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HUMAN RELATIONS PROVISIONS- Articles 19-36
G.R. No. 88694 January 11, 1993
ALBENSON ENTERPRISES CORP., JESSE YAP, AND BENJAMIN
MENDIONA, petitioners,
vs.
THE COURT OF APPEALS AND EUGENIO S. BALTAO, respondents.
Puruganan, Chato, Chato & Tan for petitioners.
Lino M. Patajo, Francisco Ma. Chanco, Ananiano Desierto and Segundo Mangohig for
private respondent.
BIDIN, J.:
This petition assails the decision of respondent Court of Appeals in
CA-GR CV No. 14948 entitled "Eugenio S. Baltao, plaintiff-appellee vs. Albenson
Enterprises Corporation, et al, defendants-appellants", which modified the judgment of the
Regional Trial Court of Quezon City, Branch XCVIII in Civil Case No. Q-40920 and
ordered petitioner to pay private respondent, among others, the sum of P500,000.00 as
moral damages and attorney's fees in the amount of P50,000.00.
The facts are not disputed.
In September, October, and November 1980, petitioner Albenson Enterprises Corporation
(Albenson for short) delivered to Guaranteed Industries, Inc. (Guaranteed for short) located
at 3267 V. Mapa Street, Sta. Mesa, Manila, the mild steel plates which the latter ordered.
As part payment thereof, Albenson was given Pacific Banking Corporation Check No.
136361 in the amount of P2,575.00 and drawn against the account of E.L. Woodworks
(Rollo, p. 148).
When presented for payment, the check was dishonored for the reason "Account Closed."
Thereafter, petitioner Albenson, through counsel, traced the origin of the dishonored check.
From the records of the Securities and Exchange Commission (SEC), Albenson discovered
that the president of Guaranteed, the recipient of the unpaid mild steel plates, was one
"Eugenio S. Baltao." Upon further inquiry, Albenson was informed by the Ministry of
Trade and Industry that E.L. Woodworks, a single proprietorship business, was registered
in the name of one "Eugenio Baltao". In addition, upon verification with the drawee bank,
Pacific Banking Corporation, Albenson was advised that the signature appearing on the
subject check belonged to one "Eugenio Baltao."
After obtaining the foregoing information, Albenson, through counsel, made an
extrajudicial demand upon private respondent Eugenio S. Baltao, president of Guaranteed,
to replace and/or make good the dishonored check.
Respondent Baltao, through counsel, denied that he issued the check, or that the signature
appearing thereon is his. He further alleged that Guaranteed was a defunct entity and
hence, could not have transacted business with Albenson.
On February 14, 1983, Albenson filed with the Office of the Provincial Fiscal of Rizal a
complaint against Eugenio S. Baltao for violation of Batas Pambansa Bilang 22. Submitted
to support said charges was an affidavit of petitioner Benjamin Mendiona, an employee of
Albenson. In said affidavit, the above-mentioned circumstances were stated.
It appears, however, that private respondent has a namesake, his son Eugenio Baltao III,
who manages a business establishment, E.L. Woodworks, on the ground floor of the Baltao
Building, 3267 V. Mapa Street, Sta. Mesa, Manila, the very same business address of
Guaranteed.
On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an information against
Eugenio S. Baltao for Violation of Batas Pambansa Bilang 22. In filing said information,
Fiscal Sumaway claimed that he had given Eugenio S. Baltao opportunity to submit
controverting evidence, but the latter failed to do so and therefore, was deemed to have
waived his right.
Respondent Baltao, claiming ignorance of the complaint against him, immediately filed
with the Provincial Fiscal of Rizal a motion for reinvestigation, alleging that it was not true
that he had been given an opportunity to be heard in the preliminary investigation
conducted by Fiscal Sumaway, and that he never had any dealings with Albenson or
Benjamin Mendiona, consequently, the check for which he has been accused of having
issued without funds was not issued by him and the signature in said check was not his.
On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal reversed the finding of
Fiscal Sumaway and exonerated respondent Baltao. He also instructed the Trial Fiscal to
move for dismissal of the information filed against Eugenio S. Baltao. Fiscal Castro found
that the signature in PBC Check No. 136361 is not the signature of Eugenio S. Baltao. He
also found that there is no showing in the records of the preliminary investigation that
Eugenio S. Baltao actually received notice of the said investigation. Fiscal Castro then
castigated Fiscal Sumaway for failing to exercise care and prudence in the performance of
his duties, thereby causing injustice to respondent who was not properly notified of the
complaint against him and of the requirement to submit his counter evidence.
Because of the alleged unjust filing of a criminal case against him for allegedly issuing a
check which bounced in violation of Batas Pambansa Bilang 22 for a measly amount of
P2,575.00, respondent Baltao filed before the Regional Trial Court of Quezon City a
complaint for damages against herein petitioners Albenson Enterprises, Jesse Yap, its
owner, and Benjamin Mendiona, its employee.
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In its decision, the lower court observed that "the check is drawn against the account of
"E.L. Woodworks," not of Guaranteed Industries of which plaintiff used to be President.
Guaranteed Industries had been inactive and had ceased to exist as a corporation since
1975. . . . . The possibility is that it was with Gene Baltao or Eugenio Baltao III, a son of
plaintiff who had a business on the ground floor of Baltao Building located on V. Mapa
Street, that the defendants may have been dealing with . . . ." (Rollo, pp. 41-42).
The dispositive portion of the trial court 's decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants
ordering the latter to pay plaintiff jointly and severally:
1. actual or compensatory damages of P133,350.00;
2. moral damages of P1,000,000.00 (1 million pesos);
3. exemplary damages of P200,000.00;
4. attorney's fees of P100,000.00;
5 costs.
Defendants' counterclaim against plaintiff and claim for damages against Mercantile
Insurance Co. on the bond for the issuance of the writ of attachment at the instance of
plaintiff are hereby dismissed for lack of merit. (Rollo, pp. 38-39).
On appeal, respondent court modified the trial court's decision as follows:
WHEREFORE, the decision appealed from is MODIFIED by reducing the moral damages
awarded therein from P1,000,000.00 to P500,000.00 and the attorney's fees from
P100,000.00 to P50,000.00, said decision being hereby affirmed in all its other aspects.
With costs against appellants. (Rollo, pp. 50-51)
Dissatisfied with the above ruling, petitioners Albenson Enterprises Corp., Jesse Yap, and
Benjamin Mendiona filed the instant Petition, alleging that the appellate court erred in:
1. Concluding that private respondent's cause of action is not one based on malicious
prosecution but one for abuse of rights under Article 21 of the Civil Code notwithstanding
the fact that the basis of a civil action for malicious prosecution is Article 2219 in relation
to Article 21 or Article 2176 of the Civil Code . . . .
2. Concluding that "hitting at and in effect maligning (private respondent) with an unjust
criminal case was, without more, a plain case of abuse of rights by misdirection" and "was
therefore, actionable by itself," and which "became inordinately blatant and grossly
aggravated when . . . (private respondent) was deprived of his basic right to notice and a
fair hearing in the so-called preliminary investigation . . . . "
3. Concluding that petitioner's "actuations in this case were coldly deliberate and
calculated", no evidence having been adduced to support such a sweeping statement.
4. Holding the petitioner corporation, petitioner Yap and petitioner Mendiona jointly and
severally liable without sufficient basis in law and in fact.
5. Awarding respondents
5.1. P133,350.00 as actual or compensatory damages, even in the absence of sufficient
evidence to show that such was actually suffered.
5.2. P500,000.00 as moral damages considering that the evidence in this connection merely
involved private respondent's alleged celebrated status as a businessman, there being no
showing that the act complained of adversely affected private respondent's reputation or
that it resulted to material loss.
5.3. P200,000.00 as exemplary damages despite the fact that petitioners were duly advised
by counsel of their legal recourse.
5.4. P50,000.00 as attorney's fees, no evidence having been adduced to justify such an
award (Rollo, pp. 4-6).
Petitioners contend that the civil case filed in the lower court was one for malicious
prosecution. Citing the case of Madera vs. Lopez (102 SCRA 700 [1981]), they assert that
the absence of malice on their part absolves them from any liability for malicious
prosecution. Private respondent, on the other hand, anchored his complaint for Damages on
Articles 19, 20, and 21 ** of the Civil Code.
Article 19, known to contain what is commonly referred to as the principle of abuse of
rights, sets certain standards which may be observed not only in the exercise of one's rights
but also in the performance of one's duties. These standards are the following: to act with
justice; to give everyone his due; and to observe honesty and good faith. The law,
therefore, recognizes the primordial limitation on all rights: that in their exercise, the norms
of human conduct set forth in Article 19 must be observed. A right, though by itself legal
because recognized or granted by law as such, may nevertheless become the source of
some illegality. When a right is exercised in a manner which does not conform with the
norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be held responsible. Although the requirements
of each provision is different, these three (3) articles are all related to each other. As the
eminent Civilist Senator Arturo Tolentino puts it: "With this article (Article 21), combined
with articles 19 and 20, the scope of our law on civil wrongs has been very greatly
broadened; it has become much more supple and adaptable than the Anglo-American law
on torts. It is now difficult to conceive of any malevolent exercise of a right which could
not be checked by the application of these articles" (Tolentino, 1 Civil Code of the
Philippines 72).
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There is however, no hard and fast rule which can be applied to determine whether or not
the principle of abuse of rights may be invoked. The question of whether or not the
principle of abuse of rights has been violated, resulting in damages under Articles 20 and
21 or other applicable provision of law, depends on the circumstances of each case. (Globe
Mackay Cable and Radio Corporation vs. Court of Appeals, 176 SCRA 778 [1989]).
The elements of an abuse of right under Article 19 are the following: (1) There is a legal
right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or
injuring another. Article 20 speaks of the general sanction for all other provisions of law
which do not especially provide for their own sanction (Tolentino, supra, p. 71). Thus,
anyone who, whether willfully or negligently, in the exercise of his legal right or duty,
causes damage to another, shall indemnify his victim for injuries suffered thereby. Article
21 deals with acts contra bonus mores, and has the following elements: 1) There is an act
which is legal; 2) but which is contrary to morals, good custom, public order, or public
policy; 3) and it is done with intent to injure.
Thus, under any of these three (3) provisions of law, an act which causes injury to another
may be made the basis for an award of damages.
There is a common element under Articles 19 and 21, and that is, the act must be
intentional. However, Article 20 does not distinguish: the act may be done either
"willfully", or "negligently". The trial court as well as the respondent appellate court
mistakenly lumped these three (3) articles together, and cited the same as the bases for the
award of damages in the civil complaint filed against petitioners, thus:
With the foregoing legal provisions (Articles 19, 20, and 21) in focus, there is not much
difficulty in ascertaining the means by which appellants' first assigned error should be
resolved, given the admitted fact that when there was an attempt to collect the amount of
P2,575.00, the defendants were explicitly warned that plaintiff Eugenio S. Baltao is not the
Eugenio Baltao defendants had been dealing with (supra, p. 5). When the defendants
nevertheless insisted and persisted in filing a case a criminal case no less against
plaintiff, said defendants ran afoul of the legal provisions (Articles 19, 20, and 21 of the
Civil Code) cited by the lower court and heretofore quoted (supra).
Defendants, not having been paid the amount of P2,575.00, certainly had the right to
complain. But that right is limited by certain constraints. Beyond that limit is the area of
excess, of abuse of rights. (Rollo, pp.
44-45).
Assuming, arguendo, that all the three (3) articles, together and not independently of each
one, could be validly made the bases for an award of damages based on the principle of
"abuse of right", under the circumstances, We see no cogent reason for such an award of
damages to be made in favor of private respondent.
Certainly, petitioners could not be said to have violated the aforestated principle of abuse
of right. What prompted petitioners to file the case for violation of Batas Pambansa Bilang
22 against private respondent was their failure to collect the amount of P2,575.00 due on a
bounced check which they honestly believed was issued to them by private respondent.
Petitioners had conducted inquiries regarding the origin of the check, and yielded the
following results: from the records of the Securities and Exchange Commission, it was
discovered that the President of Guaranteed (the recipient of the unpaid mild steel plates),
was one "Eugenio S. Baltao"; an inquiry with the Ministry of Trade and Industry revealed
that E.L. Woodworks, against whose account the check was drawn, was registered in the
name of one "Eugenio Baltao"; verification with the drawee bank, the Pacific Banking
Corporation, revealed that the signature appearing on the check belonged to one "Eugenio
Baltao".
In a letter dated December 16, 1983, counsel for petitioners wrote private respondent
demanding that he make good the amount of the check. Counsel for private respondent
wrote back and denied, among others, that private respondent ever transacted business with
Albenson Enterprises Corporation; that he ever issued the check in question. Private
respondent's counsel even went further: he made a warning to defendants to check the
veracity of their claim. It is pivotal to note at this juncture that in this same letter, if indeed
private respondent wanted to clear himself from the baseless accusation made against his
person, he should have made mention of the fact that there are three (3) persons with the
same name, i.e.: Eugenio Baltao, Sr., Eugenio S. Baltao, Jr. (private respondent), and
Eugenio Baltao III (private respondent's son, who as it turned out later, was the issuer of
the check). He, however, failed to do this. The last two Baltaos were doing business in the
same building Baltao Building located at 3267 V. Mapa Street, Sta. Mesa, Manila.
The mild steel plates were ordered in the name of Guaranteed of which respondent Eugenio
S. Baltao is the president and delivered to Guaranteed at Baltao building. Thus, petitioners
had every reason to believe that the Eugenio Baltao who issued the bouncing check is
respondent Eugenio S. Baltao when their counsel wrote respondent to make good the
amount of the check and upon refusal, filed the complaint for violation of BP Blg. 22.
Private respondent, however, did nothing to clarify the case of mistaken identity at first
hand. Instead, private respondent waited in ambush and thereafter pounced on the hapless
petitioners at a time he thought was propitious by filing an action for damages. The Court
will not countenance this devious scheme.
The criminal complaint filed against private respondent after the latter refused to make
good the amount of the bouncing check despite demand was a sincere attempt on the part
of petitioners to find the best possible means by which they could collect the sum of money
due them. A person who has not been paid an obligation owed to him will naturally seek
ways to compel the debtor to pay him. It was normal for petitioners to find means to make
the issuer of the check pay the amount thereof. In the absence of a wrongful act or
omission or of fraud or bad faith, moral damages cannot be awarded and that the adverse
result of an action does not per se make the action wrongful and subject the actor to the
payment of damages, for the law could not have meant to impose a penalty on the right to
litigate (Rubio vs. Court of Appeals, 141 SCRA 488 [1986]).
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In the case at bar, private respondent does not deny that the mild steel plates were ordered
by and delivered to Guaranteed at Baltao building and as part payment thereof, the
bouncing check was issued by one Eugenio Baltao. Neither had private respondent
conveyed to petitioner that there are two Eugenio Baltaos conducting business in the same
building he and his son Eugenio Baltao III. Considering that Guaranteed, which
received the goods in payment of which the bouncing check was issued is owned by
respondent, petitioner acted in good faith and probable cause in filing the complaint before
the provincial fiscal.
To constitute malicious prosecution, there must be proof that the prosecution was prompted
by a sinister design to vex and humiliate a person, and that it was initiated deliberately by
the defendant knowing that his charges were false and groundless. Concededly, the mere
act of submitting a case to the authorities for prosecution does not make one liable for
malicious prosecution. (Manila Gas Corporation vs. Court of Appeals, 100 SCRA 602
[1980]). Still, private respondent argues that liability under Articles 19, 20, and 21 of the
Civil Code is so encompassing that it likewise includes liability for damages for malicious
prosecution under Article 2219 (8). True, a civil action for damages for malicious
prosecution is allowed under the New Civil Code, more specifically Articles 19, 20, 26, 29,
32, 33, 35, and 2219 (8) thereof. In order that such a case can prosper, however, the
following three (3) elements must be present, to wit: (1) The fact of the prosecution and the
further fact that the defendant was himself the prosecutor, and that the action was finally
terminated with an acquittal; (2) That in bringing the action, the prosecutor acted without
probable cause; (3) The prosecutor was actuated or impelled by legal malice (Lao vs. Court
of Appeals, 199 SCRA 58, [1991]).
Thus, a party injured by the filing of a court case against him, even if he is later on
absolved, may file a case for damages grounded either on the principle of abuse of rights,
or on malicious prosecution. As earlier stated, a complaint for damages based on malicious
prosecution will prosper only if the three (3) elements aforecited are shown to exist. In the
case at bar, the second and third elements were not shown to exist. It is well-settled that
one cannot be held liable for maliciously instituting a prosecution where one has acted with
probable cause. "Probable cause is the existence of such facts and circumstances as would
excite the belief, in a reasonable mind, acting on the facts within the knowledge of the
prosecutor, that the person charged was guilty of the crime for which he was prosecuted. In
other words, a suit will lie only in cases where a legal prosecution has been carried on
without probable cause. The reason for this rule is that it would be a very great
discouragement to public justice, if prosecutors, who had tolerable ground of suspicion,
were liable to be sued at law when their indictment miscarried" (Que vs. Intermediate
Appellate Court, 169 SCRA 137 [1989]).
The presence of probable cause signifies, as a legal consequence, the absence of malice. In
the instant case, it is evident that petitioners were not motivated by malicious intent or by
sinister design to unduly harass private respondent, but only by a well-founded anxiety to
protect their rights when they filed the criminal complaint against private respondent.
To constitute malicious prosecution, there must be proof that the prosecution was prompted
by a sinister design to vex and humiliate a person, that it was initiated deliberately by the
defendant knowing that his charges were false and groundless. Concededly, the mere act of
submitting a case to the authorities for prosecution does not make one liable for malicious
prosecution. Proof and motive that the institution of the action was prompted by a sinister
design to vex and humiliate a person must be clearly and preponderantly established to
entitle the victims to damages (Ibid.).
In the case at bar, there is no proof of a sinister design on the part of petitioners to vex or
humiliate private respondent by instituting the criminal case against him. While petitioners
may have been negligent to some extent in determining the liability of private respondent
for the dishonored check, the same is not so gross or reckless as to amount to bad faith
warranting an award of damages.
The root of the controversy in this case is founded on a case of mistaken identity. It is
possible that with a more assiduous investigation, petitioners would have eventually
discovered that private respondent Eugenio S. Baltao is not the "Eugenio Baltao"
responsible for the dishonored check. However, the record shows that petitioners did exert
considerable effort in order to determine the liability of private respondent. Their
investigation pointed to private respondent as the "Eugenio Baltao" who issued and signed
the dishonored check as the president of the debtor-corporation Guaranteed Enterprises.
Their error in proceeding against the wrong individual was obviously in the nature of an
innocent mistake, and cannot be characterized as having been committed in bad faith. This
error could have been discovered if respondent had submitted his counter-affidavit before
investigating fiscal Sumaway and was immediately rectified by Provincial Fiscal Mauro
Castro upon discovery thereof, i.e., during the reinvestigation resulting in the dismissal of
the complaint.
Furthermore, the adverse result of an action does not per se make the act wrongful and
subject the actor to the payment of moral damages. The law could not have meant to
impose a penalty on the right to litigate, such right is so precious that moral damages may
not be charged on those who may even exercise it erroneously. And an adverse decision
does not ipso facto justify the award of attorney's fees to the winning party (Garcia vs.
Gonzales, 183 SCRA 72 [1990]).
Thus, an award of damages and attorney's fees is unwarranted where the action was filed in
good faith. If damage results from a person's exercising his legal rights, it is damnum
absque injuria (Ilocos Norte Electric Company vs. Court of Appeals, 179 SCRA 5 [1989]).
Coming now to the claim of private respondent for actual or compensatory damages, the
records show that the same was based solely on his allegations without proof to
substantiate the same. He did not present proof of the cost of the medical treatment which
he claimed to have undergone as a result of the nervous breakdown he suffered, nor did he
present proof of the actual loss to his business caused by the unjust litigation against him.
In determining actual damages, the court cannot rely on speculation, conjectures or
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guesswork as to the amount. Without the actual proof of loss, the award of actual damages
becomes erroneous (Guilatco vs. City of Dagupan, 171 SCRA 382 [1989]).
Actual and compensatory damages are those recoverable because of pecuniary loss in
business, trade, property, profession, job or occupation and the same must be proved,
otherwise, if the proof is flimsy and unsubstantiated, no damages will be given (Rubio vs.
Court of Appeals, 141 SCRA 488 [1986]). For these reasons, it was gravely erroneous for
respondent court to have affirmed the award of actual damages in favor of private
respondent in the absence of proof thereof.
Where there is no evidence of the other party having acted in wanton, fraudulent or
reckless, or oppressive manner, neither may exemplary damages be awarded (Dee Hua
Liong Electrical Equipment Corporation vs. Reyes, 145 SCRA 488 [1986]).
As to the award of attorney's fees, it is well-settled that the same is the exception rather
than the general rule. Needless to say, the award of attorney's fees must be disallowed
where the award of exemplary damages is eliminated (Article 2208, Civil Code; Agustin
vs. Court of Appeals, 186 SCRA 375 [1990]). Moreover, in view of the fact that there was
no malicious prosecution against private respondent, attorney's fees cannot be awarded him
on that ground.
In the final analysis, there is no proof or showing that petitioners acted maliciously or in
bad faith in the filing of the case against private respondent. Consequently, in the absence
of proof of fraud and bad faith committed by petitioners, they cannot be held liable for
damages (Escritor, Jr. vs. Intermediate Appellate Court, 155 SCRA 577 [1987]). No
damages can be awarded in the instant case, whether based on the principle of abuse of
rights, or for malicious prosecution. The questioned judgment in the instant case attests to
the propensity of trial judges to award damages without basis. Lower courts are hereby
cautioned anew against awarding unconscionable sums as damages without bases therefor.
WHEREFORE, the petition is GRANTED and the decision of the Court of Appeals in C.A.
G.R. C.V. No. 14948 dated May 13, 1989, is hereby REVERSED and SET ASIDE. Costs
against respondent Baltao.
SO ORDERED.
[G. R. No. 126486. February 9, 1998]
BARONS MARKETING CORP., petitioner, vs. COURT OF APPEALS and PHELPS
DODGE PHILS., INC. respondents.
DECISION
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 attorneys
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 plaintiffs 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 attorneys 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
defendants offer and accordingly reiterated its demand for the full payment of defendants
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
attorneys 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.
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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
Dodges 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 defendants purchases from plaintiff
and interest thereon at 12% per annum computed from the respective expiration of the 60
day credit term, vis--vis the various sales invoices and/or delivery receipts;
2. 25% of the preceding obligation for and as attorneys 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 P3,108,000.00. The latter amount
appears in petitioners prayer supposedly as a result of a typographical error.
On the other hand, petitioner reiterated its claims for damages as a result of creditors
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 defendants purchases from plaintiff
and interest thereon at 12% per annum computed from the respective expiration of the 60
day credit term, vis--vis the various sales invoices and/or delivery receipts; and
2. 5% of the preceding obligation for and as attorneys 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 creditors abuse, and (2)
petitioner liable to private respondent for interest and attorneys fees.
I
Petitioner does not deny private respondents rights to institute an action for collection and
to claim full payment. Indeed, petitioners right to file an action for collection is beyond
cavil.[5] Likewise, private respondents right to reject petitioners offer to pay in installments
is guaranteed by Article 1248 of the Civil Code which states:
ART. 1248. Unless there is an express stipulation to that effect, the creditor cannot be
compelled partially to receive the prestations in which the obligation consists. Neither may
the debtor be required to make partial payments.
However, when the debt is in part liquidated and in part unliquidated, the creditor may
demand and the debtor may effect the payment of the former without waiting for the
liquidation of the latter.
Under this provision, the prestation , i.e., the object of the obligation, must be performed in
one act, not in parts.
Tolentino concedes that the right has its limitations:
Partial Prestations. Since the creditor cannot be compelled to accept partial performance,
unless otherwise stipulated, the creditor who refuses to accept partial prestations does not
incur in delay or mora accipiendi, except when there is abuse of right or if good faith
requires acceptance.[6]
Indeed, the law, as set forth in Article 19 of the Civil Code, prescribes a primordial
limitation on all rights by setting certain standards that must be observed in the exercise
thereof .[7] Thus:
ART. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
Petitioner now invokes Article 19 and Article 21 [8] of the Civil Code, claiming that private
respondent abused its rights when it rejected petitioners offer of settlement and
subsequently filed the action for collection considering:
xxx 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
6|P a g e
TORTS 09/25/17
respondent, and that the petitioner was just asking a small concession that it be allowed to
liquidate its obligation to eight (8) monthly installments of P500,000.00 plus 1% interest
per month on the balance which proposal was supported by post-dated checks.[9]
Expounding on its theory, petitioner states:
In the ordinary course of events, a suit for collection of a sum of money filed in court is
done for the primary purpose of collecting a debt or obligation. If there is an offer by the
debtor to pay its debt or obligation supported by post-dated checks and with provision for
interests, the normal response of a creditor would be to accept the offer of compromise and
not file the suit for collection. It is of common knowledge that proceedings in our courts
would normally take years before an action is finally settled. It is always wiser and more
prudent to accept an offer of payment in installment rather than file an action in court to
compel the debtor to settle his obligation in full in a single payment.
xxx.
xxx. Why then did private respondent elect to file a suit for collection rather than accept
petitioners offer of settlement, supported by post-dated checks, by paying monthly
installments of P500,000.00 plus 1% per month commencing on October 15, 1987 until full
payment?The answer is obvious. The action of private respondent in filling a suit for
collection was an abuse of right and exercised for the sole purpose of prejudicing and
injuring the petitioner.[10]
Petitioner prays that the Court order private respondent to pay petitioner moral and
exemplary damages, attorneys 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.
Petitioners 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 petitioners 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.Petitioners 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 petitioners 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 petitioners 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, petitioners prayer for moral and exemplary damages must thus be
rejected. Petitioners 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.
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
xxx.
Having ruled that private respondents 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.
7|P a g e
TORTS 09/25/17
It may not be amiss to state that petitioners contract with private respondent has the force
of law between them.[14] Petitioner 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
respondents right under Article 1248 will be negated, the sanctity of its contract with
petitioner defiled. The principle of autonomy of contracts[16] 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 respondents sales invoices
expressly provide that:
xxx. Interest at 12% per annum will be charged on all overdue account plus 25% on said
amount for attorneys fees and collection. xxx.[17]
It may also be noted that the above stipulation, insofar as it provides for the payment of
25% on said amount for attorneys 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.
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 attorneys 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 attorneys fees and collection fees are manifestly
exorbitant.Accordingly, we reduce the same to ten percent (10%) of the principal.
Private respondent, however, argues that petitioner failed to question the award of
attorneys 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 respondents 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]

