G.R. No.

75112 August 17, 1992

FILAMER CHRISTIAN INSTITUTE, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT, HON. ENRIQUE P. SUPLICO, ! "s #$%$#t& $s 'u(g) o* t") R)go!$+ T,$+ Cou,t, -,$!#" .I/, Ro0$s Ct&
$!( POTENCIANO 1APUNAN, SR., respondents.
Bedona & Bedona Law Office for petitioner.
Rhodora G. Kapunan for private respondents.

GUTIERRE2, 'R., J.:
The private respondents, heirs of the late Potenciano Kapunan, seek reconsideration of the decision rendered by this Court on October 16, 1990 !ila"er
Christian #nstitute v. Court of $ppeals, 190 %C&$ '(() revie*in+ the appellate court,s conclusion that there e-ists an e"ployer.e"ployee relationship bet*een
the petitioner and its co.defendant !untecha. The Court ruled that the petitioner is not liable for the in/uries caused by !untecha on the +rounds that the latter
*as not an authori0ed driver for *hose acts the petitioner shall be directly and pri"arily ans*erable, and that !untecha *as "erely a *orkin+ scholar *ho, under
%ection 1', &ule 1, 2ook ### of the &ules and &e+ulations #"ple"entin+ the 3abor Code is not considered an e"ployee of the petitioner.
The private respondents assert that the circu"stances obtainin+ in the present case call for the application of $rticle 4150 of the Civil Code since !untecha is no
doubt an e"ployee of the petitioner. The private respondents "aintain that under $rticle 4150 an in/ured party shall have recourse a+ainst the servant as *ell as
the petitioner for *ho", at the ti"e of the incident, the servant *as perfor"in+ an act in furtherance of the interest and for the benefit of the petitioner. !untecha
alle+edly did not steal the school /eep nor use it for a /oy ride *ithout the kno*led+e of the school authorities.
$fter a re.e-a"ination of the la*s relevant to the facts found by the trial court and the appellate court, the Court reconsiders its decision. 6e reinstate the Court
of $ppeals, decision penned by the late 7ustice 8esiderio 7urado and concurred in by 7ustices 7ose C. Ca"pos, 7r. and %erafin 9. Ca"ilon. $pplyin+ Civil Code
provisions, the appellate court affir"ed the trial court decision *hich ordered the pay"ent of the P40,000.00 liability in the :enith #nsurance Corporation policy,
P10,000.00 "oral da"a+es, P',000.00 liti+ation and actual e-penses, and P;,000.00 attorney,s fees.
#t is undisputed that !untecha *as a *orkin+ student, bein+ a part.ti"e /anitor and a scholar of petitioner !ila"er. <e *as, in relation to the school, an e"ployee
even if he *as assi+ned to clean the school pre"ises for only t*o 4) hours in the "ornin+ of each school day.
<avin+ a student driver,s license, !untecha re=uested the driver, $llan >asa, and *as allo*ed, to take over the vehicle *hile the latter *as on his *ay ho"e one
late afternoon. #t is si+nificant to note that the place *here $llan lives is also the house of his father, the school president, $+ustin >asa. >oreover, it is also the
house *here !untecha *as allo*ed free board *hile he *as a student of !ila"er Christian #nstitute.
$llan >asa turned over the vehicle to !untecha only after drivin+ do*n a road, ne+otiatin+ a sharp dan+erous curb, and vie*in+ that the road *as clear. T%?,
$pril ', 195;, pp. (5.(9) $ccordin+ to $llan,s testi"ony, a fast "ovin+ truck *ith +larin+ li+hts nearly hit the" so that they had to s*erve to the ri+ht to avoid a
collision. @pon s*ervin+, they heard a sound as if so"ethin+ had bu"ped a+ainst the vehicle, but they did not stop to check. $ctually, the Pinoy /eep s*erved
to*ards the pedestrian, Potenciano Kapunan *ho *as *alkin+ in his lane in the direction a+ainst vehicular traffic, and hit hi". $llan affir"ed that !untecha
follo*ed his advise to s*erve to the ri+ht. Ibid., p. (9) $t the ti"e of the incident 6A;0 P.>.) in &o-as City, the /eep had only one functionin+ headli+ht.
$llan testified that he *as the driver and at the sa"e ti"e a security +uard of the petitioner.school. <e further said that there *as no specific ti"e for hi" to be
off.duty and that after drivin+ the students ho"e at BA00 in the afternoon, he still had to +o back to school and then drive ho"e usin+ the sa"e vehicle.
8rivin+ the vehicle to and fro" the house of the school president *here both $llan and !untecha reside is an act in furtherance of the interest of the petitioner.
school. $llan,s /ob de"ands that he drive ho"e the school /eep so he can use it to fetch students in the "ornin+ of the ne-t school day.
#t is indubitable under the circu"stances that the school president had kno*led+e that the /eep *as routinely driven ho"e for the said purpose. >oreover, it is
not i"probable that the school president also had kno*led+e of !untecha,s possession of a student driver,s license and his desire to under+o drivin+ lessons
durin+ the ti"e that he *as not in his classroo"s.
#n learnin+ ho* to drive *hile takin+ the vehicle ho"e in the direction of $llan,s house, !untecha definitely *as not havin+ a /oy ride. !untecha *as not drivin+ for
the purpose of his en/oy"ent or for a Cfrolic of his o*nC but ulti"ately, for the service for *hich the /eep *as intended by the petitioner school. %ee 3. 2attistoni v.
Tho"as, Can %C 1'', 1 8.3.&. B((, 50 $3& (44 D19;4EF %ee also $ssociation of 2aptists for 6orld 9van+elis", #nc. v. !ield"en,s #nsurance Co., #nc. 14' %C&$
615 D195;E). Therefore, the Court is constrained to conclude that the act of !untecha in takin+ over the steerin+ *heel *as one done for and in behalf of his
e"ployer for *hich act the petitioner.school cannot deny any responsibility by ar+uin+ that it *as done beyond the scope of his /anitorial duties. The clause
C*ithin the scope of their assi+ned tasksC for purposes of raisin+ the presu"ption of liability of an e"ployer, includes any act done by an e"ployee, in furtherance
of the interests of the e"ployer or for the account of the e"ployer at the ti"e of the infliction of the in/ury or da"a+e. >anuel Casada, 190 Ga 906, B9 %9 4d '(
D19B0E) 9ven if so"eho*, the e"ployee drivin+ the vehicle derived so"e benefit fro" the act, the e-istence of a presu"ptive liability of the e"ployer is
deter"ined by ans*erin+ the =uestion of *hether or not the servant *as at the ti"e of the accident perfor"in+ any act in furtherance of his "aster,s business.
Kohl"an v. <yland, 410 ?6 6';, B0 $3& 1';( D1946EF 7a"eson v. Havett, (1 P 4d 9;( D19;(E)
%ection 1', &ule 1, 2ook ### of the &ules i"ple"entin+ the 3abor Code, on *hich the petitioner anchors its defense, *as pro"ul+ated by the %ecretary of 3abor
and 9"ploy"ent only for the purpose of ad"inisterin+ and enforcin+ the provisions of the 3abor Code on conditions of e"ploy"ent. Particularly, &ule 1 of 2ook
### provides +uidelines on the "anner by *hich the po*ers of the 3abor %ecretary shall be e-ercisedF on *hat records should be keptF "aintained and preservedF
on payrollF and on the e-clusion of *orkin+ scholars fro", and inclusion of resident physicians in the e"ploy"ent covera+e as far as co"pliance *ith the
substantive labor provisions on *orkin+ conditions, rest periods, and *a+es, is concerned.
#n other *ords, &ule 1 is "erely a +uide to the enforce"ent of the substantive la* on labor. The Court, thus, "akes the distinction and so holds that %ection 1',
&ule 1, 2ook ### of the &ules is not the decisive la* in a civil suit for da"a+es instituted by an in/ured person durin+ a vehicular accident a+ainst a *orkin+
student of a school and a+ainst the school itself.
The present case does not deal *ith a labor dispute on conditions of e"ploy"ent bet*een an alle+ed e"ployee and an alle+ed e"ployer. #t invokes a clai"
brou+ht by one for da"a+es for in/ury caused by the patently ne+li+ent acts of a person, a+ainst both doer.e"ployee and his e"ployer. <ence, the reliance on
the i"ple"entin+ rule on labor to disre+ard the pri"ary liability of an e"ployer under $rticle 4150 of the Civil Code is "isplaced. $n i"ple"entin+ rule on labor
cannot be used by an e"ployer as a shield to avoid liability under the substantive provisions of the Civil Code.
There is evidence to sho* that there e-ists in the present case an e-tra.contractual obli+ation arisin+ fro" the ne+li+ence or reckless i"prudence of a person
C*hose acts or o"issions are i"putable, by a le+al fiction, to others) *ho are in a position to e-ercise an absolute or li"ited control over hi").C 2ahia v.
3iton/ua and 3eynes, ;0 Phil. 64' D191BE)
!untecha is an e"ployee of petitioner !ila"er. <e need not have an official appoint"ent for a driver,s position in order that the petitioner "ay be held responsible
for his +rossly ne+li+ent act, it bein+ sufficient that the act of drivin+ at the ti"e of the incident *as for the benefit of the petitioner. <ence, the fact that !untecha
*as not the school driver or *as not actin+ *ithin the scope of his /anitorial duties does not relieve the petitioner of the burden of rebuttin+ the presu"ption juris
tantum that there *as ne+li+ence on its part either in the selection of a servant or e"ployee, or in the supervision over hi". The petitioner has failed to sho*
proof of its havin+ e-ercised the re=uired dili+ence of a +ood father of a fa"ily over its e"ployees !untecha and $llan.
The Court reiterates that supervision includes the for"ulation of suitable rules and re+ulations for the +uidance of its e"ployees and the issuance of proper
instructions intended for the protection of the public and persons *ith *ho" the e"ployer has relations throu+h his e"ployees. 2ahia v. 3iton/ua and 3eynes,
supra, at p. 645F Phoeni- Construction, v. #nter"ediate $ppellate Court, 1'5 %C&$ ;B; D195(E)
$n e"ployer is e-pected to i"pose upon its e"ployees the necessary discipline called for in the perfor"ance of any act indispensable to the business and
beneficial to their e"ployer.
#n the present case, the petitioner has not sho*n that it has set forth such rules and +uidelines as *ould prohibit any one of its e"ployees fro" takin+ control
over its vehicles if one is not the official driver or prohibitin+ the driver and son of the !ila"er president fro" authori0in+ another e"ployee to drive the school
vehicle. !urther"ore, the petitioner has failed to prove that it had i"posed sanctions or *arned its e"ployees a+ainst the use of its vehicles by persons other
than the driver.
The petitioner, thus, has an obli+ation to pay da"a+es for in/ury arisin+ fro" the unskilled "anner by *hich !untecha drove the vehicle. Can+co v. >anila
&ailroad Co., ;5 Phil. (65, ((4 D1915E). #n the absence of evidence that the petitioner had e-ercised the dili+ence of a +ood father of a fa"ily in the supervision of
its e"ployees, the la* i"poses upon it the vicarious liability for acts or o"issions of its e"ployees. @"ali v. 2acani, 69 %C&$ 46; D19(6EF Poblete v. !abros, 9;
%C&$ 400 D19(9EF Kapalaran 2us 3iner v. Coronado, 1(6 %C&$ (94 D1959EF !ranco v. #nter"ediate $ppellate Court, 1(5 %C&$ ;;1 D1959EF Pantranco ?orth
9-press, #nc. v. 2aesa, 1(9 %C&$ ;5' D1959E) The liability of the e"ployer is, under $rticle 4150, pri"ary and solidary. <o*ever, the e"ployer shall have
recourse a+ainst the ne+li+ent e"ployee for *hatever da"a+es are paid to the heirs of the plaintiff.
#t is an ad"itted fact that the actual driver of the school /eep, $llan >asa, *as not "ade a party defendant in the civil case for da"a+es. This is =uite
understandable considerin+ that as far as the in/ured pedestrian, plaintiff Potenciano Kapunan, *as concerned, it *as !untecha *ho *as the one drivin+ the
vehicle and presu"ably *as one authori0ed by the school to drive. The plaintiff and his heirs should not no* be left to suffer *ithout si"ultaneous recourse
a+ainst the petitioner for the conse=uent in/ury caused by a /anitor doin+ a drivin+ chore for the petitioner even for a short *hile. !or the purpose of recoverin+
da"a+es under the prevailin+ circu"stances, it is enou+h that the plaintiff and the private respondent heirs *ere able to establish the e-istence of e"ployer.
e"ployee relationship bet*een !untecha and petitioner !ila"er and the fact that !untecha *as en+a+ed in an act not for an independent purpose of his o*n but
in furtherance of the business of his e"ployer. $ position of responsibility on the part of the petitioner has thus been satisfactorily de"onstrated.
6<9&9!O&9, the "otion for reconsideration of the decision dated October 16, 1990 is hereby H&$?T98. The decision of the respondent appellate court
affir"in+ the trial court decision is &9#?%T$T98.
%O O&89&98.
&epublic of the Philippines
SUPREME COURT
>anila
T<#&8 8#G#%#O?

G.R. No. 33247 M$& 15, 1992
MA.IMINO SOLIMAN, 'R., ,)%,)s)!t)( 6& "s 7u(#$+ gu$,($! /IRGINIA C. SOLIMAN, petitioner,
vs.
HON. 'UDGE RAMON TUA2ON, P,)s(!g 'u(g) o* -,$!#" L.I, R)go!$+ T,$+ Cou,t o* R)go! III, A!g)+)s Ct&, $!( t") REPU-LIC CENTRAL
COLLEGES, ,)%,)s)!t)( 6& ts P,)s()!t, respondents.
Mariano . !avarro for Repub"ic #entra" #o""e$es.
& 9 % O 3 @ T # O ?

FELICIANO, J.:
On 44 >arch 195;, petitioner %oli"an, 7r. filed a civil co"plaint for da"a+es a+ainst private respondent &epublic Central Colle+es CColle+esC), the &.3. %ecurity
$+ency #nc. and one 7i""y 2. %olo"on, a security +uard, as defendants. The co"plaint alle+ed thatA
. . . on 1; $u+ust 1954, in the "ornin+ thereof, *hile the plaintiff *as in the ca"pus +round and pre"ises of the defendant, &9P@23#C
C9?T&$3 CO339H9%, as he *as and is still a re+ular enrolled student of said school takin+ his "ornin+ classes, the defendant, 7#>>I
2. %O3O>O?, *ho *as on said date and hour in the pre"ises of said school perfor"in+ his duties and obli+ations as a duly appointed
security +uard under the e"ploy"ent, supervision and control of his e"ployer.defendant &.3. %9C@&#TI $H9?CI, #?C., headed by >r.
2en/a"in %errano, *ithout any provocation, in a *anton, fraudulent, reckless, oppressive or "alevolent "anner, *ith intent to kill, attack,
assault, strike and shoot the plaintiff on the abdo"en *ith a .;5 Caliber &evolver, a deadly *eapon, *hich ordinarily such *ound
sustained *ould have caused plaintiff,s death *ere it not for the ti"ely "edical assistance +iven to hi". The plaintiff *as treated and
confined at $n+eles >edical Center, $n+eles City, and, as per doctor,s opinion, the plaintiff "ay not be able to attend to his re+ular classes
and *ill be incapacitated in the perfor"ance of his usual *ork for a duration of fro" three to four "onths before his *ounds *ould be
co"pletely healed.
1
Private respondent Colle+es filed a "otion to dis"iss, contendin+ that the co"plaint stated no cause of action
a+ainst it. Private respondent ar+ued that it is free fro" any liability for the in/uries sustained by petitioner
student for the reason that private respondent school *as not the e"ployer of the security +uard char+ed, 7i""y
%olo"on, and hence *as not responsible for any *ron+ful act of %olo"on. Private respondent school further
ar+ued that $rticle 4150, (th para+raph, of the Civil Code did not apply, since said para+raph holds teachers and
heads of establish"ent of arts and trades liable for da"a+es caused by their pupils and students or apprentices,
*hile security +uard 7i""y %olo"on *as not a pupil, student or apprentice of the school.
#n an order dated 49 ?ove"ber 195;, respondent 7ud+e +ranted private respondent school,s "otion to dis"iss,
holdin+ that security +uard 7i""y %olo"on *as not an e"ployee of the school *hich accordin+ly could not be
held liable for his acts or o"issions. Petitioner "oved for reconsideration, *ithout success.
#n this Petition for #ertiorari and Prohibition, it is contended that respondent trial /ud+e co""itted a +rave abuse
of discretion *hen he refused to apply the provisions of $rticle 4150, as *ell as those of $rticles ;'9, ;B0 and
;B4, of the Civil Code and +ranted the school,s "otion to dis"iss.
@nder $rticle 4150 of the Civil Code, the obli+ation to respond for da"a+e inflicted by one a+ainst another by
fault or ne+li+ence e-ists not only for one,s o*n act or o"ission, but also for acts or o"issions of a person for
*ho" one is by la* responsible. $"on+ the persons held vicariously responsible for acts or o"issions of
another person are the follo*in+A
--- --- ---
9"ployers shall be liable for the da"a+es caused by their e"ployees and household helpers
actin+ *ithin the scope of their assi+ned tasks, even thou+h the for"er are not en+a+ed in any
business or industry.
--- --- ---
3astly, teachers or heads of establish"ents of arts and trades shall be liable for da"a+es
caused by their pupils, their students or apprentices, so lon+ as they re"ain in their custody.
--- --- ---
The first para+raph =uoted above offers no basis for holdin+ the Colle+es liable for the alle+ed *ron+ful acts of
security +uard 7i""y 2. %olo"on inflicted upon petitioner %oli"an, 7r. Private respondent school *as not the
e"ployer of 7i""y %olo"on. The e"ployer of 7i""y %olo"on *as the &.3. %ecurity $+ency #nc., *hile the
school *as the client or custo"er of the &.3. %ecurity $+ency #nc. #t is settled that *here the security a+ency, as
here, recruits, hires and assi+ns the *ork of its *atch"en or security +uards, the a+ency is the e"ployer of such
+uards or *atch"en.
2
3iability for ille+al or har"ful acts co""itted by the security +uards attaches to the
e"ployer a+ency, and not to the clients or custo"ers of such a+ency.
8
$s a +eneral rule, a client or custo"er of
a security a+ency has no hand in selectin+ *ho a"on+ the pool of security +uards or *atch"en e"ployed by
the a+ency shall be assi+ned to itF the duty to observe the dili+ence of a +ood father of a fa"ily in the selection
of the +uards cannot, in the ordinary course of events, be de"anded fro" the client *hose pre"ises or property
are protected by the security +uards. The fact that a client co"pany "ay +ive instructions or directions to the
security +uards assi+ned to it, does not, by itself, render the client responsible as an e"ployer of the security
+uards concerned and liable for their *ron+ful acts or o"issions. Those instructions or directions are ordinarily
no "ore than re=uests co""only envisa+ed in the contract for services entered into *ith the security a+ency.
There bein+ no e"ployer.e"ployee relationship bet*een the Colle+es and 7i""y %olo"on, petitioner student
cannot i"pose vicarious liability upon the Colle+es for the acts of security +uard %olo"on.
%ince there is no =uestion that 7i""y %olo"on *as not a pupil or student or an apprentice of the Colle+es, he
bein+ in fact an e"ployee of the &.3. %ecurity $+ency #nc., the other above.=uoted para+raph of $rticle 4150 of
the Civil Code is si"ilarly not available for i"posin+ liability upon the &epublic Central Colle+es for the acts or
o"issions of 7i""y %olo"on.
The relevant portions of the other $rticles of the Civil Code invoked by petitioner are as follo*sA
$rt. ;'9. The follo*in+ persons shall e-ercise substitute parental authorityA
--- --- ---
4) Teachers and professorsF
--- --- ---
') 8irectors of trade establish"ents *ith re+ard to apprenticesF
--- --- ---
$rt. ;B0. The persons na"ed in the precedin+ article shall e-ercise reasonable supervision over
the conduct of the child.
--- --- ---
$rt. ;B4. The relations bet*een teacher and pupil, professor and student are fi-ed by
+overn"ent re+ulations and those of each school or institution. #n no case shall corporal
punish"ent be countenanced. The teacher or professor shall cultivate the best potentialities of
the heart and "ind of the pupil or student.
#n %a"isoc v. Bri""antes,
9
invoked by petitioner, the Court held the o*ner and president of a school of arts and
trades kno*n as the C>anila Technical #nstitute,C Jue0on 2lvd., >anila, responsible in da"a+es for the death of
8o"inador Palisoc, a student of #nstitute, *hich resulted fro" fist blo*s delivered by Gir+ilio 3. 8affon, another
student of the Institute. #t *ill be seen that the facts of %a"isoc v. Bri""antes brou+ht it e-pressly *ithin the (th
para+raph of $rticle 4150, =uoted aboveF but those facts are entirely different fro" the facts e-istin+ in the
instant case.
Persons e-ercisin+ substitute parental authority are "ade responsible for da"a+e inflicted upon a third person
by the child or person sub/ect to such substitute parental authority. #n the instant case, as already noted, 7i""y
%olo"on *ho co""itted alle+edly tortious acts resultin+ in in/ury to petitioner, *as not a pupil, student or
apprentice of the &epublic Central Colle+esF the school had no substitute parental authority over %olo"on.
Clearly, *ithin the confines of its li"ited lo+ic, i.e., treatin+ the petitioner,s clai" as one based *holly and
e-clusively on $rticle 4150 of the Civil Code, the order of the respondent trial /ud+e *as correct. 8oes it follo*,
ho*ever, that respondent Colle+es could not be held liable upon any other basis in la*, for or in respect of the
in/ury sustained by petitioner, so as to entitle respondent school to dis"issal of petitioner,s co"plaint in respect
of itselfK
The very recent case of the %hi"ippine &choo" of Business 'dministration (%&B') v. #ourt of 'ppea"s,
5
re=uires
us to +ive a ne+ative ans*er to that =uestion.
#n %&B', the Court held that $rticle 4150 of the Civil Code *as not applicable *here a student had been in/ured
by one *ho *as an outsider or by one over *ho" the school did not e-ercise any custody or control or
supervision. $t the sa"e ti"e, ho*ever, the Court stressed that an i"plied contract "ay be held to be
established bet*een a school *hich accepts students for enroll"ent, on the one hand, and the students *ho are
enrolled, on the other hand, *hich contract results in obli+ations for both partiesA
6hen an acade"ic institution accepts students for enroll"ent, there is established a contract
bet*een the", resultin+ in bilateral obli+ations *hich parties are bound to co"ply *ith. !or its
part, the school undertakes to provide the student *ith an education that *ould presu"ably
suffice to e=uip hi" *ith the necessary tools and skills to pursue hi+her education or a
profession. On the other hand, the student covenants to abide by the school,s acade"ic
re=uire"ents and observe its rules and re+ulations.
#nstitutions of learnin+ "ust also "eet the i"plicit or Cbuilt.inC obli+ation of providin+ their
students *ith an at"osphere that pro"otes or assists in attainin+ its pri"ary undertakin+ of
i"partin+ kno*led+e. Certainly, no student can absorb the intricacies of physics or hi+her
"athe"atics or e-plore the real" of the arts and other sciences *hen bullets are flyin+ or
+renades e-plodin+ in the air or *here there loo"s around the school pre"ises a constant threat
to life and li"b. ?ecessarily, the school "ust ensure that ade=uate steps are taken to "aintain
peace and order *ithin the ca"pus pre"ises and to prevent the breakdo*n thereof.
3
#n that case, the Court *as careful to point out thatA
#n the circu"stances obtainin+ in the case at bar, ho*ever, there is, as yet, no findin+ that the
contract bet*een the school and 2autista had been breached thru the for"er,s ne+li+ence in
providin+ proper security "easures. This *ould be for the trial court to deter"ine. $nd, even if
there be a findin+ of ne+li+ence, the sa"e could +ive rise +enerally to a breach of contractual
obli+ation only. @sin+ the test of #an$co, supra, the ne+li+ence of the school *ould not be
relevant absent a contract. #n fact, that ne+li+ence beco"es "aterial only because of the
contractual relation bet*een P%2$ and 2autista. #n other *ords, a contractual relation is a
condition sine *ua non to the school,s liability. The ne+li+ence of the school cannot e-ist
independently of the contract, unless the ne+li+ence occurs under the circu"stances set out in
$rticle 41 of the Civil Code.
The Court is not un"indful of the attendant difficulties posed by the obli+ation of schools, above.
"entioned, for conceptually a school, like a co""on carrier, cannot be an insurer of its students
a+ainst a"" risks. This is specially true in the populous student co""unities of the so.called
Cuniversity beltC in >anila *here there have been reported several incidents ran+in+ fro" +an+
*ars to other for"s of hooli+anis". #t *ould not be e=uitable to e-pect of schools to anticipate all
types of violent trespass upon their pre"ises, for not*ithstandin+ the security "easures
installed, the sa"e "ay still fail a+ainst an individual or +roup deter"ined to carry out a
nefarious deed inside school pre"ises and environs. %hould this be the case, the school "ay
still avoid liability by provin+ that the breach of its contractual obli+ation to the students *as not
due to its ne+li+ence, here statutorily defined to be the o"ission of that de+ree of dili+ence
*hich is re=uired by the nature of obli+ation and correspondin+ to the circu"stances of person,
ti"e and place.
7
#n the %&B' case, the trial court had denied the school,s "otion to dis"iss the co"plaint a+ainst it, and both the
Court of $ppeals and this Court affir"ed the trial court,s order. #n the case at bar, the court a *uo +ranted the
"otion to dis"iss filed by respondent Colle+es, upon the assu"ption that petitioner,s cause of action *as based,
and could have been based, only on $rticle 4150 of the Civil Code. $s %&B', ho*ever, states, acts *hich are
tortious or alle+edly tortious in character "ay at the sa"e ti"e constitute breach of a contractual, or other le+al,
obli+ation. &espondent trial /ud+e *as in serious error *hen he supposed that petitioner could have no cause of
action other than one based on $rticle 4150 of the Civil Code. &espondent trial /ud+e should not have +ranted
the "otion to dis"iss but rather should have, in the interest of /ustice, allo*ed petitioner to prove acts
constitutin+ breach of an obli+ation e+ contractu or e+ "e$e on the part of respondent Colle+es.
#n line, therefore, *ith the "ost recent /urisprudence of this Court, and in order to avoid a possible substantial
"iscarria+e of /ustice, and puttin+ aside technical considerations, *e consider that respondent trial /ud+e
co""itted serious error correctible by this Court in the instant case.
$CCO&8#?H3I, the Court &esolved to H&$?T 8@9 CO@&%9 to the Petition, to T&9$T the co""ent of
respondent Colle+es as its ans*er, and to &9G9&%9 and %9T $%#89 the Order dated 49 ?ove"ber 195;. This
case is &9>$?898 to the court a *uo for further proceedin+s consistent *ith this &esolution.
Gutierre,, -r., Bidin, .avide, -r. and Romero, --., concur.
G.R. No. L-11154 March 21, 1916
E. MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-appellant.
Crossfield and O'Brien for plaintiff.
Attorney-General Avancea for defendant..
TRENT, J.
This is an appeal by both parties from a judgment of the Court of First Instance of the city of Manila in
favor of the plaintiff for the sum of P!,"!, together #ith the costs of the cause.
Counsel for the plaintiff insist that the trial court erred $% &in limiting the general damages #hich the
plaintiff suffered to P',(((, instead of P)',((( as claimed in the complaint,& and $)% &in limiting the
time #hen plaintiff #as entirely disabled to t#o months and t#enty-one days and fi*ing the damage
accordingly in the sum of P),+++, instead of P+,((( as claimed by plaintiff in his complaint.&
The ,ttorney--eneral on behalf of the defendant urges that the trial court erred. $a% in finding that the
collision bet#een the plaintiff/s motorcycle and the ambulance of the -eneral 0ospital #as due to the
negligence of the chauffeur1 $b% in holding that the -overnment of the Philippine Islands is liable for
the damages sustained by the plaintiff as a result of the collision, even if it be true that the collision #as
due to the negligence of the chauffeur1 and $c% in rendering judgment against the defendant for the sum
of P!,"!.
The trial court/s findings of fact, #hich are fully supported by the record, are as follo#s.
It is a fact not disputed by counsel for the defendant that #hen the plaintiff, riding on a
motorcycle, #as going to#ard the #estern part of Calle Padre Faura, passing along the #est
side thereof at a speed of ten to t#elve miles an hour, upon crossing Taft ,venue and #hen he
#as ten feet from the south#estern intersection of said streets, the -eneral 0ospital ambulance,
upon reaching said avenue, instead of turning to#ard the south, after passing the center thereof,
so that it #ould be on the left side of said avenue, as is prescribed by the ordinance and the
Motor 2ehicle ,ct, turned suddenly and une*pectedly and long before reaching the center of the
street, into the right side of Taft ,venue, #ithout having sounded any #histle or horn, by #hich
movement it struc3 the plaintiff, #ho #as already si* feet from the south#estern point or from
the post place there.
4y reason of the resulting collision, the plaintiff #as so severely injured that, according to 5r.
6aleeby, #ho e*amined him on the very same day that he #as ta3en to the -eneral 0ospital, he
#as suffering from a depression in the left parietal region, a #ould in the same place and in the
bac3 part of his head, #hile blood issued from his nose and he #as entirely unconscious.
The mar3s revealed that he had one or more fractures of the s3ull and that the grey matter and
brain #as had suffered material injury. ,t ten o/cloc3 of the night in 7uestion, #hich #as the
time set for performing the operation, his pulse #as so #ea3 and so irregular that, in his
opinion, there #as little hope that he #ould live. 0is right leg #as bro3en in such a #ay that the
fracture e*tended to the outer s3in in such manner that it might be regarded as double and the
#ould be e*posed to infection, for #hich reason it #as of the most serious nature.
,t another e*amination si* days before the day of the trial, 5r. 6aleeby noticed that the
plaintiff/s leg sho#ed a contraction of an inch and a half and a curvature that made his leg very
#ea3 and painful at the point of the fracture. 8*amination of his head revealed a notable
readjustment of the functions of the brain and nerves. The patient apparently #as slightly deaf,
had a light #ea3ness in his eyes and in his mental condition. This latter #ea3ness #as al#ays
noticed #hen the plaintiff had to do any difficult mental labor, especially #hen he attempted to
use his money for mathematical calculations.
,ccording to the various merchants #ho testified as #itnesses, the plaintiff/s mental and
physical condition prior to the accident #as e*cellent, and that after having received the injuries
that have been discussed, his physical condition had undergone a noticeable depreciation, for he
had lost the agility, energy, and ability that he had constantly displayed before the accident as
one of the best constructors of #ooden buildings and he could not no# earn even a half of the
income that he had secured for his #or3 because he had lost '( per cent of his efficiency. ,s a
contractor, he could no longer, as he had before done, climb up ladders and scaffoldings to reach
the highest parts of the building.
,s a conse7uence of the loss the plaintiff suffered in the efficiency of his #or3 as a contractor,
he had to dissolved the partnership he had formed #ith the engineer. 9ilson, because he #as
incapacitated from ma3ing mathematical calculations on account of the condition of his leg and
of his mental faculties, and he had to give up a contract he had for the construction of the :y
Chaco building.&
9e may say at the outset that #e are in full accord #ith the trial court to the effect that the collision
bet#een the plaintiff/s motorcycle and the ambulance of the -eneral 0ospital #as due solely to the
negligence of the chauffeur.
The t#o items #hich constitute a part of the P!,"! and #hich are dra#n in 7uestion by the plaintiff
are $a% P',(((, the a#ard a#arded for permanent injuries, and $b% the P),+++, the amount allo#ed for
the loss of #ages during the time the plaintiff #as incapacitated from pursuing his occupation. 9e find
nothing in the record #hich #ould justify us in increasing the amount of the first. ,s to the second, the
record sho#s, and the trial court so found, that the plaintiff/s services as a contractor #ere #orth P,(((
per month. The court, ho#ever, limited the time to t#o months and t#enty-one days, #hich the plaintiff
#as actually confined in the hospital. In this #e thin3 there #as error, because it #as clearly established
that the plaintiff #as #holly incapacitated for a period of si* months. The mere fact that he remained in
the hospital only t#o months and t#enty-one days #hile the remainder of the si* months #as spent in
his home, #ould not prevent recovery for the #hole time. 9e, therefore, find that the amount of
damages sustained by the plaintiff, #ithout any fault on his part, is P;,("'.
,s the negligence #hich caused the collision is a tort committed by an agent or employee of the
-overnment, the in7uiry at once arises #hether the -overnment is legally-liable for the damages
resulting therefrom.
,ct <o. )!'", effective February =, >', reads.
,n ,ct authori?ing 8. Merritt to bring suit against the -overnment of the Philippine Islands and
authori?ing the ,ttorney--eneral of said Islands to appear in said suit.
9hereas a claim has been filed against the -overnment of the Philippine Islands by Mr. 8.
Merritt, of Manila, for damages resulting from a collision bet#een his motorcycle and the
ambulance of the -eneral 0ospital on March t#enty-fifth, nineteen hundred and thirteen1 h
9hereas it is not 3no#n #ho is responsible for the accident nor is it possible to determine the
amount of damages, if any, to #hich the claimant is entitled1 and
9hereas the 5irector of Public 9or3s and the ,ttorney--eneral recommended that an ,ct be
passed by the @egislature authori?ing Mr. 8. Merritt to bring suit in the courts against the
-overnment, in order that said 7uestions may be decided. <o#, therefore,
By authority of the United States, be it enacted by the hilippine !e"islature, that#
68CTIA< . 8. Merritt is hereby authori?ed to bring suit in the Court of First Instance of the
city of Manila against the -overnment of the Philippine Islands in order to fi* the responsibility
for the collision bet#een his motorcycle and the ambulance of the -eneral 0ospital, and to
determine the amount of the damages, if any, to #hich Mr. 8. Merritt is entitled on account of
said collision, and the ,ttorney--eneral of the Philippine Islands is hereby authori?ed and
directed to appear at the trial on the behalf of the -overnment of said Islands, to defendant said
-overnment at the same.
68C. ). This ,ct shall ta3e effect on its passage.
8nacted, February =, >'.
5id the defendant, in enacting the above 7uoted ,ct, simply #aive its immunity from suit or did it also
concede its liability to the plaintiffB If only the former, then it cannot be held that the ,ct created any
ne# cause of action in favor of the plaintiff or e*tended the defendant/s liability to any case not
previously recogni?ed.
,ll admit that the Insular -overnment $the defendant% cannot be sued by an individual #ithout its
consent. It is also admitted that the instant case is one against the -overnment. ,s the consent of the
-overnment to be sued by the plaintiff #as entirely voluntary on its part, it is our duty to loo3 carefully
into the terms of the consent, and render judgment accordingly.
The plaintiff #as authori?ed to bring this action against the -overnment &in order to fi* the
responsibility for the collision bet#een his motorcycle and the ambulance of the -eneral 0ospital and
to determine the amount of the damages, if any, to #hich Mr. 8. Merritt is entitled on account of said
collision, . . . .& These #ere the t#o 7uestions submitted to the court for determination. The ,ct #as
passed &in order that said 7uestions may be decided.& 9e have &decided& that the accident #as due
solely to the negligence of the chauffeur, #ho #as at the time an employee of the defendant, and #e
have also fi*ed the amount of damages sustained by the plaintiff as a result of the collision. 5oes the
,ct authori?e us to hold that the -overnment is legally liable for that amountB If not, #e must loo3
else#here for such authority, if it e*ists.
The -overnment of the Philippine Islands having been &modeled after the Federal and 6tate
-overnments in the :nited 6tates,& #e may loo3 to the decisions of the high courts of that country for
aid in determining the purpose and scope of ,ct <o. )!'".
In the :nited 6tates the rule that the state is not liable for the torts committed by its officers or agents
#hom it employs, e*cept #hen e*pressly made so by legislative enactment, is #ell settled. &The
-overnment,& says Custice 6tory, &does not underta3e to guarantee to any person the fidelity of the
officers or agents #hom it employs, since that #ould involve it in all its operations in endless
embarrassments, difficulties and losses, #hich #ould be subversive of the public interest.& $Claussen
vs. City of @uverne, (= Minn., !>, citing :. 6. vs. Dir3patric3, > 9heat, ")(1 + @. 8d., >>1 and
4eers vs. 6tates, )( 0o#., ')"1 ' @. 8d., >>.%
In the case of $elvin vs. State $) Cal., +%, the plaintiff sought to recover damages from the state for
personal injuries received on account of the negligence of the state officers at the state fair, a state
institution created by the legislature for the purpose of improving agricultural and 3indred industries1 to
disseminate information calculated to educate and benefit the industrial classes1 and to advance by such
means the material interests of the state, being objects similar to those sought by the public school
system. In passing upon the 7uestion of the state/s liability for the negligent acts of its officers or
agents, the court said.
<o claim arises against any government is favor of an individual, by reason of the misfeasance,
laches, or unauthori?ed e*ercise of po#ers by its officers or agents. $Citing -ibbons vs. :. 6., ;
9all., )+>1 Clodfelter vs. 6tate, ;+ <. C., ', '=1 ! ,m. Eep., !!(1 Chapman vs. 6tate, (!
Cal., +>(1 != ,m. 6t. Eep., ';1 -reen vs. 6tate, "= Cal., )>1 4ourn vs. 0art, >= Cal., =)1 )"
,m. 6t. Eep., )(=1 6tory on ,gency, sec. =>.%
,s to the scope of legislative enactments permitting individuals to sue the state #here the cause of
action arises out of either fort or contract, the rule is stated in =+ Cyc., >', thus.
4y consenting to be sued a state simply #aives its immunity from suit. It does not thereby
concede its liability to plaintiff, or create any cause of action in his favor, or e*tend its liability
to any cause not previously recogni?ed. It merely gives a remedy to enforce a pree*isting
liability and submits itself to the jurisdiction of the court, subject to its right to interpose any
la#ful defense.
In Apfelbacher vs. State $') <. 9., !!, advanced sheets%, decided ,pril +, >', the ,ct of >=,
#hich authori?ed the bringing of this suit, read.
68CTIA< . ,uthority is hereby given to -eorge ,pfelbacher, of the to#n of 6ummit,
9au3esha County, 9isconsin, to bring suit in such court or courts and in such form or forms as
he may be advised for the purpose of settling and determining all controversies #hich he may
no# have #ith the 6tate of 9isconsin, or its duly authori?ed officers and agents, relative to the
mill property of said -eorge ,pfelbacher, the fish hatchery of the 6tate of 9isconsin on the
4ar3 Eiver, and the mill property of 8van 0umphrey at the lo#er end of <aga#ic3a @a3e, and
relative to the use of the #aters of said 4ar3 Eiver and <aga#ic3a @a3e, all in the county of
9au3esha, 9isconsin.
In determining the scope of this act, the court said.
Plaintiff claims that by the enactment of this la# the legislature admitted liability on the part of
the state for the acts of its officers, and that the suit no# stands just as it #ould stand bet#een
private parties. It is difficult to see ho# the act does, or #as intended to do, more than remove
the state/s immunity from suit. It simply gives authority to commence suit for the purpose of
settling plaintiff/s controversies #ith the estate. <o#here in the act is there a #hisper or
suggestion that the court or courts in the disposition of the suit shall depart from #ell
established principles of la#, or that the amount of damages is the only 7uestion to be settled.
The act opened the door of the court to the plaintiff. It did not pass upon the 7uestion of liability,
but left the suit just #here it #ould be in the absence of the state/s immunity from suit. If the
@egislature had intended to change the rule that obtained in this state so long and to declare
liability on the part of the state, it #ould not have left so important a matter to mere inference,
but #ould have done so in e*press terms. $Murdoc3 -rate Co. vs. Common#ealth, ') Mass.,
);1 )! <.8., ;'!1 ; @. E. ,., =>>.%
In %ennin" vs. State $)= Cal., =+%, the provisions of the ,ct of ;>=, relied upon and considered, are
as follo#s.
,ll persons #ho have, or shall hereafter have, claims on contract or for negligence against the
state not allo#ed by the state board of e*aminers, are hereby authori?ed, on the terms and
conditions herein contained, to bring suit thereon against the state in any of the courts of this
state of competent jurisdiction, and prosecute the same to final judgment. The rules of practice
in civil cases shall apply to such suits, e*cept as herein other#ise provided.
,nd the court said.
This statute has been considered by this court in at least t#o cases, arising under different facts,
and in both it #as held that said statute did not create any liability or cause of action against the
state #here none e*isted before, but merely gave an additional remedy to enforce such liability
as #ould have e*isted if the statute had not been enacted. $Chapman vs. 6tate, (! Cal., +>(1 !=
,m. 6t. Eep., ';1 Melvin vs. 6tate, ) Cal., +.%
, statute of Massachusetts enacted in ;;" gave to the superior court &jurisdiction of all claims against
the common#ealth, #hether at la# or in e7uity,& #ith an e*ception not necessary to be here mentioned.
In construing this statute the court, in $urdoc& Grate Co. vs. Co''on(ealth $') Mass., );%, said.
The statute #e are discussing disclose no intention to create against the state a ne# and
heretofore unrecogni?ed class of liabilities, but only an intention to provide a judicial tribunal
#here #ell recogni?ed e*isting liabilities can be adjudicated.
In Sipple vs. State $>> <. F., );!%, #here the board of the canal claims had, by the terms of the statute
of <e# For3, jurisdiction of claims for damages for injuries in the management of the canals such as
the plaintiff had sustained, Chief Custice Euger remar3s. &It must be conceded that the state can be
made liable for injuries arising from the negligence of its agents or servants, only by force of some
positive statute assuming such liability.&
It being 7uite clear that ,ct <o. )!'" does not operate to e*tend the -overnment/s liability to any cause
not previously recogni?ed, #e #ill no# e*amine the substantive la# touching the defendant/s liability
for the negligent acts of its officers, agents, and employees. Paragraph ' of article >(= of the Civil
Code reads.
The state is liable in this sense #hen it acts through a special agent, but not #hen the damage
should have been caused by the official to #hom properly it pertained to do the act performed,
in #hich case the provisions of the preceding article shall be applicable.
The supreme court of 6pain in defining the scope of this paragraph said.
That the obligation to indemnify for damages #hich a third person causes to another by his fault
or negligence is based, as is evidenced by the same @a# =, Title ', Partida ", on that the person
obligated, by his o#n fault or negligence, ta3es part in the act or omission of the third party #ho
caused the damage. It follo#s therefrom that the state, by virtue of such provisions of la#, is not
responsible for the damages suffered by private individuals in conse7uence 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 organi?ation of branches of
public service and in the appointment of its agents1 on the contrary, #e must presuppose all
foresight humanly possible on its part in order that each branch of service serves the general
#eal an that of private persons interested in its operation. 4et#een these latter and the state,
therefore, no relations of a private nature governed by the civil la# can arise e*cept in a case
#here the state acts as a judicial person capable of ac7uiring rights and contracting obligations.
$6upreme Court of 6pain, Canuary ", ;>;1 ;= Cur. Civ., )!.%
That the Civil Code in chapter ), title +, boo3 !, regulates the obligations #hich arise out of
fault or negligence1 and #hereas in the first article thereof. <o. >(), #here the general
principle is laid do#n that #here a person #ho 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 #ho directly or indirectly cause the damage, the follo#ing
articles refers to this persons and imposes an identical obligation upon those #ho maintain fi*ed
relations of authority and superiority over the authors of the damage, because the la# presumes
that in conse7uence of such relations the evil caused by their o#n fault or negligence is
imputable to them. This legal presumption gives #ay to proof, ho#ever, because, as held in the
last paragraph of article >(=, responsibility for acts of third persons ceases #hen 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 ans#er in a direct and not a
subsidiary manner, are found, in addition to the mother or the father in a proper case, guardians
and o#ners or directors of an establishment or enterprise, the state, but not al#ays, e*cept #hen
it acts through the agency of a special agent, doubtless because and only in this case, the fault or
negligence, #hich is the original basis of this 3ind of objections, must be presumed to lie #ith
the state.
That although in some cases the state might by virtue of the general principle set forth in article
>() respond for all the damage that is occasioned to private parties by orders or resolutions
#hich 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 e*ternal e*pression of its sovereignty in the
e*ercise of its e*ecutive po#ers, yet said article is not applicable in the case of damages said to
have been occasioned to the petitioners by an e)ecutive official, acting in the e*ercise of his
po#ers, in proceedings to enforce the collections of certain property ta*es o#ing by the o#ner
of the property #hich they hold in sublease.
That the responsibility of the state is limited by article >(= to the case #herein it acts throu"h
a special a"ent $and a special agent, in the sense in #hich these #ords are employed, is one #ho
receives a definite and fi*ed order or commission, foreign to the e*ercise 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 e*ecutes the trust confided to him. This concept does not apply to any
e*ecutive agent #ho is an employee of the acting administration and #ho on his o#n
responsibility performs the functions #hich are inherent in and naturally pertain to his office
and #hich are regulated by la# and the regulations.& $6upreme Court of 6pain, May ;, >(!1
>; Cur. Civ., =;>, =>(.%
That according to paragraph ' of article >(= of the Civil Code and the principle laid do#n in a
decision, among others, of the ;th of May, >(!, in a damage case, the responsibility of the
state is limited to that #hich it contracts through a special agent, duly empo#ered by a definite
order or co''ission to perfor' so'e act or char"ed (ith so'e definite purpose (hich "ives
rise to the clai', and not #here the claim is based on acts or omissions imputable to a public
official charged #ith some administrative or technical office #ho can be held to the proper
responsibility in the manner laid do#n by the la# of civil responsibility. Conse7uently, the trial
court in not so deciding and in sentencing the said entity to the payment of damages, caused by
an official of the second class referred to, has by erroneous interpretation infringed the
provisions of articles >() and >(= of the Civil Code. $6upreme Court of 6pain, Culy =(, >1
)) Cur. Civ., !+.%
It is, therefore, evidence that the 6tate $the -overnment of the Philippine Islands% is only liable,
according to the above 7uoted decisions of the 6upreme Court of 6pain, for the acts of its agents,
officers and employees #hen they act as special agents #ithin the meaning of paragraph ' of article
>(=, supra, and that the chauffeur of the ambulance of the -eneral 0ospital #as not such an agent.
For the foregoing reasons, the judgment appealed from must be reversed, #ithout costs in this instance.
9hether the -overnment intends to ma3e itself legally liable for the amount of damages above set
forth, #hich the plaintiff has sustained by reason of the negligent acts of one of its employees, by
legislative enactment and by appropriating sufficient funds therefor, #e are not called upon to
determine. This matter rests solely #ith the @egislature and not #ith the courts.
Arellano, C. *., +orres, *ohnson, and $oreland, **., concur.
G.R. No. L:55938 D)#);6), 1, 1959
SPOUSES 'OSE FONTANILLA AND /IRGINIA FONTANILLA, petitioners,
vs.
HONORA-LE INOCENCIO D. MALIAMAN $!( NATIONAL IRRIGATION
ADMINISTRATION, respondents.
G.R. No. L:31495 D)#);6), 1, 1959
NATIONAL IRRIGATION ADMINISTRATION, appellant,
vs.
SPOUSES 'OSE FONTANILLA $!( /IRGINIA FONTANILLA, appellees.
#eci"io /. &uare,, -r. for &pouses 0ontani""a.
0e"icisimo #. /i""af"or for !I'.

PARAS, J.:
#n H.&. ?o. 3.BB96;, the petition for revie* on certiorari seeks the affir"ance of the decision
dated >arch 40, 1950 of the then Court of !irst #nstance of ?ueva 9ci/a, 2ranch G###, at %an
7ose City and its "odification *ith respect to the denial of petitioner,s clai" for "oral and
e-e"plary da"a+es and attorneys fees.
#n H.&. ?o. 610'B, respondent ?ational #rri+ation $d"inistration seeks the reversal of the
aforesaid decision of the lo*er court. The ori+inal appeal of this case before the Court of
$ppeals *as certified to this Court and in the resolution of 7uly (, 1954, it *as docketed *ith
the aforecited nu"ber. $nd in the resolution of $pril ;, this case *as consolidated *ith H.&.
?o. BB96;.
#t appears that on $u+ust 41, 19(6 at about 6A;0 P.>., a pickup o*ned and operated by
respondent ?ational #rri+ation $d"inistration, a +overn"ent a+ency bearin+ Plate ?o. #?.6B1,
then driven officially by <u+o Harcia, an e"ployee of said a+ency as its re+ular driver,
bu"ped a bicycle ridden by !rancisco !ontanilla, son of herein petitioners, and &estituto
8eli+o, at >aasin, %an 7ose City alon+ the >aharlika <i+h*ay. $s a result of the i"pact,
!rancisco !ontanilla and &estituto 8eli+o *ere in/ured and brou+ht to the %an 7ose City
9"er+ency <ospital for treat"ent. !ontanilla *as later transferred to the Cabanatuan
Provincial <ospital *here he died.
Harcia *as then a re+ular driver of respondent ?ational #rri+ation $d"inistration *ho, at the
ti"e of the accident, *as a licensed professional driver and *ho =ualified for e"ploy"ent as
such re+ular driver of respondent after havin+ passed the *ritten and oral e-a"inations on
traffic rules and "aintenance of vehicles +iven by ?ational #rri+ation $d"inistration
authorities.
The *ithin petition is thus an off.shot of the action Civil Case ?o. %7C.B6) instituted by
petitioners.spouses on $pril 1(, 19(5 a+ainst respondent ?#$ before the then Court of !irst
#nstance of ?ueva 9ci/a, 2ranch G### at %an 7ose City, for da"a+es in connection *ith the
death of their son resultin+ fro" the aforestated accident.
$fter trial, the trial court rendered /ud+"ent on >arch 40, 1950 *hich directed respondent
?ational #rri+ation $d"inistration to pay da"a+es death benefits) and actual e-penses to
petitioners. The dispositive portion of the decision reads thusA
. . . . . 7ud+"ent is here rendered orderin+ the defendant ?ational #rri+ation
$d"inistration to pay to the heirs of the deceased P14,000.00 for the death of
!rancisco !ontanillaF P;,;59.00 *hich the parents of the deceased had spent
for the hospitali0ation and burial of the deceased !rancisco !ontanillaF and to
pay the costs. 2rief for the petitioners spouses !ontanilla, p. 'F &ollo, p. 1;4)
&espondent ?ational #rri+ation $d"inistration filed on $pril 41, 1950, its "otion for
reconsideration of the aforesaid decision *hich respondent trial court denied in its Order of
7une 1;, 1950. &espondent ?ational #rri+ation $d"inistration thus appealed said decision to
the Court of $ppeals C.$..H.&. ?o. 6(4;(. &) *here it filed its brief for appellant in support of
its position.
#nstead of filin+ the re=uired brief in the aforecited Court of $ppeals case, petitioners filed the
instant petition *ith this Court.
The sole issue for the resolution of the Court isA 6hether or not the a*ard of "oral da"a+es,
e-e"plary da"a+es and attorney,s fees is le+ally proper in a co"plaint for da"a+es based
on =uasi.delict *hich resulted in the death of the son of herein petitioners.
Petitioners alle+eA
1. The a*ard of "oral da"a+es is specifically allo*able. under para+raph ; of
$rticle 4406 of the ?e* Civil Code *hich provides that the spouse, le+iti"ate
and ille+iti"ate descendants and ascendants of the deceased "ay de"and
"oral da"a+es for "ental an+uish by reason of the death of the deceased.
%hould "oral da"a+es be +ranted, the a*ard should be "ade to each of
petitioners.spouses individua""1 and in varyin+ a"ounts dependin+ upon proof of
"ental and depth of intensity of the sa"e, *hich should not be less than
PB0,000.00 for each of the".
4. The decision of the trial court had "ade an i"pression that respondent
?ational #rri+ation $d"inistration acted *ith +ross ne+li+ence because of the
accident and the subse=uent failure of the ?ational #rri+ation $d"inistration
personnel includin+ the driver to stop in order to +ive assistance to the, victi"s.
Thus, by reason of the +ross ne+li+ence of respondent, petitioners beco"e
entitled to e-e"plary da"a+es under $rts. 44;1 and 4449 of the ?e* Civil
Code.
;. Petitioners are entitled to an a*ard of attorney,s fees, the a"ount of *hich
40L) had been sufficiently established in the hearin+ of >ay 4;, 19(9.
'. This petition has been filed only for the purpose of revie*in+ the findin+s of
the lo*er court upon *hich the disallo*ance of "oral da"a+es, e-e"plary
da"a+es and attorney,s fees *as based and not for the purpose of disturbin+
the other findin+s of fact and conclusions of la*.
The %olicitor Heneral, takin+ up the cud+els for public respondent ?ational #rri+ation
$d"inistration, contends thusA
1. The filin+ of the instant petition is rot proper in vie* of the appeal taken by
respondent ?ational #rri+ation $d"inistration to the Court of $ppeals a+ainst the
/ud+"ent sou+ht to be revie*ed. The focal issue raised in respondent,s appeal
to the Court of $ppeals involves the =uestion as to *hether or not the driver of
the vehicle that bu"ped the victi"s *as ne+li+ent in his operation of said
vehicle. #t thus beco"es necessary that before petitioners, clai" for "oral and
e-e"plary da"a+es could be resolved, there should first be a findin+ of
ne+li+ence on the part of respondent,s e"ployee.driver. #n this re+ard, the
%olicitor Heneral alle+es that the trial court decision does not cate+orically
contain such findin+.
4. The filin+ of the C$ppearance and @r+ent >otion !or 3eave to !ile Plaintiff.
$ppellee,s 2riefC dated 8ece"ber 45, 1951 by petitioners in the appeal C$.
H.&. ?o. 6(4;(.&F and H. &. ?o.610'B) of the respondent ?ational #rri+ation
$d"inistration before the Court of $ppeals, is an e-plicit ad"ission of said
petitioners that the herein petition, is not proper. #nconsistent procedures are
"anifest because *hile petitioners =uestion the findin+s of fact in the Court of
$ppeals, they present only the =uestions of la* before this Court *hich posture
confir"s their ad"ission of the facts.
;. The fact that the parties failed to a+ree on *hether or not ne+li+ence caused
the vehicular accident involves a =uestion of fact *hich petitioners should have
brou+ht to the Court of $ppeals *ithin the re+le"entary period. <ence, the
decision of the trial court has beco"e final as to the petitioners and for this
reason alone, the petition should be dis"issed.
'. &espondent 7ud+e acted *ithin his /urisdiction, sound discretion and in
confor"ity *ith the la*.
B. &espondents do not assail petitioners, clai" to "oral and e-e"plary
da"a+es by reason of the shock and subse=uent illness they suffered because
of the death of their son. &espondent ?ational #rri+ation $d"inistration,
ho*ever, avers that it cannot be held liable for the da"a+es because it is an
a+ency of the %tate perfor"in+ +overn"ental functions and driver <u+o Harcia
*as a re+ular driver of the vehicle, not a special a+ent *ho *as perfor"in+ a /ob
or act forei+n to his usual duties. <ence, the liability for the tortious act should.
not be borne by respondent +overn"ent a+ency but by driver Harcia *ho should
ans*er for the conse=uences of his act.
6. 9ven as the trial court touched on the failure or la-ity of respondent ?ational
#rri+ation $d"inistration in e-ercisin+ due dili+ence in the selection and
supervision of its e"ployee, the "atter of due dili+ence is not an issue in this
case since driver Harcia *as not its special a+ent but a re+ular driver of the
vehicle.
The sole le+al =uestion on *hether or not petitioners "ay be entitled to an a*ard of "oral
and e-e"plary da"a+es and attorney,s fees can very *ell be ans*ered *ith the application
of $rts. 41(6 and 4150 of the?e* Civil Code.
$rt. 41(6 thus providesA
6hoever by act o"ission causes da"a+e to another, there bein+ fault or
ne+li+ence, is obli+ed to pay for da"a+e done. %uch fault or ne+li+ence, if there
is no pre.e-istin+ cotractual relation bet*een the parties, is called a =uasi.delict
and is +overned by the provisions of this Chapter
Para+raphs B and 6 of $rt. 41 50 read as follo*sA
9"ployers shall be liable for the da"a+es caused by their e"ployees and
household helpers actin+ *ithin the scope of their assi+ned tasks, even the
thou+h the for"er are not en+a+ed in any business or industry.
The %tate is responsible in like "anner *hen it acts throu+h a special a+ent.F
but not *hen the da"a+e has been caused by the official to *ho" the task done
properly pertains, in *hich case *hat is provided in $rt. 41(6 shall be applicable.
The liability of the %tate has t*o aspects. na"elyA
1. #ts public or +overn"ental aspects *here it is liable for the tortious acts of
special a+ents only.
4. #ts private or business aspects as *hen it en+a+es in private enterprises)
*here it beco"es liable as an ordinary e"ployer. p. 961, Civil Code of the
PhilippinesF $nnotated, ParasF 2345 6d. ).
#n this /urisdiction, the %tate assu"es a li"ited liability for the da"a+e caused by the tortious
acts or conduct of its special a+ent.
@nder the afore=uoted para+rah 6 of $rt. 4150, the %tate has voluntarily assu"ed liability for
acts done throu+h special a+ents. The %tate,s a+ent, if a public official, "ust not only be
specially co""issioned to do a particular task but that such task "ust be forei+n to said
official,s usual +overn"ental functions. #f the %tate,s a+ent is not a public official, and is
co""issioned to perfor" non.+overn"ental functions, then the %tate assu"es the role of an
ordinary e"ployer and *ill be held liable as such for its a+ent,s tort. 6here the +overn"ent
co""issions a private individual for a special +overn"ental task, it is actin+ throu+h a special
a+ent *ithin the "eanin+ of the provision. Torts and 8a"a+es, %an+co, p. ;'(, 195' 9d.)
Certain functions and activities, *hich can be perfor"ed only by the +overn"ent, are "ore or
less +enerally a+reed to be C+overn"entalC in character, and so the %tate is i""une fro" tort
liability. On the other hand, a service *hich "i+ht as *ell be provided by a private corporation,
and particularly *hen it collects revenues fro" it, the function is considered a CproprietaryC
one, as to *hich there "ay be liability for the torts of a+ents *ithin the scope of their
e"ploy"ent.
The ?ational #rri+ation $d"inistration is an a+ency of the +overn"ent e-ercisin+ proprietary
functions, by e-press provision of &ep. $ct ?o. ;601. %ection 1 of said $ct providesA
%ection 1. ?a"e and do"icile..$ bod1 corporate is hereby created *hich shall
be kno*n as the ?ational #rri+ation $d"inistration, hereinafter called the ?#$ for
short, *hich shall be or+ani0ed i""ediately after the approval of this $ct. #t shall
have its principal seat of business in the City of >anila and shall have
representatives in all provinces for the proper conduct of its business.
%ection 4 of said la* spells out so"e of the ?#$,s proprietary functions. Thus.
%ec. 4. %owers and objectives..The ?#$ shall have the follo*in+ po*ers and
ob/ectivesA
a) - - - - - - - - - - - - - - - - - -
b) - - - - - - - - - - - - - - - - - -
c) To collect fro" the users of each irri+ation syste" constructed by it such fees
as "ay be necessary to finance the continuous operation of the syste" and
rei"burse *ithin a certain period not less than t*enty.five years cost of
construction thereofF and
d) To do all such other tthin+s and to transact all such business as are directly
or indirectly necessary, incidental or conducive to the attain"ent of the above
ob/ectives.
#ndubitably, the ?#$ is a +overn"ent corporation *ith /uridical personality and not a "ere
a+ency of the +overn"ent. %ince it is a corporate body perfor"in+ non.+overn"ental
functions, it no* beco"es liable for the da"a+e caused by the accident resultin+ fro" the
tortious act of its driver.e"ployee. #n this particular case, the ?#$ assu"es the responsibility
of an ordinary e"ployer and as such, it beco"es ans*erable for da"a+es.
This assu"ption of liability, ho*ever, is predicated upon the e-istence of ne+li+ence on the
part of respondent ?#$. The ne+li+ence referred to here is the ne+li+ence of supervision.
$t this /uncture, the "atter of due dili+ence on the part of respondent ?#$ beco"es a crucial
issue in deter"inin+ its liability since it has been established that respondent is a +overn"ent
a+ency perfor"in+ proprietary functions and as such, it assu"es the posture of an ordinary
e"ployer *hich, under Par. B of $rt. 4150, is responsible for the da"a+es caused by its
e"ployees provided that it has failed to observe or e-ercise due dili+ence in the selection and
supervision of the driver.
#t *ill be noted fro" the assailed decision of the trial court that Cas a result of the i"pact,
!rancisco !ontanilla *as thrown to a distance 78 meters awa1 from the point of impact *hile
&estituto 8eli+o *as thro*n a little bit further a*ay. The i"pact took place al"ost at the ed+e
of the ce"ented portion of the road.C 9"phasis supplied,) Dpa+e 46, &olloE
The lo*er court further declared that Ca speedin+ vehicle co"in+ in contact *ith a person
causes force and i"pact upon the vehicle that anyone in the vehicle cannot fail to notice. $s a
"atter of fact, the i"pact *as so stron+ as sho*n by the fact that the vehic"e suffered dents
on the ri$ht side of the radiator $uard, the hood, the fender and a crac9 on the radiator as
shown b1 the investi$ation report 9-hibit C9C). 9"phasis supplied) Dpa+e 49, &olloE
#t should be e"phasi0ed that the accident happened alon+ the >aharlika ?ational &oad
*ithin the city li"its of %an 7ose City, an urban area. Considerin+ the fact that the victi" *as
thro*n B0 "eters a*ay fro" the point of i"pact, there is a stron+ indication that driver Harcia
*as drivin+ at a hi+h speed. This is confir"ed by the fact that the pick.up suffered substantial
and heavy da"a+e as above.described and the fact that the ?#$ +roup *as then Cin a hurry
to reach the ca"psite as early as possibleC, as sho*n by their not stoppin+ to find out *hat
they bu"ped as *ould have been their nor"al and initial reaction.
9vidently, there *as ne+li+ence in the supervision of the driver for the reason that they *ere
travellin+ at a hi+h speed *ithin the city li"its and yet the supervisor of the +roup, 9ly
%alon+a, failed to caution and "ake the driver observe the proper and allo*ed speed li"it
*ithin the city. @nder the situation, such ne+li+ence is further a++ravated by their desire to
reach their destination *ithout even checkin+ *hether or not the vehicle suffered da"a+e
fro" the ob/ect it bu"ped, thus sho*in+ i"prudence and reckelessness on the part of both
the driver and the supervisor in the +roup.
%i+nificantly, this Court has ruled that even if the e"ployer can prove the dili+ence in the
selection and supervision the latter aspect has not been established herein) of the e"ployee,
still if he ratifies the *ron+ful acts, or take no step to avert further da"a+e, the e"ployer
*ould still be liable. >a-ion vs. >anila &ailroad Co., '' Phil. B9().
Thus, too, in the case of Gda. de 2onifacio vs. 2.3.T. 2us Co. 3.46510, $u+ust ;1, 19(0, ;'
%C&$ 615), this Court held that a driver should be especially *atchful in anticipation of others
*ho "ay be usin+ the hi+h*ay, and his failure to keep a proper look out for reasons and
ob/ects in the line to be traversed constitutes ne+li+ence.
Considerin+ the fore+oin+, respondent ?#$ is hereby directed to pay herein petitioners.
spouses the a"ounts of P14,000.00 for the death of !rancisco !ontanillaF P;,;59.00 for
hospitali0ation and burial e-penses of the aforena"ed deceasedF P;0,000.00 as "oral
da"a+esF P5,000.00 as e-e"plary da"a+es and attorney,s fees of 40L of the total a*ard.
%O O&89&98.
%adi""a, &armiento and Re$a"ado, --., concur.
Me"encio: ;errera (#hairperson,), -., is on "eave.
G.R. No. L:97795 A%,+ 15, 1955
'OSE S. AMADORA, LORETA A. AMADORA, 'OSE A. AMADORA 'R., NORMA A. <LA<A
PANTALEON A. AMADORA, 'OSE A. AMADORA III, LUC< A. AMADORA, ROSALINDA A.
AMADORA, PERFECTO A. AMADORA, SERREC A. AMADORA, /ICENTE A. AMADORA
$!( MARIA TISCALINA A. AMADORA, petitioners
vs.
HONORA-LE COURT OF APPEALS, COLEGIO DE SAN 'OSE:RECOLETOS, /ICTOR
LLUCH SERGIO P. DLMASO 'R., CELESTINO DICON, ANIANO A-ELLANA, PA-LITO
DAFFON t",u "s %$,)!ts $!( !$tu,$+ gu$,($!s, MR. $!( MRS. NICANOR GUM-AN,
$!( ROLANDO /ALENCIA, t",u "s gu$,($!, A. FRANCISCO ALONSO, respondents.
-ose &. 'madora & 'ssociates for petitioners.
%adi""a Law Office for respondents.

