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- Trial court held that the collision was due solely on the negligence of the chauffeur and awarded

the plaintiff the sum of P14, 741. - Act No. 2457 was enacted. It states that E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city of Manila against the Government of the Philippine Islands in order to fix the responsibility for the collision between his motorcycle and the ambulance of the General Hospital, and to determine the amount of the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, and the Attorney-General of the Philippine Islands is hereby authorized and directed to appear at the trial on the behalf of the Government of said Islands, to defendant said Government at the same. ISSUES WON the government is liable for the damages resulting from a tort committed by an agent or employee of the government HELD NO Ratio The State is only liable for the acts of its agents, officers and employees when they act as special agents within the meaning of paragraph 5 of article 1903. Reasoning - In the United States the rule is that the state is not liable for the torts committed by its officers or agents whom it employs, except when expressly made so by legislative enactment. The Government does not undertake to guarantee to any person the fidelity of the officers or agents whom it employs, since that would involve it in all its operations in endless embarrassments, difficulties and losses, which would be subversive of the public interest. - As to the scope of legislative enactments permitting individuals to sue the state where the cause of action arises out of either fort or contract, the rule is stated in 36 Cyc., 915, thus: By consenting to be sued a state simply waives its immunity from suit. It does not thereby concede its liability to plaintiff, or create any cause of action in his favor, or extend its liability to any cause not previously recognized. It merely gives a remedy to enforce a preexisting liability and submits itself to the jurisdiction of the court, subject to its right to interpose any lawful defense. - Paragraph 5 of article 1903 of the Civil Code reads: The state is liable in this sense when it acts through a special agent, but not when the damage should have been caused by the official to whom properly it pertained to do the act performed, in which case the provisions of the preceding article shall be applicable. - The obligation to indemnify for damages which a third person causes to another by his fault or negligence is based, as is evidenced by the same Law 3, Title 15, Partida 7, on that the person obligated, by his own fault or negligence, takes part in the act or omission of the third party who caused the damage. It follows therefrom that the state, by virtue of such provisions of law, is not responsible for the damages suffered by private individuals in consequence of acts performed by its employees in the discharge of the functions pertaining to their office, because neither fault nor even negligence can be presumed on the part of the state in the organization of branches of public service and in the appointment of its agents; on the contrary, we must presuppose all foresight humanly possible on its part in order that each branch of service serves the general weal an that of private persons interested in its operation. Between these latter and the state, therefore, no relations of a private nature governed by the civil law can arise except in a case where the state acts as a judicial person capable of acquiring rights and contracting obligations. - The Civil Code in chap 2, title 16, book 4, regulates the obligations which arise out of fault or negligence; and whereas in the first article thereof. No. 1902,

where the general principle is laid down that where a person who by an act or omission causes damage to another through fault or negligence, shall be obliged to repair the damage so done, reference is made to acts or omissions of the persons who directly or indirectly cause the damage, the following articles refers to this persons and imposes an identical obligation upon those who maintain fixed relations of authority and superiority over the authors of the damage, because the law presumes that in consequence of such relations the evil caused by their own fault or negligence is imputable to them. This legal presumption gives way to proof, however, because, as held in the last paragraph of article 1903, responsibility for acts of third persons ceases when the persons mentioned in said article prove that they employed all the diligence of a good father of a family to avoid the damage, and among these persons, called upon to answer in a direct and not a subsidiary manner, are found, in addition to the mother or the father in a proper case, guardians and owners or directors of an establishment or enterprise, the state, but not always, except when it acts through the agency of a special agent, doubtless because and only in this case, the fault or negligence, which is the original basis of this kind of objections, must be presumed to lie with the state. - Although in some cases the state might by virtue of the general principle set forth in article 1902 respond for all the damage that is occasioned to private parties by orders or resolutions which by fault or negligence are made by branches of the central administration acting in the name and representation of the state itself and as an external expression of its sovereignty in the exercise of its executive powers, yet said article is not applicable in the case of damages said to have been occasioned to the petitioners by an executive official , acting in the exercise of his powers, in proceedings to enforce the collections of certain property taxes owing by the owner of the property which they hold in sublease. - The responsibility of the state is limited by article 1903 to the case wherein it acts through a special agent (one who receives a definite and fixed order or commission, foreign to the exercise of the duties of his office if he is a special official) so that in representation of the state and being bound to act as an agent thereof, he executes the trust confided to him. This concept does not apply to any executive agent who is an employee of the acting administration and who on his own responsibility performs the functions which are inherent in and naturally pertain to his office and which are regulated by law and the regulations. - The responsibility of the state is limited to that which it contracts through a special agent, duly empowered by a definite order or commission to perform some act or charged with some definite purpose which gives rise to the claim, and not where the claim is based on acts or omissions imputable to a public official charged with some administrative or technical office who can be held to the proper responsibility in the manner laid down by the law of civil responsibility. - The chauffeur of the ambulance of the General Hospital was not such an agent within the meaning of paragraph 5 of article 1903 On the computation of damages The two items which constitute a part of the P14,741 and which are drawn in question by the plaintiff are (a) P5,000, the award awarded for permanent injuries, and (b) the P2,666, the amount allowed for the loss of wages during the time the plaintiff was incapacitated from pursuing his occupation. We find nothing in the record which would justify us in increasing the amount of the first. As to the second, the record shows, and the trial court so found, that the plaintiff's services as a contractor were worth P1,000 per month. The court, however, limited the time to

2months and 21 days, which the plaintiff was actually confined in the hospital. In this we think there was error, because it was clearly established that the plaintiff was wholly incapacitated for a period of 6 months. The mere fact that he remained in the hospital only 2 months and 21 days while the remainder of the 6 months was spent in his home, would not prevent recovery for the whole time. We, therefore, find that the amount of damages sustained by the plaintiff, without any fault on his part, is P18,075. Dispositive Judgment appealed from reversed. Whether the Government intends to make itself legally liable for the amount of damages above set forth, which the plaintiff has sustained by reason of the negligent acts of one of its employees, by legislative enactment and by appropriating sufficient funds therefor, we are not called upon to determine. This matter rests solely with the Legislature and not with the courts. ROSETE v AUDITOR GENERAL 81 Phil 453 FERIA; August 31, 1948 NATURE Appeal from the decision of the Insular Auditor FACTS - Jose Panlilio ignited his lighter near a drum into which gasoline was being drained causing fire in the warehouse of Emergency Control Administration (ECA, a government agency). - The fire destroyed the building owned by the petitioner, thereby giving rise to this claim for damages against Panlilio for his negligence and the officers of ECA for storing gasoline in said warehouse contrary to the provisions of ordinances of the City of Manila (ordinance requires a license for storing flammable substances, which ECA didnt have). - Insular Auditor dismissed the claim hence this appeal. ISSUE WON the government is liable for the damages HELD NO - Art. 1903 of the Civil Code reads: Art. 1903. The obligation imposed in the preceding article is enforceable not only for personal acts and omission but also for those persons for whom another is responsible. xx The state is liable in this sense when it acts through a special agent, but not when the damage should have been caused by the official to whom it properly pertained to do the act performed, in which case the provisions of the preceding article shall be applicable. - In the case of Merritt v. Government, the court held the following: The state is not responsible for the damage suffered by private individuals in consequence of acts performed by its employees in the discharge of the functions pertaining to their office n relations of a private nature governed by the civil law can arise except in a case

where the state acts as a juridical person capable of acquiring rights and contracting obligations. xx That the responsibility of the state is limited by article 1903 to the case wherein it acts through a special agent (and a special agent, in the sense in which these words are employed, is one who receives a definite and fixed order by the commission, foreign to the exercise of duties of his office if he is a special official) so that in representation of the state and being bound to act as an agent thereof, he executes the trust confided to him. - There being no showing that whatever negligence may be imputed to the ECA or its officers, was done by a special agent, because the officers of the ECA did not act as special agents of the government within the above defined meaning of that wod in Article 1903 of the Civil Code in storing gasoline in the warehouse of ECA, the government is not responsible for damages caused through such negligence. - Although there is an act (Act No. 327) authorizing the filing of claims against the government with the Insular Auditor, and appeal by private persons or entities from the latters decision to the Supreme Court, it does not make any and all claims against the government allowable, and the latter responsible for all claims. DISPOSITION Decision appealed from is affirmed. MENDOZA V. DE LEON FONTANILLA V MALIAMAN ADMINSITRATION 194 SCRA 486 PARAS; February 27, 1991 NATURE Resolution FACTS The National Irrigation Administration (NIA) maintains that it does not perform solely and primarily proprietary functions, but is an agency of the government tasked with governmental functions, and is therefore not liable for the tortuous act of its driver Garcia, who was not its special agent. o NIA believes this bases this on: PD 552 amended some provisions of RA 3601 (the law which created the NIA) The case of Angat River Irrigation System v. Angat River Workers Union Angat Case: Although the majority opinion declares that the Angat System, like the NIA, exercised a governmental function because the nature of its powers and functions does not show that it was intended to bring to the Government any special corporate benefit or pecuniary profit, a strong dissenting opinion held that Angat River system is a government entity exercising proprietary functions. The Angat dissenting opinion: Alegre protested the announced termination of his employment. He argued that although his contract did stipulate that the same would and NATIONAL IRRIGATION

terminate on July 17, 1976, since his services were necessary and desirable in the usual business of his employer, and his employment had lasted for five years , he had acquired the status of regular employee and could not be removed except for valid cause. The employment contract of 1971 was executed when the Labor Code of the Philippines had not yet been promulgated, which came into effect some 3 years after the perfection of the contract.