Petitioner nevertheless urges this Court to reduce the attorneys fees for being grossly WHEREFORE, the decision of the Court of Appeals is hereby MODIFIED in that the
excessive, considering the nature of the case which is a mere action for collection of a sum attorneys and collection fees are reduced to ten percent (10%) of the principal but is
of money. It may be pointed out however that the above penalty is supposed to answer not AFFIRMED in all other respects.
only for attorneys fees but for collection fees as well. Moreover:
SO ORDERED.
x x x 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 irregularly complied with by the debtor. Even if there has been no
performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable. (Underscoring supplied.)

The sentiments of the law are echoed in Article 2227 of the same Code:

8|P a g e
TORTS 09/25/17
G.R. No. 85464 October 3, 1991
DAVID P. LLORENTE, petitioner,
vs.
THE SANDIGANBAYAN (THIRD DIVISION), and PEOPLE OF THE
PHILIPPINES, respondents.
Padilla Law Office for petitioner.
SAMIENTO, J.:
The petitioner questions the Decision of the Sandiganbayan * holding him civilly liable
in spite of an acquittal. The facts are not disputed:
Atty. Llorente was employed in the PCA, a public corporation (Sec. 1, PD 1468) from
1975 to August 31, 1986, when he resigned. He occupied the positions of Assistant
Corporate Secretary for a year, then Corporate Legal Counsel until November 2,
1981, and, finally, Deputy Administrator for Administrative Services, Finance
Services, Legal Affairs Departments. ...
As a result of a massive reorganization in 1981, hundreds of PCA employees resigned
effective October 31, 1981. Among them were Mr. Curio, Mrs. Perez, Mr. Azucena,
and Mrs. Javier (TSN, Oct. 22/87, p. 2; Exhs. M-2, N-1, and O-1). They were all
required to apply for PCA clearances in support of their gratuity benefits (Exhs. C,
M-2, N-1, and 0-1). Condition (a) of the clearance provided:
The clearance shall be signed by the PCA officers concemed only when there is no
item appearing under "PENDING ACCOUNTABILITY" or after every item
previously entered thereunder is fully settled. Settlement thereof shall be written in
RED ink. (Exhs. D or D-1 and 1-B)
After the clearance was signed by the PCA officers concerned, it was to be approved,
first, by Atty. Llorente, in the case of a rank-and-file employee, or by Col. Duefias, the
acting administrator, in the case of an officer, and then by Atty. Rodriguez, the
corporate auditor ...
Notwithstanding Condition (a) just quoted, the clearances of Mrs Perez and Mr.
Azucena both dated October 30, 1981, were favorably acted upon by the CPA officers
concerned, including Mrs. Sotto, acting for the accounting division, even if the
clearances showed they had pending accountabilities to the GSIS and the UCPB, and
subsequently approved by Attys. Llorente and Rodriguez (Exhs. M and N).
Thereafter, the vouchers for their gratuity benefits, also indicating their outstanding
obligations were approved, among others, by Atty Llorente, and their gratuity
benefits released to them after deducting those accountabilities. ...
The clearanceof Mrs. Javier of the same date of October 30, 1991 was also signed by
all PCA officers concerned, including Mrs. Sotto even though the former had
unsettled obligations noted thereon, viz 'SIS loan P5,387.00 and UCPB car loan
P19,705.00, or a total of P25,092.00, and later on approveed by Col. Dueas, Mrs
Javier being an officer, and Atty. Rodriguez "Exh. (O)". Similariv the, voucher of
Mrs Javier for her gratuity benefits likewise recited her accountabilities of P25,092.00
plus P92.000.00, which was handwritten. Both accounts were deducted from her
gratuity benefits, and the balance released to her on November 16, 1981. The voucher
passed post-audit by Atty. Rodriguez on December 1, 1981 (Exhs. L,
L-1, L-2, and L-3).
The said P92,000.00 was the disallowed portion of the cash advances received by Mr.
Curio in connection with his duties as "super cargo" in the distribution of seed nuts
throughout the country. He received them through and in the name of Mrs. Javier
from the UCPB. When the amount was disallowed, the UCPB withheld from the PCA
certain receivables; the latter, in turn, deducted the same amount from the gratuity
benefits of Mrs. Javier, she being primarily liable therefor (Exhs, L, L-1, L-2, and L-
3), At the time of the deduction, the additional liquidation papers had already been
submitted and were in process. Just in case she would not be successful in having the
entire amount wiped out, she requested Mr. Curio, who admittedly received it, to
execute, as he did, an affidavit dated November 26, 1981, in which he assumed
whatever portion thereof might not be allowed ...
The clearance of Mr. Curio dated November 4,1981, (Exh. D or D-1) likewise
favorably passed all officers concerned, including Mrs. Sotto, the latter signing
despite the notation handwritten on December 8, 1981, that Mr. Curio had pending
accountabilities, namely: GSIS loan 2,193.74, 201 accounts receivable P3,897.75,
and UCPB loan P3,623.49, or a total of P10,714.78. However, when the clearance
was submitted to Atty. Llorente for approval, he refused to approve it. For this
reason, the clearance was held up in his office and did not reach Atty. Rodriguez, ...
The reason given by Atty. Llorente was that when the clearance was presented to him
on December 8, 1981, he was already aware of the affidavit dated November 26, 1981,
in which Mr. Curio assumed to pay any residual liability for the disallowed cash
advances, which at the time, December 8, 1981, stood at P92,000.00 (Exhs. 2 and 2-A).
Moreover, Mr. Curio had other pending obligations noted on his clearance totalling
Pl0,714.98 (Exh. 1-a). To justify his stand, Atty. Llorente invoked Condition (a) of
the clearance(Exhs. D and I-B), which, he said, was "very stringent" and could not be
interpreted in any other way ...
On December 1, 1982, Mr. Curio brought the matter of his unapproved clearance to
Col. Dueas (Exh. G), who referred it to the Legal Department, which was under
Atty. Llorente as Deputy Administrator for legal affairs. After follow-up in that
9|P a g e
TORTS 09/25/17
department, Mr. Curio received the answer of Col. Dueas dated February 11, 1983,
saying that the clearance was being withheld until the former settled his alleged
accountability for P92,000.00 reduced already to P56,000.00 (Exh. I). Mr. Curio
elevated the matter to the Chairman of the PCA Board, who indorsed it to Col.
Dueas, who, in turn, sent it to the Legal Department. This time the latter, through its
Manager, Manuel F. Pastor, Jr., first cousin of Atty. Llorente, submitted a formal
report under date of August 14, 1986, to the PCA Chairman, justifying the action
taken by Atty. Llorente and Col. Dueas (Exh. 12). The PCA Chairman did not
respond in writing, but advised Mr. Curio to wait for the resolution of the
Tanodbayan with which he (Mr. Curio) had filed this case initially against Atty.
Llorente and, later on, against Col. Duerias also. On August 31, 1986, Atty. Llorente
resigned from the PCA; the clearance, however, could not be issued because,
according to the PCA Corporate Legal Counsel, Arthur J. Liquate, the PCA did not
want to preempt the Tanodbayan. On November 12, 1986, the latter decided to
institlite this case in court ...
Nine days thereafter, or on November 21, 1986, Mr. Curio accomplished another
clearance, which no longer imposed Condition (a) of his earlier clearance (Exh. E).
The new clearance was approved, even if he still had pending accountabilities,
totalling P10,714.78 that had remained unsettled since December 1981. His voucher
was also approved, and his gratuity benefits paid to him in the middle of December
1986, after deducting those obligations (Exh. F). Nothing was mentioned anymore
about the disallowed cash advances of P92,000.00, which had been reduced to
P55,000.00 ...
Between December 1981 and December 1986, Mr. Curio failed to get gainful
employment; as a result, his family literally went hungry, In 1981, he applied for
work with the Philippine Cotton Authority, but was refused, because he could not
present his PCA clearance. The same thing happened when he sought employment
with the Philippine Fish Marketing Administration in January 1982. In both
prospective employers, the item applied for was P2,500.00 a month. At that time, he
was only about 45 years old and still competitive in the job market. But in 1986, being
already past 50 years, he could no longer be hired permanently, there being a
regulation to that effect. His present employment with the Philippine Ports Authority,
which started on March 16, 1987, was casual for that reason. Had his gratuity benefits
been paid in 1981, he would have received a bigger amount, considering that since
then interest had accrued and the foreign exchange rate of the peso to the dollar had
gone up ... 1
On December 10, 1986, an Information for violation of Section 3(c) of the Anti-Graft and Corrupt Practices Act was filed against
the petitioner:
That on or about December 8, 1981 and/or subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of this
Honorable Court, accused David Pastor Llorente, Deputy Administrator for the Philippine Coconut Authority (PCA), and as such
was empowered among others to approve clearances of employees thereat, taking advantage of his position, through evident bad
faith, did then and there, wilfully and unlawfully refuse to issue a certificate of clearance to Herminigildo M. Curio, an employee
thereat, who was forced to resign as a result of the abolition of his item pursuant to the 1981 reorganization of the PCA, resulting in
his deprivation to receive his gratuity benefits amounting to P29,854.90, and to secure employment with other offices to his damage
and prejudice, and that of the public service.
CONTRARY TO LAW.
Manila, Philippines, December 10, 1986. 2
As indicated at the outset, the Sandiganbayan acquitted the petitioner in the absence of any evidence that he acted in bad
faith. 3
The Sandiganbayan cited three considerations that precluded bad faith:
First, when Atty. Llorente withheld favorable action on the clearance on and after
December 8, 1981, there was still the possibility, remote though it was when viewed
after the fact, that the accountability, which Mrs. Javier was primarily liable therefor
and which was fully settled by deduction from her gratuity benefits on November 16,
1981 (Exhs. L, L-1, L-2, and
L-3), would be reinstated and charged directly to Mr. Curio, for the latter executed
on November 26, 1981, an affidavit assuming responsibility for the obligation to the
extent of the amount finally disallowed, and the affidavit was on December 8, 1981,
already pending consideration by the PCA management (Exhs. 2 and 2-A).
Second, Atty. Llorente was appointed Deputy Administrator for administrative
services, finance services, and legal affairs departments only on November 2,1981
(TSN, March 9/87, p. 3). Being new in his job, it was but natural that he was zealous
in the performance of his functions in fact, overzealous in the protection of the
PCA interests, even if that protection was not necessary, as the P92,000.00
accountability had already been paid (See Exh. 12, 4th paragraph).
Finally, Atty. Llorente was officiously, though incidentally, taking care also of the
interest of Mrs. Javier who, justice and equity demanded, should not be made to
shoulder the P92,000.00 unliquidated cash advances, for the reason that it was Mr.
Curio who admittedly spent them or who, at the very least, should be able to get
reimbursement of what she paid, totally or partially, from his gratuity benefits (See
Exh. 5, pp. 2-3 ). 4
The Sandiganbayan, as we also indicated earlier, took the petitioner to task civilly,
and ordered him to pay "compensatory damages" in the sum of P90,000.00.
According to the Sandiganbayan, the petitioner was guilty nonetheless of abuse of
10 | P a g e
TORTS 09/25/17
right under Article 19 of the Civil Code and as a public officer, he was liable for
damages suffered by the aggrieved party (under Article 27).
The petitioner claims that the Sandiganbayan's Decision is erroneous even if the
Sandiganbayan acquitted him therein, because he was never in bad faith as indeed
found by the Sandiganbayan.
Under the 1985 Rules of Criminal Procedure, amending Rules 110 through 127 of the
Rules of Court, the judgment of the court shall include, in case of acquittal, and
unless there is a clear showing that the act from which the civil liability might arise
did not exist, "a finding on the civil liability of the accused in favor of the offended
party." 5 The rule is based on the provisions of substantive law, 6 that if acquittal proceeds from
reasonable doubt, a civil action, lies nonetheless.
The challenged judgment found that the petitioner, in refusing to issue a certificate of
clearance in favor of the private offended party, Herminigildo Curio, did not act with
"evident bad faith," one of the elements of Section 3(e) of Republic Act No. 3819. 7 We
agree with tile judgment, insofar as it found lack of evident bad faith by the
petitioner, for the reasons cited therein basicallv, because the petitioner was acting
within the bounds of law in refusing to clear Curio although "[t]he practice was that
the clearance was nevertheless approved, and then the amount of the unsettled
obligation was deducted from the gratuity benefits of the employee." 8
We also agree with the Sandiganbaya (although the Sandiganbayan did not say it) that although the petitioner did not act with
evident bad faith, he acted with bad faith nevertheless, for which he should respond for damages.
The records show that the office practice indeed in the Philippine Coconut Authority was to clear the employee (retiree) and deduct
his accountabilities from his gratuity benefits. There seems to be no debate about the existence of this practice (the petitioner
admitted it later on) and in fact, he cleared three employees on the condition that their obligations should be deducted from their
benefits. 9
We quote:
Confronted with these evidence (sic), Atty. Llorente conceded, albeit grudgingly, the
existence of the practice by the accounting division of not complying with Condition
(a). He, however, claimed that he learned of the practice only during the trial of the
case and that he must have inadvertently approved the clearances of Mrs. Perez, Mr.
Azucena, and possibly others who were similarly situated (TSN, March 9/88,pp. 4-5).
This the evidence belies. First, he himself testified that when the clearance of Mr.
Curio was presented to him in December 1981, it already bore the signature of Mrs.
Sotto of the accounting division and the notation set opposite her name about the
outstanding accountabilities of Mr. Curio; but he (Atty. Llorente) significantly did not
ask her why she signed the clearance (TSN, Nov. 24/87, pp. 24-25). Second, in that
month, Atty. Llorente approved Mrs. Perez's and Mr. Azucena's vouchers showing
that hey has pending obligations to the GSIS and the UCPB, which were being
deducted from their gratuity benefits. Attached to those vouchers were the clearances
as supporting documents (Exhs. M-2 and N-1; TSN, Dec. 7/87, pp. 13,23). And third,
in the same month, Atty. Llorente was already aware of the cae of Mrs. Javier whose
clearance and voucher were, according to him, preciselywithheld because of her
unsettled accountability for the cash advances of P92,000.00, but here later on given
due course; and her gratuity benefits released on November 16, 1981, minus that
amount (TSN, Nov. 24/87, pp. 31-32; Exhs. L, L-1, L-2 and L-3).
The cash advances of P92,000.00 were the primary obligation of Mrs. Javier, since
they were secured through her and in her name from the UCPB. That was why they
were charged to and deducted from, her gratuity benefits. Consequently, as early as
that date and in so far as the PCA and the UCPB were concerned, the accountability
was already fully paid. The assumption of residual liability by Mr. Curio for the cash
advances on November 26, 1981, was a matter between him and Mrs. Javier (Exhs. 2
and 2-A). 10
The general rule is that this Court is bound by the findings of fact of the Sandiganbayan. 11
As we said, the acts of the petitioner were legal (that is, pursuant to procedures), as he insists in this petition, yet it does not follow,
as we said, that his acts were done in good faith. For emphasis, he had no valid reason to "go legal" all of a sudden with respect to
Mr. Curio, since he had cleared three employees who, as the Sandiganbayan found, "were all similarly circumstanced in that they
all had pending obligations when, their clearances were filed for consideration, warranting similar official action." 12
The Court is convinced that the petitioner had unjustly discriminated against Mr. Curio.
It is no defense that the petitioner was motivated by no ill-will (a grudge, according to the Sandiganbayan), since the facts speak for
themselves. It is no defense either that he was, after all, complying merely with legal procedures since, as we indicated, he was not as
strict with respect to the three retiring other employees. There can be no other logical conclusion that he was acting unfairly, no
more, no less, to Mr. Curio.
It is the essence of Article 19 of the Civil Code, under which the petitioner was made to pay damages, together with Article 27, that
the performance of duty be done with justice and good faith. In the case of Velayo vs. Shell Co. of the Philippines, 13 we held the
defendant liable under Article 19 for disposing of its propertv a perfectly legal act in order to escape the reach of a creditor. In
two fairly more recent cases, Sevilla vs. Court of Appeals 14 and Valenzuela vs. Court of Appeals, 15
we held that a
principal is liable under Article 19 in terminating the agency again, a legal act
when terminating the agency would deprive the agent of his legitimate business.
We believe that the petitioner is liable under Article 19.
The Court finds the award of P90,000.00 to be justified bv Article 2202 of the Civil
Code, which holds the defendant liable for all "natural and probable" damages.
11 | P a g e
TORTS 09/25/17
Hennenegildo Cunct presented evidence that as a consequence of the petitioner's G.R. No. 132344 February 17, 2000
refusal to clear him, he failed to land a job at the Philippine Cotton Authority and
Philippine First Marketing Authority. He also testified that a job in either office UNIVERSITY OF THE EAST, petitioner,
would have earned him salary of P2,500.00 a month, or P150,000.00 in five years. vs.
Deducting his probable expenses of reasonably about P1,000.00 a month or ROMEO A. JADER, respondent.
P60,000.00 in five years, the petitioner owes him a total actual damages of P90,000.00
YNARES-SANTIAGO, J.:
WHEREFORE, premises considered, the Petition is DENIED. No pronouncement as
to costs. May an educational institution be held liable for damages for misleading a student into
believing that the latter had satisfied all the requirements for graduation when such is not
IT IS SO ORDERED. the case? This is the issue in the instant petition for review premised on the following
undisputed facts as summarized by the trial court and adopted by the Court of Appeals
(CA),1 to wit:

Plaintiff was enrolled in the defendants' College of Law from 1984 up to 1988. In the first
semester of his last year (School year 1987-1988), he failed to take the regular final
examination in Practice Court I for which he was given an incomplete grade (Exhibits "2",
also Exhibit "H"). He enrolled for the second semester as fourth year law student (Exhibit
"A") and on February 1, 1988 he filed an application for the removal of the incomplete
grade given him by Professor Carlos Ortega (Exhibits "H-2", also Exhibit "2") which was
approved by Dean Celedonio Tiongson after payment of the required fee. He took the
examination on March 28, 1988. On May 30, 1988, Professor Carlos Ortega submitted his
grade. It was a grade of five (5). (Exhibits "H-4", also Exhibits "2-L", "2-N").1wphi1.nt

In the meantime, the Dean and the Faculty Members of the College of Law met to
deliberate on who among the fourth year students should be allowed to graduate. The
plaintiff's name appeared in the Tentative List of Candidates for graduation for the Degree
of Bachelor of Laws (LL.B) as of Second Semester (1987-1988) with the following
annotation:

JADER ROMEO A.

Def. Conflict of Laws x-1-87-88, Practice Court I Inc., 1-87-88 C-1 to submit transcript
with S.O. (Exhibits "3", "3-C-1", "3-C-2").

The 35th Investitures & Commencement Ceremonies for the candidates of Bachelor of
Laws was scheduled on the 16th of April 1988 at 3:00 o'clock in the afternoon, and in the
invitation for that occasion the name of the plaintiff appeared as one of the candidates.
(Exhibits "B", "B-6", "B-6-A"). At the foot of the list of the names of the candidates there
appeared however the following annotation:

This is a tentative list Degrees will be conferred upon these candidates who satisfactorily
complete requirements as stated in the University Bulletin and as approved of the
Department of Education, Culture and Sports (Exhibit "B-7-A").

12 | P a g e
TORTS 09/25/17
The plaintiff attended the investiture ceremonies at F. dela Cruz Quadrangle, U.E., Recto
Campus, during the program of which he went up the stage when his name was called,
escorted by her (sic) mother and his eldest brother who assisted in placing the Hood, and
his Tassel was turned from left to right, and he was thereafter handed by Dean Celedonio a
rolled white sheet of paper symbolical of the Law Diploma. His relatives took pictures of
the occasion (Exhibits "C" to "C-6", "D-3" to "D-11").
He tendered a blow-out that evening which was attended by neighbors, friends and
relatives who wished him good luck in the forthcoming bar examination. There were
pictures taken too during the blow-out (Exhibits "D" to "D-1").
He thereafter prepared himself for the bar examination. He took a leave of absence without
pay from his job from April 20, 1988 to September 30, 1988 (Exhibit "G") and enrolled at
the pre-bar review class in Far Eastern University. (Exhibits "F" to "F-2"). Having learned
of the deficiency he dropped his review class and was not able to take the bar examination. 2
Consequently, respondent sued petitioner for damages alleging that he suffered moral
shock, mental anguish, serious anxiety, besmirched reputation, wounded feelings and
sleepless nights when he was not able to take the 1988 bar examinations arising from the
latter's negligence. He prayed for an award of moral and exemplary damages, unrealized
income, attorney's fees, and costs of suit.
In its answer with counterclaim, petitioner denied liability arguing mainly that it never led
respondent to believe that he completed the requirements for a Bachelor of Laws degree
when his name was included in the tentative list of graduating students. After trial, the
lower court rendered judgment as follows:
WHEREFORE, in view of the foregoing judgment is hereby rendered in favor of the
plaintiff and against the defendant ordering the latter to pay plaintiff the sum of THIRTY
FIVE THOUSAND FOUR HUNDRED SEVENTY PESOS (P35,470.00) with legal rate of
interest from the filing of the complaint until fully paid, the amount of FIVE THOUSAND
PESOS (P5,000.00) as attorney's fees and the cost of suit.
Defendant's counterclaim is, for lack of merit, hereby dismissed.
SO ORDERED.3
which on appeal by both parties was affirmed by the Court of Appeals (CA) with
modification. The dispositive portion of the CA decision reads:
WHEREFORE, in the light of the foregoing, the lower Court's Decision is hereby
AFFIRMED with the MODIFICATION that defendant-appellee, in addition to the sum
adjudged by the lower court in favor of plaintiff-appellant, is also ORDERED to pay
plaintiff-appellant the amount of FIFTY THOUSAND (P50,000.00) PESOS for moral
damages. Costs against defendant-appellee.
SO ORDERED.4
Upon the denial of its motion for reconsideration, petitioner UE elevated the case to this
Court on a petition for review under Rule 45 of the Rules of Court, arguing that it has no
liability to respondent Romeo A. Jader, considering that the proximate and immediate
cause of the alleged damages incurred by the latter arose out of his own negligence in not
verifying from the professor concerned the result of his removal exam.
The petition lacks merit.
When a student is enrolled in any educational or learning institution, a contract of
education is entered into between said institution and the student. The professors, teachers
or instructors hired by the school are considered merely as agents and administrators tasked
to perform the school's commitment under the contract. Since the contracting parties are
the school and the student, the latter is not duty-bound to deal with the former's agents,
such as the professors with respect to the status or result of his grades, although nothing
prevents either professors or students from sharing with each other such information. The
Court takes judicial notice of the traditional practice in educational institutions wherein the
professor directly furnishes his/her students their grades. It is the contractual obligation of
the school to timely inform and furnish sufficient notice and information to each and every
student as to whether he or she had already complied with all the requirements for the
conferment of a degree or whether they would be included among those who will graduate.
Although commencement exercises are but a formal ceremony, it nonetheless is not an
ordinary occasion, since such ceremony is the educational institution's way of announcing
to the whole world that the students included in the list of those who will be conferred a
degree during the baccalaureate ceremony have satisfied all the requirements for such
degree. Prior or subsequent to the ceremony, the school has the obligation to promptly
inform the student of any problem involving the latter's grades and performance and also
most importantly, of the procedures for remedying the same.
Petitioner, in belatedly informing respondent of the result of the removal examination,
particularly at a time when he had already commenced preparing for the bar exams, cannot
be said to have acted in good faith. Absence of good faith must be sufficiently established
for a successful prosecution by the aggrieved party in a suit for abuse of right under Article
19 of the Civil Code. Good faith connotes an honest intention to abstain from taking undue
advantage of another, even though the forms and technicalities of the law, together with the
absence of all information or belief of facts, would render the transaction
unconscientious.5 It is the school that has access to those information and it is only the
school that can compel its professors to act and comply with its rules, regulations and
policies with respect to the computation and the prompt submission of grades. Students do
not exercise control, much less influence, over the way an educational institution should
run its affairs, particularly in disciplining its professors and teachers and ensuring their
compliance with the school's rules and orders. Being the party that hired them, it is the
school that exercises general supervision and exclusive control over the professors with
respect to the submission of reports involving the students' standing. Exclusive control
13 | P a g e
TORTS 09/25/17
means that no other person or entity had any control over the instrumentality which caused
the damage or injury.6
The college dean is the senior officer responsible for the operation of an academic
program, enforcement of rules and regulations, and the supervision of faculty and student
services.7 He must see to it that his own professors and teachers, regardless of their status
or position outside of the university, must comply with the rules set by the latter. The
negligent act of a professor who fails to observe the rules of the school, for instance by not
promptly submitting a student's grade, is not only imputable to the professor but is an act of
the school, being his employer.
Considering further, that the institution of learning involved herein is a university which is
engaged in legal education, it should have practiced what it inculcates in its students, more
specifically the principle of good dealings enshrined in Articles 19 and 20 of the Civil
Code which states:
Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to
another, shall indemnify the latter for the same.
Art. 19 was intended to expand the concept of torts by granting adequate legal remedy for
the untold number of moral wrongs which is impossible for human foresight to provide
specifically in statutory law.8 In civilized society, men must be able to assume that others
will do them no intended injury that others will commit no internal aggressions upon
them; that their fellowmen, when they act affirmatively will do so with due care which the
ordinary understanding and moral sense of the community exacts and that those with whom
they deal in the general course of society will act in good faith. The ultimate thing in the
theory of liability is justifiable reliance under conditions of civilized society. 9 Schools and
professors cannot just take students for granted and be indifferent to them, for without the
latter, the former are useless.
Educational institutions are duty-bound to inform the students of their academic status and
not wait for the latter to inquire from the former. The conscious indifference of a person to
the rights or welfare of the person/persons who may be affected by his act or omission can
support a claim for damages.10 Want of care to the conscious disregard of civil obligations
coupled with a conscious knowledge of the cause naturally calculated to produce them
would make the erring party liable.11 Petitioner ought to have known that time was of the
essence in the performance of its obligation to inform respondent of his grade. It cannot
feign ignorance that respondent will not prepare himself for the bar exams since that is
precisely the immediate concern after graduation of an LL.B. graduate. It failed to act
seasonably. Petitioner cannot just give out its student's grades at any time because a student
has to comply with certain deadlines set by the Supreme Court on the submission of
requirements for taking the bar. Petitioner's liability arose from its failure to promptly
inform respondent of the result of an examination and in misleading the latter into
believing that he had satisfied all requirements for the course. Worth quoting is the
following disquisition of the respondent court:
It is apparent from the testimony of Dean Tiongson that defendant-appellee University had
been informed during the deliberation that the professor in Practice Court I gave plaintiff-
appellant a failing grade. Yet, defendant-appellee still did not inform plaintiff-appellant of
his failure to complete the requirements for the degree nor did they remove his name from
the tentative list of candidates for graduation. Worse, defendant-appellee university, despite
the knowledge that plaintiff-appellant failed in Practice Court I, again included plaintiff-
appellant's name in the "tentative list of candidates for graduation which was prepared after
the deliberation and which became the basis for the commencement rites program. Dean
Tiongson reasons out that plaintiff-appellant's name was allowed to remain in the tentative
list of candidates for graduation in the hope that the latter would still be able to remedy the
situation in the remaining few days before graduation day. Dean Tiongson, however, did
not explain how plaintiff appellant Jader could have done something to complete his
deficiency if defendant-appellee university did not exert any effort to inform plaintiff-
appellant of his failing grade in Practice Court I.12
Petitioner cannot pass on its blame to the professors to justify its own negligence that led to
the delayed relay of information to respondent. When one of two innocent parties must
suffer, he through whose agency the loss occurred must bear it.13 The modern tendency is
to grant indemnity for damages in cases where there is abuse of right, even when the act is
not illicit.14 If mere fault or negligence in one's acts can make him liable for damages for
injury caused thereby, with more reason should abuse or bad faith make him liable. A
person should 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.15
However, while petitioner was guilty of negligence and thus liable to respondent for the
latter's actual damages, we hold that respondent should not have been awarded moral
damages. We do not agree with the Court of Appeals' findings that respondent suffered
shock, trauma and pain when he was informed that he could not graduate and will not be
allowed to take the bar examinations. At the very least, it behooved on respondent to verify
for himself whether he has completed all necessary requirements to be eligible for the bar
examinations. As a senior law student, respondent should have been responsible enough to
ensure that all his affairs, specifically those pertaining to his academic achievement, are in
order. Given these considerations, we fail to see how respondent could have suffered
untold embarrassment in attending the graduation rites, enrolling in the bar review classes
and not being able to take the bar exams. If respondent was indeed humiliated by his failure
to take the bar, he brought this upon himself by not verifying if he has satisfied all the
requirements including his school records, before preparing himself for the bar
examination. Certainly, taking the bar examinations does not only entail a mental
preparation on the subjects thereof; there are also prerequisites of documentation and
submission of requirements which the prospective examinee must meet.
14 | P a g e
TORTS 09/25/17
WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED with G.R. No. 81262 August 25, 1989
MODIFICATION. Petitioner is ORDERED to PAY respondent the sum of Thirty-five
Thousand Four Hundred Seventy Pesos (P35,470.00), with legal interest of 6% per GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C.
annum computed from the date of filing of the complaint until fully paid; the amount of HENDRY, petitioners,
Five Thousand Pesos (P5,000.00) as attorney's fees; and the costs of the suit. The award of vs.
moral damages is DELEIED.1wphi1.nt THE HONORABLE COURT OF APPEALS and RESTITUTO M.
TOBIAS, respondents.
SO ORDERED.
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.