CRU2, J.:
3ike any prospective +raduate, $lfredo $"adora *as lookin+ for*ard to the co""ence"ent e-ercises *here he *ould ascend the sta+e and in the presence of
his relatives and friends receive his hi+h school diplo"a. These cere"onies *ere scheduled on $pril 16, 19(4. $s it turned out, thou+h, fate *ould intervene and
deny hi" that a*aited e-perience. On $pril 1;, 19(4, *hile they *ere in the auditoriu" of their school, the Cole+io de %an 7ose.&ecoletos, a class"ate, Pablito
8a"on, fired a +un that "ortally hit $lfredo, endin+ all his e-pectations and his life as *ell. The victi" *as only seventeen years old.
1

8affon *as convicted of ho"icide thru reckless i"prudence .
2
$dditionally, the herein petitioners, as the victi",s
parents, filed a civil action for da"a+es under $rticle 4150 of the Civil Code a+ainst the Cole+io de %an 7ose.
&ecoletos, its rector the hi+h school principal, the dean of boys, and the physics teacher, to+ether *ith 8affon
and t*o other students, throu+h their respective parents. The co"plaint a+ainst the students *as later dropped.
$fter trial, the Court of !irst #nstance of Cebu held the re"ainin+ defendants liable to the plaintiffs in the su" of
P49',95'.00, representin+ death co"pensation, loss of earnin+ capacity, costs of liti+ation, funeral e-penses,
"oral da"a+es, e-e"plary da"a+es, and attorney,s fees .
8
On appeal to the respondent court, ho*ever, the
decision *as reversed and all the defendants *ere co"pletely absolved .
9

#n its decision, *hich is no* the sub/ect of this petition for certiorari under &ule 'B of the &ules of Court, the
respondent court found that $rticle 4150 *as not applicable as the Cole+io de %an 7ose.&ecoletos *as not a
school of arts and trades but an acade"ic institution of learnin+. #t also held that the students *ere not in the
custody of the school at the ti"e of the incident as the se"ester had already ended, that there *as no clear
identification of the fatal +un and that in any event the defendant, had e-ercised the necessary dili+ence in
preventin+ the in/ury.
5

The basic undisputed facts are that $lfredo $"adora *ent to the %an 7ose.&ecoletos on $pril 1;, 19(4, and
*hile in its auditoriu" *as shot to death by Pablito 8affon, a class"ate. On the i"plications and conse=uences
of these facts, the parties sharply disa+ree.
The petitioners contend that their son *as in the school to sho* his physics e-peri"ent as a prere=uisite to his
+raduationF hence, he *as then under the custody of the private respondents. The private respondents sub"it
that $lfredo $"adora had +one to the school only for the purpose of sub"ittin+ his physics report and that he
*as no lon+er in their custody because the se"ester had already ended.
There is also the =uestion of the identity of the +un used *hich the petitioners consider i"portant because of an
earlier incident *hich they clai" underscores the ne+li+ence of the school and at least one of the private
respondents. #t is not denied by the respondents that on $pril (, 19(4, %er+io 8a"aso, 7r., the dean of boys,
confiscated fro" 7ose Hu"ban an unlicensed pistol but later returned it to hi" *ithout "akin+ a report to the
principal or takin+ any further action .
3
$s Hu"ban *as one of the co"panions of 8affon *hen the latter fired
the +un that killed $lfredo, the petitioners contend that this *as the sa"e pistol that had been confiscated fro"
Hu"ban and that their son *ould not have been killed if it had not been returned by 8a"aso. The respondents
say, ho*ever, that there is no proof that the +un *as the sa"e firear" that killed $lfredo.
&esolution of all these disa+ree"ents *ill depend on the interpretation of $rticle 4150 *hich, as it happens, is
invoked by both parties in support of their conflictin+ positions. The pertinent part of this article reads as follo*sA
3astly, teachers or heads of establish"ents of arts and trades shall be liable for da"a+es
caused by their pupils and students or apprentices so lon+ as they re"ain in their custody.
Three cases have so far been decided by the Court in connection *ith the above.=uoted provision, to *itA
9-conde v. Capuno
7
>ercado v. Court of $ppeals,
5
and Palisoc v. 2rillantes.
9
These *ill be briefly revie*ed in
this opinion for a better resolution of the case at bar.
#n the 9-conde Case, 8ante Capuno, a student of the 2alinta*ak 9le"entary %chool and a 2oy %cout, attended
a &i0al 8ay parade on instructions of the city school supervisor. $fter the parade, the boy boarded a /eep, took
over its *heel and drove it so recklessly that it turned turtle, resultin+ in the death of t*o of its passen+ers. 8ante
*as found +uilty of double ho"icide *ith reckless i"prudence. #n the separate civil action flied a+ainst the", his
father *as held solidarily liable *ith hi" in da"a+es under $rticle 190; no* $rticle 4150) of the Civil Code for
the tort co""itted by the 1B.year old boy.
This decision, *hich *as penned by 7ustice 2autista $n+elo on 7une 49,19B(, e-culpated the school in an obiter
dictum as it *as not a party to the case) on the +round that it *as riot a school of arts and trades. 7ustice 7.2.3.
&eyes, *ith *ho" 7ustices %abino Padilla and $le- &eyes concurred, dissented, ar+uin+ that it *as the school
authorities *ho should be held liable 3iability under this rule, he said, *as i"posed on 1) teachers in +eneralF
and 4) heads of schools of arts and trades in particular. The "odifyin+ clause Cof establish"ents of arts and
tradesC should apply only to CheadsC and not Cteachers.C
9-conde *as reiterated in the >ercado Case, and *ith an elaboration. $ student cut a class"ate *ith a ra0or
blade durin+ recess ti"e at the 3ourdes Catholic %chool in Jue0on City, and the parents of the victi" sued the
culprits parents for da"a+es. Throu+h 7ustice 3abrador, the Court declared in another obiter as the school itself
had also not been sued that the school *as not liable because it *as not an establish"ent of arts and trades.
>oreover, the custody re=uire"ent had not been proved as this Cconte"plates a situation *here the student
lives and boards *ith the teacher, such that the control, direction and influences on the pupil supersede those of
the parents.C 7ustice 7.2.3. &eyes did not take part but the other "e"bers of the court concurred in this decision
pro"ul+ated on >ay ;0, 1960.
#n %a"isoc vs. Bri""antes, decided on October ', 19(1, a 16.year old student *as killed by a class"ate *ith fist
blo*s in the laboratory of the >anila Technical #nstitute. $lthou+h the *ron+doer M *ho *as already of a+e M
*as not boardin+ in the school, the head thereof and the teacher in char+e *ere held solidarily liable *ith hi".
The Court declared throu+h 7ustice TeehankeeA
The phrase used in the cited article M Cso lon+ as the students) re"ain in their custodyC M
"eans the protective and supervisory custody that the school and its heads and teachers
e-ercise over the pupils and students for as lon+ as they are at attendance in the school,
includin+ recess ti"e. There is nothin+ in the la* that re=uires that for such liability to attach, the
pupil or student *ho co""its the tortious act "ust live and board in the schoo", as erroneously
held by the lo*er court, and the dicta in >ercado as *ell as in 9-conde) on *hich it relied, "ust
no* be dee"ed to have been set aside by the present decision.
This decision *as concurred in by five other "e"bers,
14
includin+ 7ustice 7.2.3. &eyes, *ho stressed, in
ans*er to the dissentin+ opinion, that even students already of a+e *ere covered by the provision since they
*ere e=ually in the custody of the school and sub/ect to its discipline. 8issentin+ *ith three others,
11
7ustice
>akalintal *as for retainin+ the custody interpretation in >ercado and sub"itted that the rule should apply only
to torts co""itted by students not yet of a+e as the school *ould be actin+ only in "oco parentis.
#n a footnote, 7ustice Teehankee said he a+reed *ith 7ustice &eyes, dissent in the 9-conde Case but added that
Csince the school involved at bar is a non.acade"ic school, the =uestion as to the applicability of the cited codal
provision to acade"ic institutions *ill have to a*ait another case *herein it "ay properly be raised.C
This is the case.
@nlike in 9-conde and >ercado, the Cole+io de %an 7ose.&ecoletos has been directly i"pleaded and is sou+ht
to be held liable under $rticle 4150F and unlike in Palisoc, it is not a school of arts and trades but an acade"ic
institution of learnin+. The parties herein have also directly raised the =uestion of *hether or not $rticle 4150
covers even establish"ents *hich are technically not schools of arts and trades, and, if so, *hen the offendin+
student is supposed to be Cin its custody.C
$fter an e-haustive e-a"ination of the proble", the Court has co"e to the conclusion that the provision in
=uestion should apply to a"" schools, acade"ic as *ell as non.acade"ic. 6here the school is acade"ic rather
than technical or vocational in nature, responsibility for the tort co""itted by the student *ill attach to the
teacher in char+e of such student, follo*in+ the first part of the provision. This is the +eneral rule. #n the case of
establish"ents of arts and trades, it is the head thereof, and only he, *ho shall be held liable as an e-ception to
the +eneral rule. #n other *ords, teachers in +eneral shall be liable for the acts of their students e-cept *here the
school is technical in nature, in *hich case it is the head thereof *ho shall be ans*erable. !ollo*in+ the canon
of reddendo sin$u"a sin$u"is CteachersC should apply to the *ords Cpupils and studentsC and Cheads of
establish"ents of arts and tradesC to the *ord Capprentices.C
The Court thus confor"s to the dissentin+ opinion e-pressed by 7ustice 7.2.3. &eyes in 9-conde *here he said
in partA
# can see no sound reason for li"itin+ $rt. 190; of the Old Civil Code to teachers of arts and
trades and not to acade"ic ones. 6hat substantial difference is there bet*een the" insofar as
concerns the proper supervision and vice over their pupilsK #t cannot be seriously contended that
an acade"ic teacher is e-e"pt fro" the duty of *atchin+ that his pupils do not co""it a tort to
the detri"ent of third Persons, so lon+ as they are in a position to e-ercise authority and
%upervision over the pupil. #n "y opinion, in the phrase Cteachers or heads of establish"ents of
arts and tradesC used in $rt. 190; of the old Civil Code, the *ords Carts and tradesC does not
=ualify CteachersC but only Cheads of establish"ents.C The phrase is only an updated version of
the e=uivalent ter"s Cpreceptores y artesanosC used in the #talian and !rench Civil Codes.
#f, as conceded by all co""entators, the basis of the presu"ption of ne+li+ence of $rt. 190; in
so"e cu"pa in vi$i"ando that the parents, teachers, etc. are supposed to have incurred in the
e-ercise of their authority, it *ould see" clear that *here the parent places the child under the
effective authority of the teacher, the latter, and not the parent, should be the one ans*erable for
the torts co""itted *hile under his custody, for the very reasonNthat the parent is not supposed
to interfere *ith the discipline of the school nor *ith the authority and supervision of the teacher
*hile the child is under instruction. $nd if there is no authority, there can be no responsibility.
There is really no substantial distinction bet*een the acade"ic and the non.acade"ic schools insofar as torts
co""itted by their students are concerned. The sa"e vi+ilance is e-pected fro" the teacher over the students
under his control and supervision, *hatever the nature of the school *here he is teachin+. The su++estion in the
9-conde and >ercado Cases is that the provision *ould "ake the teacher or even the head of the school of arts
and trades liable for an in/ury caused by any student in its custody but if that sa"e tort *ere co""itted in an
acade"ic school, no liability *ould attach to the teacher or the school head. $ll other circu"stances bein+ the
sa"e, the teacher or the head of the acade"ic school *ould be absolved *hereas the teacher and the head of
the non.acade"ic school *ould be held liable, and si"ply because the latter is a school of arts and trades.
The Court cannot see *hy different de+rees of vi+ilance should be e-ercised by the school authorities on the
basis only of the nature of their respective schools. There does not see" to be any plausible reason for rela-in+
that vi+ilance si"ply because the school is acade"ic in nature and for increasin+ such vi+ilance *here the
school is non.acade"ic. ?otably, the in/ury sub/ect of liability is caused by the student and not by the school
itself nor is it a result of the operations of the school or its e=uip"ent. The in/ury conte"plated "ay be caused by
any student re+ardless of the school *here he is re+istered. The teacher certainly should not be able to e-cuse
hi"self by si"ply sho*in+ that he is teachin+ in an acade"ic school *here, on the other hand, the head *ould
be held liable if the school *ere non.acade"ic.
These =uestions, thou+h, "ay be askedA #f the teacher of the acade"ic school is to be held ans*erable for the
torts co""itted by his students, *hy is it the head of the school only *ho is held liable *here the in/ury is caused
in a school of arts and tradesK $nd in the case of the acade"ic or non. technical school, *hy not apply the rule
also to the head thereof instead of i"posin+ the liability only on the teacherK
The reason for the disparity can be traced to the fact that historically the head of the school of arts and trades
e-ercised a closer tutela+e over his pupils than the head of the acade"ic school. The old schools of arts and
trades *ere en+a+ed in the trainin+ of artisans apprenticed to their "aster *ho personally and directly instructed
the" on the techni=ue and secrets of their craft. The head of the school of arts and trades *as such a "aster
and so *as personally involved in the task of teachin+ his students, *ho usually even boarded *ith hi" and so
ca"e under his constant control, supervision and influence. 2y contrast, the head of the acade"ic school *as
not as involved *ith his students and e-ercised only ad"inistrative duties over the teachers *ho *ere the
persons directly dealin+ *ith the students. The head of the acade"ic school had then as no*) only a vicarious
relationship *ith the students. Conse=uently, *hile he could not be directly faulted for the acts of the students,
the head of the school of arts and trades, because of his closer ties *ith the", could be so bla"ed.
#t is conceded that the distinction no lon+er obtains at present in vie* of the e-pansion of the schools of arts and
trades, the conse=uent increase in their enroll"ent, and the correspondin+ di"inution of the direct and personal
contract of their heads *ith the students. $rticle 4150, ho*ever, re"ains unchan+ed. #n its present state, the
provision "ust be interpreted by the Court accordin+ to its clear and ori+inal "andate until the le+islature, takin+
into account the char+es in the situation sub/ect to be re+ulated, sees fit to enact the necessary a"end"ent.
The other "atter to be resolved is the duration of the responsibility of the teacher or the head of the school of
arts and trades over the students. #s such responsibility co.e-tensive *ith the period *hen the student is actually
under+oin+ studies durin+ the school ter", as contended by the respondents and i"pliedly ad"itted by the
petitioners the"selvesK
!ro" a readin+ of the provision under e-a"ination, it is clear that *hile the custody re=uire"ent, to repeat
%a"isoc v. Bri""antes, does not "ean that the student "ust be boardin+ *ith the school authorities, it does si+nify
that the student should be *ithin the control and under the influence of the school authorities at the ti"e of the
occurrence of the in/ury. This does not necessarily "ean that such, custody be co.ter"inous *ith the se"ester,
be+innin+ *ith the start of classes and endin+ upon the close thereof, and e-cludin+ the ti"e before or after
such period, such as the period of re+istration, and in the case of +raduatin+ students, the period before the
co""ence"ent e-ercises. #n the vie* of the Court, the student is in the custody of the school authorities as lon+
as he is under the control and influence of the school and *ithin its pre"ises, *hether the se"ester has not yet
be+un or has already ended.
#t is too tenuous to ar+ue that the student co"es under the discipline of the school only upon the start of classes
not*ithstandin+ that before that day he has already re+istered and thus placed hi"self under its rules. ?either
should such discipline be dee"ed ended upon the last day of classes not*ithstandin+ that there "ay still be
certain re=uisites to be satisfied for co"pletion of the course, such as sub"ission of reports, ter" papers,
clearances and the like. 8urin+ such periods, the student is still sub/ect to the disciplinary authority of the school
and cannot consider hi"self released alto+ether fro" observance of its rules.
$s lon+ as it can be sho*n that the student is in the school pre"ises in pursuance of a le+iti"ate student
ob/ective, in the e-ercise of a le+iti"ate student ri+ht, and even in the en/oy"ent of a le+iti"ate student ri+ht,
and even in the en/oy"ent of a le+iti"ate student privile+e, the responsibility of the school authorities over the
student continues. #ndeed, even if the student should be doin+ nothin+ "ore than rela-in+ in the ca"pus in the
co"pany of his class"ates and friends and en/oyin+ the a"bience and at"osphere of the school, he is still
*ithin the custody and sub/ect to the discipline of the school authorities under the provisions of $rticle 4150.
8urin+ all these occasions, it is obviously the teacher.in.char+e *ho "ust ans*er for his students, torts, in
practically the sa"e *ay that the parents are responsible for the child *hen he is in their custody. The teacher.
in.char+e is the one desi+nated by the dean, principal, or other ad"inistrative superior to e-ercise supervision
over the pupils in the specific classes or sections to *hich they are assi+ned. #t is not necessary that at the ti"e
of the in/ury, the teacher be physically present and in a position to prevent it. Custody does not connote
i""ediate and actual physical control but refers "ore to the influence e-erted on the child and the discipline
instilled in hi" as a result of such influence. Thus, for the in/uries caused by the student, the teacher and not the
parent sha+ be held responsible if the tort *as co""itted *ithin the pre"ises of the school at any ti"e *hen its
authority could be validly e-ercised over hi".
#n any event, it should be noted that the liability i"posed by this article is supposed to fall directly on the teacher
or the head of the school of arts and trades and not on the school itself. #f at all, the school, *hatever its nature,
"ay be held to ans*er for the acts of its teachers or even of the head thereof under the +eneral principle of
respondeat superior, but then it "ay e-culpate itself fro" liability by proof that it had e-ercised the dili+ence of a
bonus paterfami"ias.
%uch defense is, of course, also available to the teacher or the head of the school of arts and trades directly held
to ans*er for the tort co""itted by the student. $s lon+ as the defendant can sho* that he had taken the
necessary precautions to prevent the in/ury co"plained of, he can e-onerate hi"self fro" the liability i"posed
by $rticle 4150, *hich also states thatA
The responsibility treated of in this article shall cease *hen the Persons herein "entioned prove
that they observed all the dili+ence of a +ood father of a fa"ily to prevent da"a+es.
#n this connection, it should be observed that the teacher *ill be held liable not only *hen he is actin+ in "oco
parentis for the la* does not re=uire that the offendin+ student be of "inority a+e. @nlike the parent, *ho *i+ be
liable only if his child is still a "inor, the teacher is held ans*erable by the la* for the act of the student under
hi" re+ardless of the student,s a+e. Thus, in the Palisoc Case, liability attached to the teacher and the head of
the technical school althou+h the *ron+doer *as already of a+e. #n this sense, $rticle 4150 treats the parent
"ore favorably than the teacher.
The Court is not un"indful of the apprehensions e-pressed by 7ustice >akalintal in his dissentin+ opinion in
Palisoc that the school "ay be unduly e-posed to liability under this article in vie* of the increasin+ activis"
a"on+ the students that is likely to cause violence and resultin+ in/uries in the school pre"ises. That is a valid
fear, to be sure. ?evertheless, it should be repeated that, under the present rulin+, it is not the school that *ill be
held directly liable. >oreover, the defense of due dili+ence is available to it in case it is sou+ht to be held
ans*erable as principal for the acts or o"ission of its head or the teacher in its e"ploy.
The school can sho* that it e-ercised proper "easures in selectin+ the head or its teachers and the appropriate
supervision over the" in the custody and instruction of the pupils pursuant to its rules and re+ulations for the
"aintenance of discipline a"on+ the". #n al"ost all cases no*, in fact, these "easures are effected throu+h the
assistance of an ade=uate security force to help the teacher physically enforce those rules upon the students.
>s should bolster the clai" of the school that it has taken ade=uate steps to prevent any in/ury that "ay be
co""itted by its students.
$ fortiori, the teacher hi"self "ay invoke this defense as it *ould other*ise be unfair to hold hi" directly
ans*erable for the da"a+e caused by his students as lon+ as they are in the school pre"ises and presu"ably
under his influence. #n this respect, the Court is disposed not to e-pect fro" the teacher the sa"e "easure of
responsibility i"posed on the parent for their influence over the child is not e=ual in de+ree. Obviously,the parent
can e-pect "ore obedience fro" the child because the latter,s dependence on hi" is +reater than on the
teacher. #t need not be stressed that such dependence includes the child,s support and sustenance *hereas
sub"ission to the teacher,s influence, besides bein+ coter"inous *ith the period of custody is usually enforced
only because of the students, desire to pass the course. The parent can instill "ore las discipline on the child
than the teacher and so should be held to a +reater accountability than the teacher for the tort co""itted by the
child.
$nd if it is also considered that under the article in =uestion, the teacher or the head of the school of arts and
trades is responsible for the da"a+e caused by the student or apprentice even if he is already of a+e M and
therefore less tractable than the "inor M then there should all the "ore be /ustification to re=uire fro" the school
authorities less accountability as lon+ as they can prove reasonable dili+ence in preventin+ the in/ury. $fter all, if
the parent hi"self is no lon+er liable for the student,s acts because he has reached "a/ority a+e and so is no
lon+er under the for"er,s control, there is then all the "ore reason for leniency in assessin+ the teacher,s
responsibility for the acts of the student.
$pplyin+ the fore+oin+ considerations, the Court has arrived at the follo*in+ conclusionsA
1. $t the ti"e $lfredo $"adora *as fatally shot, he *as still in the custody of the authorities of Cole+io de %an
7ose.&ecoletos not*ithstandin+ that the fourth year classes had for"ally ended. #t *as i""aterial if he *as in
the school auditoriu" to finish his physics e-peri"ent or "erely to sub"it his physics report for *hat is i"portant
is that he *as there for a le+iti"ate purpose. $s previously observed, even the "ere savorin+ of the co"pany of
his friends in the pre"ises of the school is a le+iti"ate purpose that *ould have also brou+ht hi" in the custody
of the school authorities.
4. The rector, the hi+h school principal and the dean of boys cannot be held liable because none of the" *as the
teacher.in.char+e as previously defined. 9ach of the" *as e-ercisin+ only a +eneral authority over the student
body and not the direct control and influence e-erted by the teacher placed in char+e of particular classes or
sections and thus i""ediately involved in its discipline. The evidence of the parties does not disclose *ho the
teacher.in.char+e of the offendin+ student *as. The "ere fact that $lfredo $"adora had +one to school that day
in connection *ith his physics report did not necessarily "ake the physics teacher, respondent Celestino 8icon,
the teacher.in.char+e of $lfredo,s killer.
;. $t any rate, assu"in+ that he *as the teacher.in.char+e, there is no sho*in+ that 8icon *as ne+li+ent in
enforcin+ discipline upon 8affon or that he had *aived observance of the rules and re+ulations of the school or
condoned their non.observance. <is absence *hen the tra+edy happened cannot be considered a+ainst hi"
because he *as not supposed or re=uired to report to school on that day. $nd *hile it is true that the offendin+
student *as still in the custody of the teacher.in.char+e even if the latter *as physically absent *hen the tort *as
co""itted, it has not been established that it *as caused by his la-ness in enforcin+ discipline upon the student.
On the contrary, the private respondents have proved that they had e-ercised due dili+ence, throu+h the
enforce"ent of the school re+ulations, in "aintainin+ that discipline.
'. #n the absence of a teacher.in.char+e, it is probably the dean of boys *ho should be held liable especially in
vie* of the unrefuted evidence that he had earlier confiscated an unlicensed +un fro" one of the students and
returned the sa"e later to hi" *ithout takin+ disciplinary action or reportin+ the "atter to hi+her authorities.
6hile this *as clearly ne+li+ence on his part, for *hich he deserves sanctions fro" the school, it does not
necessarily link hi" to the shootin+ of $"ador as it has not been sho*n that he confiscated and returned pistol
*as the +un that killed the petitioners, son.
B. !inally, as previously observed, the Cole+io de %an 7ose.&ecoletos cannot be held directly liable under the
article because only the teacher or the head of the school of arts and trades is "ade responsible for the da"a+e
caused by the student or apprentice. ?either can it be held to ans*er for the tort co""itted by any of the other
private respondents for none of the" has been found to have been char+ed *ith the custody of the offendin+
student or has been re"iss in the dischar+e of his duties in connection *ith such custody.
#n su", the Court finds under the facts as disclosed by the record and in the li+ht of the principles herein
announced that none of the respondents is liable for the in/ury inflicted by Pablito 8a"on on $lfredo $"adora
that resulted in the latter,s death at the auditoriu" of the Cole+io de %an 7ose.&ecoletos on $pril 1;, 19(4. 6hile
*e deeply sy"pathi0e *ith the petitioners over the loss of their son under the tra+ic circu"stances here related,
*e nevertheless are unable to e-tend the" the "aterial relief they seek, as a bal" to their +rief, under the la*
they have invoked.
6<9&9!O&9, the petition is 89?#98, *ithout any pronounce"ent as to costs. #t is so ordered.
ap, !arvasa, %aras, 0e"iciano, Ganca1co, Bidin, &armiento, #ortes and Gri<o:'*uino, --., concur.
0ernan, %adi""a and =eehan9ee, #.-., --, too9 no part.



S)%$,$t) O%!o!s

MELENCIO:HERRERA, J., concurrin+ and dissentin+A
# concur, e-cept *ith respect to the restricted "eanin+ +iven
the ter" CteacherC in $rticle 4150 of the Civil Code as
Cteacher.in.char+e.C This *ould li"it liability to occasions
*here there are classes under the i""ediate char+e of a
teacher, *hich does not see" to be the intend"ent of the la*.
$s # understand it, the philosophy of the la* is that *hoever
stands in "oco parentis *ill have the sa"e duties and
obli+ations as parents *henever in such a standin+. Those
persons are "andatorily held liable for the tortious acts of
pupils and students so lon+ as the latter re"ain in their
custody, "eanin+ their protective and supervisory custody.
Thus $rticle ;'9 of the Civil Code enu"erates the persons
*ho stand in "oco parentis and thereby e-ercise substitute
parental authorityA
$rt. ;'9 The follo*in+ persons shall e-ercise
substitute parental authorityA
--- --- ---
4) Teachers and professors
--- --- ---
') 8irectors of trade establish"ents, *ith re+ard to
apprenticesF,
$rticle ;B4 of the Civil Code further providesA
$rt. ;64. The relations bet*een teacher and pupil,
professor and student, are fi-ed by +overn"ent
re+ulations and those of each school or institution....
2ut even such rules and re+ulations as "ay be fi-ed can not
contravene the concept of substitute parental authority.
The rationale of liability of school heads and teachers for the
tortious acts of their pupils *as e-plained in %a"isoc vs.
Bri""antes '1 %C&$ B'5), thusA
The protective custody of the schoo" heads and
teachers is "andatorily substituted for that of the
parents, and hence, it beco"es their obli+ation as
we"" as that of the schoo" itse"f to provide proper
supervision of the students, activities durin+ the
*hole ti"e that they are at attendance in the school,
inc"udin$ recess time, as *ell as to take the
necessary precautions to protect the students in their
custody fro" dan+ers and ha0ards that *ould
reasonably be anticipated, includin+ in/uries that
so"e students the"selves "ay inflict *ilfully or
throu+h ne+li+ence on their fello* students.
9"phasis supplied)
Of course, as provided for in the sa"e $rticle 4150, the
responsibility treated of shall cease *hen the persons
"entioned prove that they observed all the dili+ence of a +ood
father of a fa"ily to prevent da"a+e.
$nd *hile a school is, ad"ittedly, not directly liable since
$rticle 4150 speaks only of teachers and schools heads, yet,
by virtue of the sa"e provision, the school, as their e"ployer,
"ay be held liable for the failure of its teachers or school
heads to perfor" their "andatory le+al duties as substitute
parents %an+co, Philippine 3a* on Torts O 8a"a+es, 19(5
ed., p. 401). $+ain, the school "ay e-culpate itself fro"
liability by provin+ that it had e-ercised the dili+ence of a +ood
father of the fa"ily.
$rt. 4150. - - -
9"ployers shall be liable for the da"a+es caused by
their e"ployees and household helpers actin+ *ithin
the scope of their assi+ned tasks, even thou+h the
for"er are not en+a+ed in any business or industry.
--- --- ---
Parenthetically, fro" the enu"eration in $rticle ;'9 of the Civil
Code, supra, it is apparent that the Code Co""ission had
already se+re+ated the classification of Cteachers and
professorsC vis.a.vis their pupils, fro" Cdirectors of trade
establish"ents, *ith re+ard to their apprentices.C
GUTIERRE2, 'R., J., concurrin+A
# concur in the Court,s opinion so carefully analy0ed and
crafted by 7ustice #sa+ani $. Cru0. <o*ever, # *ould like to
stress the need for a "a/or a"end"ent to, if not a co"plete
scrappin+ of, $rticle 4150 of the Civil Code insofar as it refers
to teachers or heads of establish"ents of arts and trades in
relation to pupils and students or apprentices. The seventh
para+raph of $rt. 4150 is a relic of the past and conte"plates
a situation lon+ +one and out of date. #n a %a"isoc v. Bri""antes
'1 %C&$ B'5) situation, it is bound to result in "ischief and
in/ustice.
!irst, *e no lon+er have "asters and apprentices toilin+ in
schools of arts and trades. %tudents in Ctechnolo+icalC
colle+es and universities are no different fro" students in
liberal arts or professional schools. $pprentices no* *ork in
re+ular shops and factories and their relationship to the
e"ployer is covered by la*s +overnin+ the e"ploy"ent
relationship and not by la*s +overnin+ the teacherMstudent
relationship.
%econd, e-cept for kinder+arten, ele"entary, and perhaps
early hi+h school students, teachers are often no lon+er
ob/ects of veneration *ho are +iven the respect due to
substitute parents. >any students in their late teens or early
adult years vie* so"e teachers as part of a bour+eois or
reactionary +roup *hose advice on behaviour, deport"ent,
and other non.acade"ic "atters is not only resented but
actively re/ected. #t ,see"s "ost unfair to hold teachers liable
on a presu"ption juris tantum of ne+li+ence for acts of
students even under circu"stances *here strictly speakin+
there could be no in "oco parentis relationship. 6hy do
teachers have to prove the contrary of ne+li+ence to be freed
fro" solidary liability for the acts f bo"b.thro*in+ or pistol
packin+ students *ho *ould /ust as soon hurt the" as they
*ould other "e"bers of the so.called.establish"ent.
The ordinary rules on =uasi.delicta should apply to teachers
and schools of *hatever nature insofar as +ro*n up students
are concerned. The provision of $rt. 4150 of the Civil Code
involved in this case has outlived its purpose. The Court
cannot "ake la*. #t can only apply the la* *ith its
i"perfections. <o*ever, the Court can su++est that such a la*
should be a"ended or repealed.


S)%$,$t) O%!o!s
MELENCIO:HERRERA, J., concurrin+ and dissentin+A
# concur, e-cept *ith respect to the restricted "eanin+ +iven
the ter" CteacherC in $rticle 4150 of the Civil Code as
Cteacher.in.char+e.C This *ould li"it liability to occasions
*here there are classes under the i""ediate char+e of a
teacher, *hich does not see" to be the intend"ent of the la*.
$s # understand it, the philosophy of the la* is that *hoever
stands in "oco parentis *ill have the sa"e duties and
obli+ations as parents *henever in such a standin+. Those
persons are "andatorily held liable for the tortious acts of
pupils and students so lon+ as the latter re"ain in their
custody, "eanin+ their protective and supervisory custody.
Thus $rticle ;'9 of the Civil Code enu"erates the persons
*ho stand in "oco parentis and thereby e-ercise substitute
parental authorityA
$rt. ;'9 The follo*in+ persons shall e-ercise
substitute parental authorityA
--- --- ---
4) Teachers and professors
--- --- ---
') 8irectors of trade establish"ents, *ith re+ard to
apprenticesF,
$rticle ;B4 of the Civil Code further providesA
$rt. ;64. The relations bet*een teacher and pupil,
professor and student, are fi-ed by +overn"ent
re+ulations and those of each school or institution....
2ut even such rules and re+ulations as "ay be fi-ed can not
contravene the concept of substitute parental authority.
The rationale of liability of school heads and teachers for the
tortious acts of their pupils *as e-plained in %a"isoc vs.
Bri""antes '1 %C&$ B'5), thusA
The protective custody of the schoo" heads and
teachers is "andatorily substituted for that of the
parents, and hence, it beco"es their obli+ation as
we"" as that of the schoo" itse"f to provide proper
supervision of the students, activities durin+ the
*hole ti"e that they are at attendance in the school,
inc"udin$ recess time, as *ell as to take the
necessary precautions to protect the students in their
custody fro" dan+ers and ha0ards that *ould
reasonably be anticipated, includin+ in/uries that
so"e students the"selves "ay inflict *ilfully or
throu+h ne+li+ence on their fello* students.
9"phasis supplied)
Of course, as provided for in the sa"e $rticle 4150, the
responsibility treated of shall cease *hen the persons
"entioned prove that they observed all the dili+ence of a +ood
father of a fa"ily to prevent da"a+e.
$nd *hile a school is, ad"ittedly, not directly liable since
$rticle 4150 speaks only of teachers and schools heads, yet,
by virtue of the sa"e provision, the school, as their e"ployer,
"ay be held liable for the failure of its teachers or school
heads to perfor" their "andatory le+al duties as substitute
parents %an+co, Philippine 3a* on Torts O 8a"a+es, 19(5
ed., p. 401). $+ain, the school "ay e-culpate itself fro"
liability by provin+ that it had e-ercised the dili+ence of a +ood
father of the fa"ily.
$rt. 4150. - - -
9"ployers shall be liable for the da"a+es caused by
their e"ployees and household helpers actin+ *ithin
the scope of their assi+ned tasks, even thou+h the
for"er are not en+a+ed in any business or industry.
--- --- ---
Parenthetically, fro" the enu"eration in $rticle ;'9 of the Civil
Code, supra, it is apparent that the Code Co""ission had
already se+re+ated the classification of Cteachers and
professorsC vis.a.vis their pupils, fro" Cdirectors of trade
establish"ents, *ith re+ard to their apprentices.C
GUTIERRE2, 'R., J., concurrin+A
# concur in the Court,s opinion so carefully analy0ed and
crafted by 7ustice #sa+ani $. Cru0. <o*ever, # *ould like to
stress the need for a "a/or a"end"ent to, if not a co"plete
scrappin+ of, $rticle 4150 of the Civil Code insofar as it refers
to teachers or heads of establish"ents of arts and trades in
relation to pupils and students or apprentices. The seventh
para+raph of $rt. 4150 is a relic of the past and conte"plates
a situation lon+ +one and out of date. #n a %a"isoc v. Bri""antes
'1 %C&$ B'5) situation, it is bound to result in "ischief and
in/ustice.
!irst, *e no lon+er have "asters and apprentices toilin+ in
schools of arts and trades. %tudents in Ctechnolo+icalC
colle+es and universities are no different fro" students in
liberal arts or professional schools. $pprentices no* *ork in
re+ular shops and factories and their relationship to the
e"ployer is covered by la*s +overnin+ the e"ploy"ent
relationship and not by la*s +overnin+ the teacherMstudent
relationship.
%econd, e-cept for kinder+arten, ele"entary, and perhaps
early hi+h school students, teachers are often no lon+er
ob/ects of veneration *ho are +iven the respect due to
substitute parents. >any students in their late teens or early
adult years vie* so"e teachers as part of a bour+eois or
reactionary +roup *hose advice on behaviour, deport"ent,
and other non.acade"ic "atters is not only resented but
actively re/ected. #t ,see"s "ost unfair to hold teachers liable
on a presu"ption juris tantum of ne+li+ence for acts of
students even under circu"stances *here strictly speakin+
there could be no in "oco parentis relationship. 6hy do
teachers have to prove the contrary of ne+li+ence to be freed
fro" solidary liability for the acts f bo"b.thro*in+ or pistol
packin+ students *ho *ould /ust as soon hurt the" as they
*ould other "e"bers of the so.called.establish"ent.
The ordinary rules on =uasi.delicta should apply to teachers
and schools of *hatever nature insofar as +ro*n up students
are concerned. The provision of $rt. 4150 of the Civil Code
involved in this case has outlived its purpose. The Court
cannot "ake la*. #t can only apply the la* *ith its
i"perfections. <o*ever, the Court can su++est that such a la*
should be a"ended or repealed.

G.R. No. 74955 O#to6), 5, 1955
-EN'AMIN SAL/OSA $!( -AGUIO COLLEGES FOUNDATION, petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT, EDUARDO -. CASTRO, DIOMEDES -.
CASTRO, /IRGINIA -. CASTRO $!( RODOLFO -. CASTRO., respondents.
6di"berto B. =enefrancia for petitioners.
Leonardo L. #ocjin -r. for respondents.

PADILLA, J.:
#n this petition for revie* on certiorari, petitioners seek the reversal of the
decision
1
of respondent #nter"ediate $ppellate Court, dated ( 8ece"ber 195', in $C.H.&. ?o. CG 695(6, in so far
as it affir"ed the decision
2
of the Court of !irst #nstance of Tarlac hereinafter referred to as the Trial Court),
*hich held, a"on+ others, petitioners solidarily hable *ith 7i""y 2. $bon, under $rt. 4150 of the Civil Code.
The relevant facts, as found by the Trial Court and adopted by reference by the respondent Court, areA
... 2a+uio Colle+es !oundation 2C!, hereafter) is an acade"ic institution ... D<o*everE, it is also an institution of
arts and trade. #t has so advertised itself, as its o*n evidence sho*s. #ts brochure 9-h. 4) sho*s that 2C! has a
full.fled+ed technical.vocational depart"ent offer Co""unication, 2roadcast and Teletype Technician courses as
*ell as 9lectronics %ervice"an and $uto"otive >echanics courses... these courses divest 2C! of the nature or
character of bein+ purely or e-clusively an acade"ic institution.
8
6ithin the pre"ises of the 2C! is an &OTC @nit, the 2a+uio Colle+es !oundation &eserve Officers Trainin+
Corps &OTC) @nit, *hich is under the fifth control of the $r"ed !orces of the Philippines.
9
The &OTC @nit, by
*ay of acco""odation to the $r"ed !orces of the Philippines $!P), pursuant to 8epart"ent Order ?o. 1',
%eries of 19(B of the 8epart"ent of 9ducation and Culture,
5
is provided by the 2C! an office and an ar"ory
located at the base"ent of its "ain buildin+.
3
The 2a+uio Colle+es !oundation &OTC @nit had 7i""y 2. $bon as its duly appointed ar"orer.
7
$s ar"orer of
the &OTC @nit, 7i""y 2. $bon received his appoint"ent fro" the $!P. ?ot bein+ an e"ployee of the 2C!, he
also received his salary fro" the $!P,
5
as *ell as orders fro" Captain &oberto C. @n+os, the Co""andant of
the 2a+uio Colle+es !oundation &OTC @nit, concurrent Co""andant of other &OTC units in 2a+uio and an
e"ployee officer) of the $!P.
9
7i""y 2. $bon *as also a co""erce student of the 2C!.
14
On ; >arch 19((, at around 5A00 p."., in the parkin+ space of 2C!, 7i""y 2. $bon shot ?apoleon Castro a
student of the @niversity of 2a+uio *ith an unlicensed firear" *hich the for"er took fro" the ar"ory of the
&OTC @nit of the 2C!.
11
$s a result, ?apoleon Castro died and 7i""y 2. $bon *as prosecuted for, and
convicted of the cri"e of <o"icide by >ilitary Co""ission ?o. ;0, $!P.
12
%ubse=uently, the heirs of ?apoleon Castro sued for da"a+es, i"pleadin+ 7i""y 2. $bon, &oberto C. @n+os
&OTC Co""andant 2en/a"in %alvosa President and Chair"an of the 2oard of 2C!), 7esus %alvosa
9-ecutive Gice President of 2C!), 3ibertad 8. Juetolio 8ean of the Colle+e of 9ducation and 9-ecutive
Trustee of 2C!) and the 2a+uio Colle+es !oundation #nc. as party defendants. $fter hearin+, the Trial Court
rendered a decision, 1) sentencin+ defendants 7i""y 2. $bon, 2en/a"in %alvosa and 2a+uio Colle+es
!oundation, #nc., /ointly and severally, to pay private respondents, as heirs of ?apoleon CastroA a) P14,000.00
for the death of ?apoleon Castro, b) P;16,000.00 as inde"nity for the loss of earnin+ capacity of the deceased,
c) PB,000.00 as "oral da"a+es, d) P6,000.00 as actual da"a+es, and e) PB,000.00 as attorney,s fees, plus
costsF 4) absolvin+ the other defendantsF and ;) dis"issin+ the defendants, counterclai" for lack of "erit.
18
On appeal by petitioners, the respondent Court affir"ed *ith "odification the decision of the Trial Court. The
"odification consisted in reducin+ the a*ard for loss of earnin+ capacity of the deceased fro" P;16,000.00 to
P;0,000.00 by *ay of te"perate da"a+es, and increasin+ the inde"nity for the death of ?apoleon Castro fro"
P14,000.00 to P;0,000.00.
<ence, this petition.
The central issue in this case is *hether or not petitioners can be held solidarity hable *ith 7i""y 2. $bon for
da"a+es under $rticle 4150 of the Civil Code, as a conse=uence of the tortious act of 7i""y 2. $bon.
@nder the penulti"ate para+raph of $rt. 4150 of the Civil Code, teachers or heads of establish"ents of arts and
trades are hable for Cda"a+es caused by their pupils and students or apprentices, so lon+ as they re"ain in
their custody.C The rationale of such liability is that so lon+ as the student re"ains in the custody of a teacher, the
latter Cstands, to a certain e-tent, in loco parentis Das to the studentE and DisE called upon to e-ercise reasonable
supervision over the conduct of the DstudentE.C
19
3ike*ise, Cthe phrase used in D$rt. 4150 M ,so lon+ as the
students) re"ain in their custody "eans the protective and supervisory custody that the school and its heads
and teachers e-ercise over the pupils and students for as lon+ as they are at attendance in the schoo", includin+
recess ti"e.C
15
#n the case at bar, in holdin+ that 7i""y 2. $bon *as stin in the protective and supervisory custody of the 2a+uio
Colle+es !oundation *hen he shot ?apoleon Castro, the respondent Court ruled thatA
it is true that 'bon was not attendin$ an1 c"ass or schoo" function at the time of the shootin$
incident, *hich *as at about 5 o,clock in the evenin+F but considerin+ that $bon *as e"ployed
as an ar"orer and property custodian of the 2C! &OTC unit, he must have been attendin$ ni$ht
c"asses and therefore that hour in the evenin$ was just about dismissa" time for him or soon
thereafter. =he time interva" is safe"1 within the >recess time> that the tria" court spo9e of and
envisioned b1 the %a"isoc case, supra.
13
9"phasis supplied)
#n line *ith the case of %a"isoc,
17
a student not Cat attendance in the schoolC cannot be in CrecessC thereat. $
Crecess,C as the concept is e"braced in the phrase Cat attendance in the school,C conte"plates a situation of
te"porary ad/ourn"ent of school activities *here the student still re"ains *ithin call of his "entor and is not
per"itted to leave the school pre"ises, or the area *ithin *hich the school activity is conducted. &ecess by its
nature does not include dis"issal.
15
3ike*ise, the "ere fact of bein+ enrolled or bein+ in the pre"ises of a
school *ithout "ore does not constitute Cattendin+ schoolC or bein+ in the Cprotective and supervisory custody, of
the school, as conte"plated in the la*.
@pon the fore+oin+ considerations, *e hold that 7i""y 2. $bon cannot be considered to have been Cat
attendance in the school,C or in the custody of 2C!, *hen he shot ?apoleon Castro. 3o+ically, therefore,
petitioners cannot under $rt. 4150 of the Civil Code be held solidarity liable *ith 7i""y 2. $bon for da"a+es
resultin+ fro" his acts.
2esides, the record sho*s that before the shootin+ incident, &oberto 2. @n+os &OTC @nit Co""andant, $!P,
had instructed 7i""y 2. $bon Cnot to leave the office and Dto keep the ar"oryE *ell +uarded.C
19
$part fro"
ne+atin+ a findin+ that 7i""y 2. $bon *as under the custody of the school *hen he co""itted the act for *hich
the petitioners are sou+ht to be held liable, this circu"stance sho*s that 7i""y 2. $bon *as supposed to be
wor9in$ in the armor1 *ith definite instructions fro" his superior, the &OTC Co""andant, *hen he shot
?apoleon Castro.
Petitioners also raise the issue that, under $rt. 4150 of the Civil Code, a school *hich offers both acade"ic and
technicalNvocational courses cannot be held liable for a tort co""itted by a student enrolled only in its acade"ic
pro+ra"F ho*ever, considerin+ that 7i""y 2. $bon *as not in the custody of 2C! *hen he shot ?apoleon
Castro, the Court dee"s it unnecessary to pass upon such other issue.
24
6<9&9!O&9, the decision appealed fro" is hereby &9G9&%98 in so far as it holds petitioners solidarily liable
*ith 7i""y 2. $bon for his tortious act in the killin+ of ?apoleon Castro. ?o costs.
%O O&89&98.
Me"encio:;errera (#hairperson), %aras, &armiento and Re$a"ado, --., concur.

Foot!ot)s
1 Penned by 7ustice %erafin 9. Ca"ilon and concurred in by 7ustices Crisolito Pascual and 8esiderio P. 7urado.
4 Penned by 7ud+e !ernando %. $lcantara.
; &ollo, p. 15.
' Id., at 4'F &ecord on $ppeal, p. '1F $s stated in the decision of the Trial Court and adopted by reference by the respondent Court.
B 9-hibits p. 41.
6 %ee note ', supra.
( Ibid.
5 Ibid.
9 Ibid.
10 &ollo, p. 4'F &ecord on $ppeal, p. '4F $s stated in the decision of the Trial Court and adopted by reference by the respondent Court.
11 &ello, p. 4'F &ecord on $ppeal, p. '0F $s stated in the decision of the Trial Court and adopted by reference by the respondent Court.
14 Ibid.
1; &ollo, p. 4'F &ecord on $ppeal, p. '6.
1' Palisoc v. 2rillantes, '1 %C&$ B'5.
1B Ibid.
16 &ollo, p. 19.
1( Palisoc vs. 2rillantes, et al., 3.4904B, Oct. ', 19(1, '1 %C&$ B'5.
15 %chedule of classes at 2C! is fro" (A;0 a.". to 5A00 p.". T%?, 6 7anuary 1951, p. 4B.
40 The *riter, ho*ever, like the ponente in the case of Palisoc for"er >r. Chief 7ustice Claudio Teehankee, also "anifests his
concurrence C*ith the vie*s e-pressed in the dissentin+ opinion of >r. 7ustice 7.2.3. &eyes in 9-conde Dconcurred in by 7ustices %.
Padilla and $. &eyesE that ,1) can see no sound reason for li"itin+ $rt. 190; of the old Civil Code to teachers of arts and trades and not to
acade"ic ones. 6hat substantial difference is there bet*een the" in so far as concerns the proper supervision and vi+ilance over their
pupils. #t cannot be seriously contended that an acade"ic teacher is e-e"pt fro" the duty of *atchin+ that his pupils do not co""it a tort
to the detri"ent of third persons, so lon+ as they are in a position to e-ercise authority and supervision over the pupil.C,
G.R. No. 79981 No=);6), 3, 1959
PURITA MIRANDA /ESTIL $!( AGUSTIN /ESTIL, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, DA/ID U< $!( TERESITA U<, respondents.
%ab"o %. Garcia for petitioners.
Roberto R. %a"mares for private respondents.

