethearts or so the plaintiff must have thought because of the deception
of defendant, for otherwise, she would not have allowed herself to be photographed with
defendant in public in so (sic) loving and tender poses as those depicted in the pictures
Exhs. "D" and "E". We cannot believe, therefore, defendant's pretense that plaintiff was a
nobody to him except a waitress at the restaurant where he usually ate. Defendant in fact
admitted that he went to plaintiff's hometown of Bañaga, Bugallon, Pangasinan, at least
thrice; at (sic) the town fiesta on February 27, 1987 (p. 54, tsn May 18, 1988), at (sic) a
beach party together with the manager and employees of the Mabuhay Luncheonette on
March 3, 1987 (p. 50, tsn id.), and on April 1, 1987 when he allegedly talked to plaintiff's
mother who told him to marry her daughter (pp. 55-56, tsn id.). Would defendant have left
Dagupan City where he was involved in the serious study of medicine to go to plaintiff's
hometown in Bañaga, Bugallon, unless there was (sic) some kind of special relationship
between them? And this special relationship must indeed have led to defendant's insincere
proposal of marriage to plaintiff, communicated not only to her but also to her parents, and
(sic) Marites Rabino, the owner of the restaurant where plaintiff was working and where
defendant first proposed marriage to her, also knew of this love affair and defendant's
proposal of marriage to plaintiff, which she declared was the reason why plaintiff resigned
from her job at the restaurant after she had accepted defendant's proposal (pp. 6-7, tsn
March 7, 1988).
Upon the other hand, appellant does not appear to be a man of good moral character and
must think so low and have so little respect and regard for Filipino women that he openly
admitted that when he studied in Bacolod City for several years where he finished his B.S.
Biology before he came to Dagupan City to study medicine, he had a common-law wife in
Bacolod City. In other words, he also lived with another woman in Bacolod City but did not
marry that woman, just like what he did to plaintiff. It is not surprising, then, that he felt so
little compunction or remorse in pretending to love and promising to marry plaintiff, a young,
innocent, trustful country girl, in order to satisfy his lust on her. 11
and then concluded:
In sum, we are strongly convinced and so hold that it was defendant-appellant's fraudulent
and deceptive protestations of love for and promise to marry plaintiff that made her surrender
her virtue and womanhood to him and to live with him on the honest and sincere belief that
he would keep said promise, and it was likewise these (sic) fraud and deception on
appellant's part that made plaintiff's parents agree to their daughter's living-in with him
preparatory to their supposed marriage. And as these acts of appellant are palpably and
undoubtedly against morals, good customs, and public policy, and are even gravely and
deeply derogatory and insulting to our women, coming as they do from a foreigner who has
been enjoying the hospitality of our people and taking advantage of the opportunity to study
in one of our institutions of learning, defendant-appellant should indeed be made, under Art.
21 of the Civil Code of the Philippines, to compensate for the moral damages and injury that
he had caused plaintiff, as the lower court ordered him to do in its decision in this case. 12
Unfazed by his second defeat, petitioner filed the instant petition on 26 March 1991; he
raises therein the single issue of whether or not Article 21 of the Civil Code applies to the
case at bar. 13
It is petitioner's thesis that said Article 21 is not applicable because he had not committed
any moral wrong or injury or violated any good custom or public policy; he has not professed
love or proposed marriage to the private respondent; and he has never maltreated her. He
criticizes the trial court for liberally invoking Filipino customs, traditions and culture, and
ignoring the fact that since he is a foreigner, he is not conversant with such Filipino customs,
traditions and culture. As an Iranian Moslem, he is not familiar with Catholic and Christian
ways. He stresses that even if he had made a promise to marry, the subsequent failure to
fulfill the same is excusable or tolerable because of his Moslem upbringing; he then alludes
to the Muslim Code which purportedly allows a Muslim to take four (4) wives and concludes
that on the basis thereof, the trial court erred in ruling that he does not posses good moral
character. Moreover, his controversial "common law life" is now his legal wife as their
marriage had been solemnized in civil ceremonies in the Iranian Embassy. As to his unlawful
cohabitation with the private respondent, petitioner claims that even if responsibility could be
pinned on him for the live-in relationship, the private respondent should also be faulted for
consenting to an illicit arrangement. Finally, petitioner asseverates that even if it was to be
assumed arguendo that he had professed his love to the private respondent and had also
promised to marry her, such acts would not be actionable in view of the special
circumstances of the case. The mere breach of promise is not actionable. 14
On 26 August 1991, after the private respondent had filed her Comment to the petition and
the petitioner had filed his Reply thereto, this Court gave due course to the petition and
required the parties to submit their respective Memoranda, which they subsequently
complied with.
As may be gleaned from the foregoing summation of the petitioner's arguments in support of
his thesis, it is clear that questions of fact, which boil down to the issue of the credibility of
witnesses, are also raised. It is the rule in this jurisdiction that appellate courts will not disturb
the trial court's findings as to the credibility of witnesses, the latter court having heard the
witnesses and having had the opportunity to observe closely their deportment and manner of
testifying, unless the trial court had plainly overlooked facts of substance or value which, if
considered, might affect the result of the case. 15
Petitioner has miserably failed to convince Us that both the appellate and trial courts had
overlooked any fact of substance or values which could alter the result of the case.
Equally settled is the rule that only questions of law may be raised in a petition for review
on certiorari under Rule 45 of the Rules of Court. It is not the function of this Court to analyze
or weigh all over again the evidence introduced by the parties before the lower court. There
are, however, recognized exceptions to this rule. Thus, in Medina vs.Asistio, Jr.,  16 this Court
took the time, again, to enumerate these exceptions:
xxx xxx xxx
(1) When the conclusion is a finding grounded entirely on speculation, surmises or
conjectures (Joaquin v. Navarro, 93 Phil. 257 [1953]); (2) When the inference made is
manifestly mistaken, absurb or impossible (Luna v. Linatok, 74 Phil. 15 [1942]); (3) Where
there is a grave abuse of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4) When the
judgment is based on a misapprehension of facts (Cruz v. Sosing, 
L-4875, Nov. 27, 1953); (5) When the findings of fact are conflicting (Casica v. Villaseca, L-
9590 Ap. 30, 1957; unrep.) (6) When the Court of Appeals, in making its findings, went
beyond the issues of the case and the same is contrary to the admissions of both appellate
and appellee (Evangelista v. Alto Surety and Insurance Co., 103 Phil. 401 [1958]); 
(7) The findings of the Court of Appeals are contrary to those of the trial court (Garcia v.
Court of Appeals, 33 SCRA 622 [1970]; Sacay v. Sandiganbayan, 142 SCRA 593 [1986]); (8)
When the findings of fact are conclusions without citation of specific evidence on which they
are based (Ibid.,); (9) When the facts set forth in the petition as well as in the petitioners main
and reply briefs are not disputed by the respondents (Ibid.,); and (10) The finding of fact of
the Court of Appeals is premised on the supposed absence of evidence and is contradicted
by the evidence on record (Salazar v. Gutierrez, 33 SCRA 242 [1970]).
Petitioner has not endeavored to joint out to Us the existence of any of the above quoted
exceptions in this case. Consequently, the factual findings of the trial and appellate courts
must be respected.
And now to the legal issue.
The existing rule is that a breach of promise to marry per se is not an actionable
wrong. 17 Congress deliberately eliminated from the draft of the New Civil Code the
provisions that would have made it so. The reason therefor is set forth in the report of the
Senate Committees on the Proposed Civil Code, from which We quote:
The elimination of this chapter is proposed. That breach of promise to marry is not actionable
has been definitely decided in the case of De Jesus vs. Syquia. 18 The history of breach of
promise suits in the United States and in England has shown that no other action lends itself
more readily to abuse by designing women and unscrupulous men. It is this experience
which has led to the abolition of rights of action in the so-called Heart Balm suits in many of
the American states. . . . 19
This notwithstanding, the said Code contains a provision, Article 21, which is designed to
expand the concept of torts or quasi-delict in this jurisdiction by granting adequate legal
remedy for the untold number of moral wrongs which is impossible for human foresight to
specifically enumerate and punish in the statute books. 20
As the Code Commission itself stated in its Report:
But the Code Commission had gone farther than the sphere of wrongs defined or determined
by positive law. Fully sensible that there are countless gaps in the statutes, which leave so
many victims of moral wrongs helpless, even though they have actually suffered material and
moral injury, the Commission has deemed it necessary, in the interest of justice, to
incorporate in the proposed Civil Code the following rule:
Art. 23. Any person who wilfully causes loss or injury to another in a manner that is contrary
to morals, good customs or public policy shall compensate the latter for the damage.
An example will illustrate the purview of the foregoing norm: "A" seduces the nineteen-year
old daughter of "X". A promise of marriage either has not been made, or can not be proved.
The girl becomes pregnant. Under the present laws, there is no crime, as the girl is above
nineteen years of age. Neither can any civil action for breach of promise of marriage be filed.
Therefore, though the grievous moral wrong has been committed, and though the girl and
family have suffered incalculable moral damage, she and her parents cannot bring action for
damages. But under the proposed article, she and her parents would have such a right of
action.
Thus at one stroke, the legislator, if the forgoing rule is approved, would vouchsafe adequate
legal remedy for that untold number of moral wrongs which it is impossible for human
foresight to provide for specifically in the statutes. 21
Article 2176 of the Civil Code, which defines a quasi-delict thus:
Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.
is limited to negligent acts or omissions and excludes the notion of willfulness or
intent. Quasi-delict, known in Spanish legal treatises as culpa aquiliana, is a civil law concept
while torts is an Anglo-American or common law concept. Torts is much broader than culpa
aquiliana because it includes not only negligence, but international criminal acts as well such
as assault and battery, false imprisonment and deceit. In the general scheme of the
Philippine legal system envisioned by the Commission responsible for drafting the New Civil
Code, intentional and malicious acts, with certain exceptions, are to be governed by the
Revised Penal Code while negligent acts or omissions are to be covered by Article 2176 of
the Civil Code. 22 In between these opposite spectrums are injurious acts which, in the
absence of Article 21, would have been beyond redress. Thus, Article 21 fills that vacuum. It
is even postulated that together with Articles 19 and 20 of the Civil Code, Article 21 has
greatly broadened the scope of the law on civil wrongs; it has become much more supple
and adaptable than the Anglo-American law on torts. 23
In the light of the above laudable purpose of Article 21, We are of the opinion, and so hold,
that where a man's promise to marry is in fact the proximate cause of the acceptance of his
love by a woman and his representation to fulfill that promise thereafter becomes the
proximate cause of the giving of herself unto him in a sexual congress, proof that he had, in
reality, no intention of marrying her and that the promise was only a subtle scheme or
deceptive device to entice or inveigle her to accept him and to obtain her consent to the
sexual act, could justify the award of damages pursuant to Article 21 not because of such
promise to marry but because of the fraud and deceit behind it and the willful injury to her
honor and reputation which followed thereafter. It is essential, however, that such injury
should have been committed in a manner contrary to morals, good customs or public policy.
In the instant case, respondent Court found that it was the petitioner's "fraudulent and
deceptive protestations of love for and promise to marry plaintiff that made her surrender her
virtue and womanhood to him and to live with him on the honest and sincere belief that he
would keep said promise, and it was likewise these fraud and deception on appellant's part
that made plaintiff's parents agree to their daughter's living-in with him preparatory to their
supposed marriage." 24 In short, the private respondent surrendered her virginity, the
cherished possession of every single Filipina, not because of lust but because of moral
seduction — the kind illustrated by the Code Commission in its example earlier adverted to.
The petitioner could not be held liable for criminal seduction punished under either Article
337 or Article 338 of the Revised Penal Code because the private respondent was above
eighteen (18) years of age at the time of the seduction.
Prior decisions of this Court clearly suggest that Article 21 may be applied in a breach of
promise to marry where the woman is a victim of moral seduction. Thus, in Hermosisima
vs. Court of Appeals,25 this Court denied recovery of damages to the woman because:
. . . we find ourselves unable to say that petitioner is morally guilty of seduction, not only
because he is approximately ten (10) years younger than the complainant — who was
around thirty-six (36) years of age, and as highly enlightened as a former high school teacher
and a life insurance agent are supposed to be — when she became intimate with petitioner,
then a mere apprentice pilot, but, also, because the court of first instance found that,
complainant "surrendered herself" to petitioner because, "overwhelmed by her love" for him,
she "wanted to bind" him by having a fruit of their engagement even before they had the
benefit of clergy.
In Tanjanco vs. Court of Appeals, 26 while this Court likewise hinted at possible recovery if
there had been moral seduction, recovery was eventually denied because We were not
convinced that such seduction existed. The following enlightening disquisition and conclusion
were made in the said case:
The Court of Appeals seem to have overlooked that the example set forth in the Code
Commission's memorandum refers to a tort upon a minor who had been seduced. The
essential feature is seduction, that in law is more than mere sexual intercourse, or a breach
of a promise of marriage; it connotes essentially the idea of deceit, enticement, superior
power or abuse of confidence on the part of the seducer to which the woman has yielded
(U.S. vs. Buenaventura, 27 Phil. 121; U.S. vs. Arlante, 9 Phil. 595).
It has been ruled in the Buenaventura case (supra) that —
To constitute seduction there must in all cases be some sufficient promise or
inducement and the woman must yield because of the promise or other inducement. If she
consents merely from carnal lust and the intercourse is from mutual desire, there is no
seduction (43 Cent. Dig. tit. Seduction, par. 56) She must be induced to depart from the path
of virtue by the use of some species of arts, persuasions and wiles, which are calculated to
have and do have that effect, and which result in her person to ultimately submitting her
person to the sexual embraces of her seducer (27 Phil. 123).
And in American Jurisprudence we find:
On the other hand, in an action by the woman, the enticement, persuasion or deception is
the essence of the injury; and a mere proof of intercourse is insufficient to warrant a
recovery.
Accordingly it is not seduction where the willingness arises out of sexual desire of curiosity of
the female, and the defendant merely affords her the needed opportunity for the commission
of the act. It has been emphasized that to allow a recovery in all such cases would tend to
the demoralization of the female sex, and would be a reward for unchastity by which a class
of adventuresses would be swift to profit. (47 Am. Jur. 662)
xxx xxx xxx
Over and above the partisan allegations, the fact stand out that for one whole year, from
1958 to 1959, the plaintiff-appellee, a woman of adult age, maintain intimate sexual relations
with appellant, with repeated acts of intercourse. Such conduct is incompatible with the idea
of seduction. Plainly there is here voluntariness and mutual passion; for had the appellant
been deceived, had she surrendered exclusively because of the deceit, artful persuasions
and wiles of the defendant, she would not have again yielded to his embraces, much less for
one year, without exacting early fulfillment of the alleged promises of marriage, and would
have cut short all sexual relations upon finding that defendant did not intend to fulfill his
defendant did not intend to fulfill his promise. Hence, we conclude that no case is made
under article 21 of the Civil Code, and no other cause of action being alleged, no error was
committed by the Court of First Instance in dismissing the complaint. 27
In his annotations on the Civil Code, 28 Associate Justice Edgardo L. Paras, who recently
retired from this Court, opined that in a breach of promise to marry where there had been
carnal knowledge, moral damages may be recovered:
. . . if there be criminal or moral seduction, but not if the intercourse was due to mutual lust.
(Hermosisima vs. Court of Appeals, 
L-14628, Sept. 30, 1960; Estopa vs. Piansay, Jr., L-14733, Sept. 30, 1960; Batarra vs.
Marcos, 7 Phil. 56 (sic); Beatriz Galang vs. Court of Appeals, et al., L-17248, Jan. 29, 1962).
(In other words, if the CAUSE be the promise to marry, and the EFFECT be the carnal
knowledge, there is a chance that there was criminal or moral seduction, hence recovery of
moral damages will prosper. If it be the other way around, there can be no recovery of moral
damages, because here mutual lust has intervened). . . .
together with "ACTUAL damages, should there be any, such as the expenses for the
wedding presentations (See Domalagon v. Bolifer, 33 Phil. 471).
Senator Arturo M. Tolentino 29 is also of the same persuasion:
It is submitted that the rule in Batarra vs. Marcos,  30 still subsists, notwithstanding the
incorporation of the present article31 in the Code. The example given by the Code
Commission is correct, if there was seduction, not necessarily in the legal sense, but in the
vulgar sense of deception. But when the sexual act is accomplished without any deceit or
qualifying circumstance of abuse of authority or influence, but the woman, already of age,
has knowingly given herself to a man, it cannot be said that there is an injury which can be
the basis for indemnity.
But so long as there is fraud, which is characterized by willfulness (sic), the action lies. The
court, however, must weigh the degree of fraud, if it is sufficient to deceive the woman under
the circumstances, because an act which would deceive a girl sixteen years of age may not
constitute deceit as to an experienced woman thirty years of age. But so long as there is a
wrongful act and a resulting injury, there should be civil liability, even if the act is not
punishable under the criminal law and there should have been an acquittal or dismissal of
the criminal case for that reason.
We are unable to agree with the petitioner's alternative proposition to the effect that granting,
for argument's sake, that he did promise to marry the private respondent, the latter is
nevertheless also at fault. According to him, both parties are in pari delicto; hence, pursuant
to Article 1412(1) of the Civil Code and the doctrine laid down in Batarra vs. Marcos, 32 the
private respondent cannot recover damages from the petitioner. The latter even goes as far
as stating that if the private respondent had "sustained any injury or damage in their
relationship, it is primarily because of her own doing, 33 for:
. . . She is also interested in the petitioner as the latter will become a doctor sooner or later.
Take notice that she is a plain high school graduate and a mere employee . . . (Annex "C") or
a waitress (TSN, p. 51, January 25, 1988) in a luncheonette and without doubt, is in need of
a man who can give her economic security. Her family is in dire need of financial assistance.
(TSN, pp. 51-53, May 18, 1988). And this predicament prompted her to accept a proposition
that may have been offered by the petitioner. 34
These statements reveal the true character and motive of the petitioner. It is clear that he
harbors a condescending, if not sarcastic, regard for the private respondent on account of
the latter's ignoble birth, inferior educational background, poverty and, as perceived by him,
dishonorable employment. Obviously then, from the very beginning, he was not at all moved
by good faith and an honest motive. Marrying with a woman so circumstances could not have
even remotely occurred to him. Thus, his profession of love and promise to marry were
empty words directly intended to fool, dupe, entice, beguile and deceive the poor woman into
believing that indeed, he loved her and would want her to be his life's partner. His was
nothing but pure lust which he wanted satisfied by a Filipina who honestly believed that by
accepting his proffer of love and proposal of marriage, she would be able to enjoy a life of
ease and security. Petitioner clearly violated the Filipino's concept of morality and brazenly
defied the traditional respect Filipinos have for their women. It can even be said that the
petitioner committed such deplorable acts in blatant disregard of Article 19 of the Civil Code
which directs every person to act with justice, give everyone his due and observe honesty
and good faith in the exercise of his rights and in the performance of his obligations.
No foreigner must be allowed to make a mockery of our laws, customs and traditions.
The pari delicto rule does not apply in this case for while indeed, the private respondent may
not have been impelled by the purest of intentions, she eventually submitted to the petitioner
in sexual congress not out of lust, but because of moral seduction. In fact, it is apparent that
she had qualms of conscience about the entire episode for as soon as she found out that the
petitioner was not going to marry her after all, she left him. She is not, therefore, in pari
delicto with the petitioner. Pari delicto means "in equal fault; in a similar offense or crime;
equal in guilt or in legal fault." 35At most, it could be conceded that she is merely in delicto.