15 | P a g e
TORTS 09/25/17
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 THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code,
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
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.
16 | P a g e
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However, in the case at bar, petitioners claim that they did not violate any provision of law
since they were merely exercising their legal right to dismiss private respondent. This does
not, however, leave private respondent with no relief because Article 21 of the Civil Code
provides that:
Art. 21. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.
This article, adopted to remedy the "countless gaps in the statutes, which leave so many
victims of moral wrongs helpless, even though they have actually suffered material and
moral injury" [Id.] should "vouchsafe adequate legal remedy for that untold number of
moral wrongs which it is impossible for human foresight to provide for specifically in the
statutes" [Id. it p. 40; See also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA
237, 247].
In determining whether or not the principle of abuse of rights may be invoked, there is no
rigid test which can be applied. While the Court has not hesitated to apply Article 19
whether the legal and factual circumstances called for its application [See for e.g., Velayo
v. Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra; Grand Union
Supermarket, Inc. v. Espino, Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953;
PAL v. CA, G.R. No. L-46558, July 31,1981,106 SCRA 391; United General Industries,
Inc, v. Paler G.R. No. L-30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No.
50911, August 21, 1987, 153 SCRA 183] the question of whether or not the principle of
abuse of rights has been violated resulting in damages under Article 20 or Article 21 or
other applicable provision of law, depends on the circumstances of each case. And in the
instant case, the Court, after examining the record and considering certain significant
circumstances, finds that all petitioners have indeed abused the right that they invoke,
causing damage to private respondent and for which the latter must now be indemnified.
The trial court made a finding that notwithstanding the fact that it was private respondent
Tobias who reported the possible existence of anomalous transactions, petitioner Hendry
"showed belligerence and told plaintiff (private respondent herein) that he was the number
one suspect and to take a one week vacation leave, not to communicate with the office, to
leave his table drawers open, and to leave his keys to said defendant (petitioner Hendry)"
[RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But regardless of
whether or not it was private respondent Tobias who reported the anomalies to petitioners,
the latter's reaction towards the former upon uncovering the anomalies was less than civil.
An employer who harbors suspicions that an employee has committed dishonesty might be
justified in taking the appropriate action such as ordering an investigation and directing the
employee to go on a leave. Firmness and the resolve to uncover the truth would also be
expected from such employer. But the high-handed treatment accorded Tobias by
petitioners was certainly uncalled for. And this reprehensible attitude of petitioners was to
continue when private respondent returned to work on November 20, 1972 after his one
week forced leave. Upon reporting for work, Tobias was confronted by Hendry who said.
"Tobby, you are the crook and swindler in this company." Considering that the first report
made by the police investigators was submitted only on December 10, 1972 [See Exh. A]
the statement made by petitioner Hendry was baseless. The imputation of guilt without
basis and the pattern of harassment during the investigations of Tobias transgress the
standards of human conduct set forth in Article 19 of the Civil Code. The Court has already
ruled that the right of the employer to dismiss an employee should not be confused with the
manner in which the right is exercised and the effects flowing therefrom. If the dismissal is
done abusively, then the employer is liable for damages to the employee [Quisaba v. Sta.
Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA
771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L-21871, September
27,1966, 18 SCRA 107] Under the circumstances of the instant case, the petitioners clearly
failed to exercise in a legitimate manner their right to dismiss Tobias, giving the latter the
right to recover damages under Article 19 in relation to Article 21 of the Civil Code.
But petitioners were not content with just dismissing Tobias. Several other tortious acts
were committed by petitioners against Tobias after the latter's termination from work.
Towards the latter part of January, 1973, after the filing of the first of six criminal
complaints against Tobias, the latter talked to Hendry to protest the actions taken against
him. In response, Hendry cut short Tobias' protestations by telling him to just confess or
else the company would file a hundred more cases against him until he landed in jail.
Hendry added that, "You Filipinos cannot be trusted." The threat unmasked petitioner's bad
faith in the various actions taken against Tobias. On the other hand, the scornful remark
about Filipinos as well as Hendry's earlier statements about Tobias being a "crook" and
"swindler" are clear violations of 'Tobias' personal dignity [See Article 26, Civil Code].
The next tortious act committed by petitioners was the writing of a letter to RETELCO
sometime in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY
due to dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO
and as a result of which, Tobias remained unemployed for a longer period of time. For this
further damage suffered by Tobias, petitioners must likewise be held liable for damages
consistent with Article 2176 of the Civil Code. Petitioners, however, contend that they
have a "moral, if not legal, duty to forewarn other employers of the kind of employee the
plaintiff (private respondent herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further
claim that "it is the accepted moral and societal obligation of every man to advise or warn
his fellowmen of any threat or danger to the latter's life, honor or property. And this
includes warning one's brethren of the possible dangers involved in dealing with, or
accepting into confidence, a man whose honesty and integrity is suspect" [Id.]. These
arguments, rather than justify petitioners' act, reveal a seeming obsession to prevent Tobias
from getting a job, even after almost two years from the time Tobias was dismissed.
Finally, there is the matter of the filing by petitioners of six criminal complaints against
Tobias. Petitioners contend that there is no case against them for malicious prosecution and
that they cannot be "penalized for exercising their right and prerogative of seeking justice
by filing criminal complaints against an employee who was their principal suspect in the
commission of forgeries and in the perpetration of anomalous transactions which defrauded
them of substantial sums of money" [Petition, p. 10, Rollo, p. 11].
17 | P a g e
TORTS 09/25/17
While sound principles of justice and public policy dictate that persons shall have free
resort to the courts for redress of wrongs and vindication of their rights [Buenaventura v.
Sto. Domingo, 103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be
exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30,
1971, 38 SCRA 5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May
31, 1961, 2 SCRA 337, the Court held that the right to file criminal complaints should not
be used as a weapon to force an alleged debtor to pay an indebtedness. To do so would be a
clear perversion of the function of the criminal processes and of the courts of justice. And
in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court upheld the
judgment against the petitioner for actual and moral damages and attorney's fees after
making a finding that petitioner, with persistence, filed at least six criminal complaints
against respondent, all of which were dismissed.
To constitute malicious prosecution, there must be proof that the prosecution was prompted
by a design to vex and humiliate a person and that it was initiated deliberately by the
defendant knowing that the charges were false and groundless [Manila Gas Corporation v.
CA, G.R. No. L-44190, October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit
by itself, does not render a person liable for malicious prosecution [Inhelder Corporation v.
CA, G.R. No. 52358, May 301983122 SCRA 576]. The mere dismissal by the fiscal of the
criminal complaint is not a ground for an award of damages for malicious prosecution if
there is no competent evidence to show that the complainant had acted in bad faith [Sison
v. David, G.R. No. L-11268, January 28,1961, 1 SCRA 60].
In the instant case, however, the trial court made a finding that petitioners acted in bad faith
in filing the criminal complaints against Tobias, observing that:
xxx
Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6)
criminal cases, five (5) of which were for estafa thru falsification of commercial document
and one for violation of Art. 290 of the Revised Penal Code "discovering secrets thru
seizure of correspondence," and all were dismissed for insufficiency or lack of evidence."
The dismissal of four (4) of the cases was appealed to the Ministry of Justice, but said
Ministry invariably sustained the dismissal of the cases. As above adverted to, two of these
cases were refiled with the Judge Advocate General's Office of the Armed Forces of the
Philippines to railroad plaintiffs arrest and detention in the military stockade, but this was
frustrated by a presidential decree transferring criminal cases involving civilians to the civil
courts.
xxx
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.
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
18 | P a g e
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the damage wrought on Tobias, the Court finds that, contrary to petitioners' contention, the
amount of damages awarded to Tobias was reasonable under the circumstances.
Yet, petitioners still insist that the award of damages was improper, invoking the principle
of damnum absque injuria. It is argued that "[t]he only probable actual damage that
plaintiff (private respondent herein) could have suffered was a direct result of his having
been dismissed from his employment, which was a valid and legal act of the defendants-
appellants (petitioners herein).lwph1.t " [Petition, p. 17; Rollo, p. 18]. Leodegario L. Mogol for defendant-appellee.
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. L-17396 May 30, 1962
CECILIO PE, ET AL., plaintiffs-appellants,
vs.
ALFONSO PE, defendant-appellee.
Cecilio L. Pe for and in his own behalf as plaintiff-appellant.
BAUTISTA ANGELO, J.:
Plaintiffs brought this action before the Court of First Instance of Manila to recover moral,
compensatory, exemplary and corrective damages in the amount of P94,000.00 exclusive
of attorney's fees and expenses of litigation.
Defendant, after denying some allegations contained in the complaint, set up as a defense
that the facts alleged therein, even if true, do not constitute a valid cause of action.
After trial, the lower court, after finding that defendant had carried on a love affair with
one Lolita Pe, an unmarried woman, being a married man himself, declared that defendant
cannot be held liable for moral damages it appearing that plaintiffs failed to prove that
defendant, being aware of his marital status, deliberately and in bad faith tried to win
Lolita's affection. So it rendered decision dismissing the complaint.1wph1.t
Plaintiffs brought this case on appeal before this Court on the ground that the issues
involved are purely of law.
The facts as found by the trial court are: Plaintiffs are the parents, brothers and sisters of
one Lolita Pe. At the time of her disappearance on April 14, 1957, Lolita was 24 years old
and unmarried. Defendant is a married man and works as agent of the La Perla Cigar and
Cigarette Factory. He used to stay in the town of Gasan, Marinduque, in connection with
his aforesaid occupation. Lolita was staying with her parents in the same town. Defendant
was an adopted son of a Chinaman named Pe Beco, a collateral relative of Lolita's father.
Because of such fact and the similarity in their family name, defendant became close to the
plaintiffs who regarded him as a member of their family. Sometime in 1952, defendant
frequented the house of Lolita on the pretext that he wanted her to teach him how to pray
the rosary. The two eventually fell in love with each other and conducted clandestine trysts
not only in the town of Gasan but also in Boac where Lolita used to teach in a barrio
school. They exchanged love notes with each other the contents of which reveal not only
their infatuation for each other but also the extent to which they had carried their
relationship. The rumors about their love affairs reached the ears of Lolita's parents
sometime, in 1955, and since then defendant was forbidden from going to their house and
from further seeing Lolita. The plaintiffs even filed deportation proceedings against
defendant who is a Chinese national. The affair between defendant and Lolita continued
nonetheless.
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Sometime in April, 1957, Lolita was staying with her brothers and sisters at their residence
at 54-B Espaa Extension, Quezon City. On April 14, 1957, Lolita disappeared from said
house. After she left, her brothers and sisters checked up her thing and found that Lolita's
clothes were gone. However, plaintiffs found a note on a crumpled piece of paper inside
Lolita's aparador. Said note, written on a small slip of paper approximately 4" by 3" in
size, was in a handwriting recognized to be that of defendant's. In English it reads:
Honey, suppose I leave here on Sunday night, and that's 13th of this month and we will
have a date on the 14th, that's Monday morning at 10 a.m.
Reply
Love
The disappearance of Lolita was reported to the police authorities and the NBI but up to the
present there is no news or trace of her whereabouts.
teach in a barrio school. When the rumors about their illicit affairs reached the knowledge
of her parents, defendant was forbidden from going to their house and even from seeing
Lolita. Plaintiffs even filed deportation proceedings against defendant who is a Chinese
national. Nevertheless, defendant continued his love affairs with Lolita until she
disappeared from the parental home. Indeed, no other conclusion can be drawn from this
chain of events than that defendant not only deliberately, but through a clever strategy,
succeeded in winning the affection and love of Lolita to the extent of having illicit relations
with her. The wrong he has caused her and her family is indeed immeasurable considering
the fact that he is a married man. Verily, he has committed an injury to Lolita's family in a
manner contrary to morals, good customs and public policy as contemplated in Article 21
of the new Civil Code.
WHEREFORE, the decision appealed from is reversed. Defendant is hereby sentenced to
pay the plaintiffs the sum of P5,000.00 as damages and P2,000.00 as attorney's fees and
expenses of litigations. Costs against appellee.