CRU2, J.:
3ittle Theness Tan @y *as dead at the a+e of three. <er parents said she died because she
*as bitten by a do+ of the petitioners, but the latter denied this, clai"in+ they had nothin+ to
do *ith the do+. The @ys sued the Gestils, *ho *ere sustained by the trial court. On appeal,
the decision of the court a *uo *as reversed in favor of the @ys. The Gestils are no* before
us. They ask us to set aside the /ud+"ent of the respondent court and to reinstate that of the
trial court.
On 7uly 49, 191B, Theness *as bitten by a do+ *hile she *as playin+ *ith a child of the
petitioners in the house of the late Gicente >iranda, the father of Purita Gestil, at !. &a"os
%treet in Cebu City. %he *as rushed to the Cebu Heneral <ospital, *here she *as treated for
C"ultiple lacerated *ounds on the foreheadC
1
and ad"inistered an anti.rabies vaccine by 8r. $ntonio
Taut/o. %he *as dischar+ed after nine days but *as read"itted one *eek later due to Cvo"itin+ of saliva.C
2
The
follo*in+ day, on $u+ust 1B, 19(B, the child died. The cause of death *as certified as broncho.pneu"onia.
8
%even "onths later, the @ys sued for da"a+es, alle+in+ that the Gestils *ere liable to the" as the possessors of
C$ndoy,C the do+ that bit and eventually killed their dau+hter. The Gestils re/ected the char+e, insistin+ that the
do+ belon+ed to the deceased Gicente >iranda, that it *as a ta"e ani"al, and that in any case no one had
*itnessed it bite Theness. $fter trial, 7ud+e 7ose &. &a"olete of the Court of !irst #nstance of Cebu sustained
the defendants and dis"issed the co"plaint.
9
The respondent court arrived at a different conclusion *hen the case *as appealed.
5
#t found that the Gestils
*ere in possession of the house and the do+ and so should be responsible under $rticle 415; of the Civil Code
for the in/uries caused by the do+. #t also held that the child had died as a result of the do+ bites and not for
causes independent thereof as sub"itted by the appellees. $ccordin+ly, the Gestils *ere ordered to pay the @ys
da"a+es in the a"ount of P;0,000.00 for the death of Theness, P14,000.00 for "edical and hospitali0ation
e-penses, and P4,000.00 as attorney,s fees.
#n the proceedin+s no* before us, Purita Gestil insists that she is not the o*ner of the house or of the do+ left by
her father as his estate has not yet been partitioned and there are other heirs to the property. Pursuin+ the lo+ic
of the @ys, she clai"s, even her sister livin+ in Canada *ould be held responsible for the acts of the do+ si"ply
because she is one of >iranda,s heirs. <o*ever, that is hardly the point. 6hat "ust be deter"ined is the
possession of the do+ that ad"ittedly *as stayin+ in the house in =uestion, re+ardless of the o*nership of the
do+ or of the house.
$rticle 415; reads as follo*sA
The possessor of an ani"al or *hoever "ay "ake use of the sa"e is responsible for the
da"a+e *hich it "ay cause, althou+h it "ay escape or be lost. ,This responsibility shall cease
only in case the da"a+es should co"e fro" force majeure fro" the fault of the person *ho has
suffered da"a+e.
Thus, in 'fia"da v. ;iso"e,
3
a person hired as caretaker of a carabao +ored hi" to death and his heirs thereupon
sued the o*ner of the ani"al for da"a+es. The co"plaint *as dis"issed on the +round that it *as the
caretaker,s duty to prevent the carabao fro" causin+ in/ury to any one, includin+ hi"self.
Purita Gestil,s testi"ony that she *as not in possession of >iranda,s house is hardly credible. %he said that the
occupants of the house left by her father *ere related to hi" Cone *ay or the otherC) and "aintained the"selves
out of a co""on fund or by so"e kind of arran+e"ent on *hich, ho*ever, she did not elaborate ).
7
%he
"entioned as "any as ten of such relatives *ho had stayed in the house at one ti"e or another althou+h they
did not appear to be close kin.
5
%he at least i"plied that they did not pay any rent, presu"ably because of their
relation *ith Gicente >iranda not*ithstandin+ that she herself did not see" to kno* the" very *ell.
There is contrary evidence that the occupants of the house, *ere boarders or "ore of boarders than relatives)
*ho paid the petitioners for providin+ the" *ith "eals and acco""odations. #t also appears that Purita Gestil
had hired a "aid, 8olores 7u"ao.as, *ho did the cookin+ and cleanin+ in the said house for its occupants.
9
<er
"other, Pacita, *ho *as a nurse"aid of Purita herself, cate+orically declared that the petitioners *ere
"aintainin+ boarders in the house *here Theness *as bitten by a do+.
14
$nother *itness, >arcial 3ao, testified
that he *as indeed a boarder and that the Gestils *ere "aintainin+ the house for business purposes.
11
$nd
althou+h Purita denied payin+ the *ater bills for the house, the private respondents sub"itted docu"entary
evidence of her application for *ater connection *ith the Cebu 6ater 8istrict, *hich stron+ly su++ested that she
*as ad"inisterin+ the house in =uestion.
12
6hile it is true that she is not really the o*ner of the house, *hich *as still part of Gicente >iranda,s estate,
there is no doubt that she and her husband *ere its possessors at the ti"e of the incident in =uestion. %he *as
the only heir residin+ in Cebu City and the "ost lo+ical person to take care of the property, *hich *as only si-
kilo"eters fro" her o*n house.
18
>oreover, there is evidence sho*in+ that she and her fa"ily re+ularly *ent to
the house, once or t*ice *eekly, accordin+ to at least one *itness,
19
and used it virtually as a second house.
#nterestin+ly, her o*n dau+hter *as playin+ in the house *ith Theness *hen the little +irl *as bitten by the do+.
15
The do+ itself re"ained in the house even after the death of Gicente >iranda in 19(; and until 19(B, *hen
the incident in =uestion occurred. #t is also note*orthy that the petitioners offered to assist the @ys *ith their
hospitali0ation e-penses althou+h Purita said she kne* the" only casually.
13
The petitioners also ar+ue that even assu"in+ that they *ere the possessors of the do+ that bit Theness there
*as no clear sho*in+ that she died as a result thereof. On the contrary, the death certificate
17
declared that she
died of broncho.pneu"onia, *hich had nothin+ to do *ith the do+ bites for *hich she had been previously
hospitali0ed. The Court need not involve itself in an e-tended scientific discussion of the causal connection
bet*een the do+ bites and the certified cause of death e-cept to note that, first, Theness developed
hydrophobia, a sy"pto" of rabies, as a result of the do+ bites, and second, that asphy-ia broncho.pneu"onia,
*hich ulti"ately caused her death, *as a co"plication of rabies. That Theness beca"e afraid of *ater after she
*as bitten by the do+ is established by the follo*in+ testi"ony of 8r. Taut/oA
CO@&TA # think there *as "ention of rabies in the report in the second ad"issionK
$A ?o*, the child *as continuously vo"itin+ /ust before # referred to 8r. Co earlier in the "ornin+
and then the father, because the child *as askin+ for *ater, the father tried to +ive the child
*ater and this child *ent under the bed, she did not like to drink the *ater and there *as fri+ht in
her eyeballs. !or this reason, because # *as in dan+er there *as rabies, # called 8r. Co.
JA #n other *ords, the child had hydrophobiaK
$A Ies, sir.
15
$s for the link bet*een rabies and broncho.pneu"onia, the doctor had the follo*in+ to say under oathA
$A ?o*, as 1 said before, broncho.pneu"onia can result fro" physical, che"ical and bacterial
"eans. ... #t can be the result of infection, no*, so if you have any other disease *hich can lo*er
your resistance you can also +et pneu"onia.
--- --- ---
JA 6ould you say that a person *ho has rabies "ay die of co"plication *hich is broncho.
pneu"oniaK
$A Ies.
JA !or the record, # a" "anifestin+ that this book sho*n the *itness is kno* as C@&&9?T
8#$?O%#% O T&9$T>9?T, 1965 by <enry 2rainerd, %heldon >ar+en and >ilton Chaton. ?o*, #
invite your attention, doctor, to pa+e (B1 of this book under the title C&abies.C There is on this
pa+e, CPro+nosisC as a result of rabies and it saysA Once the sy"pto"s, have appeared death
inevitably occurs after 4.; days as a result of cardiac or respiratory failure or +enerali0ed
paralysis. $fter a positive dia+nosis of rabies or after a bite by a suspected ani"al if the ani"al
cannot be observed or if the bite is on the head, +ive rabies vaccine duck e"bryo). 8o you
believe in this state"entK
$A Ies.
JA 6ould you say therefore that persons *ho have rabies "ay die of respiratory failure *hich
leave in the for" of bronco.pneu"oniaK
$A 2roncho.pneu"onia can be a co"plication of rabies.
19
On the stren+th of the fore+oin+ testi"ony, the Court finds that the link bet*een the do+ bites and the certified
cause of death has beep satisfactorily established. 6e also reiterate our rulin+ in &ison v. &un Life 'ssurance
#ompan1 of #anada,
24
that the death certificate is not conclusive proof of the cause of death but only of the
fact of death. #ndeed, the evidence of the child,s hydrophobia is sufficient to convince us that she died because
she *as bitten by the do+ even if the death certificate stated a different cause of death. The petitioner,s
contention that they could not be e-pected to e-ercise re"ote control of the do+ is not acceptable. #n fact, $rticle
415; of the Civil Code holds the possessor liable even if the ani"al should Cescape or be lostC and so be
re"oved fro" his control. $nd it does not "atter either that, as the petitioners also contend, the do+ *as ta"e
and *as "erely provoked by the child into bitin+ her. The la* does not speak only of vicious ani"als but covers
even ta"e ones as lon+ as they cause in/ury. $s for the alle+ed provocation, the petitioners for+et that Theness
*as only three years old at the ti"e she *as attacked and can hardly be faulted for *hatever she "i+ht have
done to the ani"al.
#t is *orth observin+ that the above defenses of the petitioners are an i"plied re/ection of their ori+inal posture
that there *as no proof that it *as the do+ in their father,s house that bit Theness.
$ccordin+ to >anresa the obli+ation i"posed by $rticle 415; of the Civil Code is not based on the ne+li+ence or
on the presu"ed lack of vi+ilance of the possessor or user of the ani"al causin+ the da"a+e. #t is based on
natural e=uity and on the principle of social interest that he *ho possesses ani"als for his utility, pleasure or
service "ust ans*er for the da"a+e *hich such ani"al "ay cause.
21
6e sustain the findin+s of the Court of $ppeals and approve the "onetary a*ards e-cept only as to the "edical
and hospitali0ation e-penses, *hich are reduced to P4,046.69, as prayed for in the co"plaint. 6hile there is no
reco"pense that can brin+ back to the private respondents the child they have lost, their pain should at least be
assua+ed by the civil da"a+es to *hich they are entitled.
6<9&9!O&9, the challen+ed decision is $!!#&>98 as above "odified. The petition is 89?#98, *ith costs
a+ainst the petitioners. #t is so ordered.
!arvasa, Ganca1co, Gri<o:'*uino and Media"dea, --., concur.

68CA<5 5I2I6IA<

G. R. No. 91875 'u!) 9, 1992
FIRST MALA<AN LEASING AND FINANCE CORPORATION, petitioner,
vs.
THE HON. COURT OF APPEALS, CRISOSTOMO -. /ITUG $!( ESTATE OF /ICENTE TRINIDAD, R)%,)s)!t)( 6& >(o? GLORIA D. TRINIDAD,
respondents.

