G.R. No.

L-63915 December 29, 1986

1. What is meant by "law of public nature" or "general applicability"?

LORENZO M. TA;ADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF

ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
(MABINI), petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the
President, HON. JOAQUIN VENUS, in his capacity as Deputy Executive
Assistant to the President, MELQUIADES P. DE LA CRUZ, ETC., ET
AL., respondents.

2. Must a distinction be made between laws of general applicability and laws

which are not?

RESOLUTION

Resolving their own doubts, the petitioners suggest that there should be no
distinction between laws of general applicability and those which are not; that
publication means complete publication; and that the publication must be
made forthwith in the Official Gazette. 2

CRUZ, J.:
Due process was invoked by the petitioners in demanding the disclosure of a
number of presidential decrees which they claimed had not been published as
required by law. The government argued that while publication was necessary
as a rule, it was not so when it was "otherwise provided," as when the decrees
themselves declared that they were to become effective immediately upon
their approval. In the decision of this case on April 24, 1985, the Court affirmed
the necessity for the publication of some of these decrees, declaring in the
dispositive portion as follows:
WHEREFORE, the Court hereby orders respondents to publish in the
Official Gazette all unpublished presidential issuances which are of
general application, and unless so published, they shall have no
binding force and effect.
The petitioners are now before us again, this time to move for
reconsideration/clarification of that decision. 1Specifically, they ask the
following questions:

3. What is meant by "publication"?

4. Where is the publication to be made?
5. When is the publication to be made?

In the Comment 3 required of the then Solicitor General, he claimed first that
the motion was a request for an advisory opinion and should therefore be
dismissed, and, on the merits, that the clause "unless it is otherwise provided"
in Article 2 of the Civil Code meant that the publication required therein was
not always imperative; that publication, when necessary, did not have to be
made in the Official Gazette; and that in any case the subject decision was
concurred in only by three justices and consequently not binding. This elicited
a Reply 4 refuting these arguments. Came next the February Revolution and
the Court required the new Solicitor General to file a Rejoinder in view of the
supervening events, under Rule 3, Section 18, of the Rules of Court.
Responding, he submitted that issuances intended only for the internal
administration of a government agency or for particular persons did not have
to be 'Published; that publication when necessary must be in full and in the
Official Gazette; and that, however, the decision under reconsideration was
not binding because it was not supported by eight members of this Court. 5
The subject of contention is Article 2 of the Civil Code providing as follows:

ART. 2. Laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless it is
otherwise provided. This Code shall take effect one year after such
publication.
After a careful study of this provision and of the arguments of the parties, both
on the original petition and on the instant motion, we have come to the
conclusion and so hold, that the clause "unless it is otherwise provided" refers
to the date of effectivity and not to the requirement of publication itself, which
cannot in any event be omitted. This clause does not mean that the legislature
may make the law effective immediately upon approval, or on any other date,
without its previous publication.
Publication is indispensable in every case, but the legislature may in its
discretion provide that the usual fifteen-day period shall be shortened or
extended. An example, as pointed out by the present Chief Justice in his
separate concurrence in the original decision, 6 is the Civil Code which did not
become effective after fifteen days from its publication in the Official Gazette
but "one year after such publication." The general rule did not apply because it
was "otherwise provided. "
It is not correct to say that under the disputed clause publication may be
dispensed with altogether. The reason. is that such omission would offend due
process insofar as it would deny the public knowledge of the laws that are
supposed to govern the legislature could validly provide that a law effective
immediately upon its approval notwithstanding the lack of publication (or after
an unreasonably short period after publication), it is not unlikely that persons
not aware of it would be prejudiced as a result and they would be so not
because of a failure to comply with but simply because they did not know of its
existence, Significantly, this is not true only of penal laws as is commonly
supposed. One can think of many non-penal measures, like a law on
prescription, which must also be communicated to the persons they may affect
before they can begin to operate.

We note at this point the conclusive presumption that every person knows the
law, which of course presupposes that the law has been published if the
presumption is to have any legal justification at all. It is no less important to
remember that Section 6 of the Bill of Rights recognizes "the right of the
people to information on matters of public concern," and this certainly applies
to, among others, and indeed especially, the legislative enactments of the
government.
The term "laws" should refer to all laws and not only to those of general
application, for strictly speaking all laws relate to the people in general albeit
there are some that do not apply to them directly. An example is a law granting
citizenship to a particular individual, like a relative of President Marcos who
was decreed instant naturalization. It surely cannot be said that such a law
does not affect the public although it unquestionably does not apply directly to
all the people. The subject of such law is a matter of public interest which any
member of the body politic may question in the political forums or, if he is a
proper party, even in the courts of justice. In fact, a law without any bearing on
the public would be invalid as an intrusion of privacy or as class legislation or
as anultra vires act of the legislature. To be valid, the law must invariably affect
the public interest even if it might be directly applicable only to one individual,
or some of the people only, and t to the public as a whole.
We hold therefore that all statutes, including those of local application and
private laws, shall be published as a condition for their effectivity, which shall
begin fifteen days after publication unless a different effectivity date is fixed by
the legislature.
Covered by this rule are presidential decrees and executive orders
promulgated by the President in the exercise of legislative powers whenever
the same are validly delegated by the legislature or, at present, directly
conferred by the Constitution. administrative rules and regulations must a also
be published if their purpose is to enforce or implement existing law pursuant
also to a valid delegation.

Interpretative regulations and those merely internal in nature, that is,

regulating only the personnel of the administrative agency and not the public,
need not be published. Neither is publication required of the so-called letters
of instructions issued by administrative superiors concerning the rules or
guidelines to be followed by their subordinates in the performance of their
duties.
Accordingly, even the charter of a city must be published notwithstanding that
it applies to only a portion of the national territory and directly affects only the
inhabitants of that place. All presidential decrees must be published, including
even, say, those naming a public place after a favored individual or exempting
him from certain prohibitions or requirements. The circulars issued by the
Monetary Board must be published if they are meant not merely to interpret
but to "fill in the details" of the Central Bank Act which that body is supposed
to enforce.
However, no publication is required of the instructions issued by, say, the
Minister of Social Welfare on the case studies to be made in petitions for
adoption or the rules laid down by the head of a government agency on the
assignments or workload of his personnel or the wearing of office uniforms.
Parenthetically, municipal ordinances are not covered by this rule but by the
Local Government Code.
We agree that publication must be in full or it is no publication at all since its
purpose is to inform the public of the contents of the laws. As correctly pointed
out by the petitioners, the mere mention of the number of the presidential
decree, the title of such decree, its whereabouts (e.g., "with Secretary
Tuvera"), the supposed date of effectivity, and in a mere supplement of the
Official Gazette cannot satisfy the publication requirement. This is not even
substantial compliance. This was the manner, incidentally, in which the
General Appropriations Act for FY 1975, a presidential decree undeniably of
general applicability and interest, was "published" by the Marcos
administration. 7 The evident purpose was to withhold rather than disclose
information on this vital law.

Coming now to the original decision, it is true that only four justices were
categorically for publication in the Official Gazette 8 and that six others felt that
publication could be made elsewhere as long as the people were sufficiently
informed.9 One reserved his vote 10 and another merely acknowledged the
need for due publication without indicating where it should be made. 11 It is
therefore necessary for the present membership of this Court to arrive at a
clear consensus on this matter and to lay down a binding decision supported
by the necessary vote.
There is much to be said of the view that the publication need not be made in
the Official Gazette, considering its erratic releases and limited readership.
Undoubtedly, newspapers of general circulation could better perform the
function of communicating, the laws to the people as such periodicals are
more easily available, have a wider readership, and come out regularly. The
trouble, though, is that this kind of publication is not the one required or
authorized by existing law. As far as we know, no amendment has been made
of Article 2 of the Civil Code. The Solicitor General has not pointed to such a
law, and we have no information that it exists. If it does, it obviously has not
yet been published.
At any rate, this Court is not called upon to rule upon the wisdom of a law or to
repeal or modify it if we find it impractical. That is not our function. That
function belongs to the legislature. Our task is merely to interpret and apply
the law as conceived and approved by the political departments of the
government in accordance with the prescribed procedure. Consequently, we
have no choice but to pronounce that under Article 2 of the Civil Code, the
publication of laws must be made in the Official Gazett and not elsewhere, as
a requirement for their effectivity after fifteen days from such publication or
after a different period provided by the legislature.
We also hold that the publication must be made forthwith or at least as soon
as possible, to give effect to the law pursuant to the said Article 2. There is
that possibility, of course, although not suggested by the parties that a law
could be rendered unenforceable by a mere refusal of the executive, for

whatever reason, to cause its publication as required. This is a matter,

however, that we do not need to examine at this time.

Teehankee, C.J., Feria, Yap, Narvasa, Melencio-Herrera, Alampay, Gutierrez,

Jr., and Paras, JJ., concur.

Finally, the claim of the former Solicitor General that the instant motion is a
request for an advisory opinion is untenable, to say the least, and deserves no
further comment.

G.R. No. L-63915 April 24, 1985

The days of the secret laws and the unpublished decrees are over. This is
once again an open society, with all the acts of the government subject to
public scrutiny and available always to public cognizance. This has to be so if
our country is to remain democratic, with sovereignty residing in the people
and all government authority emanating from them.
Although they have delegated the power of legislation, they retain the authority
to review the work of their delegates and to ratify or reject it according to their
lights, through their freedom of expression and their right of suffrage. This they
cannot do if the acts of the legislature are concealed.

LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF

ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
[MABINI], petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the
President, HON. JOAQUIN VENUS, in his capacity as Deputy Executive
Assistant to the President , MELQUIADES P. DE LA CRUZ, in his capacity
as Director, Malacaang Records Office, and FLORENDO S. PABLO, in
his capacity as Director, Bureau of Printing, respondents.

ESCOLIN, J.:
Laws must come out in the open in the clear light of the sun instead of
skulking in the shadows with their dark, deep secrets. Mysterious
pronouncements and rumored rules cannot be recognized as binding unless
their existence and contents are confirmed by a valid publication intended to
make full disclosure and give proper notice to the people. The furtive law is
like a scabbarded saber that cannot feint parry or cut unless the naked blade
is drawn.
WHEREFORE, it is hereby declared that all laws as above defined shall
immediately upon their approval, or as soon thereafter as possible, be
published in full in the Official Gazette, to become effective only after fifteen
days from their publication, or on another date specified by the legislature, in
accordance with Article 2 of the Civil Code.
SO ORDERED.

Invoking the people's right to be informed on matters of public concern, a right

recognized in Section 6, Article IV of the 1973 Philippine Constitution, 1 as well
as the principle that laws to be valid and enforceable must be published in the
Official Gazette or otherwise effectively promulgated, petitioners seek a writ of
mandamus to compel respondent public officials to publish, and/or cause the
publication in the Official Gazette of various presidential decrees, letters of
instructions, general orders, proclamations, executive orders, letter of
implementation and administrative orders.
Specifically, the publication of the following presidential issuances is sought:
Xxxxxx

The respondents, through the Solicitor General, would have this case
dismissed outright on the ground that petitioners have no legal personality or
standing to bring the instant petition. The view is submitted that in the absence
of any showing that petitioners are personally and directly affected or
prejudiced by the alleged non-publication of the presidential issuances in
question 2 said petitioners are without the requisite legal personality to institute
this mandamus proceeding, they are not being "aggrieved parties" within the
meaning of Section 3, Rule 65 of the Rules of Court, which we quote:
SEC. 3. Petition for Mandamus.When any tribunal,
corporation, board or person unlawfully neglects the
performance of an act which the law specifically enjoins as a
duty resulting from an office, trust, or station, or unlawfully
excludes another from the use a rd enjoyment of a right or
office to which such other is entitled, and there is no other
plain, speedy and adequate remedy in the ordinary course of
law, the person aggrieved thereby may file a verified petition
in the proper court alleging the facts with certainty and
praying that judgment be rendered commanding the
defendant, immediately or at some other specified time, to do
the act required to be done to Protect the rights of the
petitioner, and to pay the damages sustained by the petitioner
by reason of the wrongful acts of the defendant.
Upon the other hand, petitioners maintain that since the subject of the petition
concerns a public right and its object is to compel the performance of a public
duty, they need not show any specific interest for their petition to be given due
course.
The issue posed is not one of first impression. As early as the 1910 case
of Severino vs. Governor General, 3 this Court held that while the general rule
is that "a writ of mandamus would be granted to a private individual only in
those cases where he has some private or particular interest to be subserved,
or some particular right to be protected, independent of that which he holds

with the public at large," and "it is for the public officers exclusively to apply for
the writ when public rights are to be subserved [Mithchell vs. Boardmen, 79
M.e., 469]," nevertheless, "when the question is one of public right and the
object of the mandamus is to procure the enforcement of a public duty, the
people are regarded as the real party in interest and the relator at whose
instigation the proceedings are instituted need not show that he has any legal
or special interest in the result, it being sufficient to show that he is a citizen
and as such interested in the execution of the laws [High, Extraordinary Legal
Remedies, 3rd ed., sec. 431].
Thus, in said case, this Court recognized the relator Lope Severino, a private
individual, as a proper party to the mandamus proceedings brought to compel
the Governor General to call a special election for the position of municipal
president in the town of Silay, Negros Occidental. Speaking for this Court, Mr.
Justice Grant T. Trent said:
We are therefore of the opinion that the weight of authority
supports the proposition that the relator is a proper party to
proceedings of this character when a public right is sought to
be enforced. If the general rule in America were otherwise, we
think that it would not be applicable to the case at bar for the
reason 'that it is always dangerous to apply a general rule to a
particular case without keeping in mind the reason for the
rule, because, if under the particular circumstances the
reason for the rule does not exist, the rule itself is not
applicable and reliance upon the rule may well lead to error'
No reason exists in the case at bar for applying the general
rule insisted upon by counsel for the respondent. The
circumstances which surround this case are different from
those in the United States, inasmuch as if the relator is not a
proper party to these proceedings no other person could be,
as we have seen that it is not the duty of the law officer of the

Government to appear and represent the people in cases of

this character.
The reasons given by the Court in recognizing a private citizen's legal
personality in the aforementioned case apply squarely to the present petition.
Clearly, the right sought to be enforced by petitioners herein is a public right
recognized by no less than the fundamental law of the land. If petitioners were
not allowed to institute this proceeding, it would indeed be difficult to conceive
of any other person to initiate the same, considering that the Solicitor General,
the government officer generally empowered to represent the people, has
entered his appearance for respondents in this case.
Respondents further contend that publication in the Official Gazette is not a
sine qua non requirement for the effectivity of laws where the laws themselves
provide for their own effectivity dates. It is thus submitted that since the
presidential issuances in question contain special provisions as to the date
they are to take effect, publication in the Official Gazette is not indispensable
for their effectivity. The point stressed is anchored on Article 2 of the Civil
Code:
Art. 2. Laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless it
is otherwise provided, ...
The interpretation given by respondent is in accord with this Court's
construction of said article. In a long line of decisions, 4 this Court has ruled
that publication in the Official Gazette is necessary in those cases where the
legislation itself does not provide for its effectivity date-for then the date of
publication is material for determining its date of effectivity, which is the
fifteenth day following its publication-but not when the law itself provides for
the date when it goes into effect.
Respondents' argument, however, is logically correct only insofar as it equates
the effectivity of laws with the fact of publication. Considered in the light of

other statutes applicable to the issue at hand, the conclusion is easily reached
that said Article 2 does not preclude the requirement of publication in the
Official Gazette, even if the law itself provides for the date of its effectivity.
Thus, Section 1 of Commonwealth Act 638 provides as follows:
Section 1. There shall be published in the Official Gazette [1]
all important legisiative acts and resolutions of a public nature
of the, Congress of the Philippines; [2] all executive and
administrative orders and proclamations, except such as have
no general applicability; [3] decisions or abstracts of decisions
of the Supreme Court and the Court of Appeals as may be
deemed by said courts of sufficient importance to be so
published; [4] such documents or classes of documents as
may be required so to be published by law; and [5] such
documents or classes of documents as the President of the
Philippines shall determine from time to time to have general
applicability and legal effect, or which he may authorize so to
be published. ...
The clear object of the above-quoted provision is to give the general public
adequate notice of the various laws which are to regulate their actions and
conduct as citizens. Without such notice and publication, there would be no
basis for the application of the maxim "ignorantia legis non excusat." It would
be the height of injustice to punish or otherwise burden a citizen for the
transgression of a law of which he had no notice whatsoever, not even a
constructive one.
Perhaps at no time since the establishment of the Philippine Republic has the
publication of laws taken so vital significance that at this time when the people
have bestowed upon the President a power heretofore enjoyed solely by the
legislature. While the people are kept abreast by the mass media of the
debates and deliberations in the Batasan Pambansaand for the diligent
ones, ready access to the legislative recordsno such publicity accompanies
the law-making process of the President. Thus, without publication, the people

have no means of knowing what presidential decrees have actually been

promulgated, much less a definite way of informing themselves of the specific
contents and texts of such decrees. As the Supreme Court of Spain ruled:
"Bajo la denominacion generica de leyes, se comprenden tambien los
reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordines
dictadas de conformidad con las mismas por el Gobierno en uso de su
potestad. 5
The very first clause of Section I of Commonwealth Act 638 reads: "There
shall be published in the Official Gazette ... ." The word "shall" used therein
imposes upon respondent officials an imperative duty. That duty must be
enforced if the Constitutional right of the people to be informed on matters of
public concern is to be given substance and reality. The law itself makes a list
of what should be published in the Official Gazette. Such listing, to our mind,
leaves respondents with no discretion whatsoever as to what must be included
or excluded from such publication.
The publication of all presidential issuances "of a public nature" or "of general
applicability" is mandated by law. Obviously, presidential decrees that provide
for fines, forfeitures or penalties for their violation or otherwise impose a
burden or. the people, such as tax and revenue measures, fall within this
category. Other presidential issuances which apply only to particular persons
or class of persons such as administrative and executive orders need not be
published on the assumption that they have been circularized to all
concerned. 6
It is needless to add that the publication of presidential issuances "of a public
nature" or "of general applicability" is a requirement of due process. It is a rule
of law that before a person may be bound by law, he must first be officially and
specifically informed of its contents. As Justice Claudio Teehankee said
in Peralta vs. COMELEC 7:
In a time of proliferating decrees, orders and letters of
instructions which all form part of the law of the land, the

requirement of due process and the Rule of Law demand that

the Official Gazette as the official government repository
promulgate and publish the texts of all such decrees, orders
and instructions so that the people may know where to obtain
their official and specific contents.
The Court therefore declares that presidential issuances of general
application, which have not been published, shall have no force and effect.
Some members of the Court, quite apprehensive about the possible unsettling
effect this decision might have on acts done in reliance of the validity of those
presidential decrees which were published only during the pendency of this
petition, have put the question as to whether the Court's declaration of
invalidity apply to P.D.s which had been enforced or implemented prior to their
publication. The answer is all too familiar. In similar situations in the past this
Court had taken the pragmatic and realistic course set forth in Chicot County
Drainage District vs. Baxter Bank 8 to wit:
The courts below have proceeded on the theory that the Act
of Congress, having been found to be unconstitutional, was
not a law; that it was inoperative, conferring no rights and
imposing no duties, and hence affording no basis for the
challenged decree. Norton v. Shelby County, 118 U.S. 425,
442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566. It
is quite clear, however, that such broad statements as to the
effect of a determination of unconstitutionality must be taken
with qualifications. The actual existence of a statute, prior to
such a determination, is an operative fact and may have
consequences which cannot justly be ignored. The past
cannot always be erased by a new judicial declaration. The
effect of the subsequent ruling as to invalidity may have to be
considered in various aspects-with respect to particular
conduct, private and official. Questions of rights claimed to
have become vested, of status, of prior determinations
deemed to have finality and acted upon accordingly, of public

policy in the light of the nature both of the statute and of its
previous application, demand examination. These questions
are among the most difficult of those which have engaged the
attention of courts, state and federal and it is manifest from
numerous decisions that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot be justified.
Consistently with the above principle, this Court in Rutter vs.
Esteban 9 sustained the right of a party under the Moratorium Law, albeit said
right had accrued in his favor before said law was declared unconstitutional by
this Court.
Similarly, the implementation/enforcement of presidential decrees prior to their
publication in the Official Gazette is "an operative fact which may have
consequences which cannot be justly ignored. The past cannot always be
erased by a new judicial declaration ... that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot be justified."
From the report submitted to the Court by the Clerk of Court, it appears that of
the presidential decrees sought by petitioners to be published in the Official
Gazette, only Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and
1937 to 1939, inclusive, have not been so published. 10 Neither the subject
matters nor the texts of these PDs can be ascertained since no copies thereof
are available. But whatever their subject matter may be, it is undisputed that
none of these unpublished PDs has ever been implemented or enforced by
the government. In Pesigan vs. Angeles, 11 the Court, through Justice Ramon
Aquino, ruled that "publication is necessary to apprise the public of the
contents of [penal] regulations and make the said penalties binding on the
persons affected thereby. " The cogency of this holding is apparently
recognized by respondent officials considering the manifestation in their
comment that "the government, as a matter of policy, refrains from prosecuting
violations of criminal laws until the same shall have been published in the
Official Gazette or in some other publication, even though some criminal laws
provide that they shall take effect immediately.

WHEREFORE, the Court hereby orders respondents to publish in the Official

Gazette all unpublished presidential issuances which are of general
application, and unless so published, they shall have no binding force and
effect.
SO ORDERED.

G.R. No. 103144

April 4, 2001

PHILSA INTERNATIONAL PLACEMENT and SERVICES

CORPORATION, petitioner,
vs.
THE HON. SECRETARY OF LABOR AND EMPLOYMENT, VIVENCIO DE
MESA, RODRIGO MIKIN and CEDRIC LEYSON, respondents.
GONZAGA-REYES, J.:
This is a petition for certiorari from the Order dated November 25, 1991 issued
by public respondent Secretary of Labor and Employment. The November 25,
1991 Order affirmed in toto the August 29, 1988 Order of the Philippine
Overseas Employment Administration (hereinafter the "POEA") which found
petitioner liable for three (3) counts of illegal exaction, two (2) counts of
contract substitution and one count of withholding or unlawful deduction from
salaries of workers in POEA Case No. (L) 85-05-0370.
Petitioner Philsa International Placement and Services Corporation
(hereinafter referred to as "Philsa") is a domestic corporation engaged in the
recruitment of workers for overseas employment. Sometime in January 1985,
private respondents, who were recruited by petitioner for employment in Saudi
Arabia, were required to pay placement fees in the amount of P5,000.00 for
private respondent Rodrigo L. Mikin and P6,500.00 each for private
respondents Vivencio A. de Mesa and Cedric P. Leyson. 1
After the execution of their respective work contracts, private respondents left
for Saudi Arabia on January 29, 1985. They then began work for Al-Hejailan
Consultants A/E, the foreign principal of petitioner.
While in Saudi Arabia, private respondents were allegedly made to sign a
second contract on February 4, 1985 which changed some of the provisions of
their original contract resulting in the reduction of some of their benefits and
privileges.2 On April 1, 1985, their foreign employer allegedly forced them to

sign a third contract which increased their work hours from 48 hours to 60
hours a week without any corresponding increase in their basic monthly
salary. When they refused to sign this third contract, the services of private
respondents were terminated by Al-Hejailan and they were repatriated to the
Philippines.3
Upon their arrival in the Philippines, private respondents demanded from
petitioner Philsa the return of their placement fees and for the payment of their
salaries for the unexpired portion of their contract. When petitioner refused,
they filed a case before the POEA against petitioner Philsa and its foreign
principal, Al-Hejailan., with the following causes of action:
1. Illegal dismissal;
2. Payment of salary differentials;
3. Illegal deduction/withholding of salaries;
4. Illegal exactions/refund of placement fees; and
5. Contract substitution. 4
The case was docketed as POEA Case No. (L) 85-05 0370.
Under the rules of the POEA dated May 21, 1985, complaints involving
employer-employee relations arising out of or by virtue of any law or contract
involving Filipino workers for overseas employment, including money claims,
are adjudicated by the Workers' Assistance and Adjudication Office
(hereinafter the "WAAO") thru the POEA Hearing Officers. 5 On the other hand,
complaints involving recruitment violations warranting suspension or
cancellation of the license of recruiting agencies are cognizable by the POEA
thru its Licensing and Recruitment Office (hereinafter the "LRO"). 6 In cases
where a complaint partakes of the nature of both an employer-employee
relationship case and a recruitment regulation case, the POEA Hearing Officer
shall act as representative of both the WAAO and the LRO and both cases

shall be heard simultaneously. In such cases, the Hearing Officer shall submit
two separate recommendations for the two aspects of the case. 7
In the case at bench, the first two causes of action were in the nature of
money claims arising from the employer-employee relations and were properly
cognizable by the WAAO. The last two causes of action were in the nature of
recruitment violations and may be investigated by the LRO. The third cause of
action, illegal deduction/withholding of salary, is both a money claim and a
violation of recruitment regulations and is thus under the investigatory
jurisdiction of both the WAAO and the LRO.
Several hearings were conducted before the POEA Hearing Officer on the two
aspects of private respondents' complaint. During these hearings, private
respondents supported their complaint with the presentation of both
documentary and testimonial evidence. When it was its turn to present its
evidence, petitioner failed to do so and consequently, private respondents filed
a motion to decide the case on the basis of the evidence on record. 8
On the aspects of the case involving money claims arising from the employeremployee relations and illegal dismissal, the POEA rendered a decision dated
August 31, 1988 9 , the dispositive portion of which reads:
"CONFORMABLY TO THE FOREGOING, judgment is hereby
rendered ordering respondent PHILSA INTERNATIONAL
PLACEMENT AND SERVICE CORPORATION to pay complainants,
jointly and severally with its principal Al-Hejailan, the following
amounts, to wit:
1. TWO THOUSAND TWO HUNDRED TWENTY FIVE SAUDI
RIYALS (SR2,225.00) to each complainant, representing the refund of
their unpaid separation pay;
2. ONE THOUSAND SAUDI RIYALS (SR1,000.00) for V.A. de Mesa
alone, representing the salary deduction from his March salary;

3. TWO THOUSAND SAUDI RIYALS (SR2,000.00) each for R.I. Mikin

and C.A.P. Leyson only, representing their differential pay for the
months of February and March, 1985; and
4. Five percent (5%) of the total awards as and by way of attorney's
fees.
All payments of the abovestated awards shall be made in Philippine
Currency equivalent to the prevailing exchange rate according to the
Central Bank at the time of payment.
All other claims of complainants as well as the counterclaims of
respondent are dismissed for lack of merit.
SO ORDERED." 10
Under the Rules and Regulations of the POEA, the decision of the POEAAdjudication Office on matters involving money claims arising from the
employer-employee relationship of overseas Filipino workers may be
appealed to the National Labor Relations Commission (hereinafter the
"NLRC)11 . Thus, as both felt aggrieved by the said POEA Decision, petitioner
and private respondents filed separate appeals from the August 31, 1988
POEA Decision to the NLRC.
In a decision dated July 26, 1989 12 , the NLRC modified the appealed
decision of the POEA Adjudication Office by deleting the award of salary
deductions and differentials. These awards to private respondents were
deleted by the NLRC considering that these were not raised in the complaint
filed by private respondents. The NLRC likewise stated that there was nothing
in the text of the decision which would justify the award.
Private respondents filed a Motion for Reconsideration but the same was
denied by the NLRC in a Resolution dated October 25; 1989.

Private respondents then elevated the July 26, 1989 decision of the NLRC to
the Supreme Court in a petition for review for certiorari where it was docketed
as G.R. No. 89089. However, in a Resolution dated October 25, 1989, the
petition was dismissed outright for "insufficiency in form and substance, having
failed to comply with the Rules of Court and Circular No. 1-88 requiring
submission of a certified true copy of the questioned resolution dated August
23, 1989." 13
Almost simultaneous with the promulgation of the August 31, 1988 decision of
the POEA on private respondents' money claims, the POEA issued a separate
Order dated August 29, 1988 14 resolving the recruitment violations aspect of
private respondents' complaint. In this Order, the POEA found petitioner guilty
of illegal exaction, contract substitution, and unlawful deduction. The
dispositive portion of this August 29, 1988 POEA Order reads:
"WHEREFORE, premises considered, this Office finds herein
respondent PHILSA International Placement and Services
Corporation liable for three (3) counts of illegal exaction, two (2)
counts of contract substitution and one count of withholding or
unlawful deduction from salaries of workers.
Accordingly, respondent is hereby ordered to refund the placement
fees in the amount of P2,500.00 to Rodrigo L. Mikin, P4,000.00, each,
to Vivencio A. de Mesa and Cedric A.P. Leyson plus restitution of the
salaries withheld in the amount of SR1,000.00 to Vivencio A. de
Mesa.
Moreover, respondent's license is hereby suspended for eight (8)
months to take effect immediately and to remain as such until full
refund and restitution of the above-stated amounts have been
effected or in lieu thereof, it is fined the amount of SIXTY THOUSAND
(P60,000.00) PESOS plus restitution.
SO ORDERED."

In line with this August 29, 1988 Order, petitioner deposited the check
equivalent to the claims of private respondents and paid the corresponding
fine under protest. From the said Order, petitioner filed a Motion for
Reconsideration which was subsequently denied in an Order dated October
10, 1989.
Under the POEA Rules and Regulations, the decision of the POEA thru the
LRO suspending or canceling a license or authority to act as a recruitment
agency may be appealed to the Ministry (now Department) of Labor and
Employment. 15 Accordingly, after the denial of its motion for reconsideration,
petitioner appealed the August 21, 1988 Order to the Secretary of Labor and
Employment. However, in an Order dated September 13, 1991, 16public
respondent Secretary of Labor and Employment affirmed in toto the assailed
Order. Petitioner filed a Motion for Reconsideration but this was likewise
denied in an Order dated November 25, 1991.
Hence, the instant Petition for Certiorari where petitioner raises the following
grounds for the reversal of the questioned Orders:
I
THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN
EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION IN HOLDING PETITIONER GUILTY OF ILLEGAL
EXACTIONS. THE FINDING IS NOT SUPPORTED BY EVIDENCE
AND IN ANY EVENT, THE LAW ON WHICH THE CONVICTION IS
BASED IS VOID.
II
THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN
EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION IN PENALIZING PETITIONER WITH CONTRACT
SUBSTITUTION. IN THE PREMISES, THE CONTRACT

SUBSTITUTION IS VALID AS IT IMPROVED THE TERMS AND

CONDITIONS OF PRIVATE RESPONDENTS' EMPLOYMENT.
III.
THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN
EXCESS OF JURISDICTION, OR WITH GRAVE ABUSE OF
DISCRETION IN HOLDING PETITIONER LIABLE FOR ILLEGAL
DEDUCTIONS/WITHHOLDING OF SALARIES FOR THE SUPREME
COURT ITSELF HAS ALREADY ABSOLVED PETITIONER FROM
THIS CHARGE.
With respect to the first ground, petitioner would want us to overturn the
findings of the POEA, subsequently affirmed by the Secretary of the
Department of Labor and Employment, that it is guilty of illegal exaction
committed by collecting placement fees in excess of the amounts allowed by
law. This issue, however, is a question of fact which cannot be raised in a
petition for certiorari under Rule 65. 17 As we have previously held:
"It should be noted, in the first place, that the instant petition is a
special civil action for certiorari under Rule 65 of the Revised Rules of
Court. An extraordinary remedy, its use is available only and
restrictively in truly exceptional cases wherein the action of an inferior
court, board or officer performing judicial or quasi-judicial acts is
challenged for being wholly void on grounds of jurisdiction. The sole
office of the writ of certiorari is the correction of errors of jurisdiction
including the commission of grave abuse of discretion amounting to
lack or excess of jurisdiction. It does not include correction of public
respondent NLRC's evaluation of the evidence and factual findings
based thereon, which are generally accorded not only great respect
but even finality." 18
The question of whether or not petitioner charged private respondents
placement fees in excess of that allowed by law is clearly a question of fact

which is for public respondent POEA, as a trier of facts, to determine. As

stated above, the settled rule is that the factual findings of quasi-judicial
agencies like the POEA, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only
respect, but at times even finality if such findings are supported by substantial
evidence. 19
On this point, we have carefully examined the records of the case and it is
clear that the ruling of public respondent POEA that petitioner is guilty of illegal
exaction is supported by substantial evidence. Aside from the testimonial
evidence offered by private respondents, they also presented documentary
evidence consisting of receipts issued by a duly authorized representative of
petitioner which show the payment of amounts in excess of those allowed by
the POEA. In contrast, petitioner did not present any evidence whatsoever to
rebut the claims of private respondents despite the many opportunities for
them to do so.
Petitioner insists, however, that it cannot be held liable for illegal exaction as
POEA Memorandum Circular No. 11, Series of 1983, which enumerated the
allowable fees which may be collected from applicants, is void for lack of
publication.
There is merit in the argument.
In Taada vs. Tuvera 20 , the Court held, as follows:
"We hold therefore that all statutes, including those of local application
and private laws, shall be published as a condition for their effectivity,
which shall begin fifteen days after publication unless a different
effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders
promulgated by the President in the exercise of legislative powers
whenever the same are validly delegated by the legislature or, at

present, directly conferred by the Constitution: Administrative rules

and regulations must also be published if their purpose is to enforce
or implement existing law pursuant to a valid delegation.
Interpretative regulations and those merely internal in nature, that is,
regulating only the personnel of the administrative agency and the
public, need not be published. Neither is publication required of the
so-called letter of instructions issued by the administrative superiors
concerning the rules or guidelines to be followed by their subordinates
in the performance of their duties."
Applying this doctrine, we have previously declared as having no force and
effect the following administrative issuances: a) Rules and Regulations issued
by the Joint Ministry of Health-Ministry of Labor and Employment Accreditation
Committee regarding the accreditation of hospitals, medical clinics and
laboratories; 21 b) Letter of Instruction No. 416 ordering the suspension of
payments due and payable by distressed copper mining companies to the
national government; 22 c) Memorandum Circulars issued by the POEA
regulating the recruitment of domestic helpers to Hong Kong; 23 d)
Administrative Order No. SOCPEC 89-08-01 issued by the Philippine
International Trading Corporation regulating applications for importation from
the People's Republic of China;24and e) Corporate Compensation Circular No.
10 issued by the Department of Budget and Management discontinuing the
payment of other allowances and fringe benefits to government officials and
employees. 25 In all these cited cases, the administrative issuances questioned
therein were uniformly struck down as they were not published or filed with the
National Administrative Register as required by the Administrative Code of
1987. 26
POEA Memorandum Circular No. 2, Series of 1983 must likewise be declared
ineffective as the same was never published or filed with the National
Administrative Register.

POEA Memorandum Order No. 2, Series of 1983 provides for the applicable
schedule of placement and documentation fees for private employment
agencies or authority holders. Under the said Order, the maximum amount
which may be collected from prospective Filipino overseas workers is
P2,500.00. The said circular was apparently issued in compliance with the
provisions of Article 32 of the Labor Code which provides, as follows:
"ARTICLE 32. Fees to be paid by workers. Any person applying
with a private fee-charging employment agency for employment
assistance shall not be charged any fee until he has obtained
employment through its efforts or has actually commenced
employment. Such fee shall be always covered with the approved
receipt clearly showing the amount paid. The Secretary of Labor shall
promulgate a schedule of allowable fees." (italic supplied)
It is thus clear that the administrative circular under consideration is one of
those issuances which should be published for its effectivity, since its purpose
is to enforce and implement an existing law pursuant to a valid
delegation. 27 Considering that POEA Administrative Circular No. 2, Series of
1983 has not as yet been published or filed with the National Administrative
Register, the same is ineffective and may not be enforced.
The Office of the Solicitor General argues however that the imposition of
administrative sanctions on petitioner was based not on the questioned
administrative circular but on Article 32 and Article 34 (a) 28 of the Labor Code.
The argument is not meritorious. The said articles of the Labor Code were
never cited, much less discussed, in the body of the questioned Orders of the
POEA and Secretary of Labor and Employment. In fact, the said Orders were
consistent in mentioning that petitioner's violation of Administrative Circular
No. 2, Series of 1983 was the basis for the imposition of administrative
sanctions against petitioner. Furthermore, even assuming that petitioner was
held liable under the said provisions of the Labor Code, Articles 32 and 34 (a)
of the Labor Code presupposes the promulgation of a valid schedule of fees

by the Department of Labor and Employment. Considering that, as, previously

discussed, Administrative Circular No. 2, Series of 1983 embodying such a
schedule of fees never took effect, there is thus no basis for the imposition of
the administrative sanctions against petitioner. Moreover, under Book VI,
Chapter II, Section 3 of the Administrative Code of 1987, "(r)ules in force on
the date of the effectivity of this Code which are not filed within three (3)
months from that date shall not thereafter be the basis of any sanction against
any party or persons." Considering that POEA Administrative Circular No. 2
was never filed with the National Administrative Register, the same cannot be
used as basis for the imposition of administrative sanctions against petitioner.
The Office of the Solicitor General likewise argues that the questioned
administrative circular is not among those requiring publication contemplated
by Taada vs. Tuvera as it is addressed only to a specific group of persons
and not to the general public.
Again, there is no merit in this argument.
The fact that the said circular is addressed only to a specified group, namely
private employment agencies or authority holders, does not take it away from
the ambit of our ruling in Taada vs. Tuvera. In the case of Phil. Association of
Service Exporters vs. Torres,29 the administrative circulars questioned therein
were addressed to an even smaller group, namely Philippine and Hong Kong
agencies engaged in the recruitment of workers for Hong Kong, and still the
Court ruled therein that, for lack of proper publication, the said circulars may
not be enforced or implemented.
Our pronouncement in Taada vs. Tuvera is clear and categorical.
Administrative rules and regulations must be published if their purpose is to
enforce or implement existing law pursuant to a valid delegation., The only
exceptions are interpretative regulations, those merely internal in nature, or
those so-called letters of instructions issued by administrative superiors
concerning the rules and guidelines to be followed by their subordinates in the

performance of their duties. Administrative Circular No. 2, Series of 1983 has

not been shown to fall under any of these exceptions.
In this regard, the Solicitor General's reliance on the case of Yaokasin vs.
Commissioner of Customs 30 is misplaced. In the said case, the validity of
certain Customs Memorandum Orders were upheld despite their lack of
publication as they were addressed to a particular class of persons, the
customs collectors, who were also the subordinates of the Commissioner of
the Bureau of Customs. As such, the said Memorandum Orders clearly fall
under one of the exceptions to the publication requirement, namely those
dealing with instructions from an administrative superior to a subordinate
regarding the performance of their duties, a circumstance which does not
obtain in the case at bench.
With respect to the second ground, petitioner would want us to review the
findings of fact of the POEA regarding the two counts of alleged contract
substitution. Again, this is a question of fact which may not be disturbed if the
same is supported by substantial evidence. A reading of the August 29, 1988
Order of the POEA shows that, indeed, the ruling that petitioner is guilty of two
(2) counts of prohibited contract substitution is supported by substantial
evidence. Thus:
"2. As admitted by respondent, there was definitely a contract of
substitution in the first count. The first contract was duly approved by
the Administration and, therefore, the parties are bound by the terms
and condition thereof until its expiration. The mere intention of
respondents to increase the number of hours of work, even if there
was a corresponding increase in wage is clear violation of the contract
as approved by the Administration, and notwithstanding the same, the
amendment is evidently contrary to law, morals, good customs and
public policy and hence, must be shunned (Art. 1306, Civil Code of
the Philippines, Book III, Title I, Chapter 1, Article 83, Labor Code of
the Philippines, as amended). Moreover, it would appear that the
proposed salary increase corresponding to the increase in number of

work bonus may just have been a ploy as complainant were (sic)
thereafter not paid at the increased rate.
As to contract substitution in the second part, a third contract was
emphatically intended by respondent to be signed by complainants
which, however, was not consummated due to the adamant refusal of
complainants to sign thereon. Mere intention of the respondent to
commit contract substitution for a second time should not be left
unpunished. It is the duty of this Office to repress such acts by
teaching agencies a lesson to avoid repetition of the same
violation." 31
With respect to the third ground, petitioner argues that the public respondent
committed grave abuse of discretion in holding petitioner liable for illegal
deductions/withholding of salaries considering that the Supreme Court itself
has already absolved petitioner from this charge. Petitioner premises its
argument on the fact that the July 26, 1989 Decision of the NLRC absolving it
from private respondent de Mesa's claim for salary deduction has already
attained finality by reason of the dismissal of private respondents' petition for
certiorari of the said NLRC decision by the Supreme Court.
Petitioner is correct in stating that the July 26, 1989 Decision of the NLRC has
attained finality by reason of the dismissal of the petition for certiorari assailing
the same. However, the said NLRC Decision dealt only with the money claims
of private respondents arising from employer-employee relations and illegal
dismissal and as such, it is only for the payment of the said money claims that
petitioner is absolved. The administrative sanctions, which are distinct and
separate from the money claims of private respondents, may still be properly
imposed by the POEA. In fact, in the August 31, 1988 Decision of the POEA
dealing with the money claims of private respondents, the POEA Adjudication
Office precisely declared that "respondent's liability for said money claims is
without prejudice to and independent of its liabilities for the recruitment
violations aspect of the case which is the subject of a separate Order." 32

The NLRC Decision absolving petitioner from paying private respondent de

Mesa's claim for salary deduction based its ruling on a finding that the said
money claim was not raised in the complaint. 33 While there may be questions
regarding such finding of the NLRC, the finality of the said NLRC Decision
prevents us from modifying or reviewing the same. But the fact that the claim
for salary deduction was not raised by private respondents in their complaint
will not bar the POEA from holding petitioner liable for illegal deduction or
withholding of salaries as a ground for the suspension or cancellation of
petitioner's license.
Under the POEA Rules and Regulations, the POEA, on its own initiative, may
conduct the necessary proceeding for the suspension or cancellation of the
license of any private placement agency on any of the grounds mentioned
therein. 34 As such, even without a written complaint from an aggrieved party,
the POEA can initiate proceedings against an erring private placement agency
and, if the result of its investigation so warrants, impose the corresponding
administrative sanction thereof. Moreover, the POEA, in an investigation of an
employer-employee relationship case, may still hold a respondent liable for
administrative sanctions if, in the course of its investigation, violations of
recruitment regulations are uncovered. 35 It is thus clear that even if
recruitment violations were not included in a complaint for money claims
initiated by a private complainant, the POEA, under its rules, may still take
cognizance of the same and impose administrative sanctions if the evidence
so warrants.
As such, the fact that petitioner has been absolved by final judgment for the
payment of the money claim to private respondent de Mesa does not mean
that it is likewise absolved from the administrative sanctions which may be
imposed as a result of the unlawful deduction or withholding of private
respondents' salary. The POEA thus committed no grave abuse of discretion
in finding petitioner administratively liable of one count of unlawful
deduction/withholding of salary.

To summarize, petitioner should be absolved from the three (3) counts of

illegal exaction as POEA Administrative Circular No. 2, Series of 1983 could
not be the basis of administrative sanctions against petitioner for lack of
publication. However, we affirm the ruling of the POEA and the Secretary of
Labor and Employment that petitioner should be held administratively liable for
two (2) counts of contract substitution and one (1) count of withholding or
unlawful deduction of salary.
Under the applicable schedule of penalties imposed by the POEA, the penalty
for each count of contract substitution is suspension of license for two (2)
months or a fine of P10,000.00 while the penalty for withholding or unlawful
deduction of salaries is suspension of license for two (2) months or fine equal
to the salary withheld but not less than P10,000.00 plus restitution of the
amount in both instances.36 Applying the said schedule on the instant case,
the license of petitioner should be suspended for six (6) months or, in lieu
thereof, it should be ordered to pay fine in the amount of P30,000.00.
Petitioner should likewise pay the amount of SR1,000.00 to private respondent
Vivencio A. de Mesa as restitution for the amount withheld from his salary.
WHEREFORE, premises considered, the September 13, 1991 and November
25, 1991 Orders of public respondent Secretary of Labor and Employment are
hereby MODIFIED. As modified, the license of private respondent Philsa
International Placement and Services Corporation is hereby suspended for six
(6) months or, in lieu thereof, it is hereby ordered to pay the amount of
P30,000.00 as fine. Petitioner is likewise ordered to pay the amount of
SR1,000.00 to private respondent Vivencio A. de Mesa. All other monetary
awards are deleted.
SO ORDERED.

G.R. No. 100335. April 7, 1993.

UNCIANO PARAMEDICAL COLLEGE, INC. (now UNCIANO COLLEGES &
GENERAL HOSPITAL, INC.); MIRANDO C. UNCIANO, SR., DOMINADOR
SANTOS AND EDITHA MORA, petitioners,
vs.
THE COURT OF APPEALS, Honorable LOURDES K. TAYAO-JAGUROS, in
her capacity as Presiding Judge, Regional Trial Court, Branch 21, Manila;
ELENA VILLEGAS thru VICTORIA VILLEGAS; and TED MAGALLANES thru
JACINTA MAGALLANES, respondents.
Bernardo P. Fernandez for petitioners.
Free Legal Assistance Group for private respondents.
SYLLABUS
1. STATUTORY CONSTRUCTION; RULE WHEN A DOCTRINE OF THE
SUPREME COURT IS OVERRULED AND A DIFFERENT VIEW IS
ADOPTED. In the case of People v. Jabinal, (G.R. No. 82499, 178 SCRA
493 [1989]), it is a settled rule that when a doctrine of this Court is overruled
and a different view is adopted, the new doctrine should be applied
prospectively, and should not apply to parties who had relied on the old
doctrine and acted on the faith thereof.
2. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY
INJUNCTION; PURPOSE. As to the question on the propriety of the
issuance of the writ of preliminary mandatory injunction, the case of Capitol
Medical Center, Inc., et al. v. Court of Appeals, et al. discussed exhaustively
the purpose in issuing said writ: "The sole object of a preliminary injunction,
whether prohibitory or mandatory, is to preserve the status quo until the merits
of the case can be heard. The status quo is the last actual peaceable
uncontested status which preceded the controversy (Rodulfa vs. Alfonso, 76
Phil. 225). It may only be resorted to by a litigant for the preservation or

protection of his rights or interests and for no other purpose during the
pendency of the principal action (Calo vs. Roldan, 76 Phil. 445). It should only
be granted if the party asking for it is clearly entitled thereto (Climaco vs.
Macaraeg, 4 SCRA 930; Subido vs. Gopengco, 27 SCRA 455; Police
Commission vs. Bello, 37 SCRA 230). Inasmuch as a mandatory injunction
tends to do more than to maintain the status quo, it is generally improper to
issue such an injunction prior to the final hearing (Manila Electric Railroad and
Light Co. vs. Del Rosario, 22 Phil. 433). It may, however, issue 'in cases of
extreme urgency; where the right is very clear; where considerations of
relative inconvenience bear strongly in complainant's favor; where there is a
willful and unlawful invasion of plaintiff's right against his protest and
remonstrance, the injury being a continuing one; and where the effect of the
mandatory injunction is rather to reestablish and maintain a preexisting
continuing relation between the parties, recently and arbitrarily interrupted by
the defendant, than to establish a new relation. Indeed, the writ should not be
denied the complainant when he makes out a clear case, free from doubt and
dispute.' (Commissioner of Customs vs. Cloribel, et al., 19 SCRA 235)."
DECISION
NOCON, J p:
This is a petition for review on certiorari seeking reversal of the decision 1 of
public respondent Court of Appeals dated February 7, 1991, in CA-G.R. SP
No. 21020; and its resolution dated June 3, 1991.
The antecedent facts are, as follows:
On April 16, 1990, private respondents Elena Villegas and Ted Magallanes,
thru their mothers, Victoria Villegas and Jacinta Magallanes, respectively, filed
before the Regional Trial Court, National Capital Judicial Region, Branch 21, a
petition for injunction and damages with prayer for a writ of preliminary
mandatory injunction against petitioners Unciano Paramedical College, Inc.
(now Unciano Colleges and General Hospital, Inc.), Mirando C. Unciano, Sr.,

Dominador Santos, Editha Mora, Dr. Evelyn Moral and Laureana Vitug,
docketed as Civil Case No. 90-52745. Among other things, they alleged
therein that:
"6.01. Around the latter part of July 1989, the above-named students initiated
a petition proposing to the school authorities the organization of a student
council in the school. They solicited support of their petition from the studentry
by asking the students to endorse the same with their signatures. They were
able to get at least 180 signatures.
"6.02. On August 18, 1989, Elena Villegas and a certain student named
Solomon Barroa were summoned to the Office of Dr. Moral and were
admonished not to proceed with the proposal because, according to her, the
school does not allow and had never allowed such an organization.
"6.03. On September 12, 1989, when news leaked out that the above-named
students would be barred from enrollment, they sought confirmation with
respondent Dr. Moral, Dean of Discipline, who told them 'it's not true unless
you violate the rules and regulations of the school and if you still insist with
your student council.'
"6.04. On October 28, 1989, in compliance with an announcement to see the
Dean of Nursing, the above-named students met with Dean Vitug and Dr.
Moral who informed them that they would be barred from enrollment for the
second semester because they supposedly harassed a female student, invited
an outsider to the school to speak before the students, and also because the
school has an arrangement with the Department of Education, Culture and
Sports not to allow their students to put up a student council. Dr. Moral
advised them to get their Honorable Dismissal, and warned them that if she
herself were to give it, it would be marked `expelled.'
"6.05. On November 6, 1989, the students again approached Dr. Moral who
informed them that they were no longer allowed to enroll because they are
allegedly members of the National Union of Students of the Philippines

(NUSP) and the League of Filipino Students (LFS), officers of the student
organization they organized, and, moreover 'drug addicts.' The students asked
for proof of these accusations but were not given any, and were told by Dr.
Moral that the school has people investigating for (sic) them but she did not
disclose their identities nor provide any proof to support her allegations.
"6.06. On November 13, 1989, a few days after petitioners retained the
services of counsel FREE LEGAL ASSISTANCE GROUP (FLAG), counsel
sent a letter to Mr. Mirando Unciano, President of the College, demanding that
the constitutional requirements of due process be complied with prior to
unilaterally dismissing the students, and requesting that a conference be held
prior to 17 November 1989, as the enrollment deadline was fast
approaching . . .:
"6.07. On 17 November 1989, acceding to the demand, a meeting was held,
attended by Dr. Moral, Dean Vitug, Mr. Rustico Lopez, the students, and their
counsel. Due, however, to the inability of Dr. Moral to resolve the problem in
the absence of the College President and their legal counsel, the meeting was
reset to November 22, 1989 upon Dr. Moral's request. However, notice was
sent to the students' counsel from Unciano Paramedical College resetting the
meeting to November 27, 1989 stating that the President will attend personally
therein . . .
"6.08. On 27 November 1989, due to the absence of the school's legal
counsel and the President who allegedly just arrived from the United States,
Dr. Moral again requested that the meeting be reset. A verbal altercation
occurred between the parties due to the delaying tactics of the school officials
and the failure to resolve the problem by their continuous refusal to discuss
the merits of the accusations against the students. The meeting, attended by
Dr. Moral, Dean Vitug and Dean Dominador Santos, ended with the school
officials' request that it be reset for 29 November 19B9 and that the students
bring their parents or guardian with them at said meeting. The students agreed
to this request and their counsel prepared a written summary of the matters

discussed and agreed during the meeting. The school officials refused to sign
it, however . . .

to enroll for the first semester of school year 1990-1991, upon filing by
petitioners of a bond in the amount of P2,000.00 each.

"6.09. On 29 November 1989, the students were informed that the President
had unilaterally refused to allow them to enroll and it was up to their parents to
request or appeal to the school officials to change their decision. Mrs. Victoria
Villegas and Mrs. Jacinta Magallanes wrote to the school officials to request
that their children be allowed to enroll . . . Dr. Moral informed them that the
Board of Trustees will have to decide on these requests.

"xxx xxx xxx

"6.10. On 11 December 1989, the students were informed that the Board of
Trustees had refused to grant the parents' request." 2
On May 16, 1990, the trial court issued a temporary restraining order effective
May 17, 1990, enjoining petitioner school from not enrolling private
respondents in its College of Nursing and setting the hearing for the issuance
of the writ of preliminary injunction on June 4, 1990. 3
Petitioners filed an opposition to the prayer for a preliminary mandatory
injunction on the ground that private respondents are not entitled thereto and
have no clear legal right to the relief demanded. On the same date, the trial
court issued an order, the pertinent parts of which, read:
"xxx xxx xxx
"It is the opinion of the Court that there will be irreparable injury to the
petitioners if they are not allowed to enroll. At least they will miss another
semester.
"On the other hand, the injuries mentioned by Dr. Unciano, in particular the
withdrawal of the other students and the school will lose money if the
petitioners are allowed to enroll is still a speculation, and may not take place.
"In view thereof, the Court hereby GRANTS the petition for issuance of a
preliminary mandatory injunction, ordering the respondents to allow petitioners

"SO ORDERED." 4
On June 11. 1990, the writ of preliminary mandatory injunction was issued. 5
On June 13, 1990, petitioners' motion for reconsideration of the Order of June
4, 1990 was denied. 6
Elevating the matter to the Court of Appeals in a petition for certiorari and
prohibition with preliminary injunction, the same was dismissed on February 7,
1991 for lack of merit. 7 Said the court:
"The arguments advanced in support of the petition are mainly anchored on
the decision of the Supreme Court in the case of ALCUAZ, et al. vs. Philippine
School of Business Administration, Quezon City Branch (PSBA), et al., L76353, May 2, 1988; 161 SCRA 7 where it was held that
'It is beyond dispute that a student once admitted by the school is considered
enrolled for one semester. It is provided in Paragraph 137 (of the) Manual of
Regulations for Private Schools, that when a college student registers in a
school, it is understood that he is enrolling for the entire semester. Likewise, it
is provided in the Manual, that the 'written contracts' required for college
teachers are for 'one semester.' It is thus evident that after the close of the first
semester, the PSBA-QC no longer has any existing contract either with the
students or with the intervening teachers . . .
"However, in the more recent case of Ariel Non, et al. vs. Hon. Sancho Dames
II, et al., G.R. No. 89317, May 20, 1990 (185 SCRA 523), the Supreme Court,
abandoned and overruled its decision in Alcuaz and declared thus:

The Court, in Alcuaz, anchored its decision on the 'termination of contract'

theory. But it must be repeatedly emphasized that the contract between the
school and the student is not an ordinary contract. It is imbued with public
interest, considering the high priority given by the Constitution to education
and the grant to the State of supervisory and regulatory powers over all
educational institutions [See Art. XIV, Secs. 1-2, 4(1).]
'Respondent school cannot justify its actions by relying on Paragraph 137 of
the Manual of Regulations for Private School which provides that '(w)hen a
student registers in a school, it is understood that he is enrolling for the entire
semester for collegiate courses,' which the Court in Alcuaz construed as
authority for schools to refuse enrollment to a student on the ground that his
contract, which has a term of one semester, has already expired.
'The 'termination of contract' theory does not even find support in the Manual.
Paragraph 137 merely clarifies that a college student enrolls for the entire
semester. It serves to protect schools wherein tuition fees are collected and
paid on an installment basis, i.e. collection and payment of the downpayment
upon enrollment and the balance before examinations. Thus, even if a student
does not complete the semester for which he was enrolled, but has stayed on
for more than two weeks, he may be required to pay his tuition fees for the
whole semester before he is given his credentials for transfer. This is the
import of Paragraph 137, subsumed under Section VII on Tuition and Other
Fees, which in its totality provides:
'137. When a student registers in a school, it is understood that he is enrolling
for the entire school year for elementary and secondary courses, and for the
entire semester for collegiate courses. A student who transfers or otherwise
withdraws, in writing, within two weeks after the beginning of classes and who
has already paid the pertinent tuition and other school fees in full or for any
length of time longer than one month may be charged ten per cent of the total
amount due for the term if he withdraws within the first week of classes, or
twenty per cent if within the second week of classes, regardless of whether or
not he has actually attended classes. The student may be charged all the

school fees in full if he withdraws anytime after the second week of classes.
However, if the transfer or withdrawal is due to a justifiable reason, the student
shall be charged the pertinent fees only up to and including the last month of
attendance.'
'Clearly, in no way may Paragraph 137 be construed to mean that the student
shall be enrolled for only one semester, and that after the semester is over his
re-enrollment is dependent solely on the sound discretion of the school. On
the contrary, the Manual recognizes the right of the student to be enrolled in
his course for the entire period he is expected to complete it. Thus, Paragraph
107 states:
'Every student has the right to enroll in any school, college or university upon
meeting its specific requirement and reasonable regulation: Provided, that
except in the case of academic delinquency and violation of disciplinary
regulation, the student is presumed to be qualified for enrollment for the entire
period he is expected to his (sic) complete his course without prejudice to his
right to transfer.'
'This 'presumption' has been translated into a right in Batas Pambansa Blg.
232, the 'Education Act of 1982.' Section 9 of this act provides:
'SEC. 9. Rights of Students in School. In addition to other rights, and
subject to the limitations prescribed by law and regulations, students and
pupils in all schools shall enjoy the following rights:
xxx xxx xxx
12. The right to freely choose their field of study subject to existing curricula
and to continue their course therein up to graduation, except in cases of
academic deficiency, or violation of disciplinary regulations.' " 8
On June 3, 1991, the motion for reconsideration was denied, again, for lack of
merit. 9 Hence, the present petition.