Equity often interferes for the relief of the less guilty of the parties, where his transgression
has been brought about by the imposition of undue influence of the party on whom the
burden of the original wrong principally rests, or where his consent to the transaction was
itself procured by 
fraud. 36
In Mangayao vs. Lasud, 37 We declared:
Appellants likewise stress that both parties being at fault, there should be no action by one
against the other (Art. 1412, New Civil Code). This rule, however, has been interpreted as
applicable only where the fault on both sides is, more or less, equivalent. It does not apply
where one party is literate or intelligent and the other one is not. (c.f. Bough vs. Cantiveros,
40 Phil. 209).
We should stress, however, that while We find for the private respondent, let it not be said
that this Court condones the deplorable behavior of her parents in letting her and the
petitioner stay together in the same room in their house after giving approval to their
marriage. It is the solemn duty of parents to protect the honor of their daughters and infuse
upon them the higher values of morality and dignity.
WHEREFORE, finding no reversible error in the challenged decision, the instant petition is
hereby DENIED, with costs against the petitioner.
SO ORDERED.
Feliciano, Bidin, Romero and Melo, JJ., concur.
Gutierrez, Jr., J., is on leave.
 
# Footnotes
1 Annex "G" of Petition; Rollo, 53-62. Per Associate Justice Alicia V. Sempio-Diy, concurred
in by Associate Justices Jose C. Campos, Jr. and Jaime M. Lantin.
2 Annex "A" of Petition; Rollo, 20-22.
3 Annex "B" of Petition; Rollo, 23-24.
4 Annex "C", Id.; Id., 25.
5 Annex "D" of Petition; Rollo, 26-33. Per Judge Antonio M. Belen.
6 Id., 33.
7 Rollo, 31-33.
8 Rollo, 54-55.
9 Exhibit "E" of Petition; Rollo, 34-50.
10 Annex "G", Id.; Id.; 53-62.
11 Rollo, 58-59.
12 Rollo, 61.
13 Id., 11.
14 In support thereof, he cites Despi vs. Aliosco, [CA] 64 O.G.; Wassmer vs. Velez, 12
SCRA 648 [1964]; Hermosisima vs. Court of Appeals, 109 Phil. 629 [1960]; and Estopa vs.
Piansay, 109 Phil. 640 [1960].
15 People vs. Garcia, 89 SCRA 440 [1979]; People vs. Bautista, 92 SCRA 465 [1979];
People vs. Abejuela, 92 SCRA 503 [1979]; People vs. Arciaga, 98 SCRA 1 [1980]; People
vs. Marzan, 128 SCRA 203 [1984]; People vs. Alcid, 135 SCRA 280 [1985]; People vs.
Sanchez, 199 SCRA 414 [1991]; and People vs. Atilano, 204 SCRA 278 [1991].
16 191 SCRA 218 [1990], footnote omitted; see also, Remalante vs. Tibe, 158 SCRA 138
[1988].
17 Hermosisima vs. Court of Appeals, 109 Phil. 629 [1960]; Estopa vs. Piansay, 109 Phil.
640 [1960].
18 58 Phil. 866 [1933].
19 Congressional Record, vol. IV, No. 79, Thursday, 14 May 1949, 2352.
20 Philippine National Bank vs. Court of Appeals, 83 SCRA 237 [1978].
21 Report of the Code Commission, 39-40. This passage is quoted, except for the last
paragraph, in Tanjanco vs. Court of Appeals, 18 SCRA 994, 996-997 [1966]; the Article 23
referred to is now Article 21.
22 Report of the Code Commission, 161-162.
23 TOLENTINO, A.M., Commentaries and Jurisprudence on the Civil Code of the
Philippines, vol. 1, 1985 ed., 72.
24. Rollo, 61.
25. Supra.
26. Supra.
27 At pages 997-999.
28 Civil Code of the Philippines Annotated, vol. I, Eleventh ed., (1984), 91-92.
29 Commentaries and Jurisprudence on the Civil Code of the Philippines, vol. 1, 1985 ed.,
76-77, omitting footnotes. 
30 7 Phil. 156 [1906].
31 Article 21.
32 Supra.
33 Rollo, 16.
34 Id., 16-17.
35 Black's Law Dictionary, Fifth ed., 1004.
36 37 Am Jur 2d, 401, omitting citations.
37 11 SCRA 158 [1964]; see also, Liguez vs. Court of Appeals 102 Phil. 577 [1975].
G.R. No. 143958             July 11, 2003
ALFRED FRITZ FRENZEL, petitioner, 
vs.
EDERLINA P. CATITO, respondent.
CALLEJO, SR., J.:
Before us is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. CV No.
53485 which affirmed the Decision2 of the Regional Trial Court of Davao City, Branch 14, in
Civil Case No. 17,817 dismissing the petitioner's complaint, and the resolution of the Court of
Appeals denying his motion for reconsideration of the said decision. 
The Antecedents3
As gleaned from the evidence of the petitioner, the case at bar stemmed from the following
factual backdrop:
Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He is an electrical
engineer by profession, but worked as a pilot with the New Guinea Airlines. He arrived in the
Philippines in 1974, started engaging in business in the country two years thereafter, and
married Teresita Santos, a Filipino citizen. In 1981, Alfred and Teresita separated from bed
and board without obtaining a divorce.
Sometime in February 1983, Alfred arrived in Sydney, Australia for a vacation. He went to
King's Cross, a night spot in Sydney, for a massage where he met Ederlina Catito, a Filipina
and a native of Bajada, Davao City. Unknown to Alfred, she resided for a time in Germany
and was married to Klaus Muller, a German national. She left Germany and tried her luck in
Sydney, Australia, where she found employment as a masseuse in the King's Cross
nightclub. She was fluent in German, and Alfred enjoyed talking with her. The two saw each
other again; this time Ederlina ended up staying in Alfred's hotel for three days. Alfred gave
Ederlina sums of money for her services.4
Alfred was so enamored with Ederlina that he persuaded her to stop working at King's Cross,
return to the Philippines, and engage in a wholesome business of her own. He also proposed
that they meet in Manila, to which she assented. Alfred gave her money for her plane fare to
the Philippines. Within two weeks of Ederlina's arrival in Manila, Alfred joined her. Alfred
reiterated his proposal for Ederlina to stay in the Philippines and engage in business, even
offering to finance her business venture. Ederlina was delighted at the idea and proposed to
put up a beauty parlor. Alfred happily agreed.
Alfred told Ederlina that he was married but that he was eager to divorce his wife in Australia.
Alfred proposed marriage to Ederlina, but she replied that they should wait a little bit longer.
Ederlina found a building at No. 444 M.H. del Pilar corner Arquiza Street, Ermita, Manila,
owned by one Atty. Jose Hidalgo who offered to convey his rights over the property for
P18,000.00. Alfred and Ederlina accepted the offer. Ederlina put up a beauty parlor on the
property under the business name Edorial Beauty Salon, and had it registered with the
Department of Trade and Industry under her name. Alfred paid Atty. Hidalgo P20,000.00 for
his right over the property and gave P300,000.00 to Ederlina for the purchase of equipment
and furniture for the parlor. As Ederlina was going to Germany, she executed a special
power of attorney on December 13, 19835 appointing her brother, Aser Catito, as her
attorney-in-fact in managing the beauty parlor business. She stated in the said deed that she
was married to Klaus Muller. Alfred went back to Papua New Guinea to resume his work as a
pilot.
When Alfred returned to the Philippines, he visited Ederlina in her Manila residence and
found it unsuitable for her. He decided to purchase a house and lot owned by Victoria Binuya
Steckel in San Francisco del Monte, Quezon City, covered by Transfer Certificate of Title No.
218429 for US$20,000.00. Since Alfred knew that as an alien he was disqualified from
owning lands in the Philippines, he agreed that only Ederlina's name would appear in the
deed of sale as the buyer of the property, as well as in the title covering the same. After all,
he was planning to marry Ederlina and he believed that after their marriage, the two of them
would jointly own the property. On January 23, 1984, a Contract to Sell was entered into
between Victoria Binuya Steckel as the vendor and Ederlina as the sole vendee. Alfred
signed therein as a witness.6 Victoria received from Alfred, for and in behalf of Ederlina, the
amount of US$10,000.00 as partial payment, for which Victoria issued a receipt.7 When
Victoria executed the deed of absolute sale over the property on March 6, 1984,8 she
received from Alfred, for and in behalf of Ederlina, the amount of US$10,000.00 as final and
full payment. Victoria likewise issued a receipt for the said amount.9 After Victoria had
vacated the property, Ederlina moved into her new house. When she left for Germany to visit
Klaus, she had her father Narciso Catito and her two sisters occupy the property.
Alfred decided to stay in the Philippines for good and live with Ederlina. He returned to
Australia and sold his fiber glass pleasure boat to John Reid for $7,500.00 on May 4,
1984.10 He also sold his television and video business in Papua New Guinea for K135,000.00
to Tekeraoi Pty. Ltd.11 He had his personal properties shipped to the Philippines and stored
at No. 14 Fernandez Street, San Francisco del Monte, Quezon City. The proceeds of the
sale were deposited in Alfred's account with the Hong Kong Shanghai Banking Corporation
(HSBC), Kowloon Branch under Bank Account No. 018-2-807016.12 When Alfred was in
Papua New Guinea selling his other properties, the bank sent telegraphic letters updating
him of his account.13 Several checks were credited to his HSBC bank account from Papua
New Guinea Banking Corporation, Westpac Bank of Australia and New Zealand Banking
Group Limited and Westpac Bank-PNG-Limited. Alfred also had a peso savings account with
HSBC, Manila, under Savings Account No. 01-725-183-01.14
Once, when Alfred and Ederlina were in Hong Kong, they opened another account with
HSBC, Kowloon, this time in the name of Ederlina, under Savings Account No. 018-0-
807950.15 Alfred transferred his deposits in Savings Account No. 018-2-807016 with the said
bank to this new account. Ederlina also opened a savings account with the Bank of America
Kowloon Main Office under Account No. 30069016.16
On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter dated
December 7, 1983 from Klaus Muller who was then residing in Berlin, Germany. Klaus
informed Alfred that he and Ederlina had been married on October 16, 1978 and had a
blissful married life until Alfred intruded therein. Klaus stated that he knew of Alfred and
Ederlina's amorous relationship, and discovered the same sometime in November 1983
when he arrived in Manila. He also begged Alfred to leave Ederlina alone and to return her to
him, saying that Alfred could not possibly build his future on his (Klaus') misfortune.17
Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He inquired if there
was any truth to Klaus' statements and Sally confirmed that Klaus was married to Ederlina.
When Alfred confronted Ederlina, she admitted that she and Klaus were, indeed, married.
But she assured Alfred that she would divorce Klaus. Alfred was appeased. He agreed to
continue the amorous relationship and wait for the outcome of Ederlina's petition for divorce.
After all, he intended to marry her. He retained the services of Rechtsanwaltin Banzhaf with
offices in Berlin, as her counsel who informed her of the progress of the proceedings.18 Alfred
paid for the services of the lawyer.
In the meantime, Alfred decided to purchase another house and lot, owned by Rodolfo
Morelos covered by TCT No. 92456 located in Peña Street, Bajada, Davao City.19 Alfred
again agreed to have the deed of sale made out in the name of Ederlina. On September 7,
1984, Rodolfo Morelos executed a deed of absolute sale over the said property in favor of
Ederlina as the sole vendee for the amount of P80,000.00.20 Alfred paid US$12,500.00 for
the property.
Alfred purchased another parcel of land from one Atty. Mardoecheo Camporedondo, located
in Moncado, Babak, Davao, covered by TCT No. 35251. Alfred once more agreed for the
name of Ederlina to appear as the sole vendee in the deed of sale. On December 31, 1984,
Atty. Camporedondo executed a deed of sale over the property for P65,000.00 in favor of
Ederlina as the sole vendee.21 Alfred, through Ederlina, paid the lot at the cost of P33,682.00
and US$7,000.00, respectively, for which the vendor signed receipts.22 On August 14, 1985,
TCT No. 47246 was issued to Ederlina as the sole owner of the said property.23
Meanwhile, Ederlina deposited on December 27, 1985, the total amount of US$250,000 with
the HSBC Kowloon under Joint Deposit Account No. 018-462341-145.24
The couple decided to put up a beach resort on a four-hectare land in Camudmud, Babak,
Davao, owned by spouses Enrique and Rosela Serrano. Alfred purchased the property from
the spouses for P90,000.00, and the latter issued a receipt therefor.25 A draftsman
commissioned by the couple submitted a sketch of the beach resort.26Beach houses were
forthwith constructed on a portion of the property and were eventually rented out by
Ederlina's father, Narciso Catito. The rentals were collected by Narciso, while Ederlina kept
the proceeds of the sale of copra from the coconut trees in the property. By this time, Alfred
had already spent P200,000.00 for the purchase, construction and upkeep of the property.
Ederlina often wrote letters to her family informing them of her life with Alfred. In a Letter
dated January 21, 1985, she wrote about how Alfred had financed the purchases of some
real properties, the establishment of her beauty parlor business, and her petition to divorce
Klaus.27
Because Ederlina was preoccupied with her business in Manila, she executed on July 8,
1985, two special powers of attorney28 appointing Alfred as attorney-in-fact to receive in her
behalf the title and the deed of sale over the property sold by the spouses Enrique Serrano.
In the meantime, Ederlina's petition for divorce was denied because Klaus opposed the
same. A second petition filed by her met the same fate. Klaus wanted half of all the
properties owned by Ederlina in the Philippines before he would agree to a divorce. Worse,
Klaus threatened to file a bigamy case against Ederlina.29
Alfred proposed the creation of a partnership to Ederlina, or as an alternative, the
establishment of a corporation, with Ederlina owning 30% of the equity thereof. She initially
agreed to put up a corporation and contacted Atty. Armando Dominguez to prepare the
necessary documents. Ederlina changed her mind at the last minute when she was advised
to insist on claiming ownership over the properties acquired by them during their coverture.
Alfred and Ederlina's relationship started deteriorating. Ederlina had not been able to secure
a divorce from Klaus. The latter could charge her for bigamy and could even involve Alfred,
who himself was still married. To avoid complications, Alfred decided to live separately from
Ederlina and cut off all contacts with her. In one of her letters to Alfred, Ederlina complained
that he had ruined her life. She admitted that the money used for the purchase of the
properties in Davao were his. She offered to convey the properties deeded to her by Atty.
Mardoecheo Camporedondo and Rodolfo Morelos, asking Alfred to prepare her affidavit for
the said purpose and send it to her for her signature.30 The last straw for Alfred came on
September 2, 1985, when someone smashed the front and rear windshields of Alfred's car
and damaged the windows. Alfred thereafter executed an affidavit-complaint charging
Ederlina and Sally MacCarron with malicious mischief.31
On October 15, 1985, Alfred wrote to Ederlina's father, complaining that Ederlina had taken
all his life savings and because of this, he was virtually penniless. He further accused the
Catito family of acquiring for themselves the properties he had purchased with his own
money. He demanded the return of all the amounts that Ederlina and her family had "stolen"
and turn over all the properties acquired by him and Ederlina during their coverture.32
Shortly thereafter, Alfred filed a Complaint33 dated October 28, 1985, against Ederlina, with
the Regional Trial Court of Quezon City, for recovery of real and personal properties located
in Quezon City and Manila. In his complaint, Alfred alleged, inter alia, that Ederlina, without
his knowledge and consent, managed to transfer funds from their joint account in HSBC
Hong Kong, to her own account with the same bank. Using the said funds, Ederlina was able
to purchase the properties subject of the complaints. He also alleged that the beauty parlor in
Ermita was established with his own funds, and that the Quezon City property was likewise
acquired by him with his personal funds.34
Ederlina failed to file her answer and was declared in default. Alfred adduced his evidence ex
parte.
In the meantime, on November 7, 1985, Alfred also filed a complaint35 against Ederlina with
the Regional Trial Court, Davao City, for specific performance, declaration of ownership of
real and personal properties, sum of money, and damages. He alleged, inter alia, in his
complaint:
4. That during the period of their common-law relationship, plaintiff solely through his own
efforts and resources acquired in the Philippines real and personal properties valued more or
less at P724,000.00; The defendant's common-law wife or live-in partner did not contribute
anything financially to the acquisition of the said real and personal properties. These
properties are as follows:
I. Real Properties
a. TCT No. T-92456 located at Bajada, Davao City, consisting of 286 square meters, (with
residential house) registered in the name of the original title owner Rodolfo M. Morelos but
already fully paid by plaintiff. Valued at P342,000.00;
b. TCT No. T-47246 (with residential house) located at Babak, Samal, Davao, consisting of
600 square meters, registered in the name of Ederlina Catito, with the Register of Deeds of
Tagum, Davao del Norte valued at P144,000.00;
c. A parcel of agricultural land located at Camudmud, Babak, Samal, Davao del Norte,
consisting of 4.2936 hectares purchased from Enrique Serrano and Rosela B. Serrano.
Already paid in full by plaintiff. Valued at P228,608.32;
II. Personal Properties:
a. Furniture valued at P10,000.00.
...
5. That defendant made no contribution at all to the acquisition, of the above-mentioned
properties as all the monies (sic) used in acquiring said properties belonged solely to
plaintiff;36
Alfred prayed that after hearing, judgment be rendered in his favor:
WHEREFORE, in view of the foregoing premises, it is respectfully prayed that judgment be
rendered in favor of plaintiff and against defendant:
a) Ordering the defendant to execute the corresponding deeds of transfer and/or
conveyances in favor of plaintiff over those real and personal properties enumerated in
Paragraph 4 of this complaint;
b) Ordering the defendant to deliver to the plaintiff all the above real and personal properties
or their money value, which are in defendant's name and custody because these were
acquired solely with plaintiffs money and resources during the duration of the common-law
relationship between plaintiff and defendant, the description of which are as follows:
(1) TCT No. T-92456 (with residential house) located at Bajada, Davao City, consisting of
286 square meters, registered in the name of the original title owner Rodolfo Morelos but
already fully paid by plaintiff. Valued at P342,000.00;
(2) TCT No. T-47246 (with residential house) located at Babak, Samal, Davao, consisting of
600 square meters, registered in the name of Ederlina Catito, with the Register of Deeds of
Tagum, Davao del Norte, valued at P144,000.00;
(3) A parcel of agricultural land located at Camudmud, Babak, Samal, Davao del Norte,
consisting of 4.2936 hectares purchased from Enrique Serrano and Rosela B. Serrano.
