THIRD DIVISION

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

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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:

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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

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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:

x x x

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

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[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 absqueinjuria. 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 Zuluetacase, 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.

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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.

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SECOND DIVISION

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

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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.

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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.

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SECOND DIVISION

G.R. No. L-44748 August 29, 1986

RADIO COMMUNICATIONS OF THE PHILS., INC. (RCPI). petitioner, vs.COURT OF APPEALS and LORETO DIONELA, respondents.

O. Pythogoras Oliver for respondents.

PARAS, J.:

Before Us, is a Petition for Review by certiorari of the decision of the Court of Appeals, modifying the decision of the trial court in a civil case for recovery of damages against petitioner corporation by reducing the award to private respondent Loreto Dionela of moral damages from P40,000 to Pl5,000, and attorney's fees from P3,000 to P2,000.

The basis of the complaint against the defendant corporation is a telegram sent through its Manila Office to the offended party, Loreto Dionela, reading as follows:

176 AS JR 1215PM 9 PAID MANDALUYONG JUL 22-66 LORETO DIONELA CABANGAN LEGASPI CITY

WIRE ARRIVAL OF CHECK FER

LORETO DIONELA-CABANGAN-WIRE ARRIVAL OF CHECK-PER

115 PM

SA IYO WALANG PAKINABANG DUMATING KA DIYAN-WALA-KANG PADALA DITO KAHIT BULBUL MO

(p. 19, Annex "A")

Plaintiff-respondent Loreto Dionela alleges that the defamatory words on the telegram sent to him not only wounded his feelings but also caused him undue embarrassment and affected adversely his business as well because other people have come to know of said defamatory words. Defendant corporation as a defense, alleges that the additional words in Tagalog was a private joke between the sending and receiving operators and that they were not addressed to or intended for plaintiff and therefore did not form part of the telegram and that the Tagalog words are not defamatory. The telegram sent through its facilities was received in its station at Legaspi City. Nobody other than the operator manned the teletype machine which automatically receives telegrams being transmitted. The said telegram was detached from the machine and placed inside a sealed envelope and delivered to plaintiff, obviously as is. The additional words in Tagalog were never noticed and were included in the telegram when delivered.

The trial court in finding for the plaintiff ruled as follows:

There is no question that the additional words in Tagalog are libelous. They clearly impute a vice or defect of the plaintiff. Whether or not they were intended for the plaintiff, the effect on the plaintiff is the same. Any person reading the additional words in Tagalog will naturally think that they refer to the addressee, the plaintiff. There is no indication from the face of the telegram that the additional words in Tagalog were sent as a private joke between the operators of the defendant.

The defendant is sued directly not as an employer. The business of the defendant is to transmit telegrams. It will open the door to frauds and allow the defendant to act with impunity if it can escape liability by the simple expedient of showing that its employees acted beyond the scope of their assigned tasks.

The liability of the defendant is predicated not only on Article 33 of the Civil Code of the Philippines but on the following articles of said Code:

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

Page 11 of 173

ART. 20.-Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.

There is sufficient publication of the libelous Tagalog words. The office file of the defendant containing copies of telegrams received are open and held together only by a metal fastener. Moreover, they are open to view and inspection by third parties.

It follows that the plaintiff is entitled to damages and attorney's fees. The plaintiff is a businessman. The libelous Tagalog words must have affected his business and social standing in the community. The Court fixes the amount of P40,000.00 as the reasonable amount of moral damages and the amount of P3,000.00 as attorney's fee which the defendant should pay the plaintiff. (pp. 15-16, Record on Appeal)

The respondent appellate court in its assailed decision confirming the aforegoing findings of the lower court stated:

The proximate cause, therefore, resulting in injury to appellee, was the failure of the appellant to take the necessary or precautionary steps to avoid the occurrence of the humiliating incident now complained of. The company had not imposed any safeguard against such eventualities and this void in its operating procedure does not speak well of its concern for their clientele's interests. Negligence here is very patent. This negligence is imputable to appellant and not to its employees.

The claim that there was no publication of the libelous words in Tagalog is also without merit. The fact that a carbon copy of the telegram was filed among other telegrams and left to hang for the public to see, open for inspection by a third party is sufficient publication. It would have been otherwise perhaps had the telegram been placed and kept in a secured place where no one may have had a chance to read it without appellee's permission.

The additional Tagalog words at the bottom of the telegram are, as correctly found by the lower court, libelous per se, and from which malice may be presumed in the absence of any showing of good intention and justifiable motive on the part of the appellant. The law implies damages in this instance (Quemel vs. Court of Appeals, L-22794, January 16, 1968; 22 SCRA 44). The award of P40,000.00 as moral damages is hereby reduced to P15,000.00 and for attorney's fees the amount of P2,000.00 is awarded. (pp. 22-23, record)

After a motion for reconsideration was denied by the appellate court, petitioner came to Us with the following:

ASSIGNMENT OF ERRORS

I

The Honorable Court of Appeals erred in holding that Petitioner-employer should answer directly and primarily for the civil liability arising from the criminal act of its employee.

II

The Honorable Court of Appeals erred in holding that there was sufficient publication of the alleged libelous telegram in question, as contemplated by law on libel.

III

The Honorable Court of Appeals erred in holding that the liability of petitioner-company-employer is predicated on Articles 19 and 20 of the Civil Code, Articles on Human Relations.

IV

The Honorable Court of Appeals erred in awarding Atty's. fees. (p. 4, Record)

Petitioner's contentions do not merit our consideration. The action for damages was filed in the lower court directly against respondent corporation not as an employer subsidiarily liable under the provisions of Article 1161 of the New Civil Code in relation to Art. 103 of the Revised Penal Code. The cause of action of the private respondent is based on Arts. 19 and 20 of the New Civil Code (supra). As well as on respondent's breach of contract thru the negligence of its own employees. 1

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Petitioner is a domestic corporation engaged in the business of receiving and transmitting messages. Everytime a person transmits a message through the facilities of the petitioner, a contract is entered into. Upon receipt of the rate or fee fixed, the petitioner undertakes to transmit the message accurately. There is no question that in the case at bar, libelous matters were included in the message transmitted, without the consent or knowledge of the sender. There is a clear case of breach of contract by the petitioner in adding extraneous and libelous matters in the message sent to the private respondent. As a corporation, the petitioner can act only through its employees. Hence the acts of its employees in receiving and transmitting messages are the acts of the petitioner. To hold that the petitioner is not liable directly for the acts of its employees in the pursuit of petitioner's business is to deprive the general public availing of the services of the petitioner of an effective and adequate remedy. In most cases, negligence must be proved in order that plaintiff may recover. However, since negligence may be hard to substantiate in some cases, we may apply the doctrine of RES IPSA LOQUITUR (the thing speaks for itself), by considering the presence of facts or circumstances surrounding the injury.

WHEREFORE, premises considered, the judgment of the appellate court is hereby AFFIRMED.

SO ORDERED.

Feria (Chairman), Fernan, Alampay, and Gutierrez, Jr., JJ., concur.

Footnotes

1 In contracts the negligence of the employee (servant) is the negligence of the employer (master). This is the master and servant rule.

Page 13 of 173

Page 14 of 173

SECOND DIVISION

G.R. No. 79578 March 13, 1991

RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI), petitioner, vs.HON. COURT OF APPEALS, and SPOUSES MINERVA TIMAN and FLORES TIMAN, respondents.

Salalima, Trenas, Pagaoa & Associates for petitioner.

Paul P. Lentejas for private respondents.

SARMIENTO, J.:p

A social condolence telegram sent through the facilities of the petitioner gave rise to the present petition for review on certiorari assailing the decision 1 of the respondent Court of Appeals which affirmed in toto the judgment 2 of the trial court, dated February 14, 1985, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Ordering the defendant RCPI to pay plaintiff the amount of P30,848.05 representing actual and compensatory damages; P10,000.00 as moral damages and P5,000.00 as exemplary damages.

2. Awarding of attorney's fees in the sum of P5,000.00. Costs against the defendant.

SO ORDERED. 3

The facts as gleaned from the records of the case are as follows:

On January 24, 1983, private respondents-spouses Minerva Timan and Flores Timan sent a telegram of condolence to their cousins, Mr. and Mrs. Hilario Midoranda, at Trinidad, Calbayog City, through petitioner Radio Communications of the Philippines, Inc. (RCPI, hereinafter) at Cubao, Quezon City, to convey their deepest sympathy for the recent death of the mother-in-law of Hilario Midoranda 4 to wit:

MR. & MRS. HILARIO MIDORANDATRINIDAD, CALBAYOG CITY

MAY GOD GIVE YOU COURAGE AND STRENGTH TO BEAR YOUR LOSS. OUR DEEPEST SYMPATHY TO YOU AND MEMBERS OF THE FAMILY.

MINER & FLORY. 5

The condolence telegram was correctly transmitted as far as the written text was concerned. However, the condolence message as communicated and delivered to the addressees was typewritten on a "Happy Birthday" card and placed inside a "Christmasgram" envelope. Believing that the transmittal to the addressees of the aforesaid telegram in that nonsuch manner was done intentionally and with gross breach of contract resulting to ridicule, contempt, and humiliation of the private respondents and the addressees, including their friends and relatives, the spouses Timan demanded an explanation. Unsatisfied with RCPI's explanations in its letters, dated March 9 and April 20, 1983, the Timans filed a complaint for damages. 6

The parties stipulated at the pre-trial that the issue to be resolved by the trial court was:

WHETHER or not the act of delivering the condolence message in a Happy Birthday" card with a "Christmasgram" envelope constitutes a breach of contract on the part of the defendant. If in the affirmative, whether or not plaintiff is entitled to damages. 7

The trial court rendered judgment in favor of the respondents Timans which was affirmed in toto by the Court of Appeals. RCPI now submits the following assignment of errors:

Page 15 of 173

I

THE RESPONDENT COURT ERRED IN CONDEMNING PETITIONER TO PAY ACTUAL AND COMPENSATORY DAMAGES IN THE AMOUNT OF P30,848.05.

II

THE RESPONDENT COURT ERRED IN CONDEMNING PETITIONER TO PAY MORAL DAMAGES IN THE AMOUNT OF P10,000.00.

III

THE RESPONDENT COURT ERRED IN CONDEMNING PETITIONER TO PAY EXEMPLARY DAMAGES IN THE AMOUNT OF P5,000.00.

IV

THE RESPONDENT COURT ERRED IN CONDEMNING PETITIONER TO PAY ATTORNEYS FEES IN THE AMOUNT OF P5,000.00 PLUS COSTS OF SUIT. 8

The four assigned errors are going to be discussed jointly because they are all based on the same findings of fact.

We fully agree with the appellate court's endorsement of the trial court's conclusion that RCPI, a corporation dealing in telecommunications and offering its services to the public, is engaged in a business affected with public interest. As such, it is bound to exercise that degree of diligence expected of it in the performance of its obligation.9

One of RCPI's main arguments is that it still correctly transmitted the text of the telegram and was received by the addressees on time despite the fact that there was "error" in the social form and envelope used. 10 RCPI asserts that there was no showing that it has any motive to cause harm or damage on private respondents:

Petitioner humbly submits that the "error" in the social form used does not come within the ambit of fraud, malice or bad faith as understood/defined under the law. 11

We do not agree.

In a distinctly similar case, 12 and oddly also involving the herein petitioner as the same culprit, we held:

Petitioner is a domestic corporation engaged in the business of receiving and transmitting messages. Everytime a person transmits a message through the facilities of the petitioner, a contract is entered into. Upon receipt of the rate or fee fixed, the petitioner undertakes to transmit the message accurately . . . As a corporation, the petitioner can act only through its employees. Hence the acts of its employees in receiving and transmitting messages are the acts of the petitioner. To hold that the petitioner is not liable directly for the acts of its employees in the pursuit of petitioner's business is to deprive the general public availing of the services of the petitioner of an effective and adequate remedy. 13

Now, in the present case, it is self-evident that a telegram of condolence is intended and meant to convey a message of sorrow and sympathy. Precisely, it is denominated "telegram of condolence" because it tenders sympathy and offers to share another's grief. It seems out of this world, therefore, to place that message of condolence in a birthday card and deliver the same in a Christmas envelope for such acts of carelessness and incompetence not only render violence to good taste and common sense, they depict a bizarre presentation of the sender's feelings. They ridicule the deceased's loved ones and destroy the atmosphere of grief and respect for the departed.

Anyone who avails of the facilities of a telegram company like RCPI can choose to send his message in the ordinary form or in a social form. In the ordinary form, the text of the message is typed on plain newsprint paper. On the other hand, a social telegram is placed in a special form with the proper decorations and embellishments to suit the occasion and the message and delivered in an envelope matching the purpose of the occasion and the words and intent of the message. The sender pays a higher amount for the social telegram than for one in the ordinary form. It is clear, therefore, that when RCPI typed the private respondents' message of condolence in a birthday card and delivered the same in a colorful Christmasgram envelope, it committed a breach of contract as well as

Page 16 of 173

gross negligence. Its excuse that it had run out of social condolence cards and envelopes 14 is flimsy and unacceptable. It could not have been faulted had it delivered the message in the ordinary form and reimbursed the difference in the cost to the private respondents. But by transmitting it unfittingly—through other special forms clearly, albeit outwardly, portraying the opposite feelings of joy and happiness and thanksgiving—RCPI only exacerbated the sorrowful situation of the addressees and the senders. It bears stress that this botchery exposed not only the petitioner's gross negligence but also its callousness and disregard for the sentiments of its clientele, which tantamount to wanton misconduct, for which it must be held liable for damages.

It is not surprising that when the Timans' telegraphic message reached their cousin, it became the joke of the Midorandas' friends, relatives, and associates who thought, and rightly so, that the unpardonable mix-up was a mockery of the death of the mother-in-law of the senders' cousin. Thus it was not unexpected that because of this unusual incident, which caused much embarrassment and distress to respondent Minerva Timan, he suffered nervousness and hypertension resulting in his confinement for three days starting from April 4, 1983 at the Capitol Medical Center in Quezon City. 15

The petitioner argues that "a court cannot rely on speculation, conjectures or guess work as to the fact and amount of damages, but must depend on the actual proof that damages had been suffered and evidence of the actualamount. 16 In other words, RCPI insists that there is no causal relation of the illness suffered by Mr. Timan with the foul-up caused by the petitioner. But that is a question of fact. The findings of fact of the trial court and the respondent court concur in favor of the private respondents. We are bound by such findings—that is the general rule well-established by a long line of cases. Nothing has been shown to convince us to justify the relaxation of this rule in the petitioner's favor. On the contrary, these factual findings are supported by substantial evidence on record.

Anent the award of moral and exemplary damages assigned as errors, the findings of the respondent court are persuasive.

. . . When plaintiffs placed an order for transmission of their social condolence telegram, defendant did not inform the plaintiff of the exhaustion of such social condolence forms. Defendant-appellant accepted through its authorized agent or agency the order and received the corresponding compensation therefor. Defendant did not comply with its contract as intended by the parties and instead of transmitting the condolence message in an ordinary form, in accordance with its guidelines, placed the condolence message expressing sadness and sorrow in forms conveying joy and happiness. Under the circumstances, We cannot accept the defendant's plea of good faith predicated on such exhaustion of social condolence forms. Gross negligence or carelessness can be attributed to defendant-appellant in not supplying its various stations with such sufficient and adequate social condolence forms when it held out to the public sometime in January, 1983, the availability of such social condolence forms and accepted for a fee the transmission of messages on said forms. Knowing that there are no such forms as testified to by its Material Control Manager Mateo Atienza, and entering into a contract for the transmission of messages in such forms, defendant-appellant committed acts of bad faith, fraud or malice. . . . 17

RCPI's argument that it can not be held liable for exemplary damages, being penal or punitive in character, 18 is without merit. We have so held in many cases, and oddly, quite a number of them likewise involved the herein petitioner as the transgressor.

xxx xxx xxx

. . . In contracts and quasi-contracts, exemplary damages may be awarded if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. There was gross negligence on the part of RCPI personnel in transmitting the wrong telegram, of which RCPI must be held liable. Gross carelessness or negligence constitutes wanton misconduct.

xxx xxx xxx

. . . punitive damages may be recovered for wilful or wantonly negligent acts in respect of messages, even though those acts are neither authorized nor ratified (Arkansas & L.R. Co. vs. Stroude 91 SW 18; West vs. Western U. Tel. Co., 17 P807; Peterson vs. Western U. Tel. Co., 77 NW 985; Brown vs. Western U. Tel. Co., 6 SE 146). Thus, punitive damages have been recovered for mistakes in the transmission of telegrams (Pittman vs. Western Union Tel. Co., 66 SO 977; Painter vs. Western Union Tel. Co., 84 SE 293) (emphasis supplied). 19

Page 17 of 173

We wish to add a little footnote to this Decision. By merely reviewing the number of cases that has reached this Court in which the petitioner was time and again held liable for the same causes as in the present case breach of contract and gross negligence—the ineluctable conclusion is that it has not in any way reformed nor improved its services to the public. It must do so now or else next time the Court may be constrained to adjudge stricter sanctions.

WHEREFORE, premises considered, the decision appealed from is AFFIRMED in toto.

Costs against the petitioner.

SO ORDERED.

Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.

Footnotes

1 CA-G.R. CV No. 06008, promulgated on August 14, 1987; Magsino, Celso L., J., ponente, Melo, Jose A.R. and Lising, Esteban M., concurring.2 Rendered by Judge Johnico G. Serquiña, Regional Trial Court of Quezon City, Branch CV (105), Civil Case No. Q-38497.3 Rollo, 59.4 Id., 56.5 Id., 48.6 Id., 56.7 Id., 57.8 Id., 11.9 Id., 49.10 Petition, 6; Rollo, 12.11 Id.12 "SA IYO WALANG PAKINABANG DUMATING — KA DIYAN WALA KANG PADALA DITO KAHIT BULBUL MO", RCPI v. Court of Appeals, No.L-44748, promulgated on August 29, 1986, 143 SCRA 659.13 Supra, 662-663.14 Rollo, 6.15 Id., 50.16 Id., 100.17 Id., 51.18 Petition, 16; Rollo, 22.19 RCPI vs. Court of Appeals, No. 55194, promulgated on February 26, 1981, 103 SCRA 359, 362.

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EN BANC

[G.R. No. L-7817.  October 31, 1956.]

ALFREDO M. VELAYO, in his capacity as Assignee of the insolvent COMMERCIAL AIR LINES, INC. (CALI), Plaintiff-Appellant, vs. SHELL COMPANY OF THE PHILIPPINE ISLANDS,

LTD.,Defendant-Appellee, YEK HUA TRADING CORPORATION, PAUL SYCIP and MABASA & CO., intervenors.

 

D E C I S I O N

FELIX, J.:

Antecedents — The Commercial Air Lines, Inc., which will be hereinafter referred to as CALI, is a corporation duly organized and existing in accordance with the Philippines laws, with offices in the City of Manila and previously engaged in air transportation business. The Shell Company of the P. I., Ltd., which will be designated as the Defendant, is on the other hand, a corporation organized under the laws of England and duly licensed to do business in the Philippines, with principal offices at the Hongkong and Shanghai Bank building in the City of Manila.

Since the start of CALI’s operations, its fuel needs were all supplied by the Defendant. Mr. Desmond Fitzgerald, its Credit Manager who extended credit to CALI, was in charge of the collection thereof. However, all matters referring to extensions of the term of payment had to be decided first by Mr. Stephen Crawford and later by Mr. Wildred Wooding, who represented in this country Defendant’s Board of Directors, the residence of which is in London, England (Exhs. 4-B and 4-A).

As of August, 1948, the books of the Defendant showed a balance of P170,162.58 in its favor for goods it sold and delivered to CALI. Even before August 6, 1948, Defendant had reasons to believe that the financial condition of the CALI was far from being satisfactory. As a matter of fact, according to Mr. Fitzgerald, CALI’s Douglas C-54 plane, then in California, was offered to him by Mr. Alfonso Sycip, CALI’s President of the Board of Directors, in partial settlement of their accounts, which offer was, however, declined by Mr. Crawford, probably because upon inquiries made by Mr. Fitzgerald sometime before August 6, 1948, for the purpose of preparing the report for its London office regarding CALI’s indebtedness, Col. Lambert, CALI’s Vice President and General Manager, answered that the total outstanding liabilities of his corporation was only P550,000, and the management of Defendant probably assumed that the assets of the CALI could very well meet said liabilities and were not included to take charge of the sale of CALI’s said Douglas C-54 plane to collect its credit.

On August 6, 1948, the management of CALI informally convened its principal creditors (excepting only the insignificant small claims) who were invited to a luncheon that was held between 12: 00 and 2: 00 o’clock in the afternoon of that day in the Trade and Commerce Building at 123 Juan Luna St., Manila, and informed them that CALI was in a state of insolvency and had to stop operation. The creditors present, or represented at the meeting, were: Mr. A. L. Bartolini, representing Firestone Tire & Rubber Co.;  Mr. Quintin Yu, representing Commercial News;  Mr. Mark Pringle, representing Smith, Bell & Co. (Lloyds of London);  Messrs. Vicente Liwag, C. Dominguez and Pacifico Agcaoili, representing National Airports Corporation;  Messrs. W. J. Bunnel and Manuel Chan, representing Goodrich International Rubber Co.;  Mr. G. E. Adair, representing Goodyear Tire & Rubber Co.;  Mr. J. T. Chuidian, representing Gibbs, Gibbs, Chuidian & Quasha;  Mr. E. Valera, representing Mabasa & Co.; Mr. D. Fitzgerald, representing Shell Co. P.I. Ltd.;  and Mr. Alfonso Z. Sycip, representing himself, Yek Hua Trading Corporation and Paul Sycip (Exhs. NN, JJJ, MM, QQQ, II-4, SS, TT, UU, VV, WW, XX, YY, ZZ, AAA, BBB, CCC, DDD, EEE, FFF, GGG, and HHH).

The persons present, including Mr. Desmond Fitzgerald, signed their names and the names of the companies they represented on a memorandum pad of the law firm Quisumbing, Sycip, and Quisumbing (Exhs. VV and VV-1).

In that meeting at noontime of August 6, 1948, out of the 194 creditors in all (Exh. OO) 15 were listed as principal creditors having big balances (Exh. NN), to wit:

13th Air Force  P12,880.00

Civil Aeronautics Administration  98,127.00

Gibbs, Giibs, Chuidian & Quasha  5,544.90

Goodrich Int’l Rubber Co.  3,142.47

Goodyear Tire & Rubber Co.  1,727.50

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Mabasa & Co.  4,867.72

Manila Int’l Airport  55,280.04

Manila Int’l Air Terminal (PAL)  36,163.68

Shell Co. of the Phil., Ltd.  152,641.68

Smith, Bell & Co., Ltd.  45,534.00

Paul Sycip  8,189.33

Mrs. Buenaventura  20,000.00

Firestone Tire & Rubber Co.  4,911.72

Alfonso Sycip  575,880.83

Yek Hua Trading Corp.  487,871.20

—————

P1,512,762.87

What occurred in that meeting may be summarized as follows: Mr. Alexander Sycip, Secretary of the Board of Directors of the CALI, informed the creditors present that this corporation was insolvent and had to stop operations. He explained the memorandum agreement executed by the CALI with the Philippine Air Lines, Inc., on August 4, 1948, regarding the proposed sale to the latter of the aviation equipments of the former (Exhs. MM and QQQ, par. 1 — memo of meeting;  Exhs. III and PPP — P. Agcaoili’s memorandum dated August 7, 1948, to the General Manager of the National Airports Corp.). Mr. Alexander Sycip was assisted in the explanation by CPA Alfredo Velayo of Washington, Sycip & Company, Auditors of the CALI, who discussed the balance sheets and distributed copies thereof to the creditors present (Exhs. NN, NN-1 to 7;  Exh. JJ — P. Agcaoili’s copy of balance sheet p. 229- 230 t.s.n., Nov. 27, 1951, of the testimony of D. Fitzgerald). The said balance sheet made mention of a C-54 plane in the United States, the property now involved in this suit. He was likewise assisted in his explanation by Mr. Curtis L. Lambert, Vice President and General Manager of the CALI, who described in greater detail the assets of the CALI. There was a general understanding among all the creditors present on the desirability of consummating the sale in favor of the Philippine Air Lines Inc. (Exhs. MM and QQQ, par. 2 — Memo of meeting;  Exhs. III and PPP, par. 5 — P. Agcoaili’s memorandum dated August 7, 1948, to the General Manager of the National Airports Corp.;  and pp. 299-300 t.s.n., January 15, 1952, of the testimony of Desmond Fitzgerald).

Then followed a discussion on the payment of claims of creditors and the preferences claimed for the accounts due to the employees, the Government and the National Airports Corporation. The representatives of the latter Messrs. Vicente H. Liwag, C. Dominguez and Pacifico V. Agcaoili, contended that their accounts were preferred. The other creditors disputed such contention of preference (Exhs. MM and QQQ, par. 3 — 0151 Memo of meeting; Exhs. III and PPP, par. 3 — P. Agcaoili’s memorandum dated August 1, 1948, to the General Manager of the National Airports Corp.;  and pp. 247-248 t.s.n., January 10, 1952, of the testimony of D. Fitzgerald). No understanding was reached on this point and it was then generally agreed that the matter of preference be further studied by a working committee to be formed (Exhs. MM, par. 3 — Memo of meeting). The creditors present agreed to the formation of a working committee to continue the discussion of the payment of claims and preferences alleged by certain creditors, and it was further agreed that said working committee would supervise the preservation of the properties of the corporation while the creditors attempted to come to an understanding as to a fair distribution of the assets among them (Exhs. MM and QQQ, Memo of meeting). From the latter exhibit the following is copied:

“4.  Certain specific matters such as the amount owing to the Philippine Air Lines, Inc., and the claims of Smith, Bell vs. Co., (representing Lloyds of London) that its claim should be offset against the payments which may be due to CALI from insurance claims were not taken up in detail. It was agreed that these matters together with the general question of what are preferred claims should be the subject of further discussions, but shall not interfere with the consummation of the sale in favor of PAL.

“5.  The creditors present agreed to the formation of the working committee to supervise the preservation of the properties of the corporation and agreed further that Mr. Fitzgerald shall represent the creditors as a whole in this committee. It was understood, however, that all questions relating to preference of claims can be decided only by the creditors assembled.

“6.  It was the sense of the persons present that, if possible, the insolvency court be avoided but that should the creditors not meet in agreement, then all the profits from the sale will be submitted to an insolvency court for proper division among the creditors.”

Page 20 of 173

To this working committee, Mr. Desmond Fitzgerald, Credit Manager, of the Defendant, Atty. Agcaoili of the National Airports Corporation and Atty. Alexander Sycip (Exhs. III and PPP, par. 5 — P. Agcaoili’s memorandum dated August 7, 1948, to the General Manager of the National Airports (Corp.) were appointed. After the creditors present knew the balance sheet and heard the explanations of the officers of the CALI, it was their unanimous opinion that it would be advantageous not to present suits against this corporation but to strive for a fair pro-rata division of its assets (Exh. MM, par 6, Memo of meeting), although the management of the CALI announced that in case of non-agreement of the creditors on a pro-rata division of the assets, it would file insolvency proceedings (p. 70, t.s.n., October 22, 1951).

Mr. Fitzgerald did not decline the nomination to form part of said working committee and on August 9, 1948, the 3 members thereof discussed methods of achieving the objectives of the committee as decided at the creditors’ meeting, which were to preserve the assets of the CALI and to study the way of making a fair division of all the assets among the creditors. Atty. Sycip made an offer to Mr. D. Fitzgerald to name a representative to oversee the preservation of the assets of the CALI, but Mr. Fitzgerald replied that the creditors could rely on Col. Lambert. Atty. Pacifico Agcaoili promised to refer the arguments adduced at the second meeting to the General Manager of the National Airports Corporations and to obtain the advice of the Corporate Counsel, so the negotiation with respect to the division of assets of the CALI among the creditors was left pending or under advice when on that very day of the meeting of the working committee, August 9, 1948, which Mr. Fitzgerald attended, Defendant effected a telegraphic transfer of its credit against the CALI to the American corporation Shell Oil Company, Inc., assigning its credit, amounting to $79,440.00, which was subsequently followed by a deed of assignment of credit dated August 10, 1948, the credit amounting this time to the sum of $85,081.29 (Exh. I).

On August 12, 1948, the American corporation Shell Oil Company, Inc., filed a complaint against the CALI in the Superior Court of the State of California, U.S.A. in and for the County of San Bernardino, for the collection of an assigned credit of $79,440.00 — Case No. 62576 of said Court (Exhs. A, E, F, G, H, V, and Z) and a writ of attachment was applied for and issued on the same date against a C-54 plane (Exhs. B, C, D, Y, W, X, and X-1).

On September 17, 1948, an amended complaint was filed to recover an assigned credit of $85,081.29 (Exhs. I, K, L, M, Q, R, S, T, U, DD) and a supplemental attachment for a higher sum was applied for and issued against the C-54 plane, plus miscellaneous personal properties held by Pacific Overseas Air Lines for the CALI (Exhs. N, O, P, AA, BB, BB-1 and CC) and on January 5, 1949, a judgment by default was entered by the American court (Exhs. J, EE, FF, GG, and HH).

Unaware of Defendant’s assignments of credit and attachment suit, the stockholders of CALI resolved in a special meeting of August 12, 1948, to approve the memorandum agreement of sale to the Philippine Air Lines, Inc, and noted “that the Board had been trying to reach an agreement with the creditors of the corporation to prevent insolvency proceedings, but so far no definite agreement had been reached” (Exh. OO — Minutes of August 12, 1948, stockholders’ meeting).

By the first week of September, 1948, the National Airports Corporation learned ofDefendant’s action in the United States and hastened to file its own complaint with attachment against the CALI in the Court of First Instance of Manila (Exhs. KKK, LLL, and MMM). The CALI, also prompted by Defendant’s action in getting the alleged undue preference over the other creditors by attaching the C-54 plane in the United States, beyond the jurisdiction of the Philippines, filed on October 7, 1948, a petition for voluntary insolvency. On this date, an order of insolvency was issued by the court (Exh. JJ) which necessarily stayed the National Airports Corporation’s action against the CALI and dissolved its attachment (Exh. NNN), thus compelling the National Airports Corporation to file its claims with the insolvency court (Exh. SS).

By order of October 28, 1948, the Court confirmed the appointment of Mr. Alfredo M. Velayo, who was unanimously elected by the creditors as Assignee in the proceedings, and ordered him to qualify as such by taking the oath of office within 5 days from notice and filing a bond in the sum of P30,000.00 to be approved by the Court conditioned upon the faithful performance of his duties, and providing further that all funds that the Assignee may collect or receive from the debtors of the corporation, or from any other source or sources, be deposited in a local bank (Exh. KK). On November 3, 1948, the clerk of court executed a deed of conveyance in favor of the Assignee (Alfredo M. Velayo) over all the assets of the CALI (Exh. LL).

The Case. — After properly qualifying as Assignee, Alfredo M. Velayo instituted this case (No. 6966 of the Court of First Instance of Manila) on December 17, 1948, against the Shell Company of P. I., Ltd., for the purpose of securing from the Court a writ of injunction restraining Defendant, its agents, servants, attorneys and solicitors from prosecuting in and for the County of San Bernardino in the Superior Court of the State of California, U.S.A. the aforementioned Civil Case No. 62576 against the insolvent Commercial Air Lines, Inc., begun by it in the name of the American corporation Shell Oil Company, Inc., and as an alternative remedy, in case the purported assignment of Defendant’s alleged credit to the American corporation Shell Oil Company, Inc., and the attachment issued against CALI in the said Superior Court of California shall have the effect of defeating the procurement by Plaintiff as Assignee in insolvency of the above- mentioned airplane, which is the property of the insolvent CALI, situated in the Ontario International Airport, with in the County of San Bernardino, State of California,

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U.S.A., that judgment for damages in double the value of the airplane be awarded in favor of Plaintiff against Defendant, with costs.

The complaint further prays that upon the filing of a bond executed to the Defendant in an amount to be fixed by the Court, to the effect that Plaintiff will pay to Defendant all damages the latter may sustain by reason of the injunction if the Court should finally decide that the Plaintiff was not entitled thereto, the Court issued a writ of preliminary injunction enjoining the Defendant, its agent, servants, attorney’s and solicitor, from prosecuting the aforementioned Case No. 62576, the same writ of preliminary injunction to issue without notice to the Defendant it appearing by verified complaint that the great irreparable injury will result to the Plaintiff-Appellant before the matter could be on notice. The Plaintiff also prays for such other remedies that the Court may deem proper in the premises.

On December 20, 1948, the Defendant filed an opposition to the Plaintiff’s petition for the issuance of a writ of the preliminary injunction, and on December 22, 1948, the Court denied the same because whether the conveyance of Defendant’s credit was fraudulent or not, the Philippine court would not be in position to enforce its orders as against the American corporation Shell Oil Company, Inc., which is outside of the jurisdiction of the Philippines.

Plaintiff having failed to restrain the progress of the attachment suit in the United States by denial of his application for a writ of preliminary injunction and the consequences on execution of the C-54 plane in the County of San Bernardino, State of California, U. S. A., he confines his action to the recovery of damages against the Defendant.

On December 28, 1948, Defendant filed its answer to the complaint, which was amended on February 3, 1949. In its answer, Defendant, besides denying certain averments of the complaint alleged, among other reasons, that the assignment of its credit in favor of the Shell Oil Company, Inc., in the United States was for a valuable consideration and made in accordance with the established commercial practices, there being no law prohibiting a creditor from assigning his credit to another;  that it had no interest whatsoever in Civil Case No. 62576 instituted in the Superior Court in the State of California by the Shell Oil Company, Inc., which is a separate and distinct corporation organized and existing in the State of Virginia and doing business in the State of California, U. S. A., the Defendant having as its stockholders the Shell Petroleum Company of London and other persons residing in that City, while the Shell Oil Company Inc., of the United State has its principal stockholders the Shell Union Oil Company of the U.S. and presumably countless American investors inasmuch as its shares of stock are being traded daily in the New York stock market;  that Mr. Fitzgerald, Defendant’s Credit Manager, was merely invited to a luncheon-meeting at the Trade and Commerce Building in the City of Manila on August 6, 1948, without knowing the purpose for which it was called;  and that Mr. Fitzgerald could not have officially represented theDefendant at that time because such authority resides on Mr. Stephen Crawfurd. Defendant, therefore, prays that the complaint be dismissed with costs against the Plaintiff.

Then Alfonso Sycip, Yek Hua Trading Corporation and Paul Sycip, as well as Mabasa & Co., filed, with permission of the Court, their respective complaints in intervention taking the side of the Plaintiff. These complaints in intervention were timely answered by Defendant which prayed that they be dismissed.

After proper proceedings and hearing, the Court rendered decision on February 26, 1954, dismissing the complaint as well as the complaints in intervention, with costs against the Plaintiff. In view of this outcome, Plaintiff comes to us praying that the judgment of the lower court be reversed and that the Defendant be ordered to pay him damages in the sum of P660,000 (being double the value of the airplane as established by evidence, i.e., P330,000), with costs, and for such other remedy as the Court may deem just and equitable in the premises.

The Issues. — Either admission of the parties, or by preponderance of evidence, or by sheer weight of the circumstance attending the transactions herein involved, We find that the facts narrated in the preceding statement of the “antecedents” have been sufficiently established, and the questions at issue submitted to our determination in this instance may be boiled down to the following propositions:

(1)  Whether or not under the facts of the case, the Defendant Shell Company of the P. I., Ltd., taking advantage of its knowledge of the existence of CALI’s airplane C-54 at the Ontario International Airport within the Country of San Bernardino, State of California, U. S. A.,

(Which knowledge it acquired: first at the informal luncheon-meeting of the principal creditors of CALI on August 5, 1948, where its Credit Manager, Mr. Desmond Fitzgerald, was selected to form part of the Working Committee to supervise the preservation of CALI’s properties and to study the way of making a fair division of all the assets among the creditors and thus avoid the institution of insolvency proceedings in court;  and

Subsequently, at the meeting of August 9, 1948, when said Mr. Fitzgerald met the other members of the said Working Committee and heard and discussed the contention of certain creditors of CALI — on the accounts due the employees, the Government and the National Airports Corporation — who alleged that their claims were preferred),

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acted in bad faith and betrayed the confidence and trust of the other creditors of CALI present in said meeting by affecting a hasty telegraphic transfer of its credit to the American corporation Shell Oil Company, Inc., for the sum of $79,440 which was subsequently followed by a deed of assignment of credit dated August 10, 1948, amounting this time to the sum of $85,081.28 (Exhs. Z), thus defeating the purpose of the informal meetings of CALI’s principal creditors end depriving the Plaintiff, as its Assignee, of the means of obtaining said C-54 plane, or the value thereof, to the detriment and prejudice of the other CALI’s creditors who were consequently deprived of their share in the distribution of said value;  and (2) Whether or not by reason of said betrayal of confidence and trust, Defendant may be made under the law to answer for the damages prayed by the Plaintiff;  and if so, what should be the amount of such damages.

DISCUSSION OF THE CONTROVERSY

I.  The mere enunciation of the first proposition can lead to no other conclusion than thatDefendant, upon learning the precarious economic situation of CALI and that with all probability, it could not get much of its outstanding credit because of the preferred claims of certain other creditors, forgot that “Man does not live by bread alone” and entirely disregarded all moral inhibitory tenets. So, on the very day its Credit Manager attended the meeting of the Working Committee on August 9, 1948, it hastily made a telegraphic assignment of its credit against the CALI to its sister American Corporation, the Shell Oil Company, Inc., and by what is stated in the preceding pages hereof, We know that were the damaging effects of said assignment upon the right of other creditors of the CALI to participate in the proceeds of said CALI’s plane C-54.

Defendants endeavor to extricate itself from any liability caused by such evident misdeed of its part, alleging that Mr. Fitzgerald had no authority from his principal to commit the latter on any agreement;  that the assignment of its credit in favor of its sister corporation, Shell Oil Company, Inc., was for a valuable consideration and in accordance with the established commercial practices;  that there is no law prohibiting a creditor from assigning his credit to another;  and that the Shell Oil Company Inc., of the United States is a corporation different and independent from the Defendant. But all these defenses are entirely immaterial and have no bearing on the main question at issue in this appeal. Moreover, we might say that Defendant could not have accomplished the transfer of its credit to its sister corporation if all the Shell companies throughout the world would not have a sort of union, relation or understanding among themselves to come to the aid of each other. The telegraphic transfer made without knowledge and at the back of the other creditors of CALI may be a shrewd and surprise move that enabled Defendant to collect almost all if not the entire amount of its credit, but the Court of Justice cannot countenance such attitude at all, and much less from a foreign corporation to the detriment of our Government and local business.

To justify its actions, Defendant may also claim that Mr. Fitzgerald, based on his feeling of distrust and apprehension, entertained the conviction that intervenors Alfonso Sycip and Yek Hua Trading Corporation tried to take undue advantage by infiltrating their credits. But even assuming for the sake of argument, that these intervenors really resorted to such strategem or fraudulent device, yet Defendant’s act finds not justification for no misdeed on the part of a person is cured by any misdeed of another, and it is to be noted that neither Alfonso Z. Sycip, nor Yek Hua Trading Corporation were the only creditors of CALI, nor even preferred ones, and that the infiltration of one’s credit is of no sequence if it cannot be proven in the insolvency proceedings to the satisfaction of the court. Under the circumstances of the case, Defendant’s transfer of its aforementioned credit would have been justified only if Mr. Fitzgerald had declined to take part in the Working Committee and frankly and honestly informed the other creditors present that he had no authority to bind his principal and that the latter was to be left free to collect its credit from CALI by whatever means his principal deemed wise and were available to it. But then such information would have immediately dissolved all attempts to come to an amicable conciliation among the creditors and would have precipitated the filing in court of CALI’s voluntary insolvency proceedings and nullified the intended transfer of Defendant’s credit to its above-mentioned sister corporation.

II.  We may agree with the trial judge, that the assignment of Defendant’s credit for a valuable consideration is not violative of the provisions of Sections 32 and 70 of the Insolvency Law (Public Act No. 1956), because the assignment was made since August 9, 1948, the original complaint in the United States was filed on August 12, 1948, and the writ of attachment issued on this same date, while CALI filed its petition for insolvency on October 7, 1948. As his Honor correctly states, said Sections 32 and 70 only contemplate acts and transactions occurring within 30 days prior to the commencement of the proceedings in insolvency and, consequently, all other acts outside of the 30-day period cannot possibly be considered as coming within the orbit of the operation. In addition to this, We may add that Article 70 of the Insolvency Law refers to acts of the debtor (in this case the insolvent CALI) and not of the creditor, the Shell Company of the P. I. Ltd. But section 70 does not constitute the only provisions of the law pertinent to the matter. The Insolvency Law also provides the following:

“SEC. 33.  The assignee shall have the right to recover all the estate, debt and effects of said insolvent. If at the time of the commencement of the proceedings in insolvency, an action is pending in the name of the debtor, for the recovery of a debt or other thing might or ought to pass to the assignee by the assignment, the assignee shall be allowed to prosecute the action, in like manner and with life effect as if it had been originally commenced by him. If there are any rights of action in favor of the insolvency for damages, on any account, for which an action is not pending the assignee shall have the

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right to prosecute the same with effect as the insolvent might have done himself if no proceedings in insolvency had been instituted.”

It must not be forgotten that in accordance with the spirit of the Insolvency Law and with the provisions of Chapter V thereof which deal with the powers and duties of a receiver, the assignee represents the insolvent as well as the creditors in voluntary and involuntary proceedings — Intestate of Mariano G. Veloso, etc. vs. Vda. de Veloso S. C. — G. R. No. 42454; Hunter, Kerr & Co. vs. Samuel Murray, 48 Phil. 449;  Chartered Bank vs. Imperial, 48 Phil. 931;  Asia Banking Corporation vs. Herridge, 45 Phil. 527 — (II Tolentino’s Commercial Laws of the Philippines, 633). See also Section 36 of the Insolvency Law. From the foregoing, We see that Plaintiff, as Assignee of the Insolvent CALI, had personality and authority to institute this case for damages, and the only question that remains determination is whether the payment of damages sought to be recovered from Defendant may be ordered under the Law and the evidence of record.

IF ANY PERSON, before the assignment is made, having notice of the commencement of the proceedings in insolvency, or having reason to believe that insolvency proceedings are about to be commenced, embezzles or disposes of any money, goods, chattels, or effects of the insolvent, he is chargeable therewith, and liable to an action by the assignee for double the value of the property sought to be embezzled or disposed of, to be received for the benefit of the insolvent estate.

The writer of this decision does not entertain any doubt that the Defendant — taking advantage of his knowledge that insolvency proceedings were to be instituted by CALI if the creditors did not come to an understanding as to the manner of distribution of the insolvent asset among them, and believing it most probable that they would not arrive at such understanding as it was really the case — schemed and effected the transfer of its sister corporation in the United States, where CALI’s plane C-54 was by that swift and unsuspected operation efficaciously disposed of said insolvent’s property depriving the latter and the Assignee that was latter appointed, of the opportunity to recover said plane. In addition to the aforementioned Section 37, Chapter 2 of the PRELIMINARY TITLE of the Civil Code, dealing on Human Relations, provides the following:

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

It maybe said that this article only contains a mere declarations of principles and while such statement may be is essentially correct, yet We find that such declaration is implemented by Article 21 and sequence of the same Chapter which prescribe the following:

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

The Code Commission commenting on this article, says the following:

“Thus at one stroke, the legislator, if the forgoing rule is approved (as it was approved), would vouchsafe adequate legal remedy for that untold numbers of moral wrongs which is impossible for human foresight to provide for specifically in the statutes.

“But, it may be asked, would this proposed article obliterate the boundary line between morality and law? The answer is that, in the last analysis, every good law draws its breath of life from morals, from those principles which are written with words of fire in the conscience of man. If this premises is admitted, then the proposed rule is a prudent earnest of justice in the face of the impossibility of enumerating, one by one, all wrongs which cause damages. When it is reflected that while codes of law and statutes have changed from age to age, the conscience of man has remained fixed to its ancient moorings, one cannot but feel that it is safe and salutary to transmute, as far as may be, moral norms into legal rules, thus imparting to every legal system that enduring quality which ought to be one of its superlative attributes.

“Furthermore, there is no belief of more baneful consequence upon the social order than that a person may with impunity cause damage to his fellow-men so long as he does not break any law of the State, though he may be defying the most sacred postulates of morality. What is more, the victim loses faith in the ability of the government to afford him protection or relief.

“A provision similar to the one under consideration is embodied in article 826 of the German Civil Code.

“The same observations may be made concerning injurious acts that are contrary to public policy but are not forbidden by statute. There are countless acts of such character, but have not been foreseen by the lawmakers. Among these are many business practices that are unfair or oppressive, and certain acts of landholders and employers affecting their tenants and employees which contravene the public policy of social justice.

“Another rule is expressed in Article 24 which compels the return of a thing acquired ‘without just or legal grounds’. This provision embodies the doctrine that no person should unjustly enrich himself at the expense of another, which has been one of the mainstays of every legal system for centuries. It is

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most needful that this ancient principles be clearly and specifically consecrated in the proposed Civil Code to the end that in cases not foreseen by the lawmaker, no one may unjustly benefit himself to the prejudice of another. The German Civil Code has a similar provision (art. 812).” (Report of the Code Commission on the Proposed Civil Code of the Philippines, p. 40- 41).

From the Civil Code Annotated by Ambrosio Padilla, Vol. I, p. 51, 1956 edition, We also copy the following:

“A moral wrong or injury, even if it does not constitute a violation of a statute law, should be compensated by damages. Moral damages (Art. 2217) may be recovered (Art. 2219). In Article 20, the liability for damages arises from a willful or negligent act contrary to law. In this article, the act is contrary to morals, good customs or public policy.”

Now, if Article 23 of the Civil Code goes as far as to provide that:

“Even if an act or event causing damage to another’s property was not due to the fault or negligence of the Defendant, the latter shall be liable for indemnity if through the act or event he was benefited.”

with mere much more reason the Defendant should be liable for indemnity for acts it committed in bad faith and with betrayal of confidence.

It may be argued that the aforequoted provisions of the Civil Code only came into effect on August 30, 1950, and that they cannot be applicable to acts that took place in 1948, prior to its effectivity. But Article 2252 of the Civil Code, though providing that:

“Changes made and new provisions and rules laid down by this Code which may be prejudice or impair vested or acquired rights in accordance with the old legislation, shall have no retroactive effect.”

implies that when the new provisions of the Code does not prejudice or impair vested or acquired rights in accordance with the old legislation — and it cannot be alleged that in the case at bar Defendant had any vested or acquired right to betray the confidence of the insolvent CALI or of its creditors — said new provisions, like those on Human Relations, can be given retroactive effect. Moreover, Article 2253 of the Civil Code further provides:

“ But if a right should be declared for the first time in this Code, it shall be effective at once, even though the act or event which may give rise thereto may have been done or may have occurred under the prior legislation, provided said new right does not prejudice or impair any vested or acquired right, of the same origin.”

and according to Article 2254, “no vested or acquired right can arise from acts or omissions which are against the law or which infringe upon the right of others.”

In case of Juan Castro vs. Acro Taxicab Company, (82 Phil., 359;  47 Off. Gaz., [5] 2023), one of the question at issue was whether or not the provisions of the New Civil Code of the Philippines on moral damages should be applied to an act of negligence which occurred before the effectivity of said code, and this Court, through Mr. Justice Briones, sustaining the affirmative proposition and citing decisions of the Supreme Court of Spain of February 14, 1941, and November 14, 1934, as well as the comment of Mr. Castan, Chief Justice of the Supreme Court of Spain, about the revolutionary tendency of Spanish jurisprudence, said the following:

“We conclude, therefore, reaffirming the doctrine laid down in the case of Lilius (59 J. F. 800) in the sense that indemnity lies for moral and patrimonial damages which include physical and pain sufferings. With this (doctrine), We effect in this jurisdiction a real symbiosis of the Spanish and American Laws and, at the same time, We act in consonance with the spirit and progressive march of time” (translation)

The writer of this decision does not see any reason for not applying the provisions of Section 37 of the Insolvency Law to the case at bar, specially if We take into consideration that the term “any person” used therein cannot be limited to the officers or employee of the insolvent, as no such limitation exist in the wording of the section (See also Sec. 38 of the same Act), and that, as stated before, the Defendant schemed and affected the transfer of its credits (from which it could derive practically nothing) to its sister corporation in the United States where CALI’s plane C-54 was then situated, succeeding by such swift and unsuspected operation in disposing of said insolvent’s property by removing it from the possession and ownership of the insolvent. However, some members of this Court entertain doubt as to the applicability of said section 37 because in their opinion what Defendant in reality disposed of was its own credit and not the insolvent’s property, although this was practically the effect and result of the scheme. Having in mind this objection and that the provisions of Article 37 making the person coming within its purview liable for double the value of the property sought to be disposed of  constitute a sort of penal clause which shall be strictly construed, and considering further that the same result may be obtained, by applying only the provisions of the Civil Code, the writer of this decision yields to the objection aforementioned.

Articles 2229, 2232, 2234, 2142, and 2143 of the Civil Code read as follows:

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

“Art. 2232.  In contracts quasi-contracts, the Court may award exemplary damages if the Defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.”

“Art. 2234.  While the amount of the exemplary damages need not be proved, the Plaintiff 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. In case liquidated damages should be upon, although no proof of loss is necessary in order that such liquidated damages be recovered, nevertheless, before the court may consider the question of granting exemplary in addition to the liquidated damages, the Plaintiff must show that he would be entitled to moral, temperate or compensatory damages were it not for the stipulation for liquidated damages.”

“Art. 2142.  Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.”

“Art, 2143.  The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts which may come within the purview of the preceding article.”

In accordance with these quoted provisions of the Civil Code, We hold Defendant liable to pay to the Plaintiff, for the benefit of the insolvent CALI and its creditors, as compensatory damages a sum equivalent to the value of the plane at the time aforementioned and another equal sum as exemplary damages.

There is no clear proof in the record about the real value of CALI’s plane C-54 at the time when Defendant’s credit was assigned to its sister corporation in the United States.

Judgment

Wherefore, and on the strength of the foregoing considerations, the decision appealed from is reversed and Defendant-Appellee-, Shell Company of the Philippine Islands, Ltd., is hereby sentenced to pay to Plaintiff-Appellant, as Assignee of the insolvent CALI, damages in a sum double the amount of the value of the insolvent’s airplane C-54 at the time Defendant’s credit against the CALI was assigned to its sister corporation in the United States, which value shall be determined in the corresponding incident in the lower court after this decision becomes final. Costs are taxed against Defendant-Appellee. It is SO ORDERED.

Paras, C.J., Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., and Endencia, concur.

 

Read case digest here.

 

 

RESOLUTION

July 30, 1957

 

FELIX, J.:

Plaintiff-Appellant and intervenors on one hand and Defendant Shell Company of the Philippine Islands, Ltd., on the other, have filed their respective motions for reconsideration of Our decision rendered in this case. The motion of Plaintiff Appellant and the intervenors seeks the reconsideration of said decision in so far as it held that:

“There is no clear proof in the record about the real value of CALI’s plane C-54, at the time when Defendant’s credit was assigned to its sister corporation in the United States.”

and, upon such holding, it orders that the value of the C-54 plane —

“be determined in the corresponding incident in the lower Court after this decision becomes final.”

The movants maintain that there is evidence sufficient to support a finding that CALI’s C-54 plane had a fair market value of $165,000 at or about the time Defendant credit was assigned to its sister corporation in the United States and the plane attached. This motion was opposed by Defendant-

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Appellee which was replied by Plaintiff- Appellant with a supplemental motion for reconsideration, and then retorted with a manifestation and motion of Defendant-Appellant followed by Defendant’s answer to Plaintiff’s motion for reconsideration.

After considering the evidence pointed out by said parties in support of their respective contentions, we are more convinced that the proofs relative to the real value of CALI plane C-54 at the time Defendant’s credit was assigned to its sister corporation in the United States, is not clear. Hence, Plaintiff-Appellant’s and intervenors’ motion for reconsideration is hereby overruled.

The main grounds on which Defendant-Appellee bases its motion for reconsideration, as relied upon in its counsel’s memoranda and oral argument, may be reduced to the following:

(1)  That the Defendant Appellee is not guilty of bad faith, it having done nothing but to protect legitimately its own interest or credit against the bad faith of its debtor, the insolvent CALI, under the control of the latter’s President Alfonso Sycip;

(2)  That Appellee’s transfer of its credit to its sister corporation in the United States, did not prejudice the Government, because its claims were fully paid, nor caused any loss or injury to other creditors, except the entities and groups controlled by Alfonso Z. Sycip;

(3)  That Appellee is not liable for exemplary damages because the provisions of the new Civil Code on the matter are not applicable to this case;

(4)   That the Plaintiff-Appellant has no cause of action against Defendant-Appellant and is not the real party in interest;  and

(5)  That Plaintiff’s right of action was based and prosecuted in the lower court under the provisions of the Insolvency Law and consequently that he is stopped from pursuing another theory and is not entitled to damages under the provisions of the New Civil Code.

I.  The facts on which this Court based its conclusion that Defendant corporation acted in bad faith are plainly and explicitly narrated in the decision. They are not and cannot be denied or contradicted by said Defendant. On the contrary they are in many respects admitted by the Defendant and no amount of reasoning can make Us change that conclusion.