GRI@O:AQUINO. J.A
This case brin+s to the fore the i"portance of "otor vehicle re+istration in deter"inin+ *ho should be liable for the death or in/uries suffered by passen+ers or
third persons as a conse=uence of the operation of a "otor vehicle.
On 7une 46, 195', Crisosto"o 2. Gitu+ filed Civil Case ?o. 5'.4B156 in the &e+ional Trial Court of >anila. 2ranch 13###, a+ainst the defendant. !irst >alayan
3easin+ and !inance Corporation !>3!C for short), to recover da"a+es for physical in/uries, loss of personal effects, and the *reck of his car as a result of a
three.vehicle collision on 8ece"ber 1', 195;. involvin+ his car, another car, and an #su0u car+o truck re+istered in the na"e of !>3!C and driven by one
Crispin %icat.
The evidence sho*s that *hile Gitu+,s car *as at a full stop at the intersection of ?e* Iork %treet and 9pifanio delos %antos $venue 98%$) in Cubao, Jue0on
City, north*ard.bound, the on.co"in+ #su0u car+o truck bu"ped, a !ord Hranada car behind hi" *ith such force that the !ord car *as thro*n on top of Gitu+,s
car crushin+ its roof. The car+o truck thereafter struck Gitu+,s car in the rear causin+ the +as tank to e-plode and settin+ the car abla0e.
%tunned by the i"pact. Gitu+ *as fortunately e-tricated fro" his car by solicitous bystanders before the vehicle e-ploded. <o*ever, t*o of his passen+ers *ere
burned to death. Gitu+,s car, valued at P(0,000, *as a total loss.
6hen he re+ained consciousness in the hospital, Gitu+ discovered that he had lost various personal articles valued at P'5,9B0, na"ely a necklace *ith a
dia"ond pendant, a HP *atch, a pair of Christian 8ior eye+lasses. a +old Cross pen and a pair of 2ally shoes. Gitu+ also suffered in/uries producin+ recurrin+
pains in his neck and back. @pon his physician,s advice, he received further "edical treat"ent in the @nited %tates *hich cost hi" @%P4,;(;.6' for his first trip,
and @%PB,B96.6' for the second.
$t the ti"e of the accident on 8ece"ber 1', 195;, the #su0u car+o truck *as re+istered in the na"e of the !irst >alayan 3easin+ and !inance Corporation
!>3!C).
<o*ever, !>3!C denied any liability, alle+in+ that it *as not the o*ner of the truck. neither the e"ployer of the driver Crispin %icat, because it had sold the truck
to Gicente Trinidad on %epte"ber 4'. 1950, after the latter had paid all his "onthly a"orti0ations under the financin+ lease a+ree"ent bet*een !>3!C and
Trinidad.
On !>3!C,s "otion, the lo*er court +ranted !>3!C,s leave to file a third.party co"plaint a+ainst Trinidad and ad"itted the third.party co"plaint filed there*ith.
$ns*erin+ the third.party co"plaint the 9state of Gicente Trinidad ad"itted that the truck *as operated by the deceased durin+ his lifeti"e. ?evertheless it
raised the defense that the estate of Gicente Trinidad *as no lon+er e-istin+ because the sa"e had lon+ been settled and partitioned e-tra /udicially by his heirs.
On $u+ust 4B, 1956, the trial court rendered a decision sentencin+ !>3!C to pay Gitu+ the su" of P1;;,9B0 *ith interest at the le+al rate fro" the filin+ of the
co"plaint until fully paid, plus the su" of P10,000 as attorneys fees and costs.
!>3!C appealed in due ti"e to the Court of $ppeals *hich rendered a decision on ?ove"ber 4(, 1959 "odifyin+ the appealed /ud+"ent by orderin+ the third.
party defendant.appellee 9state of Gicente Trinidad) to inde"nify the appellant, !>3!C, for *hatever a"ount the latter "ay pay Gitu+ under the /ud+"ent. #n all
other respects, the trial court,s decision *as affir"ed.
!>3!C has filed this petition for revie* on certiorari prayin+ that the decision of the appellate court be reversed and set aside.
On !ebruary 1', 1990, the Court dis"issed the petition for insufficiency in for" and substance, havin+ failed to co"ply *ith the &ules of Court and Circular 1.55
re=uirin+ the sub"ission of 1) proof of service of the petition on the adverse party, and 4) a certified true copy of the decision of the Court of $ppeals. >oreover,
the petition *as filed late on !ebruary 1, 1990, the due date bein+ 7anuary 4(, 1990.
The petitioner filed a "otion for reconsideration. On $pril 16, 1990. *e +ranted the sa"e and reinstated the petition. 6ithout +ivin+ it due course, *e re=uired the
respondents to co""ent.
$fter deliberatin+ on the petition, the co""ents of the private respondents and the petitioner,s reply thereto, *e find the petition to be bereft of "erit, hence,
resolved to deny it.
#n the first place, the factual findin+ of the trial court and the Court of $ppeals that the #su0u vehicle *hich fi+ured in the "ishap *as still re+istered in the na"e of
!>3!C at the ti"e of the accident is not revie*able by this Court in a petition for certiorari under &ule 'B of &ules of Court.
This Court has consistently ruled that re+ardless of *ho the actua" o*ner of a "otor vehicle "i+ht be, the re+istered o*ner is the operator of the sa"e *ith
respect to the public and third persons, and as such, directly and pri"arily responsible for the conse=uences of its operation. #n conte"plation of la*, the
o*nerNoperator of record is the e"ployer of the driver, the actual operator and e"ployer bein+ considered "erely as his a+ent >IC.$+ro.#ndustrial Corporation
vs. Gda. de Caldo, 1;4 %C&$ 10. citin$ Gar+as vs. 3an+cay. 6 %C&$ 1('F Ta"ayo vs. $=uino. 10B Phil. 9'9).
6e believe that it is i""aterial *hether or not the driver *as actually e"ployed by the operator of record. #t is even not necessary to
prove *ho the actual o*ner of the vehicle and the e"ployer of the driver is. Hrantin+ that, in this case, the father of the driver is the actual
o*ner and that he is the actual e"ployer, follo*in+ the *ell.settled principle that the operator of record continues to be the operator of the
vehicle in conte"plation of la*, as re+ards the public and third persons, and as such is responsible for the conse=uences incident to its
operation *e "ust hold and consider such o*ner.operator of record as the e"ployer, in conte"plation of la*, of the driver. $nd, to +ive
effect to this policy of la* as enunciated in the above cited decisions of this Court, *e "ust no* e-tend the sa"e and consider the actual
operator and e"ployer as the a+ent of the operator of record.C Gar+as vs. 3an+cay, 6 %C&$ 1(5F citin$ >ontoya vs. #+nacio, H.&. ?o. 3.
B565, 8ec. 49, 19B;F Ti"bol vs. Osias, H.&. ?o. 3.(B'(, $pril ;0, 19BBF Gda. de >edina vs. Cresencia, H.&. ?o. 3.519', 7uly 11, 19B6F
?ecesito vs. Paras, H.&. ?o. 31060B, 7une ;0, 19BB.)
. . . 6ere the re+istered o*ner allo*ed to evade responsibility by provin+ *ho the supposed transferee or o*ner is, it *ould be easy for
hi" by collusion *ith others or other*ise, to escape said responsibility and transfer the sa"e to an indefinite person, or to one *ho
possesses no property *ith *hich to respond financially for the da"a+e or in/ury done 9re0o vs. 7epte, 104 Phil 10;.)
. . . The re+istered o*ner or operator of record is the one liable for da"a+es caused by a vehicle re+ardless of any alle+ed sale or lease
"ade thereon.C >IC.$+ro. #ndustrial Corp. vs. Gda. de Caldo, 1;4 %C&$ 11.)
#n order for a transfer of o*nership of a "otor vehicle to be valid a+ainst third persons. it "ust be recorded in the 3and Transportation Office. !or, althou+h valid
bet*een the parties, the sale cannot affect third persons *ho rely on the public re+istration of the "otor vehicle as conclusive evidence of o*nership. #n la*,
!>3!C *as the o*ner and operator of the #0usu car+o truck, hence, fully liable to third parties in/ured by its operation due to the fault or ne+li+ence of the driver
thereof.
6<9&9!O&9, the petition for revie* is 89?#98 for lack of "erit. Costs a+ainst the petitioner.
%O O&89&98.
R!"#$%&c Ac' No. ()94 A"r&% 1), 1992
THE *ONS+MER A*T OF THE PHILIPPINES
Be it enacted by the Senate and ,ouse of -epresentatives of the hilippines in Con"ress asse'bled#.
TITLE I. , GENERAL PROVISIONS
Ar'&c%! 1. Short Title. G This ,ct shall be 3no#n as the &Consumer ,ct of the Philippines.&
Ar'&c%! 2. Declaration of Basic Policy. G It is the policy of the 6tate to protect the interests of the
consumer, promote his general #elfare and to establish standards of conduct for business and industry.
To#ards this end, the 6tate shall implement measures to achieve the follo#ing objectives.
a% protection against ha?ards to health and safety1
b% protection against deceptive, unfair and unconscionable sales acts and practices1
c% provision of information and education to facilitate sound choice and the proper e*ercise of
rights by the consumer1
d% provision of ade7uate rights and means of redress1 and
e% involvement of consumer representatives in the formulation of social and economic policies.
Ar'&c%! ). Construction. G The best interest of the consumer shall be considered in the interpretation
and implementation of the provisions of this ,ct, including its implementing rules and regulations.
Ar'&c%! 4. Definition of Terms. G For purposes of this ,ct, the term.
a% &Advertise'ent& means the prepared and through any form of mass medium, subse7uently
applied, disseminated or circulated advertising matter.
b% &Advertisin"& means the business of conceptuali?ing, presenting or ma3ing available to the
public, through any form of mass media, fact, data or information about the attributes, features,
7uality or availability of consumer products, services or credit.
c% &Advertisin" a"ency or A"ent& means a service organi?ation or enterprise creating,
conducting, producing, implementing or giving counsel on promotional campaigns or programs
through any medium for and in behalf of any advertiser.
d% &Advertiser& means the client of the advertising agency or the sponsor of the advertisement
on #hose account the advertising is prepared, conceptuali?ed, presented or disseminated.
e% &A"ricultural purpose& means a purpose related to the production, harvest, processing,
manufacture, distribution, storage, transportation, mar3eting, e*hibition or disposition of
agricultural, fishery or marine products.
f% &A'ount financed& in a consumer credit sale constitutes the cash price plus non-finance
charges less the amount of any do#n payment #hether made in cash or in property traded in, or
in a consumer loan the amount paid to, receivable by or paid or payable to the buyer or to
another person in his behalf.
g% &Banned ha.ardous substance& means $% any toy or other articles intended for use by
children, #hich are ha?ardous per se, or #hich bear or contain substances harmful to human
beings1 or $)% any ha?ardous substance intended or pac3aged in a form suitable for use in the
household, #hich the implementing agency by regulation, classifies as &banned ha?ardous
substance& not#ithstanding the e*istence of cautionary labels, to safeguard public health and
safety. Provided, That the implementing agency may, by regulation, e*empt from this ,ct,
articles #hich by reason of their functional purpose re7uire the inclusion of the ha?ardous
substance involved and #hich bear appropriate labels giving ade7uate directions and #arnings
for their safe use.
Procedures for the issuance, amendment or repeal of regulations pursuant to clause $)% or
paragraph $g% of this ,rticle shall be governed by the rules and regulations promulgated by the
5epartment of 0ealth1 Provided, That if the 5epartment of 0ealth finds that the distribution for
household use of the ha?ardous substance involved presents an imminent ha?ards to the public
health, it may publish in a ne#spaper of general circulation a notice of such finding and such
substance shall be deemed to be a &banned ha?ardous substance& pending the issuance of
regulation formally banning such substance.
h% &Batch& means a 7uantity of any drug or device produced during a given cycle of
manufacture.
i% &Business na'e, fir' na'e, or style& means any name or designation other than the true name
of a person, partnership, corporation or association #hich is used or signed in connection #ith
hisHits business or in
% any #ritten or printed receipt, including receipt for ta* or business1
)% any #ritten or printed contract not verified by a notary public1
=% any #ritten or printed evidence of any agreement or business transaction1 and
!% any sign or billboard 3ept conspicuously e*hibited in plain vie# in or at the place of
the business, announcing a firm name or business name or style.
j% &Cash price or delivered price&, in case of trade transaction, means the amount of money
#hich #ould constitute full payment upon delivery of the property $e*cept money% or service
purchased at the creditor/s place of business. In the case of financial transactions, cash price
represents the amount received by the debtor upon consummation of the credit transaction, net
of finance charges collected at the time the credit is e*tended, if any.
3% &Chain distribution plans& or &pyramid sales schemes& means sales devices #hereby a
person, upon condition that he ma3es an investment, is granted by the manufacturer of his
representative a right to recruit for profit one or more additional persons #ho #ill also be
granted such right to recruit upon condition of ma3ing similar investments. Provided, That the
profits of the person employing such a plan are derived primarily from the recruitment of other
persons into the plan rather than from the sale of consumer products, services and credit.
Provided, further, That the limitation on the number of participants does not change the nature
of the plan.
l% &Closin" out sale& means a consumer sale #herein the seller uses the announcement to create
the impression that he is #illing to give large discounts or merchandise in order to reduce,
dispose or close out his inventory and business.
m% &Co''erce& means the sale, lease, e*change, traffic or distribution of goods, commodities,
productions, services or property, tangible or intangible.
n% &Consu'er& means a natural person #ho is a purchaser, lessee, recipient or prospective
purchaser, lessor or recipient of consumer products, services or credit.
o% &Consu'er credit& means any credit e*tended by a creditor to a consumer for the sale or
lease of any consumer product or service under #hich part or all of the price or payment
therefor is payable at some future time, #hether in full or in installments.
p% &Consu'er loan& means a loan made by the lender to a person #hich is payable in
installments for #hich a finance charge is or may be imposed. This term includes credit
transactions pursuant to an open-end-credit plan other than a seller credit card.
7% &Consu'er products and services& means goods, services and credits, debts or obligations
#hich are primarily for personal, family, household or agricultural purposes, #hich shall
include but not limited to food, drugs, cosmetics, and devices.
r% &Consu'er product safety rule& means a consumer product safety standard described in
,rticle "; or a rule under this Chapter declaring a consumer product banned ha?ardous product.
s% &Consu'er transaction& means $% $i% a sale, lease, assignment, a#ard by chance, or other
disposition of consumer products, including chattels that are intended to be affi*ed to land, or of
services, or of any right, title, or interest therein, e*cept securities as defined in the 6ecurities
,ct and contracts of insurance under the Insurance Code, or $ii% a grant of provision of credit to
a consumer for purposes that are primarily personal, family, household or agricultural, or $)% a
solicitation or promotion by a supplier #ith respect to a transaction referred to in clause $%.
t% &Corrosive& means any substance #hich on contact #ith living tissue #ill cause destruction of
tissue by chemical action.
u% &Cos'etics& means $% articles intended to be rubbed, poured, sprin3led or sprayed on,
introduced into or other#ise applied to the human body or any part thereof for cleansing,
beautifying, promoting attractiveness, or altering the appearance, and $)% article intended for use
as a component of any such article e*cept that such term shall not include soap.
v% &Counterfeit product& means any consumer product #hich, or the container or labeling of
#hich, #ithout authori?ation, bears the trademar3, trade name, or other identifying mar3,
imprint, or device, or any li3eness thereof, of a consumer product manufacturer, processor,
pac3er, distributor, other than the person or persons #ho in fact manufactured, processed,
pac3ed or distributed such product and #hich thereby falsely purports or is represented to be the
product of, or to have been pac3ed or distributed by such consumer product manufacturer,
processor, pac3er, or distributor.
#% &Credit card& means any card, plate, coupon boo3 or other credit device e*isting for the
purpose of obtaining money, property, labor or services on credit.
*% &Credit Sale& means a sale products, services or an interest in land to a person on credit
#here a debt is payable in installments or a finance charge is imposed and includes any
agreement in the form of a bailment of products or lease of products or real property if the
bailee or lessee pays or agrees to pay compensation for use a sum substantially e7uivalent to or
in e*cess of the aggregate value of the products or real property involved and it is agreed that
the bailee or lessee #ill become, or for no other or a nominal consideration has the option to
become, the o#ner of the products or real property upon full compliance #ith the terms of the
agreement.
y% &Credit transaction& means a transaction bet#een a natural person and a creditor in #hich
real or personal property, services or money ac7uired on credit and the person/s obligation is
payable in installment.
?% &Creditor& means any person engaged in the business of e*tending credit and shall include
any person #ho as a regular business practice ma3es loans or sells or rents property or services
on a time, credit or installment basis, either as principal or as agent #ho re7uires as an incident
to the e*tension of credit, the payment of a finance charge.
aa% &%efault or delin/uency char"e& means, #ith respect to a consumer credit transaction, the
penalty charge payable by the consumer-debtor for failure to pay an amount or installment in
full on the date the same becomes due and demandable, or on or before the period specified for
the purpose in the consumer credit sale documents.
ab% &%evice& means an instrument, apparatus, implement, machine, contrivance, implant, in
vitro reagent, or other similar or related article, including any component, part or accessory
#hich is $% recogni?ed in the official :nited 6tates Pharmacopoeia-<ational Formulary $:6P-
<F% or any supplement to them, $)% intended for use in the diagnosis of disease or other
condition or in the cure, mitigation, treatment or prevention of disease, in man or other animals1
or $=% intended to affect the structure or any function of the body of man or other animals, and
#hich does not achieve any of its principal intended purposes through chemical action #ithin or
on the body of man or other animals and #hich is not dependent upon being metaboli?ed for the
achievement of any of its principal intended purposes.
ac% &%istributor& means any person to #hom a consumer product is delivered or sold for
purposes of distribution in commerce, e*cept that such term does not include a manufacturer or
retailer of such product.
ad% &%ru"s& mean $% articles recogni?ed in the current official :nited 6tates Pharmacopoeia-
<ational Formulary, official 0omeopathic Pharmacopoeia of the :nited 6tates, official <ational
5rug Formulary, or any supplement to any of them1 and $)% articles intended for use in the
diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals1 and $=%
articles $other than food% intended to affect the structure or any function of the body of man or
animals1 and $!% articles intended for use as a component of any articles specified in clauses $%,
$)%, or $=% but do not include devices or their components, parts or accessories.
The term &drug& #hen used in this ,ct shall include herbal andHor traditional drug. They are
defined as articles from indigenous plant or animal origin used in fol3 medicine #hich are. $%
recogni?ed in the Philippine <ational Formulary1 $)% intended for use in the treatment or cure,
mitigation, of disease symptoms, injury or bodily defect for use in man1 $=% other than food,
intended to affect the structure of any function of the body of man1 $!% put into finishes, ready to
use form by means of formulation, dosage or dosage directions1 and $'% intended for use as a
component of any of the articles specified in clauses $%, $)%, $=% and $!% of this paragraph.
ae% &0)piry or e)piration date& means the date stated on the label of food, drug, cosmetic,
device or ha?ardous substance after #hich they are not e*pected to retain their claimed safety,
efficacy and 7uality or potency and after #hich it is no longer permissible to sell them.
af% &0)tre'ely fla''able& means any substance #hich has a flash point at or belo# negative si*
and si*-tenths degrees centigrade as determined by the Tagliabue Apen Cub Tester1 and term
&combustible& shall apply to any substance #hich has a flash point of above t#enty-si* and si*-
tenths degrees to and including si*ty-five and five-tenths degrees centigrade as determined by
the Tagliabue Apen Cub Tester. Provided, That the flammability or combustibility of solids and
of the contents of self-pressuri?ed containers shall be determined through methods found by the
implementing agency to be generally applicable to such materials or containers, respectively,
and established by regulations issued by it.
ag% &1ood& means any substance, #hether processed, semi-processed or ra#, intended for
human consumption and includes che#ing gum, drin3s and beverages and any substance #hich
has been used as an ingredient or a component in the manufacture, preparation or treatment of
food.
ah% &1ood additive& means any substance, the intended use of #hich results or may reasonably
be e*pected to result, directly or indirectly, in its becoming a component or other#ise affecting
the characteristics of any food $including any substance intended for use in producing,
manufacturing, pac3ing, processing, preparing, treating, pac3aging, transporting, or holding
food1 and including any source of radiation intended for any such use%, if such substance is not
generally recogni?ed, among e*perts 7ualified as having been ade7uately sho#n through
scientific procedures to be safe under the conditions of the intended use.
ai% &Generic na'e& is the identification of drugs and medicines by their scientifically and
internationally recogni?ed active ingredients or by their official generic name as determined by
the 4ureau of Food and 5rugs of the 5epartment of 0ealth.
aj% &Guarantee& means an e*pressed or implied assurance of the 7uality of the consumer
products and services offered for sale or length of satisfactory use to be e*pected from a product
or other similar specified assurances.
a3% &,a.ardous substance& means.
$% $i% ,ny substance or mi*ture of substances #hich is to*ic, corrosive, irritant, a strong
sensiti?er, flammable or combustible, or generates pressure through decomposition, heat
or other means, if such substance or mi*ture or substances any cause substantial injury
or substantial illness during or as a pro*imate result of any customary or reasonably
foreseeable ingestion by children.
$ii% ,ny substance #hich the department finds to be under the categories
enumerated in clause $% $i% of this paragraph1
$iii% ,ny radioactive substance, if, #ith respect to such substance as used in a
particular class of article or as pac3aged, the 5epartment, upon approval of the
5epartment determines by regulation that the substance is sufficiently ha?ardous
to re7uire labeling in accordance #ith this section in order to protect the public
health1
$iv% ,ny toy or other articles intended for use by children #hich the director may,
by regulation, determine the presence of an electrical, mechanical or thermal
ha?ard.
$)% This term shall not apply to food, drugs, cosmetics, and devices nor to substances
intended for use as fuels #hen stored in containers and used in the heating, coo3ing or
refrigeration system of a house, but such term shall apply to any article #hich is not in
itself a pesticide but #hich is a ha?ardous substance, as construed in clause $a% of
paragraph $%, by reason of bearing or containing such harmful substances described
therein.
al% &,i"hly +o)ic& means any substance #hich has any of the follo#ing effects. $% produces
death #ithin fourteen days to one-half or more than one-half of a group of ten or more
laboratory #hite rats each #eighing bet#een T#o hundred and three hundred grams, at a single
dose of fifty milligrams or less per 3ilogram of body #eight, #hen orally administered1 or $)%
produces death #ithin fourteen days to one-half or more of a group of ten or more laboratory
#hite rats each #eighing bet#een t#o hundred and three hundred grams, #hen inhaled
continuously for a period of one hour or less at an atmospheric concentration of t#o hundred
parts per million by volume or less of gas or vapor or t#o milligrams per liter by volume or less
of mist or dust, provided such concentration is li3ely to be encountered by man #hen the
substance is used in any reasonably foreseeable manner, or $=% produces death #ithin fourteen
days to one-half or more of a group of ten or more rabbits, #hen tested in a dosage of t#o
hundred milligrams or less per 3ilogram of body #eight, or #hen administered through
continuous contact #ith the bare s3in for t#enty-four hours or less.
am% &,o'e solicitation sale& means consumer sales or leases #hich are personally solicited by
any person or organi?ation by telephone, person-to-person contact or by #ritten or printed
communication other than general advertising or consummated at the buyer/s residence or a
place of business, at the seller/s transient 7uarters, or a#ay from a seller/s regular place of
business.
an% &2''ediate container& means the container or pac3age #hich is immediately after or near
the substance but does not include pac3age liners.
ao% &2''inently ha.ardous product& means a consumer product #hich presents an unreasonable
ris3 of death, serious illness or severe personal injury.
ap% &2rritant& means any substance not corrosive #ithin the meaning of paragraph $t% of this
,rticle #hich, on immediate, prolonged or repeated contact #ith normal living tissue #ill
induce a local inflammatory reaction.
a7% &!abel, labelin"& means the display of #ritten, printed or graphic matter on any consumer
product its immediate container, tag, literature or other suitable material affi*ed thereto for the
purpose of giving information as to identify, components, ingredients, attributes, directions for
use, specifications and such other information as may be re7uired by la# or regulations.
ar% &$anufacture& means and any and all operations involved in the production, including
preparation, propagation, processing, formulating, filing, pac3ing, repac3ing, altering,
ornamenting, finishing or other#ise changing the container, #rapper or labeling of a consumer
product in the furtherance of the distribution of the same from the original place of manufacture
to the person #ho ma3es the final delivery or sale to the ultimate consumer.
as% &$anufacturer& means any person #ho manufactures, assembles or processes consumer
products, e*cept that if the goods are manufactured, assembled or processed for another person
#ho attaches his o#n brand name to the consumer products, the latter shall be deemed the
manufacturer. In case of imported products, the manufacturer/s representatives or, in his
absence, the importer, shall be deemed the manufacturer.
at% &$ass 'edia& refers to any means or methods used to convey advertising messages to the
public such as television, radio, maga?ines, cinema, billboards, posters, streamers, hand bills,
leaflets, mails and the li3e.
au% &$aterially defective product& means a product #hich, because of the pattern of the defect,
the number of defective products distributed in commerce and the severity of the ris3 or
other#ise, creates a substantial ris3 of injury to the public.
av% &$islabeled ha.ardous substance& means any ha?ardous substance intended, or pac3aged in
a form suitable, for use in households, especially by children, the pac3aging or labeling of
#hich is in violation of the special pac3aging regulation issued by the 5epartment of 0ealth
under ,ETIC@8 > or if such substance fails to bear a label #hich $% states conspicuously $i%
the name and the e*act address of the manufacturer, pac3er, distributor, or seller1 $ii% the
common or usual name of the ha?ardous substance or of each component #hich contributes
substantially to the harmfulness of the substance, unless the 5epartment by regulation approved
by the 5epartment permits or re7uires the use of the recogni?ed generic name1 $iii% the signal
#ord &danger& on substances #hich are e*tremely flammable, corrosive, or highly to*ic1 $iv%
the signal #ord &#arning& or &caution& on all other ha?ardous substances1 $v% a fran3 statement
of the principal ha?ard or ha?ards involved, as &flammable&, &vapor harmful&, &causes burns&,
&absorbed through s3in&, or similar #ording describing the action to be follo#ed or avoided,
e*cept #hen modified by regulation by the 5epartment pursuant to 6ection !+1 $vi% instructions,
#hen necessary or appropriate, for first aid treatment1 $vii% the #ord &poison& for any ha?ardous
substance #hich is defined as highly to*ic1 $viii% instructions for handling and storage of
pac3ages #hich re7uire special care in handling or storage1 and $i*% the statement &3eep out of
the reach of children&, or its practical e7uivalent, if the article is intended for use by children
and is not a banned ha?ardous substance, #ith ade7uate directions for the protection of children
from the ha?ard involved. The aforementioned signal #ords, affirmative statements, description
of precautionary measures, necessary instructions or other #ords or statements may be in the
8nglish language or its e7uivalent in Filipino1 and
$)% on #hich any statement re7uired under clause $% of this paragraph are located prominently
and in contrast by typography are located prominently and in contrast by typography, layout,
#ith other printed matters on the label.
a#% &3e( %ru"s& mean $% any drug the composition of #hich is such that said drug is not
generally recogni?ed among e*perts 7ualified by scientific training and e*perience to evaluate
the safety, efficacy and 7uality of drugs as safe, efficacious and of good 7uality for use under
the conditions prescribed, recommended, or suggested in the labeling thereof1 or $)% any drug
the composition of #hich is such that said drug, as a result of its previous investigations to
determine its safety, efficacy and good 7uality for use under certain conditions, has become so
recogni?ed but #hich has not, other#ise than in such investigations, been used to a material
e*tent or for a material time under ne# conditions.
&<e# 5rugs& shall include drugs $a% containing a ne#ly discovered active ingredient1 $b%
containing a ne# fi*ed combination of drugs, either by molecular or physical combination1 $c%
intended for ne# indications1 $d% an additional ne# mode of administration1 or $e% in an
additional dosage or strength of the dosage form, #hich meets the conditions as defined under
the ne# drug.
The definition of &ne# drugs& covers to the e*tent applicable, &ne# devices&.
a*% &3e( roduct& means a consumer product #hich incorporates a design, material or form of
energy e*change #hich has not previously been used substantially in consumer products and as
to #hich there e*ists a lac3 of ade7uate information to determine the 7uality and safety of such
product if used by the consumers.
ay% &Open-end-credit plan& means a consumer credit e*tended on an account pursuant to a plan
under #hich.
% the creditor may permit the person to ma3e purchases or obtain loans, from time to
time, directly from the creditor or indirectly by use of credit card, chec3 or other device1
)% the person has the privilege of paying the balance1 or
=% a finance charge may be computed by the creditor from time to time on an
outstanding unpaid balance.
a?% &ac&a"e& or &pac&a"in"& means any container or #rapping in #hich any consumer product
is enclosed for use in the delivery or display of that consumer product to retail purchasers, but
does not include.
% shipping containers or #rappings used solely for the transportation of any consumer
product in bul3 or in big 7uantities by manufacturers, pac3ers, or processors to
#holesale retail distributors thereof1
)% shipping containers or outer #rappings used by retailers to ship or deliver any product
to retail costumers if such containers and #rappings bear no printed matter pertaining
any particular product1
=% The #rappers or containers of consumer products sold in small 7uantities by small
retail stores to the consumer #hich by tradition are #rapped #ith ordinary paper.
ba% &erson& means any individual, partnership, corporation or association, trust, government or
governmental subdivision or any other legal entity.
bb% &oisonous substance& means any substance capable of destroying life or seriously
endangering health #hen applied e*ternally to the body or introduced internally in moderate
doses.
bc% &rice co'parison& means the direct comparison in any advertisement of a seller/s current
price for consumer products or services #ith any other price or statement of value for such
property or services e*pressed in pesos, centavos, fractions or percentages.
bd% &rice ta"& means any device, #ritten, printed, affi*ed or attached to a consumer product or
displayed in a consumer repair or service establishment for the purpose of indicating the retail
price per unit or service.
be% &rincipal display panel& means that part of the label that is most li3ely to be displayed,
presented, sho#n or e*amined under normal and customary conditions of display for retail or
sale.
bf% &rivate labeler& means an o#ner of a brand or trademar3 on the label of consumer product
other than a manufacturer of the product.
, consumer product bears a private label if $% the product or its container is labeled #ith a
brand or trademar3 of a person other than its manufacturer1 or $)% the brand or trademar3 of the
manufacturer of such product does not appear on such label.
bg% &-adioactive substance& means any substance #hich emits ioni?ing radiation.
bh% &-eferral sellin"& means the sales device employed by the sellers #herein the buyer is
induced to ac7uire goods or services by representing that after the ac7uisition of the goods or
services, he #ill receive a rebate, commission or other benefit in return for the submission of
names of potential customers or other#ise helping the seller enter into other sales, if the receipt
of such benefit is contingent on an event occurring after the sale is made.
bi% &-epair and service fir'& means any business establishment, engaged directly or indirectly,
in the repair, service or maintenance of any consumer product.
b3% &-etailer& means a person engaged in the business of selling consumer products directly to
consumers.
bl% &Sale or distribution& shall mean an act made by a manufacturer or seller, or their respective
representative or agent, to ma3e available consumer products, services or credit to the end
consumers under a consumer sale transaction. It shall not include sampling or any distribution
not for sale.
bm% &Sales ro'otion& means techni7ues intended for broad consumer participation #hich
contain promises of gain such as pri?es, in cash or in 3ind, as re#ard for the purchase of a
product, security, service or #inning in contest, game, tournament and other similar
competitions #hich involve determination of #innerHs and #hich utili?e mass media or other
#idespread media of information. It also means techni7ues purely intended to increase the sales,
patronage andHor good#ill of a product.
bn% &Seller& means a person engaged in the business of selling consumer products directly to
consumers. It shall include a supplier or distributor if $% the seller is a subsidiary or affiliate of
the supplier or distributor1 $)% the seller interchanges personnel or maintains common or
overlapping officers or directors #ith the supplier or distributor1 or $=% the supplier or distributor
provides or e*ercises supervision, direction or control over the selling practices of the seller.
bo% &Service& shall mean, #ith respect to repair and service firms, services supplied in
connection #ith a contact for construction, maintenance, repair, processing, treatment or
cleaning of goods or of fi*tures on land, or distribution of goods, or transportation of goods.
bp% &Services& means services that are the subject of a consumer transaction, either together
#ith, or separate from any 3ind of personal property, #hether tangible or intangible.
b7% &Special pac&a"in"& means pac3aging that is designed or constructed to be significantly
difficult for children five years of age to open or to obtain a to*ic or harmful amount of the
substance contained therein #ithin a reasonable time and not difficult for normal adults to use
properly but does not mean pac3aging #hich all such children cannot open or obtain a to*ic or
harmful amount #ithin a reasonable time.
br% &Standard& means a set of conditions to be fulfilled to ensure the 7uality and safety of a
product1
bs% &Stron" sensiti.er& means any substance #hich #ill cause on normal living tissue, allergy or
photodynamic 7uality of hypersensitivity #hich becomes evident on reapplication of the same
substance, to be designated as such by the implementing agency. 4efore designating any
substance as a strong sensiti?er, the implementing agency, upon consideration of the fre7uency
of occurrence and severity of the reaction, shall find that the substance has a significant capacity
to cause hypersensitivity.
bt% &Substandard product& means a product #hich fails to comply #ith an applicable consumer
product safety rule #hich creates a substantial ris3 of injury to the public.
bu% &Supplier& means a person, other than a consumer, #ho in the course of his business,
solicits, offers, advertises, or promotes the disposition or supply of a consumer product or #ho
other than the consumer, engages in, enforces, or other#ise participates in a consumer
transaction, #hether or not any privity of contract actually e*ists bet#een that person and the
consumer, and includes the successor to, or assignee of, any right or obligation on of the
supplier.
bv% &+echnical personnel of repair and service enterprise& shall mean a machine or technician
or any person #ho #or3s or renders diagnosis or advice in connection #ith repair, service and
maintenance of the consumer products in a repair and service firm.
b#% &+o)ic substance& means any substance other than a radioactive substance #hich can cause
injury, illness or death to man through ingestion, inhalation or absorption through any body
surface.
b*% &+rade na'e& or &trade'ar&& means a #ord or #ords, name, title, symbol, emblem, sign or
device or any combination thereof used as an advertisement, sign, label, poster or other#ise for
the purpose of enabling the public to distinguish the business of the person #ho o#ns and uses
said trade name or trademar3.
TITLE II
*HAPTER I
*ONS+MER PROD+*T -+ALIT. AND SAFET.
Ar'&c%! 5. Declaration of Policy. G It shall be the duty of the 6tate.
a% to develop and provide safety and 7uality standards for consumer products, including
performance or use-oriented standards, codes of practice and methods of tests1
b% to assist the consumer in evaluating the 7uality, including safety, performance and
comparative utility of consumer products1
c% to protect the public against unreasonable ris3s of injury associated #ith consumer products1
d% to underta3e research on 7uality improvement of products and investigation into causes and
prevention of product related deaths, illness and injuries1
e% to assure the public of the consistency of standardi?ed products.
Ar'&c%! 6. Implementing Agencies. G The provisions of this ,rticle and its implementing rules and
regulations shall be enforced by.
a% the 5epartment of 0ealth #ith respect to food, drugs, cosmetics, devices and substances1
b% the 5epartment of ,griculture #ith respect to products related to agriculture, and1
c% the 5epartment of Trade and Industry #ith respect to other consumer products not specified
above.
Ar'&c%! (. Promulgation and Adoption of Consumer Product Standards. G The concerned department
shall establish consumer product 7uality and safety standards #hich shall consist of one or more of the
follo#ing.
a% re7uirements to performance, composition, contents, design, construction, finish, pac3aging
of a consumer product1
b% re7uirements as to 3ind, class, grade, dimensions, #eights, material1
c% re7uirements as to the methods of sampling, tests and codes used to chec3 the 7uality of the
products1
d% re7uirements as to precautions in storage, transporting and pac3aging1
e% re7uirements that a consumer product be mar3ed #ith or accompanied by clear and ade7uate
safety #arnings or instructions, or re7uirements respecting the form of #arnings or instructions.
For this purpose, the concerned department shall adopt e*isting government domestic product 7uality
and safety standards. Provided, That in the absence of such standards, the concerned department shall
form speciali?ed technical committees composed of e7ual number of representatives from each of the
-overnment, business and consumer sectors to formulate, develop and purpose consumer product
7uality and safety standards. The said technical committees shall consult #ith the private sector, #hich
may, motu proprio, develop its o#n 7uality and safety standards that shall be subject or agencies after
public hearings have been conducted for that purpose1 and shall li3e#ise consider e*isting international
standards recogni?ed by the Philippine -overnment.
Ar'&c%! /. Publication of Consumer Product Standards. G The concerned departments shall, upon
promulgation of the above standards, publish or cause the publication of the same in t#o $)%
ne#spapers of general circulation at least once a #ee3 for a period of not less than one $% month. It
may li3e#ise conduct an information campaign through other means deemed effective to ensure the
proper guidance of consumers, businesses, industries and other sectors concerned.
Ar'&c%! 9. Effectiity of !ules. G a% 8ach consumer product standard or safety rule shall specify the
date such rule is to ta3e effect, #hich shall not e*ceed ninety $>(% days from the date promulgated
unless the concerned department funds, for good cause sho#n, that a later effective date is in the public
interest and publishes its reasons for such finding. ,fter #hich, it shall no longer be legal to, or cause
to, sell or distribute the consumer product not complying #ith the standards or rules.
b% The department may, by regulation, prohibit a manufacturer from stoc3piling consumer
products so as to prevent such manufacturer from circumventing the purposes of this paragraph.
The term &stoc3piling& means manufacturing or importing a product bet#een the date of
promulgation of its consumer product safety rule and its effective date, at a rate #hich is
significantly greater than the rate at #hich such product #as produced or imported during a base
period as prescribed in the regulation under this paragraph, ending before the date of
promulgation of consumer product safety rule.
Ar'&c%! 10. In"urious# Dangerous and $nsafe Products. G 9henever the departments find, by their
o#n initiative or by petition of a consumer, that a consumer product is found to be injurious, unsafe or
dangerous, it shall, after due notice and hearing, ma3e the appropriate order for its recall, prohibition or
sei?ure from public sale or distribution. Provided, That, in the sound discretion of the department it
may declare a consumer product to be imminently injurious, unsafe or dangerous, and order is
immediate recall, ban or sei?ure from public sale or distribution, in #hich case, the seller, distributor,
manufacturer or producer thereof shall be afforded a hearing #ithin forty-eight $!;% hours from such
order.
The ban on the sale and distribution of a consumer product adjudged injurious, unsafe or dangerous, or
imminently injurious, unsafe or dangerous under the preceding paragraph shall stay in force until such
time that its safety can be assured or measures to ensure its safety have been established.
Ar'&c%! 11. Amendment and !eocation of Declaration of the In"urious# $nsafe or Dangerous
Character of a Consumer Product. G ,ny interested person may petition the appropriate department to
commence a proceeding for the issuance of an amendment or revocation of a consumer product safety
rule or an order declaring a consumer product injurious, dangerous and unsafe.
In case the department, upon petition by an interested party or its o#n initiative and after due notice
and hearing, determines a consumer product to be substandard or materially defective, it shall so notify
the manufacturer, distributor or seller thereof of such finding and order such manufacturer, distributor
or seller to.
a% give notice to the public of the defect or failure to comply #ith the product safety standards1
and
b% give notice to each distributor or retailer of such product.
The department shall also direct the manufacturer, distributor or seller of such product to e*tend any or
all of the follo#ing remedies to the injured person.
a% to bring such product into conformity #ith the re7uirements of the applicable consumer
product standards or to repair the defect in order to conform #ith the same1
b% to replace the product #ith a li3e or e7uivalent product #hich complies #ith the applicable
consumer product standards #hich does not contain the defect1
c% to refund the purchase price of the product less a reasonable allo#ance for use1 and
d% to pay the consumer reasonable damages as may be determined by the department.
The manufacturer, distributor or seller shall not charge a consumer #ho avails himself of the remedy as
provided above of any e*pense and cost that may be incurred.
Ar'&c%! 12. Effectiity of Amendments and !eocation of Consumer Product Safety !ule. G ,ny
amendment or revocation of a consumer product safety rule made by the concerned department shall
specify the date on #hich it shall ta3e effect #hich shall not e*ceed ninety days from the date of
amendment or revocation is published unless the concerned department finds, for a good cause sho#n,
that a later effective date is in the public interest and publishes its reasons for such finding. The
department shall promulgate the necessary rules for the issuance, amendment or revocation of any
consumer product safety rule.
Ar'&c%! 1). %e& Products. G The concerned department shall ta3e measures to ma3e a list of ne#
consumer products and to cause the publication by the respective manufacturers or importers of such
products a list thereof together #ith the descriptions in a ne#spaper of general circulation.
Ar'&c%! 14. Certification of Conformity to Consumer Product Standards. G The concerned department
shall aim at having consumer product standards established for every consumer product so that
consumer products shall be distributed in commerce only after inspection and certification of its 7uality
and safety standards by the department. The manufacturer shall avail of the Philippine 6tandard
Certification Mar3 #hich the department shall grant after determining the product/s compliance #ith
the relevant standard in accordance #ith the implementing rules and regulations.
Ar'&c%! 15. Imported Products. G
a% ,ny consumer product offered for importation into the customs of the Philippine territory
shall be refused admission if such product.
% fails to comply #ith an applicable consumer product 7uality and safety standard or
rule1
)% is or has been determined to be injurious, unsafe and dangerous1
=% is substandard1 or
!% has material defect.
b% 6amples of consumer products being imported into the Philippines in a 7uantity necessary for
purposes of determining the e*istence of any of the above causes for non-admission may be
obtained by the concerned department or agency #ithout charge from the o#ner or consignee
thereof. The o#ner or consignee of the imported consumer product under e*amination shall be
afforded an opportunity to a hearing #ith respect to the importation of such products into the
Philippines. If it appears from e*amination of such samples or other#ise that an imported
consumer product does not conform to the consumer product safety rule or is injurious, unsafe
and dangerous, is substandard or has a material defect, such product shall be refused admission
unless the o#ner or the consignee thereof manifests under bond that none of the above ground
for non-admission e*ists or that measures have been ta3en to cure them before they are sold,
distributed or offered for sale to the general public.
,ny consumer product, the sale or use of #hich has been banned or #ithdra#n in the country of
manufacture, shall not be imported into the country.
c% If it appears that any consumer product #hich may not be admitted pursuant to paragraph $a%
of this ,rticle can be so modified that it can already be accepted, the concerned department may
defer final e*amination as to the admission of such product for a period not e*ceeding ten $(%
days, and in accordance #ith such regulations as the department and the Commissioner of
Customs shall jointly promulgate, such product may be released from customs custody under
bond for the purpose of permitting the o#ner or consignee an opportunity to so modify such
product.
d% ,ll modifications ta3en by an o#ner or consignee for the purpose of securing admission of an
imported consumer product under paragraph $c% shall be subject to the supervision of the
concerned department. If the product cannot be so modified, or if the o#ner or consignee is not
proceeding to satisfactorily modify such product, it shall be refused admission and the
department may direct redelivery of the product into customs custody, and to sei?e the product
if not so redelivered.
e% Imported consumer products not admitted must be e*ported, e*cept that upon application, the
Commissioner of Customs may permit the destruction of the product if, #ithin a reasonable
time, the o#ner or consignee thereof fails to e*port the same.
f% ,ll e*penses in connection #ith the destruction provided for in this ,rticle, and all e*penses
in connection #ith the storage, cartage or labor #ith respect to any consumer product refused
admission under this ,rticle, shall be paid by the o#ner or consignee and, in default of such
payment, shall constitute a lien against any future importation made by such o#ner or
consignee.
Ar'&c%! 16. Consumer Products for E'port. G The preceding article on safety not apply to any
consumer product if.
a% it can be sho#n that such product is manufactured, sold or held for sale for e*port from the
Philippines, or that such product #as imported for e*port, unless such consumer product is in
fact distributed in commerce for use in the Philippines1 and
b% such consumer product or the pac3aging thereof bears a stamp or label stating that such
consumer product is intended for e*port and actually e*ported.
Ar'&c%! 1(. Po&ers# functions and duties. G In addition to their po#ers, functions and duties under
e*isting la#s, the concerned department shall have the follo#ing po#ers, functions and duties.
a% to administer and supervise the implementation of this ,rticle and its implementing rules and
regulations1
b% to underta3e researches, develop and establish 7uality and safety standards for consumer
products in coordination #ith other government and private agencies closely associated #ith
these products1
c% to inspect and analy?e consumer products for purposes of determining conformity to
established 7uality and safety standards1
d% to levy, assess, collect and retain fees as are necessary to cover the cost of inspection,
certification, analysis and tests of samples of consumer products and materials submitted in
compliance #ith the provisions of this ,rticle1
e% to investigate the causes of and maintain a record of product-related deaths, illnesses and
injuries for use in researches or studies on the prevention of such product-related deaths,
illnesses and injuries.
f% to accredit independent, competent non-government bodies, to assist in $% monitoring the
mar3et for the presence of ha?ardous or non-certified products and other forms of violations of
,rticle ;1 and $)% other appropriate means to e*pand the monitoring and enforcement outreach
of the department in relation to its manpo#er, testing and certification resources at a given time.
g% to accredit independent competent testing laboratories.
PROHI1ITED A*TS AND PENALTIES
Ar'&c%! 1/. Prohibited Acts. G It shall be unla#ful for any person to.
a% manufacture for sale, offer for sale, distribute in commerce, or import into the Philippines any
consumer product #hich is not in conformity #ith an applicable consumer product 7uality or
safety standard promulgated in this ,ct1
b% manufacture for sale, offer for sale, distribute in commerce, or import into the Philippines
any consumer product #hich has been declared as banned consumer product by a rule in this
,ct1
c% refuse access to or copying of pertinent records or fail or refuse to permit entry of or
inspection by authori?ed officers or employees of the department1
d% fail to comply #ith an order issued under ,rticle II relating to notifications of substantial
product ha?ards and to recall, repair, replacement or refund of unsafe products1
e% fail to comply #ith the rule prohibiting stoc3piling.
Ar'&c%! 19. Penalties. G
a% ,ny person #ho shall violate any provision of ,rticle ; shall upon conviction, be subject to
a fine of not less than Ane thousand pesos $P,(((.((% but not more than Ten thousand pesos
$P(,(((.((% or imprisonment of not less than t#o $)% months but not more than one $% year, or
both upon the discretion of the court. If the offender is an alien, he shall be deported after
service of sentence and payment of fine #ithout further deportation proceedings.
b% In case the offender is a naturali?ed citi?en, he shall, in addition to the penalty prescribed
herein, suffer the penalty of cancellation of his naturali?ation certificate and its registration in
the civil register and immediate deportation after service of sentence and payment of fine.
c% ,ny director, officer or agent of a corporation #ho shall authori?e, order or perform any of
the acts or practices constituting in #hole or in part a violation of ,rticle ;, and #ho has
3no#ledge or notice of noncompliance received by the corporation from the concerned
department, shall be subject to penalties to #hich that corporation may be subject.
In case the violation is committed by, or in the interest of a foreign juridical person duly licensed to
engage in business in the Philippines, such license to engage in business in the Philippines shall
immediately be revo3ed.
*HAPTER II
FOOD, DR+GS, *OSMETI*S AND DEVI*ES
Ar'&c%! 20. Declaration of Policy. G The 6tate shall ensure safe and good 7uality of food, drugs,
cosmetics and devices, and regulate their production, sale, distribution and advertisement to protect the
health of the consumer.
Ar'&c%! 21. Implementing Agency. G In the implementation of the foregoing policy, the 6tate, through
the 5epartment of 0ealth, hereby referred as the 5epartment, shall, in accordance #ith the provisions
of this ,ct.
a% establish standards and 7uality measures for food, drugs, devices and cosmetics1
b% adopt measures to ensure pure and safe supply of foods and cosmetics, and safe, efficacious
and good 7uality of drugs and devices in the Country1
c% adopt measures to ensure the rational use of drugs and devices, such as, but not limited to,
banning, recalling or #ithdra#ing from the mar3et drugs and devices #hich are unregistered,
unsafe, inefficacious or of doubtful therapeutic value, the adoption of an official <ational 5rug
Formulary, and the use of generic names in the labeling of drugs1
d% strengthen the 4ureau of Food and 5rugs.
Ar'&c%! 22. !ules and !egulations on Definitions and Standards. G 9henever in the judgment of the
5epartment such action #ill promote honesty and fair dealing in the interest of consumers, it shall
promulgate rules and regulations fi*ing and establishing a reasonable definition and standard of
identity, a reasonable standard of 7uality andHor reasonable standard of fill of containers for food,
drugs, cosmetics or devices.
Ar'&c%! 2). Adulterated (ood. G , food shall be deemed to be adulterated.
a% % if it bears or contains any poisonous or deleterious substance #hich may render it injurious
to health1 but in case the substance is not an added substance, such food shall not be considered
adulterated under this clause if the 7uantity of such substance does not ordinarily render it
injurious to health1
)% if it bears or contains any added poisonous or deleterious substance other than one
#hich is $i% a pesticide chemical in or on a ra# agricultural commodity, $ii% a food
additive, $iii% a color additive, for #hich tolerances have been established and it
conforms to such tolerances1
=% if it consists in #hole or in part of any filthy, putrid or decomposed substance, or if it
is other#ise unfit for food1
!% if it has been prepared, pac3ed or held under unsanitary conditions #hereby it may
have become contaminated #ith filth, or #hereby, it may have been rendered injurious
to health1
'% if it is, in #hole or part, the product of a diseased animal or of an animal #hich has
died other than by slaughter1
+% if its container is composed, in #hole or in part, of any poisonous or deleterious
substance #hich may render the contents injurious to health1 or
"% if it has passed its e*piry date.
b% $% If any valuable constituent has been, in #hole or in part, omitted or abstracted therefrom
and the same has not been substituted, by any healthful e7uivalent of such constituent1
)% if any substance, not a valuable constituent, has been added or substituted or in part
therefor1
=% if damage or inferiority has been concealed in any manner1 or
!% if any substance has been added thereto or pac3ed there#ith so as to increase its bul3
or #eight, reduce its 7uality or strength, or ma3e it appear better or of greater value than
it is.
c% if it is, or bears or contains a color additive #hich is unsafe under e*isting regulations.
Provided, That the 5epartment shall promulgate regulations providing for the listing of color
additives #hich are harmless and suitable for use in food for #hich tolerances have been
established1
d% if it is confectionary, and it bears or contains any alcohol or non-nutritive article or substance
e*cept harmless coloring, harmless flavoring, harmless resinous glass not in e*cess of four-
tenths $!H(% of one per centum $I% natural gum and pectin. Provided, That this clause shall
not apply to a safe non-nutritive article or substance if, in the judgment of the 5epartment as
provided by regulations, $% such article or substance is of practical functional value in the
manufacture, pac3aging or storage of such confectionery, $)% if the use of the substance does not
promote deception of the consumer or other#ise results in adulteration or mislabeling in
violation of any provision of this ,ct, and $=% #ould not render the product injurious or
ha?ardous to health. Provided, further, That this paragraph shall not apply to any confectionery
by reason of its containing less than one-half $J% of one per centum $I% by volume of alcohol,
derived solely from the use of flavoring e*tracts, or to any che#ing gum by reason of its
containing harmless non-nutritive masticatory substance. Provided, finally, That the 5epartment
may, for the purpose of avoiding or resolving uncertainty as to the application of this clause,
promulgate regulations allo#ing or prohibiting the use of particular non-nutritive substances1
e% if it is oleomargarine, margarine or butter and any of the ra# materials used therein consists
in #hole or in part of any filthy, putrid or decomposed substance, or such oleomargarine,
margarine or butter is other#ise unfit for food1
f% if it has not been prepared in accordance #ith current acceptable manufacturing practice
established by the 5epartment through regulations.
Ar'&c%! 24. !egulation of $nprocessed (ood. G The provincial, municipal and city governments shall
regulate the preparation and sale of meat, fresh fruits, poultry, mil3, fish, vegetables and other foodstuff
for public consumption, pursuant to the @ocal -overnment Code.
Ar'&c%! 25. Tolerance for Poisonous Ingredients in (ood. G ,ny poisonous or deleterious substance
added to any food shall be deemed to be unsafe, e*cept #hen such substance is re7uired or can not be
avoided in its production or can not be avoided by good manufacturing practice. In such case, the
5epartment shall promulgate regulations limiting the 7uantity therein in such e*tent as he finds
necessary for the protection of public health, and any 7uantity e*ceeding the limits so fi*ed shall be
deemed to be unsafe. In determining the 7uantity of such added substance to be tolerated in different
articles of food, the 5epartment shall ta3e into account the e*tent to #hich the use of such article is
re7uired or can not be avoided in the production or manufacture of such articles and the other #ays in
#hich the consumer may be affected by the same or other poisonous or deleterious substance.
Ar'&c%! 26. $nsafe (ood Addities# E'ceptions for Conformity &ith !egulation. G , food additive,
#ith respect to any particular use or intended use, shall be deemed unsafe unless.
a% it and its use or intended use conforms to the terms of an e*emption for being solely intended
for investigational use by 7ualified e*perts1 or
b% it and its use or intended use is in conformity #ith a regulation issued by the 5epartment
prescribing the conditions under #hich such additives may be safely used.
Ar'&c%! 2(. Petition for !egulation of (ood Additie. G ,ny person may, #ith respect to any intended
use of a food additive, file #ith the 5epartment a petition proposing the issuance of a regulation
prescribing the conditions under #hich such additives may be safely used.
The 5epartment shall $% establish a regulation prescribing, #ith respect to one or more proposed uses
of the food additive involved, $i% the conditions under #hich a food additive may be safely used
including, but not limited to, specifications as to the particular food, classes of food, in #hich such
additive may be used, $ii% the ma*imum 7uantity #hich may be used, or permitted to remain in or on
such food1 $iii% the manner in #hich such additive may be added to or used in or on such food, and $iv%
any directions or other labeling or pac3aging re7uirement for such additive deemed necessary to assure
the safety of such use, and shall notify the petitioner of such order and the reasons for such action1 or
$)% deny the petition and notify the petitioner of and the reasons for such action.
The 5epartment may, at any time upon his o#n initiative, issue a regulation prescribing, #ith respect to
any particular food additive, the conditions under #hich such additive may be safely used and the
reasons thereof, and cause the publication of the same.
Ar'&c%! 2/. Effectiity of !egulations. G The regulations promulgated under the preceding articles shall
ta3e effect fifteen $'% days after its publication in a ne#spaper of general circulation but the
5epartment may stay such effectivity if, after issuance of such order, a hearing is sought by any person
adversely affected by such order.
DR+GS AND DEVI*ES
Ar'&c%! 29. Adulterated Drugs and Deices. G , drug or device shall be deemed to be adulterated.
a% % if it contains in #hole or in part of any filthy, putrid, or decomposed substance #hich may
affect its safety, efficacy or good 7uality1 or $)% if it has been manufactured, prepared or held
under unsanitary conditions #hereby it may have been contaminated #ith dirt or filth or
#hereby it may have been rendered injurious to health1 or $=% if its container is composed, in
#hole or in part, of any poisonous or deleterious substance #hich may render the contents
injurious to health1 or $!% if it bears or contains any color other than a permissible one as
determined by the 5epartment, ta3ing into consideration standards of safety, efficacy or good
7uality.
b% If it purports to be or is represented as a drug, the name of #hich is recogni?ed in an official
compendium, and its strength differs from, or its safety, efficacy, 7uality or purity falls belo#
the standards set forth in such compendium, e*cept that #henever tests or methods of assay as
prescribed are, in the judgment of the 5epartment, insufficient for the ma3ing of such
determination, the 5epartment shall promulgate regulations prescribing appropriate tests or
methods of safety, efficacy, 7uality or purity shall be made. <o drug defined in an official
compendium shall be deemed to be adulterated under this paragraph because it differs from the
standards of strength, safety, efficacy, 7uality or purity therefor set forth in such compendium, if
its difference in strength, safety, efficacy, 7uality or purity from such standards is plainly stated
in its label and approved for registration as such.
c% If it is not subject to the provisions of paragraph $b% and its strength differs from, or its
efficacy, 7uality or purity falls belo#, that #hich it purports or is represented to possess.
d% If a drug or device and any substance has been mi*ed or pac3ed there#ith, or any substance
has been substituted #holly or in part thereof, so as to reduce its safety, efficacy, 7uality,
strength or purity.
e% If the methods used in, or the facilities or controls used for its manufacture or holding do not
conform to or are not operated or administered in conformity #ith current good manufacturing
practice to assure that such drug meets the re7uirements of this ,ct as to safety, 7uality and
efficacy, and has the identity and strength, and meets the 7uality and purity characteristics
#hich it purports or is represented to possess.
Ar'&c%! )0. E'emption in Case of Drugs and Deices. G
a% The 5epartment is hereby directed to promulgate regulations e*empting from any labeling or
pac3aging re7uirement of this ,ct drugs and devices #hich are, in accordance #ith the practice
of the trade, to be processed, labeled or repac3ed in substantial 7uantities at establishments
other than those #here originally processes or pac3ed, on conditions that such drugs and
devices are not adulterated or mislabeled under the provisions of this ,ct upon removal from
such processing, labeling or repac3ing establishment.
b% % 5rugs intended for use by man #hich.
$i% are habit-forming1
$ii% because of their to*icity or other potentiality for harmful effect, or method of their
use is not safe for use e*cept under the supervision of practitioner licensed by la# to
administer such drug1
$iii% are ne# drugs #hose applications are limited to investigational use1 shall be
dispensed only $a% upon #ritten prescription of a practitioner licensed by la# to
administer such drug, or $b% upon an oral prescription of such practitioner #hich is
reduced promptly to #riting and filed by the pharmacist, or $c% by refilling any such
#ritten or oral prescription if such refilling is authori?ed by the prescriber either in the
original prescription or by oral order #hich is reduced promptly to #riting and filed by
the pharmacist. The act of dispensing a drug contrary to the provisions of this paragraph
shall be deemed to be an act #hich results in the drug being mislabeled #hile held for
sale.
)% ,ny drug dispensed by filling or refilling a #ritten prescription of a practitioner licensed by
la# to administer such drug shall be e*empt from the re7uirements of ,rticle ;>, e*cept
paragraphs $a%, $h%, $)% and $=%, and the pac3aging re7uirements of paragraphs $f% and $g%, if the
drug bears a label containing the name and address of the dispenser, the serial number and the
date of the prescription or its filling, the name of the prescriber and, if stated in the prescription
the name of the patient and the directions for use and cautionary statements, if any, container in
such prescription.
=% The 5epartment may, by regulation, remove drugs subject to ,rticle ;> $d% and ,rticle =
from the re7uirements of sub-article $b% $% of this ,rticle, #hen such re7uirements are not
necessary for the protection of the public health.
!% , drug #hich is subject to sub-article $b% $% of this ,rticle shall be deemed to be mislabeled
if any time prior to dispensing, its label fails to bear the statement &Caution. 6hould not be
dispensed #ithout prescription.& , drug to #hich sub-article $b% $% of this ,rticle does not
apply shall de deemed to be mislabeled it at any time prior to dispensing, its label bears the
caution statement 7uoted in the preceding sentence.
Ar'&c%! )1. )icensing and !egistration. G
a% <o person shall manufacture, sell, offer for sale, import, e*port, distribute or transfer any
drug or device, unless an application filed pursuant to sub-article $b% hereof is effective #ith
respect to such drug or device.
b% ,ny person may file #ith the 5epartment, through the 5epartment, an application under oath
#ith respect to any drug or device subject to the provisions of sub-article $a% hereof. 6uch
persons shall submit to the 5epartment. $% full reports of investigations #hich have been made
to sho# #hether or not such drug or device is safe, efficacious and of good 7uality for use based
on clinical studies conducted in the Philippines1 $)% a full list of the articles used as components
of such drug or device1 $=% a full statement of the composition of such drug or device1 $!% a full
description of the methods used in and the facilities and controls used for the manufacture of
such drug or device1 $'% such samples of such drug or device and of the articles used as
components thereof as the 5epartment may re7uire1 $+% specimens of the labeling proposed to
be used for such drug or device1 and $"% such other re7uirements as may be prescribed by
regulations to ensure safety, efficacy and good 7uality of such drug and device.
c% 9ithin one hundred eighty $;(% days after the filing of an application under this sub-article,
or such additional period as may be agreed upon by the 5epartment and the applicant, the
5epartment shall either $% approve the application if he then finds that none of the grounds for
denying approval specified in sub-article $d% applies, or $)% give the applicant notice of an
opportunity for a hearing before the 5epartment under sub-article $d% on the 7uestion #hether
such application is approvable.
d% If the 5epartment finds, after due notice to the applicant and giving him an opportunity for a
hearing, that $% the reports of the investigations #hich are re7uired to be submitted to the
5epartment pursuant to sub-article $b% hereof, do not include ade7uate tests by all methods
reasonably applicable to sho# #hether or not such drug or device is safe, efficacious and of
good 7uality for use under the conditions prescribed, recommended or suggested in the
proposed labeling thereof1 $)% the results of such test sho# that drug or device is unsafe,
inefficacious or of doubtful therapeutic value for use under such conditions or do not sho# that
such drug or device is safe, methods used in, and the facilities and controls used for the
manufacture of such drug or device are inade7uate to preserve its identity, strength, 7uality and
purity1 or $!% upon the basis of the information submitted to him as part of the application, or
upon the basis of any other information before him #ith respect to such drug or device, he has
insufficient information to determine #hether such drug or device is safe, efficacious or of good
e7uality for use under such conditions1 or $'% evaluated on the basis of the information
submitted to him as part of the application, and any other information before him #ith respect to
such drug or device, there is a lac3 of substantial evidence that the drug or device #ill have the
effect it purports or is represented to have under the conditions of use prescribed, recommended
or suggested in the proposed labeling thereof1 or $+% based on a fair evaluation of all material
facts, such labeling is false or misleading in any #ay1 he shall issue an order disapproving the
application.
e% The effectiveness of an application #ith respect to any drug or device shall, after due notice
and opportunity for hearing to the applicant, by order of the 5epartment be suspended if it finds
$% that clinical e*perience, tests by ne# methods, or tests by methods not deemed reasonably
applicable #hen such application became effective sho# that such drug or device is unsafe or
ineffective for use under the conditions of use upon the basis of #hich the application became
effective, or $)% that the application contains any untrue statement of a material fact. The order
shall state the findings upon #hich it is based.
f% The 5epartment shall promulgate regulations for e*empting from the operation of this ,rticle
drugs and devices intended solely for investigational used by e*perts 7ualified by scientific
training and e*perience to investigate the safety and effectiveness of drugs and devices.
g% <o person shall manufacture, sell, offer for sale, import, e*port, distribute or transfer any
drug or device #ithout first securing a license to operate from the 5epartment after due
compliance #ith technical re7uirements in accordance #ith the rules and regulations
promulgated by the 5epartment pursuant to this ,ct.
h% <o drug or device shall be manufactured, sold, offered for sale, imported, e*ported,
distributed or transferred, unless registered by the manufacturer, imported or distributor thereof,
in accordance #ith rules and regulations promulgated by the 5epartment pursuant to this ,ct.
The provisions of ,rticle = $b%, $d% and $e%, to the e*tent applicable, shall govern the
registration of such drugs and devices.
i% The 5epartment shall promulgate a schedule of fees for the issuance of the certificate of
product registration and license to operate provided for under this ,rticle.
Ar'&c%! )2. Dangerous Drugs. G The importation, distribution, manufacture, production, compounding,
prescription, dispensing and sale of, and other la#ful acts in connection #ith, dangerous drugs of such
3ind and 7uantity as may be deemed necessary according to the medical and research needs of the
country and the determination of the 7uantityH7uantities to be imported, manufactured and held in stoc3
at any given time by an authori?ed importer, manufacturer or distributor of dangerous drugs shall be
under the jurisdiction and authority of the 5angerous 5rugs 4oard as provided for by e*isting la#s and
regulations.
Ar'&c%! )). Banned or !estricted Drugs. G 4anned or severely restricted drugs for health and safety
reasons in their country of origin shall be banned and confiscated or its uses severely restricted
#hichever is appropriate, by the 5epartment. The 5epartment shall monitor the presence in the mar3et
of such drugs and cause the maintenance and regular publications of an updated consolidated list
thereof.
*ERTIFI*ATION OF DR+GS *ONTAINING ANTI1IOTI*S
Ar'&c%! )4. Certification of Certain Drugs. G
a% The 5epartment shall, by regulations, provide for the certification of batches of drugs
composed #holly or partially of any 3ind of antibiotic. , batch of such drug shall be certified if
such drug has such characteristics of identity, strength, 7uality and purity, as the 5epartment
prescribes in such regulations as necessary to insure ade7uately safety and efficacy of use and
good 7uality, but shall not other#ise be certified. Prior to the effective date of such regulations
the 5epartment, in lieu of certification, shall issue a release for any batch #hich, in his
judgment, may be released #ithout ris3 as to the safety and efficacy of its use. 6uch release
shall prescribe the date of its e*piration and other conditions under #hich it shall cease to be
effective as to such batch and as to portions thereof. For purposes of this ,rticle and of ,rticle
;> $j%, the term &antibiotic drug& means any drug intended for use by man containing any
7uantity of any chemical substance #hich is produced by a micro-organism and #hich has the
capacity to inhibit or destroy micro-organisms in dilute solution $including the chemically
synthesi?ed e7uivalent of any such substance%.
b% 9henever in the judgment of the 5epartment, the re7uirements of this ,rticle and of ,rticle
;> $j% #ith respect to any drug or class of drugs are not necessary to insure safety and efficacy
of use and good 7uality, the 5epartment shall promulgate regulations e*empting such drug or
class of drugs from such re7uirements.
c% The 5epartment shall promulgate regulations e*empting from any re7uirement of this ,rticle
and of ,rticle ;> $j%, $l% drugs #hich are to be stored, processed, labeled, or repac3ed at
establishments other than those #here manufactured, or condition that such drugs comply #ith
all such re7uirements upon removal from such establishments1 $)% drugs #hich conform to
applicable standards of identity, strength, 7uality, and purity prescribed by these regulations and
are intended for use in manufacturing other drugs1 and $=% drugs #hich are intended for
investigational use by e*perts 7ualified by scientific training and e*perience to investigate the
safety and efficacy of drugs.
*OSMETI*S
Ar'&c%! )5. Adulterated cosmetics. G , cosmetic shall be deemed to be adulterated.
a% if it bears or contains any poisonous or deleterious substance #hich may render it injurious to
users under the condition of use prescribed in the labeling thereof, or under the condition of use
as are customary or usual. Provided, That this provision shall not apply to color additive hair
dye, the label of #hich bears the follo#ing legend conspicuously displayed thereon. &Caution.
this product contains ingredients #hich may cause s3in irritation on certain individuals and a
preliminary test according to accompanying directions should first be made. This product must
not be used for dyeing the eyelashes or eyebro#s1 to do so may cause blindness& and labeling of
#hich bears ade7uate directions for such preliminary testing. For purposes of this paragraph $e%
the term &hair dye& shall not include eyelash dyes or eyebro# dyes.
b% if it consists in #hole or in part of any filthy, putrid, or decomposed substance.
c% if it has been prepared, pac3ed or held under unsanitary conditions #hereby it may have
become contaminated #ith filth, or #hereby it may have been rendered injurious to health.
d% if its container is composed, in #hole or in part, of any poisonous or deleterious substance
#hich may render the contents injurious to health.
e% if it is not a hair dye, and it bears or contains color additive other than #hich is permissible.
f% if any of its substances has been $% mi*ed or pac3ed there#ith so as to reduce its 7uality or
strength or $)% substituted #holly or in parts therefor.
Ar'&c%! )6. (actory Inspection. G
a% For purposes of enforcement of this ,rticle, officers or employees duly designated by the
5epartment, upon presenting appropriate credentials to the o#ner, operator, or agent in charge,
are authori?ed $% to enter, at reasonable hours, any factory, #arehouse or establishment in
#hich food, drugs, devices or cosmetics are manufactured, processed, pac3ed or held, for
introduction into domestic commerce or are held after such introduction, or to enter any vehicle
being used to transport or hold such food, drugs, devices, or cosmetics in domestic commerce1
and $)% to inspect, in a reasonable manner, such factory, #arehouse, or establishment or vehicle
and all pertinent e7uipment, finished and unfinished materials, containers and labeling therein.
b% If the officer or employee ma3ing any such inspection of a factory, #arehouse or other
establishment has obtained any sample in the course of the inspection, upon completion of the
inspection and prior to leaving the premises he shall give to the o#ner, operator, or agent in
charge a receipt describing the samples obtained.
c% 9henever in the course of any such inspection of a factory or other establishment #here food
is manufactured, processed or pac3ed, the officer or employee ma3ing the inspection obtains a
sample of any such food, and an analysis made of such sample for the purpose of ascertaining
#hether such food consists in #hole or in part of any filthy, putrid or decomposed substance, or
is other#ise unfit for food, a copy of the results of such analysis shall be furnished promptly to
the o#ner, operator or agent in charge.
Ar'&c%! )(. Proisional Permits. G 9henever the 5epartment finds, after investigation, that the sale or
distribution in commerce of any class of food, cosmetics, drugs or devices, may be injurious to health,
and that such injurious nature cannot be ade7uately determined after such articles have entered into
domestic commerce, it shall promulgate regulations providing for the issuance, suspension and
revocation of provisional permits, offer for sale or transfer of such classes of food, cosmetics, drugs or
devices to manufacturers, processors or pac3ers of the same in such locality to #hich shall be attached
such conditions governing the manufacture, processing or pac3ing of such consumer products for such
temporary period of time as may be necessary to protect public health1 and after the effective date of
such regulations, and during such temporary period, no person shall, offer for sale or transfer any such
food, cosmetics, drugs or devices unless such manufacturer, processor or pac3er holds such permit.
Ar'&c%! )/. Publicity and Publication. G
a% The 5epartment my cause to be disseminated information regarding food, drugs, devices, or
cosmetics in situations involving, in the opinion of the 5epartment, imminent danger to health,
or gross deception to the consumer. <othing in this ,rticle shall be construed to prohibit the
5epartment from collecting, reporting, and illustrating the results of its investigations.
b% The 5epartment shall publish a 5rug Eeference Manual and 5rug 4ulletin to serve as
reference by manufacturers, distributors, physicians, consumers and such other groups as may
be deemed necessary. The 5epartment is hereby authori?ed to sell the 5rug Eeference Manual
at cost.
Ar'&c%! )9. Administratie Sanctions. G In addition to the administrative sanctions provided for under
@etter of Instructions <o. ))=, the 5epartment is hereby authori?ed to impose, after notice and
hearing, administrative fines of not less than Ane thousand pesos $P,(((.((% nor more than Five
thousand pesos $P',(((.((% for any violation of this ,ct.
PROHI1ITED A*TS AND PENALTIES
Ar'&c%! 40. Prohibited Acts. G The follo#ing acts and the causing thereof are hereby prohibited.
a% the manufacture, importation, e*portation, sale, offering for sale, distribution or transfer of
any food, drug, device or cosmetic that is adulterated or mislabeled1
b% the adulteration or misbranding of any food, drug, device or cosmetic1
c% the refusal to permit entry or inspection as authori?ed by ,rticle =+ to allo# samples to be
collected1
d% the giving of a guaranty or underta3ing referred to in ,rticle ! $b% hereof #hich guaranty or
underta3ing is false, e*cept by a person #ho relied upon a guaranty or underta3ing to the same
effect signed by, and containing the name and address of, the person residing in the Philippines
from #hom he received in good faith the food, drug, device, or cosmetic or the giving of a
guaranty or underta3ing referred to in ,rticle ! $b% #hich guaranty or underta3ing is false1
e% forging, counterfeiting, simulating, or falsely representing or #ithout proper authority using
any mar3, stamp, tag, label, or other identification device authori?ed or re7uired by regulations
promulgated under the provisions of this ,ct1
f% the using by any person to his o#n advantage, or revealing, other than to the 5epartment or to
the courts #hen relevant in any judicial proceeding under this ,ct, any information concerning
any method or process #hich as a trade secret is entitled to protection1
g% the alteration, mutilation, destruction, obliteration, or removal of the #hole or any part of the
labeling of, or the doing of any other act #ith respect to a food, drug, device, or cosmetic, if
such act is done #hile such product is held for sale $#hether or not the first sale% and results in
such product being adulterated or mislabeled1
h% the use, on the labeling of any drug or in any advertising relating to such drug, of any
representation or suggestion that an application #ith respect to such drug is effective under
,rticle = hereof, or that such drug complies #ith the provisions of such articles1
i% the use, in labeling, advertising or other sales promotion, of any reference to any report or
analysis furnished in compliance #ith 6ection > of 8*ecutive Arder "', series of >;"1
j% the manufacture, importation, e*portation, sale, offering for sale, distribution, or transfer of
any drug or device #hich is not registered #ith the 5epartment pursuant to this ,ct1
3% the manufacture, importation, e*portation, sale, offering for sale, distribution, or transfer of
any drug or device by any person #ithout the license from the 5epartment re7uired in this ,ct1
l% the sale or offering for sale of any drug or device beyond its e*piration or e*piry date1
m% the release for sale or distribution of a batch of drugs #ithout batch certification #hen
re7uired under ,rticle =! hereof.
Ar'&c%! 41. Penalties. G
a% ,ny person #ho violates any of the provisions of ,rticle !( hereof shall, upon conviction, be
subject to imprisonment of not less than one $% year but not more than five $'% years, or a fine
of not less than Five thousand pesos $P',(((.((% but not more than Ten thousand pesos
$P(,(((.((%, or both such imprisonment and fine, in the discretion of the Court.
6hould the offense be committed by a juridical person, the Chairman of the 4oard of 5irectors,
the President, -eneral Manager, or the partners andHor the persons directly responsible therefor
shall be penali?ed.
b% <o person shall be subject to the penalties of sub-article $a% of this ,rticle for $% having sold,
offered for sale or transferred any product and delivered it, if such delivery #as made in good
faith, unless he refuses to furnish on re7uest of the 5epartment, the name and address of the
person from #hom he purchased or received such product and copies of all documents, if any
there be, pertaining to the delivery of the product to him1 $)% having violated ,rticle !( $a% if he
established a guaranty or underta3ing signed by, and containing the name and address of, the
person residing in the Philippines from #hom he received in good faith the product, or $=%
having violated ,rticle !( $a%, #here the violation e*ists because the product is adulterated by
reason of containing a color other than the permissible one under regulations promulgated by
the 5epartment in this ,ct, if such person establishes a guaranty or underta3ing signed by, and
containing the name and address, of the manufacturer of the color, to the effect that such color is
permissible, under applicable regulations promulgated by the 5epartment in this ,ct.
*HAPTER III
HA2ARDO+S S+1STAN*E
Ar'&c%! 42. Declaration of Policy. G The 6tate shall adopt measures designed to protect the consumer
against substances other than food, drugs, cosmetics and devices that are ha?ardous to his health and
safety.
Ar'&c%! 4). Implementing Agency. G The 5epartment of 0ealth, hereby referred to as the 5epartment,
shall enforce the provisions of this Chapter.
Ar'&c%! 44. !egulations Declaring *a+ardous Substances and Establishing ,ariations and
E'emptions. G The 5epartment shall promulgate the rules and regulations governing the
implementation of this ,rticle.
To resolve uncertainty as to the coverage of this ,rticle, the 5epartment may, by regulations, declare as
ha?ardous any substance of mi*ture of substances #hich he finds meets the re7uirements of paragraph
$a3%, clause $% $i% of ,rticle !.
If the 5epartment finds that for good and sufficient reasons, full compliance #ith the labeling
re7uirements other#ise applicable under this Chapter is impracticable or is not necessary for the
ade7uate protection of public health and safety, it shall promulgate regulations e*empting such
substances from these re7uirements to the e*tent he deems consistent #ith the objective of ade7uately
safeguarding public health and safety, and any ha?ardous substance #hich does not bear a label in
accordance #ith such regulations shall be deemed to be a mislabeled ha?ardous substance.
Ar'&c%! 45. Imports- !egulations on Imported *a+ardous Substances. G
a% The Commissioner of Customs shall deliver to the 5epartment, upon its re7uest, samples of
ha?ardous substances being imported or offered for import to the Philippines, giving notice
thereof to the o#ner or consignee #ho may appear before the 5epartment and e*ercise the right
to ma3e testimony. If it appears from the e*amination of such samples that such ha?ardous
substance is a mislabeled ha?ardous substance or banned ha?ardous substance, then such
ha?ardous substance shall be refused admission e*cept as may be provided in an order issued by
the 5epartment authori?ing delivery of the refused products or substance under the
re7uirements imposed therein. The Commissioner of Customs shall cause the destruction of any
ha?ardous substance refused admission unless such is e*ported, under regulations issued by the
Commissioner #ithin ninety $>(% days from the date of notice of such refusal or #ithin such
additional time as may be fi*ed by him.
b% Pending decision on the admissibility of a ha?ardous substance being imported or offered for
import, the Commissioner of Customs may authori?e delivery of such ha?ardous substance to
the o#ner or consignee upon e*ecution by him of a good and sufficient bond providing for the
payment of such li7uidated damages in the event of default. If it appears to the 5epartment that
the ha?ardous substance can by relabeling or other action made to comply #ith the re7uirements
of this ,rticle final determination as to the admission of such ha?ardous substance may be
deferred and upon filing of a timely #ritten application by the o#ner or consignee and the
e*ecution by him of a bond as provided in the provision of this paragraph. The 5epartment may,
in accordance #ith regulations, authori?e the applicant to perform such relabeling or other
action specified in such authori?ation, including destruction or e*port of such rejected
ha?ardous substance. ,ll such relabeling or other action pursuant to such authori?ation shall be
in accordance #ith regulations and shall be under the supervision of an officer or employee of
the Commission of Customs and the 5epartment.
PROHI1ITED A*TS AND PENALTIES
Ar'&c%! 46. Prohibited Acts. G It shall be unla#ful for any person to.
a% introduce or deliver for introduction into commerce of any mislabeled ha?ardous substance or
banned ha?ardous substance1
b% alter, mutilate, destroy, obliterate or remove the #hole or any part of the label of a mislabeled
ha?ardous substance, or banned ha?ardous substance, if such act is done #hile the substance is
in commerce or #hile the substance is held for sale, #hether or not it is the first sale1
c% receive in commerce any mislabeled ha?ardous substance or banned ha?ardous substance and
the delivery or preferred delivery thereof at cost or other#ise1
d% give the guaranty or underta3ing referred to in paragraph $b% of ,rticle >= and paragraph $b%
of ,rticle !' if such guaranty or underta3ing if false e*cept by a person #ho relied upon a
guaranty or underta3ing #hich he received in good faith1
e% introduce or deliver for introduction into commerce or receive in commerce and subse7uently
deliver or preferred at cost or other#ise, or a ha?ardous substance in a refused food, drug,
cosmetic or device container or in a container #hich, though not a reused container, is
identifiable as a food, drug, cosmetic or device container by its labeling or by other
identification. The use of a used food, drug, cosmetic or device container for a ha?ardous
substance does not diminish the danger posed by the ha?ardous substance involved, therefore,
such substance shall be deemed a mislabeled ha?ardous substance.
Ar'&c%! 4(. Penalties# e'ception. G
a% ,ny person #ho violates any of the provisions of ,rticle !+ shall, upon conviction, be subject
to a fine of not less than Ane thousand pesos $P,(((.((% or an imprisonment of not less than
si* $+% months but not more than five $'% years or both upon the discretion of the court.
b% <o person shall be subject to the penalties of paragraph $a% of this ,rticle for $% having
violated paragraph $c% of ,rticle !+ unless he refuses to furnish, upon re7uest by the 5epartment
or his representative, the name and address of the person from #ho he purchased such
ha?ardous substances and $)% having violated paragraph $a% of ,rticle !+, if he establishes a
guaranty or underta3ing signed by, and containing the name and address of, the person from
#hom he received in good faith, the ha?ardous substance to the effect that the ha?ardous
substance is not a mislabeled ha?ardous substance or banned ha?ardous #ithin the meaning of
that term in this ,ct.
TITLE III. , PROTE*TION AGAINST DE*EPTIVE, +NFAIR AND+N*ONS*IONA1LE
SALES A*TS OR PRA*TI*ES
*HAPTER I
DE*EPTIVE, +NFAIR AND +N*ONS*IONA1LE SALES A*TS OR PRA*TI*ES
Ar'&c%! 4/. Declaration of Policy. G The 6tate shall promote and encourage fair, honest and e7uitable
relations among parties in consumer transactions and protect the consumer against deceptive, unfair
and unconscionable sales acts or practices.
Ar'&c%! 49. Implementing Agency. G The 5epartment of Trade and Industry, hereby referred to as the
5epartment, shall enforce the provisions of this Chapter.
REG+LATION OF SALES A*TS AND PRA*TI*ES
Ar'&c%! 50. Prohibition Against Deceptie Sales Acts or Practices. G , deceptive act or practice by a
seller or supplier in connection #ith a consumer transaction violates this ,ct #hether it occurs before,
during or after the transaction. ,n act or practice shall be deemed deceptive #henever the producer,
manufacturer, supplier or seller, through concealment, false representation of fraudulent manipulation,
induces a consumer to enter into a sales or lease transaction of any consumer product or service.
9ithout limiting the scope of the above paragraph, the act or practice of a seller or supplier is deceptive
#hen it represents that.
a% a consumer product or service has the sponsorship, approval, performance, characteristics,
ingredients, accessories, uses, or benefits it does not have1
b% a consumer product or service is of a particular standard, 7uality, grade, style, or model #hen
in fact it is not1
c% a consumer product is ne#, original or unused, #hen in fact, it is in a deteriorated, altered,
reconditioned, reclaimed or second-hand state1
d% a consumer product or service is available to the consumer for a reason that is different from
the fact1
e% a consumer product or service has been supplied in accordance #ith the previous
representation #hen in fact it is not1
f% a consumer product or service can be supplied in a 7uantity greater than the supplier intends1
g% a service, or repair of a consumer product is needed #hen in fact it is not1
h% a specific price advantage of a consumer product e*ists #hen in fact it does not1
i% the sales act or practice involves or does not involve a #arranty, a disclaimer of #arranties,
particular #arranty terms or other rights, remedies or obligations if the indication is false1 and
j% the seller or supplier has a sponsorship, approval, or affiliation he does not have.
Ar'&c%! 51. Deceptie Sales Act or Practices By !egulation. G The 5epartment shall, after due notice
and hearing, promulgate regulations declaring as deceptive any sales act, practice or techni7ue #hich is
a misrepresentation of facts other than these enumerated in ,rticle '(.
Ar'&c%! 52. $nfair or $nconscionable Sales Act or Practice. G ,n unfair or unconscionable sales act
or practice by a seller or supplier in connection #ith a consumer transaction violates this Chapter
#hether it occurs before, during or after the consumer transaction. ,n act or practice shall be deemed
unfair or unconscionable #henever the producer, manufacturer, distributor, supplier or seller, by ta3ing
advantage of the consumer/s physical or mental infirmity, ignorance, illiteracy, lac3 of time or the
general conditions of the environment or surroundings, induces the consumer to enter into a sales or
lease transaction grossly inimical to the interests of the consumer or grossly one-sided in favor of the
producer, manufacturer, distributor, supplier or seller.
In determining #hether an act or practice is unfair and unconscionable, the follo#ing circumstances
shall be considered.
a% that the producer, manufacturer, distributor, supplier or seller too3 advantage of the inability
of the consumer to reasonably protect his interest because of his inability to understand the
language of an agreement, or similar factors1
b% that #hen the consumer transaction #as entered into, the price grossly e*ceeded the price at
#hich similar products or services #ere readily obtainable in similar transaction by li3e
consumers1
c% that #hen the consumer transaction #as entered into, the consumer #as unable to receive a
substantial benefit from the subject of the transaction1
d% that #hen the consumer #as entered into, the seller or supplier #as a#are that there #as no
reasonable probability or payment of the obligation in full by the consumer1 and
e% that the transaction that the seller or supplier induced the consumer to enter into #as
e*cessively one-sided in favor of the seller or supplier.
Ar'&c%! 5). Chain Distribution Plans or Pyramid Sales Schemes. G Chain distribution plans or
pyramid sales schemes shall not be employed in the sale of consumer products.
Ar'&c%! 54. *ome Solicitation Sales. G <o business entity shall conduct any home solicitation sale of
any consumer product or service #ithout first obtaining a permit from the 5epartment. 6uch permit
may be denied suspended or revo3ed upon cause as provided in the rules and regulations promulgated
by the 5epartment, after due notice and hearing.
Ar'&c%! 55. *ome Solicitation Sales. /hen Conducted. G 0ome solicitation sales may be conducted
only bet#een the hours of nine o/cloc3 in the morning and seven o/cloc3 in the evening of each
#or3ing day. Provided, That solicitation sales may be made at a time other than the prescribed hours
#here the person solicited has previously agreed to the same.
Ar'&c%! 56. *ome Solicitation Sales. by /hom Conducted. G 0ome solicitation sales shall only be
conducted by a person #ho has the proper identification and authority from his principal to ma3e such
solicitations.
Ar'&c%! 5(. !eceipts for *ome Solicitation Sales. G 6ales generated from home solicitation sales shall
be properly receipted as per e*isting la#s, rules and regulations on sale transactions.
Ar'&c%! 5/. Prohibited !epresentations. G , home solicitation sale shall not represent that.
a% the buyer has been specially selected1
b% a survey, test or research is being conducted1 or
c% the seller is ma3ing a special offer to a fe# persons only for a limited period of time.
Ar'&c%! 59. !eferral Sales. G Eeferral selling plans shall not be used in the sale of consumer products
unless the seller e*ecutes in favor of the buyer a #ritten underta3ing that #ill grant a specified
compensation or other benefit to said buyer in return for each and every transaction consummated by
said seller #ith the persons referred by said buyer or for subse7uent sales that said buyers has helped
the seller enter into.
Ar'&c%! 60. Penalties. G
a% ,ny person #ho shall violate the provisions of Title III, Chapter I, shall upon conviction, be
subject to a fine of not less than Five 0undred Pesos $P'((.((% but not more than Ten Thousand
Pesos $P(,(((.((% or imprisonment of not less than five $'% months but not more than one $%
year or both, upon the discretion of the court.
b% In addition to the penalty provided for in paragraph $%, the court may grant an injunction
restraining the conduct constituting the contravention of the provisions of ,rticles '( and '
andHor actual damages and such other orders as it thin3s fit to redress injury to the person
caused by such conduct.
*HAPTER II
REG+LATION OF PRA*TI*ES RELATIVE TO 3EIGHTS AND MEAS+RES GENERAL
PROVISION
Ar'&c%! 61. Implementing Agency. G The provincial, city, or municipal treasurers shall strictly enforce
the provisions of this Chapter, and its implementing rules and regulations. Provided, That, #ith respect
to the use of the Metric 6ystem, it shall be enforced by the 5epartment of Trade and Industry.
Ar'&c%! 62. Sealing and Testing of Instruments of /eights and 0easure. G ,ll instruments for
determining #eights and measures in all consumer and consumer related transactions shall be tested,
calibrated and sealed every si* $+% months by the official sealer #ho shall be the provincial or city or
municipal treasurer or his authori?ed representative upon payment of fees re7uired under e*isting la#.
Provided, That all instruments of #eights and measures shall continuously be inspected for compliance
#ith the provisions of this Chapter.
Ar'&c%! 6). $se of 0etric System. G The system of #eights and measures to be used for all products,
commodities, materials, utilities, services and commercial transactions, in all contracts, deeds and other
official and legal instruments and documents shall be the metric system, in accordance #ith e*isting
la#s and their implementing rules and regulations.
The 5epartment of Trade and Industry shall also adopt standard measurement for garments, shoes and
other similar consumer products.
PROHI1ITED A*TS
Ar'&c%! 64. (raudulent Practices !elatie to /eights and 0easures. G The follo#ing acts relating to
#eights and measures are prohibited.
a% for any person other than the official sealer or his duly authori?ed representative to place or
attach an official tag, seal, stic3er, mar3, stamp, brand or other characteristic sign used to
indicate that such instrument of #eight and measure has officially been tested, calibrated, sealed
or inspected1
b% for any person to imitate any seal, stic3er, mar3, stamp, brand, tag or other characteristic sign
used to indicate that such instrument of #eight or measures has been officially tested,
calibrated, sealed or inspected1
c% for any person other than the official sealer or his duly authori?ed representative to alter in
any #ay the certificate or receipt given by the official sealer or his duly authori?ed
representative as an ac3no#ledgment that the instrument for determining #eight or measure has
been fully tested, calibrated, sealed or inspected1
d% for any person to ma3e or 3no#ingly sell or use any false or counterfeit seal, stic3er, brand,
stamp, tag, certificate or license or any dye for printing or ma3ing the same or any characteristic
sign used to indicate that such instrument of #eight or measure has been officially tested,
calibrated, sealed or inspected1
e% for any person other than the official sealer or his duly authori?ed representative to alter the
#ritten or printed figures, letters or symbols on any official seal, stic3er, receipt, stamp, tag,
certificate or license used or issued1
f% for any person to use or reuse any restored, altered, e*pired, damaged stamp, tag certificate or
license for the purpose of ma3ing it appear that the instrument of #eight of measure has been
tested, calibrated, sealed or inspected1
g% for any person engaged in the buying and selling of consumer products or of furnishing
services the value of #hich is estimated by #eight or measure to possess, use or maintain #ith
intention to use any scale, balance, #eight or measure that has not been sealed or if previously
sealed, the license therefor has e*pired and has not been rene#ed in due time1
h% for any person to fraudulently alter any scale, balance, #eight, or measure after it is officially
sealed1
i% for any person to 3no#ingly use any false scale, balance, #eight or measure, #hether sealed
or not1
j% for any person to fraudulently give short #eight or measure in the ma3ing of a scale1
3% for any person, assuming to determine truly the #eight or measure of any article bought or
sold by #eight or measure, to fraudulently misrepresent the #eight or measure thereof1 or
l% for any person to procure the commission of any such offense abovementioned by another.
Instruments officially sealed at some previous time #hich have remained unaltered and accurate and
the seal or tag officially affi*ed thereto remains intact and in the same position and condition in #hich
it #as placed by the official sealer or his duly authori?ed representative shall, if presented for sealing,
be sealed promptly on demand by the official sealer or his authori?ed representative #ithout penalty
e*cept a surcharge fi*ed by la# or regulation.
Ar'&c%! 65. Penalties. G
a% ,ny person #ho shall violate the provisions of paragraphs $a% to $f% and paragraph $l% of
,rticle +! or its implementing rules and regulations shall, upon conviction, be subject to a fine
of not less than T#o hundred pesos $P)((.((% but not more than Ane thousand pesos
$P,(((.((% or by imprisonment of not more than one $% year or both upon the discretion of the
court.
b% ,ny person #ho shall violate the provisions of paragraph $g% of ,rticle +! for the first time
shall be subject to a fine of not less than Five hundred pesos $P'((.((% or by imprisonment of
not less than one $% month but not more than five $'% years or both, upon the discretion of the
court.
c% The o#ner-possessor or user of instrument of #eights and measure enumerated in paragraphs
$h% to $3% of ,rticle +! shall, upon conviction, be subject to a fine of not less than Three hundred
pesos $P=((.((% or imprisonment not e*ceeding one $% year, or both, upon the discretion of the
court.
*HAPTER III
*ONS+MER PROD+*T AND SERVI*E 3ARRANTIES
Ar'&c%! 66. Implementing Agency. G The 5epartment of Trade and Industry, shall strictly enforce the
provision of this Chapter and its implementing rules and regulations.
Ar'&c%! 6(. Applicable )a& on /arranties. G The provisions of the Civil Code on conditions and
#arranties shall govern all contracts of sale #ith conditions and #arranties.
Ar'&c%! 6/. Additional Proisions on /arranties. G In addition to the Civil Code provisions on sale
#ith #arranties, the follo#ing provisions shall govern the sale of consumer products #ith #arranty.
a% Terms of e*press #arranty. G ,ny seller or manufacturer #ho gives an e*press #arranty shall.
% set forth the terms of #arranty in clear and readily understandable language and
clearly identify himself as the #arrantor1
)% identify the party to #hom the #arranty is e*tended1
=% state the products or parts covered1
!% state #hat the #arrantor #ill do in the event of a defect, malfunction of failure to
conform to the #ritten #arranty and at #hose e*pense1
'% state #hat the consumer must do to avail of the rights #hich accrue to the #arranty1
and
+% stipulate the period #ithin #hich, after notice of defect, malfunction or failure to
conform to the #arranty, the #arrantor #ill perform any obligation under the #arranty.
b% 8*press #arranty G operative from moment of sale. G ,ll #ritten #arranties or guarantees
issued by a manufacturer, producer, or importer shall be operative from the moment of sale.
% 6ales Eeport. G ,ll sales made by distributors of products covered by this ,rticle shall
be reported to the manufacturer, producer, or importer of the product sold #ithin thirty
$=(% days from date of purchase, unless other#ise agreed upon. The report shall contain,
among others, the date of purchase, model of the product bought, its serial number, name
and address of the buyer. The report made in accordance #ith this provision shall be
e7uivalent to a #arranty registration #ith the manufacturer, producer, or importer. 6uch
registration is sufficient to hold the manufacturer, producer, or importer liable, in
appropriate cases, under its #arranty.
)% Failure to ma3e or send report. G Failure of the distributor to ma3e the report or send
them the form re7uired by the manufacturer, producer, or importer shall relieve the latter
of its liability under the #arranty. Provided, ho#ever, That the distributor #ho failed to
comply #ith its obligation to send the sales reports shall be personally liable under the
#arranty. For this purpose, the manufacturer shall be obligated to ma3e good the
#arranty at the e*pense of the distributor.
=% Eetail. G The retailer shall be subsidiarily liable under the #arranty in case of failure
of both the manufacturer and distributor to honor the #arranty. In such case, the retailer
shall shoulder the e*penses and costs necessary to honor the #arranty. <othing therein
shall prevent the retailer from proceeding against the distributor or manufacturer.
!% 8nforcement of #arranty or guarantee. G The #arranty rights can be enforced by
presentment of a claim. To this end, the purchaser needs only to present to the immediate
seller either the #arranty card of the official receipt along #ith the product to be
serviced or returned to the immediate seller. <o other documentary re7uirement shall be
demanded from the purchaser. If the immediate seller is the manufacturer/s factory or
sho#room, the #arranty shall immediately be honored. If the product #as purchased
from a distributor, the distributor shall li3e#ise immediately honor the #arranty. In the
case of a retailer other than the distributor, the former shall ta3e responsibility #ithout
cost to the buyer of presenting the #arranty claim to the distributor in the consumer/s
behalf.
'% Eecord of purchases. G 5istributors and retailers covered by this ,rticle shall 3eep a
record of all purchases covered by a #arranty or guarantee for such period of time
corresponding to the lifetime of the product/s respective #arranties or guarantees.
+% Contrary stipulations G null and void. G ,ll covenants, stipulations or agreements
contrary to the provisions of this ,rticle shall be #ithout legal effect.
c% 5esignation of #arranties. G , #ritten #arranty shall clearly and conspicuously designate
such #arranty as.
% &Full #arranty& if the #ritten #arranty meets the minimum re7uirements set forth in
paragraph $d%1 or
)% &@imited #arranty& if the #ritten #arranty does not meet such minimum
re7uirements.
d% Minimum standards for #arranties. G For the #arrantor of a consumer product to meet the
minimum standards for #arranty, he shall.
% remedy such consumer product #ithin a reasonable time and #ithout charge in case of
a defect, malfunction or failure to conform to such #ritten #arranty1
)% permit the consumer to elect #hether to as3 for a refund or replacement #ithout
charge of such product or part, as the case may be, #here after reasonable number of
attempts to remedy the defect or malfunction, the product continues to have the defect or
to malfunction.
The #arrantor #ill not be re7uired to perform the above duties if he can sho# that the defect,
malfunction or failure to conform to a #ritten #arranty #as caused by damage due to
unreasonable use thereof.
e% 5uration of #arranty. G The seller and the consumer may stipulate the period #ithin #hich
the e*press #arranty shall be enforceable. If the implied #arranty on merchantability
accompanies an e*press #arranty, both #ill be of e7ual duration.
,ny other implied #arranty shall endure not less than si*ty $+(% days nor more than one $%
year follo#ing the sale of ne# consumer products.
f% 4reach of #arranties. G % In case of breach of e*press #arranty, the consumer may elect to
have the goods repaired or its purchase price refunded by the #arrantor. In case the repair of the
product in #hole or in part is elected, the #arranty #or3 must be made to conform to the
e*press #arranty #ithin thirty $=(% days by either the #arrantor or his representative. The thirty-
day period, ho#ever, may be e*tended by conditions #hich are beyond the control of the
#arrantor or his representative. In case the refund of the purchase price is elected, the amount
directly attributable to the use of the consumer prior to the discovery of the non-conformity
shall be deducted.
)% In case of breach of implied #arranty, the consumer may retain in the goods and
recover damages, or reject the goods, cancel and contract and recover from the seller so
much of the purchase price as has been paid, including damages.
Ar'&c%! 69. /arranties in Supply of Serices. G
a% In every contract for the supply of services to a consumer made by a seller in the course of a
business, there is an implied #arranty that the service #ill be rendered #ith due care and s3ill
and that any material supplied in connection #ith such services #ill be reasonably fit for the
purpose for #hich it is supplied.
b% 9here a seller supplies consumer services in the course of a business and the consumer,
e*pressly or by implication, ma3es 3no#n to the seller the particular purpose for #hich the
services are re7uired, there is an implied #arranty that the services supplied under the contract
and any material supplied in connection there#ith #ill be reasonably fit for that purpose or are
of such a nature or 7uality that they might reasonably be e*pected to achieve that result, unless
the circumstances sho# that the consumer does not rely or that it is unreasonable for him to rely,
on the seller/s s3ill or judgment.
Ar'&c%! (0. Professional Serices. G The provision of this ,ct on #arranty shall not apply to
professional services of certified public accountants, architects, engineers, la#yers, veterinarians,
optometrists, pharmacists, nurses, nutritionists, dietitians, physical therapists, salesmen, medical and
dental practitioners and other professionals engaged in their respective professional endeavors.
Ar'&c%! (1. 1uaranty of Serice (irms. G 6ervice firms shall guarantee #or3manship and replacement
of spare parts for a period not less than ninety $>(% days #hich shall be indicated in the pertinent
invoices.
Ar'&c%! (2. Prohibited Acts. G The follo#ing acts are prohibited.
a% refusal #ithout any valid legal cause by the total manufacturer or any person obligated under
the #arranty or guarantee to honor a #arranty or guarantee issued1
b% unreasonable delay by the local manufacturer or any person obligated under the #arranty or
guarantee in honoring the #arranty1
c% removal by any person of a product/s #arranty card for the purpose of evading said #arranty
obligation1
d% any false representation in an advertisement as to the e*istence of a #arranty or guarantee.
Ar'&c%! (). Penalties. G
a% ,ny person #ho shall violate the provisions of ,rticle +" shall be subject to fine of not less
than Five hundred pesos $P'((.((% but not more than Five thousand pesos $P',(((.((% or an
imprisonment of not less than three $=% months but not more than t#o $)% years or both upon the
discretion of the court. , second conviction under this paragraph shall also carry #ith it the
penalty or revocation of his business permit and license.
b% ,ny person, natural or juridical, committing any of the illegal acts provided for in Chapter
III, e*cept #ith respect to ,rticle +", shall be liable for a fine of not less than Ane thousand
pesos $P,(((.((% but not more than Fifty thousand pesos $P'(,(((.((% or imprisonment for a
period of at least one $% year but not more than five $'% years, or both, at the discretion of the
court.
The imposition of any of the penalties herein provided is #ithout prejudice to any liability incurred
under the #arranty or guarantee.
*HAPTER IV
LA1ELING AND FAIR PA*4AGING
Ar'&c%! (4. Declaration of Policy. G The 6tate shall enforce compulsory labeling, and fair pac3aging to
enable the consumer to obtain accurate information as to the nature, 7uality and 7uantity of the contents
of consumer products and to facilitate his comparison of the value of such products.
Ar'&c%! (5. Implementing Agency. G The 5epartment of Trade and Industry shall enforce the
provisions of this Chapter and its implementing rules and regulations. Provided, That #ith respect to
food, drugs, cosmetics, devices and ha?ardous substances, it shall be enforced by the concerned
department.
Ar'&c%! (6. Prohibited Acts on )abeling and Pac2aging. G It shall be unla#ful for any person, either
as principal or agent, engaged in the labeling or pac3aging of any consumer product, to display or
distribute or to cause to be displayed or distributed in commerce any consumer product #hose pac3age
or label does not conform to the provisions of this Chapter.
The prohibition in this Chapter shall not apply to persons engaged in the business of #holesale or retail
distributors of consumer products e*cept to the e*tent that such persons.
a% are engaged in the pac3aging or labeling of such products1
b% prescribe or specify by any means the manner in #hich such products are pac3aged or
labeled1 or
c% having 3no#ledge, refuse to disclose the source of the mislabeled or mispac3aged products.
Ar'&c%! ((. 0inimum )abeling !e3uirements for Consumer Products. G ,ll consumer products
domestically sold #hether manufactured locally or imported shall indicate the follo#ing in their
respective labels of pac3aging.
a% its correct and registered trade name or brand name1
b% its duly registered trademar31
c% its duly registered business name1
d% the address of the manufacturer, importer, repac3er of the consumer product in the
Philippines1
e% its general ma3e or active ingredients1
f% the net 7uality of contents, in terms of #eight, measure or numerical count rounded of to at
least the nearest tenths in the metric system1
g% country of manufacture, if imported1 and
h% if a consumer product is manufactured, refilled or repac3ed under license from a principal,
the label shall so state the fact.
The follo#ing may be re7uired by the concerned department in accordance #ith the rules and
regulations they #ill promulgate under authority of this ,ct.
a% #hether it is flammable or inflammable1
b% directions for use, if necessary1
c% #arning of to*icity1
d% #attage, voltage or amperes1 or
e% process of manufacture used if necessary.
,ny #ord, statement or other information re7uired by or under authority of the preceding paragraph
shall appear on the label or labeling #ith such conspicuousness as compared #ith other #ords,
statements, designs or devices therein, and in such terms as to render it li3ely to be read and understood
by the ordinary individual under customary conditions of purchase or use.
The above re7uirements shall form an integral part of the label #ithout danger of being erased or
detached under ordinary handling of the product.
Ar'&c%! (/. Philippine Product Standard 0ar2. G The label may contain the Philippine Product
6tandard Mar3 if it is certified to have passed the consumer product standard prescribed by the
concerned department.
Ar'&c%! (9. Authority of the Concerned Department to Proide for Additional )abeling and
Pac2aging !e3uirements. G 9henever the concerned department determines that regulations
containing re7uirements other than those prescribed in ,rticle "" hereof are necessary to prevent the
deception of the consumer or to facilitate value comparisons as to any consumer product, it may issue
such rules and regulations to.
a% establish and define standards for characteri?ation of the si?e of a pac3age enclosing any
consumer product #hich may be used to supplement the label statement of net 7uality, of
contents of pac3ages containing such products but this clause shall not be construed as
authori?ing any limitation on the si?e, shape, #eight, dimensions, or number of pac3ages #hich
may be used to enclose any product1
b% regulate the placement upon any pac3age containing any product or upon any label affi*ed to
such product of any printed matter stating or representing by implication that such product is
offered for retail at a price lo#er than the ordinary and customary retail price or that a price
advantage is accorded to purchases thereof by reason of the si?e of the pac3age or the 7uantity
of its contents1
c% prevent the nonfunctional slac3-fill of pac3ages containing consumer products.
For purposes of paragraph $c% of this ,rticle, a pac3age shall be deemed to be nonfunctionally slac3-
filled if it is filled to substantially less than its capacity for reasons other than $% protection of the
contents of such pac3age, $)% the re7uirements of machines used for enclosing the contents in such
pac3age, or $=% inherent characteristics of pac3age materials or construction being used.
Ar'&c%! /0. Special Pac2aging of Consumer Products for the Protection of Children. G The concerned
department may establish standards for the special pac3aging of any consumer product if it finds that.
a% the degree or nature of the ha?ard to children in the availability of such product, by reason of
its pac3aging, is such that special pac3aging is re7uired to protect children from serious
personal injury or serious illness resulting from handling and use of such product1 and
b% the special pac3aging to be re7uired by such standard is technically feasible, practicable and
appropriate for such product. In establishing a standard under this ,rticle, the concerned
department shall consider.
% the reasonableness of such standard1
)% available scientific, medical and engineering data concerning special pac3aging and
concerning accidental, ingestions, illnesses and injuries caused by consumer product1
=% the manufacturing practices of industries affected by this ,rticle1 and
!% the nature and use of consumer products.
Ar'&c%! /1. Price Tag !e3uirement. G It shall be unla#ful to offer any consumer product for retail sale
to the public #ithout an appropriate price tag, label or mar3ing publicly displayed to indicate the price
of each article and said products shall not be sold at a price higher than that stated therein and #ithout
discrimination to all buyers. Provided, That lumber sold, displayed or offered for sale to the public
shall be tagged or labeled by indicating thereon the price and the corresponding official name of the
#ood. Provided, further, That if consumer products for sale are too small or the nature of #hich ma3es
it impractical to place a price tag thereon price list placed at the nearest point #here the products are
displayed indicating the retail price of the same may suffice.
Ar'&c%! /2. 0anner of Placing Price Tags. G Price tags, labels or mar3ings must be #ritten clearly,
indicating the price of the consumer product per unit in pesos and centavos.
Ar'&c%! /). !egulations for Price Tag Placement. G The concerned department shall prescribe rules
and regulations for the visible placement of price tags for specific consumer products and services.
There shall be no erasures or alterations of any sort of price tags, labels or mar3ings.
Ar'&c%! /4. Additional )abeling !e3uirements for (ood. G The follo#ing additional labeling
re7uirements shall be imposed by the concerned department for food.
a% e*piry or e*piration date, #here applicable1
b% #hether the consumer product is semi-processed, fully processed, ready-to-coo3, ready-to-
eat, prepared food or just plain mi*ture1
c% nutritive value, if any1
d% #hether the ingredients use are natural or synthetic, as the case may be1
e% such other labeling re7uirements as the concerned department may deem necessary and
reasonable.
Ar'&c%! /5. 0islabeled (ood. G , food shall also be deemed mislabeled.
a% if its labeling or advertising is false or misleading in any #ay1
b% if it is offered for sale under the name of another food1
c% if it is an imitation of another food, unless its label bears in type of uniform si?e and
prominence, the #ord &imitation& and, immediately thereafter, the name of the food imitated1
d% its containers is so made, formed, or filled as to be misleading1
e% if in pac3age form unless it bears a label conforming to the re7uirements of this ,ct.
Provided, That reasonable variation on the re7uirements of labeling shall be permitted and
e*emptions as to small pac3ages shall be established by the regulations prescribed by the
concerned department of health1
f% if any #ord, statement or other information re7uired by or under authority of this ,ct to
appear on the principal display panel of the label or labeling is not prominently placed thereon
#ith such conspicuousness as compared #ith other #ords, statements, designs or devices in the
labeling and in such terms as to render it li3ely to be read and understood by the ordinary
individual under customary conditions of purchase and use1
g% if it purports to be or is represented as a food for #hich a definition or standard of identity
has been prescribed unless.
% it conforms to such definition and standard1 and
)% its labels bears the name of the food specified in the definition or standards, and
insofar as may be re7uired by such regulations, the common names of optional
ingredients other than spices, flavoring and coloring, present in such food1
h% if it purports to be or represented as.
% a food for #hich a standard of 7uality has been prescribed by regulations as provided
in this ,ct and its 7uality fall belo# such standard, unless its label bears in such manner
and form as such regulations specify, a statement that it falls belo# such standard1 or
)% a food for #hich a standard or standards or fill of container have been prescribed by
regulations as provided by this ,ct and it falls belo# the standard of fill of container
applicable thereto, unless its label bears, in such manner and form as such regulations
specify, a statement that it falls belo# such standard1
i% if it is not subject to the provisions of paragraph $g% of this ,rticle unless its label bears.
% the common or usual name of the food, if there be any1 and
)% in case it is manufactured or processed from t#o or more ingredients, the common or
usual name of such ingredient1 e*cept the spices, flavorings and colorings other than
those sold as such, may be designated as spices, flavorings and colorings #ithout
naming each. Provided, That to the e*tent that compliance #ith the re7uirement of
clause $)% of this paragraph is impracticable or results in deception or unfair competition,
e*emptions shall be established by regulations promulgated by the concerned
department of health1
j% if it purports to be or is represented for special dietary uses, unless its label bears such
information concerning its vitamin or mineral or other dietary properties as the concerned
department determines to be, or by regulations prescribed as necessary in order fully to inform
purchasers as its value for such uses1
3% if it bears or contains any artificial flavoring, artificial coloring, or chemical preservative,
unless it bears labeling, stating that fact. Provided, That to the e*tent that compliance #ith the
re7uirements of this paragraph is impracticable, e*emptions shall be established by regulations
promulgated by the concerned department. The provisions of this paragraph or paragraphs $g%
and $i% #ith respect to the artificial coloring shall not apply in the case of butter, cheese or ice
cream.
Ar'&c%! /6. )abeling of Drugs. G The -enerics ,ct shall apply in the labeling of drugs.
Ar'&c%! /(. Additional )abeling !e3uirements for Cosmetics. G The follo#ing additional re7uirements
may be re7uired for cosmetics.
a% e*piry or e*piration date1
b% #hether or not it may be an irritant1
c% precautions or contra-indications1 and
d% such other labeling re7uirements as the concerned department may deem necessary and
reasonable.
Ar'&c%! //. Special )abeling !e3uirements for Cosmetics. G , cosmetic shall be deemed mislabeled.
a% if its labeling or advertising is false or misleading in any #ay1
b% if in pac3age form unless it bears a label conforming to the re7uirements of labeling provided
for in this ,ct or under e*isting regulations. Provided, That reasonable variations shall be
permitted, and e*emptions as to small pac3ages shall be established by regulations prescribed
by the concerned department1
c% if any #ord, statement or other information re7uired by or under authority of this ,ct to
appear on the label or labeling is not prominently placed thereon #ith such conspicuousness, as
compared #ith other #ords, statements, designs or devices in the labeling, and in such terms as
to render it li3ely to be read and understood by the ordinary individual under customary
conditions of purchase and use1
d% if its container is so made, formed or filled as to be misleading1 or
e% if its label does not state the common or usual name of its ingredients.
Ar'&c%! /9. 0islabeled Drugs and Deices. G , drug or device shall be deemed to be mislabeled.
a% if its labeling is false or misleading in any #ay1
b% if its in pac3age form unless it bears a label conforming to the re7uirements of this ,ct or the
regulations promulgated therefor. Provided, that reasonable variations shall be permitted and
e*emptions as to small pac3ages shall be established by regulations prescribed by the concerned
department.
c% if any #ord, statement or other information re7uired by or under authority of this ,ct to
appear on the principal display panel of the label or labeling is not prominently placed thereon
#ith such conspicuousness as compared #ith other #ords, statements, designs or devices in the
labeling and in such terms as to render it li3ely to be read and understood by the ordinary
individual under customary conditions of purchase and use1
d% if it is for use by man and contains any 7uantity of the narcotic or hypnotic substance alpha-
eucaine, barbituric acid, beta-eucaine, bromal, cannabis, carbromal, chloral, coca, cocaine,
codeine, heroin, marijuana, morphine, opium, paraldehyde, peyote or sulfonmethane, or any
chemical derivative of such substance, #hich derivative has been designated by the concerned
department after investigation, and by regulations as habit forming1 unless its label bears the
name and 7uantity or proportion of such substance or derivative and in ju*taposition there#ith
the statement &9arning-May be habit forming&1
e% its labeling does not bear.
% ade7uate directions for use1 and
)% such ade7uate #arning against use in those pathological conditions or by children
#here its use may be dangerous to health, or against unsafe dosage or methods or
duration of administration or application, in such manner and form, as are necessary for
the protection of users. Provided, That #here any re7uirement of clause $% of this
paragraph, as applied to any drug or device, is not necessary for the protection of the
public health, the concerned department may promulgate regulations e*empting such
drug or device from such re7uirement1
f% if it purports to be a drug the name of #hich is recogni?ed in an official compendium, unless
it is pac3aged and labeled as prescribed therein. Provided, That the method of pac3ing may be
modified #ith the consent of the concerned department1
g% if it has been found by the concerned department to be a drug liable to deterioration, unless it
is pac3aged in such form and manner, and its label bears a statement of such precautions, as the
concerned department, shall by regulations, re7uire as necessary for the protection of the public
health1
h% % if it is a drug and its container is so made, formed or filled as to be misleading1 or
)% if it is an imitation of another drug1 or
=% if it is dangerous to health #hen used in the dosage, or #ith the fre7uency of duration
prescribed, recommended or suggested in the labeling thereof1
j% if it is, purports to be or is represented as a drug composed #holly or partly of insulin or of
any 3ind of penicillin, streptomycin, chlortetracycline, chloramphenicol, bacitracin, or any other
antibiotic drug, or any derivative thereof, unless.
% it is from a batch #ith respect to #hich a certificate of release has been issued
pursuant to regulations of the concerned department1 and
)% such certificate of release is in effect #ith respect to such drug. Provided, That this
paragraph shall not apply to any drug or class of drugs e*empted by regulations
promulgated under ,uthority of this ,ct.
Ar'&c%! 90. !egulation4ma2ing E'emptions. G The concerned department may promulgate regulations
e*empting from any labeling re7uirements of this ,ct food, cosmetics, drugs or devices #hich are, in
accordance #ith the practice of trade, to be processed, labeled or repac3ed in substantial 7uantities at
establishments other than those #here originally processed, labeled or pac3ed on condition that such
food, cosmetics, drugs or devices are not adulterated or mislabeled under the provisions of this ,ct and
other applicable la#s upon approval from such processing, labeling and repac3ing establishments.
Ar'&c%! 91. 0islabeled *a+ardous Substances. G 0a?ardous substances shall be deemed mislabeled
#hen.
a% having been intended or pac3aged in a form suitable for use in households, especially for
children, the pac3aging or labeling of #hich is in violation of the special pac3aging regulations
issued by the concerned department1
b% such substance fails to bear a label1
% #hich states conspicuously.
$i% the name and the place of business of the manufacturer, pac3er, distributor or
seller1
$ii% the common or usual name or the chemical name, if there be no common or
usual name, of the ha?ardous substance or of each component #hich contributes
substantially to the harmfulness of the substance, unless the concerned
department by regulation permits or re7uires the use of the recogni?ed generic
name1
$iii% the signal #ord &danger& on substances #hich are e*tremely flammable,
corrosive or highly to*ic1
$iv% the signal #ord &#arning& or &caution& #ith a bright red or orange color #ith
a blac3 symbol on all other ha?ardous substances1
$v% a clear statement as to the possible injury it may cause if used improperly1
$vi% precautionary measures describing the action to be follo#ed or avoided1
$vii% instructions #hen necessary or appropriate for first-aid treatment1
$viii% the #ord& poison& for any ha?ardous substance #hich is defined as highly
to*ic1
$i*% instructions for handling and storage of pac3ages #hich re7uire special care
in handling and storage1 and
$*% the statement &3eep out of the reach of children&, or its practical e7uivalent, if
the article is not intended for use by children and is not a banned ha?ardous
substance, #ith ade7uate directions for the protection of children from the ha?ard
involved. The aforementioned signal #ords, affirmative statements, description
of precautionary measures, necessary instructions or other #ords or statements
may be in 8nglish language or its e7uivalent in Filipino1 and
)% on #hich any statement re7uired under clause % of this paragraph is located
prominently in bright red and orange color #ith a blac3 symbol in contrast typography,
layout or color #ith the other printed matters on the label.
Ar'&c%! 92. E'emptions. G If the concerned department finds that for good or sufficient reasons, full
compliance #ith the labeling re7uirements other#ise applicable under this ,ct is impracticable or is not
necessary for the ade7uate protection of public health and safety, it shall promulgate regulations
e*empting such substances from these re7uirements to the e*tent it deems consistent #ith the objective
of ade7uately safeguarding public health and safety, and any ha?ardous substance #hich does not bear
a label in accordance #ith such regulations shall be deemed mislabeled ha?ardous substance.
Ar'&c%! 9). 1rounds for Sei+ure and Condemnation of 0islabeled *a+ardous Substances. G
a% ,ny mislabeled ha?ardous substance #hen introduced into commerce or #hile held for sale
shall be liable to be proceeded against and condemned upon order of the concerned department
in accordance #ith e*isting procedure for sei?ure and condemnation of articles in commerce.
Provided, That this ,rticle shall not apply to a ha?ardous substance intended for e*port to any
foreign country if.
% it is in a pac3age labeled in accordance #ith the specifications of the foreign
purchaser1
)% it is labeled in accordance #ith the la#s of the foreign country1
=% it is labeled on the outside of the shipping pac3age to sho# that it is intended for
e*port1 and
!% it is so e*ported,
b% any ha?ardous substance condemned under this ,rticle shall after entry of order of
condemnation be disposed of by destruction or sale as the concerned department may direct,
and the proceeds thereof, if sold, less the legal cost and charges, shall be paid into the treasury
of the Philippines1 but such ha?ardous substance shall not be sold under any order #hich is
contrary to the provisions of this ,ct1 Provided, That, after entry of the order and upon the
payment of the costs of such proceedings and the e*ecution of a good and sufficient bond
conditioned that such ha?ardous substance shall not be sold or disposed of contrary to the
provisions of this ,ct, the concerned department may direct that such ha?ardous substance be
delivered to or retained by the o#ner thereof for destruction or for alteration to comply #ith the
provisions of this ,ct under the supervision of an officer or employee duly designated by the
concerned department. The e*penses for such supervision shall be paid by the person obtaining
release of the ha?ardous substance under bond.
c% all e*penses in connection #ith the destruction provided for in paragraphs $a% and $b% of this
,rticle and all e*penses in connection #ith the storage and labor #ith respect to such ha?ardous
substance shall be paid by the o#ner or consignee, and default in such payment shall constitute
a lien against any importation by such o#ner or consignee.
Ar'&c%! 94. )abeling !e3uirements of Cigarettes. G ,ll cigarettes for sale or distribution #ithin the
country shall be contained in a pac3age #hich shall bear the follo#ing statement or its e7uivalent in
Filipino. &9arning& Cigarette 6mo3ing is 5angerous to Four 0ealth&. 6uch statement shall be located
in conspicuous place on every cigarette pac3age and shall appear in conspicuous and legible type in
contrast by typography, layout or color #ith other printed matter on the pac3age. ,ny advertisement of
cigarette shall contain the name #arning as indicated in the label.
Ar'&c%! 95. Penalties. G
a% ,ny person #ho shall violate the provisions of Title III, Chapter I2 of this ,ct, or its
implementing rules and regulations, e*cept ,rticles ; to ;= of the same Chapter, shall be
subject to a fine of not less than Five hundred pesos $P'((.((% but not more than T#enty
thousand pesos $P)(,(((.((% or imprisonment of not less than three $=% months but not more
than t#o $)% years or both, at the discretion of the court. Provided, That, if the consumer product
is one #hich is not a food, cosmetic, drug, device or ha?ardous substance, the penalty shall be a
fine of not less than T#o hundred pesos $P)((.((% but not more than Five thousand pesos
$P',(((.((% or imprisonment of not less than one $% month but not more than one $% year or
both, at the discretion of the court.
b% ,ny person #ho violates the provisions of ,rticle ; to ;= for the first time shall be subject
to a fine of not less than T#o hundred pesos $P)((.((% but not more than Five thousand pesos
$P',(((.((% or by imprisonment of not less than one $% month but not more than si* $+% months
or both, at the discretion of the court. , second conviction under this paragraph shall also carry
#ith it the penalty of revocation of business permit and license.
*HAPTER V
LIA1ILIT. FOR PROD+*T AND SERVI*E
Ar'&c%! 96. Implementing Agency. G The 5epartment of Trade and Industry shall enforce the
provisions of this Chapter and its implementing rules and regulations.
Ar'&c%! 9(. )iability for the Defectie Products. G ,ny Filipino or foreign manufacturer, producer, and
any importer, shall be liable for redress, independently of fault, for damages caused to consumers by
defects resulting from design, manufacture, construction, assembly and erection, formulas and handling
and ma3ing up, presentation or pac3ing of their products, as #ell as for the insufficient or inade7uate
information on the use and ha?ards thereof.
, product is defective #hen it does not offer the safety rightfully e*pected of it, ta3ing relevant
circumstances into consideration, including but not limited to.
a% presentation of product1
b% use and ha?ards reasonably e*pected of it1
c% the time it #as put into circulation.
, product is not considered defective because another better 7uality product has been placed in the
mar3et.
The manufacturer, builder, producer or importer shall not be held liable #hen it evidences.
a% that it did not place the product on the mar3et1
b% that although it did place the product on the mar3et such product has no defect1
c% that the consumer or a third party is solely at fault.
Ar'&c%! 9/. )iability of Tradesman or Seller. G The tradesmanHseller is li3e#ise liable, pursuant to the
preceding article #hen1
a% it is not possible to identify the manufacturer, builder, producer or importer.
b% the product is supplied, #ithout clear identification of the manufacturer, producer, builder or
importer1
c% he does not ade7uately preserve perishable goods. The party ma3ing payment to the damaged
party may e*ercise the right to recover a part of the #hole of the payment made against the
other responsible parties, in accordance #ith their part or responsibility in the cause of the
damage effected.
Ar'&c%! 99. )iability for Defectie Serices. G The service supplier is liable for redress, independently
of fault, for damages caused to consumers by defects relating to the rendering of the services, as #ell as
for insufficient or inade7uate information on the fruition and ha?ards thereof.
The service is defective #hen it does not provide the safety the consumer may rightfully e*pect of it,
ta3ing the relevant circumstances into consideration, including but not limited to.
a% the manner in #hich it is provided1
b% the result of ha?ards #hich may reasonably be e*pected of it1
c% the time #hen it #as provided.
, service is not considered defective because of the use or introduction of ne# techni7ues.
The supplier of the services shall not be held liable #hen it is proven.
a% that there is no defect in the service rendered1
b% that the consumer or third party is solely at fault.
Ar'&c%! 100. )iability for Product and Serice Imperfection. G The suppliers of durable or nondurable
consumer products are jointly liable for imperfections in 7uality that render the products unfit or
inade7uate for consumption for #hich they are designed or decrease their value, and for those resulting
from inconsistency #ith the information provided on the container, pac3aging, labels or publicity
messagesHadvertisement, #ith due regard to the variations resulting from their nature, the consumer
being able to demand replacement to the imperfect parts.
If the imperfection is not corrected #ithin thirty $=(% days, the consumer may alternatively demand at
his option.
a% the replacement of the product by another of the same 3ind, in a perfect state of use1
b% the immediate reimbursement of the amount paid, #ith monetary updating, #ithout prejudice
to any losses and damages1
c% a proportionate price reduction.
The parties may agree to reduce or increase the term specified in the immediately preceding paragraph1
but such shall not be less than seven $"% nor more than one hundred and eighty $;(% days.
The consumer may ma3e immediate use of the alternatives under the second paragraph of this ,rticle
#hen by virtue of the e*tent of the imperfection, the replacement of the imperfect parts may jeopardi?e
the product 7uality or characteristics, thus decreasing its value.
If the consumer opts for the alternative under sub-paragraph $a% of the second paragraph of this ,rticle,
and replacement of the product is not possible, it may be replaced by another of a different 3ind, mar3
or model. Provided, That any difference in price may result thereof shall be supplemented or
reimbursed by the party #hich caused the damage, #ithout prejudice to the provisions of the second,
third and fourth paragraphs of this ,rticle.
Ar'&c%! 101. )iability for Product 5uantity Imperfection. G 6uppliers are jointly liable for
imperfections in the 7uantity of the product #hen, in due regard for variations inherent thereto, their net
content is less than that indicated on the container, pac3aging, labeling or advertisement, the consumer
having po#ers to demand, alternatively, at his o#n option.
a% the proportionate price
b% the supplementing of #eight or measure differential1
c% the replacement of the product by another of the same 3ind, mar3 or model, #ithout said
imperfections1
d% the immediate reimbursement of the amount paid, #ith monetary updating #ithout prejudice
to losses and damages if any.
The provisions of the fifth paragraph of ,rticle >> shall apply to this ,rticle.
The immediate supplier shall be liable if the instrument used for #eighing or measuring is not gauged
in accordance #ith official standards.
Ar'&c%! 102. )iability for Serice 5uality Imperfection. G The service supplier is liable for any 7uality
imperfections that render the services improper for consumption or decrease their value, and for those
resulting from inconsistency #ith the information contained in the offer or advertisement, the consumer
being entitled to demand alternatively at his option.
a% the performance of the services, #ithout any additional cost and #hen applicable1
b% the immediate reimbursement of the amount paid, #ith monetary updating #ithout prejudice
to losses and damages, if any1
c% a proportionate price reduction.
Eeperformance of services may be entrusted to duly 7ualified third parties, at the supplier/s ris3 and
cost.
Improper services are those #hich prove to be inade7uate for purposes reasonably e*pected of them
and those that fail to meet the provisions of this ,ct regulating service rendering.
Ar'&c%! 10). !epair Serice 6bligation. G 9hen services are provided for the repair of any product, the
supplier shall be considered implicitly bound to use ade7uate, ne#, original replacement parts, or those
that maintain the manufacturer/s technical specifications unless, other#ise authori?ed, as regards to the
latter by the consumer.
Ar'&c%! 104. Ignorance of 5uality Imperfection. G The supplier/s ignorance of the 7uality
imperfections due to inade7uacy of the products and services does not e*empt him from any liability.
Ar'&c%! 105. )egal 1uarantee of Ade3uacy. G The legal guarantee of product or service ade7uacy does
not re7uire an e*press instrument or contractual e*oneration of the supplier being forbidden.
Ar'&c%! 106. Prohibition in Contractual Stipulation. G The stipulation in a contract of a clause
preventing, e*onerating or reducing the obligation to indemnify for damages effected, as provided for
in this and in the preceding ,rticles, is hereby prohibited, if there is more than one person responsible
for the cause of the damage, they shall be jointly liable for the redress established in the pertinent
provisions of this ,ct. 0o#ever, if the damage is caused by a component or part incorporated in the
product or service, its manufacturer, builder or importer and the person #ho incorporated the
component or part are jointly liable.
Ar'&c%! 10(. Penalties. G ,ny person #ho shall violate any provision of this Chapter or its
implementing rules and regulations #ith respect to any consumer product #hich is not food, cosmetic,
or ha?ardous substance shall upon conviction, be subject to a fine of not less than Five thousand pesos
$P',(((.((% and by imprisonment of not more than one $% year or both upon the discretion of the
court.
In case of juridical persons, the penalty shall be imposed upon its president, manager or head. If the
offender is an alien, he shall, after payment of fine and service of sentence, be deported #ithout further
deportation proceedings.
*HAPTER VI
ADVERTISING AND SALES PROMOTION
Ar'&c%! 10/. Declaration of Policy. G The 6tate shall protect the consumer from misleading
advertisements and fraudulent sales promotion practices.
Ar'&c%! 109. Implementing Agency. G The 5epartment of Trade and Industry shall enforce the
provisions of this Chapter and its implementing rules and regulations. Provided, That #ith respect to
food, drugs, cosmetics, devices and ha?ardous substances, it shall be enforced by the 5epartment of
0ealth.
FALSE, DE*EPTIVE AND MISLEADING ADVERTISEMENT
Ar'&c%! 110. (alse# Deceptie or 0isleading Adertisement. G It shall be unla#ful for any person to
disseminate or to cause the dissemination of any false, deceptive or misleading advertisement by
Philippine mail or in commerce by print, radio, television, outdoor advertisement or other medium for
the purpose of inducing or #hich is li3ely to induce directly or indirectly the purchase of consumer
products or services.
,n advertisement shall be false, deceptive or misleading if it is not in conformity #ith the provisions of
this ,ct or if it is misleading in a material respect. In determining #hether any advertisement is false,
deceptive or misleading, there shall be ta3en into account, among other things, not only representations
made or any combination thereof, but also the e*tent to #hich the advertisement fails to reveal material
facts in the light of such representations, or materials #ith respect to conse7uences #hich may result
from the use or application of consumer products or services to #hich the advertisement relates under
the conditions prescribed in said advertisement, or under such conditions as are customary or usual.
Ar'&c%! 111. Price Comparisons. G Comparative price advertising by sellers of consumer products or
services shall conform to the follo#ing conditions.
a% 9here the comparison relates to a former price of the seller, the item compared shall either
have been sold at that price #ithin the ninety $>(% days immediately preceding the date of the
advertisement, or it shall have been offered for sale for at least four $!% #ee3s during such
ninety-day period. If the comparison does not relate to an item sold or offered for sale during
the ninety-day period, the date, time or seasonal period of such sale or offer shall be disclosed in
the advertisement.
b% 9here the comparison relates to a seller/s future price, the future price shall ta3e effect on the
date disclosed in the advertisement or #ithin ninety $>(% days after the price comparison is
stated in the advertisement. The stated future price shall be maintained by the seller for a period
of at least four $!% #ee3s after its effective date. Provided, That compliance thereof may be
dispensed #ith in case of circumstances beyond the seller/s control.
c% 9here the comparison relates to a competitor/s price, the competitor/s price shall relate to the
consumer products or services advertised or sold in the ninety-day period and shall be
representative of the prices similar consumer products or services are sold or advertised in the
locality #here the price comparison #as made.
Ar'&c%! 112. Special Adertising !e3uirements for (ood# Drug# Cosmetic# Deice# or *a+ardous
Substance. G
a% <o claim in the advertisement may be made #hich is not contained in the label or approved
by the concerned department.
b% <o person shall advertise any food, drug, cosmetics, device, or ha?ardous substance in
manner that is false, misleading or deceptive or is li3ely to create an erroneous impression
regarding its character, value, 7uantity, composition, merit, or safety.
c% 9here a standard has been prescribed for a food, drug, cosmetic, or device, no person shall
advertise any article or substance in such a manner that it is li3ely to be mista3en for such
product, unless the article complies #ith the prescribed standard or regulation.
d% <o person shall, in the advertisement of any food, drug, cosmetic, device, or ha?ardous
substance, ma3e use of any reference to any laboratory report of analysis re7uired to be
furnished to the concerned department, unless such laboratory report is duly approved by such
department.
e% ,ny businessman #ho is doubtful as to #hether his advertisement relative to food, drug,
cosmetic, device, or ha?ardous substance #ill violate or does not conform #ith this ,ct or the
concerned department/s pertinent rules and regulations may apply to the same for consideration
and opinion on such matter before such advertisement is disseminated to the public. In this case,
the concerned department shall give its opinion and notify the applicant of its action #ithin
thirty $=(% days from the date of application1 other#ise, the application shall be deemed
approved.
f% <o person shall advertise any food, drug, cosmetic, device, or ha?ardous substance unless
such product is duly registered and approved by the concerned department for use in any
advertisement.
Ar'&c%! 11). Credit Adertising. G <o advertisement to aid, promote, or assist, directly or indirectly,
any e*tension of consumer credit may.
a% state that a specific periodic consumer credit amount or installment amount can be arranged,
unless the creditor usually and customarily arranges credit payment or installments for that
period and in that amount1 and
b% state that a specified do#n payment is re7uired in any e*tension of consumer credit, unless
the creditor usually or customarily arranges do#n payment in that amount.
Ar'&c%! 114. Adertising of 6pen4end Credit Plan. G In case of an open-end credit plan, the rate of
interest and other material features of the plan shall be disclosed in the advertisement.
Ar'&c%! 115. Special Claims. G ,ny advertisement #hich ma3es special claims shall.
a% substantiate such claims1 and
b% properly use research result, scientific terms, statistics or 7uotations.
PROMOTION OF SALES OF *ONS+MER PROD+*TS AND SERVI*ES
Ar'&c%! 116. Permit to Conduct Promotion. G <o person shall conduct any sales campaigns, including
beauty contest, national in character, sponsored and promoted by manufacturing enterprises #ithout
first securing a permit from the concerned department at least thirty $=(% calendar days prior to the
commencement thereof. :nless an objection or denial is received #ithin fifteen $'% days from filing of
the application, the same shall be deemed approved and the promotion campaign or activity may be
conducted. Provided, That any sales promotion campaign using medical prescriptions or any part
thereof or attachment thereto for raffles or a promise of re#ard shall not be allo#ed, nor a permit be
issued thereof.
Ar'&c%! 11(. Suspension of Publication or Dissemination of Information. G The concerned
department may, after due notice and hearing, suspend the publication and dissemination of any
information accompanying a sales promotion campaign, if it finds the campaign to be in violation of
the provisions of this Chapter or its implementing rules and regulations.
Ar'&c%! 11/. Conduct of Sales Promotion. G , sales promotion #hich is intended for broad consumer
participation and utili?es mass media shall indicate the duration, commencement and termination of the
promotion, the deadline for submission of entries and the governing criteria or procedure to be
follo#ed therein.
Ar'&c%! 119. Pac2aging of Products $nder Promotion. G The pac3aging of the products covered by
the sales promotion shall not be tampered, neither shall any change in the product/s pac3age be affected
#ithout the authority of the sponsoring agency or the o#ner or manufacturer of the product.
Ar'&c%! 120. Change in Starting and Termination Dates of Promotion. G The concerned department
shall be advised of any delay of starting dates or termination dates and details of any change in the
conduct of a sales promotion. ,ny change in the termination dates shall be published in a ne#spaper of
general circulation before the e*piration of the original schedule or the termination date, #hichever
comes first.
Ar'&c%! 121. Determination of /inners. G The #inners in any sales promotion shall be determined at a
definite time and place and shall be verified by a representative of the concerned department and the
sponsor. Immediately after the #inners are selected or determined, a list #ith their addresses and
corresponding pri?es shall be submitted to the concerned department. ,ll #inners shall be announced
or published in the same manner that the sales promotion #as announced or published. Provided, That
publication in a ne#spaper of general circulation shall be done in a legible manner at least once, if the
sales promotion is national in scope. Provided, further, That such announcement and publication shall
be done not later than t#o $)% #ee3s after the determination of #inners. In all cases #here the amount
of the price is Five hundred pesos $P'((.((% or more, the #inners shall also be notified in #riting by
registered mail or any communication #herein proof of notice or service can be verified.
Ar'&c%! 122. In"unctie !elief . G
a% 9henever the concerned department has the reason to believe $% that any person, partnership
or corporation is engaged in or is about to engage in the dissemination or the causing of
dissemination of any advertisement in violation of ,rticles ( to ', and $)% that the enjoining
thereof #ould be to the interest of the public, the concerned department shall direct the filing of
a complaint in the court of competent jurisdiction, to enjoin the dissemination or the causing of
the dissemination of such advertisement. :pon proper sho#ing, a temporary injunction or
restraining order shall be granted #ithout bond. ,ny such complaint shall be filed in the locality
in #hich the person, partnership or corporation resides or transacts business.
b% ,ny person #ho may suffer loss, damage or injury due to a false, misleading or deceptive
advertisement as defined in ,rticle ! may file a complaint #ith injunction in his o#n name #ith
any court of competent jurisdiction to recover damages, cost of suit and reasonable attorney/s
fees.
Ar'&c%! 12). Penalties. G
a% any person, association, partnership or corporation #ho shall violate any of the provisions of
,rticles ( to ' shall, upon conviction, be subject to a fine of not less than Five 0undred
Pesos $P'((.((% but not more than Five thousand pesos $P',(((.((% or an imprisonment of not
less than one $% month but not more than $+% months or both upon the discretion of the court.
b% ,ny violation of the provisions of ,rticles + to ) shall, upon conviction, subject the
offenders to a fine of not less than T#o hundred pesos $P)((.((% but not more than 6i* hundred
pesos $P+((.((% or an imprisonment of not less than one $% month but not more than si* $+%
months or both upon the discretion of the court. If the violation #as committed by a juridical
person, the manager, representative, director, agent or employee of said juridical person
responsible for the act shall be deported after service of sentence and payment of the fine
#ithout need for further deportation proceedings.
Ar'&c%! 124. E'emption from Penalties. G <o publisher, radio broadcast, television licensee or medium
for the dissemination of advertising shall be liable, under this Chapter, by reason of dissemination by
him of any false advertisement unless he refuses, on the re7uest of appropriate authorities, to furnish
the name and post office address of the manufacturer, pac3er, distributor seller or advertising agency.
This e*emption shall not apply ho#ever, to the manufacturer, pac3er, distributor or seller of the
consumer product or service and the advertising agency responsible for the false and misleading
advertising.
*HAPTER VII
REG+LATION OF REPAIR AND SERVI*E FIRMS
Ar'&c%! 125. Declaration of Policy. G The 6tate shall cause the accreditation of repair and service firms
or establishments and their technical personnel in order to protect the interest of the consumers availing
of their services.
Ar'&c%! 126. Implementing Agency. G The 5epartment of Trade and Industry, hereby referred to as the
5epartment, shall enforce the provisions of this Chapter.
Ar'&c%! 12(. 0inimum !e3uirements for Accreditation. G The follo#ing shall be the minimum
re7uirements for accreditation or repair and service firms.
a% the duly registered business name, firm name or style of the firm1
b% date of issue and effectivity of the certificate of accreditation1
c% number and s3ills of technical personnel1 and
d% re7uired license for the repair or servicing of any consumer product as re7uired by special
la#s.
Ar'&c%! 12/. Accreditation of !epair and Serice (irm. G <o person shall operate a repair and service
firm or act as technical personnel therein #ithout first being accredited by the 5epartment.
Ar'&c%! 129. Certification of Accreditation. G :pon compliance #ith the re7uirements for
accreditation, the 5epartment shall issue the corresponding certificate of accreditation. , separate
certificate shall be re7uired for each branch of an enterprise located in areas outside of the main office.
0o#ever, #ith respect to repair and service centers of factory authori?ed representatives of franchised
dealers, such centers may display a certified true copy of the certificate of accreditation of the parent
company.
Ar'&c%! 1)0. Suspension# !eocation or Cancellation of Certification of Accreditation. G ,ny
certificate of accreditation may be suspended, revo3ed or cancelled by the 5epartment, for cause, after
due notice and hearing.
TITLE IV. - *ONS+MER *REDIT TRANSA*TION
Ar'&c%! 1)1. Declaration of Policy. G The 6tate shall simplify, clarify and moderni?e the la#s
governing credit transactions and encourage the development of fair and economically sound consumer
credit practices. To protect the consumer from lac3 of a#areness of the true cost of credit to the user,
the 6tate shall assure the full disclosure of the true cost of credit.
Ar'&c%! 1)2. Determination of (inance Charges. G 8*cept as other#ise provided, the amount of the
finance charges in connection #ith any consumer credit transaction shall be determined as the sum of
all charges, payable directly or indirectly by the person to #hom the credit is e*tended and imposed
directly or indirectly by the creditor as an accident to the e*tension of credit, including any of the
follo#ing type of charges #hich are applicable.
a% interest or time price differential and any amount payable under point or other system of
additional charges1
b% collection fees #hich include finder/s fees or similar charges1
c% credit investigation fees1
d% notarial fees, if any1
e% premium or other charges for any guarantee or insurance protecting the creditor against the
obligor/s default or other credit loss. The implementing agency shall determine #hat items shall
be e*empted from the computation of the finance charges.
Ar'&c%! 1)). Determination of Simple Annual !ate. G The simple annual rate applicable to any
e*tension of consumer credit shall be determined in accordance #ith the rules and regulations
promulgated by the implementing agency.
Ar'&c%! 1)4. Delin3uency Charges. G 9ith respect to a consumer credit transaction other than one
pursuant to an open-end credit plan, the parties may agree to a delin7uency charge on any installment
not pain in full on or before the tenth day after its scheduled or deferred due date.
Ar'&c%! 1)5. Deferral Charges. G The parties in a consumer credit transaction may at any time agree in
#riting to a deferral of all or part of one or more unpaid installments and the creditor may ma3e and
collect a charge #hich shall not e*ceed the rate previously disclosed pursuant to the provisions on
disclosure. , deferral charge may be collected at the time it is assessed.
Ar'&c%! 1)6. (inance Charge on !efinancing. G The parties may agree on a finance charge in an open-
end credit plan based on the amount financed resulting from the refinancing or consolidation at a rate
not e*ceeding that permitted by the rules promulgated by the implementing agency.
Ar'&c%! 1)(. !ight to Prepay. G The person to #hom credit is e*tended may prepay in full or in part, at
any time #ithout penalty, the unpaid balance of any consumer credit transaction.
Ar'&c%! 1)/. !ebate on Prepayment. G :pon prepayment in full of the unpaid balance of a
precomputed consumer credit transaction, refinancing or consolidation, an amount not less than the
unearned portion of the finance charge calculated according to this ,rticle shall be rebated to the
person to #hom credit is e*tended.
The unearned portion of the precomputed finance charge on consumer transactions repayable in
substantially e7ual successive installments shall be e7ual to at least that portion of finance charge
#hich the sums of the installment balances of the obligation scheduled to be outstanding after the
installment date nearest the date of prepayment bears to the sum of all installment balances originally
scheduled to be outstanding under the obligation.
For the purpose of determining the installment date nearest the date of prepayment #hen payments are
monthly, any payment made on or before the fifteenth day follo#ing an installment due date shall be
deemed to have been made as of the installment due date, and if prepayment occurs after the fifteenth
day, it shall be deemed to have been made on the succeeding installment due date. This method of
calculating rebates may be referred to as the &rule of ";& or &sum of the digits& method.
The implementing agency may promulgate and adopt rules and regulations #ith respect to other
precomputed consumer credit transactions.
Ar'&c%! 1)9. 1eneral !e3uirements on Credit Cost Disclosure. G 8ach creditor shall disclose, in
accordance #ith the regulations of the implementing agency, to each person to #hom consumer credit
is e*tended, the disclosures re7uired by this ,ct.
If there is more than one obligor, a creditor need not furnish a statement of information re7uired under
this ,ct to more than one of them.
Ar'&c%! 140. Credit Sale# !e3uired Disclosures. G ,ny creditor e*tending a consumer credit sale other
than one pursuant to an open-end credit plan shall disclose in a statement to the e*tent applicable, the
follo#ing information.
a% the cash price or delivered price of the property or service to be ac7uired1
b% the amounts, if any, to be credited as do#n payment andHor trade in1
c% the total amount to be financed or the difference bet#een the amounts set forth under
paragraphs $% and $)%1
d% the charges, individually itemi?ed, #hich are paid or to be paid by such person in connection
#ith the transaction but #hich are not incident to the e*tension of credit1
e% the finance charge e*pressed in terms of pesos and centavos1
f% the percentage that the finance charge bears to the total amount to be financed e*pressed as a
simple annual rate on the outstanding balance of the obligation1
g% the effective interest rate1
h% the number, amount and due dates or periods of payments scheduled to repay the
indebtedness1 and
i% the default, delin7uency or similar charges payable in the event of late payments.
Ar'&c%! 141. !e3uired Disclosure on 6pen4end Credit Plan. G 4efore opening any account under an
open-end consumer credit plan, the creditor shall disclose, to the e*tent applicable, the follo#ing
information.
a% the conditions under #hich a finance charge may be imposed, including the time period, if
any, #ithin #hich any credit e*tended may be repaid #ithout incurring a finance charge1
b% the method of determining the balance upon #hich a finance charge may be imposed1
c% the method of determining the amount of the finance charges, including any minimum or
fi*ed amount imposed as a finance charge1
d% #here one or more periodic rates may be used to compute a finance charge, each such rate,
the range of balances to #hich it is applicable, and the corresponding simple annual rate1
e% the conditions under #hich the creditor may impose a security lien and a description of the
goods to #hich such lien may attach.
The implementing agency shall prescribe regulations consistent #ith commonly accepted accounting
standards to carry out the re7uirements of this ,rticle.
Ar'&c%! 142. !e3uired Disclosures on Consumer )oans %ot $nder 6pen4End Credit Plan. G ,ny
creditor e*tending a consumer loan or in a transaction #hich is neither a consumer credit sale nor under
an open-end consumer credit plan shall disclose, to the e*tent applicable, the follo#ing information.
a% the amount of credit of #hich the debtor #ill have the actual use, or #hich is or #ill be paid
to him or for his account or to another person on his behalf1
b% all charges, individually itemi?ed, #hich are included in the amount of credit e*tended but
#hich are not part of the finance charge1
c% the total amount to be financed or the sum of the amounts referred to in paragraphs $a% and
$b%1
d% the finance charge e*pressed in terms or pesos and centavos1
e% the effective interest rate1
f% the percentage that the finance charge bears to the total amount to be financed e*pressed as a
simple annual rate on the outstanding unpaid balance of the obligation1
g% the default, delin7uency or similar charges payable in the event of late payments1
h% a description of any security interest held or to be held or to be retained or ac7uired by the
creditor in connection #ith the e*tension of credit and a clear identification of the property to
#hich the security interest relates.
Ar'&c%! 14). (orm and Timing of Disclosure. G ,ll disclosures re7uired under this ,ct shall be made
clearly and conspicuously in #riting before the transaction is consummated.
Ar'&c%! 144. Periodic Statement of Charges. G The periodic statement transmitted by the creditor in
connection #ith any e*tension of consumer credit other than under an open-end consumer credit plan,
shall set forth the follo#ing information.
a% the simple annual rate1
b% the effective interest rate1
c% the date by #hich, or the period $if any% #ithin #hich payment must be made in order to
avoid additional finance charges1
d% method of determining the balance upon #hich the finance charge may be imposed.
Ar'&c%! 145. E'empted Transaction. G The foregoing re7uirements on consumer credit transactions
shall not apply to the follo#ing credit transactions.
a% those involving e*tension of credits for business or commercial purposes, or to the
-overnment and governmental agencies and instrumentalities, juridical entities or to
organi?ations1
b% those in #hich the debtor is the one specifying the definite set of credit terms such as ban3
deposits, insurance contracts, sale of bonds or analogous transactions.
Ar'&c%! 146. Sale of Consumer Products 6n Installment Payment. G In a consumer credit sale other
than one pursuant to an open-end credit plan, the obligation of the consumer to #hom credit is being
e*tended shall be evidenced by a single instrument #hich shall include, in addition to the disclosures
re7uired by this act, the signature of the seller and the person to #hom credit is e*tended, the date it
#as signed, a description of the property sold and a description of any property transferred as a trade-
in. The instrument evidencing the credit shall contain a clear and conspicuous type#ritten notice to the
person to #hom credit is being e*tended that.
a% he should not sign the instrument if it contains any blan3 space1
b% he is entitled to a reasonable return of the precomputed finance charge if the balance is
prepaid1 and
c% he is entitled to an e*act, true copy of the agreement.
In cases #here the instrument #ill be sold at a discount to a ban3, financing company or other lender,
the said transferee shall be subject to all claims and defenses #hich the debtor could assert against the
seller of consumer products obtained hereto or #ith the proceeds thereof.
Ar'&c%! 14(. Penalties. G ,ny creditor #ho in connection #ith any credit transaction fails to disclose to
any person any information in violation of this Chapter or the Implementing rules and regulations
issued thereunder shall be liable to such person in the amount of Ane thousand pesos $P,(((.((% or in
amount e7ual to t#ice the finance charge re7uired by such creditor in connection #ith such transaction,
#hichever is greater, e*cept that such liability shall not e*ceed Three thousand pesos $P=,(((.((% for
any credit transaction and actual damages #ith the non-disclosure of the re7uired information. ,ction
to recover such penalty may be brought by such person #ithin one $% year from the date of the
occurrence of the violation in any court of competent jurisdiction.
TITLE V. - THE NATIONAL *ONS+MER AFFAIRS *O+N*IL
*HAPTER I
ESTA1LISHMENT AND *OMPOSITION
Ar'&c%! 14/. %ational Consumer Affairs Council. G To improve the management, coordination and
effectiveness of consumer programs, a <ational Consumer ,ffairs Council is hereby created,
hereinafter referred to as the &Council&.
Ar'&c%! 149. Composition. G The Council shall be composed of representatives from the follo#ing
government agencies and non-government agencies.
a% 5epartment of Trade and Industry1
b% 5epartment of 8ducation, Culture and 6ports1
c% 5epartment of 0ealth1
d% 5epartment of ,griculture1
e% four $!% representatives from consumer organi?ations of nation#ide base to be chosen by the
President from among the nominees submitted by the various consumer groups in the
Philippines1
f% t#o $)% representatives from businessHindustry sector to be chosen by the President from
among the nominees submitted by the various business organi?ations.
Ar'&c%! 150. Chairman. (unctions. G The Council shall be headed and presided by a Chairman #ho
shall be elected by the members from among themselves. 0e shall establish, #ith the concurrence of
the Council, the policies, procedures and standards to govern the implementation and interpretation of
the functions and duties of the Council.
Ar'&c%! 151. Per Diems of 0embers. G The members of the Council shall be entitled to an allo#ance of
Five hundred pesos $P'((.((% per meeting actually attended but not more than T#o thousand pesos
$P),(((.((% a month.
Ar'&c%! 152. The Secretariat. G The Council shall appoint an 8*ecutive 5irector #ho shall assist the
Chairman and act as 6ecretary of the Council. The 5epartment of Trade and Industry shall provide the
6ecretariat #hich shall assist the Council in the effective performance of its functions.
*HAPTER II
PO3ERS AND F+N*TIONS
Ar'&c%! 15). Po&ers and (unctions. G The Council have the follo#ing po#ers and functions.
a% to rationali?e and coordinate the functions of the agencies charged #ith consumer programs
and enforcement of consumer related la#s to the end that an effective, coordinated and
integrated system of consumer protection, research and implementation and enforcement of
such la#s shall be achieved1
b% to recommend ne# policies and legislation or amendments to e*isting ones1
c% to monitor and evaluate implementation of consumer programs and projects and to ta3e
appropriate steps to comply #ith the established priorities, standards and guidelines1
d% to see3 the assistance of government instrumentalities in the form of augmenting the need for
personnel facilities and other resources1
e% to underta3e a continuing education and information campaign to provide the consumer #ith,
among others1
% facts about consumer products and services1
)% consumer rights and the mechanism for redress available to him1
=% information on ne# concepts and developments on consumer protection1 and
!% general 3no#ledge and a#areness necessary for a critical and better judgment on
consumption1
'% such other matters of importance to the consumer/s general #ell-being.
Ar'&c%! 154. Consumer Education in Schools. G The 5epartment of 8ducation, Culture and 6ports,
#ith the cooperation and advice of the Council, shall develop and adopt a consumer education program
#hich shall be integrated into e*isting curricula of all public and private schools from primary to
secondary level.
, continuing consumer education program for out-of-school youth and adults shall li3e#ise be
developed and underta3en.
The consumer education program shall include information regarding.
a% the consumer as a responsible member of society and his responsibility to develop.
% critical a#areness #hich is the responsibility to be alert and 7uestioning about the use
of and price and 7uality of goods he uses1
)% assertiveness #hich is the responsibility to assert himself and act so he is assured of a
fair deal, a#are that for as long as he remains to be a passive consumer he #ill continue
to be e*ploited1
=% social concern #hich is the responsibility to be a#are of the impact of his
consumption on other citi?ens, especially the disadvantaged1 and
!% environmental a#areness #hich is the responsibility to understand the environmental
conse7uences of his consumption, recogni?ing his individual and social responsibility to
conserve natural resources for future generations1
b% consumer rights1 and
c% practical problems the consumer faces in daily life.
Ar'&c%! 155. Concerned Departments# Po&ers and Duties $nder E'isting )a&s. G The concerned
departments shall continue to e*ercise the po#ers and duties provided to them under e*isting la#s,
unless repealed or modified accordingly.
Ar'&c%! 156. Consumer Participation. G The 5epartments shall establish procedures for meaningful
participation by consumers or consumer organi?ations in the development and revie# of department
rules, policies and programs. 6uch procedures shall include provisions for a forum, #here consumers
can e*press their concerns and recommendations to decision ma3ers. The departments shall e*ert
efforts to inform consumers of pending proceedings #here their participation is important.
Ar'&c%! 15(. Adisory Serices. G The departments shall render advisory services upon re7uest. The
technical and legal assistance shall be made available to consumers and their organi?ations and to the
general public.
Ar'&c%! 15/. Consumer Program !eforms. G 8ach concerned 5epartment shall formulate and develop
a consumer program consonant #ith the objectives of its charter or the applicable la#s #hich program
shall embody the standards set forth in 6ections '+ and '" of this ,ct. Copies of these program shall
be furnished the Council. The 8*ecutive 5irector shall, among his other functions, monitor and
coordinate the implementation by the concerned agencies of their respective consumer programs.
,fter the close of the fiscal year, the Council shall submit to Congress and the Affice of the President, a
full report on the progress of the implementation of consumer programs.
*HAPTER III
*ONS+MER *OMPLAINTS
Ar'&c%! 159. Consumer Complaints. G The concerned department may commerce an investigation
upon petition or upon letter-complaint from any consumer. Provided, That, upon a finding by the
department of prima facie violation of any provisions of this ,ct or any rule or regulation promulgated
under its authority, it may motu proprio or upon verified complaint commerce formal administrative
action against any person #ho appears responsible therefor. The department shall establish procedures
for systematically logging in, investigating and responding to consumer complaints into the
development of consumer policies, rules and regulations, assuring as far as practicable simple and easy
access on the part of the consumer to see3 redress for his grievances.
Ar'&c%! 160. Consumer Arbitration 6fficers. G The concerned 5epartment 6ecretaries shall appoint as
many 7ualified consumer arbitration officers as may be necessary for the effective and efficient
protection of consumer rights. Provided, ho#ever, That there shall be not more than ten $(% consumer
arbitration officers per province, including the <ational Capital Eegion.
Ar'&c%! 161. Consumer Arbitration 6fficers. 5ualifications. G The consumer arbitration officer must
be a college graduate #ith at least three $=% years e*perience in the field of consumer protection and
shall be of good moral character.
Ar'&c%! 162. Arbitration 6fficers. Jurisdiction. G The consumer arbitration officers shall have original
and e*clusive jurisdiction to mediate, conciliate, hear and adjudicate all consumer complaints,
Provided, ho#ever, That this does not preclude the parties from pursuing the proper judicial action.
Ar'&c%! 16). Inestigation Procedure. G
a% The consumer arbitration officer shall conduct hearings on any complaint received by him or
referred by the Council.
b% Parties to the case shall be entitled to notice of the hearing, and shall be informed of the date,
time and place of the same. , copy of the complaint shall be attached to the notice.
c% The department shall afford all interested parties the opportunity to submit a statement of
facts, arguments, offers of settlements or proposals of adjustments.
d% The Consumer arbitration officer shall first and foremost ensure that the contending parties
come to a settlement of the case.
e% In the event that a settlement has not been effected, the Mediation officer may no# proceed
to formally investigate, hear and decide the case.
f% The Consumer arbitration officer may summon #itnesses, administer oaths and affirmations,
issue subpoena and subpoena duces tecum, rule upon offers of proof and receive relevant
evidence, ta3e or cause deposition to be ta3en #henever the ends of justice #ould be served
thereby, regulate the course of the hearing, rule on any procedural re7uest or similar matter and
decide the complaint.
In hearing the complaint, the mediation officer shall use every and all reasonable means to ascertain the
facts in each complaint speedily and objectively #ithout regard to strict rules of evidence prevailing in
suits before courts. The complaints shall be decided #ithin fifteen $'% days from the time the
investigation #as terminated.
Ar'&c%! 164. Sanctions. G ,fter investigation, any of the follo#ing administrative penalties may be
imposed even if not prayed for in the complaint.
a% the issuance of a cease and desist order, Provided, ho#ever, That such order shall specify the
acts that respondent shall cease and desist from and shall re7uire him to submit a report of
compliance there#ith #ithin a reasonable time1
b% the acceptance of a voluntary assurance of compliance or discontinuance from the respondent
#hich may include any or all of the follo#ing terms and conditions.
% an assurance to comply #ith the provisions of this ,ct and its implementing rules and
regulations1
)% an assurance to refrain from engaging in unla#ful acts and practices or unfair or
unethical trade practices subject of the formal investigation1
=% an assurance to comply #ith the terms and conditions specified in the consumer
transaction subject of the complaint1
!% an assurance to recall, replace, repair, or refund the money value of defective products
distributed in commerce1
'% an assurance to reimburse the complaint out of any money or property in connection
#ith the complaint, including e*penses in ma3ing or pursuing the complaint, if any, and
to file a bond to guarantee compliance there#ith.
c% restitution or rescission of the contract #ithout damages1
d% condemnation and sei?ure of the consumer product found to be ha?ardous to health and
safety unless the respondent files a bond to ans#er for any damage or injury that may arise from
the continued use of the product1
e% the imposition of administrative fines in such amount as deemed reasonable by the 6ecretary,
#hich shall in no case be less that Five hundred pesos $P'((.((% nor more than Three hundred
thousand pesos $P=((,(((.((% depending on the gravity of the offense, and an additional fine of
not more than Ane thousand pesos $P,(((.((% or each day of continuing violation.
Ar'&c%! 165. Appeal from 6rders. G ,ny order, not interlocutory of the Consumer arbitration officer,
becomes final and e*ecutory unless appealed to the 5epartment 6ecretary concerned #ithin fifteen $'%
days from receipt of such order. ,n appeal may be entertained only on any of the follo#ing grounds.
a% grave abuse of discretion1
b% the order is in e*cess of the jurisdiction or authority of the consumer arbitration officer1
c% the order is not supported by the evidence or there is serious error in the findings of facts.
Ar'&c%! 166. Decision on Appeal. G The 6ecretary shall decide the appeal #ithin thirty $=(% days from
receipt thereof. The decision becomes final after fifteen $'% days from receipt thereof unless a petition
for certiorari is filed #ith the proper court.
TITLE VI
TRANSITOR. AND FINAL PROVISIONS
Ar'&c%! 16(. !elation of the Act to 6ther !ights. G The provisions of this ,ct shall apply
not#ithstanding any agreement to the contrary but shall not restrict, limit or derogate from any other
rights or remedies of a consumer under any other la#.
Ar'&c%! 16/. Application of )a&s Enacted Prior to the Act. G ,ll actions or claims accruing prior to
the effectivity of this ,ct shall be determined in accordance #ith the acts, la#s, decrees and regulations
in force at the time of the accrual.
Ar'&c%! 169. Prescription. G ,ll actions or claims accruing under the provisions of this ,ct and the
rules and regulations issued pursuant thereto shall prescribe #ithin t#o $)% years from the time the
consumer transaction #as consummated or the deceptive or unfair and unconscionable act or practice
#as committed and in case of hidden defects, from discovery thereof.
Ar'&c%! 1(0. !epealing Clause. G ,ll la#s, e*ecutive orders, rules and regulations or parts thereof
#hich are inconsistent #ith this ,ct are hereby repealed or amended accordingly.
Ar'&c%! 1(1. Appropriations. G For the initial operating e*penses of the <ational Consumer ,ffairs
Council, the sum of T#o million pesos $P),(((,(((.((% is hereby appropriated out of funds of the
<ational Treasury not other#ise appropriated. Thereafter, such sums as may be necessary to carry out
its purpose shall be included in the -eneral ,ppropriations ,ct.
Ar'&c%! 1(2. Separability Clause. G If for any reason any article or provision of this ,ct or any portion
thereof or the application of such article, provision or portion thereof to any person, group or
circumstance is declared invalid or unconstitutional, the remainder of this ,ct shall not be affected by
such decision.
Ar'&c%! 1(). Effectiity. G This ,ct shall ta3e effect thirty $=(% days from the date of its publication in
the Afficial -a?ette.
,pproved. A"r&% 1), 1992.la(phi45
G.R. No. L-2)052 5a6#ar7 29, 196/
*IT. OF MANILA, petitioner,
vs.
GENARO N. TEOTI*O a68 *O+RT OF APPEALS, respondents.
City 1iscal $anuel +. -eyes for petitioner.
Sevilla, %a.a and Associates for respondents.
*ON*EP*ION, C.J.-
,ppeal by certiorari from a decision of the Court of ,ppeals.
An Canuary )", >';, at about ;.(( p.m., -enaro <. Teotico #as at the corner of the Ald @uneta and P.
4urgos ,venue, Manila, #ithin a &loading and unloading& ?one, #aiting for a jeepney to ta3e him do#n
to#n. ,fter #aiting for about five minutes, he managed to hail a jeepney that came along to a stop. ,s
he stepped do#n from the curb to board the jeepney, and too3 a fe# steps, he fell inside an uncovered
and unlighted catch basin or manhole on P. 4urgos ,venue. 5ue to the fall, his head hit the rim of the
manhole brea3ing his eyeglasses and causing bro3en pieces thereof to pierce his left eyelid. ,s blood
flo#ed therefrom, impairing his vision, several persons came to his assistance and pulled him out of the
manhole. Ane of them brought Teotico to the Philippine -eneral 0ospital, #here his injuries #ere
treated, after #hich he #as ta3en home. In addition to the lacerated #ound 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, re7uired further medical treatment by a
private practitioner #ho charged therefor P,!((.((.
,s a conse7uence of the foregoing occurrence, Teotico filed, #ith the Court of First Instance of Manila,
a complaint K #hich #as, subse7uently, amended K for damages against the City of Manila, its
mayor, city engineer, city health officer, city treasurer and chief of police. ,s stated in the decision of
the trial court, and 7uoted #ith approval by the Court of ,ppeals,
,t the time of the incident, plaintiff #as a practicing public accountant, a businessman and a
professor at the :niversity of the 8ast. 0e held responsible positions in various business firms
li3e the Philippine Merchandising Co., the ,.:. 2alencia and Co., the 6ilver 6#an
Manufacturing Company and the 6incere Pac3ing Corporation. 0e #as also associated #ith
several civic organi?ations such as the 9ac3 9ac3 -olf Club, the Chamber of Commerce of the
Philippines, F/s Men Club of Manila and the Dnights of Ei?al. ,s a result of the incident,
plaintiff #as prevented from engaging in his customary occupation for t#enty days. Plaintiff
has lost a daily income of about P'(.(( during his incapacity to #or3. 4ecause of the incident,
he #as subjected to humiliation and ridicule by his business associates and friends. 5uring the
period of his treatment, plaintiff #as under constant fear and an*iety for the #elfare of his
minor children since he #as their only support. 5ue to the filing of this case, plaintiff has
obligated himself to pay his counsel the sum of P),(((.((.
An the other hand, the defense presented evidence, oral and documentary, to prove that the
6torm 5rain 6ection, Affice of the City 8ngineer of Manila, received a report of the uncovered
condition of a catchbasin at the corner of P. 4urgos and Ald @uneta 6treets, Manila, on Canuary
)!, >';, but the same #as covered on the same day $8*hibit !%1 that again the iron cover of the
same catch basin #as reported missing on Canuary =(, >';, but the said cover #as replaced the
ne*t day $8*hibit '%1 that the Affice of the City 8ngineer never received any report to the effect
that the catchbasin in 7uestion #as not covered bet#een Canuary )' and )>, >+;1 that it has
al#ays been a policy of the said office, #hich is charged #ith the duty of installation, repair and
care of storm drains in the City of Manila, that #henever a report is received from #hatever
source of the loss of a catchbasin cover, the matter is immediately attended to, either by
immediately replacing the missing cover or covering the catchbasin #ith steel matting that
because of the lucrative scrap iron business then prevailing, stealing of iron catchbasin covers
#as rampant1 that the Affice of the City 8ngineer has filed complaints in court resulting from
theft of said iron covers1 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 side#al3s #ith
concrete cement covers and openings on the side of the gutter1 and that these changes had been
underta3en by the city from time to time #henever funds #ere available.
,fter appropriate proceedings the Court of First Instance of Manila rendered the aforementioned
decision sustaining the theory of the defendants and dismissing the amended complaint, #ithout costs.
An appeal ta3en by plaintiff, this decision #as affirmed by the Court of ,ppeals, e*cept insofar as the
City of Manila is concerned, #hich #as sentenced to pay damages in the aggregate sum of P+,"'(.((.