Already fully paid by plaintiff. Valued at P228,608.32;
c) Declaring the plaintiff to be the sole and absolute owner of the above-mentioned real and
personal properties;
d) Awarding moral damages to plaintiff in an amount deemed reasonable by the trial court;
e) To reimburse plaintiff the sum of P12,000.00 as attorney's fees for having compelled the
plaintiff to litigate;
f) To reimburse plaintiff the sum of P5,000.00 incurred as litigation expenses also for having
compelled the plaintiff to litigate; and
g) To pay the costs of this suit;
Plaintiff prays other reliefs just and equitable in the premises.37
In her answer, Ederlina denied all the material allegations in the complaint, insisting that she
acquired the said properties with her personal funds, and as such, Alfred had no right to the
same. She alleged that the deeds of sale, the receipts, and certificates of titles of the subject
properties were all made out in her name.38 By way of special and affirmative defense, she
alleged that Alfred had no cause of action against her. She interposed counterclaims against
the petitioner.39
In the meantime, the petitioner filed a Complaint dated August 25, 1987, against the HSBC in
the Regional Trial Court of Davao City40 for recovery of bank deposits and damages.41 He
prayed that after due proceedings, judgment be rendered in his favor, thus:
WHEREFORE, plaintiff respectfully prays that the Honorable Court adjudge defendant bank,
upon hearing the evidence that the parties might present, to pay plaintiff:
1. ONE HUNDRED TWENTY SIX THOUSAND TWO HUNDRED AND THIRTY U.S.
DOLLARS AND NINETY EIGHT CENTS (US$126,230.98) plus legal interests, either of
Hong Kong or of the Philippines, from 20 December 1984 up to the date of execution or
satisfaction of judgment, as actual damages or in restoration of plaintiffs lost dollar savings;
2. The same amount in (1) above as moral damages;
3. Attorney's fees in the amount equivalent to TWENTY FIVE PER CENT (25%) of (1) and
(2) above;
4. Litigation expenses in the amount equivalent to TEN PER CENT (10%) of the amount in
(1) above; and
5. For such other reliefs as are just and equitable under the circumstances.42
On April 28, 1986, the RTC of Quezon City rendered its decision in Civil Case No. Q-46350,
in favor of Alfred, the decretal portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered ordering the defendant to
perform the following:
(1) To execute a document waiving her claim to the house and lot in No. 14 Fernandez St.,
San Francisco Del Monte, Quezon City in favor of plaintiff or to return to the plaintiff the
acquisition cost of the same in the amount of $20,000.00, or to sell the said property and turn
over the proceeds thereof to the plaintiff;
(2) To deliver to the plaintiff the rights of ownership and management of the beauty parlor
located at 444 Arquiza St., Ermita, Manila, including the equipment and fixtures therein;
(3) To account for the earnings of rental of the house and lot in No. 14 Fernandez St., San
Francisco Del Monte, Quezon City, as well as the earnings in the beauty parlor at 444
Arquiza St., Ermita, Manila and turn over one-half of the net earnings of both properties to
the plaintiff;
(4) To surrender or return to the plaintiff the personal properties of the latter left in the house
at San Francisco Del Monte, to wit:
"(1) Mamya automatic camera
(1) 12 inch "Sonny" T.V. set, colored with remote control.
(1) Micro oven
(1) Electric fan (tall, adjustable stand)
(1) Office safe with (2) drawers and safe
(1) Electric Washing Machine
(1) Office desk and chair
(1) Double bed suits
(1) Mirror/dresser
(1) Heavy duty voice/working mechanic
(1) "Sony" Beta-Movie camera
(1) Suitcase with personal belongings
(1) Cardboard box with belongings
(1) Guitar Amplifier
(1) Hanger with men's suit (white)."
To return to the plaintiff, (1) Hi-Fi Stereo equipment left at 444 Arquiza Street, Ermita, Manila,
as well as the Fronte Suzuki car.
(4) To account for the monies (sic) deposited with the joint account of the plaintiff and
defendant (Account No. 018-0-807950); and to restore to the plaintiff all the monies (sic)
spent by the defendant without proper authority;
(5) To pay the amount of P5,000.00 by way of attorney's fees, and the costs of suit.
SO ORDERED.43
However, after due proceedings in the RTC of Davao City, in Civil Case No. 17,817, the trial
court rendered judgment on September 28, 1995 in favor of Ederlina, the dispositive portion
of which reads:
WHEREFORE, the Court cannot give due course to the complaint and hereby orders its
dismissal. The counterclaims of the defendant are likewise dismissed.
SO ORDERED.44
The trial court ruled that based on documentary evidence, the purchaser of the three parcels
of land subject of the complaint was Ederlina. The court further stated that even if Alfred was
the buyer of the properties; he had no cause of action against Ederlina for the recovery of the
same because as an alien, he was disqualified from acquiring and owning lands in the
Philippines. The sale of the three parcels of land to the petitioner was null and void ab initio.
Applying the pari delicto doctrine, the petitioner was precluded from recovering the properties
from the respondent.
Alfred appealed the decision to the Court of Appeals45 in which the petitioner posited the view
that although he prayed in his complaint in the court a quo that he be declared the owner of
the three parcels of land, he had no intention of owning the same permanently. His principal
intention therein was to be declared the transient owner for the purpose of selling the
properties at public auction, ultimately enabling him to recover the money he had spent for
the purchase thereof.
On March 8, 2000, the CA rendered a decision affirming in toto the decision of the RTC. The
appellate court ruled that the petitioner knowingly violated the Constitution; hence, was
barred from recovering the money used in the purchase of the three parcels of land. It held
that to allow the petitioner to recover the money used for the purchase of the properties
would embolden aliens to violate the Constitution, and defeat, rather than enhance, the
public policy.46
Hence, the petition at bar.
The petitioner assails the decision of the court contending that:
THE HONORABLE COURT OF APPEALS ERRED IN APPLYING THE RULE OF IN PARI
DELICTO IN THE INSTANT CASE BECAUSE BY THE FACTS AS NARRATED IN THE
DECISION IT IS APPARENT THAT THE PARTIES ARE NOT EQUALLY GUILTY BUT
RATHER IT WAS THE RESPONDENT WHO EMPLOYED FRAUD AS WHEN SHE DID
NOT INFORM PETITIONER THAT SHE WAS ALREADY MARRIED TO ANOTHER
GERMAN NATIONAL AND WITHOUT SUCH FRAUDULENT DESIGN PETITIONER
COULD NOT HAVE PARTED WITH HIS MONEY FOR THE PURCHASE OF THE
PROPERTIES.47
and
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
INTENTION OF THE PETITIONER IS NOT TO OWN REAL PROPERTIES IN THE
PHILIPPINES BUT TO SELL THEM AT PUBLIC AUCTION TO BE ABLE TO RECOVER HIS
MONEY USED IN PURCHASING THEM.48
Since the assignment of errors are intertwined with each other, the Court shall resolve the
same simultaneously.
The petitioner contends that he purchased the three parcels of land subject of his complaint
because of his desire to marry the respondent, and not to violate the Philippine Constitution.
He was, however, deceived by the respondent when the latter failed to disclose her previous
marriage to Klaus Muller. It cannot, thus, be said that he and the respondent are "equally
guilty;" as such, the pari delicto doctrine is not applicable to him. He acted in good faith, on
the advice of the respondent's uncle, Atty. Mardoecheo Camporedondo. There is no
evidence on record that he was aware of the constitutional prohibition against aliens
acquiring real property in the Philippines when he purchased the real properties subject of
his complaint with his own funds. The transactions were not illegal per se but merely
prohibited, and under Article 1416 of the New Civil Code, he is entitled to recover the money
used for the purchase of the properties. At any rate, the petitioner avers, he filed his
complaint in the court a quo merely for the purpose of having him declared as the owner of
the properties, to enable him to sell the same at public auction. Applying by analogy Republic
Act No. 13349 as amended by Rep. Act No. 4381 and Rep. Act No. 4882, the proceeds of the
sale would be remitted to him, by way of refund for the money he used to purchase the said
properties. To bar the petitioner from recovering the subject properties, or at the very least,
the money used for the purchase thereof, is to allow the respondent to enrich herself at the
expense of the petitioner in violation of Article 22 of the New Civil Code.
The petition is bereft of merit.
Section 14, Article XIV of the 1973 Constitution provides, as follows:
Save in cases of hereditary succession, no private land shall be transferred or conveyed
except to individuals, corporations, or associations qualified to acquire or hold lands in the
public domain.50
Lands of the public domain, which include private lands, may be transferred or conveyed
only to individuals or entities qualified to acquire or hold private lands or lands of the public
domain. Aliens, whether individuals or corporations, have been disqualified from acquiring
lands of the public domain. Hence, they have also been disqualified from acquiring private
lands.51
Even if, as claimed by the petitioner, the sales in question were entered into by him as the
real vendee, the said transactions are in violation of the Constitution; hence, are null and
void ab initio.52 A contract that violates the Constitution and the law, is null and void and vests
no rights and creates no obligations. It produces no legal effect at all.53 The petitioner, being
a party to an illegal contract, cannot come into a court of law and ask to have his illegal
objective carried out. One who loses his money or property by knowingly engaging in a
contract or transaction which involves his own moral turpitude may not maintain an action for
his losses. To him who moves in deliberation and premeditation, the law is unyielding.54 The
law will not aid either party to an illegal contract or agreement; it leaves the parties where it
finds them.55 Under Article 1412 of the New Civil Code, the petitioner cannot have the subject
properties deeded to him or allow him to recover the money he had spent for the purchase
thereof.56 Equity as a rule will follow the law and will not permit that to be done indirectly
which, because of public policy, cannot be done directly.57 Where the wrong of one party
equals that of the other, the defendant is in the stronger position . . . it signifies that in such a
situation, neither a court of equity nor a court of law will administer a remedy.58 The rule is
expressed. in the maxims: EX DOLO ORITUR ACTIO and IN PARI DELICTO POTIOR EST
CONDITIO DEFENDENTIS.59
The petitioner cannot feign ignorance of the constitutional proscription, nor claim that he
acted in good faith, let alone assert that he is less guilty than the respondent. The petitioner
is charged with knowledge of the constitutional prohibition.60 As can be gleaned from the
decision of the trial court, the petitioner was fully aware that he was disqualified from
acquiring and owning lands under Philippine law even before he purchased the properties in
question; and, to skirt the constitutional prohibition, the petitioner had the deed of sale placed
under the respondent's name as the sole vendee thereof:
Such being the case, the plaintiff is subject to the constitutional restrictions governing the
acquisition of real properties in the Philippines by aliens.
From the plaintiff's complaint before the Regional Trial Court, National Capital Judicial
Region, Branch 84, Quezon City in Civil Case No. Q-46350 he alleged:
x x x "That on account that foreigners are not allowed by the Philippine laws to acquire real
properties in their name as in the case of my vendor Miss Victoria Vinuya (sic) although
married to a foreigner, we agreed and I consented in having the title to subject property
placed in defendant's name alone although I paid for the whole price out of my own exclusive
funds." (paragraph IV, Exhibit "W.")
and his testimony before this Court which is hereby quoted:
ATTY. ABARQUEZ:
Q.         In whose name the said house and lot placed, by the way, where is his house and lot
located?
A.         In 14 Fernandez St., San Francisco, del Monte, Manila.
Q.         In whose name was the house placed?
A.         Ederlina Catito because I was informed being not a Filipino, I cannot own the
property. (tsn, p. 11, August 27, 1986).
xxx             xxx             xxx
COURT:
Q.         So you understand that you are a foreigner that you cannot buy land in the
Philippines?
A.         That is correct but as she would eventually be my wife that would be owned by us
later on. (tsn, p. 5, September 3, 1986)
xxx             xxx             xxx
Q.         What happened after that?
A.         She said you foreigner you are using Filipinos to buy property.
Q.         And what did you answer?
A:         I said thank you very much for the property I bought because I gave you a lot of
money (tsn., p. 14, ibid).
It is evident that the plaintiff was fully aware that as a non-citizen of the Philippines, he was
disqualified from validly purchasing any land within the country.61
The petitioner's claim that he acquired the subject properties because of his desire to marry
the respondent, believing that both of them would thereafter jointly own the said properties, is
belied by his own evidence. It is merely an afterthought to salvage a lost cause. The
petitioner admitted on cross-examination that he was all along legally married to Teresita
Santos Frenzel, while he was having an amorous relationship with the respondent:
ATTY. YAP:
Q         When you were asked to identify yourself on direct examination you claimed before
this Honorable Court that your status is that of being married, do you confirm that?
A         Yes, sir.
Q         To whom are you married?
A         To a Filipina, since 1976.
Q         Would you tell us who is that particular person you are married since 1976?
A         Teresita Santos Frenzel.
Q         Where is she now?
A         In Australia.
Q         Is this not the person of Teresita Frenzel who became an Australian citizen?
A         I am not sure, since 1981 we were separated.
Q         You were only separated, in fact, but not legally separated?
A         Thru my counsel in Australia I filed a separation case.
Q         As of the present you are not legally divorce[d]?
A         I am still legally married.62
The respondent was herself married to Klaus Muller, a German citizen. Thus, the petitioner
and the respondent could not lawfully join in wedlock. The evidence on record shows that the
petitioner in fact knew of the respondent's marriage to another man, but nonetheless
purchased the subject properties under the name of the respondent and paid the purchase
prices therefor. Even if it is assumed gratia arguendi that the respondent and the petitioner
were capacitated to marry, the petitioner is still disqualified to own the properties in tandem
with the respondent.63
The petitioner cannot find solace in Article 1416 of the New Civil Code which reads:
Art. 1416. When the agreement is not illegal per se but is merely prohibited, and the
prohibition by the law is designed for the protection of the plaintiff, he may, if public policy is
thereby enhanced, recover what he has paid or delivered.64
The provision applies only to those contracts which are merely prohibited, in order to benefit
private interests. It does not apply to contracts void ab initio. The sales of three parcels of
land in favor of the petitioner who is a foreigner is illegal per se. The transactions are void ab
initio because they were entered into in violation of the Constitution. Thus, to allow the
petitioner to recover the properties or the money used in the purchase of the parcels of land
would be subversive of public policy.
Neither may the petitioner find solace in Rep. Act No. 133, as amended by Rep. Act No.
4882, which reads:
SEC. 1. Any provision of law to the contrary notwithstanding, private real property may be
mortgaged in favor of any individual, corporation, or association, but the mortgagee or his
successor-in-interest, if disqualified to acquire or hold lands of the public domain in the
Philippines, shall not take possession of the mortgaged property during the existence of the
mortgage and shall not take possession of mortgaged property except after default and for
the sole purpose of foreclosure, receivership, enforcement or other proceedings and in no
case for a period of more than five years from actual possession and shall not bid or take
part in any sale of such real property in case of foreclosure: Provided, That said mortgagee
or successor-in-interest may take possession of said property after default in accordance
with the prescribed judicial procedures for foreclosure and receivership and in no case
exceeding five years from actual possession.65
From the evidence on record, the three parcels of land subject of the complaint were not
mortgaged to the petitioner by the owners thereof but were sold to the respondent as the
vendee, albeit with the use of the petitioner's personal funds.
Futile, too, is petitioner's reliance on Article 22 of the New Civil Code which reads:
Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or
legal ground, shall return the same to him.66
The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER DETREMENTO
PROTEST" (No person should unjustly enrich himself at the expense of another). An action
for recovery of what has been paid without just cause has been designated as an accion in
rem verso.67 This provision does not apply if, as in this case, the action is proscribed by the
Constitution or by the application of the pari delicto doctrine. 68 It may be unfair and unjust to
bar the petitioner from filing an accion in rem verso over the subject properties, or from
recovering the money he paid for the said properties, but, as Lord Mansfield stated in the
early case of Holman vs. Johnson:69 "The objection that a contract is immoral or illegal as
between the plaintiff and the defendant, sounds at all times very ill in the mouth of the
defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded
in general principles of policy, which the defendant has the advantage of, contrary to the real
justice, as between him and the plaintiff." 
IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The decision of the Court
of Appeals is AFFIRMED in toto.
Costs against the petitioner.
SO ORDERED.
Bellosillo, Austria-Martinez and Tinga, JJ ., concur.
Quisumbing, J ., is on leave.

Footnotes
1
 Penned by Justice Martin Villarama, Jr., with Presiding Justice Cancio C. Garcia and
Justice Andres B. Reyes, Jr. concurring.
2
 Penned by Judge William M. Layague.
3
 The petitioner adduced testimonial and documentary evidence. The respondent did not
adduce any testimonial evidence, but adduced as Exhibit "5," the petitioner's complaint in
Civil Case No. 18,750-87 filed with the RTC of Davao City.
4
 Exhibits "A" to "D-4."
5
 Exhibits "B" and "B-1."
6
 Exhibit "C."
7
 Exhibit "E."
8
 Exhibit "D."
9
 Exhibit "F."
10
 Exhibit "G."
11
 Exhibits "H" to "H-12."
12
 Exhibit "J."
13
 Exhibits "K" to "K-5."
14
 Exhibit "L."
15
 Exhibit "M."
16
 Exhibit "V."
17
 Exhibit "N."
18
 Exhibits "O" to "O-4."
19
 Exhibit "P-4."
20
 Exhibit "P" & "P-1."
21
 Exhibit "Q" & "Q-1."
22
 Exhibits "Q-4" to "Q-6."
23
 Exhibit "Q-20."
24
 Exhibits "V-4"–"V-10."
25
 Exhibit "R-5."
26
 Exhibit "R-13."
27
 Exhibit "BB."
28
 Exhibits "S" and "T."
29
 Exhibit "BB."
30
 Exhibits "CC" to "CC-4."
31
 Exhibit "U;" Entitled and docketed as Alfred Fritz Frenzel vs. Ederlina P. Catito, Civil Case
No. 46350.
32
 Exhibit "GG."
33
 Entitled and docketed as Alfred Fritz Frenzel vs. Ederlina P. Catito, Civil Case No. Q-
46350.
34
 Exhibit "W."
35
 Entitled and docketed as Alfred Frenzel vs. Ederlina P. Catito, Civil Case No. 17,817.
36
 Records, p. 2.
37
 Records, pp. 4–5.
38
 Exhibit "5."
39
 Records, pp. 13–16.
40
 Docketed as Civil Case No. 18,750-87.
41
 Exhibit "5;" Records, pp. 194–198.
42
 Exhibit "5-D;" Records, pp. 197–198.
43
 Exhibit "X-2"–"X-3."
44
 Records, p. 232.
45
 Docketed as CA-G.R. CV. No. 53485.
46
 Rollo, p. 30.
47
 Id., at 16.
48
 Id., at 19.
49
 An act to authorize the mortgage of private real property in favor of any individual,
corporation or association subject to certain conditions.
50
 Supra. The conveyances subject of the case were executed when the 1973 Constitution
was in effect.
51
 Ong Ching Po vs. Court of Appeals, 239 SCRA 341 [1994].
52
 Alexander Krivenko, vs. Register of Deeds, et al., 79 Phil. 461 [1947]; Rellosa vs. Hun, 93
Phil. 827 [1953]; Caoile vs. Peng, 93 Phil. 861 [1953]; Ong Ching Po vs. Court of
Appeals, supra.
53
 Francisco Chavez vs. Presidential Commission on Good Government, et al., 307 SCRA
394 [1999].
54
 Aikman vs. City of Wheeling, Southeastern Reporter, 667 [1938].
55
 Rellosa vs. Hun, supra.
56
 ART. 1412. If the act in which the unlawful or forbidden cause consists does not constitute
a criminal offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither may recover what he has
given by virtue of the contract, or demand the performance of the other's undertaking. . . 
57
 Corkins vs. Ritter, 40 N.W., Reporter, 2d 726 [1950], Daley vs. City of Melvindale, 260
N.W. Reporter, 898 [1935].
58
 19 Am. Jur., Equity, Section 478.
59
 Bough & Bough vs. Cantiveros and Hanopol, 40 Phil. 209 [1919], Reporter.
60
 Cheesman vs. Intermediate Appellate Court, et al., 193 SCRA 93 [1991].
61
 Records, pp. 230–231.
62
 TSN, 7 April 1987, pp. 2–3 (Frenzel).
63
 See note 57.
64
 Supra.
65
 Supra.
66
 Supra.
67
 Id., at 85.
68
 Tolentino, Civil Code of the Philippines, 1990 ed., Vol. I, p. 85.
69
 Cited in Marissey vs. Bologna, 123 So. 2d 537 [1960].

April 26, 2017

G.R. No. 178467
SPS. CRISTINO & EDNA CARBONELL, Petitioners, 
vs.