Petitioners raise this lone issue:

"WHETHER OR NOT THE NON DOCTRINE SHOULD BE APPLIED
RETROACTIVELY TO GOVERN AND INVALIDATE THE LEGAL EFFECTS
OF INCIDENTS THAT TOOK PLACE PRIOR TO ITS ADOPTION AND
WHICH INCIDENTS WERE PROPER AND VALID UNDER THE ALCUAZ
DOCTRINE PREVAILING AT THE TIME SAID INCIDENTS TOOK PLACE." 10
Petitioners argue that under the then prevailing Alcuaz doctrine which was
promulgated on May 2, 1988, the contract between them and private
respondents was validly terminated upon the end of the first semester of
school year 1989-1990. Although said doctrine was later abandoned in Non, et
al. v. Dames II, et al., supra, this case was promulgated much later, or on May
20, 1990, when the termination of the contract between them had long
become fait accompli. Settled is the rule that when a doctrine of this Court is
overruled and a different view is adopted, the new doctrine is applied
prospectively, and should not apply to parties who relied on the old doctrine
and acted on the faith thereof, conformably with the case of People v. Jabinal,
G.R. No. L-30061, 55 SCRA 607 (1974). Thus, the writ of preliminary
mandatory injunction was issued by the trial court with grave abuse of
discretion.
We agree with the arguments of petitioners.
The ruling in the Non case should not be given a retroactive effect to cases
that arose before its promulgation on May 20, 1990, as in this case, which was
filed on April 16, 1990. If it were otherwise, it would result in oppression to
petitioners and other schools similarly situated who relied on the ruling in the
Alcuaz case, promulgated on May 2, 1988, which recognized the termination
of contract theory. We had an opportunity to resolve a similar issue in National
Service Corporation, et al. v. NLRC. 11 In this case, petitioner claimed that as
a government corporation (by virtue of its being a subsidiary of the National
Investment and Development Corporation, a subsidiary wholly owned by the
Philippine National Bank, which in turn is a government owned corporation),

the terms and conditions of employment of its employees are governed by the
civil service law, rules and regulations. In support thereof, petitioner cited the
ruling in National Housing Corporation v. Juco, 12 that employees of
government owned or controlled corporations are governed by the civil service
law, rules and regulations, we rejected this claim of petitioner and held that:
"It would appear that, in the interest of justice, the holding in said case should
not be given retroactive effect, that is, to cases that arose before its
promulgation on 17 January 1985. To do otherwise would be oppressive to
Credo and other employees similarly situated, because under the same 1973
Constitution but prior to the ruling in National Housing Corporation vs. Juco,
this Court had recognized the applicability of the Labor Code to, and the
authority of the NLRC to exercise jurisdiction over, disputes involving terms
and conditions of employment in government-owned or controlled
corporations, among them, the National Service Corporation (NASECO)." 13
In addition, We reiterate Our earlier pronouncement in the case of People v.
Jabinal, supra, that it is a settled rule that when a doctrine of this Court is
overruled and a different view is adopted, the new doctrine should be applied
prospectively, and should not apply to parties who had relied on the old
doctrine and acted on the faith thereof.
Coming now to the question on the propriety of the issuance of the writ of
preliminary mandatory injunction, the case of Capitol Medical Center, Inc., et
al. v. Court of Appeals, et al. 14 discussed exhaustively the purpose in issuing
said writ:
"The sole object of a preliminary injunction, whether prohibitory or mandatory,
is to preserve the status quo until the merits of the case can be heard. The
status quo is the last actual peaceable uncontested status which preceded the
controversy (Rodulfa vs. Alfonso, 76 Phil. 225). It may only be resorted to by a
litigant for the preservation or protection of his rights or interests and for no
other purpose during the pendency of the principal action (Calo vs. Roldan, 76
Phil. 445). It should only be granted if the party asking for it is clearly entitled

thereto (Climaco vs. Macaraeg, 4 SCRA 930; Subido vs. Gopengco, 27 SCRA
455; Police Commission vs. Bello, 37 SCRA 230).
Inasmuch as a mandatory injunction tends to do more than to maintain the
status quo, it is generally improper to issue such an injunction prior to the final
hearing (Manila Electric Railroad and Light Co. vs. Del Rosario, 22 Phil. 433).
It may, however, issue 'in cases of extreme urgency; where the right is very
clear; where considerations of relative inconvenience bear strongly in
complainant's favor where there is a willful and unlawful invasion of plaintiff's
right against his protest and remonstrance, the injury being a continuing one
and where the effect of the mandatory injunction is rather to re-establish and
maintain a pre-existing continuing relation between the parties, recently and
arbitrarily interrupted by the defendant, than to establish a new relation.
Indeed, the writ should not be denied the complainant when he makes out a
clear case, free from doubt and dispute.' (Commissioner of Customs vs.
Cloribel, et al., 19 SCRA 235.)." 15
In the present case, the contract between the parties was validly terminated
upon the end of the first semester of school year 1989-1990, or in October,
1989. This is the status quo. The trial court gravely abused its discretion in
issuing the writ of preliminary mandatory injunction which ordered petitioners
to allow private respondents "to enroll for the first semester of school year
1990-1190." 16 Guided by the Capitol case, certainly, this writ will not restore
the status quo but will go a step backward, then restore the condition
preceding the status quo. Private respondents do not possess any clear legal
right to re-enroll, corollarily, petitioners are not obliged legally to re-admit them.
WHEREFORE, the petition is hereby GRANTED. The decision of the Court of
Appeals dated February 7, 1991 and its resolution dated June 3, 1991 are
SET ASIDE. The orders of the trial court dated June 4, 1990 and June 13,
1990 and the writ of preliminary mandatory injunction are likewise SET ASIDE.
SO ORDERED.

G.R. No. L-15127

May 30, 1961

EMETERIO CUI, plaintiff-appellant,

vs.
ARELLANO UNIVERSITY, defendant-appellee.
G.A.S. Sipin, Jr., for plaintiff-appellant.
E. Voltaire Garcia for defendant-appellee.
CONCEPCION, J.:
Appeal by plaintiff Emeterio Cui from a decision of the Court of First Instance
of Manila, absolving defendant Arellano University from plaintiff's complaint,
with costs against the plaintiff, and dismissing defendant's counter claim, for
insufficiency of proof thereon.
In the language of the decision appealed from:
The essential facts of this case are short and undisputed. As
established by the agreement of facts Exhibits X and by the
respective oral and documentary evidence introduced by the parties, it
appears conclusive that plaintiff, before the school year 1948-1949
took up preparatory law course in the defendant University. After
finishing his preparatory law course plaintiff enrolled in the College of
Law of the defendant from the school year 1948-1949. Plaintiff
finished his law studies in the defendant university up to and including
the first semester of the fourth year. During all the school years in
which plaintiff was studying law in defendant law college, Francisco R.
Capistrano, brother of the mother of plaintiff, was the dean of the
College of Law and legal counsel of the defendant university. Plaintiff
enrolled for the last semester of his law studies in the defendant
university but failed to pay his tuition fees because his uncle Dean
Francisco R. Capistrano having severed his connection with
defendant and having accepted the deanship and chancellorship of
the College of Law of Abad Santos University, plaintiff left the
defendant's law college and enrolled for the last semester of his fourth
year law in the college of law of the Abad Santos University
graduating from the college of law of the latter university. Plaintiff,

during all the time he was studying law in defendant university was
awarded scholarship grants, for scholastic merit, so that his semestral
tuition fees were returned to him after the ends of semester and when
his scholarship grants were awarded to him. The whole amount of
tuition fees paid by plaintiff to defendant and refunded to him by the
latter from the first semester up to and including the first semester of
his last year in the college of law or the fourth year, is in total
P1,033.87. After graduating in law from Abad Santos University he
applied to take the bar examination. To secure permission to take the
bar he needed the transcripts of his records in defendant Arellano
University. Plaintiff petitioned the latter to issue to him the needed
transcripts. The defendant refused until after he had paid back the
P1,033 87 which defendant refunded to him as above stated. As he
could not take the bar examination without those transcripts, plaintiff
paid to defendant the said sum under protest. This is the sum which
plaintiff seeks to recover from defendant in this case.
Before defendant awarded to plaintiff the scholarship grants as above
stated, he was made to sign the following contract covenant and
agreement:
"In consideration of the scholarship granted to me by the University, I
hereby waive my right to transfer to another school without having
refunded to the University (defendant) the equivalent of my
scholarship cash.

(Sgd.) Emeterio Cui".

It is admitted that, on August 16, 1949, the Director of Private Schools issued
Memorandum No. 38, series of 1949, on the subject of "Scholarship,"
addressed to "All heads of private schools, colleges and universities," reading:
1. School catalogs and prospectuses submitted to this, Bureau show
that some schools offer full or partial scholarships to deserving
students for excellence in scholarship or for leadership in extra-

curricular activities. Such inducements to poor but gifted students

should be encouraged. But to stipulate the condition that such
scholarships are good only if the students concerned continue in the
same school nullifies the principle of merit in the award of these
scholarships.
2. When students are given full or partial scholarships, it is understood
that such scholarships are merited and earned. The amount in tuition
and other fees corresponding to these scholarships should not be
subsequently charged to the recipient students when they decide to
quit school or to transfer to another institution. Scholarships should
not be offered merely to attract and keep students in a school.
3. Several complaints have actually been received from students who
have enjoyed scholarships, full or partial, to the effect that they could
not transfer to other schools since their credentials would not be
released unless they would pay the fees corresponding to the period
of the scholarships. Where the Bureau believes that the right of the
student to transfer is being denied on this ground, it reserves the right
to authorize such transfer.
that defendant herein received a copy of this memorandum; that plaintiff asked
the Bureau of Private Schools to pass upon the issue on his right to secure the
transcript of his record in defendant University, without being required to
refund the sum of P1,033.87; that the Bureau of Private Schools upheld the
position taken by the plaintiff and so advised the defendant; and that, this
notwithstanding, the latter refused to issue said transcript of records, unless
said refund were made, and even recommended to said Bureau that it issue a
written order directing the defendant to release said transcript of record, "so
that the case may be presented to the court for judicial action." As above
stated, plaintiff was, accordingly, constrained to pay, and did pay under
protest, said sum of P1,033.87, in order that he could take the bar examination
in 1953. Subsequently, he brought this action for the recovery of said amount,
aside from P2,000 as moral damages, P500 as exemplary damages, P2,000
as attorney's fees, and P500 as expenses of litigation.
In its answer, defendant reiterated the stand it took, vis-a-vis the Bureau of
Private Schools, namely, that the provisions of its contract with plaintiff are
valid and binding and that the memorandum above-referred to is null and void.

It, likewise, set up a counterclaim for P10,000.00 as damages, and P3,000 as

attorney's fees.
The issue in this case is whether the above quoted provision of the contract
between plaintiff and the defendant, whereby the former waived his right to
transfer to another school without refunding to the latter the equivalent of his
scholarships in cash, is valid or not. The lower court resolved this question in
the affirmative, upon the ground that the aforementioned memorandum of the
Director of Private Schools is not a law; that the provisions thereof are
advisory, not mandatory in nature; and that, although the contractual provision
"may be unethical, yet it was more unethical for plaintiff to quit studying with
the defendant without good reasons and simply because he wanted to follow
the example of his uncle." Moreover, defendant maintains in its brief that the
aforementioned memorandum of the Director of Private Schools is null and
void because said officer had no authority to issue it, and because it had been
neither approved by the corresponding department head nor published in the
official gazette.
We do not deem it necessary or advisable to consider as the lower court did,
the question whether plaintiff had sufficient reasons or not to transfer from
defendant University to the Abad Santos University. The nature of the issue
before us, and its far reaching effects, transcend personal equations and
demand a determination of the case from a high impersonal plane. Neither do
we deem it essential to pass upon the validity of said Memorandum No. 38,
for, regardless of the same, we are of the opinion that the stipulation in
question is contrary to public policy and, hence, null and void. The aforesaid
memorandum merely incorporates a sound principle of public policy. As the
Director of Private Schools correctly pointed, out in his letter, Exhibit B, to the
defendant,
There is one more point that merits refutation and that is whether or
not the contract entered into between Cui and Arellano University on
September 10, 1951 was void as against public policy. In the case of
Zeigel vs. Illinois Trust and Savings Bank, 245 Ill. 180, 19 Ann. Case
127, the court said: 'In determining a public policy of the state, courts
are limited to a consideration of the Constitution, the judicial
decisions, the statutes, and the practice of government officers.' It
might take more than a government bureau or office to lay down or
establish a public policy, as alleged in your communication, but courts

consider the practices of government officials as one of the four

factors in determining a public policy of the state. It has been
consistently held in America that under the principles relating to the
doctrine of public policy, as applied to the law of contracts, courts of
justice will not recognize or uphold a transaction which its object,
operation, or tendency is calculated to be prejudicial to the public
welfare, to sound morality or to civic honesty (Ritter vs. Mutual Life
Ins. Co., 169 U.S. 139; Heding vs. Gallaghere 64 L.R.A. 811; Veazy
vs. Allen, 173 N.Y. 359). If Arellano University understood clearly the
real essence of scholarships and the motives which prompted this
office to issue Memorandum No. 38, s. 1949, it should have not
entered into a contract of waiver with Cui on September 10, 1951,
which is a direct violation of our Memorandum and an open challenge
to the authority of the Director of Private Schools because the contract
was repugnant to sound morality and civic honesty. And finally, in
Gabriel vs. Monte de Piedad, Off. Gazette Supp. Dec. 6, 1941, p. 67
we read: 'In order to declare a contract void as against public policy, a
court must find that the contract as to consideration or the thing to be
done, contravenes some established interest of society, or
is inconsistent with sound policy and good morals or tends clearly to
undermine the security of individual rights. The policy enunciated in
Memorandum No. 38, s. 1949 is sound policy. Scholarship are
awarded in recognition of merit not to keep outstanding students in
school to bolster its prestige. In the understanding of that university
scholarships award is a business scheme designed to increase the
business potential of an education institution. Thus conceived it is not
only inconsistent with sound policy but also good morals. But what is
morals? Manresa has this definition. It is good customs; those
generally accepted principles of morality which have received some
kind of social and practical confirmation. The practice of awarding
scholarships to attract students and keep them in school is not good
customs nor has it received some kind of social and practical
confirmation except in some private institutions as in Arellano
University. The University of the Philippines which implements Section
5 of Article XIV of the Constitution with reference to the giving of free
scholarships to gifted children, does not require scholars to reimburse
the corresponding value of the scholarships if they transfer to other
schools. So also with the leading colleges and universities of the
United States after which our educational practices or policies are

patterned. In these institutions scholarships are granted not to attract

and to keep brilliant students in school for their propaganda mine but
to reward merit or help gifted students in whom society has an
established interest or a first lien. (Emphasis supplied.)
WHEREFORE, the decision appealed from is hereby reversed and another
one shall be entered sentencing the defendant to pay to the plaintiff the sum of
P1,033.87, with interest thereon at the legal rate from September 1, 1954,
date of the institution of this case, as well as the costs, and dismissing
defendant's counterclaim. It is so ordered.

.R. No. L-30061 February 27, 1974

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellees,
vs.
JOSE JABINAL Y CARMEN, defendant-appellant.
Office of the Solicitor General Felix V. Makasiar and Solicitor Antonio M.
Martinez for plaintiff-appellee.
Pedro Panganiban y Tolentino for defendant-appellant.

ANTONIO, J.:p
Appeal from the judgment of the Municipal Court of Batangas (provincial
capital), Batangas, in Criminal Case No. 889, finding the accused guilty of the
crime of Illegal Possession of Firearm and Ammunition and sentencing him to
suffer an indeterminate penalty ranging from one (1) year and one (1) day to
two (2) years imprisonment, with the accessories provided by law, which
raises in issue the validity of his conviction based on a retroactive application
of Our ruling in People v. Mapa. 1
The complaint filed against the accused reads:
That on or about 9:00 o'clock, p.m., the 5th day of September,
1964, in the poblacion, Municipality of Batangas, Province of
Batangas, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, a person not
authorized by law, did then and there wilfully, unlawfully and
feloniously keep in his possession, custody and direct control
a revolver Cal. .22, RG8 German Made with one (1) live
ammunition and four (4) empty shells without first securing
the necessary permit or license to possess the same.

At the arraignment on September 11, 1964, the accused entered a plea of not
guilty, after which trial was accordingly held.
The accused admitted that on September 5, 1964, he was in possession of
the revolver and the ammunition described in the complaint, without the
requisite license or permit. He, however, claimed to be entitled to exoneration
because, although he had no license or permit, he had an appointment as
Secret Agent from the Provincial Governor of Batangas and an appointment
as Confidential Agent from the PC Provincial Commander, and the said
appointments expressly carried with them the authority to possess and carry
the firearm in question.
Indeed, the accused had appointments from the above-mentioned officials as
claimed by him. His appointment from Governor Feliciano Leviste, dated
December 10, 1962, reads:
Reposing special trust and confidence in your civic spirit, and
trusting that you will be an effective agent in the detection of
crimes and in the preservation of peace and order in the
province of Batangas, especially with respect to the
suppression of trafficking in explosives, jueteng, illegal
cockfighting, cattle rustling, robbery and the detection of
unlicensed firearms, you are hereby appointed a SECRET
AGENT of the undersigned, the appointment to take effect
immediately, or as soon as you have qualified for the position.
As such Secret Agent, your duties shall be those generally of
a peace officer and particularly to help in the preservation of
peace and order in this province and to make reports thereon
to me once or twice a month. It should be clearly understood
that any abuse of authority on your part shall be considered
sufficient ground for the automatic cancellation of your
appointment and immediate separation from the service. In
accordance with the decision of the Supreme Court in G.R.
No. L-12088 dated December 23, 1959, you will have the

right to bear a firearm, particularly described below, for use in

connection with the performance of your duties.
By virtue hereof, you may qualify and enter upon the
performance of your duties by taking your oath of office and
filing the original thereof with us.
FIREARM AUTHORIZED TO CARRY:
Kind: ROHM-Revolver
Make: German
SN: 64
Cal: .22
On March 15, 1964, the accused was also appointed by the PC Provincial
Commander of Batangas as Confidential Agent with duties to furnish
information regarding smuggling activities, wanted persons, loose firearms,
subversives and other similar subjects that might affect the peace and order
condition in Batangas province, and in connection with these duties he was
temporarily authorized to possess a ROHM revolver, Cal. .22 RG-8 SN-64, for
his personal protection while in the performance of his duties.
The accused contended before the court a quo that in view of his abovementioned appointments as Secret Agent and Confidential Agent, with
authority to possess the firearm subject matter of the prosecution, he was
entitled to acquittal on the basis of the Supreme Court's decision in People vs.
Macarandang 2 and People vs. Lucero. 3 The trial court, while conceding on the
basis of the evidence of record the accused had really been appointed Secret
Agent and Confidential Agent by the Provincial Governor and the PC
Provincial Commander of Batangas, respectively, with authority to possess
and carry the firearm described in the complaint, nevertheless held the
accused in its decision dated December 27, 1968, criminally liable for illegal

possession of a firearm and ammunition on the ground that the rulings of the
Supreme Court in the cases of Macarandang and Lucero were reversed and
abandoned in People vs. Mapa, supra. The court considered as mitigating
circumstances the appointments of the accused as Secret Agent and
Confidential Agent.
Let us advert to Our decisions in People v. Macarandang, supra, People v.
Lucero, supra, and People v. Mapa, supra. In Macarandang, We reversed the
trial court's judgment of conviction against the accused because it was shown
that at the time he was found to possess a certain firearm and ammunition
without license or permit, he had an appointment from the Provincial Governor
as Secret Agent to assist in the maintenance of peace and order and in the
detection of crimes, with authority to hold and carry the said firearm and
ammunition. We therefore held that while it is true that the Governor has no
authority to issue any firearm license or permit, nevertheless, section 879 of
the Revised Administrative Code provides that "peace officers" are exempted
from the requirements relating to the issuance of license to possess firearms;
and Macarandang's appointment as Secret Agent to assist in the maintenance
of peace and order and detection of crimes, sufficiently placed him in the
category of a "peace officer" equivalent even to a member of the municipal
police who under section 879 of the Revised Administrative Code are
exempted from the requirements relating to the issuance of license to possess
firearms. In Lucero, We held that under the circumstances of the case, the
granting of the temporary use of the firearm to the accused was a necessary
means to carry out the lawful purpose of the batallion commander to effect the
capture of a Huk leader. In Mapa, expressly abandoning the doctrine
in Macarandang, and by implication, that in Lucero, We sustained the
judgment of conviction on the following ground:
The law is explicit that except as thereafter specifically
allowed, "it shall be unlawful for any person to ... possess any
firearm, detached parts of firearms or ammunition therefor, or
any instrument or implement used or intended to be used in
the manufacture of firearms, parts of firearms, or

ammunition." (Sec. 878, as amended by Republic Act No. 4,

Revised Administrative Code.) The next section provides that
"firearms and ammunition regularly and lawfully issued to
officers, soldiers, sailors, or marines [of the Armed Forces of
the Philippines], the Philippine Constabulary, guards in the
employment of the Bureau of Prisons, municipal police,
provincial governors, lieutenant governors, provincial
treasurers, municipal treasurers, municipal mayors, and
guards of provincial prisoners and jails," are not covered
"when such firearms are in possession of such officials and
public servants for use in the performance of their official
duties." (Sec. 879, Revised Administrative Code.)
The law cannot be any clearer. No provision is made for a
secret agent. As such he is not exempt. ... .
It will be noted that when appellant was appointed Secret Agent by the
Provincial Government in 1962, and Confidential Agent by the Provincial
Commander in 1964, the prevailing doctrine on the matter was that laid down
by Us in People v. Macarandang (1959) and People v. Lucero (1958). Our
decision in People v. Mapa reversing the aforesaid doctrine came only in
1967. The sole question in this appeal is: Should appellant be acquitted on the
basis of Our rulings in Macarandang and Lucero, or should his conviction
stand in view of the complete reversal of
the Macarandang and Lucero doctrine in Mapa? The Solicitor General is of the
first view, and he accordingly recommends reversal of the appealed judgment.
Decisions of this Court, although in themselves not laws, are nevertheless
evidence of what the laws mean, and this is the reason why under Article 8 of
the New Civil Code "Judicial decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system ... ." The interpretation upon
a law by this Court constitutes, in a way, a part of the law as of the date that
law originally passed, since this Court's construction merely establishes the
contemporaneous legislative intent that law thus construed intends to

effectuate. The settled rule supported by numerous authorities is a

restatement of legal maxim "legis interpretatio legis vim obtinet" the
interpretation placed upon the written law by a competent court has the force
of law. The doctrine laid down in Lucero andMacarandang was part of the
jurisprudence, hence of the law, of the land, at the time appellant was found in
possession of the firearm in question and when he arraigned by the trial court.
It is true that the doctrine was overruled in the Mapa case in 1967, but when a
doctrine of this Court is overruled and a different view is adopted, the new
doctrine should be applied prospectively, and should not apply to parties who
had relied on the old doctrine and acted on the faith thereof. This is especially
true in the construction and application of criminal laws, where it is necessary
that the punishability of an act be reasonably foreseen for the guidance of
society.
It follows, therefore, that considering that appellant conferred his appointments
as Secret Agent and Confidential Agent and authorized to possess a firearm
pursuant to the prevailing doctrine enunciated in Macarandang andLucero,
under which no criminal liability would attach to his possession of said firearm
in spite of the absence of a license and permit therefor, appellant must be
absolved. Certainly, appellant may not be punished for an act which at the
time it was done was held not to be punishable.
WHEREFORE, the judgment appealed from is hereby reversed, and appellant
is acquitted, with costs de oficio.

G.R. No. L-68470 October 8, 1985

ALICE REYES VAN DORN, petitioner,
vs.
HON. MANUEL V. ROMILLO, JR., as Presiding Judge of Branch CX,
Regional Trial Court of the National Capital Region Pasay City and
RICHARD UPTON respondents.

MELENCIO-HERRERA, J.:\
In this Petition for certiorari and Prohibition, petitioner Alice Reyes Van Dorn
seeks to set aside the Orders, dated September 15, 1983 and August 3, 1984,
in Civil Case No. 1075-P, issued by respondent Judge, which denied her
Motion to Dismiss said case, and her Motion for Reconsideration of the
Dismissal Order, respectively.
The basic background facts are that petitioner is a citizen of the Philippines
while private respondent is a citizen of the United States; that they were
married in Hongkong in 1972; that, after the marriage, they established their
residence in the Philippines; that they begot two children born on April 4, 1973
and December 18, 1975, respectively; that the parties were divorced in
Nevada, United States, in 1982; and that petitioner has re-married also in
Nevada, this time to Theodore Van Dorn.
Dated June 8, 1983, private respondent filed suit against petitioner in Civil
Case No. 1075-P of the Regional Trial Court, Branch CXV, in Pasay City,
stating that petitioner's business in Ermita, Manila, (the Galleon Shop, for
short), is conjugal property of the parties, and asking that petitioner be ordered
to render an accounting of that business, and that private respondent be
declared with right to manage the conjugal property. Petitioner moved to
dismiss the case on the ground that the cause of action is barred by previous
judgment in the divorce proceedings before the Nevada Court wherein

respondent had acknowledged that he and petitioner had "no community

property" as of June 11, 1982. The Court below denied the Motion to Dismiss
in the mentioned case on the ground that the property involved is located in
the Philippines so that the Divorce Decree has no bearing in the case. The
denial is now the subject of this certiorari proceeding.
Generally, the denial of a Motion to Dismiss in a civil case is interlocutory and
is not subject to appeal. certiorari and Prohibition are neither the remedies to
question the propriety of an interlocutory order of the trial Court. However,
when a grave abuse of discretion was patently committed, or the lower Court
acted capriciously and whimsically, then it devolves upon this Court in a
certiorari proceeding to exercise its supervisory authority and to correct the
error committed which, in such a case, is equivalent to lack of
jurisdiction. 1 Prohibition would then lie since it would be useless and a waste
of time to go ahead with the proceedings. 2 Weconsider the petition filed in this
case within the exception, and we have given it due course.
For resolution is the effect of the foreign divorce on the parties and their
alleged conjugal property in the Philippines.
Petitioner contends that respondent is estopped from laying claim on the
alleged conjugal property because of the representation he made in the
divorce proceedings before the American Court that they had no community of
property; that the Galleon Shop was not established through conjugal funds,
and that respondent's claim is barred by prior judgment.
For his part, respondent avers that the Divorce Decree issued by the Nevada
Court cannot prevail over the prohibitive laws of the Philippines and its
declared national policy; that the acts and declaration of a foreign Court
cannot, especially if the same is contrary to public policy, divest Philippine
Courts of jurisdiction to entertain matters within its jurisdiction.
For the resolution of this case, it is not necessary to determine whether the
property relations between petitioner and private respondent, after their

marriage, were upon absolute or relative community property, upon complete

separation of property, or upon any other regime. The pivotal fact in this case
is the Nevada divorce of the parties.
The Nevada District Court, which decreed the divorce, had obtained
jurisdiction over petitioner who appeared in person before the Court during the
trial of the case. It also obtained jurisdiction over private respondent who,
giving his address as No. 381 Bush Street, San Francisco, California,
authorized his attorneys in the divorce case, Karp & Gradt Ltd., to agree to the
divorce on the ground of incompatibility in the understanding that there were
neither community property nor community obligations. 3 As explicitly stated in
the Power of Attorney he executed in favor of the law firm of KARP & GRAD
LTD., 336 W. Liberty, Reno, Nevada, to represent him in the divorce
proceedings:
xxx xxx xxx
You are hereby authorized to accept service of Summons, to
file an Answer, appear on my behalf and do an things
necessary and proper to represent me, without further
contesting, subject to the following:
1. That my spouse seeks a divorce on the ground of
incompatibility.
2. That there is no community of property to be adjudicated
by the Court.
3. 'I'hat there are no community obligations to be adjudicated
by the court.
xxx xxx xxx 4
There can be no question as to the validity of that Nevada divorce in any of
the States of the United States. The decree is binding on private respondent

as an American citizen. For instance, private respondent cannot sue

petitioner, as her husband, in any State of the Union. What he is contending in
this case is that the divorce is not valid and binding in this jurisdiction, the
same being contrary to local law and public policy.
It is true that owing to the nationality principle embodied in Article 15 of the
Civil Code, 5 only Philippine nationals are covered by the policy against
absolute divorces the same being considered contrary to our concept of public
police and morality. However, aliens may obtain divorces abroad, which may
be recognized in the Philippines, provided they are valid according to their
national law. 6 In this case, the divorce in Nevada released private respondent
from the marriage from the standards of American law, under which divorce
dissolves the marriage. As stated by the Federal Supreme Court of the United
States in Atherton vs. Atherton, 45 L. Ed. 794, 799:
The purpose and effect of a decree of divorce from the bond
of matrimony by a court of competent jurisdiction are to
change the existing status or domestic relation of husband
and wife, and to free them both from the bond. The marriage
tie when thus severed as to one party, ceases to bind either. A
husband without a wife, or a wife without a husband, is
unknown to the law. When the law provides, in the nature of a
penalty. that the guilty party shall not marry again, that party,
as well as the other, is still absolutely freed from the bond of
the former marriage.
Thus, pursuant to his national law, private respondent is no longer the
husband of petitioner. He would have no standing to sue in the case below as
petitioner's husband entitled to exercise control over conjugal assets. As he is
bound by the Decision of his own country's Court, which validly exercised
jurisdiction over him, and whose decision he does not repudiate, he is
estopped by his own representation before said Court from asserting his right
over the alleged conjugal property.

To maintain, as private respondent does, that, under our laws, petitioner has to
be considered still married to private respondent and still subject to a wife's
obligations under Article 109, et. seq. of the Civil Code cannot be just.
Petitioner should not be obliged to live together with, observe respect and
fidelity, and render support to private respondent. The latter should not
continue to be one of her heirs with possible rights to conjugal property. She
should not be discriminated against in her own country if the ends of justice
are to be served.
WHEREFORE, the Petition is granted, and respondent Judge is hereby
ordered to dismiss the Complaint filed in Civil Case No. 1075-P of his Court.
Without costs.
SO ORDERED.

G.R. No. 124862 December 22, 1998

FE D. QUITA, petitioner,
vs.
COURT OF APPEALS and BLANDINA DANDAN, * respondents.

BELLOSILLO, J.:
FE D. QUITA and Arturo T. Padlan, both Filipinos, were married in the
Philippines on 18 May 1941. They were not however blessed with children.
Somewhere along the way their relationship soured. Eventually Fe sued Arturo
for divorce in San Francisco, California, U.S.A. She submitted in the divorce
proceedings a private writing dated 19 July 1950 evidencing their agreement
to live separately from each other and a settlement of their conjugal
properties. On 23 July 1954 she obtained a final judgment of divorce. Three
(3) weeks thereafter she married a certain Felix Tupaz in the same locality but
their relationship also ended in a divorce. Still in the U.S.A., she married for
the third time, to a certain Wernimont.
On 16 April 1972 Arturo died. He left no will. On 31 August 1972 Lino Javier
Inciong filed a petition with the Regional Trial Court of Quezon City for
issuance of letters of administration concerning the estate of Arturo in favor of
the Philippine Trust Company. Respondent Blandina Dandan (also referred to
as Blandina Padlan), claiming to be the surviving spouse of Arturo Padlan, and
Claro, Alexis, Ricardo, Emmanuel, Zenaida and Yolanda, all surnamed
Padlan, named in the children of Arturo Padlan opposed the petition and
prayed for the appointment instead of Atty. Leonardo Casaba, which was
resolved in favor of the latter. Upon motion of the oppositors themselves, Atty.
Cabasal was later replaced by Higino Castillon. On 30 April 1973 the
oppositors (Blandina and Padlan children) submitted certified photocopies of
the 19 July 1950 private writing and the final judgment of divorce between

petitioner and Arturo. Later Ruperto T. Padlan, claiming to be the sole

surviving brother of the deceased Arturo, intervened.
On 7 October 1987 petitioner moved for the immediate declaration of heirs of
the decedent and the distribution of his estate. At the scheduled hearing on 23
October 1987, private respondent as well as the six (6) Padlan children and
Ruperto failed to appear despite due notice. On the same day, the trial court
required the submission of the records of birth of the Padlan children within
ten (10) days from receipt thereof, after which, with or without the documents,
the issue on the declaration of heirs would be considered submitted for
resolution. The prescribed period lapsed without the required documents
being submitted.
The trial court invoking Tenchavez v. Escao 1 which held that "a
foreign divorce between Filipino citizens sought and decreed after the
effectivity of the present Civil Code (Rep. Act 386) was not entitled to
recognition as valid in this jurisdiction," 2 disregarded the divorce between
petitioner and Arturo. Consecuently, it expressed the view that their marriage
subsisted until the death of Arturo in 1972. Neither did it consider valid their
extrajudicial settlement of conjugal properties due to lack of judicial
approval. 3 On the other hand, it opined that there was no showing that
marriage existed between private respondent and Arturo, much less was it
shown that the alleged Padlan children had been acknowledged by the
deceased as his children with her. As regards Ruperto, it found that he was a
brother of Arturo. On 27 November 1987 4 only petitioner and Ruperto were
declared the intestate heirs of Arturo. Accordingly, equal adjudication of the net
hereditary estate was ordered in favor of the two intestate heirs. 5
On motion for reconsideration, Blandina and the Padlan children were allowed
to present proofs that the recognition of the children by the deceased as his
legitimate children, except Alexis who was recognized as his illegitimate child,
had been made in their respective records of birth. Thus on 15 February
1988 6 partial reconsideration was granted declaring the Padlan children, with
the exception of Alexis, entitled to one-half of the estate to the exclusion of

Ruperto Padlan, and petitioner to the other half. 7 Private respondent was not
declared an heir. Although it was stated in the aforementioned records of birth
that she and Arturo were married on 22 April 1947, their marriage was clearly
void since it was celebrated during the existence of his previous marriage to
petitioner.
In their appeal to the Court of Appeals, Blandina and her children assigned as
one of the errors allegedly committed by the trial court the circumstance that
the case was decided without a hearing, in violation of Sec. 1, Rule 90, of the
Rules of Court, which provides that if there is a controversy before the court as
to who are the lawful heirs of the deceased person or as to the distributive
shares to which each person is entitled under the law, the controversy shall be
heard and decided as in ordinary cases.
Respondent appellate court found this ground alone sufficient to sustain the
appeal; hence, on 11 September 1995 it declared null and void the 27
November 1987 decision and 15 February 1988 order of the trial court, and
directed the remand of the case to the trial court for further proceedings. 8 On
18 April 1996 it denied reconsideration. 9
Should this case be remanded to the lower court for further proceedings?
Petitioner insists that there is no need because, first, no legal or factual issue
obtains for resolution either as to the heirship of the Padlan children or as to
the decedent; and, second, the issue as to who between petitioner and private
respondent is the proper hier of the decedent is one of law which can be
resolved in the present petition based on establish facts and admissions of the
parties.
We cannot sustain petitioner. The provision relied upon by respondent court is
clear: If there is a controversybefore the court as to who are the lawful heirs of
the deceased person or as to the distributive shares to which each person is
entitled under the law, the controversy shall be heard and decided as in
ordinary cases.

We agree with petitioner that no dispute exists either as to the right of the six
(6) Padlan children to inherit from the decedent because there are proofs that
they have been duly acknowledged by him and petitioner herself even
recognizes them as heirs of Arturo Padlan; 10 nor as to their respective
hereditary shares. But controversy remains as to who is the legitimate
surviving spouse of Arturo. The trial court, after the parties other than
petitioner failed to appear during the scheduled hearing on 23 October 1987 of
the motion for immediate declaration of heirs and distribution of estate, simply
issued an order requiring the submission of the records of birth of the Padlan
children within ten (10) days from receipt thereof, after which, with or without
the documents, the issue on declaration of heirs would be deemed submitted
for resolution.
We note that in her comment to petitioner's motion private respondent raised,
among others, the issue as to whether petitioner was still entitled to inherit
from the decedent considering that she had secured a divorce in the U.S.A.
and in fact had twice remarried. She also invoked the above quoted
procedural rule. 11 To this, petitioner replied that Arturo was a Filipino and as
such remained legally married to her in spite of the divorce they
obtained. 12Reading between the lines, the implication is that petitioner was no
longer a Filipino citizen at the time of her divorce from Arturo. This should
have prompted the trial court to conduct a hearing to establish her citizenship.
The purpose of a hearing is to ascertain the truth of the matters in issue with
the aid of documentary and testimonial evidence as well as the arguments of
the parties either supporting or opposing the evidence. Instead, the lower
court perfunctorily settled her claim in her favor by merely applying the ruling
in Tenchavez v. Escao.
Then in private respondent's motion to set aside and/or reconsider the lower
court's decision she stressed that the citizenship of petitioner was relevant in
the light of the ruling in Van Dorn v. Romillo Jr. 13 that aliens may obtain
divorces abroad, which may be recognized in the Philippines, provided they
are valid according to their national law. She prayed therefore that the case be
set for hearing. 14 Petitioner opposed the motion but failed to squarely address

the issue on her citizenship. 15 The trial court did not grant private respondent's
prayer for a hearing but proceeded to resolve her motion with the finding that
both petitioner and Arturo were "Filipino citizens and were married in the
Philippines." 16 It maintained that their divorce obtained in 1954 in San
Francisco, California, U.S.A., was not valid in Philippine jurisdiction. We
deduce that the finding on their citizenship pertained solely to the time of their
marriage as the trial court was not supplied with a basis to determine
petitioner's citizenship at the time of their divorce. The doubt persisted as to
whether she was still a Filipino citizen when their divorce was decreed. The
trial court must have overlooked the materiality of this aspect. Once proved
that she was no longer a Filipino citizen at the time of their divorce, Van
Dorn would become applicable and petitioner could very well lose her right to
inherit from Arturo.
Respondent again raised in her appeal the issue on petitioner's
citizenship; 17 it did not merit enlightenment however from petitioner. 18 In the
present proceeding, petitioner's citizenship is brought anew to the fore by
private respondent. She even furnishes the Court with the transcript of
stenographic notes taken on 5 May 1995 during the hearing for the
reconstitution of the original of a certain transfer certificate title as well as the
issuance of new owner's duplicate copy thereof before another trial court.
When asked whether she was an American citizen petitioner answered that
she was since 1954.19 Significantly, the decree of divorce of petitioner and
Arturo was obtained in the same year. Petitioner however did not bother to file
a reply memorandum to erase the uncertainty about her citizenship at the time
of their divorce, a factual issue requiring hearings to be conducted by the trial
court. Consequently, respondent appellate court did not err in ordering the
case returned to the trial court for further proceedings.
We emphasize however that the question to be determined by the trial court
should be limited only to the right of petitioner to inherit from Arturo as his
surviving spouse. Private respondent's claim to heirship was already resolved
by the trial court. She and Arturo were married on 22 April 1947 while the prior
marriage of petitioner and Arturo was subsisting thereby resulting in a

bigamous marriage considered void from the beginning under Arts. 80 and 83
of the Civil Code. Consequently, she is not a surviving spouse that can inherit
from him as this status presupposes a legitimate relationship. 20
As regards the motion of private respondent for petitioner and a her counsel to
be declared in contempt of court and that the present petition be dismissed for
forum shopping, 21 the same lacks merit. For forum shopping to exist the
actions must involve the same transactions and same essential facts and
circumstances. There must also be identical causes of action, subject matter
and issue. 22 The present petition deals with declaration of heirship while the
subsequent petitions filed before the three (3) trial courts concern the issuance
of new owner's duplicate copies of titles of certain properties belonging to the
estate of Arturo. Obviously, there is no reason to declare the existence of
forum shopping.
WHEREFORE, the petition is DENIED. The decision of respondent Court of
Appeals ordering the remand of the case to the court of origin for further
proceedings and declaring null and void its decision holding petitioner Fe D.
Quita and Ruperto T. Padlan as intestate heirs is AFFIRMED. The order of the
appellate court modifying its previous decision by granting one-half (1/2) of the
net hereditary estate to the Padlan children, namely, Claro, Ricardo,
Emmanuel, Zenaida and Yolanda, with the exception of Alexis, all surnamed
Padlan, instead of Arturo's brother Ruperto Padlan, is likewise AFFIRMED.
The Court however emphasizes that the reception of evidence by the trial
court should he limited to the hereditary rights of petitioner as the surviving
spouse of Arturo Padlan.
The motion to declare petitioner and her counsel in contempt of court and to
dismiss the present petition for forum shopping is DENIED.
SO ORDERED.

G.R. No. 167109

February 6, 2007

FELICITAS AMOR-CATALAN, Petitioner,

vs.
COURT OF APPEALS, MANILA, ORLANDO B. CATALAN and MEROPE E.
BRAGANZA, Respondents.
DECISION

On October 10, 2000, the RTC rendered judgment in favor of the petitioner,
the dispositive portion of which reads:
WHEREFORE, judgment is declared in favor of plaintiff Felicitas Amor Catalan
and against defendants Orlando B. Catalan and Merope E. Braganza, as
follows:
1) The subsequent marriage of Merope Braganza with Orlando B.
Catalan is declared null and void ab initio;

YNARES-SANTIAGO, J.:
This petition for review assails the Decision 1 of the Court of Appeals in CAG.R. CV No. 69875 dated August 6, 2004, which reversed the Decision 2 of the
Regional Trial Court (RTC) of Dagupan City, Branch 44, in Civil Case No. D10636, declaring the marriage between respondents Orlando B. Catalan and
Merope E. Braganza void on the ground of bigamy, as well as the
Resolution3 dated January 27, 2005, which denied the motion for
reconsideration.

2) The defendants are ordered jointly and severally to pay plaintiff by

way of moral damages the amount of P300,000.00, exemplary
damages in the amount of P200,000.00 and attorneys fees in the
amount of P50,000.00, including costs of this suit; and
3) The donation in consideration of marriage is ordered revoked and
the property donated is ordered awarded to the heirs of Juliana
Braganza.

Petitioner Felicitas Amor-Catalan married respondent Orlando on June 4,

1950 in Mabini, Pangasinan.4Thereafter, they migrated to the United States of
America and allegedly became naturalized citizens thereof. After 38 years of
marriage, Felicitas and Orlando divorced in April 1988. 5

Furnish copies of this Decision to Atty. Napoleon B. Arenas, Jr. and Atty. Nolan
Evangelista.

Two months after the divorce, or on June 16, 1988, Orlando married
respondent Merope in Calasiao, Pangasinan. 6 Contending that said marriage
was bigamous since Merope had a prior subsisting marriage with Eusebio
Bristol, petitioner filed a petition for declaration of nullity of marriage with
damages in the RTC of Dagupan City7 against Orlando and Merope.

Respondents appealed the decision to the Court of Appeals, which reversed

the decision of the RTC, thus:

Respondents filed a motion to dismiss 8 on the ground of lack of cause of

action as petitioner was allegedly not a real party-in-interest, but it was
denied.9 Trial on the merits ensued.

SO ORDERED.10

WHEREFORE, premises considered, we hereby GRANT the appeal and

consequently REVERSE and SET ASIDE the appealed decision. We likewise
DISMISS Civil Case No. D-10636, RTC, Branch 44, Dagupan City. No costs.
SO ORDERED.11
After the motion for reconsideration was denied, petitioner filed the instant
petition for review raising the following issues:

I.
WHETHER PETITIONER HAS THE REQUIRED STANDING IN COURT TO
QUESTION THE NULLITY OF THE MARRIAGE BETWEEN
RESPONDENTS;
II.
WHETHER THE FAILURE OF THE COURT OF APPEALS TO DECLARE
THE QUESTIONED MARRIAGE VOID CONSTITUTES REVERSIBLE
ERROR.12
Petitioner contends that the bigamous marriage of the respondents, which
brought embarrassment to her and her children, confers upon her an interest
to seek judicial remedy to address her grievances and to protect her family
from further embarrassment and humiliation. She claims that the Court of
Appeals committed reversible error in not declaring the marriage void despite
overwhelming evidence and the state policy discouraging illegal and immoral
marriages.13
The main issue to be resolved is whether petitioner has the personality to file a
petition for the declaration of nullity of marriage of the respondents on the
ground of bigamy. However, this issue may not be resolved without first
determining the corollary factual issues of whether the petitioner and
respondent Orlando had indeed become naturalized American citizens and
whether they had actually been judicially granted a divorce decree.
While it is a settled rule that the Court is not a trier of facts and does not
normally undertake the re-examination of the evidence presented by the
contending parties during the trial of the case, 14 there are, however,
exceptions to this rule, like when the findings of facts of the RTC and the Court
of Appeals are conflicting, or when the findings are conclusions without citation
of specific evidence on which they are based. 15

Both the RTC and the Court of Appeals found that petitioner and respondent
Orlando were naturalized American citizens and that they obtained a divorce
decree in April 1988. However, after a careful review of the records, we note
that other than the allegations in the complaint and the testimony during the
trial, the records are bereft of competent evidence to prove their naturalization
and divorce.
The Court of Appeals therefore had no basis when it held:
In light of the allegations of Felicitas complaint and the documentary and
testimonial e vidence she presented, we deem it undisputed that Orlando
and Felicitas are American citizens and had this citizenship status when they
secured their divorce decree in April 1988. We are not therefore dealing in this
case with Filipino citizens whose marital status is governed by the Family
Code and our Civil Code, but with American citizens who secured their divorce
in the U.S. and who are considered by their national law to be free to contract
another marriage. x x x16
Further, the Court of Appeals mistakenly considered the failure of the
petitioner to refute or contest the allegation in respondents brief, that she and
respondent Orlando were American citizens at the time they secured their
divorce in April 1988, as sufficient to establish the fact of naturalization and
divorce.17 We note that it was the petitioner who alleged in her complaint that
they acquired American citizenship and that respondent Orlando obtained a
judicial divorce decree.18 It is settled rule that one who alleges a fact has the
burden of proving it and mere allegation is not evidence. 19
Divorce means the legal dissolution of a lawful union for a cause arising after
marriage. But divorces are of different types. The two basic ones are (1)
absolute divorce or a vinculo matrimonii and (2) limited divorce or a mensa et
thoro. The first kind terminates the marriage, while the second suspends it and
leaves the bond in full force.20 A divorce obtained abroad by an alien may be
recognized in our jurisdiction, provided such decree is valid according to the
national law of the foreigner.21 However, before it can be recognized by our

courts, the party pleading it must prove the divorce as a fact and demonstrate
its conformity to the foreign law allowing it, which must be proved considering
that our courts cannot take judicial notice of foreign laws. 22
Without the divorce decree and foreign law as part of the evidence, we cannot
rule on the issue of whether petitioner has the personality to file the petition for
declaration of nullity of marriage. After all, she may have the personality to file
the petition if the divorce decree obtained was a limited divorce or a mensa et
thoro; or the foreign law may restrict remarriage even after the divorce decree
becomes absolute.23 In such case, the RTC would be correct to declare the
marriage of the respondents void for being bigamous, there being already in
evidence two existing marriage certificates, which were both obtained in the
Philippines, one in Mabini, Pangasinan dated December 21, 1959 between
Eusebio Bristol and respondent Merope, 24 and the other, in Calasiao,
Pangasinan dated June 16, 1988 between the respondents. 25
However, if there was indeed a divorce decree obtained and which, following
the national law of Orlando, does not restrict remarriage, the Court of Appeals
would be correct in ruling that petitioner has no legal personality to file a
petition to declare the nullity of marriage, thus:
Freed from their existing marital bond, each of the former spouses no longer
has any interest nor should each have the personality to inquire into the
marriage that the other might subsequently contract. x x x Viewed from
another perspective, Felicitas has no existing interest in Orlandos subsequent
marriage since the validity, as well as any defect or infirmity, of this
subsequent marriage will not affect the divorced status of Orlando and
Felicitas. x x x26
True, under the New Civil Code which is the law in force at the time the
respondents were married, or even in the Family Code, there is no specific
provision as to who can file a petition to declare the nullity of marriage;
however, only a party who can demonstrate "proper interest" can file the
same. A petition to declare the nullity of marriage, like any other actions, must

be prosecuted or defended in the name of the real party in interest 27 and must
be based on a cause of action.28 Thus, in Nial v. Bayadog,29 the Court held
that the children have the personality to file the petition to declare the nullity of
the marriage of their deceased father to their stepmother as it affects their
successional rights.1awphi1.net
Significantly, Section 2(a) of The Rule on Declaration of Absolute Nullity of
Void Marriages and Annulment of Voidable Marriages, which took effect on
March 15, 2003, now specifically provides:
SECTION 2. Petition for declaration of absolute nullity of void marriages.
(a) Who may file. A petition for declaration of absolute nullity of void
marriage may be filed solely by the husband or the wife.
xxxx
In fine, petitioners personality to file the petition to declare the nullity of
marriage cannot be ascertained because of the absence of the divorce decree
and the foreign law allowing it. Hence, a remand of the case to the trial court
for reception of additional evidence is necessary to determine whether
respondent Orlando was granted a divorce decree and whether the foreign
law which granted the same allows or restricts remarriage. If it is proved that a
valid divorce decree was obtained and the same did not allow respondent
Orlandos remarriage, then the trial court should declare respondents
marriage as bigamous and void ab initio but reduce the amount of moral
damages from P300,000.00 to P50,000.00 and exemplary damages
from P200,000.00 to P25,000.00. On the contrary, if it is proved that a valid
divorce decree was obtained which allowed Orlando to remarry, then the trial
court must dismiss the instant petition to declare nullity of marriage on the
ground that petitioner Felicitas Amor-Catalan lacks legal personality to file the
same.

WHEREFORE, in view of the foregoing, let this case be REMANDED to the

trial court for its proper disposition. No costs.
SO ORDERED.

G.R. No. 133743

February 6, 2007

EDGAR SAN LUIS, Petitioner,

vs.
FELICIDAD SAN LUIS, Respondent.
x ---------------------------------------------------- x
G.R. No. 134029

February 6, 2007

RODOLFO SAN LUIS, Petitioner,

vs.
FELICIDAD SAGALONGOS alias FELICIDAD SAN LUIS, Respondent.
DECISION
YNARES-SANTIAGO, J.:
Before us are consolidated petitions for review assailing the February 4, 1998
Decision 1 of the Court of Appeals in CA-G.R. CV No. 52647, which reversed
and set aside the September 12, 1995 2 and January 31, 1996 3Resolutions of
the Regional Trial Court of Makati City, Branch 134 in SP. Proc. No. M-3708;
and its May 15, 1998 Resolution 4 denying petitioners motion for
reconsideration.
The instant case involves the settlement of the estate of Felicisimo T. San Luis
(Felicisimo), who was the former governor of the Province of Laguna. During
his lifetime, Felicisimo contracted three marriages. His first marriage was with
Virginia Sulit on March 17, 1942 out of which were born six children, namely:
Rodolfo, Mila, Edgar, Linda, Emilita and Manuel. On August 11, 1963, Virginia
predeceased Felicisimo.
Five years later, on May 1, 1968, Felicisimo married Merry Lee Corwin, with
whom he had a son, Tobias. However, on October 15, 1971, Merry Lee, an
American citizen, filed a Complaint for Divorce 5 before the Family Court of the

First Circuit, State of Hawaii, United States of America (U.S.A.), which issued
a Decree Granting Absolute Divorce and Awarding Child Custody on
December 14, 1973. 6
On June 20, 1974, Felicisimo married respondent Felicidad San Luis, then
surnamed Sagalongos, before Rev. Fr. William Meyer, Minister of the United
Presbyterian at Wilshire Boulevard, Los Angeles, California, U.S.A. 7 He had
no children with respondent but lived with her for 18 years from the time of
their marriage up to his death on December 18, 1992.
Thereafter, respondent sought the dissolution of their conjugal partnership
assets and the settlement of Felicisimos estate. On December 17, 1993, she
filed a petition for letters of administration 8 before the Regional Trial Court of
Makati City, docketed as SP. Proc. No. M-3708 which was raffled to Branch
146 thereof.
Respondent alleged that she is the widow of Felicisimo; that, at the time of his
death, the decedent was residing at 100 San Juanico Street, New Alabang
Village, Alabang, Metro Manila; that the decedents surviving heirs are
respondent as legal spouse, his six children by his first marriage, and son by
his second marriage; that the decedent left real properties, both conjugal and
exclusive, valued at P30,304,178.00 more or less; that the decedent does not
have any unpaid debts. Respondent prayed that the conjugal partnership
assets be liquidated and that letters of administration be issued to her.
On February 4, 1994, petitioner Rodolfo San Luis, one of the children of
Felicisimo by his first marriage, filed a motion to dismiss 9 on the grounds of
improper venue and failure to state a cause of action. Rodolfo claimed that the
petition for letters of administration should have been filed in the Province of
Laguna because this was Felicisimos place of residence prior to his death. He
further claimed that respondent has no legal personality to file the petition
because she was only a mistress of Felicisimo since the latter, at the time of
his death, was still legally married to Merry Lee.

On February 15, 1994, Linda invoked the same grounds and joined her
brother Rodolfo in seeking the dismissal 10 of the petition. On February 28,
1994, the trial court issued an Order 11 denying the two motions to dismiss.
Unaware of the denial of the motions to dismiss, respondent filed on March 5,
1994 her opposition 12 thereto. She submitted documentary evidence showing
that while Felicisimo exercised the powers of his public office in Laguna, he
regularly went home to their house in New Alabang Village, Alabang, Metro
Manila which they bought sometime in 1982. Further, she presented the
decree of absolute divorce issued by the Family Court of the First Circuit,
State of Hawaii to prove that the marriage of Felicisimo to Merry Lee had
already been dissolved. Thus, she claimed that Felicisimo had the legal
capacity to marry her by virtue of paragraph 2, 13 Article 26 of the Family Code
and the doctrine laid down in Van Dorn v. Romillo, Jr. 14
Thereafter, Linda, Rodolfo and herein petitioner Edgar San Luis, separately
filed motions for reconsideration from the Order denying their motions to
dismiss. 15 They asserted that paragraph 2, Article 26 of the Family Code
cannot be given retroactive effect to validate respondents bigamous marriage
with Felicisimo because this would impair vested rights in derogation of Article
256 16 of the Family Code.
On April 21, 1994, Mila, another daughter of Felicisimo from his first marriage,
filed a motion to disqualify Acting Presiding Judge Anthony E. Santos from
hearing the case.
On October 24, 1994, the trial court issued an Order 17 denying the motions for
reconsideration. It ruled that respondent, as widow of the decedent,
possessed the legal standing to file the petition and that venue was properly
laid. Meanwhile, the motion for disqualification was deemed moot and
academic 18 because then Acting Presiding Judge Santos was substituted by
Judge Salvador S. Tensuan pending the resolution of said motion.

Mila filed a motion for inhibition 19 against Judge Tensuan on November 16,
1994. On even date, Edgar also filed a motion for reconsideration 20 from the
Order denying their motion for reconsideration arguing that it does not state
the facts and law on which it was based.
On November 25, 1994, Judge Tensuan issued an Order 21 granting the
motion for inhibition. The case was re-raffled to Branch 134 presided by Judge
Paul T. Arcangel.
On April 24, 1995, 22 the trial court required the parties to submit their
respective position papers on the twin issues of venue and legal capacity of
respondent to file the petition. On May 5, 1995, Edgar manifested 23 that he is
adopting the arguments and evidence set forth in his previous motion for
reconsideration as his position paper. Respondent and Rodolfo filed their
position papers on June 14, 24 and June 20, 25 1995, respectively.
On September 12, 1995, the trial court dismissed the petition for letters of
administration. It held that, at the time of his death, Felicisimo was the duly
elected governor and a resident of the Province of Laguna. Hence, the petition
should have been filed in Sta. Cruz, Laguna and not in Makati City. It also
ruled that respondent was without legal capacity to file the petition for letters of
administration because her marriage with Felicisimo was bigamous, thus, void
ab initio. It found that the decree of absolute divorce dissolving Felicisimos
marriage to Merry Lee was not valid in the Philippines and did not bind
Felicisimo who was a Filipino citizen. It also ruled that paragraph 2, Article 26
of the Family Code cannot be retroactively applied because it would impair the
vested rights of Felicisimos legitimate children.
Respondent moved for reconsideration 26 and for the disqualification 27 of
Judge Arcangel but said motions were denied. 28
Respondent appealed to the Court of Appeals which reversed and set aside
the orders of the trial court in its assailed Decision dated February 4, 1998, the
dispositive portion of which states:

WHEREFORE, the Orders dated September 12, 1995 and January 31, 1996
are hereby REVERSED and SET ASIDE; the Orders dated February 28 and
October 24, 1994 are REINSTATED; and the records of the case is
REMANDED to the trial court for further proceedings. 29
The appellante court ruled that under Section 1, Rule 73 of the Rules of Court,
the term "place of residence" of the decedent, for purposes of fixing the venue
of the settlement of his estate, refers to the personal, actual or physical
habitation, or actual residence or place of abode of a person as distinguished
from legal residence or domicile. It noted that although Felicisimo discharged
his functions as governor in Laguna, he actually resided in Alabang,
Muntinlupa. Thus, the petition for letters of administration was properly filed in
Makati City.
The Court of Appeals also held that Felicisimo had legal capacity to marry
respondent by virtue of paragraph 2, Article 26 of the Family Code and the
rulings in Van Dorn v. Romillo, Jr. 30 and Pilapil v. Ibay-Somera. 31 It found that
the marriage between Felicisimo and Merry Lee was validly dissolved by virtue
of the decree of absolute divorce issued by the Family Court of the First
Circuit, State of Hawaii. As a result, under paragraph 2, Article 26, Felicisimo
was capacitated to contract a subsequent marriage with respondent. Thus
With the well-known rule express mandate of paragraph 2, Article 26, of the
Family Code of the Philippines, the doctrines in Van Dorn, Pilapil, and the
reason and philosophy behind the enactment of E.O. No. 227, there is no
justiciable reason to sustain the individual view sweeping statement of
Judge Arc[h]angel, that "Article 26, par. 2 of the Family Code, contravenes the
basic policy of our state against divorce in any form whatsoever." Indeed,
courts cannot deny what the law grants. All that the courts should do is to give
force and effect to the express mandate of the law. The foreign divorce having
been obtained by the Foreigner on December 14, 1992,32 the Filipino divorcee,
"shall x x x have capacity to remarry under Philippine laws". For this reason,
the marriage between the deceased and petitioner should not be denominated
as "a bigamous marriage.