0ence, this appeal by the City of Manila.
The first issue raised by the latter is #hether the present case is governed by 6ection ! of Eepublic ,ct
<o. !(> $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 4oard, or any other city officer, to enforce the
provisions of this chapter, or any other la# or ordinance, or from negligence of said Mayor,
Municipal 4oard, or other officers #hile enforcing or attempting to enforce said provisions.
or by ,rticle );> of the Civil Code of the Philippines #hich 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 #or3s under their control or supervision.
Manila maintains that the former provision should prevail over the latter, because Eepublic ,ct !(>, is
a special la#, intended e*clusively for the City of Manila, #hereas the Civil Code is a general la#,
applicable to the entire Philippines.
The Court of ,ppeals, ho#ever, applied the Civil Code, and, #e thin3, correctly. It is true that, insofar
as its territorial application is concerned, Eepublic ,ct <o. !(> is a special la# and the Civil Code a
general legislation1 but, as regards the subject-matter of the provisions above 7uoted, 6ection ! of
Eepublic ,ct !(> establishes a general rule regulating the liability of the City of Manila for. &damages
or injury to persons or property arising from the failure of& city officers &to enforce the provisions of&
said ,ct &or any other la# or ordinance, or from negligence& of the city &Mayor, Municipal 4oard, or
other officers #hile enforcing or attempting to enforce said provisions.& :pon the other hand, ,rticle
);> of the Civil Code constitutes a particular prescription ma3ing &provinces, cities and municipalities
. . . liable for damages for the death of, or injury suffered by any person by reason& K specifically K
&of the defective condition of roads, streets, brid"es, public buildin"s, and other-public (or&s under
their control or supervision.& In other #ords, said section ! refers to liability arising from negligence,
in general, regardless of the object thereof, #hereas ,rticle );> governs liability due to &defective
streets,& in particular. 6ince the present action is based upon the alleged defective condition of a road,
said ,rticle );> is decisive thereon.
It is urged that the City of Manila cannot be held liable to Teotico for damages. % because the accident
involving him too3 place in a national high#ay1 and )% because the City of Manila has not been
negligent in connection there#ith.
,s regards the first issue, #e note that it is based upon an allegation of fact not made in the ans#er of
the City. Moreover, Teotico alleged in his complaint, as #ell as in his amended complaint, that his
injuries #ere due to the defective condition of a street #hich is &under the supervision and control& of
the City. In its ans#er to the amended complaint, the City, in turn, alleged that 6the streets
afore'entioned (ere and have been constantly &ept in "ood condition and re"ularly inspected and the
stor' drains and 'anholes thereof covered by the defendant City and the officers concerned6 (ho
6have been ever vi"ilant and .ealous in the perfor'ance of their respective functions and duties as
i'posed upon the' by la(.6 Thus, the City had, in effect, admitted that P. 4urgos ,venue #as and is
under its control and supervision.
Moreover, the assertion to the effect that said ,venue is a national high#ay #as made, for the first time,
in its motion for reconsideration of the decision of the Court of ,ppeals. 6uch assertion raised,
therefore, a 7uestion of fact, #hich had not been put in issue in the trial court, and cannot be set up, for
the first time, on appeal, much less after the rendition of the decision of the appellate court, in a motion
for the reconsideration thereof.
,t any rate, under ,rticle );> of the Civil Code, it is not necessary for the liability therein established
to attach that the defective roads or streets belon" to the province, city or municipality from #hich
responsibility is e*acted. 9hat said article re7uires is that the province, city or municipality have either
&control or supervision& over said street or road. 8ven if P. 4urgos ,venue #ere, therefore, a national
high#ay, this circumstance #ould not necessarily detract from its &control or supervision& by the City
of Manila, under Eepublic ,ct !(>. In fact 6ection ;$*% thereof provides.
6ec. ;. !e"islative po(ers. K The Municipal 4oard shall have the follo#ing legislative
po#ers.
* * * * * * * * *
$*% 6ubject to the provisions of e*isting la# to provide for the layin" out, construction and
i'prove'ent, and to re"ulate the use of streets, avenues, alleys, side#al3s, #harves, piers,
par3s, cemeteries, and other public places1 to provide for li"htin", cleaning, and sprin3ling of
streets and public places1 . . . to provide for the inspection of, fi* the license fees for and
regulate the openings in the same for the laying of gas, #ater, se#er and other pipes, the
building and repair of tunnels, se#ers, and drains, and all structures in and under the same and
the erecting of poles and the stringing of #ires therein1 to provide for and re"ulate cross-(or&s,
curbs, and "utters therein, . . . to re"ulate traffic and sales upon the streets and other public
places1 to provide for the abate'ent of nuisances in the same and punish the authors or o#ners
thereof1 to provide for the construction and maintenance, and regulate the use, of bridges,
viaducts and culverts1 to prohibit and regulate ball playing, 3ite-flying, hoop rolling, and other
amusements #hich may annoy persons usin" the streets and public places, or frighten horses or
other animals1 to re"ulate the speed of horses and other animals, motor and other vehicles, cars,
and locomotives #ithin the limits of the city1 to re"ulate the li"hts used on all vehicles, cars,
and locomotives1 . . . to provide for and change the location, grade, and crossing of railroads,
and compel any such railroad to raise or lo#er its trac3s to conform to such provisions or
changes1 and to re7uire railroad companies to fence their property, or any part thereof, to
provide suitable protection a"ainst in7ury to persons or property, and to construct and repair
ditches, drains, se(ers, and culverts along and under their trac3s, so that the natural drainage of
the streets and adjacent property shall not be obstructed.
This authority has been neither #ithdra#n nor restricted by Eepublic ,ct <o. >" and 8*ecutive Arder
<o. =, dated May ), >'', upon #hich the City relies. 6aid ,ct governs the disposition or
appropriation of the high#ay funds and the giving of aid to provinces, chartered cities and
municipalities in the construction of roads and streets #ithin their respective boundaries, and 8*ecutive
Arder <o. = merely implements the provisions of said Eepublic ,ct <o. >", concerning the
disposition and appropriation of the high#ay funds. Moreover, it provides that &the construction,
'aintenance and improvement of national primary, national secondary and national aid provincial and
city roads shall be accomplished by the 0igh#ay 5istrict 8ngineers and 0igh#ay City 8ngineers under
the supervision of the Commissioner of Public 0igh#ays and shall be financed from such
appropriations as may be authori?ed by the Eepublic of the Philippines in annual or special
appropriation ,cts.&
Then, again, the determination of #hether or not P. 4urgos ,venue is under the control or supervision
of the City of Manila and #hether the latter is guilty of negligence, in connection #ith the maintenance
of said road, #hich #ere decided by the Court of ,ppeals in the affirmative, is one of fact, and the
findings of said Court thereon are not subject to our revie#.
908E8FAE8, the decision appealed from should be as it is hereby affirmed, #ith costs against the
City of Manila. It is so ordered.48(ph94.:t
-eyes, *.B.!., %i.on, $a&alintal, Ben".on, *.., ;aldivar, Sanche., Castro, An"eles and 1ernando, **.,
concur.
Foo'6o'!9

Medical fees K P,!((.((1 @ost income K P='(.((1 Moral damages K P=,(((.((1 and
,ttorney/s fees K P),(((.((.
G.R. No. 31513 M$,#" 21, 1959
FLORENTINA A. GUILATCO, petitioner,
vs.
CIT< OF DAGUPAN, $!( t") HONORA-LE COURT OF APPEALS, respondents.
!o"an R. 6van$e"ista for petitioner.
=he #it1 Le$a" Officer for respondents.