METROPOLITAN BANK AND TRUST COMPANY, Respondent.
DECISION
BERSAMIN, J.:
The petitioners assail the decision promulgated on December 7, 2006, 1 whereby the Court of
Appeals (CA) affirmed with modification the decision rendered on May 22, 19982 by the
Regional Trial Court, Branch 157, in Pasig City (RTC) dismissing the petitioners' complaint in
Civil Case No. 65725 for its lack of merit, and awarded attorney's fees under the
respondent's counterclaim.
Antecedents
The petitioners initiated against the respondent Civil Case No. 65725, an action for damages,
alleging that they had experienced emotional shock, mental anguish, public ridicule,
humiliation, insults and embarrassment during their trip to Thailand because of the
respondent's release to them of five US$ 100 bills that later on turned out to be counterfeit.
They claimed that they had travelled to Bangkok, Thailand after withdrawing US$ l ,000.00 in
US$ 100 notes from their dollar account at the respondent's Pateros branch; that while in
Bangkok, they had exchanged five US$ 100 bills into Baht, but only four of the US$ 100 bills
had been accepted by the foreign exchange dealer because the fifth one was "no good;" that
unconvinced by the reason for the rejection, they had asked a companion to exchange the
same bill at Norkthon Bank in Bangkok; that the bank teller thereat had then informed them
and their companion that the dollar bill was fake; that the teller had then confiscated the US$
100 bill and had threatened to report them to the police if they insisted in getting the fake
dollar bill back; and that they had to settle for a Foreign Exchange Note receipt.3
The petitioners claimed that later on, they had bought jewelry from a shop owner by using
four of the remaining US$100 bills as payment; that on the next day, however, they had been
confronted by the shop owner at the hotel lobby because their four US$ 100 bills had turned
out to be counterfeit; that the shop owner had shouted at them: "You Filipinos, you are all
cheaters!;" and that the incident had occurred within the hearing distance of fellow travelers
and several foreigners.
The petitioners continued that upon their return to the Philippines, they had confronted the
manager of the respondent's Pateros branch on the fake dollar bills, but the latter had
insisted that the dollar bills she had released to them were genuine inasmuch as the bills had
come from the head office; that in order to put the issue to rest, the counsel of the petitioners
had submitted the subject US$ 100 bills to the Bangko Sentral ng Pilipinas (BSP) for
examination; that the BSP had certified that the four US$100 bills were near perfect genuine
notes;4 and that their counsel had explained by letter their unfortunate experience caused by
the respondent's release of the fake US dollar bills to them, and had demanded moral
damages of ₱10 Million and exemplary damages.5
The petitioners then sent a written notice to the respondent, attaching the BSP certification
and informing the latter that they were giving it five days within which to comply with their
demand, or face court action.6 In response, the respondent's counsel wrote to the petitioners
on March 1996 expressing sympathy with them on their experience but stressing that the
respondent could not absolutely guarantee the genuineness of each and every foreign
currency note that passed through its system; that it had also been a victim like them; and
that it had exercised the diligence required in dealing with foreign currency notes and in the
selection and supervision of its employees.7
Prior to the filing of the suit in the RTC, the petitioners had two meetings with the
respondent's representatives. In the course of the two meetings, the latter's representatives
reiterated their sympathy and regret over the troublesome experience that the petitioners had
encountered, and offered to reinstate US$500 in their dollar account, and, in addition, to
underwrite a round-trip all-expense-paid trip to Hong Kong, but they were adamant and
staged a walk-out.8
In its judgment rendered on May 22, 1998,9 the RTC ruled in favor of the respondent,
disposing as follows:
WHEREFORE, in the light of all the foregoing, judgment is hereby rendered:
1. Dismissing plaintiff’s complaint for lack of merit;
2. On the counterclaim, awarding Metrobank the amount of ₱20,000.00 as attorney's fees.
SO ORDERED.10
The petitioners appealed, but the CA ultimately promulgated its assailed decision on
December 7, 2006 affirming the judgment of the RTC with the modification of deleting the
award of attorney's fees, 11 to wit:
As to the award of attorneys fees, we agree with appellants that there is simply no factual
and legal basis thereto.
Unquestionably, appellants filed the present case for the humiliation and embarrassment
they suffered in Bangkok. They instituted the complaint in their honest belief that they were
entitled to damages as a result of appellee's issuance of counterfeit dollar notes. Such being
the case, they should not be made answerable to attorney's fees. It is not good public policy
to put a premium on the right to litigate where such right is exercised in good faith, albeit
erroneously.
WHEREFORE, the appealed decision is AFFIRMED with modification that the award of
attorney's fees is deleted.
SO ORDERED.
Issues
Hence, this appeal, with the petitioners contending that the CA gravely erred in affirming the
judgment of the RTC. They insist that inasmuch as the business of banking was imbued with
public interest, the respondent's failure to exercise the degree of diligence required in
handling the affairs of its clients showed that it was liable not just for simple negligence but
for misrepresentation and bad faith amounting to fraud; that the CA erred in giving weight
and relying on the news clippings allegedly showing that the "supernotes" had deceived even
the U.S. Secret Service and Central Intelligence Agency, for such news were not based on
facts. 12
Ruling of the Court
The appeal is partly meritorious.
The General Banking Act of 2000 demands of banks the highest standards of integrity and
performance. As such, the banks are under obligation to treat the accounts of their
depositors with meticulous care. 13 However, the banks' compliance with this degree of
diligence is to be determined in accordance with the particular circumstances of each case.
The petitioners argue that the respondent was liable for failing to observe the diligence
required from it by not doing an act from which the material damage had resulted by reason
of inexcusable lack of precaution in the performance of its duties. 14 Hence, the respondent
was guilty of gross negligence, misrepresentation and bad faith amounting to fraud.
The petitioners' argument is unfounded.
Gross negligence connotes want of care in the performance of one's duties; it is a negligence
characterized by the want of even slight care, acting or omitting to act in a situation where
there is duty to act, not inadvertently but wilfully and intentionally, with a conscious
indifference to consequences insofar as other persons may be affected. It evinces a
thoughtless disregard of consequences without exe1iing any effort to avoid them. 15
In order for gross negligence to exist as to warrant holding the respondent liable therefor, the
petitioners must establish that the latter did not exert any effort at all to avoid unpleasant
consequences, or that it wilfully and intentionally disregarded the proper protocols or
procedure in the handling of US dollar notes and in selecting and supervising its employees.
The CA and the RTC both found that the respondent had exercised the diligence required by
law in observing the standard operating procedure, in taking the necessary precautions for
handling the US dollar bills in question, and in selecting and supervising its
employees. 16 Such factual findings by the trial court are entitled to great weight and respect
especially after being affirmed by the appellate court, and could be overturned only upon a
showing of a very good reason to warrant deviating from them.
In this connection, it is significant that the BSP certified that the falsity of the US dollar notes
in question, which were "near perfect genuine notes," could be detected only with extreme
difficulty even with the exercise of due diligence. Ms. Nanette Malabrigo, BSP's Senior
Currency Analyst, testified that the subject dollar notes were "highly deceptive" inasmuch as
the paper used for them were similar to that used in the printing of the genuine notes. She
observed that the security fibers and the printing were perfect except for some microscopic
defects, and that all lines were clear, sharp and well defined. 17
Nonetheless, the petitioners contend that the respondent should be liable for moral and
exemplary damages18 on account of their suffering the unfortunate experience abroad
brought about by their use of the fake US dollar bills withdrawn from the latter.
The contention cannot be upheld.
The relationship existing between the petitioners and the respondent that resulted from a
contract of loan was that of a creditor-debtor. 19 Even if the law imposed a high standard on
the latter as a bank by vi1iue of the fiduciary nature of its banking business, bad faith or
gross negligence amounting to bad faith was absent. Hence, there simply was no legal basis
for holding the respondent liable for moral and exemplary damages. In breach of contract,
moral damages may be awarded only where the defendant acted fraudulently or in bad faith.
That was not true herein because the respondent was not shown to have acted fraudulently
or in bad faith. This is pursuant to Article 2220 of the Civil Code, to wit:
Article 2220. Willful injury to property may be a legal ground for awarding moral damages if
the court should find that, under the circumstances, such damages are justly due. The same
rule applies to breaches of contract where defendant acted fraudulently or in bad faith.
With the respondent having established that the characteristics of the subject dollar notes
had made it difficult even for the BSP itself as the country's own currency note expert to
identify the counterfeiting with ease despite adhering to all the properly laid out standard
operating procedure and precautions in the handling of US dollar bills, holding it liable for
damages in favor of the petitioners would be highly unwarranted in the absence of proof of
bad faith, malice or fraud on its part. That it formally apologized to them and even offered to
reinstate the USD$500.00 in their account as well as to give them the all-expense-paid round
trip ticket to Hong Kong as means to assuage their inconvenience did not necessarily mean it
was liable. In civil cases, an offer of compromise is not an admission of liability, and is
inadmissible as evidence against the offeror. 20
Even without taking into consideration the news clippings to the effect that the US Secret
Service and Central Intelligence Agency had themselves been deceived by the 1990 series
of the US dollar notes infamously known as the "supernotes," the record had enough to show
in that regard, not the least of which was the testimony of Ms. Malabrigo as BSP's Senior
Currency Analyst about the highly deceptive nature of the subject US dollar notes and the
possibility for them to pass undetected.
Also, the petitioners' allegation of misrepresentation on the part of the respondent was
factually unsupported.1âwphi1 They had been satisfied with the services of the respondent
for about three years prior to the incident in question.21 The incident was but an isolated one.
Under the law, moral damages for culpa contractual or breach of contract are recoverable
only if the defendant acted fraudulently or in bad faith, or is found guilty of gross negligence
amounting to bad faith, or in wanton disregard of his contractual obligations.22 The breach
must be wanton, reckless, malicious or in bad faith, oppressive or abusive.23 In order to
maintain their action for damages, the petitioners must establish that their injury resulted
from a breach of duty that the respondent had owed to them, that is, there must be the
concurrence of injury caused to them as the plaintiffs and legal responsibility on the part of
the respondent. Underlying the award of damages is the premise that an individual was
injured in contemplation of law. In this regard, there must first be a breach of some duty and
the imposition of liability for that breach before damages may be awarded; and the breach of
such duty should be the proximate cause of the injury. 24 That was not so in this case.
It is true that the petitioners suffered embarrassment and humiliation in Bangkok. Yet, we
should distinguish between damage and injury. In The Orchard Golf & Country Club, Inc. v.
Yu,  25 the Court has fittingly pointed out the distinction, viz.:
x x x Injury is the illegal invasion of a legal right, damage is the loss, hurt, or harm which
results from the injury; and damages are the recompense or compensation awarded for the
damage suffered. Thus, there can be damage without injury in those instances in which the
loss or harm was not the result of a violation of a legal duty. These situations are often
called dmimum absque injuria.  26
In every situation of damnum absque injuria, therefore, the injured person alone bears the
consequences because the law affords no remedy for damages resulting from an act that
does not amount to a legal injury or wrong. For instance, in BP I Express Card Corporation v.
Court of Appeals ,27 the Court turned down the claim for damages of a cardholder whose
credit card had been cancelled after several defaults in payment, holding therein that there
could be damage without injury where the loss or harm was not the result of a violation of a
legal duty towards the plaintiff. In such situation, the injured person alone should bear the
consequences because the law afforded no remedy for damages resulting from an act that
did not
amount to a legal injury or wrong.28 Indeed, the lack of malice in the conduct complained of
precluded the recovery of damages.29
Here, although the petitioners suffered humiliation resulting from their unwitting use of the
counterfeit US dollar bills, the respondent, by virtue of its having observed the proper
protocols and procedure in handling the US dollar bills involved, did not violate any legal duty
towards them. Being neither guilty of negligence nor remiss in its exercise of the degree of
diligence required by law or the nature of its obligation as a banking institution, the latter
was not liable for damages. Given the situation being one of damnum absque injuria, they
could not be compensated for the damage sustained.
WHEREFORE, the Court AFFIRMS the decision promulgated on December 7, 2006;
and ORDERS the petitioners to pay the costs of suit.
SO ORDERED.
LUCAS P. BERSAMIN,
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
BIENVENIDO L. REYES FRANCIS H. JARDELEZA
Associate Justice Associate Justice
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Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Court’s Division.
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
CERTIFICATION
Pursuant to the Section 13, Article VIII of the Constitution and the Division Chairperson’s
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Court’s Division.
MARIA LOURDES P.A. SERENO
Chief Justice

Footnotes
1
 Rollo, pp. 35-50; penned by Associate Justice Lucenito N. Tagle (retired) and concurred in
by Associate Justice Robe1to A. Barrios (retired) and Associate Justice Mario L. Guariña III
(retired).
2
 Id. al 53-61; penned by Judge Vivcncio S. Baclig (retired).
3
 Id. at 35-37.
4
 Id. at 37-38.
5
 Id. at 38.
6
 Id. at 38.
7
 Id. at 38-39.
8
 Id. at 55.
9
 Supra note 2.
10
 Id. at 48-50.
11
 Supra note I.
12
 Id.at]8-19.
13
 Philippine Savings Bank v. Chowking Food Corporation, G.R. No. I 77526, July 4, 2008,
557 SCRA 318, 331.
14
 Rollo, p. 26.
15
 Comsaving Banks (now GSIS Family Bank) v. Capistrano, G.R. No. 170942, August 28.
2013, 704 SCRA 72, 87-88.
16
 Rullo, p. 59.
17
 Id. at 56-58.
18
 Id. at 29-30.
19
 Article.: 1980 of the Civil Code provides that fixed, savings, current deposits of money m
banks and similar institutions shall be governed by the prov1s1ons concerning simple loan.
20
 Section 27, Rule 130 of the Rules of Court pertinently states:
Section 27. Offer of compromise not admissible.- In civil cases, an offer of compromise is not
an admission of any liability, and is not admissible in evidence against the offeror. xxxx
21
 Rollo, pp. 60-61.
22
 Philippine Telegraph & Telephone Corp. v. Court rf Appeals, G.R. No. 139268, September
3, 2002, 388 SCRA 270, 276-277.
23
 Equitable Banking Corporation v. Calderon, G.R. No. 156168; December 14, 2004, 446
SCRA 271, 277.
24
 BPI Express Card v. Court ofAppeals, G.R. No. 120639, September 25, 1998, 296 SCRA
260, 273.
25
 G.R. No. 191033, January 11, 2016, 778 SCRA 404.
26
 Id. at421, citing Custodio v. Court of Appeals, G.R. No. 116100, February 9, 1996, 253
SCRA 483, 490.
27
 Supra, note 24.
28
 Id. at 272-273.
29
 Lagon v. Court of Appeals, GR. No. 119107, March 18, 2005, 453 SCRA 616, 628.

G.R. No. 134241            August 11, 2003

DAVID REYES (Substituted by Victoria R. Fabella), petitioner, 
vs.
JOSE LIM, CHUY CHENG KENG and HARRISON LUMBER, INC., respondents.
CARPIO, J.:
The Case
This is a petition for review on certiorari of the Decision1 dated 12 May 1998 of the Court of
Appeals in CA-G.R. SP No. 46224. The Court of Appeals dismissed the petition for certiorari
assailing the Orders dated 6 March 1997, 3 July 1997 and 3 October 1997 of the Regional
Trial Court of Paranaque, Branch 2602 ("trial court") in Civil Case No. 95-032.
The Facts
On 23 March 1995, petitioner David Reyes ("Reyes") filed before the trial court a complaint
for annulment of contract and damages against respondents Jose Lim ("Lim"), Chuy Cheng
Keng ("Keng") and Harrison Lumber, Inc. ("Harrison Lumber").
The complaint3 alleged that on 7 November 1994, Reyes as seller and Lim as buyer entered
into a contract to sell ("Contract to Sell") a parcel of land ("Property") located along F.B.
Harrison Street, Pasay City. Harrison Lumber occupied the Property as lessee with a
monthly rental of P35,000. The Contract to Sell provided for the following terms and
conditions:
1. The total consideration for the purchase of the aforedescribed parcel of land together with
the perimeter walls found therein is TWENTY EIGHT MILLION (P28,000,000.00) PESOS
payable as follows:
(a) TEN MILLION (P10,000,000.00) PESOS upon signing of this Contract to Sell;
(b) The balance of EIGHTEEN MILLION (P18,000,000.00) PESOS shall be paid on or before
March 8, 1995 at 9:30 A.M. at a bank to be designated by the Buyer but upon the complete
vacation of all the tenants or occupants of the property and execution of the Deed of
Absolute Sale. However, if the tenants or occupants have vacated the premises earlier than
March 8, 1995, the VENDOR shall give the VENDEE at least one week advance notice for
the payment of the balance and execution of the Deed of Absolute Sale.
2. That in the event, the tenants or occupants of the premises subject of this sale shall not
vacate the premises on March 8, 1995 as stated above, the VENDEE shall withhold the
payment of the balance of P18,000,000.00 and the VENDOR agrees to pay a penalty of Four
percent (4%) per month to the herein VENDEE based on the amount of the downpayment of
TEN MILLION (P10,000,000.00) PESOS until the complete vacation of the premises by the
tenants therein.4
The complaint claimed that Reyes had informed Harrison Lumber to vacate the Property
before the end of January 1995. Reyes also informed Keng5 and Harrison Lumber that if they
failed to vacate by 8 March 1995, he would hold them liable for the penalty of P400,000 a
month as provided in the Contract to Sell. The complaint further alleged that Lim connived
with Harrison Lumber not to vacate the Property until the P400,000 monthly penalty would
have accumulated and equaled the unpaid purchase price of P18,000,000.
On 3 May 1995, Keng and Harrison Lumber filed their Answer6 denying they connived with
Lim to defraud Reyes. Keng and Harrison Lumber alleged that Reyes approved their request
for an extension of time to vacate the Property due to their difficulty in finding a new location
for their business. Harrison Lumber claimed that as of March 1995, it had already started
transferring some of its merchandise to its new business location in Malabon.7
On 31 May 1995, Lim filed his Answer8 stating that he was ready and willing to pay the
balance of the purchase price on or before 8 March 1995. Lim requested a meeting with
Reyes through the latter’s daughter on the signing of the Deed of Absolute Sale and the
payment of the balance but Reyes kept postponing their meeting. On 9 March 1995, Reyes
offered to return the P10 million down payment to Lim because Reyes was having problems
in removing the lessee from the Property. Lim rejected Reyes’ offer and proceeded to verify
the status of Reyes’ title to the Property. Lim learned that Reyes had already sold the
Property to Line One Foods Corporation ("Line One") on 1 March 1995 for P16,782,840.
After the registration of the Deed of Absolute Sale, the Register of Deeds issued to Line One
TCT No. 134767 covering the Property. Lim denied conniving with Keng and Harrison
Lumber to defraud Reyes.
On 2 November 1995, Reyes filed a Motion for Leave to File Amended Complaint due to
supervening facts. These included the filing by Lim of a complaint for estafa against Reyes
as well as an action for specific performance and nullification of sale and title plus damages
before another trial court.9 The trial court granted the motion in an Order dated 23 November
1995.
In his Amended Answer dated 18 January 1996,10 Lim prayed for the cancellation of the
Contract to Sell and for the issuance of a writ of preliminary attachment against Reyes. The
trial court denied the prayer for a writ of preliminary attachment in an Order dated 7 October
1996.
On 6 March 1997, Lim requested in open court that Reyes be ordered to deposit the P10
million down payment with the cashier of the Regional Trial Court of Parañaque. The trial
court granted this motion.