II.  As pointed out by counsel for Plaintiff, Defendant chooses to ignore that besides the claims of intervenors Alfonso Z. Sycip and Yek Hua Trading Corporation, which counsel for the Shell says to constitute 10/11 of the approved ordinary claims, there is still 1/11 of the other creditors whose claims have been also approved by the insolvency Court, in addition to the ordinary creditors whose claims are yet unapproved by the insolvency Court, amounting to P560,296,32, and “no good reason suggests itself why these unapproved but pending claims should be taken into account in considering the prejudice caused all the creditors of the insolvent CALI. As long as these claims are pending, the contingency exist, that these creditors may recover from the insolvent estate and when they do, they will suffer to the diminution of CALI’s asset resulting from the attachment of the plane by Appellee Shell.”

Answering Defendant’s contention that the transfer of its credit to its sister corporation in the United States did not prejudice the Government or the other creditors of CALI, counsel for Plaintiff-Appellant has the following to say:

“So far as the claims of the Government are concerned, it is true that they were preferred claims and have all been paid. But this circumstance cannot erase the fact that the Appellee’s action jeopardized the Government’s claims as well as the other claims. There was doubt as to the preferential character of the Government’s claims. Indeed, the preferential character of one of the Government’s claims necessitated a litigation to establish. Had it been held to be an ordinary claim, the Government would have suffered as other creditors. But that is neither here nor there;  neither the character of the claim nor the identity of the claimant can possibly affect the application of a principle that no person may profit from his betrayal of a trust.”

And the Appellant continues thus:

“Appellee had a credit of P170,000 against the insolvent CALI as of August 1948, which is assigned to its sister corporation in the United States for P120.000. Hence, Appellee recovered 70% of its credit and immediately upon making the assignment in 1948. More than this, the stated consideration was fixed by and between two sister companies. The fact remains that Appellee’s sister company was enabled to get hold of a C-54 plane worth about P330,000.

“On the other hand, the ordinary creditors who filed their claims against the insolvent CALI had to wait until November 1956 to get their dividends and only at the rate of 30%, computed as follows:

Assets as of October 30, 1956  P668,605.15

Less:

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Preferred claims still uncollected,

assignee and attorney’s fees and

other reserves  P138,719.56

—————

Amount available for distribution  P529,885.59

Divident:

Amount available for distribution  P529,885.59

—————  = 30%

Total of all ordinary claims approved

and unapproved  P1,746,222.33

Had Appellee not assigned its credit in 1948, the insolvent CALI would have realized from the sale of the plane (which was attached by Appellee) P330,000 representing the fair market value of the plane at the time of the attachment. Therefore, if this amount of P330,000 is added to the distributable amount of P529,- 885.59, the share of each of the ordinary creditos would certainly amount to approximately 1 1/2 times the dividend each of them has received; in other words, each ordinary creditors would received not 30% but approximately 45% of his claim, and Appellee would recover approximately only 45% and not 70% of its credit.”

And even if the sale of CALI’s plane would not have obtained the sum of P330,000.00, the proceeds thereof that might be diminished though affecting, no doubt, the calculated dividend of each of the ordinary creditors, estimated at 45% by reducing it proportionately, such diminution would at the same time increase the difference between the dividend paid CALI’s ordinary creditors in November, 1956, and the dividend of 70% secured by Defendant Shell in 1948.

III and IV.  That Appellee Shell is not liable for exemplary damages in this case and thatPlaintiff-Appellant has no cause of action against Defendant-Appellee, for he is not the real party in interest, are matters fully discussed in Our decision and We find no sensible reason for disturbing the conclusions We reached therein.

V.  As to the fifth question raised by counsel for Appellee in the course of his oral argument at the hearing in the City of Baguio of his motion, i.e., “that Plaintiff’s right of action was based and prosecuted in the lower court under the provisions of the Insolvency Law and he is, therefore, stopped from pursuing on appeal another theory under which he might be entitled to damages in consonance with the provisions of the new Civil Code”, We may invoke the decision in the case of Dimaliwat vs. Asuncion, 59 Phil., 396, 401. In that decision We said the following:

“Vicente Dimaliwat contends that Esperanza Dimaliwat has no right to claim the ownership of the property in question to the exclusion of the children of the third marriage, under the foregoing provisions of the Civil Code, because the case was not tried on that theory in the lower court. We find no merit in that contention. The decision cited are not in point. Articles 968 and 969 of the Civil Code are rules of substantive law, and if they are applicable to the facts of this case they must be given effect.”

The same thing can be said in the case at bar. Articles 19, 21, 2229, 2232, 2234, 2142 and 2143 of the new Civil Code are rules of substantive law, and if they are applicable to the facts of this case, which We hold they do, they must be made operative and given effect in this litigation.

x x x                    x x x                    x x x

It maybe seen from the foregoing that the above mentioned grounds on which the motion for reconsideration of the Defendant Shell stand, are not well taken. However, and despite this finding, We insist to delve in the question of whether the exemplary damages imposed in this Court upon Defendant Appellee, which the latter’s counsel contends to be inequitable and unfair, may be modified.

It will be remembered that this case was looked into from the point of view of the provisions of Section 37 of the Insolvency Law, which reads as follows:

SEC. 37.  IF ANY PERSON, before the assignment is made, having notice of the commencement of the proceedings in insolvency, or having reason to believe that insolvency proceedings are about to be commenced, embezzles or disposses of any of the money, goods, chattels, or effects of the insolvent,

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he is chargeable therewith, and liable to an action by the assignee for double the value of the property sought to be embezzled or disposed of, to be received for the benefit of the insolvent estate.

The writer of the decision was then and still is of the opinion that the provisions of this section were applicable to the case, and accordingly, that Defendant Shell was liable in this action instituted by the Assignee for double the value of the property disposed of, to be received for the benefit of the Insolvent estate. However, some of the members of this Court, for the reasons already stated in the decision, entertained some doubt as to the applicability of said Section 37, and yielding to their objections the writer of the decision turned his eyes to the provisions of the new Civil Code, inasmuch as the same result could be achieved. In the case at bar, it cannot be denied that:

“Defendant — taking advantage of his knowledge that insolvency proceedings were to be instituted by CALI if the creditors did not come to an understanding as to the manner of distribution of the insolvent assets among them, and believing as most probable that they would not arrive at such understanding, as it was really the case- schemed and effected the transfer of its credit to its sister corporation in the United States where CALI’s plane C-54 was and by this swift and unsuspected operation efficaciously disposed of said insolvent’s property depriving the latter and the Assignee that was later appointed, of the opportunity to recover said plane.”

These acts of Defendant Shell come squarely within the sanction prescribed by Congress by similar acts and no reflection can be reasonably cast on Us if in the measure of the exemplary damages that were to be imposed upon Defendant-Appellee, We were influenced by the provisions of Section 37 of the Insolvency Law. In this connection it is to be noted that, according to the Civil Code, exemplary or corrective damages are imposed by way of example or correction for the public good, in addition of the moral, temperate, liquidated or compensatory damages Art. 2229, and that the amount of the exemplary damages need not be proved (Art. 2234), for it is left to the sound discretion of the Court.

Notwithstanding the foregoing, a majority of this Court was of the belief that the value of CALI’s plane C-54, at the time when Defendant’s credit was assigned to its sister corporation in the United States, might result quite high, and that exemplary damages should not be left to speculation but properly determined by a certain and fixed amount. So they voted for the reconsideration of the decision with regard to the amount of exemplary damages which this Court fixed at P25,000.00.

Because of this attitude of the Court, the dispositive part of our decision rendered in this case is hereby amended to read as follows:

Wherefore, and on the strength of the foregoing considerations, the decision appealed from is reversed and Defendant-Appellee, Shell Company of the Philippine Islands Ltd., is hereby sentenced to pay Plaintiff-Appellant, as Assignee of the insolvent CALI, compensatory damages in a sum equal to the value of the insolvent’s airplane C-54 at the time Defendant’s credit against CALI was assigned to its sister corporation in the United States – which shall be determined in the corresponding incident in the lower Court after this decision becomes final – and exemplary damages in the sum of P25,000. Costs are taxed against Defendant-Appellee. It is SO ORDERED.

Parás, C.J., Padilla, Concepcion and Endencia, JJ., concur.

 

Separate Opinions

 

MONTEMAYOR, J., concurring:

We concur, but we feel that the ends of justice would be sufficiently served if the exemplary damages were reduced to P10,000.

Reyes, Bengzon, Bautista Angelo and Labrador, JJ., concur.

100 Phil 168Torts and Damages – Obligations arising from human relations

Prior to 1948, Commercial Airlines (CALI) owed P170k (abt. $79k) to Shell and CAL offered its C-54 plane as payment to Shell Company (the plane was in California) but Shell at that time declined as it thought CALI had sufficient money to pay its debt.  In 1948 however, CALI was going bankrupt so it called upon an informal meeting of its creditors. In that meeting, the creditors agreed to appoint representatives to a working committee that would determine the order of preference as to how each creditor should be paid. They also agreed not to file suit against CALI but CALI did reserve that it will file insolvency proceedings

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should its assets be not enough to pay them up. Shell Company was represented by a certain Fitzgerald to the three man working committee. Later, the working committee convened to discuss how CALI’s asset should be divided amongst the creditors but while such was pending, Fitzgerald sent a telegraph message to Shell USA advising the latter that Shell Philippines is assigning its credit to Shell USA in the amount of $79k, thereby effectively collecting almost all if not the entire indebtedness of CALI to Shell Philippines. Shell USA got wind of the fact that CALI has a C-54 plane is California and so Shell USA petitioned before a California court to have the plane be the subject of a writ of attachment which was granted.Meanwhile, the stockholders of CALI were unaware of the assignment of credit made by Shell Philippines to Shell USA and they went on to approve the sale of CALI’s asset to the Philippine Airlines. In September 1948, the other creditors learned of the assignment made by Shell. This prompted these other creditors to file their own complaint of attachment against CALI’s assets. CALI then filed for insolvency proceedings to protect its assets in the Philippines from being attached. Velayo’s appointment as CALI’s assignee was approved in lieu of the insolvency proceeding. In order for him to recover the C-54 plane in California, it filed for a writ of injunction against Shell Philippines in order for the latter to restrain Shell USA from proceeding with the attachment and in the alternative that judgment be awarded in favor of CALI for damages double the amount of the C-54 plane. The C-54 plane was not recovered. Shell Company argued it is not liable for damages because there is nothing in the law which prohibits a company from assigning its credit, it being a common practice.ISSUE: Whether or not Shell is liable for damages considering that it did not violate any law.HELD: Yes. The basis of such liability, in the absence of law, is Article 21 of the Civil Code which states:“Art. 21.  Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage”.Thus at one stroke, the legislator, if the forgoing rule is approved (as it was approved), would vouchsafe adequate legal remedy for that untold numbers of moral wrongs which is impossible for human foresight to provide for specifically in the statutes. A moral wrong or injury, even if it does not constitute a violation of a statute law, should be compensated by damages. Moral damages (Art. 2217) may be recovered (Art. 2219). In Article 20, the liability for damages arises from a willful or negligent act contrary to law. In this article, the act is contrary to morals, good customs or public policy.

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THIRD DIVISION

G.R. No. 78911-25 December 11, 1987

CHARMINA B. BANAL, petitioner, vs.THE HON. TOMAS V. TADEO, JR., Presiding Judge, RTC-Quezon City, Branch 105 and Rosario Claudia respondents.

GUTIERREZ, JR., J.:

This is a petition for certiorari to review and set aside the orders of the respondent Regional Trial Court, Branch 105, Quezon City dated (1) 8 January 1987 which rejected the appearance of Atty. Nicolito L. Bustos as private prosecutor in Criminal Cases Nos. Q-40909 to Q-40913 where respondent Rosario Claudio is the accused for violation of Batas Pambansa Blg. 22; and (2) 31 March 1987 which denied the petitioner's motion for reconsideration of the order dated 8 January 1987; and for mandamus to allow Atty. Bustos to enter his appearance as private prosecutor in the aforestated criminal cases.

It appears that fifteen (15) separate informations for violation of Batas Pambansa Blg. 22 or the Bouncing Checks Law, docketed as Criminal Cases Nos. 40909-40913, were filed against respondent Claudio before the Regional Trial Court of Quezon City and originally assigned to Branch 84.

The presiding judge of Branch 84 inhibited himself when respondent Claudio, through counsel, filed a petition for recuse dated May 19,1986.

The cases were re-raffled and consequently assigned on June 25, 1986 to Branch 105 which was then presided over by Judge Johnico G. Serquina

During these proceedings, respondent Claudio was finally arraigned on November 20, 1986 where she pleaded not guilty to the charges. Pre-trial was then set on January 8, 1987.

In the meantime Judge Tomas V. Tadeo, Jr. replaced Judge Serquina as presiding judge of Branch 105.

On January 8, 1987, the respondent court issued an order rejecting the appearance of Atty. Nicolito L. Bustos as private prosecutor on the ground that the charge is for the violation of Batas Pambansa Blg. 22 which does not provide for any civil liability or indemnity and hence, "it is not a crime against property but public order."

The petitioner, through counsel filed a motion for reconsideration of the order dated 8 January 1987 on March 10, 1987.

Respondent Claudio filed her opposition to the motion for reconsideration on March 25, 1987.

In an order dated 31 March 1987, the respondent court denied petitioner's motion for reconsideration.

Hence, this petition questioning the orders of the respondent Court.

The issue to be resolved is whether or not the respondent Court acted with grave abuse of discretion or in excess of its jurisdiction in rejecting the appearance of a private prosecutor.

The respondents make capital of the fact that Batas Pambansa Blg. 22 punishes the act of knowingly issuing worthless checks as an offense against public order. As such, it is argued that it is the State and the public that are the principal complainants and, therefore, no civil indemnity is provided for by Batas Pambansa Blg. 22 for which a private party or prosecutor may intervene.

On the other hand, the petitioner, relying on the legal axiom that "Every man criminally liable is also civilly liable," contends that indemnity may be recovered from the offender regardless of whether or not Batas Pambansa Blg. 22 so provides.

A careful study of the concept of civil liability allows a solution to the issue in the case at bar.

Generally, the basis of civil liability arising from crime is the fundamental postulate of our law that "Every man criminally liable is also civilly liable" (Art. 100, The Revised Penal Code). Underlying this legal principle is the traditional theory that when a person commits a crime he offends two entities namely ( 1) the society in which he

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lives in or the political entity called the State whose law he had violated; and (2) the individual member of that society whose person, right, honor, chastity or property was actually or directly injured or damaged by the same punishable act or omission. However, this rather broad and general provision is among the most complex and controversial topics in criminal procedure. It can be misleading in its implications especially where the same act or omission may be treated as a crime in one instance and as a tort in another or where the law allows a separate civil action to proceed independently of the course of the criminal prosecution with which it is intimately intertwined. Many legal scholars treat as a misconception or fallacy the generally accepted notion that, the civil liability actually arises from the crime when, in the ultimate analysis, it does not. While an act or omission is felonious because it is punishable by law, it gives rise to civil liability not so much because it is a crime but because it caused damage to another. Viewing things pragmatically, we can readily see that what gives rise to the civil liability is really the obligation and the moral duty of everyone to repair or make whole the damage caused to another by reason of his own act or omission, done intentionally or negligently, whether or not the same be punishable by law. In other words, criminal liability will give rise to civil liability only if the same felonious act or omission results in damage or injury to another and is the direct and proximate cause thereof. Damage or injury to another is evidently the foundation of the civil action. Such is not the case in criminal actions for, to be criminally liable, it is enough that the act or omission complained of is punishable, regardless of whether or not it also causes material damage to another. (See Sangco, Philippine Law on Torts and Damages, 1978, Revised Edition, pp. 246-247).

Article 20 of the New Civil Code provides:

Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.

Regardless, therefore, of whether or not a special law so provides, indemnification of the offended party may be had on account of the damage, loss or injury directly suffered as a consequence of the wrongful act of another. The indemnity which a person is sentenced to pay forms an integral part of the penalty imposed by law for the commission of a crime (Quemel v. Court of Appeals, 22 SCRA 44, citing Bagtas v. Director of Prisons, 84 Phil. 692). Every crime gives rise to a penal or criminal action for the punishment of the guilty party, and also to civil action for the restitution of the thing, repair of the damage, and indemnification for the losses. (United States v. Bernardo, 19 Phil. 265).

Indeed one cannot disregard the private party in the case at bar who suffered the offenses committed against her. Not only the State but the petitioner too is entitled to relief as a member of the public which the law seeks to protect. She was assured that the checks were good when she parted with money, property or services. She suffered with the State when the checks bounced.

In Lozano v. Hon. Martinez (G.R. No. 63419, December 18, 1986) and the cases consolidated therewith, we held that "The effects of a worthless check transcend the private interests of the parties directly involved in the transaction and touch the interests of the community at large." Yet, we too recognized the wrong done to the private party defrauded when we stated therein that "The mischief it creates is not only a wrong to the payee or the holder, but also an injury to the public."

Civil liability to the offended private party cannot thus be denied, The payee of the check is entitled to receive the payment of money for which the worthless check was issued. Having been caused the damage, she is entitled to recompense.

Surely, it could not have been the intendment of the framers of Batas Pambansa Big. 22 to leave the offended private party defrauded and empty- handed by excluding the civil liability of the offender, giving her only the remedy, which in many cases results in a Pyrrhic victory, of having to file a separate civil suit. To do so, may leave the offended party unable to recover even the face value of the check due her, thereby unjustly enriching the errant drawer at the expense of the payee. The protection which the law seeks to provide would, therefore, be brought to naught.

The petitioner's intervention in the prosecution of Criminal Cases 40909 to 40913 is justified not only for the protection of her interests but also in the interest of the speedy and inexpensive administration of justice mandated by the Constitution (Section 16, Article III, Bill of Rights, Constitution of 1987). A separate civil action for the purpose would only prove to be costly, burdensome, and time-consuming for both parties and further delay the final disposition of the case. This multiplicity of suits must be avoided. Where petitioner's rights may be fulIy adjudicated in the proceedings before the trial court, resort t o a separate action to recover civil liability is clearly unwarranted.

WHEREFORE the petition is hereby GRANTED. The respondent court is ordered to permit the intervention of a private prosecutor in behalf of petitioner Charmina B. Banal, in the prosecution of the civil aspect of Criminasl

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Cases Nos. 40909 to 40913. The temporary restraining order issued by this court a quo for further proceedings. This decision is immediately executory.

SO ORDERED.

Fernan (Chairman), Feliciano, Bidin and Cortes

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FIRST DIVISION

DEVELOPMENT BANK G.R. No. 167238

OF THE PHILIPPINES,

Petitioner, Present:

PUNO, C.J., Chairperson,

YNARES-SANTIAGO,*

- v e r s u s - CARPIO,

CORONA and

LEONARDO-DE CASTRO, JJ.

SPOUSES JESUS and

ANACORITA DOYON,

Respondents. Promulgated:

March 25, 2009

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

D E C I S I O N

CORONA, J.:

This petition[1] seeks to the set aside the November 23, 2004 decision[2] and February 18, 2005 resolution[3] of the Court of Appeals (CA) in CA-G.R. CV No. 74660.

In the early 1990s, respondent spouses Jesus and Anacorita Doyon obtained several loans amounting to P10 million[4] from petitioner Development Bank of the Philippines (DBP). As security for the loans, respondents mortgaged their real estate properties as well as the motor vehicles of JD Bus Lines.

Due to their inability to fully pay their obligations upon maturity,[5] respondents requested petitioner to restructure their past due loans.[6] Petitioner agreed. Hence, respondents signed three promissory notes on June 29, 1994.[7]

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Nonetheless, respondents still failed to pay the quarterly installments on the promissory notes. Thus, petitioner demanded the payment of the total value of their loans from respondents.[8] Respondents, however, ignored petitioner and adamantly refused to pay their loans.

Consequently, petitioner filed an application for extrajudicial foreclosure of real estate mortgages in the Regional Trial Court (RTC) of Ormoc City in 1995. To forestall the foreclosure proceedings, respondents immediately filed an action for their nullification in the RTC of Ormoc City, Branch 35 claiming that they had already paid the principal amount of their loans (or P10 million) to petitioner. This was docketed as Civil Case No. 3314-O.

For three years, Civil Case No. 3314-O was not acted upon by the RTC.

In 1998, petitioner withdrew the application for extrajudicial foreclosure and thereafter moved for the dismissal of Civil Case No. 3314-O. The RTC granted the motion in an order dated March 2, 1998.[9] It held:

In today’s hearing, which is for the reception of evidence for [petitioner], [it] informed the Court about its withdrawal of the [application] for extrajudicial foreclosure of real estate made subject of the present case. In view of the withdrawal, [petitioner] moved for the dismissal of the case considering that the action would be rendered moot and academic.

When [respondents were] made to comment, they interposed no objection to the motion to dismiss.

By agreement therefore between the parties, this case is considered DISMISSED with prejudice.

Weeks later, petitioner demanded from respondents the payment of their outstanding obligations which had by then ballooned to more than P20 million. Again, respondents ignored petitioner.

Petitioner filed an application for extrajudicial foreclosure of respondents’ real and chattel mortgages with the DBP special sheriff in Makati[10] and subsequently took constructive possession of the foreclosed properties.[11] It posted guards at the perimeter of respondents’ property in Barangay Cabulihan, Ormoc City (Cabulihan property) where the foreclosed motor vehicles of JD Bus Lines were parked.[12] Subsequently, the DBP special sheriff issued notices of sale at public auction of the foreclosed properties.[13]

Meanwhile, respondents filed a complaint for damages[14] against petitioner and the DBP special sheriff in the RTC of Ormoc City, Branch 35. According to respondents, by withdrawing the application for extrajudicial foreclosure and moving for the dismissal of Civil Case No. 3314-O, petitioner led them to believe that it would no longer seek the satisfaction of its claims. Petitioner therefore acted contrary to Article 19 of the Civil Code[15] when it foreclosed on the real and chattel mortgages anew.

Furthermore, respondents claimed that the provision in the mortgage contracts[16] allowing petitioner as mortgagee to take constructive possession of the mortgaged properties upon respondents’ default was void. The

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provision allegedly constituted a pactum commissorium[17] since it permitted petitioner to appropriate the mortgaged properties.

Lastly, respondents assailed the validity of the public auctions conducted by the DBP special sheriff. The September 9, 1998 notices of sale stated that the foreclosed real properties would be sold at public auction on “September 16, 1998 at 10:00 a.m. or soon thereafter”[18] while the foreclosed motor vehicles would be sold on “September 16, 1998 at 2:00 p.m. or soon thereafter.”[19] Section 4 of Act 3135,[20] however, requires that public auctions must take place from 9 a.m. until 4 p.m. or, allegedly, for seven continuous hours.

Petitioner, in its answer, pointed out that despite the restructuring, respondents refused to pay the amortizations on the June 29, 2004 promissory notes. Moreover, the filing of Civil Case No. 3314-O and the delay in its resolution prevented petitioner from collecting on the said notes from respondents. It withdrew the application in the RTC and moved for the dismissal of Civil Case No. 3314-O only for the purpose of availing of a more efficient legal remedy, that is, foreclosure through a special sheriff, as authorized by its charter.[21]

In a decision dated January 25, 2002,[22] the RTC found that, by withdrawing its application for extrajudicial foreclosure and moving for the dismissal of Civil Case No. 3314-O, petitioner led respondents to believe that their loans had been extinguished. Thus, petitioner acted in bad faith when it foreclosed on the real and chattel mortgages anew. The dispositive portion of the decision read:

WHEREFORE, after due consideration of all the foregoing, judgment is hereby rendered in favor of [respondents] and against [petitioner], ordering as follows:

1. [petitioner] to immediately stop the presence of its security guards in the compound or premises of the plaintiffs at Barangay Cabulihan, Ormoc City, and to vacate them from said premises;

2. [petitioner] to pay actual damages to [respondents] in the total amount of P16,000 per day for the four buses, or a total of P480,000 per month for these buses starting from April 27, 1998 until the time the buses shall have been allowed to leave the compound of [respondents] or until [petitioner] shall vacate the said premises, and P200,000 as compensatory damages for the injury to [respondents'] business standing;

3. [petitioner] to pay P1,000,000 as exemplary damages;

4. [petitioner and the DBP special sheriff] jointly and severally to pay the plaintiffs the sum of P2,000,000 as moral damages, the sum of P50,000 as attorney's fees, the sum of P10,000 as litigation expenses and costs of the suit.

Aggrieved, petitioner appealed to the CA. [23]

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In a decision dated November 23, 2004, the CA affirmed the RTC decision with modification of the liability for damages. Because the DBP special sheriff merely performed his ministerial duty (when he foreclosed on the real and chattel mortgages and issued notices of sale in public auction of the foreclosed properties), petitioner alone was liable.

Petitioner moved for reconsideration but it was denied. Hence, this petition.

Petitioner basically asserts that it did not act in bad faith when it foreclosed on respondents’ real and chattel mortgages anew. Because respondents’ loans were past due, it had the right to satisfy its credit by foreclosing on the mortgages.

We grant the petition.

This Court is not a trier of facts and, as a rule, it only entertains questions of law in a petition for review on certiorari. This rule, however, admits of exceptions such as when the assailed decision is based on a misapprehension of facts.[24]

In this instance, the RTC and the CA both found that petitioner acted with bad faith when it foreclosed on the real and chattel mortgages. We disagree.

What is due to a person is determined by the circumstances of each particular case.[25] Article 19 of the Civil Code provides:

Article 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.

For an action for damages under this provision to prosper, the complainant must prove that:

(a) defendant has a legal right or duty;

(b) he exercised his right or performed his duty with bad faith and

(c) complainant was prejudiced or injured as a result of the said exercise or performance by defendant.

On the first requisite, we find that petitioner had the legal right to foreclose on the real and chattel mortgages.

Since respondents neither assailed the due execution of the June 29, 1994 promissory notes nor presented proof of payment thereof, their obligation remained outstanding. Upon default, by prior mutual agreement, petitioner had the right to foreclose on the real and chattel mortgages securing their loans.

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The June 29, 1994 promissory notes uniformly stated that failure to pay an installment (or interest) on the due date was an event of default.[26] Respondents were therefore in default when they failed to pay the quarterly amortizations on the designated due dates.

When the principal obligation becomes due and the debtor fails to perform his obligation, the creditor may foreclose on the mortgage[27] for the purpose of alienating the (mortgaged) property to satisfy his credit.[28]

Regarding the second requisite, bad faith imports a dishonest purpose or some moral obliquity or conscious doing of a wrong that partakes of the nature of fraud.[29]

We note that the RTC of Ormoc City (Judge Fortunito L. Madrona) “sat” on Civil Case No. 3314-O for three long years. This inordinate delay prejudiced petitioner. Inasmuch as petitioner was in the business of lending out money it borrowed from the public, sound banking practice called for the exercise of a more efficient legal remedy against a defaulting debtor like respondent.[30] Thus, petitioner could not be faulted for resorting to foreclosure through a special sheriff. Such procedure was, after all, the more efficient method of enforcing petitioner’s rights as mortgagee under its charter.[31]

Moreover, the March 2, 1998 order of the RTC (quoted above) merely stated that the withdrawal of the application for extrajudicial foreclosure in the RTC rendered Civil Case No. 3314-O moot and academic. Nothing in the said order stated, or even hinted, that respondents’ obligation to petitioner had in fact been extinguished. Thus, there was nothing on the part of petitioner even remotely showing that it led respondents to believe that it had waived its claims.

Lastly, inasmuch as petitioner demanded payment from them right after the dismissal of Civil Case No. 3314-O, respondents could not have reasonably presumed that the bank had waived its claims against them. Furthermore, the fact that a demand for payment was made negated bad faith on the part of petitioner. Despite giving respondents the opportunity to pay their long overdue obligations and avoid foreclosure, respondents still refused to pay. Since respondents did not have a cause of action against petitioner, the RTC and CA erred in granting damages to them.

A stipulation allowing the mortgagee to take actual or constructive possession of a mortgaged property upon foreclosure is valid. In Agricultural and Industrial Bank v. Tambunting,[32] we explained:

A stipulation … authorizing the mortgagee, for the purpose stated therein specified, to take possession of the mortgaged premises upon the foreclosure of a mortgage is not repugnant [to either Article 2088 or Article 2137]. On the contrary, such a stipulation is in consonance or analogous to the provisions of Article [2132], et seq. of the Civil Code regarding antichresis and the provision of the Rules of Court regarding the appointment of a receiver as a convenient and feasible means of preserving and administering the property in litigation.[33]

The real estate and chattel mortgage contracts[34] uniformly provided that petitioner could take possession of the foreclosed properties upon the failure of respondents to pay even one amortization. Thus, respondents’ refusal to pay their obligations gave rise to petitioner’s right to take constructive possession of the foreclosed motor vehicles.

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In Philippine National Bank v. Cabatingan,[35] we held that a sale at public auction held at any time between 9:00 a.m. and 4:00 p.m. of a particular day, regardless of duration, was valid. Since the sale at public auction of the foreclosed real properties and chattels was conducted between 10:00 a.m. and 11:00 a.m. and between 2:00 p.m. and 3:30 p.m., respectively, the auctions were valid.

WHEREFORE, the petition is hereby GRANTED. The November 23, 2004 decision and February 18, 2005 resolution of the Court of Appeals in CA-G.R. CV 74660 affirming the January 25, 2002 decision of the Regional Trial Court of Ormoc City, Branch 35 in Civil Case No. 3592-0 are SET ASIDE. New judgment is hereby entered dismissing Civil Case No. 3592-0 for lack of cause of action.

No pronouncement as to costs.

SO ORDERED.

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SPOUSES MAMARIL v. THE BOY SCOUTS OF THE PHILIPPINES, ET. AL., G.R. No. 179382, January 14, 2013Civil Law; Lease Contract; Parking a vehicle in a garage, upon payment of a fixed amount, is a lease. Moreover, the Court concurs with the finding of the CA that the contract between the parties herein was one of lease as defined under Article 1643 of the Civil Code. It has been held that the act of parking a vehicle in a garage, upon payment of a fixed amount, is a lease. Even in a majority of American cases, it has been ruled that where a customer simply pays a fee, parks his car in any available space in the lot, locks the car and takes the key with him, the possession and control of the car, necessary elements in bailment, do not pass to the parking lot operator, hence, the contractual relationship between the parties is one of lease.In the instant case, the owners parked their six (6) passenger jeepneys inside the BSP compound for a monthly fee of P300.00 for each unit and took the keys home with them. Hence, a lessor-lessee relationship indubitably existed between them and BSP. On this score, Article 1654 of the Civil Code provides that “[t]he lessor (BSP) is obliged: (1) to deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended; (2) to make on the same during the lease all the necessary repairs in order to keep it suitable for the use to which it has been devoted, unless there is a stipulation to the contrary; and (3) to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract.” In relation thereto, Article 1664 of the same Code states that “[t]he lessor is not obliged to answer for a mere act of trespass which a third person may cause on the use of the thing leased; but the lessee shall have a direct action against the intruder.” Here, BSP was not remiss in its obligation to provide Sps. Mamaril a suitable parking space for their jeepneys as it even hired security guards to secure the premises; hence, it should not be held liable for the loss suffered by Sps. Mamaril.

Sps. Mamaril vs. Boy Scout of the Philippines | G.R. No. 179382 | January 14, 2013

Facts: PUJ operators Sps. Mamaril would park their 6 passenger jeepneys every night at BSP’s compound in Malate, Manila for a fee of P300.00 per month for each unit. One day, one of the vehicles was missing and was never recovered. According to the security guards Peña and Gaddi of AIB Security Agency with whom BSP had contracted for its security and protection, a male person who looked familiar to them took the subject vehicle out of the compound. Sps. Mamaril prayed that Peña and Gaddi, together with AIB and BSP, be held liable for: (a) the value of the subject vehicle; (b) amount representing daily loss of income/boundary reckoned from the day the vehicle was lost; (c) exemplary damages; (d) moral damages; (e) attorney's fees; and (f) cost of suit.

BSP denied any liability contending that not only did Sps. Mamaril directly deal with AIB with respect to the manner by which the parked vehicles would be handled, but the parking ticket itself expressly stated that the "Management shall not be responsible for loss of vehicle or any of its accessories or article left therein." It also claimed that Sps. Mamaril erroneously relied on the Guard Service Contract. Apart from not being parties thereto, its provisions cover only the protection of BSP's properties, its officers, and employees.

Issue: Whether or not BSP may be held liable for the loss of the vehicle caused by the negligence of its security guards.

Held: The proximate cause of the loss of Sps. Mamaril's vehicle was the negligent act of security guards Peña and Gaddi in allowing an unidentified person to drive out the subject vehicle. The records are bereft of any finding of negligence on the part of BSP. Neither will the vicarious liability of an employer under Article 2180 of the Civil Code apply in this case. Peña and Gaddi were assigned as security guards by AIB to BSP pursuant to the Guard Service Contract. No employer-employee relationship existed between BSP and the security guards assigned in its premises. Sps. Mamaril are not parties to the Guard Service Contract. Guard Service Contract between defendant-appellant BSP and defendant AIB Security Agency is purely between the parties therein.

Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property he received from the decedent. If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person.

Thus, in order that a third person benefited by the second paragraph of Article 1311, referred to as a stipulation pour autrui, may demand its fulfillment, the following requisites must concur: (1) There is a stipulation in favor of a third person; (2) The stipulation is a part, not the whole, of the contract; (3) The contracting parties clearly and deliberately conferred a favor to the third person - the favor is not merely incidental; (4) The favor is unconditional and uncompensated; (5) The third person communicated his or her acceptance of the favor before its revocation; and (6) The contracting parties do not represent, or are not authorized, by the third party. However, none of the foregoing elements obtains in this case.There is absolutely nothing in the said contract that would indicate any obligation and/or liability on the part of the parties therein in favor of third persons such as herein plaintiffs-appellees.

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Moreover, the Court concurs with the finding of the CA that the contract between the parties herein was one of lease as defined under Article 1643 of the Civil Code. It has been held that the act of parking a vehicle in a garage, upon payment of a fixed amount, is a lease. The agreement with respect to the ingress and egress of Sps. Mamaril's vehicles were coordinated only with AIB and its security guards, without the knowledge and consent of BSP. Accordingly, the mishandling of the parked vehicles that resulted in herein complained loss should be recovered only from the tort feasors (Peña and Gaddi) and their employer, AIB; and not against the lessor, BSP.

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SECOND DIVISION CALATAGAN GOLF CLUB, INC. G.R. No. 165443 Petitioner, Present: QUISUMBING, J., - versus - Chairperson, YNARES-SANTIAGO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ.*

SIXTO CLEMENTE, JR., Respondent. Promulgated: April 16, 2009 x ---------------------------------------------------------------------------------x D E C I S I O N TINGA, J.: Seeking the reversal of the Decision[1] dated 1 June 2004 of the Court of Appeals in CA-G.R. SP No. 62331 and the reinstatement of the Decision dated 15 November 2000 of the Securities and Exchange Commission (SEC) in SEC Case No. 04-98-5954, petitioner Calatagan Golf Club, Inc. (Calatagan) filed this Rule 45 petition against respondent Sixto Clemente, Jr. (Clemente). The key facts are undisputed. Clemente applied to purchase one share of stock of Calatagan, indicating in his application for membership his mailing address at “Phimco Industries, Inc. – P.O. Box 240, MCC,” complete residential address, office and residence telephone numbers, as well as the company (Phimco) with which he was connected, Calatagan issued to him Certificate of Stock No. A-01295 on 2 May 1990 after paying P120,000.00 for the share.[2] Calatagan charges monthly dues on its members to meet expenses for general operations, as well as costs for upkeep and improvement of the grounds and facilities. The provision on monthly dues is incorporated in Calatagan’s Articles of Incorporation and By-Laws. It is also reproduced at the back of each certificate of stock.[3] As reproduced in the dorsal side of Certificate of Stock No. A-01295, the provision reads: 5. The owners of shares of stock shall be subject to the payment of monthly dues in an amount as may be prescribed in the by-laws or by the Board of Directors which shall in no case be less that [sic] P50.00 to meet the expenses for the general operations of the club, and the maintenance and improvement of its premises and facilities, in addition to such fees as may be charged for the actual use of the facilities x x x When Clemente became a member the monthly charge stood at P400.00. He paid P3,000.00 for his monthly dues on 21 March 1991 and another P5,400.00 on 9 December 1991. Then he ceased paying the dues. At that point, his balance amounted to P400.00.[4]

Ten (10) months later, Calatagan made the initial step to collect Clemente’s back accounts by sending a demand letter dated 21 September 1992. It was followed by a second letter dated 22 October 1992. Both letters were sent to Clemente’s mailing address as indicated in his membership application but were sent back to sender with the postal note that the address had been closed.[5]

Calatagan declared Clemente delinquent for having failed to pay his monthly dues for more than sixty (60) days, specifically P5,600.00 as of 31 October 1992. Calatagan also included Clemente’s name in the list of delinquent members posted on the club’s bulletin board. On 1 December 1992, Calatagan’s board of directors adopted a resolution authorizing the foreclosure of shares of delinquent members, including Clemente’s; and the public auction of these shares.

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On 7 December 1992, Calatagan sent a third and final letter to Clemente, this time signed by its Corporate Secretary, Atty. Benjamin Tanedo, Jr. The letter contains a warning that unless Clemente settles his outstanding dues, his share would be included among the delinquent shares to be sold at public auction on 15 January 1993. Again, this letter was sent to Clemente’s mailing address that had already been closed.[6] On 5 January 1993, a notice of auction sale was posted on the Club’s bulletin board, as well as on the club’s premises. The auction sale took place as scheduled on 15 January 1993, and Clemente’s share sold for P64,000.[7] According to the Certificate of Sale issued by Calatagan after the sale, Clemente’s share was purchased by a Nestor A. Virata.[8] At the time of the sale, Clemente’s accrued monthly dues amounted to P5,200.00.[9] A notice of foreclosure of Clemente’s share was published in the 26 May 1993 issue of the Business World.[10]

Clemente learned of the sale of his share only in November of 1997.[11] He filed a claim with the Securities and Exchange Commission (SEC) seeking the restoration of his shareholding in Calatagan with damages. On 15 November 2000, the SEC rendered a decision dismissing Clemente’s complaint. Citing Section 69 of the Corporation Code which provides that the sale of shares at an auction sale can only be questioned within six (6) months from the date of sale, the SEC concluded that Clemente’s claim, filed four (4) years after the sale, had already prescribed. The SEC further held that Calatagan had complied with all the requirements for a valid sale of the subject share, Clemente having failed to inform Calatagan that the address he had earlier supplied was no longer his address. Clemente, the SEC ruled, had acted in bad faith in assuming as he claimed that his non-payment of monthly dues would merely render his share “inactive.” Clemente filed a petition for review with the Court of Appeals. On 1 June 2004, the Court of Appeals promulgated a decision reversing the SEC. The appellate court restored Clemente’s one share with a directive to Calatagan to issue in his a new share, and awarded to Clemente a total of P400,000.00 in damages, less the unpaid monthly dues of P5,200.00. In rejecting the SEC’s finding that the action had prescribed, the Court of Appeals cited the SEC’s own ruling in SEC Case No. 4160, Caram v. Valley Golf Country Club, Inc., that Section 69 of the Corporation Code specifically refers to unpaid subscriptions to capital stock, and not to any other debt of stockholders. With the insinuation that Section 69 does not apply to unpaid membership dues in non-stock corporations, the appellate court employed Article 1140 of the Civil Code as the proper rule of prescription. The provision sets the prescription period of actions to recover movables at eight (8) years. The Court of Appeals also pointed out that since that Calatagan’s first two demand letters had been returned to it as sender with the notation about the closure of the mailing address, it very well knew that its third and final demand letter also sent to the same mailing address would not be received by Clemente. It noted the by-law requirement that within ten (10) days after the Board has ordered the sale at auction of a member’s share of stock for indebtedness, the Corporate Secretary shall notify the owner thereof and advise the Membership Committee of such fact. Finally, the Court of Appeals ratiocinated that “a person who is in danger of the imminent loss of his property has the right to be notified and be given the chance to prevent the loss.”[12]

Hence, the present appeal. Calatagan maintains that the action of Clemente had prescribed pursuant to Section 69 of the Corporation Code, and that the requisite notices under both the law and the by-laws had been rendered to Clemente. Section 69 of the Code provides that an action to recover delinquent stock sold must be commenced by the filing of a complaint within six (6) months from the date of sale. As correctly pointed out by the Court of Appeals, Section 69 is part of Title VIII of the Code entitled “Stocks and Stockholders” and refers specifically to unpaid subscriptions to capital stock, the sale of which is governed by the immediately preceding Section 68. The Court of Appeals debunked both Calatagan’s and the SEC’s reliance on Section 69 by citing another SEC ruling in the case of Caram v. Valley Golf. In connection with Section 69, Calatagan raises a peripheral point made in the SEC’s Caram ruling. In Caram, the SEC, using as take-off Section 6 of the Corporation Code which refers to “such rights, privileges or restrictions as may be stated in the articles of incorporation,” pointed out that the Articles of Incorporation of Valley Golf does not “impose any lien, liability or restriction on the Golf Share [of Caram],” but only its (Valley Golf’s) By-Laws does. Here, Calatagan stresses that its own Articles of Incorporation does provide

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that the monthly dues assessed on owners of shares of the corporation, along with all other obligations of the shareholders to the club, “shall constitute a first lien on the shares… and in the event of delinquency such shares may be ordered sold by the Board of Directors in the manner provided in the By-Laws to satisfy said dues or other obligations of the shareholders.”[13] With its illative but incomprehensible logic, Calatagan concludes that the prescriptive period under Section 69 should also apply to the sale of Clemente’s share as the lien that Calatagan perceives to be a restriction is stated in the articles of incorporation and not only in the by-laws. We remain unconvinced. There are fundamental differences that defy equivalence or even analogy between the sale of delinquent stock under Section 68 and the sale that occurred in this case. At the root of the sale of delinquent stock is the non-payment of the subscription price for the share of stock itself. The stockholder or subscriber has yet to fully pay for the value of the share or shares subscribed. In this case, Clemente had already fully paid for the share in Calatagan and no longer had any outstanding obligation to deprive him of full title to his share. Perhaps the analogy could have been made if Clemente had not yet fully paid for his share and the non-stock corporation, pursuant to an article or by-law provision designed to address that situation, decided to sell such share as a consequence. But that is not the case here, and there is no purpose for us to apply Section 69 to the case at bar. Calatagan argues in the alternative that Clemente’s suit is barred by Article 1146 of the Civil Code which establishes four (4) years as the prescriptive period for actions based upon injury to the rights of the plaintiff on the hypothesis that the suit is purely for damages. As a second alternative still, Calatagan posits that Clemente’s action is governed by Article 1149 of the Civil Code which sets five (5) years as the period of prescription for all other actions whose prescriptive periods are not fixed in the Civil Code or in any other law. Neither article is applicable but Article 1140 of the Civil Code which provides that an action to recover movables shall prescribe in eight (8) years. Calatagan’s action is for the recovery of a share of stock, plus damages. Calatagan’s advertence to the fact that the constitution of a lien on the member’s share by virtue of the explicit provisions in its Articles of Incorporation and By-Laws is relevant but ultimately of no help to its cause. Calatagan’s Articles of Incorporation states that the “dues, together with all other obligations of members to the club, shall constitute a first lien on the shares, second only to any lien in favor of the national or local government, and in the event of delinquency such shares may be ordered sold by the Board of Directors in the manner provided in the By-Laws to satisfy said dues or other obligations of the stockholders.”[14] In turn, there are several provisions in the By-laws that govern the payment of dues, the lapse into delinquency of the member, and the constitution and execution on the lien. We quote these provisions: ARTICLE XII – MEMBER’S ACCOUNT SEC. 31. (a) Billing Members, Posting of Delinquent Members – The Treasurer shall bill al members monthly. As soon as possible after the end of every month, a statement showing the account of bill of a member for said month will be prepared and sent to him. If the bill of any member remains unpaid by the 20th of the month following that in which the bill was incurred, the Treasurer shall notify him that if his bill is not paid in full by the end of the succeeding month his name will be posted as delinquent the following day at the Clubhouse bulletin board. While posted, a member, the immediate members of his family, and his guests, may not avail of the facilities of the Club. (b) Members on the delinquent list for more than 60 days shall be reported to the Board and their shares or the shares of the juridical entities they represent shall thereafter be ordered sold by the Board at auction to satisfy the claims of the Club as provided for in Section 32 hereon. A member may pay his overdue account at any time before the auction sale. Sec. 32. Lien on Shares; Sale of Share at Auction- The club shall have a first lien on every share of stock to secure debts of the members to the Club. This lien shall be annotated on the certificates of stock and may be enforced by the Club in the following manner: (a) Within ten (10) days after the Board has ordered the sale at auction of a member’s share of stock for indebtedness under Section 31(b) hereof, the Secretary shall notify the owner thereof, and shall advise the Membership Committee of such fact. (b) The Membership Committee shall then notify all applicants on the Waiting List and all registered stockholders of the availability of a share of stock for sale at auction at a specified date, time and place, and shall post a notice to that effect in the Club bulletin board for at least ten (10) days prior to the auction sale.

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(c) On the date and hour fixed, the Membership Committee shall proceed with the auction by viva voce bidding and award the sale of the share of stock to the highest bidder. (d) The purchase price shall be paid by the winning bidder to the Club within twenty-four (24) hours after the bidding. The winning bidder or the representative in the case of a juridical entity shall become a Regular Member upon payment of the purchase price and issuance of a new stock certificate in his name or in the name of the juridical entity he represents. The proceeds of the sale shall be paid by the Club to the selling stockholder after deducting his obligations to the Club. (e) If no bids be received or if the winning bidder fails to pay the amount of this bid within twenty-four (24) hours after the bidding, the auction procedures may be repeated from time to time at the discretion of the Membership Committee until the share of stock be sold. (f) If the proceeds from the sale of the share of stock are not sufficient to pay in full the indebtedness of the member, the member shall continue to be obligated to the Club for the unpaid balance. If the member whose share of stock is sold fails or refuse to surrender the stock certificate for cancellation, cancellation shall be effected in the books of the Club based on a record of the proceedings. Such cancellation shall render the unsurrendered stock certificate null and void and notice to this effect shall be duly published. It is plain that Calatagan had endeavored to install a clear and comprehensive procedure to govern the payment of monthly dues, the declaration of a member as delinquent, and the constitution of a lien on the shares and its eventual public sale to answer for the member’s debts. Under Section 91 of the Corporation Code, membership in a non-stock corporation “shall be terminated in the manner and for the causes provided in the articles of incorporation or the by-laws.” The By-law provisions are elaborate in explaining the manner and the causes for the termination of membership in Calatagan, through the execution on the lien of the share. The Court is satisfied that the By-Laws, as written, affords due protection to the member by assuring that the member should be notified by the Secretary of the looming execution sale that would terminate membership in the club. In addition, the By-Laws guarantees that after the execution sale, the proceeds of the sale would be returned to the former member after deducting the outstanding obligations. If followed to the letter, the termination of membership under this procedure outlined in the By-Laws would accord with substantial justice. Yet, did Calatagan actually comply with the by-law provisions when it sold Clemente’s share? The appellate court’s finding on this point warrants our approving citation, thus: In accordance with this provision, Calatagan sent the third and final demand letter to Clemente on December 7, 1992. The letter states that if the amount of delinquency is not paid, the share will be included among the delinquent shares to be sold at public auction. This letter was signed by Atty. Benjamin Tanedo, Jr., Calatagan Golf’s Corporate Secretary. It was again sent to Clemente’s mailing address – Phimco Industries Inc., P.O. Box 240, MCC Makati. As expected, it was returned because the post office box had been closed. Under the By-Laws, the Corporate Secretary is tasked to “give or cause to be given, all notices required by law or by these By-Laws. .. and … keep a record of the addresses of all stockholders. As quoted above, Sec. 32 (a) of the By-Laws further provides that “within ten (10) days after the Board has ordered the sale at auction of a member’s share of stock for indebtedness under Section 31 (b) hereof, the Secretary shall notify the owner thereof and shall advise the Membership Committee of such fact.,” The records do not disclose what report the Corporate Secretary transmitted to the Membership Committee to comply with Section 32(a). Obviously, the reason for this mandatory requirement is to give the Membership Committee the opportunity to find out, before the share is sold, if proper notice has been made to the shareholder member. We presume that the Corporate Secretary, as a lawyer is knowledgeable on the law and on the standards of good faith and fairness that the law requires. As custodian of corporate records, he should also have known that the first two letters sent to Clemente were returned because the P.O. Box had been closed. Thus, we are surprised – given his knowledge of the law and of corporate records – that he would send the third and final letter – Clemente’s last chance before his share is sold and his membership lost – to the same P.O. Box that had been closed.

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Calatagan argues that it “exercised due diligence before the foreclosure sale” and “sent several notices to Clemente’s specified mailing address.” We do not agree; we cannot label as due diligence Calatagan’s act of sending the December 7, 1992 letter to Clemente’s mailing address knowing fully well that the P.O. Box had been closed. Due diligence or good faith imposes upon the Corporate Secretary – the chief repository of all corporate records – the obligation to check Clemente’s other address which, under the By-Laws, have to be kept on file and are in fact on file. One obvious purpose of giving the Corporate Secretary the duty to keep the addresses of members on file is specifically for matters of this kind, when the member cannot be reached through his or her mailing address. Significantly, the Corporate Secretary does not have to do the actual verification of other addressees on record; a mere clerk can do the very simple task of checking the files as in fact clerks actually undertake these tasks. In fact, one telephone call to Clemente’s phone numbers on file would have alerted him of his impending loss. Ultimately, the petition must fail because Calatagan had failed to duly observe both the spirit and letter of its own by-laws. The by-law provisions was clearly conceived to afford due notice to the delinquent member of the impending sale, and not just to provide an intricate façade that would facilitate Calatagan’s sale of the share. But then, the bad faith on Calatagan’s part is palpable. As found by the Court of Appeals, Calatagan very well knew that Clemente’s postal box to which it sent its previous letters had already been closed, yet it persisted in sending that final letter to the same postal box. What for? Just for the exercise, it appears, as it had known very well that the letter would never actually reach Clemente. It is noteworthy that Clemente in his membership application had provided his residential address along with his residence and office telephone numbers. Nothing in Section 32 of Calatagan’s By-Laws requires that the final notice prior to the sale be made solely through the member’s mailing address. Clemente cites our aphorism-like pronouncement in Rizal Commercial Banking Corporation v. Court of Appeals[15] that “[a] simple telephone call and an ounce of good faith x x x could have prevented this present controversy.” That memorable observation is quite apt in this case. Calatagan’s bad faith and failure to observe its own By-Laws had resulted not merely in the loss of Clemente’s privilege to play golf at its golf course and avail of its amenities, but also in significant pecuniary damage to him. For that loss, the only blame that could be thrown Clemente’s way was his failure to notify Calatagan of the closure of the P.O. Box. That lapse, if we uphold Calatagan would cost Clemente a lot. But, in the first place, does he deserve answerability for failing to notify the club of the closure of the postal box? Indeed, knowing as he did that Calatagan was in possession of his home address as well as residence and office telephone numbers, he had every reason to assume that the club would not be at a loss should it need to contact him. In addition, according to Clemente, he was not even aware of the closure of the postal box, the maintenance of which was not his responsibility but his employer Phimco’s. The utter bad faith exhibited by Calatagan brings into operation Articles 19, 20 and 21 of the Civil Code,[16] under the Chapter on Human Relations. These provisions, which the Court of Appeals did apply, enunciate a general obligation under law for every person to act fairly and in good faith towards one another. A non-stock corporation like Calatagan is not exempt from that obligation in its treatment of its members. The obligation of a corporation to treat every person honestly and in good faith extends even to its shareholders or members, even if the latter find themselves contractually bound to perform certain obligations to the corporation. A certificate of stock cannot be a charter of dehumanization. We turn to the matter of damages. The award of actual damages is of course warranted since Clemente has sustained pecuniary injury by reason of Calatagan’s wrongful violation of its own By-Laws. It would not be feasible to deliver Clemente’s original Certificate of Stock because it had already been cancelled and a new one issued in its place in the name of the purchases at the auction who was not impleaded in this case. However, the Court of Appeals instead directed that Calatagan to issue to Clemente a new certificate of stock. That sufficiently redresses the actual damages sustained by Clemente. After all, the certificate of stock is simply the evidence of the share. The Court of Appeals also awarded Clemente P200,000.00 as moral damages, P100,000.00 as exemplary damages, and P100,000.00 as attorney’s fees. We agree that the award of such damages is warranted. The Court of Appeals cited Calatagan for violation of Article 32 of the Civil Code, which allows recovery of damages from any private individual “who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs” the right “against deprivation of property without due process of laws.” The plain letter of the provision squarely entitles Clemente to damages from Calatagan. Even without Article 32 itself, Calatagan will still be bound to pay moral and exemplary damages to Clemente. The latter was able to duly prove that he had sustained mental anguish, serious anxiety and wounded feelings by reason of Calatagan’s acts, thereby entitling him to moral

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damages under Article 2217 of the Civil Code. Moreover, it is evident that Calatagan’s bad faith as exhibited in the course of its corporate actions warrants correction for the public good, thereby justifying exemplary damages under Article 2229 of the Civil Code. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. Costs against petitioner. SO ORDERED.