SARMIENTO, J.:
#n a civil action 1 for recovery of da"a+es filed by the petitioner !lorentina $. Huilatco, the follo*in+ /ud+"ent *as rendered a+ainst the respondent
City of 8a+upanA
- - -
1) Orderin+ defendant City of 8a+upan to pay plaintiff actual da"a+es in the a"ount of P 1B,94' na"ely P5,0B'.00 as hospital, "edical
and other e-penses D9-hs. < to <.60E, P (,'40.00 as lost inco"e for one 1) year D9-h. !E and P 'B0.00 as bonus). P 1B0,000.00 as "oral
da"a+es, P B0,000.00 as e-e"plary da"a+es, and P ;,000.00 as attorney,s fees, and liti+ation e-penses, plus costs and to appropriate
throu+h its %an++unian+ Pan+lunsod City Council) said a"ounts for said purposeF
4) 8is"issin+ plaintiffs co"plaint as a+ainst defendant City 9n+r. $lfredo H. Tan+coF and
;) 8is"issin+ the counterclai"s of defendant City of 8a+upan and defendant City 9n+r. $lfredo H. Tan+co, for lack of "erit. 2
The facts found by the trial court are as follo*sA 8
#t *ould appear fro" the evidences that on 7uly 4B, 19(5, herein plaintiff, a Court #nterpreter of 2ranch ###, C!#..8a+upan City, *hile she
*as about to board a "otori0ed tricycle at a side*alk located at Pere0 2lvd. a ?ational &oad, under the control and supervision of the
City of 8a+upan) accidentally fell into a "anhole located on said side*alk, thereby causin+ her ri+ht le+ to be fractured. $s a result
thereof, she had to be hospitali0ed, operated on, confined, at first at the Pan+asinan Provincial <ospital, fro" 7uly 4B to $u+ust ;, 19(5
or for a period of 16 days). %he also incurred hospitali0ation, "edication and other e-penses to the tune of P 5,0B;.6B 9-h. < to <.60) or
a total of P 10,000.00 in all, as other receipts *ere either lost or "isplacedF durin+ the period of her confine"ent in said t*o hospitals,
plaintiff suffered severe or e-cruciatin+ pain not only on her ri+ht le+ *hich *as fractured but also on all parts of her bodyF the pain has
persisted even after her dischar+e fro" the >edical City Heneral <ospital on October 9, 19(5, to the present. 8espite her dischar+e fro"
the <ospital plaintiff is presently still *earin+ crutches and the Court has actually observed that she has difficulty in loco"otion. !ro" the
ti"e of the "ishap on 7uly 4B, 19(5 up to the present, plaintiff has not yet reported for duty as court interpreter, as she has difficulty of
loco"otion in +oin+ up the stairs of her office, located near the city hall in 8a+upan City. %he earns at least P (40.00 a "onth consistin+ of
her "onthly salary and other "eans of inco"e, but since 7uly 4B, 19(5 up to the present she has been deprived of said inco"e as she
has already consu"ed her accrued leaves in the +overn"ent service. %he has lost several pounds as a result of the accident and she is
no lon+er her for"er /ovial self, she has been unable to perfor" her reli+ious, social, and other activities *hich she used to do prior to the
incident.
8r. ?orberto !eli- and 8r. 8o"inado >an0ano of the Provincial <ospital, as *ell as 8r. $ntonio %ison of the >edical City Heneral <ospital
in >andaluyon+ &i0al 9-h. #F see also 9-hs. !, H, H.1 to H.19) have confir"ed beyond shado* of any doubt the e-tent of the fracture
and in/uries sustained by the plaintiff as a result of the "ishap. On the other hand, Patrol"an Claveria, 8e $sis and Cere0o corroborated
the testi"ony of the plaintiff re+ardin+ the "ishap and they have confir"ed the e-istence of the "anhole 9-hs. $, 2, C and sub.e-hibits)
on the side*alk alon+ Pere0 2lvd., at the ti"e of the incident on 7uly 4B, 19(5 *hich *as partially covered by a concrete flo*er pot by
leavin+ +apin+ hole about 4 ft. lon+ by 1 1N4 feet *ide or '4 c"s. *ide by (B c"s. lon+ by 1B0 c"s. deep see 9-hs. 8 and 8.1).
8efendant $lfredo Tan+co, City 9n+ineer of 8a+upan City and ad"ittedly e-.officio <i+h*ay 9n+ineer, City 9n+ineer of the Public 6orks
and 2uildin+ Official for 8a+upan City, ad"itted the e-istence of said "anhole alon+ the side*alk in Pere0 2lvd., ad"ittedly a ?ational
&oad in front of the 3u0on Colle+es. <e also ad"itted that said "anhole there are at least 11 in all in Pere0 2lvd.) is o*ned by the
?ational Hovern"ent and the side*alk on *hich they are found alon+ Pere0 2lvd. are also o*ned by the ?ational Hovern"ent. 2ut as
City 9n+ineer of 8a+upan City, he supervises the "aintenance of said "anholes or draina+e syste" and sees to it that they are properly
covered, and the /ob is specifically done by his subordinates, >r. %antia+o de Gera >aintenance !ore"an) and 9n+r. 9rnesto %oler"o
also a "aintenance 9n+ineer. #n his ans*er defendant Tan+co e-pressly ad"itted in par. (.1 thereof, that in his capacity as e-.officio
<i+h*ay 9n+ineer for 8a+upan City he e-ercises supervision and control over ?ational roads, includin+ the Pere0 2lvd. *here the
incident happened.
On appeal by the respondent City of 8a+upan, the appellate court 9 reversed the lo*er court findin+s on the +round that no evidence *as presented by the
plaintiff. appellee to prove that the City of 8a+upan had Ccontrol or supervisionC over Pere0 2oulevard. 5
The city contends that Pere0 2oulevard, *here the fatal draina+e hole is located, is a national road that is not under the control or supervision of the City of
8a+upan. <ence, no liability should attach to the city. #t sub"its that it is actually the >inistry of Public <i+h*ays that has control or supervision throu+h the
<i+h*ay 9n+ineer *hich, by "ere coincidence, is held concurrently by the sa"e person *ho is also the City 9n+ineer of 8a+upan.
$fter e-a"ination of the findin+s and conclusions of the trial court and those of the appellate court, as *ell as the ar+u"ents presented by the parties, *e a+ree
*ith those of the trial court and of the petitioner. <ence, *e +rant the petition.
#n this revie* on certiorari, *e have si"plified the errors assi+ned by the petitioner to a sin+le issueA *hether or not control or supervision over a national road by
the City of 8a+upan e-ists, in effect bindin+ the city to ans*er for da"a+es in accordance *ith article 4159 of the Civil Code.
The liability of public corporations for da"a+es arisin+ fro" in/uries suffered by pedestrians fro" the defective condition of roads is e-pressed in the Civil Code
as follo*sA
$rticle 4159. Provinces, cities and "unicipalities shall be liable for da"a+es for the death of, or in/uries suffered by, any person by reason
of the defective condition of roads, streets, brid+es, public buildin+s, and other public *orks under their control or supervision.
#t is not even necessary for the defective road or street to belon+ to the province, city or "unicipality for liability to attach. The article only re=uires that either
control or supervision is e-ercised over the defective road or street. 3
#n the case at bar, this control or supervision is provided for in the charter of 8a+upan and is e-ercised throu+h the City 9n+ineer *ho has the follo*in+ dutiesA
%ec. 44. The City 9n+ineer..<is po*ers, duties and co"pensation.There shall be a city en+ineer, *ho shall be in char+e of the
depart"ent of 9n+ineerin+ and Public 6orks. <e shall receive a salary of not e-ceedin+ three thousand pesos per annu". <e shall have
the follo*in+ dutiesA
- - -
/) <e shall have the care and custody of the public syste" of *ater*orks and se*ers, and all sources of *ater supply, and shall control,
"aintain and re+ulate the use of the sa"e, in accordance *ith the ordinance relatin+ theretoF shall inspect and re+ulate the use of all
private syste"s for supplyin+ *ater to the city and its inhabitants, and all private se*ers, and their connection *ith the public se*er
syste".
- - -
The sa"e charter of 8a+upan also provides that the layin+ out, construction and i"prove"ent of streets, avenues and alleys and side*alks, and re+ulation of
the use thereof, "ay be le+islated by the >unicipal 2oard . 7 Thus the charter clearly indicates that the city indeed has supervision and control over the side*alk
*here the open draina+e hole is located.
The e-press provision in the charter holdin+ the city not liable for da"a+es or in/uries sustained by persons or property due to the failure of any city officer to
enforce the provisions of the charter, can not be used to e-e"pt the city, as in the case at bar.5
The charter only lays do*n $enera" ru"es re+ulatin+ the liability of the city. On the other hand article 4159 applies in particu"ar to the liability arisin+ fro"
Cdefective streets, public buildin+s and other public *orks.C 9
The City 9n+ineer, >r. $lfredo H. Tan+co, ad"its that he e-ercises control or supervision over the said road. 2ut the city can not be e-cused fro" liability by the
ar+u"ent that the duty of the City 9n+ineer to supervise or control the said provincial road belon+s "ore to his functions as an e-.officio <i+h*ay 9n+ineer of the
>inistry of Public <i+h*ay than as a city officer. This is because *hile he is entitled to an honorariu" fro" the >inistry of Public <i+h*ays, his salary fro" the
city +overn"ent substantially e-ceeds the honorariu".
6e do not a+ree.
$lfredo H. Tan+co Ci)n his official capacity as City 9n+ineer of 8a+upan, as 9-. Officio <i+h*ay 9n+ineer, as 9-.Officio City 9n+ineer of the 2ureau of Public
6orks, and, last but not the least, as 2uildin+ Official for 8a+upan City, receives the follo*in+ "onthly co"pensationA P 1,510.66 fro" 8a+upan CityF P 400.00
fro" the >inistry of Public <i+h*aysF P 100.00 fro" the 2ureau of Public 6orks and P B00.00 by virtue of P.8. 1096, respectively.C 14 This function of
supervision over streets, public buildin+s, and other public *orks pertainin+ to the City 9n+ineer is coursed throu+h a >aintenance !ore"an and a >aintenance
9n+ineer.11 $lthou+h these last t*o officials are e"ployees of the ?ational Hovern"ent, they are detailed *ith the City of 8a+upan and hence receive instruction
and supervision fro" the city throu+h the City 9n+ineer.
There is, therefore, no doubt that the City 9n+ineer e-ercises control or supervision over the public *orks in =uestion. <ence, the liability of the city to the
petitioner under article 4195 of the Civil Code is clear.
2e all that as it "ay, the actual da"a+es a*arded to the petitioner in the a"ount of P 10,000.00 should be reduced to the proven e-penses of P 5,0B;.6B only.
The trial court should not have rounded off the a"ount. #n deter"inin+ actual da"a+es, the court can not rely on Cspeculation, con/ecture or +uess *orkC as to
the a"ount. 6ithout the actual proof of loss, the a*ard of actual da"a+es beco"es erroneous. 12
On the other hand, "oral da"a+es "ay be a*arded even *ithout proof of pecuniary loss, inas"uch as the deter"ination of the a"ount is discretionary on the
court.18 Thou+h incapable of pecuniary esti"ation, "oral da"a+es are in the nature of an a*ard to co"pensate the clai"ant for actual in/ury suffered but *hich
for so"e reason can not be proven. <o*ever, in a*ardin+ "oral da"a+es, the follo*in+ should be taken into considerationA
1) !irst, the pro-i"ate cause of the in/ury "ust be the clai"ee,s acts.19
4) %econd, there "ust be co"pensatory or actual da"a+es as satisfactory proof of the factual basis for da"a+es.15
;) Third, the a*ard of "oral da"a+es "ust be predicated on any of the cases enu"erated in the Civil Code. 13
#n the case at bar, the physical sufferin+ and "ental an+uish suffered by the petitioner *ere proven. 6itnesses fro" the petitioner,s place of *ork testified to the
de+eneration in her disposition.fro" bein+ /ovial to depressed. %he refrained fro" attendin+ social and civic activities.17
?evertheless the a*ard of "oral da"a+es at P 1B0,000.00 is e-cessive. <er handicap *as not per"anent and disabled her only durin+ her treat"ent *hich
lasted for one year. Thou+h evidence of "oral loss and an+uish e-isted to *arrant the a*ard of da"a+es, 15 the "oderatin+ hand of the la* is called for. The
Court has ti"e and a+ain called attention to the reprehensible propensity of trial /ud+es to a*ard da"a+es *ithout basis,19 resultin+ in e-horbitant a"ounts.24
$lthou+h the assess"ent of the a"ount is better left to the discretion of the trial court 21 under precedin+ /urisprudence, the a"ount of "oral da"a+es should be
reduced to P 40,000.00.
$s for the a*ard of e-e"plary da"a+es, the trial court correctly pointed out the basisA
To serve as an e-a"ple for the public +ood, it is hi+h ti"e that the Court, throu+h this case, should serve *arnin+ to the city or cities
concerned to be "ore conscious of their duty and responsibility to their constituents, especially *hen they are en+a+ed in construction
*ork or *hen there are "anholes on their side*alks or streets *hich are uncovered, to i""ediately cover the sa"e, in order to "ini"i0e
or prevent accidents to the poor pedestrians.22
Too often in the 0eal to put up Cpublic i"pactC pro/ects such as beautification drives, the end is "ore i"portant than the "anner in *hich the *ork is carried out.
2ecause of this obsession for sho*in+ off, such trivial details as "isplaced flo*er pots betray the careless e-ecution of the pro/ects, causin+ public
inconvenience and invitin+ accidents.
Pendin+ appeal by the respondent City of 8a+upan fro" the trial court to the appellate court, the petitioner *as able to secure an order for +arnish"ent of the
funds of the City deposited *ith the Philippine ?ational 2ank, fro" the then presidin+ /ud+e, <on. 6illel"o !ortun. This order for +arnish"ent *as revoked
subse=uently by the succeedin+ presidin+ /ud+e, <on. &o"eo 8. >a+at, and beca"e the basis for the petitioner,s "otion for reconsideration *hich *as also
denied. 28
6e rule that the e-ecution of the /ud+"ent of the trial court pendin+ appeal *as pre"ature. 6e do not find any +ood reason to /ustify the issuance of an order of
e-ecution even before the e-piration of the ti"e to appeal .29
6<9&9!O&9, the petition is H&$?T98. The assailed decision and resolution of the respondent Court of $ppeals are hereby &9G9&%98 and %9T $%#89 and
the decision of the trial court, dated >arch 14, 19(9 and a"ended on >arch 1;, 19(9, is hereby &9#?%T$T98 *ith the indicated "odifications as re+ards the
a"ounts a*ardedA
1) Orderin+ the defendant City of 8a+upan to pay the plaintiff actual da"a+es in the a"ount of P 1B,94' na"ely P 5,0B'.00 as hospital,
"edical and other e-pensesF P (,'40.00 as lost inco"e for one 1) year and P 'B0.00 as bonus)F P 40,000.00 as "oral da"a+es and P
10,000.00 as e-e"plary da"a+es.
The attorney,s fees of P ;,000.00 re"ain the sa"e.
%O O&89&98.
Me"encio:;errera, (#haiperson), %aras, %adi""a and Re$a"ado, --., concur.

G.R. No. L:97551 O#to6), 8, 1953
'UAN F. NA1PIL B SONS, $!( 'UAN F. NA1PIL, petitioners,
vs.
THE COURT OF APPEALS, UNITED CONSTRUCTION COMPAN<, INC., 'UAN '. CARLOS, $!( t") PHILIPPINE -AR ASSOCIATION, respondents.
G.R. No. L:97538 O#to6), 8, 1953
THE UNITED CONSTRUCTION CO., INC., %)tto!),,
=s.
COURT OF APPEALS, ET AL., ,)s%o!()!ts.
G.R. No. L:97593 O#to6), 8, 1953
PHILIPPINE -AR ASSOCIATION, ET AL., %)tto!),s,
=s.
COURT OF APPEALS, ET AL., ,)s%o!()!ts.

PARAS, J.:
T")s) $,) %)tto!s *o, ,)=)? o! #),to,$, o* t") No=);6), 25, 1977 ()#so! o* t") Cou,t o* A%%)$+s ! CA:G.R. No. 51771:R ;o(*&!g t") ()#so!
o* t") Cou,t o* F,st I!st$!#) o* M$!+$, -,$!#" /, ! C=+ C$s) No. 79955 ($t)( S)%t);6), 21, 1971 $s ;o(*)( 6& t") O,(), o* t") +o?), #ou,t ($t)(
D)#);6), 5, 1971. T") Cou,t o* A%%)$+s ! ;o(*&!g t") ()#so! o* t") +o?), #ou,t !#+u()( $! $?$,( o* $! $((to!$+ $;ou!t o* P244,444.44 to t")
P"+%%!) -$, Asso#$to! to 6) %$( 7o!t+& $!( s)=),$++& 6& t") ()*)!($!t U!t)( Co!st,u#to! Co. $!( 6& t") t",(:%$,t& ()*)!($!ts 'u$! F. N$C%+
$!( So!s $!( 'u$! F. N$C%+.
T") (s%ost=) %o,to! o* t") ;o(*)( ()#so! o* t") +o?), #ou,t ,)$(sA
>HEREFORE, 7u(g;)!t s "),)6& ,)!(),)(A
D$E O,(),!g ()*)!($!t U!t)( Co!st,u#to! Co., I!#. $!( t",(:%$,t& ()*)!($!ts D)0#)%t Ro;$! OF$)t$E to %$& t") %+$!t**,
7o!t+& $!( s)=),$++&, t") su; o* P959,885.35 ?t" !t),)st $t t") +)g$+ ,$t) *,o; No=);6), 29, 1935, t") ($t) o* t") *+!g o* t")
#o;%+$!t u!t+ *u++ %$&;)!tG
D6E Ds;ss!g t") #o;%+$!t ?t" ,)s%)#t to ()*)!($!t 'u$! '. C$,+osG
D#E Ds;ss!g t") t",(:%$,t& #o;%+$!tG
D(E Ds;ss!g t") ()*)!($!tHs $!( t",(:%$,t& ()*)!($!tsH #ou!t),#+$;s *o, +$#C o* ;),tG
D)E O,(),!g ()*)!($!t U!t)( Co!st,u#to! Co., I!#. $!( t",(:%$,t& ()*)!($!ts D)0#)%t Ro;$! OF$)t$E to %$& t") #osts ! )Iu$+
s"$,)s.
SO ORDERED. DR)#o,( o! A%%)$+ %. 521G Ro++o, L: 97551, %. 139E.
T") (s%ost=) %o,to! o* t") ()#so! o* t") Cou,t o* A%%)$+s ,)$(sA
>HEREFORE, t") 7u(g;)!t $%%)$+)( *,o; s ;o(*)( to !#+u() $! $?$,( o* P244,444.44 ! *$=o, o* %+$!t**:$%%)++$!t
P"+%%!) -$, Asso#$to!, ?t" !t),)st $t t") +)g$+ ,$t) *,o; No=);6), 29, 1935 u!t+ *u++ %$&;)!t to 6) %$( 7o!t+& $!(
s)=),$++& 6& ()*)!($!t U!t)( Co!st,u#to! Co., I!#. $!( t",( %$,t& ()*)!($!ts D)0#)%t Ro;$! OF$)t$E. I! $++ ot"), ,)s%)#ts, t")
7u(g;)!t ($t)( S)%t);6), 21, 1971 $s ;o(*)( ! t") D)#);6), 5, 1971 O,(), o* t") +o?), #ou,t s "),)6& $**,;)( ?t" COSTS
to 6) %$( 6& t") ()*)!($!t $!( t",( %$,t& ()*)!($!t D)0#)%t Ro;$! OF$)t$E ! )Iu$+ s"$,)s.
SO ORDERED.
P)tto!),s 'u$! F. N$C%+ B So!s ! L:97551 $!( U!t)( Co!st,u#to! Co., I!#. $!( 'u$! '. C$,+os ! L:97538 s))C t") ,)=),s$+ o* t") ()#so! o* t")
Cou,t o* A%%)$+s, $;o!g ot"), t"!gs, *o, )0o!),$to! *,o; +$6+t& ?"+) %)tto!), P"+%%!) -$, Asso#$to! ! L:97593 s))Cs t") ;o(*#$to! o*
$*o,)s$( ()#so! to o6t$! $! $?$,( o* P1,584,444.44 *o, t") +oss o* t") P-A 6u+(!g %+us *ou, D9E t;)s su#" $;ou!t $s ($;$g)s ,)su+t!g !
!#,)$s)( #ost o* t") 6u+(!g, P144,444.44 $s )0);%+$,& ($;$g)sG $!( P144,444.44 $s $tto,!)&Hs *))s.
T")s) %)tto!s $,s!g *,o; t") s$;) #$s) *+)( ! t") Cou,t o* F,st I!st$!#) o* M$!+$ ?),) #o!so+($t)( 6& t"s Cou,t ! t") ,)so+uto! o* M$& 14,
1975 ,)Iu,!g t") ,)s%)#t=) ,)s%o!()!ts to #o;;)!t. DRo++o, L:97551, %. 172E.
T") *$#ts $s *ou!( 6& t") +o?), #ou,t DD)#so!, C.C. No. 79955G R)#o,( o! A%%)$+, %%. 239:895G %%. 524:521G Ro++o, L:97551, %. 139E $!( $**,;)( 6&
t") Cou,t o* A%%)$+s $,) $s *o++o?sA
T") %+$!t**, P"+%%!) -$, Asso#$to!, $ #=#:!o!:%,o*t $sso#$to!, !#o,%o,$t)( u!(), t") Co,%o,$to! L$?, ()#()( to #o!st,u#t $! o**#)
6u+(!g o! ts 594 sIu$,) ;)t),s +ot +o#$t)( $t t") #o;), o* A(u$!$ $!( A,Fo6s%o St,))ts, I!t,$;u,os, M$!+$. T") #o!st,u#to! ?$s u!(),t$C)! 6&
t") U!t)( Co!st,u#to!, I!#. o! $! J$(;!st,$to!J 6$ss, o! t") sugg)sto! o* 'u$! '. C$,+os, t") %,)s()!t $!( g)!),$+ ;$!$g), o* s$(
#o,%o,$to!. T") %,o%os$+ ?$s $%%,o=)( 6& %+$!t**Hs 6o$,( o* (,)#to,s $!( sg!)( 6& ts %,)s()!t Ro;$! OF$)t$, $ t",(:%$,t& ()*)!($!t ! t"s
#$s). T") %+$!s $!( s%)#*#$to!s *o, t") 6u+(!g ?),) %,)%$,)( 6& t") ot"), t",(:%$,t& ()*)!($!ts 'u$! F. N$C%+ B So!s. T") 6u+(!g ?$s
#o;%+)t)( ! 'u!), 1933.
I! t") )$,+& ;o,!!g o* August 2, 1935 $! u!usu$++& st,o!g )$,t"Iu$C) "t M$!+$ $!( ts )!=,o!s $!( t") 6u+(!g ! Iu)sto! sust$!)( ;$7o,
($;$g). T") *,o!t #o+u;!s o* t") 6u+(!g 6u#C+)(, #$us!g t") 6u+(!g to t+t *o,?$,( ($!g),ous+&. T") t)!$!ts =$#$t)( t") 6u+(!g ! =)? o* ts
%,)#$,ous #o!(to!. As $ t);%o,$,& ,);)($+ ;)$su,), t") 6u+(!g ?$s s"o,)( u% 6& U!t)( Co!st,u#to!, I!#. $t t") #ost o* P18,331.25.
O! No=);6), 29, 1935, t") %+$!t** #o;;)!#)( t"s $#to! *o, t") ,)#o=),& o* ($;$g)s $,s!g *,o; t") %$,t$+ #o++$%s) o* t") 6u+(!g $g$!st
U!t)( Co!st,u#to!, I!#. $!( ts P,)s()!t $!( G)!),$+ M$!$g), 'u$! '. C$,+os $s ()*)!($!ts. P+$!t** $++)g)s t"$t t") #o++$%s) o* t") 6u+(!g ?$s
$##us)( 6& ()*)#ts ! t") #o!st,u#to!, t") *$+u,) o* t") #o!t,$#to,s to *o++o? %+$!s $!( s%)#*#$to!s $!( =o+$to!s 6& t") ()*)!($!ts o* t") t),;s
o* t") #o!t,$#t.
D)*)!($!ts ! tu,! *+)( $ t",(:%$,t& #o;%+$!t $g$!st t") $,#"t)#ts ?"o %,)%$,)( t") %+$!s $!( s%)#*#$to!s, $++)g!g ! )ss)!#) t"$t t") #o++$%s)
o* t") 6u+(!g ?$s (u) to t") ()*)#ts ! t") s$( %+$!s $!( s%)#*#$to!s. Ro;$! OF$)t$, t") t")! %,)s()!t o* t") %+$!t** -$, Asso#$to! ?$s
!#+u()( $s $ t",(:%$,t& ()*)!($!t *o, ($;$g)s *o, "$=!g !#+u()( 'u$! '. C$,+os, P,)s()!t o* t") U!t)( Co!st,u#to! Co., I!#. $s %$,t& ()*)!($!t.
O! M$,#" 8, 1939, t") %+$!t** $!( t",(:%$,t& ()*)!($!ts 'u$! F. N$C%+ B So!s $!( 'u$! F. N$C%+ %,)s)!t)( $ ?,tt)! st%u+$to! ?"#" ,)$(sA
1. T"$t ! ,)+$to! to ()*)!($!tsH $!s?), ?t" #ou!t),#+$;s $!( t",(: %$,t& #o;%+$!ts $!( t") t",(:%$,t& ()*)!($!ts N$C%+ B
So!sH $!s?), t"),)to, t") %+$!t** !))( !ot $;)!( ts #o;%+$!t 6& !#+u(!g t") s$( 'u$! F. N$C%+ B So!s $!( 'u$! F. N$C%+
%),so!$++& $s %$,t)s ()*)!($!t.
2. T"$t ! t") )=)!t Du!)0%)#t)( 6& t") u!(),sg!)(E t"$t t") Cou,t s"ou+( *!( $*t), t") t,$+ t"$t t") $6o=):!$;)( ()*)!($!ts
'u$! '. C$,+os $!( U!t)( Co!st,u#to! Co., I!#. $,) *,)) *,o; $!& 6+$;) $!( +$6+t& *o, t") #o++$%s) o* t") P-A -u+(!g, $!(
s"ou+( *u,t"), *!( t"$t t") #o++$%s) o* s$( 6u+(!g ?$s (u) to ()*)#ts $!(Ko, !$()Iu$#& o* t") %+$!s, ()sg!s, $!(
s%)#*#$to!s % 6& t") t",(:%$,t& ()*)!($!ts, o, ! t") )=)!t t"$t t") Cou,t ;$& *!( 'u$! F. N$C%+ $!( So!s $!(Ko, 'u$! F.
N$C%+ #o!t,6uto,+& !)g+g)!t o, ! $!& ?$& 7o!t+& $!( so+($,+& +$6+) ?t" t") ()*)!($!ts, 7u(g;)!t ;$& 6) ,)!(),)( ! ?"o+)
o, ! %$,t. $s t") #$s) ;$& 6), $g$!st 'u$! F. N$C%+ B So!s $!(Ko, 'u$! F. N$C%+ ! *$=o, o* t") %+$!t** to $++ !t)!ts $!(
%u,%os)s $s * %+$!t**Hs #o;%+$!t "$s 6))! (u+& $;)!()( 6& !#+u(!g t") s$( 'u$! F. N$C%+ B So!s $!( 'u$! F. N$C%+ $s
%$,t)s ()*)!($!t $!( 6& $++)g!g #$us)s o* $#to! $g$!st t"); !#+u(!g, $;o!g ot"),s, t") ()*)#ts o, !$()Iu$#& o* t")
%+$!s, ()sg!s, $!( s%)#*#$to!s %,)%$,)( 6& t"); $!(Ko, *$+u,) ! t") %),*o,;$!#) o* t"), #o!t,$#t ?t" %+$!t**.
8. -ot" %$,t)s "),)6& 7o!t+& %)tto! t"s Ho!o,$6+) Cou,t to $%%,o=) t"s st%u+$to!. DR)#o,( o! A%%)$+, %%. 279:275G Ro++o, L:
97551,%.139E.
U%o! t") ssu)s 6)!g 7o!)(, $ %,):t,$+ ?$s #o!(u#t)( o! M$,#" 7, 1939, (u,!g ?"#" $;o!g ot"),s, t") %$,t)s $g,))( to ,)*), t") t)#"!#$+ ssu)s
!=o+=)( ! t") #$s) to $ Co;;sso!),. M,. A!(,)s O. HFo!, ?"o ?$s u+t;$t)+& $%%o!t)( 6& t") t,$+ #ou,t, $ssu;)( "s o**#) $s Co;;sso!),,
#"$,g)( ?t" t") (ut& to t,& t") *o++o?!g ssu)sA
1. >")t"), t") ($;$g) sust$!)( 6& t") P-A 6u+(!g (u,!g t") August 2, 1935 )$,t"Iu$C) "$( 6))! #$us)(, (,)#t+& o,
!(,)#t+&, 6&A
D$E T") !$()Iu$#)s o, ()*)#ts ! t") %+$!s $!( s%)#*#$to!s %,)%$,)( 6& t",(:%$,t& ()*)!($!tsG
D6E T") ()=$to!s, * $!&, ;$() 6& t") ()*)!($!ts *,o; s$( %+$!s $!( s%)#*#$to!s $!( "o? s$( ()=$to!s #o!t,6ut)( to t")
($;$g) sust$!)(G
D#E T") $++)g)( *$+u,) o* ()*)!($!ts to o6s),=) t") ,)Iust) Iu$+t& o* ;$t),$+s $!( ?o,C;$!s"% ! t") #o!st,u#to! o* t")
6u+(!gG
D(E T") $++)g)( *$+u,) to )0),#s) t") ,)Iust) ()g,)) o* su%),=so! )0%)#t)( o* t") $,#"t)#t, t") #o!t,$#to, $!(Ko, t") o?!),
o* t") 6u+(!gG
D)E A! $#t o* Go( o, $ *o,tutous )=)!tG $!(
D*E A!& ot"), #$us) !ot "),)! $6o=) s%)#*)(.
2. I* t") #$us) o* t") ($;$g) su**),)( 6& t") 6u+(!g $,os) *,o; $ #o;6!$to! o* t") $6o=):)!u;),$t)( *$#to,s, t") ()g,)) o,
%,o%o,to! ! ?"#" )$#" !(=(u$+ *$#to, #o!t,6ut)( to t") ($;$g) sust$!)(G
8. >")t"), t") 6u+(!g s !o? $ tot$+ +oss $!( s"ou+( 6) #o;%+)t)+& ();o+s")( o, ?")t"), t ;$& st++ 6) ,)%$,)( $!( ,)sto,)(
to $ t)!$!t$6+) #o!(to!. I! t") +$tt), #$s), t") ()t),;!$to! o* t") #ost o* su#" ,)sto,$to! o, ,)%$,, $!( t") =$+u) o* $!&
,);$!!g #o!st,u#to!, su#" $s t") *ou!($to!, ?"#" ;$& st++ 6) ut+F)( o, $=$+)( o* DR)#o,( o! A%%)$+, %%. 275:273G Ro++o,
L:97551, %. 139E.
T"us, t") ssu)s o* t"s #$s) ?),) (=()( !to t)#"!#$+ ssu)s $!( !o!:t)#"!#$+ ssu)s. As $*o,)st$t)( t") t)#"!#$+ ssu)s ?),) ,)*),,)( to t")
Co;;sso!),. T") !o!:t)#"!#$+ ssu)s ?),) t,)( 6& t") Cou,t.
M)$!?"+), %+$!t** ;o=)( t?#) *o, t") ();o+to! o* t") 6u+(!g o! t") g,ou!( t"$t t ;$& to%%+) (o?! ! #$s) o* $ st,o!g )$,t"Iu$C). T") ;oto!s
?),) o%%os)( 6& t") ()*)!($!ts $!( t") ;$tt), ?$s ,)*),,)( to t") Co;;sso!),. F!$++&, o! A%,+ 84, 1979 t") 6u+(!g ?$s $ut"o,F)( to 6)
();o+s")( $t t") )0%)!s) o* t") %+$!t**, 6ut !ot $!ot"), )$,t"Iu$C) o* "g" !t)!st& o! A%,+ 7, 1974 *o++o?)( 6& ot"), st,o!g )$,t"Iu$C)s o! A%,+
9, $!( 12, 1974, #$us)( *u,t"), ($;$g) to t") %,o%),t&. T") $#tu$+ ();o+to! ?$s u!(),t$C)! 6& t") 6u&), o* t") ($;$g)( 6u+(!g. DR)#o,( o!
A%%)$+, %%. 275:254G Ibid.E
A*t), t") %,ot,$#t)( ")$,!gs, t") Co;;sso!), )=)!tu$++& su6;tt)( "s ,)%o,t o! S)%t);6), 25, 1974 ?t" t") *!(!gs t"$t ?"+) t") ($;$g)
sust$!)( 6& t") P-A 6u+(!g ?$s #$us)( (,)#t+& 6& t") August 2, 1935 )$,t"Iu$C) ?"os) ;$g!tu() ?$s )st;$t)( $t 7.8 t")& ?),) $+so #$us)(
6& t") ()*)#ts ! t") %+$!s $!( s%)#*#$to!s %,)%$,)( 6& t") t",(:%$,t& ()*)!($!tsH $,#"t)#ts, ()=$to!s *,o; s$( %+$!s $!( s%)#*#$to!s 6& t")
()*)!($!t #o!t,$#to,s $!( *$+u,) o* t") +$tt), to o6s),=) t") ,)Iust) ?o,C;$!s"% ! t") #o!st,u#to! o* t") 6u+(!g $!( o* t") #o!t,$#to,s,
$,#"t)#ts $!( )=)! t") o?!),s to )0),#s) t") ,)Iust) ()g,)) o* su%),=so! ! t") #o!st,u#to! o* su67)#t 6u+(!g.
A++ t") %$,t)s ,)gst),)( t"), o67)#to!s to $*o,)s$( *!(!gs ?"#" ! tu,! ?),) $!s?),)( 6& t") Co;;sso!),.
T") t,$+ #ou,t $g,))( ?t" t") *!(!gs o* t") Co;;sso!), )0#)%t $s to t") "o+(!g t"$t t") o?!), s #"$,g)( ?t" *u++ !!) su%),=so! o* t")
#o!st,u#to!. T") Cou,t s))s !o +)g$+ o, #o!t,$#tu$+ 6$ss *o, su#" #o!#+uso!. DR)#o,( o! A%%)$+, %%. 849:825G I6(E.
T"us, o! S)%t);6), 21, 1971, t") +o?), #ou,t ,)!(),)( t") $ss$+)( ()#so! ?"#" ?$s ;o(*)( 6& t") I!t),;)($t) A%%)++$t) Cou,t o! No=);6),
25, 1977.
A++ t") %$,t)s "),)! $%%)$+)( *,o; t") ()#so! o* t") I!t),;)($t) A%%)++$t) Cou,t. H)!#), t")s) %)tto!s.
O! M$& 11, 1975, t") U!t)( A,#"t)#ts o* t") P"+%%!)s, t") Asso#$to! o* C=+ E!g!)),s, $!( t") P"+%%!) I!sttut) o* A,#"t)#ts *+)( ?t" t")
Cou,t $ ;oto! to !t),=)!) $s amicus curiae. T")& %,o%os)( to %,)s)!t $ %osto! %$%), o! t") +$6+t& o* $,#"t)#ts ?")! $ 6u+(!g #o++$%s)s $!(
to su6;t +C)?s) $ #,t#$+ $!$+&ss ?t" #o;%ut$to!s o! t") (=),g)!t =)?s o! t") ()sg! $!( %+$!s $s su6;tt)( 6& t") )0%),ts %,o#u,)( 6& t")
%$,t)s. T") ;oto! "$=!g 6))! g,$!t)(, t") amicus curiae ?),) g,$!t)( $ %),o( o* 34 ($&s ?t"! ?"#" to su6;t t"), %osto!.
A*t), t") %$,t)s "$( $++ *+)( t"), #o;;)!ts, >) g$=) (u) #ou,s) to t") %)tto!s ! Ou, R)so+uto! o* 'u+& 21, 1975.
T") %osto! %$%),s o* t") amicus curiae Dsu6;tt)( o! No=);6), 29, 1975E ?),) (u+& !ot)(.
T") amicus curiae g$=) t") o%!o! t"$t t") %+$!s $!( s%)#*#$to!s o* t") N$C%+s ?),) !ot ()*)#t=). -ut t") Co;;sso!),, ?")! $sC)( 6& Us to
#o;;)!t, ,)t),$t)( "s #o!#+uso! t"$t t") ()*)#ts ! t") %+$!s $!( s%)#*#$to!s !())( )0st)(.
Us!g t") s$;) $ut"o,t)s $=$+)( o* 6& t") amicus curiae su#" $s t") M$!+$ Co() DO,(. No. 9181E $!( t") 1933 As)% Co(), t") Co;;sso!),
$(()( t"$t )=)! * t #$! 6) %,o=)( t"$t t") ()*)#ts ! t") construction $+o!) D$!( !ot ! t") %+$!s $!( ()sg!E #$us)( t") ($;$g) to t") 6u+(!g, st++
t") ()*#)!#& ! t") o,g!$+ ()sg! $!( 7$#C o* s%)#*# %,o=so!s $g$!st to,so! ! t") o,g!$+ %+$!s $!( t") o=),+o$( o! t") g,ou!( *+oo, #o+u;!s
D*ou!( 6& $! t") )0%),ts !#+u(!g t") o,g!$+ ()sg!),E #),t$!+& #o!t,6ut)( to t") ($;$g) ?"#" o##u,,)(. DIbid, %. 179E.
I! t"), ,)s%)#t=) 6,)*s %)tto!),s, $;o!g ot"),s, ,$s)( t") *o++o?!g $ssg!;)!ts o* ),,o,sA P"+%%!) -$, Asso#$to! #+$;)( t"$t t") ;)$su,)
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;$! $!( ,)%+& 6,)*s $,) !ot (s%ut)( 6& t") ,)s%o!()!ts DG$,#$ =s. CA, 'u!) 84, 1974, 88 SCRA 322G A+su$:-)tt =s. Cou,t o* A%%)$+s, 'u+& 84, 1979,
92 SCRA 822, 833EG D14E t") *!(!g o* *$#t o* t") Cou,t o* A%%)$+s s %,);s)( o! t") su%%os)( $6s)!#) o* )=()!#) $!( s #o!t,$(#t)( 6& )=()!#)
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#o!s(),$to!.
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%+$#). T") )!g!)),!g )0%),ts *o, t") ()*)!($!ts st,o!g+& $ss),t $!( $%%$,)!t+& 6)+)=) t"$t t") #utt!g o* t") s%,$+s (( !ot
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A5 ?"#" ;$& "$=) #o!t,6ut)( to t") ($;$g)s sust$!)( 6& t") 6u+(!g.
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#o+u;! t") +oss ! st,)!gt" (u) to t")s) ;!o, ()*)#ts ;$& ,u! to $s ;u#" $s t)! %),#)!t.
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#o!t,6ut)( g,)$t+& to t") #o++$%s) o* t") P-A 6u+(!g s!#) t s $t t")s) %o!ts ?"),) t") g,)$t), %$,t o* t") *$+u,) o##u,,)(.
T") +$6+t& *o, t") #utt!g o* t") s%,$+s ! #o+u;! A5, g,ou!( *+oo,, ! t") #o!s(),)( o%!o! o* t") Co;;sso!), ,)sts o! t")
s"ou+(),s o* t") ()*)!($!ts $!( t") +oss o* st,)!gt" ! t"s #o+u;! #o!t,6ut)( to t") ($;$g) ?"#" o##u,,)(.
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($;$g) ?"#" o##u,,)(.
S!#) t") )0)#uto! $!( su%),=so! o* t") #o!st,u#to! ?o,C ! t") "$!(s o* t") #o!t,$#to, s (,)#t $!( %ost=), t") %,)s)!#)
o* )0st)!#) o* $++ t") ;$7o, ()*)#ts $!( ()*#)!#)s !ot)( $!( %,o=)! ;$!*)sts $! )+);)!t o* !)g+g)!#) ?"#" ;$& $;ou!t
to ;%,u()!#) ! t") #o!st,u#to! ?o,C. D%%. 92:99, Co;;sso!),s R)%o,tE.
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$!( t"$t t"os) ()=$to!s !ot o!+& $(()( 6ut $+so $gg,$=$t)( t") ($;$g) #$us)( 6& t") ()*)#ts ! t") %+$!s $!( s%)#*#$to!s %,)%$,)( 6& t",(:
%$,t& ()*)!($!ts. DRo++o, /o+. I, %%. 125:192E
T") $*o,):;)!to!)( *$#ts #+)$,+& !(#$t) t") ?$!to! !)g+g)!#) o* 6ot" t") ()*)!($!t $!( t") t",(:%$,t& ()*)!($!ts ! )**)#t!g t") %+$!s, ()sg!s,
s%)#*#$to!s, $!( #o!st,u#to! o* t") P-A 6u+(!g $!( >) "o+( su#" !)g+g)!#) $s )Iu=$+)!t to bad faith ! t") %),*o,;$!#) o* t"), ,)s%)#t=)
t$sCs.
R)+$t=) t"),)to, t") ,u+!g o* t") Su%,);) Cou,t ! Tucker v. Milan D99 O.G. 9879, 9854E ?"#" ;$& 6) ! %o!t ! t"s #$s) ,)$(sA
O!) ?"o !)g+g)!t+& #,)$t)s $ ($!g),ous #o!(to! #$!!ot )s#$%) +$6+t& *o, t") !$tu,$+ $!( %,o6$6+) #o!s)Iu)!#)s t"),)o*, $+t"oug" t") $#t o* $
t",( %),so!, o, $! $#t o* Go( *o, ?"#" ") s !ot ,)s%o!s6+), !t),=)!)s to %,)#%t$t) t") +oss.
As $+,)$(& (s#uss)(, t") ()st,u#to! ?$s !ot %u,)+& $! $#t o* Go(. T,ut" to t)++ "u!(,)(s o* $!#)!t 6u+(!gs ! t") =#!t& ?),) "$,(+& $**)#t)( 6&
t") )$,t"Iu$C). O!+& o!) t"!g s%)++s out t") *$t$+ (**),)!#)G g,oss !)g+g)!#) $!( )=()!t 6$( *$t", ?t"out ?"#" t") ($;$g) ?ou+( !ot "$=)
o##u,,)(.
>HEREFORE, t") ()#so! $%%)$+)( *,o; s "),)6& MODIFIED $!( #o!s(),!g t") s%)#$+ $!( )!=,o!;)!t$+ #,#u;st$!#)s o* t"s #$s), >) ());
t ,)$so!$6+) to ,)!(), $ ()#so! ;%os!g, $s >) (o "),)6& ;%os), u%o! t") ()*)!($!t $!( t") t",(:%$,t& ()*)!($!ts D?t" t") )0#)%to! o*
Ro;$! OF$)t$E $ solidary DA,t. 1728, C=+ Co(), Supra, %. 14E !();!t& ! *$=o, o* t") P"+%%!) -$, Asso#$to! o* FI/E MILLION DP5,444,444.44E
P)sos to #o=), $++ ($;$g)s D?t" t") )0#)%to! o* $tto,!)&Hs *))sE o##$so!)( 6& t") +oss o* t") 6u+(!g D!#+u(!g !t),)st #"$,g)s $!( +ost ,)!t$+sE
$!( $! $((to!$+ ONE HUNDRED THOUSAND DP144,444.44E P)sos $s $!( *o, $tto,!)&Hs *))s, t") tot$+ su; 6)!g %$&$6+) u%o! t") *!$+t& o* t"s
()#so!. U%o! *$+u,) to %$& o! su#" *!$+t&, t?)+=) D12ME %), #)!t !t),)st %), $!!u; s"$++ 6) ;%os)( u%o! $*o,):;)!to!)( $;ou!ts *,o; *!$+t&
u!t+ %$(. So+($,& #osts $g$!st t") ()*)!($!t $!( t",(:%$,t& ()*)!($!ts D)0#)%t Ro;$! OF$)t$E.
SO ORDERED.
Feria (hairman!, Fernan, "lampay and ru#, JJ., concur.
G.R. No. 148872 'u!) 22, 1992
EPG CONSTRUCTION COMPAN<, INC., $!( EMMANUEL P. DE GU2MAN, petitioner,
vs.
HONARA-LE COURT OF APPEALS D17t" D=so!E, D R)%u6+# o* t") P"+%%!)sE, UNI/ERSIT< OF THE PHILIPPINES, respondents.

CRU2, J.:
Petitioner 9PH Construction Co., #nc. and the @niversity of the Philippines, herein private respondent, entered into a contract for the construction of the @P 3a*
3ibrary 2uildin+ for the stipulated price of P(,B'B,000.00. The a+ree"ent included the follo*in+ provisionA
$&T#C39 1#
H@$&$?T99
CO?T&$CTO& +uarantees that the *ork co"pleted under the contract and any chan+e order, thereto, shall be in accordance *ith the
plans and specification prepared by $&C<#T9CT, and shall confor" to the specific re=uire"ents, perfor"ances, and capacities re=uired
by the contract, and shall be free fro" i"perfect *ork"anship or "aterials. CO?T&$CTO& shall repair at his o*n cost and e-penses for
a period of one 1) year fro" date of substantial co"pletion and acceptance of the *ork by the O6?9&, all the *ork covered under the
contract and chan+e orders that "ay prove defective e-cept "aintenance *orks. The CO?T&$CTO& shall be liable in accordance *ith
$rt. 1(4; of the Civil Code in case, *ithin 1B years fro" co"pletion of the pro/ect, the buildin+ collapses on account of defects in the
construction or the use of "aterials of inferior =uality furnished by hi" or due to any violation of the ter"s of contract.
@pon its co"pletion, the buildin+ *as for"ally turned over by 9PH to the private respondent. @P issued a certification of acceptance dated 7anuary 1;, 195;,
readin+ as follo*sA
This is to certify that the Heneral Construction 6ork of the Colle+e of 3a* 3ibrary $nne- 2uildin+, @niversity of the Philippines, 8ili"an,
Jue0on City, has been satisfactorily co"pleted as per plans and specifications as of 7anuary 11, 195; *ithout any defects *hatsoever
and therefore accepted.
&elease of the 10L retention is hereby reco""ended in favor of 9PH Construction, #nc.
%o"eti"e in 7uly, 195;, the private respondent co"plained to the petitioner that 6 air.conditionin+ units on the third floor of the buildin+ *ere not coolin+
properly. $fter inspection of the e=uip"ent, 9PH a+reed to shoulder the e-penses for their repair, includin+ labor and "aterials, in the a"ount of P;5.000.00.
!or *hatever reason, the repair *as never undertaken. @P repeated its co"plaints to 9PH, *hich a+ain sent its representatives to assess the defects. !inally, it
"ade @P a *ritten offer to repair the syste" for P19',000.00.
@P insisted that 9PH *as obli+ated to repair the defects at its o*n e-pense under the +uarantee provision in their contract. 9PH de"urred. @P then contracted
*ith another co"pany, *hich repaired the defects for P190,000.00.
The private respondent subse=uently de"anded fro" 9PH rei"burse"ent of the said a"ount plus an e=ual su" as li=uidated da"a+es. 6hen the de"and *as
re/ected, @P sued 9PH and its president, 9""anuel P. de Hu0"an, in the &e+ional Trial Court of Jue0on City. 8e Hu0"an "oved to dis"iss the co"plaint as
to hi" for lack of a cause of action, but the "otion *as denied.
$fter trial, /ud+"ent *as rendered by 7ud+e $ntonio P. %olano re=uirin+ both defendants /ointly and severally to pay the plaintiff P190,000.00 as actual da"a+es,
PB0,000.00 as li=uidated da"a+es, P10,000.00 as attorney,s fees, and costs.
The petitioners appealed to the Court of $ppeals, *hich sustained the trial court.
1
They then ca"e to this Court to fault the respondent
court for not holdin+ thatA 1) @P *as estopped by its certificate of acceptance fro" i"putin+ liability to 9PH for
the defectsF 4) the defects *ere due to force majeure or fortuitous eventF and ;) 9""anuel de Hu0"an has a
separate personality fro" that of 9PH Construction Co., #nc.
The petitioners ar+ue that by issuin+ the certificate of acceptance, @P *aived the +uarantee provision and is
no* estopped fro" invokin+ it. The ar+u"ent is absurd. $ll @P certified to *as that the buildin+ *as in +ood
condition at the ti"e it *as turned over to it on 7anuary 1;, 195;. #t did not thereby relieve the petitioners of
liability for any defect that "i+ht arise or be discovered later durin+ the one.year period of the +uarantee. $ny
other interpretation *ould "ake the +uarantee provision useless to be+in *ith as it *ould have auto"atically
beco"e functus officio *ith the turn.over of the construction.
The petitioners bolster their ar+u"ent by =uotin+ $rticle 1(19 of the Civil Code thus, C$cceptance of the *ork by
the e"ployer relieves the contractor of liability . . . C and stoppin$ there. The $rticle reads in full as follo*sA
$rt. 1(19. $cceptance of the *ork by the e"ployer relieves the contractor of liability for any
defect in the *ork, unlessA
1) The defect is hidden and the e"ployer is not, by his special kno*led+e, e-pected to
reco+ni0e the sa"eF or
4) The e"ployer e-pressly reserves his ri+hts a+ainst the contractor by reason of the defect.
The e-ceptions *ere o"itted by the petitioners for obvious reasons. The defects co"plained a+ainst *ere
hidden and the e"ployer *as not e-pected to reco+ni0e the" at the ti"e the *ork *as accepted. >oreover,
there *as an e-press reservation by @P of its ri+ht to hold the contractor liable for the defects durin+ a period of
one year.
The petitioners, contention that the defects *ere caused by force majeure or fortuitous event as a result of the
fre=uent bro*n.outs in >etro >anila is not "eritorious. The Court is not prepared to accept that the recurrent
po*er cut.offs can be classified as force majeure or a fortuitous event, 6e a+ree that the real cause of the
proble", accordin+ to the petitioners, o*n subcontractor, *as poor *ork"anship, as discovered upon inspection
of the coolin+ syste", $"on+ the detects noted *ere i"proper interlockin+ of the entire electrical syste" in all
the si- unitsF *ron+ specification of the ti"e delay relay, also in all the si- unitsF incorrect *irin+ connections on
the oil pressure s*itchesF i"proper settin+ of the <i and 3o pressure s*itchesF and "any "issin+ parts like bolts
and scre*s of panels, and the co"pressor ter"inal insulation, and the ter"inal scre*s of a circuit breaker.
2
Curiously, it has not been sho*n that the coolin+ syste" in buildin+s *ithin the sa"e area have been si"ilarly
da"a+ed by the po*er cut.offs. The bro*n.outs have beco"e an intolerable annoyance, but they cannot e-cuse
all contractual irre+ularities, includin+ the petitioners, shortco"in+s.
The petitioners also clai" that the breakdo*n of the coolin+ syste" *as caused by the failure of @P to do
"aintenance *ork thereon. 6e do not see ho* "ere "aintenance *ork could have corrected the above.
"entioned defects. $t any rate, *hether the repairs in the air.conditionin+ syste" can be considered "ere
"aintenance *ork is a factual issue. The resolution thereof by the lo*er courts is bindin+ upon this Court in the
absence of a clear sho*in+ that it co"es under the accepted e-ceptions to the rule. There is no such sho*in+
here.
The final point of the petition is that 9""anuel P. de Hu0"an has a separate le+al personality fro" 9PH
Construction Co., #nc. and should not be held solidarity liable *ith it. <e stresses that the acts of the co"pany
are its o*n responsibility and there is no reason *hy any liability arisin+ fro" such acts should be ascribed to
hi". ThusA
#t is a doctrine *ell.established and obtains both at la* and in e=uity that a corporation is a
distinct le+al entity to be considered as separate and apart fro" the individual stockholders or
"e"bers *ho co"pose it, and is not affected by the personal ri+hts, obli+ations and
transactions of its stockholders or "e"bers.
8
The trial court did not e-plain *hy 9""anuel de Hu0"an *as held solidarity liable *ith 9PH Construction Co.,
#nc., and neither did the respondent court *hen it affir"ed the appealed decision, #n its Co""ent on the present
petition, @P also did not refute the petitioners, ar+u"ent and si"ply passed upon it sub si"entio althou+h the
"atter *as s=uarely raised and discussed in the petition.
?otably, *hen 9""anuel de Hu0"an "oved to dis"iss the co"plaint as to hi", @P said in its opposition to the
"otion that it *as suin+ hi" Cin his officia" capacity and not in his personal capacity.C <is inclusion as President
of the co"pany *as therefore superfluous, as 8e Hu0"an correctly contended, because his acts as such *ere
corporate acts i"putable to 9PH itself as his principal. #t is settled thatF
$ corporation is invested by la* *ith a personality separate and distinct fro" those of the
persons co"posin+ it as *ell as fro" that of any other entity to *hich it "ay be related. >ere
o*nership by a sin+le stockholder or by another corporation of all or nearly all of the capital
stock of a corporation is not of itself sufficient +round for disre+ardin+ the separate corporate
personality. The +eneral "ana+er of a corporation therefore should not be "ade personally
ans*erable for the pay"ent of the e"ployee,s back*a+es unless he had acted "aliciously or in
bad faith in ter"inatin+ the services of the e"ployee.
9
The e-ception noted is *here the official Chad acted "aliciously or in bad faith,C in *hich event he "ay be "ade
personally liable for his o*n act. That e-ception is not applicable in the case at bar, because it has not been
proved that 8e Hu0"an acted "aliciously or in bad faith *hen, as President of 9PH, he sou+ht to protect its
interests and resisted @P,s clai"s. 6hatever da"a+e *as caused to @P as a result of his acts is the sole
responsibility of 9PH even thou+h 8e Hu0"an *as its principal officer and controllin+ stockholder.
#n su", *e hold that the lo*er court did not err in holdin+ 9PH liable for the repair of the air.conditionin+ syste"
at its e-pense pursuant to the +uarantee provision in the construction contract *ith @P. <o*ever, 9""anuel de
Hu0"an is not solidarily liable *ith it, havin+ acted on its behalf *ithin the scope of his authority and *ithout any
de"onstrated "alice or bad faith.
6<9&9!O&9, the appealed decision is $!!#&>98 but *ith the "odification that 9PH Construction Co., #nc.
shall be solely liable for the da"a+es a*arded in favor of the @niversity of the Philippines. #t is so ordered.
Gri<o:'*uino, Media"dea and Be""osi""o, --., concur.
G.R. No. L:84212 S)%t);6), 84, 1957
-IEN/ENIDO GELISAN, petitioner,
vs.
-ENITO ALDA<, ,)s%o!()!t.