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

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

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

We disagree with this view. The circumstances under which defendant tried to win Lolita's
affection cannot lead, to any other conclusion than that it was he who, thru an ingenious
scheme or trickery, seduced the latter to the extent of making her fall in love with him. This
is shown by the fact that defendant frequented the house of Lolita on the pretext that he
wanted her to teach him how to pray the rosary. Because of the frequency of his visits to
the latter's family who was allowed free access because he was a collateral relative and was
considered as a member of her family, the two eventually fell in love with each other and
conducted clandestine love affairs not only in Gasan but also in Boac where Lolita used to
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G.R. No. L-20089 December 26, 1964
BEATRIZ P. WASSMER, plaintiff-appellee,
vs.
FRANCISCO X. VELEZ, defendant-appellant.
Jalandoni & Jamir for defendant-appellant.
Samson S. Alcantara for plaintiff-appellee.
BENGZON, J.P., J.:
The facts that culminated in this case started with dreams and hopes, followed by
appropriate planning and serious endeavors, but terminated in frustration and, what is
worse, complete public humiliation.
Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love,
decided to get married and set September 4, 1954 as the big day. On September 2, 1954
Velez left this note for his bride-to-be:
Dear Bet
Will have to postpone wedding My mother opposes it. Am leaving on the Convair
today.
Please do not ask too many people about the reason why That would only create a
scandal.
Paquing
But the next day, September 3, he sent her the following telegram:
NOTHING CHANGED REST ASSURED RETURNING VERY SOON APOLOGIZE
MAMA PAPA LOVE .
PAKING
Thereafter Velez did not appear nor was he heard from again.
Sued by Beatriz for damages, Velez filed no answer and was declared in default. Plaintiff
adduced evidence before the clerk of court as commissioner, and on April 29, 1955,
judgment was rendered ordering defendant to pay plaintiff P2,000.00 as actual damages;
P25,000.00 as moral and exemplary damages; P2,500.00 as attorney's fees; and the costs.
On June 21, 1955 defendant filed a "petition for relief from orders, judgment and
proceedings and motion for new trial and reconsideration." Plaintiff moved to strike it cut.
But the court, on August 2, 1955, ordered the parties and their attorneys to appear before it
on August 23, 1955 "to explore at this stage of the proceedings the possibility of arriving at
an amicable settlement." It added that should any of them fail to appear "the petition for
relief and the opposition thereto will be deemed submitted for resolution."
On August 23, 1955 defendant failed to appear before court. Instead, on the following day
his counsel filed a motion to defer for two weeks the resolution on defendants petition for
relief. The counsel stated that he would confer with defendant in Cagayan de Oro City
the latter's residence on the possibility of an amicable element. The court granted two
weeks counted from August 25, 1955.
Plaintiff manifested on June 15, 1956 that the two weeks given by the court had expired on
September 8, 1955 but that defendant and his counsel had failed to appear.
Another chance for amicable settlement was given by the court in its order of July 6, 1956
calling the parties and their attorneys to appear on July 13, 1956. This time. however,
defendant's counsel informed the court that chances of settling the case amicably were nil.
On July 20, 1956 the court issued an order denying defendant's aforesaid petition.
Defendant has appealed to this Court. In his petition of June 21, 1955 in the court a
quo defendant alleged excusable negligence as ground to set aside the judgment by default.
Specifically, it was stated that defendant filed no answer in the belief that an amicable
settlement was being negotiated.
A petition for relief from judgment on grounds of fraud, accident, mistake or excusable
negligence, must be duly supported by an affidavit of merits stating facts constituting a
valid defense. (Sec. 3, Rule 38, Rules of Court.) Defendant's affidavit of merits attached to
his petition of June 21, 1955 stated: "That he has a good and valid defense against
plaintiff's cause of action, his failure to marry the plaintiff as scheduled having been due to
fortuitous event and/or circumstances beyond his control." An affidavit of merits like this
stating mere conclusions or opinions instead of facts is not valid. (Cortes vs. Co Bun Kim,
L-3926, Oct. 10, 1951; Vaswani vs. P. Tarrachand Bros., L-15800, December 29, 1960.)
Defendant, however, would contend that the affidavit of merits was in fact unnecessary, or
a mere surplusage, because the judgment sought to be set aside was null and void, it having
been based on evidence adduced before the clerk of court. In Province of Pangasinan vs.
Palisoc, L-16519, October 30, 1962, this Court pointed out that the procedure of
designating the clerk of court as commissioner to receive evidence is sanctioned by Rule
34 (now Rule 33) of the Rules of Court. Now as to defendant's consent to said procedure,
the same did not have to be obtained for he was declared in default and thus had no
standing in court (Velez vs. Ramas, 40 Phil. 787; Alano vs. Court of First Instance, L-
14557, October 30, 1959).
In support of his "motion for new trial and reconsideration," defendant asserts that the
judgment is contrary to law. The reason given is that "there is no provision of the Civil
Code authorizing" an action for breach of promise to marry. Indeed, our ruling
in Hermosisima vs. Court of Appeals (L-14628, Sept. 30, 1960), as reiterated in Estopa vs.
Biansay (L-14733, Sept. 30, 1960), is that "mere breach of a promise to marry" is not an
21 | P a g e
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actionable wrong. We pointed out that Congress deliberately eliminated from the draft of
the new Civil Code the provisions that would have it so.
It must not be overlooked, however, that the extent to which acts not contrary to law may
be perpetrated with impunity, is not limitless for Article 21 of said Code provides that "any
person who wilfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the damage."
The record reveals that on August 23, 1954 plaintiff and defendant applied for a license to
contract marriage, which was subsequently issued (Exhs. A, A-1). Their wedding was set
for September 4, 1954. Invitations were printed and distributed to relatives, friends and
acquaintances (Tsn., 5; Exh. C). The bride-to-be's trousseau, party drsrses and other
apparel for the important occasion were purchased (Tsn., 7-8). Dresses for the maid of
honor and the flower girl were prepared. A matrimonial bed, with accessories, was bought.
Bridal showers were given and gifts received (Tsn., 6; Exh. E). And then, with but two
days before the wedding, defendant, who was then 28 years old,: simply left a note for
plaintiff stating: "Will have to postpone wedding My mother opposes it ... " He
enplaned to his home city in Mindanao, and the next day, the day before the wedding, he
wired plaintiff: "Nothing changed rest assured returning soon." But he never returned and
was never heard from again.
Surely this is not a case of mere breach of promise to marry. As stated, mere breach of
promise to marry is not an actionable wrong. But to formally set a wedding and go through
all the above-described preparation and publicity, only to walk out of it when the
matrimony is about to be solemnized, is quite different. This is palpably and unjustifiably
contrary to good customs for which defendant must be held answerable in damages in
accordance with Article 21 aforesaid.
Defendant urges in his afore-stated petition that the damages awarded were excessive. No
question is raised as to the award of actual damages. What defendant would really assert
hereunder is that the award of moral and exemplary damages, in the amount of P25,000.00,
should be totally eliminated.
Per express provision of Article 2219 (10) of the New Civil Code, moral damages are
recoverable in the cases mentioned in Article 21 of said Code. As to exemplary damages,
defendant contends that the same could not be adjudged against him because under Article
2232 of the New Civil Code the condition precedent is that "the defendant acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner." The argument is devoid
of merit as under the above-narrated circumstances of this case defendant clearly acted in a
"wanton ... , reckless [and] oppressive manner." This Court's opinion, however, is that
considering the particular circumstances of this case, P15,000.00 as moral and exemplary
damages is deemed to be a reasonable award.
PREMISES CONSIDERED, with the above-indicated modification, the lower court's
judgment is hereby affirmed, with costs.
G.R. No. 101749 July 10, 1992
CONRADO BUNAG, JR., petitioner,
vs.
HON. COURT OF APPEALS, First Division, and ZENAIDA B.
CIRILO, respondents.
REGALADO, J.:
Petitioner appeals for the reversal of the decision 1 of respondent Court of Appeals
promulgated on May 17, 1991 in CA-G.R. CV No. 07054, entitled "Zenaida B. Cirilo vs.
Conrado Bunag, Sr. and Conrado Bunag, Jr.," which affirmed in toto the decision of the
Regional Trial Court, Branch XI at Bacoor, Cavite, and, implicitly, respondent court's
resolution of September 3, 1991 2 denying petitioner's motion for reconsideration.
Respondent court having assiduously discussed the salient antecedents of this case, vis-a-
vis the factual findings of the court below, the evidence of record and the contentions of the
parties, it is appropriate that its findings, which we approve and adopt, be extensively
reproduced hereunder:
Based on the evidence on record, the following facts are considered indisputable: On the
afternoon of September 8, 1973, defendant-appellant Bunag, Jr. brought plaintiff-appellant
to a motel or hotel where they had sexual intercourse. Later that evening, said defendant-
appellant brought plaintiff-appellant to the house of his grandmother Juana de Leon in
Pamplona, Las Pias, Metro Manila, where they lived together as husband and wife for 21
days, or until September 29, 1973. On September 10, 1973, defendant-appellant Bunag, Jr.
and plaintiff-appellant filed their respective applications for a marriage license with the
Office of the Local Civil Registrar of Bacoor, Cavite. On October 1, 1973, after leaving
plaintiff-appellant, defendant-appellant Bunag, Jr. filed an affidavit withdrawing his
application for a marriage license.
Plaintiff-appellant contends that on the afternoon of September 8, 1973, defendant-
appellant Bunag, Jr., together with an unidentified male companion, abducted her in the
vicinity of the San Juan de Dios Hospital in Pasay City and brought her to a motel where
she was raped. The court a quo, which adopted her evidence, summarized the same which
we paraphrased as follows:
Plaintiff was 26 years old on November 5, 1974 when she testified, single and had finished
a college course in Commerce (t.s.n., p. 4, Nov. 5, 1974). It appears that on September 8,
1973, at about 4:00 o'clock in the afternoon, while she was walking along Figueras Street,
Pasay City on her way to the San Juan de Dios Canteen to take her snack, defendant,
Conrado Bunag, Jr., came riding in a car driven by a male companion. Plaintiff and
defendant Bunag, Jr. were sweethearts, but two weeks before September 8, 1973, they had
a quarrel, and Bunag, Jr. wanted to talk matters over with plaintiff, so that he invited her to
22 | P a g e
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take their merienda at the Aristocrat Restaurant in Manila instead of at the San Juan de
Dios Canteen, to which plaintiff obliged, as she believed in his sincerity (t.s.n., pp. 8-10,
Nov. 5, 1974).
Plaintiff rode in the car and took the front seat beside the driver while Bunag, Jr. seated
himself by her right side. The car travelled north on its way to the Aristocrat Restaurant but
upon reaching San Juan Street in Pasay City, it turned abruptly to the right, to which
plaintiff protested, but which the duo ignored and instead threatened her not to make any
noise as they were ready to die and would bump the car against the post if she persisted.
Frightened and silenced, the car travelled its course thru F.B. Harrison Boulevard until they
reached a motel. Plaintiff was then pulled and dragged from the car against her will, and
amidst her cries and pleas. In spite of her struggle she was no match to the joint strength of
the two male combatants because of her natural weakness being a woman and her small
stature. Eventually, she was brought inside the hotel where the defendant Bunag, Jr.
deflowered her against her will and consent. She could not fight back and repel the attack
because after Bunag, Jr. had forced her to lie down and embraced her, his companion held
her two feet, removed her panty, after which he left. Bunag, Jr. threatened her that he
would ask his companion to come back and hold her feet if she did not surrender her
womanhood to him, thus he succeeded in feasting on her virginity. Plaintiff described the
pains she felt and how blood came out of her private parts after her vagina was penetrated
by the penis of the defendant Bunag, Jr. (t.s.n. pp. 17-24, Nov. 5, 1974).
After that outrage on her virginity, plaintiff asked Bunag, Jr. once more to allow her to go
home but the latter would not consent and stated that he would only let her go after they
were married as he intended to marry her, so much so that she promised not to make any
scandal and to marry him. Thereafter, they took a taxi together after the car that they used
had already gone, and proceeded to the house of Juana de Leon, Bunag, Jr.'s grandmother
in Pamplona, Las Pias, Metro Manila where they arrived at 9:30 o'clock in the evening
(t.s.n., p. 26, Nov. 5, 1974). At about ten (10) o'clock that same evening, defendant
Conrado Bunag, Sr., father of Bunag, Jr. arrived and assured plaintiff that the following
day which was a Monday, she and Bunag, Jr. would go to Bacoor, to apply for a marriage
license, which they did. They filed their applications for marriage license (Exhibits "A" and
"C") and after that plaintiff and defendant Bunag, Jr. returned to the house of Juana de
Leon and lived there as husband and wife from September 8, 1973 to September 29, 1973.
On September 29, 1973 defendant Bunag, Jr. left and never returned, humiliating plaintiff
and compelled her to go back to her parents on October 3, 1973. Plaintiff was ashamed
when she went home and could not sleep and eat because of the deception done against her
by defendants-appellants (t.s.n., p. 35, Nov. 5, 1974).
The testimony of plaintiff was corroborated in toto by her uncle, Vivencio Bansagan who
declared that on September 8, 1973 when plaintiff failed to arrive home at 9:00 o'clock in
the evening, his sister who is the mother of plaintiff asked him to look for her but his
efforts proved futile, and he told his sister that plaintiff might have married (baka nag-
asawa, t.s.n., pp. 5-6, March 18, 1976). However, in the afternoon of the next day
(Sunday), his sister told him that Francisco Cabrera, accompanied by barrio captain Jacinto
Manalili of Ligas, Bacoor, Cavite, informed her that plaintiff and Bunag, Jr. were in
Cabrera's house, so that her sister requested him to go and see the plaintiff, which he did,
and at the house of Mrs. Juana de Leon in Pamplona, Las Pias, Metro Manila he met
defendant Conrado Bunag, Sr., who told him, "Pare, the children are here already. Let us
settle the matter and have them married."
He conferred with plaintiff who told him that as she had already lost her honor, she would
bear her sufferings as Boy Bunag, Jr. and his father promised they would be married.
Defendants-appellants, on the other hand, deny that defendant-appellant Conrado Bunag,
Jr. abducted and raped plaintiff-appellant on September 8, 1973. On the contrary, plaintiff-
appellant and defendant-appellant Bunag, Jr. eloped on that date because of the opposition
of the latter's father to their relationship.
Defendant-appellants claim that defendant-appellant Bunag, Jr. and plaintiff-appellant had
earlier made plans to elope and get married, and this fact was known to their friends,
among them, Architect Chito Rodriguez. The couple made good their plans to elope on the
afternoon of September 8, 1973, when defendant-appellant Bunag, Jr., accompanied by his
friend Guillermo Ramos, Jr., met plaintiff-appellant and her officemate named Lydia in the
vicinity of the San Juan de Dios Hospital. The foursome then proceeded to (the) aforesaid
hospital's canteen where they had some snacks. Later, Guillermo Ramos, Jr. took Lydia to
Quirino Avenue where she could get a ride home, thereby leaving the defendant-appellant
Bunag, Jr. and plaintiff-appellant alone. According to defendant-appellant Bunag, Jr., after
Guillermo Ramos, Jr. and Lydia left, he and plaintiff-appellant took a taxi to the Golden
Gate and Flamingo Hotels where they tried to get a room, but these were full. They finally
got a room at the Holiday Hotel, where defendant-appellant registered using his real name
and residence certificate number. Three hours later, the couple check out of the hotel and
proceeded to the house of Juana de Leon at Pamplona, Las Pias, where they stayed until
September 19, 1873. Defendant-appellant claims that bitter disagreements with the
plaintiff-appellant over money and the threats made to his life prompted him to break off
their plan to get married.
During this period, defendant-appellant Bunag, Sr. denied having gone to the house of Juan
de Leon and telling plaintiff-appellant that she would be wed to defendant-appellant
Bunag, Jr. In fact, he phoned Atty. Conrado Adreneda, member of the board of directors of
Mandala Corporation, defendant-appellant Bunag, Jr.'s employer, three times between the
evening of September 8, 1973 and September 9, 1973 inquiring as to the whereabouts of
his son. He came to know about his son's whereabouts when he was told of the couple's
elopement late in the afternoon of September 9, 1973 by his mother Candida Gawaran. He
likewise denied having met relatives and emissaries of plaintiff-appellant and agreeing to
her marriage to his son. 3
A complaint for damages for alleged breach of promise to marry was filed by herein
private respondent Zenaida B. Cirilo against petitioner Conrado Bunag, Jr. and his father,
Conrado Bunag, Sr., as Civil Case No. N-2028 of the Regional Trial Court, Branch XIX at
Bacoor, Cavite. On August 20, 1983, on a finding, inter alia, that petitioner had forcibly
23 | P a g e
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abducted and raped private respondent, the trial court rendered a decision 4 ordering
petitioner Bunag, Jr. to pay private respondent P80,000.00 as moral damages, P20,000.00
as exemplary damages, P20,000.00 by way of temperate damages, and P10,000.00 for and
as attorney's fees, as well as the costs of suit. Defendant Conrado Bunag, Sr. was absolved
from any and all liability.
Private respondent appealed that portion of the lower court's decision disculpating Conrado
Bunag, Sr. from civil liability in this case. On the other hand, the Bunags, as defendants-
appellants, assigned in their appeal several errors allegedly committed by trial court, which
were summarized by respondent court as follows: (1) in finding that defendant-appellant
Conrado Bunag, Jr. forcibly abducted and raped plaintiff-appellant; (2) in finding that
defendants-appellants promised plaintiff-appellant that she would be wed to defendant-
appellant Conrado Bunag, Jr.; and (3) in awarding plaintiff-appellant damages for the
breach of defendants-appellants' promise of marriage. 5
As stated at the outset, on May 17, 1991 respondent Court of Appeals rendered judgment
dismissing both appeals and affirming in toto the decision of the trial court. His motion for
reconsideration having been denied, petitioner Bunag, Jr. is before us on a petition for
review, contending that (1) respondent court failed to consider vital exhibits, testimonies
and incidents for petitioner's defense, resulting in the misapprehensions of facts and
violative of the law on preparation of judgment; and (2) it erred in the application of the
proper law and jurisprudence by holding that there was forcible abduction with rape, not
just a simple elopement and an agreement to marry, and in the award of excessive
damages. 6
Petitioner Bunag, Jr. first contends that both the trial and appellate courts failed to take into
consideration the alleged fact that he and private respondent had agreed to marry, and that
there was no case of forcible abduction with rape, but one of simple elopement and
agreement to marry. It is averred that the agreement to marry has been sufficiently proven
by the testimonies of the witnesses for both parties and the exhibits presented in court.
This submission, therefore, clearly hinges on the credibility of the witnesses and evidence
presented by the parties and the weight accorded thereto in the factual findings of the trial
court and the Court of Appeals. In effect, what petitioner would want this Court to do is to
evaluate and analyze anew the evidence, both testimonial and documentary, presented
before and calibrated by the trial court, and as further meticulously reviewed and discussed
by respondent court.
The issue raised primarily and ineluctably involves questions of fact. We are, therefore,
once again constrained to stress the well-entrenched statutory and jurisprudential mandate
that findings of fact of the Court of Appeals are, as a rule, conclusive upon this Court. Only
questions of law, distinctly set forth, may be raised in a petition for review
on certiorari under Rule 45 of the Rules of Court, subject to clearly settled exceptions in
case law.
Our jurisdiction in cases brought to us from the Court of Appeals is limited to reviewing
and revising the errors of law imputed to the latter, its findings of fact being conclusive.
This Court has emphatically declared that it is not its function to analyze or weigh such
evidence all over again, its jurisdiction being limited to reviewing errors of law that might
have been committed by the lower court. Barring, therefore, 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, such findings must stand, for this
Court is not expected or required to examine or contrast the oral and documentary evidence
submitted by the parties. 7 Neither does the instant case reveal any feature falling within,
any of the exceptions which under our decisional rules may warrant a review of the factual
findings of the Court of Appeals. On the foregoing considerations and our review of the
records, we sustain the holding of respondent court in favor of private respondent.
Petitioner likewise asserts that since action involves a breach of promise to marry, the trial
court erred in awarding damages.
It is true that in this jurisdiction, we adhere to the time-honored rule that an action for
breach of promise to marry has no standing in the civil law, apart from the right to recover
money or property advanced by the plaintiff upon the faith of such promise. 8 Generally,
therefore, a breach of promise to marry per se is not actionable, except where the plaintiff
has actually incurred expenses for the wedding and the necessary incidents thereof.
However, the award of moral damages is allowed in cases specified in or analogous to
those provided in Article 2219 of the Civil Code. Correlatively, under Article 21 of said
Code, in relation to paragraph 10 of said Article 2219, 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 moral damages. 9 Article 21 was 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, and is intended to vouchsafe