Therefore, under Article 130 of the Family Code, the petitioner as the surviving
spouse can institute the judicial proceeding for the settlement of the estate of
the deceased. x x x 33
Edgar, Linda, and Rodolfo filed separate motions for reconsideration 34 which
were denied by the Court of Appeals.
On July 2, 1998, Edgar appealed to this Court via the instant petition for
review on certiorari. 35 Rodolfo later filed a manifestation and motion to adopt
the said petition which was granted. 36
In the instant consolidated petitions, Edgar and Rodolfo insist that the venue
of the subject petition for letters of administration was improperly laid because
at the time of his death, Felicisimo was a resident of Sta. Cruz, Laguna. They
contend that pursuant to our rulings in Nuval v. Guray 37 and Romualdez v.
RTC, Br. 7, Tacloban City, 38 "residence" is synonymous with "domicile" which
denotes a fixed permanent residence to which when absent, one intends to
return. They claim that a person can only have one domicile at any given time.
Since Felicisimo never changed his domicile, the petition for letters of
administration should have been filed in Sta. Cruz, Laguna.
Petitioners also contend that respondents marriage to Felicisimo was void
and bigamous because it was performed during the subsistence of the latters
marriage to Merry Lee. They argue that paragraph 2, Article 26 cannot be
retroactively applied because it would impair vested rights and ratify the void
bigamous marriage. As such, respondent cannot be considered the surviving
wife of Felicisimo; hence, she has no legal capacity to file the petition for
letters of administration.
The issues for resolution: (1) whether venue was properly laid, and (2)
whether respondent has legal capacity to file the subject petition for letters of
administration.
The petition lacks merit.

Under Section 1, 39 Rule 73 of the Rules of Court, the petition for letters of
administration of the estate of Felicisimo should be filed in the Regional Trial
Court of the province "in which he resides at the time of his death." In the case
of Garcia Fule v. Court of Appeals, 40 we laid down the doctrinal rule for
determining the residence as contradistinguished from domicile of the
decedent for purposes of fixing the venue of the settlement of his estate:
[T]he term "resides" connotes ex vi termini "actual residence" as distinguished
from "legal residence or domicile." This term "resides," like the terms "residing"
and "residence," is elastic and should be interpreted in the light of the object or
purpose of the statute or rule in which it is employed. In the application of
venue statutes and rules Section 1, Rule 73 of the Revised Rules of Court is
of such nature residence rather than domicile is the significant factor. Even
where the statute uses the word "domicile" still it is construed as meaning
residence and not domicile in the technical sense. Some cases make a
distinction between the terms "residence" and "domicile" but as generally used
in statutes fixing venue, the terms are synonymous, and convey the same
meaning as the term "inhabitant." In other words, "resides" should be viewed
or understood in its popular sense, meaning, the personal, actual or physical
habitation of a person, actual residence or place of abode. It signifies physical
presence in a place and actual stay thereat. In this popular sense, the term
means merely residence, that is, personal residence, not legal residence or
domicile. Residence simply requires bodily presence as an inhabitant in a
given place, while domicile requires bodily presence in that place and also an
intention to make it ones domicile. No particular length of time of residence is
required though; however, the residence must be more than
temporary.41 (Emphasis supplied)
It is incorrect for petitioners to argue that "residence," for purposes of fixing the
venue of the settlement of the estate of Felicisimo, is synonymous with
"domicile." The rulings in Nuval and Romualdez are inapplicable to the instant
case because they involve election cases. Needless to say, there is a
distinction between "residence" for purposes of election laws and "residence"
for purposes of fixing the venue of actions. In election cases, "residence" and

"domicile" are treated as synonymous terms, that is, the fixed permanent
residence to which when absent, one has the intention of
returning. 42 However, for purposes of fixing venue under the Rules of Court,
the "residence" of a person is his personal, actual or physical habitation, or
actual residence or place of abode, which may not necessarily be his legal
residence or domicile provided he resides therein with continuity and
consistency.43 Hence, it is possible that a person may have his residence in
one place and domicile in another.
In the instant case, while petitioners established that Felicisimo was domiciled
in Sta. Cruz, Laguna, respondent proved that he also maintained a residence
in Alabang, Muntinlupa from 1982 up to the time of his death. Respondent
submitted in evidence the Deed of Absolute Sale 44 dated January 5, 1983
showing that the deceased purchased the aforesaid property. She also
presented billing statements 45 from the Philippine Heart Center and Chinese
General Hospital for the period August to December 1992 indicating the
address of Felicisimo at "100 San Juanico, Ayala Alabang, Muntinlupa."
Respondent also presented proof of membership of the deceased in the Ayala
Alabang Village Association 46 and Ayala Country Club, Inc., 47 letterenvelopes 48 from 1988 to 1990 sent by the deceaseds children to him at his
Alabang address, and the deceaseds calling cards 49stating that his home/city
address is at "100 San Juanico, Ayala Alabang Village, Muntinlupa" while his
office/provincial address is in "Provincial Capitol, Sta. Cruz, Laguna."
From the foregoing, we find that Felicisimo was a resident of Alabang,
Muntinlupa for purposes of fixing the venue of the settlement of his estate.
Consequently, the subject petition for letters of administration was validly filed
in the Regional Trial Court 50 which has territorial jurisdiction over Alabang,
Muntinlupa. The subject petition was filed on December 17, 1993. At that time,
Muntinlupa was still a municipality and the branches of the Regional Trial
Court of the National Capital Judicial Region which had territorial jurisdiction
over Muntinlupa were then seated in Makati City as per Supreme Court
Administrative Order No. 3. 51 Thus, the subject petition was validly filed before
the Regional Trial Court of Makati City.

Anent the issue of respondent Felicidads legal personality to file the petition
for letters of administration, we must first resolve the issue of whether a
Filipino who is divorced by his alien spouse abroad may validly remarry under
the Civil Code, considering that Felicidads marriage to Felicisimo was
solemnized on June 20, 1974, or before the Family Code took effect on
August 3, 1988. In resolving this issue, we need not retroactively apply the
provisions of the Family Code, particularly Art. 26, par. (2) considering that
there is sufficient jurisprudential basis allowing us to rule in the affirmative.
The case of Van Dorn v. Romillo, Jr. 52 involved a marriage between a
foreigner and his Filipino wife, which marriage was subsequently dissolved
through a divorce obtained abroad by the latter. Claiming that the divorce was
not valid under Philippine law, the alien spouse alleged that his interest in the
properties from their conjugal partnership should be protected. The Court,
however, recognized the validity of the divorce and held that the alien spouse
had no interest in the properties acquired by the Filipino wife after the divorce.
Thus:
In this case, the divorce in Nevada released private respondent from the
marriage from the standards of American law, under which divorce dissolves
the marriage. As stated by the Federal Supreme Court of the United States in
Atherton vs. Atherton, 45 L. Ed. 794, 799:
"The purpose and effect of a decree of divorce from the bond of matrimony by
a competent jurisdiction are to change the existing status or domestic relation
of husband and wife, and to free them both from the bond. The marriage tie,
when thus severed as to one party, ceases to bind either. A husband without a
wife, or a wife without a husband, is unknown to the law. When the law
provides, in the nature of a penalty, that the guilty party shall not marry again,
that party, as well as the other, is still absolutely freed from the bond of the
former marriage."
Thus, pursuant to his national law, private respondent is no longer the
husband of petitioner. He would have no standing to sue in the case below as

petitioners husband entitled to exercise control over conjugal assets. As he is

bound by the Decision of his own countrys Court, which validly exercised
jurisdiction over him, and whose decision he does not repudiate, he is
estopped by his own representation before said Court from asserting his right
over the alleged conjugal property. 53
As to the effect of the divorce on the Filipino wife, the Court ruled that she
should no longer be considered married to the alien spouse. Further, she
should not be required to perform her marital duties and obligations. It held:
To maintain, as private respondent does, that, under our laws, petitioner
has to be considered still married to private respondent and still subject
to a wife's obligations under Article 109, et. seq. of the Civil Code cannot
be just. Petitioner should not be obliged to live together with, observe respect
and fidelity, and render support to private respondent. The latter should not
continue to be one of her heirs with possible rights to conjugal property. She
should not be discriminated against in her own country if the ends of
justice are to be served. 54 (Emphasis added)
This principle was thereafter applied in Pilapil v. Ibay-Somera 55 where the
Court recognized the validity of a divorce obtained abroad. In the said case, it
was held that the alien spouse is not a proper party in filing the adultery suit
against his Filipino wife. The Court stated that "the severance of the marital
bond had the effect of dissociating the former spouses from each other, hence
the actuations of one would not affect or cast obloquy on the other." 56
Likewise, in Quita v. Court of Appeals, 57 the Court stated that where a Filipino
is divorced by his naturalized foreign spouse, the ruling in Van
Dorn applies. 58 Although decided on December 22, 1998, the divorce in the
said case was obtained in 1954 when the Civil Code provisions were still in
effect.
The significance of the Van Dorn case to the development of limited
recognition of divorce in the Philippines cannot be denied. The ruling has long

been interpreted as severing marital ties between parties in a mixed marriage

and capacitating the Filipino spouse to remarry as a necessary consequence
of upholding the validity of a divorce obtained abroad by the alien spouse. In
his treatise, Dr. Arturo M. Tolentino cited Van Dorn stating that "if the foreigner
obtains a valid foreign divorce, the Filipino spouse shall have capacity to
remarry under Philippine law." 59 In Garcia v. Recio, 60 the Court likewise cited
the aforementioned case in relation to Article 26. 61
In the recent case of Republic v. Orbecido III, 62 the historical background and
legislative intent behind paragraph 2, Article 26 of the Family Code were
discussed, to wit:
Brief Historical Background
On July 6, 1987, then President Corazon Aquino signed into law Executive
Order No. 209, otherwise known as the "Family Code," which took effect on
August 3, 1988. Article 26 thereof states:
All marriages solemnized outside the Philippines in accordance with the laws
in force in the country where they were solemnized, and valid there as such,
shall also be valid in this country, except those prohibited under Articles 35,
37, and 38.
On July 17, 1987, shortly after the signing of the original Family Code,
Executive Order No. 227 was likewise signed into law, amending Articles 26,
36, and 39 of the Family Code. A second paragraph was added to Article 26.
As so amended, it now provides:
ART. 26. All marriages solemnized outside the Philippines in accordance with
the laws in force in the country where they were solemnized, and valid there
as such, shall also be valid in this country, except those prohibited under
Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly obtained abroad by the alien

spouse capacitating him or her to remarry, the Filipino spouse shall have
capacity to remarry under Philippine law. (Emphasis supplied)
xxxx
Legislative Intent
Records of the proceedings of the Family Code deliberations showed that the
intent of Paragraph 2 of Article 26, according to Judge Alicia Sempio-Diy, a
member of the Civil Code Revision Committee, is to avoid the absurd situation
where the Filipino spouse remains married to the alien spouse who, after
obtaining a divorce, is no longer married to the Filipino spouse.
Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case
of Van Dorn v. Romillo, Jr. TheVan Dorn case involved a marriage
between a Filipino citizen and a foreigner. The Court held therein that a
divorce decree validly obtained by the alien spouse is valid in the
Philippines, and consequently, the Filipino spouse is capacitated to
remarry under Philippine law. 63 (Emphasis added)
As such, the Van Dorn case is sufficient basis in resolving a situation where a
divorce is validly obtained abroad by the alien spouse. With the enactment of
the Family Code and paragraph 2, Article 26 thereof, our lawmakers codified
the law already established through judicial precedent.1awphi1.net
Indeed, when the object of a marriage is defeated by rendering its continuance
intolerable to one of the parties and productive of no possible good to the
community, relief in some way should be obtainable. 64 Marriage, being a
mutual and shared commitment between two parties, cannot possibly be
productive of any good to the society where one is considered released from
the marital bond while the other remains bound to it. Such is the state of
affairs where the alien spouse obtains a valid divorce abroad against the
Filipino spouse, as in this case.

Petitioners cite Articles 15 65 and 17 66 of the Civil Code in stating that the
divorce is void under Philippine law insofar as Filipinos are concerned.
However, in light of this Courts rulings in the cases discussed above, the
Filipino spouse should not be discriminated against in his own country if the
ends of justice are to be served. 67 In Alonzo v. Intermediate Appellate
Court, 68 the Court stated:
But as has also been aptly observed, we test a law by its results; and likewise,
we may add, by its purposes. It is a cardinal rule that, in seeking the meaning
of the law, the first concern of the judge should be to discover in its provisions
the intent of the lawmaker. Unquestionably, the law should never be
interpreted in such a way as to cause injustice as this is never within the
legislative intent. An indispensable part of that intent, in fact, for we presume
the good motives of the legislature, is to render justice.
Thus, we interpret and apply the law not independently of but in consonance
with justice. Law and justice are inseparable, and we must keep them so. To
be sure, there are some laws that, while generally valid, may seem arbitrary
when applied in a particular case because of its peculiar circumstances. In
such a situation, we are not bound, because only of our nature and functions,
to apply them just the same, in slavish obedience to their language. What we
do instead is find a balance between the word and the will, that justice may be
done even as the law is obeyed.
As judges, we are not automatons. We do not and must not unfeelingly apply
the law as it is worded, yielding like robots to the literal command without
regard to its cause and consequence. "Courts are apt to err by sticking too
closely to the words of a law," so we are warned, by Justice Holmes again,
"where these words import a policy that goes beyond them."
xxxx
More than twenty centuries ago, Justinian defined justice "as the constant and
perpetual wish to render every one his due." That wish continues to motivate

this Court when it assesses the facts and the law in every case brought to it
for decision. Justice is always an essential ingredient of its decisions. Thus
when the facts warrants, we interpret the law in a way that will render justice,
presuming that it was the intention of the lawmaker, to begin with, that the law
be dispensed with justice. 69
Applying the above doctrine in the instant case, the divorce decree allegedly
obtained by Merry Lee which absolutely allowed Felicisimo to remarry, would
have vested Felicidad with the legal personality to file the present petition as
Felicisimos surviving spouse. However, the records show that there is
insufficient evidence to prove the validity of the divorce obtained by Merry Lee
as well as the marriage of respondent and Felicisimo under the laws of the
U.S.A. In Garcia v. Recio, 70 the Court laid down the specific guidelines for
pleading and proving foreign law and divorce judgments. It held that
presentation solely of the divorce decree is insufficient and that proof of its
authenticity and due execution must be presented. Under Sections 24 and 25
of Rule 132, a writing or document may be proven as a public or official record
of a foreign country by either (1) an official publication or (2) a copy thereof
attested by the officer having legal custody of the document. If the record is
not kept in the Philippines, such copy must be (a) accompanied by a certificate
issued by the proper diplomatic or consular officer in the Philippine foreign
service stationed in the foreign country in which the record is kept and (b)
authenticated by the seal of his office. 71
With regard to respondents marriage to Felicisimo allegedly solemnized in
California, U.S.A., she submitted photocopies of the Marriage Certificate and
the annotated text 72 of the Family Law Act of California which purportedly
show that their marriage was done in accordance with the said law. As stated
in Garcia, however, the Court cannot take judicial notice of foreign laws as
they must be alleged and proved. 73
Therefore, this case should be remanded to the trial court for further reception
of evidence on the divorce decree obtained by Merry Lee and the marriage of
respondent and Felicisimo.

Even assuming that Felicisimo was not capacitated to marry respondent in

1974, nevertheless, we find that the latter has the legal personality to file the
subject petition for letters of administration, as she may be considered the coowner of Felicisimo as regards the properties that were acquired through their
joint efforts during their cohabitation.
Section 6, 74 Rule 78 of the Rules of Court states that letters of administration
may be granted to the surviving spouse of the decedent. However, Section 2,
Rule 79 thereof also provides in part:
SEC. 2. Contents of petition for letters of administration. A petition for letters
of administration must be filed by an interested person and must show, as far
as known to the petitioner: x x x.
An "interested person" has been defined as one who would be benefited by
the estate, such as an heir, or one who has a claim against the estate, such as
a creditor. The interest must be material and direct, and not merely indirect or
contingent. 75
In the instant case, respondent would qualify as an interested person who has
a direct interest in the estate of Felicisimo by virtue of their cohabitation, the
existence of which was not denied by petitioners. If she proves the validity of
the divorce and Felicisimos capacity to remarry, but fails to prove that her
marriage with him was validly performed under the laws of the U.S.A., then
she may be considered as a co-owner under Article 144 76 of the Civil Code.
This provision governs the property relations between parties who live
together as husband and wife without the benefit of marriage, or their marriage
is void from the beginning. It provides that the property acquired by either or
both of them through their work or industry or their wages and salaries shall be
governed by the rules on co-ownership. In a co-ownership, it is not necessary
that the property be acquired through their joint labor, efforts and industry. Any
property acquired during the union is prima facie presumed to have been
obtained through their joint efforts. Hence, the portions belonging to the coowners shall be presumed equal, unless the contrary is proven. 77

Meanwhile, if respondent fails to prove the validity of both the divorce and the
marriage, the applicable provision would be Article 148 of the Family Code
which has filled the hiatus in Article 144 of the Civil Code by expressly
regulating the property relations of couples living together as husband and
wife but are incapacitated to marry. 78In Saguid v. Court of Appeals, 79 we held
that even if the cohabitation or the acquisition of property occurred before the
Family Code took effect, Article 148 governs. 80 The Court described the
property regime under this provision as follows:
The regime of limited co-ownership of property governing the union of parties
who are not legally capacitated to marry each other, but who nonetheless live
together as husband and wife, applies to properties acquired during said
cohabitation in proportion to their respective contributions. Co-ownership will
only be up to the extent of the proven actual contribution of money, property or
industry. Absent proof of the extent thereof, their contributions and
corresponding shares shall be presumed to be equal.
xxxx
In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved
the issue of co-ownership of properties acquired by the parties to a bigamous
marriage and an adulterous relationship, respectively, we ruled that proof of
actual contribution in the acquisition of the property is essential. x x x
As in other civil cases, the burden of proof rests upon the party who, as
determined by the pleadings or the nature of the case, asserts an affirmative
issue. Contentions must be proved by competent evidence and reliance must
be had on the strength of the partys own evidence and not upon the
weakness of the opponents defense. x x x 81
In view of the foregoing, we find that respondents legal capacity to file the
subject petition for letters of administration may arise from her status as the
surviving wife of Felicisimo or as his co-owner under Article 144 of the Civil
Code or Article 148 of the Family Code.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals

reinstating and affirming the February 28, 1994 Order of the Regional Trial
Court which denied petitioners motion to dismiss and its October 24, 1994
Order which dismissed petitioners motion for reconsideration is AFFIRMED.
Let this case be REMANDED to the trial court for further proceedings.
SO ORDERED.

G.R. No. 155635

November 7, 2008

MARIA REBECCA MAKAPUGAY BAYOT, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and VICENTE MADRIGAL
BAYOT, respondents.
x-------------------------------------------x
G.R. No. 163979

November 7, 2008

MARIA REBECCA MAKAPUGAY BAYOT, petitioner,

vs.
VICENTE MADRIGAL BAYOT, respondent.
DECISION
VELASCO, JR., J.:
The Case
Before us are these two petitions interposed by petitioner Maria Rebecca
Makapugay Bayot impugning certain issuances handed out by the Court of
Appeals (CA) in CA-G.R. SP No. 68187.
In the first, a petition for certiorari1 under Rule 65 and docketed as G.R. No.
155635, Rebecca assails and seeks to nullify the April 30, 2002 Resolution 2 of
the CA, as reiterated in another Resolution of September 2, 2002, 3 granting a
writ of preliminary injunction in favor of private respondent Vicente Madrigal
Bayot staving off the trial court's grant of support pendente lite to Rebecca.
The second, a petition for review under Rule 45, 4 docketed G.R. No. 163979,
assails the March 25, 2004 Decision 5 of the CA, (1) dismissing Civil Case No.
01-094, a suit for declaration of absolute nullity of marriage with application for
support commenced by Rebecca against Vicente before the Regional Trial
Court (RTC) in Muntinlupa City; and (2) setting aside certain orders and a
resolution issued by the RTC in the said case.

Per its Resolution of August 11, 2004, the Court ordered the consolidation of
both cases.
The Facts
Vicente and Rebecca were married on April 20, 1979 in Sanctuario de San
Jose, Greenhills, Mandaluyong City. On its face, the Marriage
Certificate6 identified Rebecca, then 26 years old, to be an American
citizen7 born in Agaa, Guam, USA to Cesar Tanchiong Makapugay, American,
and Helen Corn Makapugay, American.
On November 27, 1982 in San Francisco, California, Rebecca gave birth to
Marie Josephine Alexandra or Alix. From then on, Vicente and Rebecca's
marital relationship seemed to have soured as the latter, sometime in 1996,
initiated divorce proceedings in the Dominican Republic. Before the Court of
the First Instance of the Judicial District of Santo Domingo, Rebecca
personally appeared, while Vicente was duly represented by counsel. On
February 22, 1996, the Dominican court issued Civil Decree No.
362/96,8ordering the dissolution of the couple's marriage and "leaving them to
remarry after completing the legal requirements," but giving them joint custody
and guardianship over Alix. Over a year later, the same court would issue Civil
Decree No. 406/97,9 settling the couple's property relations pursuant to an
Agreement10 they executed on December 14, 1996. Said agreement
specifically stated that the "conjugal property which they acquired during their
marriage consist[s] only of the real property and all the improvements and
personal properties therein contained at 502 Acacia Avenue, Alabang,
Muntinlupa."11
Meanwhile, on March 14, 1996, or less than a month from the issuance of Civil
Decree No. 362/96, Rebecca filed with the Makati City RTC a petition 12 dated
January 26, 1996, with attachments, for declaration of nullity of
marriage, docketed as Civil Case No. 96-378. Rebecca, however, later
moved13and secured approval14 of the motion to withdraw the petition.
On May 29, 1996, Rebecca executed an Affidavit of Acknowledgment 15 stating
under oath that she is an American citizen; that, since 1993, she and Vicente
have been living separately; and that she is carrying a child not of Vicente.

On March 21, 2001, Rebecca filed another petition, this time before the
Muntinlupa City RTC, for declaration of absolute nullity of marriage 16 on the
ground of Vicente's alleged psychological incapacity. Docketed as Civil Case
No. 01-094 and entitled as Maria Rebecca Makapugay Bayot v. Vicente
Madrigal Bayot, the petition was eventually raffled to Branch 256 of the court.
In it, Rebecca also sought the dissolution of the conjugal partnership of gains
with application for support pendente lite for her and Alix. Rebecca also
prayed that Vicente be ordered to pay a permanent monthly support for their
daughter Alix in the amount of PhP 220,000.
On June 8, 2001, Vicente filed a Motion to Dismiss 17 on, inter alia, the grounds
of lack of cause of action and that the petition is barred by the prior judgment
of divorce. Earlier, on June 5, 2001, Rebecca filed and moved for the
allowance of her application for support pendente lite.

SO ORDERED.19
The RTC declared, among other things, that the divorce judgment invoked by
Vicente as bar to the petition for declaration of absolute nullity of marriage is a
matter of defense best taken up during actual trial. As to the grant of
support pendente lite, the trial court held that a mere allegation of adultery
against Rebecca does not operate to preclude her from receiving legal
support.
Following the denial20 of his motion for reconsideration of the above August 8,
2001 RTC order, Vicente went to the CA on a petition for certiorari, with a
prayer for the issuance of a temporary restraining order (TRO) and/or writ of
preliminary injunction.21 His petition was docketed as CA-G.R. SP No. 68187.
Grant of Writ of Preliminary Injunction by the CA

To the motion to dismiss, Rebecca interposed an opposition, insisting on her

Filipino citizenship, as affirmed by the Department of Justice (DOJ), and that,
therefore, there is no valid divorce to speak of.
Meanwhile, Vicente, who had in the interim contracted another marriage, and
Rebecca commenced several criminal complaints against each other.
Specifically, Vicente filed adultery and perjury complaints against Rebecca.
Rebecca, on the other hand, charged Vicente with bigamy and concubinage.
Ruling of the RTC on the Motion to Dismiss
and Motion for Support Pendente Lite
On August 8, 2001, the RTC issued an Order 18 denying Vicente's motion to
dismiss Civil Case No. 01-094 and granting Rebecca's application for
support pendente lite, disposing as follows:
Wherefore, premises considered, the Motion to Dismiss filed by the
respondent is DENIED. Petitioner's Application in Support of the
Motion for Support Pendente Lite is hereby GRANTED. Respondent
is hereby ordered to remit the amount of TWO HUNDRED AND
TWENTY THOUSAND PESOS (Php 220,000.00) a month to
Petitioner as support for the duration of the proceedings relative to the
instant Petition.

On January 9, 2002, the CA issued the desired TRO. 22 On April 30, 2002, the
appellate court granted, via a Resolution, the issuance of a writ of preliminary
injunction, the decretal portion of which reads:
IN VIEW OF ALL THE FOREGOING, pending final resolution of the
petition at bar, let the Writ of Preliminary Injunction be ISSUED in this
case, enjoining the respondent court from implementing the assailed
Omnibus Order dated August 8, 2001 and the Order dated November
20, 2001, and from conducting further proceedings in Civil Case No.
01-094, upon the posting of an injunction bond in the amount of
P250,000.00.
SO ORDERED.23
Rebecca moved24 but was denied reconsideration of the aforementioned April
30, 2002 resolution. In the meantime, on May 20, 2002, the preliminary
injunctive writ25 was issued. Rebecca also moved for reconsideration of this
issuance, but the CA, by Resolution dated September 2, 2002, denied her
motion.
The adverted CA resolutions of April 30, 2002 and September 2, 2002 are
presently being assailed in Rebecca's petition for certiorari, docketed
under G.R. No. 155635.

Ruling of the CA
Pending resolution of G.R. No. 155635, the CA, by a Decision dated March
25, 2004, effectively dismissed Civil Case No. 01-094, and set aside incidental
orders the RTC issued in relation to the case. The fallo of the presently
assailed CA Decision reads:
IN VIEW OF THE FOREGOING, the petition is GRANTED. The
Omnibus Order dated August 8, 2001 and the Order dated November
20, 2001 are REVERSED and SET ASIDE and a new one
entered DISMISSING Civil Case No. 01-094, for failure to state a
cause of action. No pronouncement as to costs.
SO ORDERED.26
To the CA, the RTC ought to have granted Vicente's motion to dismiss on the
basis of the following premises:

that effect during momentous events of her life, such as: (a) during her
marriage; (b) when she applied for divorce; and (c) when she applied for and
eventually secured an American passport on January 18, 1995, or a little over
a year before she initiated the first but later withdrawn petition for nullity of her
marriage (Civil Case No. 96-378) on March 14, 1996.
(5) Assuming that she had dual citizenship, being born of a purportedly Filipino
father in Guam, USA which follows the jus soli principle, Rebecca's
representation and assertion about being an American citizen when she
secured her foreign divorce precluded her from denying her citizenship and
impugning the validity of the divorce.
Rebecca seasonably filed a motion for reconsideration of the above Decision,
but this recourse was denied in the equally assailed June 4, 2004
Resolution.29 Hence, Rebecca's Petition for Review on Certiorari under Rule
45, docketed under G.R. No. 163979.
The Issues

(1) As held in China Road and Bridge Corporation v. Court of Appeals, the
hypothetical-admission rule applies in determining whether a complaint or
petition states a cause of action. 27 Applying said rule in the light of the
essential elements of a cause of action,28 Rebecca had no cause of action
against Vicente for declaration of nullity of marriage.
(2) Rebecca no longer had a legal right in this jurisdiction to have her marriage
with Vicente declared void, the union having previously been dissolved on
February 22, 1996 by the foreign divorce decree she personally secured as an
American citizen. Pursuant to the second paragraph of Article 26 of the Family
Code, such divorce restored Vicente's capacity to contract another marriage.
(3) Rebecca's contention about the nullity of a divorce, she being a Filipino
citizen at the time the foreign divorce decree was rendered, was dubious. Her
allegation as to her alleged Filipino citizenship was also doubtful as it was not
shown that her father, at the time of her birth, was still a Filipino citizen. The
Certification of Birth of Rebecca issued by the Government of Guam also did
not indicate the nationality of her father.
(4) Rebecca was estopped from denying her American citizenship, having
professed to have that nationality status and having made representations to

In G.R. No. 155635, Rebecca raises four (4) assignments of errors as grounds
for the allowance of her petition, all of which converged on the proposition that
the CA erred in enjoining the implementation of the RTC's orders which would
have entitled her to support pending final resolution of Civil Case No. 01-094.
In G.R. No. 163979, Rebecca urges the reversal of the assailed CA decision
submitting as follows:
I
THE COURT OF APPEALS GRAVELY ERRED IN NOT
MENTIONING AND NOT TAKING INTO CONSIDERATION IN ITS
APPRECIATION OF THE FACTS THE FACT OF PETITIONER'S
FILIPINO CITIZENSHIP AS CATEGORICALLY STATED AND
ALLEGED IN HER PETITION BEFORE THE COURT A QUO.
II

THE COURT OF APPEALS GRAVELY ERRED IN RELYING ONLY

ON ANNEXES TO THE PETITION IN RESOLVING THE MATTERS
BROUGHT BEFORE IT.
III
THE COURT OF APPEALS GRAVELY ERRED IN FAILING TO
CONSIDER THAT RESPONDENT IS ESTOPPED FROM CLAIMING
THAT HIS MARRIAGE TO PETITIONER HAD ALREADY BEEN
DISSOLVED BY VIRTUE OF HIS SUBSEQUENT AND
CONCURRENT ACTS.
IV
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT
THERE WAS ABUSE OF DISCRETION ON THE PART OF THE
TRIAL COURT, MUCH LESS A GRAVE ABUSE.30
We shall first address the petition in G.R. No. 163979, its outcome being
determinative of the success or failure of the petition in G.R. No. 155635.
Three legal premises need to be underscored at the outset. First, a divorce
obtained abroad by an alien married to a Philippine national may be
recognized in the Philippines, provided the decree of divorce is valid according
to the national law of the foreigner. 31 Second, the reckoning point is not the
citizenship of the divorcing parties at birth or at the time of marriage, but their
citizenship at the time a valid divorce is obtained abroad. And third, an
absolute divorce secured by a Filipino married to another Filipino is contrary to
our concept of public policy and morality and shall not be recognized in this
jurisdiction.32
Given the foregoing perspective, the determinative issue tendered in G.R. No.
155635, i.e., the propriety of the granting of the motion to dismiss by the
appellate court, resolves itself into the questions of: first, whether petitioner
Rebecca was a Filipino citizen at the time the divorce judgment was rendered
in the Dominican Republic on February 22, 1996; and second, whether the
judgment of divorce is valid and, if so, what are its consequent legal effects?
The Court's Ruling

The petition is bereft of merit.

Rebecca an American Citizen in the Purview of This Case
There can be no serious dispute that Rebecca, at the time she applied for and
obtained her divorce from Vicente, was an American citizen and remains to be
one, absent proof of an effective repudiation of such citizenship. The following
are compelling circumstances indicative of her American citizenship: (1) she
was born in Agaa, Guam, USA; (2) the principle of jus soli is followed in this
American territory granting American citizenship to those who are born there;
and (3) she was, and may still be, a holder of an American passport. 33
And as aptly found by the CA, Rebecca had consistently professed, asserted,
and represented herself as an American citizen, particularly: (1) during her
marriage as shown in the marriage certificate; (2) in the birth certificate of Alix;
and (3) when she secured the divorce from the Dominican Republic. Mention
may be made of the Affidavit of Acknowledgment 34 in which she stated being
an American citizen.
It is true that Rebecca had been issued by the Bureau of Immigration (Bureau)
of Identification (ID) Certificate No. RC 9778 and a Philippine Passport. On its
face, ID Certificate No. RC 9778 would tend to show that she has indeed been
recognized as a Filipino citizen. It cannot be over-emphasized, however, that
such recognition was given only on June 8, 2000 upon the affirmation by the
Secretary of Justice of Rebecca's recognition pursuant to the Order of
Recognition issued by Bureau Associate Commissioner Edgar L. Mendoza.
For clarity, we reproduce in full the contents of ID Certificate No. RC 9778:
To Whom It May Concern:
This is to certify that *MARIA REBECCA MAKAPUGAY
BAYOT* whose photograph and thumbprints are affixed hereto and
partially covered by the seal of this Office, and whose other particulars
are as follows:
Place of Birth:
1953

Guam, USA

Date of Birth:

March 5,

Sex: female
Color of Hair: brown

Civil Status:

Color of Eyes:
face: none

Distinguishing marks on

brown

married

was - r e c o g n i z e d - as a citizen of the Philippines as per pursuant

to Article IV, Section 1, Paragraph 3 of the 1935 Constitution per order
of Recognition JBL 95-213 signed by Associate Commissioner Jose
B. Lopez dated October 6, 1995, and duly affirmed by Secretary of
Justice Artemio G. Tuquero in his 1st Indorsement dated June 8, 2000.
Issued for identification purposes only. NOT VALID for travel
purposes.
Given under my hand and seal this 11th day of October, 1995

(SGD) EDGAR L. MENDOZA

ASSO. COMMISSIONER

Official Receipt No. 5939988

issued at Manila
dated Oct. 10, 1995 for P 2,000

From the text of ID Certificate No. RC 9778, the following material facts and
dates may be deduced: (1) Bureau Associate Commissioner Jose B. Lopez
issued the Order of Recognition on October 6, 1995; (2) the 1st Indorsement
of Secretary of Justice Artemio G. Tuquero affirming Rebecca's recognition as
a Filipino citizen was issued on June 8, 2000 or almost five years from the
date of the order of recognition; and (3) ID Certificate No. RC 9778 was
purportedly issued on October 11, 1995 after the payment of the PhP 2,000
fee on October 10, 1995 per OR No. 5939988.

What begs the question is, however, how the above certificate could have
been issued by the Bureau on October 11, 1995 when the Secretary of Justice
issued the required affirmation only on June 8, 2000. No explanation was
given for this patent aberration. There seems to be no error with the date of
the issuance of the 1st Indorsement by Secretary of Justice Tuquero as this
Court takes judicial notice that he was the Secretary of Justice from February
16, 2000 to January 22, 2001. There is, thus, a strong valid reason to
conclude that the certificate in question must be spurious.
Under extant immigration rules, applications for recognition of Filipino
citizenship require the affirmation by the DOJ of the Order of Recognition
issued by the Bureau. Under Executive Order No. 292, also known as
the 1987 Administrative Code, specifically in its Title III, Chapter 1, Sec. 3(6), it
is the DOJ which is tasked to "provide immigration and naturalization
regulatory services and implement the laws governing citizenship and the
admission and stay of aliens." Thus, the confirmation by the DOJ of any Order
of Recognition for Filipino citizenship issued by the Bureau is required.
Pertinently, Bureau Law Instruction No. RBR-99-002 35 on Recognition as a
Filipino Citizen clearly provides:
The Bureau [of Immigration] through its Records Section shall
automatically furnish the Department of Justice an official copy of its
Order of Recognition within 72 days from its date of approval by the
way of indorsement for confirmation of the Order by the Secretary of
Justice pursuant to Executive Order No. 292. No Identification
Certificate shall be issued before the date of confirmation by the
Secretary of Justice and any Identification Certificate issued by the
Bureau pursuant to an Order of Recognition shall prominently indicate
thereon the date of confirmation by the Secretary of Justice.
(Emphasis ours.)
Not lost on the Court is the acquisition by Rebecca of her Philippine passport
only on June 13, 2000, or five days after then Secretary of Justice Tuquero
issued the 1st Indorsement confirming the order of recognition. It may be too
much to attribute to coincidence this unusual sequence of close events which,
to us, clearly suggests that prior to said affirmation or confirmation, Rebecca
was not yet recognized as a Filipino citizen. The same sequence would also
imply that ID Certificate No. RC 9778 could not have been issued in 1995, as

Bureau Law Instruction No. RBR-99-002 mandates that no identification

certificate shall be issued before the date of confirmation by the Secretary of
Justice. Logically, therefore, the affirmation or confirmation of Rebecca's
recognition as a Filipino citizen through the 1 st Indorsement issued only on
June 8, 2000 by Secretary of Justice Tuquero corresponds to the eventual
issuance of Rebecca's passport a few days later, or on June 13, 2000 to be
exact.

At any rate, the CA was correct in holding that the RTC had sufficient basis to
dismiss the petition for declaration of absolute nullity of marriage as said
petition, taken together with Vicente's motion to dismiss and Rebecca's
opposition to motion, with their respective attachments, clearly made out a
case of lack of cause of action, which we will expound later.
Validity of Divorce Decree

When Divorce Was Granted Rebecca, She Was not a

Filipino Citizen and Was not Yet Recognized as One

Going to the second core issue, we find Civil Decree Nos. 362/96 and 406/97
valid.

The Court can assume hypothetically that Rebecca is now a Filipino citizen.
But from the foregoing disquisition, it is indubitable that Rebecca did not have
that status of, or at least was not yet recognized as, a Filipino citizen when she
secured the February 22, 1996 judgment of divorce from the Dominican
Republic.

First, at the time of the divorce, as above elucidated, Rebecca was still to be
recognized, assuming for argument that she was in fact later recognized, as a
Filipino citizen, but represented herself in public documents as an American
citizen. At the very least, she chose, before, during, and shortly after her
divorce, her American citizenship to govern her marital relationship. Second,
she secured personally said divorce as an American citizen, as is evident in
the text of the Civil Decrees, which pertinently declared:

The Court notes and at this juncture wishes to point out that Rebecca
voluntarily withdrew her original petition for declaration of nullity (Civil Case
No. 96-378 of the Makati City RTC) obviously because she could not show
proof of her alleged Filipino citizenship then. In fact, a perusal of that petition
shows that, while bearing the date January 26, 1996, it was only filed with the
RTC on March 14, 1996 or less than a month after Rebecca secured, on
February 22, 1996, the foreign divorce decree in question. Consequently,
there was no mention about said divorce in the petition. Significantly, the only
documents appended as annexes to said original petition were: the VicenteRebecca Marriage Contract (Annex "A") and Birth Certificate of Alix (Annex
"B"). If indeed ID Certificate No. RC 9778 from the Bureau was truly issued on
October 11, 1995, is it not but logical to expect that this piece of document be
appended to form part of the petition, the question of her citizenship being
crucial to her case?
As may be noted, the petition for declaration of absolute nullity of marriage
under Civil Case No. 01-094, like the withdrawn first petition, also did not have
the ID Certificate from the Bureau as attachment. What were attached
consisted of the following material documents: Marriage Contract (Annex "A")
and Divorce Decree. It was only through her Opposition (To Respondent's
Motion to Dismiss dated 31 May 2001)36 did Rebecca attach as Annex "C" ID
Certificate No. RC 9778.

IN THIS ACTION FOR DIVORCE in which the parties expressly

submit to the jurisdiction of this court, by reason of the existing
incompatibility of temperaments x x x. The parties MARIA REBECCA
M. BAYOT, of United States nationality, 42 years of age, married,
domiciled and residing at 502 Acacia Ave., Ayala Alabang, Muntin
Lupa, Philippines, x x x, who personally appeared before this court,
accompanied by DR. JUAN ESTEBAN OLIVERO, attorney, x x x and
VICENTE MADRIGAL BAYOT, of Philippine nationality, of 43 years of
age, married and domiciled and residing at 502 Acacia Ave., Ayala
Alabang, Muntin Lupa, Filipino, appeared before this court
represented by DR. ALEJANDRO TORRENS, attorney, x x x,
revalidated by special power of attorney given the 19 th of February of
1996, signed before the Notary Public Enrico L. Espanol of the City of
Manila, duly legalized and authorizing him to subscribe all the acts
concerning this case.37 (Emphasis ours.)
Third, being an American citizen, Rebecca was bound by the national laws of
the United States of America, a country which allows divorce. Fourth, the
property relations of Vicente and Rebecca were properly adjudicated through
their Agreement38 executed on December 14, 1996 after Civil Decree No.

362/96 was rendered on February 22, 1996, and duly affirmed by Civil Decree
No. 406/97 issued on March 4, 1997. Veritably, the foreign divorce secured by
Rebecca was valid.
To be sure, the Court has taken stock of the holding in Garcia v. Recio that a
foreign divorce can be recognized here, provided the divorce decree is proven
as a fact and as valid under the national law of the alien spouse. 39 Be this as it
may, the fact that Rebecca was clearly an American citizen when she secured
the divorce and that divorce is recognized and allowed in any of the States of
the Union,40 the presentation of a copy of foreign divorce decree duly
authenticated by the foreign court issuing said decree is, as here, sufficient.
It bears to stress that the existence of the divorce decree has not been denied,
but in fact admitted by both parties. And neither did they impeach the
jurisdiction of the divorce court nor challenge the validity of its proceedings on
the ground of collusion, fraud, or clear mistake of fact or law, albeit both
appeared to have the opportunity to do so. The same holds true with respect
to the decree of partition of their conjugal property. As this Court explained
in Roehr v. Rodriguez:
Before our courts can give the effect of res judicata to a foreign
judgment [of divorce] x x x, it must be shown that the parties opposed
to the judgment had been given ample opportunity to do so on
grounds allowed under Rule 39, Section 50 of the Rules of Court (now
Rule 39, Section 48, 1997 Rules of Civil Procedure), to wit:
SEC. 50. Effect of foreign judgments.--The effect of a
judgment of a tribunal of a foreign country, having jurisdiction
to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment
is conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is
presumptive evidence of a right as between the parties and
their successors in interest by a subsequent title; but the
judgment may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or
clear mistake of law or fact.

It is essential that there should be an opportunity to challenge the

foreign judgment, in order for the court in this jurisdiction to properly
determine its efficacy. In this jurisdiction, our Rules of Court clearly
provide that with respect to actions in personam, as distinguished
from actions in rem, a foreign judgment |merely constitutes prima
facie evidence of the justness of the claim of a party and, as such, is
subject to proof to the contrary.41
As the records show, Rebecca, assisted by counsel, personally secured the
foreign divorce while Vicente was duly represented by his counsel, a certain
Dr. Alejandro Torrens, in said proceedings. As things stand, the foreign divorce
decrees rendered and issued by the Dominican Republic court are valid and,
consequently, bind both Rebecca and Vicente.
Finally, the fact that Rebecca may have been duly recognized as a Filipino
citizen by force of the June 8, 2000 affirmation by Secretary of Justice
Tuquero of the October 6, 1995 Bureau Order of Recognition will not, standing
alone, work to nullify or invalidate the foreign divorce secured by Rebecca as
an American citizen on February 22, 1996. For as we stressed at the outset, in
determining whether or not a divorce secured abroad would come within the
pale of the country's policy against absolute divorce, the reckoning point is the
citizenship of the parties at the time a valid divorce is obtained. 42
Legal Effects of the Valid Divorce
Given the validity and efficacy of divorce secured by Rebecca, the same shall
be given a res judicataeffect in this jurisdiction. As an obvious result of the
divorce decree obtained, the marital vinculumbetween Rebecca and Vicente is
considered severed; they are both freed from the bond of matrimony. In plain
language, Vicente and Rebecca are no longer husband and wife to each
other. As the divorce court formally pronounced: "[T]hat the marriage between
MARIA REBECCA M. BAYOT and VICENTE MADRIGAL BAYOT is
hereby dissolved x x x leaving them free to remarry after completing the
legal requirements."43
Consequent to the dissolution of the marriage, Vicente could no longer be
subject to a husband's obligation under the Civil Code. He cannot, for
instance, be obliged to live with, observe respect and fidelity, and render
support to Rebecca.44

The divorce decree in question also brings into play the second paragraph of
Art. 26 of the Family Code, providing as follows:
Art. 26. x x x x
Where a marriage between a Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly obtained abroad by the
alien spouse capacitating him or her to remarry, the Filipino spouse
shall likewise have capacity to remarry under Philippine law. (As
amended by E.O. 227)
In Republic v. Orbecido III, we spelled out the twin elements for the
applicability of the second paragraph of Art. 26, thus:
x x x [W]e state the twin elements for the application of Paragraph 2 of
Article 26 as follows:
1. There is a valid marriage that has been celebrated between a
Filipino citizen and a foreigner; and
2. A valid divorce is obtained abroad by the alien spouse capacitating
him or her to remarry.
The reckoning point is not the citizenship of the parties at the time of
the celebration of the marriage, but their citizenship at the time a valid
divorce is obtained abroad by the alien spouse capacitating the latter
to remarry.45
Both elements obtain in the instant case. We need not belabor further the fact
of marriage of Vicente and Rebecca, their citizenship when they wed, and
their professed citizenship during the valid divorce proceedings.
Not to be overlooked of course is the fact that Civil Decree No. 406/97 and the
Agreement executed on December 14, 1996 bind both Rebecca and Vicente
as regards their property relations. The Agreement provided that the excouple's conjugal property consisted only their family home, thus:

9. That the parties stipulate that the conjugal property which they
acquired during their marriage consists only of the real
property and all the improvements and personal properties therein
contained at 502 Acacia Avenue, Ayala Alabang, Muntinlupa, covered
by TCT No. 168301 dated Feb. 7, 1990 issued by the Register of
Deeds of Makati, Metro Manila registered in the name of Vicente M.
Bayot, married to Rebecca M. Bayot, x x x. 46 (Emphasis ours.)
This property settlement embodied in the Agreement was affirmed by the
divorce court which, per its second divorce decree, Civil Decree No. 406/97
dated March 4, 1997, ordered that, "THIRD: That the agreement entered into
between the parties dated 14th day of December 1996 in Makati City,
Philippines shall survive in this Judgment of divorce by reference but not
merged and that the parties are hereby ordered and directed to comply with
each and every provision of said agreement."47
Rebecca has not repudiated the property settlement contained in the
Agreement. She is thus estopped by her representation before the divorce
court from asserting that her and Vicente's conjugal property was not limited to
their family home in Ayala Alabang.48
No Cause of Action in the Petition for Nullity of Marriage
Upon the foregoing disquisitions, it is abundantly clear to the Court that
Rebecca lacks, under the premises, cause of action. Philippine Bank of
Communications v. Trazo explains the concept and elements of a cause of
action, thus:
A cause of action is an act or omission of one party in violation of the
legal right of the other. A motion to dismiss based on lack of cause of
action hypothetically admits the truth of the allegations in the
complaint. The allegations in a complaint are sufficient to constitute a
cause of action against the defendants if, hypothetically admitting the
facts alleged, the court can render a valid judgment upon the same in
accordance with the prayer therein. A cause of action exists if the
followingelements are present, namely: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the named defendant to
respect or not to violate such right; and (3) an act or omission on the

part of such defendant violative of the right of the plaintiff or

constituting a breach of the obligation of the defendant to the plaintiff
for which the latter may maintain an action for recovery of damages. 49
One thing is clear from a perusal of Rebecca's underlying petition before the
RTC, Vicente's motion to dismiss and Rebecca's opposition thereof, with the
documentary evidence attached therein: The petitioner lacks a cause of action
for declaration of nullity of marriage, a suit which presupposes the existence of
a marriage.
To sustain a motion to dismiss for lack of cause of action, the movant must
show that the claim for relief does not exist rather than that a claim has been
defectively stated or is ambiguous, indefinite, or uncertain. 50 With the valid
foreign divorce secured by Rebecca, there is no more marital tie binding her to
Vicente. There is in fine no more marriage to be dissolved or nullified.
The Court to be sure does not lose sight of the legal obligation of Vicente and
Rebecca to support the needs of their daughter, Alix. The records do not
clearly show how he had discharged his duty, albeit Rebecca alleged that the
support given had been insufficient. At any rate, we do note that Alix, having
been born on November 27, 1982, reached the majority age on November 27,
2000, or four months before her mother initiated her petition for declaration of
nullity. She would now be 26 years old. Hence, the issue of back support,
which allegedly had been partly shouldered by Rebecca, is best litigated in a
separate civil action for reimbursement. In this way, the actual figure for the
support of Alix can be proved as well as the earning capacity of both Vicente
and Rebecca. The trial court can thus determine what Vicente owes, if any,
considering that support includes provisions until the child concerned shall
have finished her education.
Upon the foregoing considerations, the Court no longer need to delve into the
issue tendered in G.R. No. 155635, that is, Rebecca's right to
support pendente lite. As it were, her entitlement to that kind of support hinges
on the tenability of her petition under Civil Case No. 01-094 for declaration of
nullity of marriage. The dismissal of Civil Case No. 01-094 by the CA veritably
removed any legal anchorage for, and effectively mooted, the claim for
support pendente lite.

WHEREFORE, the petition for certiorari in G.R. No. 155635 is

hereby DISMISSED on the ground of mootness, while the petition for review
in G.R. No. 163979 is hereby DENIED for lack of merit. Accordingly, the March
25, 2004 Decision and June 4, 2004 Resolution of the CA in CA-G.R. SP No.
68187 are hereby AFFIRMED. Costs against petitioner.
SO ORDERED.

G.R. No. L-16749

January 31, 1963

IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E.

CHRISTENSEN, DECEASED.
ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the
deceased, Executor and Heir-appellees,
vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.
M. R. Sotelo for executor and heir-appellees.
Leopoldo M. Abellera and Jovito Salonga for oppositor-appellant.
LABRADOR, J.:
This is an appeal from a decision of the Court of First Instance of Davao, Hon.
Vicente N. Cusi, Jr., presiding, in Special Proceeding No. 622 of said court,
dated September 14, 1949, approving among things the final accounts of the
executor, directing the executor to reimburse Maria Lucy Christensen the
amount of P3,600 paid by her to Helen Christensen Garcia as her legacy, and
declaring Maria Lucy Christensen entitled to the residue of the property to be
enjoyed during her lifetime, and in case of death without issue, one-half of said
residue to be payable to Mrs. Carrie Louise C. Borton, etc., in accordance with
the provisions of the will of the testator Edward E. Christensen. The will was
executed in Manila on March 5, 1951 and contains the following provisions:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY
CHRISTENSEN (now Mrs. Bernard Daney), who was born in the
Philippines about twenty-eight years ago, and who is now residing at
No. 665 Rodger Young Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no
descendants except my above named daughter, MARIA LUCY
CHRISTENSEN DANEY.
xxx

xxx

xxx

7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN,

now married to Eduardo Garcia, about eighteen years of age and
who, notwithstanding the fact that she was baptized Christensen, is
not in any way related to me, nor has she been at any time adopted
by me, and who, from all information I have now resides in Egpit,
Digos, Davao, Philippines, the sum of THREE THOUSAND SIX
HUNDRED PESOS (P3,600.00), Philippine Currency the same to be
deposited in trust for the said Maria Helen Christensen with the Davao
Branch of the Philippine National Bank, and paid to her at the rate of
One Hundred Pesos (P100.00), Philippine Currency per month until
the principal thereof as well as any interest which may have accrued
thereon, is exhausted..
xxx

xxx

xxx

12. I hereby give, devise and bequeath, unto my well-beloved

daughter, the said MARIA LUCY CHRISTENSEN DANEY (Mrs.
Bernard Daney), now residing as aforesaid at No. 665 Rodger Young
Village, Los Angeles, California, U.S.A., all the income from the rest,
remainder, and residue of my property and estate, real, personal
and/or mixed, of whatsoever kind or character, and wheresoever
situated, of which I may be possessed at my death and which may
have come to me from any source whatsoever, during her lifetime: ....
It is in accordance with the above-quoted provisions that the executor in his
final account and project of partition ratified the payment of only P3,600 to
Helen Christensen Garcia and proposed that the residue of the estate be
transferred to his daughter, Maria Lucy Christensen.
Opposition to the approval of the project of partition was filed by Helen
Christensen Garcia, insofar as it deprives her (Helen) of her legitime as an
acknowledged natural child, she having been declared by Us in G.R. Nos. L11483-84 an acknowledged natural child of the deceased Edward E.
Christensen. The legal grounds of opposition are (a) that the distribution

should be governed by the laws of the Philippines, and (b) that said order of
distribution is contrary thereto insofar as it denies to Helen Christensen, one of
two acknowledged natural children, one-half of the estate in full ownership. In
amplification of the above grounds it was alleged that the law that should
govern the estate of the deceased Christensen should not be the internal law
of California alone, but the entire law thereof because several foreign
elements are involved, that the forum is the Philippines and even if the case
were decided in California, Section 946 of the California Civil Code, which
requires that the domicile of the decedent should apply, should be applicable.
It was also alleged that Maria Helen Christensen having been declared an
acknowledged natural child of the decedent, she is deemed for all purposes
legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the
United States and of the State of California at the time of his death, the
successional rights and intrinsic validity of the provisions in his will are to be
governed by the law of California, in accordance with which a testator has the
right to dispose of his property in the way he desires, because the right of
absolute dominion over his property is sacred and inviolable (In re McDaniel's
Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re Kaufman, 117 Cal. 286,
49 Pac. 192, cited in page 179, Record on Appeal). Oppositor Maria Helen
Christensen, through counsel, filed various motions for reconsideration, but
these were denied. Hence, this appeal.
The most important assignments of error are as follows:
I
THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE
HONORABLE SUPREME COURT THAT HELEN IS THE ACKNOWLEDGED
NATURAL CHILD OF EDWARD E. CHRISTENSEN AND, CONSEQUENTLY,
IN DEPRIVING HER OF HER JUST SHARE IN THE INHERITANCE.
II

THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING

TO RECOGNIZE THE EXISTENCE OF SEVERAL FACTORS, ELEMENTS
AND CIRCUMSTANCES CALLING FOR THE APPLICATION OF INTERNAL
LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER
INTERNATIONAL LAW, PARTICULARLY UNDER THE RENVOI DOCTRINE,
THE INTRINSIC VALIDITY OF THE TESTAMENTARY DISPOSITION OF THE
DISTRIBUTION OF THE ESTATE OF THE DECEASED EDWARD E.
CHRISTENSEN SHOULD BE GOVERNED BY THE LAWS OF THE
PHILIPPINES.
IV
THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE
OF DISTRIBUTION SUBMITTED BY THE EXECUTOR IS CONTRARY TO
THE PHILIPPINE LAWS.
V
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE
PHILIPPINE LAWS HELEN CHRISTENSEN GARCIA IS ENTITLED TO ONEHALF (1/2) OF THE ESTATE IN FULL OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United
States and of the State of California at the time of his death. But there is also
no question that at the time of his death he was domiciled in the Philippines,
as witness the following facts admitted by the executor himself in appellee's
brief:
In the proceedings for admission of the will to probate, the facts of
record show that the deceased Edward E. Christensen was born on
November 29, 1875 in New York City, N.Y., U.S.A.; his first arrival in

the Philippines, as an appointed school teacher, was on July 1, 1901,

on board the U.S. Army Transport "Sheridan" with Port of Embarkation
as the City of San Francisco, in the State of California, U.S.A. He
stayed in the Philippines until 1904.
In December, 1904, Mr. Christensen returned to the United States and
stayed there for the following nine years until 1913, during which time
he resided in, and was teaching school in Sacramento, California.
Mr. Christensen's next arrival in the Philippines was in July of the year
1913. However, in 1928, he again departed the Philippines for the
United States and came back here the following year, 1929. Some
nine years later, in 1938, he again returned to his own country, and
came back to the Philippines the following year, 1939.
Wherefore, the parties respectfully pray that the foregoing stipulation
of facts be admitted and approved by this Honorable Court, without
prejudice to the parties adducing other evidence to prove their case
not covered by this stipulation of facts. 1wph1.t
Being an American citizen, Mr. Christensen was interned by the
Japanese Military Forces in the Philippines during World War II. Upon
liberation, in April 1945, he left for the United States but returned to
the Philippines in December, 1945. Appellees Collective Exhibits "6",
CFI Davao, Sp. Proc. 622, as Exhibits "AA", "BB" and "CC-Daney";
Exhs. "MM", "MM-l", "MM-2-Daney" and p. 473, t.s.n., July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more to
California shortly after the making of his last will and testament (now
in question herein) which he executed at his lawyers' offices in Manila
on March 5, 1951. He died at the St. Luke's Hospital in the City of
Manila on April 30, 1953. (pp. 2-3)

In arriving at the conclusion that the domicile of the deceased is the

Philippines, we are persuaded by the fact that he was born in New York,
migrated to California and resided there for nine years, and since he came to
the Philippines in 1913 he returned to California very rarely and only for short
visits (perhaps to relatives), and considering that he appears never to have
owned or acquired a home or properties in that state, which would indicate
that he would ultimately abandon the Philippines and make home in the State
of California.
Sec. 16. Residence is a term used with many shades of meaning from
mere temporary presence to the most permanent abode. Generally,
however, it is used to denote something more than mere physical
presence. (Goodrich on Conflict of Laws, p. 29)
As to his citizenship, however, We find that the citizenship that he acquired in
California when he resided in Sacramento, California from 1904 to 1913, was
never lost by his stay in the Philippines, for the latter was a territory of the
United States (not a state) until 1946 and the deceased appears to have
considered himself as a citizen of California by the fact that when he executed
his will in 1951 he declared that he was a citizen of that State; so that he
appears never to have intended to abandon his California citizenship by
acquiring another. This conclusion is in accordance with the following principle
expounded by Goodrich in his Conflict of Laws.
The terms "'residence" and "domicile" might well be taken to mean the
same thing, a place of permanent abode. But domicile, as has been
shown, has acquired a technical meaning. Thus one may be
domiciled in a place where he has never been. And he may reside in a
place where he has no domicile. The man with two homes, between
which he divides his time, certainly resides in each one, while living in
it. But if he went on business which would require his presence for
several weeks or months, he might properly be said to have sufficient
connection with the place to be called a resident. It is clear, however,
that, if he treated his settlement as continuing only for the particular

business in hand, not giving up his former "home," he could not be a

domiciled New Yorker. Acquisition of a domicile of choice requires the
exercise of intention as well as physical presence. "Residence simply
requires bodily presence of an inhabitant in a given place, while
domicile requires bodily presence in that place and also an intention
to make it one's domicile." Residence, however, is a term used with
many shades of meaning, from the merest temporary presence to the
most permanent abode, and it is not safe to insist that any one use et
the only proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in
Article 16 of the Civil Code of the Philippines, which is as follows:
ART. 16. Real property as well as personal property is subject to the
law of the country where it is situated.
However, intestate and testamentary successions, both with respect
to the order of succession and to the amount of successional rights
and to the intrinsic validity of testamentary provisions, shall be
regulated by the national law of the person whose succession is under
consideration, whatever may be the nature of the property and
regardless of the country where said property may be found.
The application of this article in the case at bar requires the determination of
the meaning of the term "national law" is used therein.
There is no single American law governing the validity of testamentary
provisions in the United States, each state of the Union having its own private
law applicable to its citizens only and in force only within the state. The
"national law" indicated in Article 16 of the Civil Code above quoted can not,
therefore, possibly mean or apply to any general American law. So it can refer
to no other than the private law of the State of California.