On 25 March 1997, Reyes filed a Motion to Set Aside the Order dated 6 March 1997 on the
ground the Order practically granted the reliefs Lim prayed for in his Amended Answer.11 The
trial court denied Reyes’ motion in an Order12 dated 3 July 1997. Citing Article 1385 of the
Civil Code, the trial court ruled that an action for rescission could prosper only if the party
demanding rescission can return whatever he may be obliged to restore should the court
grant the rescission.
The trial court denied Reyes’ Motion for Reconsideration in its Order13 dated 3 October 1997.
In the same order, the trial court directed Reyes to deposit the P10 million down payment
with the Clerk of Court on or before 30 October 1997.
On 8 December 1997, Reyes14 filed a Petition for Certiorari15 with the Court of Appeals.
Reyes prayed that the Orders of the trial court dated 6 March 1997, 3 July 1997 and 3
October 1997 be set aside for having been issued with grave abuse of discretion amounting
to lack of jurisdiction. On 12 May 1998, the Court of Appeals dismissed the petition for lack of
merit.
Hence, this petition for review.
The Ruling of the Court of Appeals
The Court of Appeals ruled the trial court could validly issue the assailed orders in the
exercise of its equity jurisdiction. The court may grant equitable reliefs to breathe life and
force to substantive law such as Article 138516of the Civil Code since the provisional
remedies under the Rules of Court do not apply to this case.
The Court of Appeals held the assailed orders merely directed Reyes to deposit the P10
million to the custody of the trial court to protect the interest of Lim who paid the amount to
Reyes as down payment. This did not mean the money would be returned automatically to
Lim.
The Issues
Reyes raises the following issues:
1. Whether the Court of Appeals erred in holding the trial court could issue the questioned
Orders dated March 6, 1997, July 3, 1997 and October 3, 1997, requiring petitioner David
Reyes to deposit the amount of Ten Million Pesos (P10,000,000.00) during the pendency of
the action, when deposit is not among the provisional remedies enumerated in Rule 57 to 61
of the 1997 Rules on Civil Procedure.
2. Whether the Court of Appeals erred in finding the trial court could issue the questioned
Orders on grounds of equity when there is an applicable law on the matter, that is, Rules 57
to 61 of the 1997 Rules on Civil Procedure.17
The Court’s Ruling
Reyes’ contentions are without merit.
Reyes points out that deposit is not among the provisional remedies enumerated in the 1997
Rules of Civil Procedure. Reyes stresses the enumeration in the Rules is exclusive. Not one
of the provisional remedies in Rules 57 to 6118 applies to this case. Reyes argues that a court
cannot apply equity and require deposit if the law already prescribes the specific provisional
remedies which do not include deposit. Reyes invokes the principle that equity is "applied
only in the absence of, and never against, statutory law or x x x judicial rules of
procedure."19 Reyes adds the fact that the provisional remedies do not include deposit is a
matter of dura lex sed lex.20
The instant case, however, is precisely one where there is a hiatus in the law and in the
Rules of Court. If left alone, the hiatus will result in unjust enrichment to Reyes at the
expense of Lim. The hiatus may also imperil restitution, which is a precondition to the
rescission of the Contract to Sell that Reyes himself seeks. This is not a case of equity
overruling a positive provision of law or judicial rule for there is none that governs this
particular case. This is a case of silence or insufficiency of the law and the Rules of Court. In
this case, Article 9 of the Civil Code expressly mandates the courts to make a ruling despite
the "silence, obscurity or insufficiency of the laws."21 This calls for the application of
equity,22 which "fills the open spaces in the law."23
Thus, the trial court in the exercise of its equity jurisdiction may validly order the deposit of
the P10 million down payment in court. The purpose of the exercise of equity jurisdiction in
this case is to prevent unjust enrichment and to ensure restitution. Equity jurisdiction aims to
do complete justice in cases where a court of law is unable to adapt its judgments to the
special circumstances of a case because of the inflexibility of its statutory or legal
jurisdiction.24Equity is the principle by which substantial justice may be attained in cases
where the prescribed or customary forms of ordinary law are inadequate.25
Reyes is seeking rescission of the Contract to Sell. In his amended answer, Lim is also
seeking cancellation of the Contract to Sell. The trial court then ordered Reyes to deposit in
court the P10 million down payment that Lim made under the Contract to Sell. Reyes admits
receipt of the P10 million down payment but opposes the order to deposit the amount in
court. Reyes contends that prior to a judgment annulling the Contract to Sell, he has the
"right to use, possess and enjoy"26 the P10 million as its "owner"27 unless the court orders its
preliminary attachment.28
To subscribe to Reyes’ contention will unjustly enrich Reyes at the expense of Lim. Reyes
sold to Line One the Property even before the balance of P18 million under the Contract to
Sell with Lim became due on 8 March 1995. On 1 March 1995, Reyes signed a Deed of
Absolute Sale29 in favor of Line One. On 3 March 1995, the Register of Deeds issued TCT
No. 13476730 in the name of Line One.31 Reyes cannot claim ownership of the P10 million
down payment because Reyes had already sold to another buyer the Property for which Lim
made the down payment. In fact, in his Comment32 dated 20 March 1996, Reyes reiterated
his offer to return to Lim the P10 million down payment.
On balance, it is unreasonable and unjust for Reyes to object to the deposit of the P10
million down payment. The application of equity always involves a balancing of the equities in
a particular case, a matter addressed to the sound discretion of the court. Here, we find the
equities weigh heavily in favor of Lim, who paid the P10 million down payment in good faith
only to discover later that Reyes had subsequently sold the Property to another buyer.
In Eternal Gardens Memorial Parks Corp. v. IAC,33 this Court held the plaintiff could not
continue to benefit from the property or funds in litigation during the pendency of the suit at
the expense of whomever the court might ultimately adjudge as the lawful owner. The Court
declared:
In the case at bar, a careful analysis of the records will show that petitioner admitted among
others in its complaint in Interpleader that it is still obligated to pay certain amounts to private
respondent; that it claims no interest in such amounts due and is willing to pay whoever is
declared entitled to said amounts. x x x
Under the circumstances, there appears to be no plausible reason for petitioner’s objections
to the deposit of the amounts in litigation after having asked for the assistance of the lower
court by filing a complaint for interpleader where the deposit of aforesaid amounts is not only
required by the nature of the action but is a contractual obligation of the petitioner under the
Land Development Program (Rollo, p. 252).
There is also no plausible or justifiable reason for Reyes to object to the deposit of the P10
million down payment in court. The Contract to Sell can no longer be enforced because
Reyes himself subsequently sold the Property to Line One. Both Reyes and Lim are now
seeking rescission of the Contract to Sell. Under Article 1385 of the Civil Code, rescission
creates the obligation to return the things that are the object of the contract. Rescission is
possible only when the person demanding rescission can return whatever he may be obliged
to restore. A court of equity will not rescind a contract unless there is restitution, that is, the
parties are restored to the status quo ante.34
Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot refuse to deposit
the P10 million down payment in court.35 Such deposit will ensure restitution of the P10
million to its rightful owner. Lim, on the other hand, has nothing to refund, as he has not
received anything under the Contract to Sell.36
In Government of the Philippine Islands v. Wagner and Cleland Wagner,37 the Court
ruled the refund of amounts received under a contract is a precondition to the rescission of
the contract. The Court declared:
The Government, having asked for rescission, must restore to the defendants whatever it
has received under the contract. It will only be just if, as a condition to rescission, the
Government be required to refund to the defendants an amount equal to the purchase price,
plus the sums expended by them in improving the land. (Civil Code, art. 1295.)
The principle that no person may unjustly enrich himself at the expense of another is
embodied in Article 2238 of the Civil Code. This principle applies not only to substantive rights
but also to procedural remedies. One condition for invoking this principle is that the
aggrieved party has no other action based on contract, quasi-contract, crime, quasi-delict or
any other provision of law.39 Courts can extend this condition to the hiatus in the Rules of
Court where the aggrieved party, during the pendency of the case, has no other recourse
based on the provisional remedies of the Rules of Court.
Thus, a court may not permit a seller to retain, pendente lite, money paid by a buyer if the
seller himself seeks rescission of the sale because he has subsequently sold the same
property to another buyer.40 By seeking rescission, a seller necessarily offers to return what
he has received from the buyer. Such a seller may not take back his offer if the court deems
it equitable, to prevent unjust enrichment and ensure restitution, to put the money in judicial
deposit.
There is unjust enrichment 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.41 In this case, it was just, equitable and proper for the
trial court to order the deposit of the P10 million down payment to prevent unjust enrichment
by Reyes at the expense of Lim.42
WHEREFORE, we AFFIRM the Decision of the Court of Appeals.
SO ORDERED.
Davide, Jr., C.J., Vitug, Ynares-Santiago, and Azcuna, JJ., concur.

Footnotes
1
 Penned by Associate Justice Quirino D. Abad Santos, Jr., with Associate Justices Ruben T.
Reyes and Eloy R. Bello, Jr. concurring.
2
 Presided by Judge Helen Bautista-Ricafort.
3
 Rollo, pp. 47-52.
4
 Ibid., pp. 53-54.
5
 Chuy Cheng Keng is the General Manager of Harrison Lumber.
6
 Rollo, pp. 56-65.
7
 According to the Stipulation of Facts agreed upon by the parties, defendant Harrison
Lumber vacated the leased premises on 30 April 1995. Rollo, p. 119.
8
 Rollo, pp. 66-81.
9
 Upon a joint motion to dismiss filed by Lim and Line One and a separate motion to dismiss
filed by Reyes, the Regional Trial Court of Pasay City dismissed on 17 January 1996 the
action for specific performance and nullification of sale and title plus damages filed by
Lim. Rollo, pp. 144, 191-197.
10
 Rollo, pp. 121-143.
11
 Ibid., pp. 155-159.
12
 Ibid. ,p. 165.
13
 Ibid.,p. 166.
14
 Reyes died on 4 November 1999. In a Resolution dated 14 June 2000, the Court granted
Lim’s petition to substitute deceased Reyes with his eldest daughter Victoria R.
Fabella. Rollo, pp. 406-426.
15
 Rollo, pp. 177-203.
16
 Art. 1385. Rescission creates the obligation to return the things which were the object of
the contract, together with their fruits, and the price with its interest; consequently, it can be
carried out only when he who demands rescission can return whatever he may be obliged to
restore.
x     x     x.
17
 Rollo, p. 26.
18
 These are preliminary attachment, preliminary injunction, receivership, replevin and
support pendente lite.
19
 Zabat, Jr. v. CA, 226 Phil. 489 (1986).
20
 Petition for Review, p. 17. Rollo, p. 24.
21
 Article 9 of the Civil Code provides: "No judge or court shall decline to render judgment by
reason of the silence, obscurity or insufficiency of the laws."
22
 1 ARTURO M. TOLENTINO, CIVIL CODE OF THE PHILIPPINES 43 (1990) citing Camus.
23
 JUSTICE BENJAMIN N. CARDOZO, THE NATURE OF THE JUDICIAL PROCESS 113
(1921).
24
 Agcaoili v. Government Service Insurance System, G.R. No. L-30056, 30 August 1988,
165 SCRA 1; Air Manila, Inc. v. Court of Industrial Relations, G.R. No. L-39742, 9 June 1978,
83 SCRA 579.
25
 American Life Ins. Co. v. Stewart, 300 U.S. 203, 81 L. Ed. 605 (1936); Davis v. Wallace,
257 U.S. 478, 66 L. Ed. 325 (1921).
26
 Petition for Review, pp. 32-33. Rollo, pp. 39-40.
27
 Ibid.
28
 Memorandum for Petitioner, p. 32. Rollo, p. 462.
29
 Rollo, pp. 88-90.
30
 CA Rollo, pp. 159-160.
31
 In the Stipulation of Facts agreed upon by the parties to this case, the existence of the
Deed of Absolute Sale between David Reyes and Line One Foods Corporation and the TCT
No. 134767 in the name of One Line Foods Corporation (sic) was admitted. Rollo, p. 119.
32
 CA Rollo, pp. 206-211.
33
 G.R. No. L-73794, 19 September 1988, 165 SCRA 439.
34
 Grymes v. Sanders, 93 U.S. 55, 23 L.Ed. 798 (1876).
35
 See Spouses Velarde v. Court of Appeals, 413 Phil. 360 (2001). See also Binalbagan
Tech., Inc. v. Court of Appeals, G.R. No. 100594, 10 March 1993, 219 SCRA 777.
36
 See Spouses Co v. Court of Appeals, 371 Phil. 445 (1999).
37
 49 Phil. 944 (1927).
38
 Article 22 of the Civil Code provides: "Every person who through an act of performance by
another, or any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to him."
39
 1 TOLENTINO, supra note 22, at 77, 82.
40
 See Bonzon v. Standard Oil Co. and Osorio, 27 Phil. 141 (1914), where the Court held: "In
this jurisdiction (even in the absence of the statute), under the general principle that one
person may not enrich himself at the expense of another, a judgment creditor would not be
permitted to retain the purchase price of land sold as the property of the judgment debtor
after it has been made to appear that the judgment debtor had no title to the land and that
the purchaser had failed to secure title thereto, and we find no difficulty therefore in accepting
a liberal construction of the statute which arrives at the same equitable result."
41
 66 Am. Jur. 2D Restitution and Implied Contracts § 3 (1973).
42
 See Ong Yong v. Tiu, G.R. No. 144476, 1 February 2002, 375 SCRA 614.
G.R. No. 121917 March 12, 1997
ROBIN CARIÑO PADILLA @ ROBINHOOD PADILLA, petitioner, 
vs.
COURT OF APPEALS and PEOPLE of the PHILIPPINES, respondents.

FRANCISCO, J.:
On October 26, 1992, high-powered firearms with live ammunitions were found in the
possession of petitioner Robin Padilla @ Robinhood Padilla, i.e.:
(1) One .357 Caliber revolver, Smith and Wesson, SN-32919 with six (6) live ammunitions;
(2) One M-16 Baby Armalite rifle, SN-RP 131120 with four (4) long and one (1) short
magazine with ammunitions;
(3) One .380 Pietro Beretta, SN-A 35723 Y with clip and eight (8) ammunitions; and
(4) Six additional live double action ammunitions of .38 caliber revolver.1
Petitioner was correspondingly charged on December 3, 1992, before the Regional Trial
Court (RTC) of Angeles City with illegal possession of firearms and ammunitions under P.D.
18662 thru the following Information:3
That on or about the 26th day of October, 1992, in the City of Angeles, Philippines, and
within the jurisdiction of this Honorable Court, the above-named accused, did then and there
willfully, unlawfully and feloniously have in his possession and under his custody and control
one (1) M-16 Baby Armalite rifle, SN-RP 131120 with four (4) long and one (1) short
magazines with ammunitions, one (1) .357 caliber revolver Smith and Wesson, SN-32919
with six (6) live ammunitions and one (1) .380 Pietro Beretta, SN-A35723Y with clip and eight
(8) ammunitions, without having the necessary authority and permit to carry and possess the
same.
ALL CONTRARY TO LAW. 4
The lower court then ordered the arrest of petitioner,5 but granted his application for
bail. 6 During the arraignment on January 20, 1993, a plea of not guilty was entered for
petitioner after he refused, 7 upon advice of counsel, 8 to make any plea. 9 Petitioner waived
in writing his right to be present in any and all stages of the case. 10
After trial, Angeles City RTC Judge David Rosete rendered judgment dated April 25, 1994
convicting petitioner of the crime charged and sentenced him to an "indeterminate penalty
from 17 years, 4 months and 1 day of reclusion temporal as minimum, to 21 years
of reclusion perpetua, as maximum". 11 Petitioner filed his notice of appeal on April 28,
1994. 12 Pending the appeal in the respondent Court of Appeals, 13 the Solicitor-General,
convinced that
the conviction shows strong evidence of guilt, filed on December 2, 1994 a motion to cancel
petitioner's bail bond. The resolution of this motion was incorporated in the now assailed
respondent court's decision sustaining petitioner's conviction 14 the dispositive portion of
which reads:
WHEREFORE, the foregoing circumstances considered, the appealed decision is hereby
AFFIRMED, and furthermore, the P200,000.00 bailbond posted by accused-appellant for his
provisional liberty, FGU Insurance Corporation Bond No. JCR (2) 6523, is hereby cancelled.
The Regional Trial Court, Branch 61, Angeles City, is directed to issue the Order of Arrest of
accused-appellant and thereafter his transmittal to the National Bureau of Prisons thru the
Philippine National Police where the said accused-appellant shall remain under confinement
pending resolution of his appeal, should he appeal to the Supreme Court. This shall be
immediately executory. The Regional Trial Court is further directed to submit a report of
compliance herewith.
SO ORDERED. 15
Petitioner received a copy of this decision on July 26, 1995. 16 On August 9, 1995 he filed a
"motion for reconsideration (and to recall the warrant of arrest)" 17 but the same was denied
by respondent court in its September 20, 1995 Resolution 18 copy of which was received by
petitioner on September 27, 1995. The next day, September 28, petitioner filed the instant
petition for review on certiorari with application for bail 19followed by two "supplemental
petitions" filed by different counsels, 20 a "second supplemental petition" 21 and an urgent
motion for the separate resolution of his application for bail. Again, the Solicitor-
General 22 sought the denial of the application for bail, to which the Court agreed in a
Resolution promulgated on July 31, 1996. 23 The Court also granted the Solicitor-General's
motion to file a consolidated comment on the petitions and thereafter required the petitioner
to file his reply. 24 However, after his vigorous resistance and success on the intramural of
bail (both in the respondent court and this Court) and thorough exposition of petitioner's guilt
in his 55-page Brief in the respondent court, the Solicitor-General now makes a complete
turnabout by filing a "Manifestation In Lieu Of Comment" praying for petitioner's acquittal. 25
The People's detailed narration of facts, well-supported by evidence on record and given
credence by respondent court, is as follows: 26
At about 8:00 o'clock in the evening of October 26, 1992, Enrique Manarang and his
compadre Danny Perez were inside the Manukan sa Highway Restaurant in Sto. Kristo,
Angeles City where they took shelter from the heavy downpour (pp. 5-6, TSN, February 15,
1993) that had interrupted their ride on motorcycles (pp 5-6, ibid.) along McArthur Highway
(ibid). While inside the restaurant, Manarang noticed a vehicle, a Mitsubishi Pajero, running
fast down the highway prompting him to remark that the vehicle might get into an accident
considering the inclement weather. (p. 7, Ibid) In the local vernacular, he said thus: "Ka bilis
na, mumuran pa naman pota makaaksidente ya." (p. 7, ibid). True enough, immediately after
the vehicle had passed the restaurant, Manarang and Perez heard a screeching sound
produced by the sudden and hard braking of a vehicle running very fast (pp. 7-8, ibid)
followed by a sickening sound of the vehicle hitting something (p. 8, ibid). Danny Cruz, quite
sure of what had happened, remarked "oy ta na" signifying that Manarang had been right in
his observation (pp. 8-9, ibid).
Manarang and Cruz went out to investigate and immediately saw the vehicle occupying the
edge or shoulder of the highway giving it a slight tilt to its side (pp. 9-10, ibid). Manarang,
being a member of both the Spectrum, a civic group and the Barangay Disaster Coordinating
Council, decided to report the incident to the Philippine National Police of Angeles City (p.
10, ibid). He took out his radio and called the Viper, the radio controller of the Philippine
National Police of Angeles City (p. 10, ibid). By the time Manarang completed the call, the
vehicle had started to leave the place of the accident taking the general direction to the north
(p. 11, ibid).