adequate legal remedy for that untold number of moral wrongs which is impossible for
human foresight to specifically provide for in the statutes. 10
Under the circumstances obtaining in the case at bar, the acts of petitioner in forcibly
abducting private respondent and having carnal knowledge with her against her will, and
thereafter promising to marry her in order to escape criminal liability, only to thereafter
renege on such promise after cohabiting with her for twenty-one days, irremissibly
constitute acts contrary to morals and good customs. These are grossly insensate and
reprehensible transgressions which indisputably warrant and abundantly justify the award
of moral and exemplary damages, pursuant to Article 21 in relation to paragraphs 3 and 10,
Article 2219, and Article 2229 and 2234 of Civil Code.
Petitioner would, however, belabor the fact that said damages were awarded by the trial
court on the basis of a finding that he is guilty of forcible abduction with rape, despite the
prior dismissal of the complaint therefor filed by private respondent with the Pasay City
Fiscal's Office.
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Generally, the basis of civil liability from crime is the fundamental postulate of our law
that every person criminally liable for a felony is also civilly liable. In other words,
criminal liability will give rise to civil liability ex delicto only if the same felonious act or
omission results in damage or injury to another and is the direct and proximate cause
thereof. 11 Hence, extinction of the penal action does not carry with it the extinction of
civil liability unless the extinction proceeds from a declaration in a final judgment that the
fact from which the civil might arise did not exist. 12
In the instant case, the dismissal of the complaint for forcible abduction with rape was by
mere resolution of the fiscal at the preliminary investigation stage. There is no declaration
in a final judgment that the fact from which the civil case might arise did not exist.
Consequently, the dismissal did not in any way affect the right of herein private respondent
to institute a civil action arising from the offense because such preliminary dismissal of the
penal action did not carry with it the extinction of the civil action.
The reason most often given for this holding is that the two proceedings involved are not
between the same parties. Furthermore, it has long been emphasized, with continuing
validity up to now, that there are different rules as to the competency of witnesses and the
quantum of evidence in criminal and civil proceedings. In a criminal action, the State must
prove its case by evidence which shows the guilt of the accused beyond reasonable doubt,
while in a civil action it is sufficient for the plaintiff to sustain his cause by preponderance
of evidence only. 13 Thus, in Rillon, et al. vs. Rillon, 14 we stressed that it is not now
necessary that a criminal prosecution for rape be first instituted and prosecuted to final
judgment before a civil action based on said offense in favor of the offended woman can
likewise be instituted and prosecuted to final judgment.
WHEREFORE, the petition is hereby DENIED for lack of merit, and the assailed judgment
and resolution are hereby AFFIRMED.
SO ORDERED.
[G.R. No. 147614. January 29, 2004]
H.L. CARLOS CONSTRUCTION, INC., petitioner, vs. MARINA PROPERTIES
CORPORATION, JESUS K. TYPOCO SR. and TAN YU, respondents.
DECISION
PANGANIBAN, J.:
There is unjust enrichment when a building contractor is denied payment for increased
labor cost validly incurred and additional work validly rendered with the owners express or
implied agreement.
The Case
The Petition for Review[1] before the Court, filed under Rule 45, seeks the reversal of the
Decision[2] dated March 29, 2001, issued by the Court of Appeals[3] in CA-GR CV No.
60975. The assailed Decision disposed as follows:
WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE, and
a new one entered DISMISSING the [petitioners] Complaint, AND PARTIALLY
GRANTING THE [RESPONDENT-CORPORATIONS] COUNTERCLAIM, IN THAT
THE [PETITIONER] IS DIRECTED TO PAY UNTO THE [RESPONDENT-
CORPORATION] THE SUM OF P4,604,579.00 in ACTUAL DAMAGES
PLUS P3,549,416.00 AS AND FOR LIQUIDATED DAMAGES.[4]
The Facts
The facts of the case, summarized by the Court of Appeals (CA), are as follows:
[Respondent] MARINA PROPERTIES CORPORATION (MPC for brevity) is engaged in
the business of real estate development. On May 10, 1988, MPC entered into a
contract[5] with [Petitioner] H.[L.] CARLOS CONSTRUCTION, INC. (HLC) to construct
Phase III of a condominium complex called MARINA BAYHOMES CONDOMINIUM
PROJECT, consisting of townhouses and villas, totaling 31 housing units, for a total
consideration of P38,580,609.00, within a period of 365 days from receipt of Notice to
Proceed. The original completion date of the project was May 16, 1989, but it was
extended to October 31, 1989 with a grace period until November 30, 1989.[6]
The contract was signed by Jovencio F. Cinco, president of MPC, and Honorio L. Carlos,
president of HLC.
On December 15, 1989, HLC instituted this case for sum of money against not only MPC
but also against the latters alleged president, [Respondent] Jesus K. Typoco, Sr. (Typoco)
and [Respondent] Tan Yu (Tan), seeking the payment of various sums with an aggregate
amount of P14 million pesos, broken down as follows:
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a) P7,065,885.03 for costs of labor escalation, change orders and material price escalation;
b) P2,000,000.00 as additional compensatory damages, exclusive of the cost of suit.
c) P3,147,992.00 representing retention money allegedly withheld by MPC on HLCs
Progress Billings as of January 1990, and
d) P2,000,000.00 representing the value of construction materials allegedly
withheld/detained by MPC.
Traversing the allegations of the complaint, [respondents] filed separate answers, whereby
the two individual [respondents] alleged that they are not parties to the Construction
Contract and Amendatory Contract and are therefore not liable to HLC. [Respondent] MPC
on the other hand alleged that the [petitioner] has no cause of action against it and that it
(HLC) is not entitled to its various claims. MPC interposed a counterclaim in the aggregate
sum of P68,296,227.14 for actual and compensatory damages, liquidated damages,
unliquidated advances, and attorneys fees.[7]
On May 15, 1997, the trial court[8] ruled as follows:[9]
WHEREFORE, premises above considered, judgment is hereby rendered for [Petitioner]
H.L. CARLOS CONSTRUCTION, INC. and as against [Respondents] MARINA
PROPERTIES CORPORATION, TAN YU, and JESUS K. TYPOCO, SR., who are hereby
ordered to pay, jointly and severally, the [petitioner], as follows:
1. the amount of P7,065,885.03, representing unpaid labor escalation costs, change orders
and material price escalations, plus 12% interest per annum from date of filing of the
complaint, until fully paid;
2. the amount of P3,147,992.39 representing the 10% retention money withheld by the
[respondents] [from] [petitioners] progress billing as of January 1990, plus 12% interest per
annum from the date of filing of the complaint, until fully paid;
3. the amount of P2,000,000.00 representing the value of construction materials and the
like detained by the [respondents], plus 12% legal interest from the date of filing of the
complaint, until fully paid;
4. the sum equivalent to 15% of the principal sum as and by way of attorneys fees; and to
5. [p]ay the costs of this suit.
The counterclaim for liquidated damages, are hereby DISMISSED for lack of
evidence. Liquidated damages can only be awarded under paragraph 2 of the amended
construction contract that extended the completion period and mainly on the finding of the
85% substantial completion of the project, and that the delay and stoppage of the project
was caused by [respondents] default in payment of [the] progress billings that would have
allowed [petitioner] to have the capability to continue and complete the project.
Ruling of the Court of Appeals
On appeal, the CA held that respondents were not liable for escalations in the cost of labor
and construction materials, because of the following reasons: (1) the contract between the
parties was for a lump sum consideration, which did not allow for cost escalation; and (2)
petitioner failed to show any basis for the award sought.
Respondents were also absolved from paying for change orders and extra work, inasmuch
as there was no supplemental agreement covering them as required in the main
Construction Contract. Although Progress Billing No. 24 apparently indicates that extra
work was rendered by petitioner, this claim is not supported by sufficient evidence.
The CA further failed to find any basis for the release of the 10 percent retention fee. The
Construction Contract had provided that such release would be made only under certain
conditions, none of which was complied with, as petitioner failed to complete the work
required. Furthermore, MPC was not held liable for detained or withheld construction
materials, since petitioner had eventually withdrawn them.
Nothing in the records indicated any personal liability on the part of Typoco and
Tan. Moreover, they had nothing to assume, as MPC was not held liable to petitioner.
Furthermore, the CA ruled that petitioner was liable for actual and liquidated damages. The
latter had abandoned the project prior to its completion; hence, MPC contracted out the
work to another entity and incurred actual damages in excess of the remaining balance of
the contract price. In addition, the Construction Contract had stipulated payment of
liquidated damages in an amount equivalent to 1/1000 of the contract price for each
calendar day of delay.
Hence, this Petition.[10]
Issues
In its Memorandum, petitioner raises the following issues:
a. Whether or not the respondents are liable to pay the petitioner its claim for price
escalation of construction materials and labor cost escalation.
b. Whether or not the respondents are liable to the petitioner for cost of change orders and
extra works.
c. Whether or not the respondents are liable to the petitioner for the ten percent retention
money.
d. Whether or not the respondents are liable to pay the petitioner attorneys fees.
e. Whether or not the respondents are liable to the petitioner for the cost of illegally
detained materials.
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f. Whether or not the respondents Jesus Typoco Sr., and Tan Yu are jointly and solidarily
liable to the petitioner for the latters claims.
g. Whether or not the petitioner is liable to the respondents for actual and liquidated
damages.[11]
In simpler terms, the issues to be resolved are as follows:
(1) Whether petitioner is entitled to (a) a price escalation for labor and material cost, (b) the
cost of change orders and extra work, (c) the release of the 10 percent retention money, (d)
the cost of illegally detained materials, and (e) attorneys fees
(2) Whether Typoco and Tan are solidarily liable with MPC
(3) Whether petitioner is liable for actual and liquidated damages
The Courts Ruling
The Petition is partly meritorious.
First Issue:
Liability for Additional Costs
Petitioner argues that it is entitled to price escalation for both labor and materials, because
MPC was delayed in paying for its obligations. The former admits that it is normally not
entitled to any price increase for labor and materials, because a contractor is expected to
build into its price a contingency factor to protect it from cost increases that may occur
during the contract period.[12] It justifies its claim, however, on the ground that a contractor
cannot be expected to anticipate price increases beyond the original contract
period.Respondents, on the other hand, aver that it was delayed in finishing the project;
hence, it is not entitled to any price increase.
It must be pointed out that the reason for the CAs denial of petitioners claim was that the
contract between the parties was for a lump sum consideration, and petitioner was guilty of
delay in completing the project.
Labor and Material
Cost Escalation
We agree with petitioner that it is entitled to price escalation, but only for the labor
component of Progress Billing No. 24. The Construction Contract contains the following
provision on the considerations therefor:
6.1 For and in consideration of the true and faithful performance of the work by the
CONTRACTOR, the OWNER shall pay the Lump Sum Contract Price of
PESOS: THIRTY EIGHT MILLION FIVE HUNDRED EIGHTY THOUSAND SIX
HUNDRED NINE (P38,580,609.00) broken down as shown in the Bid Form. No cost
escalation shall be allowed except on the labor component of the work x x x. [13]
Since the Contract allows escalation only of the labor component, the implication is that
material cost escalations are barred. There appears to be no provision, either in the original
or in the amended contract, that would justify billing of increased cost of
materials.Furthermore, no evidence -- like official economic data showing an increase in
the price index of construction materials -- was even adduced by petitioner to prove that
there had indeed been increases in material costs.[14]
Petitioner attempts to pass off these cost escalations as a form of damages suffered by it as
a natural consequence of the delay in the payment of billings and claims for additional
work. It argues that the baseless and malicious refusal to pay for those claims renders
respondents liable for damages under Article 2201 of the Civil Code.
We disagree. Without tackling the issue of delay, we find that the contentious Progress
Billing No. 24 contains no claim for material cost escalation. The other unsettled bills
claimed by petitioner are those for change orders or extra work, which have not been
shown to be related to the increase in cost of materials. Dealt with in separate contracts
between the parties were such claims, the costs of which were to be determined and agreed
upon only when required by MPC. Materials used for those additional jobs were to be
purchased only when the work was contracted, not prior thereto. As admitted by petitioner,
expenses for change orders/additional work were not included in the agreed contract
price[15] and, hence, were not subject to increases.
MPC admits that the labor cost escalation clause was adopted by the parties to safeguard
the contractor against losses in the event that, during the execution of the Contract, the
government would order a minimum wage adjustment, which would then inflate the labor
cost.[16] Respondents deny liability for this added expense because, according to the
Contract, the allowance for labor cost escalation is available only within the duration of the
original construction period.
We clarify. The claimed cost of labor escalation pertains to the period September 1 to
December 15, 1989, in the amount of P170,722.10; and December 16 to January 27,
1990, P45,983.91. During those periods, petitioner had not yet incurred any delay in the
project, originally stipulated to be finished by May 16, 1989. But by mutual agreement, the
period was extended up to October 31, 1989, with a grace period until November 30, 1989.
Furthermore, a legislated wage increase became effective after the expiration of the
original period.[17] Respondents are, therefore, liable for this increase in labor cost, because
they allowed petitioner to continue working on the project until April 20, 1990 (even
beyond November 30, 1989).
MPC argues that to allow the claim for labor cost escalation would be to reward petitioner
for incurring delay, thereby breaching a contractual obligation.
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This contention is untenable. Before the expiration of the extended period, petitioner was
not yet in delay. It was granted by MPC an extension to complete the project until
November 30, 1989. Moreover, despite the expiration of the extended period, MPC
allowed it to continue working on the project until the former took over and awarded that
project to another contractor. Hence, labor costs were actually incurred by petitioner until
April 20, 1990. It was thus entitled to reimbursement for labor cost escalation until that
date. MPC cannot now be allowed to question the true valuation of the additional labor
because, instead of submitting to an independent evaluator, it violated the Temporary
Restraining Order (TRO) issued by the trial court and hired another contractor to finish the
project.
Noteworthy is the fact that MPC paid for the labor cost escalation during the period August
1-15, 1989,[18] which was past the expiration of the original period. Apparently, it thereafter
stopped paying for labor cost escalation in response to the suit filed against it by petitioner.
The CA denied the labor cost escalation claim because, despite having billed MPC
therefor, petitioner accepted payments that did not include such claim. The appellate court
construed the acceptance by petitioner as a waiver of the latters right to be reimbursed for
the increased labor cost.
We believe that this position is untenable. The CA mistook Exhibits C-7-B[19] and D-
1[20] as bills coming from petitioner, when in truth they were Accomplishment Evaluation
Sheets issued by MPC. The notation labor escalation not included in the said Exhibits was
an admission on the part of MPC that it had not paid such amount, upon the advice of Atty.
Jose C. Laureta, its resident counsel. According to him, petitioner should be faulted for
having incurred labor cost increases after the expiration of the original period (after May
16, 1989). Not having waived such increases, it should thus bear them.[21]
To allow MPC to acquire the partially accomplished project without paying for labor cost
escalation validly incurred would constitute unjust enrichment at the expense of
petitioner.[22] There is unjust enrichment under Article 22 of the Civil Code when (1) a
person is unjustly benefited, and (2) such benefit is derived at the expense of or with
damages to another.[23] Since petitioner had rendered services that were accepted by MPC,
then the former should be compensated for them. Labor cost escalation, in this case, has
already been earned by petitioner.
Change Orders and Extra Work
Petitioner claims entitlement to compensation for change orders and extra work that were
covered by construction memoranda. MPC counters, however, that the former never
presented any cost estimate for additional work. The estimate would have formed the basis
for a consensual agreement and a computation of actual accomplishment, for which MPC
could have been unilaterally billed. Worse, the extra work was allegedly assessed by its
engineer to be worth only P705.41.
We side with petitioner. The General Conditions to the Construction Contract provides:
13. CLAIMS FOR EXTRA AND FORCE ACCOUNT WORK:
If the Contractor claims that any construction by drawings or otherwise involve extra cost
under this Contract, he shall give the Owner and/or the Architect, written notice thereof
within a reasonable time after receipt of such instructions, and in any event before
proceeding to execute the work, except in emergency endangering life or property. No such
claim shall be valid unless so made.
Extra work for which no price is provided in the proposal shall be covered by a
supplementary agreement to be signed by both parties before such work is commenced. [24]
The CA is correct in holding that there is no supplemental agreement covering the claimed
extra work and change orders. Exhibits C-1, C-2, C-2-A, C-3 and C-4 show billings for
extra work sent by petitioner to MPC. But the former did not submit in evidence the
alleged construction memoranda covering them. Neither were they mentioned in the
letter[25] of Roilo Golez dated November 24, 1989.
Progress Billing No. 24, which pertained to the project as covered by the Construction
Contract, did not mention any claim for extra work or change orders. These additional jobs
were covered by separate bills other than the twenty-four Progress Billings sent by
petitioner.
MPC, however, never denied having ordered additional work. In Item No. 12 of its
Amended Answer,[26] it averred that petitioners claim for change orders and extra work
were premature. Limneo P. Miranda, respondents work engineer, manifested that
additional work was indeed done, but that claims therefor were not settled for the following
reasons: (1) reconciliation between the parties was never completed due to the absence of
petitioners representative in scheduled meetings; (2) difference in opinion on the proper
valuation of the additional work, as MPC wanted to use the net quantity method, while
petitioner preferred the gross method; and (3) some claims were rejected by MPC, because
they had not been properly approved in accordance with the Contract.[27]
Evidence on record further reveals that MPC approved some change order jobs despite the
absence of any supplementary agreement. In its Over-all Summary of Reconciled
Quantities as of September 6, 1989 (Annex C), [28] it valued petitioners valid claim therefor
at P79,340.52. After noting that the claim had extremely been bloated, Atty. Laureta, in-
house counsel for respondent corporation, affirmed as valid the amount stated in the
summary.[29]
Petitioner may have failed to show the construction memoranda covering its claim, but it
inarguably performed extra work that was accepted by MPC. Hence, we will consider
Annex C as the proper valuation thereof.
Under the principle of quantum meruit, a contractor is allowed to recover the reasonable
value of the thing or services rendered despite the lack of a written contract, in order to
avoid unjust enrichment.[30] Quantum meruit means that in an action for work and labor,
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payment shall be made in such amount as the plaintiff reasonably deserves. [31] To deny
payment for a building almost completed and already occupied would be to permit unjust
enrichment at the expense of the contractor.[32]
The CA held that since Billing No. 24 did not include any claim for additional work, such
work had presumably been previously paid for. This reasoning is not correct. It is beyond
dispute that the change orders and extra work were billed separately from the usual
progress billings petitioner sent to MPC.
Retention Money
The CA denied the claim for the 10 percent retention money, because petitioner had failed
to comply with the conditions under paragraph 6.3 of the Construction Contract. On the
other hand, the latter avers that these conditions were deemed fulfilled under Article 1186
of the Civil Code because, when its contract was terminated, MPC prevented the
fulfillment of those conditions. It would allegedly be unfair and unreasonable for petitioner
to guarantee a project finished by another contractor.
We disagree with petitioner. In the construction industry, the 10 percent retention money is
a portion of the contract price automatically deducted from the contractors billings, as
security for the execution of corrective work -- if any -- becomes necessary. This amount is
to be released one year after the completion of the project, minus the cost of corrective
work.[33] The conditions for its release are stated in the Construction Contract as follows:
6.3 In all cases, however, payment of the progress billings shall be subject to deduction of
twenty percent (20%) recoupment of the downpayment, ten percent (10%) retention and
expanded withholding tax on CONTRACTORS income. Upon issuance of the Certificate
of Completion of the work by the OWNER and upon submission of Guaranty Bond, Ninety
Percent (90%) of the retained amount shall be released to the CONTRACTOR and the
balance thereof shall be released by the OWNER within thirty (30) days after the