The next question is: What is the law in California governing the disposition of
personal property? The decision of the court below, sustains the contention of
the executor-appellee that under the California Probate Code, a testator may
dispose of his property by will in the form and manner he desires, citing the
case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176 P. 2d 952. But appellant
invokes the provisions of Article 946 of the Civil Code of California, which is as
follows:
If there is no law to the contrary, in the place where personal property
is situated, it is deemed to follow the person of its owner, and is
governed by the law of his domicile.
The existence of this provision is alleged in appellant's opposition and is not
denied. We have checked it in the California Civil Code and it is there.
Appellee, on the other hand, relies on the case cited in the decision and
testified to by a witness. (Only the case of Kaufman is correctly cited.) It is
argued on executor's behalf that as the deceased Christensen was a citizen of
the State of California, the internal law thereof, which is that given in the
abovecited case, should govern the determination of the validity of the
testamentary provisions of Christensen's will, such law being in force in the
State of California of which Christensen was a citizen. Appellant, on the other
hand, insists that Article 946 should be applicable, and in accordance
therewith and following the doctrine of therenvoi, the question of the validity of
the testamentary provision in question should be referred back to the law of
the decedent's domicile, which is the Philippines.
The theory of doctrine of renvoi has been defined by various authors, thus:
The problem has been stated in this way: "When the Conflict of Laws
rule of the forum refers a jural matter to a foreign law for decision, is
the reference to the purely internal rules of law of the foreign system;
i.e., to the totality of the foreign law minus its Conflict of Laws rules?"

On logic, the solution is not an easy one. The Michigan court chose to
accept the renvoi, that is, applied the Conflict of Laws rule of Illinois
which referred the matter back to Michigan law. But once having
determined the the Conflict of Laws principle is the rule looked to, it is
difficult to see why the reference back should not have been to
Michigan Conflict of Laws. This would have resulted in the "endless
chain of references" which has so often been criticized be legal
writers. The opponents of the renvoi would have looked merely to the
internal law of Illinois, thus rejecting the renvoi or the reference back.
Yet there seems no compelling logical reason why the original
reference should be the internal law rather than to the Conflict of Laws
rule. It is true that such a solution avoids going on a merry-go-round,
but those who have accepted the renvoi theory avoid this inextricabilis
circulas by getting off at the second reference and at that point
applying internal law. Perhaps the opponents of the renvoi are a bit
more consistent for they look always to internal law as the rule of
reference.
Strangely enough, both the advocates for and the objectors to
the renvoi plead that greater uniformity will result from adoption of
their respective views. And still more strange is the fact that the only
way to achieve uniformity in this choice-of-law problem is if in the
dispute the two states whose laws form the legal basis of the litigation
disagree as to whether the renvoi should be accepted. If both reject,
or both accept the doctrine, the result of the litigation will vary with the
choice of the forum. In the case stated above, had the Michigan court
rejected the renvoi, judgment would have been against the woman; if
the suit had been brought in the Illinois courts, and they too rejected
the renvoi, judgment would be for the woman. The same result would
happen, though the courts would switch with respect to which would
hold liability, if both courts accepted the renvoi.
The Restatement accepts the renvoi theory in two instances: where
the title to land is in question, and where the validity of a decree of

divorce is challenged. In these cases the Conflict of Laws rule of the

situs of the land, or the domicile of the parties in the divorce case, is
applied by the forum, but any further reference goes only to the
internal law. Thus, a person's title to land, recognized by the situs, will
be recognized by every court; and every divorce, valid by the domicile
of the parties, will be valid everywhere. (Goodrich, Conflict of Laws,
Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate, domiciled in France,
leaving movable property in Massachusetts, England, and France.
The question arises as to how this property is to be distributed among
X's next of kin.
Assume (1) that this question arises in a Massachusetts court. There
the rule of the conflict of laws as to intestate succession to movables
calls for an application of the law of the deceased's last domicile.
Since by hypothesis X's last domicile was France, the natural thing for
the Massachusetts court to do would be to turn to French statute of
distributions, or whatever corresponds thereto in French law, and
decree a distribution accordingly. An examination of French law,
however, would show that if a French court were called upon to
determine how this property should be distributed, it would refer the
distribution to the national law of the deceased, thus applying the
Massachusetts statute of distributions. So on the surface of things the
Massachusetts court has open to it alternative course of action: (a)
either to apply the French law is to intestate succession, or (b) to
resolve itself into a French court and apply the Massachusetts statute
of distributions, on the assumption that this is what a French court
would do. If it accepts the so-called renvoidoctrine, it will follow the
latter course, thus applying its own law.
This is one type of renvoi. A jural matter is presented which the
conflict-of-laws rule of the forum refers to a foreign law, the conflict-oflaws rule of which, in turn, refers the matter back again to the law of

the forum. This is renvoi in the narrower sense. The German term for
this judicial process is 'Ruckverweisung.'" (Harvard Law Review, Vol.
31, pp. 523-571.)

the conflict of laws as well. According to this theory 'the law of a

country' means the whole of its law.
xxx

After a decision has been arrived at that a foreign law is to be resorted

to as governing a particular case, the further question may arise: Are
the rules as to the conflict of laws contained in such foreign law also
to be resorted to? This is a question which, while it has been
considered by the courts in but a few instances, has been the subject
of frequent discussion by textwriters and essayists; and the doctrine
involved has been descriptively designated by them as the
"Renvoyer" to send back, or the "Ruchversweisung", or the
"Weiterverweisung", since an affirmative answer to the question
postulated and the operation of the adoption of the foreign law in toto
would in many cases result in returning the main controversy to be
decided according to the law of the forum. ... (16 C.J.S. 872.)
Another theory, known as the "doctrine of renvoi", has been
advanced. The theory of the doctrine of renvoiis that the court of the
forum, in determining the question before it, must take into account
the whole law of the other jurisdiction, but also its rules as to conflict
of laws, and then apply the law to the actual question which the rules
of the other jurisdiction prescribe. This may be the law of the forum.
The doctrine of therenvoi has generally been repudiated by the
American authorities. (2 Am. Jur. 296)
The scope of the theory of renvoi has also been defined and the reasons for
its application in a country explained by Prof. Lorenzen in an article in the Yale
Law Journal, Vol. 27, 1917-1918, pp. 529-531. The pertinent parts of the
article are quoted herein below:
The recognition of the renvoi theory implies that the rules of the
conflict of laws are to be understood as incorporating not only the
ordinary or internal law of the foreign state or country, but its rules of

xxx

xxx

Von Bar presented his views at the meeting of the Institute of

International Law, at Neuchatel, in 1900, in the form of the following
theses:
(1) Every court shall observe the law of its country as regards the
application of foreign laws.
(2) Provided that no express provision to the contrary exists, the court
shall respect:
(a) The provisions of a foreign law which disclaims the right to
bind its nationals abroad as regards their personal statute,
and desires that said personal statute shall be determined by
the law of the domicile, or even by the law of the place where
the act in question occurred.
(b) The decision of two or more foreign systems of law,
provided it be certain that one of them is necessarily
competent, which agree in attributing the determination of a
question to the same system of law.
xxx

xxx

xxx

If, for example, the English law directs its judge to distribute the
personal estate of an Englishman who has died domiciled in Belgium
in accordance with the law of his domicile, he must first inquire
whether the law of Belgium would distribute personal property upon
death in accordance with the law of domicile, and if he finds that the
Belgian law would make the distribution in accordance with the law of

nationality that is the English law he must accept this reference

back to his own law.
We note that Article 946 of the California Civil Code is its conflict of laws rule,
while the rule applied in In re Kaufman, Supra, its internal law. If the law on
succession and the conflict of laws rules of California are to be enforced
jointly, each in its own intended and appropriate sphere, the principle cited In
re Kaufman should apply to citizens living in the State, but Article 946 should
apply to such of its citizens as are not domiciled in California but in other
jurisdictions. The rule laid down of resorting to the law of the domicile in the
determination of matters with foreign element involved is in accord with the
general principle of American law that the domiciliary law should govern in
most matters or rights which follow the person of the owner.
When a man dies leaving personal property in one or more states,
and leaves a will directing the manner of distribution of the property,
the law of the state where he was domiciled at the time of his death
will be looked to in deciding legal questions about the will, almost as
completely as the law of situs is consulted in questions about the
devise of land. It is logical that, since the domiciliary rules control
devolution of the personal estate in case of intestate succession, the
same rules should determine the validity of an attempted
testamentary dispostion of the property. Here, also, it is not that the
domiciliary has effect beyond the borders of the domiciliary state. The
rules of the domicile are recognized as controlling by the Conflict of
Laws rules at the situs property, and the reason for the recognition as
in the case of intestate succession, is the general convenience of the
doctrine. The New York court has said on the point: 'The general
principle that a dispostiton of a personal property, valid at the domicile
of the owner, is valid anywhere, is one of the universal application. It
had its origin in that international comity which was one of the first
fruits of civilization, and it this age, when business intercourse and the
process of accumulating property take but little notice of boundary

lines, the practical wisdom and justice of the rule is more apparent
than ever. (Goodrich, Conflict of Laws, Sec. 164, pp. 442-443.)
Appellees argue that what Article 16 of the Civil Code of the Philippines
pointed out as the national law is the internal law of California. But as above
explained the laws of California have prescribed two sets of laws for its
citizens, one for residents therein and another for those domiciled in other
jurisdictions. Reason demands that We should enforce the California internal
law prescribed for its citizens residing therein, and enforce the conflict of laws
rules for the citizens domiciled abroad. If we must enforce the law of California
as in comity we are bound to go, as so declared in Article 16 of our Civil Code,
then we must enforce the law of California in accordance with the express
mandate thereof and as above explained, i.e., apply the internal law for
residents therein, and its conflict-of-laws rule for those domiciled abroad.
It is argued on appellees' behalf that the clause "if there is no law to the
contrary in the place where the property is situated" in Sec. 946 of the
California Civil Code refers to Article 16 of the Civil Code of the Philippines
and that the law to the contrary in the Philippines is the provision in said Article
16 that the national law of the deceased should govern. This contention can
not be sustained. As explained in the various authorities cited above the
national law mentioned in Article 16 of our Civil Code is the law on conflict of
laws in the California Civil Code, i.e., Article 946, which authorizes the
reference or return of the question to the law of the testator's domicile. The
conflict of laws rule in California, Article 946, Civil Code, precisely refers back
the case, when a decedent is not domiciled in California, to the law of his
domicile, the Philippines in the case at bar. The court of the domicile can not
and should not refer the case back to California; such action would leave the
issue incapable of determination because the case will then be like a football,
tossed back and forth between the two states, between the country of which
the decedent was a citizen and the country of his domicile. The Philippine
court must apply its own law as directed in the conflict of laws rule of the state
of the decedent, if the question has to be decided, especially as the
application of the internal law of California provides no legitime for children

while the Philippine law, Arts. 887(4) and 894, Civil Code of the Philippines,
makes natural children legally acknowledged forced heirs of the parent
recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs.
Palmaroli, 40 Phil. 105; Miciano vs. Brimo, 50 Phil. 867; Babcock Templeton
vs. Rider Babcock, 52 Phil. 130; and Gibbs vs. Government, 59 Phil. 293.)
cited by appellees to support the decision can not possibly apply in the case at
bar, for two important reasons, i.e., the subject in each case does not appear
to be a citizen of a state in the United States but with domicile in the
Philippines, and it does not appear in each case that there exists in the state
of which the subject is a citizen, a law similar to or identical with Art. 946 of the
California Civil Code.
We therefore find that as the domicile of the deceased Christensen, a citizen
of California, is the Philippines, the validity of the provisions of his will
depriving his acknowledged natural child, the appellant, should be governed
by the Philippine Law, the domicile, pursuant to Art. 946 of the Civil Code of
California, not by the internal law of California..
WHEREFORE, the decision appealed from is hereby reversed and the case
returned to the lower court with instructions that the partition be made as the
Philippine law on succession provides. Judgment reversed, with costs against
appellees.

G.R. No. L-23678

June 6, 1967

TESTATE ESTATE OF AMOS G. BELLIS, deceased.

PEOPLE'S BANK and TRUST COMPANY, executor.
MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositorsappellants,
vs.
EDWARD A. BELLIS, ET AL., heirs-appellees.
Vicente R. Macasaet and Jose D. Villena for oppositors appellants.
Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis, et al.
Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.
J. R. Balonkita for appellee People's Bank & Trust Company.
Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.
BENGZON, J.P., J.:
This is a direct appeal to Us, upon a question purely of law, from an order of
the Court of First Instance of Manila dated April 30, 1964, approving the
project of partition filed by the executor in Civil Case No. 37089
therein.1wph1.t
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the
United States." By his first wife, Mary E. Mallen, whom he divorced, he had
five legitimate children: Edward A. Bellis, George Bellis (who pre-deceased
him in infancy), Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman; by
his second wife, Violet Kennedy, who survived him, he had three legitimate
children: Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he
had three illegitimate children: Amos Bellis, Jr., Maria Cristina Bellis and
Miriam Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which
he directed that after all taxes, obligations, and expenses of administration are

paid for, his distributable estate should be divided, in trust, in the following
order and manner: (a) $240,000.00 to his first wife, Mary E. Mallen; (b)
P120,000.00 to his three illegitimate children, Amos Bellis, Jr., Maria Cristina
Bellis, Miriam Palma Bellis, or P40,000.00 each and (c) after the foregoing two
items have been satisfied, the remainder shall go to his seven surviving
children by his first and second wives, namely: Edward A. Bellis, Henry A.
Bellis, Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S.
Bellis, and Dorothy E. Bellis, in equal shares.1wph1.t
Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San
Antonio, Texas, U.S.A. His will was admitted to probate in the Court of First
Instance of Manila on September 15, 1958.
The People's Bank and Trust Company, as executor of the will, paid all the
bequests therein including the amount of $240,000.00 in the form of shares of
stock to Mary E. Mallen and to the three (3) illegitimate children, Amos Bellis,
Jr., Maria Cristina Bellis and Miriam Palma Bellis, various amounts totalling
P40,000.00 each in satisfaction of their respective legacies, or a total of
P120,000.00, which it released from time to time according as the lower court
approved and allowed the various motions or petitions filed by the latter three
requesting partial advances on account of their respective legacies.
On January 8, 1964, preparatory to closing its administration, the executor
submitted and filed its "Executor's Final Account, Report of Administration and
Project of Partition" wherein it reported, inter alia, the satisfaction of the legacy
of Mary E. Mallen by the delivery to her of shares of stock amounting to
$240,000.00, and the legacies of Amos Bellis, Jr., Maria Cristina Bellis and
Miriam Palma Bellis in the amount of P40,000.00 each or a total of
P120,000.00. In the project of partition, the executor pursuant to the
"Twelfth" clause of the testator's Last Will and Testament divided the
residuary estate into seven equal portions for the benefit of the testator's
seven legitimate children by his first and second marriages.

On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their
respective oppositions to the project of partition on the ground that they were
deprived of their legitimes as illegitimate children and, therefore, compulsory
heirs of the deceased.

the doctrine of renvoi. As stated, they never invoked nor even mentioned it in
their arguments. Rather, they argue that their case falls under the
circumstances mentioned in the third paragraph of Article 17 in relation to
Article 16 of the Civil Code.

Amos Bellis, Jr. interposed no opposition despite notice to him, proof of

service of which is evidenced by the registry receipt submitted on April 27,
1964 by the executor.1

Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the
national law of the decedent, in intestate or testamentary successions, with
regard to four items: (a) the order of succession; (b) the amount of
successional rights; (e) the intrinsic validity of the provisions of the will; and (d)
the capacity to succeed. They provide that

After the parties filed their respective memoranda and other pertinent
pleadings, the lower court, on April 30, 1964, issued an order overruling the
oppositions and approving the executor's final account, report and
administration and project of partition. Relying upon Art. 16 of the Civil Code, it
applied the national law of the decedent, which in this case is Texas law, which
did not provide for legitimes.
Their respective motions for reconsideration having been denied by the lower
court on June 11, 1964, oppositors-appellants appealed to this Court to raise
the issue of which law must apply Texas law or Philippine law.
In this regard, the parties do not submit the case on, nor even discuss, the
doctrine of renvoi, applied by this Court in Aznar v. Christensen Garcia, L16749, January 31, 1963. Said doctrine is usually pertinent where the
decedent is a national of one country, and a domicile of another. In the present
case, it is not disputed that the decedent was both a national of Texas and a
domicile thereof at the time of his death.2 So that even assuming Texas has a
conflict of law rule providing that the domiciliary system (law of the domicile)
should govern, the same would not result in a reference back (renvoi) to
Philippine law, but would still refer to Texas law. Nonetheless, if Texas has a
conflicts rule adopting the situs theory (lex rei sitae) calling for the application
of the law of the place where the properties are situated, renvoi would arise,
since the properties here involved are found in the Philippines. In the absence,
however, of proof as to the conflict of law rule of Texas, it should not be
presumed different from ours.3Appellants' position is therefore not rested on

ART. 16. Real property as well as personal property is subject to the

law of the country where it is situated.
However, intestate and testamentary successions, both with respect
to the order of succession and to the amount of successional rights
and to the intrinsic validity of testamentary provisions, shall be
regulated by the national law of the person whose succession is under
consideration, whatever may he the nature of the property and
regardless of the country wherein said property may be found.
ART. 1039. Capacity to succeed is governed by the law of the nation
of the decedent.
Appellants would however counter that Art. 17, paragraph three, of the Civil
Code, stating that
Prohibitive laws concerning persons, their acts or property, and those
which have for their object public order, public 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.
prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This
is not correct. Precisely, Congressdeleted the phrase, "notwithstanding the

provisions of this and the next preceding article" when they incorporated Art.
11 of the old Civil Code as Art. 17 of the new Civil Code, while reproducing
without substantial change the second paragraph of Art. 10 of the old Civil
Code as Art. 16 in the new. It must have been their purpose to make the
second paragraph of Art. 16 a specific provision in itself which must be applied
in testate and intestate succession. As further indication of this legislative
intent, Congress added a new provision, under Art. 1039, which decrees that
capacity to succeed is to be governed by the national law of the decedent.
It is therefore evident that whatever public policy or good customs may be
involved in our System of legitimes, Congress has not intended to extend the
same to the succession of foreign nationals. For it has specifically chosen to
leave, inter alia, the amount of successional rights, to the decedent's national
law. Specific provisions must prevail over general ones.
Appellants would also point out that the decedent executed two wills one to
govern his Texas estate and the other his Philippine estate arguing from
this that he intended Philippine law to govern his Philippine estate. Assuming
that such was the decedent's intention in executing a separate Philippine will,
it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil.
867, 870, a provision in a foreigner's will to the effect that his properties shall
be distributed in accordance with Philippine law and not with his national law,
is illegal and void, for his national law cannot be ignored in regard to those
matters that Article 10 now Article 16 of the Civil Code states said
national law should govern.
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State
of Texas, U.S.A., and that under the laws of Texas, there are no forced heirs or
legitimes. Accordingly, since the intrinsic validity of the provision of the will and
the amount of successional rights are to be determined under Texas law, the
Philippine law on legitimes cannot be applied to the testacy of Amos G. Bellis.
Wherefore, the order of the probate court is hereby affirmed in toto, with costs
against appellants. So ordered.

G.R. No. 124371

November 23, 2000

PAULA T. LLORENTE, petitioner,

vs.
COURT OF APPEALS and ALICIA F. LLORENTE, respondents.
DECISION
PARDO, J.:
The Case
The case raises a conflict of laws issue.
What is before us is an appeal from the decision of the Court of
Appeals1 modifying that of the Regional Trial Court, Camarines Sur, Branch
35, Iriga City2 declaring respondent Alicia F. Llorente (herinafter referred to as
"Alicia"), as co-owners of whatever property she and the deceased Lorenzo N.
Llorente (hereinafter referred to as "Lorenzo") may have acquired during the
twenty-five (25) years that they lived together as husband and wife.
The Facts
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United
States Navy from March 10, 1927 to September 30, 1957. 3
On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter
referred to as "Paula") were married before a parish priest, Roman Catholic
Church, in Nabua, Camarines Sur.4
Before the outbreak of the Pacific War, Lorenzo departed for the United States
and Paula stayed in the conjugal home in barrio Antipolo, Nabua, Camarines
Sur.5

On November 30, 1943, Lorenzo was admitted to United States citizenship

and Certificate of Naturalization No. 5579816 was issued in his favor by the
United States District Court, Southern District of New York. 6
Upon the liberation of the Philippines by the American Forces in 1945,
Lorenzo was granted an accrued leave by the U. S. Navy, to visit his wife and
he visited the Philippines.7 He discovered that his wife Paula was pregnant
and was "living in" and having an adulterous relationship with his brother,
Ceferino Llorente.8
On December 4, 1945, Paula gave birth to a boy registered in the Office of the
Registrar of Nabua as "Crisologo Llorente," with the certificate stating that the
child was not legitimate and the line for the fathers name was left blank. 9
Lorenzo refused to forgive Paula and live with her. In fact, on February 2,
1946, the couple drew a written agreement to the effect that (1) all the family
allowances allotted by the United States Navy as part of Lorenzos salary and
all other obligations for Paulas daily maintenance and support would be
suspended; (2) they would dissolve their marital union in accordance with
judicial proceedings; (3) they would make a separate agreement regarding
their conjugal property acquired during their marital life; and (4) Lorenzo would
not prosecute Paula for her adulterous act since she voluntarily admitted her
fault and agreed to separate from Lorenzo peacefully. The agreement was
signed by both Lorenzo and Paula and was witnessed by Paulas father and
stepmother. The agreement was notarized by Notary Public Pedro Osabel. 10
Lorenzo returned to the United States and on November 16, 1951 filed for
divorce with the Superior Court of the State of California in and for the County
of San Diego. Paula was represented by counsel, John Riley, and actively
participated in the proceedings. On November 27, 1951, the Superior Court of
the State of California, for the County of San Diego found all factual
allegations to be true and issued an interlocutory judgment of divorce. 11
On December 4, 1952, the divorce decree became final. 12

In the meantime, Lorenzo returned to the Philippines.

On January 16, 1958, Lorenzo married Alicia F. Llorente in
Manila.13 Apparently, Alicia had no knowledge of the first marriage even if they
resided in the same town as Paula, who did not oppose the marriage or
cohabitation.14
From 1958 to 1985, Lorenzo and Alicia lived together as husband and
wife.15 Their twenty-five (25) year union produced three children, Raul, Luz
and Beverly, all surnamed Llorente.16
On March 13, 1981, Lorenzo executed a Last Will and Testament. The will
was notarized by Notary Public Salvador M. Occiano, duly signed by Lorenzo
with attesting witnesses Francisco Hugo, Francisco Neibres and Tito Trajano.
In the will, Lorenzo bequeathed all his property to Alicia and their three
children, to wit:
"(1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively my
residential house and lot, located at San Francisco, Nabua, Camarines Sur,
Philippines, including ALL the personal properties and other movables or
belongings that may be found or existing therein;
"(2) I give and bequeath exclusively to my wife Alicia R. Fortuno and to my
children, Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal
shares, all my real properties whatsoever and wheresoever located,
specifically my real properties located at Barangay Aro-Aldao, Nabua,
Camarines Sur; Barangay Paloyon, Nabua, Camarines Sur; Barangay Baras,
Sitio Puga, Nabua, Camarines Sur; and Barangay Paloyon, Sitio Nalilidong,
Nabua, Camarines Sur;
"(3) I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno
and unto my children, Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente,
in equal shares, my real properties located in Quezon City Philippines, and
covered by Transfer Certificate of Title No. 188652; and my lands in Antipolo,

Rizal, Philippines, covered by Transfer Certificate of Title Nos. 124196 and

165188, both of the Registry of Deeds of the province of Rizal, Philippines;
"(4) That their respective shares in the above-mentioned properties, whether
real or personal properties, shall not be disposed of, ceded, sold and
conveyed to any other persons, but could only be sold, ceded, conveyed and
disposed of by and among themselves;
"(5) I designate my wife ALICIA R. FORTUNO to be the sole executor of this
my Last Will and Testament, and in her default or incapacity of the latter to act,
any of my children in the order of age, if of age;
"(6) I hereby direct that the executor named herein or her lawful substitute
should served (sic) without bond;
"(7) I hereby revoke any and all my other wills, codicils, or testamentary
dispositions heretofore executed, signed, or published, by me;
"(8) It is my final wish and desire that if I die, no relatives of mine in any
degree in the Llorentes Side should ever bother and disturb in any manner
whatsoever my wife Alicia R. Fortunato and my children with respect to any
real or personal properties I gave and bequeathed respectively to each one of
them by virtue of this Last Will and Testament." 17
On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga,
Camarines Sur, a petition for the probate and allowance of his last will and
testament wherein Lorenzo moved that Alicia be appointed Special
Administratrix of his estate.18
On January 18, 1984, the trial court denied the motion for the reason that the
testator Lorenzo was still alive.19
On January 24, 1984, finding that the will was duly executed, the trial court
admitted the will to probate.20

On June 11, 1985, before the proceedings could be terminated, Lorenzo

died.21
On September 4, 1985, Paula filed with the same court a petition 22 for letters
of administration over Lorenzos estate in her favor. Paula contended (1) that
she was Lorenzos surviving spouse, (2) that the various property were
acquired during their marriage, (3) that Lorenzos will disposed of all his
property in favor of Alicia and her children, encroaching on her legitime and
1/2 share in the conjugal property.23
On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No.
IR-755), a petition for the issuance of letters testamentary. 24
On October 14, 1985, without terminating the testate proceedings, the trial
court gave due course to Paulas petition in Sp. Proc. No. IR-888. 25
On November 6, 13 and 20, 1985, the order was published in the newspaper
"Bicol Star".26
On May 18, 1987, the Regional Trial Court issued a joint decision, thus:
"Wherefore, considering that this court has so found that the divorce decree
granted to the late Lorenzo Llorente is void and inapplicable in the Philippines,
therefore the marriage he contracted with Alicia Fortunato on January 16,
1958 at Manila is likewise void. This being so the petition of Alicia F. Llorente
for the issuance of letters testamentary is denied. Likewise, she is not entitled
to receive any share from the estate even if the will especially said so her
relationship with Lorenzo having gained the status of paramour which is under
Art. 739 (1).
"On the other hand, the court finds the petition of Paula Titular Llorente,
meritorious, and so declares the intrinsic disposition of the will of Lorenzo
Llorente dated March 13, 1981 as void and declares her entitled as conjugal
partner and entitled to one-half of their conjugal properties, and as primary
compulsory heir, Paula T. Llorente is also entitled to one-third of the estate and

then one-third should go to the illegitimate children, Raul, Luz and Beverly, all
surname (sic) Llorente, for them to partition in equal shares and also entitled
to the remaining free portion in equal shares.
"Petitioner, Paula Llorente is appointed legal administrator of the estate of the
deceased, Lorenzo Llorente. As such let the corresponding letters of
administration issue in her favor upon her filing a bond in the amount (sic) of
P100,000.00 conditioned for her to make a return to the court within three (3)
months a true and complete inventory of all goods, chattels, rights, and
credits, and estate which shall at any time come to her possession or to the
possession of any other person for her, and from the proceeds to pay and
discharge all debts, legacies and charges on the same, or such dividends
thereon as shall be decreed or required by this court; to render a true and just
account of her administration to the court within one (1) year, and at any other
time when required by the court and to perform all orders of this court by her
to be performed.
"On the other matters prayed for in respective petitions for want of evidence
could not be granted.
"SO ORDERED."27
In time, Alicia filed with the trial court a motion for reconsideration of the
aforequoted decision.28
On September 14, 1987, the trial court denied Alicias motion for
reconsideration but modified its earlier decision, stating that Raul and Luz
Llorente are not children "legitimate or otherwise" of Lorenzo since they were
not legally adopted by him.29 Amending its decision of May 18, 1987, the trial
court declared Beverly Llorente as the only illegitimate child of Lorenzo,
entitling her to one-third (1/3) of the estate and one-third (1/3) of the free
portion of the estate.30
On September 28, 1987, respondent appealed to the Court of Appeals. 31

On July 31, 1995, the Court of Appeals promulgated its decision, affirming with
modification the decision of the trial court in this wise:

Thus, as a rule, issues arising from these incidents are necessarily governed
by foreign law.

"WHEREFORE, the decision appealed from is hereby AFFIRMED with the

MODIFICATION that Alicia is declared as co-owner of whatever properties she
and the deceased may have acquired during the twenty-five (25) years of
cohabitation.

The Civil Code clearly provides:

"Art. 15. Laws relating to family rights and duties, or to the status, condition
and legal capacity of persons arebinding upon citizens of the Philippines,
even though living abroad.

"SO ORDERED."32
On August 25, 1995, petitioner filed with the Court of Appeals a motion for
reconsideration of the decision. 33

"Art. 16. Real property as well as personal property is subject to the law of the
country where it is situated.

The Issue

"However, intestate and testamentary succession, both with respect to the

order of succession and to the amount of successional rights and to the
intrinsic validity of testamentary provisions, shall be regulated by the
national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country
wherein said property may be found." (emphasis ours)

Stripping the petition of its legalese and sorting through the various arguments
raised,36 the issue is simple. Who are entitled to inherit from the late Lorenzo
N. Llorente?

True, foreign laws do not prove themselves in our jurisdiction and our courts
are not authorized to take judicial notice of them. Like any other fact, they
must be alleged and proved.37

We do not agree with the decision of the Court of Appeals. We remand the
case to the trial court for ruling on the intrinsic validity of the will of the
deceased.

While the substance of the foreign law was pleaded, the Court of Appeals did
not admit the foreign law. The Court of Appeals and the trial court called to the
fore the renvoi doctrine, where the case was "referred back" to the law of the
decedents domicile, in this case, Philippine law.

34

On March 21, 1996, the Court of Appeals, denied the motion for lack of merit.
Hence, this petition.35

The Applicable Law

The fact that the late Lorenzo N. Llorente became an American citizen long
before and at the time of: (1) his divorce from Paula; (2) marriage to Alicia; (3)
execution of his will; and (4) death, is duly established, admitted and
undisputed.

We note that while the trial court stated that the law of New York was not
sufficiently proven, in the same breath it made the categorical, albeit equally
unproven statement that "American law follows the domiciliary theory hence,
Philippine law applies when determining the validity of Lorenzos will. 38
First, there is no such thing as one American law.1wph!1 The "national law"
indicated in Article 16 of the Civil Code cannot possibly apply to general

American law. There is no such law governing the validity of testamentary

provisions in the United States. Each State of the union has its own law
applicable to its citizens and in force only within the State. It can therefore
refer to no other than the law of the State of which the decedent was a
resident.39Second, there is no showing that the application of
the renvoi doctrine is called for or required by New York State law.
The trial court held that the will was intrinsically invalid since it contained
dispositions in favor of Alice, who in the trial courts opinion was a
mere paramour. The trial court threw the will out, leaving Alice, and her two
children, Raul and Luz, with nothing.

In Pilapil v. Ibay-Somera,42 we recognized the divorce obtained by the

respondent in his country, the Federal Republic of Germany. There, we stated
that divorce and its legal effects may be recognized in the Philippines insofar
as respondent is concerned in view of the nationality principle in our civil law
on the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals must
be reversed.43 We hold that the divorce obtained by Lorenzo H. Llorente from
his first wife Paula was valid and recognized in this jurisdiction as a matter of
comity. Now, the effects of this divorce (as to the succession to the estate of
the decedent) are matters best left to the determination of the trial court.

The Court of Appeals also disregarded the will. It declared Alice entitled to one
half (1/2) of whatever property she and Lorenzo acquired during their
cohabitation, applying Article 144 of the Civil Code of the Philippines.

Validity of the Will

The hasty application of Philippine law and the complete disregard of the will,
already probated as duly executed in accordance with the formalities of
Philippine law, is fatal, especially in light of the factual and legal
circumstances here obtaining.

"Art. 17. The forms and solemnities of contracts, wills, and other public
instruments shall be governed by the laws of the country in which they are
executed.

Validity of the Foreign Divorce

In Van Dorn v. Romillo, Jr.40 we held that owing to the nationality principle
embodied in Article 15 of the Civil Code, only Philippine nationals are covered
by the policy against absolute divorces, the same being considered contrary to
our concept of public policy and morality. In the same case, the Court ruled
that aliens may obtain divorces abroad, provided they are valid according to
their national law.
Citing this landmark case, the Court held in Quita v. Court of Appeals,41 that
once proven that respondent was no longer a Filipino citizen when he
obtained the divorce from petitioner, the ruling in Van Dorn would become
applicable and petitioner could "very well lose her right to inherit" from him.

The Civil Code provides:

"When the acts referred to are executed before the diplomatic or consular
officials of the Republic of the Philippines in a foreign country, the solemnities
established by Philippine laws shall be observed in their execution."
(underscoring ours)
The clear intent of Lorenzo to bequeath his property to his second wife and
children by her is glaringly shown in the will he executed. We do not wish to
frustrate his wishes, since he was a foreigner, not covered by our laws on
"family rights and duties, status, condition and legal capacity." 44
Whether the will is intrinsically valid and who shall inherit from Lorenzo are
issues best proved by foreign law which must be pleaded and proved.
Whether the will was executed in accordance with the formalities required is
answered by referring to Philippine law. In fact, the will was duly probated.

As a guide however, the trial court should note that whatever public policy or
good customs may be involved in our system of legitimes, Congress did not
intend to extend the same to the succession of foreign nationals. Congress
specifically left the amount of successional rights to the decedent's national
law.45
Having thus ruled, we find it unnecessary to pass upon the other issues
raised.
The Fallo
WHEREFORE, the petition is GRANTED. The decision of the Court of
Appeals in CA-G. R. SP No. 17446 promulgated on July 31, 1995 is SET
ASIDE.
In lieu thereof, the Court REVERSES the decision of the Regional Trial Court
and RECOGNIZES as VALID the decree of divorce granted in favor of the
deceased Lorenzo N. Llorente by the Superior Court of the State of California
in and for the County of San Diego, made final on December 4, 1952.
Further, the Court REMANDS the cases to the court of origin for determination
of the intrinsic validity of Lorenzo N. Llorentes will and determination of the
parties successional rights allowing proof of foreign law with instructions that
the trial court shall proceed with all deliberate dispatch to settle the estate of
the deceased within the framework of the Rules of Court.
No costs.
SO ORDERED.

G.R. No. L-8883

July 14, 1959

ALFREDO M. VELAYO, ETC., plaintiff,

vs.
SHELL COMPANY OF THE PHILIPPINES ISLANDS, LTD., defendantappellee.
ALFONSO Z. SYCIP, ET. AL., intervenors-appellants.
Sycip, Quisumbing, Salazar and Associates for appellants.
Ozaeta, Lichauco and Picazo for appellee.
BAUTISTA ANGELO, J.:
On December 17, 1948, Alfredo M. Velayo as assignees of the insolvent
Commercial Airlines, Inc., instituted an action against Shell Company of the
Philippine Islands, Ltd., in the Court of First Instance of Manila for injunction
and damages (Civil Case No. 6966). On October 26, 1951, a complaint in
intervention was filed by Alfonso Sycip, Paul Sycip, and Yek Trading
Corporation, and on November 14, 1951, by Mabasa & Company.
After trial wherein plaintiff presented evidence in his behalf, but none in behalf
of intervenors, the court rendered decision dismissing plaintiff's complaint as
well as those filed by the intervenors. On March 31, 1954, counsel for plaintiff
filed a notice of appeal, appeal bond, and record on appeal in behalf only of
plaintiff even if they also represent the intervenors, which in due time were
approved, the Court instructing its clerk to forward the record on appeal to the
Supreme Court together with all the evidence presented in the case. This
instruction was actually complied with.
On August 31, 1954, the Deputy Clerk of the Supreme Court notified counsel
of plaintiff that the record as well as the evidence have already been received
and that they should file their brief within 45 days from receipt of the notice.
On November 2, 1954, counsel filed their brief for appellants. On November 6,
1954, or 7 months after the judgment had become final as against the

intervenors, and 4 days after counsel for appellants had submitted the latter's
brief, counsel for intervenors filed with the Supreme Court a petition for
correction of the record on appeal in order to enable them to insert therein the
names of the intervenors as appellants, the petition being based, among
others, on the ground that the omission of the names of the intervenors in said
record on appeal was due to the mistake of the typist who prepared it while
the attorney in charge was on vacation. The petition was vigorously opposed
by counsel for defendant, contending that the same would serve no purpose,
whatsoever considering that the intervenors had not presented any evidence
in support of their claim, aside from the fact that the alleged absence of the
attorney of the intervenors cannot constitute a justification for the alleged
omission of the intervenors as appellants. On November 12, 1954, the Court
denied the petition. Counsel intervenors moved for a reconsideration of the
order, but the same was denied.
On November 19, 1954, counsel for intervenors filed with the lower court a
petition for relief under Rule 38 of the Rules of Court, wherein he reiterated the
same grounds they alleged in the petition for correction filed by them in the
Supreme Court, which petition was denied on November 27, 1954, for having
been filed outside the reglementary period fixed in said Rule 38. Counsel filed
a motion for reconsideration, which was again denied, the Court stating that
"no judgment or order has been rendered, nor any other proceeding taken by
this Court on the right of the intervenors to appeal."
On December 20, 1954, counsel filed once more a motion to amend the
record on appeal based on grounds identical with those alleged in the petition
for correction filed before the Supreme Court. On December 27, 1954, the
lower court denied the motion. On January 6, 1955, counsel filed a petition for
relief from this last order entered on December 27, 1954, to which counsel for
defendant filed an opposition. On February 5, 1955, hearing was had on both
the petition for relief and the opposition, and on February 9, 1955, the petition
was denied on the ground that the case is already before the Supreme Court
on appeal. It is from this order that the counsel for intervenors has taken the
appeal now before us.

The instant appeal has no merit.

To begin with, the only remedy which appellants now seek in this appeal is the
inclusion of the intervenors as appellants in the appeal from the decision
rendered in the main case, but this remedy has already been denied twice by
this Court, first, in its resolution of November 12, 1954 denying their petition
for correction of the record on appeal, and, second, in denying their motion for
reconsideration of said resolution. It should be noted that the grounds relied
upon in this appeal are the same grounds alleged in said petition for
correction.
In the second place, the intervenors have no right or reason to appeal from the
decision in the main case, it appearing that they did not introduce any
evidence during the trial in support of their complaint, which shows that their
appeal would be merely pro-forma. And, in any event, they made the attempt
to amend the record on appealseven (7) months after the decision had
become final against them.
In the third place, the intervenors have no right or reason to file a petition for
relief under Rule 38 of the Rules of Court from the order of the lower court
issued on December 27, 1954, for the reason that the same was entered upon
a motion filed by them. Indeed they cannot reasonably assert that the order
was entered against them through fraud, accident, mistake, or negligence.
The fraud mentioned in Rule 38 is the fraud committed by the adverse party
and certainly the same cannot be attributed to the Court.
Finally, it appears that the main case has already been decided by this Court
on the merits on October 31, 1956, reversing the decision of the lower court
and awarding damages to plaintiff, which apparently is the very purpose which
the intervenors seek to accomplish in joining the appeal as co-appellants. This
appeal, therefore, has already become moot.
Wherefore, the order appealed from is affirmed, with costs against appellants.

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).lwph1.t Two of these
complaints were refiled with the Judge Advocate General's Office, which
however, remanded them to the fiscal's office. All of the six criminal complaints
were dismissed by the fiscal. Petitioners appealed four of the fiscal's
resolutions dismissing the criminal complaints with the Secretary of Justice,
who, however, affirmed their dismissal.
In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F")
from petitioners that his employment has been terminated effective December
13, 1972. Whereupon, Tobias filed a complaint for illegal dismissal. The labor
arbiter dismissed the complaint. On appeal, the National Labor Relations
Commission (NLRC) reversed the labor arbiter's decision. However, the
Secretary of Labor, acting on petitioners' appeal from the NLRC ruling,
reinstated the labor arbiter's decision. Tobias appealed the Secretary of
Labor's order with the Office of the President. During the pendency of the
appeal with said office, petitioners and private respondent Tobias entered into
a compromise agreement regarding the latter's complaint for illegal dismissal.
Unemployed, Tobias sought employment with the Republic Telephone
Company (RETELCO). However, petitioner Hendry, without being asked by
RETELCO, wrote a letter to the latter stating that Tobias was dismissed by
GLOBE MACKAY due to dishonesty.
Private respondent Tobias filed a civil case for damages anchored on alleged
unlawful, malicious, oppressive, and abusive acts of petitioners. Petitioner
Hendry, claiming illness, did not testify during the hearings. The Regional Trial
Court (RTC) of Manila, Branch IX, through Judge Manuel T. Reyes rendered
judgment in favor of private respondent by ordering petitioners to pay him
eighty thousand pesos (P80,000.00) as actual damages, two hundred
thousand pesos (P200,000.00) as moral damages, twenty thousand pesos
(P20,000.00) as exemplary damages, thirty thousand pesos (P30,000.00) as
attorney's fees, and costs. Petitioners appealed the RTC decision to the Court
of Appeals. On the other hand, Tobias appealed as to the amount of damages.

However, the Court of Appeals, an a decision dated August 31, 1987 affirmed
the RTC decision in toto. Petitioners' motion for reconsideration having been
denied, the instant petition for review on certiorari was filed.
The main issue in this case is whether or not petitioners are liable for
damages to private respondent.
Petitioners contend that they could not be made liable for damages in the
lawful exercise of their right to dismiss private respondent.
On the other hand, private respondent contends that because of petitioners'
abusive manner in dismissing him as well as for the inhuman treatment he got
from them, the Petitioners must indemnify him for the damage that he had
suffered.
One of the more notable innovations of the New Civil Code is the codification
of "some basic principles that are to be observed for the rightful relationship
between human beings and for the stability of the social order." [REPORT ON
THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE
PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect
of the old Code which merely stated the effects of the law, but failed to draw
out its spirit, incorporated certain fundamental precepts which were "designed
to indicate certain norms that spring from the fountain of good conscience"
and which were also meant to serve as "guides for human conduct [that]
should run as golden threads through society, to the end that law may
approach its supreme ideal, which is the sway and dominance of justice" (Id.)
Foremost among these principles is that pronounced in Article 19 which
provides:
Art. 19. Every person must, in the exercise of his rights and in
the performance of his duties, act with justice, give everyone
his due, and observe honesty and good faith.

This article, known to contain what is commonly referred to as the principle of

abuse of rights, sets certain standards which must be observed not only in the
exercise of one's rights but also in the performance of one's duties. These
standards are the following: to act with justice; to give everyone his due; and
to observe honesty and good faith. The law, therefore, recognizes a primordial
limitation on all rights; that in their exercise, the norms of human conduct set
forth in Article 19 must be observed. A right, though by itself legal because
recognized or granted by law as such, may nevertheless become the source
of some illegality. When a right is exercised in a manner which does not
conform with the norms enshrined in Article 19 and results in damage to
another, a legal wrong is thereby committed for which the wrongdoer must be
held responsible. But while Article 19 lays down a rule of conduct for the
government of human relations and for the maintenance of social order, it
does not provide a remedy for its violation. Generally, an action for damages
under either Article 20 or Article 21 would be proper.
Article 20, which pertains to damage arising from a violation of law, provides
that:
Art. 20. Every person who contrary to law, wilfully or
negligently causes damage to another, shall indemnify the
latter for the same.
However, in the case at bar, petitioners claim that they did not violate any
provision of law since they were merely exercising their legal right to dismiss
private respondent. This does not, however, leave private respondent with no
relief because Article 21 of the Civil Code provides that:
Art. 21. Any person who wilfully causes loss or injury to
another in a manner that is contrary to morals, good customs
or public policy shall compensate the latter for the damage.
This article, adopted to remedy the "countless gaps in the statutes, which
leave so many victims of moral wrongs helpless, even though they have

actually suffered material and moral injury" [Id.] should "vouchsafe adequate
legal remedy for that untold number of moral wrongs which it is impossible for
human foresight to provide for specifically in the statutes" [Id. it p. 40; See
also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247].
In determining whether or not the principle of abuse of rights may be invoked,
there is no rigid test which can be applied. While the Court has not hesitated
to apply Article 19 whether the legal and factual circumstances called for its
application [See for e.g., Velayo v. Shell Co. of the Phil., Ltd., 100 Phil. 186
(1956); PNB v. CA, supra;Grand Union Supermarket, Inc. v. Espino, Jr., G.R.
No. L-48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L46558, July 31,1981,106 SCRA 391; United General Industries, Inc, v. Paler
G.R. No. L-30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No.
50911, August 21, 1987, 153 SCRA 183] the question of whether or not the
principle of abuse of rights has been violated resulting in damages under
Article 20 or Article 21 or other applicable provision of law, depends on the
circumstances of each case. And in the instant case, the Court, after
examining the record and considering certain significant circumstances, finds
that all petitioners have indeed abused the right that they invoke, causing
damage to private respondent and for which the latter must now be
indemnified.
The trial court made a finding that notwithstanding the fact that it was private
respondent Tobias who reported the possible existence of anomalous
transactions, petitioner Hendry "showed belligerence and told plaintiff (private
respondent herein) that he was the number one suspect and to take a one
week vacation leave, not to communicate with the office, to leave his table
drawers open, and to leave his keys to said defendant (petitioner Hendry)"
[RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But
regardless of whether or not it was private respondent Tobias who reported
the anomalies to petitioners, the latter's reaction towards the former upon
uncovering the anomalies was less than civil. An employer who harbors
suspicions that an employee has committed dishonesty might be justified in
taking the appropriate action such as ordering an investigation and directing

the employee to go on a leave. Firmness and the resolve to uncover the truth
would also be expected from such employer. But the high-handed treatment
accorded Tobias by petitioners was certainly uncalled for. And this
reprehensible attitude of petitioners was to continue when private respondent
returned to work on November 20, 1972 after his one week forced leave. Upon
reporting for work, Tobias was confronted by Hendry who said. "Tobby, you are
the crook and swindler in this company." Considering that the first report made
by the police investigators was submitted only on December 10, 1972 [See
Exh. A] the statement made by petitioner Hendry was baseless. The
imputation of guilt without basis and the pattern of harassment during the
investigations of Tobias transgress the standards of human conduct set forth
in Article 19 of the Civil Code. The Court has already ruled that the right of the
employer to dismiss an employee should not be confused with the manner in
which the right is exercised and the effects flowing therefrom. If the dismissal
is done abusively, then the employer is liable for damages to the employee
[Quisaba v. Sta. Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088,
August 30, 1974, 58 SCRA 771; See also Philippine Refining Co., Inc. v.
Garcia, G.R. No. L-21871, September 27,1966, 18 SCRA 107] Under the
circumstances of the instant case, the petitioners clearly failed to exercise in a
legitimate manner their right to dismiss Tobias, giving the latter the right to
recover damages under Article 19 in relation to Article 21 of the Civil Code.
But petitioners were not content with just dismissing Tobias. Several other
tortious acts were committed by petitioners against Tobias after the latter's
termination from work. Towards the latter part of January, 1973, after the filing
of the first of six criminal complaints against Tobias, the latter talked to Hendry
to protest the actions taken against him. In response, Hendry cut short Tobias'
protestations by telling him to just confess or else the company would file a
hundred more cases against him until he landed in jail. Hendry added that,
"You Filipinos cannot be trusted." The threat unmasked petitioner's bad faith in
the various actions taken against Tobias. On the other hand, the scornful
remark about Filipinos as well as Hendry's earlier statements about Tobias
being a "crook" and "swindler" are clear violations of 'Tobias' personal dignity
[See Article 26, Civil Code].

The next tortious act committed by petitioners was the writing of a letter to
RETELCO sometime in October 1974, stating that Tobias had been dismissed
by GLOBE MACKAY due to dishonesty. Because of the letter, Tobias failed to
gain employment with RETELCO and as a result of which, Tobias remained
unemployed for a longer period of time. For this further damage suffered by
Tobias, petitioners must likewise be held liable for damages consistent with
Article 2176 of the Civil Code. Petitioners, however, contend that they have a
"moral, if not legal, duty to forewarn other employers of the kind of employee
the plaintiff (private respondent herein) was." [Petition, p. 14; Rollo, p. 15].
Petitioners further claim that "it is the accepted moral and societal obligation of
every man to advise or warn his fellowmen of any threat or danger to the
latter's life, honor or property. And this includes warning one's brethren of the
possible dangers involved in dealing with, or accepting into confidence, a man
whose honesty and integrity is suspect" [Id.]. These arguments, rather than
justify petitioners' act, reveal a seeming obsession to prevent Tobias from
getting a job, even after almost two years from the time Tobias was dismissed.
Finally, there is the matter of the filing by petitioners of six criminal complaints
against Tobias. Petitioners contend that there is no case against them for
malicious prosecution and that they cannot be "penalized for exercising their
right and prerogative of seeking justice by filing criminal complaints against an
employee who was their principal suspect in the commission of forgeries and
in the perpetration of anomalous transactions which defrauded them of
substantial sums of money" [Petition, p. 10, Rollo, p. 11].
While sound principles of justice and public policy dictate that persons shall
have free resort to the courts for redress of wrongs and vindication of their
rights [Buenaventura v. Sto. Domingo, 103 Phil. 239 (1958)], the right to
institute criminal prosecutions can not be exercised maliciously and in bad
faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 5871.]
Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2
SCRA 337, the Court held that the right to file criminal complaints should not
be used as a weapon to force an alleged debtor to pay an indebtedness. To do
so would be a clear perversion of the function of the criminal processes and of

the courts of justice. And in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20
SCRA 536 the Court upheld the judgment against the petitioner for actual and
moral damages and attorney's fees after making a finding that petitioner, with
persistence, filed at least six criminal complaints against respondent, all of
which were dismissed.

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.
xxx

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].

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.

In the instant case, however, the trial court made a finding that petitioners
acted in bad faith in filing the criminal complaints against Tobias, observing
that:
xxx
Defendants (petitioners herein) filed with the Fiscal's Office of
Manila a total of six (6) criminal cases, five (5) of which were
for estafa thru falsification of commercial document and one
for violation of Art. 290 of the Revised Penal Code
"discovering secrets thru seizure of correspondence," and all
were dismissed for insufficiency or lack of evidence." The
dismissal of four (4) of the cases was appealed to the Ministry
of Justice, but said Ministry invariably sustained the dismissal
of the cases. As above adverted to, two of these cases were
refiled with the Judge Advocate General's Office of the Armed

xxx
[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).lwph1.t " [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.

G.R. No. 126486 February 9, 1998

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

KAPUNAN, J.:
The instant petition raises two issues: (1) whether or not private respondent is
guilty of abuse of right; and (2) whether or not private respondent is entitled to
interest and attorney's fees.
The facts are undisputed:
On August 31, 1973, plaintiff [Phelps Dodge, Philippines, Inc. private
respondent herein] appointed defendant [petitioner Barons Marketing,
Corporation] as one of its dealers of electrical wires and cables
effective September 1, 1973 (Exh. A). As such dealer, defendant was
given by plaintiff 60 days credit for its purchases of plaintiff's electrical
products. This credit term was to be reckoned from the date of
delivery by plaintiff of its products to defendant (Exh. 1).
During the period covering December 1986 to August 17, 1987,
defendant purchased, on credit, from plaintiff various electrical wires
and cables in the total amount of P4,102,438.30 (Exh. B to K). These
wires and cables were in turn sold, pursuant to previous
arrangements, by defendant to MERALCO, the former being the
accredited supplier of the electrical requirements of the latter. Under
the sales invoices issued by plaintiff to defendant for the subject
purchases, it is stipulated that interest at 12% on the amount due for
attorney's fees and collection (Exh. BB). 1 On September 7, 1987,
defendant paid plaintiff the amount of P300,000.00 out of its total
purchases as above-stated (Exh. S), thereby leaving an unpaid

account on the aforesaid deliveries of P3,802,478.20. On several

occasions, plaintiff wrote defendant demanding payment of its
outstanding obligations due plaintiff (Exhs. L, M, N, and P). In
response, defendant wrote plaintiff on October 5, 1987 requesting the
latter if it could pay its outstanding account in monthly installments of
P500,000.00 plus 1% interest per month commencing on October 15,
1987 until full payment (Exh. O and O-4). Plaintiff, however, rejected
defendant's offer and accordingly reiterated its demand for the full
payment of defendant's account (Exh. P). 2
On 29 October 1987, private respondent Phelps Dodge Phils., Inc. filed a
complaint before the Pasig Regional Trial Court against petitioner Barons
Marketing Corporation for the recovery of P3,802,478.20 representing the
value of the wires and cables the former had delivered to the latter, including
interest. Phelps Dodge likewise prayed that it be awarded attorney's fees at
the rate of 25% of the amount demanded, exemplary damages amounting to
at least P100,000.00, the expenses of litigation and the costs of suit.
Petitioner, in its answer, admitted purchasing the wires and cables from private
respondent but disputed the amount claimed by the latter. Petitioner likewise
interposed a counterclaim against private respondent, alleging that it suffered
injury to its reputation due to Phelps Dodge's acts. Such acts were purportedly
calculated to humiliate petitioner and constituted an abuse of rights.
After hearing, the trial court on 17 June 1991 rendered its decision, the
dispositive portion of which reads:
WHEREFORE, from all the foregoing considerations, the Court finds
Phelps Dodge Phils., Inc. to have preponderantly proven its case and
hereby orders Barons Marketing, Inc. to pay Phelps Dodge the
following:
1. P3,108,000.00 constituting the unpaid balance of defendant's
purchases from plaintiff and interest thereon at 12% per

annum computed from the respective expiration of the 60 day credit

term, vis-a-vis the various sales invoices and/or delivery receipts;
2. 25% of the preceding obligation for and as attorney's fees;
3. P10,000.00 as exemplary damages;
4. Costs of suit. 3
Both parties appealed to respondent court. Private respondent claimed that
the trial court should have awarded it the sum of P3,802,478.20, the amount
which appeared in the body of the complaint and proven during the trial rather
than P3,1081000.00 The latter amount appears in petitioner's prayer
supposedly as a result of a typographical error.
On the other hand, petitioner reiterated its claims for damages as a result of
"creditor's abuse." It also alleged that private respondent failed to prove its
cause of action against it.
On 25 June 1996, the Court of Appeals rendered a decision modifying the
decision of the trial court, thus:
WHEREFORE, from all the foregoing considerations, the Court finds
Phelps Dodge Phils., Inc. to have preponderantly proven its case and
hereby orders Barons Marketing, Inc. to pay Phelps Dodge the
following:
1. P3,802,478.20 constituting the unpaid balance of defendant's
purchases from plaintiff and interest thereon at 12% per
annum computed from the respective expiration of the 60 day credit
term, vis-a-vis the various sales invoices and/or delivery receipts; and
2. 5% of the preceding obligation for and as attorney's fees.
No costs. 4

Petitioner Barons Marketing is now before this Court alleging that respondent
court erred when it held (1) private respondent Phelps Dodge not guilty of
"creditor's abuse," and (2) petitioner liable to private respondent for interest
and attorney's fees.
I
Petitioner does not deny private respondent's rights to institute an action for
collection and to claim full payment. Indeed, petitioner's right to file an action
for collection is beyond cavil. 5 Likewise, private respondent's right to reject
petitioner's offer to pay in installments is guaranteed by Article 1248 of the
Civil Code which states:
Art. 1248. Unless there is an express stipulation to that effect, the
creditor cannot be compelled partially to receive the prestations in
which the obligation consists. Neither may the debtor be required to
make partial payments.
However, when the debt is in part liquidated and in part unliquidated,
the creditor may demand and the debtor may effect the payment of
the former without waiting for the liquidation of the latter.
Under this provision, the prestation, i.e., the object of the obligation, must be
performed in one act, not in parts.
Tolentino concedes that the right has its limitations:
Partial Prestations. Since the creditor cannot be compelled to
accept partial performance, unless otherwise stipulated, the creditor
who refuses to accept partial prestations does not incur in delay
or mora accipiendi, except when there is abuse of right or if good faith
requires acceptance. 6

Indeed, the law, as set forth in Article 19 of the Civil Code, prescribes a
"primordial limitation on all rights" by setting certain standards that must be
observed in the exercise thereof. 7 Thus:

before an action is finally settled. It is always wiser and more prudent

to accept an offer of payment in installment rather than file an action
in court to compel the debtor to settle his obligation in full in a single
payment.