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SECOND DIVISION VALLEY GOLF & COUNTRY G.R. No. 158805CLUB, INC., Petitioner, Present: QUISUMBING, J., Chairperson, CARPIO MORALES,- versus - TINGA, VELASCO, JR., andBRION, JJ. ROSA O. VDA. DE CARAM, Respondent. Promulgated: April 16, 2009 x----------------------------------------------------------------------------x D E C I S I O N TINGA, J.: May a non-stock corporation seize and dispose of the membership share of a fully-paid member on account of its unpaid debts to the corporation when it is authorized to do so under the corporate by-laws but not by the Articles of Incorporation? Such is the central issue raised in this petition, which arose after petitioner Valley Golf & Country Club (Valley Golf) sold the membership share of a member who had been delinquent in the payment of his monthly dues. I. The facts that preceded this petition are simple. Valley Golf & Country Club (Valley Golf) is a duly constituted non-stock, non-profit corporation which operates a golf course. The members and their guests are entitled to play golf on the said course and otherwise avail of the facilities and privileges provided by Valley Golf.[1] The shareholders are likewise assessed monthly membership dues. In 1961, the late Congressman Fermin Z. Caram, Jr. (Caram),[2] the husband of the present respondent, subscribed to purchased and paid for in full one share (Golf Share) in the capital stock of Valley Golf. He was issued Stock Certificate No. 389 dated 26 January 1961 for the Golf Share.[3] The Stock Certificate likewise indicates a par value of P9,000.00. Valley Golf would subsequently allege that beginning 25 January 1980, Caram stopped paying his monthly dues, which were continually assessed until 31 June 1987. Valley Golf claims to have sent five (5) letters to Caram concerning his delinquent account within the period from 27 January 1986 until 3 May 1987, all forwarded to

P.O. Box No. 1566, Makati Commercial Center Post Office, the mailing address which Caram allegedly furnished Valley Golf.[4] The first letter informed Caram that his account as of 31 December 1985 was delinquent and that his club privileges were suspended pursuant to Section 3, Article VII of the by-laws of Valley Golf.[5] Despite such notice of delinquency, the second letter, dated 26 August 1986, stated that should Caram’s account remain unpaid for 45 days, his name would be “included in the delinquent list to be posted on the club’s bulletin board.”[6] The third letter, dated 25 January 1987, again informed Caram of his delinquent account and the suspension of his club privileges.[7] The fourth letter, dated 7 March 1987, informed Caram that should he fail to settle his delinquencies, then totaling P7,525.45, within ten (10) days from receipt thereof Valley Golf would exercise its right to sell the Golf Share to satisfy the outstanding amount, again pursuant to the provisions of the by-laws.[8] The final letter, dated 3 May 1987, issued a final deadline until 31 May 1987 for Caram to settle his account, or otherwise face the sale of the Golf Share to satisfy the claims of Valley Golf.[9]

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The Golf Share was sold at public auction on 11 June 1987 for P25,000.00 after the Board of Directors had authorized the sale in a meeting on 11 April 1987, and the Notice of Auction Sale was published in the 6 June 1987 edition of the Philippine Daily Inquirer.[10] As it turned out, Caram had died on 6 October 1986. Respondent initiated intestate proceedings before the Regional Trial Court (RTC) of Iloilo City, Branch 35, to settle her husband’s estate.[11] Unaware of the pending controversy over the Golf Share, the Caram family and the RTC included the same as part of Caram’s estate. The RTC approved a project of partition of Caram’s estate on 29 August 1989. The Golf Share was adjudicated to respondent, who paid the corresponding estate tax due, including that on the Golf Share. It was only through a letter dated 15 May 1990 that the heirs of Caram learned of the sale of the Golf Share following their inquiry with Valley Golf about the share. After a series of correspondence, the Caram heirs were subsequently informed, in a letter dated 15 October 1990, that they were entitled to the refund of P11,066.52 out of the proceeds of the sale of the Golf Share, which amount had been in the custody of Valley Golf since 11 June 1987.[12] Respondent filed an action for reconveyance of the share with damages before the Securities and Exchange Commission (SEC) against Valley Golf.[13] On 15 November 1996, SEC Hearing Officer Elpidio S. Salgado rendered a decision in favor of respondent, ordering Valley Golf to convey ownership of the Golf Share or in the alternative to issue one fully paid share of stock of Valley Golf the same class as the Golf Share to respondent. Damages totaling P90,000.00 were also awarded to respondent.[14] The SEC hearing officer noted that under Section 67, paragraph 2 of the Corporation Code, a share stock could only be deemed delinquent and sold in an extrajudicial sale at public auction only upon the failure of the stockholder to pay the unpaid subscription or balance for the share. The section could not have applied in Caram’s case since he had fully paid for the Golf Share and he had been assessed not for the share itself but for his delinquent club dues. Proceeding from the foregoing premises, the SEC hearing officer concluded that the auction sale had no basis in law and was thus a nullity. The SEC hearing officer did entertain Valley Golf’s argument that the sale of the Golf Share was authorized under the by-laws. However, it was ruled that pursuant to Section 6 of the Corporation Code, “a provision creating a lien upon shares of stock for unpaid debts, liabilities, or assessments of stockholders to the corporation, should be embodied in the Articles of Incorporation, and not merely in the by-laws, because Section 6 (par.1) prescribes that the shares of stock of a corporation may have such rights, privileges and restrictions as may be stated in the articles of incorporation.”[15] It was observed that the Articles of Incorporation of Valley Golf did not impose any lien, liability or restriction on the Golf Share or, for that matter, even any conditionality that the Golf Share would be subject to assessment of monthly dues or a lien on the share for non-payment of such dues.[16] In the same vein, it was opined that since Section 98 of the Corporation Code provides that restrictions on transfer of shares should appear in the articles of incorporation, by-laws and the certificate of stock to be valid and binding on any purchaser in good faith, there was more reason to apply the said rule to club delinquencies to constitute a lien on golf shares.[17] The SEC hearing officer further held that the delinquency in monthly club dues was merely an ordinary debt enforceable by judicial action in a civil case. The decision generally affirmed respondent’s assertion that Caram was not properly notified of the delinquencies, citing Caram’s letter dated 7 July 1978 to Valley Golf about the change in his mailing address. He also noted that Valley Golf had sent most of the letters after Caram’s death. In all, the decision concluded that the sale of the Golf Share was effectively a deprivation of property without due process of law. On appeal to the SEC en banc,[18] said body promulgated a decision[19] on 9 May 2000, affirming the hearing officer’s decision in toto. Again, the SEC found that Section 67 of the Corporation Code could not justify the sale of the Golf Share since it applies only to unpaid subscriptions and not to delinquent membership dues. The SEC also cited a general rule, formulated in American jurisprudence, that a corporation has no right to dispose of shares of stock for delinquent assessments, dues, service fees and other unliquidated charges unless there is an express grant to do so, either by the statute itself or by the charter of a corporation.[20] Said rule, taken in conjunction with Section 6 of the Corporation Code, militated against the validity of the sale of the Golf Share, the SEC stressed. In view of these premises, which according to the SEC entailed the nullity of the sale, the body found it unnecessary to rule on whether there was valid notice of the sale at public auction. Valley Golf elevated the SEC’s decision to the Court of Appeals by way of a petition for review.[21] On 4 April 2003, the appellate court rendered a decision[22] affirming the decisions of the SEC and the hearing officer, with

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modification consisting of the deletion of the award of attorney’s fees. This time, Valley Golf’s central argument was that its by-laws, rather than Section 67 of the Corporation Code, authorized the auction sale of the Golf Share. Nonetheless, the Court of Appeals found that the by-law provisions cited by Valley Golf are “of doubtful validity,” as they purportedly conflict with Section 6 of the Code, which mandates that “rights privileges or restrictions attached to a share of stock should be stated in the articles of incorporation.[23] It noted that what or who had become delinquent was “was Mr. Caram himself and not his golf share,” and such being the case, the unpaid account “should have been filed as a money claim in the proceedings for the settlement of his estate, instead of the petitioner selling his golf share to satisfy the account.”[24] The Court of Appeals also adopted the findings of the hearing officer that the notices had not been properly served on Caram or his heirs, thus effectively depriving respondent of property without due process of law. While it upheld the award of damages, the appellate court struck down the award of attorney’s fees since there was no discussion on the basis of such award in the body of the decisions of both the hearing officer and the SEC.[25]

There is one other fact of note, mentioned in passing by the SEC hearing officer[26] but ignored by the SEC en banc and the Court of Appeals. Valley Golf’s third and fourth demand letters dated 25 January 1987 and 7 March 1987, respectively, were both addressed to “Est. of Fermin Z. Caram, Jr.” The abbreviation “Est.” can only be taken to refer to “Estate.” Unlike the first two demand letters, the third and fourth letters were sent after Caram had died on 6 October 1986. However, the fifth and final demand letter, dated 3 May 1987 or twenty-eight (28) days before the sale, was again addressed to Fermin Caram himself and not to his estate, as if he were still alive. The foregoing particular facts are especially significant to our disposition of this case. II. In its petition before this Court, Valley Golf concedes that Section 67 of the Corporation Code, which authorizes the auction sale of shares with delinquent subscriptions, is not applicable in this case. Nonetheless, it argues that the by-laws of Valley Golf authorizes the sale of delinquent shares and that the by-laws constitute a valid law or contractual agreement between the corporation and its stockholders or their respective successors. Caram, by becoming a member of Valley Golf, bound himself to observe its by-laws which constitutes “the rules and regulations or private laws enacted by the corporation to regulate, govern and control its own actions, affairs and concerns and its stockholders or members and directors and officers with relation thereto and among themselves in their relation to it.”[27] It also points out that the by-laws itself had duly passed the SEC’s scrutiny and approval. Valley Golf further argues that it was error on the part of the Court of Appeals to rely, as it did, upon Section 6 of the Corporation Code “to nullify the subject provisions of the By-Laws.”[28] Section 6 referrs to “restrictions” on the shares of stock which should be stated in the articles of incorporation, as differentiated from “liens” which under the by-laws would serve as basis for the auction sale of the share. Since Section 6 refers to restrictions and not to liens, Valley Golf submits that “liens” are excluded from the ambit of the provision. It further proffers that assuming that liens and restrictions are synonymous, Section 6 itself utilizes the permissive word “may,” thus evincing the non-mandatory character of the requirement that restrictions or liens be stated in the articles of incorporation. Valley Golf also argues that the Court of Appeals erred in relying on the factual findings of the hearing officer, which are allegedly replete with errors and contradictions. Finally, it assails the award of moral and exemplary damages.

III. As found by the SEC and the Court of Appeals, the Articles of Incorporation of Valley Golf does not contain any provision authorizing the corporation to create any lien on a member’s Golf Share as a consequence of the member’s unpaid assessments or dues to Valley Golf. Before this Court, Valley Golf asserts that such a provision is contained in its by-laws. We required the parties to submit a certified copy of the by-laws of Valley Golf in effect as of 11 June 1987.[29] In compliance, Valley Golf submitted a copy of its by-laws, originally adopted on 6 June 1958[30] and amended on 26 November 1986.[31] The amendments bear no relevance to the issue of delinquent membership dues. The relevant provisions, found in Article VIII entitled “Club Accounts,” are reproduced below: Section 1. Lien.—The Club has the first lien on the share of the stockholder who has, in his/her/its name, or in the name of an assignee, outstanding accounts and liabilities in favor of the Club to secure the payment thereof. xxx

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Section 3. The account of any member shall be presented to such member every month. If any statement of accounts remains unpaid for a period forty-five (45) days after cut-off date, said member maybe (sic) posted as deliqnuent (sic). No delinquent member shall be entitled to enjoy the privileges of such membership for the duration of the deliquency (sic). After the member shall have been posted as delinquent, the Board may order his/her/its share sold to satisfy the claims of the club; after which the member loses his/her/its rights and privileges permanently. No member can be indebted to the Club at any time any amount in excess of the credit limit set by the Board of Directors from time to time. The unpaid account referred to here includes non-payment of dues, charges and other assessments and non-payment for subscriptions.[32] To bolster its cause, Valley Golf proffers the proposition that by virtue of the by-law provisions a lien is created on the shares of its members to ensure payment of dues, charges and other assessments on the members. Both the SEC and the Court of Appeals debunked the tenability or applicability of the proposition through two common thrusts. Firstly, they correctly noted that the procedure under Section 67 of the Corporation Code for the stock corporation’s recourse on unpaid subscriptions is inapt to a non-stock corporation vis-à-vis a member’s outstanding dues. The basic factual backdrops in the two situations are disperate. In the latter, the member has fully paid for his membership share, while in the former, the stockholder has not yet fully paid for the share or shares of stock he subscribed to, thereby authorizing the stock corporation to call on the unpaid subscription, declare the shares delinquent and subject the delinquent shares to a sale at public auction.[33] Secondly, the two bodies below concluded that following Section 6 of the Corporation Code, which provides: The shares of stock of stock corporation may be divided into classes or series of shares, or both, any of which classes or series of shares may have such rights, privileges or restrictions as may be stated in the articles of incorporation x x x [34] the lien on the Golf Share in favor of Valley Golf is not valid, as the power to constitute such a lien should be provided in the articles of incorporation, and not merely in the by-laws. However, there is a specific provision under the Title XI, on Non-Stock Corporations of the Corporation Code dealing with termination of membership. Section 91 of the Corporation Code provides: SEC. 91. Termination of membership.—Membership shall be terminated in the manner and for the causes provided in the articles of incorporation or the by-laws. Termination of membership shall have the effect of extinguishing all rights of a member in the corporation or in its property, unless otherwise provided in the articles of incorporation or the by-laws. (Emphasis supplied) Clearly, the right of a non-stock corporation such as Valley Golf to expel a member through the forfeiture of the Golf Share may be established in the by-laws alone, as is the situation in this case. Thus, both the SEC and the appellate court are wrong in holding that the establishment of a lien and the loss of the Golf Share consequent to the enforcement of the lien should have been provided for in the articles of incorporation. IV. Given that the cause for termination of membership in a non-stock corporation may be established through the by-laws alone and need not be set forth in the articles of incorporation, is there any cause to invalidate the lien and the subsequent sale of the Golf Share by Valley Golf? Former SEC Chairperson, Rosario Lopez, in her commentaries on the Corporation Code, explains the import of Section 91 in a manner relevant to this case: The prevailing rule is that the provisions of the articles of incorporation or by-laws of termination of membership must be strictly complied with and applied to the letter. Thus, an association whose member fails to pay his membership due and annual due as required in the by-laws, and which provides for the termination or suspension of erring members as well as prohibits the latter from intervening in any manner in the operational activities of the association, must be observed because by-laws are self-imposed private laws binding on all members, directors and officers of the corporation.[35]

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Examining closely the relevant by-law provisions of Valley Golf,[36] it appears that termination of membership may occur when the following successive conditions are met: (1) presentation of the account of the member; (2) failure of the member to settle the account within forty-five days after the cut-off date; (3) posting of the member as delinquent; and (4) issuance of an order by the board of directors that the share of the delinquent member be sold to satisfy the claims of Valley Golf. These conditions found in by-laws duly approved by the SEC warrant due respect and we are disinclined to rule against the validity of the by-law provisions. At the same time, two points warrant special attention. A. Valley Golf has sought to accomplish the termination of Caram’s membership through the sale of the Golf Share, justifying the sale through the constitution of a lien on the Golf Share under Section 1, Article VIII of its by-laws. Generally in theory, a non-stock corporation has the power to effect the termination of a member without having to constitute a lien on the membership share or to undertake the elaborate process of selling the same at public auction. The articles of incorporation or the by-laws can very well simply provide that the failure of a member to pay the dues on time is cause for the board of directors to terminate membership. Yet Valley Golf was organized in such a way that membership is adjunct to ownership of a share in the club; hence the necessity to dispose of the share to terminate membership. Share ownership introduces another dimension to the case—the reality that termination of membership may also lead to the infringement of property rights. Even though Valley Golf is a non-stock corporation, as evinced by the fact that it is not authorized to distribute to the holder of its shares dividends or allotments of the surplus profits on the basis of shares held,[37] the Golf Share has an assigned value reflected on the certificate of membership itself.[38] Termination of membership in Valley Golf does not merely lead to the withdrawal of the rights and privileges of the member to club properties and facilities but also to the loss of the Golf Share itself for which the member had fully paid. The claim of Valley Golf is limited to the amount of unpaid dues plus incremental costs. On the other hand, Caram’s loss may encompass not only the amount he had paid for the share but also the price it would have fetched in the market at the time his membership was terminated. There is an easy way to remedy what is obviously an unfair situation. Taking the same example, Valley Golf seizes the share, sells it to itself or a third person for P100.000.00, then refunds P99,000.00 back to the delinquent member. On its face, such a mechanism obviates the inequity of the first example, and assures that the loss sustained by the delinquent member is commensurate to the actual debt owed to Valley Golf. After all, applying civil law concepts, the pecuniary injury sustained by Valley Golf attributable to the delinquent member is only to the extent of the unpaid debt, and it would be difficult to foresee what right under law Valley Golf would have to the remainder of the sale’s proceeds. A refund mechanism may disquiet concerns of undue loss of property rights corresponding to termination of membership. Yet noticeably, the by-laws of Valley Golf does not require the Club to refund to the discharged member the remainder of the proceeds of the sale after the outstanding obligation is extinguished. After petitioner had filed her complaint though, Valley Golf did inform her that the heirs of Caram are entitled to such refund. B. Let us now turn to the other significant concern. The by-laws does not provide for a mode of notice to the member before the board of directors puts up the Golf Share for sale, yet the sale marks the termination of membership. Whatever semblance of a notice that is afforded is bare at best, ambiguous at most. The member is entitled to receive a statement of account every month; however, the mode by which the member is to receive such notice is not elaborated upon. If the member fails to pay within 45 days from the due date, Valley Golf is immediately entitled to have the member “posted as delinquent.” While the assignation of “delinquent status” is evident enough, it is not as clear what the word “posted” entails. Connotatively, the word could imply the physical posting of the notice of delinquency within the club premises, such as a bulletin board, which we recognize is often the case. Still, the actual posting modality is uncertain from the language of the by-laws.

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The moment the member is “posted as delinquent,” Valley Golf is immediately enabled to seize the share and sell the same, thereby terminating membership in the club. The by-laws does not require any notice to the member from the time delinquency is posted to the day the sale of the share is actually held. The setup is to the extreme detriment to the member, who upon being notified that the lien on his share is due for execution would be duly motivated to settle his accounts to foreclose such possibility. Does the Corporation Code permit the termination of membership without due notice to the member? The Code itself is silent on that matter, and the argument can be made that if no notice is provided for in the articles of incorporation or in the by-laws, then termination may be effected without any notice at all. Support for such an argument can be drawn from our ruling in Long v. Basa,[39] which pertains to a religious corporation that is also a non-stock corporation.[40] Therein, the Court upheld the expulsion of church members despite the absence of any provision on prior notice in the by-laws, stating that the members had “waived such notice by adhering to those by-laws[,] became members of the church voluntarily[,] entered into its covenant and subscribed to its rules [and by] doing so, they are bound by their consent.”[41] However, a distinction should be made between membership in a religious corporation, which ordinarily does not involve the purchase of ownership shares, and membership in a non-stock corporation such as Valley Golf, where the purchase of an ownership share is a condition sine qua non. Membership in Valley Golf entails the acquisition of a property right. In turn, the loss of such property right could also involve the application of aspects of civil law, in addition to the provisions of the Corporation Code. To put it simply, when the loss of membership in a non-stock corporation also entails the loss of property rights, the manner of deprivation of such property right should also be in accordance with the provisions of the Civil Code. It has been held that a by-law providing that if a member fails to pay dues for a year, he shall be deemed to have relinquished his membership and may be excluded from the rooms of the association and his certificate of membership shall be sold at auction, and any surplus of the proceeds be paid over him, does not ipso facto terminate the membership of one whose dues are a year in arrears; the remedy given for non-payment of dues is not exclusive because the corporation, so long as he remains a member, may sue on his agreement and collect them.[42] V. With these foregoing concerns in mind, were the actions of Valley Golf concerning the Golf Share and membership of Caram warranted? We believe not. It may be conceded that the actions of Valley Golf were, technically speaking, in accord with the provisions of its by-laws on termination of membership, vaguely defined as these are. Yet especially since the termination of membership in Valley Golf is inextricably linked to the deprivation of property rights over the Golf Share, the emergence of such adverse consequences make legal and equitable standards come to fore. The commentaries of Lopez advert to an SEC Opinion dated 29 September 1987 which we can cite with approval. Lopez cites: [I]n order that the action of a corporation in expelling a member for cause may be valid, it is essential, in the absence of a waiver, that there shall be a hearing or trial of the charge against him, with reasonable notice to him and a fair opportunity to be heard in his defense. (Fletcher Cyc. Corp., supra) If the method of trial is not regulated by the by-laws of the association, it should at least permit substantial justice. The hearing must be conducted fairly and openly and the body of persons before whom it is heard or who are to decide the case must be unprejudiced. (SEC opinion dated September 29, 1987, Bacalaran-Sucat Drivers Association)

It is unmistakably wise public policy to require that the termination of membership in a non-stock corporation be done in accordance with substantial justice. No matter how one may precisely define such term, it is evident in this case that the termination of Caram’s membership betrayed the dictates of substantial justice. Valley Golf alleges in its present petition that it was notified of the death of Caram only in March of 1990,[43] a claim which is reiterated in its Reply to respondent’s Comment.[44] Yet this claim is belied by the very demand letters sent by Valley Golf to Caram’s mailing address. The letters dated 25 January 1987 and 7 March 1987, both of which were sent within a few months after Caram’s death are both addressed to “Est. of Fermin Z. Caram, Jr.;” and the abbreviation “[e]st.” can only be taken to refer to “estate.” This is to be distinguished from the two earlier

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letters, both sent prior to Caram’s death on 6 October 1986, which were addressed to Caram himself. Inexplicably, the final letter dated 3 May 1987 was again addressed to Caram himself, although the fact that the two previous letters were directed at the estate of Caram stands as incontrovertible proof that Valley Golf had known of Caram’s death even prior to the auction sale.

Interestingly, Valley Golf did not claim before the Court of Appeals that they had learned of Caram’s death only after the auction sale. It also appears that Valley Golf had conceded before the SEC that some of the notices it had sent were addressed to the estate of Caram, and not the decedent himself.[45] What do these facts reveal? Valley Golf acted in clear bad faith when it sent the final notice to Caram under the pretense they believed him to be still alive, when in fact they had very well known that he had already died. That it was in the final notice that Valley Golf had perpetrated the duplicity is especially blameworthy, since it was that notice that carried the final threat that his Golf Share would be sold at public auction should he fail to settle his account on or before 31 May 1987. Valley Golf could have very well addressed that notice to the estate of Caram, as it had done with the third and fourth notices. That it did not do so signifies that Valley Golf was bent on selling the Golf Share, impervious to potential complications that would impede its intentions, such as the need to pursue the claim before the estate proceedings of Caram. By pretending to assume that Caram was then still alive, Valley Golf would have been able to capitalize on his previous unresponsiveness to their notices and proceed in feigned good faith with the sale. Whatever the reason Caram was unable to respond to the earlier notices, the fact remains that at the time of the final notice, Valley Golf knew that Caram, having died and gone, would not be able to settle the obligation himself, yet they persisted in sending him notice to provide a color of regularity to the resulting sale. That reason alone, evocative as it is of the absence of substantial justice in the sale of the Golf Share, is sufficient to nullify the sale and sustain the rulings of the SEC and the Court of Appeals. Moreover, the utter and appalling bad faith exhibited by Valley Golf in sending out the final notice to Caram on the deliberate pretense that he was still alive could bring into operation Articles Articles 19, 20 and 21 under the Chapter on Human Relations of the Civil Code.[46] These provisions enunciate a general obligation under law for every person to act fairly and in good faith towards one another. Non-stock corporations and its officers are not exempt from that obligation. VI. Another point. The by-laws of Valley Golf is discomfiting enough in that it fails to provide any formal notice and hearing procedure before a member’s share may be seized and sold. The Court would have been satisfied had the by-laws or the articles of incorporation established a procedure which assures that the member would in reality be actually notified of the pending accounts and provide the opportunity for such member to settle such accounts before the membership share could be seized then sold to answer for the debt. As we have emphasized, membership in Valley Golf and many other like-situated non-stock corporations actually involves the purchase of a membership share, which is a substantially expensive property. As a result, termination of membership does not only lead to loss of bragging rights, but the actual deprivation of property. The Court has no intention to interfere with how non-stock corporations should run their daily affairs. The Court also respects the fact that membership is non-stock corporations is a voluntary arrangement, and that the member who signs up is bound to adhere to what the articles of incorporation or the by-laws provide, even if provisions are detrimental to the interest of the member. At the same time, in the absence of a satisfactory procedure under the articles of incorporation or the by-laws that affords a member the opportunity to defend against the deprivation of significant property rights in accordance with substantial justice, the terms of the by-laws or articles of incorporation will not suffice. There will be need in such case to refer to substantive law. Such a flaw attends the articles of incorporation and by-laws of Valley Golf. The Court deems it judicious to refer to the protections afforded by the Civil Code, with respect to the preservation, maintenance, and defense from loss of property rights. The arrangement provided for in the afore-quoted by-laws of Valley Golf whereby a lien is constituted on the membership share to answer for subsequent obligations to the corporation finds applicable parallels under the Civil Code. Membership shares are considered as movable or personal property,[47] and they can be constituted as security to secure a principal obligation, such as the dues and fees. There are at least two contractual modes under the Civil Code by which personal property can be used to secure a principal obligation. The first is through a

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contract of pledge,[48] while the second is through a chattel mortgage.[49] A pledge would require the pledgor to surrender possession of the thing pledged, i.e., the membership share, to the pledge in order that the contract of pledge may be constituted.[50] Is delivery of the share cannot be effected, the suitable security transaction is the chattel mortgage. Under Article 2124 of the Civil Code, movables may be the object of a chattel mortgage. The Chattel mortgage is governed by Act No. 1508, otherwise known The Chattel Mortgage Law,[51] and the Civil Code. In this case, Caram had not signed any document that manifests his agreement to constitute his Golf Share as security in favor of Valley Golf to answer for his obligations to the club. There is no document we can assess that it is substantially compliant with the form of chattel mortgages under Section 5 of Act No. 1508. The by-laws could not suffice for that purpose since it is not designed as a bilateral contract between Caram and Valley Golf, or a vehicle by which Caram expressed his consent to constitute his Golf Share as security for his account with Valley Golf. VII. We finally turn to the matter of damages. The award of damages sustained by the Court of Appeals was for moral damages in the sum of P50,000.00 and exemplary damages in the sum of P10,000.00. Both awards should be sustained. In pretending to give actual notice to Caram despite full knowledge that he was in fact dead, Valley Golf exhibited utter bad faith. The award of moral damages was based on a finding by the hearing officer that Valley Golf had “considerably besmirched the reputation and good credit standing of the plaintiff and her family,” such justification having foundation under Article 2217 of the Civil Code. No cause has been submitted to detract from such award. In addition, exemplary damages were awarded “to [Valley Golf] defendant from repeating similar acts in the future and to protect the interest of its stockholders… and by way of example or correction for the public good.” Such conclusion is in accordance with Article 2229 of the Civil Code, which establishes liability for exemplary damages. WHEREFORE, the petition is DENIED. Costs against petitioners. SO ORDERED.

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SECOND DIVISION

MANUEL GO CINCO and ARACELI S. GO CINCO, Petitioners, - versus - COURT OF APPEALS, ESTER SERVACIO and MAASIN TRADERS LENDING CORPORATION, Respondents.G.R. No. 151903 Present: *CORONA, J.,**CARPIO-MORALES, Acting Chairperson,***NACHURA, BRION, and ABAD, JJ. Promulgated: October 9, 2009

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

D E C I S I O N

BRION, J.:

Before the Court is a petition for review on certiorari[1] filed by petitioners, spouses Manuel and Araceli Go Cinco (collectively, the spouses Go Cinco), assailing the decision[2] dated June 22, 2001 of the Court of Appeals (CA) in CA-G.R. CV No. 47578, as well as the resolution[3] dated January 25, 2002 denying the spouses Go Cinco’s motion for reconsideration. THE FACTUAL ANTECEDENTS In December 1987, petitioner Manuel Cinco (Manuel) obtained a commercial loan in the amount of P700,000.00 from respondent Maasin Traders Lending Corporation (MTLC). The loan was evidenced by a promissory note dated December 11, 1987,[4] and secured by a real estate mortgage executed on December 15, 1987 over the spouses Go Cinco’s land and 4-storey building located in Maasin, Southern Leyte.

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Under the terms of the promissory note, the P700,000.00 loan was subject to a monthly interest rate of 3% or 36% per annum and was payable within a term of 180 days or 6 months, renewable for another 180 days. As of July 16, 1989, Manuel’s outstanding obligation with MTLC amounted to P1,071,256.66, which amount included the principal, interest, and penalties.[5] To be able to pay the loan in favor of MTLC, the spouses Go Cinco applied for a loan with the Philippine National Bank, Maasin Branch (PNB or the bank) and offered as collateral the same properties they previously mortgaged to MTLC. The PNB approved the loan application for P1.3 Million[6] through a letter dated July 8, 1989; the release of the amount, however, was conditioned on the cancellation of the mortgage in favor of MTLC. On July 16, 1989, Manuel went to the house of respondent Ester Servacio (Ester), MTLC’s President, to inform her that there was money with the PNB for the payment of his loan with MTLC. Ester then proceeded to the PNB to verify the information, but she claimed that the bank’s officers informed her that Manuel had no pending loan application with them. When she told Manuel of the bank’s response, Manuel assured her there was money with the PNB and promised to execute a document that would allow her to collect the proceeds of the PNB loan. On July 20, 1989, Manuel executed a Special Power of Attorney[7] (SPA) authorizing Ester to collect the proceeds of his PNB loan. Ester again went to the bank to inquire about the proceeds of the loan. This time, the bank’s officers confirmed the existence of the P1.3 Million loan, but they required Ester to first sign a deed of release/cancellation of mortgage before they could release the proceeds of the loan to her. Outraged that the spouses Go Cinco used the same properties mortgaged to MTLC as collateral for the PNB loan, Ester refused to sign the deed and did not collect the P1.3 Million loan proceeds. As the MTLC loan was already due, Ester instituted foreclosure proceedings against the spouses Go Cinco on July 24, 1989. To prevent the foreclosure of their properties, the spouses Go Cinco filed an action for specific performance, damages, and preliminary injunction[8] before the Regional Trial Court (RTC), Branch 25, Maasin, Southern Leyte. The spouses Go Cinco alleged that foreclosure of the mortgage was no longer proper as there had already been settlement of Manuel’s obligation in favor of MTLC. They claimed that the assignment of the proceeds of the PNB loan amounted to the payment of the MTLC loan. Ester’s refusal to sign the deed of release/cancellation of mortgage and to collect the proceeds of the PNB loan were, to the spouses Go Cinco, completely unjustified and entitled them to the payment of damages. Ester countered these allegations by claiming that she had not been previously informed of the spouses Go Cinco’s plan to obtain a loan from the PNB and to use the loan proceeds to settle Manuel’s loan with MTLC. She claimed that she had no explicit agreement with Manuel authorizing her to apply the proceeds of the PNB loan to Manuel’s loan with MTLC; the SPA merely authorized her to collect the proceeds of the loan. She thus averred that it was unfair for the spouses Go Cinco to require the release of the mortgage to MTLC when no actual payment of the loan had been made. In a decision dated August 16, 1994,[9] the RTC ruled in favor of the spouses Go Cinco. The trial court found that the evidence sufficiently established the existence of the PNB loan whose proceeds were available to satisfy Manuel’s obligation with MTLC, and that Ester unjustifiably refused to collect the amount. Creditors, it ruled, cannot unreasonably prevent payment or performance of obligation to the damage and prejudice of debtors who may stand liable for payment of higher interest rates.[10] After finding MTLC and Ester liable for abuse of rights, the RTC ordered the award of the following amounts to the spouses Go Cinco: (a) P1,044,475.15 plus 535.63 per day hereafter, representing loss of savings on interest, by way of actual or compensatory damages, if defendant corporation insists on the original 3% monthly interest rate;(b) P100,000.00 as unrealized profit;(c) P1,000,000.00 as moral damages;(d) P20,000.00 as exemplary damages;(e) P22,000.00 as litigation expenses; and(f) 10% of the total amount as attorney’s fees plus costs.[11] Through an appeal with the CA, MTLC and Ester successfully secured a reversal of the RTC’s decision. Unlike the trial court, the appellate court found it significant that there was no explicit agreement between Ester and the spouses Go Cinco for the cancellation of the MTLC mortgage in favor of PNB to facilitate the release and collection by Ester of the proceeds of the PNB loan. The CA read the SPA as merely authorizing Ester to withdraw the proceeds of the loan. As Manuel’s loan obligation with MTLC remained unpaid, the CA ruled that no valid

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objection could be made to the institution of the foreclosure proceedings. Accordingly, it dismissed the spouses Go Cinco’ complaint. From this dismissal, the spouses Go Cinco filed the present appeal by certiorari. THE PETITION The spouses Go Cinco impute error on the part of the CA for its failure to consider their acts as equivalent to payment that extinguished the MTLC loan; their act of applying for a loan with the PNB was indicative of their good faith and honest intention to settle the loan with MTLC. They contend that the creditors have the correlative duty to accept the payment. The spouses Go Cinco charge MTLC and Ester with bad faith and ill-motive for unjustly refusing to collect the proceeds of the loan and to execute the deed of release of mortgage. They assert that Ester’s justifications for refusing the payment were flimsy excuses so she could proceed with the foreclosure of the mortgaged properties that were worth more than the amount due to MTLC. Thus, they conclude that the acts of MTLC and of Ester amount to abuse of rights that warrants the award of damages in their (spouses Go Cinco’s) favor. In refuting the claims of the spouses Go Cinco, MTLC and Ester raise the same arguments they raised before the RTC and the CA. They claim that they were not aware of the loan and the mortgage to PNB, and that there was no agreement that the proceeds of the PNB loan were to be used to settle Manuel’s obligation with MTLC. Since the MTLC loan remained unpaid, they insist that the institution of the foreclosure proceedings was proper. Additionally, MTLC and Ester contend that the present petition raised questions of fact that cannot be addressed in a Rule 45 petition. THE COURT’S RULING The Court finds the petition meritorious. Preliminary Considerations Our review of the records shows that there are no factual questions involved in this case; the ultimate facts necessary for the resolution of the case already appear in the records. The RTC and the CA decisions differed not so much on the findings of fact, but on the conclusions derived from these factual findings. The correctness of the conclusions derived from factual findings raises legal questions when the conclusions are so linked to, or are inextricably intertwined with, the appreciation of the applicable law that the case requires, as in the present case.[12] The petition raises the issue of whether the loan due the MTLC had been extinguished; this is a question of law that this Court can fully address and settle in an appeal by certiorari. Payment as Mode ofExtinguishing Obligations Obligations are extinguished, among others, by payment or performance,[13] the mode most relevant to the factual situation in the present case. Under Article 1232 of the Civil Code, payment means not only the delivery of money but also the performance, in any other manner, of an obligation. Article 1233 of the Civil Code states that “a debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered, as the case may be.” In contracts of loan, the debtor is expected to deliver the sum of money due the creditor. These provisions must be read in relation with the other rules on payment under the Civil Code,[14] which rules impliedly require acceptance by the creditor of the payment in order to extinguish an obligation. In the present case, Manuel sought to pay Ester by authorizing her, through an SPA, to collect the proceeds of the PNB loan – an act that would have led to payment if Ester had collected the loan proceeds as authorized. Admittedly, the delivery of the SPA was not, strictly speaking, a delivery of the sum of money due to MTLC, and Ester could not be compelled to accept it as payment based on Article 1233. Nonetheless, the SPA stood as an authority to collect the proceeds of the already-approved PNB loan that, upon receipt by Ester, would have constituted as payment of the MTLC loan.[15] Had Ester presented the SPA to the bank and signed the deed of release/cancellation of mortgage, the delivery of the sum of money would have been effected and the obligation extinguished.[16] As the records show, Ester refused to collect and allow the cancellation of the mortgage. Under these facts, Manuel posits two things: first, that Ester’s refusal was based on completely unjustifiable grounds; and second, that the refusal was equivalent to payment that led to the extinguishment of the obligation. a. Unjust Refusal to Accept Payment

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After considering Ester’s arguments, we agree with Manuel that Ester’s refusal of the payment was without basis. Ester refused to accept the payment because the bank required her to first sign a deed of release/cancellation of the mortgage before the proceeds of the PNB loan could be released. As a prior mortgagee, she claimed that the spouses Go Cinco should have obtained her consent before offering the properties already mortgaged to her as security for the PNB loan. Moreover, Ester alleged that the SPA merely authorized her to collect the proceeds of the loan; there was no explicit agreement that the MTLC loan would be paid out of the proceeds of the PNB loan. There is nothing legally objectionable in a mortgagor’s act of taking a second or subsequent mortgage on a property already mortgaged; a subsequent mortgage is recognized as valid by law and by commercial practice, subject to the prior rights of previous mortgages. Section 4, Rule 68 of the 1997 Rules of Civil Procedure on the disposition of the proceeds of sale after foreclosure actually requires the payment of the proceeds to, among others, the junior encumbrancers in the order of their priority.[17] Under Article 2130 of the Civil Code, a stipulation forbidding the owner from alienating the immovable mortgaged is considered void. If the mortgagor-owner is allowed to convey the entirety of his interests in the mortgaged property, reason dictates that the lesser right to encumber his property with other liens must also be recognized. Ester, therefore, could not validly require the spouses Go Cinco to first obtain her consent to the PNB loan and mortgage. Besides, with the payment of the MTLC loan using the proceeds of the PNB loan, the mortgage in favor of the MTLC would have naturally been cancelled. We find it improbable for Ester to claim that there was no agreement to apply the proceeds of the PNB loan to the MTLC loan. Beginning July 16, 1989, Manuel had already expressed intent to pay his loan with MTLC and thus requested for an updated statement of account. Given Manuel’s express intent of fully settling the MTLC loan and of paying through the PNB loan he would secure (and in fact secured), we also cannot give credit to the claim that the SPA only allowed Ester to collect the proceeds of the PNB loan, without giving her the accompanying authority, although verbal, to apply these proceeds to the MTLC loan. Even Ester’s actions belie her claim as she in fact even went to the PNB to collect the proceeds. In sum, the surrounding circumstances of the case simply do not support Ester’s position. b. Unjust Refusal Cannot be Equated to Payment While Ester’s refusal was unjustified and unreasonable, we cannot agree with Manuel’s position that this refusal had the effect of payment that extinguished his obligation to MTLC. Article 1256 is clear and unequivocal on this point when it provides that – ARTICLE 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due. [Emphasis supplied.] In short, a refusal without just cause is not equivalent to payment; to have the effect of payment and the consequent extinguishment of the obligation to pay, the law requires the companion acts of tender of payment and consignation. Tender of payment, as defined in Far East Bank and Trust Company v. Diaz Realty, Inc.,[18] is the definitive act of offering the creditor what is due him or her, together with the demand that the creditor accept the same. When a creditor refuses the debtor’s tender of payment, the law allows the consignation of the thing or the sum due. Tender and consignation have the effect of payment, as by consignation, the thing due is deposited and placed at the disposal of the judicial authorities for the creditor to collect.[19] A sad twist in this case for Manuel was that he could not avail of consignation to extinguish his obligation to MTLC, as PNB would not release the proceeds of the loan unless and until Ester had signed the deed of release/cancellation of mortgage, which she unjustly refused to do. Hence, to compel Ester to accept the loan proceeds and to prevent their mortgaged properties from being foreclosed, the spouses Go Cinco found it necessary to institute the present case for specific performance and damages. c. Effects of Unjust Refusal Under these circumstances, we hold that while no completed tender of payment and consignation took place sufficient to constitute payment, the spouses Go Cinco duly established that they have legitimately secured a means of paying off their loan with MTLC; they were only prevented from doing so by the unjust refusal of Ester to accept the proceeds of the PNB loan through her refusal to execute the release of the mortgage on the properties mortgaged to MTLC. In other words, MTLC and Ester in fact prevented the spouses Go Cinco from the exercise of their right to secure payment of their loan. No reason exists under this legal situation why we cannot compel MTLC and Ester: (1) to release the mortgage to MTLC as a condition to the release of the proceeds of the PNB loan, upon PNB’s acknowledgment that the proceeds of the loan are ready and shall forthwith be released; and (2)

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to accept the proceeds, sufficient to cover the total amount of the loan to MTLC, as payment for Manuel’s loan with MTLC. We also find that under the circumstances, the spouses Go Cinco have undertaken, at the very least, the equivalent of a tender of payment that cannot but have legal effect. Since payment was available and was unjustifiably refused, justice and equity demand that the spouses Go Cinco be freed from the obligation to pay interest on the outstanding amount from the time the unjust refusal took place;[20] they would not have been liable for any interest from the time tender of payment was made if the payment had only been accepted. Under Article 19 of the Civil Code, they should likewise be entitled to damages, as the unjust refusal was effectively an abusive act contrary to the duty to act with honesty and good faith in the exercise of rights and the fulfillment of duty. For these reasons, we delete the amounts awarded by the RTC to the spouses Go Cinco (P1,044,475.15, plus P563.63 per month) representing loss of savings on interests for lack of legal basis. These amounts were computed based on the difference in the interest rates charged by the MTLC (36% per annum) and the PNB (17% to 18% per annum), from the date of tender of payment up to the time of the promulgation of the RTC decision. The trial court failed to consider the effects of a tender of payment and erroneously declared that MTLC can charge interest at the rate of only 18% per annum – the same rate that PNB charged, not the 36% interest rate that MTLC charged; the RTC awarded the difference in the interest rates as actual damages. As part of the actual and compensatory damages, the RTC also awarded P100,000.00 to the spouses Go Cinco representing unrealized profits. Apparently, if the proceeds of the PNB loan (P1,203,685.17) had been applied to the MTLC loan (P1,071,256.55), there would have been a balance of P132,428.62 left, which amount the spouses Go Cinco could have invested in their businesses that would have earned them a profit of at least P100,000.00. We find no factual basis for this award. The spouses Go Cinco were unable to substantiate the amount they claimed as unrealized profits; there was only their bare claim that the excess could have been invested in their other businesses. Without more, this claim of expected profits is at best speculative and cannot be the basis for a claim for damages. In Lucas v. Spouses Royo,[21] we declared that: In determining actual damages, the Court cannot rely on speculation, conjecture or guesswork as to the amount. Actual and compensatory damages are those recoverable because of pecuniary loss in business, trade, property, profession, job or occupation and the same must be sufficiently proved, otherwise, if the proof is flimsy and unsubstantiated, no damages will be given. [Emphasis supplied.] We agree, however, that there was basis for the award of moral and exemplary damages and attorney’s fees. Ester’s act of refusing payment was motivated by bad faith as evidenced by the utter lack of substantial reasons to support it. Her unjust refusal, in her behalf and for the MTLC which she represents, amounted to an abuse of rights; they acted in an oppressive manner and, thus, are liable for moral and exemplary damages.[22] We nevertheless reduce the P1,000,000.00 to P100,000.00 as the originally awarded amount for moral damages is plainly excessive. We affirm the grant of exemplary damages by way of example or correction for the public good in light of the same reasons that justified the grant of moral damages. As the spouses Go Cinco were compelled to litigate to protect their interests, they are entitled to payment of 10% of the total amount of awarded damages as attorney’s fees and expenses of litigation. WHEREFORE, we GRANT the petitioners’ petition for review on certiorari, and REVERSE the decision of June 22, 2001 of the Court of Appeals in CA-G.R. CV No. 47578, as well as the resolution of January 25, 2002 that followed. We REINSTATE the decision dated August 16, 1994 of the Regional Trial Court, Branch 25, Maasin, Southern Leyte, with the following MODIFICATIONS: (1) The respondents are hereby directed to accept the proceeds of the spouses Go Cinco’s PNB loan, if still available, and to consent to the release of the mortgage on the property given as security for the loan upon PNB’s acknowledgment that the proceeds of the loan, sufficient to cover the total indebtedness to respondent Maasin Traders Lending Corporation computed as of June 20, 1989, shall forthwith be released;(2) The award for loss of savings and unrealized profit is deleted;(3) The award for moral damages is reduced to P100,000.00; and(4) The awards for exemplary damages, attorney’s fees, and expenses of litigation are retained. The awards under (3) and (4) above shall be deducted from the amount of the outstanding loan due the respondents as of June 20, 1989. Costs against the respondents.

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EN BANC

G.R. No. L-17396             May 30, 1962

CECILIO PE, ET AL., plaintiffs-appellants, vs.ALFONSO PE, defendant-appellee.

Cecilio L. Pe for and in his own behalf as plaintiff-appellant.Leodegario L. Mogol for defendant-appellee.

BAUTISTA ANGELO, J.:

Plaintiffs brought this action before the Court of First Instance of Manila to recover moral, compensatory, exemplary and corrective damages in the amount of P94,000.00 exclusive of attorney's fees and expenses of litigation.

Defendant, after denying some allegations contained in the complaint, set up as a defense that the facts alleged therein, even if true, do not constitute a valid cause of action.

After trial, the lower court, after finding that defendant had carried on a love affair with one Lolita Pe, an unmarried woman, being a married man himself, declared that defendant cannot be held liable for moral damages it appearing that plaintiffs failed to prove that defendant, being aware of his marital status, deliberately and in bad faith tried to win Lolita's affection. So it rendered decision dismissing the complaint.1äwphï1.ñët

Plaintiffs brought this case on appeal before this Court on the ground that the issues involved are purely of law.

The facts as found by the trial court are: Plaintiffs are the parents, brothers and sisters of one Lolita Pe. At the time of her disappearance on April 14, 1957, Lolita was 24 years old and unmarried. Defendant is a married man and works as agent of the La Perla Cigar and Cigarette Factory. He used to stay in the town of Gasan, Marinduque, in connection with his aforesaid occupation. Lolita was staying with her parents in the same town. Defendant was an adopted son of a Chinaman named Pe Beco, a collateral relative of Lolita's father. Because of such fact and the similarity in their family name, defendant became close to the plaintiffs who regarded him as a member of their family. Sometime in 1952, defendant frequented the house of Lolita on the pretext that he wanted her to teach him how to pray the rosary. The two eventually fell in love with each other and conducted clandestine trysts not only in the town of Gasan but also in Boac where Lolita used to teach in a barrio school. They exchanged love notes with each other the contents of which reveal not only their infatuation for each other but also the extent to which they had carried their relationship. The rumors about their love affairs reached the ears of Lolita's parents sometime, in 1955, and since then defendant was forbidden from going to their house and from further seeing Lolita. The plaintiffs even filed deportation proceedings against defendant who is a Chinese national. The affair between defendant and Lolita continued nonetheless.

Sometime in April, 1957, Lolita was staying with her brothers and sisters at their residence at 54-B España Extension, Quezon City. On April 14, 1957, Lolita disappeared from said house. After she left, her brothers and sisters checked up her thing and found that Lolita's clothes were gone. However, plaintiffs found a note on a crumpled piece of paper inside Lolita's aparador. Said note, written on a small slip of paper approximately 4" by 3" in size, was in a handwriting recognized to be that of defendant's. In English it reads:

Honey, suppose I leave here on Sunday night, and that's 13th of this month and we will have a date on the 14th, that's Monday morning at 10 a.m.

Reply

Love

The disappearance of Lolita was reported to the police authorities and the NBI but up to the present there is no news or trace of her whereabouts.

The present action is based on Article 21 of the New Civil Code which provides:

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

There is no doubt that the claim of plaintiffs for damages is based on the fact that defendant, being a married man, carried on a love affair with Lolita Pe thereby causing plaintiffs injury in a manner contrary to morals, good customs and public policy. But in spite of the fact that plaintiffs have clearly established that in illicit affair was carried on between defendant and Lolita which caused great damage to the name and reputation of plaintiffs who are her parents, brothers and sisters, the trial court considered their complaint not actionable for the reason that they failed to prove that defendant deliberately and in bad faith tried to win Lolita's affection Thus, the trial court said: "In the absence of proof on this point, the court may not presume that it was the defendant who deliberately induced such relationship. We cannot be unmindful of the uncertainties and sometimes inexplicable mysteries of the human emotions. It is a possibility that the defendant and Lolita simply fell in love with each other, not only without any desire on their part, but also against their better judgment and in full consciousness of what it will bring to both of them. This is specially so with respect to Lolita, being an unmarried woman, falling in love with defendant who is a married man."

We disagree with this view. The circumstances under which defendant tried to win Lolita's affection cannot lead, to any other conclusion than that it was he who, thru an ingenious scheme or trickery, seduced the latter to the extent of making her fall in love with him. This is shown by the fact that defendant frequented the house of Lolita on the pretext that he wanted her to teach him how to pray the rosary. Because of the frequency of his visits to the latter's family who was allowed free access because he was a collateral relative and was considered as a member of her family, the two eventually fell in love with each other and conducted clandestine love affairs not only in Gasan but also in Boac where Lolita used to teach in a barrio school. When the rumors about their illicit affairs reached the knowledge of her parents, defendant was forbidden from going to their house and even from seeing Lolita. Plaintiffs even filed deportation proceedings against defendant who is a Chinese national. Nevertheless, defendant continued his love affairs with Lolita until she disappeared from the parental home. Indeed, no other conclusion can be drawn from this chain of events than that defendant not only deliberately, but through a clever strategy, succeeded in winning the affection and love of Lolita to the extent of having illicit relations with her. The wrong he has caused her and her family is indeed immeasurable considering the fact that he is a married man. Verily, he has committed an injury to Lolita's family in a manner contrary to morals, good customs and public policy as contemplated in Article 21 of the new Civil Code.

WHEREFORE, the decision appealed from is reversed. Defendant is hereby sentenced to pay the plaintiffs the sum of P5,000.00 as damages and P2,000.00 as attorney's fees and expenses of litigations. Costs against appellee.

Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes and Dizon, JJ., concur.

Pe et. al. vs. PeG.R. No. L-17396. 30 May 1962.Bautista Angelo J.:Appeal from a decision of the CFI Mla.

Facts: Plaintiffs are parents, brothers and sisters of Lolita Pe, an unmarried woman 24 years of age. Defendant, a married man, frequently visited Lolita’s house on the pretext that he wanted her to teach him to pray the rosary. They fell in love and conducted clandestine trysts. When the parents learned about this they prohibited defendant from going to their house. The affair continued just the same. On April 14, 1957 Lolita disappeared from her brother’s house where she was living. A note in the handwriting of the defendant was found inside Lolita’s aparador The present action was instituted under Article 21 of the Civil Code. The lower court dismissed the action and plaintiffs appealed.

Issue: W/N the defendant committed injury to Lolita's family in a manner contrary to morals, good customs and public policy as contemplated in Article 21 of the New Civil Code.”

Held: “The circumstances under which defendant tried to win Lolita’s affection cannot lead to any other conclusion than that it was he who, thru an ingenious scheme or trickery, seduced the latter to the extent of making her fall in love with him. Indeed, no other conclusion can be drawn from this chain of events than that defendant not only deliberately, but through a clever strategy, succeeded in winning the affection and love of Lolita to the extent of having illicit relations with her. The wrong he has caused her and her family is indeed immeasurable considering the fact that he is a married man. Verily, he has

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committed and injury to Lolita’s family in a manner contrary to morals, good customs and public policy as contemplated in Article 21 of the New Civil Code.”

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SECOND DIVISION

G.R. No. 76487 November 9, 1990

HEIRS OF JOHN Z. SYCIP NAMELY NATIVIDAD D. SYCIP, JOSE SYCIP, JOHN SYCIP, JR., ALFONSO SYCIP ROSE II, MARIE NATIVIDAD D. SYCIP, petitioners, vs.COURT OF APPEALS, MELENCIO YU AND TALINANAP MATUALAGA respondents.

Ildefonso V. Lagcao for petitioners.

Camilo Cariño Dionio, Jr. for private respondents.

 

PARAS, J.:

This is a petition for review on certiorari seeking the reversal of the September 22, 1986 decision ** of the Court of Appeals in CA-G.R. No. 69000 entitled "Melencio Yu, et al. v. Heirs of John Z. Sycip" affirming the decision *** of the Court of First Instance of South Cotabato, Branch I dated April 22, 1982 in Civil Case No. 1291 which, among others, adjudged private respondents Melencio Yu and Talinanap Matualaga as the registered absolute owners of Lot No. 4 and ordered the petitioner to deliver to the private respondents the property in question and to pay the attorney's fees.

The decretal portion of the appealed decision reads as follows:

WHEREFORE no reversible error in the decision appealed from, the same is hereby affirmed with costs againsts defendant-appellants.

SO ORDERED. (p. 50, Rollo)

The antecedent facts of the case as found by the appellate court are as follows:

The plaintiffs-spouses are native muslims. Prior to 1952, Talinanap Matualaga bought a parcel of land with an area of 54.4980 hectares more or less, situated at Makar, General Santos City (using the money given to her by her parents) from vendors Cosin Bentaib and Hadji Abdaua Mohamad. The land was, however, surveyed in the name of Bangon Yu (father of plaintiff Melencio Yu) on June 14 to 16, 1952 by private surveyor Justino Mendoza which was approved by the Director of Lands on March 4, 1953. On September 11 to 12, 1953, the land was subdivided into five (5) lots in another survey conducted and executed by Justino Mendoza, and approved by the Director of Lands on July 1, 1954. The subdivision was as follows: Lot No. 1 for Bengon Yu; Lot No. 2 for Melencio Yu; Lot No. 3 for Dominga Pinagawang; Lot No. 4 for Talinanap Matualaga and Lot No. 5 for Ison Yu (the brother of plaintiff Melencio Yu). (Exh. "A")

Melencio Yu, together with his wife, Talinanap Matualaga filed on December 21, their respective Free Patent Application for both Lot Nos. 4 and 2. On April 18, 1961, the approval of the Director of Lands of the Free Patent Application, Free Patent No. V-178889 was issued on June 22, 1961 by authority of the President of the Philippines (Exh. "A"). Upon transmittal to the Register of Deeds on July 17, 1961, the latter issued to Melencio Yu, married to Talinanap Matualaga, Original Certificate of Title No. (C-14496) (P-523) on August 23, 1961 (Exh. "B"), "B-1" and "BB"). The owner's copy of said title, however, was not received by the patentee Melencio Yu because the same was given to defendant John Z. Sycip (now deceased).