PADILLA, J.:
&evie* on certiorari of the /ud+"ent N rendered by the Court of $ppeals, dated 11 October 1965, as a"ended by its resolution, dated
11 !ebruary 1969, in C$.H.&. ?o. ;46(0.&, entitledA C2enito $lday, plaintiff.appellant, vs. &oberto 9spiritu and 2ienvenido Helisan, defendants.appellees,C *hich
ordered the herein petitioner 2ienvenido Helisan to pay, /ointly and severally, *ith &oberto 9spiritu, the respondent 2enito $lday the a"ount of PB,;9(.;0, *ith.
le+al interest thereon fro" the filin+ of the co"plaint, and the costs of suitF and for the said &oberto 9spiritu to pay or refund the petitioner 2ienvenido Helisan
*hatever a"ount the latter "ay have paid to the respondent 2enito $lday by virtue of the /ud+"ent.
The uncontroverted facts of the case are, as follo*sA
8efendant 2ienvenido Helisan is the o*ner of a frei+ht truck bearin+ plate ?o. T<.4;((. On 7anuary ;1, 1964, defendant 2ienvenido
Helisan and &oberto 9spiritu entered into a contract "arked 9-hibit ;.Helisan under *hich 9spiritu hired the sa"e frei+ht truck of Helisan
for the purpose of haulin+ rice, su+ar, flour and fertili0er at an a+reed price of P15.00 per trip *ithin the li"its of the City of >anila provided
the loads shall not e-ceed 400 sacks. #t is also a+reed that 9spiritu shall bear and pay all losses and da"a+es attendin+ the carria+e of
the +oods to be hauled by hi". The truck *as taken by a driver of &oberto 9spiritu on !ebruary 1, 1964. Plaintiff 2enito $lday, a truckin+
operator, and *ho o*ns about 1B frei+ht trucks, had kno*n the defendant &oberto 9spiritu since 19'5 as a truck operator. Plaintiff had a
contract to haul the fertili0ers of the $tlas !ertili0er Corporation fro" Pier ', ?orth <arbor, to its 6arehouse in >andaluyon+. $lday "et
9spiritu at the +ate of Pier ' and the latter offered the use of his truck *ith the driver and helper at 9 centavos per ba+ of fertili0er. The
offer *as accepted by plaintiff $lday and he instructed his checker Celso <enson to let &oberto 9spiritu haul the fertili0er. 9spiritu "ade
t*o hauls of 400 ba+s of fertili0er per trip. The fertili0er *as delivered to the driver and helper of 9spiritu *ith the necessary *ay bill
receipts, 9-hibits $ and 2. 9spiritu, ho*ever, did not deliver the fertili0er to the $tlas !ertoli0er bode+a at >andaluyon+. The si+natures
appearin+ in the *ay bill receipts 9-hibits $ and 2 of the $lday Transportation ad"ittedly not the si+nature of any representative or
e"ployee of the $tlas !ertili0er Corporation. &oberto 9spiritu could not be found, and plaintiff reported the loss to the >anila Police
8epart"ent. &oberto 9spiritu *as later arrested and booked for theft. ...
%ubse=uently, plaintiff $iday sa* the truck in =uestion on %to. Cristo %t. and he notified the >anila Police 8epart"ent, and it *as
i"pounded by the police. #t *as clai"ed by 2ienvenido Helisan fro" the Police 8epart"ent after he had been notified by his e"ployees
that the truck had been i"pounded by the policeF but as he could not produce at the ti"e the re+istration papers, the police *ould not
release the truck to Helisan. $s a result of the i"poundin+ of the truck accordin+ to Helisan, ... and that for the release of the truck he paid
the pre"iu" of P;00 to the surety co"pany. 1
2enito $lday *as co"pelled to pay the value of the '00 ba+s of fertili0er, in the a"ount of PB,;9(.;;, to $tlas !ertili0er Corporation so that, on 14 !ebruary 1964,
he $lday) filed a co"plaint a+ainst &oberto 9spiritu and 2ienvenido Helisan *ith the Court of !irst #nstance of >anila, docketed therein as Civil Case ?o.
'960;, for the recovery of da"a+es suffered by hi" thru the cri"inal acts co""itted by the defendants.
The defendant, &oberto 9spiritu failed to file an ans*er and *as, accordin+ly, declared in default.
The defendant, 2ienvenido Helisan, upon the other hand, diso*ned responsibility. <e clai"ed that he had no contractual relations *ith the plaintiff 2enito $lday
as re+ards the haulin+ andNor delivery of the '00 ba+s of fertili0er "entioned in the co"plaintF that the alle+ed "isappropriation or nondelivery by defendant
&oberto 9spiritu of plaintiff,s '00 ba+s of fertili0er, *as entirely beyond his Helisan,s) control and kno*led+e, and *hich fact beca"e kno*n to hi", for the first
ti"e, on 5 !ebruary 1964 *hen his frei+ht truck, *ith plate ?o. T<.4;((, *as i"pounded by the >anila Police 8epart"ent, at the instance of the plaintiffF and
that in his *ritten contract of hire *ith &oberto 9spiritu, it *as e-pressly provided that the latter *ill bear and pay all loss and da"a+es attendin+ the carria+e of
+oods to be hauled by said &oberto 9spiritu.
$fter trial, the Court of !irst #nstance of >anila ruled that &oberto 9spiritu alone *as liable to 2enito $lday, since 2ienvenido Helisan *as not privy to the contract
bet*een 9spiritu and $lday. The dispositive portion of the decision reads, as follo*sA
6<9&9!O&9, /ud+"ent is hereby rendered in favor of the plaintiff and a+ainst the defendant &oberto 9spiritu for the su" of P6,000 *ith
interest at the le+al rate fro" the ti"e of the filin+ of the co"plaint, and the costs of the suit. Plantiff,s co"plaint is dis"issed *ith respect
to defendant 2ienvenido Helisan, and /ud+"ent is rendered in favor of defendant 2ienvenido Helisan and a+ainst the plaintiff for the su"
of P;B0.
2

On appeal, ho*ever, the Court of $ppeals, citin+ the case of Monto1a vs. I$nacio,
8
found that 2ienvenido
Helisan is like*ise liable for bein+ the re+istered o*ner of the truckF and that the lease contract, e-ecuted by and
bet*een 2ienvenido Helisan and &oberto 9spiritu, is not bindin+ upon 2enito $lday for not havin+ been
previously approved by the Public %ervice Co""ission. $ccordin+ly, it sentenced 2ienvenido Helisan to pay,
/ointly and severally *ith &oberto 9spiritu, 2enito $lday the a"ount of PB,;9(.;0, *ith le+al interest thereon fro"
the filin+ of the co"plaintF and to pay the costs. &oberto 9spiritu, in turn, *as ordered to pay or refund
2ienvenido Helisan *hatever a"ount the latter "ay have paid to 2enito $lday by virtue of the /ud+"ent.
9

<ence, the present recourse by 2ienvenido Helisan.
The petition is *ithout "erit. The /ud+"ent rendered by the Court of $ppeals, *hich is sou+ht to be revie*ed, is
in accord *ith the facts and the la* on the case and *e find no co+ent reason to disturb the sa"e. The Court
has invariably held in several decisions that the re+istered o*ner of a public service vehicle is responsible for
da"a+es that "ay arise fro" conse=uences incident to its operation or that "ay be caused to any of the
passen+ers therein.
5
The clai" of the petitioner that he is not hable in vie* of the lease contract e-ecuted by
and bet*een hi" and &oberto 9spiritu *hich e-e"pts hi" fro" liability to third persons, cannot be sustained
because it appears that the lease contract, adverted to, had not been approved by the Public %ervice
Co""ission. #t is settled in our /urisprudence that if the property covered by a franchise is transferred or leased
to another *ithout obtainin+ the re=uisite approval, the transfer is not bindin+ upon the public and third persons.
3

6e also find no "erit in the petitioner,s ar+u"ent that the rule re=uirin+ the previous approval by the Public
%ervice Co""ission, of the transfer or lease of the "otor vehicle, "ay be applied only in cases *here there is
no positive #dentification of the o*ner or driver, or *here there are very scant "eans of #dentification, but not in
those instances *here the person responsible for da"a+es has been fi-ed or deter"ined beforehand, as in the
case at bar. The reason for the rule *e reiterate in the present case, *as e-plained by the Court in Monto1a vs.
I$nacio,
7
thusA
There is "erit in this contention. The la* really re=uires the approval of the Public %ervice
Co""ission in order that a franchise, or any privile+e pertainin+ thereto, "ay be sold or leased
*ithout infrin+in+ the certificate issued to the +rantee. The reason is obvious. %ince a franchise
is personal in nature any transfer or lease thereof should be notified to the Public %ervice
Co""ission so that the latter "av take proper safe+uards to protect the interest of the public. #n
fact, the la* re=uires that, before the approval is +ranted, there should be a public hearin+, *ith
notice to all interested parties, in order that the Co""ission "ay deter"ine if there are +ood and
reasonable +rounds /ustifyin+ the transfer or lease of the property covered by the franchise, or if
the sale or lease is detri"ental to public interest. %uch bein+ the reason and philosophy behind
this re=uire"ent, it follo*s that if the property covered by the franchise is transferred, or leased
to another *ithout obtainin+ the re=uisite approval, the transfer is not bindin+ a+ainst the Public
%ervice Co""ission and in conte"plation of la* the +rantee continues to be responsible under
the franchise in relation to the Co""ission and to the Public. %ince the lease of the /eepney in
=uestion *as "ade *ithout such approval the only conclusion that can be dra*n is that
>arcelino #+nacio still continues to be its operator in conte"plation of la*, and as such is
responsible for the conse=uences incident to its operation, one of the" bein+ the collision under
consideration.
2ienvenido Helisan, the re+istered o*ner, is not ho*ever *ithout recourse. <e has a ri+ht to be inde"nified by
&oberto 9spiritu for the a"ount titat he "ay be re=uired to pay as da"a+es for the in/ury caused to 2enito $lday,
since the lease contract in =uestion, althou+h not effective a+ainst the public for not havin+ been approved by
the Public %ervice Co""ission, is valid and bindin+ bet*een the contractin+ parties.
5

6e also find no "erit in the petitioner,s contention that his liability is only subsidiary. The Court has consistently
considered the re+istered o*nerNoperator of a public service vehicle to be /ointly and severally liable *ith the
driver for da"a+es incurred by passen+ers or third persons as a conse=uence of in/uries sustained in the
operation of said vehicles. Thus, in the case of /ar$as vs. Lan$ca1,
9
the Court saidA
6e hold that the Court of $ppeals erred in considerin+ appellant.petitioner 8i*ata Gar+as only
subsidiarily liable under $rticle 10; of the &evised Penal Code. This court, in previous decisions,
has al*ays considered the re+istered o*nerNoperator of a passen+er vehicle, /ointly and
severally liable *ith the driver, for da"a+es incurred by passen+ers or third persons as a
conse=uence of in/uries or death) sustained in the operation of said vehicles. >ontoya vs.
#+nacio, 9' Phil., 154F Ti"bol vs. Osias, H.&. ?o. 3.(B'(, $pril ;0, 19BBF Gda. de >edina vs.
Cresencia, 99 Phil., B06F ?ecesito vs. Paras, 10' Phil., (BF 9re0o vs. 7epte, 104 Phil., 10;F
Ta"ayo vs. $=uino and &ayos vs Ta"ayo, 10B Phil., 9'9F B6 Off. Ha0. D;6E B61(.) #n the case of
9re0o vs. 7epte, &upra, 6e heldA
Q Q Q #n synthesis, *e hold that the re+istered o*ner, the defendant.appellant herein, is pri"arily
responsible for the da"a+e caused Q Q Q 9"phasis supplied)
#n the case of Ta"ayo vs. $=uino, supra, 6e saidA
Q Q Q $s Ta"ayo is the re+istered o*ner of the truck, his responsibffity to the public or to any
passen+er ridin+ in the vehicle or truck "ust be direct Q Q Q 9"phasis supplied)
6<9&9!O&9, the petition is hereby 89?#98. 6ith costs a+ainst the petitioner.
%O O&89&98.
ap (#hairman), Me"encio:;errera, %aras and &armiento, --., concur.

.R. No. 94553 'u+& 28, 1992
ARTURO DE GU2MAN, petitioner,
vs.
NATIONAL LA-OR RELATIONS COMMISSION, LA-OR AR-ITER MA. LOURDES A.
SALES, A/ELINO D. /ALLESTEROL, ALE'ANDRO Q. FRIAS, LINDA DE LA CRU2,
CORA2ON M. DE LA FUENTE, LILIA F. FLORO, $!( MARIO F. 'A<ME, respondents.

CRU2, J.:
#t is a funda"ental principle of la* and hu"an conduct that a person C"ust, in the e-ercise of
his ri+hts and in the perfor"ance of his duties, act *ith /ustice, +ive every one his due, and
observe honesty and +ood faith.C
1
This is the principle *e shall apply in the case at bar to +au+e the
petitioner,s "otives in his dealin+s *ith the private respondents.
$rturo de Hu0"an *as the +eneral "ana+er of the >anila office of the $ffiliated >achineries $+ency, 3td., *hich
*as based in <on+kon+. On 7une ;0, 1956, he received a tele- "essa+e fro" 3eo $. !ialla, "ana+in+ director
of $>$3 in its "ain office, advisin+ hi" of the closure of the co"pany due to financial reverses. This "essa+e
tri++ered the series of events that are the sub/ect of this liti+ation.
#""ediately upon receipt of the advise, 8e Hu0"an notified all the personnel of the >anila office. The
e"ployees then sent a letter to $>$3 acceptin+ its decision to close, sub/ect to the pay"ent to the" of their
current salaries, severance pay, and other statutory benefits. 8e Hu0"an /oined the" in these representations.
These re=uests *ere, ho*ever, not heeded. Conse=uently, the e"ployees, no* herein private respondents,
lod+ed a co"plaint *ith the ?3&C a+ainst $>$3, throu+h 3eo $. !ialla and $rturo de Hu0"an, for ille+al
dis"issal, unpaid *a+es or co""issions, separation pay, sick and vacation leave benefits, 1;th "onth pay, and
bonus.
!or his part, the petitioner be+an sellin+ so"e of $>$3,s assets and applied the proceeds thereof, as *ell as the
re"ainin+ assets, to the pay"ent of his clai"s a+ainst the co"pany. <e also or+ani0ed %usarco, #nc., *ith
hi"self as its president and his *ife as one of the incorporators and a "e"ber of the board of directors. This
co"pany is en+a+ed in the sa"e line of business and has the sa"e clients as that of the dissolved $>$3.
6ith this develop"ent, %usarco and its officers *ere i"pleaded in the a"ended co"plaint of the private
respondents. 3ater, 6illia" Juasha andNor Cirilo $sperilla *ere also included in the suit as the resident a+ents
of $>$3 of the Philippines.
On ?ove"ber (, 1956, the petitioner filed his o*n co"plaint *ith the ?3&C a+ainst $>$3 for his re"ainin+
unsatisfied clai"s.
On >ay 49, 195(, 3abor $rbiter 9duardo H. >a+no, to *ho" the petitioner,s co"plaint *as assi+ned, rendered
a decision orderin+ $>$3 to pay the petitioner the a"ount of P;(1,'69.B9 as separation pay, unpaid salary and
co""issions, after deductin+ the value of the assets earlier appropriated by the petitioner.
2
On %epte"ber ;0, 195(, 3abor $rbiter >a. 3ourdes $. %ales, *ho tried the private respondents, co"plaint,
rendered a decision M
1. Orderin+ &espondents $>$3 and $rturo de Hu0"an to pay /ointly and severally to each
Co"plainant separation pay co"puted at one.half "onth pay for every year of service,
back*a+es for one "onth, unpaid salaries for 7une 16.;0, 1956, 1;th "onth pay fro" 7anuary
to 7une ;0, 1956 and incentive leave pay e=uivalent to t*o and.a.half days payF
4. 8is"issin+ the co"plaint a+ainst respondents 3eo !ialla, 6illia" Juasha, %usarco, #nc. and
its directors %usan de Hu0"an, Pacita Castaneda, Heor+e 9sto"ata and Cynthia %errano for
lack of basis andNor "eritF
;. 8is"issin+ the clai"s for da"a+es for lack of basisF
'. Orderin+ respondents $>$3 and $rturo de Hu0"an to pay /ointly and severally attorney,s fees
to Co"plainants e=uivalent to 10L of the "onetary a*ards herein.
8
This decision *as on appeal affir"ed in toto by the ?3&C, *hich is no* faulted for +rave abuse of discretion in
this petition for certiorari.
The petitioner does not dispute the /urisdiction of the 3abor $rbiter and ?3&C over the co"plaint of the private
respondents a+ainst $>$3 in vie* of their previous e"ploy"ent relationship. <e ar+ues, ho*ever, that the
public respondents acted *ithout or in e-cess of /urisdiction in holdin+ hi" /ointly and severally liable *ith $>$3
as he *as not an e"ployer of the private respondents.
The %olicitor Heneral and the private respondents disa+ree. They "aintain that the petitioner, bein+ $>$3,s
hi+hest local representative in the Philippines, "ay be held personally ans*erable for the private respondents,
clai"s because he is included in the ter" Ce"ployerC under $rt. 414 c),
no* e) of the 3abor Code *hich providesA
$rt. 414. 8efinitions. M
--- --- ---
c. C9"ployerC includes any person actin+ in the interest of an e"ployer, directly or indirectly. . . .
#n the leadin+ case of '.#. Ransom Labor ?nion:##L? vs. !LR#,
9
as affir"ed in the subse=uent cases of
Gude, vs. !LR#,
5
and Ma$"utac vs.
!LR#,
3
this Court treated the president of the e"ployer corporation as an Ce"ployerC and held hi" solidarily
liable *ith the said corporation for the pay"ent of the e"ployees, "oney clai"s. %o *as the vice.president of
the e"ployer corporation in the case of #hua vs. !LR#.
7
The aforecited cases *ill not apply to the instant case, ho*ever, because the persons *ho *ere there "ade
personally liable for the e"ployees, clai"s *ere stockholders.officers of the respondent corporation. #n the case
at bar, the petitioner, *hile ad"ittedly the hi+hest rankin+ local representative of $>$3 in the Philippines, is
nevertheless not a stockholder and "uch less a "e"ber of the board of directors or an officer thereof. <e is at
"ost only a "ana+erial e"ployee under $rt. 414 ") of the 3abor Code, *hich reads in relevant part as follo*sA
$rt 414. 8efinitions. M
--- --- ---
". >ana+erial e"ployee is one *ho is vested *ith po*ers and prero+atives to lay do*n and
e-ecute "ana+e"ent policies andNor to
hire, transfer, suspend, lay off, recall, dischar+e, assi+n or discipline e"ployees. . . .
$s such, the petitioner cannot be held directly responsible for the decision to close the business that resulted in
his separation and that of the private respondents. That decision ca"e directly and e-clusively fro" $>$3. The
petitioner,s participation *as li"ited to the enforce"ent of this decision in line *ith his duties as +eneral "ana+er
of the co"pany. 9ven in a nor"al situation, in fact, he *ould not be liable, as a "ana+erial e"ployee of $>$3,
for the "onetary clai"s of its e"ployees. There should be no =uestion that the private respondents, recourse for
such clai"s cannot be a+ainst the petitioner but a+ainst $>$3 and $>$3 alone.
The /ud+"ent in favor of the private respondents could have been enforced a+ainst the properties of $>$3
located in this country e-cept for one difficulty. The proble" is that these properties have already been
appropriated by the petitioner to satisfy his o*n clai"s a+ainst the co"pany.
2y so doin+, has the petitioner incurred liability to the private respondentsK
The 3abor $rbiter believed he had because of his bad faith and ruled as follo*sA
Considerin+ that &espondent $. de Hu0"an is +uilty of bad faith in appropriatin+ for hi"self the
properties of &espondent $>$3 to the pre/udice of Co"plainants herein *hose clai"s are
kno*n to &espondent at the ti"e he "ade the disposition of $>$3,s properties, he is held /ointly
and severally liable *ith &espondent $>$3 for the a*ard of unpaid *a+es, separation pay,
back*a+es for one "onth, 1;th "onth pay and cash value of unused vacation leave.
#n /e"a1o v. &he"" #o. of the %hi"ippines, 5 #ommercia" 'ir Lines, Inc. (#'LI), kno*in+ that it did not have enou+h assets to pay off its liabilities,
called a "eetin+ of its creditors *here it announced that in case of non.a+ree"ent on a pro.rata distribution of its assets, includin+ the C.B' plant in California, it
*ould file insolvency proceedin+s. %hell Co"pany of the Philippines, one of its creditors, took advanta+e of this infor"ation and i""ediately "ade a tele+raphic
assi+n"ent of its credits in favor of its sister corporation in the @nited %tates. The latter thereupon pro"ptly attached the plane in California and disposed of the
sa"e, thus deprivin+ the other creditors of their proportionate share in its value. The Court declared that %hell had acted in bad faith and betrayed the trust of the
other creditors of C$3#. The said co"pany *as ordered to pay the" co"pensatory da"a+es in a su" e=ual to the value of the C.B' plane at the ti"e it assi+ned
its credit and e-e"plary da"a+es in the su" of P4B,000.00.
6e =uote *ith approval the follo*in+ observations of 3abor $rbiter %ales in her decisionA
6hile the le+iti"acy of &espondent $. de Hu0"an,s clai"s a+ainst $>$3 is not =uestioned, it "ust be stated that the "anner and the
"eans by *hich he satisfied such clai"s are evidently characteri0ed by bad faith on his part. !or one, &espondent $. de Hu0"an took
advanta+e of his position as Heneral >ana+er and arro+ated to hi"self the ri+ht to retain possession and o*nership of all properties
o*ned and left by $>$3 in the Philippines, even if he kne* that Co"plainants herein have si"ilar valid clai"s for unpaid *a+es and other
e"ployee benefits fro" the &espondent $>$3. . . .
$nother stron+ indication of bad faith on the part of &espondent $. de Hu0"an is his filin+ of a separate co"plaint a+ainst $>$3 before
the ?3&C $rbitration 2ranch about four ') "onths after the filin+ of the instant case *ithout infor"in+ this Office about the e-istence of
said case durin+ the proceedin+s in the instant case. This case *as dee"ed sub"itted for decision on >ay 15, 195( but it *as only on
7une 4, 195( that &espondent $. de Hu0"an for"ally notified this Office throu+h his %upple"ental Position Paper of his pendin+
co"plaint before $rbiter 9duardo >a+no docketed as ?3&C Case ?o. 11.'''1.56. @nder &ule G, %ection ' of the revised rules of the
?3&C, it is provided thatA
%ec. '. CO?%O3#8$T#O? O! C$%9% M *here there are t*o or "ore cases pendin+ before different 3abor
$rbiters in the sa"e &e+ional $rbitration 2ranch involvin+ the same emp"o1er and issues or the sa"e parties *ith
different issues, the case *hich *as filed last shall be consolidated *ith the first to avoid unnecessary costs or
delay. %uch cases shall be disposed of by the 3abor $rbiter to *ho" the first case *as assi+ned. 9"phasis
supplied).
<ad &espondent $. de Hu0"an +iven ti"ely notice of his co"plaint, his case could have been consolidated *ith this case and the issues
in both cases could have been resolved in a "anner that *ould +ive due consideration to the ri+hts and liabilities of all parties in interest
at the least, in case consolidation is ob/ected to or no lon+er possible, the Co"plainants herein could have been +iven a chance to
intervene in the other case so that *hatever disposition "i+ht be rendered by $rbiter >a+no *ould include consideration of Co"plainants,
clai"s herein.
#t is not disputed that the petitioner in the case at bar had his o*n clai"s a+ainst $>$3 and conse=uently had so"e proportionate ri+ht over its assets. <o*ever,
this ri+ht ceased to e-ist *hen, kno*in+ fully *ell that the private respondents had si"ilarly valid clai"s, he took advanta+e of his position as +eneral "ana+er
and applied $>$3,s assets in pay"ent e-clusively of his o*n clai"s.
$ccordin+ to Tolentino in his distin+uished *ork on the Civil CodeA
The e-ercise of a ri+ht ends *hen the ri+ht disappears, and it disappears *hen it is abused, especially to the pre/udice of others. The
"ask of a ri+ht *ithout the spirit of /ustice *hich +ives it life, is repu+nant to the "odern concept of social la*. #t cannot be said that a
person e-ercises a ri+ht *hen he unnecessarily pre/udices another or offends "orals or +ood custo"s. Over and above the specific
precepts of positive la* are the supre"e nor"s of /ustice *hich the la* develops and *hich are e-pressed in three principlesA honeste
vivere, alteru" non laedre and /ust suu" =ui=ue tribuereF and he *ho violates the" violates the la*. !or this reason, it is not per"issible
to abuse our ri+hts to pre/udice others.
9
The "odern tendency, he continues, is to depart fro" the classical and traditional theory, and to +rant inde"nity
for da"a+es in cases *here there is an abuse of ri+hts, even *hen the act is not illicit. 3a* cannot be +iven an
anti.social effect. #f "ere fault or ne+li+ence in one,s acts can "ake hi" liable for da"a+es for in/ury caused
thereby, *ith "ore reason should abuse or bad faith "ake hi" liable. $ person should be protected only *hen
he acts in the le+iti"ate e-ercise of his ri+ht, that is, *hen he acts *ith prudence and in +ood faithF but not *hen
he acts *ith ne+li+ence or abuse.
14
The above."entioned principles are contained in $rticle 19 of the Civil Code *hich providesA
$rt. 19. 9very person "ust, in the e-ercise of his ri+hts and in the perfor"ance of his duties, act
*ith /ustice, +ive everyone his due, and observe honesty and +ood faith.
This is supple"ented by $rticle 41 of the sa"e Code thusA
$rt. 41. $ny person *ho *illfully causes loss or in/ury to another in a "anner that is contrary to
"orals, +ood custo"s or public policy shall co"pensate the latter for the da"a+e.
$pplyin+ these provisions, *e hold that althou+h the petitioner cannot be "ade solidarily liable *ith $>$3 for the
"onetary de"and of its e"ployees, he is nevertheless directly liable to the" for his =uestionable conduct in
atte"ptin+ to deprive the" of their /ust share in the assets of $>$3.
@nder $rt. 4419, 10) of the Civil Code, "oral da"a+es "ay be recovered for the acts referred to in $rt. 41. #n
Bert Osme<a & 'ssociates vs. #ourt of 'ppea"s,
11
*e held that Cfraud and bad faith havin+ been established,
the a*ard of "oral da"a+es is in order.C $nd in %an %acific #ompan1 (%hi".) vs. %hi". 'dvertisin$ #orp.,
12
"oral da"a+es *ere a*arded a+ainst the defendant for its *anton and deliberate refusal to pay the /ust debt
due the plaintiff.
#t is settled that the court can +rant the relief *arranted by the alle+ation and the proof even if it is not specifically
sou+ht by the in/ured party.
18
#n the case at bar, *hile the private respondents did not cate+orically pray for
da"a+es, they did alle+e that the petitioner, takin+ advanta+e of his position as +eneral "ana+er, had
appropriated the properties of $>$3 in pay"ent of his o*n clai"s a+ainst the co"pany. That *as aver"ent
enou+h of the in/ury they suffered as a result of the petitioner,s bad faith.
The fact that no actual or co"pensatory da"a+es *as proven before the trial court does not adversely affect the
private respondents, ri+ht to recover "oral da"a+es. 6e have held that "oral da"a+es "ay be a*arded in the
cases referred to in the chapter on <u"an &elations of the Civil Code $rticles 19.;6) *ithout need of proof that
the *ron+ful act co"plained of had caused any physical in/ury upon the co"plainant.
19
6hen "oral da"a+es are a*arded, e-e"plary da"a+es "ay also be decreed.
15
9-e"plary da"a+es are
i"posed by the *ay of e-a"ple or correction for the public +ood, in additional to "oral, te"perate, li=uidated or
co"pensatory da"a+es.
13
$ccordin+ to the Code Co""ission, Ce-e"plary da"a+es are re=uired by public
policy, for *anton acts "ust be suppressed. They are an antidote so that the poison of *ickedness "ay not run
throu+h the body politic.C
17
These da"a+es are le+ally assessible a+ainst hi".
The petitioner asserts that, assu"in+ the private respondents to have a cause of action a+ainst hi" for his
alle+ed bad faith, the civil courts and not the 3abor $rbiter have /urisdiction over the case.
#n 'ssociated #iti,en Ban9, et a". vs. -ud$e -apson,
15
this Court heldA
Pri"arily, the issue to be resolved is *hether or not the respondent court has /urisdiction to hear
and decide an action for da"a+es based on the dis"issal of the e"ployee.
On all fours to the above issue is the rulin+ of this Court in %rimero v. Intermediate 'ppe""ate
#ourt 1B6 %C&$ ';B D195(E) *hich once a+ain reiterated the doctrine that the /urisdiction of the
3abor $rbiter under $rticle 41( of the 3abor Code is broad and co"prehensive enou+h to include
clai"s for "oral and e-e"plary da"a+es sou+ht to be recovered by an e"ployee *hose
services has been ille+ally ter"inated by is e"ployer 9bon v. 8e Hu0"an, 11; %C&$ BB D1954EF
$+uda v. Galle/os, 11; %C&$ 69 D1954EF Het0 Corporation v. Court of $ppeals, 116 %C&$ 56
D1954E).
!or the unla*ful ter"ination of e"ploy"ent, this Court in %rimero v. Intermediate 'ppe""ate
#ourt, supra, ruled that the 3abor $rbiter had the e-clusive and ori+inal /urisdiction over clai"s
for "oral and other for"s of da"a+es, so that the e"ployee in the proceedin+s before the 3abor
$rbiter should prosecute his clai"s not only for reliefs specified under the 3abor Code but also
for da"a+es under the Civil Code.
. . . Juestion of da"a+es *hich arose out of or connected with the "abor dispute should be
deter"ined by the labor tribunal to the e-clusion of the re+ular courts of /ustice 3i"=uiaco, 7r. v.
&a"olete, 1B6 %C&$ 164 D195(E). The re+ular courts have no /urisdiction over clai"s for "oral
and e-e"plary da"a+es arisin+ fro" ille+al dis"issal of an e"ployee Gar+as v. $kai
Philippines, #nc., 1B6 %C&$ B;1 D195(E).
$lthou+h the =uestion of da"a+es arisin+ fro" the petitioner,s bad faith has not directly sprun+ fro" the ille+al
dis"issal, it is clearly intert*ined there*ith. The predica"ent of the private respondents caused by their
dis"issal *as a++ravated by the petitioner,s act in the arro+atin+ to hi"self all of $>$3,s assets to the e-clusion
of its other creditors, includin+ its e"ployees. The issue of bad faith is incidental to the "ain action for ille+al
dis"issal and is thus properly co+ni0able by the 3abor $rbiter.
6e a+ree that, strictly speakin+, the deter"ination of the a"ount thereof *ould re=uire a re"and to the 3abor
$rbiter. <o*ever, inas"uch as the private respondents *ere separated in 1956 and this case has been pendin+
since then, the interests of /ustice de"and the direct resolution of this "otion in this proceedin+.
$s this Court has consistently declaredA
. . . it is a cherished rule of procedure for this Court to al*ays strive to settle the entire
controversy in a sin+le proceedin+ leavin+ no root or branch to bear the seeds of future liti+ation.
?o useful purpose *ill be served if this case is re"anded to the trial court only to have its
decision raised a+ain tot the #ndeter"inate $ppellate Court and fro" there to this Court. $l+er
9lectric, #nc. v. Court of $ppeals, 1;B %C&$ ;()
&e"and of the case to the lo*er court for further reception of evidence is not necessary *here
the court is in a position to resolve the dispute based on the records before it. On "any
occasions, the Court, in the public interest and the e-peditious ad"inistration of /ustice, has
resolved actions on the "erits instead of re"andin+ the" to the trial court for further
proceedin+s, such as *here the ends of /ustice *ould not be subserved by the re"and of the
case or *hen public interest de"ands an early disposition of the case. 3ian+a 2ay 3o++in+ Co.,
#nc. v. C$, 1B( %C&$ ;B()
%ound practice seeks to acco""odate the theory *hich avoids *aste of ti"e, effort and
e-pense, both to the parties and the +overn"ent, not to speak of delay in the disposal of the
case cf. !ernande0 v. Harcia, 94 Phil. B94, B9(). $ "arked characteristics of our /udicial set.up
is that *here the dictates of /ustice so de"and . . . the %upre"e Court should act, and act *ith
finality. 3i %iu 3iat v. &epublic, 41 %C&$ 10;9, 10'6, citin+ %a"al v. C$, 99 Phil. 4;0 and @.%. v.
Hi"ene0, ;' Phil. ('). #n this case, the dictates of /ustice do de"and that this Court act, and act
*ith finality. 2eautifont, #nc. v. C$, 1B( %C&$ '51)
#t is stressed that the petitioner,s liability to the private respondents is a direct liability in the for" of "oral and
e-e"plary da"a+es and not a solidary liability *ith $>$3 for the clai"s of its e"ployees a+ainst the co"pany.
<e is bein+ held liable not because he is the +eneral "ana+er of $>$3 but because he took advanta+e of his
position by applyin+ the properties of $>$3 to the pay"ent e-clusively of his o*n clai"s to the detri"ent of
other e"ployees.
6<9&9!O&9, the =uestioned decision is $!!#&>98 but *ith the "odification that the petitioner shall not be
held /ointly and severally liable *ith $>$3 for the private respondents, "oney clai"s a+ainst the latter. <o*ever,
for his bad faith in arro+atin+ to hi"self $>$3,s properties to the pre/udice of the private respondents, the
petitioner is orderedA 1) to pay the private respondents "oral da"a+es in the su" of P40,00.00 and e-e"plary
da"a+es in the su" of P40,00.00F and 4) to return the assets of $>$3 that he has appropriated, or the value
thereof, *ith le+al interests thereon fro" the date of the appropriation until they are actually restored, these
a"ounts to be proportionately distributed a"on+ the private respondents in satisfaction of the /ud+"ent
rendered in their favor a+ainst $>$3.
%O O&89&98.
Gri<o:'*uino, Media"dea and Be""osi""o, --., concur.

8< 4,<C
G.R. No. L-///) 5#%7 14, 1959
ALFREDO M. VELA.O, ET*., plaintiff,
vs.
SHELL *OMPAN. OF THE PHILIPPINES ISLANDS, LTD., defendant-appellee.
ALFONSO 2. S.*IP, ET. AL., intervenors-appellants.
Sycip, <uisu'bin", Sala.ar and Associates for appellants.
O.aeta, !ichauco and ica.o for appellee.
1A+TISTA ANGELO, J.
An 5ecember ", >!;, ,lfredo M. 2elayo as assignees of the insolvent Commercial ,irlines, Inc.,
instituted an action against 6hell Company of the Philippine Islands, @td., in the Court of First Instance
of Manila for injunction and damages $Civil Case <o. +>++%. An Actober )+, >', a complaint in
intervention #as filed by ,lfonso 6ycip, Paul 6ycip, and Fe3 Trading Corporation, and on <ovember
!, >', by Mabasa L Company.
,fter trial #herein plaintiff presented evidence in his behalf, but none in behalf of intervenors, the
court rendered decision dismissing plaintiff/s complaint as #ell as those filed by the intervenors. An
March =, >'!, counsel for plaintiff filed a notice of appeal, appeal bond, and record on appeal in
behalf only of plaintiff even if they also represent the intervenors, #hich in due time #ere approved,
the Court instructing its cler3 to for#ard the record on appeal to the 6upreme Court together #ith all
the evidence presented in the case. This instruction #as actually complied #ith.
An ,ugust =, >'!, the 5eputy Cler3 of the 6upreme Court notified counsel of plaintiff that the
record as #ell as the evidence have already been received and that they should file their brief #ithin !'
days from receipt of the notice. An <ovember ), >'!, counsel filed their brief for appellants. An
<ovember +, >'!, or " months after the judgment had become final as against the intervenors, and !
days after counsel for appellants had submitted the latter/s brief, counsel for intervenors filed #ith the
6upreme Court a petition for correction of the record on appeal in order to enable them to insert therein
the names of the intervenors as appellants, the petition being based, among others, on the ground that
the omission of the names of the intervenors in said record on appeal #as due to the mista3e of the
typist #ho prepared it #hile the attorney in charge #as on vacation. The petition #as vigorously
opposed by counsel for defendant, contending that the same #ould serve no purpose, #hatsoever
considering that the intervenors had not presented any evidence in support of their claim, aside from
the fact that the alleged absence of the attorney of the intervenors cannot constitute a justification for
the alleged omission of the intervenors as appellants. An <ovember ), >'!, the Court denied the
petition. Counsel intervenors moved for a reconsideration of the order, but the same #as denied.
An <ovember >, >'!, counsel for intervenors filed #ith the lo#er court a petition for relief under
Eule =; of the Eules of Court, #herein he reiterated the same grounds they alleged in the petition for
correction filed by them in the 6upreme Court, #hich petition #as denied on <ovember )", >'!, for
having been filed outside the reglementary period fi*ed in said Eule =;. Counsel filed a motion for
reconsideration, #hich #as again denied, the Court stating that &no judgment or order has been
rendered, nor any other proceeding ta3en by this Court on the right of the intervenors to appeal.&
An 5ecember )(, >'!, counsel filed once more a motion to amend the record on appeal based on
grounds identical #ith those alleged in the petition for correction filed before the 6upreme Court. An
5ecember )", >'!, the lo#er court denied the motion. An Canuary +, >'', counsel filed a petition for
relief from this last order entered on 5ecember )", >'!, to #hich counsel for defendant filed an
opposition. An February ', >'', hearing #as had on both the petition for relief and the opposition, and
on February >, >'', the petition #as denied on the ground that the case is already before the 6upreme
Court on appeal. It is from this order that the counsel for intervenors has ta3en the appeal no# before
us.
The instant appeal has no merit.
To begin #ith, the only remedy #hich appellants no# see3 in this appeal is the inclusion of the
intervenors as appellants in the appeal from the decision rendered in the main case, but this remedy has
already been denied t#ice by this Court, first, in its resolution of <ovember ), >'! denying their
petition for correction of the record on appeal, and, second, in denying their motion for reconsideration
of said resolution. It should be noted that the grounds relied upon in this appeal are the same grounds
alleged in said petition for correction.
In the second place, the intervenors have no right or reason to appeal from the decision in the main
case, it appearing that they did not introduce any evidence during the trial in support of their complaint,
#hich sho#s that their appeal #ould be merely pro-for'a. ,nd, in any event, they made the attempt to
amend the record on appeal seven =>? 'onths after the decision had become final against them.
In the third place, the intervenors have no right or reason to file a petition for relief under Eule =; of
the Eules of Court from the order of the lo#er court issued on 5ecember )", >'!, for the reason that
the same #as entered upon a motion filed by them. Indeed they cannot reasonably assert that the order
#as entered against them through fraud, accident, mista3e, or negligence. The fraud mentioned in Eule
=; is the fraud committed by the adverse party and certainly the same cannot be attributed to the Court.
Finally, it appears that the main case has already been decided by this Court on the merits on Actober
=, >'+, reversing the decision of the lo#er court and a#arding damages to plaintiff, #hich apparently
is the very purpose #hich the intervenors see3 to accomplish in joining the appeal as co-appellants.
This appeal, therefore, has already become moot.
9herefore, the order appealed from is affirmed, #ith costs against appellants.
aras, C.*., Ben".on, adilla, $onte'ayor, !abrador, Concepcion, 0ndencia and Barrera, **., concur.
G.R. No. 115942 S)%t);6), 27, 1995
FILIN/EST CREDIT CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS $!( SPOUSES EDIL-ERTO $!( MARCIANA TADIAMAN, respondents.