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.
8

Petitioner now invokes Article 19 and Article 21 of the Civil Code, claiming
that private respondent abused its rights when it rejected petitioner's offer of
settlement and subsequently filed the action for collection considering:
. . . that the relationship between the parties started in 1973 spanning
more than 13 years before the complaint was filed, that the petitioner
had been a good and reliable dealer enjoying a good credit standing
during the period before it became delinquent in 1987, that the
relationship between the parties had been a fruitful one especially for
the private respondent, that the petitioner exerted its outmost efforts
to settle its obligations and avoid a suit, that the petitioner did not
evade in the payment of its obligation to the private respondent, and
that the petitioner was just asking a small concession that it be
allowed to liquidate its obligation to eight (8) monthly installments of
P500,000.00 plus 1% interest per month on the balance which
proposal was supported by post-dated checks. 9
Expounding on its theory, petitioner states:
In the ordinary course of events, a suit for collection of a sum of
money filed in court is done for the primary purpose of collecting a
debt or obligation. If there is an offer by the debtor to pay its debt or
obligation supported by post-dated checks and with provision for
interests, the normal response of a creditor would be to accept the
offer of compromise and not file the suit for collection. It is of common
knowledge that proceedings in our courts would normally take years

xxx xxx xxx

. . . Why then did private respondent elect to file a suit for collection
rather than accept petitioner's offer of settlement, supported by postdated checks, by paying monthly installments of P500,000.00 plus 1%
per month commencing on October 15, 1987 until full payment? The
answer is obvious. The action of private respondent in filling a suit for
collection was an abuse of right and exercised for the sole purpose of
prejudicing and injuring the petitioner. 10
Petitioner prays that the Court order private respondent to pay petitioner moral
and exemplary damages, attorney's fees, as well as the costs of suit. It
likewise asks that it be allowed to liquidate its obligation to private respondent,
without interests, in eight equal monthly installments.
Petitioner's theory is untenable.
Both parties agree that to constitute an abuse of rights under Article 19 the
defendant must act with bad faith or intent to prejudice the plaintiff. They cite
the following comments of Tolentino as their authority:
Test of Abuse of Right. Modern jurisprudence does not permit acts
which, although not unlawful, are anti-social. There is undoubtedly an
abuse of right when it is exercised for the only purpose of prejudicing
or injuring another. When the objective of the actor is illegitimate, the
illicit act cannot be concealed under the guise of exercising a right.
The principle does not permit acts which, without utility or legitimate
purpose cause damage to another, because they violate the concept
of social solidarity which considers law as rational and just. Hence,

every abnormal exercise of a right, contrary to its socio-economic

purpose, is an abuse that will give rise to liability. The exercise of a
right must be in accordance with the purpose for which it was
established, and must not be excessive or unduly harsh; there must
be no intention to injure another. Ultimately, however, and in practice,
courts, in the sound exercise of their discretion, will have to determine
all the facts and circumstances when the exercise of a right is unjust,
or when there has been an abuse of right. 11
The question, therefore, is whether private respondent intended to prejudice or
injure petitioner when it rejected petitioner's offer and filed the action for
collection.
We hold in the negative. It is an elementary rule in this jurisdiction that good
faith is presumed and that the burden of proving bad faith rests upon the party
alleging the same. 12 In the case at bar, petitioner has failed to prove bad faith
on the part of private respondent. Petitioner's allegation that private
respondent was motivated by a desire to terminate its agency relationship with
petitioner so that private respondent itself may deal directly with Meralco is
simply not supported by the evidence. At most, such supposition is merely
speculative.
Moreover, we find that private respondent was driven by very legitimate
reasons for rejecting petitioner's offer and instituting the action for collection
before the trial court. As pointed out by private respondent, the corporation
had its own "cash position to protect in order for it to pay its own obligations."
This is not such "a lame and poor rationalization" as petitioner purports it to
be. For if private respondent were to be required to accept petitioner's offer,
there would be no reason for the latter to reject similar offers from its other
debtors. Clearly, this would be inimical to the interests of any enterprise,
especially a profit-oriented one like private respondent. It is plain to see that
what we have here is a mere exercise of rights, not an abuse thereof Under
these circumstances, we do not deem private respondent to have acted in a

manner contrary to morals, good customs or public policy as to violate the

provisions of Article 21 of the Civil Code.
Consequently, petitioner's prayer for moral and exemplary damages must thus
be rejected. Petitioner's claim for moral damages is anchored on Article 2219
(10) of the Civil Code which states:
Art. 2219. Moral damages may be recovered in the following and
analogous cases:
xxx xxx xxx
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32,
34, and 35.
xxx xxx xxx
Having ruled that private respondent's acts did not transgress the provisions of
Article 21, petitioner cannot be entitled to moral damages or, for that matter,
exemplary damages. While the amount of exemplary damages need not be
proved, petitioner must show that he is entitled to moral, temperate or
compensatory damages before the court may consider the question of
whether or not exemplary damages should be awarded. 13 As we have
observed above; petitioner has failed to discharge this burden.
It may not be amiss to state that petitioner's contract with private respondent
has the force of law between them. 14Petitioner is thus bound to fulfill what has
been expressly stipulated therein. 15 In the absence of any abuse of right,
private respondent cannot be allowed to perform its obligation under such
contract in parts. Otherwise, private respondent's right under Article 1248 will
be negated, the sanctity of its contract with petitioner defiled. The principle of
autonomy of contracts16 must be respected.
II

Under said contract, petitioner is liable to private respondent for the unpaid
balance of its purchases from private respondent plus 12% interest. Private
respondent's sales invoices expressly provide that:
. . . Interest at 12% per annum will be charged on all overdue
account plus 25% on said amount for attorney's fees and collection. . .
. 17
It may also be noted that the above stipulation, insofar as it provides for the
payment of "25% on said amount for attorney's fees and collection (sic),"
constitutes what is known as a penal clause. 18 Petitioner is thus obliged to pay
such penalty in addition to the 12% annual interest, there being an express
stipulation to that effect.
Petitioner nevertheless urges this Court to reduce the attorney's fees for being
"grossly excessive," "considering the nature of the case which is a mere action
for collection of a sum of money." It may be pointed out however that the
above penalty is supposed to answer not only for attorney's fees but for
collection fees as well. Moreover:
. . . the attorneys' fees here provided is not, strictly speaking, the
attorneys' fees recoverable as between attorney and client spoken of
and regulated by the Rules of Court. Rather, the attorneys' fees here
are in the nature of liquidated damages and the stipulation therefor is
aptly called a penal clause. It has been said that so long as such
stipulation does not contravene law, morals, or public order, it is
strictly binding upon defendant. The attorneys' fees so provided are
awarded in favor of the litigant, not his counsel. It is the litigant, not
counsel, who is the judgment creditor entitled to enforce the judgment
by execution. 19
Nonetheless, courts are empowered to reduce such penalty if the same is
"iniquitous or unconscionable." Article 1229 of the Civil Code states thus:

Art. 1229. The judge shall equitably reduce the penalty when the
principal obligation has been partly or been irregularly complied with
by the debtor. Even if there has no performance, the penalty may also
be reduced by the courts if it is iniquitous or unconscionable.
(Emphasis supplied.)
The sentiments of the law are echoed in Article 2227 of the same Code:
Art. 2227. Liquidated damages, whether intended as an indemnity or
a penalty, shall be equitably reduced if they are iniquitous or
unconscionable.
It is true that we have upheld the reasonableness of penalties in the form of
attorney's fees consisting of twenty-five percent (25%) of the principal debt
plus interest. 20 In the case at bar, however, the interest alone runs to some
four and a half million pesos (P4.5M), even exceeding the principal debt
amounting to almost four million pesos (P4.0M). Twenty five percent (25%) of
the principal and interest amounts to roughly two million pesos (P2M). In real
terms, therefore, the attorney's fees and collection fees are manifestly
exorbitant. Accordingly, we reduce the same to ten percent (10%) of
theprincipal.
Private respondent, however, argues that petitioner failed to question the
award of attorney's fees on appeal before respondent court and raised the
issue only in its motion for reconsideration. Consequently, petitioner should be
deemed to have waived its right to question such award.
Private respondent's attempts to dissuade us from reducing the penalty are
futile. The Court is clothed with ample authority to review matters, even if they
are not assigned as errors in their appeal, if it finds that their consideration is
necessary in arriving at a just decision of the case. 21

WHEREFORE, the decision of the Court of Appeals is hereby MODIFIED in

that the attorney's and collection fees are reduced to ten percent (10%) of the
principal but is AFFIRMED in all other respects.
SO ORDERED.

G.R. No. 147076

June 17, 2004

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner,

vs.
ACT THEATER, INC., respondent.
DECISION
CALLEJO, SR., J.:
Before the Court is a petition for review on certiorari filed by the Metropolitan
Waterworks and Sewerage System (MWSS), seeking to reverse and set aside
the Decision1 dated January 31, 2001 of the Court of Appeals in CA-G.R. CV
No. 58581, which affirmed the civil aspect of the Decision 2 dated May 5, 1997
of the Regional Trial Court of Quezon City, Branch 77, directing the petitioner
MWSS to pay the respondent Act Theater, Inc. damages and attorneys fees.
The present case stemmed from the consolidated cases of Criminal Case No.
Q-89-2412 entitled People of the Philippines v. Rodolfo Tabian, et al., for
violation of Presidential Decree (P.D.) No. 401, as amended by Batas
Pambansa Blg. 876, and Civil Case No. Q-88-768 entitled Act Theater, Inc. v.
Metropolitan Waterworks and Sewerage System. The two cases were jointly
tried in the court a quo as they arose from the same factual circumstances, to
wit:
On September 22, 1988, four employees of the respondent Act
Theater, Inc., namely, Rodolfo Tabian, Armando Aguilar, Arnel Concha
and Modesto Ruales, were apprehended by members of the Quezon
City police force for allegedly tampering a water meter in violation of
P.D. No. 401, as amended by B.P. Blg. 876. The respondents
employees were subsequently criminally charged (Criminal Case No.
Q-89-2412) before the court a quo. On account of the incident, the
respondents water service connection was cut off. Consequently, the

respondent filed a complaint for injunction with damages (Civil Case

No. Q-88-768) against the petitioner MWSS.
In the civil case, the respondent alleged in its complaint filed with the court a
quo that the petitioner acted arbitrarily, whimsically and capriciously, in cutting
off the respondents water service connection without prior notice. Due to lack
of water, the health and sanitation, not only of the respondents patrons but in
the surrounding premises as well, were adversely affected. The respondent
prayed that the petitioner be directed to pay damages.
After due trial, the court a quo rendered its decision, the dispositive portion of
which reads:
In Criminal Case No. Q-89-2412
WHEREFORE, for failure of the prosecution to prove the guilt of the
accused beyond reasonable doubt, the four (4) above-named
Accused are hereby ACQUITTED of the crime charged. 3
In Civil Case No. Q-88-768
...
1. Ordering defendant MWSS to pay plaintiff actual or
compensatory damages in the amount ofP25,000.00; and to
return the sum of P200,000.00 deposited by the plaintiff for
the restoration of its water services after its disconnection on
September 23, 1988;
2. Defendants counterclaim for undercollection
of P530,759.96 is dismissed for lack of merit;
3. Ordering defendant MWSS to pay costs of suit;

4. Ordering defendant MWSS to pay plaintiff the amount

of P5,000.00 as attorneys fees;
5. Making the mandatory injunction earlier issued to plaintiff
Act Theater, Inc. permanent.
SO ORDERED.4
Aggrieved, the petitioner appealed the civil aspect of the aforesaid decision to
the CA. The appellate court, however, dismissed the appeal. According to the
CA, the court a quo correctly found that the petitioners act of cutting off the
respondents water service connection without prior notice was arbitrary,
injurious and prejudicial to the latter justifying the award of damages under
Article 19 of the Civil Code.
Undaunted, the petitioner now comes to this Court alleging as follows:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S]
VALIDLY AFFIRMED THE DECISION OF THE REGIONAL TRIAL
COURT IN RESOLVING THE PETITIONERS APPEAL;
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
VALIDLY UPHELD THE AWARD OF ATTORNEYS FEES;
III
WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S]
CORRECTLY APPLIED THE PROVISION OF ARTICLE 19 OF THE
NEW CIVIL CODE WITHOUT CONSIDERING THE APPLICABLE
PROVISION OF ARTICLE 429 OF THE SAME CODE.5

Preliminarily, the petitioner harps on the fact that, in quoting the decretal
portion of the court a quos decision, the CA erroneously typed P500,000 as
the attorneys fees awarded in favor of the respondent when the same should
only be P5,000. In any case, according to the petitioner, whether the amount
is P500,000 or P5,000, the award of attorneys fees is improper considering
that there was no discussion or statement in the body of the assailed decision
justifying such award. The petitioner insists that in cutting off the respondents
water service connection, the petitioner merely exercised its proprietary right
under Article 429 of the Civil Code.
The petition is devoid of merit.
Article 429 of the Civil Code, relied upon by the petitioner in justifying its act of
disconnecting the water supply of the respondent without prior notice, reads:
Art. 429. The owner or lawful possessor of a thing has the right to
exclude any person from the enjoyment and disposal thereof. For this
purpose, he may use such force as may be reasonable to repel or
prevent an actual or threatened unlawful physical invasion or
usurpation of his property.
A right is a power, privilege, or immunity guaranteed under a constitution,
statute or decisional law, or recognized as a result of long usage, 6 constitutive
of a legally enforceable claim of one person against the other. 7
Concededly, the petitioner, as the owner of the utility providing water supply to
certain consumers including the respondent, had the right to exclude any
person from the enjoyment and disposal thereof. However, the exercise of
rights is not without limitations. Having the right should not be confused with
the manner by which such right is to be exercised. 8
Article 19 of the Civil Code precisely sets the norms for the exercise of ones
rights:

Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
When a right is exercised in a manner which discards these norms resulting in
damage to another, a legal wrong is committed for which actor can be held
accountable.9 In this case, the petitioner failed to act with justice and give the
respondent what is due to it when the petitioner unceremoniously cut off the
respondents water service connection. As correctly found by the appellate
court:
While it is true that MWSS had sent a notice of investigation to
plaintiff-appellee prior to the disconnection of the latters water
services, this was done only a few hours before the actual
disconnection. Upon receipt of the notice and in order to ascertain the
matter, Act sent its assistant manager Teodulo Gumalid, Jr. to the
MWSS office but he was treated badly on the flimsy excuse that he
had no authority to represent Act. Acts water services were cut at
midnight of the day following the apprehension of the employees.
Clearly, the plaintiff-appellee was denied due process when it was
deprived of the water services. As a consequence thereof, Act had to
contract another source to provide water for a number of days.
Plaintiff-appellee was also compelled to deposit with MWSS the sum
of P200,000.00 for the restoration of their water services. 10
There is, thus, no reason to deviate from the uniform findings and conclusion
of the court a quo and the appellate court that the petitioners act was
arbitrary, injurious and prejudicial to the respondent, justifying the award of
damages under Article 19 of the Civil Code.
Finally, the amount of P500,000 as attorneys fees in that portion of the
assailed decision which quoted the fallo of the court a quos decision was
obviously a typographical error. As attorneys fees, the court a quo awarded
the amount of P5,000 only. It was this amount, as well as actual and

compensatory damages of P25,000 and the reimbursement of P200,000

deposited by the respondent for the restoration of its water supply, that the CA
affirmed, as it expressly stated in its dispositive portion that "finding no cogent
reason to reverse the appealed Decision which is in conformity with the law
and evidence, the same is hereby AFFIRMED." 11
The award of P5,000 as attorneys fees is reasonable and warranted.
Attorneys fees may be awarded when a party is compelled to litigate or incur
expenses to protect his interest by reason of an unjustified act of the other
party.12
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals
dated January 31, 2001 in CA-G.R. CV No. 58581 is AFFIRMED in toto.
SO ORDERED.

G.R. No. 151866

September 9, 2004

SOLEDAD CARPIO, petitioner,

vs.
LEONORA A. VALMONTE, respondent.
DECISION
TINGA, J.:
Assailed in the instant petition for review is the Decision of the Court of
Appeals in C.A.-G.R. CV No. 69537,1promulgated on 17 January 2002.2 The
appellate court reversed the trial courts decision denying respondents claim
for damages against petitioner and ordered the latter to pay moral damages to
the former in the amount ofP100,000.00.
Respondent Leonora Valmonte is a wedding coordinator. Michelle del Rosario
and Jon Sierra engaged her services for their church wedding on 10 October
1996. At about 4:30 p.m. on that day, Valmonte went to the Manila Hotel
where the bride and her family were billeted. When she arrived at Suite 326-A,
several persons were already there including the bride, the brides parents and
relatives, the make-up artist and his assistant, the official photographers, and
the fashion designer. Among those present was petitioner Soledad Carpio, an
aunt of the bride who was preparing to dress up for the occasion.
After reporting to the bride, Valmonte went out of the suite carrying the items
needed for the wedding rites and the gifts from the principal sponsors. She
proceeded to the Maynila Restaurant where the reception was to be held. She
paid the suppliers, gave the meal allowance to the band, and went back to the
suite. Upon entering the suite, Valmonte noticed the people staring at her. It
was at this juncture that petitioner allegedly uttered the following words to
Valmonte: "Ikaw lang ang lumabas ng kwarto, nasaan ang dala mong bag?
Saan ka pumunta? Ikaw lang and lumabas ng kwarto, ikaw ang
kumuha." Petitioner then ordered one of the ladies to search Valmontes

bag. It turned out that after Valmonte left the room to attend to her duties,
petitioner discovered that the pieces of jewelry which she placed inside the
comfort room in a paper bag were lost. The jewelry pieces consist of two (2)
diamond rings, one (1) set of diamond earrings, bracelet and necklace with a
total value of about one million pesos. The hotel security was called in to help
in the search. The bags and personal belongings of all the people inside the
room were searched. Valmonte was allegedly bodily searched, interrogated
and trailed by a security guard throughout the evening. Later, police officers
arrived and interviewed all persons who had access to the suite and
fingerprinted them including Valmonte. During all the time Valmonte was being
interrogated by the police officers, petitioner kept on saying the words "Siya
lang ang lumabas ng kwarto." Valmontes car which was parked at the hotel
premises was also searched but the search yielded nothing.
A few days after the incident, petitioner received a letter from Valmonte
demanding a formal letter of apology which she wanted to be circulated to the
newlyweds relatives and guests to redeem her smeared reputation as a result
of petitioners imputations against her. Petitioner did not respond to the letter.
Thus, on 20 February 1997, Valmonte filed a suit for damages against her
before the Regional Trial Court (RTC) of Pasig City, Branch 268. In her
complaint, Valmonte prayed that petitioner be ordered to pay actual, moral and
exemplary damages, as well as attorneys fees.
Responding to the complaint, petitioner denied having uttered words or done
any act to confront or single out Valmonte during the investigation and claimed
that everything that transpired after the theft incident was purely a police
matter in which she had no participation. Petitioner prayed for the dismissal of
the complaint and for the court to adjudge Valmonte liable on her
counterclaim.
The trial court rendered its Decision on 21 August 2000, dismissing
Valmontes complaint for damages. It ruled that when petitioner sought
investigation for the loss of her jewelry, she was merely exercising her right
and if damage results from a person exercising his legal right, it is damnum

absque injuria. It added that no proof was presented by Valmonte to show that
petitioner acted maliciously and in bad faith in pointing to her as the culprit.
The court said that Valmonte failed to show that she suffered serious anxiety,
moral shock, social humiliation, or that her reputation was besmirched due to
petitioners wrongful act.
Respondent appealed to the Court of Appeals alleging that the trial court erred
in finding that petitioner did not slander her good name and reputation and in
disregarding the evidence she presented.
The Court of Appeals ruled differently. It opined that Valmonte has clearly
established that she was singled out by petitioner as the one responsible for
the loss of her jewelry. It cited the testimony of Serena Manding, corroborating
Valmontes claim that petitioner confronted her and uttered words to the effect
that she was the only one who went out of the room and that she was the one
who took the jewelry. The appellate court held that Valmontes claim for
damages is not predicated on the fact that she was subjected to body search
and interrogation by the police but rather petitioners act of publicly accusing
her of taking the missing jewelry. It categorized petitioners utterance
defamatory considering that it imputed upon Valmonte the crime of theft. The
court concluded that petitioners verbal assault upon Valmonte was done with
malice and in bad faith since it was made in the presence of many people
without any solid proof except petitioners suspicion. Such unfounded
accusation entitles Valmonte to an award of moral damages in the amount
of P100,000.00 for she was publicly humiliated, deeply insulted, and
embarrassed. However, the court found no sufficient evidence to justify the
award of actual damages.
Hence, this petition.
Petitioner contends that the appellate courts conclusion that she publicly
humiliated respondent does not conform to the evidence presented. She adds
that even on the assumption that she uttered the words complained of, it was
not shown that she did so with malice and in bad faith.

In essence, petitioner would want this Court to review the factual conclusions
reached by the appellate court. The cardinal rule adhered to in this jurisdiction
is that a petition for review must raise only questions of law, 3 and judicial
review under Rule 45 does not extend to an evaluation of the sufficiency of
evidence unless there is a showing that the findings complained of are totally
devoid of support in the record or that they are so glaringly erroneous as to
constitute serious abuse of discretion.4 This Court, while not a trier of facts,
may review the evidence in order to arrive at the correct factual conclusion
based on the record especially so when the findings of fact of the Court of
Appeals are at variance with those of the trial court, or when the inference
drawn by the Court of Appeals from the facts is manifestly mistaken. 5
Contrary to the trial courts finding, we find sufficient evidence on record
tending to prove that petitioners imputations against respondent was made
with malice and in bad faith.
Petitioners testimony was shorn of substance and consists mainly of denials.
She claimed not to have uttered the words imputing the crime of theft to
respondent or to have mentioned the latters name to the authorities as the
one responsible for the loss of her jewelry. Well-settled is the rule that denials,
if unsubstantiated by clear and convincing evidence, are negative and selfserving which merit no weight in law and cannot be given greater evidentiary
value over the testimony of credible witnesses who testify on affirmative
matters.6
Respondent, however, has successfully refuted petitioners testimony. Quite
credibly, she has narrated in great detail her distressing experience on that
fateful day. She testified as to how rudely she was treated by petitioner right
after she returned to the room. Petitioner immediately confronted her and
uttered the words "Ikaw lang ang lumabas ng kwarto. Nasaan ang dala mong
bag? Saan ka pumunta? Ikaw ang kumuha." Thereafter, her body was
searched including her bag and her car. Worse, during the reception, she was
once more asked by the hotel security to go to the ladies room and she was
again bodily searched.7

Serea Manding, a make-up artist, corroborated respondents testimony. She

testified that petitioner confronted respondent in the presence of all the people
inside the suite accusing her of being the only one who went out of the comfort
room before the loss of the jewelry. Manding added that respondent was
embarrassed because everybody else in the room thought she was a thief. 8 If
only to debunk petitioners assertion that she did not utter the accusatory
remarks in question publicly and with malice, Mandings testimony on the point
deserves to be reproduced. Thus,

A "Ikaw yung nakita ko sa C.R. nawawala yung alahas ko."

Q When the defendant Mrs. Carpio said that to plaintiff Mrs. Valmonte
were there other people inside the room?
A Yes, sir.
Q Were they able to hear what Mrs. Carpio said to Mrs. Valmonte?

Q After that what did she do?

A Yes, sir.

A Then Leo came out from the other room she said, she is (sic) the
one I only saw from the comfort room.

Q What was your thinking at that time that Mrs. Carpio said that to
Mrs. Valmonte?

Q Now, what exact word (sic) were said by Mrs. Carpio on that
matter?

A "Nakakahiya kasi akala ng iba doon na talagang magnanakaw siya.

Kasi marami na kaming nandodoon, dumating na yung couturier pati
yung video man and we sir.

A She said "siya lang yung nakita kong galing sa C.R."

Q And who was Mrs. Carpio or the defendant referring to?
A Leo Valmonte.
Q Did she say anything else, the defendant?

Q Who was the person you [were] alleging "na nakakahiya" whose
(sic) being accused or being somebody who stole those item of
jewelry?
A "Nakakahiya para kay Leo kasi pinagbibintangan siya. Sa dami
namin doon siya yung napagbintangan."

A Her jewelry were lost and Leo was the only one she saw in the C.R.
After that she get (sic) the paper bag then the jewelry were already
gone.

Q And who is Leo, what is her full name?

Q Did she confront the plaintiff Mrs. Valmonte regarding that fact?

Q Did the defendant tell this matter to other people inside the room?

A Yes.

A Yes, the mother of the bride.

Q What did the defendant Mrs. Carpio tell the plaintiff, Mrs. Valmonte?

Q And who else did she talk to?

A Leo Valmonte.

A The father of the bride also.

Q And what did the defendant tell the mother regarding this matter?
A "Nawawala yung alahas ko." Sabi naman nung mother baka naman
hindi mo dala tignan mo munang mabuti.
Q Who was that other person that she talked to?
A Father of the bride.9
Significantly, petitioners counsel elected not to pursue her cross-examination
of the witness on this point following her terse and firm declaration that she
remembered petitioners exact defamatory words in answer to the counsels
question.10
Jaime Papio, Security Supervisor at Manila Hotel, likewise contradicted
petitioners allegation that she did not suspect or mention the name of
respondent as her suspect in the loss of the jewelry. 11
To warrant recovery of damages, there must be both a right of action, for a
wrong inflicted by the defendant, and the damage resulting therefrom to the
plaintiff. Wrong without damage, or damage without wrong, does not constitute
a cause of action.12
In the sphere of our law on human relations, the victim of a wrongful act or
omission, whether done willfully or negligently, is not left without any remedy
or recourse to obtain relief for the damage or injury he sustained. Incorporated
into our civil law are not only principles of equity but also universal moral
precepts which are designed to indicate certain norms that spring from the
fountain of good conscience and which are meant to serve as guides for
human conduct.13 First of these fundamental precepts is the principle
commonly known as "abuse of rights" under Article 19 of the Civil Code. It
provides that "Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due and observe

honesty and good faith." To find the existence of an abuse of right, the
following elements must be present: (1) there is a legal right or duty; (2) which
is exercised in bad faith; (3) for the sole intent or prejudicing or injuring
another.14 When a right is exercised in a manner which discards these norms
resulting in damage to another, a legal wrong is committed for which the actor
can be held accountable.15 One is not allowed to exercise his right in a manner
which would cause unnecessary prejudice to another or if he would thereby
offend morals or good customs. Thus, a person should be protected only
when he acts in the legitimate exercise of his right, that is when he acts with
prudence and good faith; but not when he acts with negligence or abuse. 16
Complementing the principle of abuse of rights are the provisions of Articles
20 and 21 of the Civil Code which read, thus:
Art. 20. Every person who, contrary to law, willfully or negligently
causes damage to another, shall indemnify the latter for the same.
Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals or good customs or public policy
shall compensate the latter for the damage.
The foregoing rules provide the legal bedrock for the award of
damages to a party who suffers damage whenever one commits an
act in violation of some legal provision, or an act which though not
constituting a transgression of positive law, nevertheless violates
certain rudimentary rights of the party aggrieved.
In the case at bar, petitioners verbal reproach against respondent was
certainly uncalled for considering that by her own account nobody knew that
she brought such kind and amount of jewelry inside the paper bag. 17 This
being the case, she had no right to attack respondent with her innuendos
which were not merely inquisitive but outrightly accusatory. By openly
accusing respondent as the only person who went out of the room before the
loss of the jewelry in the presence of all the guests therein, and ordering that

she be immediately bodily searched, petitioner virtually branded respondent

as the thief. True, petitioner had the right to ascertain the identity of the
malefactor, but to malign respondent without an iota of proof that she was the
one who actually stole the jewelry is an act which, by any standard or principle
of law is impermissible. Petitioner had willfully caused injury to respondent in a
manner which is contrary to morals and good customs. Her firmness and
resolve to find her missing jewelry cannot justify her acts toward respondent.
She did not act with justice and good faith for apparently, she had no other
purpose in mind but to prejudice respondent. Certainly, petitioner transgressed
the provisions of Article 19 in relation to Article 21 for which she should be held
accountable.
Owing to the rule that great weight and even finality is given to factual
conclusions of the Court of Appeals which affirm those of the trial court, 18 we
sustain the findings of the trial court and the appellate court that respondents
claim for actual damages has not been substantiated with satisfactory
evidence during the trial and must therefore be denied. To be recoverable,
actual damages must be duly proved with reasonable degree of certainty and
the courts cannot rely on speculation, conjecture or guesswork. 19
Respondent, however, is clearly entitled to an award of moral damages. Moral
damages may be awarded whenever the defendants wrongful act or omission
is the proximate cause of the plaintiffs physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury 20 in the cases specified or analogous to
those provided in Article 2219 of the Civil Code. 21Though no proof of pecuniary
loss is necessary in order that moral damages may be adjudicated, courts are
mandated to take into account all the circumstances obtaining in the case and
assess damages according to their discretion. 22 Worthy of note is that moral
damages are not awarded to penalize the defendant, 23 or to enrich a
complainant, but to enable the latter to obtain means, diversions or
amusements that will serve to alleviate the moral suffering he has undergone,
by reason of defendants culpable action. In any case, award of moral
damages must be proportionate to the sufferings inflicted. 24

Based on the foregoing jurisprudential pronouncements, we rule that the

appellate court did not err in awarding moral damages. Considering
respondents social standing, and the fact that her profession is based
primarily on trust reposed in her by her clients, the seriousness of the
imputations made by petitioner has greatly tarnished her reputation and will in
one way or the other, affect her future dealings with her clients, the award
of P100,000.00 as moral damages appears to be a fair and reasonable
assessment of respondents damages.
WHEREFORE, the instant Petition is DENIED. Costs against petitioner.
SO ORDERED.

G.R. No. 168512

March 20, 2007

ORLANDO D. GARCIA, JR., doing business under the name and style
COMMUNITY DIAGNOSTIC CENTER and BU CASTRO,1 Petitioners,
vs.
RANIDA D. SALVADOR and RAMON SALVADOR, Respondents.
DECISION

Sto. Domingo of this development but was told that the test conducted by
CDC was more reliable because it used the Micro-Elisa Method.
Thus, Ranida went back to CDC for confirmatory testing, and this time, the
Anti-HBs test conducted on her indicated a "Negative" result. 9
Ranida also underwent another HBs Ag test at the Bataan Doctors Hospital
using the Micro-Elisa Method. The result indicated that she was nonreactive.10

YNARES-SANTIAGO, J.:
This is a petition for review2 under Rule 45 of the Rules of Court assailing the
February 27, 2004 Decision3 of the Court of Appeals in CA-G.R. CV No. 58668
finding petitioner Orlando D. Garcia liable for gross negligence; and its June
16, 2005 Resolution4 denying petitioners motion for reconsideration.
On October 1, 1993, respondent Ranida D. Salvador started working as a
trainee in the Accounting Department of Limay Bulk Handling Terminal, Inc.
(the Company). As a prerequisite for regular employment, she underwent a
medical examination at the Community Diagnostic Center (CDC). Garcia who
is a medical technologist, conducted the HBs Ag (Hepatitis B Surface Antigen)
test and on October 22, 1993, CDC issued the test result 5 indicating that
Ranida was "HBs Ag: Reactive." The result bore the name and signature of
Garcia as examiner and the rubber stamp signature of Castro as pathologist.
When Ranida submitted the test result to Dr. Sto. Domingo, the Company
physician, the latter apprised her that the findings indicated that she is
suffering from Hepatitis B, a liver disease. Thus, based on the medical
report6submitted by Sto. Domingo, the Company terminated Ranidas
employment for failing the physical examination. 7
When Ranida informed her father, Ramon, about her ailment, the latter
suffered a heart attack and was confined at the Bataan Doctors Hospital.
During Ramons confinement, Ranida underwent another HBs Ag test at the
said hospital and the result8 indicated that she is non-reactive. She informed

Ranida submitted the test results from Bataan Doctors Hospital and CDC to
the Executive Officer of the Company who requested her to undergo another
similar test before her re-employment would be considered. Thus, CDC
conducted another HBs Ag test on Ranida which indicated a "Negative"
result.11 Ma. Ruby G. Calderon, Med-Tech Officer-in-Charge of CDC, issued a
Certification correcting the initial result and explaining that the examining
medical technologist (Garcia) interpreted the delayed reaction as positive or
reactive.12
Thereafter, the Company rehired Ranida.
On July 25, 1994, Ranida and Ramon filed a complaint 13 for damages against
petitioner Garcia and a purportedly unknown pathologist of CDC, claiming
that, by reason of the erroneous interpretation of the results of Ranidas
examination, she lost her job and suffered serious mental anxiety, trauma and
sleepless nights, while Ramon was hospitalized and lost business
opportunities.
On September 26, 1994, respondents amended their complaint 14 by naming
Castro as the "unknown pathologist."
Garcia denied the allegations of gross negligence and incompetence and
reiterated the scientific explanation for the "false positive" result of the first
HBs Ag test in his December 7, 1993 letter to the respondents. 15

For his part, Castro claimed that as pathologist, he rarely went to CDC and
only when a case was referred to him; that he did not examine Ranida; and
that the test results bore only his rubber-stamp signature.
On September 1, 1997,16 the trial court dismissed the complaint for failure of
the respondents to present sufficient evidence to prove the liability of Garcia
and Castro. It held that respondents should have presented Sto. Domingo
because he was the one who interpreted the test result issued by CDC.
Likewise, respondents should have presented a medical expert to refute the
testimonies of Garcia and Castro regarding the medical explanation behind
the conflicting test results on Ranida. 17
Respondents appealed to the Court of Appeals which reversed the trial courts
findings, the dispositive portion of which states:
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE
and another one entered ORDERING defendant-appellee Orlando D. Garcia,
Jr. to pay plaintiff-appellant Ranida D. Salvador moral damages in the amount
of P50,000.00, exemplary damages in the amount of P50,000.00 and
attorneys fees in the amount of P25,000.00.

Garcia maintains he is not negligent, thus not liable for damages, because he
followed the appropriate laboratory measures and procedures as dictated by
his training and experience; and that he did everything within his professional
competence to arrive at an objective, impartial and impersonal result.
At the outset, we note that the issues raised are factual in nature. Whether a
person is negligent or not is a question of fact which we cannot pass upon in a
petition for review on certiorari which is limited to reviewing errors of law. 19
Negligence is the failure to observe for the protection of the interest of another
person that degree of care, precaution and vigilance which the circumstances
justly demand,20 whereby such other person suffers injury. For health care
providers, the test of the existence of negligence is: did the health care
provider either fail to do something which a reasonably prudent health care
provider would have done, or that he or she did something that a reasonably
prudent health care provider would not have done; and that failure or action
caused injury to the patient;21 if yes, then he is guilty of negligence.
Thus, the elements of an actionable conduct are: 1) duty, 2) breach, 3) injury,
and 4) proximate causation.

SO ORDERED.18

All the elements are present in the case at bar.

The appellate court found Garcia liable for damages for negligently issuing an
erroneous HBs Ag result. On the other hand, it exonerated Castro for lack of
participation in the issuance of the results.

Owners and operators of clinical laboratories have the duty to comply with
statutes, as well as rules and regulations, purposely promulgated to protect
and promote the health of the people by preventing the operation of
substandard, improperly managed and inadequately supported clinical
laboratories and by improving the quality of performance of clinical laboratory
examinations.22 Their business is impressed with public interest, as such, high
standards of performance are expected from them.

After the denial of his motion for reconsideration, Garcia filed the instant
petition.
The main issue for resolution is whether the Court of Appeals, in reversing the
decision of the trial court, correctly found petitioner liable for damages to the
respondents for issuing an incorrect HBsAG test result.

In F.F. Cruz and Co., Inc. v. Court of Appeals, we found the owner of a
furniture shop liable for the destruction of the plaintiffs house in a fire which
started in his establishment in view of his failure to comply with an ordinance

which required the construction of a firewall. In Teague v. Fernandez, we

stated that where the very injury which was intended to be prevented by the
ordinance has happened, non-compliance with the ordinance was not only an
act of negligence, but also the proximate cause of the death. 23
In fine, violation of a statutory duty is negligence. Where the law imposes upon
a person the duty to do something, his omission or non-performance will
render him liable to whoever may be injured thereby.

For all categories of clinical laboratories, the head shall be a licensed

physician certified by the Philippine Board of Pathology in either Anatomic or
Clinical Pathology or both provided that:
(1) This shall be mandatory for all categories of free-standing clinical
laboratories; all tertiary category hospital laboratories and for all secondary
category hospital laboratories located in areas with sufficient available
pathologist.

Section 2 of Republic Act (R.A.) No. 4688, otherwise known as The Clinical
Laboratory Law, provides:
Sec. 2. It shall be unlawful for any person to be professionally in-charge of a
registered clinical laboratory unless he is a licensed physician duly qualified in
laboratory medicine and authorized by the Secretary of Health, such
authorization to be renewed annually.
No license shall be granted or renewed by the Secretary of Health for the
operation and maintenance of a clinical laboratory unless such laboratory is
under the administration, direction and supervision of an authorized physician,
as provided for in the preceding paragraph.

xxxx
Sec. 11. Reporting: All laboratory requests shall be considered as
consultations between the requesting physician and pathologist of the
laboratory. As such all laboratory reports on various examinations of human
specimens shall be construed as consultation report and shall bear the name
of the pathologist or his associate. No person in clinical laboratory shall issue
a report, orally or in writing, whole portions thereof without a directive from the
pathologist or his authorized associate and only to the requesting physician or
his authorized representative except in emergencies when the results may be
released as authorized by the pathologist.
xxxx

Corollarily, Sections 9(9.1)(1), 11 and 25(25.1)(1) of the DOH Administrative

Order No. 49-B Series of 1988, otherwise known as the Revised Rules and
Regulations Governing the Registration, Operation and Maintenance of
Clinical Laboratories in the Philippines, read:
Sec. 9. Management of the Clinical Laboratory:
9.1 Head of the Clinical Laboratory: The head is that person who assumes
technical and administrative supervision and control of the activities in the
laboratory.

Sec. 25. Violations:

25.1 The license to operate a clinical laboratory may be suspended or revoked
by the Undersecretary of Health for Standards and Regulation upon violation
of R.A. 4688 or the rules and regulations issued in pursuance thereto or the
commission of the following acts by the persons owning or operating a clinical
laboratory and the persons under their authority.
(1) Operation of a Clinical Laboratory without a certified pathologist or qualified
licensed physician authorized by the Undersecretary of Health or without
employing a registered medical technologist or a person not registered as a
medical technologist in such a position.

And Section 29(b) of R.A. No. 5527, otherwise known as The Philippine
Medical Technology Act of 1969, reads:
Section 29. Penal Provisions.- Without prejudice to the provision of the
Medical Act of 1959, as amended relating to illegal practice of Medicine, the
following shall be punished by a fine of not less than two thousand pesos nor
more than five thousand pesos, or imprisonment for not less than six months
nor more than two years, or both, in the discretion of the court:
xxxx
(b) Any medical technologist, even if duly registered, who shall practice
medical technology in the Philippines without the necessary supervision of a
qualified pathologist or physician authorized by the Department of Health;
From the foregoing laws and rules, it is clear that a clinical laboratory must be
administered, directed and supervised by a licensed physician authorized by
the Secretary of Health, like a pathologist who is specially trained in methods
of laboratory medicine; that the medical technologist must be under the
supervision of the pathologist or a licensed physician; and that the results of
any examination may be released only to the requesting physician or his
authorized representative upon the direction of the laboratory pathologist.
These rules are intended for the protection of the public by preventing
performance of substandard clinical examinations by laboratories whose
personnel are not properly supervised. The public demands no less than an
effective and efficient performance of clinical laboratory examinations through
compliance with the quality standards set by laws and regulations.
We find that petitioner Garcia failed to comply with these standards.
First, CDC is not administered, directed and supervised by a licensed
physician as required by law, but by Ma. Ruby C. Calderon, a licensed Medical
Technologist.24 In the License to Open and Operate a Clinical Laboratory for
the years 1993 and 1996 issued by Dr. Juan R. Naagas, M.D.,

Undersecretary for Health Facilities, Standards and Regulation, defendantappellee Castro was named as the head of CDC. 25 However, in his Answer
with Counterclaim, he stated:
3. By way of affirmative and special defenses, defendant pathologist further
avers and plead as follows:
Defendant pathologist is not the owner of the Community Diagnostic Center
nor an employee of the same nor the employer of its employees. Defendant
pathologist comes to the Community Diagnostic Center when and where a
problem is referred to him. Its employees are licensed under the Medical
Technology Law (Republic Act No. 5527) and are certified by, and registered
with, the Professional Regulation Commission after having passed their Board
Examinations. They are competent within the sphere of their own profession in
so far as conducting laboratory examinations and are allowed to sign for and
in behalf of the clinical laboratory. The defendant pathologist, and all
pathologists in general, are hired by laboratories for purposes of complying
with the rules and regulations and orders issued by the Department of Health
through the Bureau of Research and Laboratories. Defendant pathologist does
not stay that long period of time at the Community Diagnostic Center but only
periodically or whenever a case is referred to him by the laboratory. Defendant
pathologist does not appoint or select the employees of the laboratory nor
does he arrange or approve their schedules of duty. 26
Castros infrequent visit to the clinical laboratory barely qualifies as an
effective administrative supervision and control over the activities in the
laboratory. "Supervision and control" means the authority to act directly
whenever a specific function is entrusted by law or regulation to a subordinate;
direct the performance of duty; restrain the commission of acts; review,
approve, revise or modify acts and decisions of subordinate officials or units. 27
Second, Garcia conducted the HBsAG test of respondent Ranida without the
supervision of defendant-appellee Castro, who admitted that:

[He] does not know, and has never known or met, the plaintiff-patient even up
to this time nor has he personally examined any specimen, blood, urine or any
other tissue, from the plaintiff-patient otherwise his own handwritten signature
would have appeared in the result and not merely stamped as shown in Annex
"B" of the Amended Complaint.28
Last, the disputed HBsAG test result was released to respondent Ranida
without the authorization of defendant-appellee Castro. 29
Garcia may not have intended to cause the consequences which followed
after the release of the HBsAG test result. However, his failure to comply with
the laws and rules promulgated and issued for the protection of public safety
and interest is failure to observe that care which a reasonably prudent health
care provider would observe. Thus, his act or omission constitutes a breach of
duty.
Indubitably, Ranida suffered injury as a direct consequence of Garcias failure
to comply with the mandate of the laws and rules aforequoted. She was
terminated from the service for failing the physical examination; suffered
anxiety because of the diagnosis; and was compelled to undergo several more
tests. All these could have been avoided had the proper safeguards been
scrupulously followed in conducting the clinical examination and releasing the
clinical report.
Article 20 of the New Civil Code provides:
Art. 20. Every person who, contrary to law, willfully or negligently causes
damage to another, shall indemnify the latter for the same.
The foregoing provision provides the legal basis for the award of damages to a
party who suffers damage whenever one commits an act in violation of some
legal provision.30 This was incorporated by the Code Commission to provide
relief to a person who suffers damage because another has violated some
legal provision.31

We find the Court of Appeals award of moral damages reasonable under the
circumstances bearing in mind the mental trauma suffered by respondent
Ranida who thought she was afflicted by Hepatitis B, making her "unfit or
unsafe for any type of employment." 32 Having established her right to moral
damages, we see no reason to disturb the award of exemplary damages and
attorneys fees. Exemplary damages are imposed, by way of example or
correction for the public good, in addition to moral, temperate, liquidated or
compensatory damages,33 and attorneys fees may be recovered when, as in
the instant case, exemplary damages are awarded. 34
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 58668
dated February 27, 2004 finding petitioner Orlando D. Garcia, Jr. guilty of
gross negligence and liable to pay to respondents P50,000.00 as moral
damages, P50,000.00 as exemplary damages, and P25,000.00 as attorneys
fees, is AFFIRMED.
SO ORDERED.

G.R. No. L-39019 January 22, 1988

MANILA ELECTRIC COMPANY and PEDRO YAMBAO, petitionersappellants,
vs.
THE HONORABLE COURT OF APPEALS and ISAAC CHAVEZ, SR.,
ISAAC O. CHAVEZ, JR., ROSENDO O. CHAVES, and JUAN O.
CHAVES, respondents-appellees.

YAP, J.:
In an action for recovery of damages for embarassment, humiliation, wounded
feelings and hurt pride, caused to herein private respondents, by reason of the
disconnection of their electrical service by the petitioners, the then Court of
First Instance of Manila, Sixth Judicial District, Branch XXIV, rendered a
decision dated December 13,1967, ordering herein petitioners jointly and
severally to pay private respondents the sum of Ten Thousand (P10,000.00)
Pesos as moral damages, Two Thousand (P2,000.00) Pesos as exemplary
damages and, One Thousand (P1,000.00) Pesos as attorney's fees, and
dismissing petitioners' counterclaim.
On appeal, the Court of Appeals and in toto the trial court's decision. Their
Motion for Reconsideration having been denied, petitioners filed the instant
petition for certiorari.
Petitioner Manila Electric Company (MERALCO) is a public utility corporation
providing electric power for the consumption of the general public in Metro
Manila. Petitioner Pedro Yambao is a bill collector of MERALCO.
Private respondents Isaac Chaves and Juana O. Chaves, husband and wife,
filed the complaint for damages, together with their children, Isaac O. Chaves,
Jr. and Rosendo O. Chaves. Isaac Sr. and Isaac Jr. and Rosendo were
members of the Philippine Bar; Isaac, Sr. and Isaac, Jr. were practicing

lawyers and Rosendo was a Legal Officer at the Agricultural Productivity

Commission. Juana O. Chaves was a public school teacher.
The facts as found by the trial court and adopted by the Court of Appeals are
as follows:
Plaintiff Isaac Chaves became a customer of defendant
MERALCO in the year 1953 when he and his family were
residing at No. 211-D Rubi, Manila. In connection with the
contract for electrical service, he deposited the sum of P5.00
(Exh. "A") with defendant MERALCO on February 12, 1953.
This deposit in the name of plaintiff Isaac Chaves was
retained by MERALCO and made to apply to subsequent
contracts for electrical service entered into after subsequent
transfers of the Chaves family to other residences and up to
the time this family went to reside at the place
aforementioned, at No. 2656 Mercedes Street, Singalong,
Manila. ...
At or about the end of March, 1965, defendant Pedro Yambao
went to the residence of plaintiffs and presented two overdue
bills, one for January 11 to February 9,1965, for the sum of
P7.90 (Exhibit "C"), and the other for February 9 to March 10,
1965, for the amount of P7.20 (Exhibit "C"). Juana O.
Chaves, however, informed Yambao that these bills would be
paid at the MERALCO main office.
Accordingly, on April 2, 1965, Isaac Chaves went to the
defendant's main office at San Marcelino, Manila, but paid
only the bill marked as Exhibit 'C" leaving the other bill
Identified as Exhibit "C-l" unpaid.

Past 2:30 o'clock in the afternoon of April 21,1965,

MERALCO caused the electric service in plaintiff's residence
to be discontinued and the power line cut off.
The next day, April 22, 1965, at about 9:00 a.m., plaintiff
Rosendo O. Chaves went to the MERALCO main office and
paid the amount of P7.20 for the bill marked as Exhibit "C-l",
and the sum of P7.00 for the subsequent bill corresponding to
the period from March 10 up to April 8, 1965 (Exhibit "C-2")
after his attention was called to the latter account. Rosendo
O. Chaves then sought the help of Atty. Lourdy Torres, one of
the defendants' counsel, and, thereafter, the power line was
reconnected and electric service restored to the Chaves
residence at about 7:00 p.m. of that same day. 1
Petitioners dispute the finding that there was no notice given to herein
respondent. However, since only questions of law may be raised in a petition
for certiorari under Rule 45 of the Revised Rules of Court, petitioners, 'for the
sake of argument and for the purpose of giving focus on the legal issues', do
not take issue with such finding.
Petitioners contend that in the absence of bad faith, they could not be held
liable for moral and exemplary damages as well as attorney's fees. The failure
to give a notice of disconnection to private respondents might have been a
breach of duty or breach of contract, but by itself does not constitute bad faith
or fraud; it must be shown that such a failure was motivated by in or done with
fraudulent intent.Petitioners also maintain that ' private respondents were in
arrears in the payment of their electricity bills when their electric service was
connected, no moral damages may be recovered by them under the 'clean
hands' doctrine enunciated in Mabutas vs. Calapan Electric Company, CAG.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 nonpayment of bills, provided that a 48 hours' written notice of
such disconnection has been given the customer: Provided,
however, that disconnections of service shall not be made on
Sundays and official holidays and never after 2 p.m. of any
working day: Provided, further, that if at the moment the
disconnection is to be made the customer tenders payment of
the unpaid bill to the agent or employee of the operator who is
to effect the disconnection, the said agent or employee shall
be obliged to accept tender of payment and issue a
temporary receipt for the amount and shall desist from
disconnecting the service. 2
The respondent court stressed the importance and necessity of the 48-hour
advance written notification before a disconnection of service may be effected.
Said the court:
... It sets in motion the disconnection of an electrical service
of the customer by giving the notice, determining the
expiration date thereof, and executing the disconnection. It,
therefore, behooves the defendant MERALCO that before it
disconnects a customer's electrical service, there should be
sufficient evidence that the requirements for the
disconnection had been duly complied with, otherwise, the
poor consumer can be subjected to the whims and caprices

of the defendant, by the mere pretension that the written

notice had been duly served upon the customer. 3
We find no reversible error in the decision appealed from. One can not deny
the vital role which a public utility such as MERALCO, having a monopoly of
the supply of electrical power in Metro Manila and some nearby municipalities,
plays in the life of people living in such areas. Electricity has become a
necessity to most people in these areas justifying the exercise by the State of
its regulatory power over the business of supplying electrical service to the
public, in which petitioner MERALCO is engaged. Thus, the state may
regulate, as it has done through Section 97 of the Revised Order No. 1 of the
Public Service Commission, the conditions under which and the manner by
which a public utility such as MERALCO may effect a disconnection of service
to a delinquent customer. Among others, a prior written notice to the customer
is required before disconnection of the service. Failure to give such prior
notice amounts to a tort, as held by us in a similar case, 4 where we said:
... petitioner's act in 'disconnecting respondent Ongsip's gas
service without prior notice constitutes breach of contract
amounting to an independent tort. The prematurity of the
action is indicative of an intent to cause additional mental and
moral suffering to private respondent. This is a clear violation
of Article 21 of the Civil Code which provides that any person
who wilfully causes loss or injury to another in a manner that
is contrary to morals, good customs or public policy shall
compensate the latter for damages. This is reiterated by
paragraph 10 of Article 2219 of the Code. Moreover, the
award of moral damages is sanctioned by Article 2220 which
provides that wilfull injury to property may be a legal ground
for awarding moral damages if the court should find that,
under the circumstances, such damages are justly due. The
same rule applies to breaches of contract where the
defendant acted fraudulently or in bad faith.

Likewise, we find no merit in petitioners' contention that being in arrears in the

payment of their bills, the private respondents are not entitled to moral
damages under the doctrine that "he who comes to court in demand of equity,
must come with clean hands." We rejected this argument in the Manila Gas
Corporation case, supra, wherein we held that respondents' default in the
payment of his bills "cannot be utilized by petitioner to defeat or null the claim
for damages. At most, this circumstance can be considered as a mitigating
factor in ascertaining the amount of damages to which respondent ... is
entitled."
Accordingly, we find no grave abuse of discretion committed by respondent
court in affirming the trial court's decision. The petition is hereby DISMISSED
for lack of merit.
SO ORDERED.

G.R. No. 116100

February 9, 1996

SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and

MARIA CRISTINA SANTOS,petitioners,
vs.
COURT OF APPEALS, HEIRS OF PACIFICO C. MABASA and REGIONAL
TRIAL COURT OF PASIG, METRO MANILA, BRANCH 181, respondents.
DECISION
REGALADO, J.:
This petition for review on certiorari assails the decision of respondent Court of
Appeals in CA-G.R. CV No. 29115, promulgated on November 10, 1993,
which affirmed with modification tyhe decision of the trial court, as well as its
resolution dated July 8, 1994 denying petitioner's motion for reconsideration. 1
On August 26, 1982, Civil Case No. 47466 for the grant of an easement of
right of way was filed by Pacifico Mabasa against Cristino Custodio, Brigida R.
Custodio, Rosalina R. Morato, Lito Santos and Maria Cristina C. Santos
before the Regional Trial Court of Pasig and assigned to Branch 22 thereof. 2
The generative facts of the case, as synthesized by the trial court and adopted
by the Court of Appeals, are as follows:
Perusing the record, this Court finds that the original plaintiff Pacifico
Mabasa died during the pendency of this case and was substituted by
Ofelia Mabasa, his surviving spouse [and children].
The plaintiff owns a parcel of land with a two-door apartment erected
thereon situated at Interior P. Burgos St., Palingon, Tipas, Tagig,
Metro Manila. The plaintiff was able to acquire said property through a
contract of sale with spouses Mamerto Rayos and Teodora Quintero
as vendors last September 1981. Said property may be described to
be surrounded by other immovables pertaining to defendants herein.

Taking P. Burgos Street as the point of reference, on the left side,

going to plaintiff's property, the row of houses will be as follows: That
of defendants Cristino and Brigido Custodio, then that of Lito and
Maria Cristina Santos and then that of Ofelia Mabasa. On the right
side (is) that of defendant Rosalina Morato and then a Septic Tank
(Exhibit "D"). As an access to P. Burgos Street from plaintiff's property,
there are two possible passageways. The first passageway is
approximately one meter wide and is about 20 meters distan(t) from
Mabasa's residence to P. Burgos Street. Such path is passing in
between the previously mentioned row of houses. The second
passageway is about 3 meters in width and length from plaintiff
Mabasa's residence to P. Burgos Street; it is about 26 meters. In
passing thru said passageway, a less than a meter wide path through
the septic tank and with 5-6 meters in length, has to be traversed.
When said property was purchased by Mabasa, there were tenants
occupying the premises and who were acknowledged by plaintiff
Mabasa as tenants. However, sometime in February, 1982, one of
said tenants vacated the apartment and when plaintiff Mabasa went
to see the premises, he saw that there had been built an adobe fence
in the first passageway making it narrower in width. Said adobe fence
was first constructed by defendants Santoses along their property
which is also along the first passageway. Defendant Morato
constructed her adobe fence and even extended said fence in such a
way that the entire passageway was enclosed. (Exhibit "1-Santoses
and Custodios, Exh. "D" for plaintiff, Exhs. "1-C", "1-D" and "1-E") And
it was then that the remaining tenants of said apartment vacated the
area. Defendant Ma. Cristina Santos testified that she constructed
said fence because there was an incident when her daughter was
dragged by a bicycle pedalled by a son of one of the tenants in said
apartment along the first passageway. She also mentioned some
other inconveniences of having (at) the front of her house a pathway
such as when some of the tenants were drunk and would bang their

doors and windows. Some of their footwear were even lost. . . .

3
(Emphasis in original text; corrections in parentheses supplied)
On February 27, 1990, a decision was rendered by the trial court, with this
dispositive part:
Accordingly, judgment is hereby rendered as follows:
1) Ordering defendants Custodios and Santoses to give plaintiff
permanent access ingress and egress, to the public street;
2) Ordering the plaintiff to pay defendants Custodios and Santoses
the sum of Eight Thousand Pesos (P8,000) as indemnity for the
permanent use of the passageway.
The parties to shoulder their respective litigation expenses. 4
Not satisfied therewith, therein plaintiff represented by his heirs, herein private
respondents, went to the Court of Appeals raising the sole issue of whether or
not the lower court erred in not awarding damages in their favor. On
November 10, 1993, as earlier stated, the Court of Appeals rendered its
decision affirming the judgment of the trial court with modification, the decretal
portion of which disposes as follows:
WHEREFORE, the appealed decision of the lower court is hereby
AFFIRMED WITH MODIFICATION only insofar as the herein grant of
damages to plaintiffs-appellants. The Court hereby orders defendantsappellees to pay plaintiffs-appellants the sum of Sixty Five Thousand
(P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000)
Pesos as Moral Damages, and Ten Thousand (P10,000) Pesos as
Exemplary Damages. The rest of the appealed decision is affirmed to
all respects.5
On July 8, 1994, the Court of Appeals denied petitioner's motion for
reconsideration.6 Petitioners then took the present recourse to us, raising two

issues, namely, whether or not the grant of right of way to herein private
respondents is proper, and whether or not the award of damages is in order.
With respect to the first issue, herein petitioners are already barred from
raising the same. Petitioners did not appeal from the decision of the court a
quo granting private respondents the right of way, hence they are presumed to
be satisfied with the adjudication therein. With the finality of the judgment of
the trial court as to petitioners, the issue of propriety of the grant of right of
way has already been laid to rest.
For failure to appeal the decision of the trial court to the Court of Appeals,
petitioners cannot obtain any affirmative relief other than those granted in the
decision of the trial court. That decision of the court below has become final as
against them and can no longer be reviewed, much less reversed, by this
Court. The rule in this jurisdiction is that whenever an appeal is taken in a civil
case, an appellee who has not himself appealed may not obtain from the
appellate court any affirmative relief other than what was granted in the
decision of the lower court. The appellee can only advance any argument that
he may deem necessary to defeat the appellant's claim or to uphold the
decision that is being disputed, and he can assign errors in his brief if such is
required to strengthen the views expressed by the court a quo. These
assigned errors, in turn, may be considered by the appellate court solely to
maintain the appealed decision on other grounds, but not for the purpose of
reversing or modifying the judgment in the appellee's favor and giving him
other affirmative reliefs.7
However, with respect to the second issue, we agree with petitioners that the
Court of Appeals erred in awarding damages in favor of private respondents.
The award of damages has no substantial legal basis. A reading of the
decision of the Court of Appeals will show that the award of damages was
based solely on the fact that the original plaintiff, Pacifico Mabasa, incurred
losses in the form of unrealized rentals when the tenants vacated the leased
premises by reason of the closure of the passageway.

However, the mere fact that the plaintiff suffered losses does not give rise to a
right to recover damages. To warrant the recovery of damages, there must be
both a right of action for a legal wrong inflicted by the defendant, and damage
resulting to the plaintiff therefrom. Wrong without damage, or damage without
wrong, does not constitute a cause of action, since damages are merely part
of the remedy allowed for the injury caused by a breach or wrong. 8
There is a material distinction between damages and injury. Injury is the illegal
invasion of a legal right; damage is the loss, hurt, or harm which results from
the injury; and damages are the recompense or compensation awarded for the
damage suffered. Thus, there can be damage without injury in those instances
in which the loss or harm was not the result of a violation of a legal duty.
These situations are often called damnum absque injuria.9
In order that a plaintiff may maintain an action for the injuries of which he
complains, he must establish that such injuries resulted from a breach of duty
which the defendant owed to the plaintiff a concurrence of injury to the plaintiff
and legal responsibility by the person causing it.10 The underlying basis for the
award of tort damages is the premise that an individual was injured in
contemplation of law. Thus, there must first be the breach of some duty and
the imposition of liability for that breach before damages may be awarded; it is
not sufficient to state that there should be tort liability merely because the
plaintiff suffered some pain and suffering. 11

actual damage, that is, harm or loss to his person or property, without
sustaining any legal injury, that is, an act or omission which the law does not
deem an injury, the damage is regarded as damnum absque injuria.14
In the case at bar, although there was damage, there was no legal injury.
Contrary to the claim of private respondents, petitioners could not be said to
have violated the principle of abuse of right. In order that the principle of abuse
of right provided in Article 21 of the Civil Code can be applied, it is essential
that the following requisites concur: (1) The defendant should have acted in a
manner that is contrary to morals, good customs or public policy; (2) The acts
should be willful; and (3) There was damage or injury to the plaintiff. 15
The act of petitioners in constructing a fence within their lot is a valid exercise
of their right as owners, hence not contrary to morals, good customs or public
policy. The law recognizes in the owner the right to enjoy and dispose of a
thing, without other limitations than those established by law. 16 It is within the
right of petitioners, as owners, to enclose and fence their property. Article 430
of the Civil Code provides that "(e)very owner may enclose or fence his land
or tenements by means of walls, ditches, live or dead hedges, or by any other
means without detriment to servitudes constituted thereon."