Manarang went to the location of the accident and found out that the vehicle had hit
somebody (p. 11, ibid).
He asked Cruz to look after the victim while he went back to the restaurant, rode on his
motorcycle and chased the vehicle (p. 11 ibid). During the chase he was able to make out
the plate number of the vehicle as PMA 777 (p. 33, TSN, February 15, 1193). He called the
Viper through the radio once again (p. 34, ibid) reporting that a vehicle heading north with
plate number PMA 777 was involved in a hit and run accident (p. 20, TSN, June 8, 1993).
The Viper, in the person of SP02 Ruby Buan, upon receipt of the second radio call flashed
the message to all units of PNP Angeles City with the order to apprehend the vehicle (p.
20, ibid). One of the units of the PNP Angeles City reached by the alarm was its Patrol
Division at Jake Gonzales Street near the Traffic Division (pp. 5-7, TSN, February 23, 1993).
SPO2 Juan C. Borja III and SPO2 Emerlito Miranda immediately borded a mobile patrol
vehicle (Mobile No. 3) and positioned themselves near the south approach of Abacan bridge
since it was the only passable way going to the north (pp. 8-9, ibid). It took them about ten
(10) seconds to cover the distance between their office and the Abacan bridge (p. 9, ibid).
Another PNP mobile patrol vehicle that responded to the flash message from SPO2 Buan
was Mobile No. 7 of the Pulongmaragal Detachment which was then conducting patrol along
Don Juico Avenue (pp. 8-9, TSN, March 8, 1993). On board were SPO Ruben Mercado and
SPO3 Tan and SPO2 Odejar (p. 8, ibid). SPO Ruben Mercado immediately told SPO3 Tan to
proceed to the MacArthur Highway to intercept the vehicle with plate number PMA 777 (p.
10, ibid).
In the meantime, Manarang continued to chase the vehicle which figured in the hit and run
incident, even passing through a flooded portion of the MacArthur Highway two (2) feet deep
in front of the Iglesia ni Kristo church but he could not catch up with the same vehicle (pp. 11-
12, February 15, 1993). When he saw that the car he was chasing went towards Magalang,
he proceeded to Abacan bridge because he knew Pulongmaragal was not passable (pp. 12-
14, ibid). When he reached the Abacan bridge, he found Mobile No. 3 and SPO2 Borja and
SPO2 Miranda watching all vehicles coming their way (p. 10, TSN, February 23, 1993). He
approached them and informed them that there was a hit and run incident (p. 10, ibid). Upon
learning that the two police officers already knew about the incident, Manarang went back to
where he came from (pp. 10-11; ibid). When Manarang was in front of Tina's Restaurant, he
saw the vehicle that had figured in the hit and run incident emerging from the corner
adjoining Tina's Restaurant (p. 15, TSN, February 15, 1993). He saw that the license plate
hanging in front of the vehicle bore the identifying number PMA 777 and he followed it (p.
15, ibid) towards the Abacan bridge.
Soon the vehicle was within sight of SPO2 Borja and SPO2 Miranda of Mobile No. 3 (p. 10,
TSN, February 23, 1993). When the vehicle was about twelve (12) meters away from their
position, the two police officers boarded their Mobile car, switched on the engine, operated
the siren and strobe light and drove out to intercept the vehicle (p. 11, ibid). They cut into the
path of the vehicle forcing it to stop (p. 11, ibid).
SPO2 Borja and SPO2 Miranda alighted from Mobile No. 3 (P. 12, TSN, February 23, 1993).
SPO2 Miranda went to the vehicle with plate number PMA 777 and instructed its driver to
alight (p. 12, ibid). The driver rolled down the window and put his head out while raising both
his hands. They recognized the driver as Robin C. Padilla, appellant in this case (p. 13, ibid).
There was no one else with him inside the vehicle (p. 24). At that moment, Borja noticed that
Manarang arrived and stopped his motorcycle behind the vehicle of appellant (p. 14, ibid).
SPO2 Miranda told appellant to alight to which appellant complied. Appellant was wearing a
short leather jacket (p. 16, TSN, March 8, 1993) such that when he alighted with both his
hands raised, a gun (Exhibit "C") tucked on the left side of his waist was revealed (p. 15,
TSN, February 23, 1993), its butt protruding (p. 15, ibid). SPO2 Borja made the move to
confiscate the gun but appellant held the former's hand alleging that the gun was covered by
legal papers (p. 16, ibid). SPO2 Borja, however, insisted that if the gun really was covered by
legal papers, it would have to be shown in the office (p. 16, ibid). After disarming appellant,
SPO2 Borja told him about the hit and run incident which was angrily denied by appellant (p.
17, ibid). By that time, a crowd had formed at the place (p. 19, ibid). SPO2 Borja checked the
cylinder of the gun and find six (6) live bullets inside (p. 20, ibid).
While SPO2 Borja and appellant were arguing, Mobile No. 7 with SPO Ruben Mercado,
SPO3 Tan and SPO2 Odejar on board arrived (pp. 11-12, TSN, March 8, 1993). As the most
senior police officer in the group, SPO Mercado took over the matter and informed appellant
that he was being arrested for the hit and run incident (p. 13, ibid). He pointed out to
appellant the fact that the plate number of his vehicle was dangling and the railing and the
hood were dented (p. 12, ibid). Appellant, however, arrogantlydenied his misdeed and,
instead, played with the crowd by holding their hands with one hand and pointing to SPO3
Borja with his right hand saying "iyan, kinuha ang baril ko" (pp. 13-15, ibid). Because
appellant's jacket was short, his gesture exposed a long magazine of an armalite rifle tucked
in appellant 's back right, pocket (p. 16, ibid). SPO Mercado saw this and so when appellant
turned around as he was talking and proceeding to his vehicle, Mercado confiscated the
magazine from appellant (pp. 16-17, ibid). Suspecting that appellant could also be carrying a
rifle inside the vehicle since he had a magazine, SPO2 Mercado prevented appellant from
going back to his vehicle by opening himself the door of appellant's vehicle (16-17, ibid). He
saw a baby armalite rifle (Exhibit D) lying horizontally at the front by the driver 's seat. It had
a long magazine filled with live bullets in a semi-automatic mode (pp. 17-21, ibid). He asked
appellant for the papers covering the rifle and appellant answered angrily that they were at
his home (pp. 26-27, ibid). SPO Mercado modified the arrest of appellant by including as its
ground illegal possession of firearms (p. 28, ibid). SPO Mercado then read to appellant his
constitutional rights (pp. 28-29, ibid).
The police officers brought appellant to the Traffic Division at Jake Gonzales Boulevard (pp.
31-32, ibid) where appellant voluntarily surrendered a third firearm, a pietro berreta pistol
(Exhibit "L") with a single round in its chamber and a magazine (pp. 33-35, ibid) loaded with
seven (7) other live bullets. Appellant also voluntarily surrendered a black bag containing two
additional long magazines and one short magazine (Exhibits M, N, and O, pp. 36-37, ibid).
After appellant had been interrogated by the Chief of the Traffic Division, he was transferred
to the Police Investigation Division at Sto. Rosario Street beside the City Hall Building where
he and the firearms and ammunitions were turned over to SPO2 Rene Jesus Gregorio (pp.
5-10, TSN, July 13, 1993). During the investigation, appellant admitted possession of the
firearms stating that he used them for shooting (p. 14, ibid). He was not able to produce any
permit to carry or memorandum receipt to cover the three firearms (pp. 16-18, TSN, January
25, 1994).
On November 28, 1992, a certification (Exhibit "F") was issued by Captain, Senior Inspector
Mario Espino, PNP, Chief, Record Branch of the Firearms and Explosives Office (pp. 7-8,
TSN, March 4, 1993). The Certification stated that the three firearms confiscated from
appellant, an M-16 Baby armalite rifle SN-RP 131280, a .357 caliber revolver Smith and
Wesson SN 32919 and a .380 Pietro Beretta SN-A35720, were not registered in the name of
Robin C. Padilla (p. 6, ibid). A second Certification dated December 11, 1992 issued by
Captain Espino stated that the three firearms were not also registered in the name of
Robinhood C. Padilla (p. 10, ibid).
Petitioner's defenses are as follows: (1) that his arrest was illegal and consequently, the
firearms and ammunitions taken in the course thereof are inadmissible in evidence under the
exclusionary rule; (2) that he is a confidential agent authorized, under a Mission Order and
Memorandum Receipt, to carry the subject firearms; and (3) that the penalty for simple illegal
possession constitutes excessive and cruel punishment proscribed by the 1987 Constitution.
After a careful review of the records 27 of this case, the Court is convinced that petitioner's
guilt of the crime charged stands on terra firma, notwithstanding the Solicitor-General's
change of heart.
Anent the first defense, petitioner questions the legality of his arrest. There is no dispute that
no warrant was issued for the arrest of petitioner, but that per se did not make his
apprehension at the Abacan bridge illegal.
Warrantless arrests are sanctioned in the following instances: 28
Sec. 5. Arrest without warrant; when lawful. — A peace officer or a private person may,
without a warrant, arrest a person:
(a) When, in his presence, the person to be arrested has committed, is actually committing,
or is attempting to commit an offense;
(b) When an offense has in fact just been committed, and he has personal knowledge of
facts indicating that the person to be arrested has committed it.
(c) When the person to be arrested is a prisoner who has escaped from a penal
establishment or place where he is serving final judgment or temporarily confined while his
case is pending, or has escaped while being transferred from one confinement to another.
Paragraph (a) requires that the person be arrested (i) after he has committed or while he is
actually committing or is at least attempting to commit an offense, (ii) in the presence of the
arresting officer or private person. 29 Both elements concurred here, as it has been
established that petitioner's vehicle figured in a hit and run — an offense committed in the
"presence" of Manarang, a private person, who then sought to arrest petitioner. It must be
stressed at this point that "presence" does not only require that the arresting person sees the
offense, but also when he "hears the disturbance created thereby AND proceeds at once to
the scene." 30 As testified to by Manarang, he heard the screeching of tires followed by a
thud, saw the sideswiped victim (balut vendor), reported the incident to the police and
thereafter gave chase to the erring Pajero vehicle using his motorcycle in order to apprehend
its driver. After having sent a radio report to the PNP for assistance, Manarang proceeded to
the Abacan bridge where he found responding policemen SPO2 Borja and SPO2 Miranda
already positioned near the bridge who effected the actual arrest of petitioner. 31
Petitioner would nonetheless insist on the illegality of his arrest by arguing that the policemen
who actually arrested him were not at the scene of the hit and run. 32 We beg to disagree.
That Manarang decided to seek the aid of the policemen (who admittedly were nowhere in
the vicinity of the hit and run) in effecting petitioner's arrest, did not in any way affect the
propriety of the apprehension. It was in fact the most prudent action Manarang could have
taken rather than collaring petitioner by himself, inasmuch as policemen are unquestionably
better trained and well-equipped in effecting an arrest of a suspect (like herein petitioner)
who, in all probability, could have put up a degree of resistance which an untrained civilian
may not be able to contain without endangering his own life. Moreover, it is a reality that
curbing lawlessness gains more success when law enforcers function in collaboration with
private citizens. It is precisely through this cooperation, that the offense herein involved
fortunately did not become an additional entry to the long list of unreported and unsolved
crimes.
It is appropriate to state at this juncture that a suspect, like petitioner herein, cannot defeat
the arrest which has been set in motion in a public place for want of a warrant as the police
was confronted by an urgent need to render aid or take action. 33 The exigent circumstances
of — hot pursuit, 34 a fleeing suspect, a moving vehicle, the public place and the raining
nighttime — all created a situation in which speed is essential and delay improvident. 35 The
Court acknowledges police authority to make the forcible stop since they had more than
mere "reasonable and articulable" suspicion that the occupant of the vehicle has been
engaged in criminal activity. 36 Moreover, when caught in flagrante delicto with possession of
an unlicensed firearm (Smith & Wesson) and ammunition (M-16 magazine), petitioner's
warrantless arrest was proper as he was again actually committing another offense (illegal
possession of firearm and ammunitions) and this time in the presence of a peace officer. 37
Besides, the policemen's warrantless arrest of petitioner could likewise be justified under
paragraph (b) as he had in fact just committed an offense. There was no supervening event
or a considerable lapse of time between the hit and run and the actual apprehension.
Moreover, after having stationed themselves at the Abacan bridge in response to Manarang's
report, the policemen saw for themselves the fast approaching Pajero of petitioner, 38 its
dangling plate number (PMA 777 as reported by Manarang), and the dented hood and
railings thereof. 39 These formed part of the arresting police officer's personal knowledge of
the facts indicating that petitioner's Pajero was indeed the vehicle involved in the hit and run
incident. Verily then, the arresting police officers acted upon verified personal knowledge and
not on unreliable hearsay information. 40
Furthermore, in accordance with settled jurisprudence, any objection, defect or irregularity
attending an arrest must be made before the accused enters his plea. 41 Petitioner's belated
challenge thereto aside from his failure to quash the information, his participation in the trial
and by presenting his evidence, placed him in estoppel to assail the legality of his
arrest. 42 Likewise, by applying for bail, petitioner patently waived such irregularities and
defects. 43
We now go to the firearms and ammunitions seized from petitioner without a search warrant,
the admissibility in evidence of which, we uphold.
The five (5) well-settled instances when a warrantless search and seizure of property is
valid, 44 are as follows:
1. warrantless search incidental to a lawful arrest recognized under Section 12, Rule 126 of
the Rules of Court 45 and by prevailing jurisprudence 46,
2. Seizure of evidence in "plain view", the elements of which are: 47
(a). a prior valid intrusion based on the valid warrantless arrest in which the police are legally
present in the pursuit of their official duties;
(b). the evidence was inadvertently discovered by the police who had the right to be where
they are;
(c). the evidence must be immediately apparent, and
(d). "plain view" justified mere seizure of evidence without further search. 48
3. search of a moving vehicle. 49 Highly regulated by the government, the vehicle's inherent
mobility reduces expectation of privacy especially when its transit in public thoroughfares
furnishes a highly reasonable suspicion amounting to probable cause that the occupant
committed a criminal activity. 50
4. consented warrantless search, and
5. customs search.
In conformity with respondent court's observation, it indeed appears that the authorities
stumbled upon petitioner's firearms and ammunitions without even undertaking any active
search which, as it is commonly understood, is a prying into hidden places for that which is
concealed. 51 The seizure of the Smith & Wesson revolver and an M-16 rifle magazine was
justified for they came within "plain view" of the policemen who inadvertently discovered the
revolver and magazine tucked in petitioner's waist and back pocket respectively, when he
raised his hands after alighting from his Pajero. The same justification applies to the
confiscation of the M-16 armalite rifle which was immediately apparent to the policemen as
they took a casual glance at the Pajero and saw said rifle lying horizontally near the driver's
seat. 52 Thus it has been held that:
(W)hen in pursuing an illegal action or in the commission of a criminal offense, the . . . police
officers should happen to discover a criminal offense being committed by any person, they
are not precluded from performing their duties as police officers for the apprehension of the
guilty person and the taking of the, corpus delicti. 53
Objects whose possession are prohibited by law inadvertently found in plain view are subject
to seizure even without a warrant. 54
With respect to the Berreta pistol and a black bag containing assorted magazines, petitioner
voluntarily surrendered them to the police. 55 This latter gesture of petitioner indicated a
waiver of his right against the alleged search and seizure 56, and that his failure to quash the
information estopped him from assailing any purported defect. 57
Even assuming that the firearms and ammunitions were products of an active search done
by the authorities on the person and vehicle of petitioner, their seizure without a search
warrant nonetheless can still be justified under a search incidental to a lawful arrest (first
instance). Once the lawful arrest was effected, the police may undertake a protective
search 58 of the passenger compartment and containers in the vehicle 59 which are within
petitioner's grabbing distance regardless of the nature of the offense. 60 This satisfied the
two-tiered test of an incidental search: (i) the item to be searched (vehicle) was within the
arrestee's custody or area of immediate control 61 and (ii) the search was contemporaneous
with the arrest. 62 The products of that search are admissible evidence not excluded by the
exclusionary rule. Another justification is a search of a moving vehicle (third instance). In
connection therewith, a warrantless search is constitutionally permissible when, as in this
case, the officers conducting the search have reasonable or probable cause to believe,
before the search, that either the motorist is a law-offender (like herein petitioner with respect
to the hit and run) or the contents or cargo of the vehicle are or have been instruments or the
subject matter or the proceeds of some criminal offense. 63
Anent his second defense, petitioner contends that he could not be convicted of violating
P.D. 1866 because he is an appointed civilian agent authorized to possess and carry the
subject firearms and ammunition as evidenced by a Mission Order 64 and Memorandum
Receipt duly issued by PNP Supt. Rodialo Gumtang, the deputy commander of Task Force
Aguila, Lianga, Surigao del Sur. The contention lacks merit.
In crimes involving illegal possession of firearm, two requisites must be established, viz.: (1)
the existence of the subject firearm and, (2) the fact that the accused who owned or
possessed the firearm does not have the corresponding license or permit to possess. 65 The
first element is beyond dispute as the subject firearms and ammunitions 66 were seized from
petitioner's possession via a valid warrantless search, identified and offered in evidence
during trial. As to the second element, the same was convincingly proven by the prosecution.
Indeed, petitioner's purported Mission Order and Memorandum Receipt are inferior in the
face of the more formidable evidence for the prosecution as our meticulous review of the
records reveals that the Mission Order and Memorandum Receipt were mere afterthoughts
contrived and issued under suspicious circumstances. On this score, we lift from respondent
court's incisive observation. Thus:
Appellant's contention is predicated on the assumption that the Memorandum Receipts and
Mission Order were issued before the subject firearms were seized and confiscated from him
by the police officers in Angeles City. That is not so. The evidence adduced indicate that the
Memorandum Receipts and Mission Order were prepared and executed long after appellant
had been apprehended on October 26, 1992.
Appellant, when apprehended, could not show any document as proof of his authority to
possess and carry the subject firearms. During the preliminary investigation of the charge
against him for illegal possession of firearms and ammunitions he could not, despite the
ample time given him, present any proper document showing his authority. If he had, in
actuality, the Memorandum Receipts and Missions Order, he could have produced those
documents easily, if not at the time of apprehension, at least during the preliminary
investigation. But neither appellant nor his counsel inform the prosecutor that appellant is
authorized to possess and carry the subject firearms under Memorandum Receipt and
Mission Order. At the initial presentation of his evidence in court, appellant could have
produced these documents to belie the charged against him. Appellant did not. He did not
even take the witness stand to explain his possession of the subject firearms.
Even in appellant's Demurrer to Evidence filed after the prosecution rested contain no
allegation of a Memorandum Receipts and Mission Order authorizing appellant to possess
and carry the subject firearms.
At the initial presentation of appellant's evidence, the witness cited was one James Neneng
to whom a subpoena was issued. Superintendent Gumtang was not even mentioned. James
Neneng appeared in court but was not presented by the defense. Subsequent hearings were
reset until the defense found Superintendent Gumtang who appeared in court without
subpoena on January 13, 1994. 67
The Court is baffled why petitioner failed to produce and present the Mission Order and
Memorandum Receipt if they were really issued and existing before his apprehension.
Petitioner's alternative excuses that the subject firearms were intended for theatrical
purposes, or that they were owned by the Presidential Security Group, or that his Mission
Order and Memorandum Receipt were left at home, further compound their irregularity. As to
be reasonably expected, an accused claiming innocence, like herein petitioner, would grab
the earliest opportunity to present the Mission Order and Memorandum Receipt in question
and save himself from the long and agonizing public trial and spare him from proffering
inconsistent excuses. In fact, the Mission Order itself, as well as the Letter-Directive of the
AFP Chief of Staff, is explicit in providing that:
VIII. c. When a Mission Order is requested for verification by enforcement units/personnels
such as PNP, Military Brigade and other Military Police Units of AFP, the Mission Order
should be shown without resentment to avoid embarrassment and/or misunderstanding.