ISSUE WON the NIR is a government agency with a juridical personality separate and distinct from the government, thereby opening it up to the possibility that it may be held liable for the damages caused by its driver, who was not its special agent HELD YES Reasoning the functions of government have been classified into governmental or constituent and proprietary or ministrant. The former involves the exercise of sovereignty and considered as compulsory; the latter connotes merely the exercise of proprietary functions and thus considered as optional. The National Irrigation Administration was not created for purposes of local government. While it may be true that the NIA was essentially a service agency of the government aimed at promoting public interest and public welfare, such fact does not make the NIA essentially and purely a "government-function" corporation. NIA was created for the purpose of "constructing, improving, rehabilitating, and administering all national irrigation systems in the Philippines, including all communal and pump irrigation projects." Certainly, the state and the community as a whole are largely benefited by the services the agency renders, but these functions are only incidental to the principal aim of the agency, which is the irrigation of lands. NIA is a government agency invested with a corporate personality separate and distinct from the government, thus is governed by the Corporation Law. Section 1 of Republic Act No. 3601 provides: Sec. 1. Name and Domicile A body corporate is hereby created which shall be known as the National Irrigation Administration. . . . which shall be organized immediately after the approval of this Act. It shall have its principal seat of business in the City of Manila and shall have representatives in all provinces, for the proper conduct of its business. (Emphasis for emphasis). Besides, Section 2, subsection b of P.D. 552 provides that: (b) To charge and collect from the beneficiaries of the water from all irrigation systems constructed by or under its administration, such fees or administration charges as may be necessary to cover the cost of operation, maintenance and insurance, and to recover the cost of construction within a reasonable period of time to the extent consistent with government policy; to recover funds or portions thereof expended for the construction and/or rehabilitation of communal irrigation systems which funds shall accrue to a special fund for irrigation development under section 2 hereof; Unpaid irrigation fees or administration charges shall be preferred liens first, upon the land benefited, and then on the crops raised thereon, which liens shall have preference over all other liens except for taxes on the land, and such preferred liens shall not be removed until all fees or administration charges are paid or the property is levied upon and sold by the National Irrigation Administration for the satisfaction thereof. . . . The same section also provides that NIA may sue and be sued in court. It has its own assets and liabilities. It also has corporate powers to be exercised by a Board of Directors. Section 2, subsection (f): (f) . . . and to transact such business, as are directly or indirectly necessary, incidental or conducive to the attainment of the above powers and objectives,

including the power to establish and maintain subsidiaries, and in general, to exercise all the powers of a corporation under the Corporation Law , insofar as they are not inconsistent with the provisions of this Act. DISPOSITION We conclude that the National Irrigation Administration is a government agency with a juridical personality separate and distinct from the government. It is not a mere agency of the government but a corporate body performing proprietary functions. Therefore, it may be held liable for the damages caused by the negligent act of its driver who was not its special agent. ACCORDINGLY, the Motion for Reconsideration dated January 26, 1990 is DENIED WITH FINALITY. The decision of this Court in G.R. No. 55963 and G.R. No. 61045 dated December 1, 1989 is hereby AFFIRMED. DISSENTING: PADILLA: to say that NIA has opened itself to suit is one thing; to say that it is liable for damages arising from tort committed by its employees, is still another thing. The state or a government agency performing governmental functions may be held liable for tort committed by its employees only when it acts through a special agent. CITY OF MANILA V TEOTICA 22 SCRA 267 CONCEPCION; January 29, 1968 NATURE Appeal by certiorari from a decision of the Court of Appeals. FACTS - Genaro N. Teotico, an accountant, was at the corner of the Old Luneta and P. Burgos Avenue, Manila, waiting for a jeep. After waiting 5 mins, he hailed a jeep that came to a stop. As he stepped down from the curb to board the jeep, and took a few steps, he fell inside a manhole on P. Burgos Avenue. Due to the fall, his head hit the rim of the manhole breaking his eyeglasses and causing broken pieces thereof to pierce his left eyelid. As blood flowed therefrom, impairing his vision, several persons came to his assistance and pulled him out of the manhole. One of them brought Teotico to the Philippine General Hospital, where his injuries were treated, after which he was taken home. In addition to the lacerated wound in his left upper eyelid, Teotico suffered contusions on the left thigh, the left upper arm, the right leg and the upper lip apart from an abrasion on the right infra-patella region. These injuries and the allergic eruption caused by anti-tetanus injections administered to him in the hospital, required further medical treatment by a private practitioner. - Teotico filed with CFI Manila, a complaint which was, subsequently, amended for damages against the City of Manila, its mayor, city engineer, city health officer, city treasurer and chief of police. - Defense pointed out that because of the lucrative scrap iron business then prevailing, stealing of iron catchbasin covers was rampant; that the Office of the City Engineer has filed complaints in court resulting from theft of said iron covers; that in order to prevent such thefts, the city government has changed the position and layout of catchbasins in the City by constructing them under the sidewalks with concrete cement covers and openings on the side of the gutter; and that these changes had been undertaken by the city from time to time whenever funds were available. - CFI Manila sustained the theory of the defendants and dismissed the amended complaint, without costs. - This decision was affirmed by the Court of Appeals, except insofar as the City of Manila is concerned, which was sentenced to pay

damages in the aggregate sum of P6,750.00. Hence, this appeal by the City of Manila. - The first issue raised by the Manila is whether the present case is governed by Section 4 of RA 409 (Charter of the City of Manila) reading: The city shall not be liable or held for damages or injuries to persons or property arising from the failure of the Mayor, the Municipal Board, or any other city officer, to enforce the provisions of this chapter, or any other law or ordinance, or from negligence of said Mayor, Municipal Board, or other officers while enforcing or attempting to enforce said provisions. or by Article 2189 of the Civil Code of the Philippines which provides: Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of defective conditions of road, streets, bridges, public buildings, and other public works under their control or supervision. - Manila maintains that the former provision should prevail over the latter, because RA 409, is a special law, intended exclusively for the City of Manila, whereas the Civil Code is a general law, applicable to the entire Philippines. ISSUES WON City of Manila should be held liable for the damages suffered by Teotica. HELD YES. Ratio RA 409,sec.4 refers to liability arising from negligence, in general, regardless of the object thereof, whereas Article 2189, CC governs liability due to "defective streets," in particular. Since the present action is based upon the alleged defective condition of a road, said Article 2189 is decisive thereon. Reasoning The assertion to the effect that said Avenue is a national highway was made, for the first time, in its motion for reconsideration of the decision of the Court of Appeals. At any rate, under Article 2189 of the Civil Code, it is not necessary for the liability therein established to attach that the defective roads or streets belong to the province, city or municipality from which responsibility is exacted. What said article requires is that the province, city or municipality have either "control or supervision" over said street or road. Even if P. Burgos Avenue were, therefore, a national highway, this circumstance would not necessarily detract from its "control or supervision" by the City of Manila, under Republic Act 409. Then, again, the determination of whether or not P. Burgos Avenue is under the control or supervision of the City of Manila and whether the latter is guilty of negligence, in connection with the maintenance of said road, which were decided by the Court of Appeals in the affirmative, is one of fact, and the findings of said Court thereon are not subject to our review. Dispositive WHEREFORE, the decision appealed from should be as it is hereby affirmed, with costs against the City of Manila. Voting Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. ARANETA v JOYA 57 SCRA 59 CASTRO J.: May 24, 1974

FACTS: -An employee of the Ace ADVERTISING Company was sent to the States to pursue studies in television. When asked about the expenses of the trip, respondent answered that these were not shouldered by the company and instead by other parties -while abroad, he continued to receive his salaries in the form of vouchers ordered and signed by respondent Joya. The petitioner signed three of these checks. The others were signed by either the respondent, or Vicente Araneta (company treasurer) who put up part of the bill connected with Taylor's trip and also handed him letters for delivery in the United States. The Ace Advertising disbursed P5,043.20, all told, on account of Taylor's travel and studies -the Ace Advertising filed a complaint with the court of first instance of Manila against the respondent for recovery of the total sum disbursed to Taylor, alleging that the trip was made without its knowledge, authority or ratification. The respondent, in his answer, denied the charge and claimed that the trip was nonetheless ratified by the company's board of directors, and that in any event under the by-laws he had the discretion, as general manager, to authorize the trip which was for the company's benefit -Joya also filed a 3rd party complaint against the two Aranetas proving that they were involved in sending Taylor abroad -trial court rendered judgment ordering the respondent to pay the Ace Advertising "the sum of P5,043.20 with interest at the legal rate from August 23, 1954 until full payment. 3rd party complaint dismissed -CA affirmed however dismissal of 3rd party complaint was reversed stating that Taylor's trip had been neither authorized nor ratified by the company -CA noted that based on the facts, both petitioners knew and through their acts showed that they approved of the trip. were also privy to the unauthorized disbursement of the corporate moneys jointly with the appellant; what had happened was in truth and in fact a venture by them given their stamp of approval; and as it was an unauthorized act of expenditure of corporate funds, and it was these three without whose acts the same could not have happened, the juridical situation was a simple quasi-delict by them committed upon the corporation, for which solidary liability should have been imposed upon all in the first place ISSUE: WON petitioner is guilty of quasi-delict HELD: Yes - The petitioner's assertion that he signed the questioned payroll checks in good faith has not been substantiated, he in particular not having testified or offered testimony to prove such claim. Upon the contrary, in spite of his being a vicepresident and director of the Ace Advertising, the petitioner remained passive, throughout the period of Taylor's stay abroad, concerning the unauthorized disbursements of corporate funds for the latter. This plus the fact that he even approved thrice payroll checks for the payment of Taylor's salary, demonstrate quite distinctly that the petitioner neglected to perform his duties properly, to the damage of the firm of which he was an officer. -The fact that he was occupying a contractual position at the Ace Advertising is of no moment. The existence of a contract between the parties, as has been repeatedly held by this Court, constitutes no bar to the commission of a tort by one against the other and the consequent recovery of damages TORTS WITH INDEPENDENT CIVIL ACTION LIM v DE LEON G.R. No. L-22554