Many accidents occur and many injuries are inflicted by acts or omissions
which cause damage or loss to another but which violate no legal duty to such
other person, and consequently create no cause of action in his favor. In such
cases, the consequences must be borne by the injured person alone. The law
affords no remedy for damages resulting from an act which does not amount
to a legal injury or wrong.12

At the time of the construction of the fence, the lot was not subject to any
servitudes. There was no easement of way existing in favor of private
respondents, either by law or by contract. The fact that private respondents
had no existing right over the said passageway is confirmed by the very
decision of the trial court granting a compulsory right of way in their favor after
payment of just compensation. It was only that decision which gave private
respondents the right to use the said passageway after payment of the
compensation and imposed a corresponding duty on petitioners not to
interfere in the exercise of said right.

In other words, in order that the law will give redress for an act causing
damage, that act must be not only hurtful, but wrongful. There must
be damnum et injuria.13 If, as may happen in many cases, a person sustains

Hence, prior to said decision, petitioners had an absolute right over their
property and their act of fencing and enclosing the same was an act which
they may lawfully perform in the employment and exercise of said right. To

repeat, whatever injury or damage may have been sustained by private

respondents by reason of the rightful use of the said land by petitioners
is damnum absque injuria.17
A person has a right to the natural use and enjoyment of his own property,
according to his pleasure, for all the purposes to which such property is
usually applied. As a general rule, therefore, there is no cause of action for
acts done by one person upon his own property in a lawful and proper
manner, although such acts incidentally cause damage or an unavoidable loss
to another, as such damage or loss is damnum absque injuria. 18 When the
owner of property makes use thereof in the general and ordinary manner in
which the property is used, such as fencing or enclosing the same as in this
case, nobody can complain of having been injured, because the incovenience
arising from said use can be considered as a mere consequence of
community life. 19
The proper exercise of a lawful right cannot constitute a legal wrong for which
an action will lie, 20 although the act may result in damage to another, for no
legal right has been invaded. 21 One may use any lawful means to accomplish
a lawful purpose and though the means adopted may cause damage to
another, no cause of action arises in the latter's favor. An injury or damage
occasioned thereby is damnum absque injuria. The courts can give no redress
for hardship to an individual resulting from action reasonably calculated to
achieve a lawful means. 22
WHEREFORE, under the compulsion of the foregoing premises, the appealed
decision of respondent Court of Appeals is hereby REVERSED and SET
ASIDE and the judgment of the trial court is correspondingly REINSTATED.

G.R. No. 97336 February 19, 1993

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

DAVIDE, JR., J.:

This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to
review and set aside the Decision 1of the respondent Court of Appeals in CAG.R. CV No. 24256 which affirmed in toto the 16 October 1939 Decision of
Branch 38 (Lingayen) of the Regional Trial Court (RTC) of Pangasinan in Civil
Case No. 16503. Presented is the issue of whether or not damages may be
recovered for a breach of promise to marry on the basis of Article 21 of the
Civil Code of the Philippines.
The antecedents of this case are not complicated:
On 27 October 1987, private respondent, without the assistance of counsel,
filed with the aforesaid trial court a complaint 2 for damages against the
petitioner for the alleged violation of their agreement to get married. She
alleges in said complaint that: she is twenty-two (22) years old, single, Filipino
and a pretty lass of good moral character and reputation duly respected in her
community; petitioner, on the other hand, is an Iranian citizen residing at the
Lozano Apartments, Guilig, Dagupan City, and is an exchange student taking
a medical course at the Lyceum Northwestern Colleges in Dagupan City;
before 20 August 1987, the latter courted and proposed to marry her; she
accepted his love on the condition that they would get married; they therefore
agreed to get married after the end of the school semester, which was in

October of that year; petitioner then visited the private respondent's parents in
Baaga, Bugallon, Pangasinan to secure their approval to the marriage;
sometime in 20 August 1987, the petitioner forced her to live with him in the
Lozano Apartments; she was a virgin before she began living with him; a week
before the filing of the complaint, petitioner's attitude towards her started to
change; he maltreated and threatened to kill her; as a result of such
maltreatment, she sustained injuries; during a confrontation with a
representative of the barangay captain of Guilig a day before the filing of the
complaint, petitioner repudiated their marriage agreement and asked her not
to live with him anymore and; the petitioner is already married to someone
living in Bacolod City. Private respondent then prayed for judgment ordering
the petitioner to pay her damages in the amount of not less than P45,000.00,
reimbursement for actual expenses amounting to P600.00, attorney's fees and
costs, and granting her such other relief and remedies as may be just and
equitable. The complaint was docketed as Civil Case No. 16503.
In his Answer with Counterclaim, 3 petitioner admitted only the personal
circumstances of the parties as averred in the complaint and denied the rest of
the allegations either for lack of knowledge or information sufficient to form a
belief as to the truth thereof or because the true facts are those alleged as his
Special and Affirmative Defenses. He thus claimed that he never proposed
marriage to or agreed to be married with the private respondent; he neither
sought the consent and approval of her parents nor forced her to live in his
apartment; he did not maltreat her, but only told her to stop coming to his
place because he discovered that she had deceived him by stealing his
money and passport; and finally, no confrontation took place with a
representative of the barangay captain. Insisting, in his Counterclaim, that the
complaint is baseless and unfounded and that as a result thereof, he was
unnecessarily dragged into court and compelled to incur expenses, and has
suffered mental anxiety and a besmirched reputation, he prayed for an award
of P5,000.00 for miscellaneous expenses and P25,000.00 as moral damages.

After conducting a pre-trial on 25 January 1988, the trial court issued a PreTrial Order 4 embodying the stipulated facts which the parties had agreed
upon, to wit:

two thousand (P2,000.00) pesos at (sic) litigation expenses

and to pay the costs.
3. All other claims are denied. 6

1. That the plaintiff is single and resident (sic) of Baaga,

Bugallon, Pangasinan, while the defendant is single, Iranian
citizen and resident (sic) of Lozano Apartment, Guilig,
Dagupan City since September 1, 1987 up to the present;
2. That the defendant is presently studying at Lyceum
Northwestern, Dagupan City, College of Medicine, second
year medicine proper;
3. That the plaintiff is (sic) an employee at Mabuhay
Luncheonette , Fernandez Avenue, Dagupan City since July,
1986 up to the present and a (sic) high school graduate;
4. That the parties happened to know each other when the
manager of the Mabuhay Luncheonette, Johhny Rabino
introduced the defendant to the plaintiff on August 3, 1986.
After trial on the merits, the lower court, applying Article 21 of the Civil Code,
rendered on 16 October 1989 a decision 5 favoring the private respondent. The
petitioner was thus ordered to pay the latter damages and attorney's fees; the
dispositive portion of the decision reads:
IN THE LIGHT of the foregoing consideration, judgment is
hereby rendered in favor of the plaintiff and against the
defendant.
1. Condemning (sic) the defendant to pay the plaintiff the sum
of twenty thousand (P20,000.00) pesos as moral damages.
2. Condemning further the defendant to play the plaintiff the
sum of three thousand (P3,000.00) pesos as atty's fees and

The decision is anchored on the trial court's findings and conclusions that (a)
petitioner and private respondent were lovers, (b) private respondent is not a
woman of loose morals or questionable virtue who readily submits to sexual
advances, (c) petitioner, through machinations, deceit and false pretenses,
promised to marry private respondent, d) because of his persuasive promise
to marry her, she allowed herself to be deflowered by him, (e) by reason of
that deceitful promise, private respondent and her parents in accordance
with Filipino customs and traditions made some preparations for the
wedding that was to be held at the end of October 1987 by looking for pigs
and chickens, inviting friends and relatives and contracting sponsors, (f)
petitioner did not fulfill his promise to marry her and (g) such acts of the
petitioner, who is a foreigner and who has abused Philippine hospitality, have
offended our sense of morality, good customs, culture and traditions. The trial
court gave full credit to the private respondent's testimony because, inter alia,
she would not have had the temerity and courage to come to court and
expose her honor and reputation to public scrutiny and ridicule if her claim was
false. 7
The above findings and conclusions were culled from the detailed summary of
the evidence for the private respondent in the foregoing decision, digested by
the respondent Court as follows:
According to plaintiff, who claimed that she was a virgin at the
time and that she never had a boyfriend before, defendant
started courting her just a few days after they first met. He
later proposed marriage to her several times and she
accepted his love as well as his proposal of marriage on
August 20, 1987, on which same day he went with her to her
hometown of Baaga, Bugallon, Pangasinan, as he wanted to

meet her parents and inform them of their relationship and

their intention to get married. The photographs Exhs. "A" to
"E" (and their submarkings) of defendant with members of
plaintiff's family or with plaintiff, were taken that day. Also on
that occasion, defendant told plaintiffs parents and brothers
and sisters that he intended to marry her during the semestral
break in October, 1987, and because plaintiff's parents
thought he was good and trusted him, they agreed to his
proposal for him to marry their daughter, and they likewise
allowed him to stay in their house and sleep with plaintiff
during the few days that they were in Bugallon. When plaintiff
and defendant later returned to Dagupan City, they continued
to live together in defendant's apartment. However, in the
early days of October, 1987, defendant would tie plaintiff's
hands and feet while he went to school, and he even gave
her medicine at 4 o'clock in the morning that made her sleep
the whole day and night until the following day. As a result of
this live-in relationship, plaintiff became pregnant, but
defendant gave her some medicine to abort the fetus. Still
plaintiff continued to live with defendant and kept reminding
him of his promise to marry her until he told her that he could
not do so because he was already married to a girl in Bacolod
City. That was the time plaintiff left defendant, went home to
her parents, and thereafter consulted a lawyer who
accompanied her to the barangay captain in Dagupan City.
Plaintiff, her lawyer, her godmother, and a barangay tanod
sent by the barangay captain went to talk to defendant to still
convince him to marry plaintiff, but defendant insisted that he
could not do so because he was already married to a girl in
Bacolod City, although the truth, as stipulated by the parties
at the pre-trial, is that defendant is still single.
Plaintiff's father, a tricycle driver, also claimed that after
defendant had informed them of his desire to marry Marilou,

he already looked for sponsors for the wedding, started

preparing for the reception by looking for pigs and chickens,
and even already invited many relatives and friends to the
forthcoming wedding. 8
Petitioner appealed the trial court's decision to the respondent Court of
Appeals which docketed the case as CA-G.R. CV No. 24256. In his Brief, 9 he
contended that the trial court erred (a) in not dismissing the case for lack of
factual and legal basis and (b) in ordering him to pay moral damages,
attorney's fees, litigation expenses and costs.
On 18 February 1991, respondent Court promulgated the challenged
decision 10 affirming in toto the trial court's ruling of 16 October 1989. In
sustaining the trial court's findings of fact, respondent Court made the
following analysis:
First of all, plaintiff, then only 21 years old when she met
defendant who was already 29 years old at the time, does not
appear to be a girl of loose morals. It is uncontradicted that
she was a virgin prior to her unfortunate experience with
defendant and never had boyfriend. She is, as described by
the lower court, a barrio lass "not used and accustomed to
trend of modern urban life", and certainly would (sic) not have
allowed "herself to be deflowered by the defendant if there
was no persuasive promise made by the defendant to marry
her." In fact, we agree with the lower court that plaintiff and
defendant must have been sweethearts or so the plaintiff
must have thought because of the deception of defendant, for
otherwise, she would not have allowed herself to be
photographed with defendant in public in so (sic) loving and
tender poses as those depicted in the pictures Exhs. "D" and
"E". We cannot believe, therefore, defendant's pretense that
plaintiff was a nobody to him except a waitress at the
restaurant where he usually ate. Defendant in fact admitted

that he went to plaintiff's hometown of Baaga, Bugallon,

Pangasinan, at least thrice; at (sic) the town fiesta on
February 27, 1987 (p. 54, tsn May 18, 1988), at (sic) a beach
party together with the manager and employees of the
Mabuhay Luncheonette on March 3, 1987 (p. 50, tsn id.), and
on April 1, 1987 when he allegedly talked to plaintiff's mother
who told him to marry her daughter (pp. 55-56, tsn id.). Would
defendant have left Dagupan City where he was involved in
the serious study of medicine to go to plaintiff's hometown in
Baaga, Bugallon, unless there was (sic) some kind of
special relationship between them? And this special
relationship must indeed have led to defendant's insincere
proposal of marriage to plaintiff, communicated not only to her
but also to her parents, and (sic) Marites Rabino, the owner of
the restaurant where plaintiff was working and where
defendant first proposed marriage to her, also knew of this
love affair and defendant's proposal of marriage to plaintiff,
which she declared was the reason why plaintiff resigned
from her job at the restaurant after she had accepted
defendant's proposal (pp. 6-7, tsn March 7, 1988).
Upon the other hand, appellant does not appear to be a man
of good moral character and must think so low and have so
little respect and regard for Filipino women that he openly
admitted that when he studied in Bacolod City for several
years where he finished his B.S. Biology before he came to
Dagupan City to study medicine, he had a common-law wife
in Bacolod City. In other words, he also lived with another
woman in Bacolod City but did not marry that woman, just like
what he did to plaintiff. It is not surprising, then, that he felt so
little compunction or remorse in pretending to love and
promising to marry plaintiff, a young, innocent, trustful country
girl, in order to satisfy his lust on her. 11

and then concluded:

In sum, we are strongly convinced and so hold that it was
defendant-appellant's fraudulent and deceptive protestations
of love for and promise to marry plaintiff that made her
surrender her virtue and womanhood to him and to live with
him on the honest and sincere belief that he would keep said
promise, and it was likewise these (sic) fraud and deception
on appellant's part that made plaintiff's parents agree to their
daughter's living-in with him preparatory to their supposed
marriage. And as these acts of appellant are palpably and
undoubtedly against morals, good customs, and public policy,
and are even gravely and deeply derogatory and insulting to
our women, coming as they do from a foreigner who has
been enjoying the hospitality of our people and taking
advantage of the opportunity to study in one of our institutions
of learning, defendant-appellant should indeed be made,
under Art. 21 of the Civil Code of the Philippines, to
compensate for the moral damages and injury that he had
caused plaintiff, as the lower court ordered him to do in its
decision in this case. 12
Unfazed by his second defeat, petitioner filed the instant petition on 26 March
1991; he raises therein the single issue of whether or not Article 21 of the Civil
Code applies to the case at bar. 13
It is petitioner's thesis that said Article 21 is not applicable because he had not
committed any moral wrong or injury or violated any good custom or public
policy; he has not professed love or proposed marriage to the private
respondent; and he has never maltreated her. He criticizes the trial court for
liberally invoking Filipino customs, traditions and culture, and ignoring the fact
that since he is a foreigner, he is not conversant with such Filipino customs,
traditions and culture. As an Iranian Moslem, he is not familiar with Catholic
and Christian ways. He stresses that even if he had made a promise to marry,

the subsequent failure to fulfill the same is excusable or tolerable because of

his Moslem upbringing; he then alludes to the Muslim Code which purportedly
allows a Muslim to take four (4) wives and concludes that on the basis thereof,
the trial court erred in ruling that he does not posses good moral character.
Moreover, his controversial "common law life" is now his legal wife as their
marriage had been solemnized in civil ceremonies in the Iranian Embassy. As
to his unlawful cohabitation with the private respondent, petitioner claims that
even if responsibility could be pinned on him for the live-in relationship, the
private respondent should also be faulted for consenting to an illicit
arrangement. Finally, petitioner asseverates that even if it was to be
assumed arguendo that he had professed his love to the private respondent
and had also promised to marry her, such acts would not be actionable in view
of the special circumstances of the case. The mere breach of promise is not
actionable. 14
On 26 August 1991, after the private respondent had filed her Comment to the
petition and the petitioner had filed his Reply thereto, this Court gave due
course to the petition and required the parties to submit their respective
Memoranda, which they subsequently complied with.
As may be gleaned from the foregoing summation of the petitioner's
arguments in support of his thesis, it is clear that questions of fact, which boil
down to the issue of the credibility of witnesses, are also raised. It is the rule in
this jurisdiction that appellate courts will not disturb the trial court's findings as
to the credibility of witnesses, the latter court having heard the witnesses and
having had the opportunity to observe closely their deportment and manner of
testifying, unless the trial court had plainly overlooked facts of substance or
value which, if considered, might affect the result of the case. 15
Petitioner has miserably failed to convince Us that both the appellate and trial
courts had overlooked any fact of substance or values which could alter the
result of the case.

Equally settled is the rule that only questions of law may be raised in a petition
for review on certiorari under Rule 45 of the Rules of Court. It is not the
function of this Court to analyze or weigh all over again the evidence
introduced by the parties before the lower court. There are, however,
recognized exceptions to this rule. Thus, inMedina vs. Asistio, Jr., 16 this Court
took the time, again, to enumerate these exceptions:
xxx xxx xxx
(1) When the conclusion is a finding grounded entirely on
speculation, surmises or conjectures (Joaquin v. Navarro, 93
Phil. 257 [1953]); (2) When the inference made is manifestly
mistaken, absurb or impossible (Luna v. Linatok, 74 Phil. 15
[1942]); (3) Where there is a grave abuse of discretion (Buyco
v. People, 95 Phil. 453 [1955]); (4) When the judgment is
based on a misapprehension of facts (Cruz v. Sosing,
L-4875, Nov. 27, 1953); (5) When the findings of fact are
conflicting (Casica v. Villaseca, L-9590 Ap. 30, 1957; unrep.)
(6) When the Court of Appeals, in making its findings, went
beyond the issues of the case and the same is contrary to the
admissions of both appellate and appellee (Evangelista v. Alto
Surety and Insurance Co., 103 Phil. 401 [1958]);
(7) The findings of the Court of Appeals are contrary to those
of the trial court (Garcia v. Court of Appeals, 33 SCRA 622
[1970]; Sacay v. Sandiganbayan, 142 SCRA 593 [1986]); (8)
When the findings of fact are conclusions without citation of
specific evidence on which they are based (Ibid.,); (9) When
the facts set forth in the petition as well as in the petitioners
main and reply briefs are not disputed by the respondents
(Ibid.,); and (10) The finding of fact of the Court of Appeals is
premised on the supposed absence of evidence and is
contradicted by the evidence on record (Salazar v. Gutierrez,
33 SCRA 242 [1970]).

Petitioner has not endeavored to joint out to Us the existence of any of the
above quoted exceptions in this case. Consequently, the factual findings of the
trial and appellate courts must be respected.
And now to the legal issue.
The existing rule is that a breach of promise to marry per se is not an
actionable wrong. 17 Congress deliberately eliminated from the draft of the
New Civil Code the provisions that would have made it so. The reason
therefor is set forth in the report of the Senate Committees on the Proposed
Civil Code, from which We quote:
The elimination of this chapter is proposed. That breach of
promise to marry is not actionable has been definitely decided
in the case of De Jesus vs. Syquia. 18 The history of breach of
promise suits in the United States and in England has shown
that no other action lends itself more readily to abuse by
designing women and unscrupulous men. It is this experience
which has led to the abolition of rights of action in the socalled Heart Balm suits in many of the American states. . . . 19
This notwithstanding, the said Code contains a provision, Article 21, which is
designed to expand the concept of torts or quasi-delict in this jurisdiction by
granting adequate legal remedy for the untold number of moral wrongs which
is impossible for human foresight to specifically enumerate and punish in the
statute books. 20
As the Code Commission itself stated in its Report:
But the Code Commission had gone farther than the sphere
of wrongs defined or determined by positive law. Fully
sensible that there are countless gaps in the statutes, which
leave so many victims of moral wrongs helpless, even though
they have actually suffered material and moral injury, the

Commission has deemed it necessary, in the interest of

justice, to incorporate in the proposed Civil Code the following
rule:
Art. 23. Any person who wilfully causes loss
or injury to another in a manner that is
contrary to morals, good customs or public
policy shall compensate the latter for the
damage.
An example will illustrate the purview of the foregoing norm:
"A" seduces the nineteen-year old daughter of "X". A promise
of marriage either has not been made, or can not be proved.
The girl becomes pregnant. Under the present laws, there is
no crime, as the girl is above nineteen years of age. Neither
can any civil action for breach of promise of marriage be filed.
Therefore, though the grievous moral wrong has been
committed, and though the girl and family have suffered
incalculable moral damage, she and her parents cannot bring
action for damages. But under the proposed article, she and
her parents would have such a right of action.
Thus at one stroke, the legislator, if the forgoing rule is
approved, would vouchsafe adequate legal remedy for that
untold number of moral wrongs which it is impossible for
human foresight to provide for specifically in the statutes. 21
Article 2176 of the Civil Code, which defines a quasi-delict thus:
Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasidelict and is governed by the provisions of this Chapter.

is limited to negligent acts or omissions and excludes the notion of

willfulness or intent. Quasi-delict, known in Spanish legal treatises
as culpa aquiliana, is a civil law concept while torts is an AngloAmerican or common law concept. Torts is much broader than culpa
aquiliana because it includes not only negligence, but international
criminal acts as well such as assault and battery, false imprisonment
and deceit. In the general scheme of the Philippine legal system
envisioned by the Commission responsible for drafting the New Civil
Code, intentional and malicious acts, with certain exceptions, are to
be governed by the Revised Penal Code while negligent acts or
omissions are to be covered by Article 2176 of the Civil Code. 22 In
between these opposite spectrums are injurious acts which, in the
absence of Article 21, would have been beyond redress. Thus, Article
21 fills that vacuum. It is even postulated that together with Articles 19
and 20 of the Civil Code, Article 21 has greatly broadened the scope
of the law on civil wrongs; it has become much more supple and
adaptable than the Anglo-American law on torts. 23
In the light of the above laudable purpose of Article 21, We are of the opinion,
and so hold, that where a man's promise to marry is in fact the proximate
cause of the acceptance of his love by a woman and his representation to
fulfill that promise thereafter becomes the proximate cause of the giving of
herself unto him in a sexual congress, proof that he had, in reality, no intention
of marrying her and that the promise was only a subtle scheme or deceptive
device to entice or inveigle her to accept him and to obtain her consent to the
sexual act, could justify the award of damages pursuant to Article 21 not
because of such promise to marry but because of the fraud and deceit behind
it and the willful injury to her honor and reputation which followed thereafter. It
is essential, however, that such injury should have been committed in a
manner contrary to morals, good customs or public policy.
In the instant case, respondent Court found that it was the petitioner's
"fraudulent and deceptive protestations of love for and promise to marry
plaintiff that made her surrender her virtue and womanhood to him and to live

with him on the honest and sincere belief that he would keep said promise,
and it was likewise these fraud and deception on appellant's part that made
plaintiff's parents agree to their daughter's living-in with him preparatory to
their supposed marriage." 24 In short, the private respondent surrendered her
virginity, the cherished possession of every single Filipina, not because of lust
but because of moral seduction the kind illustrated by the Code
Commission in its example earlier adverted to. The petitioner could not be
held liable for criminal seduction punished under either Article 337 or Article
338 of the Revised Penal Code because the private respondent was above
eighteen (18) years of age at the time of the seduction.
Prior decisions of this Court clearly suggest that Article 21 may be applied in a
breach of promise to marry where the woman is a victim of moral seduction.
Thus, in Hermosisima vs. Court of Appeals, 25 this Court denied recovery of
damages to the woman because:
. . . we find ourselves unable to say that petitioner
is morally guilty of seduction, not only because he is
approximately ten (10) years younger than the complainant
who was around thirty-six (36) years of age, and as highly
enlightened as a former high school teacher and a life
insurance agent are supposed to be when she became
intimate with petitioner, then a mere apprentice pilot, but,
also, because the court of first instance found that,
complainant "surrendered herself" to petitioner because,
"overwhelmed by her love" for him, she "wanted to bind" him
by having a fruit of their engagement even before they had
the benefit of clergy.
In Tanjanco vs. Court of Appeals, 26 while this Court likewise hinted at possible
recovery if there had been moral seduction, recovery was eventually denied
because We were not convinced that such seduction existed. The following
enlightening disquisition and conclusion were made in the said case:

The Court of Appeals seem to have overlooked that the

example set forth in the Code Commission's memorandum
refers to a tort upon a minor who had been seduced. The
essential feature is seduction, that in law is more than mere
sexual intercourse, or a breach of a promise of marriage; it
connotes essentially the idea of deceit, enticement, superior
power or abuse of confidence on the part of the seducer to
which the woman has yielded (U.S. vs. Buenaventura, 27
Phil. 121; U.S. vs. Arlante, 9 Phil. 595).

Accordingly it is not seduction where the

willingness arises out of sexual desire of
curiosity of the female, and the defendant
merely affords her the needed opportunity for
the commission of the act. It has been
emphasized that to allow a recovery in all
such cases would tend to the demoralization
of the female sex, and would be a reward for
unchastity by which a class of adventuresses
would be swift to profit. (47 Am. Jur. 662)

It has been ruled in the Buenaventura case (supra) that

xxx xxx xxx
To constitute seduction there must in all
cases be some sufficient promise or
inducementand the woman must yield
because of the promise or other inducement.
If she consents merely from carnal lust and
the intercourse is from mutual desire, there is
no seduction (43 Cent. Dig. tit. Seduction,
par. 56) She must be induced to depart from
the path of virtue by the use of some species
of arts, persuasions and wiles, which are
calculated to have and do have that effect,
and which result in her person to ultimately
submitting her person to the sexual
embraces of her seducer (27 Phil. 123).
And in American Jurisprudence we find:
On the other hand, in an action by the
woman, the enticement, persuasion or
deception is the essence of the injury; and a
mere proof of intercourse is insufficient to
warrant a recovery.

Over and above the partisan allegations, the fact stand out
that for one whole year, from 1958 to 1959, the plaintiffappellee, a woman of adult age, maintain intimate sexual
relations with appellant, with repeated acts of intercourse.
Such conduct is incompatible with the idea of seduction.
Plainly there is here voluntariness and mutual passion; for
had the appellant been deceived, had she surrendered
exclusively because of the deceit, artful persuasions and
wiles of the defendant, she would not have again yielded to
his embraces, much less for one year, without exacting early
fulfillment of the alleged promises of marriage, and would
have cut short all sexual relations upon finding that defendant
did not intend to fulfill his defendant did not intend to fulfill his
promise. Hence, we conclude that no case is made under
article 21 of the Civil Code, and no other cause of action
being alleged, no error was committed by the Court of First
Instance in dismissing the complaint. 27
In his annotations on the Civil Code, 28 Associate Justice Edgardo L. Paras,
who recently retired from this Court, opined that in a breach of promise to

marry where there had been carnal knowledge, moral damages may be
recovered:
. . . if there be criminal or moral seduction, but not if the
intercourse was due to mutual lust. (Hermosisima vs. Court of
Appeals,
L-14628, Sept. 30, 1960; Estopa vs. Piansay, Jr., L-14733,
Sept. 30, 1960; Batarra vs. Marcos, 7 Phil. 56 (sic); Beatriz
Galang vs. Court of Appeals, et al., L-17248, Jan. 29, 1962).
(In other words, if the CAUSE be the promise to marry, and
the EFFECT be the carnal knowledge, there is a chance that
there was criminal or moral seduction, hence recovery of
moral damages will prosper. If it be the other way around,
there can be no recovery of moral damages, because here
mutual lust has intervened). . . .
together with "ACTUAL damages, should there be any, such as the
expenses for the wedding presentations (See Domalagon v. Bolifer,
33 Phil. 471).
Senator Arturo M. Tolentino 29 is also of the same persuasion:
It is submitted that the rule in Batarra vs. Marcos, 30 still
subsists, notwithstanding the incorporation of the present
article 31 in the Code. The example given by the Code
Commission is correct, if there was seduction, not necessarily
in the legal sense, but in the vulgar sense of deception. But
when the sexual act is accomplished without any deceit or
qualifying circumstance of abuse of authority or influence, but
the woman, already of age, has knowingly given herself to a
man, it cannot be said that there is an injury which can be the
basis for indemnity.

But so long as there is fraud, which is characterized by

willfulness (sic), the action lies. The court, however, must
weigh the degree of fraud, if it is sufficient to deceive the
woman under the circumstances, because an act which
would deceive a girl sixteen years of age may not constitute
deceit as to an experienced woman thirty years of age. But so
long as there is a wrongful act and a resulting injury, there
should be civil liability, even if the act is not punishable under
the criminal law and there should have been an acquittal or
dismissal of the criminal case for that reason.
We are unable to agree with the petitioner's alternative proposition to the
effect that granting, for argument's sake, that he did promise to marry the
private respondent, the latter is nevertheless also at fault. According to him,
both parties are in pari delicto; hence, pursuant to Article 1412(1) of the Civil
Code and the doctrine laid down inBatarra vs. Marcos, 32 the private
respondent cannot recover damages from the petitioner. The latter even goes
as far as stating that if the private respondent had "sustained any injury or
damage in their relationship, it is primarily because of her own doing, 33 for:
. . . She is also interested in the petitioner as the latter will
become a doctor sooner or later. Take notice that she is a
plain high school graduate and a mere employee . . . (Annex
"C") or a waitress (TSN, p. 51, January 25, 1988) in a
luncheonette and without doubt, is in need of a man who can
give her economic security. Her family is in dire need of
financial assistance. (TSN, pp. 51-53, May 18, 1988). And this
predicament prompted her to accept a proposition that may
have been offered by the petitioner. 34
These statements reveal the true character and motive of the petitioner. It is
clear that he harbors a condescending, if not sarcastic, regard for the private
respondent on account of the latter's ignoble birth, inferior educational
background, poverty and, as perceived by him, dishonorable employment.

Obviously then, from the very beginning, he was not at all moved by good faith
and an honest motive. Marrying with a woman so circumstances could not
have even remotely occurred to him. Thus, his profession of love and promise
to marry were empty words directly intended to fool, dupe, entice, beguile and
deceive the poor woman into believing that indeed, he loved her and would
want her to be his life's partner. His was nothing but pure lust which he wanted
satisfied by a Filipina who honestly believed that by accepting his proffer of
love and proposal of marriage, she would be able to enjoy a life of ease and
security. Petitioner clearly violated the Filipino's concept of morality and
brazenly defied the traditional respect Filipinos have for their women. It can
even be said that the petitioner committed such deplorable acts in blatant
disregard of Article 19 of the Civil Code which directs every person to act with
justice, give everyone his due and observe honesty and good faith in the
exercise of his rights and in the performance of his obligations.
No foreigner must be allowed to make a mockery of our laws, customs and
traditions.
The pari delicto rule does not apply in this case for while indeed, the private
respondent may not have been impelled by the purest of intentions, she
eventually submitted to the petitioner in sexual congress not out of lust, but
because of moral seduction. In fact, it is apparent that she had qualms of
conscience about the entire episode for as soon as she found out that the
petitioner was not going to marry her after all, she left him. She is not,
therefore, in pari delicto with the petitioner. Pari delicto means "in equal fault;
in a similar offense or crime; equal in guilt or in legal fault." 35 At most, it could
be conceded that she is merely in delicto.
Equity often interferes for the relief of the less guilty of the
parties, where his transgression has been brought about by
the imposition of undue influence of the party on whom the
burden of the original wrong principally rests, or where his
consent to the transaction was itself procured by
fraud. 36

In Mangayao vs. Lasud, 37 We declared:

Appellants likewise stress that both parties being at fault,
there should be no action by one against the other (Art. 1412,
New Civil Code). This rule, however, has been interpreted as
applicable only where the fault on both sides is, more or less,
equivalent. It does not apply where one party is literate or
intelligent and the other one is not. (c.f. Bough vs. Cantiveros,
40 Phil. 209).
We should stress, however, that while We find for the private respondent, let it
not be said that this Court condones the deplorable behavior of her parents in
letting her and the petitioner stay together in the same room in their house
after giving approval to their marriage. It is the solemn duty of parents to
protect the honor of their daughters and infuse upon them the higher values of
morality and dignity.
WHEREFORE, finding no reversible error in the challenged decision, the
instant petition is hereby DENIED, with costs against the petitioner.
SO ORDERED.

G.R. No. 138964

August 9, 2001

VICENTE RELLOSA, CYNTHIA ORTEGA assisted by husband Roberto

Ortega, petitioner,
vs.
GONZALO PELLOSIS, INESITA MOSTE, and DANILO
RADAM, respondents.
VITUG, J.:
"Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good
faith." 1 This provision in our law is not just a declaration of principle for it can
in itself constitute, when unduly ignored or violated, a valid source of a cause
of action or defense.
The case seeks to reverse the Court of Appeals in not countenancing an
attempt to abridge and render inutile a legal right to contest an adverse ruling
of an agency of government.
Respondents were lessees of a parcel of land, owned by one Marta Reyes,
located at San Pascual Street, Malate, Manila. Respondents had built their
houses on the land which, over the years, underwent continuous
improvements. After the demise of Marta, the land was inherited by her son
Victor Reyes. Sometime in 1986, Victor informed respondents that, for being
lessees of the land for more than twenty (20) years, they would have a right of
first refusal to buy the land. Sometime in the early part of 1989, without the
knowledge of respondents, the land occupied by them was sold to petitioner
Cynthia Ortega who was able to ultimately secure title to the property in her
name.
On 25 May 1989, Cynthia Ortega, filed a petition for condemnation, docketed
Condemnation Case No. 89-05-007, with the Office of the Building Official,
City of Manila, of the structures on the land.

On 31 May 1989, respondents filed with the Regional Trial Court of Manila a
suit for the "Declaration of Nullity of the Sale," docketed as Civil Case No. 8949176, made in favor of petitioner Cynthia Ortega predicated upon their right
of first refusal which was claimed to have been impinged upon the sale of the
land to petitioner Ortega without their knowledge.
After due hearing in the condemnation case, the Office of the Building Official
issued a resolution, dated 27 November 1989, ordering the demolition of the
houses of respondents. Copies of the resolution were served upon
respondents and their counsel on 07 December 1989. The following day, or on
08 December 1989, Cynthia Ortega, together with her father and co-petitioner,
Vicente Rellosa, hired workers to commence the demolition of respondents'
houses. Due to the timely intervention of a mobile unit of the Western Police
District, the intended demolition did not take place following talks between
petitioner Rellosa and counsel who pleaded that the demolition be suspended
since the order sought to be implemented was not yet final and executory. On
11 December 1989, respondents filed their appeal contesting the order of the
Office of the Building Official. On 12 December 1989, petitioners once again
hired workers and proceeded with the demolition of respondents' houses.
Resultantly, respondents filed Civil Case No. 89-49176 before the Regional
Trial Court of Manila, Branch 54, praying that petitioners be ordered to pay
moral and exemplary damages, as well as attorney's fee, for the untimely
demolition of the houses. After trial, the court dismissed the complaint of
respondents and instead ordered them to pay petitioners moral damages. On
appeal, the Court of Appeals, on the basis of its findings and conclusions,
reversed the decision of the trial court and ordered petitioners to pay
respondents the following sums:
"1) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five
Thousand Pesos (P25,000.00) for each appellant, by way of moral
damages;"

"2) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five

thousand Pesos (P25,000.00) for each appellant, by way of
exemplary damages;"

Furthermore, petitioners added, the structures subject matter of the demolition

order were declared to be dangerous structures by the Office of the Building
Official and, as such, could be abated to avoid danger to the public.

"3) Fifteen Thousand Pesos (P15,000.00) as and for attorney's fees;

and

The Court rules for affirmance of the assailed decision.

"4) The costs of suit."

A right is a power, privilege, or immunity guaranteed under a constitution,

statute or decisional law, or recognized as a result of long usage, 4 constitutive
of a legally enforceable claim of one person against another.

The appellate court ruled:

"Thus, by the clear provisions of paragraph 23 of the Implementing
Rules and Regulations of PD 1096 (otherwise known as the Building
Code), above, appellants, being the parties adversely affected by the
November 27, 1989 Resolution of the Office of the Building Official,
had fifteen (15) days from receipt of a copy of the same within which
to perfect an administrative appeal. Thus, since appellants received a
copy of the Resolution on December 7, 1989, they had until
December 22, 1989 within which to perfect an administrative appeal
and until such time, the said Resolution was not yet final and
executory."
xxx

xxx

xxx

"It cannot be denied, therefore, that when appellees commenced to

demolish appellants' houses as early as December 8, 1989 and
eventually on December 12, 1989, neither the Resolution of the
Building Official nor the Demolition Order itself were final and
executory."3
Petitioners filed the instant petition contending that the appellate court gravely
erred in ruling that the premature demolition of respondents' houses entitled
them to the award of damages. Petitioners pointed out that the order of the
Office of the Building Official was eventually upheld on appeal by the
Department of Public Works and Highways in its decision of 14 March 1990.

Petitioner might verily be the owner of the land, with the right to enjoy 5 and to
exclude any person from the enjoyment and disposal thereof, 6 but the exercise
of these rights is not without limitations. The abuse of rights rule established in
Article 19 of the Civil Code requires every person to act with justice, to give
everyone his due; and to observe honesty and good faith. 7 When a right is
exercised in a manner which discards these norms resulting in damage to
another, a legal wrong is committed for which the actor can be held
accountable. In this instance, the issue is not so much about the existence of
the right or validity of the order of demolition as the question of whether or not
petitioners have acted in conformity with, and not in disregard of, the standard
set by Article 19 of the Civil Code.
At the time petitioners implemented the order of demolition, barely five days
after respondents received a copy thereof, the same was not yet final and
executory. The law provided for a fifteen-day appeal period in favor of a party
aggrieved by an adverse ruling of the Office of the Building Official but by the
precipitate action of petitioners in demolishing the houses of respondents
(prior to the expiration of the period to appeal), the latter were effectively
deprived of this recourse. The fact that the order of demolition was later
affirmed by the Department of Public Works and Highways was of no moment.
The action of petitioners up to the point where they were able to secure an
order of demolition was not condemnable but implementing the order
unmindful of the right of respondents to contest the ruling was a different
matter and could only be held utterly indefensible.

The Court, however, finds the award of P75,000.00 exemplary damages and
another of P75,000.00 moral damages for each respondent to be rather
excessive given the circumstances; the awards must be reduced to the
reasonable amounts of P20,000.00 exemplary damages and P20,000.00
moral damages.
WHEREFORE, the assailed decision of the Court of Appeals is MODIFIED by
reducing the awards of P75,000.00 exemplary damages and of P75,000.00
moral damages to each respondent reduced to P20,000.00 exemplary
damages and P20,000.00 moral damages for each respondent. In all other
respects, the decision of the appellate court is AFFIRMED. No costs.
SO ORDERED.

G.R. No. 126204

November 20, 2001

NATIONAL POWER CORPORATION, petitioner,

vs.
PHILIPP BROTHERS OCEANIC, INC., respondent.
SANDOVAL-GUTIERREZ, J.:
Where a person merely uses a right pertaining to him, without bad faith or
intent to injure, the fact that damages are thereby suffered by another will not
make him liable.1
This principle finds useful application to the present case.
Before us is a petition for review of the Decision 2 dated August 27, 1996 of the
Court of Appeals affirming in toto the Decision 3 dated January 16, 1992 of the
Regional Trial Court, Branch 57, Makati City.
The facts are:
On May 14, 1987, the National Power Corporation (NAPOCOR) issued
invitations to bid for the supply and delivery of 120,000 metric tons of imported
coal for its Batangas Coal-Fired Thermal Power Plant in Calaca, Batangas.
The Philipp Brothers Oceanic, Inc. (PHIBRO) prequalified and was allowed to
participate as one of the bidders. After the public bidding was conducted,
PHIBRO's bid was accepted. NAPOCOR's acceptance was conveyed in a
letter dated July 8, 1987, which was received by PHIBRO on July 15,
1987.The "Bidding Terms and Specifications" 4provide for the manner of
shipment of coals, thus:
"SECTION V
SHIPMENT

The winning TENDERER who then becomes the SELLER shall

arrange and provide gearless bulk carrier for the shipment of coal to
arrive at discharging port on or before thirty (30) calendar days after
receipt of the Letter of Credit by the SELLER or its nominee as per
Section XIV hereof to meet the vessel arrival schedules at Calaca,
Batangas, Philippines as follows:
60,000 +/ - 10 % July 20, 1987
60,000 +/ - 10% September 4, 1987"5
On July 10, 1987, PHIBRO sent word to NAPOCOR that industrial disputes
might soon plague Australia, the shipment's point of origin, which could
seriously hamper PHIBRO's ability to supply the needed coal. 6 From July 23 to
July 31, 1987, PHIBRO again apprised NAPOCOR of the situation in Australia,
particularly informing the latter that the ship owners therein are not willing to
load cargo unless a "strike-free" clause is incorporated in the charter party or
the contract of carriage.7 In order to hasten the transfer of coal, PHIBRO
proposed to NAPOCOR that they equally share the burden of a "strike-free"
clause. NAPOCOR refused.
On August 6, 1987, PHIBRO received from NAPOCOR a confirmed and
workable letter of credit. Instead of delivering the coal on or before the thirtieth
day after receipt of the Letter of Credit, as agreed upon by the parties in the
July contract, PHIBRO effected its first shipment only on November 17, 1987.
Consequently, in October 1987, NAPOCOR once more advertised for the
delivery of coal to its Calaca thermal plant. PHIBRO participated anew in this
subsequent bidding. On November 24, 1987, NAPOCOR disapproved
PHIBRO's application for pre-qualification to bid for not meeting the minimum
requirements.8 Upon further inquiry, PHIBRO found that the real reason for the
disapproval was its purported failure to satisfy NAPOCOR's demand for
damages due to the delay in the delivery of the first coal shipment.

This prompted PHIBRO to file an action for damages with application for
injunction against NAPOCOR with the Regional Trial Court, Branch 57, Makati
City.9 In its complaint, PHIBRO alleged that NAPOCOR's act of disqualifying it
in the October 1987 bidding and in all subsequent biddings was tainted with
malice and bad faith. PHIBRO prayed for actual, moral and exemplary
damages and attorney's fees.
In its answer, NAPOCOR averred that the strikes in Australia could not be
invoked as reason for the delay in the delivery of coal because PHIBRO itself
admitted that as of July 28, 1987 those strikes had already ceased. And, even
assuming that the strikes were still ongoing, PHIBRO should have shouldered
the burden of a "strike-free" clause because their contract was "C and F
Calaca, Batangas, Philippines," meaning, the cost and freight from the point of
origin until the point of destination would be for the account of PHIBRO.
Furthermore, NAPOCOR claimed that due to PHIBRO's failure to deliver the
coal on time, it was compelled to purchase coal from ASEA at a higher price.
NAPOCOR claimed for actual damages in the amount of P12,436,185.73,
representing the increase in the price of coal, and a claim of P500,000.00 as
litigation expenses.10
Thereafter, trial on the merits ensued.
On January 16, 1992, the trial court rendered a decision in favor of PHIBRO,
the dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff
Philipp Brothers Oceanic Inc. (PHIBRO) and against the defendant
National Power Corporation (NAPOCOR) ordering the said defendant
NAPOCOR:
1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the
defendant National Power Corporation's list of accredited bidders and
allow PHIBRO to participate in any and all future tenders of National
Power Corporation for the supply and delivery of imported steam coal;

2. To pay Philipp Brothers Oceanic, Inc. (PHIBRO);

a. The peso equivalent at the time of payment of $864,000 as
actual damages,
b. The peso equivalent at the time of payment of $100,000 as
moral damages;
c. The peso equivalent at the time of payment of $50,000 as
exemplary damages;
d. The peso equivalent at the time of payment of $73,231.91
as reimbursement for expenses, cost of litigation and
attorney's fees;
3. To pay the costs of suit;
4. The counterclaims of defendant NAPOCOR are dismissed for lack
of merit.
SO ORDERED."11
Unsatisfied, NAPOCOR, through the Solicitor General, elevated the case to
the Court of Appeals. On August 27, 1996, the Court of Appeals rendered a
Decision affirming in toto the Decision of the Regional Trial Court. It
ratiocinated that:
"There is ample evidence to show that although PHIBRO's delivery of
the shipment of coal was delayed, the delay was in fact caused by a)
Napocor's own delay in opening a workable letter of credit; and b) the
strikes which plaqued the Australian coal industry from the first week
of July to the third week of September 1987. Strikes are included in
the definition of force majeure in Section XVII of the Bidding Terms
and Specifications, (supra), so Phibro is not liable for any delay
caused thereby.

Phibro was informed of the acceptance of its bid on July 8, 1987.

Delivery of coal was to be effected thirty (30) days from Napocor's
opening of a confirmed and workable letter of credit. Napocor was
only able to do so on August 6, 1987.
By that time, Australia's coal industry was in the middle of a seething
controversy and unrest, occasioned by strikes, overtime bans, mine
stoppages. The origin, the scope and the effects of this industrial
unrest are lucidly described in the uncontroverted testimony of James
Archibald, an employee of Phibro and member of the Export
Committee of the Australian Coal Association during the time these
events transpired.
xxx

xxx

Tolentino adds that the term generally applies, broadly speaking, to

natural accidents. In order that acts of man such as a strike, may
constitute fortuitous event, it is necessary that they have the force of
an imposition which the debtor could not have resisted. He cites a
parallel example in the case of Philippine National Bank v. Court of
Appeals, 94 SCRA 357 (1979), wherein the Supreme Court said that
the outbreak of war which prevents performance exempts a party from
liability.
Hence, by law and by stipulation of the parties, the strikes which took
place in Australia from the first week of July to the third week of
September, 1987, exempted Phibro from the effects of delay of the
delivery of the shipment of coal."12

xxx

The records also attest that Phibro periodically informed Napocor of

these developments as early as July 1, 1987, even before the bid was
approved. Yet, Napocor did not forthwith open the letter of credit in
order to avoid delay which might be caused by the strikes and their
after-effects.
"Strikes" are undoubtedly included in the force majeure clause of the
Bidding Terms and Specifications (supra). The renowned civilist, Prof.
Arturo Tolentino, defines force majeure as "an event which takes
place by accident and could not have been foreseen." (Civil Code of
the Philippines, Volume IV, Obligations and Contracts, 126, [1991]) He
further states:
"Fortuitous events may be produced by two general causes:
(1) by Nature, such as earthquakes, storms, floods,
epidemics, fires, etc., and (2) by the act of man, such as an
armed invasion, attack by bandits, governmental prohibitions,
robbery, etc."

Twice thwarted, NAPOCOR comes to us via a petition for review ascribing to

the Court of Appeals the following errors:
I
"Respondent Court of Appeals gravely and seriously erred in concluding and
so holding that PHIBRO's delay in the delivery of imported coal was due to
NAPOCOR's alleged delay in opening a letter of credit and to forcemajeure,
and not to PHIBRO's own deliberate acts and faults." 13
II
"Respondent Court of Appeals gravely and seriously erred in concluding and
so holding that NAPOCOR acted maliciously and unjustifiably in disqualifying
PHIBRO from participating in the December 8, 1987 and future biddings for
the supply of imported coal despite the existence of valid grounds therefor
such as serious impairment of its track record." 14
III

"Respondent Court of Appeals gravely and seriously erred in concluding and

so holding that PHIBRO was entitled to injunctive relief, to actual or
compensatory, moral and exemplary damages, attorney's fees and litigation
expenses despite the clear absence of legal and factual bases for such
award."15
IV
"Respondent Court of Appeals gravely and seriously erred in absolving
PHIBRO from any liability for damages to NAPOCOR for its unjustified and
deliberate refusal and/or failure to deliver the contracted imported coal within
the stipulated period."16
V
"Respondent Court of Appeals gravely and seriously erred in dismissing
NAPOCOR's counterclaims for damages and litigation expenses." 17
It is axiomatic that only questions of law, not questions of fact, may be raised
before this Court in a petition for review under Rule 45 of the Rules of
Court.18 The findings of facts of the Court of Appeals are conclusive and
binding on this Court19 and they carry even more weight when the said court
affirms the factual findings of the trial court. 20 Stated differently, the findings of
the Court of .Appeals, by itself, which are supported by substantial evidence,
are almost beyond the power of review by this Court. 21
With the foregoing settled jurisprudence, we find it pointless to delve lengthily
on the factual issues raised by petitioner. The existence of strikes in Australia
having been duly established in the lower courts, we are left only with the
burden of determining whether or not NAPOCOR acted wrongfully or with bad
faith in disqualifying PHIBRO from participating in the subsequent public
bidding.
Let us consider the case in its proper perspective.

The Court of Appeals is justified in sustaining the Regional Trial Court's

decision exonerating PHIBRO from any liability for damages to NAPOCOR as
it was clearly established from the evidence, testimonial and documentary,
that what prevented PHIBRO from complying with its obligation under the July
1987 contract was the industrial disputes which besieged Australia during that
time. Extant in our Civil Code is the rule that no person shall be responsible for
those events which could not be foreseen, or which, though foreseen, were
inevitable.22 This means that when an obligor is unable to fulfill his obligation
because of a fortuitous event or force majeure, he cannot be held liable for
damages for non-performance.23
In addition to the above legal precept, it is worthy to note that PHIBRO and
NAPOCOR explicitly agreed in Section XVII of the "Bidding Terms and
Specifications"24 that "neither seller (PHIBRO) nor buyer (NAPOCOR) shall be
liable for any delay in or failure of the performance of its obligations, other than
the payment of money due, if any such delay or failure is due to
Force Majeure." Specifically, they defined force majeure as "any disabling
cause beyond the control of and without fault or negligence of the party, which
causes may include but are not restricted to Acts of God or of the public
enemy; acts of the Government in either its sovereign or contractual capacity;
governmental restrictions; strikes, fires, floods, wars, typhoons, storms,
epidemics and quarantine restrictions."
The law is clear and so is the contract between NAPOCOR and PHIBRO.
Therefore, we have no reason to rule otherwise.
However, proceeding from the premise that PHIBRO was prevented by
force majeure from complying with its obligation, does it necessarily follow that
NAPOCOR acted unjustly, capriciously, and unfairly in disapproving PHIBRO's
application for pre-qualification to bid?
First, it must be stressed that NAPOCOR was not bound under any contract to
approve PHIBRO's pre-qualification requirements. In fact, NAPOCOR had
expressly reserved its right to reject bids. The Instruction to Bidders found in

the "Post-Qualification Documents/Specifications for the Supply and Delivery

of Coal for the Batangas Coal-Fired Thermal Power Plant I at Calaca,
Batangas Philippines,"25 is explicit, thus:

Since there is no evidence to prove bad faith and arbitrariness on the

part of the petitioners in evaluating the bids, we rule that the private
respondents are not entitled to damages representing lost profits."
(Emphasis supplied)

"IB-17 RESERVATION OF NAPOCOR TO REJECT BIDS

NAPOCOR reserves the right to reject any or all bids, to waive any
minor informality in the bids received.The right is also reserved to
reject the bids of any bidder who has previously failed to properly
perform or complete on time any and all contracts for delivery of coal
or any supply undertaken by a bidder."26(Emphasis supplied)
This Court has held that where the right to reject is so reserved, the lowest bid
or any bid for that matter may be rejected on a mere technicality. 27 And where
the government as advertiser, availing itself of that right, makes its choice in
rejecting any or all bids, the losing bidder has no cause to complain nor right
to dispute that choice unless an unfairness or injustice is shown. Accordingly,
a bidder has no ground of action to compel the Government to award the
contract in his favor, nor to compel it to accept his bid. Even the lowest bid or
any bid may be rejected.28 In Celeste v. Court of Appeals,29 we had the
occasion to rule:
"Moreover, paragraph 15 of the Instructions to Bidders states that 'the
Government hereby reserves the right to reject any or all bids
submitted.' In the case of A.C. Esguerra and Sons v. Aytona, 4 SCRA
1245, 1249 (1962), we held:
'x x x [I]n the invitation to bid, there is a condition imposed
upon the bidders to the effect that the bidders shall be subject
to the right of the government to reject any and all bids
subject to its discretion. Here the government has made its
choice, and unless an unfairness or injustice is shown, the
losing bidders have no cause to complain, nor right to dispute
that choice.'

Verily, a reservation of the government of its right to reject any bid, generally
vests in the authorities a wide discretion as to who is the best and most
advantageous bidder. The exercise of such discretion involves inquiry,
investigation, comparison, deliberation and decision, which are quasi-judicial
functions, and when honestly exercised, may not be reviewed by the
court.30 In Bureau Veritas v. Office of the President,31 we decreed:
"The discretion to accept or reject a bid and award contracts is vested
in the Government agencies entrusted with that function. The
discretion given to the authorities on this matter is of such wide
latitude that the Courts will not interfere therewith, unless it is
apparent that it is used as a shield to a fraudulent award. (Jalandoni
v. NARRA, 108 Phil. 486 [1960]) x x x. The exercise of this discretion
is a policy decision that necessitates prior inquiry, investigation,
comparison, evaluation, and deliberation. This task can best be
discharged by the Government agencies concerned, not by the
Courts. The role of the Courts is to ascertain whether a branch or
instrumentality of the Government has transgresses its constitutional
boundaries. But the Courts will not interfere with executive or
legislative discretion exercised within those boundaries. Otherwise, it
strays into the realm of policy decision-making. x x x." (Emphasis
supplied)
Owing to the discretionary character of the right involved in this case, the
propriety of NAPOCOR's act should therefore be judged on the basis of the
general principles regulating human relations, the forefront provision of which
is Article 19 of the Civil Code which provides that "every person must, in the
exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith." 32Accordingly, a

person will be protected only when he acts in the legitimate exercise of his
right, that is, when he acts with prudence and in good faith; but not when he
acts with negligence or abuse.33
Did NAPOCOR abuse its right or act unjustly in disqualifying PHIBRO from the
public bidding?
We rule in the negative.
In practice, courts, in the sound exercise of their discretion, will have to
determine under all the facts and circumstances when the exercise of a right is
unjust, or when there has been an abuse of right. 34
We went over the record of the case with painstaking solicitude and we are
convinced that NAPOCOR's act of disapproving PHIBRO's application for prequalification to bid was without any intent to injure or a purposive motive to
perpetrate damage. Apparently, NAPOCOR acted on the strong conviction
that PHIBRO had a "seriously-impaired" track record. NAPOCOR cannot be
faulted from believing so. At this juncture, it is worth mentioning that at the
time NAPOCOR issued its subsequent Invitation to Bid, i.e., October 1987,
PHIBRO had not yet delivered the first shipment of coal under the July 1987
contract, which was due on or before September 5, 1987. Naturally,
NAPOCOR is justified in entertaining doubts on PHIBRO's qualification or
capability to assume an obligation under a new contract.