IX. d. Implicit to this Mission Order is the injunction that the confidential instruction will be
carried out through all legal means and do not cover an actuation in violation of laws. In the
latter event, this Mission Order is rendered inoperative in respect to such violation. 68
which directive petitioner failed to heed without cogent explanation.
The authenticity and validity of the Mission Order and Memorandum Receipt, moreover, were
ably controverted. Witness for the prosecution Police Supt. Durendes denied under oath his
signature on the dorsal side of the Mission Order and declared further that he did not
authorize anyone to sign in his
behalf. 69 His surname thereon, we note, was glaringly misspelled as
"Durembes." 70 In addition, only Unit Commanders and Chief of Offices have the authority to
issue Mission Orders and Memorandum Receipts under the Guidelines on the Issuance of
MOs, MRs, & PCFORs. 71 PNP Supt. Rodialo Gumtang who issued petitioner's Mission
Order and Memorandum Receipt is neither a Unit Commander nor the Chief of Office, but a
mere deputy commander. Having emanated from an unauthorized source, petitioner's
Mission Order and Memorandum Receipt are infirm and lacking in force and effect. Besides,
the Mission Order covers "Recom 1-12-Baguio City," 72 areas outside Supt. Gumtang's area
of responsibility thereby needing prior approval "by next higher Headquarters" 73 which is
absent in this case. The Memorandum Receipt is also unsupported by a certification as
required by the March 5, 1988 Memorandum of the Secretary of Defense which pertinently
provides that:
No memorandum receipt shall be issued for a CCS firearms without corresponding
certification from the corresponding Responsible Supply Officer of the appropriate AFP unit
that such firearm has been officially taken up in that units property book, and that report of
such action has been reported to higher AFP authority.
Had petitioner's Memorandum Receipt been authentic, we see no reason why he cannot
present the corresponding certification as well.
What is even more peculiar is that petitioner's name, as certified to by the Director for
Personnel of the PNP, does not even appear in the Plantilla of Non-Uniform Personnel or in
the list of Civilian Agents or Employees of the PNP which could justify the issuance of a
Mission Order, a fact admitted by petitioner's counsel. 74 The implementing rules of P.D. 1866
issued by the then PC-INP Chief and Director-General Lt. Gen. Fidel V. Ramos are clear and
unambiguous, thus:
No Mission Order shall be issued to any civilian agent authorizing the same to carry firearms
outside residence unless he/she is included in the regular plantilla of the government agency
involved in law enforcement and is receiving regular compensation for the services he/she is
rendering in the agency. Further, the civilian agent must be included in a specific law
enforcement/police/intelligence project proposal or special project which specifically required
the use of firearms(s) to insure its accomplishment and that the project is duly approved at
the PC Regional Command level or its equivalent level in other major services of the AFP,
INP and NBI, or at higher levels of command. 75Circular No. 1, dated January 6, 1986, of the
then Ministry of Justice likewise provides as follows:
If mission orders are issued to civilians (not members of the uniformed service), they must be
civilian agents included in the regular plantilla of the government agency involved in law
enforcement and are receiving regular compensation for the service they are rendering.
That petitioner's Mission Order and Memorandum Receipt were fabricated pieces of
evidence is accentuated all the more by the testimony and certification of the Chief of the
Records Branch of the firearms and Explosives Office of the PNP declaring that petitioner's
confiscated firearms are not licensed or registered in the name of the petitioner. 76 Thus:
Q. In all these files that you have just mentioned Mr. Witness, what did you find, if any?
A. I found that a certain Robin C. Padilla is a licensed registered owner of one 9 mm pistol,
Smith and Wesson with Serial No. TCT 8214 and the following firearms being asked whether
it is registered or not, I did not find any records, the M-16 and the caliber .357 and the caliber
.380 but there is a firearm with the same serial number which is the same as that licensed
and/or registered in the name of one Albert Villanueva Fallorina.
Q. So in short, the only licensed firearms in the name of accused Robin C. Padilla is a pistol,
Smith and Wesson, caliber 9 mm with Serial No. TCT 8214?
A. Yes, sir.
Q. And the firearms that were the subject of this case are not listed in the names of the
accused in this case?
A. Yes, sir. 77
x x x           x x x          x x x
And the certification which provides as follows:
Republic of the Philippines
Department of the Interior and Local Government
GENERAL HEADQUARTERS PHILIPPINE NATIONAL POLICE
FIREARMS AND EXPLOSIVES OFFICE
Camp Crame, Quezon City
PNFEO5 28 November 1992
CERTIFICATION
TO WHOM IT MAY CONCERN:
THIS IS TO CERTIFY that Robin C. Padilla of 59 Labo St., Quezon City is a
licensed/registered holder of Pistol Smith and Wesson Cal 9mm with serial number TCT8214
covered by License No. RL M76C4476687.
Further certify that the following firearms are not registered with this Office per verification
from available records on file this Office as of this date:
M16 Baby Armalite SN-RP131120
Revolver Cal 357 SN-3219
Pistol Cal 380 Pietro Beretta SN-35723
However, we have on file one Pistol Cal 380, Beretta with serial number 35723Y,
licensed/registered to one Albert Villanueva Fallorina of 29 San Juan St., Capitol Pasig, MM
under Re-Registered License.
This certification is issued pursuant to Subpoena from City of Angeles.
FOR THE CHIEF, FEO:
(Sgd.)
JOSE MARIO M. ESPINO
Sr. Inspector, PNP
Chief, Records Branch 78
In several occasions, the Court has ruled that either the testimony of a representative of, or a
certification from, the PNP Firearms and Explosives Office (FEO) attesting that a person is
not a licensee of any firearm would suffice to prove beyond reasonable doubt the second
element of illegal possession of firearm. 79 In People vs. Tobias, 80 we reiterated that such
certification is sufficient to show that a person has in fact no license. From the foregoing
discussion, the fact that petitioner does not have the license or permit to possess was
overwhelmingly proven by the prosecution. The certification may even be dispensed with in
the light of the evidences 81 that an M-16 rifle and any short firearm higher than a .38 caliber
pistol, akin to the confiscated firearms, cannot be licensed to a civilian, 82 as in the case of
petitioner. The Court, therefore, entertains no doubt in affirming petitioner's conviction
especially as we find no plausible reason, and none was presented, to depart from the
factual findings of both the trial court and respondent court which, as a rule, are accorded by
the Court with respect and finality. 83
Anent his third defense, petitioner faults respondent court "in applying P.D. 1866 in a
democratic ambience (sic) and a non-subversive context" and adds that respondent court
should have applied instead the previous laws on illegal possession of firearms since the
reason for the penalty imposed under P.D. 1866 no longer exists. 84 He stresses that the
penalty of 17 years and 4 months to 21 years for simple illegal possession of firearm is cruel
and excessive in contravention of the Constitution. 85
The contentions do not merit serious consideration. The trial court and the respondent court
are bound to apply the governing law at the time of appellant's commission of the offense for
it is a rule that laws are repealed only by subsequent ones. 86 Indeed, it is the duty of judicial
officers to respect and apply the law as it stands. 87 And until its repeal, respondent court can
not be faulted for applying P.D. 1866 which abrogated the previous statutes adverted to by
petitioner.
Equally lacking in merit is appellant's allegation that the penalty for simple illegal possession
is unconstitutional. The penalty for simple possession of firearm, it should be stressed,
ranges from reclusion temporal maximum to reclusion perpetua contrary to appellant's
erroneous averment. The severity of a penalty does not ipso facto make the same cruel and
excessive.
It takes more than merely being harsh, excessive, out of proportion, or severe for a penalty to
be obnoxious to the Constitution. "The fact that the punishment authorized by the statute is
severe does not make it cruel and unusual." (24 C.J.S., 1187-1188). Expressed in other
terms, it has been held that to come under the ban, the punishment must be "flagrantly and
plainly oppressive", "wholly disproportionate to the nature of the offense as to shock the
moral sense of the community" 88
It is well-settled that as far as the constitutional prohibition goes, it is not so much the extent
as the nature of the punishment that determines whether it is, or is not, cruel and unusual
and that sentences of imprisonment, though perceived to be harsh, are not cruel or unusual
if within statutory limits. 89
Moreover, every law has in its favor the presumption of constitutionality. The burden of
proving the invalidity of the statute in question lies with the appellant which burden, we note,
was not convincingly discharged. To justify nullification of the law, there must be a clear and
unequivocal breach of the Constitution, not a doubtful and argumentative implication, 90 as in
this case. In fact, the constitutionality of P.D. 1866 has been upheld twice by this
Court. 91 Just recently, the Court declared that "the pertinent laws on illegal possession of
firearms [are not] contrary to any provision of the Constitution. . . " 92 Appellant's grievances
on the wisdom of the prescribed penalty should not be addressed to us. Courts are not
concerned with the wisdom, efficacy or morality of laws. That question falls exclusively within
the province of Congress which enacts them and the Chief Executive who approves or
vetoes them. The only function of the courts, we reiterate, is to interpret and apply the laws.
With respect to the penalty imposed by the trial court as affirmed by respondent court (17
years 4 months and 1 day of reclusion temporal, as minimum, to 21 years of reclusion
perpetua, as maximum), we reduce the same in line with the fairly recent case of People
v. Lian 93 where the Court en banc provided that the indeterminate penalty imposable for
simple illegal possession of firearm, without any mitigating or aggravating circumstance,
should be within the range of ten (10) years and one (1) day to twelve years (12) of prision
mayor, as minimum, to eighteen (18) years, eight (8) months and one (1) day to twenty (20)
of reclusion temporal, as maximum. This is discernible from the following explanation by the
Court:
In the case at bar, no mitigating or aggravating circumstances have been alleged or proved,
In accordance with the doctrine regarding special laws explained in People
v. Simon, 94 although Presidential Decree No. 1866 is a special law, the penalties therein
were taken from the Revised Penal Code, hence the rules in said Code for graduating by
degrees or determining the proper period should be applied. Consequently, the penalty for
the offense of simple illegal possession of firearm is the medium period of the complex
penalty in said Section 1, that is, 18 years, 8 months and 1 day to 20 years.
This penalty, being that which is to be actually imposed in accordance with the rules therefor
and not merely imposable as a general prescription under the law, shall be the maximum of
the range of the indeterminate sentence. The minimum thereof shall be taken, as aforesaid,
from any period of the penalty next lower in degree, which is, prision mayor in its maximum
period to reclusion temporal in its medium
period. 95
WHEREFORE, premises considered, the decision of the Court of Appeals sustaining
petitioner's conviction by the lower court of the crime of simple illegal possession of firearms
and ammunitions is AFFIRMED EXCEPT that petitioner's indeterminate penalty is
MODIFIED to "ten (10) years and one (1) day, as minimum, to eighteen (18) years, eight (8)
months and one (1) day, as maximum.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo and Panganiban, JJ., concur.
Footnotes
1 Investigation Report dated October 26, 19922 of SPO1 Rene Jesus T. Gregorio of the
Angeles City, Philippine National Police (PNP), (RTC Records, Vol. 1, p. 9).
2 CODIFYING THE LAWS ON ILLEGAL/UNLAWFUL POSSESSION, MANUFACTURE,
DEALING IN, ACQUISITION OR DISPOSITION, OF FIREARMS, AMMUNITION OR
EXPLOSIVES OR INSTRUMENTS USED IN THE MANUFACTURE OF FIREARMS,
AMMUNITIONS OR EXPLOSIVES; AND IMPOSING STIFFER PENALTIES FOR CERTAIN
VIOLATIONS THEREOF AND FOR RELEVANT PURPOSES.
3 The Information was filed by Special Counsel Irin Zenaida S. Buan and was docketed as
Criminal Case No. 92-1083 of Branch 61 of the Angeles City R.T.C. presided by Judge David
R. Rosete.
4 RTC Records, Vol. I, p. 1.
5 The warrant of arrest dated December 8, 1992 was issued by Judge Rosete. Later, an
order recalling all warrant of arrest against petitioner was issued by Judge Maximiano
Asuncion of RTC Quezon City. (RTC Records, Vol. I, p. 34).
6 Petitioner posted a personal bail bond of P200,000.00 furnished by FGU Insurance
Corporation (RTC Records, Vol. I, p. 37).
7 Rule 116, Section 1(c) "If the accused refuses to plead, or makes a conditional plea of
guilty, a plea of not guilty shall be entered for him."
8 Petitioner was assisted by his then lead counsel Dean Antonio Coronel (appearance
withdrawn April, 1993 to serve his suspension by the Supreme Court, RTC Records, Vol. I, p.
260) and Atty. Philip Jurado. The prosecution was represented by Angeles City Prosecutor
Antonio G.P. Fausto and his Assistant, Rufino Antonio.
9 Order dated January 20, 1993, RTC Records, Vol. I, pp. 59 and 75.
10 RTC Records, Vol. I, p. 57.
11 RTC Decision, p. 6; Rollo, p. 48.
12 RTC Records, vol. II, p. 828.
13 The appeal was docketed as CA-G.R. No. CR-16040. Atty. Jurado withdrew his
appearance as petitioner's counsel on October, 1994 when the appeal was pending before
the CA. His signature, however still appeared on some pleadings for petitioner (CA Rollo, p.
429). Rene A.V. Saguisag and Associates entered their appearance as new counsel
(CA Rollo, p. 58). Appellant's brief, however, was also signed by his brother Robert A. Padilla
and Gina C. Garcia (CA Rollo, p. 146).
14 The 23-page CA (Special Tenth Division) decision promulgated on July 21, 1995 was
penned by Justice Antonio P. Solano with Justices Ricardo P. Galvez and Conchita Carpio-
Morales, concurring. (Rollo, pp. 50-72).
15 CA Decision, p. 23; Rollo, p. 50.
16 Registry Return Receipt, attached to p. 343 of the CA Rollo.
17 Registry Receipt stamped August 9, 1995. See CA Rollo, pp. 403-430.
18 CA Rollo, pp. 463-464.
19 The petition was signed by the Raval Suplico and Lokin Law Office.
20 One supplemental petition was filed on October 9, 1995 signed by Padilla, Jurado and
Saguisag. The other supplemental petition was filed on October 11, 1995 and signed by the
Raval Suplico and Lokin Office.
21 Signed by Padilla, Jurado and Saguisag.
22 Solicitor-General's Comment on the application for bail.
23 Padilla vs. CA and People, (Resolution), G.R. No. 121917, July 31, 1996.
24 Rollo, pp. 258, 282.
25 Rollo, pp. 312-339.
26 Counterstatement of Facts, Appellee's Brief filed with the CA by the Solicitor-General
(CA Rollo, pp. 230-240).
27 Consisting of about 4,000 pages.
28 Section 5, Rule 113 of the Revised Rules of Criminal Procedure.
29 People v. Cuizon, G.R. No. 109287, April 18, 1996.
30 US v. Samonte, 16 Phil. 516, 519, citing 3 Cyc., 886; Ramsey v. State, 17 S.E., 613;
Dilger v. Com., 11 S. W., 651; State v. McAfee, 12 S. E., 435; State v. Williams, 15 S.E., 554;
and Hawkins v. Lutton, 70 N. W., 483.
31 TSN, February 13, 1993, Enrique Manarang, pp. 5-11.
32 This hit and run incident was the subject of a different complaint against petitioner.
33 United States v. Gordils, 982 F2d 64, 69 (1992).
34 See People v. de Lara, 55 SCAD 190, 196, 236 SCRA 291, 297 (1994).
35 United States v. Lopez, 989 F2d 24, 26 (1993); United Stares v. Ross, 456 U.S. 798, 806-
7 (1982); Warden v. Hayden, 387 U. S. 294, 298-9 (1967).
36 United States v. King, 990 F2d 1552, 1557 (1993); United States v. Place, 462 U.S. 696,
702 (1983); Reid v. Georgia, 448 U.S. 438, 440 (1980).
37 See People v. Fernandez, 57 SCAD 481 (1994); Higbee v. City of SanDiego, 911 F2d
377, 379 (1990).
38 Eighty km/hr or higher. (TSN, Ibid, p. 3).
39 Exh. "B" and its sub-markings — Picture of the vehicle driven by petitioner which showed
the dangling plate number and the damaged hood and railings.
40 See People v. Woolcock, 314 Phil. 81 (1995).
41 People v. Rivera, 315 Phil. 454; People v. de Guzman, 231 SCRA 737; People v. De
Guia, 227 SCRA 614; People v. Codilla, 224 SCRA 104 (1993); People v. de Guzman, 224
SCRA 93 (1993); People v. Rabang, 187 SCRA 682 (1990);
42 People v. Lopez, 315 Phil. 59 citing De Asis v. Romero, 41 SCRA 235 (1971); See
also People v. Nitcha, 310 Phil. 287 (1995) citing People vs. Hubilo, 220 SCRA 389 (1993);
People v. Samson, 244 SCRA 146; Sacarias v. Cruz, 141 Phil. 417 (1969), citing (US v.
Grant, 18 Phil 122, 147; Doce v. Branch II of the CFI of Quezon, 22 SCRA 1028,
1031, citing Carington v. Peterson, 4 Phil. 134 and US v. Grant, supra.
43 In Re Letter of Freddie Manuel, 54 SCAD 97, 99, 235 SCRA 5 (1994); People v. Dural, 42
SCAD 213, 223 SCRA 201 (1993); Palanca v. Querubin. 141 Phil. 432 (1969).
44 Mustang Lumber, Inc. v. CA, et. al., G.R. No. 104988, June 18, 1996. The fifth being
customs search.
45 Search incident to lawful arrest. — A person lawfully arrested may be searched for
dangerous weapons or anything which may be used as proof of the commission of an
offense, without a search warrant.
46 People v. Salazar, G.R. No. 98060, January 27, 1997; People v. Figueroa, 248 SCRA 679
(1995); People v. Gerente, 219 SCRA 756; People v. Malmstedt, 198 SCRA 401; People v.
Sucro, 195 SCRA 388; People v. Tangliben, 184 SCRA 220; People v. Lo Ho Wing, 193
SCRA 122; People v. Paco, 170 SCRA 681; Manipon v. Sandiganbayan, 143 SCRA 267.
47 Mapp v. Warden, 531 F2d 1167; United States v. Griffin, 530 F2d 739; United States v.
Hilstrom, 533 F2d 209, 429 U.S. 982, 97 S Ct 498, U.S v. Pacelli, 470 F2d 67, 415 U.S. 983,
93 S Ct 1501; Coolidge v. New Hampshire, 403 U.S. 443, 91 S Ct 2022; Ker v. California,
374 U.S 443, 465, 91 S Ct 2022, 2037-38;.
48 Harris v. US, 390 US 234; People v. Evaristo 216 SCRA 431.
49 People v. Balingan, 241 SCRA 277 (1995); People v. Fernandez, supra, citing People v.
CFI of Rizal, 101 SCRA 86 (1980); People v. Lo Ho Wing, 193 SCRA 122; Roldan v. Arca,
65 SCRA 336.
50 United v. Rem, 984 F2d 806, 812 (1993); United States v. Diaz-Lizaraza, supra, at p.
1220; United States v. McCoy, 977 F2d 706, 710 (1992); United States v. Rusher, 966 F2d
868, 874 (1992); United States v. Parker, 928 F2d 365-69 (1991).