MARTIN; August 29, 1975 NATURE Appeal from the decision of the CFI FACTS - Plaintiff-appellant Jikil Taha sold to a certain Alberto Timbangcaya a motor launch named M/L "SAN RAFAEL". A year later or on April 9, 1962 Alberto Timbangcaya filed a complaint with the Office of the Provincial Fiscal of Palawan alleging that after the sale Jikil Taha forcibly took away the motor launch from him. - After conducting a preliminary investigation, Fiscal Francisco Ponce de Leon, in his capacity as Acting Provincial Fiscal of Palawan, filed with the Court of First Instance of Palawan the corresponding information for Robbery with Force and Intimidation upon Persons against Jikil Taha. - June 15, 1962, Fiscal Francisco Ponce de Leon, upon being informed that the motor launch was in Balabac, Palawan, wrote the Provincial Commander of Palawan requesting him to direct the detachment commander in Balabac to impound and take custody of the motor launch. - Fiscal Ponce de Leon reiterated his request to the Provincial Commander to impound the motor launch, explaining that its subsequent sale to a third party, plaintiff-appellant Delfin Lim, cannot prevent the court from taking custody of the same. Upon order of the Provincial Commander, defendant-appellee Orlando Maddela, Detachment Commander of Balabac, Palawan, seized the motor launch "SAN RAFAEL" from plaintiff-appellant Delfin Lim and impounded it. - Plaintiff-appellant Delfin Lim pleaded with Orlando Maddela to return the motor launch but the latter refused. Likewise, Jikil Taha through his counsel made representations with Fiscal Ponce de Leon to return the seized property to plaintiff-appellant Delfin Lim but Fiscal Ponce de Leon refused, on the ground that the same was the subject of a criminal offense. ISSUES 1. WON defendant-appellee Fiscal Ponce de Leon had the power to order the seizure of the motor launch in question without a warrant of search and seizure even if the same was admittedly the corpus delicti of the crime 2. WON defendants-appellees are civilly liable to plaintiffs-appellants for damages allegedly suffered by them granting that the seizure of the motor launch was unlawful HELD 1. NO - Defendant-appellees admitted that when Orlando Maddela entered the premises of Delfin Lim and impounded the motor launch he was not armed with a search warrant; that he effected the seizure of the motor launch in the absence of and without the consent of Delfin Lim. There can be no question that without the proper search warrant, no public official has the right to enter the premises of another without his consent for the purpose of search and seizure. And since in the present case defendants-appellees seized the motor launch without a warrant, they have violated the constitutional right of plaintiffsappellants against unreasonable search and seizure. 2. YES - Plaintiffs-appellants anchor their claim for damages on Articles 32 and 2219 of the New Civil Code which provide in part as follows: "ART. 32.Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and

liberties of another person shall be liable to the latter for damages. xxx "(9)The rights to be secure in one's person, house, papers, and effects against unreasonable searches and seizures. xxx "The indemnity shall include moral damages. Exemplary damages may also be adjudicated." "ART. 2219.Moral damages may be recovered in the following and analogous cases: xxx "(6)Illegal search; xxx "(1)Acts and action referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 36." - Pursuant to the foregoing provisions, a person whose constitutional rights have been violated or impaired is entitled to actual and moral damages from the public officer or employee responsible therefor. In addition, exemplary damages may also be awarded. DISPOSITION Decision appealed from is hereby reversed and another one entered declaring the seizure illegal and ordering defendant-appellee Fiscal Francisco Ponce de Leon to pay to plaintiff-appellant Delfin Lim the sum of P3,000.00 as actual damages, plus P1,000.00 moral damages, and, in addition, P750.00 for attorney's fees. ABERCA V VER G.R. No. L-69866 YAP; April 15, 1988 NATURE: Petition for certiorari FACTS This case stems from alleged illegal searches and seizures and other violations of the rights and liberties of plaintiffs by various intelligence units of the Armed Forces of the Philippines, known as Task Force Makabansa (TFM) ordered by General Fabian Ver "to conduct preemptive strikes against known communist-terrorist (CT) underground houses in view of increasing reports about CT plans to sow disturbances in Metro Manila," Plaintiffs allegations: That complying with said order of Ver, elements of the TFM raided several places, employing in most cases defectively issued judicial search warrants; that during these raids, certain members of the raiding party confiscated a number of purely personal items belonging to plaintiffs; that plaintiffs were arrested without proper warrants issued by the courts; that for some period after their arrest, they were denied visits of relatives and lawyers; that plaintiffs were interrogated in violation of their rights to silence and counsel; that military men who interrogated them employed threats, tortures and other forms of violence on them in order to obtain incriminatory information or confessions and in order to punish them; that all violations of plaintiffs constitutional rights were part of a concerted and deliberate plan to forcibly extract information and incriminatory statements from plaintiffs and to terrorize, harass and punish them, said plans being previously known to and sanctioned by defendants. Plaintiffs sought actual/compensatory damages of P39,030; moral damages of at least P150K each or a total of P3M; exemplary damages of

at least P150K each or a total of P3M; and attorney's fees not less than P200K. Respondents contentions: A motion to dismiss was filed by defendants, through their counsel, then Sol-Gen. Estelito Mendoza, alleging that (1) plaintiffs may not cause a judicial inquiry into the circumstances of their detention in the guise of a damage suit because the privilege of the writ of habeas corpus is suspended; (2) assuming that the courts can entertain the present action, defendants are immune from liability for acts done in the performance of their official duties; and (3) the complaint states no cause of action against the defendants. ISSUES 1. WON the suspension of the privilege of the writ of habeas corpus bars a civil action for damages for illegal searches conducted by military personnel and other violations of rights and liberties guaranteed under the Constitution. 2. WON a superior officer under the notion of respondent superior be answerable for damages, jointly and severally with his subordinates, to the person whose constitutional rights and liberties have been violated. 3. WON trial court correct in dismissing the complaint with respect to (dome of the) plaintiffs on the basis of the alleged failure of said plaintiffs to file MFR of the court's resolution granting the respondent's motion to dismiss HELD 1. NO. Ratio: The suspension of the privilege of the writ of habeas corpus does not destroy petitioners' right and cause of action for damages for illegal arrest and detention and other violations of their constitutional rights. The suspension does not render valid an otherwise illegal arrest or detention. What is suspended is merely the right of the individual to seek release from detention through the writ of habeas corpus as a speedy means of obtaining his liberty. Reasoning: [a] The purpose Art. 32 CC is to provide a sanction to the deeply cherished rights and freedoms enshrined in the Constitution. Its message is clear; no man may seek to violate those sacred rights with impunity. In times of great upheaval or of social and political stress, when the temptation is strongest to yield to the law of force rather than the force of law, it is necessary to remind ourselves that certain basic rights and liberties are immutable and cannot be sacrificed to the transient needs or imperious demands of the ruling power. [b] The invocation of the doctrine of state immunity from suit totally misplaced. It cannot be construed as a blanket license or a roving commission untramelled by any constitutional restraint, to disregard or transgress upon the rights and liberties of the individual citizen enshrined in and protected by the Constitution. The Constitution remains the supreme law of the land to which all officials, high or low, civilian or military, owe obedience and allegiance at all times. [c] Art. 32 of CC which renders any public officer or employee or any private individual liable in damages for violating the Constitutional rights and liberties of another does not exempt the respondents from responsibility. Only judges are excluded from liability under the said article, provided their acts or omissions do not constitute a violation of the RPC or other penal statute. [d] Even assuming that the suspension of the privilege of the writ of habeas corpus suspends petitioners' right of action for damages for illegal arrest and detention, it does not and cannot suspend their rights and causes of action for injuries suffered because of respondents' confiscation of their private belongings, the violation of their right to remain silent and to counsel and their right to protection against unreasonable searches and seizures and against torture and other cruel and inhuman treatment.

2. NO Ratio: Although the doctrine of respondent superior is applicable to the case, as contended by respondents, the decisive factor in this case is the language of Art. 32 CC. The law speaks of an officer or employee or person 'directly' or "indirectly" responsible for the violation of the constitutional rights and liberties of another. Thus, it is not the actor alone (i.e. the one directly responsible) who must answer for damages under Art. 32; the person indirectly responsible has also to answer for the damages or injury caused to the aggrieved party Reasoning: [a] The doctrine of respondent superior has been generally limited in its application to principal and agent or to master and servant (i.e. employer and employee) relationship. No such relationship exists between superior officers of the military and their subordinates. But in this case, Art. 32 governs. [b] By this provision, the principle of accountability of public officials under the Constitution acquires added meaning and acquires a larger dimension. A superior have to answer for the transgressions of his subordinates against the constitutionally protected rights and liberties of the citizen. Hence, Art. 32 of CC makes the persons who are directly, as well as indirectly, responsible for the transgression joint tortfeasors. [c] To determine the sufficiency of the cause of action, only the facts alleged in the complaint, and no others, should be considered. For this purpose, the motion to dismiss must hypothetically admit the truth of the facts alleged in the complaint. [d] So, under the above principles, it is difficult to justify the TCs dismissal for lack of cause of action the complaint against all the defendants, except Maj.Aguinaldo and MSgt. Balaba. The complaint contained allegations against all the defendants which, if admitted hypothetically, would be sufficient to establish a cause or causes of action against all of them under Art. 32 of CC. 3. NO. The body of the motion itself clearly indicated that the motion was filed on behalf of all the plaintiffs. And this must have been also the understanding of defendants' counsel himself for when he filed his comment on the motion, he furnished copies thereof, not just to the lawyers who signed the motion, but to all the lawyers of plaintiffs In filing the motion to set aside the resolution, the signing attorneys did so on behalf of all the plaintiff. They needed no specific authority to do that. The authority of an attorney to appear for and in behalf of a party can be assumed, unless questioned or challenged by the adverse party or the party concerned, which was never done in this case. DISPOSITION: Petition granted. Case remanded to the respondent court for further proceedings. SEPARATE OPINION: TEEHANKEE, C.J., concurring: - The Court's judgment at bar makes clear that all persons, be they public officers or employees, or members of the military or police force or private individuals who directly or indirectly obstruct, defeat, violate or in any manner impede or impair the constitutional rights and civil liberties of another person, stand liable and may be sued in court for damages as provided in Art. 32 of CC. - The case at bar specifically upholds and reinstates the civil action for damages filed in the court below by petitioners-plaintiffs for illegal searches conducted by military personnel and other violations of their constitutional rights and liberties. At the same time it rejects the automatic application of the principle of respondent superior or command responsibility that would hold a superior officer jointly and severally accountable for damages , including moral and exemplary, with his subordinates who committed such transgressions . However, the judgment gives the caveat that a superior officer must not abdicate his duty to properly supervise his subordinates for he runs the risk of being held responsible for gross negligence and of being held under the cited provision of the Civil Code as indirectly and solidarily accountable with the tortfeasor.