In 1958, on account of jealousy, Talinanap Matualaga left her husband at Tocanabago, General Santos, South Cotabato, where they had a house in the land in question since their marriage and lived with her parents at Baluan, Cotabato. For the same period, Melencio Yu lived in Tupi South Cotabato. They reconciled, however, in 1963 and since then lived together in Buluan.

Upon their reconciliation, however, Melencio Yu asked his wife if a certain Alfonso Non had approached her regarding the sale of their land to John Sycip. Talinanap Matualaga answered in the negative and further said that she never executed any instrument

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conveying her property to anyone. Melencio Yu then explained that while they were separated, Alfonso Non approached him and told him that there was a buyer interested in their land at a price of P200.00 per hectare. Melencio told Non that the land belonged to his wife as her paraphernal property, hence, he did not have authority to sell the same. Alfonso Non, however, convinced Melencio that if he would only sign the documents which Non had prepared then Non will secure the signature of Talinanap in Buluan, and if Non fails to get Talinanap's signature, then Melencio's signature will be null and void. With such understanding, Melencio signed the "Agreement of Transfer of Rights and Deed of Sale" (Exh. "B") and the "Quitclaim Deed" (Exh. "D") without receiving any consideration therefor. It turned out that the deeds involved the sale of the whole parcel of land consisting of more than 54 hectares in favor of John Sycip for a consideration of P9,500.00.

By reason of these information, the spouses sought the assistance of the Commission on National Integration of Southern Mindanao office which informed them that their original certificate of titles were taken and delivered to John Sycip by virtue of the sale documents in question.

Plaintiffs demanded the return of their land to them and the declaration of nullity of the documents in question. (pp. 45-46, Rollo)

On December 6, 1986, private respondents filed a complaint against John Z. Sycip, (later substituted by his heirs upon his death) petitioners herein, before the trial court, docketed as Civil Case No. 969 for the Declaration of Nullity of Document and Recovery of Possession of Real Property with a prayer for a writ of Preliminary Mandatory Injunction and Damages, with Lot No. 4 Psu-135740-Amd, as the subject matter which was adjacent to Lot No. 2, Psu-135740-Amd. (Rollo, p. 149). On March 2, 1971 the trial court upheld the right of the private respondents to be restored to the possession of the aforesaid parcel of land by declaring null and void ab initio or inexistent all documents of conveyance of sale by the petitioners. On appeal, the appellate court in its decision dated October 2, 1978 affirmed in toto the decision of the trial court. Said decision became final and executory and the private respondents were restored to the possession of Lot No. 4 Psu-135740-Amd by virtue of the writ of execution issued by the trial court. (Rollo, p. 150)

Meanwhile, on May 2, 1972, private respondents filed another complaint in the Court of First Instance of Cotabato Branch I for the Declaration of Nullity of Documents and Recovery of Possession of Real Property with a prayer for a Writ of Preliminary Mandatory Injunction and Damages docketed as Civil Case No. 1291, this time it was Lot No. 2 Psu-135740-Amd as the subject matter of the aforesaid case.

On June 21, 1973, the trial court issued its order dismissing the case on the ground of prescription (Rollo, p. 95). It was on July 18, 1973 that private respondents filed their urgent motion for reconsideration to set aside the order dated June 21, 1973 which was denied on October 1, 1973 (Rollo, p. 146).

On appeal, the Court of Appeals, Special Eighth Division, rendered its decision in favor of private respondents thereby setting aside the order of dismissal of the trial court dated June 21, 1973 and remanding the case for further proceedings (Rollo, p. 147).

On April 22, 1981, the trial court in its order adopted the evidence presented in Civil Case No. 969 both oral and documentary and reversed its Order dated June 21, 1973 dismissing the complaint and declared private respondent as the registered and absolute owners of the land in question. (Rollo, p. 147; Record on Appeal p. 71)

Petitioners' motion for reconsideration was denied by the trial court on June 5, 1981. (Rollo, p. 96)

Hence, this petition for review before Us.

The pivotal issue of this case is whether or not the sale of lot No. 2 Psu-135740-Amd is null and void ab initio.

The petition is devoid of merit.

It is not disputed that the private respondents are Muslims who belong to the cultural minority or non-Christian Filipinos as members of the Maguindanao Tribe. Any transaction, involving real property with them is governed by the provisions of Sections 145 and 146 of the Revised Administrative Code of Mindanao and Sulu, Section 120 of the Public Land Act (Commonwealth Act No. 141), as amended, and Republic Act No. 3872, further amending the Public Land Act.

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Section 145 of the Revised Administrative Code of Mindanao and Sulu provides that any transaction involving real property with said non-Christian tribes shall bear the approval of the provincial governor wherein the same was executed or of his representative duly authorized in writing for such purpose, indorsed upon it. Section 146 of the same code considers every contract or agreement made in violation of Section 145 as null and void. (Emphasis supplied)

Section 120 of the Public Land Act (Commonwealth Act No. 141) provides that conveyances and encumbrances made by persons belonging to the so-called "non-Christian tribes" shall be valid if the person making the conveyance or encumbrance is able to read and can understand the language in which the instrument of conveyance or encumbrance is written. Conveyances and encumbrances made by illiterate non-Christians shall not be valid unless duly approved by the Commissioner of Mindanao and Sulu.

Republic Act No. 3872 provides that conveyances and encumbrances made by illiterate non-Christian or literate non-Christians where the instrument of conveyance or encumbrance is in a language not understood by said literate non-Christians shall not be valid unless duly approved by the Chairman of the Commission on National Integration.

All the documents declared null and void or inexistent by the trial court and affirmed by the Court of Appeals were found to have been falsified in Civil Case No. 969; without consideration and more importantly without approval by any of the following officials: the Provincial Governor of Cotabato, Commissioner of Mindanao and Sulu, or the Chairman of the Commission on National Integration and therefore nun and void.

With the resolution of this issue there appears to be no necessity to dwell on the other issues of this case.

PREMISES CONSIDERED, the petition is hereby DISMISSED and the decision of the Court of Appeals is hereby AFFIRMED.

SO ORDERED.

Melencio-Herrera (Chairman), Padilla, Sarmiento and Regalado, JJ., concur.

 

Footnotes

* Penned by Associate Justice Jose C. Campos, Jr., and concurred in by Associate Justices Reynato S. Puno and Venancio D. Aldecoa, Jr.

** Penned by Judge Pedro Samson C. Animas.

Page 68 of 173

Page 69 of 173

EN BANC

G.R. No. L-56168 December 22, 1988

CARLOTA P. VALENZUELA, in her capacity as Superintendent of Banks and Authorized Representative of the CENTRAL BANK OF THE PHILIPPINES in the Liquidation of the RURAL BANK OF LUCENA, INC., petitioner, vs.HONORABLE COURT OF APPEALS, RUFINA TELOSA, DOLORES TELOSA, FE TELOSA, ESTELITA TELOSA, MANUEL TELOSA, ROMULO TELOSA, and Minors ALFARO TELOSA, NESTOR TELOSA and MARIO TELOSA, as represented by RUFINA TELOSA, respondents.

Alfredo L. Bautista, Marcelino de Leon and Jaime M. Cabiles for petitioner.

Vitaliano N. Aguirre for respondents.

PARAS, J.:

Invoking the provisions of Article 24 of the New Civil Code which states:

In all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the Court must be vigilant for his protection.

the heirs of Carlos Telosa, a fisherman and farmer with a very limited education, initiated a complaint before the Court of First Instance of Quezon seeking the nullification of the real estate mortgage executed by Carlos Telosa in favor of the Rural Bank of Lucena and/or its reformation to state the real intention of the parties. The case was docketed as Civil Case No. 7545.

The record discloses that on November 29, 1960 Carlos Telosa obtained a loan from the Rural Bank of Lucena Inc. and as a security thereof, he mortgaged a parcel of land located at Bo. Amugeria, Malunay, Quezon with an area of 50,000 square meters. This parcel of land was registered in the name of the spouses Carlos Telosa & Rufina Telosa.

Several months thereafter, the Rural Bank of Lucena became a distressed bank. In a letter dated June 16, 1961 the Acting Governor of the Central Bank apprised the stockholders of the Lucena Bank that the Monetary Board in its Resolution No. 928 which was approved on June 13, 1961 found that its officers, directors and employees had committed certain anomalies or had resorted to unsound banking practices which were prejudicial to the government, its depositors and creditors.

The Monetary Board later on decided to liquidate the Lucena Bank. To implement the resolution of the Monetary Board for the said bank's liquidation, the Central Bank pursuant to Section 29 of its charter and on the assumption that the Lucena bank was insolvent, filed with the Court of First Instance of Manila a petition dated March 27,1962 for assistance and supervision in the liquidation of the Lucena Bank. The case was docketed as Civil Case No. 50019 and assigned to Branch 1 thereof.

Acting on that petition, the Court of First Instance of Manila issued an order dated March 28, 1963, directing the Lucena Bank to turn over its assets to the Central Bank's authorized representative.

The Monetary Board in its resolution No. 426 dated April 2, 1963 designated the Superintendent of Banks Carlota P. Valenzuela or her duly authorized representative to take charge of the assets of the Lucena bank.

The Board in its resolution of November 27, 1963 ordered the Superintendent of Banks to convert the assets of the Lucena bank to money.

Among the accounts of the Lucena bank inventoried by the Central Bank's representative was the account of Carlos Telosa in the principal amount of P5,000.00. A demand letter was thus sent to Carlos Telosa on August 27, 1965 by the Central Bank examiner Agapito S. Fajardo. Because Carlos Telosa knew that his obligation to the rural bank was only P300.00 not P5,000.00, he executed an affidavit dated January 24,1966 (Exh. "D") protesting the demand.

On January 4,1966 Carlos Telosa paid the amount of P400.00 as evidenced by Official Receipt of the Rural Bank (Exh. "F"). Carlos Telosa claimed this amount represented the principal and interest with a remaining balance of P 11.25 which was paid by Dolores Telosa on April 18, 1972 as shown by official receipt of the rural bank (Exh. "G").

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Meanwhile, Carlos Telosa died on January 13,1968.

Claiming that the payments made did not fully satisfy the whole amount due because the record still showed a balance of P9,032.22 including interest as of February 29, 1972, Napoleon R. Cruz, then authorized deputy of the Central Bank assigned at the Lucena bank, petitioned the Deputy Provincial Sheriff of Quezon to extra-judicially foreclose the mortgage and sell the collateral at public auction. The foreclosure sale was scheduled on April 20, 1972.

To restrain the sheriff of Quezon from proceeding with the sale, a complaint was filed on April 18, 1972, by the widow and children (now private respondents) of Carlos Telosa, before the Court of First Instance of Quezon, against the Rural Bank of Lucena Inc. The plaintiffs prayed for a judgment declaring the contract of mortgage executed by Carlos Telosa in favor of the Rural Bank of Lucena, Inc. null and void and of no further force and effect and/or that the said contract be reformed to state the true intention and agreement of the parties with a prayer for the issuance of writ of preliminary injunction to stop the sheriff of Quezon from proceeding with the extra-judicial foreclosure scheduled on April 20, 1972. It was the contention of the plaintiffs (now private respondents) that the amount of the loan obtained by Carlos Telosa was only P300.00 and that the same had already been fully paid.

Finding that the complaint filed was not sufficient in form and substance and that the proper parties were not impleaded, Judge Delia P. Medina of the Court of First Instance of Quezon, Branch 1, issued an Order on April 18, 1972 directing the plaintiffs within five (5) days from notice, to amend their complaint in order that all proper parties may be impleaded.

Meanwhile, as there was no restraining order issued, the foreclosure sale took place as scheduled on April 20, 1972, with the Rural Bank of Lucena, Inc., as the lone and highest bidder in the auction sale for which an award was made in its favor The certificate of sale was thereafter issued to it and the same was registered with the Registry of Deeds on September 11, 1972.

On May 4, 1972, the plaintiffs filed their amended complaint, this time against Carlota P. Valenzuela in her capacity as Superintendent of Banks and authorized representative of the Central Bank in the liquidation of the Rural Bank of Lucena, Inc., as sole defendant. In addition to the prayers in their original complaint, plaintiffs prayed in their amended complaint that the extra-judicial foreclosure sale be annulled.

Defendant (now petitioner) moved to dismiss the amended complaint on two (2) grounds: (1) that the trial court has no jurisdiction over the subject matter of the action as the Rural Bank of Lucena, Inc., is in the process of liquidation in the Court of First Instance of Manila and (2) that the plaintiffs have no cause of action against the defendant. The motion to dismiss was denied. Thereafter, defendant filed her answer. In addition to the two grounds relied upon in the motion to dismiss, she set up the defenses of the validity of the loan documents, reflecting in all respects the correct amount (P5,000.00) which Carlos Telosa obtained from the Rural Bank of Lucena, Inc. and that the plaintiffs' cause of action had already prescribed.

After trial, the court a quo rendered its decision in favor of the plaintiffs, the dispositive portion of which reads as for lows —

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant:

1. Ordering the reformation of Exhibit 3-CBP so as to make it reflect a mortgage over one-half of the property covered by Tax Declaration No. 2156, to secure a loan by Carlos Telosa in the amount of P300.00 and also to reflect the civil status of Carlos Telosa as "married," to be signed by the plaintiffs, as heirs of Carlos Telosa, for and in his behalf;

2. Setting aside as illegal and void the extrajudicial foreclosure sale of the property covered by Tax Declaration No. 2156, conducted by the Deputy Provincial Sheriff on April 20, 1972;

3. Ordering the defendant to deliver to the plaintiffs the property covered by Tax Declaration No. 2156, if said defendant has caused the taking of possession thereof by virtue of the extrajudicial foreclosure; and

4. Ordering the defendant to pay the plaintiffs from the assets of the Rural Bank of Lucena, Inc., the amount of P2,000.00 as moral damages, P1,500.00 as attorney's fees and P900.00, as litigation expenses.

With costs against the defendant.

SO ORDERED. (Record on Appeal, pp. 344-346).

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The above decision was appealed to the Court of Appeals and in its decision 1 dated October 29,1980, said court affirmed the decision of the lower court in toto. Hence, the instant petition for review.

Petitioner contends that (a) a separate action involving the assets, properties and record of an insolvent bank in the process of liquidation in the Court of First Instance of Manila cannot be maintained in another court; (b) a public instrument celebrated with all the requisites under the safeguard of a notarial certificate is evidence of a high character and to overcome its recitals, it is incumbent upon the party challenging it to prove his claim with clear, convincing and more than merely preponderant evidence; (c) respondent Rufina Telosa has no factual, valid and legal basis to ask for the reformation of the real estate mortgage contract, but even assuming that she has, her cause of action to reform had already prescribed; (d) moral damages to warrant recovery, must be alleged in the complaint and duly proved; (e) the reason for awarding attorney's fees and litigation expenses must be stated in the decision and (f) there is no legal and factual basis for the application of Article 24 of the New Civil Code in the instant case.

On the issue of jurisdiction, this Court ruled in the case of Hernandez vs. Rural Bank of Lucena, Inc. (G.R. No. L-29791, January 10, 1978, 81 SCRA 75) that if there is a judicial liquidation of an insolvent bank, all claims against the bank should be filed in the liquidation proceeding.

The fact that the insolvent bank is forbidden to do business, that its assets are turned over to the superintendent of Banks, as a receiver, for conversion into cash, and that its liquidation is undertaken with judicial intervention means that, as far as lawful and practicable, all claims against the insolvent bank should be filed in the liquidation proceeding. The judicial liquidation is intended to prevent multiplicity of actions against the insolvent bank. The lawmaking body contemplated that for convenience only one court, if possible, should pass upon the claims against the insolvent bank and that the liquidation court should assist the Superintendent of Banks and control his operations. In the course of the liquidation, contentious cases might arise wherein a full-dress hearing would be required and legal issues would have to be resolved. Hence, it would be necessary in justice to all concerned that a Court of First Instance should assist and supervise the liquidation and should act as umpire and arbitrator in the allowance and disallowance of claims. The judicial liquidation is a pragmatic arrangement designed to establish due process and orderliness in the liquidation of the bank, to obviate the proliferation of litigations and to avoid injustice and arbitrariness. (81 SCRA 77)

With the foregoing ruling, the more proper procedure would be to set aside the decision rendered by the Court of First Instance of Quezon and consequently dismiss the case without prejudice to the right of the private respondents to take up with the liquidation court, the Court of First Instance of Manila, the settlement of their mortgage obligation.

However, taking into consideration the circumstances of the case and in the interest of justice We are constrained to deviate from this procedure. To order the private respondents to refile and relitigate their case before the liquidation court would be an exercise in futility. It would mean another several years of trial and additional expenses to private respondents who are admittedly living in poverty. Incidentally, the property in question is the only property of private respondents. We have carefully reviewed the records of the case and We are convinced as were the trial court and the appellate court that the amount of loan actually obtained by the deceased Telosa was only P300.00 and not the P5,000.00 as claimed by petitioner. This fact was established by the following evidence:

(a) Exhibit "E" the receipt signed by the deceased dated December 2, 1960 showing the amount of loan to be only P300.00.

(b) The oral testimony of Rufina Telosa, wife of the deceased;

(c) The testimony of Ponciano Mendoza who was with the deceased at the time of the transactions and who categorically testified that the amount of the loan was P300.00 in six P50.00 bills but that Carlos Telosa was made to sign blank forms by the bank.

Needless to state in this regard this particular transaction was one of the fraudulent and anomalous transactions involving the officers of the Rural Bank of Lucena, Inc. The latter took advantage of the very limited education of Carlos Telosa.

The records further show that private respondents made payment in the amount of P400.00 on January 4, 1966 and P11.25 on April 18, 1972 to the Rural Bank of Lucena. This constituted full payment of the principal loan of P300.00 and the interest thereon.

Page 72 of 173

Anent the issue of prescription, suffice it to state that private respondents filed their complaint well within the ten (10) year prescriptive period to bang an action for reformation of an instrument. After discovering the fraudulent transaction on March 14, 1972, private respondents allowed only 14 days to pass before filing their complaint,

Petitioner alleges that the trial court did not state in its decision why it was awarding attorney's fees. The allegation is not correct. A cursory reading of the decision would show that the reason for the award of attorney's fees is contained in the decision, hereinbelow quoted:

As a second cause of action, plaintiffs assert that the mortgage contract in question was executed without the knowledge and marital consent of the wife, plaintiff Rufina Telosa, hence voidable, insofar as her conjugal share is concerned. Plaintiffs further assess moral damages in the amount of P5,000.00, attorney's fees of P2,000.00 and litigation expenses of P75.00 per hearing of this case. (Brief for private respondents-appellees, p. 44; Record on Appeal, p. 325).

Clearly the circumstances show that the award of attorney's fees is proper and just.

The decision also made findings that the bank acted fraudulently. It was the bank, represented by petitioner, thru its fraudulent acts which compelled private respondents to litigate and incur litigation expenses.

Incidentally the ratification by the wife cures any defect the contract may have had.

Petitioner further alleges that moral damages should not have been granted because private respondents did not duly allege the same in the complaint. The lower court granted the same because of private respondents' prayer for general relief which includes moral damages. Private respondents had proven that they suffered mental anguish, serious anxiety and moral shock as a consequence of the fraudulent act of the Rural Bank of Lucena, Inc. This is expressly allowed by Art. 2217 of the New Civil Code.

Going back to the issue of jurisdiction, it must be emphasized that at the time the present action was instituted to enjoin the foreclosure of the real estate mortgage under consideration, what must have prompted herein private respondents to seek redress from the Court of First Instance of Quezon was the authority of said court to exercise its injunctive relief. The Court of First Instance having territorial jurisdiction of the acts sought to be enjoined, the Court of First Instance of Quezon, must take cognizance of the case.

Finally, even Our ruling in the cited Hernandez versus Rural Bank case admits of exception. It says "as far as lawful and practicable all claims against the insolvent bank should be filed in the liquidation proceeding." This case should be one of them.

WHEREFORE, the petition is DENIED. The appealed decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

Fernan, C.J., Melencio-Herrera, Cruz, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.

Gutierrez, Jr., J., concur in the result.

Narvasa, J., is on leave.

Footnotes

1 Penned by Justice Porfirio V. Sison and concurred in by Justices Carlos L. Sundiam and Elias B. Asuncion.

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THIRD dIVISION

G.R. No. L-54598 April 15, 1988

JOSE B. LEDESMA, petitioner, vs.HON. COURT OF APPEALS, Spouses PACIFICO DELMO and SANCHA DELMO (as private respondents),respondents.

The Solicitor General for petitioner.

Luzel D. Demasu-ay for respondent.

 

GUTIERREZ, JR., J.:

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

The facts are not disputed.

An organization named Student Leadership Club was formed by some students of the West Visayas College. They elected the late Violets Delmo as the treasurer. In that capacity, Delmo extended loans from the funds of the club to some of the students of the school. "the petitioner claims that the said act of extending loans was against school rules and regulations. Thus, the petitioner, as President of the School, sent a letter to Delmo informing her that she was being dropped from the membership of the club and that she would not be a candidate for any award or citation from the school.

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

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

Records of the preliminary investigation conducted by one of the legal officers of this Office disclosed the following: That Violeta Delmo was the treasurer of the Student Leadership Club, an exclusive student organization; that pursuant to Article IX of the of the Constitution and By-Laws of the club, it passed Resolution No. 2, authorizing the treasurer to disburse funds of the Club to student for financial aid and other humanitarian purposes; that in compliance with said resolution and as treasurer of the Club, Violeta Delmo extended loans to some officers and members of the Club upon proper application duly approved by the majority of the members of the Executive Board; and that upon receiving the report from Mr. Jesse Dagoon, adviser of the funds of the Club, that Office conducted an investigation on the matter and having been convinced of the guilt of Violets Delmo and the other officers and members of the Club, that Office rendered the order or decision in question. In justifying that Office's order or decision, it is contended that approval by that Office of the Constitution and By-Laws of the Club is necessary for its effectivity and validity and since it was never submitted to that Office, the Club had no valid constitution and By-Laws and that as a consequence, Resolution No. 2 which was passed based on the Constitution and By-Laws- is without any force and effect and the treasurer, Violeta Delmo, who extended loans to some officers and members of the Club pursuant thereto are illegal (sic), hence, she and the other students involved are deemed guilty of misappropriating the funds of the Club. On the other hand, Raclito Castaneda, Nestor Golez and Violeta Delmo, President, Secretary and Treasurer of the Club, respectively, testified that the Club had adopted its Constitution and By-Laws in a meeting held last October 3, 1965, and that pursuant to Article I of said Constitution and By-Laws, the majority of the members of the Executive Board passed Resolution No. 2, which resolution became the basis for the extension on of loans to some officers and members of the Club, that the Club honestly believed that its Constitution and By-Laws has been approved by the superintendent because the adviser of the Club, Mr. Jesse Dagoon, assured the President of the Club that he will cause the approval of the Constitution and By-Laws by the Superintendent; the officers of the Club have been

Page 74 of 173

inducted to office on October 9,1965 by the Superintendent and that the Club had been likewise allowed to cosponsor the Education Week Celebration.

After a careful study of the records, this Office sustains the action taken by the Superintendent in penalizing the adviser of the Club as well as the officers and members thereof by dropping them from membership therein. However, this Office is convinced that Violets M. Delmo had acted in good faith, in her capacity as Club Treasurer, in extending loans to the officers and members of the Student partnership Club. Resolution No. 2 authorizing the Club treasurer to discharge finds to students in need of financial assistance and other humanitarian purposes had been approved by the Club adviser, Mr. Jesse Dagoon, with the notation that approval was given in his capacity as adviser of the Club and extension of the Superintendent's personality. Aside from misleading the officers and members of the Club, Mr. Dagoon, had unsatisfactorily explained why he failed to give the Constitution and By-Laws of the Club to the Superintendent for approval despite his assurance to the Club president that he would do so. With this finding of negligence on the part of the Club adviser, not to mention laxity in the performance of his duties as such, this Office considers as too severe and unwarranted that portion of the questioned order stating that Violeta Delmo "shall not be a candidate for any award or citation from this school or any organization in this school." Violeta Delmo, it is noted, has been a consistent full scholar of the school and she alone has maintained her scholarship. The decision in question would, therefore, set at naught all her sacrifice and frustrate her dreams of graduating with honors in this year's commencement exercises.

In view of all the foregoing, this Office believes and so holds and hereby directs that appellant Violeta. M. Delmo, and for that matter all other Club members or officers involved in this case, be not deprived of any award, citation or honor from the school, if they are otherwise entitled thereto. (Rollo, pp. 28-30)

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

"AIRMAIL RECORDS DELMO CASE MISSENT THAT OFFICE"

The Director asked for the return only of the records but the petitioner allegedly mistook the telegram as ordering him to also send the decision back. On the same day, he returned by mail all the records plus the decision of the Director to the Bureau of Public Schools.

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

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

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

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

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

The trial court after hearing rendered judgment against the petitioner and in favor of the spouses Delmo. The court said:

Let us go to specific badges of the defendants (now petitioners) bad faith. Per investigation of Violeta Delmo's appeal to Director Vitaliano Bernardino of the Bureau of Public Schools (Exhibit L it was the defendant who inducted the officers of the Student Leadership Club on October 9, 1965. In fact the Club was allowed to cosponsor the Education Week Celebration. (Exh. "L"). If the defendant he not approve of the constitution and by-laws of the Club, why did he induct the officers into office and allow

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the Club to sponsor the Education Week Celebration"? It was through his own act that the students were misled to do as they did. Coupled with the defendants tacit recognition of the Club was the assurance of Mr. Jemm Dagoon, Club Adviser, who made the students believe that he was acting as an extension of Mr. Ledesma's personality. (Exhibit "L").

Another badge of the defendan'ts want of good faith is the fact that, although, he kaew as early as April 27,1966 that per on of r Bernardino, Exhibit "L," he was directed to give honors to Miss Delmo, he kept Id information to . He told the Court that he knew that the letter of Director Bernardino directed him not to deprive Miss Delmo the honors due her, but she (sic) says that he has not finished reading the letter-decision, Exhibit "L," of Director Bernardino 0, him to give honors to Miss Delmo. (Tsn, Feb. 5, 1974, testimony of Mr. Ledesma, pp. .33-35). It could not be true that he has not finished reading the letter-decision, Exh. "L," because said letter consisted of only three pages, and the portion which directed that Miss Delmo "be not deprived of any award, citation or honor from the school, if otherwise entitled thereto is found at the last paragraph of the same. How did he know the last paragraph if he did not read the letter.

Defendants actuations regarding Miss Delmo's cam had been one of bias and prejudice. When his action would favor him, he was deliberate and aspect to the utter prejudice and detriment of Miss Delmo. Thus, although, as early as April 27, 1966, he knew of the exoneration of Miss Delino by Director Bernardino, he withheld the information from Miss Delmo. This is eloquently dramatized by Exh. "11" and Exh. "13" On April 29,1966, Director Bernardino cabled him to furnish Violeta Delmo copy of the Decision, Exh. "L," but instead of informing Miss Delmo about the decision, since he said he mailed back the decision on April 28,1966, he sent a night letter on April 29,1966, to Director Bernardino, informing the latter that he had returned the decision (Exh. "l3"), together with the record. Why a night letter when the matter was of utmost urgency to the parties in the case, because graduation day was only four days ahead? An examination of the telegrams sent by the defendant shows that he had been sending ordinary telegram and not night letters. (Exh. "5", Exhibit "7"). At least, if the defendant could not furnish a copy of the decision, (Exh. "L"), to Miss Delmo, he should have told her about it or that Miss Delmo's honors and citation in the commencement be announced or indicated. But Mr. Ledesma is one who cannot admit a mistake. Very ungentlemanly this is home out by his own testimony despite his knowledge that his decision to deprive Miss Delmo of honors due to her was overturned by Director Bernardino, he on his wrong belief. To quote the defendant,1 believed that she did not deserve those honors(Tsn Feb. 5, 1974, p. 43,Empasized supplied). Despite the telegram of Director Bernardino which the defendant received hours before the commencement executory on May 3-4,1966, he did not obey Director Bernardino because he said in his testimony that he would be embarrassment . Tan Feb 5,1974, P. 46). Evidently, he knew only his embarrassment and not that of r Bernardino whose order was being flagrantly and wantonly disregarded by bim And certainly, not the least of Miss Delmo's embarrassment. His acts speak eloquently of ho bad faith and unjust of mindwarped by his delicate sensitivity for having been challenged by Miss Delmo, a mere student.

xxx xxx xxx

Finally the defendant's behaviour relative to Miss s case smacks of contemptuous arrogance, oppression and abuse of power. Come to think of it. He refused to obey the directive of Be o and instead, chose to feign ignorance of it." (Reward on Appeal, p. 72-76).

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

On appeal, the Court of Appeals affirmed the decision. Hence, this petition.

The issues raised in this petition can be reduced to the sole question of whether or not the respondent Court of Appeals erred in affirming the trial court's finding that petitioner is liable for damages under Article 27 of the New Civil Code.

We find no reason why the findings of the trial and appellate courts should be reversed. It cannot be disputed that Violeta Delmo went through a painful ordeal which was brought about by the petitioner's neglect of duty and callousness. Thus, moral damages are but proper. As we have affirmed in the case of (Prudenciado v. Alliance Transport System, Inc., 148 SCRA 440, 448):

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There is no argument that moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of defendant's wrongly act or omission." (People v. Baylon, 129 SCRA 62 (1984).

The Solicitor-General tries to cover-up the petitioner's deliberate omission to inform Miss Delmo by stating that it was not the duty of the petitioner to furnish her a copy of the Director's decision. Granting this to be true, it was nevertheless the petitioner's duty to enforce the said decision. He could have done so considering that he received the decision on April 27, 1966 and even though he sent it back with the records of the case, he undoubtedly read the whole of it which consisted of only three pages. Moreover, the petitioner should have had the decency to meet with Mr. Delmo, the girl's father, and inform the latter, at the very least of the decision. This, the petitioner likewise failed to do, and not without the attendant bad faith which the appellate court correctly pointed out in its decision, to wit:

Third, assuming that defendant could not furnish Miss Delmo of a copy of the decision, he could have used his discretion and plain common sense by informing her about it or he could have directed the inclusion of Miss Delmo's honor in the printed commencement program or announced it during the commencement exercises.

Fourth, defendant despite receipt of the telegram of Director Benardino hours before the commencement exercises on May 3-4, 1966, disobeyed his superior by refusing to give the honors due Miss Delmo with a lame excuse that he would be embarrassed if he did so, to the prejudice of and in complete disregard of Miss Delmo's rights.

Fifth, defendant did not even extend the courtesy of meeting Mr. Pacifico Delmo, father of Miss Delmo, who tried several times to see defendant in his office thus Mr. Delmo suffered extreme disappointment and humiliation.

xxx xxx xxx

Defendant, being a public officer should have acted with circumspection and due regard to the rights of Miss Delmo. Inasmuch as he exceeded the scope of his authority by defiantly disobeying the lawful directive of his superior, Director Bernardino, defendant is liable for damages in his personal capacity. . . . (Rollo, pp- 57-58)

Based on the undisputed facts, exemplary damages are also in order. In the same case of Prudenciado v. Alliance Transport System, Inc., supra., at p. 450, we ruled:

The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or correction for the public good (Lopez, et al. v. Pan American World Airways, 16 SCRA 431).

However, we do not deem it appropriate to award the spouses Delmo damages in the amount of P10,000.00 in their individual capacity, separately from and in addition to what they are already entitled to as sole heirs of the deceased Violeta Delmo. Thus, the decision is modified insofar as moral damages are awarded to the spouses in their own behalf.

WHEREFORE, the petition is DISMISSED for lack of merit. The decision of the Court of Appeals is AFFIRMED with the slight modification as stated in the preceding paragraph. This decision is immediately executory.

SO ORDERED.

Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.

Page 77 of 173

EN BANC

G.R. No. L-20089      December 26, 1964

BEATRIZ P. WASSMER, plaintiff-appellee, vs.FRANCISCO X. VELEZ, defendant-appellant.

Jalandoni & Jamir for defendant-appellant.Samson S. Alcantara for plaintiff-appellee.

BENGZON, J.P., J.:

The facts that culminated in this case started with dreams and hopes, followed by appropriate planning and serious endeavors, but terminated in frustration and, what is worse, complete public humiliation.

Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love, decided to get married and set September 4, 1954 as the big day. On September 2, 1954 Velez left this note for his bride-to-be:

Dear Bet —

Will have to postpone wedding — My mother opposes it. Am leaving on the Convair today.

Please do not ask too many people about the reason why — That would only create a scandal.

Paquing

But the next day, September 3, he sent her the following telegram:

NOTHING CHANGED REST ASSURED RETURNING VERY SOON APOLOGIZE MAMA PAPA LOVE .

PAKING

Thereafter Velez did not appear nor was he heard from again.

Sued by Beatriz for damages, Velez filed no answer and was declared in default. Plaintiff adduced evidence before the clerk of court as commissioner, and on April 29, 1955, judgment was rendered ordering defendant to pay plaintiff P2,000.00 as actual damages; P25,000.00 as moral and exemplary damages; P2,500.00 as attorney's fees; and the costs.

On June 21, 1955 defendant filed a "petition for relief from orders, judgment and proceedings and motion for new trial and reconsideration." Plaintiff moved to strike it cut. But the court, on August 2, 1955, ordered the parties and their attorneys to appear before it on August 23, 1955 "to explore at this stage of the proceedings the possibility of arriving at an amicable settlement." It added that should any of them fail to appear "the petition for relief and the opposition thereto will be deemed submitted for resolution."

On August 23, 1955 defendant failed to appear before court. Instead, on the following day his counsel filed a motion to defer for two weeks the resolution on defendants petition for relief. The counsel stated that he would confer with defendant in Cagayan de Oro City — the latter's residence — on the possibility of an amicable element. The court granted two weeks counted from August 25, 1955.

Plaintiff manifested on June 15, 1956 that the two weeks given by the court had expired on September 8, 1955 but that defendant and his counsel had failed to appear.

Page 78 of 173

Another chance for amicable settlement was given by the court in its order of July 6, 1956 calling the parties and their attorneys to appear on July 13, 1956. This time. however, defendant's counsel informed the court that chances of settling the case amicably were nil.

On July 20, 1956 the court issued an order denying defendant's aforesaid petition. Defendant has appealed to this Court. In his petition of June 21, 1955 in the court a quo defendant alleged excusable negligence as ground to set aside the judgment by default. Specifically, it was stated that defendant filed no answer in the belief that an amicable settlement was being negotiated.

A petition for relief from judgment on grounds of fraud, accident, mistake or excusable negligence, must be duly supported by an affidavit of merits stating facts constituting a valid defense. (Sec. 3, Rule 38, Rules of Court.) Defendant's affidavit of merits attached to his petition of June 21, 1955 stated: "That he has a good and valid defense against plaintiff's cause of action, his failure to marry the plaintiff as scheduled having been due to fortuitous event and/or circumstances beyond his control." An affidavit of merits like this stating mere conclusions or opinions instead of facts is not valid. (Cortes vs. Co Bun Kim, L-3926, Oct. 10, 1951; Vaswani vs. P. Tarrachand Bros., L-15800, December 29, 1960.)

Defendant, however, would contend that the affidavit of merits was in fact unnecessary, or a mere surplusage, because the judgment sought to be set aside was null and void, it having been based on evidence adduced before the clerk of court. In Province of Pangasinan vs. Palisoc, L-16519, October 30, 1962, this Court pointed out that the procedure of designating the clerk of court as commissioner to receive evidence is sanctioned by Rule 34 (now Rule 33) of the Rules of Court. Now as to defendant's consent to said procedure, the same did not have to be obtained for he was declared in default and thus had no standing in court (Velez vs. Ramas, 40 Phil. 787; Alano vs. Court of First Instance, L-14557, October 30, 1959).

In support of his "motion for new trial and reconsideration," defendant asserts that the judgment is contrary to law. The reason given is that "there is no provision of the Civil Code authorizing" an action for breach of promise to marry. Indeed, our ruling in Hermosisima vs. Court of Appeals (L-14628, Sept. 30, 1960), as reiterated in Estopa vs. Biansay (L-14733, Sept. 30, 1960), is that "mere breach of a promise to marry" is not an actionable wrong. We pointed out that Congress deliberately eliminated from the draft of the new Civil Code the provisions that would have it so.

It must not be overlooked, however, that the extent to which acts not contrary to law may be perpetrated with impunity, is not limitless for Article 21 of said Code 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 the damage."

The record reveals that on August 23, 1954 plaintiff and defendant applied for a license to contract marriage, which was subsequently issued (Exhs. A, A-1). Their wedding was set for September 4, 1954. Invitations were printed and distributed to relatives, friends and acquaintances (Tsn., 5; Exh. C). The bride-to-be's trousseau, party drsrses and other apparel for the important occasion were purchased (Tsn., 7-8). Dresses for the maid of honor and the flower girl were prepared. A matrimonial bed, with accessories, was bought. Bridal showers were given and gifts received (Tsn., 6; Exh. E). And then, with but two days before the wedding, defendant, who was then 28 years old,: simply left a note for plaintiff stating: "Will have to postpone wedding — My mother opposes it ... " He enplaned to his home city in Mindanao, and the next day, the day before the wedding, he wired plaintiff: "Nothing changed rest assured returning soon." But he never returned and was never heard from again.

Surely this is not a case of mere breach of promise to marry. As stated, mere breach of promise to marry is not an actionable wrong. But to formally set a wedding and go through all the above-described preparation and publicity, only to walk out of it when the matrimony is about to be solemnized, is quite different. This is palpably and unjustifiably contrary to good customs for which defendant must be held answerable in damages in accordance with Article 21 aforesaid.

Defendant urges in his afore-stated petition that the damages awarded were excessive. No question is raised as to the award of actual damages. What defendant would really assert hereunder is that the award of moral and exemplary damages, in the amount of P25,000.00, should be totally eliminated.

Per 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. As to exemplary damages, defendant contends that

Page 79 of 173

the same could not be adjudged against him because under Article 2232 of the New Civil Code the condition precedent is that "the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." The argument is devoid of merit as under the above-narrated circumstances of this case defendant clearly acted in a "wanton ... , reckless [and] oppressive manner." This Court's opinion, however, is that considering the particular circumstances of this case, P15,000.00 as moral and exemplary damages is deemed to be a reasonable award.

PREMISES CONSIDERED, with the above-indicated modification, the lower court's judgment is hereby affirmed, with costs.

Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala, Makalintal, and Zaldivar, JJ.,concur.

Wassmer vs Velez

12 SCRA 648

FACTS:

Francisco Velez and Beatriz, following their promise to love, decided to get married. Two

days before their marriage Francisco wrote Beatriz telling her that their marriage had to

be postponed as his mother opposes it. A day before his marriage he sent a telegram

informing her “nothing changed rest assured returning soon”. Francisco was never

heard from again. Beatriz sued for damages for breach of promise to marry.

ISSUE:

Is breach of promise to marry an actionable wrong?

HELD:

The extent to which acts not contrary to law may be perpetrated with impunity, is not

limitless for Article 21 of the Civil Code provides that “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 damages.

This is not a case of mere breach to marry. As stated, mere breach of promise to marry

is not an actionable wrong. But to formally set a wedding and go through all the

preparation and publicity, only to walk out of it when the matrimony is about to be

solemnized, is quite different. This is palpably and unjustifiably contrary to good

customs for which defendant must be held answerable in damages in accordance with

Article 21 of the Civil Code.

When a breach to marry is actionable under Article 21 of the Civil Code, moral damages

may be awarded under Article 2219(10) of the said Code. Exemplary damages may also

be awarded under Article 2232 of said Code where it is proven that the defendant

clearly acted in a wanton, reckless and oppressive manner.

Page 80 of 173

Page 81 of 173

EN BANCG.R. No. L-14628 September 30, 1960FRANCISCO HERMOSISIMA, petitioner, vs.THE HON. COURT OF APPEALS, ET AL., respondents.Regino Hermosisima for petitioner.F.P. Gabriel, Jr. for respondents.CONCEPCION, J.: An appeal by certiorari, taken by petitioner Francisco Hermosisima, from a decision of Court of Appeals modifying that of the Court of First Instance of Cebu. On October 4, 1954, Soledad Cagigas, hereinafter referred to as complaint, filed with said of her child, Chris Hermosisima, as natural child and moral damages for alleged breach of promise. Petitioner admitted the paternity of child and expressed willingness to support the latter, but denied having ever promised to marry the complainant. Upon her motion, said court ordered petitioner, on October 27, 1954, to pay, by way of alimony pendente lite, P50.00 a month, which was, on February 16, 1955, reduced to P30.00 a month. In due course, later on, said court rendered a decision the dispositive part of which reads: WHEREFORE, judgment is hereby rendered, declaring the child, Chris Hermosisima, as the natural daughter of defendant, and confirming the order pendente lite, ordering defendant to pay to the said child, through plaintiff, the sum of thirty pesos (P30.00), payable on or before the fifth day of every month sentencing defendant to pay to plaintiff the sum of FOUR THOUSAND FIVE HUNDRED PESOS (P4,500.00) for actual and compensatory damages; the sum of FIVE THOUSAND PESOS (P5,000.00) as moral damages; and the further sum of FIVE HUNDRED PESOS (P500.00) as attorney's fees for plaintiff, with costs against defendant. On appeal taken by petitioner, the Court of Appeals affirmed this decision, except as to the actual and compensatory damages and the moral damages, which were increased to P5,614.25 and P7,000.00, respectively. The main issue before us is whether moral damages are recoverable, under our laws, for breach of promise to marry. The pertinent facts are: Complainant Soledad Cagigas, was born in July 1917. Since 1950, Soledad then a teacher in the Sibonga Provincial High School in Cebu, and petitioner, who was almost ten (10) years younger than she, used to go around together and were regarded as engaged, although he had made no promise of marriage prior thereto. In 1951, she gave up teaching and became a life insurance underwriter in the City of Cebu, where intimacy developed among her and the petitioner, since one evening in 1953, when after coming from the movies, they had sexual intercourse in his cabin on board M/V "Escaño," to which he was then attached as apprentice pilot. In February 1954, Soledad advised petitioner that she was in the family way, whereupon he promised to marry her. Their child, Chris Hermosisima, was born on June 17, 1954, in a private maternity and clinic. However, subsequently, or on July 24, 1954, defendant married one Romanita Perez. Hence, the present action, which was commenced on or about October 4, 1954. Referring now to the issue above referred to, it will be noted that the Civil Code of Spain permitted the recovery of damages for breach to marry. Article 43 and 44 of said Code provides: ART. 43. A mutual promise of marriage shall not give rise to an obligation to contract marriage. No court shall entertain any complaint by which the enforcement of such promise is sought. ART. 44. If the promise has been in a public or private instrument by an adult, or by a minor with the concurrence of the person whose consent is necessary for the celebration of the marriage, or if the banns have been published, the one who without just cause refuses to marry shall be obliged to reimburse the other for the expenses which he or she may have incurred by reason of the promised marriage. The action for reimbursement of expenses to which the foregoing article refers must be brought within one year, computed from the day of the refusal to celebrate the marriage. Inasmuch as these articles were never in force in the Philippines, this Court ruled in De Jesus vs. Syquia (58 Phil., 866), that "the action for breach of promises to marry has no standing in the civil law, apart from the right to recover money or property advanced . . . upon the faith of such promise". The Code Commission charged with the drafting of the Proposed Civil Code of the Philippines deem it best, however, to change the law thereon. We quote from the report of the Code Commission on said Proposed Civil Code: Articles 43 and 44 the Civil Code of 1889 refer to the promise of marriage. But these articles are not enforced in the Philippines. The subject is regulated in the Proposed Civil Code not only as to the aspect treated of in said articles but also in other particulars. It is advisable to furnish legislative solutions to some questions that might arise relative to betrothal. Among the provisions proposed are: That authorizing the adjudication of moral damages, in case of breach of promise of marriage, and that creating liability for causing a marriage engagement to be broken.1awphîl.nèt Accordingly, the following provisions were inserted in said Proposed Civil Code, under Chapter I, Title III, Book I thereof:Art. 56. A mutual promise to marry may be made expressly or impliedly.Art. 57. An engagement to be married must be agreed directly by the future spouses.Art. 58. A contract for a future marriage cannot, without the consent of the parent or guardian, be entered into by a male between the ages of sixteen and twenty years or by a female between the ages of sixteen and eighteen years. Without such consent of the parents or guardian, the engagement to marry cannot be the basis of a civil action for damages in case of breach of the promise.Art. 59. A promise to marry when made by a female under the age of fourteen years is not civilly actionable, even though approved by the parent or guardian.Art. 60. In cases referred to in the proceeding articles, the criminal and civil responsibility of a male for seduction shall not be affected.Art. 61. No action for specific performance of a mutual promise to marry may be brought.Art. 62. An action for breach of promise to marry may be brought by the aggrieved party even though a minor without the assistance of his parent or guardian. Should the minor refuse to bring suit, the parent or guardian may institute the action.Art. 63. Damages for breach of promise to marry shall include not only material and pecuniary losses but also compensation for mental and moral suffering.Art. 64. Any person, other than a rival, the parents, guardians and grandparents, of the affianced parties, who cause a marriage engagement to be broken shall be liable for damages, both material and moral, to the engaged person who is rejected.

Page 82 of 173

Art. 65. In case of breach of promise to marry, the party breaking the engagement shall be obliged to return what he or she has received from the other as gift on account of the promise of the marriage. These article were, however, eliminated in Congress. The reason therefor are set forth in the report of the corresponding Senate Committee, from which we quote: The elimination of this Chapter is proposed. That breach of promise to marry is not actionable has been definitely decide in the case of De Jesus vs. Syquia, 58 Phil., 866. The history of breach of promise suit 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 the rights of action in the so-called Balm suit in many of the American States. See statutes of:Florida 1945 — pp. 1342 — 1344Maryland 1945 — pp. 1759 — 1762Nevada 1943 — p. 75Maine 1941 — pp. 140 — 141New Hampshire 1941 — p. 223California 1939 — p. 1245Massachusetts 1938 — p. 326Indiana 1936 — p. 1009Michigan 1935 — p. 201New York 1935Pennsylvania p. 450 The Commission perhaps though that it has followed the more progression trend in legislation when it provided for breach of promise to marry suits. But it is clear that the creation of such causes of action at a time when so many States, in consequence of years of experience are doing away with them, may well prove to be a step in the wrong direction. (Congressional Record, Vol. IV, No. 79, Thursday, May 19, 1949, p. 2352.) The views thus expressed were accepted by both houses of Congress. In the light of the clear and manifest intent of our law making body not to sanction actions for breach of promise to marry, the award of moral damages made by the lower courts is, accordingly, untenable. The Court of Appeals said award: Moreover, it appearing that because of defendant-appellant's seduction power, plaintiff-appellee, overwhelmed by her love for him finally yielded to his sexual desires in spite of her age and self-control, she being a woman after all, we hold that said defendant-appellant is liable for seduction and, therefore, moral damages may be recovered from him under the provision of Article 2219, paragraph 3, of the new Civil Code. Apart from the fact that the general tenor of said Article 2219, particularly the paragraphs preceding and those following the one cited by the Court of Appeals, and the language used in said paragraph strongly indicates that the "seduction" therein contemplated is the crime punished as such in Article as such in Article 337 and 338 of the Revised Penal Code, which admittedly does not exist in the present case, we find ourselves unable to say that petitioner ismorally guilty of seduction, not only because he is approximately ten (10) years younger than the complainant — who 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" "by having a fruit of their engagement even before they had the benefit of clergy." The court of first instance sentenced petitioner to pay the following: (1) a monthly pension of P30.00 for the support of the child: (2) P4,500, representing the income that complainant had allegedly failed to earn during her pregnancy and shortly after the birth of the child, as actual and compensation damages; (3) P5,000, as moral damages; and (4) P500.00, as attorney's fees. The Court of Appeals added to the second item the sum of P1,114.25 — consisting of P144.20, for hospitalization and medical attendance, in connection with the parturiation, and the balance representing expenses incurred to support the child — and increased the moral damages to P7,000.00. With the elimination of this award for damages, the decision of the Court of Appeals is hereby affirmed, therefore, in all other respects, without special pronouncement as to cost in this instance. It is so ordered.Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Gutierrez David, Paredes and Dizon, JJ., concur.

Page 83 of 173

EN BANC

G.R. No. L-18630 December 17, 1966

APOLONIO TANJANCO, Petitioner, vs. HON. COURT OF APPEALS and ARACELI SANTOS, Respondents.

P. Carreon and G. O. Veneracion, Jr. for petitioner.Antonio V. Bonoan for respondents.

REYES, J.B.L., J.:

Appeal from a decision of the Court of Appeals (in its Case No. 27210-R) revoking an order of the Court of First Instance of Rizal (in Civil Case No. Q-4797) dismissing appellant's action for support and damages.chanroblesvirtualawlibrarychanrobles virtual law library

The essential allegations of the complaint are to the effect that, from December, 1957, the defendant (appellee herein), Apolonio Tanjanco, courted the plaintiff, Araceli Santos, both being of adult age; that "defendant expressed and professed his undying love and affection for plaintiff who also in due time reciprocated the tender feelings"; that in consideration of defendant's promise of marriage plaintiff consented and acceded to defendant's pleas for carnal knowledge; that regularly until December 1959, through his protestations of love and promises of marriage, defendant succeeded in having carnal access to plaintiff, as a result of which the latter conceived a child; that due to her pregnant condition, to avoid embarrassment and social humiliation, plaintiff had to resign her job as secretary in IBM Philippines, Inc., where she was receiving P230.00 a month; that thereby plaintiff became unable to support herself and her baby; that due to defendant's refusal to marry plaintiff, as promised, the latter suffered mental anguish, besmirched reputation, wounded feelings, moral shock, and social humiliation. The prayer was for a decree compelling the defendant to recognize the unborn child that plaintiff was bearing; to pay her not less than P430.00 a month for her support and that of her baby, plus P100,000.00 in moral and exemplary damages, plus P10,000.00 attorney's fees.chanroblesvirtualawlibrarychanrobles virtual law library

Upon defendant's motion to dismiss, the court of first instance dismissed the complaint for failure to state a cause of action.chanroblesvirtualawlibrarychanrobles virtual law library

Plaintiff Santos duly appealed to the Court of Appeals, and the latter ultimately decided the case, holding with the lower court that no cause of action was shown to compel recognition of a child as yet unborn, nor for its support, but decreed that the complaint did state a cause of action for damages, premised on Article 21 of the Civil Code of the Philippines, prescribing as follows:

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

The Court of Appeals, therefore, entered judgment setting aside the dismissal and directing the court of origin to proceed with the case.chanroblesvirtualawlibrarychanrobles virtual law library

Defendant, in turn, appealed to this Court, pleading that actions for breach of a promise to marry are not permissible in this jurisdiction, and invoking the rulings of this Court in Estopa vs. Piansay, L-14733, September 30, 1960; Hermosisima vs. Court of Appeals, L-14628, January 29, 1962; and De Jesus vs. SyQuia, 58 Phil. 886.chanroblesvirtualawlibrarychanrobles virtual law library

We find this appeal meritorious.chanroblesvirtualawlibrarychanrobles virtual law library

In holding that the complaint stated a cause of action for damages, under Article 21 above mentioned, the Court of Appeals relied upon and quoted from the memorandum submitted by the Code Commission to the Legislature in 1949 to support the original draft of the Civil Code. Referring to Article 23 of the draft (now Article 21 of the Code), the Commission stated:

But the Code Commission has 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."

Page 84 of 173

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 eighteen 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 her family have suffered incalculable moral damage, she and her parents cannot bring any action for damages. But under the proposed article, she and her parents would have such a right of action.

The Court of Appeals seems to have overlooked that the example set forth in the Code Commission's memorandum refers to a tort upon a minor who has 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).chanroblesvirtualawlibrarychanrobles virtual law library

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 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 recover.chanroblesvirtualawlibrarychanrobles virtual law library

Accordingly it is not seduction where the willingness arises out of sexual desire or 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)

Bearing these principles in mind, let us examine the complaint. The material allegations there are as follows:

I. That the plaintiff is of legal age, single, and residing at 56 South E. Diliman, Quezon City, while defendant is also of legal age, single and residing at 525 Padre Faura, Manila, where he may be served with summons;chanrobles virtual law library

II. That the plaintiff and the defendant became acquainted with each other sometime in December, 1957 and soon thereafter, the defendant started visiting and courting the plaintiff;chanrobles virtual law library

III. That the defendant's visits were regular and frequent and in due time the defendant expressed and professed his undying love and affection for the plaintiff who also in due time reciprocated the tender feelings;chanrobles virtual law library

IV. That in the course of their engagement, the plaintiff and the defendant as are wont of young people in love had frequent outings and dates, became very close and intimate to each other and sometime in July, 1958, in consideration of the defendant's promises of marriage, the plaintiff consented and acceded to the former's earnest and repeated pleas to have carnal knowledge with him;chanrobles virtual law library

V. That subsequent thereto and regularly until about July, 1959 except for a short period in December, 1958 when the defendant was out of the country, the defendant through his protestations of love and promises of marriage succeeded in having carnal knowledge with the plaintiff;chanrobles virtual law library

VI. That as a result of their intimate relationship, the plaintiff started conceiving which was confirmed by a doctor sometime in July, 1959;chanrobles virtual law library

VII. That upon being certain of her pregnant condition, the plaintiff informed the defendant and pleaded with him to make good his promises of marriage, but instead of honoring his promises and righting his wrong, the defendant stopped and refrained from seeing the plaintiff since about July, 1959 has not visited the plaintiff and to all intents and purposes has broken their engagement and his promises.