Moreover, PHIBRO's actuation in 1987 raised doubts as to the real situation of

the coal industry in Australia. It appears from the records that when
NAPOCOR was constrained to consider an offer from another coal supplier
(ASEA) at a price of US$33.44 per metric ton, PHIBRO unexpectedly offered
the immediate delivery of 60,000 metric tons of Ulan steam coal at US$31.00
per metric ton for arrival at Calaca, Batangas on September 20-21, 1987." 35 Of
course, NAPOCOR had reason to ponder how come PHIBRO could assure
the immediate delivery of 60,000 metric tons of coal from the same source to
arrive at Calaca not later than September 20/21, 1987 but it could not deliver
the coal it had undertaken under its contract?
Significantly, one characteristic of a fortuitous event, in a legal sense, and
consequently in relations to contracts, is that "the concurrence must be such
as to render it impossible for the debtor to fulfill his obligation in a normal
manner."36 Faced with the above circumstance, NAPOCOR is justified in
assuming that, may be, there was really no fortuitous event or
force majeure which could render it impossible for PHIBRO to effect the
delivery of coal. Correspondingly, it is also justified in treating PHIBRO's failure
to deliver a serious impairment of its track record. That the trial court,
thereafter, found PHIBRO's unexpected offer actually a result of its desire to
minimize losses on the part of NAPOCOR is inconsequential. In determining
the existence of good faith, the yardstick is the frame of mind of the actor at
the time he committed the act, disregarding actualities or facts outside his
knowledge. We cannot fault NAPOCOR if it mistook PHIBRO's unexpected
offer a mere attempt on the latter's part to undercut ASEA or an indication of
PHIBRO's inconsistency. The circumstances warrant such contemplation.
That NAPOCOR believed all along that PHIBRO's failure to deliver on time
was unfounded is manifest from its letters37 reminding PHIBRO that it was
bound to deliver the coal within 30 days from its (PHIBRO's) receipt of the
Letter of Credit, otherwise it would be constrained to take legal action. The
same honest belief can be deduced from NAPOCOR's Board Resolution,
thus:

"On the legal aspect, Management stressed that failure of PBO to

deliver under the contract makes them liable for damages,
considering that the reasons invoked were not valid. The measure of
the damages will be limited to actual and compensatory damages.
However, it was reported that Philipp Brothers advised they would like
to have continuous business relation with NPC so they are willing to
sit down or even proposed that the case be submitted to the
Department of Justice as to avoid a court action or arbitration.
xxx

xxx

xxx

On the technical-economic aspect, Management claims that if PBO

delivers in November 1987 and January 1988, there are some
advantages. If PBO reacts to any legal action and fails to deliver, the
options are: one, to use 100% Semirara and second, to go into urgent
coal order. The first option will result in a 75 MW derating and oil will
be needed as supplement. We will stand to lose around P30 M. On
the other hand, if NPC goes into an urgent coal order, there will be an
additional expense of $786,000 or P16.11 M, considering the price of
the latest purchase with ASEA. On both points, reliability is
decreased."38
The very purpose of requiring a bidder to furnish the awarding authority its
pre-qualification documents is to ensure that only those "responsible" and
"qualified" bidders could bid and be awarded with government contracts. It
bears stressing that the award of a contract is measured not solely by the
smallest amount of bid for its performance, but also by the "responsibility" of
the bidder. Consequently, the integrity, honesty, and trustworthiness of the
bidder is to be considered. An awarding official is justified in considering a
bidder not qualified or not responsible if he has previously defrauded the
public in such contracts or if, on the evidence before him, the official bona fide
believes the bidder has committed such fraud, despite the fact that there is yet
no judicial determination to that effect.39 Otherwise stated, if the awarding
body bona fide believes that a bidder has seriously impaired its track record

because of a particular conduct, it is justified in disqualifying the bidder. This

policy is necessary to protect the interest of the awarding body against
irresponsible bidders.
Thus, one who acted pursuant to the sincere belief that another willfully
committed an act prejudicial to the interest of the government cannot be
considered to have acted in bad faith. Bad faith has always been a question of
intention. It is that corrupt motive that operates in the mind. As understood in
law, it contemplates a state of mind affirmatively operating with furtive design
or with some motive of self-interest or ill-will or for ulterior purpose. 40While
confined in the realm of thought, its presence may be ascertained through the
party's actuation or through circumstantial evidence. 41 The circumstances
under which NAPOCOR disapproved PHIBRO's pre-qualification to bid do not
show an intention to cause damage to the latter. The measure it adopted was
one of self-protection. Consequently, we cannot penalize NAPOCOR for the
course of action it took. NAPOCOR cannot be made liable for actual, moral
and exemplary damages.
Corollarily, in awarding to PHIBRO actual damages in the amount of
$864,000, the Regional Trial Court computed what could have been the profits
of PHIBRO had NAPOCOR allowed it to participate in the subsequent public
bidding. It ruled that "PHIBRO would have won the tenders for the supply of
about 960,000 metric tons out of at least 1,200,000 metric tons" from the
public bidding of December 1987 to 1990. We quote the trial court's ruling,
thus:
". . . PHIBRO was unjustly excluded from participating in at least five
(5) tenders beginning December 1987 to 1990, for the supply and
delivery of imported coal with a total volume of about 1,200,000 metric
tons valued at no less than US$32 Million. (Exhs. "AA," "AA-1-1," to
"AA-2"). The price of imported coal for delivery in 1988 was quoted in
June 1988 by bidders at US$41.35 to US$43.95 per metric ton (Exh.
"JJ"); in September 1988 at US$41.50 to US$49.50 per metric ton
(Exh. "J-1"); in November 1988 at US$39.00 to US$48.50 per metric

ton (Exh. "J-2") and for the 1989 deliveries, at US$44.35 to US$47.35
per metric ton (Exh. "J-3") and US$38.00 to US$48.25 per metric ton
in September 1990 (Exh. "JJ-6" and "JJ-7"). PHIBRO would have won
the tenders for the supply and delivery of about 960,000 metric tons of
coal out of at least 1,200,000 metric tons awarded during said period
based on its proven track record of 80%. The Court, therefore finds
that as a result of its disqualification, PHIBRO suffered damages
equivalent to its standard 3% margin in 960,000 metric tons of coal at
the most conservative price of US$30,000 per metric ton, or the total
of US$864,000 which PHIBRO would have earned had it been
allowed to participate in biddings in which it was disqualified and in
subsequent tenders for supply and delivery of imported coal."
We find this to be erroneous.
Basic is the rule that to recover actual damages, the amount of loss must not
only be capable of proof but must actually be proven with reasonable degree
of certainty, premised upon competent proof or best evidence obtainable of
the actual amount thereof.42 A court cannot merely rely on speculations,
conjectures, or guesswork as to the fact and amount of damages. Thus, while
indemnification for damages shall comprehend not only the value of the loss
suffered, but also that of the profits which the obligee failed to obtain, 43 it is
imperative that the basis of the alleged unearned profits is not too speculative
and conjectural as to show the actual damages which may be suffered on a
future period.
In Pantranco North Express, Inc. v. Court of Appeals,44 this Court denied the
plaintiff's claim for actual damages which was premised on a contract he was
about to negotiate on the ground that there was still the requisite public
bidding to be complied with, thus:
"As to the alleged contract he was about to negotiate with Minister
Hipolito, there is no showing that the same has been awarded to him.
If Tandoc was about to negotiate a contract with Minister Hipolito,

there was no assurance that the former would get it or that the latter
would award the contract to him since there was the requisite public
bidding. The claimed loss of profit arising out of that alleged contract
which was still to be negotiated is a mere expectancy. Tandoc's claim
that he could have earned P2 million in profits is highly speculative
and no concrete evidence was presented to prove the same. The only
unearned income to which Tandoc is entitled to from the evidence
presented is that for the one-month period, during which his business
was interrupted, which is P6,125.00, considering that his annual net
income was P73,500.00."
In Lufthansa German Airlines v. Court of Appeals,45 this Court likewise
disallowed the trial court's award of actual damages for unrealized profits in
the amount of US$75,000.00 for being highly speculative. It was held that "the
realization of profits by respondent . . . was not a certainty, but depended on a
number of factors, foremost of which was his ability to invite investors and to
win the bid." This Court went further saying that actual or compensatory
damages cannot be presumed, but must be duly proved, and proved with
reasonable degree of certainty.
And in National Power Corporation v. Court of Appeals,46 the Court, in denying
the bidder's claim for unrealized commissions, ruled that even if NAPOCOR
does not deny its (bidder's) claims for unrealized commissions, and that these
claims have been transmuted into judicial admissions, these admissions
cannot prevail over the rules and regulations governing the bidding for
NAPOCOR contracts, which necessarily and inherently include the reservation
by the NAPOCOR of its right to reject any or all bids.
The award of moral damages is likewise improper. To reiterate, NAPOCOR did
not act in bad faith. Moreover, moral damages are not, as a general rule,
granted to a corporation.47 While it is true that besmirched reputation is
included in moral damages, it cannot cause mental anguish to a corporation,
unlike in the case of a natural person, for a corporation has no reputation in
the sense that an individual has, and besides, it is inherently impossible for a

corporation to suffer mental anguish.48 In LBC Express, Inc. v. Court of

Appeals,49 we ruled:
"Moral damages are granted in recompense for physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury. A
corporation, being an artificial person and having existence only in
legal contemplation, has no feelings, no emotions, no senses;
therefore, it cannot experience physical suffering and mental anguish.
Mental suffering can be experienced only by one having a nervous
system and it flows from real ills, sorrows, and griefs of life all of
which cannot be suffered by respondent bank as an artificial person."
Neither can we award exemplary damages under Article 2234 of the Civil
Code. Before the court may consider the question of whether or not exemplary
damages should be awarded, the plaintiff must show that he is entitled to
moral, temperate, or compensatory damages.
NAPOCOR, in this petition, likewise contests the judgment of the lower courts
awarding PHIBRO the amount of $73,231.91 as reimbursement for expenses,
cost of litigation and attorney's fees.
We agree with NAPOCOR.
This Court has laid down the rule that in the absence of stipulation, a winning
party may be awarded attorney's fees only in case plaintiff's action or
defendant's stand is so untenable as to amount to gross and evident bad
faith.50 This cannot be said of the case at bar. NAPOCOR is justified in
resisting PHIBRO's claim for damages. As a matter of fact, we partially grant
the prayer of NAPOCOR as we find that it did not act in bad faith in
disapproving PHIBRO's pre-qualification to bid.
Trial courts must be reminded that attorney's fees may not be awarded to a
party simply because the judgment is favorable to him, for it may amount to

imposing a premium on the right to redress grievances in court. We adopt the

same policy with respect to the expenses of litigation. A winning party may be
entitled to expenses of litigation only where he, by reason of plaintiff's clearly
unjustifiable claims or defendant's unreasonable refusal to his demands, was
compelled to incur said expenditures. Evidently, the facts of this case do not
warrant the granting of such litigation expenses to PHIBRO.
At this point, we believe that, in the interest of fairness, NAPOCOR should
give PHIBRO another opportunity to participate in future public bidding. As
earlier mentioned, the delay on its part was due to a fortuitous event.
But before we dispose of this case, we take this occasion to remind PHIBRO
of the indispensability of coal to a coal-fired thermal plant. With households
and businesses being entirely dependent on the electricity supplied by
NAPOCOR, the delivery of coal cannot be venturesome. Indeed, public
interest demands that one who offers to deliver coal at an appointed time must
give a reasonable assurance that it can carry through. With the deleterious
possible consequences that may result from failure to deliver the needed coal,
we believe there is greater strain of commitment in this kind of obligation.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No.
126204 dated August 27, 1996 is hereby MODIFIED. The award, in favor of
PHIBRO, of actual, moral and exemplary damages, reimbursement for
expenses, cost of litigation and attorney's fees, and costs of suit, is DELETED.
SO ORDERED.

G.R. No. 143958

July 11, 2003

ALFRED FRITZ FRENZEL, petitioner,

vs.
EDERLINA P. CATITO, respondent.
CALLEJO, SR., J.:
Before us is a petition for review of the Decision 1 of the Court of Appeals in
CA-G.R. CV No. 53485 which affirmed the Decision 2 of the Regional Trial
Court of Davao City, Branch 14, in Civil Case No. 17,817 dismissing the
petitioner's complaint, and the resolution of the Court of Appeals denying his
motion for reconsideration of the said decision.
The Antecedents3
As gleaned from the evidence of the petitioner, the case at bar stemmed from
the following factual backdrop:
Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He is
an electrical engineer by profession, but worked as a pilot with the New
Guinea Airlines. He arrived in the Philippines in 1974, started engaging in
business in the country two years thereafter, and married Teresita Santos, a
Filipino citizen. In 1981, Alfred and Teresita separated from bed and board
without obtaining a divorce.
Sometime in February 1983, Alfred arrived in Sydney, Australia for a vacation.
He went to King's Cross, a night spot in Sydney, for a massage where he met
Ederlina Catito, a Filipina and a native of Bajada, Davao City. Unknown to
Alfred, she resided for a time in Germany and was married to Klaus Muller, a
German national. She left Germany and tried her luck in Sydney, Australia,
where she found employment as a masseuse in the King's Cross nightclub.
She was fluent in German, and Alfred enjoyed talking with her. The two saw
each other again; this time Ederlina ended up staying in Alfred's hotel for three
days. Alfred gave Ederlina sums of money for her services. 4

Alfred was so enamored with Ederlina that he persuaded her to stop working
at King's Cross, return to the Philippines, and engage in a wholesome
business of her own. He also proposed that they meet in Manila, to which she
assented. Alfred gave her money for her plane fare to the Philippines. Within
two weeks of Ederlina's arrival in Manila, Alfred joined her. Alfred reiterated his
proposal for Ederlina to stay in the Philippines and engage in business, even
offering to finance her business venture. Ederlina was delighted at the idea
and proposed to put up a beauty parlor. Alfred happily agreed.
Alfred told Ederlina that he was married but that he was eager to divorce his
wife in Australia. Alfred proposed marriage to Ederlina, but she replied that
they should wait a little bit longer.
Ederlina found a building at No. 444 M.H. del Pilar corner Arquiza Street,
Ermita, Manila, owned by one Atty. Jose Hidalgo who offered to convey his
rights over the property for P18,000.00. Alfred and Ederlina accepted the offer.
Ederlina put up a beauty parlor on the property under the business name
Edorial Beauty Salon, and had it registered with the Department of Trade and
Industry under her name. Alfred paid Atty. Hidalgo P20,000.00 for his right
over the property and gave P300,000.00 to Ederlina for the purchase of
equipment and furniture for the parlor. As Ederlina was going to Germany, she
executed a special power of attorney on December 13, 1983 5appointing her
brother, Aser Catito, as her attorney-in-fact in managing the beauty parlor
business. She stated in the said deed that she was married to Klaus Muller.
Alfred went back to Papua New Guinea to resume his work as a pilot.
When Alfred returned to the Philippines, he visited Ederlina in her Manila
residence and found it unsuitable for her. He decided to purchase a house and
lot owned by Victoria Binuya Steckel in San Francisco del Monte, Quezon
City, covered by Transfer Certificate of Title No. 218429 for US$20,000.00.
Since Alfred knew that as an alien he was disqualified from owning lands in
the Philippines, he agreed that only Ederlina's name would appear in the deed
of sale as the buyer of the property, as well as in the title covering the same.
After all, he was planning to marry Ederlina and he believed that after their

marriage, the two of them would jointly own the property. On January 23,
1984, a Contract to Sell was entered into between Victoria Binuya Steckel as
the vendor and Ederlina as the sole vendee. Alfred signed therein as a
witness.6 Victoria received from Alfred, for and in behalf of Ederlina, the
amount of US$10,000.00 as partial payment, for which Victoria issued a
receipt.7 When Victoria executed the deed of absolute sale over the property
on March 6, 1984,8 she received from Alfred, for and in behalf of Ederlina, the
amount of US$10,000.00 as final and full payment. Victoria likewise issued a
receipt for the said amount.9 After Victoria had vacated the property, Ederlina
moved into her new house. When she left for Germany to visit Klaus, she had
her father Narciso Catito and her two sisters occupy the property.
Alfred decided to stay in the Philippines for good and live with Ederlina. He
returned to Australia and sold his fiber glass pleasure boat to John Reid for
$7,500.00 on May 4, 1984.10 He also sold his television and video business in
Papua New Guinea for K135,000.00 to Tekeraoi Pty. Ltd. 11 He had his
personal properties shipped to the Philippines and stored at No. 14 Fernandez
Street, San Francisco del Monte, Quezon City. The proceeds of the sale were
deposited in Alfred's account with the Hong Kong Shanghai Banking
Corporation (HSBC), Kowloon Branch under Bank Account No. 018-2807016.12 When Alfred was in Papua New Guinea selling his other properties,
the bank sent telegraphic letters updating him of his account. 13 Several checks
were credited to his HSBC bank account from Papua New Guinea Banking
Corporation, Westpac Bank of Australia and New Zealand Banking Group
Limited and Westpac Bank-PNG-Limited. Alfred also had a peso savings
account with HSBC, Manila, under Savings Account No. 01-725-183-01. 14
Once, when Alfred and Ederlina were in Hong Kong, they opened another
account with HSBC, Kowloon, this time in the name of Ederlina, under
Savings Account No. 018-0-807950.15 Alfred transferred his deposits in
Savings Account No. 018-2-807016 with the said bank to this new account.
Ederlina also opened a savings account with the Bank of America Kowloon
Main Office under Account No. 30069016.16

On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter
dated December 7, 1983 from Klaus Muller who was then residing in Berlin,
Germany. Klaus informed Alfred that he and Ederlina had been married on
October 16, 1978 and had a blissful married life until Alfred intruded therein.
Klaus stated that he knew of Alfred and Ederlina's amorous relationship, and
discovered the same sometime in November 1983 when he arrived in Manila.
He also begged Alfred to leave Ederlina alone and to return her to him, saying
that Alfred could not possibly build his future on his (Klaus') misfortune. 17
Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He
inquired if there was any truth to Klaus' statements and Sally confirmed that
Klaus was married to Ederlina. When Alfred confronted Ederlina, she admitted
that she and Klaus were, indeed, married. But she assured Alfred that she
would divorce Klaus. Alfred was appeased. He agreed to continue the
amorous relationship and wait for the outcome of Ederlina's petition for
divorce. After all, he intended to marry her. He retained the services of
Rechtsanwaltin Banzhaf with offices in Berlin, as her counsel who informed
her of the progress of the proceedings.18 Alfred paid for the services of the
lawyer.
In the meantime, Alfred decided to purchase another house and lot, owned by
Rodolfo Morelos covered by TCT No. 92456 located in Pea Street, Bajada,
Davao City.19 Alfred again agreed to have the deed of sale made out in the
name of Ederlina. On September 7, 1984, Rodolfo Morelos executed a deed
of absolute sale over the said property in favor of Ederlina as the sole vendee
for the amount of P80,000.00.20 Alfred paid US$12,500.00 for the property.
Alfred purchased another parcel of land from one Atty. Mardoecheo
Camporedondo, located in Moncado, Babak, Davao, covered by TCT No.
35251. Alfred once more agreed for the name of Ederlina to appear as the
sole vendee in the deed of sale. On December 31, 1984, Atty. Camporedondo
executed a deed of sale over the property for P65,000.00 in favor of Ederlina
as the sole vendee.21 Alfred, through Ederlina, paid the lot at the cost of
P33,682.00 and US$7,000.00, respectively, for which the vendor signed

receipts.22 On August 14, 1985, TCT No. 47246 was issued to Ederlina as the
sole owner of the said property.23
Meanwhile, Ederlina deposited on December 27, 1985, the total amount of
US$250,000 with the HSBC Kowloon under Joint Deposit Account No. 018462341-145.24
The couple decided to put up a beach resort on a four-hectare land in
Camudmud, Babak, Davao, owned by spouses Enrique and Rosela Serrano.
Alfred purchased the property from the spouses for P90,000.00, and the latter
issued a receipt therefor.25 A draftsman commissioned by the couple submitted
a sketch of the beach resort.26 Beach houses were forthwith constructed on a
portion of the property and were eventually rented out by Ederlina's father,
Narciso Catito. The rentals were collected by Narciso, while Ederlina kept the
proceeds of the sale of copra from the coconut trees in the property. By this
time, Alfred had already spent P200,000.00 for the purchase, construction and
upkeep of the property.
Ederlina often wrote letters to her family informing them of her life with Alfred.
In a Letter dated January 21, 1985, she wrote about how Alfred had financed
the purchases of some real properties, the establishment of her beauty parlor
business, and her petition to divorce Klaus. 27
Because Ederlina was preoccupied with her business in Manila, she executed
on July 8, 1985, two special powers of attorney 28 appointing Alfred as attorneyin-fact to receive in her behalf the title and the deed of sale over the property
sold by the spouses Enrique Serrano.
In the meantime, Ederlina's petition for divorce was denied because Klaus
opposed the same. A second petition filed by her met the same fate. Klaus
wanted half of all the properties owned by Ederlina in the Philippines before he
would agree to a divorce. Worse, Klaus threatened to file a bigamy case
against Ederlina.29

Alfred proposed the creation of a partnership to Ederlina, or as an alternative,

the establishment of a corporation, with Ederlina owning 30% of the equity
thereof. She initially agreed to put up a corporation and contacted Atty.
Armando Dominguez to prepare the necessary documents. Ederlina changed
her mind at the last minute when she was advised to insist on claiming
ownership over the properties acquired by them during their coverture.
Alfred and Ederlina's relationship started deteriorating. Ederlina had not been
able to secure a divorce from Klaus. The latter could charge her for bigamy
and could even involve Alfred, who himself was still married. To avoid
complications, Alfred decided to live separately from Ederlina and cut off all
contacts with her. In one of her letters to Alfred, Ederlina complained that he
had ruined her life. She admitted that the money used for the purchase of the
properties in Davao were his. She offered to convey the properties deeded to
her by Atty. Mardoecheo Camporedondo and Rodolfo Morelos, asking Alfred
to prepare her affidavit for the said purpose and send it to her for her
signature.30 The last straw for Alfred came on September 2, 1985, when
someone smashed the front and rear windshields of Alfred's car and damaged
the windows. Alfred thereafter executed an affidavit-complaint charging
Ederlina and Sally MacCarron with malicious mischief. 31
On October 15, 1985, Alfred wrote to Ederlina's father, complaining that
Ederlina had taken all his life savings and because of this, he was virtually
penniless. He further accused the Catito family of acquiring for themselves the
properties he had purchased with his own money. He demanded the return of
all the amounts that Ederlina and her family had "stolen" and turn over all the
properties acquired by him and Ederlina during their coverture. 32
Shortly thereafter, Alfred filed a Complaint33 dated October 28, 1985, against
Ederlina, with the Regional Trial Court of Quezon City, for recovery of real and
personal properties located in Quezon City and Manila. In his complaint, Alfred
alleged, inter alia, that Ederlina, without his knowledge and consent, managed
to transfer funds from their joint account in HSBC Hong Kong, to her own
account with the same bank. Using the said funds, Ederlina was able to

purchase the properties subject of the complaints. He also alleged that the
beauty parlor in Ermita was established with his own funds, and that the
Quezon City property was likewise acquired by him with his personal funds. 34
Ederlina failed to file her answer and was declared in default. Alfred adduced
his evidence ex parte.
35

In the meantime, on November 7, 1985, Alfred also filed a complaint against

Ederlina with the Regional Trial Court, Davao City, for specific performance,
declaration of ownership of real and personal properties, sum of money, and
damages. He alleged, inter alia, in his complaint:
4. That during the period of their common-law relationship, plaintiff
solely through his own efforts and resources acquired in the
Philippines real and personal properties valued more or less at
P724,000.00; The defendant's common-law wife or live-in partner did
not contribute anything financially to the acquisition of the said real
and personal properties. These properties are as follows:
I. Real Properties
a. TCT No. T-92456 located at Bajada, Davao City, consisting
of 286 square meters, (with residential house) registered in
the name of the original title owner Rodolfo M. Morelos but
already fully paid by plaintiff. Valued at P342,000.00;
b. TCT No. T-47246 (with residential house) located at Babak,
Samal, Davao, consisting of 600 square meters, registered in
the name of Ederlina Catito, with the Register of Deeds of
Tagum, Davao del Norte valued at P144,000.00;
c. A parcel of agricultural land located at Camudmud, Babak,
Samal, Davao del Norte, consisting of 4.2936 hectares
purchased from Enrique Serrano and Rosela B. Serrano.
Already paid in full by plaintiff. Valued at P228,608.32;

II. Personal Properties:

a. Furniture valued at P10,000.00.
...
5. That defendant made no contribution at all to the acquisition, of the
above-mentioned properties as all the monies (sic) used in acquiring
said properties belonged solely to plaintiff; 36
Alfred prayed that after hearing, judgment be rendered in his favor:
WHEREFORE, in view of the foregoing premises, it is respectfully
prayed that judgment be rendered in favor of plaintiff and against
defendant:
a) Ordering the defendant to execute the corresponding deeds of
transfer and/or conveyances in favor of plaintiff over those real and
personal properties enumerated in Paragraph 4 of this complaint;
b) Ordering the defendant to deliver to the plaintiff all the above real
and personal properties or their money value, which are in
defendant's name and custody because these were acquired solely
with plaintiffs money and resources during the duration of the
common-law relationship between plaintiff and defendant, the
description of which are as follows:
(1) TCT No. T-92456 (with residential house) located at
Bajada, Davao City, consisting of 286 square meters,
registered in the name of the original title owner Rodolfo
Morelos but already fully paid by plaintiff. Valued at
P342,000.00;
(2) TCT No. T-47246 (with residential house) located at
Babak, Samal, Davao, consisting of 600 square meters,

registered in the name of Ederlina Catito, with the Register of

Deeds of Tagum, Davao del Norte, valued at P144,000.00;
(3) A parcel of agricultural land located at Camudmud, Babak,
Samal, Davao del Norte, consisting of 4.2936 hectares
purchased from Enrique Serrano and Rosela B. Serrano.
Already fully paid by plaintiff. Valued at P228,608.32;
c) Declaring the plaintiff to be the sole and absolute owner of the
above-mentioned real and personal properties;
d) Awarding moral damages to plaintiff in an amount deemed
reasonable by the trial court;
e) To reimburse plaintiff the sum of P12,000.00 as attorney's fees for
having compelled the plaintiff to litigate;
f) To reimburse plaintiff the sum of P5,000.00 incurred as litigation
expenses also for having compelled the plaintiff to litigate; and
g) To pay the costs of this suit;
Plaintiff prays other reliefs just and equitable in the premises. 37
In her answer, Ederlina denied all the material allegations in the complaint,
insisting that she acquired the said properties with her personal funds, and as
such, Alfred had no right to the same. She alleged that the deeds of sale, the
receipts, and certificates of titles of the subject properties were all made out in
her name.38 By way of special and affirmative defense, she alleged that Alfred
had no cause of action against her. She interposed counterclaims against the
petitioner.39

In the meantime, the petitioner filed a Complaint dated August 25, 1987,
against the HSBC in the Regional Trial Court of Davao City 40 for recovery of
bank deposits and damages.41 He prayed that after due proceedings,
judgment be rendered in his favor, thus:
WHEREFORE, plaintiff respectfully prays that the Honorable Court
adjudge defendant bank, upon hearing the evidence that the parties
might present, to pay plaintiff:
1. ONE HUNDRED TWENTY SIX THOUSAND TWO HUNDRED AND
THIRTY U.S. DOLLARS AND NINETY EIGHT CENTS
(US$126,230.98) plus legal interests, either of Hong Kong or of the
Philippines, from 20 December 1984 up to the date of execution or
satisfaction of judgment, as actual damages or in restoration of
plaintiffs lost dollar savings;
2. The same amount in (1) above as moral damages;
3. Attorney's fees in the amount equivalent to TWENTY FIVE PER
CENT (25%) of (1) and (2) above;
4. Litigation expenses in the amount equivalent to TEN PER CENT
(10%) of the amount in (1) above; and
5. For such other reliefs as are just and equitable under the
circumstances.42
On April 28, 1986, the RTC of Quezon City rendered its decision in Civil Case
No. Q-46350, in favor of Alfred, the decretal portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered
ordering the defendant to perform the following:
(1) To execute a document waiving her claim to the house and lot in
No. 14 Fernandez St., San Francisco Del Monte, Quezon City in favor

of plaintiff or to return to the plaintiff the acquisition cost of the same in

the amount of $20,000.00, or to sell the said property and turn over
the proceeds thereof to the plaintiff;

(1) "Sony" Beta-Movie camera

(2) To deliver to the plaintiff the rights of ownership and management

of the beauty parlor located at 444 Arquiza St., Ermita, Manila,
including the equipment and fixtures therein;

(1) Cardboard box with belongings

(3) To account for the earnings of rental of the house and lot in No. 14
Fernandez St., San Francisco Del Monte, Quezon City, as well as the
earnings in the beauty parlor at 444 Arquiza St., Ermita, Manila and
turn over one-half of the net earnings of both properties to the plaintiff;

(1) Hanger with men's suit (white)."

(4) To surrender or return to the plaintiff the personal properties of the

latter left in the house at San Francisco Del Monte, to wit:
"(1) Mamya automatic camera
(1) 12 inch "Sonny" T.V. set, colored with remote control.
(1) Micro oven
(1) Electric fan (tall, adjustable stand)
(1) Office safe with (2) drawers and safe

(1) Suitcase with personal belongings

(1) Guitar Amplifier

To return to the plaintiff, (1) Hi-Fi Stereo equipment left at 444 Arquiza
Street, Ermita, Manila, as well as the Fronte Suzuki car.
(4) To account for the monies (sic) deposited with the joint account of
the plaintiff and defendant (Account No. 018-0-807950); and to
restore to the plaintiff all the monies (sic) spent by the defendant
without proper authority;
(5) To pay the amount of P5,000.00 by way of attorney's fees, and the
costs of suit.
SO ORDERED.43
However, after due proceedings in the RTC of Davao City, in Civil Case No.
17,817, the trial court rendered judgment on September 28, 1995 in favor of
Ederlina, the dispositive portion of which reads:

(1) Electric Washing Machine

(1) Office desk and chair

WHEREFORE, the Court cannot give due course to the complaint and
hereby orders its dismissal. The counterclaims of the defendant are
likewise dismissed.

(1) Double bed suits

SO ORDERED.44
(1) Mirror/dresser
(1) Heavy duty voice/working mechanic

The trial court ruled that based on documentary evidence, the purchaser of the
three parcels of land subject of the complaint was Ederlina. The court further

stated that even if Alfred was the buyer of the properties; he had no cause of
action against Ederlina for the recovery of the same because as an alien, he
was disqualified from acquiring and owning lands in the Philippines. The sale
of the three parcels of land to the petitioner was null and void ab initio.
Applying the pari delicto doctrine, the petitioner was precluded from recovering
the properties from the respondent.
45

Alfred appealed the decision to the Court of Appeals in which the petitioner
posited the view that although he prayed in his complaint in the court a
quo that he be declared the owner of the three parcels of land, he had no
intention of owning the same permanently. His principal intention therein was
to be declared the transient owner for the purpose of selling the properties at
public auction, ultimately enabling him to recover the money he had spent for
the purchase thereof.
On March 8, 2000, the CA rendered a decision affirming in toto the decision of
the RTC. The appellate court ruled that the petitioner knowingly violated the
Constitution; hence, was barred from recovering the money used in the
purchase of the three parcels of land. It held that to allow the petitioner to
recover the money used for the purchase of the properties would embolden
aliens to violate the Constitution, and defeat, rather than enhance, the public
policy.46
Hence, the petition at bar.
The petitioner assails the decision of the court contending that:
THE HONORABLE COURT OF APPEALS ERRED IN APPLYING
THE RULE OF IN PARI DELICTO IN THE INSTANT CASE BECAUSE
BY THE FACTS AS NARRATED IN THE DECISION IT IS APPARENT
THAT THE PARTIES ARE NOT EQUALLY GUILTY BUT RATHER IT
WAS THE RESPONDENT WHO EMPLOYED FRAUD AS WHEN
SHE DID NOT INFORM PETITIONER THAT SHE WAS ALREADY
MARRIED TO ANOTHER GERMAN NATIONAL AND WITHOUT

SUCH FRAUDULENT DESIGN PETITIONER COULD NOT HAVE

PARTED WITH HIS MONEY FOR THE PURCHASE OF THE
PROPERTIES.47
and
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING
THAT THE INTENTION OF THE PETITIONER IS NOT TO OWN
REAL PROPERTIES IN THE PHILIPPINES BUT TO SELL THEM AT
PUBLIC AUCTION TO BE ABLE TO RECOVER HIS MONEY USED
IN PURCHASING THEM.48
Since the assignment of errors are intertwined with each other, the Court shall
resolve the same simultaneously.
The petitioner contends that he purchased the three parcels of land subject of
his complaint because of his desire to marry the respondent, and not to violate
the Philippine Constitution. He was, however, deceived by the respondent
when the latter failed to disclose her previous marriage to Klaus Muller. It
cannot, thus, be said that he and the respondent are "equally guilty;" as such,
the pari delicto doctrine is not applicable to him. He acted in good faith, on the
advice of the respondent's uncle, Atty. Mardoecheo Camporedondo. There is
no evidence on record that he was aware of the constitutional prohibition
against aliens acquiring real property in the Philippines when he purchased
the real properties subject of his complaint with his own funds. The
transactions were not illegal per se but merely prohibited, and under Article
1416 of the New Civil Code, he is entitled to recover the money used for the
purchase of the properties. At any rate, the petitioner avers, he filed his
complaint in the courta quo merely for the purpose of having him declared as
the owner of the properties, to enable him to sell the same at public auction.
Applying by analogy Republic Act No. 133 49 as amended by Rep. Act No. 4381
and Rep. Act No. 4882, the proceeds of the sale would be remitted to him, by
way of refund for the money he used to purchase the said properties. To bar
the petitioner from recovering the subject properties, or at the very least, the

money used for the purchase thereof, is to allow the respondent to enrich
herself at the expense of the petitioner in violation of Article 22 of the New Civil
Code.
The petition is bereft of merit.
Section 14, Article XIV of the 1973 Constitution provides, as follows:
Save in cases of hereditary succession, no private land shall be
transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands in the public domain. 50
Lands of the public domain, which include private lands, may be transferred or
conveyed only to individuals or entities qualified to acquire or hold private
lands or lands of the public domain. Aliens, whether individuals or
corporations, have been disqualified from acquiring lands of the public
domain. Hence, they have also been disqualified from acquiring private
lands.51
Even if, as claimed by the petitioner, the sales in question were entered into by
him as the real vendee, the said transactions are in violation of the
Constitution; hence, are null and void ab initio.52 A contract that violates the
Constitution and the law, is null and void and vests no rights and creates no
obligations. It produces no legal effect at all. 53 The petitioner, being a party to
an illegal contract, cannot come into a court of law and ask to have his illegal
objective carried out. One who loses his money or property by knowingly
engaging in a contract or transaction which involves his own moral turpitude
may not maintain an action for his losses. To him who moves in deliberation
and premeditation, the law is unyielding. 54 The law will not aid either party to
an illegal contract or agreement; it leaves the parties where it finds
them.55 Under Article 1412 of the New Civil Code, the petitioner cannot have
the subject properties deeded to him or allow him to recover the money he
had spent for the purchase thereof.56 Equity as a rule will follow the law and
will not permit that to be done indirectly which, because of public policy,

cannot be done directly.57 Where the wrong of one party equals that of the
other, the defendant is in the stronger position . . . it signifies that in such a
situation, neither a court of equity nor a court of law will administer a
remedy.58 The rule is expressed. in the maxims: EX DOLO ORITUR
ACTIO and IN PARI DELICTO POTIOR EST CONDITIO DEFENDENTIS.59
The petitioner cannot feign ignorance of the constitutional proscription, nor
claim that he acted in good faith, let alone assert that he is less guilty than the
respondent. The petitioner is charged with knowledge of the constitutional
prohibition.60 As can be gleaned from the decision of the trial court, the
petitioner was fully aware that he was disqualified from acquiring and owning
lands under Philippine law even before he purchased the properties in
question; and, to skirt the constitutional prohibition, the petitioner had the deed
of sale placed under the respondent's name as the sole vendee thereof:
Such being the case, the plaintiff is subject to the constitutional
restrictions governing the acquisition of real properties in the
Philippines by aliens.
From the plaintiff's complaint before the Regional Trial Court, National
Capital Judicial Region, Branch 84, Quezon City in Civil Case No. Q46350 he alleged:
x x x "That on account that foreigners are not allowed by the
Philippine laws to acquire real properties in their name as in
the case of my vendor Miss Victoria Vinuya (sic) although
married to a foreigner, we agreed and I consented in having
the title to subject property placed in defendant's name alone
although I paid for the whole price out of my own exclusive
funds." (paragraph IV, Exhibit "W.")
and his testimony before this Court which is hereby quoted:
ATTY. ABARQUEZ:

Q.
In whose name the said house and lot placed, by the way,
where is his house and lot located?
A.

In 14 Fernandez St., San Francisco, del Monte, Manila.

Q.

In whose name was the house placed?

A.
Ederlina Catito because I was informed being not a Filipino, I
cannot own the property. (tsn, p. 11, August 27, 1986).
xxx

xxx

xxx

COURT:
Q.
So you understand that you are a foreigner that you cannot
buy land in the Philippines?
A.
That is correct but as she would eventually be my wife that
would be owned by us later on. (tsn, p. 5, September 3, 1986)
xxx

xxx

xxx

The petitioner's claim that he acquired the subject properties because of his
desire to marry the respondent, believing that both of them would thereafter
jointly own the said properties, is belied by his own evidence. It is merely an
afterthought to salvage a lost cause. The petitioner admitted on crossexamination that he was all along legally married to Teresita Santos Frenzel,
while he was having an amorous relationship with the respondent:
ATTY. YAP:
Q
When you were asked to identify yourself on direct
examination you claimed before this Honorable Court that your status
is that of being married, do you confirm that?
A

Yes, sir.

To whom are you married?

To a Filipina, since 1976.

Q
Would you tell us who is that particular person you are married
since 1976?

Q.

What happened after that?

Teresita Santos Frenzel.

A.

She said you foreigner you are using Filipinos to buy property.

Where is she now?

Q.

And what did you answer?

In Australia.

A:
I said thank you very much for the property I bought because I
gave you a lot of money (tsn., p. 14,ibid).
It is evident that the plaintiff was fully aware that as a non-citizen of the
Philippines, he was disqualified from validly purchasing any land within the
country.61

Q
Is this not the person of Teresita Frenzel who became an
Australian citizen?
A

I am not sure, since 1981 we were separated.

You were only separated, in fact, but not legally separated?

Thru my counsel in Australia I filed a separation case.

As of the present you are not legally divorce[d]?

I am still legally married.62

The respondent was herself married to Klaus Muller, a German citizen. Thus,
the petitioner and the respondent could not lawfully join in wedlock. The
evidence on record shows that the petitioner in fact knew of the respondent's
marriage to another man, but nonetheless purchased the subject properties
under the name of the respondent and paid the purchase prices therefor. Even
if it is assumed gratia arguendi that the respondent and the petitioner were
capacitated to marry, the petitioner is still disqualified to own the properties in
tandem with the respondent.63
The petitioner cannot find solace in Article 1416 of the New Civil Code which
reads:
Art. 1416. When the agreement is not illegal per se but is merely
prohibited, and the prohibition by the law is designed for the protection
of the plaintiff, he may, if public policy is thereby enhanced, recover
what he has paid or delivered.64
The provision applies only to those contracts which are merely prohibited, in
order to benefit private interests. It does not apply to contracts void ab initio.
The sales of three parcels of land in favor of the petitioner who is a foreigner is
illegal per se. The transactions are void ab initio because they were entered
into in violation of the Constitution. Thus, to allow the petitioner to recover the
properties or the money used in the purchase of the parcels of land would be
subversive of public policy.
Neither may the petitioner find solace in Rep. Act No. 133, as amended by
Rep. Act No. 4882, which reads:

SEC. 1. Any provision of law to the contrary notwithstanding, private

real property may be mortgaged in favor of any individual, corporation,
or association, but the mortgagee or his successor-in-interest, if
disqualified to acquire or hold lands of the public domain in the
Philippines, shall not take possession of the mortgaged property
during the existence of the mortgage and shall not take possession of
mortgaged property except after default and for the sole purpose of
foreclosure, receivership, enforcement or other proceedings and in no
case for a period of more than five years from actual possession and
shall not bid or take part in any sale of such real property in case of
foreclosure: Provided, That said mortgagee or successor-in-interest
may take possession of said property after default in accordance with
the prescribed judicial procedures for foreclosure and receivership
and in no case exceeding five years from actual possession. 65
From the evidence on record, the three parcels of land subject of the
complaint were not mortgaged to the petitioner by the owners thereof but
were sold to the respondent as the vendee, albeit with the use of the
petitioner's personal funds.
Futile, too, is petitioner's reliance on Article 22 of the New Civil Code which
reads:
Art. 22. Every person who through an act of performance by another,
or any other means, acquires or comes into possession of something
at the expense of the latter without just or legal ground, shall return
the same to him.66
The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER
DETREMENTO PROTEST" (No person should unjustly enrich himself at the
expense of another). An action for recovery of what has been paid without just
cause has been designated as an accion in rem verso.67 This provision does
not apply if, as in this case, the action is proscribed by the Constitution or by
the application of the pari delicto doctrine. 68 It may be unfair and unjust to

bar the petitioner from filing an accion in rem verso over the subject
properties, or from recovering the money he paid for the said properties, but,
as Lord Mansfield stated in the early case of Holman vs. Johnson:69"The
objection that a contract is immoral or illegal as between the plaintiff and the
defendant, sounds at all times very ill in the mouth of the defendant. It is not
for his sake, however, that the objection is ever allowed; but it is founded in
general principles of policy, which the defendant has the advantage of,
contrary to the real justice, as between him and the plaintiff."
IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The
decision of the Court of Appeals is AFFIRMED in toto.
Costs against the petitioner.
SO ORDERED.

G.R. No. 134241

August 11, 2003

DAVID REYES (Substituted by Victoria R. Fabella), petitioner,

vs.
JOSE LIM, CHUY CHENG KENG and HARRISON LUMBER,
INC., respondents.
CARPIO, J.:
The Case
This is a petition for review on certiorari of the Decision1 dated 12 May 1998 of
the Court of Appeals in CA-G.R. SP No. 46224. The Court of Appeals
dismissed the petition for certiorari assailing the Orders dated 6 March 1997, 3
July 1997 and 3 October 1997 of the Regional Trial Court of Paranaque,
Branch 2602 ("trial court") in Civil Case No. 95-032.
The Facts
On 23 March 1995, petitioner David Reyes ("Reyes") filed before the trial court
a complaint for annulment of contract and damages against respondents Jose
Lim ("Lim"), Chuy Cheng Keng ("Keng") and Harrison Lumber, Inc. ("Harrison
Lumber").
The complaint3 alleged that on 7 November 1994, Reyes as seller and Lim as
buyer entered into a contract to sell ("Contract to Sell") a parcel of land
("Property") located along F.B. Harrison Street, Pasay City. Harrison Lumber
occupied the Property as lessee with a monthly rental of P35,000. The
Contract to Sell provided for the following terms and conditions:
1. The total consideration for the purchase of the aforedescribed
parcel of land together with the perimeter walls found therein is
TWENTY EIGHT MILLION (P28,000,000.00) PESOS payable as
follows:

(a) TEN MILLION (P10,000,000.00) PESOS upon signing of this

Contract to Sell;
(b) The balance of EIGHTEEN MILLION (P18,000,000.00) PESOS
shall be paid on or before March 8, 1995 at 9:30 A.M. at a bank to be
designated by the Buyer but upon the complete vacation of all the
tenants or occupants of the property and execution of the Deed of
Absolute Sale. However, if the tenants or occupants have vacated the
premises earlier than March 8, 1995, the VENDOR shall give the
VENDEE at least one week advance notice for the payment of the
balance and execution of the Deed of Absolute Sale.
2. That in the event, the tenants or occupants of the premises subject
of this sale shall not vacate the premises on March 8, 1995 as stated
above, the VENDEE shall withhold the payment of the balance of
P18,000,000.00 and the VENDOR agrees to pay a penalty of Four
percent (4%) per month to the herein VENDEE based on the amount
of the downpayment of TEN MILLION (P10,000,000.00) PESOS until
the complete vacation of the premises by the tenants therein. 4
The complaint claimed that Reyes had informed Harrison Lumber to vacate
the Property before the end of January 1995. Reyes also informed Keng 5 and
Harrison Lumber that if they failed to vacate by 8 March 1995, he would hold
them liable for the penalty of P400,000 a month as provided in the Contract to
Sell. The complaint further alleged that Lim connived with Harrison Lumber not
to vacate the Property until the P400,000 monthly penalty would have
accumulated and equaled the unpaid purchase price of P18,000,000.
On 3 May 1995, Keng and Harrison Lumber filed their Answer 6 denying they
connived with Lim to defraud Reyes. Keng and Harrison Lumber alleged that
Reyes approved their request for an extension of time to vacate the Property
due to their difficulty in finding a new location for their business. Harrison
Lumber claimed that as of March 1995, it had already started transferring
some of its merchandise to its new business location in Malabon. 7

On 31 May 1995, Lim filed his Answer8 stating that he was ready and willing to
pay the balance of the purchase price on or before 8 March 1995. Lim
requested a meeting with Reyes through the latters daughter on the signing of
the Deed of Absolute Sale and the payment of the balance but Reyes kept
postponing their meeting. On 9 March 1995, Reyes offered to return the P10
million down payment to Lim because Reyes was having problems in
removing the lessee from the Property. Lim rejected Reyes offer and
proceeded to verify the status of Reyes title to the Property. Lim learned that
Reyes had already sold the Property to Line One Foods Corporation ("Line
One") on 1 March 1995 for P16,782,840. After the registration of the Deed of
Absolute Sale, the Register of Deeds issued to Line One TCT No. 134767
covering the Property. Lim denied conniving with Keng and Harrison Lumber
to defraud Reyes.
On 2 November 1995, Reyes filed a Motion for Leave to File Amended
Complaint due to supervening facts. These included the filing by Lim of a
complaint for estafa against Reyes as well as an action for specific
performance and nullification of sale and title plus damages before another
trial court.9 The trial court granted the motion in an Order dated 23 November
1995.
In his Amended Answer dated 18 January 1996, 10 Lim prayed for the
cancellation of the Contract to Sell and for the issuance of a writ of preliminary
attachment against Reyes. The trial court denied the prayer for a writ of
preliminary attachment in an Order dated 7 October 1996.
On 6 March 1997, Lim requested in open court that Reyes be ordered to
deposit the P10 million down payment with the cashier of the Regional Trial
Court of Paraaque. The trial court granted this motion.
On 25 March 1997, Reyes filed a Motion to Set Aside the Order dated 6 March
1997 on the ground the Order practically granted the reliefs Lim prayed for in
his Amended Answer.11 The trial court denied Reyes motion in an
Order12 dated 3 July 1997. Citing Article 1385 of the Civil Code, the trial court

ruled that an action for rescission could prosper only if the party demanding
rescission can return whatever he may be obliged to restore should the court
grant the rescission.
The trial court denied Reyes Motion for Reconsideration in its Order 13 dated 3
October 1997. In the same order, the trial court directed Reyes to deposit the
P10 million down payment with the Clerk of Court on or before 30 October
1997.
On 8 December 1997, Reyes14 filed a Petition for Certiorari15 with the Court of
Appeals. Reyes prayed that the Orders of the trial court dated 6 March 1997, 3
July 1997 and 3 October 1997 be set aside for having been issued with grave
abuse of discretion amounting to lack of jurisdiction. On 12 May 1998, the
Court of Appeals dismissed the petition for lack of merit.
Hence, this petition for review.
The Ruling of the Court of Appeals
The Court of Appeals ruled the trial court could validly issue the assailed
orders in the exercise of its equity jurisdiction. The court may grant equitable
reliefs to breathe life and force to substantive law such as Article 1385 16 of the
Civil Code since the provisional remedies under the Rules of Court do not
apply to this case.
The Court of Appeals held the assailed orders merely directed Reyes to
deposit the P10 million to the custody of the trial court to protect the interest of
Lim who paid the amount to Reyes as down payment. This did not mean the
money would be returned automatically to Lim.
The Issues
Reyes raises the following issues:

1. Whether the Court of Appeals erred in holding the trial court could
issue the questioned Orders dated March 6, 1997, July 3, 1997 and
October 3, 1997, requiring petitioner David Reyes to deposit the
amount of Ten Million Pesos (P10,000,000.00) during the pendency of
the action, when deposit is not among the provisional remedies
enumerated in Rule 57 to 61 of the 1997 Rules on Civil Procedure.
2. Whether the Court of Appeals erred in finding the trial court could
issue the questioned Orders on grounds of equity when there is an
applicable law on the matter, that is, Rules 57 to 61 of the 1997 Rules
on Civil Procedure.17

make a ruling despite the "silence, obscurity or insufficiency of the laws." 21This
calls for the application of equity, 22 which "fills the open spaces in the law."23
Thus, the trial court in the exercise of its equity jurisdiction may validly order
the deposit of the P10 million down payment in court. The purpose of the
exercise of equity jurisdiction in this case is to prevent unjust enrichment and
to ensure restitution. Equity jurisdiction aims to do complete justice in cases
where a court of law is unable to adapt its judgments to the special
circumstances of a case because of the inflexibility of its statutory or legal
jurisdiction.24 Equity is the principle by which substantial justice may be
attained in cases where the prescribed or customary forms of ordinary law are
inadequate.25

The Courts Ruling

Reyes contentions are without merit.
Reyes points out that deposit is not among the provisional remedies
enumerated in the 1997 Rules of Civil Procedure. Reyes stresses the
enumeration in the Rules is exclusive. Not one of the provisional remedies in
Rules 57 to 6118 applies to this case. Reyes argues that a court cannot apply
equity and require deposit if the law already prescribes the specific provisional
remedies which do not include deposit. Reyes invokes the principle that equity
is "applied only in the absence of, and never against, statutory law or x x x
judicial rules of procedure."19Reyes adds the fact that the provisional remedies
do not include deposit is a matter of dura lex sed lex. 20
The instant case, however, is precisely one where there is a hiatus in the law
and in the Rules of Court. If left alone, the hiatus will result in unjust
enrichment to Reyes at the expense of Lim. The hiatus may also imperil
restitution, which is a precondition to the rescission of the Contract to Sell that
Reyes himself seeks. This is not a case of equity overruling a positive
provision of law or judicial rule for there is none that governs this particular
case. This is a case of silence or insufficiency of the law and the Rules of
Court. In this case, Article 9 of the Civil Code expressly mandates the courts to

Reyes is seeking rescission of the Contract to Sell. In his amended answer,

Lim is also seeking cancellation of the Contract to Sell. The trial court then
ordered Reyes to deposit in court the P10 million down payment that Lim
made under the Contract to Sell. Reyes admits receipt of the P10 million down
payment but opposes the order to deposit the amount in court. Reyes
contends that prior to a judgment annulling the Contract to Sell, he has the
"right to use, possess and enjoy"26 the P10 million as its "owner"27 unless the
court orders its preliminary attachment.28
To subscribe to Reyes contention will unjustly enrich Reyes at the expense of
Lim. Reyes sold to Line One the Property even before the balance of P18
million under the Contract to Sell with Lim became due on 8 March 1995. On 1
March 1995, Reyes signed a Deed of Absolute Sale 29 in favor of Line One. On
3 March 1995, the Register of Deeds issued TCT No. 134767 30 in the name of
Line One.31 Reyes cannot claim ownership of the P10 million down payment
because Reyes had already sold to another buyer the Property for which Lim
made the down payment. In fact, in his Comment 32 dated 20 March 1996,
Reyes reiterated his offer to return to Lim the P10 million down payment.
On balance, it is unreasonable and unjust for Reyes to object to the deposit of
the P10 million down payment. The application of equity always involves a

balancing of the equities in a particular case, a matter addressed to the sound

discretion of the court. Here, we find the equities weigh heavily in favor of Lim,
who paid the P10 million down payment in good faith only to discover later that
Reyes had subsequently sold the Property to another buyer.
In Eternal Gardens Memorial Parks Corp. v. IAC,33 this Court held the
plaintiff could not continue to benefit from the property or funds in litigation
during the pendency of the suit at the expense of whomever the court might
ultimately adjudge as the lawful owner. The Court declared:
In the case at bar, a careful analysis of the records will show that petitioner
admitted among others in its complaint in Interpleader that it is still obligated to
pay certain amounts to private respondent; that it claims no interest in such
amounts due and is willing to pay whoever is declared entitled to said
amounts. x x x
Under the circumstances, there appears to be no plausible reason for
petitioners objections to the deposit of the amounts in litigation after having
asked for the assistance of the lower court by filing a complaint for
interpleader where the deposit of aforesaid amounts is not only required by
the nature of the action but is a contractual obligation of the petitioner under
the Land Development Program (Rollo, p. 252).
There is also no plausible or justifiable reason for Reyes to object to the
deposit of the P10 million down payment in court. The Contract to Sell can no
longer be enforced because Reyes himself subsequently sold the Property to
Line One. Both Reyes and Lim are now seeking rescission of the Contract to
Sell. Under Article 1385 of the Civil Code, rescission creates the obligation to
return the things that are the object of the contract. Rescission is possible only
when the person demanding rescission can return whatever he may be
obliged to restore. A court of equity will not rescind a contract unless there is
restitution, that is, the parties are restored to the status quo ante. 34

Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot

refuse to deposit the P10 million down payment in court. 35 Such deposit will
ensure restitution of the P10 million to its rightful owner. Lim, on the other
hand, has nothing to refund, as he has not received anything under the
Contract to Sell.36
In Government of the Philippine Islands v. Wagner and Cleland
Wagner,37 the Court ruled the refund of amounts received under a contract is a
precondition to the rescission of the contract. The Court declared:
The Government, having asked for rescission, must restore to the
defendants whatever it has received under the contract. It will only be
just if, as a condition to rescission, the Government be required to
refund to the defendants an amount equal to the purchase price, plus
the sums expended by them in improving the land. (Civil Code, art.
1295.)
The principle that no person may unjustly enrich himself at the expense of
another is embodied in Article 2238 of the Civil Code. This principle applies not
only to substantive rights but also to procedural remedies. One condition for
invoking this principle is that the aggrieved party has no other action based on
contract, quasi-contract, crime, quasi-delict or any other provision of
law.39 Courts can extend this condition to the hiatus in the Rules of Court
where the aggrieved party, during the pendency of the case, has no other
recourse based on the provisional remedies of the Rules of Court.
Thus, a court may not permit a seller to retain, pendente lite, money paid by a
buyer if the seller himself seeks rescission of the sale because he has
subsequently sold the same property to another buyer. 40 By seeking
rescission, a seller necessarily offers to return what he has received from the
buyer. Such a seller may not take back his offer if the court deems it equitable,
to prevent unjust enrichment and ensure restitution, to put the money in
judicial deposit.

There is unjust enrichment when a person unjustly retains a benefit to the loss
of another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience. 41In this case, it
was just, equitable and proper for the trial court to order the deposit of the P10
million down payment to prevent unjust enrichment by Reyes at the expense
of Lim.42
WHEREFORE, we AFFIRM the Decision of the Court of Appeals.
SO ORDERED.

[G.R. No. 148332. September 30, 2003]

NATIONAL DEVELOPMENT COMPANY, petitioner, vs. MADRIGAL WAN
HAI LINES CORPORATION, respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari[1] assailing the Decision of
the Court of Appeals dated May 21, 2001 in CA-G.R. CV No. 66026, affirming
with modification the Decision dated August 6, 1999 of the Regional Trial
Court, Branch 62, Makati City, in Civil Case No. 96-558 for sum of money and
damages.
The factual antecedents are:

The Information Package likewise contained the Negotiated Sale

Guidelines which embodied the terms and conditions of the proposed
sale. Attached thereto is a Proposal Letter Form[6] wherein bidders were
advised to submit their bids to be specified in the same form. Petitioners
desired price for the NSCP shares of stock and the vessels was Twenty-Six
Million Seven Hundred Fifty Thousand US Dollars ($26,750,000.00). [7]
During the public bidding on May 7, 1993, the lone bidder was herein
respondent, Madrigal Wan Hai Lines Corporation, a domestic private
corporation duly organized and existing under the Philippine laws with
principal office in Manila.Mr. Willie J. Uy, respondents Consultant, submitted a
bid of $15 million through the Proposal Letter Form. [8]
The respondents bid was rejected by petitioner and the Commission on
Audit.

The National Development Company, petitioner, is a government-owned

and controlled corporation created and existing under Commonwealth Act No.
182, as amended by Presidential Decree No. 1648. The National Shipping
Corporation of the Philippines (NSCP) is a wholly-owned subsidiary of
petitioner offering shipping services for containerized cargo between the Far
East ports and the U.S. West Coast.[2]

But since there was no other bidder, petitioner entered into a negotiated
sale with respondent.[9] After several negotiations, respondent increased its
offer to $18.5 million which was accepted by petitioner. The negotiated sale
was then approved by petitioners Board of Directors on August 26, 1993, the
President of the Philippines on September 28, 1993, the Committee on
Privatization on October 7, 1993, and the Commission on Audit on February 2,
1994.[10]

On March 1, 1993, petitioners Board of Directors approved the

privatization plan of the NSCP. [3] In May 1993, the Board offered for sale to the
public its one hundred percent (100%) stock ownership in NSCP
worth P150,000.00, as well as its three (3) ocean-going vessels (M/V National
Honor, M/V National Pride and M/V National Dignity).[4]

Accordingly, on February 11, 1994, petitioner issued a Notice of Award to

respondent of the sale of the NSCP shares and vessels for $18.5 million.
[11]
On March 14, 1994, petitioner and respondent executed the
corresponding Contract of Sale,[12] and the latter acquired NSCP, its
assets, personnel, records and its three (3) vessels.[13]

Consequently, petitioner released to the public an Information

Package[5] containing NSCPs background, assets, operational and financial
status. Attached thereto is NSCPs Financial Statements covering the period
from December 1990 up to 1992.