MHP GARMENTS, INC. vs. CA PUNO; 22 September 1994 Nature - Petition for Certiorari Facts -MHP Garments, Inc., was awarded by the Boy Scouts of the Philippines, the exclusive franchise to sell and distribute official Boy Scouts uniforms, supplies, badges, and insignias. In their Memorandum Agreement, petitioner corporation was given the authority to "undertake or cause to be undertaken the prosecution in court of all illegal sources of scout uniforms and other scouting supplies." -Sometime in October 1983, MHP received information that private respondents Agnes Villa Cruz, Mirasol Lugatiman, and Gertrudes Gonzales were selling Boy Scouts items and paraphernalia without any authority. De Guzman, an employee of petitioner corporation, was tasked to undertake the necessary surveillance and to make a report of the Philippine Constabulary (PC). De Guzman, Peafiel, and two (2) other constabulary men of the Reaction Force Battalion went to the stores of respondents at the Marikina Public Market. Without any warrant, they seized the boy and girl scouts pants, dresses, and suits on display at respondents' stalls. The seizure caused a commotion and embarrassed private respondents. The items were then turned over by Captain Peafiel to petitioner corporation for safekeeping. A criminal complaint for unfair competition was then filed against private respondents. After a preliminary investigation, the Provincial Fiscal of Rizal dismissed the complaint against all the private respondents. He also ordered the return of the seized items which was not immediately returned despite demands. Private respondents had to go personally to petitioners' place of business to recover their goods. Even then, not all the seized items were turned. The other items returned were of inferior quality. Private respondent then filed a Civil Case against the petitioners for sums of money and damages. The trial court ruled for the private respondents. The decision was appealed to the respondent court. It affirmed the decision with modification MHP filed a petition for certiorari before the SC. Issue/s and Held WON the search and seizure was legal No. The evidence did not justify the warrantless search and seizure of private respondents' goods. Petitioner corporation received information that private respondents were illegally selling Boy Scouts items and paraphernalia in October 1983. The specific date and time are not established in the evidence adduced by the parties. De Guzman then made a surveillance of the stores of private respondents. They reported to the Philippine Constabulary and on October 25, 1983, the raid was made on the stores of private respondents and the supposed illicit goods were seized. The progression of time between the receipt of the information and the raid of the stores of private respondents shows there was sufficient time for petitioners and the PC raiding party to apply for a judicial warrant. Despite the sufficiency of time, they did not apply for a warrant and seized the goods of private respondents. In doing so, they took the risk of a suit for damages in case the seizure would be proved to violate the right of private respondents against unreasonable search and seizure. The search and seizure were clearly illegal. There was no probable cause for the seizure. Probable cause for a search has been defined as "such facts and circumstances which would lead a reasonably discreet and prudent man to believe that an offense has been committed and that the objects sought in connection with the offense are in the place sought to be searched." These

facts and circumstances were not in any way shown by the petitioners to justify their warrantless search and seizure. Indeed, after a preliminary investigation, the Provincial Fiscal of Rizal dismissed their complaint for unfair competition and later ordered the return of the seized goods. WON MHP Garments is liable Yes. The omission will not exculpate petitioners. The respondent court correctly granted damages to private respondents. Petitioners were indirectly involved in transgressing the right of private respondents against unreasonable search and seizure. Firstly, they instigated the raid pursuant to their covenant in the Memorandum Agreement to undertake the prosecution in court of all illegal sources of scouting supplies. The raid was conducted with the active participation of their employee. Larry de Guzman who did not lift a finger to stop the seizure of the boy and girl scouts items. By standing by and apparently assenting thereto, he was liable to the same extent as the officers themselves. So with the petitioner corporation which even received for safekeeping the goods unreasonably seized by the PC raiding team and de Guzman, and refused to surrender them for quite a time despite the dismissal of its complaint for unfair competition. Secondly, Letter of Instruction No. 1299 already directs all law enforcement agencies of the Republic of the Philippines, to apprehend immediately unauthorized manufacturers and distributors of Scout paraphernalia, upon proper application by the Boy Scouts of the Philippines and/or Girl Scouts of the Philippines for warrant of arrest and/or search warrant with a judge, or such other responsible officer as may be authorized by law; and to impound the said paraphernalia to be used as evidence in court or other appropriate administrative body it orders the immediate and strict compliance with the Instructions which the petitioners miserably failed to do. And thirdly, they should have filed a third-party complaint against the raiding team for contribution or any other relief, in respect of respondents' claim for Recovery of Sum of Money with Damages. Again, they did not. WON an award for moral damages should be awarded Yes. It is consistently ruled that moral damages are not awarded to penalize the defendant but to compensate the plaintiff for the injuries he may have suffered. Conformably with our ruling in Lim vs. Ponce de Leon, op. cit., moral damages can be awarded in the case at bench. There can be no doubt that petitioners must have suffered sleepless nights, serious anxiety, and wounded feelings due the tortious raid caused by petitioners. Private respondents' avowals of embarrassment and humiliation during the seizure of their merchandise were supported by their testimonies. The wantonness of the wrongful seizure justifies the award of exemplary damages. It will also serve as a stern reminder to all and sundry that the constitutional protection against unreasonable search and seizure is a virile reality and not a mere burst of rhetoric. The all encompassing protection extends against intrusions directly done both by government and indirectly by private entities. Disposition IN VIEW WHEREFORE, the appealed decision is AFFIRMED WITH MODIFICATION. We impose a SIX PERCENT (6%) interest from January 9, 1987 on the TWO THOUSAND PESOS (P2,000.00) for the unreturned twenty-six (26) pieces of girl scouts items and a TWELVE PERCENT (12%) interest, in lieu of SIX PERCENT (6%), on the said amount upon finality of this Decision until the payment thereof. Costs against petitioners. MARCIA V CA (PAJE)

205 PHIL 147 RELOVA; January 27, 1983 NATURE Petition for certiorari FACTS - Paje is a driver of a Victory Liner Bus - His bus collided with the jeep driven by Clemente Marcia, causing the latters death and physical injuries to herein petitioners, Edgar Marcia and Renato Yap - Paje was charged with homicide and serious physical injuries thru reckless imprudence. A civil case was also instituted against him by herein petitioners for reckless imprudence and negligence in driving the passenger bus. - He was convicted in the criminal case in the RTC. However, he was acquitted in the CA. The CA ruled that criminal negligence is wanting and that Paje was not even guilty of civil negligence, for the case was of pure accident. - The defendants presented the copy of said criminal case to the court handling the civil case against them. The civil case was dismissed. ISSUES WON the acquittal in the criminal case would result to a dismissal in the civil case HELD YES - The acquittal of the accused from the criminal charge will not necessarily extinguish the civil liability unless the court declares in the judgment that the fact from which the civil liability might arise did not exist. - Petitioner also relies on Art 33 CC. However, the said article speaks only of defamation, fraud and physical injuries. The injuries suffered by herein petitioners were alleged to be the result of criminal negligence; they were not inflicted with malice. Hence, no independent civil action for damages may be instituted in connection therewith. Otherwise stated, unless the act from which the civil liability arises is declared to be non-existent in the final judgment, the extinction of the criminal liability will not carry with it the extinction of the civil liability DISPOSITIVE Decision affirmed MADEJA V CARO ABAD SANTOS, J.: December 21, 1983 NATURE Petition which seeks to set aside the order of the respondent judge granting the defendant's motion to dismiss FACTS - Dr. Eva A. Japzon is accused of homicide through reckless imprudence for the death of Cleto Madeja after an appendectomy. The complaining witness is the widow of the deceased, Carmen L. Madeja. The information states that: "The offended party Carmen L. Madeja reserving her right to file a separate civil action for damages." - The criminal case still pending, Madeja sued Dr. Japzon for damages in the same court. She alleged that her husband died because of the gross

negligence of Dr. Japzon. The respondent judge granted the defendant's motion to dismiss which invoked Section 3 (a) of Rule 111 of the Rules of Court which reads: "Sec. 3. Other civil actions arising from offenses. - In all cases not included in the preceding section the following rules shall be observed: (a) Criminal and civil actions arising from the same offense may be instituted separately, but after the criminal action has been commenced the civil action can not be instituted until final judgment has been rendered in the criminal action.". . . ISSUES 1. WON an independent civil action may be filed during the pendency of the criminal case HELD 1. YES. Ratio Section 2, Rule 111 of the Rules of Court in relation to Article 33 of the Civil Code is the applicable provision. The two enactments are quoted hereinbelow: "Sec, 2. Independent civil action. - an independent civil action entirely separate and distinct from the criminal action, may be brought by the injured party during the pendency of the criminal case, provided the right is reserved as required in the preceding section. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence. " - "Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence." Obiter - There are at least two things about Art. 33 of the Civil Code which are worth noting, namely: 1. The civil action for damages which it allows to be instituted is ex-delicto. This is manifest from the provision which uses the expressions "criminal action" and "criminal prosecution." Tolentino says: "While the State is the complainant in the criminal case, the injured individual is the one most concerned because it is he who has suffered directly. He should be permitted to demand reparation for the wrong which peculiarly affects him." 2. The term "physical injuries" is used in a generic sense. It is not the crime of physical injuries defined in the Revised Penal Code. It includes not only physical injuries but consummated, frustrated and attempted homicide. Dispositive Petition is GRANTED; the order dismissing Civil Case No. 141 is SET ASIDE ARAFILES v PHILIPPINE JOURNALISTS, INC CARPIO MORALES, J., March 25, 2004 NATURE Petition for review of CA Deci FACTS (Consti II Case) -Respondent Morales wrote an article for Peoples Journal Tonight based on the sworn statement in the police blotter and interview of Emelita Despuig where Despuig alleged that Arafiles raped her the month before then attempted to rape her the night she filed a complaint. Morales attempted to contact Arafiles but since the latters office was still closed at that time (past 12mn he works for NIAS-PAGASA), he was not able to do so.