Page 85 of 173

Over and above the partisan allegations, the facts stand out that for one whole year, from 1958 to 1959, the plaintiff-appellee, a woman of adult age, maintained 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 chart all sexual relations upon finding that defendant did not intend to fulfill his promises. 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.chanroblesvirtualawlibrarychanrobles virtual law library

Of course, the dismissal must be understood as without prejudice to whatever actions may correspond to the child of the plaintiff against the defendant-appellant, if any. On that point, this Court makes no pronouncement, since the child's own rights are not here involved.chanroblesvirtualawlibrarychanrobles virtual law library

FOR THE FOREGOING REASONS, the decision of the Court of Appeals is reversed, and that of the Court of First Instance is affirmed. No costs.chanroblesvirtualawlibrarychanrobles virtual law library

Concepcion, C.J., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur.

Tanjanco v CA 18 SCRA 994

Facts:Apolonio Tanjanco courted Araceli Santos. Since he promised her marriage, she consented to his pleas for carnal knowledge. As a result, she conceived a child, and due to her condition, she had to resign from her work. Because she was unable to support herself and the baby, and the Apolonio refused to marry her, she instituted an action for damages, compelling the defendant to recognize the unborn child, pay her monthly support, plus P100,000 in moral and exemplary damages.Issue: WON the acts of petitioner constitute seduction as contemplated in Art. 21.Held: No, it is not. Seduction is more than mere sexual intercourse or a breach of promise to marry. 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. In this case, for 1 whole year, the woman maintained intimate sexual relations with the defendant, and such conduct is incompatible with the idea of seduction. Plainly here there is voluntariness and mutual passion, for had the plaintiff been deceived, she would not have again yielded to his embraces for a year.

Page 86 of 173

EN BANC

G.R. No. L-19671           November 29, 1965

PASTOR B. TENCHAVEZ, plaintiff-appellant, vs.VICENTA F. ESCAÑO, ET AL., defendants-appellees.

I. V. Binamira & F. B. Barria for plaintiff-appellant.Jalandoni & Jarnir for defendants-appellees.

REYES, J.B.L., J.:

Direct appeal, on factual and legal questions, from the judgment of the Court of First Instance of Cebu, in its Civil Case No. R-4177, denying the claim of the plaintiff-appellant, Pastor B. Tenchavez, for legal separation and one million pesos in damages against his wife and parents-in-law, the defendants-appellees, Vicente, Mamerto and Mena,1 all surnamed "Escaño," respectively.2

The facts, supported by the evidence of record, are the following:

Missing her late afternoon classes on 24 February 1948 in the University of San Carlos, Cebu City, where she was then enrolled as a second year student of commerce, Vicenta Escaño, 27 years of age (scion of a well-to-do and socially prominent Filipino family of Spanish ancestry and a "sheltered colegiala"), exchanged marriage vows with Pastor Tenchavez, 32 years of age, an engineer, ex-army officer and of undistinguished stock, without the knowledge of her parents, before a Catholic chaplain, Lt. Moises Lavares, in the house of one Juan Alburo in the said city. The marriage was the culmination of a previous love affair and was duly registered with the local civil register.

Vicenta's letters to Pastor, and his to her, before the marriage, indicate that the couple were deeply in love. Together with a friend, Pacita Noel, their matchmaker and go-between, they had planned out their marital future whereby Pacita would be the governess of their first-born; they started saving money in a piggy bank. A few weeks before their secret marriage, their engagement was broken; Vicenta returned the engagement ring and accepted another suitor, Joseling Lao. Her love for Pastor beckoned; she pleaded for his return, and they reconciled. This time they planned to get married and then elope. To facilitate the elopement, Vicenta had brought some of her clothes to the room of Pacita Noel in St. Mary's Hall, which was their usual trysting place.

Although planned for the midnight following their marriage, the elopement did not, however, materialize because when Vicente went back to her classes after the marriage, her mother, who got wind of the intended nuptials, was already waiting for her at the college. Vicenta was taken home where she admitted that she had already married Pastor. Mamerto and Mena Escaño were surprised, because Pastor never asked for the hand of Vicente, and were disgusted because of the great scandal that the clandestine marriage would provoke (t.s.n., vol. III, pp. 1105-06). The following morning, the Escaño spouses sought priestly advice. Father Reynes suggested a recelebration to validate what he believed to be an invalid marriage, from the standpoint of the Church, due to the lack of authority from the Archbishop or the parish priest for the officiating chaplain to celebrate the marriage. The recelebration did not take place, because on 26 February 1948 Mamerto Escaño was handed by a maid, whose name he claims he does not remember, a letter purportedly coming from San Carlos college students and disclosing an amorous relationship between Pastor Tenchavez and Pacita Noel; Vicenta translated the letter to her father, and thereafter would not agree to a new marriage. Vicenta and Pastor met that day in the house of Mrs. Pilar Mendezona. Thereafter, Vicenta continued living with her parents while Pastor returned to his job in Manila. Her letter of 22 March 1948 (Exh. "M"), while still solicitous of her husband's welfare, was not as endearing as her previous letters when their love was aflame.

Vicenta was bred in Catholic ways but is of a changeable disposition, and Pastor knew it. She fondly accepted her being called a "jellyfish." She was not prevented by her parents from communicating with Pastor (Exh. "1-Escaño"), but her letters became less frequent as the days passed. As of June, 1948 the newlyweds were already estranged (Exh. "2-Escaño"). Vicenta had gone to Jimenez, Misamis Occidental, to escape from the scandal that her marriage stirred in Cebu society. There, a lawyer filed for her a petition, drafted by then Senator Emmanuel Pelaez, to annul her marriage. She did not sign the petition (Exh. "B-5"). The case was dismissed without prejudice because of her non-appearance at the hearing (Exh. "B-4").

On 24 June 1950, without informing her husband, she applied for a passport, indicating in her application that she was single, that her purpose was to study, and she was domiciled in Cebu City, and that she

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intended to return after two years. The application was approved, and she left for the United States. On 22 August 1950, she filed a verified complaint for divorce against the herein plaintiff in the Second Judicial District Court of the State of Nevada in and for the County of Washoe, on the ground of "extreme cruelty, entirely mental in character." On 21 October 1950, a decree of divorce, "final and absolute", was issued in open court by the said tribunal.

In 1951 Mamerto and Mena Escaño filed a petition with the Archbishop of Cebu to annul their daughter's marriage to Pastor (Exh. "D"). On 10 September 1954, Vicenta sought papal dispensation of her marriage (Exh. "D"-2).

On 13 September 1954, Vicenta married an American, Russell Leo Moran, in Nevada. She now lives with him in California, and, by him, has begotten children. She acquired American citizenship on 8 August 1958.

But on 30 July 1955, Tenchavez had initiated the proceedings at bar by a complaint in the Court of First Instance of Cebu, and amended on 31 May 1956, against Vicenta F. Escaño, her parents, Mamerto and Mena Escaño, whom he charged with having dissuaded and discouraged Vicenta from joining her husband, and alienating her affections, and against the Roman Catholic Church, for having, through its Diocesan Tribunal, decreed the annulment of the marriage, and asked for legal separation and one million pesos in damages. Vicenta claimed a valid divorce from plaintiff and an equally valid marriage to her present husband, Russell Leo Moran; while her parents denied that they had in any way influenced their daughter's acts, and counterclaimed for moral damages.

The appealed judgment did not decree a legal separation, but freed the plaintiff from supporting his wife and to acquire property to the exclusion of his wife. It allowed the counterclaim of Mamerto Escaño and Mena Escaño for moral and exemplary damages and attorney's fees against the plaintiff-appellant, to the extent of P45,000.00, and plaintiff resorted directly to this Court.

The appellant ascribes, as errors of the trial court, the following:

1. In not declaring legal separation; in not holding defendant Vicenta F. Escaño liable for damages and in dismissing the complaint;.

2. In not holding the defendant parents Mamerto Escano and the heirs of Doña Mena Escaño liable for damages;.

3 In holding the plaintiff liable for and requiring him to pay the damages to the defendant parents on their counterclaims; and.

4. In dismissing the complaint and in denying the relief sought by the plaintiff.

That on 24 February 1948 the plaintiff-appellant, Pastor Tenchavez, and the defendant-appellee, Vicenta Escaño, were validly married to each other, from the standpoint of our civil law, is clearly established by the record before us. Both parties were then above the age of majority, and otherwise qualified; and both consented to the marriage, which was performed by a Catholic priest (army chaplain Lavares) in the presence of competent witnesses. It is nowhere shown that said priest was not duly authorized under civil law to solemnize marriages.

The chaplain's alleged lack of ecclesiastical authorization from the parish priest and the Ordinary, as required by Canon law, is irrelevant in our civil law, not only because of the separation of Church and State but also because Act 3613 of the Philippine Legislature (which was the marriage law in force at the time) expressly provided that —

SEC. 1. Essential requisites. Essential requisites for marriage are the legal capacity of the contracting parties and consent. (Emphasis supplied)

The actual authority of the solemnizing officer was thus only a formal requirement, and, therefore, not essential to give the marriage civil effects,3 and this is emphasized by section 27 of said marriage act, which provided the following:

SEC. 27. Failure to comply with formal requirements. No marriage shall be declared invalid because of the absence of one or several of the formal requirements of this Act if, when it was performed, the spouses or one of them believed in good faith that the person who solemnized the marriage was actually empowered to do so, and that the marriage was perfectly legal.

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The good faith of all the parties to the marriage (and hence the validity of their marriage) will be presumed until the contrary is positively proved (Lao vs. Dee Tim, 45 Phil. 739, 745; Francisco vs. Jason, 60 Phil. 442, 448). It is well to note here that in the case at bar, doubts as to the authority of the solemnizing priest arose only after the marriage, when Vicenta's parents consulted Father Reynes and the archbishop of Cebu. Moreover, the very act of Vicenta in abandoning her original action for annulment and subsequently suing for divorce implies an admission that her marriage to plaintiff was valid and binding.

Defendant Vicenta Escaño argues that when she contracted the marriage she was under the undue influence of Pacita Noel, whom she charges to have been in conspiracy with appellant Tenchavez. Even granting, for argument's sake, the truth of that contention, and assuming that Vicenta's consent was vitiated by fraud and undue influence, such vices did not render her marriage ab initio void, but merely voidable, and the marriage remained valid until annulled by a competent civil court. This was never done, and admittedly, Vicenta's suit for annulment in the Court of First Instance of Misamis was dismissed for non-prosecution.

It is equally clear from the record that the valid marriage between Pastor Tenchavez and Vicenta Escaño remained subsisting and undissolved under Philippine law, notwithstanding the decree of absolute divorce that the wife sought and obtained on 21 October 1950 from the Second Judicial District Court of Washoe County, State of Nevada, on grounds of "extreme cruelty, entirely mental in character." At the time the divorce decree was issued, Vicenta Escaño, like her husband, was still a Filipino citizen.4 She was then subject to Philippine law, and Article 15 of the Civil Code of the Philippines (Rep. Act No. 386), already in force at the time, expressly provided:

Laws relating to family rights and duties or to the status, condition and legal capacity of persons are binding upon the citizens of the Philippines, even though living abroad.

The Civil Code of the Philippines, now in force, does not admit absolute divorce, quo ad vinculo matrimonii; and in fact does not even use that term, to further emphasize its restrictive policy on the matter, in contrast to the preceding legislation that admitted absolute divorce on grounds of adultery of the wife or concubinage of the husband (Act 2710). Instead of divorce, the present Civil Code only provides for legal separation (Title IV, Book 1, Arts. 97 to 108), and, even in that case, it expressly prescribes that "the marriage bonds shall not be severed" (Art. 106, subpar. 1).

For the Philippine courts to recognize and give recognition or effect to a foreign decree of absolute divorce betiveen Filipino citizens could be a patent violation of the declared public policy of the state, specially in view of the third paragraph of Article 17 of the Civil Code that prescribes the following:

Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, policy and good customs, shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country.

Even more, the grant of effectivity in this jurisdiction to such foreign divorce decrees would, in effect, give rise to an irritating and scandalous discrimination in favor of wealthy citizens, to the detriment of those members of our polity whose means do not permit them to sojourn abroad and obtain absolute divorces outside the Philippines.

From this point of view, it is irrelevant that appellant Pastor Tenchavez should have appeared in the Nevada divorce court. Primarily because the policy of our law cannot be nullified by acts of private parties (Civil Code,Art. 17, jam quot.); and additionally, because the mere appearance of a non-resident consort cannot confer jurisdiction where the court originally had none (Area vs. Javier, 95 Phil. 579).

From the preceding facts and considerations, there flows as a necessary consequence that in this jurisdiction Vicenta Escaño's divorce and second marriage are not entitled to recognition as valid; for her previous union to plaintiff Tenchavez must be declared to be existent and undissolved. It follows, likewise, that her refusal to perform her wifely duties, and her denial of consortium and her desertion of her husband constitute in law a wrong caused through her fault, for which the husband is entitled to the corresponding indemnity (Civil Code, Art. 2176). Neither an unsubstantiated charge of deceit nor an anonymous letter charging immorality against the husband constitute, contrary to her claim, adequate excuse. Wherefore, her marriage and cohabitation with Russell Leo Moran is technically "intercourse with a person not her husband" from the standpoint of Philippine Law, and entitles plaintiff-appellant Tenchavez to a decree of "legal separation under our law, on the basis of adultery" (Revised Penal Code, Art. 333).

The foregoing conclusions as to the untoward effect of a marriage after an invalid divorce are in accord with the previous doctrines and rulings of this court on the subject, particularly those that were rendered under our laws prior to the approval of the absolute divorce act (Act 2710 of the Philippine Legislature).

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As a matter of legal history, our statutes did not recognize divorces a vinculo before 1917, when Act 2710 became effective; and the present Civil Code of the Philippines, in disregarding absolute divorces, in effect merely reverted to the policies on the subject prevailing before Act 2710. The rulings, therefore, under the Civil Code of 1889, prior to the Act above-mentioned, are now, fully applicable. Of these, the decision in Ramirez vs. Gmur, 42 Phil. 855, is of particular interest. Said this Court in that case:

As the divorce granted by the French Court must be ignored, it results that the marriage of Dr. Mory and Leona Castro, celebrated in London in 1905, could not legalize their relations; and the circumstance that they afterwards passed for husband and wife in Switzerland until her death is wholly without legal significance. The claims of the very children to participate in the estate of Samuel Bishop must therefore be rejected. The right to inherit is limited to legitimate, legitimated and acknowledged natural children. The children of adulterous relations are wholly excluded. The word "descendants" as used in Article 941 of the Civil Code cannot be interpreted to include illegitimates born of adulterous relations. (Emphasis supplied)

Except for the fact that the successional rights of the children, begotten from Vicenta's marriage to Leo Moran after the invalid divorce, are not involved in the case at bar, the Gmur case is authority for the proposition that such union is adulterous in this jurisdiction, and, therefore, justifies an action for legal separation on the part of the innocent consort of the first marriage, that stands undissolved in Philippine law. In not so declaring, the trial court committed error.

True it is that our ruling gives rise to anomalous situations where the status of a person (whether divorced or not) would depend on the territory where the question arises. Anomalies of this kind are not new in the Philippines, and the answer to them was given in Barretto vs. Gonzales, 58 Phil. 667:

The hardship of the existing divorce laws in the Philippine Islands are well known to the members of the Legislature. It is the duty of the Courts to enforce the laws of divorce as written by Legislature if they are constitutional. Courts have no right to say that such laws are too strict or too liberal. (p. 72)

The appellant's first assignment of error is, therefore, sustained.

However, the plaintiff-appellant's charge that his wife's parents, Dr. Mamerto Escaño and his wife, the late Doña Mena Escaño, alienated the affections of their daughter and influenced her conduct toward her husband are not supported by credible evidence. The testimony of Pastor Tenchavez about the Escaño's animosity toward him strikes us to be merely conjecture and exaggeration, and are belied by Pastor's own letters written before this suit was begun (Exh. "2-Escaño" and "Vicenta," Rec. on App., pp. 270-274). In these letters he expressly apologized to the defendants for "misjudging them" and for the "great unhappiness" caused by his "impulsive blunders" and "sinful pride," "effrontery and audacity" [sic]. Plaintiff was admitted to the Escaño house to visit and court Vicenta, and the record shows nothing to prove that he would not have been accepted to marry Vicente had he openly asked for her hand, as good manners and breeding demanded. Even after learning of the clandestine marriage, and despite their shock at such unexpected event, the parents of Vicenta proposed and arranged that the marriage be recelebrated in strict conformity with the canons of their religion upon advice that the previous one was canonically defective. If no recelebration of the marriage ceremony was had it was not due to defendants Mamerto Escaño and his wife, but to the refusal of Vicenta to proceed with it. That the spouses Escaño did not seek to compel or induce their daughter to assent to the recelebration but respected her decision, or that they abided by her resolve, does not constitute in law an alienation of affections. Neither does the fact that Vicenta's parents sent her money while she was in the United States; for it was natural that they should not wish their daughter to live in penury even if they did not concur in her decision to divorce Tenchavez (27 Am. Jur. 130-132).

There is no evidence that the parents of Vicenta, out of improper motives, aided and abetted her original suit for annulment, or her subsequent divorce; she appears to have acted independently, and being of age, she was entitled to judge what was best for her and ask that her decisions be respected. Her parents, in so doing, certainly cannot be charged with alienation of affections in the absence of malice or unworthy motives, which have not been shown, good faith being always presumed until the contrary is proved.

SEC. 529. Liability of Parents, Guardians or Kin. — The law distinguishes between the right of a parent to interest himself in the marital affairs of his child and the absence of rights in a stranger to intermeddle in such affairs. However, such distinction between the liability of parents and that of strangers is only in regard to what will justify interference. A parent isliable for alienation of affections resulting from his own malicious conduct, as where he wrongfully entices his son or daughter to leave his or her spouse, but he is not liable unless he acts maliciously, without justification and from unworthy motives. He is not liable where he acts and advises his child in good faith with respect to his child's marital relations in the interest of his child as he sees it, the

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marriage of his child not terminating his right and liberty to interest himself in, and be extremely solicitous for, his child's welfare and happiness, even where his conduct and advice suggest or result in the separation of the spouses or the obtaining of a divorce or annulment, or where he acts under mistake or misinformation, or where his advice or interference are indiscreet or unfortunate, although it has been held that the parent is liable for consequences resulting from recklessness. He may in good faith take his child into his home and afford him or her protection and support, so long as he has not maliciously enticed his child away, or does not maliciously entice or cause him or her to stay away, from his or her spouse. This rule has more frequently been applied in the case of advice given to a married daughter, but it is equally applicable in the case of advice given to a son.

Plaintiff Tenchavez, in falsely charging Vicenta's aged parents with racial or social discrimination and with having exerted efforts and pressured her to seek annulment and divorce, unquestionably caused them unrest and anxiety, entitling them to recover damages. While this suit may not have been impelled by actual malice, the charges were certainly reckless in the face of the proven facts and circumstances. Court actions are not established for parties to give vent to their prejudices or spleen.

In the assessment of the moral damages recoverable by appellant Pastor Tenchavez from defendant Vicente Escaño, it is proper to take into account, against his patently unreasonable claim for a million pesos in damages, that (a) the marriage was celebrated in secret, and its failure was not characterized by publicity or undue humiliation on appellant's part; (b) that the parties never lived together; and (c) that there is evidence that appellant had originally agreed to the annulment of the marriage, although such a promise was legally invalid, being against public policy (cf. Art. 88, Civ. Code). While appellant is unable to remarry under our law, this fact is a consequence of the indissoluble character of the union that appellant entered into voluntarily and with open eyes rather than of her divorce and her second marriage. All told, we are of the opinion that appellant should recover P25,000 only by way of moral damages and attorney's fees.

With regard to the P45,000 damages awarded to the defendants, Dr. Mamerto Escaño and Mena Escaño, by the court below, we opine that the same are excessive. While the filing of this unfounded suit must have wounded said defendants' feelings and caused them anxiety, the same could in no way have seriously injured their reputation, or otherwise prejudiced them, lawsuits having become a common occurrence in present society. What is important, and has been correctly established in the decision of the court below, is that said defendants were not guilty of any improper conduct in the whole deplorable affair. This Court, therefore, reduces the damages awarded to P5,000 only.

Summing up, the Court rules:

(1) That a foreign divorce between Filipino citizens, sought and decreed after the effectivity of the present Civil Code (Rep. Act 386), is not entitled to recognition as valid in this jurisdiction; and neither is the marriage contracted with another party by the divorced consort, subsequently to the foreign decree of divorce, entitled to validity in the country;

(2) That the remarriage of divorced wife and her co-habitation with a person other than the lawful husband entitle the latter to a decree of legal separation conformably to Philippine law;

(3) That the desertion and securing of an invalid divorce decree by one consort entitles the other to recover damages;

(4) That an action for alienation of affections against the parents of one consort does not lie in the absence of proof of malice or unworthy motives on their part.

WHEREFORE, the decision under appeal is hereby modified as follows;

(1) Adjudging plaintiff-appellant Pastor Tenchavez entitled to a decree of legal separation from defendant Vicenta F. Escaño;

(2) Sentencing defendant-appellee Vicenta Escaño to pay plaintiff-appellant Tenchavez the amount of P25,000 for damages and attorneys' fees;

(3) Sentencing appellant Pastor Tenchavez to pay the appellee, Mamerto Escaño and the estate of his wife, the deceased Mena Escaño, P5,000 by way of damages and attorneys' fees.

Neither party to recover costs.

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Bengzon, C.J., Bautista Angelo, Concepcion, Dizon, Regala, Makalintal, Bengzon, J.P. and Zaldivar, JJ., concur.

Footnotes

1 The latter was substituted by her heirs when she died during the pendency of the case in the trial court.

2 The original complaint included the Roman Catholic Church as a defendant, sought to be enjoined from acting on a petition for the ecclesiastical annulment of the marriage between Pastor Tenchavez and Vicenta Escaño; the case against the defendant Church was dismissed on a joint motion.

3 In the present Civil Code the contrary rule obtains (Art. 53).

4 She was naturalized as an American citizen only on 8 August 1958.

TITLE: Tenchavez vs. Escano

CITATION: 15 SCRA 355

FACTS:

27 years old Vicenta Escano who belong to a prominent Filipino Family of

Spanish ancestry got married on Feburary 24, 1948 with Pastor Tenchavez, 32

years old engineer, and ex-army officer before Catholic chaplain Lt. Moises

Lavares.  The marriage was a culmination of the love affair of the couple and

was duly registered in the local civil registry.  A certain Pacita Noel came to be

their match-maker and go-between who had an amorous relationship with

Tenchavez as written by a San Carlos college student where she and Vicenta are

studying.  Vicenta and Pastor are supposed to renew their vows/ marriage in a

church as suggested by Vicenta’s parents.  However after translating the said

letter to Vicenta’s dad , he disagreed for a new marriage.  Vicenta continued

leaving with her parents in Cebu while Pastor went back to work in Manila.

Vicenta applied for a passport indicating that she was single and when it was

approved she left for the United States and filed a complaint for divorce against

Pastor which was later on approved and issued by the Second Judicial Court of

the State of Nevada.  She then sought for the annulment of her marriage to the

Archbishop of Cebu.  Vicenta married Russell Leo Moran, an American, in

Nevada and has begotten children.  She acquired citizenship on August 8, 1958. 

Petitioner filed a complaint against Vicenta and her parents whom he alleged to

have dissuaded Vicenta from joining her husband.

ISSUE: Whether the divorce sought by Vicenta Escano is valid and binding upon

courts of the Philippines.

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HELD:

Civil Code of the Philippines does not admit divorce.  Philippine courts cannot

give recognition on foreign decrees of absolute divorce between Filipino citizens

because it would be a violation of the Civil Code.  Such grant would arise to

discrimination in favor of rich citizens who can afford divorce in foreign

countries.  The adulterous relationship of Escano with her American husband is

enough grounds for the legal separation prayed by Tenchavez.  In the eyes of

Philippine laws, Tenchavez and Escano are still married.  A foreign divorce

between Filipinos sought and decreed is not entitled to recognition neither is the

marriage of the divorcee entitled to validity in the Philippines.  Thus, the

desertion and securing of an invalid divorce decree by one spouse entitled the

other for damages. 

WHEREFORE, the decision under appeal is hereby modified as follows;

(1) Adjudging plaintiff-appellant Pastor Tenchavez entitled to a decree of legal

separation from defendant Vicenta F. Escaño;

(2) Sentencing defendant-appellee Vicenta Escaño to pay plaintiff-appellant

Tenchavez the amount of P25,000 for damages and attorneys' fees;

(3) Sentencing appellant Pastor Tenchavez to pay the appellee, Mamerto Escaño

and the estate of his wife, the deceased Mena Escaño, P5,000 by way of

damages and attorneys' fees.

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THIRD DIVISION PETER PAUL PATRICK LUCAS, FATIMA GLADYS LUCAS, ABBEYGAIL LUCAS AND GILLIAN LUCAS, Petitioners, - versus - DR. PROSPERO MA. C. TUAÑO, Respondent. G. R. No. 178763 Present: YNARES-SANTIAGO, J., Chairperson,AUSTRIA-MARTINEZ,CHICO-NAZARIO,NACHURA, andPERALTA, JJ. Promulgated: April 21, 2009x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x D E C I S I O N CHICO-NAZARIO, J.: In this petition for review on certiorari[1] under Rule 45 of the Revised Rules of Court, petitioners Peter Paul Patrick Lucas, Fatima Gladys Lucas, Abbeygail Lucas and Gillian Lucas seek the reversal of the 27 September 2006 Decision[2] and 3 July 2007 Resolution,[3] both of the Court of Appeals in CA-G.R. CV No. 68666, entitled “Peter Paul Patrick Lucas, Fatima Gladys Lucas, Abbeygail Lucas and Gillian Lucas v. Prospero Ma. C. Tuaño.”In the questioned decision and resolution, the Court of Appeals affirmed the 14 July 2000 Decision of the Regional Trial Court (RTC), Branch 150, Makati City, dismissing the complaint filed by petitioners in a civil case entitled, “Peter Paul Patrick Lucas, Fatima Gladys Lucas, Abbeygail Lucas and Gillian Lucas v. Prospero Ma. C. Tuaño,” docketed as Civil Case No. 92-2482. From the record of the case, the established factual antecedents of the present petition are: Sometime in August 1988, petitioner Peter Paul Patrick Lucas (Peter) contracted “sore eyes” in his right eye. On 2 September 1988, complaining of a red right eye and swollen eyelid, Peter made use of his health care insurance issued by Philamcare Health Systems, Inc. (Philamcare), for a possible consult. The Philamcare Coordinator, Dr. Edwin Oca, M.D., referred Peter to respondent, Dr. Prospero Ma. C. Tuaño, M.D. (Dr. Tuaño), an ophthalmologist at St. Luke’s Medical Center, for an eye consult. Upon consultation with Dr. Tuaño, Peter narrated that it had been nine (9) days since the problem with his right eye began; and that he was already taking Maxitrol to address the problem in his eye. According to Dr. Tuaño, he performed “ocular routine examination” on

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Peter’s eyes, wherein: (1) a gross examination of Peter’s eyes and their surrounding area was made; (2) Peter’s visual acuity were taken; (3) Peter’s eyes were palpated to check the intraocular pressure of each; (4) the motility of Peter’s eyes was observed; and (5) the ophthalmoscopy[4] on Peter’s eyes was used. On that particular consultation, Dr. Tuaño diagnosed that Peter was suffering from conjunctivitis[5] or “sore eyes.” Dr. Tuaño then prescribed Spersacet-C[6] eye drops for Peter and told the latter to return for follow-up after one week. As instructed, Peter went back to Dr. Tuaño on 9 September 1988. Upon examination, Dr. Tuaño told Peter that the “sore eyes” in the latter’s right eye had already cleared up and he could discontinue the Spersacet-C. However, the same eye developed Epidemic Kerato Conjunctivitis (EKC),[7] a viral infection. To address the new problem with Peter’s right eye, Dr. Tuaño prescribed to the former a steroid-based eye drop called Maxitrol,[8] a dosage of six (6) drops per day.[9] To recall, Peter had already been using Maxitrol prior to his consult with Dr. Tuaño. On 21 September 1988, Peter saw Dr. Tuaño for a follow-up consultation. After examining both of Peter’s eyes, Dr. Tuaño instructed the former to taper down[10] the dosage of Maxitrol, because the EKC in his right eye had already resolved. Dr. Tuaño specifically cautioned Peter that, being a steroid, Maxitrol had to be withdrawn gradually; otherwise, the EKC might recur.[11] Complaining of feeling as if there was something in his eyes, Peter returned to Dr. Tuaño for another check-up on 6 October 1988. Dr. Tuaño examined Peter’s eyes and found that the right eye had once more developed EKC. So, Dr. Tuaño instructed Peter to resume the use of Maxitrol at six (6) drops per day. On his way home, Peter was unable to get a hold of Maxitrol, as it was out of stock. Consequently, Peter was told by Dr. Tuano to take, instead, Blephamide[12] another steroid-based medication, but with a lower concentration, as substitute for the unavailable Maxitrol, to be used three (3) times a day for five (5) days; two (2) times a day for five (5) days; and then just once a day.[13] Several days later, on 18 October 1988, Peter went to see Dr. Tuaño at his clinic, alleging severe eye pain, feeling as if his eyes were about to “pop-out,” a headache and blurred vision. Dr. Tuaño examined Peter’s eyes and discovered that the EKC was again present in his right eye. As a result, Dr. Tuaño told Peter to resume the maximum dosage of Blephamide. Dr. Tuaño saw Peter once more at the former’s clinic on 4 November 1988. Dr. Tuaño’s examination showed that only the periphery of Peter’s right eye was positive for EKC; hence, Dr. Tuaño prescribed a lower dosage of Blephamide. It was also about this time that Fatima Gladys Lucas (Fatima), Peter’s spouse, read the accompanying literature of Maxitrol and found therein the following warning against the prolonged use of such steroids:WARNING: Prolonged use may result in glaucoma, with damage to the optic nerve, defects in visual acuity and fields of vision, and posterior, subcapsular cataract formation. Prolonged use may suppress the host response and thus increase the hazard of secondary ocular infractions, in those diseases causing thinning of the cornea or sclera, perforations have been known to occur with the use of topical steroids. In acute purulent conditions of the eye, steroids may mask infection or enhance existing infection. If these products are used for 10 days or longer, intraocular pressure should be routinely monitored even though it may be difficult in children and uncooperative patients. Employment of steroid medication in the treatment of herpes simplex requires great caution. x x x x ADVERSE REACTIONS: Adverse reactions have occurred with steroid/anti-infective combination drugs which can be attributed to the steroid component, the anti-infective component, or the combination.

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Exact incidence figures are not available since no denominator of treated patients is available.Reactions occurring most often from the presence of the anti-infective ingredients are allergic sensitizations. The reactions due to the steroid component in decreasing order to frequency are elevation of intra-ocular pressure (IOP) with possible development of glaucoma, infrequent optic nerve damage; posterior subcapsular cataract formation; and delayed wound healing. Secondary infection: The development of secondary has occurred after use of combination containing steroids and antimicrobials. Fungal infections of the correa are particularly prone to develop coincidentally with long-term applications of steroid. The possibility of fungal invasion must be considered in any persistent corneal ulceration where steroid treatment has been used. Secondary bacterial ocular infection following suppression of host responses also occurs. On 26 November 1988, Peter returned to Dr. Tuaño’s clinic, complaining of “feeling worse.”[14] It appeared that the EKC had spread to the whole of Peter’s right eye yet again. Thus, Dr. Tuaño instructed Peter to resume the use of Maxitrol. Petitioners averred that Peter already made mention to Dr. Tuaño during said visit of the above-quoted warning against the prolonged use of steroids, but Dr. Tuaño supposedly brushed aside Peter’s concern as mere paranoia, even assuring him that the former was taking care of him (Peter). Petitioners further alleged that after Peter’s 26 November 1988 visit to Dr. Tuaño, Peter continued to suffer pain in his right eye, which seemed to “progress,” with the ache intensifying and becoming more frequent. Upon waking in the morning of 13 December 1988, Peter had no vision in his right eye. Fatima observed that Peter’s right eye appeared to be bloody and swollen.[15] Thus, spouses Peter and Fatima rushed to the clinic of Dr. Tuaño. Peter reported to Dr. Tuaño that he had been suffering from constant headache in the afternoon and blurring of vision. Upon examination, Dr. Tuaño noted the hardness of Peter’s right eye. With the use of a tonometer[16] to verify the exact intraocular pressure[17] (IOP) of Peter’s eyes, Dr. Tuaño discovered that the tension in Peter’s right eye was 39.0 Hg, while that of his left was 17.0 Hg.[18] Since the tension in Peter’s right eye was way over the normal IOP, which merely ranged from 10.0 Hg to 21.0 Hg,[19] Dr. Tuaño ordered[20] him to immediately discontinue the use of Maxitrol and prescribed to the latter Diamox[21] and Normoglaucon, instead.[22] Dr. Tuaño also required Peter to go for daily check-up in order for the former to closely monitor the pressure of the latter’s eyes. On 15 December 1988, the tonometer reading of Peter’s right eye yielded a high normal level, i.e., 21.0 Hg. Hence, Dr. Tuaño told Peter to continue using Diamox and Normoglaucon. But upon Peter’s complaint of “stomach pains and tingling sensation in his fingers,”[23] Dr. Tuaño discontinued Peter’s use of Diamox.[24] Peter went to see another ophthalmologist, Dr. Ramon T. Batungbacal (Dr. Batungbacal), on 21 December 1988, who allegedly conducted a complete ophthalmological examination of Peter’s eyes. Dr. Batungbacal’s diagnosis was Glaucoma[25] O.D.[26] He recommended Laser Trabeculoplasty[27] for Peter’s right eye. When Peter returned to Dr. Tuaño on 23 December 1988,[28] the tonometer measured the IOP of Peter’s right eye to be 41.0 Hg,[29] again, way above normal. Dr. Tuaño addressed the problem by advising Peter to resume taking Diamox along with Normoglaucon. During the Christmas holidays, Peter supposedly stayed in bed most of the time and was not able to celebrate the season with his family because of the debilitating effects of Diamox.[30] On 28 December 1988, during one of Peter’s regular follow-ups with Dr. Tuaño, the doctor conducted another ocular routine examination of Peter’s eyes. Dr. Tuaño noted the recurrence of EKC in Peter’s right eye. Considering, however, that the IOP of Peter’s right eye was still quite high at 41.0 Hg, Dr. Tuaño was at a loss as to how to balance the treatment of Peter’s EKC vis-à-vis the presence of glaucoma in the same eye. Dr. Tuaño, thus, referred Peter to Dr. Manuel B. Agulto, M.D. (Dr. Agulto), another ophthalmologist specializing in the treatment of glaucoma.[31] Dr. Tuaño’s letter of referral to Dr. Agulto stated that: Referring to you Mr. Peter Lucas for evaluation & possible management. I initially saw him Sept. 2, 1988 because of conjunctivitis. The latter resolved and he developed EKC for which I

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gave Maxitrol. The EKC was recurrent after stopping steroid drops. Around 1 month of steroid treatment, he noted blurring of vision & pain on the R. however, I continued the steroids for the sake of the EKC. A month ago, I noted iris atrophy, so I took the IOP and it was definitely elevated. I stopped the steroids immediately and has (sic) been treating him medically. It seems that the IOP can be controlled only with oral Diamox, and at the moment, the EKC has recurred and I’m in a fix whether to resume the steroid or not considering that the IOP is still uncontrolled.[32] On 29 December 1988, Peter went to see Dr. Agulto at the latter’s clinic. Several tests were conducted thereat to evaluate the extent of Peter’s condition. Dr. Agulto wrote Dr. Tuaño a letter containing the following findings and recommendations: Thanks for sending Peter Lucas. On examination conducted vision was 20/25 R and 20/20L. Tension curve 19 R and 15 L at 1210 H while on Normoglaucon BID OD & Diamox ½ tab every 6h po. Slit lamp evaluation[33] disclosed subepithelial corneal defect outer OD. There was circumferential peripheral iris atrophy, OD. The lenses were clear.Funduscopy[34] showed vertical cup disc of 0.85 R and 0.6 L with temporal slope R>L. Zeiss gonioscopy[35] revealed basically open angles both eyes with occasional PAS,[36] OD. Rolly, I feel that Peter Lucas has really sustained significant glaucoma damage. I suggest that we do a baseline visual fields and push medication to lowest possible levels. If I may suggest further, I think we should prescribe Timolol[37] BID[38] OD in lieu of Normoglaucon. If the IOP is still inadequate, we may try D’epifrin[39] BID OD (despite low PAS). I’m in favor of retaining Diamox or similar CAI.[40] If fields show further loss in say – 3 mos. then we should consider trabeculoplasty. I trust that this approach will prove reasonable for you and Peter.[41] Peter went to see Dr. Tuaño on 31 December 1988, bearing Dr. Agulto’s aforementioned letter. Though Peter’s right and left eyes then had normal IOP of 21.0 Hg and 17.0 Hg, respectively, Dr. Tuaño still gave him a prescription for Timolol B.I.D. so Peter could immediately start using said medication. Regrettably, Timolol B.I.D. was out of stock, so Dr. Tuaño instructed Peter to just continue using Diamox and Normoglaucon in the meantime. Just two days later, on 2 January 1989, the IOP of Peter’s right eye remained elevated at 21.0 Hg,[42] as he had been without Diamox for the past three (3) days. On 4 January 1989, Dr. Tuaño conducted a visual field study[43] of Peter’s eyes, which revealed that the latter had tubular vision[44] in his right eye, while that of his left eye remained normal. Dr. Tuaño directed Peter to religiously use the Diamox and Normoglaucon, as the tension of the latter’s right eye went up even further to 41.0 Hg in just a matter of two (2) days, in the meantime that Timolol B.I.D. and D’epifrin were still not available in the market. Again, Dr. Tuaño advised Peter to come for regular check-up so his IOP could be monitored. Obediently, Peter went to see Dr. Tuaño on the 7th, 13th, 16th and 20th of January 1989 for check-up and IOP monitoring. In the interregnum, however, Peter was prodded by his friends to seek a second medical opinion. On 13 January 1989, Peter consulted Dr. Jaime Lapuz, M.D. (Dr. Lapuz), an ophthalmologist, who, in turn, referred Peter to Dr. Mario V. Aquino, M.D. (Dr. Aquino), another ophthalmologist who specializes in the treatment of glaucoma and who could undertake the long term care of Peter’s eyes. According to petitioners, after Dr. Aquino conducted an extensive evaluation of Peter’s eyes, the said doctor informed Peter that his eyes were relatively normal, though the right one sometimes manifested maximum borderline tension. Dr. Aquino also confirmed Dr. Tuaño’s diagnosis of tubular vision in Peter’s right eye. Petitioners claimed that Dr. Aquino

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essentially told Peter that the latter’s condition would require lifetime medication and follow-ups. In May 1990 and June 1991, Peter underwent two (2) procedures of laser trabeculoplasty to attempt to control the high IOP of his right eye. Claiming to have steroid-induced glaucoma[45] and blaming Dr. Tuaño for the same, Peter, joined by: (1) Fatima, his spouse[46]; (2) Abbeygail, his natural child[47]; and (3) Gillian, his legitimate child[48] with Fatima, instituted on 1 September 1992, a civil complaint for damages against Dr. Tuaño, before the RTC, Branch 150, Quezon City. The case was docketed as Civil Case No. 92-2482. In their Complaint, petitioners specifically averred that as the “direct consequence of [Peter’s] prolonged use of Maxitrol, [he] suffered from steroid induced glaucoma which caused the elevation of his intra-ocular pressure. The elevation of the intra-ocular pressure of [Peter’s right eye] caused the impairment of his vision which impairment is not curable and may even lead to total blindness.”[49] Petitioners additionally alleged that the visual impairment of Peter’s right eye caused him and his family so much grief. Because of his present condition, Peter now needed close medical supervision forever; he had already undergone two (2) laser surgeries, with the possibility that more surgeries were still needed in the future; his career in sports casting had suffered and was continuing to suffer;[50] his anticipated income had been greatly reduced as a result of his “limited” capacity; he continually suffered from “headaches, nausea, dizziness, heart palpitations, rashes, chronic rhinitis, sinusitis,”[51] etc.; Peter’s relationships with his spouse and children continued to be strained, as his condition made him highly irritable and sensitive; his mobility and social life had suffered; his spouse, Fatima, became the breadwinner in the family;[52] and his two children had been deprived of the opportunity for a better life and educational prospects. Collectively, petitioners lived in constant fear of Peter becoming completely blind.[53] In the end, petitioners sought pecuniary award for their supposed pain and suffering, which were ultimately brought about by Dr. Tuaño’s grossly negligent conduct in prescribing to Peter the medicine Maxitrol for a period of three (3) months, without monitoring Peter’s IOP, as required in cases of prolonged use of said medicine, and notwithstanding Peter’s constant complaint of intense eye pain while using the same. Petitioners particularly prayed that Dr. Tuaño be adjudged liable for the following amounts: 1. The amount of P2,000,000.00 to plaintiff Peter Lucas as and by way of compensation for his impaired vision. 2. The amount of P300,000.00 to spouses Lucas as and by way of actual damages plus such additional amounts that may be proven during trial. 3. The amount of P1,000,000.00 as and by way of moral damages. 4. The amount of P500,000.00 as and by way of exemplary damages. 5. The amount of P200,000.00 as and by way of attorney’s fees plus costs of suit.[54] In rebutting petitioners’ complaint, Dr. Tuaño asserted that the “treatment made by [him] more than three years ago has no causal connection to [Peter’s] present glaucoma or condition.”[55] Dr. Tuaño explained that “[d]rug-induced glaucoma is temporary and curable, steroids have the side effect of increasing intraocular pressure. Steroids are prescribed to treat Epidemic Kerato Conjunctivitis or EKC which is an infiltration of the cornea as a result of conjunctivitis or sore eyes.”[56] Dr. Tuaño also clarified that (1) “[c]ontrary to [petitioners’] fallacious claim, [he] did NOT continually prescribe the drug Maxitrol which contained steroids for any prolonged period”[57] and “[t]he truth was the Maxitrol was discontinued x x x as soon as EKC disappeared and was resumed only when EKC reappeared”[58]; (2) the entire time he was treating Peter, he “continually monitored the intraocular pressure of [Peter’s eyes] by palpating the eyes and by putting pressure on

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the eyeballs,” and no hardening of the same could be detected, which meant that there was no increase in the tension or IOP, a possible side reaction to the use of steroid medications; and (3) it was only on 13 December 1988 that Peter complained of a headache and blurred vision in his right eye, and upon measuring the IOP of said eye, it was determined for the first time that the IOP of the right eye had an elevated value. But granting for the sake of argument that the “steroid treatment of [Peter’s] EKC caused the steroid induced glaucoma,”[59] Dr. Tuaño argued that: [S]uch condition, i.e., elevated intraocular pressure, is temporary. As soon as the intake of steroids is discontinued, the intraocular pressure automatically is reduced. Thus, [Peter’s] glaucoma can only be due to other causes not attributable to steroids, certainly not attributable to [his] treatment of more than three years ago x x x. From a medical point of view, as revealed by more current examination of [Peter], the latter’s glaucoma can only be long standing glaucoma, open angle glaucoma, because of the large C:D ratio. The steroids provoked the latest glaucoma to be revealed earlier as [Peter] remained asymptomatic prior to steroid application. Hence, the steroid treatment was in fact beneficial to [Peter] as it revealed the incipient open angle glaucoma of [Peter] to allow earlier treatment of the same.[60] In a Decision dated 14 July 2000, the RTC dismissed Civil Case No. 92-2482 “for insufficiency of evidence.”[61] The decretal part of said Decision reads: Wherefore, premises considered, the instant complaint is dismissed for insufficiency of evidence. The counter claim (sic) is likewise dismissed in the absence of bad faith or malice on the part of plaintiff in filing the suit.[62] The RTC opined that petitioners failed to prove by preponderance of evidence that Dr. Tuaño was negligent in his treatment of Peter’s condition. In particular, the record of the case was bereft of any evidence to establish that the steroid medication and its dosage, as prescribed by Dr. Tuaño, caused Peter’s glaucoma. The trial court reasoned that the “recognized standards of the medical community has not been established in this case, much less has causation been established to render [Tuaño] liable.”[63] According to the RTC: [Petitioners] failed to establish the duty required of a medical practitioner against which Peter Paul’s treatment by defendant can be compared with. They did not present any medical expert or even a medical doctor to convince and expertly explain to the court the established norm or duty required of a physician treating a patient, or whether the non taking (sic) by Dr. Tuaño of Peter Paul’s pressure a deviation from the norm or his non-discovery of the glaucoma in the course of treatment constitutes negligence. It is important and indispensable to establish such a standard because once it is established, a medical practitioner who departed thereof breaches his duty and commits negligence rendering him liable. Without such testimony or enlightenment from an expert, the court is at a loss as to what is then the established norm of duty of a physician against which defendant’s conduct can be compared with to determine negligence.[64] The RTC added that in the absence of “any medical evidence to the contrary, this court cannot accept [petitioners’] claim that the use of steroid is the proximate cause of the damage sustained by [Peter’s] eye.”[65] Correspondingly, the RTC accepted Dr. Tuaño’s medical opinion that “Peter Paul must have been suffering from normal tension glaucoma, meaning, optic nerve damage was happening but no elevation of the eye pressure is manifested, that the steroid treatment actually unmasked the condition that resulted in the earlier treatment of the glaucoma. There is nothing in the record to contradict such testimony. In fact, plaintiff’s Exhibit ‘S’ even tends to support them.” Undaunted, petitioners appealed the foregoing RTC decision to the Court of Appeals. Their appeal was docketed as CA-G.R. CV No. 68666. On 27 September 2006, the Court of Appeals rendered a decision in CA-G.R. CV No. 68666 denying petitioners’ recourse and affirming the appealed RTC Decision. The fallo of the judgment of the appellate court states: WHEREFORE, the Decision appealed from is AFFIRMED.[66]

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The Court of Appeals faulted petitioners because they – [D]id not present any medical expert to testify that Dr. Tuano’s prescription of Maxitrol and Blephamide for the treatment of EKC on Peter’s right eye was not proper and that his palpation of Peter’s right eye was not enough to detect adverse reaction to steroid. Peter testified that Dr. Manuel Agulto told him that he should not have used steroid for the treatment of EKC or that he should have used it only for two (2) weeks, as EKC is only a viral infection which will cure by itself. However, Dr. Agulto was not presented by [petitioners] as a witness to confirm what he allegedly told Peter and, therefore, the latter’s testimony is hearsay. Under Rule 130, Section 36 of the Rules of Court, a witness can testify only to those facts which he knows of his own personal knowledge, x x x. Familiar and fundamental is the rule that hearsay testimony is inadmissible as evidence.[67] Like the RTC, the Court of Appeals gave great weight to Dr. Tuaño’s medical judgment, specifically the latter’s explanation that: [W]hen a doctor sees a patient, he cannot determine whether or not the latter would react adversely to the use of steroids, that it was only on December 13, 1989, when Peter complained for the first time of headache and blurred vision that he observed that the pressure of the eye of Peter was elevated, and it was only then that he suspected that Peter belongs to the 5% of the population who reacts adversely to steroids.[68] Petitioners’ Motion for Reconsideration was denied by the Court of Appeals in a Resolution dated 3 July 2007. Hence, this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court premised on the following assignment of errors: I. THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN AFFIRMING THE DECISION OF THE TRIAL COURT DISMISSING THE PETITIONERS’ COMPLAINT FOR DAMAGES AGAINST THE RESPONDENT ON THE GROUND OF INSUFFICIENCY OF EVIDENCE; II. THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN DISMISSING THE PETITIONERS’ COMPLAINT FOR DAMAGES AGAINST THE RESPONDENT ON THE GROUND THAT NO MEDICAL EXPERT WAS PRESENTED BY THE PETITIONERS TO PROVE THEIR CLAIM FOR MEDICAL NEGLIGENCE AGAINST THE RESPONDENT; AND III. THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN NOT FINDING THE RESPONDENT LIABLE TO THE PETITIONERS’ FOR ACTUAL, MORAL AND EXEMPLARY DAMAGES, ASIDE FROM ATTORNEY’S FEES, COSTS OF SUIT, AS A RESULT OF HIS GROSS NEGLIGENCE.[69] A reading of the afore-quoted reversible errors supposedly committed by the Court of Appeals in its Decision and Resolution would reveal that petitioners are fundamentally assailing the finding of the Court of Appeals that the evidence on record is insufficient to establish petitioners’ entitlement to any kind of damage. Therefore, it could be said that the sole issue for our resolution in the Petition at bar is whether the Court of Appeals committed reversible error in affirming the judgment of the RTC that petitioners failed to prove, by preponderance of evidence, their claim for damages against Dr. Tuaño. Evidently, said issue constitutes a question of fact, as we are asked to revisit anew the factual findings of the Court of Appeals, as well as of the RTC. In effect, petitioners would have us sift through the evidence on record and pass upon whether there is sufficient basis to establish Dr. Tuaño’s negligence in his treatment of Peter’s eye condition. This question clearly involves a factual inquiry, the determination of which is not within the ambit of this Court’s power of review under Rule 45 of the 1997 Rules Civil Procedure, as amended.[70]

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Elementary is the principle that this Court is not a trier of facts; only errors of law are generally reviewed in petitions for review on certiorari criticizing decisions of the Court of Appeals. Questions of fact are not entertained.[71] Nonetheless, the general rule that only questions of law may be raised on appeal in a petition for review under Rule 45 of the Rules of Court admits of certain exceptions, including the circumstance when the finding of fact of the Court of Appeals is premised on the supposed absence of evidence, but is contradicted by the evidence on record. Although petitioners may not explicitly invoke said exception, it may be gleaned from their allegations and arguments in the instant Petition. Petitioners contend, that “[c]ontrary to the findings of the Honorable Court of Appeals, [they] were more than able to establish that: Dr. Tuaño ignored the standard medical procedure for ophthalmologists, administered medication with recklessness, and exhibited an absence of competence and skills expected from him.”[72] Petitioners reject the necessity of presenting expert and/or medical testimony to establish (1) the standard of care respecting the treatment of the disorder affecting Peter’s eye; and (2) whether or not negligence attended Dr. Tuaño’s treatment of Peter, because, in their words – That Dr. Tuaño was grossly negligent in the treatment of Peter’s simple eye ailment is a simple case of cause and effect. With mere documentary evidence and based on the facts presented by the petitioners, respondent can readily be held liable for damages even without any expert testimony. In any case, however, and contrary to the finding of the trial court and the Court of Appeals, there was a medical expert presented by the petitioner showing the recklessness committed by [Dr. Tuaño] – Dr. Tuaño himself. [Emphasis supplied.] They insist that Dr. Tuaño himself gave sufficient evidence to establish his gross negligence that ultimately caused the impairment of the vision of Peter’s right eye,[73] i.e., that “[d]espite [Dr. Tuaño’s] knowledge that 5% of the population reacts adversely to Maxitrol, [he] had no qualms whatsoever in prescribing said steroid to Peter without first determining whether or not the (sic) Peter belongs to the 5%.”[74] We are not convinced. The judgments of both the Court of Appeals and the RTC are in accord with the evidence on record, and we are accordingly bound by the findings of fact made therein. Petitioners’ position, in sum, is that Peter’s glaucoma is the direct result of Dr. Tuaño’s negligence in his improper administration of the drug Maxitrol; “thus, [the latter] should be liable for all the damages suffered and to be suffered by [petitioners].”[75] Clearly, the present controversy is a classic illustration of a medical negligence case against a physician based on the latter’s professional negligence. In this type of suit, the patient or his heirs, in order to prevail, is required to prove by preponderance of evidence that the physician failed to exercise that degree of skill, care, and learning possessed by other persons in the same profession; and that as a proximate result of such failure, the patient or his heirs suffered damages. For lack of a specific law geared towards the type of negligence committed by members of the medical profession, such claim for damages is almost always anchored on the alleged violation of Article 2176 of the Civil Code, which states that: ART. 2176. 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. In medical negligence cases, also called medical malpractice suits, there exist a physician-patient relationship between the doctor and the victim. But just like any other proceeding for damages, four essential (4) elements i.e., (1) duty; (2) breach; (3) injury; and (4) proximate causation,[76] must be established by the plaintiff/s. All the four (4) elements must co-exist in order to find the physician negligent and, thus, liable for damages. When a patient engages the services of a physician, a physician-patient relationship is generated. And in accepting a case, the physician, for all intents and purposes, represents that he has the needed training and skill possessed by physicians and surgeons practicing in the same field; and that he will employ such training, care, and skill in the treatment of the

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patient.[77] Thus, in treating his patient, a physician is under a duty to [the former] to exercise that degree of care, skill and diligence which physicians in the same general neighborhood and in the same general line of practice ordinarily possess and exercise in like cases.[78] Stated otherwise, the physician has the duty to use at least the same level of care that any other reasonably competent physician would use to treat the condition under similar circumstances. This standard level of care, skill and diligence is a matter best addressed by expert medical testimony, because the standard of care in a medical malpractice case is a matter peculiarly within the knowledge of experts in the field.[79] There is breach of duty of care, skill and diligence, or the improper performance of such duty, by the attending physician when the patient is injured in body or in health [and this] constitutes the actionable malpractice.[80] Proof of such breach must likewise rest upon the testimony of an expert witness that the treatment accorded to the patient failed to meet the standard level of care, skill and diligence which physicians in the same general neighborhood and in the same general line of practice ordinarily possess and exercise in like cases. Even so, proof of breach of duty on the part of the attending physician is insufficient, for there must be a causal connection between said breach and the resulting injury sustained by the patient. Put in another way, in order that there may be a recovery for an injury, it must be shown that the “injury for which recovery is sought must be the legitimate consequence of the wrong done; the connection between the negligence and the injury must be a direct and natural sequence of events, unbroken by intervening efficient causes”;[81] that is, the negligence must be the proximate cause of the injury. And the proximate cause of an injury is that cause, which, in the natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.[82] Just as with the elements of duty and breach of the same, in order to establish the proximate cause [of the injury] by a preponderance of the evidence in a medical malpractice action, [the patient] must similarly use expert testimony, because the question of whether the alleged professional negligence caused [the patient’s] injury is generally one for specialized expert knowledge beyond the ken of the average layperson; using the specialized knowledge and training of his field, the expert’s role is to present to the [court] a realistic assessment of the likelihood that [the physician’s] alleged negligence caused [the patient’s] injury.[83] From the foregoing, it is apparent that medical negligence cases are best proved by opinions of expert witnesses belonging in the same general neighborhood and in the same general line of practice as defendant physician or surgeon. The deference of courts to the expert opinion of qualified physicians [or surgeons] stems from the former’s realization that the latter possess unusual technical skills which laymen in most instances are incapable of intelligently evaluating;[84] hence, the indispensability of expert testimonies. In the case at bar, there is no question that a physician-patient relationship developed between Dr. Tuaño and Peter when Peter went to see the doctor on 2 September 1988, seeking a consult for the treatment of his sore eyes. Admittedly, Dr. Tuaño, an ophthalmologist, prescribed Maxitrol when Peter developed and had recurrent EKC. Maxitrol or neomycin/polymyxin B sulfates/dexamethasone ophthalmic ointment is a multiple-dose anti-infective steroid combination in sterile form for topical application.[85] It is the drug which petitioners claim to have caused Peter’s glaucoma. However, as correctly pointed out by the Court of Appeals, “[t]he onus probandi was on the patient to establish before the trial court that the physicians ignored standard medical procedure, prescribed and administered medication with recklessness and exhibited an absence of the competence and skills expected of general practitioners similarly situated.”[86] Unfortunately, in this case, there was absolute failure on the part of petitioners to present any expert testimony to establish: (1) the standard of care to be implemented by competent physicians in treating the same condition as Peter’s under similar circumstances; (2) that, in his treatment of Peter, Dr. Tuaño failed in his duty to exercise said standard of care that any other competent physician would use in treating the same condition as Peter’s under similar circumstances; and (3) that the injury or damage to Peter’s right eye, i.e., his glaucoma, was the result of his use of Maxitrol, as prescribed by Dr. Tuaño. Petitioners’ failure to prove the first element alone is already fatal to their cause.