On September 22, 1994, respondent was surprised to receive from

the US Department of Treasury, Internal Revenue Service (US IRS), a
Notice of Final Assessment against NSCP for deficiency taxes on gross

transportation income derived from US sources for the years ending

1990, 1991 and 1992.[14] The tax assessment was based on Section 887 of
the US Internal Revenue Code imposing a 4% tax on gross transportation
income of any foreign corporation derived from US sources. [15]
Anxious that the delay in the payment of the deficiency taxes may
hamper its shipping operations overseas, respondent, on October 14, 1994,
assumed and paid petitioners tax liabilities, including the tax due for the
year 1993, in the total amount of $671,653.00. These taxes were incurred
prior to respondents take-over of NSCPs management.[16] Respondent
likewise paid the additional amount of $16,533.10 as penalty for late
payment.[17]
Eventually, respondent demanded from petitioner reimbursement for the
amounts it paid to the US IRS. But petitioner refused despite repeated
demands. Hence, on March 20, 1996, respondent filed with the Regional Trial
Court (RTC), Branch 62, Makati City a complaint [18] against petitioner for
reimbursement and damages, docketed as Civil Case No. 96-558.
On August 6, 1999, the RTC rendered a Decision [19] in favor of
respondent and against petitioner. The trial court found, among others, that
even before the sale, petitioner knew that NSCP had tax liabilities with the US
IRS, yet it did not inform respondent about it. The dispositive portion of the
RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
(1) defendant (now petitioner) to pay plaintiff (now respondent), to wit:
a. US $671,653, US $14,415.87, and US $2,117.23 or their
peso equivalent at the time of payment;
b. 6% interest of the above-mentioned amounts per annum
from the time of the filing of the complaint until the
same shall have been fully paid;

c. P100,000.00 as exemplary damages;

d. P100,000.00 as attorneys fees;
(2) The Counterclaims of the defendant dated August 20, 1996 is DISMISSED.
[20]

Upon appeal, the Court of Appeals rendered a Decision [21] on May 21,
2001 affirming the trial courts judgment with modification, thus:
WHEREFORE, upon the premises, the Decision appealed from
is AFFIRMED with the MODIFICATION that the award of exemplary damages
is DELETED and the award of attorneys fees is REDUCED to P20,000.00.
SO ORDERED.[22]
The Court of Appeals held:
We concur with the trial court in ordering defendant-appellant (now petitioner)
to reimburse plaintiff-appellee (now respondent) the deficiency taxes it paid to
the US IRS, and quote with favor its well-written ratiocination as follows:
In its effort to extricate itself from liability, defendant further argues that the
sale with the plaintiff was on CASH, AS-WHERE-IS basis and that plaintiff, as
an offeror, was responsible for informing itself with respect to any and all
conditions regarding the NSCP shares and vessels which may in any manner
affect the offer price or the nature of offerors proposal (Exhs. 8, 8-A to A-B).
The above-mentioned contracts form part of the NSCPs Negotiated Sale
Guidelines dated March 1993 prepared by NSCP and required by NDC (now
petitioner) to be attached with the Proposal Letter Form, which was also
prepared by NSCP, and submitted to NDC by bidders. These contracts are
ready-made form of contracts, the preparation of which was left entirely to the
NSCP. Their nature is that of a contract of adhesion. A contract of adhesion
may be struck down as void and unenforceable, for being subversive of public

policy, when the weaker party is imposed upon in dealing with the dominant
bargaining party and is reduced to the alternative of taking it or leaving it,
completely deprived of the opportunity to bargain on equal footing (Saludo, Jr.
vs. Court of Appeals, 207 SCRA 498 [1992]). In the case at bar, the
acceptance of the Negotiated Sale Guidelines and submission thereof
together with the Proposal Letter Form by a prospective buyer is a required
formality of the bidding. Under the circumstance, the plaintiff, in taking such
contracts, may not be deemed to have been given the opportunity to bargain
on equal footing.[23]
Petitioner now comes to us via the instant petition, ascribing to the Court
of Appeals the following error:
THE COURT OF APPEALS ERRED IN CONCURRING WITH THE TRIAL
COURT IN ORDERING HEREIN PETITIONER TO REIMBURSE
RESPONDENT THE DEFICIENCY TAXES IT PAID TO THE US IRS.[24]
Petitioner contends that contrary to the findings of both lower courts, the
Negotiated Sale Guidelines and the Proposal Letter Form are mere invitations
to bid. As such, they are not contracts and should be treated as mere offer or
proposal to prospective buyers of the NSCP shares and marine vessels. [25]
Petitioner further stresses that the sale was on an AS IS, WHERE IS
basis.[26] By accepting the terms and conditions of the sale, respondent, in
effect, accepted the risk of an AS IS, WHERE IS arrangement wherein the
latter is charged with caution under the principle of caveat emptor.[27] Pursuant
to the Negotiated Sale Guidelines and the Proposal Letter Form, respondent
should have apprised itself of the financial status and liabilities of NSCP and
its marine vessels.Therefore, for its predicament, respondent should not fault
petitioner.[28]
For its part, respondent maintains that the Court of Appeals did not
commit any error in its challenged Decision. The Negotiated Sale Guidelines
and the Proposal Letter Form constitute a contract of adhesion because the

buyer was required to submit its bid through a pro-forma proposal letter.[29] The
offer to bidders was on a take it, or leave it basis, leaving no room for
argument or negotiation, except as to the price. [30] Being a contract of
adhesion, it should be strictly construed against the seller, herein petitioner. [31]
Respondent also contends that under Articles 19, [32] 20[33] and 21[34] of the
Civil Code, petitioner had then the legal duty to disclose its tax
liabilities. Records show that respondent repeatedly inquired from petitioner
about such matter.[35]Instead of telling the truth, petitioner made several
assurances that the NSCP was a clean, lien-free going concern and profitable
entity.[36] In fact, under Section 7.01 of the Negotiated Sale Guidelines,
petitioner made a warranty against any lien or encumbrance. [37]
In this petition, the issues for our resolution are:
(1) Whether the Negotiated Sale Guidelines and the Proposal Letter Form
constitute a contract of adhesion; and
(2) Whether petitioner is legally bound to reimburse respondent for the
amounts it paid corresponding to the formers tax liabilities to the US IRS.
On the first issue, we agree with both lower courts that the Negotiated
Sale Guidelines and the Proposal Letter Form constitute a contract of
adhesion.
A contract of adhesion is one in which one of the parties imposes a
ready-made form of contract, which the other party may accept or reject, but
which the latter cannot modify. In other words, in such contract, the terms
therein are fixed by one party, and the other party has merely to take it, or
leave it.[38] Thus, it can be struck down as void and unenforceable for being
subversive of public policy, especially when the will of the dominant party is
imposed upon the weaker party and the latter is denied the opportunity to
bargain on equal footing.[39]

It must be stressed, however, that contracts of adhesion are not strictly

against the law. In Ong Yiu vs. Court of Appeals [40] and Pan American World
Airways, Inc. vs. Intermediate Appellate Court,[41] we held that contracts of
adhesion wherein one party imposes a ready-made form of contract on the
other are not entirely prohibited. The other party is free to reject it entirely; if he
adheres, he gives his consent.
Nevertheless, the inequality of bargaining positions and the resulting
impairment of the other partys freedom to contract necessarily call upon us to
exercise our mandate as a court of justice and equity. Indeed, we have ruled
that contracts of such nature obviously call for greater strictness and vigilance
on the part of the courts of justice with a view to protecting the weaker party
from abuses and imposition and prevent their becoming traps for the unwary.

14.01 NDC and APT reserve the right in their discretion to

reject any and all offers, to waive any formality
therein and of these guidelines, and to consider
only such offer as may be advantageous to the
National Government.
NDC and APT may, at their discretion require
additional information and/or documents from any
offeror.
14.02 NDC and APT reserve the right to amend the
Guidelines prior to the submission of offers x x x.
xxxxxxxxx

[42]

In the case at bar, the Negotiated Sale Guidelines and Proposal Letter
Form fit the characteristics of a contract of adhesion. On their very face, these
documents show that petitioner NDC had control over the terms and
conditions of the sale. The Negotiated Sale Guidelines provides:
4.0 PREPARATION OF OFFERS
4.01 Offerors shall use the Proposal Letter Form for Sale of
NSCP and Vessels provided herein.
4.02 All offers should be accompanied by: x x x (b) the
Negotiated Sale Guidelines duly signed by the
offeror or authorized representative in every page
thereof x x x.
xxxxxxxxx
14.0 OTHER PROVISIONS

14.05 Violation of any of these terms and conditions shall

cause the cancellation of the award and the
automatic forfeiture of the deposit.
[43]
(Underscoring ours)
The Proposal Letter Form provides that the bidder is bound by the
Negotiated Sale Guidelines, thus:
It is understood that:
1. We accept and undertake without any reservations whatsoever that, if
this offer to purchase the vessels and NSCP shares is accepted, we shall
be subjected to all the terms and conditions issued by the NDC and APT
including those outlined in the March, 1993 Information Memorandum
and the Negotiated Sale Guidelines for the sale of NSCP and the three
vessels.
xxxxxxxxx

5. We represent and warrant that: (i) we have examined and understood the
Information Package, (ii) we accept the conditions of the March, 1993
Negotiated Sale Guidelines, including the right of NDC and APT to reject
any and all offers without thereby creating any liability in our favor x x x.
[44]
(Underscoring ours)
Clearly, respondent had hardly any say in the terms and conditions
expressed in the Negotiated Sale Guidelines. Other than the price of the offer,
respondent was left with little or no alternative at all but to comply with its
terms. Thus, the trial court correctly found:
The above-mentioned contracts form part of NSCPs Negotiated Sale
Guidelines dated March 1993 prepared by NSCP and required by NDC to be
attached with the Proposal Letter Form, which was also prepared by NSCP,
and submitted to NDC by bidders. These contracts are ready-made form of
contracts, the preparation of which was left entirely to the NSCP. Their
nature is that of a contract of adhesion. x x x. In the case at bar, the
acceptance of the Negotiated Sale Guidelines and submission thereof
together with the Proposal Letter Form by a prospective buyer is a required
formality of the bidding. Under this circumstance, the plaintiff, in taking such
contracts, may not be deemed to have been given the opportunity to bargain
on equal footing.[45] (Underscoring ours)
Being a contract of adhesion, we reiterate that it is our duty to apply a
strict construction of its terms upon the party who made the same [46] and to
construe any ambiguity in such contract against its author. [47] It is public policy
to protect a party (herein respondent) against oppressive and onerous
conditions.[48]

8. All of the terms and conditions of (a) the March 1993 NDC Information
Memorandum and Negotiated Sale Guidelines, including the amendments
thereto, more particularly those contained in NDCs letter to A. P. Madrigal
Steamship Co. Inc. dated May 4, 1993, and (b) the Notice of Award dated
February 11, 1993 are hereby incorporated herein by reference and shall
insofar as they are not inconsistent with the terms and conditions
hereof, be applicable to this Contract.[50] (Underscoring ours)
We now determine whether petitioner is obliged under the law and the
contract to reimburse respondent for the amounts it paid corresponding to the
formers US tax liabilities. We quote with approval the trial courts findings
affirmed by the Court of Appeals, thus:
From the foregoing facts, there is no doubt that during the negotiation for the
sale of defendants (now petitioners) shares of stocks and three (3) oceangoing vessels, NSCP was already aware of an impending assessment by the
US government on NSCPs gross transportation income derived from US
sources. The exchanges of communications (Exhibits D, E, F, G, H and I)
between NSCP and US IRS are glaring proof of NSCPs prior knowledge
of a possible assessment or additional taxes. Moreover, in the Partial
Printout of NSCPs Unaudited Financial Statements for the Year ending
December 31, 1993 (Exhibit V), NSCP made provisions for US taxes as
follows: for the year ending 1993, US $3,919,018.81 (Exh. V-2), and for the
years ending 1990-1992, US $11,736,192.64 (Exh. V-3). Exhibit V is a clear
indication that, indeed, NSCP had prior knowledge of such deficiency taxes,
and in fact, recognized the same even though there was no final assessment
yet from the US IRS.[51]
xxxxxxxxx

We are not impressed by petitioners argument that the Negotiated Sale

Guidelines was a mere invitation to bid. [49] On the contrary, the Contract of
Sale itself provides that it is an integral part or applicable to this Contract, thus:

The Partial Printout of NSCPs Unaudited Financial Statements for the Year
ending December 1993 (Exhs. 2, 2-A to 2-B or Exhs. V, V-2 to V-3), true to the
word of the defendant (now petitioner), carries provisions for US taxes. The
problem, however, with this evidence is there is no showing that this had

been furnished the plaintiff (now respondent). On the contrary, plaintiff

vehemently asserts having been denied by defendant access to the latters
accounting books and financial statements. Basic in the law of evidence that
he who asserts the affirmative of the allegation has the burden of proving it
(Geraldez vs. CA, 230 SCRA 320). The defendant has failed to prove that
the pertinent statement made in this document or the document itself
had been disclosed to the plaintiff.
The Unaudited Financial Statements of NSCP (Exhs. 3, 3-A and 3-B), which
allegedly includes the subject US taxes among NSCPs Trade Payable and
Accrued Expenses and Dividends, does not clearly indicate the said
taxes. The Trade Payable and Accrued Expenses and Dividends as
including the said taxes is vague or unequivocal on the matter. By mere
reading of it, one would not have the slightest inkling or suspicion that
such taxes exist as among NSCPs liabilities.[52] (Underscoring ours)
There is no dispute that petitioner was aware of its US tax liabilities
considering its numerous communications with the agents of the United States
Internal Revenue Service, just prior to the sale of NSCP and the marine
vessels to respondent.[53] The NSCP itself made an ambiguous contingent
provision in its Unaudited Financial Statements for the year ending December
1993, thereby indicating its awareness of a possible US tax assessment. [54] It
bears stressing that petitioner did not convey such information to respondent
despite its inquiries.[55] Obviously, such concealment constitutes bad faith on
its part. Bad faith implies a conscious and intentional design to do a wrongful
act for a dishonest purpose or moral obliquity; it x x x contemplates a state of
mind affirmatively operating with furtive design or ill will. [56]
We see no reason to disturb the factual findings of both the trial court and
Court of Appeals which petitioner does not dispute. Absent any showing that
such findings were reached arbitrarily or without sufficient basis, the same
must be respected and binding upon us.[57]

That petitioner has the obligation to reimburse respondent is likewise

clear under the Negotiated Sale Guidelines, which provides:
7.0 OFFERORS RESPONSIBILITY
7.01 x x x. Seller gives no warranty regarding the sale of the
shares and assets except for a warranty on ownership and
against any liens or encumbrances, and the offeror shall
not be relieved of his obligation to make the aforesaid
examinations and verifications.[58] (Underscoring ours)
The terms of the parties contract are clear and unequivocal. The seller
(petitioner NDC) gives a warranty as to the ownership of the object of sale
and against any lien and encumbrance. A tax liability of $688,186.10 was
then a potential lien upon NSCPs marine vessels. Being in bad faith for having
failed to inform the buyer, herein respondent, of such potential lien, petitioner
breached its warranty and should, therefore, be held liable for the resulting
damage, i.e., reimbursement for the amounts paid by petitioner to the US IRS.
The Negotiated Sale Guidelines further provides:
2.0 TERMS OF SALE
2.01 The sale of the NSCP and the three vessels shall be
strictly on CASH, AS IS-WHERE IS basis.
[59]
(Underscoring ours)
In Hian vs. Court of Tax Appeals,[60] we had the occasion to construe the
phrase as is, where is basis, thus:
We cannot accept the contention in the Governments Memorandum of March
31, 1976 that Condition No. 5 in the Notice of Sale to the effect that The
above-mentioned articles (the tobacco) are offered for sale AS IS and the
Bureau of Customs gives no warranty as to their condition relieves the Bureau
of Customs of liability for the storage fees in dispute. As we understand said

Condition No. 5, it refers to the physical condition of the tobacco and not
to the legal situation in which it was at the time of the sale, as could be
implied from the right of inspection to prospective bidders under Condition No.
1. x x x. (Underscoring ours)

basis for the award of exemplary damages which may only be granted in
addition thereto (Scott Consultants and Resources Development Corp. Inc.
vs. CA, 242 SCRA 393).
xxxxxxxxx

The phrase as is, where is basis pertains solely to the physical condition
of the thing sold, not to its legal situation. In the case at bar, the US tax
liabilities constitute a potential lien which applies to NSCPs legal situation, not
to its physical aspect. Thus, respondent as a buyer, has no obligation to
shoulder the same.
The case at bar calls to mind the principle of unjust enrichment Nemo
cum alterius detrimento locupletari potest. No person shall be allowed to
enrich himself unjustly at the expense of others. This principle of equity has
been enshrined in our Civil Code, Article 22 of which provides:
Art. 22. Every person who through an act or performance by another or by any
other means, acquires or comes into possession of something at the expense
of the latter without just or legal ground, shall return the same to him.
Justice and equity thus oblige that petitioner be held liable for NSCPs tax
liabilities and reimburse respondent for the amounts it paid. It would be unjust
enrichment on the part of petitioner to be relieved of that obligation.
The deletion of the award of exemplary damages and reduction of the
attorneys fees by the Court of Appeals are not challenged by either of the
parties. At any rate, we find no error in its ruling quoted hereunder:
However, we find no basis for the grant of exemplary damages which can be
granted only in addition to moral, temperate, liquidated or compensatory
damages (Art. 2229, Civil Code of the Philippines), none of which was
awarded or deserved in this case. The trial court merely granted plaintiffs
prayer in its main cause of action for reimbursement of taxes plaintiff paid to
the U.S. Since no actual or moral damages was awarded, there is no legal

Anent the award of attorneys fees, we find it excessive, considering that the
instant case is a simple action for reimbursement and did not involve
extensive litigation. Nothing precludes the appellate courts from reducing the
award of attorneys fees when it is found to be unconscionable or excessive
under the circumstances (Brahm Industries Inc. vs. NLRC, 280 SCRA
828). Thus, the award of attorneys fees is reduced to P20,000.00.[61]
WHEREFORE, the petition is DENIED and the assailed Decision of the
Court of Appeals is AFFIRMED.
SO ORDERED.
Puno, (Chairman), Panganiban,
[G.R. No. 148332. September 30, 2003]
NATIONAL DEVELOPMENT COMPANY, petitioner, vs. MADRIGAL WAN
HAI LINES CORPORATION, respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari[1] assailing the Decision of
the Court of Appeals dated May 21, 2001 in CA-G.R. CV No. 66026, affirming
with modification the Decision dated August 6, 1999 of the Regional Trial
Court, Branch 62, Makati City, in Civil Case No. 96-558 for sum of money and
damages.

The factual antecedents are:

The National Development Company, petitioner, is a government-owned
and controlled corporation created and existing under Commonwealth Act No.
182, as amended by Presidential Decree No. 1648. The National Shipping
Corporation of the Philippines (NSCP) is a wholly-owned subsidiary of
petitioner offering shipping services for containerized cargo between the Far
East ports and the U.S. West Coast.[2]
On March 1, 1993, petitioners Board of Directors approved the
privatization plan of the NSCP. [3] In May 1993, the Board offered for sale to the
public its one hundred percent (100%) stock ownership in NSCP
worth P150,000.00, as well as its three (3) ocean-going vessels (M/V National
Honor, M/V National Pride and M/V National Dignity).[4]
Consequently, petitioner released to the public an Information
Package[5] containing NSCPs background, assets, operational and financial
status. Attached thereto is NSCPs Financial Statements covering the period
from December 1990 up to 1992.
The Information Package likewise contained the Negotiated Sale
Guidelines which embodied the terms and conditions of the proposed
sale. Attached thereto is a Proposal Letter Form[6] wherein bidders were
advised to submit their bids to be specified in the same form. Petitioners
desired price for the NSCP shares of stock and the vessels was Twenty-Six
Million Seven Hundred Fifty Thousand US Dollars ($26,750,000.00). [7]
During the public bidding on May 7, 1993, the lone bidder was herein
respondent, Madrigal Wan Hai Lines Corporation, a domestic private
corporation duly organized and existing under the Philippine laws with
principal office in Manila.Mr. Willie J. Uy, respondents Consultant, submitted a
bid of $15 million through the Proposal Letter Form. [8]

The respondents bid was rejected by petitioner and the Commission on

Audit.
But since there was no other bidder, petitioner entered into a negotiated
sale with respondent.[9] After several negotiations, respondent increased its
offer to $18.5 million which was accepted by petitioner. The negotiated sale
was then approved by petitioners Board of Directors on August 26, 1993, the
President of the Philippines on September 28, 1993, the Committee on
Privatization on October 7, 1993, and the Commission on Audit on February 2,
1994.[10]
Accordingly, on February 11, 1994, petitioner issued a Notice of Award to
respondent of the sale of the NSCP shares and vessels for $18.5 million.
[11]
On March 14, 1994, petitioner and respondent executed the
corresponding Contract of Sale,[12] and the latter acquired NSCP, its
assets, personnel, records and its three (3) vessels.[13]
On September 22, 1994, respondent was surprised to receive from
the US Department of Treasury, Internal Revenue Service (US IRS), a
Notice of Final Assessment against NSCP for deficiency taxes on gross
transportation income derived from US sources for the years ending
1990, 1991 and 1992.[14] The tax assessment was based on Section 887 of
the US Internal Revenue Code imposing a 4% tax on gross transportation
income of any foreign corporation derived from US sources. [15]
Anxious that the delay in the payment of the deficiency taxes may
hamper its shipping operations overseas, respondent, on October 14, 1994,
assumed and paid petitioners tax liabilities, including the tax due for the
year 1993, in the total amount of $671,653.00. These taxes were incurred
prior to respondents take-over of NSCPs management.[16] Respondent
likewise paid the additional amount of $16,533.10 as penalty for late
payment.[17]

Eventually, respondent demanded from petitioner reimbursement for the

amounts it paid to the US IRS. But petitioner refused despite repeated
demands. Hence, on March 20, 1996, respondent filed with the Regional Trial
Court (RTC), Branch 62, Makati City a complaint [18] against petitioner for
reimbursement and damages, docketed as Civil Case No. 96-558.
On August 6, 1999, the RTC rendered a Decision [19] in favor of
respondent and against petitioner. The trial court found, among others, that
even before the sale, petitioner knew that NSCP had tax liabilities with the US
IRS, yet it did not inform respondent about it. The dispositive portion of the
RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
(1) defendant (now petitioner) to pay plaintiff (now respondent), to wit:
a. US $671,653, US $14,415.87, and US $2,117.23 or their
peso equivalent at the time of payment;
b. 6% interest of the above-mentioned amounts per annum
from the time of the filing of the complaint until the
same shall have been fully paid;
c. P100,000.00 as exemplary damages;
d. P100,000.00 as attorneys fees;
(2) The Counterclaims of the defendant dated August 20, 1996 is DISMISSED.
[20]

Upon appeal, the Court of Appeals rendered a Decision [21] on May 21,
2001 affirming the trial courts judgment with modification, thus:

WHEREFORE, upon the premises, the Decision appealed from

is AFFIRMED with the MODIFICATION that the award of exemplary damages
is DELETED and the award of attorneys fees is REDUCED to P20,000.00.
SO ORDERED.[22]
The Court of Appeals held:
We concur with the trial court in ordering defendant-appellant (now petitioner)
to reimburse plaintiff-appellee (now respondent) the deficiency taxes it paid to
the US IRS, and quote with favor its well-written ratiocination as follows:
In its effort to extricate itself from liability, defendant further argues that the
sale with the plaintiff was on CASH, AS-WHERE-IS basis and that plaintiff, as
an offeror, was responsible for informing itself with respect to any and all
conditions regarding the NSCP shares and vessels which may in any manner
affect the offer price or the nature of offerors proposal (Exhs. 8, 8-A to A-B).
The above-mentioned contracts form part of the NSCPs Negotiated Sale
Guidelines dated March 1993 prepared by NSCP and required by NDC (now
petitioner) to be attached with the Proposal Letter Form, which was also
prepared by NSCP, and submitted to NDC by bidders. These contracts are
ready-made form of contracts, the preparation of which was left entirely to the
NSCP. Their nature is that of a contract of adhesion. A contract of adhesion
may be struck down as void and unenforceable, for being subversive of public
policy, when the weaker party is imposed upon in dealing with the dominant
bargaining party and is reduced to the alternative of taking it or leaving it,
completely deprived of the opportunity to bargain on equal footing (Saludo, Jr.
vs. Court of Appeals, 207 SCRA 498 [1992]). In the case at bar, the
acceptance of the Negotiated Sale Guidelines and submission thereof
together with the Proposal Letter Form by a prospective buyer is a required
formality of the bidding. Under the circumstance, the plaintiff, in taking such
contracts, may not be deemed to have been given the opportunity to bargain
on equal footing.[23]

Petitioner now comes to us via the instant petition, ascribing to the Court
of Appeals the following error:
THE COURT OF APPEALS ERRED IN CONCURRING WITH THE TRIAL
COURT IN ORDERING HEREIN PETITIONER TO REIMBURSE
RESPONDENT THE DEFICIENCY TAXES IT PAID TO THE US IRS.[24]
Petitioner contends that contrary to the findings of both lower courts, the
Negotiated Sale Guidelines and the Proposal Letter Form are mere invitations
to bid. As such, they are not contracts and should be treated as mere offer or
proposal to prospective buyers of the NSCP shares and marine vessels. [25]
Petitioner further stresses that the sale was on an AS IS, WHERE IS
basis.[26] By accepting the terms and conditions of the sale, respondent, in
effect, accepted the risk of an AS IS, WHERE IS arrangement wherein the
latter is charged with caution under the principle of caveat emptor.[27] Pursuant
to the Negotiated Sale Guidelines and the Proposal Letter Form, respondent
should have apprised itself of the financial status and liabilities of NSCP and
its marine vessels.Therefore, for its predicament, respondent should not fault
petitioner.[28]
For its part, respondent maintains that the Court of Appeals did not
commit any error in its challenged Decision. The Negotiated Sale Guidelines
and the Proposal Letter Form constitute a contract of adhesion because the
buyer was required to submit its bid through a pro-forma proposal letter.[29] The
offer to bidders was on a take it, or leave it basis, leaving no room for
argument or negotiation, except as to the price. [30] Being a contract of
adhesion, it should be strictly construed against the seller, herein petitioner. [31]
Respondent also contends that under Articles 19, [32] 20[33] and 21[34] of the
Civil Code, petitioner had then the legal duty to disclose its tax
liabilities. Records show that respondent repeatedly inquired from petitioner
about such matter.[35]Instead of telling the truth, petitioner made several
assurances that the NSCP was a clean, lien-free going concern and profitable

entity.[36] In fact, under Section 7.01 of the Negotiated Sale Guidelines,

petitioner made a warranty against any lien or encumbrance. [37]
In this petition, the issues for our resolution are:
(1) Whether the Negotiated Sale Guidelines and the Proposal Letter Form
constitute a contract of adhesion; and
(2) Whether petitioner is legally bound to reimburse respondent for the
amounts it paid corresponding to the formers tax liabilities to the US IRS.
On the first issue, we agree with both lower courts that the Negotiated
Sale Guidelines and the Proposal Letter Form constitute a contract of
adhesion.
A contract of adhesion is one in which one of the parties imposes a
ready-made form of contract, which the other party may accept or reject, but
which the latter cannot modify. In other words, in such contract, the terms
therein are fixed by one party, and the other party has merely to take it, or
leave it.[38] Thus, it can be struck down as void and unenforceable for being
subversive of public policy, especially when the will of the dominant party is
imposed upon the weaker party and the latter is denied the opportunity to
bargain on equal footing.[39]
It must be stressed, however, that contracts of adhesion are not strictly
against the law. In Ong Yiu vs. Court of Appeals [40] and Pan American World
Airways, Inc. vs. Intermediate Appellate Court,[41] we held that contracts of
adhesion wherein one party imposes a ready-made form of contract on the
other are not entirely prohibited. The other party is free to reject it entirely; if he
adheres, he gives his consent.
Nevertheless, the inequality of bargaining positions and the resulting
impairment of the other partys freedom to contract necessarily call upon us to
exercise our mandate as a court of justice and equity. Indeed, we have ruled
that contracts of such nature obviously call for greater strictness and vigilance

on the part of the courts of justice with a view to protecting the weaker party
from abuses and imposition and prevent their becoming traps for the unwary.
[42]

In the case at bar, the Negotiated Sale Guidelines and Proposal Letter
Form fit the characteristics of a contract of adhesion. On their very face, these
documents show that petitioner NDC had control over the terms and
conditions of the sale. The Negotiated Sale Guidelines provides:

xxxxxxxxx
14.05 Violation of any of these terms and conditions shall
cause the cancellation of the award and the
automatic forfeiture of the deposit.
[43]
(Underscoring ours)
The Proposal Letter Form provides that the bidder is bound by the
Negotiated Sale Guidelines, thus:

4.0 PREPARATION OF OFFERS

It is understood that:
4.01 Offerors shall use the Proposal Letter Form for Sale of
NSCP and Vessels provided herein.
4.02 All offers should be accompanied by: x x x (b) the
Negotiated Sale Guidelines duly signed by the
offeror or authorized representative in every page
thereof x x x.
xxxxxxxxx
14.0 OTHER PROVISIONS
14.01 NDC and APT reserve the right in their discretion to
reject any and all offers, to waive any formality
therein and of these guidelines, and to consider
only such offer as may be advantageous to the
National Government.
NDC and APT may, at their discretion require
additional information and/or documents from any
offeror.
14.02 NDC and APT reserve the right to amend the
Guidelines prior to the submission of offers x x x.

1. We accept and undertake without any reservations whatsoever that, if

this offer to purchase the vessels and NSCP shares is accepted, we shall
be subjected to all the terms and conditions issued by the NDC and APT
including those outlined in the March, 1993 Information Memorandum
and the Negotiated Sale Guidelines for the sale of NSCP and the three
vessels.
xxxxxxxxx
5. We represent and warrant that: (i) we have examined and understood the
Information Package, (ii) we accept the conditions of the March, 1993
Negotiated Sale Guidelines, including the right of NDC and APT to reject
any and all offers without thereby creating any liability in our favor x x x.
[44]
(Underscoring ours)
Clearly, respondent had hardly any say in the terms and conditions
expressed in the Negotiated Sale Guidelines. Other than the price of the offer,
respondent was left with little or no alternative at all but to comply with its
terms. Thus, the trial court correctly found:
The above-mentioned contracts form part of NSCPs Negotiated Sale
Guidelines dated March 1993 prepared by NSCP and required by NDC to be
attached with the Proposal Letter Form, which was also prepared by NSCP,

and submitted to NDC by bidders. These contracts are ready-made form of

contracts, the preparation of which was left entirely to the NSCP. Their
nature is that of a contract of adhesion. x x x. In the case at bar, the
acceptance of the Negotiated Sale Guidelines and submission thereof
together with the Proposal Letter Form by a prospective buyer is a required
formality of the bidding. Under this circumstance, the plaintiff, in taking such
contracts, may not be deemed to have been given the opportunity to bargain
on equal footing.[45] (Underscoring ours)
Being a contract of adhesion, we reiterate that it is our duty to apply a
strict construction of its terms upon the party who made the same [46] and to
construe any ambiguity in such contract against its author. [47] It is public policy
to protect a party (herein respondent) against oppressive and onerous
conditions.[48]
We are not impressed by petitioners argument that the Negotiated Sale
Guidelines was a mere invitation to bid. [49] On the contrary, the Contract of
Sale itself provides that it is an integral part or applicable to this Contract, thus:
8. All of the terms and conditions of (a) the March 1993 NDC Information
Memorandum and Negotiated Sale Guidelines, including the amendments
thereto, more particularly those contained in NDCs letter to A. P. Madrigal
Steamship Co. Inc. dated May 4, 1993, and (b) the Notice of Award dated
February 11, 1993 are hereby incorporated herein by reference and shall
insofar as they are not inconsistent with the terms and conditions
hereof, be applicable to this Contract.[50] (Underscoring ours)
We now determine whether petitioner is obliged under the law and the
contract to reimburse respondent for the amounts it paid corresponding to the
formers US tax liabilities. We quote with approval the trial courts findings
affirmed by the Court of Appeals, thus:
From the foregoing facts, there is no doubt that during the negotiation for the
sale of defendants (now petitioners) shares of stocks and three (3) ocean-

going vessels, NSCP was already aware of an impending assessment by the

US government on NSCPs gross transportation income derived from US
sources. The exchanges of communications (Exhibits D, E, F, G, H and I)
between NSCP and US IRS are glaring proof of NSCPs prior knowledge
of a possible assessment or additional taxes. Moreover, in the Partial
Printout of NSCPs Unaudited Financial Statements for the Year ending
December 31, 1993 (Exhibit V), NSCP made provisions for US taxes as
follows: for the year ending 1993, US $3,919,018.81 (Exh. V-2), and for the
years ending 1990-1992, US $11,736,192.64 (Exh. V-3). Exhibit V is a clear
indication that, indeed, NSCP had prior knowledge of such deficiency taxes,
and in fact, recognized the same even though there was no final assessment
yet from the US IRS.[51]
xxxxxxxxx
The Partial Printout of NSCPs Unaudited Financial Statements for the Year
ending December 1993 (Exhs. 2, 2-A to 2-B or Exhs. V, V-2 to V-3), true to the
word of the defendant (now petitioner), carries provisions for US taxes. The
problem, however, with this evidence is there is no showing that this had
been furnished the plaintiff (now respondent). On the contrary, plaintiff
vehemently asserts having been denied by defendant access to the latters
accounting books and financial statements. Basic in the law of evidence that
he who asserts the affirmative of the allegation has the burden of proving it
(Geraldez vs. CA, 230 SCRA 320). The defendant has failed to prove that
the pertinent statement made in this document or the document itself
had been disclosed to the plaintiff.
The Unaudited Financial Statements of NSCP (Exhs. 3, 3-A and 3-B), which
allegedly includes the subject US taxes among NSCPs Trade Payable and
Accrued Expenses and Dividends, does not clearly indicate the said
taxes. The Trade Payable and Accrued Expenses and Dividends as
including the said taxes is vague or unequivocal on the matter. By mere
reading of it, one would not have the slightest inkling or suspicion that
such taxes exist as among NSCPs liabilities.[52] (Underscoring ours)

There is no dispute that petitioner was aware of its US tax liabilities

considering its numerous communications with the agents of the United States
Internal Revenue Service, just prior to the sale of NSCP and the marine
vessels to respondent.[53] The NSCP itself made an ambiguous contingent
provision in its Unaudited Financial Statements for the year ending December
1993, thereby indicating its awareness of a possible US tax assessment. [54] It
bears stressing that petitioner did not convey such information to respondent
despite its inquiries.[55] Obviously, such concealment constitutes bad faith on
its part. Bad faith implies a conscious and intentional design to do a wrongful
act for a dishonest purpose or moral obliquity; it x x x contemplates a state of
mind affirmatively operating with furtive design or ill will. [56]
We see no reason to disturb the factual findings of both the trial court and
Court of Appeals which petitioner does not dispute. Absent any showing that
such findings were reached arbitrarily or without sufficient basis, the same
must be respected and binding upon us.[57]
That petitioner has the obligation to reimburse respondent is likewise
clear under the Negotiated Sale Guidelines, which provides:
7.0 OFFERORS RESPONSIBILITY
7.01 x x x. Seller gives no warranty regarding the sale of the
shares and assets except for a warranty on ownership and
against any liens or encumbrances, and the offeror shall
not be relieved of his obligation to make the aforesaid
examinations and verifications.[58] (Underscoring ours)

The terms of the parties contract are clear and unequivocal. The seller
(petitioner NDC) gives a warranty as to the ownership of the object of sale
and against any lien and encumbrance. A tax liability of $688,186.10 was
then a potential lien upon NSCPs marine vessels. Being in bad faith for having
failed to inform the buyer, herein respondent, of such potential lien, petitioner
breached its warranty and should, therefore, be held liable for the resulting
damage, i.e., reimbursement for the amounts paid by petitioner to the US IRS.
The Negotiated Sale Guidelines further provides:
2.0 TERMS OF SALE
2.01 The sale of the NSCP and the three vessels shall be
strictly on CASH, AS IS-WHERE IS basis.
[59]
(Underscoring ours)
In Hian vs. Court of Tax Appeals,[60] we had the occasion to construe the
phrase as is, where is basis, thus:
We cannot accept the contention in the Governments Memorandum of March
31, 1976 that Condition No. 5 in the Notice of Sale to the effect that The
above-mentioned articles (the tobacco) are offered for sale AS IS and the
Bureau of Customs gives no warranty as to their condition relieves the Bureau
of Customs of liability for the storage fees in dispute. As we understand said
Condition No. 5, it refers to the physical condition of the tobacco and not
to the legal situation in which it was at the time of the sale, as could be
implied from the right of inspection to prospective bidders under Condition No.
1. x x x. (Underscoring ours)
The phrase as is, where is basis pertains solely to the physical condition
of the thing sold, not to its legal situation. In the case at bar, the US tax
liabilities constitute a potential lien which applies to NSCPs legal situation, not
to its physical aspect. Thus, respondent as a buyer, has no obligation to
shoulder the same.

The case at bar calls to mind the principle of unjust enrichment Nemo
cum alterius detrimento locupletari potest. No person shall be allowed to
enrich himself unjustly at the expense of others. This principle of equity has
been enshrined in our Civil Code, Article 22 of which provides:
Art. 22. Every person who through an act or performance by another or by any
other means, acquires or comes into possession of something at the expense
of the latter without just or legal ground, shall return the same to him.
Justice and equity thus oblige that petitioner be held liable for NSCPs tax
liabilities and reimburse respondent for the amounts it paid. It would be unjust
enrichment on the part of petitioner to be relieved of that obligation.
The deletion of the award of exemplary damages and reduction of the
attorneys fees by the Court of Appeals are not challenged by either of the
parties. At any rate, we find no error in its ruling quoted hereunder:
However, we find no basis for the grant of exemplary damages which can be
granted only in addition to moral, temperate, liquidated or compensatory
damages (Art. 2229, Civil Code of the Philippines), none of which was
awarded or deserved in this case. The trial court merely granted plaintiffs
prayer in its main cause of action for reimbursement of taxes plaintiff paid to
the U.S. Since no actual or moral damages was awarded, there is no legal
basis for the award of exemplary damages which may only be granted in
addition thereto (Scott Consultants and Resources Development Corp. Inc.
vs. CA, 242 SCRA 393).
xxxxxxxxx

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

G.R. No. L-39999 May 31, 1984

ROY PADILLA, FILOMENO GALDONES, ISMAEL GONZALGO and JOSE
FARLEY BEDENIA, petitioners,
vs.
COURT OF APPEALS, respondent.
Sisenando Villaluz, Sr. for petitioners.
The Solicitor General for respondent.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of a Court of Appeals' decision which
reversed the trial court's judgment of conviction and acquitted the petitioners
of the crime of grave coercion on the ground of reasonable doubt but inspite of
the acquittal ordered them to pay jointly and severally the amount of
P9,000.00 to the complainants as actual damages.
The petitioners were charged under the following information:
The undersigned Fiscal accused ROY PADILLA, FILOMENO
GALDONES, PEPITO BEDENIA, YOLLY RICO, DAVID
BERMUNDO, VILLANOAC, ROBERTO ROSALES,
VILLANIA, ROMEO GARRIDO, JOSE ORTEGA, JR.,
RICARDO CELESTINO, REALINGO alias "KAMLON", JOHN
DOE alias TATO, and FOURTEEN (14) RICARDO DOES of
the crime of GRAVE COERCION, committed as follows:
That on or about February 8, 1964 at around 9:00 o'clock in
the morning, in the municipality of Jose Panganiban, province
of Camarines Norte, Philippines, and within the jurisdiction of
this Honorable Court, the above- named accused, Roy

Padilla, Filomeno Galdones, Pepito Bedenia, Yolly Rico,

David Bermundo, Villanoac, Roberto Rosales, Villania,
Romeo Garrido, Jose Ortega, Jr., Ricardo Celestino, Realingo
alias Kamlon, John Doe alias Tato, and Fourteen Richard
Does, by confederating and mutually helping one another,
and acting without any authority of law, did then and there
wilfully, unlawfully, and feloniously, by means of threats, force
and violence prevent Antonio Vergara and his family to close
their stall located at the Public Market, Building No. 3, Jose
Panganiban, Camarines Norte, and by subsequently forcibly
opening the door of said stall and thereafter brutally
demolishing and destroying said stall and the furnitures
therein by axes and other massive instruments, and carrying
away the goods, wares and merchandise, to the damage and
prejudice of the said Antonio Vergara and his family in the
amount of P30,000.00 in concept of actual or compensatory
and moral damages, and further the sum of P20,000.00 as
exemplary damages.
That in committing the offense, the accused took advantage
of their public positions: Roy Padilla, being the incumbent
municipal mayor, and the rest of the accused being
policemen, except Ricardo Celestino who is a civilian, all of
Jose Panganiban, Camarines Norte, and that it was
committed with evident premeditation.
The Court of First Instance of Camarines Norte, Tenth Judicial District
rendered a decision, the dispositive portion of which states that:
IN VIEW OF THE FOREGOING, the Court finds the accused Roy Padilla,
Filomeno Galdonez, Ismael Gonzalgo and Jose Parley Bedenia guilty beyond
reasonable doubt of the crime of grave coercion, and hereby imposes upon
them to suffer an imprisonment of FIVE (5) months and One (1) day; to pay a
fine of P500.00 each; to pay actual and compensatory damages in the amount

of P10,000.00; moral damages in the amount of P30,000.00; and another

P10,000.00 for exemplary damages, jointly and severally, and all the
accessory penalties provided for by law; and to pay the proportionate costs of
this proceedings.
The accused Federico Realingo alias 'Kamlon', David
Bermundo, Christopher Villanoac, Godofredo Villania, Romeo
Garrido, Roberto Rosales, Ricardo Celestino and Jose
Ortega, are hereby ordered acquitted on grounds of
reasonable doubt for their criminal participation in the crime
charged.
The petitioners appealed the judgment of conviction to the Court of Appeals.
They contended that the trial court's finding of grave coercion was not
supported by the evidence. According to the petitioners, the town mayor had
the power to order the clearance of market premises and the removal of the
complainants' stall because the municipality had enacted municipal
ordinances pursuant to which the market stall was a nuisance per se. The
petitioners stated that the lower court erred in finding that the demolition of the
complainants' stall was a violation of the very directive of the petitioner Mayor
which gave the stall owners seventy two (72) hours to vacate the market
premises. The petitioners questioned the imposition of prison terms of five
months and one day and of accessory penalties provided by law. They also
challenged the order to pay fines of P500.00 each, P10,000.00 actual and
compensatory damages, P30,000.00 moral damages, P10,000.00 exemplary
damages, and the costs of the suit.
The dispositive portion of the decision of the respondent Court of Appeals
states:

WHEREFORE, we hereby modify the judgment appealed

from in the sense that the appellants are acquitted on ground
of reasonable doubt. but they are ordered to pay jointly and
severally to complainants the amount of P9,600.00, as actual
damages.
The petitioners filed a motion for reconsideration contending that the acquittal
of the defendants-appellants as to criminal liability results in the extinction of
their civil liability. The Court of Appeals denied the motion holding that:
xxx xxx xxx
... appellants' acquittal was based on reasonable doubt
whether the crime of coercion was committed, not on facts
that no unlawful act was committed; as their taking the law
into their hands, destructing (sic) complainants' properties is
unlawful, and, as evidence on record established that
complainants suffered actual damages, the imposition of
actual damages is correct.
Consequently, the petitioners filed this special civil action, contending that:
I
THE COURT OF APPEALS COMMITTED A GRAVE ERROR
OF LAW OR GRAVELY ABUSED ITS DISCRETION IN
IMPOSING UPON PETITIONERS PAYMENT OF DAMAGES
TO COMPLAINANTS AFTER ACQUITTING PETITIONERS
OF THE CRIME CHARGED FROM WHICH SAID LIABILITY
AROSE.
II
THE COURT OF APPEALS ERRED IN HOLDING IN ITS
RESOLUTION DATED DECEMBER 26, 1974 THAT SINCE

APPELLANTS' ACQUITTAL WAS BASED ON REASONABLE

DOUBT, NOT ON FACTS THAT NO UNLAWFUL ACT WAS
COMMITTED, THE IMPOSITION OF ACTUAL DAMAGES IS
CORRECT.
III
THE COURT OF APPEALS COMMITTED A LEGAL
INCONSISTENCY, IF NOT PLAIN JUDICIAL ERROR, IN
HOLDING IN ITS APPEALED RESOLUTION THAT
PETITIONERS COMMITTED AN UNLAWFUL ACT, THAT IS
TAKING THE LAW INTO THEIR HANDS, DESTRUCTING
(sic) 'COMPLAINANTS' PROPERTIES', AFTER HOLDING IN
ITS MAIN DECISION OF NOVEMBER 6,1974 THAT THE
ACTS FOR WHICH THEY WERE CHARGED DID NOT
CONSTITUTE GRAVE COERCION AND THEY WERE NOT
CHARGED OF ANY OTHER CRIME.
IV
THE COURT OF APPEALS ERRED IN ORDERING THE
PETITIONERS HEREIN, APPELLANTS IN CA-G.R. NO.
13456CR, JOINTLY AND SEVERALLY, TO PAY
COMPLAINANTS P9,600.00 IN SUPPOSED ACTUAL
DAMAGES.
The issue posed in the instant proceeding is whether or not the respondent
court committed a reversible error in requiring the petitioners to pay civil
indemnity to the complainants after acquitting them from the criminal charge.
Petitioners maintain the view that where the civil liability which is included in
the criminal action is that arising from and as a consequence of the criminal
act, and the defendant was acquitted in the criminal case, (no civil liability
arising from the criminal case), no civil liability arising from the criminal charge

could be imposed upon him. They cite precedents to the effect that the liability
of the defendant for the return of the amount received by him may not be
enforced in the criminal case but must be raised in a separate civil action for
the recovery of the said amount (People v. Pantig, 97 Phil. 748; following the
doctrine laid down in Manila Railroad Co. v. Honorable Rodolfo Baltazar, 49
O.G. 3874; Pueblo contra Abellera, 69 Phil. 623; People v. Maniago 69 Phil.
496; People v. Miranda, 5 SCRA 1067; Aldaba v. Elepafio 116 Phil. 457). In the
case before us, the petitioners were acquitted not because they did not
commit the acts stated in the charge against them. There is no dispute over
the forcible opening of the market stall, its demolition with axes and other
instruments, and the carting away of the merchandize. The petitioners were
acquitted because these acts were denominated coercion when they properly
constituted some other offense such as threat or malicious mischief.
The respondent Court of Appeals stated in its decision:
For a complaint to prosper under the foregoing provision, the
violence must be employed against the person, not against
property as what happened in the case at bar. ...
xxx xxx xxx
The next problem is: May the accused be convicted of an
offense other than coercion?
From all appearances, they should have been prosecuted
either for threats or malicious mischief. But the law does not
allow us to render judgment of conviction for either of these
offenses for the reason that they were not indicted for, these
offenses. The information under which they were prosecuted
does not allege the elements of either threats or malicious
mischief. Although the information mentions that the act was
by means of threats', it does not allege the particular threat
made. An accused person is entitled to be informed of the

nature of the acts imputed to him before he can be made to

enter into trial upon a valid information.
We rule that the crime of grave coercion has not been proved
in accordance with law.
While appellants are entitled to acquittal they nevertheless
are liable for the actual damages suffered by the
complainants by reason of the demolition of the stall and loss
of some of their properties. The extinction of the penal action
does not carry with it that 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. (Rule 111, Sec. 3
(c), Rev. Rules of Court; Laperal v. Aliza, 51 OG.R. 1311,
People v. Velez, 44 OG. 1811). In the instant case, the fact
from which the civil might arise, namely, the demolition of the
stall and loss of the properties contained therein; exists, and
this is not denied by the accused. And since there is no
showing that the complainants have reserved or waived their
right to institute a separate civil action, the civil aspect therein
is deemed instituted with the criminal action. (Rule 111, Sec.
1, Rev. Rules of Court).
xxx xxx xxx
Section 1 of Rule 111 of the Rules of Court states the fundamental proposition
that when a criminal action is instituted, the civil action for recovery of civil
liability arising from the offense charged is impliedly instituted with it. There is
no implied institution when the offended party expressly waives the civil action
or reserves his right to institute it separately. (Morte Sr. v. Alvizo, Jr., 101
SCRA 221).
The extinction of the civil action by reason of acquittal in the criminal case
refers exclusively to civil liability ex delicto founded on Article 100 of the

Revised Penal Code. (Elcano v. Hill, 77 SCRA 98; Virata v. Ochoa, 81 SCRA
472). In other words, the civil liability which is also extinguished upon acquittal
of the accused is the civil liability arising from the act as a crime.
As easily as 1942, the Supreme Court speaking through Justice Jorge Bocobo
in Barredo v. Garcia, et at. 73 Phil. 607 laid down the rule that the same
punishable act or omission can create two kinds of civil liabilities against the
accused and, where provided by law, his employer. 'There is the civil liability
arising from the act as a crime and the liability arising from the same act as
a quasi-delict. Either one of these two types of civil liability may be enforced
against the accused, However, the offended party cannot recover damages
under both types of liability. For instance, in cases of criminal negligence or
crimes due to reckless imprudence, Article 2177 of the Civil Code provides:
Responsibility for fault or negligence under the preceding
article is entirely separate and distinct from the civil liability
arising from negligence under the Penal Code. But the
plaintiff cannot recover damages twice for the same act or
omission of the defendant.
Section 3 (c) of Rule 111 specifically provides that:
Sec. 3. Other civil actions arising from offenses. In all
cases not included in the preceding section the following rules
shall be observed:
xxx xxx xxx
xxx xxx xxx
(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. In other cases, the person
entitled to the civil action may institute it in the Jurisdiction

and in the manner provided by law against the person who

may be liable for restitution of the thing and reparation or
indemnity for the damage suffered.
The judgment of acquittal extinguishes the liability of the accused for damages
only when it includes a declaration that the facts from which the civil might
arise did not exist. Thus, the civil liability is not extinguished by acquittal where
the acquittal is based on reasonable doubt (PNB v. Catipon, 98 Phil. 286) as
only preponderance of evidence is required in civil cases; where the court
expressly declares that the liability of the accused is not criminal but only civil
in nature (De Guzman v. Alvia, 96 Phil. 558; People v. Pantig, supra) as, for
instance, in the felonies of estafa, theft, and malicious mischief committed by
certain relatives who thereby incur only civil liability (See Art. 332, Revised
Penal Code); and, where the civil liability does not arise from or is not based
upon the criminal act of which the accused was acquitted (Castro v. Collector
of Internal Revenue, 4 SCRA 1093; See Regalado, Remedial Law
Compendium, 1983 ed., p. 623). Article 29 of the Civil Code also provides that:
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. Such action requires only a
preponderance of evidence. Upon motion of the defendant,
the court may require the plaintiff to file a bond to answer for
damages in case the complaint should be found to be
malicious.
If in a criminal case the judgment of acquittal is based upon
reasonable doubt, the court shall so declare. In the absence
of any declaration to that effect, it may be inferred from the
text of the decision whether or not the acquittal is due to that
ground.

More recently, we held that the acquittal of the defendant in the criminal case
would not constitute an obstacle to the filing of a civil case based on the same
acts which led to the criminal prosecution:
... The finding by the respondent court that he spent said sum
for and in the interest of the Capiz Agricultural and Fishery
School and for his personal benefit is not a declaration that
the fact upon which Civil Case No. V-3339 is based does not
exist. The civil action barred by such a declaration is the civil
liability arising from the offense charged, which is the one
impliedly instituted with the criminal action. (Section 1, Rule
III, Rules of Court.) Such a declaration would not bar a civil
action filed against an accused who had been acquitted in the
criminal case if the criminal action is predicated on factual or
legal considerations other than the commission of the offense
charged. A person may be acquitted of malversation where,
as in the case at bar, he could show that he did not
misappropriate the public funds in his possession, but he
could be rendered liable to restore said funds or at least to
make a proper accounting thereof if he shall spend the same
for purposes which are not authorized nor intended, and in a
manner not permitted by applicable rules and regulations.
(Republic v. Bello, 120 SCRA 203)
There appear to be no sound reasons to require a separate civil action to still
be filed considering that the facts to be proved in the civil case have already
been established in the criminal proceedings where the accused was
acquitted. Due process has been accorded the accused. He was, in fact,
exonerated of the criminal charged. The constitutional presumption of
innocence called for more vigilant efforts on the part of prosecuting attorneys
and defense counsel, a keener awareness by all witnesses of the serious
implications of perjury, and a more studied consideration by the judge of the
entire records and of applicable statutes and precedents. To require a
separate civil action simply because the accused was acquitted would mean

needless clogging of court dockets and unnecessary duplication of litigation

with all its attendant loss of time, effort, and money on the part of all
concerned.
The trial court found the following facts clearly established by the evidence
adduced by both the prosecution and the defense:
xxx xxx xxx
(9) In the morning of February 8, 1964, then Chief Galdones,
complying with the instructions contained in said
Memorandum No. 32 of the Mayor, and upon seeing that
Antonio Vergara had not vacated the premises in question,
with the aid of his policemen, forced upon the store or stall
and ordered the removal of the goods inside the store of
Vergara, at the same time taking inventory of the goods taken
out, piled them outside in front of the store and had it
cordoned with a rope, and after all the goods were taken out
from the store, ordered the demolition of said stall of Antonio
Vergara. Since then up to the trial of this case, the
whereabouts of the goods taken out from the store nor the
materials of the demolished stall have not been made known.
The respondent Court of Appeals made a similar finding that:

On the morning of February 8th, because the said Vergaras

had not up to that time complied with the order to vacate, the
co-accused Chief of Police Galdones and some members of
his police force, went to the market and, using ax, crowbars
and hammers, demolished the stall of the Vergaras who were
not present or around, and after having first inventoried the
goods and merchandise found therein, they had them brought
to the municipal building for safekeeping. Inspite of notice
served upon the Vergaras to take possession of the goods
and merchandise thus taken away, the latter refused to do so.
The loss and damage to the Vergaras as they evaluated them
were:
Cost of stall construction P1,300.00
Value of furniture and
equipment
judgment destroyed 300.00
Value of goods and equipment taken
8,000.00
P9,600.00
It is not disputed that the accused demolished the grocery
stall of the complainants Vergaras and carted away its
contents. The defense that they did so in order to abate what
they considered a nuisance per se is untenable, This finds no
support in law and in fact. The couple has been paying
rentals for the premises to the government which allowed
them to lease the stall. It is, therefore, farfetched to say that
the stall was a nuisance per se which could be summarily
abated.

The petitioners, themselves, do not deny the fact that they caused the
destruction of the complainant's market stall and had its contents carted away.
They state:
On February 8, 1964, despite personal pleas on Vergaras by
the Mayor to vacate the passageways of Market Building No.
3, the Vergaras were still in the premises, so the petitioners
Chief of Police and members of the Police Force of Jose
Panganiban, pursuant to the Mayor' 6 directives, demolished
the store of the Vergaras, made an inventory of the goods
found in said store, and brought these goods to the municipal
building under the custody of the Municipal Treasurer, ...
The only supposed obstacle is the provision of Article 29 of the Civil Code,
earlier cited, that "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." According
to some scholars, this provision of substantive law calls for a separate civil
action and cannot be modified by a rule of remedial law even in the interests
of economy and simplicity and following the dictates of logic and common
sense.
As stated by retired Judge J. Cezar Sangco:
... if the Court finds the evidence sufficient to sustain the civil
action but inadequate to justify a conviction in the criminal
action, may it render judgment acquitting the accused on
reasonable doubt, but hold him civilly liable nonetheless? An
affirmative answer to this question would be consistent with
the doctrine that the two are distinct and separate actions,
and win (a) dispense with the reinstituting of the same civil
action, or one based on quasi-delict or other independent civil
action, and of presenting the same evidence: (b) save the
injured party unnecessary expenses in the prosecution of the

civil action or enable him to take advantage of the free

services of the fiscal; and (c) otherwise resolve the unsettling
implications of permitting the reinstitution of a separate civil
action whether based on delict, or quasi-delict, or other
independent civil actions.
... But for the court to be able to adjudicate in the manner
here suggested, Art. 29 of the Civil Code should be amended
because it clearly and expressly provides that the civil action
based on the same act or omission may only be instituted in a
separate action, and therefore, may not inferentially be
resolved in the same criminal action. To dismiss the civil
action upon acquittal of the accused and disallow the
reinstitution of any other civil action, would likewise render,
unjustifiably, the acquittal on reasonable doubt without any
significance, and would violate the doctrine that the two
actions are distinct and separate.
In the light of the foregoing exposition, it seems evident that
there is much sophistry and no pragmatism in the doctrine
that it is inconsistent to award in the same proceedings
damages against the accused after acquitting him on
reasonable doubt. Such doctrine must recognize the distinct
and separate character of the two actions, the nature of an
acquittal on reasonable doubt, the vexatious and oppressive
effects of a reservation or institution of a separate civil action,
and that the injured party is entitled to damages not because
the act or omission is punishable but because he was
damaged or injured thereby (Sangco, Philippine Law on Torts
and Damages, pp. 288-289).
We see no need to amend Article 29 of the Civil Code in order to allow a court
to grant damages despite a judgment of acquittal based on reasonable doubt.
What Article 29 clearly and expressly provides is a remedy for the plaintiff in

case the defendant has been acquitted in a criminal prosecution on the

ground that his guilt has not been proved beyond reasonable doubt. It merely
emphasizes that a civil action for damages is not precluded by an acquittal for
the same criminal act or omission. The Civil Code provision does not state that
the remedy can be availed of only in a separate civil action. A separate civil
case may be filed but there is no statement that such separate filing is the only
and exclusive permissible mode of recovering damages.
There is nothing contrary to the Civil Code provision in the rendition of a
judgment of acquittal and a judgment awarding damages in the same criminal
action. The two can stand side by side. A judgment of acquittal operates to
extinguish the criminal liability. It does not, however, extinguish the civil liability
unless there is clear showing that the act from which civil liability might arise
did not exist.
A different conclusion would be attributing to the Civil Code a trivial
requirement, a provision which imposes an uncalled for burden before one
who has already been the victim of a condemnable, yet non-criminal, act may
be accorded the justice which he seeks.
We further note the rationale behind Art. 29 of the Civil Code in arriving at the
intent of the legislator that they could not possibly have intended to make it
more difficult for the aggrieved party to recover just compensation by making a
separate civil action mandatory and exclusive:
The old rule that the acquittal of the accused in a criminal
case also releases him from civil liability is one of the most
serious flaws in the Philippine legal system. It has given rise
to numberless instances of miscarriage of justice, where the
acquittal was due to a reasonable doubt in the mind of the
court as to the guilt of the accused. The reasoning followed is
that inasmuch as the civil responsibility is derived from the the
criminal offense, when the latter is not proved, civil liability
cannot be demanded.

This is one of those cases where confused thinking leads to

unfortunate and deplorable consequences. Such reasoning
fails to draw a clear line of demarcation between criminal
liability and civil responsibility, and to determine the logical
result of the distinction. The two liabilities are separate and
distinct from each other. One affects the social order and the
other, private rights. One is for the punishment or correction
of the offender while the other is for reparation of damages
suffered by the aggrieved party... it is just and proper that, for
the purposes of the imprisonment of or fine upon the
accused, the offense should be proved beyond reasonable
doubt. But for the purpose of indemnifying the complaining
party, why should the offense also be proved beyond
reasonable doubt? Is not the invasion or violation of every
private right to be proved only by preponderance of
evidence? Is the right of the aggrieved person any less
private because the wrongful act is also punishable by the
criminal law? (Code Commission, pp. 45-46).
A separate civil action may be warranted where additional facts have to be
established or more evidence must be adduced or where the criminal case
has been fully terminated and a separate complaint would be just as
efficacious or even more expedient than a timely remand to the trial court
where the criminal action was decided for further hearings on the civil aspects
of the case. The offended party may, of course, choose to file a separate
action. These do not exist in this case. Considering moreover the delays
suffered by the case in the trial, appellate, and review stages, it would be
unjust to the complainants in this case to require at this time a separate civil
action to be filed.
With this in mind, we therefore hold that the respondent Court of Appeals did
not err in awarding damages despite a judgment of acquittal.

WHEREFORE, we hereby AFFIRM the decision of the respondent Court of

Appeals and dismiss the petition for lack of merit.

SO ORDERED.