-About a year following the published article, Arafiles filed action for damages based on the alleged grossly malicious and overly sensationalized report by Morales which cast aspersions on his character, being the object of public contempt and ridicule as he was depicted as a sex-crazed stalker and serial rapist. -RTC: in favor of Arafiles -CA: in favor of Morales, et. al. based on doctrine of fair comment ISSUE WON the CA erred in holding that the publication of the news item was not attended with malice to thus free respondents of liability for damages HELD NO. Every citizen of course has the right to enjoy a good name and reputation, but we do not consider that the respondents, under the circumstances of this case, had violated said right or abused the freedom of the press. Ratio. The newspapers should be given such leeway and tolerance as to enable them to courageously and effectively perform their important role in our democracy. In the preparation of stories, press reporters and [editors] usually have to race with their deadlines; and consistently with good faith and reasonable care, they should not be held to account, to a point of suppression, for honest mistakes or imperfection in the choice of words. Reasoning. First discussed applicable provisions (A33, 19, 21 NCC): Article 33 contemplates a civil action for the recovery of damages that is entirely unrelated to the purely criminal aspect of the case. A civil action for libel under this article shall be instituted and prosecuted to final judgment and proved by preponderance of evidence separately from and entirely independent of the institution, pendency or result of the criminal action because it is governed by the provisions of the New Civil Code and not by the Revised Penal Code governing the criminal offense charged and the civil liability arising therefrom. -then discussed how to determine if a published work is libelous: In actions for damages for libel, it is axiomatic that the published work alleged to contain libelous material must be examined and viewed as a whole. -then discussed the petitioners allegation that the news item as a malicious sensationalization failed: even though the police blotter only shows 1 count of abduction and rape, respondent was present when Emelita executed her swornstatement where she reported an abduction with rape and an abduction incident (where no rape occurred, but was about to happen) so respondents article was not maliciously sensationalized. The presentation of the news item subject of petitioners complaint may have been in a sensational manner, but it is not per se illegal. Respondents could of course have been more circumspect in their choice of words as the headline and first seven paragraphs of the news item give the impression that a certain director of the NIAS actually committed the crimes complained of by Emelita. The succeeding paragraphs (in which petitioner and complainant Emelita were eventually identified) sufficiently convey to the readers, however, that the narration of events was only an account of what Emelita had reported at the police headquarters. -then mentioned doctrine: The newspapers should be given such leeway and tolerance as to enable them to courageously and effectively perform their important role in our democracy. In the preparation of stories, press reporters and [editors] usually have to race with their deadlines; and consistently with good faith and reasonable care, they should not be held to account, to a point of suppression, for honest mistakes or imperfection in the choice of words . Disposition. WHEREFORE, the petition is hereby DENIED. SO ORDERED MVRS V ISLAMIC DAWAH COUNCIL G.R. No. 135306

BELLOSILLO; January 28, 2003 NATURE Petition to review decision of CA FACTS - The ISLAMIC DA'WAH COUNCIL OF THE PHIL (IDCP), a local federation of more than 70 Muslim religious orgs, and some individual Muslims filed in the RTC Manila a complaint for damages in their own behalf and as a class suit in behalf of the Muslim members nationwide against MVRS PUBLICATIONS, et.al. - Complaint alleged that what was published in BULGAR was insulting and damaging to the Muslims; that these words alluding to the pig as the God of the Muslims was not only published out of sheer ignorance but with intent to hurt the feelings, cast insult and disparage the Muslims and Islam; that on account of these libelous words Bulgar insulted not only the Muslims in the Phil but the entire Muslim world, esp. every Muslim individual in non-Muslim countries. - MVRS claimed it was merely an expression of belief/opinion and was published without malice. Also, it did not mention respondents as object of the article, hence, were not entitled to damages. RTC dismissed: plaintiffs failed to establish their cause of action since the persons allegedly defamed by the article were not specifically identified. CA reversed: it was "clear from the disputed article that the defamation was directed to all adherents of Islamic faith. ISSUE 1. WON elements of libel exist 2. WON the cause of action should rise from an intentional tortuous act causing mental distress HELD 1. NO. Reasoning Defamation means the offense of injuring a person's character, fame or reputation through false and malicious statements. Words which are merely insulting are not actionable as libel or slander per se, and mere words of general abuse however opprobrious, ill-natured, or vexatious, whether written or spoken, do not constitute a basis for an action for defamation in the absence of an allegation for special damages. 2. NO. The cause of action is libel. Ratio Action arising from an intentional tortuous act causing mental distress cannot be sustained in this case, for such action is personal in nature, and since no particular individual was identified in the disputed article, such cause of action cannot be sustained. Torts with independent civil action: DEFAMATION An "emotional distress" tort action is personal in nature; it is a civil action filed by an individual to assuage the injuries to his emotional tranquility due to personal attacks on his character. - The purported damage caused by the published article falls under principle of relational harm - which includes harm to social relationships in the community in the form of defamation; as distinguished from the principle of reactive harm - which includes injuries to individual emotional tranquility in the form of an infliction of emotional distress . The present case falls within the application of the relational harm principle of tort actions for defamation.

- To recover for this the plaintiff must show that: (a) conduct of the defendant was intentional or in reckless disregard of plaintiff; (b) conduct was extreme and outrageous; (c) causal connection between defendant's conduct and the plaintiff's mental distress; and, (d) the plaintiff's mental distress was extreme and severe. - Any party seeking recovery for mental anguish must prove more than mere worry, anxiety, embarrassment, or anger. (AmJur) Disposition Petition granted. Decision reversed. SEPARATE OPINION VITUG [concur] - The present controversy stems from a civil action for damages and not from a criminal complaint. CC recognizes the possibility of such a civil action either pursuant to Art 26, par. 4, to the effect that although it may not constitute a criminal offense, vexing or humiliating another on account of his religious beliefs xxx can give rise to a cause of action for damages, or to Art. 33 which provides that in case of defamation, a civil complaint for damages, entirely separate and distinct from the criminal case, may be brought by the injured party. - In the present case, the article relates to the entire Muslim population and not just to the IDCP or to any of the individual respondents. There is no direct reference or allusion to the federation or any of its members, or to any of the individual complainants. Respondents scarcely can claim having been singled out for social censure pointedly resulting in damages. CARPIO [dissent] - I dissent not because the newspaper article in question is libelous, but because it constitutes an intentional tortious act causing mental distress to those whom private respondent IDCP represents. - Both RTC and CA found the article insulting and humiliating to Muslims, causing wounded feelings and mental anguish to believers of Islam. This finding of fact establishes that petitioners have inflicted on private respondents an intentional wrongful act - humiliating persons because of their religious beliefs. AUSTRIA-MARTINEZ [dissent] - Focal point of claim for damages: insult caused by the article that the Muslims worship the pig as their God which is absolutely contrary to their basic belief as Muslims that there is only one God, and, that the greatest sin in Islam is to worship things or persons other than Allah. - The article is not only an imputation of irreligious conduct but also a downright misrepresentation of the religious beliefs of Muslims. Liability for libel does not depend on the intention of the defamer, but on the fact of defamation. SALTA V DE VEYRA 202 Phil 527 DE CASTRO; September 30, 1982 FACTS - Two cases involving the same issue disposed of by two judges in a manner directly in opposition of each other. For a uniform ruling that would authoritatively settle this regrettable conflict of opinion, the two cases have been consolidated for a single decision. - Salta was an employee of the PNB assigned as Manager of the Malolos' branch. His duty was to grant loans, or only to recommend the granting of loans, depending on the amount of the loan applied for.

- In disregard of the pertinent rules, regulations and policies of the respondent bank, Salta indiscriminately granted certain loans mentioned in the complaints filed by PNB, in manner characterized by negligence, fraud and manifest partiality, and upon securities not commensurate with the amount of the loans. - PNB filed two civil actions to recover losses the bank suffered (Civil Case No. 79583, Civil Case No. 88343). With this the bank filed a criminal action against Salta, for violation of the Anti-Graft and Corrupt Practices Act. - Salta was acquitted in the criminal case, and filed Motions to Dismiss in each of the two civil cases. It is in the resolution of the motions to dismiss that Judges de Veyra and Purisima of the CFI of Manila took diametrically opposing views, the former denying the motion, the latter granting it. ISSUE WON a decision of acquittal in a criminal case operates to dismiss a separate civil action filed on the basis of the same facts as alleged in the criminal case (Anti-Graft and Corrupt Practices Act). HELD NO. Ratio The civil action permitted therein to be filed separately from the criminal action may proceed independently of the criminal proceedings "regardless of the result of the latter." Acquittal in the criminal case will not be an obstacle for the civil case to prosper unless in the criminal case the Court makes a finding that even civilly, the accused would not be liable. Reasoning ART 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence. - The filing in this case of a civil action separate from the criminal action is fully warranted under the provision of Article 33 of the New Civil Code. The criminal case is for the prosecution of an offense the main element of which is fraud, one of the kinds of crime mentioned in the aforecited provision. Based on the same acts for which the criminal action was filed, the civil actions very clearly alleged fraud and negligence as having given rise to the cause of action averred in the complaints. - The offenses specified in Article 33 are of such a nature, unlike other offenses not mentioned, that they may be made the subject of a separate civil action because of the distinct separability of their respective juridical cause or basis of action. This is clearly illustrated in the case of swindling, a specie of an offense committed by means of fraud, where the civil case may be filed separately and proceed independently of the criminal case, regardless of the result of the latter. - That there was fraud committed by the defendant in granting the aforesaid loans which rendered him liable for his acts, which fraud is positively and easily identifiable in the manner and scheme aforementioned. - JUSTICE JBL REYES: in the case of an independent civil actions under the Civil Code, the result of the criminal case, whether acquittal or conviction, would be entirely irrelevant to the civil action. This seems to be the spirit of the law when it decided to make these actions `entirely separate and distinct' from the criminal action. Hence in these cases, I think Rule 107 Sec. 1(d) does not apply. - It is significant to note that under Article 31 [11] of the New Civil Code, it is made clear that the civil action permitted therein to be filed separately from the criminal action may proceed independently of the criminal proceedings "regardless of the result of the latter."