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Petitioners maintain that Dr. Tuaño failed to follow in Peter’s case the required procedure for the prolonged use of Maxitrol. But what is actually the required procedure in situations such as in the case at bar? To be precise, what is the standard operating procedure when ophthalmologists prescribe steroid medications which, admittedly, carry some modicum of risk? Absent a definitive standard of care or diligence required of Dr. Tuaño under the circumstances, we have no means to determine whether he was able to comply with the same in his diagnosis and treatment of Peter. This Court has no yardstick upon which to evaluate or weigh the attendant facts of this case to be able to state with confidence that the acts complained of, indeed, constituted negligence and, thus, should be the subject of pecuniary reparation. Petitioners assert that prior to prescribing Maxitrol, Dr. Tuaño should have determined first whether Peter was a “steroid responder.”[87] Yet again, petitioners did not present any convincing proof that such determination is actually part of the standard operating procedure which ophthalmologists should unerringly follow prior to prescribing steroid medications. In contrast, Dr. Tuaño was able to clearly explain that what is only required of ophthalmologists, in cases such as Peter’s, is the conduct of standard tests/procedures known as “ocular routine examination,”[88] composed of five (5) tests/procedures – specifically, gross examination of the eyes and the surrounding area; taking of the visual acuity of the patient; checking the intraocular pressure of the patient; checking the motility of the eyes; and using ophthalmoscopy on the patient’s eye – and he did all those tests/procedures every time Peter went to see him for follow-up consultation and/or check-up. We cannot but agree with Dr. Tuaño’s assertion that when a doctor sees a patient, he cannot determine immediately whether the latter would react adversely to the use of steroids; all the doctor can do is map out a course of treatment recognized as correct by the standards of the medical profession. It must be remembered that a physician is not an insurer of the good result of treatment. The mere fact that the patient does not get well or that a bad result occurs does not in itself indicate failure to exercise due care.[89] The result is not determinative of the performance [of the physician] and he is not required to be infallible.[90] Moreover, that Dr. Tuaño saw it fit to prescribe Maxitrol to Peter was justified by the fact that the latter was already using the same medication when he first came to see Dr. Tuaño on 2 September 1988 and had exhibited no previous untoward reaction to that particular drug. [91] Also, Dr. Tuaño categorically denied petitioners’ claim that he never monitored the tension of Peter’s eyes while the latter was on Maxitrol. Dr. Tuaño testified that he palpated Peter’s eyes every time the latter came for a check-up as part of the doctor’s ocular routine examination, a fact which petitioners failed to rebut. Dr. Tuaño’s regular conduct of examinations and tests to ascertain the state of Peter’s eyes negate the very basis of petitioners’ complaint for damages. As to whether Dr. Tuaño’s actuations conformed to the standard of care and diligence required in like circumstances, it is presumed to have so conformed in the absence of evidence to the contrary. Even if we are to assume that Dr. Tuaño committed negligent acts in his treatment of Peter’s condition, the causal connection between Dr. Tuaño’s supposed negligence and Peter’s injury still needed to be established. The critical and clinching factor in a medical negligence case is proof of the causal connection between the negligence which the evidence established and the plaintiff’s injuries.[92] The plaintiff must plead and prove not only that he has been injured and defendant has been at fault, but also that the defendant’s fault caused the injury. A verdict in a malpractice action cannot be based on speculation or conjecture. Causation must be proven within a reasonable medical probability based upon competent expert testimony.[93] The causation between the physician’s negligence and the patient’s injury may only be established by the presentation of proof that Peter’s glaucoma would not have occurred but for Dr. Tuaño’s supposed negligent conduct. Once more, petitioners failed in this regard. Dr. Tuaño does not deny that the use of Maxitrol involves the risk of increasing a patient’s IOP. In fact, this was the reason why he made it a point to palpate Peter’s eyes every time

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the latter went to see him -- so he could monitor the tension of Peter’s eyes. But to say that said medication conclusively caused Peter’s glaucoma is purely speculative. Peter was diagnosed with open-angle glaucoma. This kind of glaucoma is characterized by an almost complete absence of symptoms and a chronic, insidious course.[94] In open-angle glaucoma, halos around lights and blurring of vision do not occur unless there has been a sudden increase in the intraocular vision.[95] Visual acuity remains good until late in the course of the disease.[96] Hence, Dr. Tuaño claims that Peter’s glaucoma “can only be long standing x x x because of the large C:D[97] ratio,” and that “[t]he steroids provoked the latest glaucoma to be revealed earlier” was a blessing in disguise “as [Peter] remained asymptomatic prior to steroid application.” Who between petitioners and Dr. Tuaño is in a better position to determine and evaluate the necessity of using Maxitrol to cure Peter’s EKC vis-à-vis the attendant risks of using the same? That Dr. Tuaño has the necessary training and skill to practice his chosen field is beyond cavil. Petitioners do not dispute Dr. Tuaño’s qualifications – that he has been a physician for close to a decade and a half at the time Peter first came to see him; that he has had various medical training; that he has authored numerous papers in the field of ophthalmology, here and abroad; that he is a Diplomate of the Philippine Board of Ophthalmology; that he occupies various teaching posts (at the time of the filing of the present complaint, he was the Chair of the Department of Ophthalmology and an Associate Professor at the University of the Philippines-Philippine General Hospital and St. Luke’s Medical Center, respectively); and that he held an assortment of positions in numerous medical organizations like the Philippine Medical Association, Philippine Academy of Ophthalmology, Philippine Board of Ophthalmology, Philippine Society of Ophthalmic Plastic and Reconstructive Surgery, Philippine Journal of Ophthalmology, Association of Philippine Ophthalmology Professors, et al. It must be remembered that when the qualifications of a physician are admitted, as in the instant case, there is an inevitable presumption that in proper cases, he takes the necessary precaution and employs the best of his knowledge and skill in attending to his clients, unless the contrary is sufficiently established.[98] In making the judgment call of treating Peter’s EKC with Maxitrol, Dr. Tuaño took the necessary precaution by palpating Peter’s eyes to monitor their IOP every time the latter went for a check-up, and he employed the best of his knowledge and skill earned from years of training and practice. In contrast, without supporting expert medical opinions, petitioners’ bare assertions of negligence on Dr. Tuaño’s part, which resulted in Peter’s glaucoma, deserve scant credit. Our disposition of the present controversy might have been vastly different had petitioners presented a medical expert to establish their theory respecting Dr. Tuaño’s so-called negligence. In fact, the record of the case reveals that petitioners’ counsel recognized the necessity of presenting such evidence. Petitioners even gave an undertaking to the RTC judge that Dr. Agulto or Dr. Aquino would be presented. Alas, no follow-through on said undertaking was made. The plaintiff in a civil case has the burden of proof as he alleges the affirmative of the issue. However, in the course of trial in a civil case, once plaintiff makes out a prima facie case in his favor, the duty or the burden of evidence shifts to defendant to controvert plaintiff’s prima facie case; otherwise, a verdict must be returned in favor of plaintiff.[99] The party having the burden of proof must establish his case by a preponderance of evidence.[100] The concept of “preponderance of evidence” refers to evidence which is of greater weight or more convincing than that which is offered in opposition to it;[101] in the last analysis, it means probability of truth. It is evidence which is more convincing to the court as worthy of belief than that which is offered in opposition thereto.[102] Rule 133, Section 1 of the Revised Rules of Court provides the guidelines for determining preponderance of evidence, thus: In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. In determining where the preponderance or superior weight of evidence on the issues involved lies the court may consider all the facts and circumstances of the case, the witnesses’ manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and also their personal credibility so far as the same legitimately appear upon

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the trial. The court may also consider the number of witnesses, though the preponderance is not necessarily with the greater number. Herein, the burden of proof was clearly upon petitioners, as plaintiffs in the lower court, to establish their case by a preponderance of evidence showing a reasonable connection between Dr. Tuaño’s alleged breach of duty and the damage sustained by Peter’s right eye. This, they did not do. In reality, petitioners’ complaint for damages is merely anchored on a statement in the literature of Maxitrol identifying the risks of its use, and the purported comment of Dr. Agulto – another doctor not presented as witness before the RTC – concerning the prolonged use of Maxitrol for the treatment of EKC. It seems basic that what constitutes proper medical treatment is a medical question that should have been presented to experts. If no standard is established through expert medical witnesses, then courts have no standard by which to gauge the basic issue of breach thereof by the physician or surgeon. The RTC and Court of Appeals, and even this Court, could not be expected to determine on its own what medical technique should have been utilized for a certain disease or injury. Absent expert medical opinion, the courts would be dangerously engaging in speculations. All told, we are hard pressed to find Dr. Tuaño liable for any medical negligence or malpractice where there is no evidence, in the nature of expert testimony, to establish that in treating Peter, Dr. Tuaño failed to exercise reasonable care, diligence and skill generally required in medical practice. Dr. Tuaño’s testimony, that his treatment of Peter conformed in all respects to standard medical practice in this locality, stands unrefuted. Consequently, the RTC and the Court of Appeals correctly held that they had no basis at all to rule that petitioners were deserving of the various damages prayed for in their Complaint. WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The assailed Decision dated 27 September 2006 and Resolution dated 3 July 2007, both of the Court of Appeals in CA-G.R. CV No. 68666, are hereby AFFIRMED. No cost. SO ORDERED.

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Negligence; medical malpractice suits. For lack of a specific law geared towards the type of negligence committed by members of the medical profession, such claim for damages is almost always anchored on the alleged violation of Article 2176 of the Civil Code.In medical negligence cases, also called medical malpractice suits, there exist a physician-patient relationship between the doctor and the victim.  But just like any other proceeding for damages, four essential (4) elements i.e., (1) duty; (2) breach; (3) injury; and (4) proximate causation, must be established by the plaintiff/s. All the four (4) elements must co-exist in order to find the physician negligent and, thus, liable for damages.When a patient engages the services of a physician, a physician-patient relationship is generated. And in accepting a case, the physician, for all intents and purposes, represents that he has the needed training and skill possessed by physicians and surgeons practicing in the same field; and that he will employ such training, care, and skill in the treatment of the patient. Thus, in treating his patient, a physician is under a duty to [the former] to exercise that degree of care, skill and diligence which physicians in the same general neighborhood and in the same general line of practice ordinarily possess and exercise in like cases. Stated otherwise, the physician has the duty to use at least the same level of care that any other reasonably competent physician would use to treat the condition under similar circumstances.This standard level of care, skill and diligence is a matter best addressed by expert medical testimony, because the standard of care in a medical malpractice case is a matter peculiarly within the knowledge of experts in the field.There is breach of duty of care, skill and diligence, or the improper performance of such duty, by the attending physician when the patient is injured in body or in health [and this] constitutes the actionable malpractice.Proof of such breach must likewise rest upon the testimony of an expert witness that the treatment accorded to the patient failed to meet the standard level of care, skill and diligence which physicians in the same general neighborhood and in the same general line of practice ordinarily possess and exercise in like cases.Even so, proof of breach of duty on the part of the attending physician is insufficient, for there must be a causal connection between said breach and the resulting injury sustained by the patient. Put in another way, in order that there may be a recovery for an injury, it must be shown that the “injury for which recovery is sought must be the legitimate consequence of the wrong done; the connection between the negligence and the injury must be a direct and natural sequence of events, unbroken by intervening efficient causes”; that is, the negligence must be the proximate cause of the injury. And the proximate

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cause of an injury is that cause, which, in the natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.Just as with the elements of duty and breach of the same, in order to establish the proximate cause [of the injury] by a preponderance of the evidence in a medical malpractice action, [the patient] must similarly use expert testimony, because the question of whether the alleged professional negligence caused [the patient’s] injury is generally one for specialized expert knowledge beyond the ken of the average layperson; using the specialized knowledge and training of his field, the expert’s role is to present to the [court] a realistic assessment of the likelihood that [the physician’s] alleged negligence caused [the patient’s] injury. Peter Paul Patrick Lucas, et al. vs. Dr. Prospero Ma. C. Tuaño, G.R. No. 178763,   April 21, 2009.

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FIRST DIVISION LBC EXPRESS – METRO G.R. No. 168215MANILA, INC. andLORENZO A. NIÑO, Petitioners, Present: PUNO, C.J., Chairperson, CARPIO, - v e r s u s - CORONA, VELASCO, JR.* and LEONARDO-DE CASTRO, JJ. JAMES MATEO, Respondent. Promulgated: June 9, 2009 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x D E C I S I O NCORONA, J.: Respondent James Mateo, designated as a customer associate, was a regular employee of petitioner LBC Express – Metro Manila, Inc. (LBC). His job was to deliver and pick-up packages to and from LBC and its customers. For this purpose, Mateo was assigned the use of a Kawasaki motorcycle.[1]

On April 30, 2001 at about 6:10 p.m., Mateo arrived at LBC’s Escolta office, along Burke Street, to drop off packages coming from various LBC airposts. He parked his motorcycle directly in front of the LBC office, switched off the engine and took the key with him. However, he did not lock the steering wheel because he allegedly was primarily concerned with the packages, including a huge sum of money that needed to be immediately secured inside the LBC office. He returned promptly within three to five minutes but the motorcycle was gone. He immediately reported the loss to his superiors at LBC and to the nearest police station. LBC, through its vice-president petitioner, Lorenzo A. Niño, directed Mateo to appear in his office to explain his side and for formal investigation.[2] As directed, Mateo appeared and presented his side. After investigation, he received a notice of termination from LBC dated May 30, 2001.[3] He was barred from reporting for work.Mateo thereafter filed a complaint for illegal dismissal, payment of backwages and reinstatement with damages. After the parties submitted their respective position papers, the labor arbiter found Mateo’s dismissal to be lawful on the ground that he was grossly negligent.[4]

Mateo appealed to the National Labor Relations Commission which, however, affirmed the labor arbiter’s decision.[5]

In resolving Mateo’s petition for certiorari, the Court of Appeals (CA) ruled that Mateo was illegally dismissed.[6] Furthermore, due process was not observed in terminating Mateo’s employment with LBC. The motion for reconsideration was denied. LBC and Niño now seek a reversal of the CA decision. They contend that Mateo was grossly negligent in the performance of his duties and that habituality may be dispensed with, specially if the grossly negligent act resulted in substantial damage to the company. We agree. The services of a regular employee may be terminated only for just or authorized causes, including gross and habitual negligence under Article 282, paragraph (b) of the Labor Code. Gross negligence is characterized by want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a conscious indifference to consequences insofar as other persons may be affected.[7]

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Mateo was undisputedly negligent when he left the motorcycle along Burke Street in Escolta, Manila without locking it despite clear, specific instructions to do so. His argument that he stayed inside the LBC office for only three to five minutes was of no moment. On the contrary, it only proved that he did not exercise even the slightest degree of care during that very short time. Mateo deliberately did not heed the employer’s very important precautionary measure to ensure the safety of company property. Regardless of the reasons advanced, the exact evil sought to be prevented by LBC (in repeatedly directing its customer associates to lock their motorcycles) occurred, resulting in a substantial loss to LBC. Although Mateo’s infraction was not habitual, we must take into account the substantial amount lost.[8] In this case, LBC lost a motorcycle with a book value ofP46,000 which by any means could not be considered a trivial amount. Mateo was entrusted with a great responsibility to take care of and protect company property and his gross negligence should not allow him to walk away from that incident as if nothing happened and, worse, to be rewarded with backwages to boot. An employer cannot legally be compelled to continue with the employment of a person admittedly guilty of gross negligence in the performance of his duties.[9]This holds true specially if the employee’s continued tenure is patently inimical to the employer’s interest. What happened was not a simple case of oversight and could not be attributed to a simple lapse of judgment. No amount of good intent, or previous conscientious performance of duty, can assuage the damage Mateo caused LBC when he failed to exercise the requisite degree of diligence required of him under the circumstances. LBC and Niño likewise assail the CA’s finding that procedural due process was not observed in effecting Mateo’s dismissal. Specifically, the CA held that the first written notice (for Mateo’s investigation) allegedly did not specify the grounds for termination required by the implementing rules of the Labor Code. Mateo was allegedly not properly apprised of the grounds for his investigation. We disagree. The memorandum directing Mateo to be present for investigation clearly provided the reasons or grounds for Mateo’s investigation. As stated there, the grounds were the “alleged carnapping of the motorcycle and the alleged pilferage of a package.” Nothing could be clearer. What the law merely requires is that the employee be informed of the particular acts or omissions for which his dismissal is sought.[10] The memorandum did just that. Mateo was thereafter given the opportunity to explain his side and was handed the requisite second notice (of termination). Procedural due process was therefore complied with. The law protecting the rights of the employee authorizes neither oppression nor self-destruction of the employer.[11] All told, Mateo’s dismissal was for just cause and was validly carried out. WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated February 18, 2005 and resolution dated May 23, 2005 in CA-G.R. SP No. 86034 are REVERSED and SET ASIDE. The complaint for illegal dismissal is hereby DISMISSED. SO ORDERED.

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FIRST DIVISION HERMINIO MARIANO, JR., Petitioner, - versus - ILDEFONSO C. CALLEJAS and EDGAR DE BORJA, Respondents.G.R. No. 166640 Present:PUNO, C.J., Chairperson,CARPIO,CORONA,LEONARDO-DE CASTRO, andBERSAMIN, JJ. Promulgated: July 31, 2009 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - xD E C I S I O NPUNO, C.J.:On appeal are the Decision[1] and Resolution[2] of the Court of Appeals in CA-G.R. CV No. 66891, dated May 21, 2004 and January 7, 2005 respectively, which reversed the Decision[3] of the Regional Trial Court (RTC) of Quezon City, dated September 13, 1999, which found respondents jointly and severally liable to pay petitioner damages for the death of his wife.First, the facts:Petitioner Herminio Mariano, Jr. is the surviving spouse of Dr. Frelinda Mariano who was a passenger of a Celyrosa Express bus bound for Tagaytay when she met her death. Respondent Ildefonso C. Callejas is the registered owner of Celyrosa Express, while respondent Edgar de Borja was the driver of the bus on which the deceased was a passenger. At around 6:30 p.m. on November 12, 1991, along Aguinaldo Highway, San Agustin, Dasmariñas, Cavite, the Celyrosa Express bus, carrying Dr. Mariano as its passenger, collided with an Isuzu truck with trailer bearing plate numbers PJH 906 and TRH 531. The passenger bus was bound for Tagaytay while the trailer truck came from the opposite direction, bound for Manila. The trailer truck bumped the passenger bus on its left middle portion. Due to the impact, the passenger bus fell on its right side on the right shoulder of the highway and caused the death of Dr. Mariano and physical injuries to four other passengers. Dr. Mariano was 36 years old at the time of her death. She left behind three minor children, aged four, three and two years.Petitioner filed a complaint for breach of contract of carriage and damages against respondents for their failure to transport his wife and mother of his three minor children safely to her destination. Respondents denied liability for the death of Dr. Mariano. They claimed that the proximate cause of the accident was the recklessness of the driver of the trailer truck which bumped their bus while allegedly at a halt on the shoulder of the road in its rightful lane. Thus, respondent Callejas filed a third-party complaint against Liong Chio Chang, doing business under the name and style of La Perla Sugar Supply, the owner of the trailer truck, for indemnity in the event that he would be held liable for damages to petitioner.Other cases were filed. Callejas filed a complaint,[4] docketed as Civil Case No. NC-397 before the RTC of Naic, Cavite, against La Perla Sugar Supply and Arcadio Arcilla, the truck driver, for damages he incurred due to the vehicular accident. On September 24, 1992, the said court dismissed the complaint against La Perla Sugar Supply for lack of evidence. It, however, found Arcilla liable to pay Callejas the cost of the repairs of his passenger bus, his lost earnings, exemplary damages and attorney’s fees.[5]

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A criminal case, Criminal Case No. 2223-92, was also filed against truck driver Arcilla in the RTC of Imus, Cavite. On May 3, 1994, the said court convicted truck driver Arcadio Arcilla of the crime of reckless imprudence resulting to homicide, multiple slight physical injuries and damage to property.[6]In the case at bar, the trial court, in its Decision dated September 13, 1999, found respondents Ildefonso Callejas and Edgar de Borja, together with Liong Chio Chang, jointly and severally liable to pay petitioner damages and costs of suit. The dispositive portion of the Decision reads:ACCORDINGLY, the defendants are ordered to pay as follows:1. The sum of P50,000.00 as civil indemnity for the loss of life;2. The sum of P40,000.00 as actual and compensatory damages;3. The sum of P1,829,200.00 as foregone income;4. The sum of P30,000.00 as moral damages;5. The sum of P20,000.00 as exemplary damages;6. The costs of suit.SO ORDERED.[7]Respondents Callejas and De Borja appealed to the Court of Appeals, contending that the trial court erred in holding them guilty of breach of contract of carriage.On May 21, 2004, the Court of Appeals reversed the decision of the trial court. It reasoned:. . . the presumption of fault or negligence against the carrier is only a disputable presumption. It gives in where contrary facts are established proving either that the carrier had exercised the degree of diligence required by law or the injury suffered by the passenger was due to a fortuitous event. Where, as in the instant case, the injury sustained by the petitioner was in no way due to any defect in the means of transport or in the method of transporting or to the negligent or wilful acts of private respondent's employees, and therefore involving no issue of negligence in its duty to provide safe and suitable cars as well as competent employees, with the injury arising wholly from causes created by strangers over which the carrier had no control or even knowledge or could not have prevented, the presumption is rebutted and the carrier is not and ought not to be held liable. To rule otherwise would make the common carrier the insurer of the absolute safety of its passengers which is not the intention of the lawmakers.[8]The dispositive portion of the Decision reads:WHEREFORE, the decision appealed from, insofar as it found defendants-appellants Ildefonso Callejas and Edgar de Borja liable for damages to plaintiff-appellee Herminio E. Mariano, Jr., is REVERSED and SET ASIDE and another one entered absolving them from any liability for the death of Dr. Frelinda Cargo Mariano.[9]The appellate court also denied the motion for reconsideration filed by petitioner.Hence, this appeal, relying on the following ground:THE DECISION OF THE HONORABLE COURT OF APPEALS, SPECIAL FOURTEENTH DIVISION IS NOT IN ACCORD WITH THE FACTUAL BASIS OF THE CASE.[10] The following are the provisions of the Civil Code pertinent to the case at bar:ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.ART. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.ART. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755.In accord with the above provisions, Celyrosa Express, a common carrier, through its driver, respondent De Borja, and its registered owner, respondent Callejas, has the express obligation “to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances,”[11] and to observe extraordinary diligence in the discharge of its duty. The death of the wife of the petitioner in the course of transporting her to her destination gave rise to the presumption of negligence of the carrier. To overcome the presumption, respondents have to show that they observed extraordinary diligence in the discharge of their duty, or that the accident was caused by a fortuitous event.This Court interpreted the above quoted provisions in Pilapil v. Court of Appeals.[12] We elucidated:While the law requires the highest degree of diligence from common carriers in the safe transport of their passengers and creates a presumption of negligence against them, it does not, however, make the carrier an insurer of the absolute safety of its passengers.Article 1755 of the Civil Code qualifies the duty of extraordinary care, vigilance and precaution in the carriage of passengers by common carriers to only such as human care and foresight can provide. What constitutes compliance with said duty is adjudged with due regard to all the circumstances.Article 1756 of the Civil Code, in creating a presumption of fault or negligence on the part of the common carrier when its passenger is injured, merely relieves the latter, for the time being, from introducing evidence to fasten the negligence on the former, because the presumption stands in the place of evidence. Being a mere presumption, however, the same is rebuttable by proof that the common carrier had exercised extraordinary

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diligence as required by law in the performance of its contractual obligation, or that the injury suffered by the passenger was solely due to a fortuitous event.In fine, we can only infer from the law the intention of the Code Commission and Congress to curb the recklessness of drivers and operators of common carriers in the conduct of their business.Thus, it is clear that neither the law nor the nature of the business of a transportation company makes it an insurer of the passenger's safety, but that its liability for personal injuries sustained by its passenger rests upon its negligence, its failure to exercise the degree of diligence that the law requires.In the case at bar, petitioner cannot succeed in his contention that respondents failed to overcome the presumption of negligence against them. The totality of evidence shows that the death of petitioner’s spouse was caused by the reckless negligence of the driver of the Isuzu trailer truck which lost its brakes and bumped the Celyrosa Express bus, owned and operated by respondents.First, we advert to the sketch prepared by PO3 Magno S. de Villa, who investigated the accident. The sketch[13] shows the passenger bus facing the direction of Tagaytay City and lying on its right side on the shoulder of the road, about five meters away from the point of impact. On the other hand, the trailer truck was on the opposite direction, about 500 meters away from the point of impact. PO3 De Villa stated that he interviewed De Borja, respondent driver of the passenger bus, who said that he was about to unload some passengers when his bus was bumped by the driver of the trailer truck that lost its brakes. PO3 De Villa checked out the trailer truck and found that its brakes really failed. He testified before the trial court, as follows:ATTY. ESTELYDIZ:q You pointed to the Isuzu truck beyond the point of impact. Did you investigate why did (sic) the Isuzu truck is beyond the point of impact?a Because the truck has no brakes.COURT:q What is the distance between that circle which is marked as Exh. 1-c to the place where you found the same?a More or less 500 meters.q Why did you say that the truck has no brakes?a I tested it.q And you found no brakes?a Yes, sir.x x xq When you went to the scene of accident, what was the position of Celyrosa bus?a It was lying on its side.COURT:q Right side or left side?a Right side.ATTY. ESTELYDIZ:q On what part of the road was it lying?a On the shoulder of the road.COURT:q How many meters from the point of impact?a Near, about 5 meters.[14]His police report bolsters his testimony and states:Said vehicle 1 [passenger bus] was running from Manila toward south direction when, in the course of its travel, it was hit and bumped by vehicle 2 [truck with trailer] then running fast from opposite direction, causing said vehicle 1 to fall on its side on the road shoulder, causing the death of one and injuries of some passengers thereof, and its damage, after collission (sic), vehicle 2 continiously (sic) ran and stopped at approximately 500 meters away from the piont (sic) of impact.[15]In fine, the evidence shows that before the collision, the passenger bus was cruising on its rightful lane along the Aguinaldo Highway when the trailer truck coming from the opposite direction, on full speed, suddenly swerved and encroached on its lane, and bumped the passenger bus on its left middle portion. Respondent driver De Borja had every right to expect that the trailer truck coming from the opposite direction would stay on its proper lane. He was not expected to know that the trailer truck had lost its brakes. The swerving of the trailer truck was abrupt and it was running on a fast speed as it was found 500 meters away from the point of collision. Secondly, any doubt as to the culpability of the driver of the trailer truck ought to vanish when he pleaded guilty to the charge of reckless imprudence resulting to multiple slight physical injuries and damage to property in Criminal Case No. 2223-92, involving the same incident. IN VIEW WHEREOF, the petition is DENIED. The Decision dated May 21, 2004 and the Resolution dated January 7, 2005 of the Court of Appeals in CA-G.R. CV No. 66891 are AFFIRMED.SO ORDERED.

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SECOND DIVISION REGIONAL CONTAINER LINES(RCL) OF SINGAPORE andEDSA SHIPPING AGENCY, Petitioners, - versus - THE NETHERLANDS INSURANCE CO. (PHILIPPINES), INC., Respondent. G.R. No. 168151 Present: QUISUMBING, J., Chairperson, CARPIO-MORALES, BRION, DEL CASTILLO, and ABAD, JJ. Promulgated: September 4, 2009x -------------------------------------------------------------------------------------- x D E C I S I O N BRION, J.: For our resolution is the petition for review on certiorari filed by petitioners Regional Container Lines of Singapore (RCL) and EDSA Shipping Agency (EDSA Shipping) to annul and set aside the decision[1] and resolution[2] of the Court of Appeals (CA) dated May 26, 2004 and May 10, 2005, respectively, in CA-G.R. CV No. 76690. RCL is a foreign corporation based in Singapore. It does business in the Philippines through its agent, EDSA Shipping, a domestic corporation organized and existing under Philippine laws. Respondent Netherlands Insurance Company (Philippines), Inc. (Netherlands Insurance) is likewise a domestic corporation engaged in the marine underwriting business. FACTUAL ANTECEDENTS The pertinent facts, based on the records are summarized below. On October 20, 1995, 405 cartons of Epoxy Molding Compound were consigned to be shipped from Singapore to Manila for Temic Telefunken Microelectronics Philippines (Temic). U-Freight Singapore PTE Ltd.[3] (U-Freight Singapore), a forwarding agent based in Singapore, contracted the services of Pacific Eagle Lines PTE. Ltd. (Pacific Eagle) to transport the subject cargo. The cargo was packed, stored, and sealed by Pacific Eagle in its Refrigerated Container No. 6105660 with Seal No. 13223. As the cargo was highly perishable, the inside of the container had to be kept at a temperature of 0º Celsius. Pacific Eagle then loaded the refrigerated container on board the M/V Piya

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Bhum, a vessel owned by RCL, with which Pacific Eagle had a slot charter agreement. RCL duly issued its own Bill of Lading in favor of Pacific Eagle. To insure the cargo against loss and damage, Netherlands Insurance issued a Marine Open Policy in favor of Temic, as shown by MPO-21-05081-94 and Marine Risk Note MRN-21 14022, to cover all losses/damages to the shipment. On October 25, 1995, the M/V Piya Bhum docked in Manila. After unloading the refrigerated container, it was plugged to the power terminal of the pier to keep its temperature constant. Fidel Rocha (Rocha), Vice-President for Operations of Marines Adjustment Corporation, accompanied by two surveyors, conducted a protective survey of the cargo. They found that based on the temperature chart, the temperature reading was constant from October 18, 1995 to October 25, 1995 at 0º Celsius. However, at midnight of October 25, 1995 – when the cargo had already been unloaded from the ship – the temperature fluctuated with a reading of 33º Celsius. Rocha believed the fluctuation was caused by the burnt condenser fan motor of the refrigerated container. On November 9, 1995, Temic received the shipment. It found the cargo completely damaged. Temic filed a claim for cargo loss against Netherlands Insurance, with supporting claims documents. The Netherlands Insurance paid Temic the sum of P1,036,497.00 under the terms of the Marine Open Policy. Temic then executed a loss and subrogation receipt in favor of Netherlands Insurance. Seven months from delivery of the cargo or on June 4, 1996, Netherlands Insurance filed a complaint for subrogation of insurance settlement with the Regional Trial Court, Branch 5, Manila, against “the unknown owner of M/V Piya Bhum” and TMS Ship Agencies (TMS), the latter thought to be the local agent of M/V Piya Bhum’s unknown owner.[4] The complaint was docketed as Civil Case No. 96-78612. Netherlands Insurance amended the complaint on January 17, 1997 to implead EDSA Shipping, RCL, Eagle Liner Shipping Agencies, U-Freight Singapore, and U-Ocean (Phils.), Inc. (U-Ocean), as additional defendants. A third amended complaint was later made, impleading Pacific Eagle in substitution of Eagle Liner Shipping Agencies. TMS filed its answer to the original complaint. RCL and EDSA Shipping filed their answers with cross-claim and compulsory counterclaim to the second amended complaint. U-Ocean likewise filed an answer with compulsory counterclaim and cross-claim. During the pendency of the case, U-Ocean, jointly with U-Freight Singapore, filed another answer with compulsory counterclaim. Only Pacific Eagle and TMS filed their answers to the third amended complaint. The defendants all disclaimed liability for the damage caused to the cargo, citing several reasons why Netherland Insurance’s claims must be rejected. Specifically, RCL and EDSA Shipping denied negligence in the transport of the cargo; they attributed any negligence that may have caused the loss of the shipment to their co-defendants. They likewise asserted that no valid subrogation exists, as the payment made by Netherlands Insurance to the consignee was invalid. By way of affirmative defenses, RCL and EDSA Shipping averred that the Netherlands Insurance has no cause of action, and is not the real party-in-interest, and that the claim is barred by laches/prescription. After Netherlands Insurance had made its formal offer of evidence, the defendants including RCL and EDSA Shipping sought leave of court to file their respective motions to dismiss based on demurrer to evidence. RCL and EDSA Shipping, in their motion, insisted that Netherlands Insurance had (1) failed to prove any valid subrogation, and (2) failed to establish that any negligence on their part or that the loss was sustained while the cargo was in their custody. On May 22, 2002, the trial court handed down an Order dismissing Civil Case No. 96-78612 on demurrer to evidence. The trial court ruled that while there was valid subrogation, the defendants could not be held liable for the loss or damage, as their respective liabilities ended at the time of the discharge of the cargo from the ship at the Port of Manila.

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Netherlands Insurance seasonably appealed the order of dismissal to the CA. On May 26, 2004, the CA disposed of the appeal as follows: WHEREFORE, in view of the foregoing, the dismissal of the complaint against defendants Regional Container Lines and Its local agent, EDSA Shipping Agency, is REVERSED and SET ASIDE. The dismissal of the complaint against the other defendants is AFFIRMED. Pursuant to Section 1, Rule 33 of the 1997 Rules of Civil Procedure, defendants Regional Container Lines and EDSA Shipping Agency are deemed to have waived the right to present evidence. As such, defendants Regional Container Lines and EDSA Shipping Agency are ordered to reimburse plaintiff in the sum of P1,036,497.00 with interest from date hereof until fully paid. No costs. SO ORDERED. [Emphasis supplied.] The CA dismissed Netherland Insurance’s complaint against the other defendants after finding that the claim had already been barred by prescription.[5] Having been found liable for the damage to the cargo, RCL and EDSA Shipping filed a motion for reconsideration, but the CA maintained its original conclusions. The sole issue for our resolution is whether the CA correctly held RCL and EDSA Shipping liable as common carriers under the theory of presumption of negligence. THE COURT’S RULING The present case is governed by the following provisions of the Civil Code: ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them according to all the circumstances of each case. Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles1755 and 1756. ART. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: 1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;2) Act of the public enemy in war, whether international or civil;3) Act of omission of the shipper or owner of the goods;4) The character of the goods or defects in the packing or in the containers;5) Order or act of competent public authority. ART. 1735. In all cases other that those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding article, if the goods are lost, destroyed, or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required by article 1733. ART. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the sane are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of articles 1738.

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ART. 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them. ART. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss. In Central Shipping Company, Inc. v. Insurance Company of North America,[6] we reiterated the rules for the liability of a common carrier for lost or damaged cargo as follows: (1) Common carriers are bound to observe extraordinary diligence over the goods they transport, according to all the circumstances of each case;(2) In the event of loss, destruction, or deterioration of the insured goods, common carriers are responsible, unless they can prove that such loss, destruction, or deterioration was brought about by, among others, “flood, storm, earthquake, lightning, or other natural disaster or calamity”; and(3) In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently, unless they observed extraordinary diligence.[7] In the present case, RCL and EDSA Shipping disclaim any responsibility for the loss or damage to the goods in question. They contend that the cause of the damage to the cargo was the “fluctuation of the temperature in the reefer van,” which fluctuation occurred after the cargo had already been discharged from the vessel; no fluctuation, they point out, arose when the cargo was still on board M/V Piya Bhum. As the cause of the damage to the cargo occurred after the same was already discharged from the vessel and was under the custody of the arrastre operator (International Container Terminal Services, Inc. or ICTSI), RCL and EDSA Shipping posit that the presumption of negligence provided in Article 1735 of the Civil Code should not apply. What applies in this case is Article 1734, particularly paragraphs 3 and 4 thereof, which exempts the carrier from liability for loss or damage to the cargo when it is caused either by an act or omission of the shipper or by the character of the goods or defects in the packing or in the containers. Thus, RCL and EDSA Shipping seek to lay the blame at the feet of other parties. We do not find the arguments of RCL and EDSA Shipping meritorious. A common carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported.[8] When the goods shipped are either lost or arrived in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable.[9] To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinary diligence over the goods. It must do more than merely show that some other party could be responsible for the damage.[10] In the present case, RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence required by law over the goods they transported. Indeed, there is sufficient evidence showing that the fluctuation of the temperature in the refrigerated container van, as recorded in the temperature chart, occurred after the cargo had been discharged from the vessel and was already under the custody of the arrastre operator, ICTSI. This evidence, however, does not disprove that the condenser fan – which caused the fluctuation of the temperature in the refrigerated container – was not damaged while the cargo was being unloaded from the ship. It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier;[11] RCL and EDSA Shipping failed to dispute this.

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RCL and EDSA Shipping could have offered evidence before the trial court to show that the damage to the condenser fan did not occur: (1) while the cargo was in transit; (2) while they were in the act of discharging it from the vessel; or (3) while they were delivering it actually or constructively to the consignee. They could have presented proof to show that they exercised extraordinary care and diligence in the handling of the goods, but they opted to file a demurrer to evidence. As the order granting their demurrer was reversed on appeal, the CA correctly ruled that they are deemed to have waived their right to present evidence,[12] and the presumption of negligence must stand. It is for this reason as well that we find RCL and EDSA Shipping’s claim that the loss or damage to the cargo was caused by a defect in the packing or in the containers. To exculpate itself from liability for the loss/damage to the cargo under any of the causes, the common carrier is burdened to prove any of the causes in Article 1734 of the Civil Code claimed by it by a preponderance of evidence. If the carrier succeeds, the burden of evidence is shifted to the shipper to prove that the carrier is negligent.[13] RCL and EDSA Shipping, however, failed to satisfy this standard of evidence and in fact offered no evidence at all on this point; a reversal of a dismissal based on a demurrer to evidence bars the defendant from presenting evidence supporting its allegations. WHEREFORE, we DENY the petition for review on certiorari filed by the Regional Container Lines of Singapore and EDSA Shipping Agency. The decision of the Court of Appeals dated May 26, 2004 in CA-G.R. CV No. 76690 is AFFIRMED IN TOTO. Costs against the petitioners. SO ORDERED.

THIRD DIVISION R TRANSPORT CORPORATION, represented by its owner/President RIZALINA LAMZON, Petitioner, - versus - EDUARDO PANTE, Respondent. G.R. No. 162104 Present: YNARES-SANTIAGO, J., Chairperson, CHICO-NAZARIO, VELASCO, JR.,NACHURA, andPERALTA, JJ. Promulgated: September 15, 2009x-------------------------------------------------------------------------------------------------x

D E C I S I O N

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PERALTA, J.: This is a petition for review on certiorari[1] of the Decision dated October 7, 2003 of the Court of Appeals in CA-G.R. CV No. 76170, and its Resolution dated February 5, 2004, denying petitioner’s motion for reconsideration. The Court of Appeals affirmed the Decision of the Regional Trial Court (RTC) of Gapan City, Branch 35, dated January 26, 2002, holding petitioner liable to respondent for damages for physical injuries sustained by respondent due to a vehicular accident. The facts[2] are as follows: Petitioner R Transport Corporation, represented by its owner and president, Rizalina Lamzon,[3] is a common carrier engaged in operating a bus line transporting passengers to Gapan, Nueva Ecija from Cubao, Quezon City and back. At about 3:00 a.m. of January 27, 1995, respondent Eduardo Pante rode petitioner’s R. L. Bus Liner with Plate Number CVW-635 and Body Number 94810 in Cubao, Quezon City bound for Gapan, Nueva Ecija. Respondent paid the sum of P48.00 for his fare, and he was issued bus ticket number 555401.[4] While traveling along the Doña Remedios Trinidad Highway in Baliuag, Bulacan, the bus hit a tree and a house due to the fast and reckless driving of the bus driver, Johnny Merdiquia. Respondent sustained physical injuries as a result of the vehicular accident. He was brought by an unidentified employee of petitioner to the Baliuag District Hospital, where respondent was diagnosed to have sustained a “laceration frontal area, with fracture of the right humerus,”[5] or the bone that extends from the shoulder to the elbow of the right arm. Respondent underwent an operation for the fracture of the right humerus per Certification dated February 17, 1995 issued by Dr. Virginia C. Cabling of the Baliuag District Hospital.[6] The hospital's Statement of Account showed that respondent’s operation and confinement cost P22,870.00.[7] Respondent also spent P8,072.60 for his medication. He was informed that he had to undergo a second operation after two years of rest.[8] He was unemployed for almost a year after his first operation because Goldilocks, where he worked as a production crew, refused to accept him with his disability as he could not perform his usual job.[9] By way of initial assistance, petitioner gave respondent's wife, Analiza P. Pante, the sum of P7,000.00, which was spent for the stainless steel instrument used in his fractured arm.[10] After the first operation, respondent demanded from petitioner, through its manager, Michael Cando, the full payment or reimbursement of his medical and hospitalization expenses, but petitioner refused payment.[11] Four years later, respondent underwent a second operation. He spent P15,170.00 for medical and hospitalization expenses.[12] On March 14, 1995, respondent filed a Complaint[13] for damages against petitioner with the RTC of Gapan City, Branch 35 (trial court) for the injuries he sustained as a result of the vehicular accident. In its Answer,[14] petitioner put up the defense that it had always exercised the diligence of a good father of a family in the selection and supervision of its employees, and that the accident was a force majeure for which it should not be held liable. At the pre-trial on October 4, 1995, petitioner was declared in default,[15] which was reconsidered by the trial court on December 12, 1995[16] upon finding that petitioner had earlier filed a Motion to Transfer Date of Hearing. Trial was first set on February 26, 1996, and from then on trial was postponed several times on motion of petitioner. Six years later, on October 24, 2001, respondent’s direct examination was concluded. His cross-examination was reset to December 5, 2001 due to the absence of petitioner and its counsel.[17] It was again reset to January 23, 2002[18] upon petitioner’s motion. On January 23, 2002, petitioner, through its new counsel, asked for another postponement on the ground that he was not ready. Hence, the cross-examination of respondent was reset to March 13, 2002.[19]

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On March 13, 2002, petitioner was declared to have waived its right to cross-examine respondent due to the absence of petitioner and its counsel, and respondent was allowed to offer his exhibits within five days.[20] Petitioner’s motion for reconsideration dated April 4, 2002[21] was denied on May 7, 2002.[22] In the hearing of June 19, 2002, petitioner was declared to have waived its right to present evidence on motion of respondent’s counsel in view of the unexplained absence of petitioner and its counsel despite prior notice. The case was declared submitted for decision.[23]

On June 26, 2002, the trial court rendered a Decision, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered finding the plaintiffs to be entitled to damages and ordering defendants to [pay]: 1.) P39,112.60 as actual damages;2.) P50,000.00 as moral damages;3.) P50,000.00 as exemplary damages;4.) Twenty-five percent (25%) of the total of which shall constitute a lien as contingent fee of plaintiff’s counsel.[24] So ordered. The trial court held that the provisions of the Civil Code on common carriers govern this case. Article 1756 of the Civil Code states that “[i]n case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed by Articles 1733 and 1755.” The trial court ruled that since petitioner failed to dispute said presumption despite the many opportunities given to it, such presumption of negligence stands. Petitioner appealed the decision of the trial court to the Court of Appeals. In its Decision dated October 7, 2003, the Court of Appeals affirmed the decision of the trial court, the dispositive portion of which reads: WHEREFORE, for lack of merit, the appeal is DENIED and the Decision appealed from is AFFIRMED in toto. With double costs against the appellant.[25] Petitioner’s motion for reconsideration was denied for lack of merit in the Resolution of the Court of Appeals dated February 5, 2004.[26] Hence, petitioner filed this petition raising the following issues: ITHE HONORABLE COURT OF APPEALS, TENTH DIVISION GRAVELY ERRED IN NOT GIVING DUE COURSE TO THE DEFENDANT-APPELLANT'S MOTION FOR RECONSIDERATION OF THE DECISION PROMULGATED ON OCTOBER 7, 2003, THEREBY DEPRIVING PETITIONER'S FUNDAMENTAL RIGHT TO DUE PROCESS.IITHE HONORABLE COURT OF APPEALS, TENTH DIVISION FURTHER GRAVELY ERRED IN AFFIRMING IN TOTO THE DECISION OF THE REGIONAL TRIAL COURT OF GAPAN CITY, BRANCH 35, PARTICULARLY IN AWARDING DAMAGES TO THE RESPONDENT WITHOUT PRESENTING ANY SUBSTANTIAL EVIDENCE.IIITHE HONORABLE COURT OF APPEALS, TENTH DIVISION, IN AFFIRMING IN TOTO THE DECISION OF THE REGIONAL TRIAL COURT OF GAPAN CITY, BRANCH 35, HAS COMMITTED GRAVE AND REVERSIBLE ERROR IN ITS FINDING OF FACTS AND APPLICATION OF [THE] LAW.[27]

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The main issue is whether or not petitioner is liable to respondent for damages. The Court affirms the decision of the Court of Appeals that petitioner is liable for damages. Under the Civil Code, common carriers, like petitioner bus company, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence for the safety of the passengers transported by them, according to all the circumstances of each case.[28] They are bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.[29] Article 1756 of the Civil Code states that “[i]n case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed by Articles 1733 and 1755.” Further, Article 1759 of the Civil Code provides that “[c]ommon carriers are liable for the death or injury to passengers through the negligence or willful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees.”[30] In this case, the testimonial evidence of respondent showed that petitioner, through its bus driver, failed to observe extraordinary diligence, and was, therefore, negligent in transporting the passengers of the bus safely to Gapan, Nueva Ecija on January 27, 1995, since the bus bumped a tree and a house, and caused physical injuries to respondent. Article 1759 of the Civil Code explicitly states that the common carrier is liable for the death or injury to passengers through the negligence or willful acts of its employees, and that such liability does not cease upon proof that the common carrier exercised all the diligence of a good father of a family in the selection and supervision of its employees. Hence, even if petitioner was able to prove that it exercised the diligence of a good father of the family in the selection and supervision of its bus driver, it is still liable to respondent for the physical injuries he sustained due to the vehicular accident.[31] Petitioner cannot complain that it was denied due process when the trial court waived its right to present evidence, because it only had itself to blame for its failure to attend the hearing scheduled for reception of its evidence on June 19, 2002. The trial court stated, thus:

It is noteworthy to state that during the course of the proceeding of this case, defendant (petitioner) and its counsel hardly appeared in court and only made innumerable motions to reset the hearings to the point that this case x x x dragged [on] for seven years from its filing up to the time that it has been submitted for decision. And for the unexplained absence of counsel for defendant in the hearing set last June 19, 2002 despite repeated resetting, upon motion of the counsel for plaintiff (respondent), Atty. Ireneo Romano, its right to present its evidence was considered waived.[32] In Silverio, Sr. v. Court of Appeals,[33] the Court held that petitioner therein was not denied due process when the records of the case showed that he was amply given the opportunity to present his evidence, which he, however, waived. There is no denial of due process where a party was given an opportunity to be heard.[34] Next, petitioner contends that the Court of Appeals erred in denying its motion for reconsideration of the appellate court’s Decision dated October 7, 2003. The contention is unmeritorious.The Court of Appeals has the discretion to deny petitioner’s motion for reconsideration since it found that there was no cogent reason to warrant reconsideration of its Decision dated October 7, 2003. According to the appellate court, it had already considered, if not squarely ruled upon, the arguments raised in petitioner’s motion for reconsideration.[35] Moreover, petitioner contends that the Court of Appeals erred in affirming the decision of the trial court, which awarded actual damages in the amount of P22,870.00 based on the statement of account issued by the Baliuag District Hospital and not based on an official receipt. Petitioner argues that the statement of account is not the best evidence. The contention is without merit.

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As cited by the Court of Appeals in its Decision, Jarco Marketing Corporation v. Court of Appeals[36] awarded actual damages for hospitalization expenses that was evidenced by a statement of account issued by the Makati Medical Center. Hence, the statement of account is admissible evidence of hospital expenses incurred by respondent.

Petitioner also contends that the award of moral damages is not proper, because it is not recoverable in actions for damages predicated on breach of the contract of transportation under Articles 2219 and 2220 of the Civil Code.[37]

The Court is not persuaded. The Court of Appeals correctly sustained the award of moral damages, citing Spouses Ong v. Court of Appeals,[38] which awarded moral damages to paying passengers, who suffered physical injuries on board a bus that figured in an accident. Spouses Ong held that a person is entitled to the integrity of his body and if that integrity is violated, damages are due and assessable. Thus, the usual practice is to award moral damages for physical injuries sustained. In Spouses Ong, the Court awarded moral damages in the amount of P50,000.00 to a passenger who was deemed to have suffered mental anguish and anxiety because her right arm could not function in a normal manner. Another passenger, who suffered injuries on his left chest, right knee, right arm and left eye, was awarded moral damages in the amount of P30,000.00 for the mental anxiety and anguish he suffered from the accident. In this case, respondent sustained a “laceration frontal area, with fracture of the right humerus” due to the vehicular accident. He underwent an operation for the fracture of the bone extending from the shoulder to the elbow of his right arm. After a few years of rest, he had to undergo a second operation. Respondent, therefore, suffered physical pain, mental anguish and anxiety as a result of the vehicular accident. Hence, the award of moral damages in the amount of P50,000.00 is proper. Petitioner likewise contends that the award of exemplary damages is improper, because it did not act in a wanton, fraudulent, reckless, oppressive or malevolent manner.

The contention is without merit. Article 2232 of the Civil Code states that “[i]n contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. In this case, respondent’s testimonial evidence showed that the bus driver, Johnny Merdiquia, was driving the bus very fast in a reckless, negligent and imprudent manner; hence, the bus hit a tree and a house along the highway in Baliuag, Bulacan. The award of exemplary damages is, therefore, proper. The award of exemplary damages is justified to serve as an example or as a correction for the public good.[39] Further, the Court affirms the award of attorney’s fees to respondent’s counsel. The Court notes that respondent filed his Complaint for damages on March 14, 1995 as pauper-litigant. The award of legal fees by the trial court to respondent’s counsel was a contingent fee of 25 percent of the total amount of damages, which shall constitute a lien on the total amount awarded. The said award was affirmed by the Court of Appeals. Twenty-five percent of the total damages is equivalent to P34,778.15. The award of legal fees is commensurate to the effort of respondent’s counsel, who attended to the case in the trial court for seven years, and who finally helped secure redress for the injury sustained by respondent after 14 years. Lastly, petitioner contends that the medical certificate presented in evidence is without probative value since respondent failed to present as witness Dr. Virginia Cabling to affirm the content of said medical certificate. The contention lacks merit. The Court of Appeals correctly held that the medical certificate is admissible since petitioner failed to object to the presentation of the evidence.[40]WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 76170, dated October 7, 2003, and its Resolution dated February 5, 2004, are hereby AFFIRMED. Petitioner R Transport Corporation is ordered to pay respondent Eduardo Pante P39,112.60 as actual damages; P50,000.00 as moral damages; and P50,000.00 as exemplary damages. Twenty-five percent (25%) of the total amount shall constitute a lien as contingent fee of respondent’s counsel.

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Costs against petitioner. SO ORDERED.

Common carrier;   liability .  Petitioner, through its bus driver, failed to observe extraordinary diligence, and was, therefore, negligent in transporting the passengers of the bus safely to Gapan, Nueva Ecija on January 27, 1995, since the bus bumped a tree and a house, and caused physical injuries to respondent. Article 1759 of the Civil Code explicitly states that the common carrier is liable for the death or injury to passengers through the negligence or willful acts of its employees, and that such liability does not cease upon proof that the common carrier exercised all the diligence of a good father of a family in the selection and supervision of its employees. Hence, even if petitioner was able to prove that it exercised the diligence of a good father of the family in the selection and supervision of its bus driver, it is still liable to respondent for the physical injuries he sustained due to the vehicular accident.  R Transport Corporation vs. Eduardo Pante, G.R. No. 162104, September 15, 2009 .