expiration of the guaranty period which is 365 days after issuance of the certificate of
completion. [34]
None of the foregoing conditions were satisfied; hence, the CA was correct in forfeiting the
retention fee. The completion of the work was stipulated in the Contract to be within 365
days from the issuance of a Notice to Proceed or until May 16, 1989. Then the period was
extended up to November 30, 1989. Petitioner worked on the project till April 20, 1990. It
was given by MPC ample time and two extensions to complete the project. The simple
truth is that in failing to finish the project, the former failed to fulfill a prerequisite for the
release of the retention money.
Detained Materials
Petitioner claims cost reimbursement of illegally detained materials, as it was allowed to
withdraw them from the site only after two years from the unilateral termination of the
Contract. By 1992, only 30 percent of the materials detained were salvageable, while the
rest had depreciated.
This contention has no merit. According to the CAs ruling, the only proof that MPC
detained materials belonging to petitioner was the denial of the request, contained in the
latters February 1990 letter,[35] for the release of used form lumber. Aside from that letter,
however, no other attempt was shown to have been made by petitioner to obtain its
request. It should have tried again to do so before claiming that respondents unreasonably
prevented it from removing its construction materials from the premises. As to the other
materials, there was absolutely no attempt to remove them from the construction
site. Hence, we cannot say that these were ever withheld from petitioner.
Detention is not proved by Atty. Lauretas letter [36] dated July 4, 1992, allowing petitioner
to remove its materials from the site. The letter was merely a directive for it to clear out its
belongings therefrom, in view of the hiring of a second contractor to finish the project.
Moreover, in a specifically designated yard inside the construction site, petitioner
maintained a warehouse that was guarded by its own security complement and completely
inaccessible to MPC personnel.[37] It therefore had control over those materials and should
have made provisions to keep them safe from the elements and from pilferage.
Attorneys Fees
Petitioner argues that it is entitled to attorneys fees based on Article 2208 of the Civil
Code, because (1) respondents act or omission has compelled it to litigate with third
persons or to incur expenses to protect its interest; and (2) respondents acted in gross and
evident bad faith in refusing to satisfy its plainly valid, just and demandable claim.
The grant of some of the claims of petitioner does not change the fact that it did not finish
the project. Attorneys fees are not granted every time a party prevails in a suit, because no
premium should be placed on the right to litigate.[38] Petitioner is not, after all, blameless in
the present controversy. Just because MPC withheld some payments from petitioner does
not mean that the former was in gross or evident bad faith. MPC had claims that it wanted
to offset with those of the latter.
Second Issue:
Typoco and Tans Liabilities
Petitioner claims that Respondents Jesus Typoco and Tan Yu are solidarily liable with
MPC.
We concur with the CA that these two respondents are not liable. Section 31 of the
Corporation Code (Batas Pambansa Blg. 68) provides:
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Section 31. Liability of directors, trustees or officers. Directors or trustees who willfully
and knowingly vote for or assent to patently unlawful acts of the corporation or who are
guilty of gross negligence or bad faith x x x shall be liable jointly and severally for all
damages resulting therefrom suffered by the corporation, its stockholders and other
persons.
The personal liability of corporate officers validly attaches only when (a) they assent to a
patently unlawful act of the corporation; or (b) they are guilty of bad faith or gross
negligence in directing its affairs; or (c) they incur conflict of interest, resulting in damages
to the corporation, its stockholders or other persons. [39]
The records are bereft of any evidence that Typoco acted in bad faith with gross or
inexcusable negligence, or that he acted outside the scope of his authority as company
president. The unilateral termination of the Contract during the existence of the TRO was
indeed contemptible -- for which MPC should have merely been cited for contempt of
court at the most -- and a preliminary injunction would have then stopped work by the
second contractor. Besides, there is no showing that the unilateral termination of the
Contract was null and void.
Respondent Tan is not an officer or a director of MPC. His participation is limited to an
alleged conversation between him and Engineer Mario Cornista, petitioners project
manager. Supposedly, the former verbally agreed therein to guarantee the payment of the
latters progress billings. We find no satisfactory evidence to show respondents alleged
solidary liability to petitioner.
Third Issue:
Liability for Actual and Liquidated Damages
Petitioner avers that it should be exonerated from the counterclaims for actual and
liquidated damages, because its failure to complete the project was due to respondents acts.
Central to the resolution of this issue is the question of which party was in delay. Aside
from the contentious Progress Billing No. 24, there are no other unpaid claims. The bills
for extra work and change orders, aside from those for the beams and columns, were
premature and still subject to reconciliation and adjustment. Hence, we cannot hold MPC
liable for them.
In comparison, petitioner did not fulfill its contractual obligations. It could not totally pass
the blame to MPC for hiring a second contractor, because the latter was allowed to
terminate the services of the contractor.
10.1 The OWNER shall have the right to terminate this Contract in the event that the
CONTRACTOR incurs a fifteen percent (15%) or greater slippage in the prosecution of the
overall work evaluated against the Project schedule as indicated by the critical path of the
approved PERT/CPM network for the Project or as amended by Art. II herein.
Either party shall have the right to terminate this Contract for reason of violation or non-
compliance by the other party of the terms and conditions herein agreed upon. [40]
As of November 30, 1989, petitioner accomplished only approximately 80 percent of the
project. In other words, it was already in delay at the time. In addition, Engineer Miranda
testified that it would lose money even if it finished the project; [41] thus, respondents
already suspected that it had no intention of finishing the project at all.
Petitioner was in delay and in breach of contract. Clearly, the obligor is liable for damages
that are the natural and probable consequences of its breach of obligation. [42] Petitioner was
already paid by MPC in the amount of P31,435,187 out of the total contract price
of P38,580,609; thus, only P7,145,422 remained outstanding. In order to finish the project,
the latter had to contract the services of a second construction firm for P11,750,000. Hence,
MPC suffered actual damages in the amount of P4,604,579 for the completion of the
project.
Petitioner is also liable for liquidated damages as provided in the Contract, [43] the pertinent
portion of which is quoted as follows:
4.1 Time is an essential feature of this Contract and in the event that the CONTRACTOR
fails to complete the contracted work within the stipulated time inclusive of any granted
extension of time, the CONTRACTOR shall pay the OWNER, as liquidated damages, the
amount of one over one thousand (1/1000) of the value of the contract price for each and
every calendar day of delay (Sundays and Holidays included), not to exceed 15% of [the]
Contract amount, in the completion of the work as specified in Article II above. It is
understood that the liquidated damages herein provided are fixed, agreed upon and not by
way of penalty, and as such, the OWNER shall not be further required to prove that he has
incurred actual damages to be entitled thereto. In the case of such delays, the OWNER is
hereby authorized to deduct the amount of liquidated damages from any money due or
which may become due the CONTRACTOR in this or any other contract or to collect such
amount from the CONTRACTORs performance bond whichever is convenient and
expeditious to the OWNER.
Liquidated damages are those that the parties agree to be paid in case of a breach. [44] As
worded, the amount agreed upon answers for damages suffered by the owner due to delays
in the completion of the project. Under Philippine laws, these damages take the nature of
penalties.[45] A penal clause is an accessory undertaking to assume greater liability in case
of a breach. It is attached to an obligation in order to ensure performance.
Thus, as held by the CA, petitioner is bound to pay liquidated damages for 92 days, or from
the expiration of the grace period in the Amended Contract until February 1, 1990, when it
effectively abandoned the project.
WHEREFORE, the Petition is partly GRANTED and the assailed
Decision MODIFIED. Petitioner is AWARDED labor cost escalation in the sum
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of P1,196,202 and cost of extra work in the sum of P79,340.52. In all other respects, the
appealed Decision is AFFIRMED.
SO ORDERED.
G.R. No. L-4596 January 13, 1909
THE UNITED STATES, plaintiff-appellant,
vs.
ESTEBAN FORTALEZA, defendant-appellee.
Attorney-General Araneta, for appellant.
R. Kapunan, for appellee.
CARSON, J.:
The information filed in this case charges the defendant, Fortaleza, with the crime
of atentado contra los agentes de la autoridad (criminal attempt against agents of
authority), in that he gravely intimitated and threatened to assault with a club one
"Gregorio Tulang and his policemen Roman Paganpang and Julian Tosloc," this at a time
when Tulang, in the performance of his duties as lieutenant of the barrio of Hinatungan,
was undertaking to arrest the accused who had been discovered, in flagrante delicto,
conducting a candlestine cockpit.
The defendant filed a demurrer to the information on the ground that the facts alleged do
not constitute a crime. The trial court sustained the demurrer, ordered the information to be
dismissed, and held that "in the arrest in question, Gregorio was not in the discharge of the
functions of his office as lieutenant of a barrio," and that accordingly no criminal attempt
against an agent of authority had been committed by the accused in intimidating and
threatening to assault him; and that "so-called police of the lieutenant of the barrio" were
not agents of authority, "for the reason that the said lieutenant had no authority to appoint
police." From this order sustaining fiscal appealed.
Criminal attempts against an agent of authority are defined in paragraph 2 of article 249 of
the Penal Code as follows:
Those who attack the authorities or their agents, or employ force against them, gravely
intimidate them, or offer an equally grave resistance, while they are discharging the
functions of their office or on the occasion thereof.
Viada, discussing the meaning of the phrase agente de la autoridad, as employed in this
article, says that
The code gives no definition of what are agentes de la autoridad (agents of authority); but
it well may be said that all those persons who may direct provision of law or by
appointment of competent authority are charged with the maintenance of public order and
the protection and security of life and property must be characterized as such, and further
that in accordance with the final section of article 264 (Spanish Penal Code), it may be
affirmed that, for the purposes of this chapter and of the two following ones, all persons
who come to the aid of agents of authority, and also all public functionaries, are entitled to
be considered as agents of authority, it being understood, nevertheless, that in order that the
person who come to the aid of agents of authority may be considered as agents of authority,
it is an essential condition that they lend assistance, by virtue of an order or request of such
agent of authority.
Accepting Viada's definition of agents of authorities, it is clear that, if a lieutenant of a
barrio is charged with the maintenance of public order, and the protection and security of
life and property within his barrio, he must be considered an "agent of authority;" and that,
if an officer charged with the maintenance of public order has authority to make arrests,
without warrant, for violations of law committed in his presence, then Gregorio Tulang, the
lieutenant of the barrio of Hinatungan, was in the performance of his duty at the time, who
was discovered, in flagrante delicto, conducting a candlestine cockpit.
We agree with the trial judge that the determination of the questions involved "depends
largely upon the provisions of the law fixing the powers and duties of lieutenants of
barrios," and that these provisions are to be found in section 37 and 38 of Act No. 82,
defining the duties of municipal councilors and lieutenants of barrios. Those sections are as
follows:
SEC. 37. (a) If the number of barrios in a municipality is less than equal to the number of
councilors the council shall put each of its members in immediate charge of a barrio or part
of a barrio, so that each barrio shall be under the direction of one or more councilors.
(b) If the numbers of barrios exceeds the number of councilors, including the vice-
president, the council shall group the barrios into as many districts as there are councilors,
and shall place each councilor in charge of one such district. Each councilor shall be
empowered to appoint one lieutenant in each barrio or part of barrio which comes under his
immediate supervision. A lieutenant of barrio shall serve without compensation and shall
report directly to the councilor appointing him.
SEC. 38 (a) Each councilor shall keep the people of his barrio or barrios informed as to the
acts of the council or other governmental measures which directly concern them, by means
of suitable notices posted in a public and conspicuous as the representative of the people of
his barrio, or barrios and shall bring their special needs to the attention of that day.
(b) He shall further promptly inform the president of any unusual or untoward event
occurring within the barrios assigned to him.
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(c) He is authorized to use as a symbol of office a cause with silver head, plated ferule and
black cord and tassels.
It will not be doubted that under these provisions of law, a lieutenant of a barrio, duly
appointed by the councilor in charge of such barrio, is clothed with all the authority of the
councilor himself within the limits of such barrio, subject, of course, to the commands of
his principal. But it must be admitted that the authority expressly and explicitly conferred
upon the councilor in charge of a barrio, within such barrio, would appear, upon a
superficial examination of the above-cited sections of Act No. 82, to be somewhat limited,
and to be confined to the keeping of the people of his barrio informed of acts of the
council, and other governmental measures which directly concern them, and informing
the presidente of any unusual or untoward event occurring within the barrio assigned to
him. We are of the opinion, however, that it was not the intention of the lawmaker to limit
the functions of municipal councilors within in such narrow boundaries, and that the
provisions of section 37 which put out or more barrios in immediate charge of each
councilor, so that each barrio shall be under the direction of one or more councilors, and
authorizes and empowers each councilor to appoint one lieutenant in each barrio or part of
barrio "which comes under his immediate supervision," must be understood as conferring
upon, or confirming to municipal councilors functions of wider scope and higher import
than those with which they are explicitly charged in section 38.
To say that "each of the members of the council shall be put in immediate charge of a
barrio or part of barrio, so that each barrio shall be under the direction of one or more
coucilors" and that each barrio is placed "under the immediate supervision of a councilor"
would seem necessarily to imply a grant of some degree of control over the conduct of the
residents of the barrio by the councilors placed in charge thereof. Certainly it implies
something more than a mere authority and obligation to post notices of acts of the council
and other governmental measures and to inform the municipal president of unusual or
untoward events occurring in the barrio; and taking into consideration the general
provisions of Act No. 82, entitled "A general Act for the organization of municipal
governments in the Philippine Island," which divides the greater part of these Islands into
municipalities and each of these municipalities into barrios, and places these barrios under
the charge of designated councilors and lieutenants of barrios, adopting in this respect the
general scheme of the Spanish system of municipal administration in existence when the
Act was promulgated; and keeping in mind, first, the imperative necessity for providing for
the maintenance of order in each of these barrios, many of which are located at long
distances from the centers of population, where the municipal officials reside; second, the
fact that nowhere else in the Act is any provision made for the appointment of peace
officers for the various barrios with the necessary authority to maintain order; and, third,
the fact that under the municipal system which was superseded by the system provided in
this Act, municipal councilors and their lieutenants placed in charge of particular barrios
were always recognized as agentes de la autoridad and clothed with the necessary
authority for the maintenance of order and the protection of life and property; we think that
the Commission, in the providing for the assignment of one or more councilors in charge of
each barrio or part of barrio, so that each barrio shall be under the direction of one or more
councilors, must be taken to have entrusted to these councilors and their lieutenants a duty
of maintaining order within their respective barrios, substantially similar to that which was
imposed upon municipal councilors under the Spanish law existing at the time of the
promulgation of the Act, and thus to have conferred upon, or confirmed to them the
functions of agentes de la autoridad (agents of authority) within their respective barrios,
with the necessary authority incident thereto for the maintenance of order and the
protection of life and property.
There is no express provision of the Municipal Code defining the authority necessarily
incident to the duty of maintaining order, and protecting life and property, thus imposed
upon these officials within their respective jurisdictions; but the extent and limitations of
the authority thus conferred, in so far as it requires the exercise of powers to make arrests
without warrant, may be ascertained from an examination of the "Provisional Law for the
Application of the Penal Code," as modified and amended by legislation enacted since the
American occupation of these Islands. Rules 27, 28, 29, and 30 of this law are as follows:
RULE 27. Anyone may detain:
First. A person who attempts to commit a crime, when about to commit the same.
Second. An offender is flagrante.
Third. A person who is escaping from the penal establishment where serving sentence.
Fourth. A prisoner who is escaping from the jail while awaiting transfer to the penal
establishment or place were he is to serve the sentence imposed upon him by final
judgment.
Fifth. A prisoner who is escaping from confinement while his case is pending.
Seventh. A defendant in a criminal prosecution or convicted person en rebeldia (at large).
RULE 28. Judicial and administrative authorities have power to detain, or to cause to be
detained, persons whom there is a reasonable ground to believe guilty of some offense. It
will be the duty of the authorities, as well as of their agents, to arrest:
First. Such persons as may be arrested under the provisions of rule 27.
Second. A person charged with a crime for which the code provides a penalty greater than
that of confinamiento.
Third, A person charges with a crime for which the code provides a penalty less than that
of confinamiento, if his antecedents or the circumstances of the case would warrant the
presumption that he would fail to appear when summoned by the judicial authorities.
The provisions of the preceding paragraph shall not apply, however, to a defendant who
gives sufficient bond, to the satisfaction of the authority or agent who may arrest him, and
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who it may reasonably be presumed will appear whenever summoned by the judge or court
competent to try him.
Fourth. A person coming under the provisions of the preceding paragraph may be arrested,
although no formal complaint has been filed against him, provided the following
circumstances are present:
First. That the authority or agent had reasonable cause to believe that unlawful act,
amounting to a crime had been committed.
Second. that the authority or agent had sufficient reason to believe that the person arrested
participated in the commission of such unlawful act or crime.
RULE 29. A private individual who detains a person must take or have such person
immediately taken to the district jail or to the courthouse of the town, and deliver to the
warden of the prison or to the person in charge of such prison, a written statement setting
out the cause of the arrest.
If such private individual is unable to sign, the statement above referred to will be signed
by the warden of the prison in the presence of two witnesses.
RULE 30. The executive authorities or their agents detaining a person shall release the
same or else turn him over to the judicial authorities within twenty-four hours after the
arrest if made in the head town of the district, or within as brief as period as distance and
transportation facilities permit.
person had committed, or is about to commit any crime or breach of the peace; may arrest,
or to cause to be arrested without warrant, and offender, when the offense is committed in
the presence of a peace officer within his view." These provisions quite clearly set out the
powers usually conferred by American and English law upon "peace officers" including
"constables" in making arrests without warrants; and since similar powers are clearly
included in the powers conferred upon "agents of authority" in the above cited articles of
the "Provisional Law," there can be no doubt that the Commission, in imposing the duty of
maintaining order and preserving and protecting life and property within their respective
barrios upon municipal councilors and their lieutenants of barrios, conferred upon such
officials authority to make arrest without warrant not less extensive than that conferred
upon peace in Manila in the above-cited provisions of the Manila Charter. (The Unites
States vs.Vallejo,1 No. 4637, decided by this court on Sept. 3, 1908; also the United
States vs. Burgueta, 10 Phil. Rep., 188.)
We are of opinion, therefore, that Gregorio Tulang was in the lawful performance of the
duties of his office when he attempted to arrest the accused, who was also discovered, in
flagrante delicto, conducting a candlestine cockpit; and that the trial court erred in
sustaining the demurrer interposed to the information filed in the case.
After ten days let judgment be entered reversing the judgment of the trial court, and ten
days thereafter let the record be returned to the court below, for further proceedings. So
ordered.