DISPOSITION The decision of Justice De Veyra is affirmed. PRUDENTIAL BANK V IAC (Philippine Rayon Mills & Anacleto Chi) 216 SCRA 257 DAVIDE, JR.; G.R. No. 74886 December 8, 1992 NATURE Petition for review of the decision of IAC, which affirmed in toto the decision of CFI Quezon City in a civil action instituted by the petitioner for the recovery of a sum of money representing the amount paid by it to the Nissho Company Ltd. of Japan for textile machinery imported by the Philippine Rayon Mills, Inc., represented by co-defendant Anacleto R. Chi. FACTS -August 8, 1962: Philippine Rayon Mills, Inc. entered into a contract with Nissho Co., Ltd. of Japan for the importation of textile machineries under a five-year deferred payment plan. To effect payment for said machineries, Phil. Rayon applied for and was granted a commercial letter of credit with the Prudential Bank and Trust Company in favor of Nissho. Against this letter of credit, drafts were drawn and issued by Nissho, which were all paid by the Prudential Bank through its correspondent in Japan, the Bank of Tokyo, Ltd. As indicated on their faces, two of these drafts were accepted by the Phil Rayon through its president, Anacleto R. Chi, while the others were not. -Upon arrival of the machineries, the Prudential Bank indorsed the shipping documents to the Phil Rayon which accepted delivery of the same. To enable the Phil Rayon to take delivery of the machineries, it executed, by prior arrangement with the Prudential Bank, a trust receipt which was signed by Anacleto R. Chi in his capacity as president of Phil Rayon. -At the back of the trust receipt is a printed form to be accomplished by two sureties who, by the very terms and conditions thereof, were to be jointly and severally liable to the Prudential Bank should the Phil Rayon fail to pay the total amount or any portion of the drafts issued by Nissho and paid for by Prudential Bank. The Phil Rayon was able to take delivery of the textile machineries and installed the same at its factory site at 69 Obudan Street, Quezon City. -Sometime in 1967, the Phil Rayon ceased business operation. On December 29, 1969, Phil Rayon's factory was leased by Yupangco Cotton Mills for an annual rental of P200,000.00. The lease was renewed on January 3, 1973. On January 5, 1974, all the textile machineries in the Phil Rayon's factory were sold to AIC Development Corporation for P300,000.00. -The obligation of the Phil Rayon arising from the letter of credit and the trust receipt remained unpaid and unliquidated. Repeated formal demands for the payment of the said trust receipt yielded no result Hence, the present action for the collection of the principal amount of P956,384.95 was filed on October 3, 1974 against the Phil Rayon and Anacleto R. Chi. Defendants Defenses lack of cause of action; prescription; laches Lower Courts Ruling Both the CFI and the IAC ruled that Philippine Rayon could be held liable for the two (2) drafts because only these appear to have been accepted by the latter after due presentment. The liability for the remaining ten (10) drafts did not arise because the same were not presented for acceptance. In short, both courts concluded that acceptance of the drafts by Philippine Rayon was indispensable to make the latter liable thereon. ISSUES: 1. Whether presentment for acceptance of the drafts was indispensable to make Philippine Rayon liable thereon; 2. Whether Philippine Rayon is liable on the basis of the trust receipt;

3. Whether private respondent Chi is jointly and severally liable with Philippine Rayon for the obligation sought to be enforced 3a. If not, WON he may be considered a guarantor 3b. If he is a guarantor, WON the case should have been dismissed on the ground of lack of cause of action as there was no prior exhaustion of Philippine Rayon's properties. HELD: 1. NO. Presentment for acceptance is necessary only in the cases expressly provided for in Section 143 of the Negotiable Instruments Law (NIL). The parties herein agree, and the trial court explicitly ruled, that the subject, drafts are sight drafts which do not require presentment for acceptance. They are, pursuant to Section 7 of the NIL, payable on demand. And even if these were not sight drafts, thereby necessitating acceptance, it would be the petitioner and not Philippine Rayon which had to accept the same for the latter was not the drawee. 2. YES. -And although it is true that the petitioner commenced a criminal action for the violation of the Trust Receipts Law, no legal obstacle prevented it from enforcing the civil liability arising out of the trust, receipt in a separate civil action. Under Section 13 of the Trust Receipts Law, the failure of an entrustee to turn over the proceeds of the sale of goods, documents or instruments covered by a trust receipt to the extent of the amount owing to the entruster or as appear in the trust receipt or to return said goods, documents or instruments if they were not sold or disposed of in accordance with the terms of the trust receipt shall constitute the crime of estafa, punishable under the provisions of Art.315, par. 1(b) of the RPC. -Under Article 33 of the Civil Code, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party in cases of defamation, fraud and physical injuries. Estafa falls under fraud. 3. NO. Private respondent Chi's signature in the dorsal portion of the trust receipt did not bind him solidarily with Philippine Rayon. 3a. YES. SCs own reading of the questioned solidary guaranty clause yields the conclusion that the obligation of Chi is only that of a guarantor. Reasoning Last sentence of the clause speaks of waiver of exhaustion, which, nevertheless, is ineffective in this case because the space therein for the party whose property may not be exhausted was not filled up. -The clause "we jointly and severally agree and undertake" refers to the undertaking of the two (2) parties who are to sign it or to the liability existing between themselves. It does not refer to the undertaking between either one or both of them on the one hand and the petitioner on the other with respect to the liability described under the trust receipt. Elsewise stated, their liability is not divisible as between them, i.e., it can be enforced to its full extent against any one of them. -Any doubt as to the import, or true intent of the solidary guaranty clause should be resolved against the petitioner since the trust receipt, together with the questioned solidary guaranty clause, is a contract of adhesion which must be strictly construed against the party responsible for its preparation. -By his signing, Chi became the sole guarantor. The attestation by witnesses and the acknowledgement before a notary public are not required by law to make a party liable on the instrument. Contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present; however, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that it be proved in a certain way, that requirement is absolute and indispensable. With respect to a guaranty, which is a

promise to answer for the debt or default of another, the law merely requires that it, or some note or memorandum thereof, be in writing. Otherwise, it would be unenforceable unless ratified. While the acknowledgement of a surety before a notary public is required to make the same a public document, under Article 1358 of the Civil Code, a contract of guaranty does not have to appear in a public document. -Reading Section 13 of PD No. 115: It is clear that if the violation or offense is committed by a corporation, partnership, association or other juridical entities, the penalty of imprisonment shall be imposed upon the directors, officers, employees or other officials or persons therein responsible for the offense. However, it is these corporations, partnerships, associations, etc, which are made liable for the civil liability arising from the criminal offense. -Since that violation of a trust receipt constitutes fraud under Article 33 of the Civil Code, petitioner was acting well within its rights in filing an independent civil action to enforce the civil liability arising therefrom against Philippine Rayon. 3b. NO. Excussion is not a condition sine qua non for the institution of an action against a guarantor. There was nothing procedurally objectionable in impleading private respondent Chi as a co-defendant in the civil case for the collection of a sum of money. As a matter of fact, Section 6, Rule 3 of the Rules of Court on permissive joinder of parties explicitly allows it. -This is the equity rule relating to multifariousness. It is based on trial convenience and is designed to permit the joinder of plaintiffs or defendants whenever there is a common question of law or fact. It will save the parties unnecessary work, trouble and expense. -However, Chi's liability is limited to the principal obligation in the trust receipt plus all the accessories thereof including judicial costs; with respect to the latter, he shall only be liable for those costs incurred after being judicially required to pay. Interest and damages, being accessories of the principal obligation, should also be paid; these, however, shall run only from the date of the filing of the complaint. Attorney's fees may even be allowed in appropriate cases. Disposition Petition granted. Philippine Rayon Mills, Inc. declared liable on the 12 drafts in question and on the trust receipt. Private respondent Anacleto R. Chi declared secondarily liable on the trust receipt. CAPUNO V PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES MAKALINTAL; April 30, 1965 FACTS - The case arose from a vehicular collision. - Involved were a Pepsi-Cola delivery truck driven by Jon Elordi and a private car driven by Capuno. - The collision proved fatal to the latter as well as to his passengers, the spouses Florencio Buan and Rizalina Paras. - Elordi was charged with triple homicide through reckless imprudence in the CFI of Pampanga. The information was subsequently amended to include claims for damages by the heirs of the three victims. - While the criminal case was pending, the Intestate Estate of the Buan spouses and their heirs filed a civil action, also for damages, in the CFI of Tarlac against the Pepsi-Cola Bottling Company of the Philippines and Jon Elordi. - Included in the complaint was a claim for indemnity in the sum of P2,623.00 allegedly paid by the Estate to the heirs of Capuno under the Workmen's Compensation Act.