51 Black's Law Dictionary, Revised Fourth Edition, citing People v. Exum, 382 III, 204, 47
N.E. 2d 56, 59.
52 TSN, SPO Mercado, July 1, 1993, p. 5.
53 Concurring opinion of Justice Perfecto in Magoncia v. Palacio, 80 Phil. 770, 776 cited in
People v. Cruz, ibid, at 141 and People v. Acol, ibid.
54 People v. Evaristo, supra.
55 TSN, March 8, 1993, SPO Ruben Mercado, pp. 32-35.
56 In People v. Doro, 223 SCRA 19 the Court said that the accused therein waived his right
against the warrantless search when he voluntarily opened the package containing illegal
drugs. See also People v. Kagui Malasugui, 63 Phil. 221.
57 People v. Compil, 244 SCRA 135 (1944).
58 United States v. Saffeels, 982 F2d 1199, 1206 (1992); Michigan v. Long, 463 U.S. 1032,
1034-5 (1983).
59 United States v. Diaz-Lizaraza, 981 F2d 1216, 1222 (1993); United States v. Franco, 981
F2d 470, 473 (1992); New York V. Belton, 453 U.S. 454, 460-1 (1981).
60 United States v. $639,558.00 in United States Currency, 955 F2d 712, 715-16 (1992);
United States v. Holifield, 956 F2d 665, 669 (1992); United States v. Arango, 879 F2d 1501,
1505 (1989).
61 United States v. Tarazon, 989 F2d 1045, 1051 (1993).
62 Shipley v. California, 395 U.S. 818, 819 (1969).
63 People v. Barros, 231 SCRA 557, 566.
64 Exhibit "I" — Alleged Mission Order of Petitioner contains the following:
Republic of the Philippines
Department of Interior and Local Government
Headquarters Philippine National Police
Lianga, Surigao, del Sur
29 Sept. 1992
Mission Order
Number 29-9-92-B
To: PSUPT GREGORIO DUREMBES
SO ROBIN C. PADILLA
-P O S T-
I. PROCEED TO: Camp Crame, NCR, Recom 1-12-Baguio City
II. PURPOSE: To intensify Int'l coverage and to negotiate the imdte. surrender of Father
Frank Navarro (rebel priest), believed attending conference in Baguio City. (CPP/NPA)
III. DURATION: FROM: 29 Sept to 31 Oct 1992
IV. AUTHORIZE TO WEAR THE FOLLOWING UNIFORM/ATTIRE:
(x) KHAKI ( ) HBT (X) CIVILIAN
V. AUTHORIZED TO CARRY THE FOLLOWING FIREARMS:
LIC OR MR MAKE KIND CAL SER NO AMMO
LIC or MR issued Firearms & Ammos
Nothing Follows
RECOMMENDED BY: APPROVED BY:
Sgd. RODIALO A. GUMTANG
SUPT (CSP) PNP
Deputy & S-4
65 People vs. Solayao, G.R. No. 119220, September 20, 1996; People vs. Lualhati, 234
SCRA 325 (1994); People vs. Damaso, 212 SCRA 547 (1992).
66 Exh. "C" — 357 Smith and Wesson with bullets; Exh. "D" — M-16 armalite with magazine;
Exh. "K" — M-16 magazine; Exh. "L" — Pietro Berreta; Exh. "N" — 2 long magazines; Exh.
"O" — 1 short magazine.
67 Decision of the Court of Appeals, pp. 18-19; Rollo pp. 67-68.
68 Exhibit "1"; Exhibit "Y".
69 TSN, Supt. Gregorio Durendes, February 10, 1994, p. 11.
70 Exhibit "I" for the Defense; Exhibit "U" (Rebuttal) for the Prosecution.
71 Issued by PNP Director-General Cesar Nazareno, March 21, 1991. Its pertinent provision
states as follows:
3.a. Only Unit Commanders/Chiefs of Offices are authorized to issue Mission Orders to their
respective personnel while in the official performance of duties. Such Mos shall be valid only
within the area of responsibility (AOR) of the Unit Commander/Chief of Office concerned.
c. MOs of PNP personnel performing mission outside AOR must be approved by next higher
Headquarters.
72 Exhibit "I" 
73 See Note 71, supra.
74 Ethel Ignacio, Chief of the Non-Uniform Personnel Section of the PNP, testified that
petitioner's name is not in the Plantilla of Personnel. Counsel for petitioner admitted that the
latter is "not in the plantilla." (Rollo, p. 357; CA Decision, p. 14; TSN, Ethel Ignacio, July 25,
1994, pp. 4-6).
75 April 28, 1984 Amendments to the Rules and Regulations Implementing P.D. 1866 issued
by the PC-INP Chief and Director-General.
76 Sr. Inspector Jose Mario Espino, of the PNP Headquarters in Camp Crame, Quezon City
issued the certification dated November 28, 1992 and December 11, 1992. (Exhibits "F'' and
"G"; TSN March 4, 1993, Jose Mario Espino, pp. 7, 9, 14-17).
77 TSN, Sr. Inspector Jose Mario Espino, March 4, 1993, p. 14
78 Exhibit "F". In Exhibit "G", petitioner's alias, "Robinhood C. Padilla," was checked and
yielded the same information found in Exhibit "F" quoted above.
79 Mallari vs. CA and People of the Philippines, G.R. No. 110569, December 9,
1996 citing People vs. Solayao, G.R. No. 119220, September 20, 1996. Such and similar
certifications were declared adequate by the Court in Rosales vs. CA, 255 SCRA 123 (1996),
People vs. Orehuela, 232 SCRA 82, 97 (1994).
80 G.R. No. 114185, January 30, 1997.
81 People vs. Mesal, 313 Phil. 888.
82 TSN, Jose Mario Espino, March 4, 1993, p. 20.
83 People vs. Cahindo, G.R. No. 121178, January 27, 1997; People vs. Bracamonte, G.R.
No. 95939, June 17, 1996; People vs. Angeles, 315 Phil. 23; People vs. Remoto, 314 Phil.
432.
84 Supplemental petition, pp. 1-3; Rollo, pp. 84-86.
85 Article III, Section 19(1), 1987 Constitution.
86 Article 7, Civil Code.
87 See: People v. Limaco, 88 Phil. 36; People v. Venaracion, 249 SCRA 244.
88 People v. Estoista, 93 Phil. 647.
89 Baylosis v. Chavez, Jr., 202 SCRA 405, 417.
90 Peralta v. COMELEC, 82 SCRA 30, 55.
91 Misolas v. Panga, 181 SCRA 648; Baylosis v. Chavez, Jr. 202 SCRA 405.
92 People v. Morato, 224 SCRA 361, 367-368.
93 255 SCRA 532 (1996).
94 234 SCRA 555.
95 People v. Jian, 255 SCRA 532, 542.
G.R. No. 210148               December 8, 2014
ANTONIO L. DALURAYA, Petitioner, 
vs.
MARLA OLIVA, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated June 28, 2013 and
the Resolution3 dated November 22, 2013 rendered by the Court of Appeals (CA) in CA-G.R.
SP No. 125113 finding petitioner Antonio L. Daluraya (Daluraya) civilly liable for the death of
Marina Arabit Oliva (Marina Oliva) despite having been acquitted for Reckless Imprudence
Resulting in Homicide on the ground of insufficiency of evidence.
The Facts
On January 4, 2006, Daluraya was charged in an Information4 for Reckless Imprudence
Resulting in Homicide in connection with the death5 of Marina Oliva. Records reveal that
sometime in the afternoon of January 3, 2006, Marina Oliva was crossing the street when a
Nissan Vanette, bearing plate number UPN-172 and traversing EDSA near the Quezon
Avenue flyover in Quezon City, ran her over.6 While Marina Oliva was rushed to the hospital
to receive medical attention,she eventually died, prompting her daughter, herein respondent
Marla Oliva (Marla), to file a criminal case for Reckless Imprudence Resulting in Homicide
against Daluraya, the purported driver of the vehicle.7
During the proceedings, the prosecution presented as witness Shem Serrano (Serrano), an
eye-witness to the incident, who testified that on said date, he saw a woman crossing EDSA
heading towards the island near the flyover and that the latter was bumped by a Nissan
Vanette bearing plate number UPN-172. The prosecution also offered the testimonies of (a)
Marla, who testified as to the civil damages sustained by her family as a result of her
mother’s death; (b) Dr. Paul Ortiz (Dr. Ortiz), who presented his findings on the autopsy
conducted upon the body of Marina Oliva; and (c) Police Senior Inspector Lauro Gomez (PSI
Gomez), who conducted the investigation following the incident and claimed that Marina
Oliva was hit by the vehicle being driven by Daluraya, albeit he did not witness the incident.8
After the prosecution rested its case, Daluraya filed an Urgent Motion to Dismiss
(demurrer)9 asserting, inter alia, that he was not positively identified by any of the prosecution
witnesses as the driver of the vehicle that hit the victim, and that there was no clear and
competent evidence of how the incident transpired.10
The MeTC Ruling
In an Order11 dated May 24, 2010, the Metropolitan Trial Court of Quezon City, Branch 38
(MeTC) granted Daluraya’s demurrer and dismissed the case for insufficiency of evidence. It
found that the testimonies of the prosecution witnesses were wanting in material details and
that they failed to sufficiently establish that Daluraya committed the crime imputed upon
him.12 Deconstructing the testimonies of the prosecution witnesses individually, the MeTC
found that: (a) Marla merely testified on the damages sustained by her family but she failed
to identify Daluraya as the driver of the vehicle that hit her mother; (b) Serrano also did not
identify
Daluraya as the driver of the said vehicle; (c) Dr. Ortiz merely testified on the autopsy results;
and (d) PSI Gomez, while he did investigate the incident, likewise declared thathe did not
witness the same.13
Marla moved for reconsideration,14 which the MeTC denied in an Order15 dated November 4,
2010, clarifying that the grant of Daluraya’s demurrer had the effect of an acquittal and that
reconsideration of its Order granting Daluraya’s demurrer would violate the latter’s right
against double jeopardy.16 With respect to the civil aspect of the case, the MeTC likewise
denied the same, holding that no civil liability can be awarded absent any evidence proving
that Daluraya was the person responsible for Marina Oliva’s demise.17
Aggrieved, Marla appealed18 to the Regional Trial Court of Quezon City, Branch 76 (RTC),
insisting that the MeTC failed to make any finding as to the civil liability of Daluraya,19 which
finding was not precluded by the dismissal of the criminal aspect of the case.
The RTC Ruling
In a Decision20 dated September 8, 2011, the RTC dismissed the appeal and affirmed the
MeTC’s ruling,declaring that "the act from which the criminal responsibility may spring did not
at all exist."21
Marla filed a motion for reconsideration22 which, although filed beyond the reglementary
period, was nonetheless accepted. However, the RTC found the same without merit and
thus, sustained the factual findings and rulings of the MeTC in its Order23 dated May 10,
2012. Dissatisfied, Marla elevated the case to the CA via petition for review, maintaining that
Daluraya must be held civilly liable.
The CA Ruling
In a Decision24 dated June 28, 2013, the CA granted the petition and reversed the RTC
Decision, ordering Daluraya to pay Marla the amounts of ₱152,547.00 as actual damages,
₱50,000.00 as civil indemnity, and ₱50,000.00 as moral damages.25 In so ruling, the CA held
that the MeTC’s Order showed that Daluraya’s acquittal was based on the fact that the
prosecution failed to prove his guilt beyond reasonable doubt. As such, Daluraya was not
exonerated from civil liability.26
Moreover, the CA considered the following pieces of evidence to support its finding that
Daluraya must be held civilly liable: (a) the inadmissible sworn statement executed by
Daluraya where he admitted that he drove the subject vehicle which hit Marina Oliva; (b) the
conclusion derived from Serrano’s testimony that the woman he saw crossing the street who
was hit by a Nissan Vanette with plate number UPN-172, and the victim who eventually died,
are one and the same; (c) the Philippine National Police Referral Letter of one Police Chief
Inspector Virgilio Pereda identifying Daluraya as the suspectin the case of Reckless
Imprudence Resulting in Homicide involving the death of Marina Oliva, and stating that he
brought the victim to the Quezon City General Hospital for treatment but was declared dead
on arrival; and (d) the subject vehicle was registered in the name of Daluraya’s aunt, Gloria
Zilmar,27who authorized him to claim the vehicle from the MeTC.28
Daluraya filed a motion for reconsideration,29 which the CA denied in a Resolution30 dated
November 22, 2013,hence, this petition.
The Issue Before the Court
The sole issue advanced for the Court’s resolution is whether or not the CA was correct in
finding Daluraya civilly liable for Marina Oliva’s death despite his acquittal in the criminal
case for Reckless Imprudence Resulting in Homicide on the ground of insufficiency of
evidence.
The Court’s Ruling
The petition is meritorious.
Every person criminally liable for a felony is also civilly liable. The acquittal of an accused of
the crime charged, however, does not necessarily extinguish his civil liability.31 In Manantan
v. CA,32 the Court expounded on the two kinds of acquittal recognized by our law and their
concomitant effects on the civil liability of the accused, as follows:
Our law recognizes two kinds of acquittal, with different effects on the civil liability of the
accused. First is an acquittal on the ground that the accused is not the author of the actor
omission complained of. This instance closes the door to civil liability, for a person who has
been found to be not the perpetrator of any act or omission cannot and can never be held
liable for such act or omission. There being no delict, civil liability ex delictois out of the
question, and the civil action, if any, which may be instituted must be based on grounds other
than the delict complained of. This is the situation contemplated inRule 111 of the Rules of
Court. The second instance is an acquittal based on reasonable doubt on the guilt of the
accused. In this case, even if the guilt of the accused has not been satisfactorily established,
he is not exempt from civil liability which may be proved by preponderance of evidence
only.33
In Dayap v. Sendiong,34 the Court explained further:
The acquittal of the accused does not automatically preclude a judgment against him on the
civil aspect of the case.1âwphi1The extinction of the penal action does not carry with it the
extinction of the civil liability where: (a) the acquittal is based on reasonable doubt as only
preponderance of evidence is required; (b) the court declares that the liability of the accused
is only civil; and (c) the civil liability of the accused does not arise from or is not based upon
the crime of which the accused is acquitted. However, the civil action based on delictmay be
deemed extinguished if there is a finding on the final judgment in the criminal action that the
act or omission from which the civil liability may arise did not exist or where the accused did
not commit the acts or omission imputed to him.
Thus, if demurrer is granted and the accused is acquitted by the court, the accused has the
right to adduce evidence on the civil aspect of the case unless the court also declares that
the act or omission from which the civil liability may arise did not exist. This is because when
the accused files a demurrer to evidence, he has not yet adduced evidence both on the
criminal and civil aspects of the case. The only evidence on record is the evidence for the
prosecution. What the trial court should do is issue an order or partial judgment granting the
demurrer to evidence and acquitting the accused, and set the case for continuation of trial for
the accused to adduce evidence on the civil aspect of the case and for the private
complainant to adduce evidence by way of rebuttal. Thereafter, the court shall render
judgment on the civil aspect of the case.35
(Emphases supplied)
In case of an acquittal, the Rules of Court requires that the judgment state "whether the
evidence of the prosecution absolutely failed to prove the guilt of the accused or merely
failed to prove his guilt beyond reasonable doubt. In either case, the judgment shall
determine if the act or omission from which the civil liability might arise did not exist."36
A punctilious examination of the MeTC’s Order, which the RTC sustained, will show that
Daluraya’s acquittal was based on the conclusion that the act or omission from which the civil
liability may arise did not exist, given that the prosecution was not able to establish that he
was the author of the crime imputed against him. Such conclusion is clear and categorical
when the MeTC declared that "the testimonies of the prosecution witnesses are wanting in
material details and they did not sufficiently establish that the accused precisely committed
the crime charged against him."37 Furthermore, when Marla sought reconsideration of the
MeTC’s Order acquitting Daluraya, said court reiterated and firmly clarified that "the
prosecution was not able to establish that the accused was the driver of the Nissan Vanette
which bumped Marina Oliva"38 and that "there is no competent evidence on hand which
proves that the accused was the person responsible for the death of Marina Oliva."39
Clearly, therefore, the CA erred in construing the findings of the MeTC, as affirmed by the
RTC, that Daluraya’s acquittal was anchored on reasonable doubt, which would necessarily
call for a remand of the case to the court a quo for the reception of Daluraya’s evidence on
the civil aspect.1âwphi1 Records disclose that Daluraya’s acquittal was based on the fact
that "the act or omission from which the civil liability may arise did not exist" in view of the
failure of the prosecution to sufficiently establish that he was the author of the crime ascribed
against him. Consequently, his civil liability should be deemed as non-existent by the nature
of such acquittal.
WHEREFORE, the petition is GRANTED. The Decision dated June 28, 2013 and the
Resolution dated November 22, 2013 of the Court of Appeals in CA-G.R. SP No. 125113 are
hereby REVERSED and SET ASIDE. The Decision dated September 8,2011 and the Order
dated May 10, 2012 of the Regional Trial Court of Quezon City, Branch 76 are
REINSTATED.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
WE CONCUR:
MARIA LOURDES P.A. SERENO
Chief Justice
Chairperson
ANTONIO T. CARPIO* TERESITA J. LEONARDO-DE CASTRO
Associate Justice Associate Justice
BIENVENIDO L. REYES**
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the
above Decision had been reached in consultation before the case was assigned to the writer
of the opinion of the Court's Division.
MARIA LOURDES P.A. SERENO
Chief Justice

Footnotes
* Designated Acting Member per Special Order No. 1899 dated December 3, 2014.
** Designated Acting Member per Special Order No. 1892 dated November 28, 2014.
1
 Rollo, pp. 10-20.
2
 Id. at 203-208. Penned by Associate Justice Jose C. Reyes, Jr. with Associate Justices
Mario V. Lopez and Socorro B. Inting, concurring.
3
 Id. at 217.
4
 Id. at 48.
5
 See Certificate of Death; id. at 59.
6
 Id. at 203.
7
 Id. at 25.
8
 Id. at 26.
9
 Not attached to the records of this case. See id. at 12.
10
 Id. at 12-13.
11
 Id. at 145-147. Penned by Judge Nadine Jessica Corazon J. Fama.
12
 Id. at 147.
13
 Id. at 146.
14
 Not attached to the records of this case.
15
 Rollo, pp. 148-150.
16
 Id. at 148.
17
 Id. at 149.
18
 See Appellant’s Memorandum dated April 18, 2011; id. at 151-169.
19
 Id. at 159-161.
20
 Id. at 45-46. Penned by Presiding Judge Alexander S. Balut.
21
 Id. at 46.
22
 Dated October 21, 2011. (Id. at 175-184.)
23
 Id. at 47.
24
 Id. at 203-208.
25
 Id. at 208.
26
 Id. at 206.
27
 See Motion to Release Vehicle dated January 11, 2005; id. at 190-191.
28
 Id. at 207.
29
 Dated July 19, 2013; id. at 209-215.
30
 Id. at 217.
31
 Lumantas v. Calapiz, G.R. No. 163753, January 15, 2014.
32
 403 Phil. 299 (2001).
33
 Id. at 308-309; citations omitted.
34
 597 Phil. 127 (2009).
35
 Id. at 141, citing Hun Hyung Park v. Eung Won Choi, 544 Phil. 431, 444 (2007) and
Salazar v. People, 458 Phil. 504, 515-517 (2003).
36
 RULES OF COURT, Rule 120, Section 2.
37
 Rollo, p. 147.
38
 Id. at 149.
39
 Id. at 150.