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FIRST DIVISION BANK OF AMERICA NT & SA, Petitioner, -versus- PHILIPPINE RACING CLUB, Respondent. G.R. No. 150228 Present: PUNO, C.J., Chairperson,CARPIO,CORONA,LEONARDO-DE CASTRO, andBERSAMIN, JJ. Promulgated: July 30, 2009x-----------------------------------------------------------------------------------------x D E C I S I O N LEONARDO-DE CASTRO, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court from the Decision[1] promulgated on July 16, 2001 by the former Second Division of the Court of Appeals (CA), in CA-G.R. CV No. 45371 entitled “Philippine Racing Club, Inc. v. Bank of America NT & SA,” affirming the Decision[2] dated March 17, 1994 of the Regional Trial Court (RTC) of Makati, Branch 135 in Civil Case No. 89-5650, in favor of the respondent. Likewise, the present petition assails the Resolution[3] promulgated on September 28, 2001, denying the Motion for Reconsideration of the CA Decision. The facts of this case as narrated in the assailed CA Decision are as follows: Plaintiff-appellee PRCI is a domestic corporation which maintains several accounts with different banks in the Metro Manila area. Among the accounts maintained was Current Account No. 58891-012 with defendant-appellant BA (Paseo de Roxas Branch). The authorized joint signatories with respect to said Current Account were plaintiff-appellee’s President (Antonia Reyes) and Vice President for Finance (Gregorio Reyes). On or about the 2nd week of December 1988, the President and Vice President of plaintiff-appellee corporation were scheduled to go out of the country in connection with the corporation’s business. In order not to disrupt operations in their absence, they pre-signed several checks relating to Current Account No. 58891-012. The intention was to insure continuity of plaintiff-appellee’s operations by making available cash/money especially to settle obligations that might become due. These checks were entrusted to the accountant with instruction to make use of the same as the need arose. The internal

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arrangement was, in the event there was need to make use of the checks, the accountant would prepare the corresponding voucher and thereafter complete the entries on the pre-signed checks. It turned out that on December 16, 1988, a John Doe presented to defendant-appellant bank for encashment a couple of plaintiff-appellee corporation’s checks (Nos. 401116 and 401117) with the indicated value of P110,000.00 each. It is admitted that these 2 checks were among those presigned by plaintiff-appellee corporation’s authorized signatories. The two (2) checks had similar entries with similar infirmities and irregularities. On the space where the name of the payee should be indicated (Pay To The Order Of) the following 2-line entries were instead typewritten: on the upper line was the word “CASH” while the lower line had the following typewritten words, viz: “ONE HUNDRED TEN THOUSAND PESOS ONLY.” Despite the highly irregular entries on the face of the checks, defendant-appellant bank, without as much as verifying and/or confirming the legitimacy of the checks considering the substantial amount involved and the obvious infirmity/defect of the checks on their faces, encashed said checks. A verification process, even by was of a telephone call to PRCI office, would have taken less than ten (10) minutes. But this was not done by BA. Investigation conducted by plaintiff-appellee corporation yielded the fact that there was no transaction involving PRCI that call for the payment of P220,000.00 to anyone. The checks appeared to have come into the hands of an employee of PRCI (one Clarita Mesina who was subsequently criminally charged for qualified theft) who eventually completed without authority the entries on the pre-signed checks. PRCI’s demand for defendant-appellant to pay fell on deaf ears. Hence, the complaint.[4] After due proceedings, the trial court rendered a Decision in favor of respondent, the dispositive portion of which reads: PREMISES CONSIDERED, judgment is hereby rendered in favor of plaintiff and against the defendant, and the latter is ordered to pay plaintiff:(1) The sum of Two Hundred Twenty Thousand (P220,000.00) Pesos, with legal interest to be computed from date of the filing of the herein complaint;(2) The sum of Twenty Thousand (P20,000.00) Pesos by way of attorney’s fees;(3) The sum of Ten Thousand (P10,000.00) Pesos for litigation expenses, and(4) To pay the costs of suit. SO ORDERED.[5] Petitioner appealed the aforesaid trial court Decision to the CA which, however, affirmed said decision in toto in its July 16, 2001 Decision. Petitioner’s Motion for Reconsideration of the CA Decision was subsequently denied on September 28, 2001. Petitioner now comes before this Court arguing that: I. The Court of Appeals gravely erred in holding that the proximate cause of respondent’s loss was petitioner’s encashment of the checks. A. The Court of Appeals gravely erred in holding that petitioner was liable for the amount of the checks despite the fact that petitioner was merely fulfilling its obligation under law and contract.B. The Court of Appeals gravely erred in holding that petitioner had a duty to verify the encashment, despite the absence of any obligation to do so.C. The Court of Appeals gravely erred in not applying Section 14 of the Negotiable Instruments Law, despite its clear applicability to this case; II. The Court of Appeals gravely erred in not holding that the proximate cause of respondent’s loss was its own grossly negligent practice of pre-signing checks without payees and amounts and delivering these pre-signed checks to its employees (other than their signatories). III. The Court of Appeals gravely erred in affirming the trial court’s award of attorney’s fees despite the absence of any applicable ground under Article 2208 of the Civil Code.

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IV. The Court of Appeals gravely erred in not awarding attorney’s fees, moral and exemplary damages, and costs of suit in favor of petitioner, who clearly deserves them.[6] From the discussions of both parties in their pleadings, the key issue to be resolved in the present case is whether the proximate cause of the wrongful encashment of the checks in question was due to (a) petitioner’s failure to make a verification regarding the said checks with the respondent in view of the misplacement of entries on the face of the checks or (b) the practice of the respondent of pre-signing blank checks and leaving the same with its employees. Petitioner insists that it merely fulfilled its obligation under law and contract when it encashed the aforesaid checks. Invoking Sections 126[7] and 185[8] of the Negotiable Instruments Law (NIL), petitioner claims that its duty as a drawee bank to a drawer-client maintaining a checking account with it is to pay orders for checks bearing the drawer-client’s genuine signatures. The genuine signatures of the client’s duly authorized signatories affixed on the checks signify the order for payment. Thus, pursuant to the said obligation, the drawee bank has the duty to determine whether the signatures appearing on the check are the drawer-client’s or its duly authorized signatories. If the signatures are genuine, the bank has the unavoidable legal and contractual duty to pay. If the signatures are forged and falsified, the drawee bank has the corollary, but equally unavoidable legal and contractual, duty not to pay.[9] Furthermore, petitioner maintains that there exists a duty on the drawee bank to inquire from the drawer before encashing a check only when the check bears a material alteration. A material alteration is defined in Section 125 of the NIL to be one which changes the date, the sum payable, the time or place of payment, the number or relations of the parties, the currency in which payment is to be made or one which adds a place of payment where no place of payment is specified, or any other change or addition which alters the effect of the instrument in any respect. With respect to the checks at issue, petitioner points out that they do not contain any material alteration.[10] This is a fact which was affirmed by the trial court itself.[11] There is no dispute that the signatures appearing on the subject checks were genuine signatures of the respondent’s authorized joint signatories; namely, Antonia Reyes and Gregorio Reyes who were respondent’s President and Vice-President for Finance, respectively. Both pre-signed the said checks since they were both scheduled to go abroad and it was apparently their practice to leave with the company accountant checks signed in black to answer for company obligations that might fall due during the signatories’ absence. It is likewise admitted that neither of the subject checks contains any material alteration or erasure. However, on the blank space of each check reserved for the payee, the following typewritten words appear: “ONE HUNDRED TEN THOUSAND PESOS ONLY.” Above the same is the typewritten word, “CASH.” On the blank reserved for the amount, the same amount of One Hundred Ten Thousand Pesos was indicated with the use of a check writer. The presence of these irregularities in each check should have alerted the petitioner to be cautious before proceeding to encash them which it did not do. It is well-settled that banks are engaged in a business impressed with public interest, and it is their duty to protect in return their many clients and depositors who transact business with them. They have the obligation to treat their client’s account meticulously and with the highest degree of care, considering the fiduciary nature of their relationship. The diligence required of banks, therefore, is more than that of a good father of a family.[12] Petitioner asserts that it was not duty-bound to verify with the respondent since the amount below the typewritten word “CASH,” expressed in words, is the very same amount indicated in figures by means of a check writer on the amount portion of the check. The amount stated in words is, therefore, a mere reiteration of the amount stated in figures. Petitioner emphasizes that a reiteration of the amount in words is merely a repetition and that a repetition is not an alteration which if present and material would have enjoined it to commence verification with respondent.[13]

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We do not agree with petitioner’s myopic view and carefully crafted defense. Although not in the strict sense “material alterations,” the misplacement of the typewritten entries for the payee and the amount on the same blank and the repetition of the amount using a check writer were glaringly obvious irregularities on the face of the check. Clearly, someone made a mistake in filling up the checks and the repetition of the entries was possibly an attempt to rectify the mistake. Also, if the check had been filled up by the person who customarily accomplishes the checks of respondent, it should have occurred to petitioner’s employees that it would be unlikely such mistakes would be made. All these circumstances should have alerted the bank to the possibility that the holder or the person who is attempting to encash the checks did not have proper title to the checks or did not have authority to fill up and encash the same. As noted by the CA, petitioner could have made a simple phone call to its client to clarify the irregularities and the loss to respondent due to the encashment of the stolen checks would have been prevented. In the case at bar, extraordinary diligence demands that petitioner should have ascertained from respondent the authenticity of the subject checks or the accuracy of the entries therein not only because of the presence of highly irregular entries on the face of the checks but also of the decidedly unusual circumstances surrounding their encashment. Respondent’s witness testified that for checks in amounts greater than Twenty Thousand Pesos (P20,000.00) it is the company’s practice to ensure that the payee is indicated by name in the check.[14] This was not rebutted by petitioner. Indeed, it is highly uncommon for a corporation to make out checks payable to “CASH” for substantial amounts such as in this case. If each irregular circumstance in this case were taken singly or isolated, the bank’s employees might have been justified in ignoring them. However, the confluence of the irregularities on the face of the checks and circumstances that depart from the usual banking practice of respondent should have put petitioner’s employees on guard that the checks were possibly not issued by the respondent in due course of its business. Petitioner’s subtle sophistry cannot exculpate it from behavior that fell extremely short of the highest degree of care and diligence required of it as a banking institution. Indeed, taking this with the testimony of petitioner’s operations manager that in case of an irregularity on the face of the check (such as when blanks were not properly filled out) the bank may or may not call the client depending on how busy the bank is on a particular day,[15] we are even more convinced that petitioner’s safeguards to protect clients from check fraud are arbitrary and subjective. Every client should be treated equally by a banking institution regardless of the amount of his deposits and each client has the right to expect that every centavo he entrusts to a bank would be handled with the same degree of care as the accounts of other clients. Perforce, we find that petitioner plainly failed to adhere to the high standard of diligence expected of it as a banking institution. In defense of its cashier/teller’s questionable action, petitioner insists that pursuant to Sections 14[16] and 16[17] of the NIL, it could validly presume, upon presentation of the checks, that the party who filled up the blanks had authority and that a valid and intentional delivery to the party presenting the checks had taken place. Thus, in petitioner’s view, the sole blame for this debacle should be shifted to respondent for having its signatories pre-sign and deliver the subject checks.[18] Petitioner argues that there was indeed delivery in this case because, following American jurisprudence, the gross negligence of respondent’s accountant in safekeeping the subject checks which resulted in their theft should be treated as a voluntary delivery by the maker who is estopped from claiming non-delivery of the instrument.[19] Petitioner’s contention would have been correct if the subject checks were correctly and properly filled out by the thief and presented to the bank in good order. In that instance, there would be nothing to give notice to the bank of any infirmity in the title of the holder of the checks and it could validly presume that there was proper delivery to the holder. The bank could not be faulted if it encashed the checks under those circumstances. However, the undisputed facts plainly show that there were circumstances that should have alerted the bank to the likelihood that the checks were not properly delivered to the person who encashed the same. In all, we see no reason to depart from the finding in the assailed CA Decision that the subject checks are properly characterized as incomplete and undelivered instruments thus making Section 15[20] of the NIL applicable in this case. However, we do agree with petitioner that respondent’s officers’ practice of pre-signing of blank checks should be deemed seriously negligent behavior and a highly risky means of purportedly ensuring the efficient operation of businesses. It should have occurred to respondent’s officers and managers that the

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pre-signed blank checks could fall into the wrong hands as they did in this case where the said checks were stolen from the company accountant to whom the checks were entrusted. Nevertheless, even if we assume that both parties were guilty of negligent acts that led to the loss, petitioner will still emerge as the party foremost liable in this case. In instances where both parties are at fault, this Court has consistently applied the doctrine of last clear chance in order to assign liability. In Westmont Bank v. Ong,[21] we ruled: …[I]t is petitioner [bank] which had the last clear chance to stop the fraudulent encashment of the subject checks had it exercised due diligence and followed the proper and regular banking procedures in clearing checks. As we had earlier ruled, the one who had a last clear opportunity to avoid the impending harm but failed to do so is chargeable with the consequences thereof.[22] (emphasis ours) In the case at bar, petitioner cannot evade responsibility for the loss by attributing negligence on the part of respondent because, even if we concur that the latter was indeed negligent in pre-signing blank checks, the former had the last clear chance to avoid the loss. To reiterate, petitioner’s own operations manager admitted that they could have called up the client for verification or confirmation before honoring the dubious checks. Verily, petitioner had the final opportunity to avert the injury that befell the respondent. Failing to make the necessary verification due to the volume of banking transactions on that particular day is a flimsy and unacceptable excuse, considering that the “banking business is so impressed with public interest where the trust and confidence of the public in general is of paramount importance such that the appropriate standard of diligence must be a high degree of diligence, if not the utmost diligence.”[23] Petitioner’s negligence has been undoubtedly established and, thus, pursuant to Art. 1170 of the NCC,[24] it must suffer the consequence of said negligence. In the interest of fairness, however, we believe it is proper to consider respondent’s own negligence to mitigate petitioner’s liability. Article 2179 of the Civil Code provides: Art. 2179. When the plaintiff’s own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendant’s lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. Explaining this provision in Lambert v. Heirs of Ray Castillon,[25] the Court held: The underlying precept on contributory negligence is that a plaintiff who is partly responsible for his own injury should not be entitled to recover damages in full but must bear the consequences of his own negligence. The defendant must thus be held liable only for the damages actually caused by his negligence. xxx xxx xxx As we previously stated, respondent’s practice of signing checks in blank whenever its authorized bank signatories would travel abroad was a dangerous policy, especially considering the lack of evidence on record that respondent had appropriate safeguards or internal controls to prevent the pre-signed blank checks from falling into the hands of unscrupulous individuals and being used to commit a fraud against the company. We cannot believe that there was no other secure and reasonable way to guarantee the non-disruption of respondent’s business. As testified to by petitioner’s expert witness, other corporations would ordinarily have another set of authorized bank signatories who would be able to sign checks in the absence of the preferred signatories.[26] Indeed, if not for the fortunate happenstance that the thief failed to properly fill up the subject checks, respondent would expectedly take the blame for the entire loss since the defense of forgery of a drawer’s signature(s) would be unavailable to it. Considering that respondent knowingly took the risk that the pre-signed blank checks might fall into the hands of wrongdoers, it is but just that respondent shares in the responsibility for the loss. We also cannot ignore the fact that the person who stole the pre-signed checks subject of this case from respondent’s accountant turned out to be another employee, purportedly a clerk in respondent’s accounting department. As the employer of the “thief,” respondent supposedly had control and

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supervision over its own employee. This gives the Court more reason to allocate part of the loss to respondent. Following established jurisprudential precedents,[27] we believe the allocation of sixty percent (60%) of the actual damages involved in this case (represented by the amount of the checks with legal interest) to petitioner is proper under the premises. Respondent should, in light of its contributory negligence, bear forty percent (40%) of its own loss. Finally, we find that the awards of attorney’s fees and litigation expenses in favor of respondent are not justified under the circumstances and, thus, must be deleted. The power of the court to award attorney’s fees and litigation expenses under Article 2208 of the NCC[28] demands factual, legal, and equitable justification. An adverse decision does not ipso facto justify an award of attorney’s fees to the winning party.[29] Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not be awarded where no sufficient showing of bad faith could be reflected in a party’s persistence in a case other than an erroneous conviction of the righteousness of his cause.[30] WHEREFORE, the Decision of the Court of Appeals dated July 16, 2001 and its Resolution dated September 28, 2001 are AFFIRMED with the following MODIFICATIONS: (a) petitioner Bank of America NT & SA shall pay to respondent Philippine Racing Club sixty percent (60%) of the sum of Two Hundred Twenty Thousand Pesos (P220,000.00) with legal interest as awarded by the trial court and (b) the awards of attorney’s fees and litigation expenses in favor of respondent are deleted. Proportionate costs. SO ORDERED.--------------------------------------------------------------------------------------------------------------------------Bank of America vs. Philippine Racing ClubG.R. 150228  July 30, 2009Ponente: Leonardo-De Castro, J:

Facts:

1. Plaintiff PRCI is a domestic corporation which maintains a current account with petitioner Bank of America. Its authorized signatories are the company President and Vice-President. By virtue of a travel abroad for these officers, they pre-signed checks to accommodate any expenses that may come up while they were abroad for a business trip. The said pre-signed checks were left for safekeeping by PRCs accounting officer. Unfortunately, the two (2) of said checks came into the hands of one of its employees who managed to encash it with petitioner bank. The said check was filled in with the use of a check-writer, wherein in the blank for the 'Payee', the amount in words was written, with the word 'Cash' written above it.

2. Clearly there was an irregularity with the filling up of the blank checks as both showed similar infirmities and irregularities and yet, the petitioner bank did not try to verify with the corporation and proceeded to encash the checks.

3. PRC filed an action for damages against the bank. The lower court awarded actual and exemplary damages. On appeal, the CA affirmed the lower court's decision and held that the bank was negligent. Hence this appeal. Petitioner contends that it was merely doing its obligation under the law and contract in encashing the checks, since the signatures in the checks are genuine.

Issue: Whether or not the petitioner can be held liable for negligence and thus should pay damages to PRC

Both parties are held to be at fault but the bank has the last clear chance to prevent the fraudulent encashment hence it is the one foremost liable .

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1. There was no dispute that the signatures in the checks are genuine but the presence of irregularities on the face of the check should have alerted the bank to exercise caution before encashing them. It is well-settled that banks are in the business impressed with public interest that they  are duty bound to protect their clients and their deposits at all times.  They must treat the accounts of these clients with meticulousness and a highest degree of care considering the fiduciary nature of their relationship. The diligence required of banks are more than that of a good father of a family.

2. The PRC officers' practice of pre-signing checks is a seriously negligent and highly risky behavior which makes them also contributor to the loss. It's own negligence must therefore mitigate the petitioner's liability. Moreover, the person who stole the checks is also an employee of the plaintiff, a cleck in its accounting department at that. As the employer, PRC supposedly should have control and supervision over its own employees.

3. The court held that the petitioner is liable for 60% of the total amount of damages while PRC should shoulder 40% of the said amount.

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EN BANC

G.R. No. L-45404 August 7, 1987

G. JESUS B. RUIZ, petitioner, vs.ENCARNACION UCOL and THE COURT OF APPEALS, respondents.

 

GUTIERREZ, JR., J:

This is an appeal from the order of the Court of First Instance of Ilocos Norte dismissing the plaintiff-appellant's complaint for damages against defendant-appellee on the ground of res judicata. The issue involved being a pure question of law, the appellate court certified the appeal to us for decision on the merits.

The facts are not disputed, Agustina Tagaca, laundrywoman for plaintiff-appellant Atty. Jesus B. Ruiz filed an administrative charge against defendant-appellee Encarnacion Ucol, a midwife in the health center of Sarratt Ilocos Norte. In her answer to the charges, Ucol alleged that Tagaca was merely used as a tool by Atty. Ruiz who wanted to get back at the Ucol's because of a case filed by Encarnacion Ucol's husband against Ruiz. She was also alleged to have made remarks that Atty. Ruiz instigated the complaint and fabricated the charges.

The administrative case was dismissed. Ruiz decided to file his own criminal complaint for libel against Ucol based on the alleged libelous portion of Ucol's answer.

Upon arraignment, Ucol entered a plea of not guilty. During the proceedings in the libel case, complainant Atty. Ruiz entered his appearance and participated as private prosecutor. After trial, the lower court rendered judgment acquitting Ucol on the ground that her guilt was not established beyond reasonable doubt. No pronouncement was made by the trial court as to the civil liability of the accused.

Instead of appealing the civil aspects of the case, Ruiz filed a separate complaint for damages based on the same facts upon which the libel case was founded.

Ucol filed a motion to dismiss stating that the action had prescribed and that the cause of action was barred by the decision in the criminal case for libel.

The trial court granted the motion to dismiss on the ground of res judicata. As earlier stated, on appeal, the Court of Appeals certified the case to us, the only issue being whether or not the civil action for damages was already barred by the criminal case of libel.

Before going into the merit of this appeal, it is noteworthy to mention that there are actually two cases now before us involving the contending parties. Defendant-appellee Ucol filed an "appeal by certiorari" before this Court questioning the dissenting opinion of the Court of Appeals.

Ucol prays for a ruling "that the respondent Court of Appeals committed a grave abuse of discretion in not dismissing the present case but instead in ordering the same remanded to the lower court for further proceedings ... ."

Any ordinary student in law school should readily know that what comprises a decision which can be the subject of an appeal or a special civil action is the majority opinion of the members of the court, but never the dissenting opinion. Moreover, no decision on appeal has as yet been rendered in this case. The act of the defendant-appellee's counsel in filing such a petition defies logic or reason. It is totally inexplicable how a member of the bar could be so careless or, if the act was deliberate, could have the courage to come before this Court asking us to review a dissenting opinion. Counsel is warned that we do not find his mistake in the slightest bit amusing.

Turning now to the present appeal, plaintiff-appellant Ruiz contends that there can be no res judicata since nowhere in its decision did the trial court pass upon the civil aspect of the criminal case nor did

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it make any express declaration that the fact on which said case was predicated did not exist. He cites the pertinent provisions of Article 29 of the Civil Code and Rule III, Section 3 subsection (c) of the Rules of Court which respectively provide:

ART. 29. When the accused in a criminal prosecution is acquitted on the ground that his guilt has not been proved beyond reasonable doubt, a civil action for damages for the same act or omission may be instituted. ...

xxx xxx xxx

RULE III, Sec. 3(c) —

Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist. ...

We may also mention Article 33 of the Civil Code which gives an offended party in cases of defamation, among others, the right to file a civil action separate and distinct from the criminal proceedings whether or not a reservation was made to that effect.

The plaintiff-appellant's contentions have no merit. The right of the plaintiff-appellant under the above provisions to file the civil action for damages based on the same facts upon which he instituted the libel case is not without limitation.

We find the appeal of G. Jesus B. Ruiz without merit. We see no advantage or benefit in adding to the clogged dockets of our trial courts what plainly appears from the records to be a harassment suit.

In acquitting Encarnacion Ucol of the libel charge, the trial court made these factual findings:

Clearly then, Atty. Ruiz filed the instant Criminal Case against Encarnacion Ucol as retaliation for what he believed was an act of ingratitude to him on the part of her husband. The precipitate haste with which the administrative complaint was filed shows that he was the one personally interested in the matter. All that Agustina Tagaca told him was double hearsay. The incident, if there was, happened between the accused and Ceferino in the absence of Agustina; so that, all that Ceferina allegedly told her, and she in turn told Atty. Ruiz, was undoubtedly double check hearsay; and Atty. Ruiz should therefore check the facts with Ceferino, but he did not do that, and he did not even present Ceferino as a witness. For these reasons, accused has every reason to believe that Atty. Ruiz was the author who concocted the charges in the administrative complaint and had his laundry-woman, complainant Agustina Tagaca, sign it. Agustina has very little education and could hardly speak English, yet the administrative complaint was written in polished English, and who else but Atty. Ruiz could have authored those phrases in the complaint: "The retention of Mrs. Ucol in this government service is inimical to the good intentions of the Department to serve humanity and a disgrace and liability to present administration." As will be shown later on, it appears that it is this complaint signed by Agustina, but authored by Atty. Ruiz, that is libelous and not the respondent's answer; and even, assuming that the administrative complaint may not have been impelled by actual malice, the charge(s) were certainly reckless in the face of proven facts and circumstances. Court actions are not established for parties to give bent to their prejudice. The poor and the humble are, as a general rule, grateful to a fault, that intrigues and ingratitude are what they abhor. (Amended Record on Appeal, pp. 8-10).

The findings in the criminal case, therefore, show a pattern of harassment. First, petitioner Ruiz had something to do with the administrative complaint. The complaint was dismissed. Second, he filed a criminal case for libel based on portions of Mrs. Ucol's answer in the administrative case. Third, he acted as private prosecutor in the criminal case actively handling as a lawyer the very case where he was the complainant. And fourth, after the accused was acquitted on the basis of the facts stated above, Atty. Ruiz pursued his anger at the Ucols with implacability by filing a civil action for damages. As stated by the trial judge, "court actions are not established for parties to give bent to their prejudice." This is doubly true when the party incessantly filing cases is a member of the bar. He should set an example in sobriety and in trying to prevent false and groundless suits.

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In Roa v. de la Cruz, et al. (107, Phil. 10) this Court ruled:

Under the above provisions (Art. 33 of the Civil Code), independently of a criminal action for defamation, a civil suit for the recovery of damages arising therefrom may be brought by the injured party. It is apparent, however, from the use of the words "may be," that the institution of such suit is optional." (An Outline of Philippine Civil Law by J.B.L. Reyes and R.C. Puno, Vol. I, p. 54) In other words, the civil liability arising from the crime charged may still be determined in the criminal proceedings if the offended party does not waive to have it adjudged, or does not reserve his right to institute a separate civil action against the defendant. (The case of Reyes v. de la Rosa (52 Off. Gaz., [15] 6548; 99 Phil., 1013) cited by plaintiff in support of her contention that under Art. 33 of the New Civil Code the injured party is not required to reserve her right to institute the civil action, is not applicable to the present case. There was no showing in that case that the offended party intervened in the prosecution of the offense, and the amount of damages sought to be recovered was beyond the jurisdiction of the criminal court so that a reservation of the civil action was useless or unnecessary.) (Dionisio v. Alvendia, 102 Phil., 443; 55 Off. Gaz., [25]4633.])

In the instant case, it is not disputed that plaintiff Maria C. Roa — upon whose initiative the criminal action for defamation against the defendant Segunda de la Cruz was filed — did not reserve her right to institute it, subject, always to the direction and control of the prosecuting fiscal. (Section 15 in connection with section 4 of Rule 106, Rules of Court; Lim Tek Goan v. Yatco, 94 Phil., 197). The reason of the law in not permitting the offended party to intervene in the prosecution of the offense if he had waived or reserved his right to institute the civil action is that by such action her interest in the criminal case has disappeared. Its prosecution becomes the sole function of the public prosecutor. (Gorospe, et al., v. Gatmaitan, et al., 98 Phil., 600; 52 Off. Gaz., [15] 2526). The rule, therefore, is that the right of intervention reserved to the injured party is for the sole purpose of enforcing the civil liability born of the criminal act and not of demanding punishment of the accused. (People v. Orais, 65 Phil., 744; People v. Velez, 77 Phil., 1026; People v. Flores, et al., G.R. No. L-7528, December 18,1957; see also U.S. v. Malabon, 1 Phil., 731; U.S. v. Heery, 25 Phil., 600).

Plaintiff having elected to claim damages arising from the offense charged in the criminal case through her appearance or intervention as private prosecutor we hold that the final judgment rendered therein constitutes a bar to the present civil action for damages based upon the same cause. (See Tan v. Standard Vacuum Oil Co., et al., 91 Phil., 672; 48 Off. Gaz., [7] 2745.).

We are, therefore, constrained to dismiss the present appeal. Atty. Ruiz has more than had his day in court. The then court of first instance acquitted Mrs. Ucol and stated in the dispositive portion of its decision that her guilt was not established beyond reasonable doubt. A review of the court's findings, however, indicates that the disputed Answer of Mrs. Ucol in the administrative case contains no libel. As stated by the trial court, "As will be shown later, it appears that it is this complaint signed by Agustina, but authored by Atty. Ruiz, that is libelous and not the respondent's answer." (Emphasis supplied). The court found the charges against Ucol, if not malicious, at least reckless in the face of proven facts and circumstances.

The trial court stated.

Analyzing defendant's answer Exh. "5", even with meticulous care, the Court did not find any defamatory imputation which causes dishonor or discredit to the complainant. She was the victim of an unprovoked, unjustified and libelous attack against her honor, honesty, character and reputation; she has a right to self-defense, which she did in her answer, to protect her honesty and integrity and the very job upon which her family depend for their livelihood. Every sentence in her answer (Exh. "5") is relevant, and constitutes privileged matter. She did not go further than her interest or duties require. She did not go beyond explaining what was said of her in the complaint for the purpose of repairing if not entirely removing the effects of the charge against her. She had absolutely no motive to libel Atty. Ruiz who, by the way, cast the first stone. ... (Amended Record on Appeal pp. 10-11)

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WHEREFORE, the appeal filed by appellant Jesus B. Ruiz is DISMISSED for lack of merit. The petition filed by petitioner Encarnacion Ucol is likewise DISMISSED for patent lack of merit.

SO ORDERED.

Teehankee, C.J., Yap, Fernan, Narvasa, Cruz, Paras, Feliciano, Padilla, Bidin Sarmiento and Cortes, JJ., concur.

Melencio-Herrera, J., is on leave.

Gancayco, J., took no part.

Ruiz v Ucol GR No. L-45404 8.7.8702/14/2011

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F: The petitioner’s laundrywoman filed an administrative complaint against the respondent who alleged

that the petitioner is using the laundrywoman in retaliation for the charges filed by the respondent against

petitioner. The case was dismissed by the court. The petitioner filed a case of libel against the respondent

which was likewise dismissed. The petitioner again filed for damages based on the information in the

case of libel which the court dismissed on grounds of res judicata. On one hand, Ucol files an appeal for

certiorari questioning the dissenting opinion of the CA.

I: WON an appeal may be filed questioning a court’s dissenting opinion.

R: It would be elementary to know that a dissenting opinion is not the decision of the case. What is

subject to appeal or a special civil action would be the majority opinion of the court.

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THIRD DIVISION[G.R. No. 121917. March 12, 1997]

ROBIN CARIÑO PADILLA @ ROBINHOOD PADILLA, petitioner, vs. COURT OF APPEALS and PEOPLE of the PHILIPPINES, respondents.D E C I S I O NFRANCISCO, 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. 1866[2] 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[19] followed 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

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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, 1993). 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 SPO2 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

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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, arrogantly denied 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:

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(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:

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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

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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:

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"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."[75]

Circular 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]

xxx xxx xxx

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

"PNPFEO5 28 November 1992

"C E R T I F I C A T I O N

"TO WHOM IT MAY CONCERN:

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"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-RP131120Revolver Cal 357 SN-3219Pistol 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. ESPINOSr. Inspector, PNPChief, 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 evidence[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

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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 grievance 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. (Chairman), Davide, Jr., Melo, and Panganiban, concur.

-------------------------------------------------------------------------------------------------------------------------------

Summary of the Case:One night, Enrique Manarang noticed the accused appellant’s car running fast. After a while, a screech of tires was heard and thus, made the officer run out and investigate. Not so long, the car continued to run, so a hot-pursuit took place. Manarang then radioed the incident to the Police.When the car was put to a stop, the driver rolled down the windows with his hands raised. The officers then noticed that it was the famous actor, Robin Padilla. While apprehended, because of the hit-and-run incident, the police saw the revolver tucked in the left waist of Robin. So, the police insisted that the gun be shown in the office if it was legal. The crowd had formed and Robin was shaking their hands and pointing to the police while saying “iyan kinuha ang baril ko”, as if it was in the movies. The gesture then revealed a magazine clip of a rifle which made the police suspect that there is a rifle inside the vehicle. Then the rifle was seen. The other firearms were voluntarily surrendered by Robin.Now, Robin’s defense was that his arrest was illegal and consequently, the firearms and ammunitions taken in the course thereof are inadmissible in evidence under the exclusionary rule.Robin Padilla was arrested, tried, and convicted for illegal possession of firearms. He was in possession of a .357 caliber revolver, Smith and Wesson with 6 live ammunitions, One M-16 baby Armalite Rifle with ammunitions, One .380 Pietro Barreta with 8 live ammunitions, and six live double action ammunitions of .38 caliber revolver.

Relation to Article3: Section 2.

Robin claimed that there was no search warrant or warrant of arrest thus, making his arrest illegal and the evidences inadmissible. The Bill of rights’ purpose is to put limit to the government’s power. In the People vs. Marti case, the government was not involved. In this case, the government is involved but it was not illegal.Why? According to what’s written in the case, a peace officer or a private person may arrest a person: (a) when the person has committed, is actually committing or is attempting to commit and 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

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committed it.The instances above clearly explain the legality of the arrest. Robin Padilla, my idol had first sideswiped a balut vendor and the incident was heard by Manarang and he saw Robin fled away from the scene, thus, committing a hit-and-run. And Enrique Manarang was a peace officer.When he was halted, the firearms were revealed to the police officers without their act of searching. The firearms were in “plain view”. And the firearms were found by the police in their pursuit of their official duties. And the police have the right as to where they are because they were in pursuit of Robin when they found the firearms.

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FIRST DIVISION

G.R. No. L-71914 January 29, 1986

ZENAIDA CRUZ REYES, petitioner, vs.HON. JUDGE ALICIA SEMPIO-DIY, 'Vacation' Judge of RTC, BRANCH 170, Malabon, Metro Manila, and SPS. CRISTINA MALICSI and DANILO MALICSI, respondents.

Leodegario A. Barayang, Sr. for petitioner.

 

PATAJO, J:

This is a direct appeal on a question of law from a resolution of the Regional Trial Court of Malabon, Metro Manila dated July 30, 1985 dismissing upon motion of the defendant Civil Case No. 357-MN.

In Criminal Case No. 23633 of the Metropolitan Trial Court of Navotas, Metro Manila, Cristina Malicsi was charged with the crime of intriguing against honor. The aggrieved party therein was Zenaida Cruz Reyes, the herein petitioner. In said case Zenaida Cruz Reyes was represented by a private prosecutor, Atty. Barayang. The accused pleaded guilty to the information and was sentenced by the Court to a fine of P50.00. Because of her plea of guilty, the aggrieved party was unable to present evidence to prove damages against the accused. Neither was she able to make a reservation of her right to file a separate civil action for damages. Instead, she filed a new action against Cristina Malicsi and her husband with the Regional Trial Court for damages arising from the defamatory words uttered against her by Cristina Malicsi which was the subject of the information filed against the latter for intriguing against honor. Said case is Civil Case No. 357-MN.

At the pre-trial plaintiff admitted that she was represented by a private prosecutor in the criminal case against defendant Cristina Malicsi and in said case she did not reserve the right to file a separate action for damages. She further admitted that the appearance of said private prosecutor was for the purpose of proving damages against the accused. After said admission made by plaintiff, the parties agreed to have the Court rule on the question of whether or not plaintiff by her being represented by a private prosecutor in the criminal case and her failing to make a reservation in said case to file a separate action was barred from filing a separate civil action for damages against the accused Cristina Malicsi.

On said issue, the Court a quo ruled in favor of the defendants, relying principally upon Roa vs. dela Cruz, 107 Phil. 8, and dismissed the case. It said:

There is no question that in defamation cases (such as the present) as in cases of fraud and physical injuries, a civil action for damages entirely separate and distinct from the criminal action may be brought by the injured party, and such action shall proceed independently of the criminal prosecution and shall require only a preponderance of evidence Art. 33, New Civil Code). In such cases, the injured party need not make a reservation in the criminal case for the filing of the civil action for damages, for the Civil Code already grants or reserves to him that right, so that his failure to reserve such right in the criminal case does not bar him from filing a separate civil action for damages (Mendoza v. Arrieta, 91 SCRA 113; Garcia v. Flerido, 52 SCRA 420). This is true even if Sec. 2 of Rule 111 of the former Rules of Criminal Procedure in the Revised Rules of Court (the rule applicable herein) required a reservation in the criminal case, because the Civil Code does not require such reservation, and the Rules of Court, being merely procedural, can not amend the Civil Code which is substantive in nature (Mendoza v. Arrieta and Garcia v. Flerido, supra).

There is, however, an exception to the above rule; namely, when the offended party actually intervenes in the criminal action by appearing therein through a private prosecutor for the purpose of recovering indemnity for damages, he is deemed to have waived his right to file a separate civil action for damages if he failed to make a reservation therefor; thus, if the court did not enter a judgment for civil liability against

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the accused in the criminal case because the offended party failed to submit evidence of damages therein and he did not file any motion for reconsideration or did not appeal from said judgment, the judgment becomes res judicata, and an independent civil action under Art. 33 of the New Civil Code cannot be brought by said offended party anymore (Roa v. de la Cruz, 107 Phil. 8; Azucena v. Potenciano, 5 SCRA 468).

We, however, believe that there are demonstrable material differences between the facts in the Roa case and the present case which would make the decision in the Roa case inapplicable in the present case as precedent. In theRoa case there was a fall-blown hearing where a private prosecutor participated actively and there could, therefore, be no question that the aggrieved party's participation through the private prosecutor in said case clearly indicated her intention to have her claim for damages litigated in the criminal action against the accused. It was only after the trial of the case on the merits that a decision was rendered finding the accused guilty of slight slander and sentencing her to pay a fine of P50.00 but making no award of damages in favor of the aggrieved party. The reason for the Court's not making any award of damages is because of the failure of the aggrieved party to submit evidence to support her claim for damages. The Court said that by such failure she had only herself or her counsel to blame. Neither did she file a motion for reconsideration of the decision of the Court nor appeal therefrom to rectify the Court's failure to award damages in her favor. The decision of the Court had, therefore, become final and any action to be filed by her for damages arising from the same criminal act of the accused would already be barred on ground of res judicata.

In the present case, however, while it is true that petitioner, the aggrieved party in the criminal case against private respondent Cristina Malicsi for the crime of intriguing against honor, was represented by a private prosecutor for the purpose of proving damages, the unexpected plea of guilt by the accused and her being sentenced immediately to a fine of P50.00 prevented petitioner from proving her claim for damages and making a reservation to file a separate civil action. More in point, therefore, is the case of Meneses vs. Luat, 12 SCRA 454, and it is the ruling in the said case rather than the Roa case which is controlling in the present case, Like in the present case in the Meneses case the aggrieved party was also represented by a private prosecutor, but the case did not proceed to trial as the accused upon arraignment pleaded guilty. Distinguishing said case from Roa vs. dela Cruz,the Court said:

The issue now before us is whether or not the rule laid down in the Roa case should govern this one. We are of the opinion that there is a demonstrable material difference between the circumstances of the two cases. In the first not only was the offended party represented by a private prosecutor in the criminal action but the action went through trial on the merits. In fact it was the private prosecutor who actually handled the case. He therefore had sufficient opportunity to claim and prove damages, for which purpose alone, according to the decision of this Court, has active intervention was allowed. For if that had not been the purpose, or if the offended party had reserved the right to file a separate civil action, such intervention would not have been justified.

In the instant case the criminal action against defendant Luat did not proceed to trial, as he pleaded guilty upon arraignment. The mere appearance of private counsel in representation of the offended party did not constitute such active intervention as could only import an intention to press a claim for damages in the same action. It is as reasonable to indulge the possibility that the private prosecutors appeared precisely to be able to make a seasonable reservation of the right to file a separate civil action which, even if unnecessary at the time would nevertheless have been the prudent and practical thing to do for the purpose of better protecting the interest of their clients. But as matters turned out, the accused pleaded guilty upon arraignment and was immediately sentenced. Thereafter there was no chance to enter such a reservation in the record.

We do not believe that plaintiffs' substantive right to claim damages should necessarily be foreclosed by the fact at best equivocal as to its purpose that private prosecutors entered their appearance at the very inception of the proceeding, which was then cut short at that stage. It cannot be said with any reasonable certainty that plaintiffs had thereby committed themselves to the submission of their action for damages in that action. The rule laid down in Roa vs. De la Cruz, supra, does not

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govern this case. The ends of justice will be better served if plaintiffs are given their day in court. (pp. 457-458)

Upon authority, therefore, of Meneses vs. Luat We find and so hold that the mere appearance of a private prosecutor in the criminal case against the herein private respondents did not necessarily constitute such intervention on the part of the aggrieved party as could only import an intention on her part to press her claim for damages in said criminal case and a waiver of her right to file a separate civil action for damages. Because the accused had pleaded guilty upon arraignment and was immediately sentenced, there was no chance for the aggrieved party to present evidence in support of her claim for damages and to enter a reservation in the record to file a separate civil action.

Moreover, the failure of petitioner to make a reservation to file a separate civil action did not foreclose her right to file said separate complaint for damages. Under Article 33 of the Civil Code there is no requirement that as a condition to the filing of a separate civil action for damages a reservation to file said civil action be first made in the criminal case and such reservation is not necessary, the provision of Rule 111, Section 2 notwithstanding.Mendoza vs. Arrieta, 91 SCRA 113, where this Court, quoting from Garcia vs. Flerido, 52 SCRA 420, said:

. . . Hence, 'the proviso in Section 2 of Rule 111 with reference to ... Articles 32, 33 and 34 of the Civil Code is contrary to the letter and spirit of the said articles, for these articles were drafted . . . and are intended to constitute as exceptions to the general rule stated in what is now Section 1 of Rule 111. The proviso, which is procedural, may also be regarded as an unauthorized amendment of substantive law, Articles 32, 33 and 34 of the Civil Code, which do not provide for the reservation required in the proviso.

IN VIEW OF THE FOREGOING, judgment is hereby rendered GRANTING the petition and ordering respondent Court to proceed with the hearing of Civil Case No. 357-MN, with costs against private respondents.

SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Plana, Gutierrez, Jr. and De la Fuente, JJ., concur.

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EN BANC

G.R. No. L-69866 April 15, 1988

ROGELIO ABERCA, RODOLFO BENOSA, NESTOR BODINO NOEL ETABAG DANILO DE LA FUENTE, BELEN DIAZ-FLORES, MANUEL MARIO GUZMAN, ALAN JAZMINEZ, EDWIN LOPEZ, ALFREDO MANSOS, ALEX MARCELINO, ELIZABETH PROTACIO-MARCELINO, JOSEPH OLAYER, CARLOS PALMA, MARCO PALO, ROLANDO SALUTIN, BENJAMIN SESGUNDO, ARTURO TABARA, EDWIN TULALIAN and REBECCA TULALIANpetitioners, vs.MAJ. GEN. FABIAN VER, COL. FIDEL SINGSON, COL. ROLANDO ABADILLA, COL. GERARDO B. LANTORIA, COL. GALILEO KINTANAR, 1ST LT. COL. PANFILO M. LACSON, MAJ. RODOLFO AGUINALDO, CAPT. DANILO PIZARRO, 1ST LT. PEDRO TANGO, 1ST LT. ROMEO RICARDO, 1ST LT. RAUL BACALSO, MSGT BIENVENIDO BALABA and REGIONAL TRIAL COURT, National Capital Judicial Region, Branch XCV (95), Quezon City,respondents.

 

YAP, J.:

This petition for certiorari presents vital issues not heretofore passed upon by this Court. It poses the question whether the suspension of the privilege of the writ of habeas corpus bars a civil action for damages for illegal searches conducted by military personnel and other violations of rights and liberties guaranteed under the Constitution. If such action for damages may be maintained, who can be held liable for such violations: only the military personnel directly involved and/or their superiors as well.

This case stems from alleged illegal searches and seizures and other violations of the rights and liberties of plaintiffs by various intelligence units of the Armed Forces of the Philippines, known as Task Force Makabansa (TFM) ordered by General Fabian Ver "to conduct pre-emptive strikes against known communist-terrorist (CT) underground houses in view of increasing reports about CT plans to sow disturbances in Metro Manila," Plaintiffs allege, among others, that complying with said order, elements of the TFM raided several places, employing in most cases defectively issued judicial search warrants; that during these raids, certain members of the raiding party confiscated a number of purely personal items belonging to plaintiffs; that plaintiffs were arrested without proper warrants issued by the courts; that for some period after their arrest, they were denied visits of relatives and lawyers; that plaintiffs were interrogated in violation of their rights to silence and counsel; that military men who interrogated them employed threats, tortures and other forms of violence on them in order to obtain incriminatory information or confessions and in order to punish them; that all violations of plaintiffs constitutional rights were part of a concerted and deliberate plan to forcibly extract information and incriminatory statements from plaintiffs and to terrorize, harass and punish them, said plans being previously known to and sanctioned by defendants.

Plaintiffs sought actual/compensatory damages amounting to P39,030.00; moral damages in the amount of at least P150,000.00 each or a total of P3,000,000.00; exemplary damages in the amount of at least P150,000.00 each or a total of P3,000,000.00; and attorney's fees amounting to not less than P200,000.00.

A motion to dismiss was filed by defendants, through their counsel, then Solicitor-General Estelito Mendoza, alleging that (1) plaintiffs may not cause a judicial inquiry into the circumstances of their detention in the guise of a damage suit because, as to them, the privilege of the writ of habeas corpus is suspended; (2) assuming that the courts can entertain the present action, defendants are immune from liability for acts done in the performance of their official duties; and (3) the complaint states no cause of action against the defendants. Opposition to said motion to dismiss was filed by plaintiffs Marco Palo, Danilo de la Fuente, Benjamin Sesgundo, Nel Etabag, Alfredo Mansos and Rolando Salutin on July 8, 1983, and by plaintiffs Edwin Lopez, Manuel Mario Guzman, Alan Jasminez, Nestor Bodino, Carlos Palma, Arturo Tabara, Joseph Olayer, Rodolfo Benosa, Belen Diaz, Flores, Rogelio Aberca, Alex Marcelino and Elizabeth Marcelino on July 21, 1983. On November 7, 1983, a Consolidated Reply was filed by defendants' counsel.

Then, on November 8, 1983, the Regional Trial Court, National Capital Region, Branch 95, Judge Willelmo C. Fortun, Presiding, 1 issued a resolution granting the motion to dismiss. I sustained, lock,

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stock and barrel, the defendants' contention (1) the plaintiffs may not cause a judicial inquiry into the circumstances of their detention in the guise of a damage suit because, as to them, the privilege of the writ of habeas corpus is suspended; (2) that assuming that the court can entertain the present action, defendants are immune from liability for acts done in the performance of their official duties; and (3) that the complaint states no cause of action against defendants, since there is no allegation that the defendants named in the complaint confiscated plaintiffs' purely personal properties in violation of their constitutional rights, and with the possible exception of Major Rodolfo Aguinaldo and Sergeant Bienvenido Balabo committed acts of torture and maltreatment, or that the defendants had the duty to exercise direct supervision and control of their subordinates or that they had vicarious liability as employers under Article 2180 of the Civil Code. The lower court stated, "After a careful study of defendants' arguments, the court finds the same to be meritorious and must, therefore, be granted. On the other hand, plaintiffs' arguments in their opposition are lacking in merit."

A motion to set aside the order dismissing the complaint and a supplemental motion for reconsideration was filed by the plaintiffs on November 18, 1983, and November 24, 1983, respectively. On December 9, 1983, the defendants filed a comment on the aforesaid motion of plaintiffs, furnishing a copy thereof to the attorneys of all the plaintiffs, namely, Attys. Jose W. Diokno, Procopio Beltran, Rene Sarmiento, Efren Mercado, Auguso Sanchez, Antonio L. Rosales, Pedro B. Ella Jr., Arno V. Sanidad, Alexander Padilla, Joker Arroyo, Rene Saguisag, Ramon Esguerra and Felicitas Aquino.

On December 15, 1983, Judge Fortun issued an order voluntarily inhibiting himself from further proceeding in the case and leaving the resolution of the motion to set aside the order of dismissal to Judge Lising, "to preclude any suspicion that he (Judge Fortun) cannot resolve [the] aforesaid pending motion with the cold neutrality of an impartial judge and to put an end to plaintiffs assertion that the undersigned has no authority or jurisdiction to resolve said pending motion." This order prompted plaintiffs to reesolve an amplificatory motion for reconsideration signed in the name of the Free Legal Assistance Group (FLAG) of Mabini Legal Aid Committee, by Attys. Joker P. Arroyo, Felicitas Aquino and Arno Sanidad on April 12, 1984. On May 2,1984, the defendants filed a comment on said amplificatory motion for reconsideration.

In an order dated May 11, 1984, the trial court, Judge Esteban Lising, Presiding, without acting on the motion to set aside order of November 8, 1983, issued an order, as follows:

It appearing from the records that, indeed, the following plaintiffs, Rogelio Aberca, Danilo de la Fuente and Marco Palo, represented by counsel, Atty. Jose W. Diokno, Alan Jasminez represented by counsel, Atty. Augusta Sanchez, Spouses Alex Marcelino and Elizabeth Protacio-Marcelino, represented by counsel, Atty. Procopio Beltran, Alfredo Mansos represented by counsel, Atty. Rene Sarmiento, and Rolando Salutin, represented by counsel, Atty. Efren Mercado, failed to file a motion to reconsider the Order of November 8, 1983, dismissing the complaint, nor interposed an appeal therefrom within the reglementary period, as prayed for by the defendants, said Order is now final against said plaintiffs.

Assailing the said order of May 11, 1984, the plaintiffs filed a motion for reconsideration on May 28,1984, alleging that it was not true that plaintiffs Rogelio Aberca, Danilo de la Fuente, Marco Palo, Alan Jasminez, Alex Marcelino, Elizabeth Protacio-Marcelino, Alfredo Mansos and Rolando Salutin failed to file a motion to reconsider the order of November 8, 1983 dismissing the complaint, within the reglementary period. Plaintiffs claimed that the motion to set aside the order of November 8, 1983 and the amplificatory motion for reconsideration was filed for all the plaintiffs, although signed by only some of the lawyers.

In its resolution of September 21, 1984, the respondent court dealt with both motions (1) to reconsider its order of May 11, 1984 declaring that with respect to certain plaintiffs, the resolution of November 8, 1983 had already become final, and (2) to set aside its resolution of November 8, 1983 granting the defendants' motion to dismiss. In the dispositive portion of the order of September 21, 1984, the respondent court resolved:

(1) That the motion to set aside the order of finality, dated May 11, 1984, of the Resolution of dismissal of the complaint of plaintiffs Rogelio Aberca, Danilo de la Fuente, Marco Palo, Alan Jasminez Alex Marcelino, Elizabeth Protacio-Marcelino, Alfredo Mansos and Rolando Salutin is deed for lack of merit;

(2) For lack of cause of action as against the following defendants, to wit:

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1. Gen Fabian Ver

2. Col. Fidel Singson

3. Col. Rolando Abadilla

4. Lt. Col. Conrado Lantoria, Jr.

5. Col. Galileo Montanar

6. Col. Panfilo Lacson

7. Capt. Danilo Pizaro

8. 1 Lt Pedro Tango

9. Lt. Romeo Ricardo

10. Lt. Raul Bacalso

the motion to set aside and reconsider the Resolution of dismissal of the present action or complaint, dated November 8, 1983, is also denied but in so far as it affects and refers to defendants, to wit:

1. Major Rodolfo Aguinaldo, and

2. Master Sgt. Bienvenido Balaba

the motion to reconsider and set aside the Resolution of dismissal dated November 3, 1983 is granted and the Resolution of dismissal is, in this respect, reconsidered and modified.

Hence, petitioners filed the instant petition for certiorari on March 15, 1985 seeking to annul and set aside the respondent court's resolution of November 8, 1983, its order of May 11, 1984, and its resolution dated September 21, 1984. Respondents were required to comment on the petition, which it did on November 9, 1985. A reply was filed by petitioners on August 26, 1986.

We find the petition meritorious and decide to give it due course.

At the heart of petitioners' complaint is Article 32 of the Civil Code which provides:

ART. 32. Any public officer or employee, or any private individual who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages:

(1) Freedom of religion;

(2) Freedom of speech;

(3) Freedom to write for the press or to maintain a periodical publication;

(4) Freedom from arbitrary or illegal detention;

(5) Freedom of suffrage;

(6) The right against deprivation of property without due process

(7) of law;

(8) The right to a just compensation when private property is taken for public use;

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(9) The right to the equal protection of the laws;

(10) The right to be secure in one's person, house, papers, and effects against unreasonable searches and seizures;

(11) The liberty of abode and of changing the same;

(12) The privacy of cmmunication and correspondence;

(13) The right to become a member of associations or societies for purposes not contrary to law;

(14) The right to take part in a peaceable assembly to petition the Government for redress of grievances;

(15) The right to be free from involuntary servitude in any form;

(16) The rigth of the accused against excessive bail;

(17) The rigth of the aaccused to be heard by himself and counsel, to be informed of the nature and cause of the accusation against him, to have a speedy and public trial, to meet the witnesses face to face, and to have compulsory process to secure the attendance of witness in behalf;

(18) Freedom from being compelled to be a witness against ones self, or from being forced to confess guilt, or from being induced by a promise of immunity or reward to make such confession, except when the person confessing becomes a State witness;

(19) Freedom from excessive fines or cruel and unusual punishment, unless the same is imposed or inflicted in accordance with a statute which has not been judicially declared unconstitutional; and

(20) Freedom of access to the courts.

In any of the cases referred to in this article, whether or not the defendant's act or omission constitutes a criminal offense, the against grieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action shall proceed independently of any criminal prosecution (if the latter be instituted), and may be proved by a preponderance of evidence.

The indemnity shall include moral damages. Exemplary damages may also be adjudicated.

The responsibility herein set forth is not demandable from a judge unless his act or omission constitutes a violation of the Penal Code or other penal statute.