-In the criminal case both the heirs of Capuno and the Estate of were represented by their respective counsel as private prosecutors: Attorney Ricardo Y. Navarro and Attorneys Jose W. Diokno and Augusto M. Ilagan. - In view of the filing of the civil action the accused Jon Elordi moved to strike out the appearances of these private prosecutors in the criminal case. Grounds for the motion were (1) that as the Capuno heirs were concerned, they no longer had any interest to protect in the criminal case since they had already claimed and received compensation for the death of their decedent; and (2) that on the part of the Estate of Buan its right to intervene in said case had been abated by the civil action. -The appearance and intervention of Attorneys Diokno and Ilagan was disallowed by the Court and that of Attorney Navarro was disallowed in an amending order. No appeal was taken from either of the two orders. - The parties in the civil case entered into a "Compromise and Settlement." For P290,000.00 the Buan Estate gave up its claims for damages, including the claim for reimbursement of the sum of P2,623.00 previously paid to the heirs of Capuno "under the Workmen's Compensation Act." - The Court approved the compromise and accordingly dismissed the case. - At that time the criminal case was still pending; judgment was rendered wherein the accused Elordi was acquitted of the charges against him. Prior thereto, herein appellants commenced a civil action for damages against the Pepsi-Cola Bottling Company of the Philippines and Jon Elordi. - This is the action which, upon appellees' motion, was dismissed by the Court a quo in its order of February 29, 1960, from which order the present appeal has been taken. - The grounds upon which appellees based their motion for dismissal and which the Court found to be "well taken" were; (1) that the action had already prescribed; and (2) that appellees had been released from appellants' claim for damages by virtue of the payment to the latter of the sum of P2,623.00 by the Buan Estate under the Workmen's Compensation Act, which sum, in turn, was sought to be recovered by the said Estate from appellees in Civil Case No. 838 but finally settled by them in their compromise. ISSUE WON the action had already prescribed. RULING YES. - There can be no doubt that the present action is one for recovery of damages based on a quasi-delict, which action must be instituted within four (4) years (Article 1146, Civil Code). - Appellants originally sought to enforce their claim ex-delicto, that is, under the provisions of the Penal Code, when they intervened in the criminal case against Jon Elordi. The information therein, it may be recalled, was amended precisely to include an allegation concerning damages suffered by the heirs of the victims of the accident for which Elordi was being prosecuted. - But appellants' intervention was subsequently disallowed and they did not appeal from the Court's order to the effect. - And when they commenced the civil action on September 26, 1958 the criminal case was still pending, showing that appellants then chose to pursue the remedy afforded by the Civil Code, for otherwise that action would have been premature and in any event would have been concluded by the subsequent judgment of acquittal in the criminal case. - In filing the civil action as they did appellants correctly considered it as entirely independent of the criminal action, pursuant to Articles 31 and 33 of the Civil Code, which read: ART. 31. When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil action may

proceed independently of the criminal proceedings and regardless of the result of the latter. ART. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence. - The term "physical injuries" in Article 33 includes bodily injuries causing death. In other words, the civil action for damages could have been commenced by appellants immediately upon the death of their decedent, Cipriano Capuno, and the same would not have been stayed by the filing of the criminal action for homicide through reckless imprudence. But the complaint here was filed only on September 26, 1958, or after the lapse of more than five years. - The foregoing considerations dispose of appellants' contention that the fouryear period of prescription in this case was interrupted by the filing of the criminal action against Jon Elordi inasmuch as they had neither waived the civil action nor reserved the right to institute it separately. Such reservation was not then necessary; without having made it they could file as in fact they did a separate civil action even during the pendency of the criminal case; and consequently, as held in Paulan v. Sarabia, supra, "the institution of a criminal action cannot have the effect of interrupting the institution of a civil action based on a quasi-delict." - As to whether or not Rule 111, Section 2, of the Revised Rules of Court which requires the reservation of the right to institute a separate and independent civil action in the cases provided for in Articles 31, 32, 33, 34, and 2177 of the Civil Code affects the question of prescription, the said rule does not apply in the present case. DISPOSTIION The order appealed from was affirmed, without costs. CORPUS V PAJE 28 SCRA 1062 CAPISTRANO; July 31, 1969 NATURE Direct appeal from an order of the Court of First Instance of Rizal FACTS - December 23, 1956 Felardo Paje was driving a Victory Liner bus. It collided with a jeepney driven by Clemente Marcia in Lubao, Pampanga. As a result of the collision, Marcia died while two other people were physically injured. - An information for homicide and double serious physical injuries through reckless imprudence was filed against Paje. Marcias heirs reserved their right to institute a separate civil action against Paje. Paje was later found guilty on November 7, 1960. - November 21, 1961 Pending Pajes appeal, the window and children of Marcia instituted the separate civil action for damages arising from the accident against Paje and Victory Liner, praying that the defendants be jointly and severally liable. - November 9, 1962 Paje was acquitted by the appellate court, saying that the collision was purely an accident. - December 29, 1962 Paje filed a motion to dismiss the civil action on the ground that his acquittal barred the said action but the motion was denied. Petitioners Claim > The petitioners claim that the Lower Court erred in acquitting Paje and that his acquittal was a bar to the civil action. Quoting Chantangco vs. Abaroai : It is true that one of the plaintiffs in the present case reserved whatever right he may have had to bring a civil action. This was obviously of no avail, inasmuch as

there resulted a judgment for the defendant, and the plain inference from the foregoing is that a verdict of acquittal must carry with it exemption from civil responsibility. Respondents Comments: > At the pre-trial of the civil case, the defendants asked the court to rule on their special defense that plaintiffs' cause of action based upon a quasi-delict had prescribed considering that the complaint was brought four years and eleven months after the collision and that according to Article 1144 of the Civil Code an action based upon a quasi-delict must be instituted within four years. The lower court ruled that the action had already prescribed. ISSUE WON the civil action against Paje can still prosper despite his acquittal HELD NO Ratio Criminal negligence, that is, reckless imprudence, is not one of the three crimes mentioned in Article 33 of the Civil Code which authorizes the institution of an independent civil action, that is, of an entirely separate and distinct civil action for damages, which shall proceed independently of the criminal prosecution and shall be proved only by a preponderance of evidence. Thearticle mentions only the crimes of defamation, fraud, (estafa) and physical injuries. Reasoning - Although in the case of Dyogi vs. Yatco this Court held that the term "physical injuries" used in Article 33 of the Civil Code includes homicide, it is to be borne in mind that the charge against Felardo Paje was for reckless imprudence resulting in homicide, and not for homicide and physical injuries. - In People vs. Buan, the Court ruled that the offense of criminal negligence under Article 365 of the Revised Penal Code lies in the execution of an imprudent or negligent act that, if intentionally done, would be punishable as a felony. The law penalizes thus the negligent or careless act, not the result thereof. - Homicide through reckless imprudence or criminal negligence comes under the general rule that the acquittal of the defendant in the criminal action is a bar to his civil liability based upon the same criminal act notwithstanding that the injured party reserved. - With regard to the issue of prescription, the Court ruled that the action had indeed prescribed because the prescription period was pegged at 4 years (A1146, CC) and began to run on the day the quasi-delict was committed. Disposition PREMISES CONSIDERED, the order appealed from is affirmed, without special pronouncement as to costs. MADEJA V CARO 211 PHIL 469 ABAD SANTOS; December 21, 1983 NATURE Petition seeking to set aside the order of the CFI dismissing the civil case against Japzon FACTS - DR. EVA A. JAPZON was accused of homicide through reckless imprudence for the death of Cleto Madeja after an appendectomy.

- In the information, the offended party Carmen L. Madeja reserved her right to file a separate civil action for damages - The criminal case still pending, Carmen L. Madeja sued Dr. Eva A. Japzon for damages, alleging that her husband died because of the gross negligence of Dr. Japzon. - The defendant filed a motion to dismiss, which the respondent judge granted on the basis of Section 3(a) of Rule 111 of the Rules of Court 1 ISSUE WON a civil action for damages may be instituted pending the resolution of a criminal case HELD YES - Section 2, Rule 111 of the Rules of Court in relation to Article 33 of the Civil Code is the applicable provision. - Sec. 2. Independent civil action. In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, an independent civil action entirely separate and distinct from the criminal action, may be brought by the injured party during the pendency of the criminal case, provided the right is reserved as required in the preceding section . Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence." (Rule 111, Rules of Court.) - Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence. (Civil Code,) Obiter - There are at least two things about Art. 33 of the Civil Code which are worth noting, namely: 1. The civil action for damages which it allows to be instituted is exdelicto. This is manifest from the provision which uses the expressions "criminal action" and "criminal prosecution." 2. The term "physical injuries" is used in a generic sense. It is not the crime of physical injuries defined in the Revised Penal Code. It includes not only physical injuries but consummated, frustrated and attempted homicide. - The Article in question uses the words 'defamation', 'fraud' and 'physical injuries.' Defamation and fraud are used in their ordinary sense because there are no specific provisions in the Revised Penal Code using these terms as means of offenses defined therein, so that these two terms defamation and fraud must have been used not to impart to them any technical meaning in the laws of the Philippines, but in their generic sense. With this in mind, it is evident that the terms 'physical injuries' could not have been used in its specific sense as a crime defined in the Revised Penal Code, for it is difficult to believe that the Code Commission would have used terms in the same article-some in their general and another in its technical sense.
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- In other words, the term 'physical injuries' should be understood to mean bodily injury, not the crime of physical injuries, because the terms used with the latter are general terms. - In any case the Code Commission recommended that the civil action for physical injuries be similar to the civil action for assault and battery in American Law, and this recommendation must hove been accepted by the Legislature when it approved the article intact as recommended. If the intent has been to establish a civil action for the bodily harm received by the complainant similar to the civil action for assault and battery, as the Code Commission states, the civil action should lie whether the offense committed is that of physical injuries, or frustrated homicide, or attempted homicide, or even death" **(end of obiter) - Corpus vs. Paje, which states that reckless imprudence or criminal negligence is not included in Article 33 of the Civil Code is not authoritative. Of eleven justices only nine took part in the decision and four of them merely concurred in the result. Disposition Petition is granted; the order dismissing Civil Case No. 141 is hereby set aside. DULAY V CA (SAFEGUARD, SUPERGUARD) 243 SCRA 220 BIDIN; April 3, 1995 FACTS - Benigno Torzuela, , a security guard on duty at the "Big Bang sa Alabang," and Atty. Napoleon Dulay had an altercation. Torzuela shot and killed Atty. Dulay. - Maria Benita Dulay, widow of Dulay, filed an action for damages against Torzuela and Safeguard Investigation and Security Co., Inc., (SAFEGUARD) and/or Superguard Security Corp. (SUPERGUARD), alleged employers of defendant Torzuela. Respondent: > that Torzuela's act of shooting Dulay was beyond the scope of his duties, and that since the alleged act of shooting was committed w/ deliberate intent (dolo), the civil liability is governed by Art 100 of the RPC. > that a complaint for damages based on negligence under Art 2176 (the one filed by petitioners) cannot lie, since the civil liability under Art 2176 applies only to quasi-offenses under Art 365 of the RPC. > that petitioners' filing of the complaint is premature considering that the conviction of Torzuela in a criminal case is a condition sine qua non for the employer's subsidiary liability. > that Article 33 of the New Civil Code applies only to injuries intentionally committed (Marcia v CA) Petitioner > the incident resulting in the death of Dulay was due to the concurring negligence of the defendants. Torzuela's wanton and reckless discharge of the firearm issued to him by defendant SAFEGUARD and/or SUPERGUARD was the immediate and proximate cause of the injury, while the negligence of defendant SAFEGUARD and/or SUPERGUARD consists in its having failed to exercise the diligence of a good father of a family in the supervision and control of its employee to avoid the injury. > that their cause of action against the private respondents is based on their liability under Article 2180 > that quasi-delicts are not limited to acts of negligence but also cover acts that are intentional and voluntary, citing Andamo v. IAC. Thus, Torzuela's act of shooting Dulay constitutes a quasi-delict actionable under Art 2176