These provisions of Spanish law have never been expressly repealed, and are still in force
in so far as they have not been repealed or amended by implification by the enactment of
the laws put in force in these Islands since the change from Spanish to American
sovereignty. They are undoubtedly modified in many respects by the enactment of the
Philippine Bill, General Orders, No. 58, the various acts of the Commission creating courts
and judicial offices, defining their jurisdiction and prescribing rules of procedure therefor,
the Manila Charter, the Constabulary Act, and other laws which might be cited; but it
would be difficult, and for the purposes of this decision it is unnecessary, to state precisely
the extent to which these amendments by implication have gone. We can and do hold,
however, that they have gone to the extent of depriving officials who by different provision
of law or by appointment of competent authority are charged with the maintenance of
public order and the protection and security of life and property," of authority to make
arrests without warrant such as, in the United States, is generally conferred upon "peace
officers" and more especially that class of peace officers known to Amercican and English
law as "constables."

Section 37 of Act No. 183 (Charter of Manila), which designates certain officials,
including police officers, as "peace officers" expressly provides that within the territory
defined in the Act they "may pursue and arrest without warrant, any person found in
suspicious places or under suspicious circumstances, reasonably tending to show that such
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G.R. No. L-53642 April 15, 1988
LEONILO C. DONATO, petitioners,
vs.
HON. ARTEMON D. LUNA, PRESIDING JUDGE, COURT OF FIRST INSTANCE
OF MANIIA, BRANCH XXXII HON. JOSE FLAMINIANO, CITY FISCAL OF
MANILA; PAZ B. ABAYAN, respondents.
Leopoldo P. Dela Rosa for petitioner.
Emiterio C. Manibog for private respondent.
City Fiscal of Manila for public respondent.
GANCAYCO, J.:
In this petition for certiorari and prohibition with preliminary injunction, the question for
the resolution of the Court is whether or not a criminal case for bigamy pending before the
Court of First Itance of Manila should be suspended in view of a civil case for annulment
of marriage pending before the Juvenile and Domestic Relations Court on the ground that
the latter constitutes a prejudicial question. The respondent judge ruled in the negative. We
sustain him.
The pertinent facts as set forth in the records follow. On January 23, 1979, the City Fiscal
of Manila acting thru Assistant City Fiscal Amado N. Cantor filed an information for
bigamy against herein petitioner, Leonilo C. Donato with the Court of First Instance of
Manila, docketed as Criminal Case No. 43554 and assigned to Branch XXXII of said court.
The information was filed based on the complaint of private respondent Paz B. Abayan.
On September 28, 1979, before the petitioner's arraignment, private respondent filed with
the Juvenile and Domestic Relations Court of Manila a civil action for declaration of
nullity of her marriage with petitioner contracted on September 26, 1978, which action was
docketed as Civil Case No. E-02627. Said civil case was based on the ground that private
respondent consented to entering into the marriage, which was petitioner Donato's second
one, since she had no previous knowledge that petitioner was already married to a certain
Rosalinda R. Maluping on June 30, 1978. Petitioner Donato's answer in the civil case for
nullity interposed the defense that his second marriage was void since it was solemnized
without a marriage license and that force, violence, intimidation and undue influence were
employed by private respondent to obtain petitioner's consent to the marriage. Prior to the
solemnization of the subsequent or second marriage, petitioner and private respondent had
lived together and deported themselves as husband and wife without the benefit of wedlock
for a period of at least five years as evidenced by a joint affidavit executed by them on
September 26, 1978, for which reason, the requisite marriage license was dispensed with
pursuant to Article 76 of the New Civil Code pertaining to marriages of exceptional
character.
Prior to the date set for the trial on the merits of Criminal Case No. 43554, petitioner filed a
motion to suspend the proceedings of said case contending that Civil Case No. E-02627
seeking the annulment of his second marriage filed by private respondent raises a
prejudicial question which must first be determined or decided before the criminal case can
proceed.
In an order dated April 7, 1980. Hon. Artemon D. Luna denied the motion to suspend the
proceedings in Criminal Case No. 43554 for bigamy. Respondent judge's basis for denial is
the ruling laid down in the case of Landicho vs. Relova. 1 The order further directed that the
proceedings in the criminal case can proceed as scheduled.
A motion for reconsideration was flied by herein petitioner thru counsel citing as one of his
grounds for suspension of proceedings the ruling laid down by this Court in the case of De
la Cruz vs. Ejercito 2 which was a much later case than that cited by respondent judge in
his order of denial.
The motion for reconsideration of the said order was likewise denied in an order dated
April 14, 1980, for lack of merit. Hence, the present petition for certiorari and prohibition
with preliminary injunction.
A prejudicial question has been defined to be one which arises in a case, the resolution of
which question is a logical antecedent of the issue involved in said case, and the
cognizance of which pertains to another tribunal.3 It is one based on a fact distinct and
separate from the crime but so intimately connected with it that it determines the guilt or
innocence of the accused, and for it to suspend the criminal action, it must appear not only
that said case involves facts intimately related to those upon which the criminal prosecution
would be based but also that in the resolution of the issue or issues raised in the civil case,
the guilt or innocence of the accused would necessarily be determined. 4 A prejudicial
question usually comes into play in a situation where a civil action and a criminal action
may proceed, because howsoever the issue raised in the civil action is resolved would be
determinative juris et de jure of the guilt or innocence of the accused in a criminal case.5
The requisites of a prejudicial question do not obtain in the case at bar. It must be noted
that the issue before the Juvenile and Domestic Relations Court touching upon the nullity
of the second marriage is not determinative of petitioner Donato's guilt or innocence in the
crime of bigamy. Furthermore, it was petitioner's second wife, the herein private
respondent Paz B. Abayan who filed the complaint for annulment of the second marriage
on the ground that her consent was obtained through deceit.
Petitioner Donato raised the argument that the second marriage should have been declared
null and void on the ground of force, threats and intimidation allegedly employed against
him by private respondent only sometime later when he was required to answer the civil
34 | P a g e
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action for anulment of the second marriage. The doctrine elucidated upon by the case
of Landicho vs. Relova 6 may be applied to the present case. Said case states that:
The mere fact that there are actions to annul the marriages entered into by the accused in a
bigamy case does not mean that "prejudicial questions" are automatically raised in civil
actions as to warrant the suspension of the case. In order that the case of annulment of
marriage be considered a prejudicial question to the bigamy case against the accused, it
must be shown that the petitioner's consent to such marriage must be the one that was
obtained by means of duress, force and intimidation to show that his act in the second
marriage must be involuntary and cannot be the basis of his conviction for the crime of
bigamy. The situation in the present case is markedly different. At the time the petitioner
was indicted for bigamy on February 27, 1963, the fact that two marriage ceremonies had
been contracted appeared to be indisputable. And it was the second spouse, not the
petitioner who filed the action for nullity on the ground of force, threats and intimidation.
And it was only on June 15, 1963, that petitioner, as defendant in the civil action, filed a
third-party complaint against the first spouse alleging that his marriage with her should be
declared null and void on the ground of force, threats and intimidation. Assuming that the
first marriage was null and void on the ground alleged by petitioner, the fact would not be
material to the outcome of the case. Parties to the marriage should not be permitted to
judge for themselves its nullity, for the same must be submitted to the judgment of the
competent courts and only when the nullity of the marriage is so declared can it be held as
void, and so long as there is no such declaration the presumption is that the marriage exists.
Therefore, he who contracts a second marriage before the judicial declaration of nullity of
the first marriage assumes the risk of being prosecuted for bigamy. The lower court
therefore, has not abused much less gravely abused, its discretion in failing to suspend the
hearing as sought by petitioner.
In the case at bar, petitioner has not even sufficiently shown that his consent to the second
marriage has been obtained by the use of threats, force and intimidation.
Petitioner calls the attention of this Court to the fact that the case of De la Cruz vs. Ejercito
is a later case and as such it should be the one applied to the case at bar. We cannot agree.
The situation in the case at bar is markedly different. In the aforecited case it was accused
Milagros dela Cruz who was charged with bigamy for having contracted a second marriage
while a previous one existed. Likewise, Milagros dela Cruz was also the one who filed an
action for annulment on the ground of duress, as contra-distinguished from the present case
wherein it was private respondent Paz B. Abayan, petitioner's second wife, who filed a
complaint for annulment of the second marriage on the ground that her consent was
obtained through deceit since she was not aware that petitioner's marriage was still
subsisting. Moreover, in De la Cruz, a judgment was already rendered in the civil case that
the second marriage of De la Cruz was null and void, thus determinative of the guilt or
innocence of the accused in the criminal case. In the present case, there is as yet no such
judgment in the civil case.
Pursuant to the doctrine discussed in Landicho vs. Relova, petitioner Donato cannot apply
the rule on prejudicial questions since a case for annulment of marriage can be considered
as a prejudicial question to the bigamy case against the accused only if it is proved that the
petitioner's consent to such marriage was obtained by means of duress, violence and
intimidation in order to establish that his act in the subsequent marriage was an involuntary
one and as such the same cannot be the basis for conviction. The preceding elements do not
exist in the case at bar.
Obviously, petitioner merely raised the issue of prejudicial question to evade the
prosecution of the criminal case. The records reveal that prior to petitioner's second
marriage on September 26, 1978, he had been living with private respondent Paz B.
Abayan as husband and wife for more than five years without the benefit of marriage.
Thus, petitioner's averments that his consent was obtained by private respondent through
force, violence, intimidation and undue influence in entering a subsequent marriage is
belled by the fact that both petitioner and private respondent executed an affidavit which
stated that they had lived together as husband and wife without benefit of marriage for five
years, one month and one day until their marital union was formally ratified by the second
marriage and that it was private respondent who eventually filed the civil action for nullity.
Another event which militates against petitioner's contentions is the fact hat it was only
when Civil Case No. E-02627 was filed on September 28, 1979, or more than the lapse of
one year from the solemnization of the second marriage that petitioner came up with the
story that his consent to the marriage was secured through the use of force, violence,
intimidation and undue influence. Petitioner also continued to live with private respondent
until November 1978, when the latter left their abode upon learning that Leonilo Donato
was already previously married.
In the light of the preceding factual circumstances, it can be seen that the respondent Judge
did not err in his earlier order. There is no pivotal issue that must be pre-emptively resolved
in Civil Case No. E-02627 before proceedings in the criminal action for bigamy can be
undertaken.
Accordingly, there being no prejudicial question shown to exit the order of denial issued by
the respondent judge dated April 14, 1980 should be sustained.
WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED for
lack of merit. We make no pronouncement as to costs.
SO ORDERED.
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G.R. No. L-5967 January 31, 1955
PABLO OCAMPO and RUFINO DE LA CRUZ, petitioners,
vs.
HON. TIBURCIO TANCINCO, Judge of the Court of First Instance of Manila, and
JOSE COCHINGYAN,respondents.
Escareal, Monzon and Escareal for petitioners.
Assistant City Fiscal Arsenio Alcantara for respondents.
PADILLA, J.:
On 13 May 1952 the petitioners Pablo Ocampo and Rufino de la Cruz were separately
charged with violation of the Copyright Law in the Court of First Instance of Manila upon
complaint of the respondent Jose Cochingyan, owner and manager of the Catholic Church
Mart (Cases Nos. 18888 and 18914).
On 17 June 1952 in the same court the petitioners brought an action against the respondent
Cochingyan and the Director of Public Libraries for the cancellation of copyrights issued
and granted to the Catholic Church Mart on the ground that the same were obtained
through fraud, deceit and misrepresentation. (Case No. 16823.)
On 21 July at the hearing of the criminal cases before the respondent court, counsel for the
petitioners moved for an indefinite postponement of the trial in the criminal cases on the
ground that the action for cancellation of the copyrights brought by them is a prejudicial
action which must be decided first before the respondent court may proceed with the trial
of the defendants in the criminal cases. The motion was denied and the cases set for
hearing on 15, 19 and 20 August 1952. A motion for reconsideration having been denied
the defendants filed this petition to prohibit the respondent court from proceeding with the
trial in the criminal cases until after the civil case shall have been decided. Meanwhile, a
writ of preliminary injunction to enjoin the respondent court from proceeding with the trial
of the defendants in the criminal cases was issued.
On 27 November 1953 the petition of Pablo Ocampo to withdraw from the case as
petitioner was granted with costs against him; so Rufino de la Cruz is the only remaining
petitioner.
The action for cancellation of copyrights brought by the petitioners on the ground of fraud,
deceit and misrepresentation allegedly resorted to by, or imputed to, the respondent Jose
Cochingyan to secure the issuance of the copyrights is independent from the criminal
prosecution for infringement of copyrights charged against the petitioner and does not
constitute and is not a prejudicial action which must be decided first before the trial of the
defendants in the criminal cases may be held, as the determination of the question raised in
the civil action is not necessarily prejudicial. Until cancelled the copyrights are presumed
to have been duly granted and issued. As a general rule, a criminal case should first be
decided; and if the trial or hearing of any case is to be suspended on the ground that there is
a prejudicial question which must first be decided, it is the hearing of the civil and not, the
criminal which should be suspended the latter must take precedence over the former.
The petition is dismissed and the writ of preliminary injunction heretofore issued
discharged, with costs against the petitioner Rufino de la Cruz.
G.R. No. L-32293 January 24, 1974
ROBERTO OCAMPO, petitioner,
vs.
FERNANDO BUENAVENTURA, JOSE VASQUEZ, ADOLFO BELDEROL,
POTENCIANO ADOBAS, JR., and JUDGE MATEO CANONOY, Court of First
Instance of Cebu, respondents.
Rafael D. de la Victoria for petitioner.
Seno, Mendoza and Associates for respondents.
ESGUERRA, J.:1wph1.t
Petition for certiorari and prohibition seeking to annul the order dated June 1, 1970,
of respondent Judge Hon. Mateo Canonoy, then of Branch III, Court of First Instance
of Cebu, denying petitioner's motion to dismiss and/or suspend the trial of its Civil
Case No. R-11320, entitled "Fernando Buenaventura, et al. v. Roberto Ocampo",
including the order denying his motion for reconsideration thereof. Petitioner further
prays this Court to make permanent the preliminary injunction issued on October 9,
1970, restraining respondent Judge from further proceeding with Civil Case No. R-
11320.
The records of this case establish the following facts:
On September 11, 1966, respondents Fernando Buenaventura, Jose Vasquez, Adolfo
Belderol and Potenciano Adobes, Jr., all members of the Cebu Police Department,
arrested and detained in the City Jail of Cebu, Edgar Ocampo (petitioner's son) and
Paul, Jade, Cesar and Julius, all surnamed Ocampo (his nephews), together with one
George Namok (a friend of the Ocampo boys), all minors, for an alleged violation of
Section 1 of Ordinance No. 345 which amended Ordinance No. 228 fixing curfew
hours. This Ordinance penalizes the "wandering, sauntering or loitering of minors in
any street, wood or alley." Pursuant to said arrest, the City Fiscal of Cebu filed an
information in the city court and the minors were convicted for violation of the said
ordinance. On appeal to the Court of First Instance, however, Judge Tantuico, on
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March 3, 1969, noting the exception under Section 3 of Ordinance 228 which
provides:
The provisions of Section 1 hereof shall not be applicable to minors attending or
participating in, or going home from, purely scholastic functions, commencement
exercises, convocations, educational and religious programs or in wholesome and
decent assemblage, and during yuletide masses, New Year's eve and Holy Week cults,
during the hours mentioned therein.
acquitted the accused minors, ruling that since they came from a birthday party
considered as a wholesome and decent assemblage, the minors fell within the
exception and committed no violation of the ordinance in question.
Meanwhile, petitioner Roberto Ocampo on September 19, 1966, filed a complaint
with the City Mayor's office charging the respondents policemen with serious
misconduct, grave abuse of authority and commission of a felony. On August 8, 1967,
the Mayor issued Administrative Order No. 157 exonerating the policemen. On
March 17, 1969, a complaint was lodged with the Police Commission (POLCOM) for
serious misconduct, abuse of authority and commission of an act constituting a felony,
which administrative case is still pending up to the present.
On June 4, 1969, respondents herein filed a complaint for damages against petitioner.
On May 22, 1970, petitioner filed a motion to dismiss and/or suspension of the trial of
the case on the merits on the following grounds: (1) existence of a prejudicial question
and (2) that the action is premature. This motion was denied by respondent Judge in
an order dated June 1, 1970. The petitioner's motion for reconsideration thereof
having been also denied, the instant petition was filed.
In the meantime respondent Fernando Buenaventura died and he was substituted
herein by his widow, Guillerma Cosca Buenaventura, and his heirs, Carlos, Cora, Eva
Araceli, Fernando, Jr., Rene Victor, Helen Grace, Flora Vicente, and Jose Adolfo, all
surnamed "Buenaventura".
The main question to be resolved is whether or not the court a quo abused its
discretion in denying petitioner's motion to dismiss and/or suspend the trial of the
case on the merits. The first ground thereof (prejudicial question) is entirely
inapplicable. In accordance with Article 36 of the Civil Code, a prejudicial question
must be decided before any criminal prosecution based on the same facts may
proceed.<re||an1w> There is no prejudicial question here since there is no 157 exonerating herein respondents policemen. The argument is devoid of merit. A
criminal prosecution involved, the petitioner's case before the POLCOM being
administrative in nature and the respondents' case before the Court of First Instance
of Cebu is a simple civil suit for damages not based on a crime but on alleged
harassment by the petitioner in charging them administratively before the City
Mayor and before the POLCOM. A careful consideration of the record discloses that
the principal issue in the complaint for damages is the alleged malicious filing of the
administrative cases by the petitioner against the policemen respondents. The
determination of this question is primarily dependent on the outcome of the
administrative case before the POLCOM. The respondents' complaint for damages is
based on their claim that the administrative case filed against them before the
POLCOM is malicious, unfounded and aimed to harass them. The veracity of this
allegation is not for us to determine, for if We rule and allow the civil case for
damages to proceed on that ground, there is the possibility that the court a quo in
deciding said case might declare the respondents victims of harassment and thereby
indirectly interfere with the proceedings before the POLCOM. The respondents' case
for damages before the lower court is, therefore, premature as it was filed during the
pendency of the administrative case against the respondents before the POLCOM.
The possibility cannot be overlooked that the POLCOM may hand down a decision
adverse to the respondents, in which case the damage suit will become unfounded and
baseless for wanting in cause of action. Of persuasive force is the ruling in William H.
Brown vs. Bank Of the Philippine Islands and Santiago Freixas, 101 Phil. 309, 312,
where this Court said:
... In effect, plaintiff herein seeks to recover damages upon the ground that the
detainer case has been filed, and is being maintained, maliciously and without
justification; but this pretense affects the merits of said detainer case. Should final
judgment be eventually rendered in that case in favor of the plaintiffs therein, such
the one rendered in the municipal court, the validity of the cause of action said lessors
against Brown, would thereby be conclusively established, and, necessarily, his
contention in the present case would have to be rejected. Similarly, we can, not
sustain the theory of Brown in the case at bar, without prejudging the issue in the
detainer case, which is still pending: Until final determination of said case, plaintiff
herein cannot, and does not, have, therefore, a cause of action if any, on which we
do not express our opinion against the herein defendants. In short, the lower court
has correctly held that the present action is premature and, that, consequently, the
complaint herein does not set for a cause of action against the defendants.
On the ground that the suit for damages is premature, the trial court, instead of
denying petitioner's motion to dismiss and/or suspend the trial on the merits, should
have held action thereon in abeyance pending determination of the case before the
POLCOM.
Respondents likewise plead res judicata to defeat this action, contending that the
administrative case before the POLCOM should have been dismissed as it is barred
by a prior judgment that embodied in the City Mayor's Administrative Order No.
review of the essential requisites of res judicata,1 viz: (1) it must have been rendered
by a court having jurisdiction of the subject matter and the parties; (2) the former
judgment must be final; (3) it must be a judgment on the merits; (4) there must be
between the 1st and 2nd actions [a] identity of parties; [b] identity of subject matter;
and [c] identity of cause of action, exposes the glaring weakness of respondents'
contention. On the first requisite alone, that of jurisdiction, respondents miserably
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failed to meet the requirements of the rule invoked. The City Mayor of Cebu was
without jurisdiction to try, hear and decide administrative cases either under
Republic Act No. 557 (An Act Providing For the Suspension or Removal of the
Members of the Provincial Guards, City Police and Municipal Police by the
Provincial Governor, City Mayor Or Municipal Mayor), or under Republic Act 4864
(An Act Creating the Police Commission, Amending and Revising the Laws Relative
to the Local Police System, and For Other Purposes). In Manuel v. De la Fuente, etc.,
et al.,2 this Court said: "Of course, it should not be understood that the City Mayor,
for the purpose of determining whether he should exercise his power of suspension
conferred by Republic Act 557, may not conduct his own investigation; but this
inquiry cannot replace the investigation that should be conducted under Republic Act
No. 557 by the Municipal Board and which should form the basis for final
administrative action or decision by said Board appealable to the Commissioner of
Civil Service." The Court further said: "... the obvious innovations introduced by
Republic Act No. 557 lie in the fact that the Municipal Board had been granted the
exclusive power to investigate, with the Mayor being conferred only the power to
prefer charges against a member of the city police ...; that the Municipal Board, not
the Mayor, decides the case; and that the decision may be appealed to the
Commissioner of Civil Service, instead of to the Secretary of the Interior." 3 (Emphasis
Ours). The power to investigate and decide administrative cases involving police service
and personnel has been transferred to the POLCOM.
In the motion to dismiss filed before the Board of Investigators of the Police
Commission,4 respondents alleged that the proceedings in the city mayor's office cannot be
attacked, invoking for the purpose Section 26 of the Police Commission Act, to wit:
Section 26. Saving Clause. All pending administrative cases involving police service and
personnel shall be absorbed by the Police Commission one hundred days after the
publication of the Police Manual containing rules and regulations relative to such matters.
The trust of their argument is that the city mayor then had jurisdiction because his decision
was rendered on August 8, 1967, while the Police Manual was promulgated later on
December 30, 1967. But the ruling in Police Commission v. Hon. Judge Eloy Bello,
et al.5 where this Court had occasion to elucidate on the "saving clause" of the POLCOM
Act, is relevant to the issue and disposes of the respondents' argument. This Court said:
Section 26 of the Police Act is, as expressly stated therein, a mere saving clause, and refers
solely to the administrative cases involving police service and personnel which were
pending at the time of the effectivity of the Act.
The Police Commission was required to absorb the said pending cases within 100 days
after it shall have published a Police Manual. The said Section 26 may not be interpreted to
mean that the Board of Investigators of each city or municipality and the Police
Commission could not legally function to carry into effect the purposes of the Act until
after the lapse of the said 100 days, because Section 28 provides that '(t)his Act shall take
effect upon its approval.' Since the Act was approved on September 8, 1966, it became
effective immediately on that date. (Emphasis Ours.)
Lastly respondent Judge in his order in question dated June 1, 1970, gave the following
reason for denying the motion to dismiss and/or suspension of the trial of the case on the
merits: "... considering that the said defendant has already filed his answer, containing
special defenses embodying the grounds stated in the motion to dismiss and/or suspension
of the trial ..., the said motion to dismiss and/or suspension of trial is hereby denied." The
denial is apparently predicated on the prior filing of an answer.
As a general rule a motion to dismiss is interposed before the defendant pleads (Section 1,
Rule 16, Rules of Court). However, there is no rule or law prohibiting the defendant from
filing a motion to dismiss after an answer had been filed. On the contrary, Section 2 of
Rule 9, expressly authorizes the filing of such motion at any stage of the proceedings when
it is based upon failure to state a cause of action, 6 as in the case at bar where the complaint
failed to state a cause of action as alleged by petitioner in his very motion to dismiss and/or
suspension of the trial. The respondent Judge therefore, erred in denying said motion. The
surrounding circumstance at the time of the filing of said motion warranted suspension of
the trial on the merits.
ACCORDINGLY, the order appealed from, dated June 1, 1970, denying the motion to
dismiss and/or suspension of the trial of the case on the merits, including the order denying
the motion for reconsideration thereof, is hereby set aside. The hearing of Civil Case R-
11320 of the Court of First Instance of Cebu, Branch III, shall be held in abeyance pending
determination of the administrative case against the respondents before the POLCOM.
The Court's writ of preliminary injunction dated October 9, 1970, restraining respondent
court from proceeding with the damage suit against petitioner shall stand until the
POLCOM decides the said administrative case; if it is decided adversely against
respondents, the injunction shall become permanent, while if it is decided in their favor,
then this damage suit may proceed to trial and determination on its merits by respondent
court.
No special pronouncement as to costs.
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G.R. No. L-13530 February 28, 1962
THE PEOPLE OF THE PHILIPPINES, ET AL., petitioners,
vs.
THE HON. JUDGE JULIO VILLAMOR, ET AL., respondents.
Felix S. Falgui for petitioners.
Arsenio R. Reyes for respondents.
BAUTISTA ANGELO, J.:
This is a petition for certiorari which seeks to enjoin respondent court from allowing the
accused in Criminal Case No. 40865 to present evidence on the existence or execution of
certain document of sale on the ground that the same presents a prejudicial question which
must first be decided in a civil case then pending before the Court of Appeals.
On October 30, 1956, Eduardo S. Puzon filed a complaint against Petra A. Querubin before
the Court of First Instance of Manila to declare as inexistent and null and void certain
document allegedly executed by Puzon in favor of Querubin, which was later amended on
December 4, 1956. After issues were joined, trial was held and on May 10, 1957 the trial
court rendered decision holding that the deed of sale alleged in the complaint was indeed
fictitious, inexistent and null and void, and condemning Petra Querubin to pay the sum of
P10,000.00, with corresponding interest thereon, and the further sum of P2,000.00 as
attorney's fees, with costs. In due time, Querubin took the case to the Court of Appeals
wherein it was docketed as CA-G.R. No. 21018-R.
While said case was pending appeal, the City Fiscal of Manila filed an information for
false testimony against Petra Querubin on the strength of a complaint filed by Eduardo S.
Puzon alleging therein that she falsely testified that Puzon executed a document of sale of
certain mineral claim and later filed and recorded the same with the office of the Mining
Recorder of Naga City knowing that said allegations were not true. This charge having
been given due course, the Court of First Instance of Manila set the case for trial during
which the people, represented by a private prosecutor, started to present its evidence. After
the prosecution had rested its case, the defense started to present its evidence to disprove
some of the points covered by the prosecution among which was the issue relative to the
existence or non-existence of the alleged document of sale involved in the civil case. And it
was in the course of the presentation of said evidence that the private prosecutor filed a
motion to suspend the trial on the ground that the issue on which the defense was
presenting evidence partakes of the nature of prejudicial question which cannot be done
inasmuch as the same is one of the issues involved in the civil case pending between the
same parties which was appealed to the Court of Appeals. Counsel for the defense objected
to this motion contending that such issue cannot be considered prejudicial since the two
cases cover different questions and issues or do not overlap and that even if they cover the
same issues the defense cannot be prevented from presenting evidence relative to the
matter because the same constitutes an indispensable element that is necessary to establish
the innocence of defendant. After counsel for both parties had argued orally and submitted
memoranda in support of their contentions, the court on December 3, 1957 issued an order
denying the motion and setting a new date for the continuation of the hearing. His motion
for reconsideration having been denied, the private prosecutor interposed the present
petition for certiorari.
We find no merit in the contention that the issue relative to the execution or non-existence
of the alleged deed of sale of certain mineral is a prejudicial question that is involved in the
civil case pending between the same parties before the Court of Appeals which was at the
time still pending determination, and that for that reason the continuation of the hearing of
the criminal case for false testimony should be suspended until said case shall have been
finally terminated. It should be observed that the criminal case of false testimony preferred
against respondent Querubin on the strength of a complaint filed by petitioner Eduardo S.
Puzon imputes to the accused, among other things, that she testified falsely that Puzon
executed the alleged document of sale knowing it to be false and that she later filed and
registered the same with the office of the Mining Recorder of Naga City when the truth
was that such document never existed and no such document was ever filed and registered
by said accused with the office of said mining recorder thereby having committed the
crime of false testimony. And in order to substantiate said imputation the prosecution
presented evidence tending to show that it was not true that Puzon ever executed the
alleged deed of sale covering the mineral claim in question, or that if said document ever
existed it is fictitious or null and void. As a matter of fact, during the hearing held in
connection with this incident, the private prosecutor has admitted in open court that he
really presented evidence to show the non-existence or non-execution of the document in
question as may be seen from the following portion of the record:
COURT:
You have presented evidence to show that those were not really the truth no document
and no registration ....
ATTY. FALGUI:
Yes, your Honor,
COURT:
How can they prove their side of the case if we don't allow them to prove that there was
such a document? If we put a stop to all their evidence, then they cannot prove their
innocence. Nonetheless, since you don't agree, I will give you a chance. How long do you
want? (Tsn p. 24, 10/23/57)
Even therefore if we concede that the issue relative to the existence or validity of the deed
of sale in question is also involved in the civil case pending before the Court of Appeals,
the same cannot be considered prejudicial in the sense that the trial of the criminal case
should be suspended until the civil case has been finally terminated, considering that the
prosecution has presented evidence thereon and the defendant has evinced a desire to
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disprove it by presenting her own evidence, it being her constitutional prerogative to have
her case terminated with the least possible delay. As the trial court has observed: "How can
they prove their side of the case if you don't allow them to prove that there was such a
document? If we put a stop to all their evidence, then they cannot prove their innocence."
Indeed, after the prosecution had presented evidence tending to prove the imputation
contained in the charge preferred against the accused, it would be most unfair if the latter
should be deprived of an opportunity to disprove it and establish her innocence. In any
event, we find it improper for the prosecution to ask for the suspension of the trial after
having lodged the alleged imputation against the accused and presented its evidence, for if
in its opinion the issue which is now raised is prejudicial in character it should not have
filed the charge in the first place but should have waited for such a time until the Court of
Appeals shall have finally disposed of the civil case. The attitude of complainant Puzon in
filing this charge against Petra Querubin immediately after the civil case between them has
been taken to the Court of Appeals cannot be taken in any other light than to cause her
harassment or prejudice.

WHEREFORE, petition is denied. The case is remanded to the lower court for further
proceedings. Costs against petitioner Eduardo S. Puzon.

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