It is obvious that the purpose of the above codal provision is to provide a sanction to the deeply cherished rights and freedoms enshrined in the Constitution. Its message is clear; no man may seek to violate those sacred rights with impunity. In times of great upheaval or of social and political stress, when the temptation is strongest to yield — borrowing the words of Chief Justice Claudio Teehankee — to the law of force rather than the force of law, it is necessary to remind ourselves that certain basic rights and liberties are immutable and cannot be sacrificed to the transient needs or imperious demands of the ruling power. The rule of law must prevail, or else liberty will perish. Our commitment to democratic principles and to the rule of law compels us to reject the view which reduces law to nothing but the expression of the will of the predominant power in the community. "Democracy cannot be a reign of progress, of liberty, of justice, unless the law is respected by him who makes it and by him for whom it is made. Now this respect implies a maximum of faith, a minimum of Idealism. On going to the bottom of the matter, we discover that life demands of us a certain residuum of sentiment which is not derived from reason, but which reason nevertheless controls. 2

Page 153 of 173

Seeking to justify the dismissal of plaintiffs' complaint, the respondents postulate the view that as public officers they are covered by the mantle of state immunity from suit for acts done in the performance of official duties or function In support of said contention, respondents maintain that —

Respondents are members of the Armed Forces of the Philippines. Their primary duty is to safeguard public safety and order. The Constitution no less provides that the President may call them "to prevent or supress lawless violence, invasion, insurrection or rebellion, or imminent danger thereof." (Constitution, Article VII, Section 9).

On January 17, 1981, the President issued Proclamation No. 2045 lifting martial law but providing for the continued suspension of the privilege of the writ of habeas corpus in view of the remaining dangers to the security of the nation. The proclamation also provided "that the call to the Armed Forces of the Philippines to prevent or suppress lawless violence, insuitection rebellion and subversion shall continue to be in force and effect."

Petitioners allege in their complaint that their causes of action proceed from respondent General Ver's order to Task Force Makabansa to launch pre-emptive strikes against communist terrorist underground houses in Metro Manila. Petitioners claim that this order and its subsequent implementation by elements of the task force resulted in the violation of their constitutional rights against unlawful searches, seizures and arrest, rights to counsel and to silence, and the right to property and that, therefore, respondents Ver and the named members of the task force should be held liable for damages.

But, by launching a pre-emptive strike against communist terrorists, respondent members of the armed forces merely performed their official and constitutional duties. To allow petitioners to recover from respondents by way of damages for acts performed in the exercise of such duties run contrary to the policy considerations to shield respondents as public officers from undue interference with their duties and from potentially disabling threats of hability (Aarlon v. Fitzgerald 102 S. Ct. 2731-1 Forbes v. Chuoco Tiaco, 16 Phil. 634), and upon the necessity of protecting the performance of governmental and public functions from being harassed unduly or constantly interrupted by private suits (McCallan v. State, 35 Cal. App. 605; Metran v. Paredes, 79 Phil. 819).

xxx xxx xxx

The immunity of public officers from liability arising from the performance of their duties is now a settled jurisprudence Alzua v. Johnson, 21 Phil. 308; Zulueta v. Nicolas, 102 Phil. 944; Spalding v. Vilas, 161 US 483; 40 L. Ed. 780, 16 S. Ct. 631; Barr v. Mateo, 360; Butz v. Economon, 438 US 478; 57 L. Ed. 2d 895, 98 S. Ct. 2894; Scheuer v. Rhodes, 416 US 232; Forbes v. Chuoco Tiaco, supra; Miller v. de Leune, 602 F. 2d 198; Sami v. US, 617 F. 2d 755).

Respondents-defendants who merely obeyed the lawful orders of the President and his call for the suppression of the rebellion involving petitioners enjoy such immunity from Suit. 3

We find respondents' invocation of the doctrine of state immunity from suit totally misplaced. The cases invoked by respondents actually involved acts done by officers in the performance of official duties written the ambit of their powers. As held in Forbes, etc. vs. Chuoco Tiaco and Crossfield: 4

No one can be held legally responsible in damages or otherwise for doing in a legal manner what he had authority, under the law, to do. Therefore, if the Governor-General had authority, under the law to deport or expel the defendants, and circumstances justifying the deportation and the method of carrying it out are left to him, then he cannot be held liable in damages for the exercise of this power. Moreover, if the courts are without authority to interfere in any manner, for the purpose of controlling or interferring with the exercise of the political powers vested in the chief executive authority of the Government, then it must follow that the courts cannot intervene for the purpose of declaring that he is liable in damages for the exeercise of this authority.

Page 154 of 173

It may be that the respondents, as members of the Armed Forces of the Philippines, were merely responding to their duty, as they claim, "to prevent or suppress lawless violence, insurrection, rebellion and subversion" in accordance with Proclamation No. 2054 of President Marcos, despite the lifting of martial law on January 27, 1981, and in pursuance of such objective, to launch pre- emptive strikes against alleged communist terrorist underground houses. But this cannot be construed as a blanket license or a roving commission untramelled by any constitutional restraint, to disregard or transgress upon the rights and liberties of the individual citizen enshrined in and protected by the Constitution. The Constitution remains the supreme law of the land to which all officials, high or low, civilian or military, owe obedience and allegiance at all times.

Article 32 of the Civil Code which renders any public officer or employee or any private individual liable in damages for violating the Constitutional rights and liberties of another, as enumerated therein, does not exempt the respondents from responsibility. Only judges are excluded from liability under the said article, provided their acts or omissions do not constitute a violation of the Penal Code or other penal statute.

This is not to say that military authorities are restrained from pursuing their assigned task or carrying out their mission with vigor. We have no quarrel with their duty to protect the Republic from its enemies, whether of the left or of the right, or from within or without, seeking to destroy or subvert our democratic institutions and imperil their very existence. What we are merely trying to say is that in carrying out this task and mission, constitutional and legal safeguards must be observed, otherwise, the very fabric of our faith will start to unravel. In the battle of competing Ideologies, the struggle for the mind is just as vital as the struggle of arms. The linchpin in that psychological struggle is faith in the rule of law. Once that faith is lost or compromised, the struggle may well be abandoned.

We do not find merit in respondents' suggestion that plaintiffs' cause of action is barred by the suspension of the privilege of the writ of habeas corpus. Respondents contend that "Petitioners cannot circumvent the suspension of the privilege of the writ by resorting to a damage suit aimed at the same purpose-judicial inquiry into the alleged illegality of their detention. While the main relief they ask by the present action is indemnification for alleged damages they suffered, their causes of action are inextricably based on the same claim of violations of their constitutional rights that they invoked in the habeas corpus case as grounds for release from detention. Were the petitioners allowed the present suit, the judicial inquiry barred by the suspension of the privilege of the writ will take place. The net result is that what the courts cannot do, i.e. override the suspension ordered by the President, petitioners will be able to do by the mere expedient of altering the title of their action."

We do not agree. We find merit in petitioners' contention that the suspension of the privilege of the writ of habeas corpus does not destroy petitioners' right and cause of action for damages for illegal arrest and detention and other violations of their constitutional rights. The suspension does not render valid an otherwise illegal arrest or detention. What is suspended is merely the right of the individual to seek release from detention through the writ of habeas corpus as a speedy means of obtaining his liberty.

Moreover, as pointed out by petitioners, their right and cause of action for damages are explicitly recognized in P.D. No. 1755 which amended Article 1146 of the Civil Code by adding the following to its text:

However, when the action (for injury to the rights of the plaintiff or for a quasi-delict) arises from or out of any act, activity or conduct of any public officer involving the exercise of powers or authority arising from Martial Law including the arrest, detention and/or trial of the plaintiff, the same must be brought within one (1) year.

Petitioners have a point in contending that even assuming that the suspension of the privilege of the writ of habeas corpus suspends petitioners' right of action for damages for illegal arrest and detention, it does not and cannot suspend their rights and causes of action for injuries suffered because of respondents' confiscation of their private belongings, the violation of their right to remain silent and to counsel and their right to protection against unreasonable searches and seizures and against torture and other cruel and inhuman treatment.

However, we find it unnecessary to address the constitutional issue pressed upon us. On March 25, 1986, President Corazon C. Aquino issued Proclamation No. 2, revoking Proclamation Nos. 2045 and 2045-A and lifting the suspension of the privilege of the writ of habeas corpus. The question therefore has become moot and academic.

Page 155 of 173

This brings us to the crucial issue raised in this petition. May a superior officer under the notion of respondent superior be answerable for damages, jointly and severally with his subordinates, to the person whose constitutional rights and liberties have been violated?

Respondents contend that the doctrine of respondent superior is applicable to the case. We agree. The doctrine of respondent superior has been generally limited in its application to principal and agent or to master and servant (i.e. employer and employee) relationship. No such relationship exists between superior officers of the military and their subordinates.

Be that as it may, however, the decisive factor in this case, in our view, is the language of Article 32. The law speaks of an officer or employee or person 'directly' or "indirectly" responsible for the violation of the constitutional rights and liberties of another. Thus, it is not the actor alone (i.e. the one directly responsible) who must answer for damages under Article 32; the person indirectly responsible has also to answer for the damages or injury caused to the aggrieved party.

By this provision, the principle of accountability of public officials under the Constitution 5 acquires added meaning and asgilrnes a larger dimension. No longer may a superior official relax his vigilance or abdicate his duty to supervise his subordinates, secure in the thought that he does not have to answer for the transgressions committed by the latter against the constitutionally protected rights and liberties of the citizen. Part of the factors that propelled people power in February 1986 was the widely held perception that the government was callous or indifferent to, if not actually responsible for, the rampant violations of human rights. While it would certainly be go naive to expect that violators of human rights would easily be deterred by the prospect of facing damage suits, it should nonetheless be made clear in no ones terms that Article 32 of the Civil Code makes the persons who are directly, as well as indirectly, responsible for the transgression joint tortfeasors.

In the case at bar, the trial court dropped defendants General Fabian Ver, Col. Fidel Singson, Col. Rolando Abadilla, Col. Gerardo Lantoria, Jr., Col. Galileo Kintanar, Col. Panfilo Lacson, Capt. Danilo Pizarro, lst Lt. Pedro Tango, Lt. Romeo Ricardo and Lt. Ricardo Bacalso from the acts of their subordinates. Only Major Rodolfo Aguinaldo and Master Sgt. Bienvenido Balaba were kept as defendants on the ground that they alone 'have been specifically mentioned and Identified to have allegedly caused injuries on the persons of some of the plaintiff which acts of alleged physical violence constitute a delict or wrong that gave rise to a cause of action. But such finding is not supported by the record, nor is it in accord with law and jurisprudence.

Firstly, it is wrong to at the plaintiffs' action for damages 5 Section 1, Article 19. to 'acts of alleged physical violence" which constituted delict or wrong. Article 32 clearly specifies as actionable the act of violating or in any manner impeding or impairing any of the constitutional rights and liberties enumerated therein, among others —

1. Freedom from arbitrary arrest or illegal detention;

2. The right against deprivation of property without due process of law;

3. The right to be secure in one's person, house, papers and effects against unreasonable searches and seizures;

4. The privacy of communication and correspondence;

5. Freedom from being compelled to be a witness against one's self, or from being forced to confess guilt, or from being induced by a promise of immunity or reward to make a confession, except when the person confessing becomes a state witness.

The complaint in this litigation alleges facts showing with abundant clarity and details, how plaintiffs' constitutional rights and liberties mentioned in Article 32 of the Civil Code were violated and impaired by defendants. The complaint speaks of, among others, searches made without search warrants or based on irregularly issued or substantially defective warrants; seizures and confiscation, without proper receipts, of cash and personal effects belonging to plaintiffs and other items of property which were not subversive and illegal nor covered by the search warrants; arrest and detention of plaintiffs without warrant or under irregular, improper and illegal circumstances; detention of plaintiffs at several undisclosed places of 'safehouses" where they were kept incommunicado and subjected to physical and psychological torture and other inhuman, degrading and brutal treatment for the purpose of extracting incriminatory statements. The complaint contains a detailed recital of abuses perpetrated upon the plaintiffs violative of their constitutional rights.

Page 156 of 173

Secondly, neither can it be said that only those shown to have participated "directly" should be held liable. Article 32 of the Civil Code encompasses within the ambit of its provisions those directly, as well as indirectly, responsible for its violation.

The responsibility of the defendants, whether direct or indirect, is amply set forth in the complaint. It is well established in our law and jurisprudence that a motion to dismiss on the ground that the complaint states no cause of action must be based on what appears on the face of the complaint. 6 To determine the sufficiency of the cause of action, only the facts alleged in the complaint, and no others, should be considered. 7 For this purpose, the motion to dismiss must hypothetically admit the truth of the facts alleged in the complaint. 8

Applying this test, it is difficult to justify the trial court's ruling, dismissing for lack of cause of action the complaint against all the defendants, except Major Rodolfo Aguinaldo and Master Sgt. Bienvenido Balaba. The complaint contained allegations against all the defendants which, if admitted hypothetically, would be sufficient to establish a cause or causes of action against all of them under Article 32 of the Civil Code.

This brings us to the last issue. Was the trial court correct in dismissing the complaint with respect to plaintiffs Rogelio Aberca, Danilo de la Puente, Marco Palo, Alan Jazminez, Alex Marcelino, Elizabeth Protacio-Marcelino, Alfredo Mansos and Rolando Salutin, on the basis of the alleged failure of said plaintiffs to file a motion for reconsideration of the court's resolution of November 8, 1983, granting the respondent's motion to dismiss?

It is undisputed that a timely motion to set aside said order of November 8, 1983 was filed by 'plaintiffs, through counsel. True, the motion was signed only by Atty. Joker P. Arroyo, counsel for Benjamin Sesgulido; Atty. Antonio Rosales, counsel for Edwin Lopez and Manuel Martin Guzman; Atty. Pedro B. Ella, Jr., counsel for Nestor Bodino and Carlos Palma; Atty. Arno V. Sanidad, counsel for Arturo Tabara; Atty. Felicitas S. Aquino, counsel for Joseph Olayer; and Atty. Alexander Padilla, counsel for Rodolfo Benosa.

But the body of the motion itself clearly indicated that the motion was filed on behalf of all the plaintiffs. And this must have been also the understanding of defendants' counsel himself for when he filed his comment on the motion, he furnished copies thereof, not just to the lawyers who signed the motion, but to all the lawyers of plaintiffs, to wit: Attys. Jose Diokno, Procopio Beltran, Rene Sarmiento, Efren Mercado, Augusto Sanchez, Antonio Rosales, Pedro Efla Jr., Arno Sanidad, Alexander Padilla, Joker Arroyo, Rene Saguisag, Ramon Esguerra and Felicitas S. Aquino.

In filing the motion to set aside the resolution of November 8, 1983, the signing attorneys did so on behalf of all the plaintiff. They needed no specific authority to do that. The authority of an attorney to appear for and in behalf of a party can be assumed, unless questioned or challenged by the adverse party or the party concerned, which was never done in this case. Thus, it was grave abuse on the part of respondent judge to take it upon himself to rule that the motion to set aside the order of November 8, 1953 dismissing the complaint was filed only by some of the plaintiffs, when by its very language it was clearly intended to be filed by and for the benefit of all of them. It is obvious that the respondent judge took umbrage under a contrived technicality to declare that the dismissal of the complaint had already become final with respect to some of the plaintiffs whose lawyers did not sign the motion for reconsideration. Such action tainted with legal infirmity cannot be sanctioned.

Accordingly, we grant the petition and annul and set aside the resolution of the respondent court, dated November 8, 1983, its order dated May 11, 1984 and its resolution dated September 21, 1984. Let the case be remanded to the respondent court for further proceedings. With costs against private respondents.

SO ORDERED.

Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes and Griño-Aquino, JJ., concur.

Gutierrez, Jr., J., concur in the result.

Padilla, J., took no part.

 

Page 157 of 173

 

 

Separate Opinions

 

TEEHANKEE, C.J., concurring:

The Court's judgment at bar makes clear that all persons, be they public officers or employees, or members of the military or police force or private individuals who directly or indirectly obstruct, defeat, violate or in any manner impede or impair the constitutional rights and civil liberties of another person, stand liable and may be sued in court for damages as provided in Art. 32 of the Civil Code.

The case at bar specifically upholds and reinstates the civil action for damages filed in the court below by petitioners-plaintiffs for illegal searches conducted by military personnel and other violations of their constitutional rights and liberties. At the same time it rejects the automatic application of the principle of respondeat superior or command responsibility that would hold a superior officer jointly and severally accountable for damages, including moral and exemplary, with his subordinates who committed such transgressions. However, the judgment gives the caveat that a superior officer must not abdicate his duty to properly supervise his subordinates for he runs the risk of being held responsible for gross negligence and of being held under the cited provision of the Civil Code as indirectly and solidarily accountable with the tortfeasor.

The rationale for this rule of law was best expressed by Brandeis in wise: "In a government of laws, existence of the government be imperilled following it fails to observe the law scrupulously. Our government is the potent omnipresent teacher. For good or ill, it teaches the whole people by example. Crime is contagious. If the government becomes the law breaker, it breeds contempt for the law, it invites every man to become a law unto himself, it invites anarchy. To declare that in the administration of criminal law the end justifies the means ... would bring terrible retribution." 1

As the writer stress in Hildawa vs. Enrile 2 Which Was an action to enjoin the operations of the dreaded secret marshals during the past regime, 'In a democratic state, you don't stoop to the level of criminals. If we stoop to what they do, then we're no better than they ... there would be no difference. ... The Supreme Court stands as the guarantor of the Constitutional and human rights of all persons within its jurisdiction and cannot abdicate its basic role under the Constitution that these rights be respected and enforced. The spirit and letter of the Constitution negates as contrary to the basic precepts of human rights and freedom that a person's life be snuffed out without due process in a split second even if he is caught in flagrante delicto — unless it was caned for as an act of self-defense by the law agents using reasonable means to prevent or repel an unlawful aggression on the part of the deceased.

Needless to say, the criminal acts of the "Sparrow Units" or death squads of the NPA which have infutrated the cities and suburbs and performed their despicable killings of innocent civilians and military and police officers constitute an equally perverse violation of the sanctity of human life and must be severely condemned by all who adhere tothe Rule of the Law.

It need only be pointed out that one of the first acts of the present government under President Corazon C. Aquino after her assumption of office in February, 1986 was to file our government's ratification and access to all human rights instruments adopted under the auspices of the United Nations, declaring thereby the government's commitment to observe the precepts of the United Nations Charter and the Universal Declaration of Human Rights. More than this, pursuant to our Constitution which the people decisively ratified on February 2, 1987, the independent office of the Commission on Human Rights hats been created and organized with ample powers to investigate human rights violations and take remedial measures against all such violations by the military as well as by the civilian groups.

 

 

Separate Opinions

Page 158 of 173

TEEHANKEE, C.J., concurring:

The Court's judgment at bar makes clear that all persons, be they public officers or employees, or members of the military or police force or private individuals who directly or indirectly obstruct, defeat, violate or in any manner impede or impair the constitutional rights and civil liberties of another person, stand liable and may be sued in court for damages as provided in Art. 32 of the Civil Code.

The case at bar specifically upholds and reinstates the civil action for damages filed in the court below by petitioners-plaintiffs for illegal searches conducted by military personnel and other violations of their constitutional rights and liberties. At the same time it rejects the automatic application of the principle of respondeat superior or command responsibility that would hold a superior officer jointly and severally accountable for damages, including moral and exemplary, with his subordinates who committed such transgressions. However, the judgment gives the caveat that a superior officer must not abdicate his duty to properly supervise his subordinates for he runs the risk of being held responsible for gross negligence and of being held under the cited provision of the Civil Code as indirectly and solidarily accountable with the tortfeasor.

The rationale for this rule of law was best expressed by Brandeis in wise: "In a government of laws, existence of the government be imperilled following it fails to observe the law scrupulously. Our government is the potent omnipresent teacher. For good or ill, it teaches the whole people by example. Crime is contagious. If the government becomes the law breaker, it breeds contempt for the law, it invites every man to become a law unto himself, it invites anarchy. To declare that in the administration of criminal law the end justifies the means ... would bring terrible retribution." 1

As the writer stress in Hildawa vs. Enrile 2 Which Was an action to enjoin the operations of the dreaded secret marshals during the past regime, 'In a democratic state, you don't stoop to the level of criminals. If we stoop to what they do, then we're no better than they ... there would be no difference. ... The Supreme Court stands as the guarantor of the Constitutional and human rights of all persons within its jurisdiction and cannot abdicate its basic role under the Constitution that these rights be respected and enforced. The spirit and letter of the Constitution negates as contrary to the basic precepts of human rights and freedom that a person's life be snuffed out without due process in a split second even if he is caught in flagrante delicto — unless it was caned for as an act of self-defense by the law agents using reasonable means to prevent or repel an unlawful aggression on the part of the deceased.

Needless to say, the criminal acts of the "Sparrow Units" or death squads of the NPA which have infutrated the cities and suburbs and performed their despicable killings of innocent civilians and military and police officers constitute an equally perverse violation of the sanctity of human life and must be severely condemned by all who adhere tothe Rule of the Law.

It need only be pointed out that one of the first acts of the present government under President Corazon C. Aquino after her assumption of office in February, 1986 was to file our government's ratification and access to all human rights instruments adopted under the auspices of the United Nations, declaring thereby the government's commitment to observe the precepts of the United Nations Charter and the Universal Declaration of Human Rights. More than this, pursuant to our Constitution which the people decisively ratified on February 2, 1987, the independent office of the Commission on Human Rights hats been created and organized with ample powers to investigate human rights violations and take remedial measures against all such violations by the military as well as by the civilian groups.

 

Footnotes1 The Presiding Judge of Branch 95, Judge Esteban M. Lising was allowed to go on leave, per resolution of the Supreme Court on October 18, 1983, and Judge Willelmo C. Fortun was authorized to take cognizance of all kinds of cases of Branch 95 during the former's absence.2 Joseph Charmont French Legal Philosophy, Mcmillan Co., New York, 1921, pp. 72-73.3 Rollo, pp. 240-241; 244,4 16 Phil. 534, 578.5 Section 1, Article XI.6 Azur v. Provincial Board, 27 SCRA 50, 57; Garcon v. Redemptorist tourist Fathers, 17 SCRA 341.

Page 159 of 173

7 Adamos v. J. M. Tuazon, 25 SCRA 529; Socorro v. Vargas, 25 SCRA 592, 596; La Suerte Cigar & Cigarette Factory vs. Central Azuearera de Davao, 23 SCRA 686, 690.8 Garcon vs. Redemptorist Fathers, supra; PNB vs. Hipolito, 13 SCRA 20.Teehankee, J., concurring:1 Olmstead vs, U.S. 277 U.S. 438; dissenting opinion. _2 138 SCRA 146, 161.

Page 160 of 173

FIRST DIVISION

G.R. No. 89306 September 13, 1990

MARCELO JERVOSO and NORMA CLOSA, petitioners, vs.PEOPLE OF THE PHILIPPINES & HON. COURT OF APPEALS, respondents.

Manuel M. Benedicto for petitioners.

The Solicitor General for respondents.

 

GRIÑO-AQUINO, J.:

In this petition for review, the petitioners assail the decision of the Court of Appeals affirming with modification of the penalty only, the decision of the trial court which convicted petitioner Marcelo Jervoso of homicide for the fatal stabbing of Rogelio Jervoso, but which appreciated in his favor the mitigating circumstance of voluntary surrender. The trial court and the Court of Appeals also convicted his wife, Norma Closa, of slight physical injuries committed against the deceased.

The Court of Appeals set forth in its decision the conflicting versions of the prosecution and the defense as to how the crime was committed, thus:

The facts as summarized in the People's brief as borne out by the evidence and WE quote, [are] as follows:

The evidence for the prosecution showed that on October 24, 1982, at about 2:20 o'clock in the afternoon, prosecution eyewitness Felicisimo Pamaus a childhood friend of appellant spouses Marcelo Jervoso and Norma Closa as well as of the victim, Rogelio Jervoso, was in the poblacion of MacArthur, Leyte going towards the store of appellants for the purpose of buying bread. While said eyewitness was about four meters distance from the store, he saw the victim, Rogelio Jervoso, walking back and forth in front of said store and appellant Marcelo Jervoso was also present thereat. It was while Rogelio, who was still walking back and forth, had his back turned away from Marcelo when the latter, in the presence of his spouse and co-appellant Norma Closa, pulled from his waist a short bolo or 'pisao' measuring about 7-1/2 inches in length (Exh. 'D') and stabbed Rogelio at the back with said weapon (pp. 2-6, tsn, March 16, 1984).

After being wounded, Rogelio ran away but was chased by Marcelo who was still holding the 'pisao' with his right hand and was closely being followed by his wife and co-appellant, Norma Closa, across the national highway and inside the hollow blockfenced yard of a certain Mrs. Olmedo. Catching up with Rogelio inside the fenced yard of Mrs. Olmedo where Rogelio had already fallen face downward upon entering the same, Marcelo stabbed Rogelio again at the back of the latter with the 'pisao.' Meanwhile, Norma Closa, who had picked up a stone measuring about 8 inches in length and 3-3/4 inches in width (Exh. 'E') struck the fallen Rogelio with said stone held by both her hands, hitting the latter on the left side of the face near the ear (pp. 5-8, 20, 21, 23, 24, tsn, March 16, 1984).

Another eyewitness who was present and who saw the incident in question from its inception up to the time of its termination and who in fact tried to pacify Marcelo and Rogelio was Eleno Requioma. After Marcelo inflicted on Rogelio the second stab wound at the back and Norma Closa hit the latter with a stone (Exh. 'E') on the left side of the face near the ear and appellants went back to their house, it was Requioma, together with Dominador Moquia and Rolando Molero, who brought the victim to the Abuyog General Hospital where he later expired (pp- 5, 25, 26, 28, tsn, March 16, 1984). Requioma, however, failed to testify for the prosecution as he died during the pendency of trial of the case (p. 6, decision, p. 229, record).

Page 161 of 173

The defense' evidence was briefly stated in the appellant's brief which WE also quote, as follows:

At the trial of this case, principal accused MARCELO JERVOSO declared that on October 24, 1982 at about 2:00 o'clock in the afternoon he was in his office situated in front of his main house which is also near his store, making list of goods to be purchased in Tacloban City for his store; that his wife Norma Closa was inside their house bathing their children preparatory to their taking their afternoon nap that Rogelio Jervoso, son of the brother of his adoptive father, entered his office without knocking, and arrogantly asked him why he was possessing the lands of Domingo Jervoso when he is not the real son and he is not also a legally adopted son; that Rogelio Jervoso was drunk at the time, demanded that an accounting of all the produce of the coconuts and palay of Domingo Jervoso's lands; that he told Rogelio to come back the next day so both of them would go and see his adoptive mother Afra Diaz who can enlighten him (Rogelio) about the matter.

Seeing Rogelio already belligerent, Marcelo went outside his office. While he was already outside and about a meter from his store, he saw Ramon Taro and heard him shout: 'Boy, don't do that! Boy' is the nickname of Rogelio Jervoso. Upon hearing Ramon Taro shout, Marcelo looked back just as Rogelio delivered a stabbing blow on him, hitting him on the left back part of Ms upper arm, with a 'pisao'(Exhibit 'D')

After the first stab blow delivered by Rogelio, he (Marcelo) ran across the National Highway towards the gate of the house of Mrs. Olmedo. Marcelo was able to enter the front yard of Mrs. Olmedo's premises and he tried to escape, but Rogelio intercepted him by passing the other way. Marcelo ran toward the corner but was met by Rogelio, so he tried to retrace his steps to the gate, but when he was about to go out of the gate, Rogelio lunged at him and delivered another stabbing blow but he was able to get hold of the right wrist of Rogelio's hand holding the deadly weapon. Meanwhile, Rogelio's left arm was choking his check (sic) and pushing him towards the concrete fence of Mrs. Olmedo.

So, he struggled to get hold of the 'pisao' and was able to wrest it from the hold of Rogelio by twisting Rogelio's right hand, but Rogelio was still holding his neck pinned in his left arm against the concrete fence. To defend himself, Marcelo, delivered two stabbing blows at the back of Rogelio the first blow, with a downward stroke on his right back portion and the second by an upward stroke on his left back portion.

After stabbing the victim, Rogelio, he pushed Rogelio who fell to the ground on his left side, he ran towards the gate of Mrs. Olmedo's premises and on his way out he saw Ramon Taro and called him instructing him to fetch a policeman.' (pp. 31-34, Rollo.)

The Court of Appeals affirmed the trial court's finding that the plea of self-defense was not proven by clear and convincing evidence:

Regrettably missing in the appellants' evidence are the elements of self-defense which are: (1) unlawful aggression; (2) reasonable necessity of the means employed to prevent and repel it; and (3) lack of sufficient provocation on the part of the person defending himself. The defense failed to demonstrate the concurrence of the three essential elements with satisfactory evidence so as to entitle the appellant of the defense of self-defense.

WE are entirely in accord with the trial court that the affirmative defense of self-defense was not proven by clear and convincing evidence. The evidence is doubtful, and lacks that requisite of certainty and sufficient credulity to sustain the plea of self-defense.

Suffice it to say that the trial court did not err in finding that the guilt of both appellant was proven with proof beyond reasonable doubt. (p. 36, Rollo.)

The dispositive part of its decision reads:

Page 162 of 173

WHEREFORE, the appealed judgment is hereby MODIFIED in the sense that the penalty to be imposed on appellant Marcelo Jervoso, should be an imprisonment of six (6) years and one (1) day of prision mayor as minimum to twelve (12) years of prision mayor as maximum, and to indemnify the heirs of the deceased Rogelio Jervoso in the amount of P30,000.00, Philippine Currency.

In all other respects, the appealed judgment is hereby affirmed. Costs against both appellants. (p. 37, Rollo.)

In their petition for review, the petitioners allege that the Court of Appeals erred:

(1) in ordering them (petitioners) to pay indemnity of P30,000 to the heirs of Rogelio Jervoso despite the reservation by said heirs of their right to file a separate civil action against the accused, which they did file in the Regional Trial Court of Manila, Branch XXXI where it was docketed as Civil Case No. 83-18958 entitled, "Digna Carino-Jervoso, et al. vs. Marcelo Jervoso and Norma Closa; and

(2) in finding the petitioners guilty of the crimes charged without support of competent evidence and contrary to applicable laws and decisions of this Court.

The first assignment of error is meritorious. Section 1, Rule 111 of the Rules of Court provides:

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

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

A waiver of any of the civil actions extinguishes the others. The institution of, or the reservation of the right to file, any of the said civil actions separately waives the others.

The reservation of the right to institute the separate civil actions shall be made before the prosecution starts to present its evidence and under circumstances affording the offended party a reasonable opportunity to make such reservation.

In no case may the offended party recover damages twice for the same act or omission of the accused.

xxx xxx xxx

The filing of a separate civil action for damages against the accused by the heirs of the deceased victim is authorized under Article 33 of the Civil Code which provides:

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

The term "physical injuries" in Art. 33 is used in a generic sense. It includes consummated, frustrated, or attempted homicide (Madeja vs. Cruz, 126 SCRA 293, cited in Vol. I, p. 62 Civil Code, 1990 Ed., by R.C. Aquino). Having reserved and filed in the Regional Trial Court of Manila a separate civil action to recover the civil liability of the accused arising from the crimes charged, the heirs of the deceased Rogelio Jervoso, are precluded from recovering damages in the criminal case against the accused, for they are not entitled to recover damages twice for the same criminal act of the accused. The trial court erred in awarding to the heirs of Rogelio Jervoso in the criminal case P30,000 as civil indemnity for his death despite their reservation to file a separate civil action for that purpose. The Court of Appeals likewise erred in affirming the award.

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The second assignment of error raises a purely factual issue: whether the evidence is sufficient to convict the accused of homicide. That issue may not be reviewed by this Court in an appeal by certiorari under Rule 45 of the Rules of Court, where only legal issues may be raised.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. CR No. 04472 entitled, "People of the Philippines, plaintiff-appellee vs. Marcelo Jervoso and Norma Closa, defendants-appellants" is affirmed, except the award of P30,000 as indemnity for damages to the heirs of Rogelio Jervoso, which should be deleted. No costs.

SO ORDERED.

Narvasa (Chairman), Cruz, Gancayco and Medialdea, JJ., concur.

JERVOSO VS PEOPLE Case Digest G.R. No. 89306. September 13, 1990Topic: Criminal Procedure, Rule 111, Rules of CourtFACTS:In this petition for review, the petitioners assail the decision of the Court of Appeals affirming with modification of the penalty only, the decision of the trial court which convicted petitioner Marcelo Jervoso of homicide for the fatal stabbing of Rogelio Jervoso, but which appreciated in his favor the mitigating circumstance of voluntary surrender. The trial court and the Court of Appeals also convicted his wife, Norma Closa, of slight physical injuries committed against the deceased.Petitioner’s contention: The Court of Appeals erred in ordering them (petitioners) to pay indemnity of P30,000 to the heirs of Rogelio Jervoso despite the reservation by said heirs of their right to file a separate civil action against the accused, which they did file in the RTC. "ISSUE/HELD: WON the filing of separate civil action precludes the offended party from recovering damages in the criminal case against the accused. AFFIRMATIVERATIO DICIDENDI:The filing of a separate civil action for damages against the accused by the heirs of the deceased victim is authorized under Article 33 of the Civil Code.The term "physical injuries" in Art. 33 is used in a generic sense. It includes consummated, frustrated, or attempted homicide (Madeja vs. Cruz) Having reserved and filed in the Regional Trial Court of Manila a separate civil action to recover the civil liability of the accused arising from the crimes charged, the heirs of the deceased Rogelio Jervoso, are precluded from recovering damages in the criminal case against the accused, for they are not entitled to recover damages twice for the same criminal act of the accused. The trial court erred in awarding to the heirs of Rogelio Jervoso in the criminal case P30,000 as civil indemnity for his death despite their reservation to file a separate civil action for that purpose. The Court of Appeals likewise erred in affirming the award.The second assignment of error raises a purely factual issue: whether the evidence is sufficient to convict the accused of homicide. That issue may not be reviewed by this Court in an appeal by certiorari under Rule 45 of the Rules of Court, where only legal issues may be raised.

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EN BANC

G.R. No. L-22677             February 28, 1967

PEDRO III FORTICH-CELDRAN, JESUS, MANUEL, MIGUEL and VICENTE, all surnamed FORTICH-CELDRAN;SANTIAGO CATANE and ABELARDO CECILIO, petitioners, vs.IGNACIO A. CELDRAN and HON. COURT OF APPEALS, respondents.

San Juan, Africa & Benedicto and Eduardo B. Sinense for petitioners.Casiano U. Laput for respondents.

BENGZON, J.P., J.:

A suit for annulment of an extrajudicial partition of properties and for accounting was filed on February 3, 1954 in the Court of First Instance of Cebu (Civil Case No. 3397-R).

Appearing therein as plaintiffs were: Jose, Francisco, Pedro, Jr., Ignacio, all surnamed Abuton-Celdran (children of the deceased Pedro Celdran by the first nuptial) and, as the administratrix of Francisco Celdran (another brother), Modesta Rodriguez. Defendants were: Pablo Celdran (child of the deceased by the first marriage who refused to join as plaintiff), Josefa Vda. de Celdran (spouse of the deceased by the second marriage), Manuel, Antonio, Pedro III, Jesus, Vicente and Miguel, all surnamed Fortich Celdran (children of the deceased by the second nuptial.

After the defendants answered on May 28, 1954, a motion to withdraw as co-plaintiff was filed on May 24, 1957. It was signed "Ignacio Celdran. This motion has been marked as Exhibit B-Josefa. 1äwphï1.ñët

Subsequently, with leave of court, the plaintiffs (excluding Ignacio) filed an amended complaint impleading Ignacio Celdran as defendant. Ignacio Celdran filed an answer with counterclaim and cross-claim.

After trial but before judgment, Ignacio Celdran had the document Exh. B-Josefa (the motion to withdraw) examined by the Police Department of Cebu City. The police were of the view that the same (signature therein) was falsified. Alleging newly discovered evidence, Ignacio Celdran asked for new trial, which the court denied.

All the parties, except Ignacio Celdran, thereafter entered on May 6, 1959 into an amicable settlement, recognizing as valid the aforementioned extrajudicial partition. Regarding Ignacio Celdran, the court rendered judgment on July 19, 1961, declaring the same extrajudicial partition as valid for having been ratified by him (Ignacio). Specifically, the court found among other things that Ignacio signed the motion to withdraw (Exh. B-Josefa) after he received P10,000 of the agreed P20,000 and two residential lots to be given to him in return for his aforesaid ratification of the partition.

Said decision was later amended to require Pedro III, Antonio, Jesus, Miguel and Vicente, all surnamed Fortich-Celdran, to pay Ignacio the balance of P20,000 aforestated and to deliver to him the promised two parcels of land.

Ignacio Celdran appealed therefrom to the Court of Appeals. And said appeal was docketed as CA-G.R. No. 30499-R, shown in the record before Us as still pending.

Now on March 22, 1963, at the instance of Ignacio Celdran, an information for falsification of a public document — that is, Exh. B-Josefa or the abovementioned motion to withdraw in the civil case — was filed by the City Fiscal of Ozamis in the Court of First Instance of Misamis Occidental. Accused therein were: Pedro III, Antonio, Manuel, Vicente, Miguel, and Jesus, all surnamed Celdran (defendants in the civil case); Santiago Catane, as subscribing officer; Abelardo Cecilio, as the person who filed the motion.

As private complainant, however, Ignacio Celdran on December 12, 1962, moved before trial to suspend the proceedings in the criminal case on the ground of prejudicial question. The reason

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given in support thereof was that the alleged falsification of the same document is at issue in the civil case pending in the Court of Appeals.

Declaring that there was no pre-judicial question, the Court of First Instance of Misamis Occidental denied on January 28, 1963 the motion to suspend the prosecution. It ruled that the alleged forgery was not an issue in the civil case.

Assailing the above ruling, Ignacio Celdran filed in the Court of Appeals on February 21, 1963, a petition for certiorari with preliminary injunction (CA-G.R. No. 31909-R) to enjoin the CFI of Misamis Occidental and the City Fiscal of Ozamis from proceeding with the prosecution of the criminal case.

On February 18, 1964 the Court of Appeals decided said petition for certiorari, ordering the suspension of the criminal case due to pre-judicial question.

Pedro III, Jesus, Manuel, Miguel and Vicente, all surnamed Fortich-Celdran; Santiago Catane and Abelardo Cecilio — accused in the criminal suit and respondents in the petition for certiorari — appealed to Us from the decision of the Court of Appeals dated February 18, 1964.

Appellants would contend that there is no pre-judicial question involved. The record shows that, as aforestated, the Court of First Instance ruled that Ignacio Celdran ratified the partition agreement; among the reasons cited by the trial court for said ruling is that Ignacio Celdran received P10,000 and signed the motion to withdraw as plaintiff in the suit. Disputing this, Celdran assigned as error in his appeal the finding that he signed the aforementioned motion (Exh. B-Josefa) and maintains that the same is a forgery. Since ratification is principal issue in the civil action pending appeal in the Court of Appeals, and the falsification or genuineness of the motion to withdraw — presented and marked as evidence in said civil case — is among the questions involved in said issue, it follows that the civil action poses a pre-judicial question to the criminal prosecution for alleged falsification of the same document, the motion to withdraw (Exh. B-Josefa).

Presented as evidence of ratification in the civil action is the motion to withdraw; its authenticity is assailed in the same civil action. The resolution of this point in the civil case will in a sense be determinative of the guilt or innocence of the accused in the criminal suit pending in another tribunal. As such, it is a prejudicial question which should first be decided before the prosecution can proceed in the criminal case.

A pre-judicial question is one that arises in a case, the resolution of which is a logical antecedent to the issue involved therein, and the cognizance of which pertains to another tribunal; that is, it is determinative of the case before the court and jurisdiction to pass upon the same is lodged in another tribunal.1

It should be mentioned here also that an administrative case filed in this Court against Santiago Catane upon the same charge was held by Us in abeyance, thus:

As it appears that the genuineness of the document allegedly forged by respondent attorneys in Administrative Case No. 77 (Richard Ignacio Celdran vs. Santiago Catane, etc., et al.) is necessarily involved in Civil Case No. R-3397 of the Cebu Court of First Instance, action on the herein complaint is withheld until that litigation has finally been decided. Complainant Celdran shall inform the Court about such decision. (Supreme Court minute resolution of April 27, 1962 in Adm. Case No. 77, Richard Ignacio Celdran vs. Santiago Catane, etc., et al.) .

Regarding the procedural question on Ignacio Celdran's right as private offended party to file through counsel a motion to suspend the criminal case, the same exists where, as herein, the Fiscal, who had direction and control of the prosecution, did not object to the filing of said motion. And its filing in this case complied with Sec. 5 of Rule 111 of the Rules of Court which provides:

SEC. 5. Suspension by reason of prejudicial question. — A petition for the suspension of the criminal action based upon the pendency of a pre-judicial question in a civil case, may only be presented by any party before or during the trial of the criminal action.

Denial of the motion to suspend the prosecution was therefore attended with grave abuse of discretion; and the issue having been squarely and definitely presented before the trial court, a motion for reconsideration, which would but raise the same points, was not necessary. Neither was

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appeal the remedy available, since the order denying suspension is interlocutory and thus not yet appealable.

Wherefore, the decision of the Court of Appeals under review — ordering suspension of Criminal CASE No. 5719,People vs. Pedro Fortich-Celdran, et al., pending before the Court of First Instance of Misamis Occidental, until after Civil Case, CA-G.R. No. 30499-R, Pedro A. Celdran, et al. vs. Pedro Fortich-Celdran III, et al., shall have been decided — is hereby affirmed, with costs against appellant. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur.

Footnotes

1People vs. Aragon, 94 Phil. 357; Merced vs. Diaz, L-15315, Aug. 26, 1960; Mendiola vs. Macadaeg, L-16874, Feb. 27, 1961; Zapanta vs. Montesa, L-14534, Feb. 28, 1962.

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Page 168 of 173

EN BANC

G.R. No. L-14534             February 28, 1962

MERARDO L. ZAPANTA, petitioner, vs.THE HON. AGUSTIN P. MONTESA, ETC., ET AL., respondents.

Pedro M. Santos and Jorge C. Salonga for petitioner.Office of the Solicitor General, Romulo L. Chua and Dewey G. Soriano for respondents.

DIZON, J.:

This is a petition for prohibition filed by Merardo L. Zapanta against the Hon. Agustin P. Montesa, Judge of the Court of First Instance of Bulacan, Fernando A. Cruz, Provincial Fiscal of Bulacan, and Olimpia A. Yco, to enjoin the former from proceeding with the trial of Criminal Case No. 3405 pending the final determination of Civil Case No. 1446 of the Court of First Instance of Pampanga.

Upon complaint filed by respondent Olimpia A. Yco on May 20, 1958, an information for Bigamy was filed by respondent Provincial Fiscal against petitioner in the Court of First Instance of Bulacan (Criminal Case No. 3405), alleging that the latter, having previously married one Estrella Guarin, and without said marriage having been dissolved, contracted a second marriage with said complainant.

On June 16, 1958, petitioner filed in the Court of First Instance of Pampanga Civil Case No. 1446 against respondent Olimpia A. Yco for the annulment of their marriage on the ground of duress, force and intimidation. On the 30th of the same month respondent Yco, as defendant in said case, filed a motion to dismiss the complaint upon the ground that it stated no cause of action, but the same was denied on July 7 of the same year. 1äwphï1.ñët

On September 2, 1958, petitioner, in turn, filed a motion in Criminal Case No. 3405 to suspend proceedings therein, on the ground that the determination of the issue involved in Civil Case No. 1446 of the Court of First Instance of Pampanga was a prejudicial question. Respondent judge denied the motion on September 20, 1958 as well as petitioner's motion for reconsideration, and ordered his arraignment. After entering a plea of not guilty, petitioner filed the present action.

We have heretofore defined a prejudicial question as that which arises in a case, the resolution of which is a logical antecedent of the issue involved therein, and the cognizance of which pertains to another tribunal (People vs. Aragon, G.R. No. L-5930, February 17, 1954). The prejudicial question — we further said — must be determinative of the case before the court, and jurisdiction to try the same must be lodged in another court (People vs. Aragon, supra). These requisites are present in the case at bar. Should the question for annulment of the second marriage pending in the Court of First Instance of Pampanga prosper on the ground that, according to the evidence, petitioner's consent thereto was obtained by means of duress, force and intimidation, it is obvious that his act was involuntary and can not be the basis of his conviction for the crime of bigamy with which he was charged in the Court of First Instance of Bulacan. Thus, the issue involved in the action for the annulment of the second marriage is determinative of petitioner's guilt or innocence of the crime of bigamy. On the other hand, there can be no question that the annulment of petitioner's marriage with respondent Yco on the grounds relied upon in the complaint filed in the Court of First Instance of Pampanga is within the jurisdiction of said court.

In the Aragon case already mentioned (supra) we held that if the defendant in a case for bigamy claims that the first marriage is void and the right to decide such validity is vested in another court, the civil action for annulment must first be decided before the action for bigamy can proceed. There is no reason not to apply the same rule when the contention of the accused is that the second marriage is void on the ground that he entered into it because of duress, force and intimidation.

WHEREFORE, the writ prayed for in the petition is hereby granted. Without costs.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes and De Leon, JJ., concur.

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Zapanta v montesaMay 1958: Olimpia Yco filed in CFI of Bulacan crim case of Bigamy against Zapanta, as he contracted marriagewith her when he was still validly married to a certain Estrella Guarin.

June 1958: Zapanta filed in CFI of Pampanga a civil case against Yco, for the annulment of their marriage on theground of duress, force and intimidation. Yco filed motion to dismiss but denied.

Sept 1958: Zapanta filed motion in crim case of Bigamy to suspend proceedings therein on the ground that thedetermination of the issue involved in civil case was a prejudicial question. Mtion denied, and Mtion for Recondenied.

After pleading not guilty in crim case, filed this action in SC.Issue: WON crim case should be suspended / WON there was a prejudicial question.Held: Yes

If there arises an issue/question in a case, the resolution of which is a logical antecedent of the issue involvedtherein, and the cognizance of which pertains to another tribunal, then there is a prejudicial question.

There is a prejudicial question in the case at bar. As seen in the rule, a prejudicial question has two elements:(1)question must be determinative of the case before the court and (2) jurisdiction to try the same must belodged in another court. Here, determination of force will prove that his act of contracting a second marriagewhile there was a subsisting one was involuntary. On the second element, the annulment case was filed inPampanga.Writ prayed for granted.

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EN BANC

G.R. No. L-10016             February 28, 1957

THE PEOPLE OF THE PHILIPPINES, plaintiff-appelle, vs.PROCESO S. ARAGON, defendant-appellant.

Office of the Solicitor General Ambrosio Padilla and Solicitor Adolfo Brillantes for appellee.Prospero V. Manuel, Fernando Moncada and Antonio Abad Tornis for defendant and appellant.

LABRADOR, J.:

Appeal from a judgment of the Court of First Instance of Cebu finding appellant guilty of bigamy. The facts are not disputed and, as found by the trial court, are as follows:

On September 28, 1925, the accused, under the name of Proceso Rosima, contracted marriage with a certain Maria Gorrea in the Philippine Independent Church in Cebu (Exhibits "1" and "1-A"). While his marriage with Maria Gorrea was subsisting, the accused under the name of Proceso Aragon, contracted a canonical marriage with Maria Faicol on August 27, 1934, in the Santa Teresita Church in Iloilo City.

The sponsors of the accused and Maria Faicol were Eulogio Giroy, who was then an employee of the Office of the Municipal Treasurer of Iloilo, and a certain Emilio Tomesa, a clerk in the said office (Exhibit "A" and testimonies of Eulogio Giroy and complainant Maria Faicol). After the said marriage, the accused and Maria Faicol established residence in Iloilo. As the accused was then a traveling salesman, he commuted between Iloilo where he maintained Maria Faicol, and Cebu where he maintained his first wife, Maria Gorrea died in Cebu City on August 5, 1939 (Exhibit "2"). After Maria Gorrea's death, and seeing that the coast was dear in Cebu, the accused brought Maria Faicol to Cebu City in 1940, where she worked as a teacher-nurse.

It would seem that the accused and Maria Faicol did not live a happy marital life in Cebu, for it appears that in 1949 and 1950, Maria Faicol suffered injuries to her eyes because of physical maltreatment in the hands of the accused. On January 22, 1953, the accused sent Maria Faicol to Iloilo, allegedly for the purpose of undergoing treatment of her eyesight. During her absence, the accused contracted a third marriage with a certain Jesusa C. Maglasang on October 3, 1953, in Sibonga, Cebu. (See Exhibits "C", "D", "E" and "F")

The accused admitted having contracted marriage with Jesusa C. Maglasangin Sibonga, Cebu, on October 3, 1953, Although the accused made an attempt to deny his previous marriage with Maria Faicol, the Court, however, believes that the attempt is futile for the fact of the said second marriage was fully established not only by the certificate of the said marriage, but also by the testimony of Maria Faicol and of Eulogio Giroy, one of the sponsors of the wedding, and the identification of the accused made by Maria Faicol. (See Exhibits "A" and "B"; t.s.n. pp. 32-33, 40, 41, hearing of April 27, 1954).

The Court of First Instance of Cebu held that even in the absence of an express provision in Act No. 3613 authorizing the filing of an action for judicial declaration of nullity of a marriage void ab initio, defendant could not legally contract marriage with Jesusa C. Maglasang without the dissolution of his marriage to Maria Faicol, either by the death of the latter or by the judicial declaration of the nullity of such marriage, at the instance of the latter. Authorities given for this ruling are 5 Viada, 5th edition, 651; 35 American Jurisprudence, Marriage, Sec. 46, p. 212; Bickford vs. Bickford, 74 N. H. 466, 69 A. 579.

Appellant in this Court relies on the case of People vs. Mendoza, (95 Phil., 845; 50 Off. Gaz., [10] 4767). In this case the majority of this Court declared:

The statutory provision (section 29 of the Marriage Law or Act No. 3613) plainly makes a subsequent marriage contracted by any person during the lifetime of his first spouse illegal and void from its performance, and no judicial decree is necessary to establish its invalidity, as distinguished from mere annullable marriages. There is here no pretense that appellant's

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second marriage with Olga Lema was contracted in the belief that the first spouse, Jovita de Asis, had been absent for seven consecutive years or generally considered as dead, so as to render said marriage valid until declared null and void by a subsequent court.

We are of the very weighty reasons by Justice Alex Reyes in the dissent in the case above-quoted But this weighty reasons notwithstanding, the very fundamental principle of strict construction of penal laws in favor of the accused, which principle we may not ignore, seems to justify our stand in the above-cited case of People vs. Mendoza. Our Revised Penal Code is of recent enactment and had the rule enunciated in Spain and in America requiring judicial declaration of nullity of ab initio void marriages been within the contemplation of the legislature, an express provision to that effect would or should have been inserted in the law. In its absence, we are bound by said rule of strict interpretation already adverted to.

It is to be noted that the action was instituted upon complaint of the second wife, whose marriage with the appellant was not renewed after the death of the first wife and before the third marriage was entered into. Hence, the last marriage was a valid one and appellant's prosecution for contracting this marriage can not prosper.

For the foregoing considerations, the judgment appealed from is hereby reversed and the defendant-appellant acquitted, with costs de oficio, without prejudice to his prosecution for having contracted the second bigamous marriage. So ordered.

Paras, C. J., Bengzon, Bautista Angelo, Reyes, J. B. L., Endencia, and Felix, JJ., concur.

Separate Opinions

REYES, A.J., dissenting:

I dissent.

Dissenting in the case of People vs. Mendoza, replied on by the majority, I there said:

Article 349 of the Revised Penal Code punishes with prision mayor "any person who shall contract a second or subsequent marriage before the former marriage has been legally dissolved."

Though the logician may say that there were the former marriage was void there would be nothing to dissolve, still it is not for the spouses to judge whether that marriage was void or not. That judgment is reserved to the courts. As Viada says, 'La satidad e importancia del matrimonio no permite que los casados juzguen por si mosmos de su nulidad; esta ha de someterse [precisamente al juicio del Tribunalcompetente, y cuando este declare la nulidad del matrimonio, y solo entonces, se tendra por nulo; mientras no exista esta declaracion, la presuncion esta siempre a favor de la validez del matrimonio, yde consiguiente, el que contrae otro segundo antes de dicha declaracio de nulidad, no puede menos de incurrir la pena de este articulo. (3 Viada, Codigo Penal, p. 275.)

"This is a sound opinion," says Mr. Justice Tuason in the case of People vs. Jose Cotas, (CA), 40 Off. Gaz. 3145, "and is in line with the well-known rule established in cases of adultery, that "until by competent authority in a final judgment the marriage contract is set aside, the offense to the vows taken and the attack on the family exists."

I may add that the construction placed by the majority upon the law penalizing bigamy would frustrate the legislative intent rather than give effect thereto.

Padilla and Montemayor, JJ., concur.

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People vs AragonPeople vs. Aragon

100 Phil 1033

FACTS:

Proceso Rosima contracted marriage with Gorrea.  While his marriage with the latter subsist, he contracted a canonical marriage with Faicol.  Gorrea is staying in Cebu while Faicol is in Iloilo.  He was a traveling salesman thus, he commuted between Iloilo and Cebu.  When Gorrea died, he brought Faicol to Cebu where the latter worked as teacher-nurse.  She later on suffered injuries in her eyes caused by physical maltreatment of Rosima and was sent to Iloilo to undergo treatment.  While she was in Iloilo, Rosima contracted a third marriage with Maglasang.  CFI-Cebu found him guilty of bigamy.

ISSUE: Whether or not the third marriage is null and void.

HELD:

The action was instituted upon the complaint of the second wife whose marriage with Rosima was not renewed after the death of the first wife and before the third marriage was entered into.  Hence, the last marriage was a valid one and prosecution against Rosima for contracting marriage cannot prosper. 

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