Sec. 3. Other civil actions arising from offenses . In all cases not included in the preceding section the following rules shall be observed: (a) Criminal and civil actions arising from the same offense may be instituted separately, but after the criminal action has been commenced the civil action can not be instituted until final judgment has been rendered in the criminal action. ...

> that Torzuela's act of shooting Dulay is also actionable under Art 332 and Section 3, Rule 111 of the Rules of Court 3 ISSUE WON civil action can proceed independently of the criminal action HELD YES - Rule 111 of the Rules on Criminal Procedure provides: "Sec 1. Institution of criminal and civil actions. When a criminal action is instituted, the civil action for the recovery of civil liability is impliedly instituted with the criminal action , unless the offended party waives the civil action, reserves his right to institute it separately, or institutes the civil action prior to the criminal action. Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, 34, and 2176 of the Civil Code of the Philippines arising from the same act or omission of the accused." - It is well-settled that the filing of an independent civil action before the prosecution in the criminal action presents evidence is even far better than a compliance with the requirement of an express reservation. This is precisely what the petitioners opted to do in this case. - The term "physical injuries" in Article 33 has already been construed to include bodily injuries causing death (Capuno v. Pepsi-Cola Bottling Co; Carandang v. Santiago). It is not the crime of physical injuries defined in the Revised Penal Code. It includes not only physical injuries but also consummated, frustrated, and attempted homicide (Madeja v. Caro). - Although in the Marcia case, it was held that no independent civil action may be filed under Article 33 where the crime is the result of criminal negligence, it must be noted however, that Torzuela, the accused in the case at bar, is charged with homicide, not with reckless imprudence, whereas the defendant in Marcia was charged with reckless imprudence. Therefore, in this case, a civil action based on Article 33 lies. INTENTIONAL TORTS VELAYO V SHELL CO OF THE PHILS 100 PHIL 186 FELIX; October 31, 1956 NATURE Appeal from a judgment of CFI Manila FACTS - Since the start of Commercial Air Line, Incs (CALI) operations, its fuel needs were all supplied by Shell Company of the P.I., Ltd, (Shell). Desmond Fitzgerald, Shells Credit Manager was in charge of collecting payment. Any extensions of term of payment, however, had to be decided by Stephen Crawford and later by Wildred Wooding
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Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence

Rule 111.Sec. 3. When civil action may proceed independently - In the cases provided for in Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent civilaction which has been reserved may be brought by the offended party, shall proceed independently of the criminal action, and shall require only a preponderance of evidence.

- As of August 1948, Shells books showed a balance of P170,162.58 in its favor for goods it sold and delivered to CALI. Shell had reasons to believe that the financial condition of Shell was far from being satisfactory. Alfonso Sycip, CALIs President of Board of Directors, offered to Fitzgerald CALIs Douglas C-54 plane, which was then in California. The offer was declined by Crawford. - Aug 6, 1948, management of CALI informally convened its principal creditors in a luncheon, and informed them that CALI was in a state of insolvency and had to stop operation. Alexander Sycip, Secretary of the Board of Directors of CALI, explained the memorandum agreement executed by CALI with Phil Air Lines Inc on Aug 4, regarding the proposed sale to PAL of the aviation equipment of CALI. Alfredo Velayo, Auditor of CALI, discussed the balance sheets of CALI. The balance sheet made mention of the Douglas C-54 plane. - There was a general understanding among all creditors present on the desirability of consummating the sale in favor of PAL. Then followed a discussion on the payment of claims of creditors and the preferences claimed for the accounts due to employees, the Government, and the National Airports Corp. The other creditors disputed such contention of preference. No understanding was reached on the matter of preference of payment and it was then generally agreed that the matter be further studied by a working committee to be formed. Mr. Fitzgerald of Shell, Atty. Agcaoili of National Airports Corp., and Atty. Alexander Sycip were appointed to the working committee. - Those present in the meeting were of the unanimous opinion that it would be advantageous not to present suits against CALI but to strive for a fair pro-rata division of its assets. The management of CALI announced that in case of non-agreement of the creditors, it would file insolvency proceedings. - Aug 9, 1948, working committee discussed methods of achieving objectives, which were to preserve the assets of CALI and to study the way of making a fair division of all the assets among the creditors. However, negotiation on the division of assets was left pending. - On the same day (Aug 9), Shell effected a telegraphic transfer of all its credit against CALI to the American Corporation Shell Oil Co., Inc., assigning its credit amounting to $79,440. This was followed on Aug 10 by a deed of assignment of credit amounting to $85,081.29. - Aug 12, 1948 American Shell Oil Co filed a complaint against CALI in the Superior Court of the State of California, USA, for the collection of assigned credit of $79,440, and a writ of attachment was applied for and issued against a C-54 plane. Sept 17, 1948 an amended complaint was filed to recover assigned credit of $85,081.29 and a supplemental attachment for a higher sum against the C-54 plane, plus miscellaneous personal properties. - Unaware of Shells assignment of credit, CALI on Aug 12, 1948 approved the memorandum agreement of sale to PAL, and noted that the Board had been trying to reach an agreement with creditors to prevent insolvency proceedings, but so far no definite agreement had been reached. - First week of Sept 1948, National Airports Corp learned of Shells action in the US and hastened to file its own complaint with attachment against CALI in the CFI of Manila. - Oct 7, 1948 CALI filed a petition for voluntary insolvency. An order of insolvency was issued by the court on the same day. Mr. Alfredo Velayo was appointed Assignee in the proceedings. - Velayo instituted case against Shell for the purpose of securing writ of injunction restraining Shell from prosecuting against CALI, and as an alternative, that Shell be ordered to pay damages double the value of the

plane if the case in the US will defeat the procurement of CALI of its plane. - Dec 22, 1948, Court denied petition because whether the conveyance of Shells credit was fraudulent or not, the Phil court would not be in a position to enforce its orders as against the American corporation Shell Oil Co., Inc., which is outside the jurisdiction of the Phils. - Plaintiff confined his action to the recovery of damages against Shell. Lower court dismissed the case. Defendants Comments > Assignment of credit in favor of American Shell was for valuable consideration and made in accordance with established commercial practices > It has no interest in the case instituted by American Shell, as they are separate and distinct corporations. > Fitzgerald was merely invited to the luncheon-meeting, without knowing the purpose for which it was called. Fitzgerald could not have officially represented Shell because authority resides on Crawford. ISSUES 1. WON Shell Co., of the P.I. Ltd, taking advantage of its knowledge of the existence of CALIs airplane C-54 at California, USA, acted in bad faith and betrayed the confidence and trust of other creditors of CALI present in said meeting by affecting a hasty telegraphic transfer of its credit to the American corporation Shell Oil Company, Inc., thus defeating the purpose of the informal meetings of CALIs principal creditors and depriving the plaintiff of the means of obtaining the plane, or its value, to the detriment and prejudice of other CALI creditors who were consequently deprived of their share in the distribution of said value 2. WON by reason of said betrayal of confidence and trust, Shell may be made to answer for the damages, and if so, the amount of such damages HELD 1. YES, Shell acted in bad faith. - It is evident that Shell, upon learning the precarious economic situation of CALI and that will all probability, it could not get much of its outstanding credit because of the preferred claims of other creditors, entirely disregarded all moral inhibitory tenets. - The telegraphic transfer made without knowledge and at the back of other creditors of CALI may be a shrewd and surprise move that enabled Shell to collect almost all if not the entire amount of its credit, but the Court of Justice (SC) cannot countenance such attitude at all, and much less from a foreign corporation to the detriment of Philippine Government and local business. - Shells transfer of credit would have been justified only if Fitzgerald had declined to take part in the working committee and frankly and honestly informed the other creditors present that he had no authority to bind his principal and that the latter was to be left free to collect its credit from CALI by whatever means his principal deemed wise and were available to it. But then, such information would have dissolved all attempts to come to an amicable conciliation and would have precipitated the filing of CALIs voluntary insolvency proceedings and nullified the intended transfer of Shells credit to American Shell. 2. YES, Shell must answer for damages. - Section 37 of the Insolvency Law states