DA/IDE, 'R., J.:
This petition for revie* on certiorari seeks to set aside the decision of the Court of $ppeals in C$.H.&. CG ?o. ;04;1
1
affir"in+ in toto the decision
of the &e+ional Trial Court &TC) of %an !ernando Pa"pan+a), 2ranch '6, in Civil Case ?o. 6B99.
2
The antecedent facts are su""ari0ed by the Court of $ppeals as follo*sA
8efendants.appellees, spouses 9dilberto and >arciana Tadia"an, residents of Cabanatuan
City, purchased a 10.*heeler #0usu car+o truck fro" 7ordan 9nterprises, #nc., in Jue0on City, in
install"ents. %aid spouses e-ecuted a pro"issory note for P196,650.00 payable in 4' "onthly
install"ents in favor of 7ordan 9nterprises, #nc., and a Chattel >ort+a+e over the "otor vehicle
purchased to secure the pay"ent of the pro"issory note. 7ordan 9nterprises, #nc. assi+ned its
ri+hts and interests over the said instru"ents to !ilinvest !inance and 3easin+ Corporation,
*hich in turn assi+ned the" to plaintiff.appellant !ilinvest Credit Corporation.
%ubse=uently, the spouses Tadia"an defaulted in the pay"ent of the install"ents due on the
pro"issory note, and plaintiff.appellant filed an action for replevin and da"a+es a+ainst the"
*ith the court belo*. @pon "otion of the plaintiff.appellant, a *rit of replevin *as issued, and the
truck *as sei0ed in the province of #sabela, by persons *ho represented the"selves to be
special sheriffs of the court, but *ho turned out to be e"ployees of the plaintiff.appellant. The
truck *as brou+ht by such persons all the *ay back to >etro >anila.
Thereafter, defendant spouses filed a counterbond, and the lo*er court ordered the return of the
truck. This *as not i""ediately i"ple"ented because the defendant spouses *ere "et *ith
delayin+ tactics of the plaintiff.appellant, and *hen they finally recovered the truck, they found
the sa"e to be Ccannibali0edC. This *as +raphically recounted in the report 9-hibit C;C) of
8eputy %heriff $nastacio 8i0on, *ho assisted the spouses in recoverin+ the vehicle, e-cerpts of
*hich are as follo*sA
On !ebruary 1', 195;, the undersi+ned contacted >r. Gillanueva, 2ranch
>ana+er of the !#3#?G9%T at 2o. 8olores, %an !ernando, Pa"pan+a and he
+ave the infor"ation that the said #su0u Car+o Truck, sub/ect of the aforesaid
Court Order, *as already delivered to their "ain +ara+e at 2o. Talon, 3as PiRasF
>etro >anila. >r. Gillanueva further told the undersi+ned that in order to
effectively enforce the afore"entioned Court Order, the undersi+ned should
discuss the "atter *ith >r. Telesforo 7un) #sidro, Collection in.char+e, and >r.
Haspar $ntonio delos %antos, Gice President for 2ranch $d"inistration of the
!#3#?G9%T "ain office at >akati, >etro >anila.
On !ebruary 15, 195;, defendant >arciana Tadia"an, $tty. 2enites and the
undersi+ned contacted >essrs. Haspar $ntonio delos %antos and Telesforo
7un) #sidro at the "ain office, !#3#?G9%T at Paseo de &o-as, >akati, >etro
>anila and *e discussed the s"ooth retakin+ of possession by the defendants
of the 10.*heeler #su0u Car+o Truck *ith "otor ?o. 9 140.440'1, %erial ?o.
%P> (1016'56'. >essrs. 8elos %antos and #sidro alternatively ar+ued that the
Traveler,s #nsurance Co"pany is one of the black listed #nsurance fir", so "uch
so, it is only the co"pany,s la*yer *ho can direct the delivery of the above.cited
Car+o Truck to us. They told us to *ait for the arrival of their 3a*yer at BA'0
p."., and *e a+reed that in the "eanti"e that their la*yer is not around, the
said vehicle *ould not be transferred to any other place.
Ca"e BA;0 P.>., but the co"pany,s la*yer never arrived and *e *ere told to +o
back on !ebruary 41, 195;. >r. delos %antos finally told us that the co"pany *ill
not deliver to us the said Car+o Truck until and after their co"pany la*yer *ould
say so.
On !ebruary 19, 195;, >r. !elicisi"o <o+aldo, $tty. 2enites, defendant
>arciana Tadia"an, three police"en of 3as Pinas, >etro >anila, and the
undersi+ned *ent directly to the !#3#?G9%T +ara+e at 2o. Talon, 3as Pinas,
>etro >anila and there contracted >r. #s"ael Pascual, Custodian of all
repossessed vehicles of the said co"pany, and >r. Pedro Hervacio, %ecurity
Huard of the co"pany assi+ned by the $llied #nvesti+ation 2ureau at 6th !loor,
&a"on %antos 2ld+. They told us that the 10.*heeler Car+o Truck sub/ect of the
above.cited court order is not one of the vehicles listed in their in.co"in+ and
out.+oin+ led+er books and they told us to e-a"ine their books.
8efendant >arciana Tadia"an told >essrs. Pedro Hervacio and #s"ael Pascual
that she sa* the above."entioned Car+o.Truck last !ebruary 1', 195; at the
end corner of the +ara+e. $nd for that purpose she re=uested us, includin+ >r.
Pascual and the %ecurity Huard, to inspect the site *here the said truck *as
supposed to have been placed *hen she for the first ti"e sa* it on !ebruary 1',
195;.
@ne-pectedly, she sa* and pointed to us on the site oil leaks on the +round
*hich she believed ca"e fro" the vehicle *e *ere lookin+ for. 6e also sa* skid
"arks of tires of a truck startin+ fro" the site *here the car+o truck *as
previously placed as pointed to by defendant >arciana Tadia"an up to around
40 "eters before reachin+ the +ate of the co"pound. The other skid larks of
tires of a truck *as also seen on a portion of a road leadin+ to a co"pound
o*ned by other person.
>r. Hervacio and Pascual stron+ly insisted that they do not kno* the
*hereabouts of the said Car+o Truck. The undersi+ned re=uested the Police"en
of 3as Pinas, >etro >anila, $tty. 2enites and defendant >arciana Tadia"an to
see for ourselves the road leadin+ to a co"pound o*ned by another fir", about
1N; of the 3en+th of *hich road is co"pletely blocked by a bi+ and tall buildin+. #t
*as at this portion *here the sub/ect Car+o Truck *as placed.
>r. #s"ael Pascual called their "ain office, !#3#?G9%T, by telephone about the
discovery of the *hereabouts of said car+o truck by the undersi+ned. 8efendant
>arciana Tadia"an to
>r. Pascual that there *ere "issin+ parts and that other parts of the truck *ere
co"pletely chan+ed *ith *orn.out spare parts.
>r. Pascual told the undersi+ned that he *ill only affi- his si+nature on the
ackno*led+"ent receipt, belo* the line CH#G9? 2IC, if the "issin+ parts and
replaced parts *ere not "entioned in said receipt.
#t *as because of the said actuations of the plaintiff.appellant that the defendants.appellee DsicE
filed a counterclai" for da"a+es. . . .
8
$fter trial, the trial court rendered a decision the dispositive portion of *hich reads as follo*sA
6<9&9!O&9, /ud+"ent is hereby rendered on the "ain action, in favor of plaintiff and a+ainst
defendants, orderin+ the latter, /ointly and severally, to pay the plaintiff the follo*in+ su"sA
a) The su" of P55,;;;.;4 *hich is the balance of the pro"issory note as of
%epte"ber 46, 1954, *ith interest thereon at 1'L per annum fro" said date.
b) The su" e=uivalent to 4BL of the a"ount sued upon, as and for attorney,s
fees, that is P55,;;;.;4 plus the stipulated interestF and
c) The costs of suit.
On the Counterclai"A
Plaintiff not havin+ successfully rebutted the defendants, evidence respectin+ da"a+es caused
to the" by virtue of the ille+al sei0ure of the property, and hidin+ the truck in so"e other place
not their +ara+e, fei+nin+ kno*led+e that the sa"e had been recorded in their inco"in+ led+er
books, the Ccannibali0in+C done *hile the truck *as in the custody of plaintiff,s +ara+e, the
frustrations *hich the defendants had to under+o for t*o *eeks before the truck *as finally
placed in the hands of %heriff 8i0on, all point to the liability of plaintiff for its failure intentionally
or other*ise Cto observe certain nor"s that sprin+ fro" the fountain of +ood conscience and
+uide hu"an conduct to the end that la* "ay approach its supre"e ideal, *hich is the s*ay and
do"inance of /ustice.
6<9&9!O&9, /ud+"ent is rendered in favor of counter.clai"ants defendants and a+ainst
plaintiff, orderin+ the latter to pay to the defendants the follo*in+ su"sA
1) $ctual da"a+es representin+ lost spare parts *hile in the custody of plaintiff
in its +ara+e bein+ hidden fro" defendants, in the su" of PB0,000.00F
4) PB0,000.00 as "oral da"a+esF
;) P40,000.00 as e-e"plary da"a+esF
') P40,000.00 as attorney,s feeF and
B) Proportionate part of the costs ad/ud+ed a+ainst plaintiff.
%O O&89&98.
9
Petitioner !ilinvest Credit Corporation hereinafter 0i"invest) appealed that portion of the /ud+"ent on the
counterclai" to the Court of $ppeals C$.H.&. CG ?o. ;04;1) and assi+ned the follo*in+ errors of the lo*er
courtA
#
T<9 T&#$3 CO@&T 9&&98 #? $6$&8#?H 8$>$H9%F $CT@$3, >O&$3, 919>P3$&I $?8
$TTO&?9I,% !99% $?8 P&OPO&T#O?$T9 P$&T O! T<9 CO%T% #? !$GO& O! T<9
89!9?8$?T% #? T<9#& CO@?T9&.C3$#>% #? T<9 $2%9?C9 O! $?I $CT#O?$239 3O%%
%@%T$#?98 2I T<9> !O& #T 6$% T<9 89!9?8$?T% 6<O G#O3$T98 T<9#&
P&O>#%%O&I ?OT9 $?8 C<$TT93 >O&TH$H9 6#T< T<9 P3$#?T#!!.
##
T<9 T&#$3 CO@&T 9&&98 #? <O38#?H T<$T T<9 P3$#?T#!! O& $?I O! #T%
&9P&9%9?T$T#G9% <$8 ?O &#H<T TO T$K9 T<9 >O&TH$H98 P&OP9&TI $!T9& T<9
2&9$C< O! T<9 CO?8#T#O?% #? T<9 P&O>#%%O&I ?OT9 $?8 C<$TT93 >O&TH$H9
2I T<9 89!9?8$?T%.
5
#n its decision of 46 >ay 199', the Court of $ppeals affir"ed in toto the decision of the trial court. #t found no
"erit in the appeal. ThusA
The plaintiff.appellant ar+ues that it had the ri+ht to sei0e the truck fro" the "o"ent that the
defendants.appellees defaulted in the pay"ent of the "onthly install"ents, and to institute an
action for replevin preli"inary to effectin+ a foreclosure of the property "ort+a+ed e-tra/udicially.
The plaintiff.appellant "isses the point entirely. #n the first place, it has not been held liable for
filin+ an action for replevin in order to recover possession of the truck prior to its foreclosure, but
for the "anner in *hich it carried out the sei0ure of the vehicle. #t is ironic that, in spite of
plaintiff.appellant,s apparent reco+nition of the necessity of le+al "eans for the recovery of the
truck, in the end, it utili0ed ille+al "eans in the actual sei0ure of the vehicle by havin+ its
e"ployees pose as special a+ents of the court in effectin+ the sa"e. Plaintiff.appellant even
*ent to the e-tent of askin+ the appoint"ent of a special sheriff to enforce the order of sei0ure,
but still had the truck sei0ed by its o*n people instead. #t is as if the plaintiff.appellant utili0ed the
court only to clothe its e"ployees *ith apparent authority to sei0e the vehicle concerned.
#n the second place, plaintiff.appellant *as held liable for hidin+ the truck and "akin+ it difficult
for the defendants.appellees to recover the sa"e. 8efendants.appellDeesE *ere able to have the
*rit of sei0ure =uashed on the basis of a counterbond. Plaintiff.appellant should have been the
first to obey the order for the return of the sei0ed truck, considerin+ its avo*ed adherence to la*
and order. $nd yet, it "ade it difficult for the defendants.appellees to actually recover the vehicle,
as reported by the deputy sheriff above.
#n the third place, there is unrebutted evidence that the truck *as Ccannibali0edC *hile in the
custody of the plaintiff.appellant. The latter ar+ues that such evidence is not credible, because, if
the truck *as stripped of vital parts, it could not have been driven by the defendants.appellees
all the *ay back to Cabanatuan City. Plaintiff.appellant conveniently overlooks the testi"ony of
defendant.appellee >rs. Tadia"an that they had to buy the "issin+ parts in order to "ake the
truck run t.s.n., p. '0, October 4, 1956, 9-hibits C,9C, C10C and C11C).
3
!ilinvest no* co"es to us alle+in+ that the Court of $ppealsA
a) . . . 89C#898 $ J@9%T#O? O! %@2%T$?C9 #? $ 6$I ?OT #? $CCO&8 6#T< 3$6 $?8
T<9 $PP3#C$239 89C#%#O?% O! T<#% <O?O&$239 CO@&T 6<9? #T &9G9&%98 T<9
89C#%#O? O! T<9 &9H#O?$3 T&#$3 CO@&T O! >$?#3$, 2&$?C< 9F
b) . . . $CT98 6#T< H&$G9 $2@%9 O! 8#%C&9T#O? $>O@?T#?H TO 3$CK O!
7@&#%8#CT#O? 6<9? #T %@%T$#?98 T<9 9&&O?9O@% 89C#%#O? O! T<9 <O?O&$239
&9H#O?$3 T&#$3 CO@&T 2&$?C< '6 O! %$? !9&?$?8O, P$>P$?H$F
c) . . . $CT98 6#T< H&$G9 $2@%9 O! 8#%C&9T#O? $?8 CO?T&$&I TO 91#%T#?H 3$6
$?8 7@&#%P&@89?C9 6<9? D#TE %@%T$#?98 T<9 %P9C@3$T#G9 !#?8#?H O! T<9 &TC
T<$T T<9 P9T#T#O?9& CC$??#2$3#:98C T<9 >O&TH$H98 G9<#C39F
d) . . . 9&&98 H&#9GO@%3I 6<9? #T 91O?9&$T98 P&#G$T9 &9%PO?89?T% !&O>
P$I#?H T<9 P9T#T#O?9& O? T<9 3$TT9&,% 39H#T#>$T9 C3$#>% @?89& T<9
CO>P3$#?T P$&T#C@3$&3I O? T<9 @?P$#8 P&O>#%%O&I ?OT9 >$89 2I T<9
P&#G$T9 &9%PO?89?T%F
e) . . . $CT98 CO?T&$&I TO 3$6 6<9? #T #H?O&98 T<9 P3$#? $8>#%%#O?% #? T<9
$?%69& $T P$&$H&$P< 4, O ;, P$H9 1) O! T<9 89!9?8$?T% P&#G$T9
&9%PO?89?T%) T<$T T<9I <$G9 8@3I 919C@T98 $ P&O>#%%O&I ?OT9 %9C@&98
2I $ 8998 O! C<$TT93 >O&TH$H9 $?8 T<$T T<9 P&#G$T9 &9%PO?89?T% G#O3$T98
T<9 T9&>% O! T<9 P&O>#%%O&I ?OT9 #? !$#3#?H TO P$I T<9 #?%T$33>9?T% 8@9
T<9&9O? !O& ?OG. 1B, 1951 $?8 T<9 %@2%9J@9?T 9 #?%T$33>9?T% O& @P TO
$@H@%T 1B, 1954F
f) . . . 9&&98 #? &9!@%#?H TO $PP3I T<9 T9&>% $?8 CO?8#T#O?% O! T<9
P&O>#%%O&I ?OT9 $?8 T<9 8998 O! C<$TT93 >O&TH$H9 %#H?98 2I T<9 PO?C9%
C$% T<9 3$6 29T699? T<9 P$&T#9%C TO T<9 CO?T&$CT %@279CT O! T<9 %@#T #?
T<9 &TC.
7
$dditionally, !ilinvest "aintains thatA
+) T<9&9 #% ?O P&OO! TO %@%T$#? T<9 $6$&8 O! >O&$3 8$>$H9% !O& PB0,000.00
$CCO&8#?H3I T<9&9 #% ?O 2$%#% !O& T<9 $6$&8 O! 919>P3$&I 8$>$H9%.
5
6e +ave due course to the petition and re=uired the parties to sub"it their respective "e"oranda after the filin+
of the co""ent to the petition by the private respondents and of the reply thereto by !ilinvest. The parties
subse=uently filed their "e"oranda *hich "erely reiterated the ar+u"ents in their respective initiatory
pleadin+s.
The only relevant issue in this petition is *hether or not the Court of $ppeals co""itted reversible error in
dis"issin+ !ilinvest,s appeal fro" the decision of the trial court on the private respondents, counterclai" and in
affir"in+ in toto the said decision. The first +round raised herein by !ilinvest is baseless since the discussions or
ar+u"ents in !ilinvest,s petition and "e"orandu" fail to disclose *hat the decision of 2ranch 9 of the &TC of
>anila is all about. %o is the fourth +round, for, the unappealed portion of the trial court,s decision did in fact
order the private respondents to pay !ilinvest the unpaid balance of the pro"issory note, *ith interest and
attorney,s fees. $ll the other +rounds are dee"ed *aived for not havin+ been raised in the appeal to the Court of
$ppeals. #n any event, !ilinvest,s dis=uisitions on such irrelevant issues are confounded.
$s to the sole issue defined above, the Court of $ppeals correctly ruled that !ilinvest is liable for da"a+es not
because it co""enced an action for replevin to recover possession of the truck prior to its foreclosure, but
because of the manner it carried out the sei0ure of the vehicle. %ections ; and ', &ule 60 of the &ules of Court
are very clear and direct as to the procedure for the sei0ure of property under a *rit of replevin, thusA
%ec. ;. Order. M @pon the filin+ of such affidavit and bond *ith the clerk or /ud+e of the court in
*hich the action is pendin+, the /ud+e of such court shall issue an order describin+ the personal
property alle+ed to be *ron+fully detained, and re=uirin+ the sheriff or other proper officer of the
court forthwith to ta9e such propert1 into his custod1.
%ec. '. .ut1 of the officer. M @pon receivin+ such order the officer "ust serve a copy thereof on
the defendant to+ether *ith a copy of the application, affidavit and bond, and "ust forthwith ta9e
the propert1, if it be in the possession of the defendant or his a$ent, and retain it in his
custod1. . . . e"phasis supplied)
#n the instant case, it *as not the sheriff or any other proper officer of the trial court *ho i"ple"ented the *rit of
replevin. 2ecause it *as a*are that no other person can i"ple"ent the *rit, !ilinvest asked the trial court to
appoint a special sheriff. Iet, it used its o*n e"ployees *ho "isrepresented the"selves as deputy sheriffs to
sei0e the truck *ithout havin+ been authori0ed by the court to do so. !ilinvest /ustified its sei0ure by citin+ a
state"ent in Bachrach Motor #o. vs. &ummers,
9
to *it, Cthe only restriction on the "ode by *hich the
"ort+a+ee shall secure possession of the "ort+a+ed property after breach of condition is that he "ust act in an
orderly "anner and *ithout creatin+ a breach of the peace, sub/ectin+ hi"self to an action for trespass.C
This /ustification is "isplace and "isleadin+ for 2achrach itself had ruled that if a "ort+a+ee cannot obtain
possession of a "ort+a+ed property for its sale on foreclosure, it "ust brin+ a civil action either to recover such
possession as a preli"inary step to the sale or to obtain /udicial foreclosure. Pertinent portions of Bachrach read
as follo*sA
6here, ho*ever, debtor refuses to yield up the property, the creditor "ust institute an action,
either to effect a /udicial foreclosure directly, to secure possession as a preli"inary to the sale
conte"plated in the provision above =uoted. <e cannot la*fully take the property by force
a+ainst the *ill of the debtor. @pon this point the $"erican authorities are even "ore
har"onious that they are upon the point that the creditor is entitled to possession. $s *as said
"ay years a+o by the *riter of this opinion in a "ono+raphic article contributed to an
encyclopedic le+al treatise, Cif possession cannot be peaceably obtained the "ort+a+ee "ust
brin+ an action.C Trust 8eeds and Po*er of %ale >ort+a+es, 45 $". O 9n+. 9ncyc. of 3a*, 4d
ed., (5;.) #n the $rticle of Chattel >ort+a+es, in Corpus 7uris, *e find the follo*in+ state"ent of
the la* on the sa"e pointA CThe only restriction on the "ode by *hich the "ort+a+ee shall
secure possession of the "ort+a+ed property after breach of condition is that he "ust act in an
orderly "anner and *ithout creatin+ a breach of the peace, sub/ectin+ hi"self to an action to
trespass. 11 #.-., B60F see a"so B &.C.3., '64.)
The reason *hy the la* does not allo* the creditor to possess hi"self of the "ort+a+ed property
*ith violence and a+ainst the *ill of the debtor is to be found in the fact that the creditor,s ri+ht of
possession is conditioned upon the fact of default, and the e-istence of this fact "ay naturally be
the sub/ect of controversy. The debtor, for instance, "ay clai" in +ood faith, and ri+htly or
*ron+ly, that the debt is paid, or that for so"e other reason the alle+ed default is none-istent.
<is possession in this situation is as fully entitled to protection as that of any other person, and in
the lan+ua+e of article ''6 of the Civil Code he "ust be respected therein. To allo* the creditor
to sei0e the property a+ainst the *ill of the debtor *ould "ake the for"er to a certain e-tent both
/ud+e and e-ecutioner in his o*n cause M a thin+ *hich is inad"issible in the absence of
une=uivocal a+ree"ent in the contract itself or e-press provision to that effect in the statute.
#t *ill be observed that the la* places the responsibility of conductin+ the sale upon Ca public
officerFC and it "i+ht be supposed that an officer, such as the sheriff, can sei0e the property
*here the creditor could not. This su++estion is, *e think, *ithout force, as it is "anifest that the
sheriff or other officer proceedin+ under the authority of the lan+ua+e already =uoted fro"
section 1' of the Chattel >ort+a+e 3a*, beco"es pro hac vice the "ere a+ent of the creditor.
There is nothin+ in this provision *hich creates a specific duty on the part of the officer to sei0e
the "ort+a+ed propertyF and no intention on the part of the la*."akin+ body to i"pose such a
duty can be i"plied. The conclusion is clear that for the recovery of possession, *here the ri+ht
is disputed, the creditor "ust proceed alon+ the usual channels by action in court. 6hether the
sheriff, upon bein+ inde"nified by the creditor, could safely proceed to take the property fro" the
debtor, is a point upon *hich *e e-press no opinion. . . .
2ut *hatever conclusion "ay be dra*n in the pre"ises *ith respect to the true nature of a
chattel "ort+a+e, the result "ust in this case be the sa"eF for *hether the "ort+a+ee beco"es
the real o*ner of the "ort+a+ed property M as so"e suppose M or ac=uires only certain ri+hts
therein, it is none the less clear that he has after default the ri+ht of possessionF thou+h it cannot
be ad"itted that he "ay take the la* into his o*n hands and *rest the property violently fro"
the possession of the "ort+a+or. ?either can he do throu+h the "ediu" of a public officer that
*hich he cannot directly do hi"self. The conse=uence is that in such case the creditor "ust
either resort to a civil action to recover possession as a preli"inary to a sale, or preferably he
"ay brin+ an action to obtain a /udicial foreclosure in confor"ity, so far as *ith the provisions of
the Chattel to >ort+a+e 3a*.
14
&eplevin is, of course, the appropriate action to recover possession preli"inary to the e-tra/udicial foreclosure of
a chattel "ort+a+e. !ilinvest did in fact institute such an action and obtained a *rit of replevin. $nd, by filin+ it,
!ilinvest ad"itted that it cannot ac=uire possession of the "ort+a+ed vehicle in an orderly or peaceful "anner.
$ccordin+ly, it should have left the enforce"ent of the *rit in accordance *ith &ule 60 of the &ules of Court
*hich it had voluntarily invoked.
Parenthetically, it "ust be observed that the trial court erred in holdin+ that the action for replevin *as Cnot in
order as D!ilinvestE is not the o*ner of the property %ec, 4 par. a) &ule 60).C
11
#t is not only the o*ner *ho can
institute a replevin suit. $ person Centitled to the possessionC of the property also can, as provided in the sa"e
para+raph cited by the trial court, *hich readsA
%ec. 4. 'ffidavit and bond. M @pon applyin+ for such order the plaintiff "ust sho* . . .
a) That the plaintiff is the o*ner of the property clai"ed, particularly describin+
it, or is entit"ed to the possession thereof@ . . . e"phasis supplied)
@pon the default by the "ort+a+or in his obli+ations, !ilinvest, as a "ort+a+ee, had the ri+ht to the
possession of the property "ort+a+ed preparatory to its sale in a public auction.
12
<o*ever, for
e"ployin+ subterfu+e in sei0in+ the truck by "isrepresentin+ its e"ployees as deputy sheriffs and then
hidin+ and cannibali0in+ it, !ilinvest co""itted bad faith in violation of $rticle 19 of the Civil Code *hich
providesA
9very person "ust, in the e-ercise of his ri+hts and in the perfor"ance of his duties, act *ith
/ustice, +ive everyone his due, and observe honesty and +ood faith.
#n co""on usa+e, $ood faith is ordinarily used to describe that state of "ind denotin+ honesty of purpose,
freedo" fro" intention to defraud, and, +enerally speakin+, "eans bein+ faithful to one,s duty or obli+ation.
18
#t
consists of the honest intention to abstain fro" takin+ an unconscionable and unscrupulous advanta+e of
another.
19
This leaves us to the issue of da"a+es and attorney,s fees.
#n their ans*er *ith counterclai", the private respondents asked for a) actual da"a+es of PB0,000.00 for the
spare parts found "issin+ after their recovery of the truck and another PB0,000.00 for unearned profits due to
the failure to use the truck in their rice"ill businessF b) "oral da"a+es of PB0,000.00 for Cthe "ental an+uish,
serious an-iety, physical sufferin+, *ounded feelin+s, social hu"iliation, "oral shock, sleepless ni+hts and other
si"ilar in/uryC *hich they suffered as a Cpro-i"ate result of the Dpetitioner,s ille+al, *ron+ful and unla*ful actsCF
c) no"inal da"a+es of P;0,000.00F d) e-e"plary da"a+es of P40,000.00F and e) attorney,s fees of
P40,000.00 *hich they incurred Cas a direct result of Dpetitioner,sE ille+al and un*arranted actuations and in
connection *ith the defense of this action.C
15
$s to actual da"a+es, the petitioner ad"its that per 9-hibits C1,C C9,C and C10C of the private respondents, only
the su" of P;;,444.00 M and not PB0,000.00 M *as Csupposedly spent for the alle+ed lost spare parts.C
13
The
petitioner "ay thus be held liable only for such a"ount for actual or co"pensatory da"a+es.
$nent the "oral da"a+es, the trial court ruled that the acts of the petitioner *ere in total disre+ard of $rticles 19,
40, and 41 of the Civil Code.
17
#t added that the petitioner had not only caused actual da"a+es in lost earnin+s,
but had also caused the private respondents to suffer indi+nities at the hands of the petitioner,s personnel in
hidin+ the truck in =uestion, "isleadin+ the", and "akin+ the" *ork for the release of the truck for about t*o
*eeks, thereby /ustifyin+ the a*ard of "oral da"a+es alon+ *ith the e-e"plary and other da"a+es in favor of
the private respondents.
15
6e a+ree *ith this findin+ of the trial court. The petitioner,s acts clearly fall *ithin the conte"plation of $rticles 19
and 41 of the Civil Code.
19
The acts of fraudulently takin+ the truck, hidin+ it fro" the private respondents, and
re"ovin+ its spare parts sho* nothin+ but a *illful intention to cause loss to the private respondents that is
punctuated *ith bad faith and is obviously contrary to +ood custo"s. Thus, the private respondents are entitled
to the "oral da"a+es they prayed for, for under $rticle 4419 of the Civil Code, "oral da"a+es "ay be
recovered in cases involvin+ acts referred to in $rticle 41 of the sa"e Code.
The private respondents prayed for no"inal da"a+es of P;0,000.00 *hich the trial court did not a*ard the".
<avin+ failed to appeal this o"ission by the trial court, *e cannot "ake any"ore such a*ard at this point.
The a*ard of e-e"plary da"a+es is in order in vie* of the *anton, fraudulent, and oppressive "anner by *hich
the petitioner sou+ht to enforce its ri+ht to the possession of the "ort+a+ed vehicle. $rticle 44;4 of the Civil
Code providesA
#n contracts and *uasi.contracts, the court "ay a*ard e-e"plary da"a+es if the defendant
acted in a *anton, fraudulent, reckless, oppressive, or "alevolent "anner.
Of course, a plaintiff need not prove the actual e-tent of e-e"plary da"a+es, for its deter"ination is
addressed to the sound discretion of the court upon proof of the plaintiff,s entitle"ent to "oral,
te"perate, or actual or co"pensatory da"a+es. $rticle 44;' of the Civil Code thus provides in part as
follo*sA
6hile the a"ount of the e-e"plary da"a+es need not be proved, the plaintiff "ust sho* that he
is entitled to "oral, te"perate or co"pensatory da"a+es before the court "ay consider the
=uestion of *hether or not e-e"plary da"a+es should be a*arded. . . .
The a*ard for attorney,s fees "ust, ho*ever, be set aside. There is no =uestion that the petitioner filed in +ood
faith its co"plaint for replevin and da"a+es to protect its ri+hts under the pro"issory note and the chattel
"ort+a+e. That the private respondents had defaulted in its obli+ation under the pro"issory note thereby
authori0in+ the petitioner to seek enforce"ent of its clai" thereunder and proceed a+ainst the "ort+a+e of the
vehicle *as duly reco+ni0ed by the trial court by its /ud+"ent a+ainst the private respondents incorporated in the
first part of the dispositive portion. The private respondents did not appeal therefro". There *ould then be no
basis for a*ardin+ attorney,s fees in favor of the private respondents for *hatever physical sufferin+, "ental
an+uish, serious an-iety, bes"irched reputation, *ounded feelin+s, "oral shock, social hu"iliation, or any other
si"ilar in/ury they had suffered, even if proven, *ere only such as are usually caused to parties haled into court
as a defendant and *hich are not co"pensable, for the la* could not have "eant to i"pose a penalty on the
ri+ht to liti+ate.
24
6<9&9!O&9, the assailed /ud+"ent of the Court of $ppeals in C$.H.&. CG ?o. ;04;1 as *ell as that of the
&e+ional Trial Court of %an !ernando, Pa"pan+a, 2ranch '6 in Civil Case ?o. 6B99 on the counterclai" is
$!!#&>98, sub/ect to the "odifications abovestated. $s so "odified, the petitioner is hereby ordered to pay the
private respondents only the follo*in+A
a) actual da"a+es in the reduced a"ount of P;;,444.00F
b) "oral da"a+es in the a"ount of PB0,000.00F and
c) e-e"plary da"a+es in the a"ount of P40,000.00.
?o pronounce"ent as to costs.
%O O&89&98.
G.R. No. L-1462/ S!"'!:$!r )0, 1960
FRAN*IS*O HERMOSISIMA, petitioner,
vs.
THE HON. *O+RT OF APPEALS, ET AL., respondents.
-e"ino ,er'osisi'a for petitioner.
1.. Gabriel, *r. for respondents.
*ON*EP*ION, J.-
,n appeal by certiorari, ta3en by petitioner Francisco 0ermosisima, from a decision of Court of
,ppeals modifying that of the Court of First Instance of Cebu.
An Actober !, >'!, 6oledad Cagigas, hereinafter referred to as complaint, filed #ith said of her child,
Chris 0ermosisima, as natural child and moral damages for alleged breach of promise. Petitioner
admitted the paternity of child and e*pressed #illingness to support the latter, but denied having ever
promised to marry the complainant. :pon her motion, said court ordered petitioner, on Actober )",
>'!, to pay, by #ay of alimony pendente lite, P'(.(( a month, #hich #as, on February +, >'',
reduced to P=(.(( a month. In due course, later on, said court rendered a decision the dispositive part of
#hich reads.
908E8FAE8, judgment is hereby rendered, declaring the child, Chris 0ermosisima, as the
natural daughter of defendant, and confirming the order pendente lite, ordering defendant to pay
to the said child, through plaintiff, the sum of thirty pesos $P=(.((%, payable on or before the
fifth day of every month sentencing defendant to pay to plaintiff the sum of FA:E
T0A:6,<5 FI28 0:<5E85 P86A6 $P!,'((.((% for actual and compensatory damages1 the
sum of FI28 T0A:6,<5 P86A6 $P',(((.((% as moral damages1 and the further sum of FI28
0:<5E85 P86A6 $P'((.((% as attorney/s fees for plaintiff, #ith costs against defendant.
An appeal ta3en by petitioner, the Court of ,ppeals affirmed this decision, e*cept as to the actual and
compensatory damages and the moral damages, #hich #ere increased to P',+!.)' and P",(((.((,
respectively.
The main issue before us is #hether moral damages are recoverable, under our la#s, for breach of
promise to marry. The pertinent facts are.
Complainant 6oledad Cagigas, #as born in Culy >". 6ince >'(, 6oledad then a teacher in the
6ibonga Provincial 0igh 6chool in Cebu, and petitioner, #ho #as almost ten $(% years younger than
she, used to go around together and #ere regarded as engaged, although he had made no promise of
marriage prior thereto. In >', she gave up teaching and became a life insurance under#riter in the
City of Cebu, #here intimacy developed among her and the petitioner, since one evening in >'=, #hen
after coming from the movies, they had se*ual intercourse in his cabin on board MH2 &8scaMo,& to
#hich he #as then attached as apprentice pilot. In February >'!, 6oledad advised petitioner that she
#as in the family #ay, #hereupon he promised to marry her. Their child, Chris 0ermosisima, #as born
on Cune ", >'!, in a private maternity and clinic. 0o#ever, subse7uently, or on Culy )!, >'!,
defendant married one Eomanita Pere?. 0ence, the present action, #hich #as commenced on or about
Actober !, >'!.
Eeferring no# to the issue above referred to, it #ill be noted that the Civil Code of 6pain permitted the
recovery of damages for breach to marry. ,rticle != and !! of said Code provides.
,ET. !=. , mutual promise of marriage shall not give rise to an obligation to contract marriage.
<o court shall entertain any complaint by #hich the enforcement of such promise is sought.
,ET. !!. If the promise has been in a public or private instrument by an adult, or by a minor
#ith the concurrence of the person #hose consent is necessary for the celebration of the
marriage, or if the banns have been published, the one #ho #ithout just cause refuses to marry
shall be obliged to reimburse the other for the e*penses #hich he or she may have incurred by
reason of the promised marriage.
The action for reimbursement of e*penses to #hich the foregoing article refers must be brought
#ithin one year, computed from the day of the refusal to celebrate the marriage.
Inasmuch as these articles #ere never in force in the Philippines, this Court ruled in %e *esus vs.
Sy/uia $'; Phil., ;++%, that &the action for breach of promises to marry has no standing in the civil la#,
apart from the right to recover money or property advanced . . . upon the faith of such promise&. The
Code Commission charged #ith the drafting of the Proposed Civil Code of the Philippines deem it best,
ho#ever, to change the la# thereon. 9e 7uote from the report of the Code Commission on said
Proposed Civil Code.
,rticles != and !! the Civil Code of ;;> refer to the promise of marriage. 4ut these articles
are not enforced in the Philippines. The subject is regulated in the Proposed Civil Code not only
as to the aspect treated of in said articles but also in other particulars. It is advisable to furnish
legislative solutions to some 7uestions that might arise relative to betrothal. ,mong the
provisions proposed are. That authori?ing the adjudication of moral damages, in case of breach
of promise of marriage, and that creating liability for causing a marriage engagement to be
bro3en.4a(ph@l.nAt
,ccordingly, the follo#ing provisions #ere inserted in said Proposed Civil Code, under Chapter I, Title
III, 4oo3 I thereof.
,rt. '+. , mutual promise to marry may be made e*pressly or impliedly.
,rt. '". ,n engagement to be married must be agreed directly by the future spouses.
,rt. ';. , contract for a future marriage cannot, #ithout the consent of the parent or guardian,
be entered into by a male bet#een the ages of si*teen and t#enty years or by a female bet#een
the ages of si*teen and eighteen years. 9ithout such consent of the parents or guardian, the
engagement to marry cannot be the basis of a civil action for damages in case of breach of the
promise.
,rt. '>. , promise to marry #hen made by a female under the age of fourteen years is not
civilly actionable, even though approved by the parent or guardian.
,rt. +(. In cases referred to in the proceeding articles, the criminal and civil responsibility of a
male for seduction shall not be affected.
,rt. +. <o action for specific performance of a mutual promise to marry may be brought.
,rt. +). ,n action for breach of promise to marry may be brought by the aggrieved party even
though a minor #ithout the assistance of his parent or guardian. 6hould the minor refuse to
bring suit, the parent or guardian may institute the action.
,rt. +=. 5amages for breach of promise to marry shall include not only material and pecuniary
losses but also compensation for mental and moral suffering.
,rt. +!. ,ny person, other than a rival, the parents, guardians and grandparents, of the affianced
parties, #ho cause a marriage engagement to be bro3en shall be liable for damages, both
material and moral, to the engaged person #ho is rejected.
,rt. +'. In case of breach of promise to marry, the party brea3ing the engagement shall be
obliged to return #hat he or she has received from the other as gift on account of the promise of
the marriage.
These article #ere, ho#ever, eliminated in Congress. The reason therefor are set forth in the report of
the corresponding 6enate Committee, from #hich #e 7uote.
The elimination of this Chapter is proposed. That breach of promise to marry is not actionable has been
definitely decide in the case of %e *esus vs. Sy/uia, '; Phil., ;++. The history of breach of promise suit
in the :nited 6tates and in 8ngland has sho#n that no other action lends itself more readily to abuse by
designing #omen and unscrupulous men. It is this e*perience #hich has led to the abolition of the
rights of action in the so-called 4alm suit in many of the ,merican 6tates.
6ee statutes of.
Florida >!' K pp. =!) K =!!
Maryland >!' K pp. "'> K "+)
<evada >!= K p. "'
Maine >! K pp. !( K !
<e# 0ampshire >! K p. ))=
California >=> K p. )!'
Massachusetts >=; K p. =)+
Indiana >=+ K p. ((>
Michigan >=' K p. )(
<e# For3 >='
Pennsylvania p. !'(
The Commission perhaps though that it has follo#ed the more progression trend in legislation
#hen it provided for breach of promise to marry suits. 4ut it is clear that the creation of such
causes of action at a time #hen so many 6tates, in conse7uence of years of e*perience are doing
a#ay #ith them, may #ell prove to be a step in the #rong direction. $Congressional Eecord,
2ol. I2, <o. ">, Thursday, May >, >!>, p. )=').%
The vie#s thus e*pressed #ere accepted by both houses of Congress. In the light of the clear and
manifest intent of our la# ma3ing body not to sanction actions for breach of promise to marry, the
a#ard of moral damages made by the lo#er courts is, accordingly, untenable. The Court of ,ppeals
said a#ard.
Moreover, it appearing that because of defendant-appellant/s seduction po#er, plaintiff-appellee,
over#helmed by her love for him finally yielded to his se*ual desires in spite of her age and
self-control, she being a #oman after all, #e hold that said defendant-appellant is liable for
seduction and, therefore, moral damages may be recovered from him under the provision of
,rticle ))>, paragraph =, of the ne# Civil Code.
,part from the fact that the general tenor of said ,rticle ))>, particularly the paragraphs preceding
and those follo#ing the one cited by the Court of ,ppeals, and the language used in said paragraph
strongly indicates that the &seduction& therein contemplated is the cri'e punished as such in ,rticle as
such in ,rticle ==" and ==; of the Eevised Penal Code, #hich admittedly does not e*ist in the present
case, #e find ourselves unable to say that petitioner is 'orally guilty of seduction, not only because he
is appro*imately ten $(% years younger than the complainant K #ho around thirty-si* $=+% years of
age, and as highly enlightened as a former high school teacher and a life insurance agent are supposed
to be K #hen she became intimate #ith petitioner, then a mere apprentice pilot, but, also, because, the
court of first instance found that, complainant &surrendered herself& to petitioner because,
&over#helmed by her love& for him, she 6(anted to bind6 6by havin" a fruit of their en"a"e'ent even
before they had the benefit of cler"y.&
The court of first instance sentenced petitioner to pay the follo#ing. $% a monthly pension of P=(.((
for the support of the child. $)% P!,'((, representing the income that complainant had allegedly failed
to earn during her pregnancy and shortly after the birth of the child, as actual and compensation
damages1 $=% P',(((, as moral damages1 and $!% P'((.((, as attorney/s fees. The Court of ,ppeals
added to the second item the sum of P,!.)' K consisting of P!!.)(, for hospitali?ation and
medical attendance, in connection #ith the parturiation, and the balance representing e*penses incurred
to support the child K and increased the moral damages to P",(((.((.
9ith the elimination of this a#ard for damages, the decision of the Court of ,ppeals is hereby
affirmed, therefore, in all other respects, #ithout special pronouncement as to cost in this instance. It is
so ordered.
aras, C.*., Ben".on, adilla, Bautista An"elo, !abrador, -eyes, *.B.!., Barrera, Gutierre. %avid,
aredes and %i.on, **., concur.

G.R. No. 97883 F)6,u$,& 19, 1998
GASHEM SHOO1AT -A1SH, petitioner,
vs.
HON. COURT OF APPEALS $!( MARILOU T. GON2ALES, respondents.
%ub"ic 'ttorne1As Office for petitioner.
#or"eto R. #astro for private respondent.

DA/IDE, 'R., J.:
This is an appeal by certiorari under &ule 'B of the &ules of Court seekin+ to revie* and set aside the 8ecision
1
of the respondent Court of
$ppeals in C$.H.&. CG ?o. 4'4B6 *hich affir"ed in toto the 16 October 19;9 8ecision of 2ranch ;5 3in+ayen)
of the &e+ional Trial Court &TC) of Pan+asinan in Civil Case ?o. 16B0;. Presented is the issue of *hether or
not da"a+es "ay be recovered for a breach of pro"ise to "arry on the basis of $rticle 41 of the Civil Code of
the Philippines.
The antecedents of this case are not co"plicatedA
On 4( October 195(, private respondent, *ithout the assistance of counsel, filed *ith the aforesaid trial court a
co"plaint
2
for da"a+es a+ainst the petitioner for the alle+ed violation of their a+ree"ent to +et "arried. %he
alle+es in said co"plaint thatA she is t*enty.t*o 44) years old, sin+le, !ilipino and a pretty lass of +ood "oral
character and reputation duly respected in her co""unityF petitioner, on the other hand, is an #ranian citi0en
residin+ at the 3o0ano $part"ents, Huili+, 8a+upan City, and is an e-chan+e student takin+ a "edical course at
the 3yceu" ?orth*estern Colle+es in 8a+upan CityF before 40 $u+ust 195(, the latter courted and proposed to
"arry herF she accepted his love on the condition that they *ould +et "arriedF they therefore a+reed to +et
"arried after the end of the school se"ester, *hich *as in October of that yearF petitioner then visited the private
respondent,s parents in 2aRa+a, 2u+allon, Pan+asinan to secure their approval to the "arria+eF so"eti"e in 40
$u+ust 195(, the petitioner forced her to live *ith hi" in the 3o0ano $part"entsF she *as a vir+in before she
be+an livin+ *ith hi"F a *eek before the filin+ of the co"plaint, petitioner,s attitude to*ards her started to
chan+eF he "altreated and threatened to kill herF as a result of such "altreat"ent, she sustained in/uriesF durin+
a confrontation *ith a representative of the baran+ay captain of Huili+ a day before the filin+ of the co"plaint,
petitioner repudiated their "arria+e a+ree"ent and asked her not to live *ith hi" any"ore andF the petitioner is
already "arried to so"eone livin+ in 2acolod City. Private respondent then prayed for /ud+"ent orderin+ the
petitioner to pay her da"a+es in the a"ount of not less than P'B,000.00, rei"burse"ent for actual e-penses
a"ountin+ to P600.00, attorney,s fees and costs, and +rantin+ her such other relief and re"edies as "ay be /ust
and e=uitable. The co"plaint *as docketed as Civil Case ?o. 16B0;.
#n his $ns*er *ith Counterclai",
8
petitioner ad"itted only the personal circu"stances of the parties as averred
in the co"plaint and denied the rest of the alle+ations either for lack of kno*led+e or infor"ation sufficient to
for" a belief as to the truth thereof or because the true facts are those alle+ed as his %pecial and $ffir"ative
8efenses. <e thus clai"ed that he never proposed "arria+e to or a+reed to be "arried *ith the private
respondentF he neither sou+ht the consent and approval of her parents nor forced her to live in his apart"entF he
did not "altreat her, but only told her to stop co"in+ to his place because he discovered that she had deceived
hi" by stealin+ his "oney and passportF and finally, no confrontation took place *ith a representative of the
baran+ay captain. #nsistin+, in his Counterclai", that the co"plaint is baseless and unfounded and that as a
result thereof, he *as unnecessarily dra++ed into court and co"pelled to incur e-penses, and has suffered
"ental an-iety and a bes"irched reputation, he prayed for an a*ard of PB,000.00 for "iscellaneous e-penses
and P4B,000.00 as "oral da"a+es.
$fter conductin+ a pre.trial on 4B 7anuary 1955, the trial court issued a Pre.Trial Order
9
e"bodyin+ the
stipulated facts *hich the parties had a+reed upon, to *itA
1. That the plaintiff is sin+le and resident sic) of 2aRa+a, 2u+allon, Pan+asinan, *hile the
defendant is sin+le, #ranian citi0en and resident sic) of 3o0ano $part"ent, Huili+, 8a+upan City
since %epte"ber 1, 195( up to the presentF
4. That the defendant is presently studyin+ at 3yceu" ?orth*estern, 8a+upan City, Colle+e of
>edicine, second year "edicine properF
;. That the plaintiff is sic) an e"ployee at >abuhay 3uncheonette , !ernande0 $venue,
8a+upan City since 7uly, 1956 up to the present and a sic) hi+h school +raduateF
'. That the parties happened to kno* each other *hen the "ana+er of the >abuhay
3uncheonette, 7ohhny &abino introduced the defendant to the plaintiff on $u+ust ;, 1956.
$fter trial on the "erits, the lo*er court, applyin+ $rticle 41 of the Civil Code, rendered on 16 October 1959 a
decision
5
favorin+ the private respondent. The petitioner *as thus ordered to pay the latter da"a+es and
attorney,s feesF the dispositive portion of the decision readsA
#? T<9 3#H<T of the fore+oin+ consideration, /ud+"ent is hereby rendered in favor of the
plaintiff and a+ainst the defendant.
1. Conde"nin+ sic) the defendant to pay the plaintiff the su" of t*enty thousand P40,000.00)
pesos as "oral da"a+es.
4. Conde"nin+ further the defendant to play the plaintiff the su" of three thousand P;,000.00)
pesos as atty,s fees and t*o thousand P4,000.00) pesos at sic) liti+ation e-penses and to pay
the costs.
;. $ll other clai"s are denied.
3
The decision is anchored on the trial court,s findin+s and conclusions that a) petitioner and private respondent
*ere lovers, b) private respondent is not a *o"an of loose "orals or =uestionable virtue *ho readily sub"its to
se-ual advances, c) petitioner, throu+h "achinations, deceit and false pretenses, pro"ised to "arry private
respondent, d) because of his persuasive pro"ise to "arry her, she allo*ed herself to be deflo*ered by hi", e)
by reason of that deceitful pro"ise, private respondent and her parents M in accordance *ith !ilipino custo"s
and traditions M "ade so"e preparations for the *eddin+ that *as to be held at the end of October 195( by
lookin+ for pi+s and chickens, invitin+ friends and relatives and contractin+ sponsors, f) petitioner did not fulfill
his pro"ise to "arry her and +) such acts of the petitioner, *ho is a forei+ner and *ho has abused Philippine
hospitality, have offended our sense of "orality, +ood custo"s, culture and traditions. The trial court +ave full
credit to the private respondent,s testi"ony because, inter a"ia, she *ould not have had the te"erity and
coura+e to co"e to court and e-pose her honor and reputation to public scrutiny and ridicule if her clai" *as
false.
7
The above findin+s and conclusions *ere culled fro" the detailed su""ary of the evidence for the private
respondent in the fore+oin+ decision, di+ested by the respondent Court as follo*sA
$ccordin+ to plaintiff, *ho clai"ed that she *as a vir+in at the ti"e and that she never had a
boyfriend before, defendant started courtin+ her /ust a fe* days after they first "et. <e later
proposed "arria+e to her several ti"es and she accepted his love as *ell as his proposal of
"arria+e on $u+ust 40, 195(, on *hich sa"e day he *ent *ith her to her ho"eto*n of 2aRa+a,
2u+allon, Pan+asinan, as he *anted to "eet her parents and infor" the" of their relationship
and their intention to +et "arried. The photo+raphs 9-hs. C$C to C9C and their sub"arkin+s) of
defendant *ith "e"bers of plaintiff,s fa"ily or *ith plaintiff, *ere taken that day. $lso on that
occasion, defendant told plaintiffs parents and brothers and sisters that he intended to "arry her
durin+ the se"estral break in October, 195(, and because plaintiff,s parents thou+ht he *as
+ood and trusted hi", they a+reed to his proposal for hi" to "arry their dau+hter, and they
like*ise allo*ed hi" to stay in their house and sleep *ith plaintiff durin+ the fe* days that they
*ere in 2u+allon. 6hen plaintiff and defendant later returned to 8a+upan City, they continued to
live to+ether in defendant,s apart"ent. <o*ever, in the early days of October, 195(, defendant
*ould tie plaintiff,s hands and feet *hile he *ent to school, and he even +ave her "edicine at '
o,clock in the "ornin+ that "ade her sleep the *hole day and ni+ht until the follo*in+ day. $s a
result of this live.in relationship, plaintiff beca"e pre+nant, but defendant +ave her so"e
"edicine to abort the fetus. %till plaintiff continued to live *ith defendant and kept re"indin+ hi"
of his pro"ise to "arry her until he told her that he could not do so because he *as already
"arried to a +irl in 2acolod City. That *as the ti"e plaintiff left defendant, *ent ho"e to her
parents, and thereafter consulted a la*yer *ho acco"panied her to the baran+ay captain in
8a+upan City. Plaintiff, her la*yer, her +od"other, and a baran+ay tanod sent by the baran+ay
captain *ent to talk to defendant to still convince hi" to "arry plaintiff, but defendant insisted
that he could not do so because he *as already "arried to a +irl in 2acolod City, althou+h the
truth, as stipulated by the parties at the pre.trial, is that defendant is still sin+le.
Plaintiff,s father, a tricycle driver, also clai"ed that after defendant had infor"ed the" of his
desire to "arry >arilou, he already looked for sponsors for the *eddin+, started preparin+ for the
reception by lookin+ for pi+s and chickens, and even already invited "any relatives and friends
to the forthco"in+ *eddin+.
5
Petitioner appealed the trial court,s decision to the respondent Court of $ppeals *hich docketed the case as C$.
H.&. CG ?o. 4'4B6. #n his 2rief,
9
he contended that the trial court erred a) in not dis"issin+ the case for lack of
factual and le+al basis and b) in orderin+ hi" to pay "oral da"a+es, attorney,s fees, liti+ation e-penses and
costs.
On 15 !ebruary 1991, respondent Court pro"ul+ated the challen+ed decision
14
affir"in+ in toto the trial court,s
rulin+ of 16 October 1959. #n sustainin+ the trial court,s findin+s of fact, respondent Court "ade the follo*in+
analysisA
!irst of all, plaintiff, then only 41 years old *hen she "et defendant *ho *as already 49 years
old at the ti"e, does not appear to be a +irl of loose "orals. #t is uncontradicted that she *as a
vir+in prior to her unfortunate e-perience *ith defendant and never had boyfriend. %he is, as
described by the lo*er court, a barrio lass Cnot used and accusto"ed to trend of "odern urban
lifeC, and certainly *ould sic) not have allo*ed
Cherself to be deflo*ered by the defendant if there *as no persuasive pro"ise "ade by the
defendant to "arry her.C #n fact, *e a+ree *ith the lo*er court that plaintiff and defendant "ust
have been s*eethearts or so the plaintiff "ust have thou+ht because of the deception of
defendant, for other*ise, she *ould not have allo*ed herself to be photo+raphed *ith defendant
in public in so sic) lovin+ and tender poses as those depicted in the pictures 9-hs. C8C and C9C.
6e cannot believe, therefore, defendant,s pretense that plaintiff *as a nobody to hi" e-cept a
*aitress at the restaurant *here he usually ate. 8efendant in fact ad"itted that he *ent to
plaintiff,s ho"eto*n of 2aRa+a, 2u+allon, Pan+asinan, at least thriceF at sic) the to*n fiesta on
!ebruary 4(, 195( p. B', tsn >ay 15, 1955), at sic) a beach party to+ether *ith the "ana+er
and e"ployees of the >abuhay 3uncheonette on >arch ;, 195( p. B0, tsn id.), and on $pril 1,
195( *hen he alle+edly talked to plaintiff,s "other *ho told hi" to "arry her dau+hter pp. BB.
B6, tsn id.). 6ould defendant have left 8a+upan City *here he *as involved in the serious study
of "edicine to +o to plaintiff,s ho"eto*n in 2aRa+a, 2u+allon, unless there *as sic) so"e kind
of special relationship bet*een the"K $nd this special relationship "ust indeed have led to
defendant,s insincere proposal of "arria+e to plaintiff, co""unicated not only to her but also to
her parents, and sic) >arites &abino, the o*ner of the restaurant *here plaintiff *as *orkin+
and *here defendant first proposed "arria+e to her, also kne* of this love affair and defendant,s
proposal of "arria+e to plaintiff, *hich she declared *as the reason *hy plaintiff resi+ned fro"
her /ob at the restaurant after she had accepted defendant,s proposal pp. 6.(, tsn >arch (,
1955).
@pon the other hand, appellant does not appear to be a "an of +ood "oral character and "ust
think so lo* and have so little respect and re+ard for !ilipino *o"en that he openly ad"itted that
*hen he studied in 2acolod City for several years *here he finished his 2.%. 2iolo+y before he
ca"e to 8a+upan City to study "edicine, he had a co""on.la* *ife in 2acolod City. #n other
*ords, he also lived *ith another *o"an in 2acolod City but did not "arry that *o"an, /ust like
*hat he did to plaintiff. #t is not surprisin+, then, that he felt so little co"punction or re"orse in
pretendin+ to love and pro"isin+ to "arry plaintiff, a youn+, innocent, trustful country +irl, in
order to satisfy his lust on her.
11
and then concludedA
#n su", *e are stron+ly convinced and so hold that it *as defendant.appellant,s fraudulent and
deceptive protestations of love for and pro"ise to "arry plaintiff that "ade her surrender her
virtue and *o"anhood to hi" and to live *ith hi" on the honest and sincere belief that he *ould
keep said pro"ise, and it *as like*ise these sic) fraud and deception on appellant,s part that
"ade plaintiff,s parents a+ree to their dau+hter,s livin+.in *ith hi" preparatory to their supposed
"arria+e. $nd as these acts of appellant are palpably and undoubtedly a+ainst "orals, +ood
custo"s, and public policy, and are even +ravely and deeply dero+atory and insultin+ to our
*o"en, co"in+ as they do fro" a forei+ner *ho has been en/oyin+ the hospitality of our people
and takin+ advanta+e of the opportunity to study in one of our institutions of learnin+, defendant.
appellant should indeed be "ade, under $rt. 41 of the Civil Code of the Philippines, to
co"pensate for the "oral da"a+es and in/ury that he had caused plaintiff, as the lo*er court
ordered hi" to do in its decision in this case.
12
@nfa0ed by his second defeat, petitioner filed the instant petition on 46 >arch 1991F he raises therein the sin+le
issue of *hether or not $rticle 41 of the Civil Code applies to the case at bar.
18
#t is petitioner,s thesis that said $rticle 41 is not applicable because he had not co""itted any "oral *ron+ or
in/ury or violated any +ood custo" or public policyF he has not professed love or proposed "arria+e to the
private respondentF and he has never "altreated her. <e critici0es the trial court for liberally invokin+ !ilipino
custo"s, traditions and culture, and i+norin+ the fact that since he is a forei+ner, he is not conversant *ith such
!ilipino custo"s, traditions and culture. $s an #ranian >osle", he is not fa"iliar *ith Catholic and Christian
*ays. <e stresses that even if he had "ade a pro"ise to "arry, the subse=uent failure to fulfill the sa"e is
e-cusable or tolerable because of his >osle" upbrin+in+F he then alludes to the >usli" Code *hich purportedly
allo*s a >usli" to take four ') *ives and concludes that on the basis thereof, the trial court erred in rulin+ that
he does not posses +ood "oral character. >oreover, his controversial Cco""on la* lifeC is no* his le+al *ife as
their "arria+e had been sole"ni0ed in civil cere"onies in the #ranian 9"bassy. $s to his unla*ful cohabitation
*ith the private respondent, petitioner clai"s that even if responsibility could be pinned on hi" for the live.in
relationship, the private respondent should also be faulted for consentin+ to an illicit arran+e"ent. !inally,
petitioner asseverates that even if it *as to be assu"ed ar$uendo that he had professed his love to the private
respondent and had also pro"ised to "arry her, such acts *ould not be actionable in vie* of the special
circu"stances of the case. The "ere breach of pro"ise is not actionable.
19
On 46 $u+ust 1991, after the private respondent had filed her Co""ent to the petition and the petitioner had
filed his &eply thereto, this Court +ave due course to the petition and re=uired the parties to sub"it their
respective >e"oranda, *hich they subse=uently co"plied *ith.
$s "ay be +leaned fro" the fore+oin+ su""ation of the petitioner,s ar+u"ents in support of his thesis, it is clear
that =uestions of fact, *hich boil do*n to the issue of the credibility of *itnesses, are also raised. #t is the rule in
this /urisdiction that appellate courts *ill not disturb the trial court,s findin+s as to the credibility of *itnesses, the
latter court havin+ heard the *itnesses and havin+ had the opportunity to observe closely their deport"ent and
"anner of testifyin+, unless the trial court had plainly overlooked facts of substance or value *hich, if
considered, "i+ht affect the result of the case.
15
Petitioner has "iserably failed to convince @s that both the appellate and trial courts had overlooked any fact of
substance or values *hich could alter the result of the case.
9=ually settled is the rule that only =uestions of la* "ay be raised in a petition for revie* on certiorari under
&ule 'B of the &ules of Court. #t is not the function of this Court to analy0e or *ei+h all over a+ain the evidence
introduced by the parties before the lo*er court. There are, ho*ever, reco+ni0ed e-ceptions to this rule. Thus, in
Medina vs. 'sistio, -r.,
13
this Court took the ti"e, a+ain, to enu"erate these e-ceptionsA
--- --- ---
1) 6hen the conclusion is a findin+ +rounded entirely on speculation, sur"ises or con/ectures
7oa=uin v. ?avarro, 9; Phil. 4B( D19B;E)F 4) 6hen the inference "ade is "anifestly "istaken,
absurb or i"possible 3una v. 3inatok, (' Phil. 1B D19'4E)F ;) 6here there is a +rave abuse of
discretion 2uyco v. People, 9B Phil. 'B; D19BBE)F ') 6hen the /ud+"ent is based on a
"isapprehension of facts Cru0 v. %osin+,
3.'5(B, ?ov. 4(, 19B;)F B) 6hen the findin+s of fact are conflictin+ Casica v. Gillaseca, 3.9B90
$p. ;0, 19B(F unrep.) 6) 6hen the Court of $ppeals, in "akin+ its findin+s, *ent beyond the
issues of the case and the sa"e is contrary to the ad"issions of both appellate and appellee
9van+elista v. $lto %urety and #nsurance Co., 10; Phil. '01 D19B5E)F
() The findin+s of the Court of $ppeals are contrary to those of the trial court Harcia v. Court of
$ppeals, ;; %C&$ 644 D19(0EF %acay v. %andi+anbayan, 1'4 %C&$ B9; D1956E)F 5) 6hen the
findin+s of fact are conclusions *ithout citation of specific evidence on *hich they are based
Ibid.,)F 9) 6hen the facts set forth in the petition as *ell as in the petitioners "ain and reply
briefs are not disputed by the respondents Ibid.,)F and 10) The findin+ of fact of the Court of
$ppeals is pre"ised on the supposed absence of evidence and is contradicted by the evidence
on record %ala0ar v. Hutierre0, ;; %C&$ 4'4 D19(0E).
Petitioner has not endeavored to /oint out to @s the e-istence of any of the above =uoted e-ceptions in this case.
Conse=uently, the factual findin+s of the trial and appellate courts "ust be respected.
$nd no* to the le+al issue.
The e-istin+ rule is that a breach of pro"ise to "arry per se is not an actionable *ron+.
17
Con+ress
deliberately eli"inated fro" the draft of the ?e* Civil Code the provisions that *ould have "ade it so. The
reason therefor is set forth in the report of the %enate Co""ittees on the Proposed Civil Code, fro" *hich 6e
=uoteA
The eli"ination of this chapter is proposed. That breach of pro"ise to "arry is not actionable
has been definitely decided in the case of 8e 7esus vs. %y=uia.
15
The history of breach of
pro"ise suits in the @nited %tates and in 9n+land has sho*n that no other action lends itself
"ore readily to abuse by desi+nin+ *o"en and unscrupulous "en. #t is this e-perience *hich
has led to the abolition of ri+hts of action in the so.called <eart 2al" suits in "any of the
$"erican states. . . .
19
This not*ithstandin+, the said Code contains a provision, $rticle 41, *hich is desi+ned to e-pand the concept of
torts or *uasi:de"ict in this /urisdiction by +rantin+ ade=uate le+al re"edy for the untold nu"ber of "oral *ron+s
*hich is i"possible for hu"an foresi+ht to specifically enu"erate and punish in the statute books.
24
$s the Code Co""ission itself stated in its &eportA
2ut the Code Co""ission had +one farther than the sphere of *ron+s defined or deter"ined by
positive la*. !ully sensible that there are countless +aps in the statutes, *hich leave so "any
victi"s of "oral *ron+s helpless, even thou+h they have actually suffered "aterial and "oral
in/ury, the Co""ission has dee"ed it necessary, in the interest of /ustice, to incorporate in the
proposed Civil Code the follo*in+ ruleA
$rt. 4;. $ny person *ho *ilfully causes loss or in/ury to another in a "anner that
is contrary to "orals, +ood custo"s or public policy shall co"pensate the latter
for the da"a+e.
$n e-a"ple *ill illustrate the purvie* of the fore+oin+ nor"A C$C seduces the nineteen.year old
dau+hter of C1C. $ pro"ise of "arria+e either has not been "ade, or can not be proved. The +irl
beco"es pre+nant. @nder the present la*s, there is no cri"e, as the +irl is above nineteen years
of a+e. ?either can any civil action for breach of pro"ise of "arria+e be filed. Therefore, thou+h
the +rievous "oral *ron+ has been co""itted, and thou+h the +irl and fa"ily have suffered
incalculable "oral da"a+e, she and her parents cannot brin+ action for da"a+es. 2ut under the
proposed article, she and her parents *ould have such a ri+ht of action.
Thus at one stroke, the le+islator, if the for+oin+ rule is approved, *ould vouchsafe ade=uate
le+al re"edy for that untold nu"ber of "oral *ron+s *hich it is i"possible for hu"an foresi+ht to
provide for specifically in the statutes.
21
$rticle 41(6 of the Civil Code, *hich defines a *uasi:de"ict thusA
6hoever by act or o"ission causes da"a+e to another, there bein+ fault or ne+li+ence, is
obli+ed to pay for the da"a+e done. %uch fault or ne+li+ence, if there is no pre.e-istin+
contractual relation bet*een the parties, is called a *uasi:de"ict and is +overned by the
provisions of this Chapter.
is li"ited to ne+li+ent acts or o"issions and e-cludes the notion of *illfulness or intent. Buasi:de"ict,
kno*n in %panish le+al treatises as cu"pa a*ui"iana, is a civil la* concept *hile torts is an $n+lo.
$"erican or co""on la* concept. =orts is "uch broader than cu"pa a*ui"iana because it includes not
only ne+li+ence, but international cri"inal acts as *ell such as assault and battery, false i"prison"ent
and deceit. #n the +eneral sche"e of the Philippine le+al syste" envisioned by the Co""ission
responsible for draftin+ the ?e* Civil Code, intentional and "alicious acts, *ith certain e-ceptions, are
to be +overned by the &evised Penal Code *hile ne+li+ent acts or o"issions are to be covered by
$rticle 41(6 of the Civil Code.
22
#n bet*een these opposite spectru"s are in/urious acts *hich, in the
absence of $rticle 41, *ould have been beyond redress. Thus, $rticle 41 fills that vacuu". #t is even
postulated that to+ether *ith $rticles 19 and 40 of the Civil Code, $rticle 41 has +reatly broadened the
scope of the la* on civil *ron+sF it has beco"e "uch "ore supple and adaptable than the $n+lo.
$"erican la* on torts.
28
#n the li+ht of the above laudable purpose of $rticle 41, 6e are of the opinion, and so hold, that *here a "an,s
pro"ise to "arry is in fact the pro-i"ate cause of the acceptance of his love by a *o"an and his representation
to fulfill that pro"ise thereafter beco"es the pro-i"ate cause of the +ivin+ of herself unto hi" in a se-ual
con+ress, proof that he had, in reality, no intention of "arryin+ her and that the pro"ise *as only a subtle
sche"e or deceptive device to entice or invei+le her to accept hi" and to obtain her consent to the se-ual act,
could /ustify the a*ard of da"a+es pursuant to $rticle 41 not because of such pro"ise to "arry but because of
the fraud and deceit behind it and the *illful in/ury to her honor and reputation *hich follo*ed thereafter. #t is
essential, ho*ever, that such in/ury should have been co""itted in a "anner contrary to "orals, +ood custo"s
or public policy.
#n the instant case, respondent Court found that it *as the petitioner,s Cfraudulent and deceptive protestations of
love for and pro"ise to "arry plaintiff that "ade her surrender her virtue and *o"anhood to hi" and to live *ith
hi" on the honest and sincere belief that he *ould keep said pro"ise, and it *as like*ise these fraud and
deception on appellant,s part that "ade plaintiff,s parents a+ree to their dau+hter,s livin+.in *ith hi" preparatory
to their supposed "arria+e.C
29
#n short, the private respondent surrendered her vir+inity, the cherished
possession of every sin+le !ilipina, not because of lust but because of "oral seduction M the kind illustrated by
the Code Co""ission in its e-a"ple earlier adverted to. The petitioner could not be held liable for cri"inal
seduction punished under either $rticle ;;( or $rticle ;;5 of the &evised Penal Code because the private
respondent *as above ei+hteen 15) years of a+e at the ti"e of the seduction.
Prior decisions of this Court clearly su++est that $rticle 41 "ay be applied in a breach of pro"ise to "arry *here
the *o"an is a victi" of "oral seduction. Thus, in ;ermosisima vs. #ourt of 'ppea"s,
25
this Court denied
recovery of da"a+es to the *o"an becauseA
. . . *e find ourselves unable to say that petitioner is mora""1 +uilty of seduction, not only
because he is appro-i"ately ten 10) years youn+er than the co"plainant M *ho *as around
thirty.si- ;6) years of a+e, and as hi+hly enli+htened as a for"er hi+h school teacher and a life
insurance a+ent are supposed to be M *hen she beca"e inti"ate *ith petitioner, then a "ere
apprentice pilot, but, also, because the court of first instance found that, co"plainant
Csurrendered herselfC to petitioner because, Cover*hel"ed by her loveC for hi", she Cwanted to
bindC him b1 havin$ a fruit of their en$a$ement even before the1 had the benefit of c"er$1.
#n =anjanco vs. #ourt of 'ppea"s,
23
*hile this Court like*ise hinted at possible recovery if there had been "oral
seduction, recovery *as eventually denied because 6e *ere not convinced that such seduction e-isted. The
follo*in+ enli+htenin+ dis=uisition and conclusion *ere "ade in the said caseA
The Court of $ppeals see" to have overlooked that the e-a"ple set forth in the Code
Co""ission,s "e"orandu" refers to a tort upon a "inor *ho had been seduced. The essential
feature is seduction, that in la* is "ore than "ere se-ual intercourse, or a breach of a pro"ise
of "arria+eF it connotes essentially the idea of deceit, entice"ent, superior po*er or abuse of
confidence on the part of the seducer to *hich the *o"an has yielded @.%. vs. 2uenaventura,
4( Phil. 141F @.%. vs. $rlante, 9 Phil. B9B).
#t has been ruled in the Buenaventura case supra) that M
To constitute seduction there "ust in all cases be so"e sufficient pro"ise or
induce"ent and the woman must 1ie"d because of the promise or other
inducement. #f she consents "erely fro" carnal lust and the intercourse is fro"
"utual desire, there is no seduction '; Cent. 8i+. tit. %eduction, par. B6) %he
"ust be induced to depart fro" the path of virtue by the use of so"e species of
arts, persuasions and *iles, *hich are calculated to have and do have that
effect, and *hich result in her person to ulti"ately sub"ittin+ her person to the
se-ual e"braces of her seducer 4( Phil. 14;).
$nd in $"erican 7urisprudence *e findA
On the other hand, in an action by the *o"an, the entice"ent, persuasion or
deception is the essence of the in/uryF and a "ere proof of intercourse is
insufficient to *arrant a recovery.
$ccordin+ly it is not seduction *here the *illin+ness arises out of se-ual desire
of curiosity of the fe"ale, and the defendant "erely affords her the needed
opportunity for the co""ission of the act. #t has been e"phasi0ed that to allo* a
recovery in all such cases *ould tend to the de"orali0ation of the fe"ale se-,
and *ould be a re*ard for unchastity by *hich a class of adventuresses *ould
be s*ift to profit. '( $". 7ur. 664)
--- --- ---
Over and above the partisan alle+ations, the fact stand out that for one *hole year, fro" 19B5 to
19B9, the plaintiff.appellee, a *o"an of adult a+e, "aintain inti"ate se-ual relations *ith
appellant, *ith repeated acts of intercourse. %uch conduct is inco"patible *ith the idea of
seduction. Plainly there is here voluntariness and "utual passionF for had the appellant been
deceived, had she surrendered e-clusively because of the deceit, artful persuasions and *iles of
the defendant, she *ould not have a+ain yielded to his e"braces, "uch less for one year,
*ithout e-actin+ early fulfill"ent of the alle+ed pro"ises of "arria+e, and *ould have cut short
all se-ual relations upon findin+ that defendant did not intend to fulfill his defendant did not
intend to fulfill his pro"ise. <ence, *e conclude that no case is "ade under article 41 of the Civil
Code, and no other cause of action bein+ alle+ed, no error *as co""itted by the Court of !irst
#nstance in dis"issin+ the co"plaint.
27
#n his annotations on the Civil Code,
25
$ssociate 7ustice 9d+ardo 3. Paras, *ho recently retired fro" this Court,
opined that in a breach of pro"ise to "arry *here there had been carnal kno*led+e, "oral da"a+es "ay be
recoveredA
. . . if there be crimina" or mora" seduction, but not if the intercourse *as due to "utual lust.
<er"osisi"a vs. Court of $ppeals,
3.1'645, %ept. ;0, 1960F 9stopa vs. Piansay, 7r., 3.1'(;;, %ept. ;0, 1960F 2atarra vs. >arcos, (
Phil. B6 sic)F 2eatri0 Halan+ vs. Court of $ppeals, et al., 3.1(4'5, 7an. 49, 1964). #n other
*ords, if the C$@%9 be the pro"ise to "arry, and the 9!!9CT be the carnal kno*led+e, there
is a chance that there *as crimina" or mora" seduction, hence recovery of "oral da"a+es *ill
prosper. #f it be the other *ay around, there can be no recovery of "oral da"a+es, because here
"utual lust has intervened). . . .
to+ether *ith C$CT@$3 da"a+es, should there be any, such as the e-penses for the *eddin+
presentations %ee 8o"ala+on v. 2olifer, ;; Phil. '(1).
%enator $rturo >. Tolentino
29
is also of the sa"e persuasionA
#t is sub"itted that the rule in Batarra vs. Marcos,
84
still subsists, not*ithstandin+ the
incorporation of the present article
81
in the Code. The e-a"ple +iven by the Code Co""ission
is correct, if there *as seduction, not necessarily in the le+al sense, but in the vul+ar sense of
deception. 2ut *hen the se-ual act is acco"plished *ithout any deceit or =ualifyin+
circu"stance of abuse of authority or influence, but the *o"an, already of a+e, has kno*in+ly
+iven herself to a "an, it cannot be said that there is an in/ury *hich can be the basis for
inde"nity.
2ut so lon+ as there is fraud, *hich is characteri0ed by *illfulness sic), the action lies. The
court, ho*ever, "ust *ei+h the de+ree of fraud, if it is sufficient to deceive the *o"an under the
circu"stances, because an act *hich *ould deceive a +irl si-teen years of a+e "ay not
constitute deceit as to an e-perienced *o"an thirty years of a+e. 2ut so lon+ as there is a
*ron+ful act and a resultin+ in/ury, there should be civil liability, even if the act is not punishable
under the cri"inal la* and there should have been an ac=uittal or dis"issal of the cri"inal case
for that reason.
6e are unable to a+ree *ith the petitioner,s alternative proposition to the effect that +rantin+, for ar+u"ent,s
sake, that he did pro"ise to "arry the private respondent, the latter is nevertheless also at fault. $ccordin+ to
hi", both parties are in pari de"ictoF hence, pursuant to $rticle 1'141) of the Civil Code and the doctrine laid
do*n in Batarra vs. Marcos,
82
the private respondent cannot recover da"a+es fro" the petitioner. The latter
even +oes as far as statin+ that if the private respondent had Csustained any in/ury or da"a+e in their
relationship, it is pri"arily because of her o*n doin+,
88
forA
. . . %he is also interested in the petitioner as the latter *ill beco"e a doctor sooner or later. Take
notice that she is a plain hi+h school +raduate and a "ere e"ployee . . . $nne- CCC) or a
*aitress T%?, p. B1, 7anuary 4B, 1955) in a luncheonette and *ithout doubt, is in need of a "an
*ho can +ive her econo"ic security. <er fa"ily is in dire need of financial assistance. T%?, pp.
B1.B;, >ay 15, 1955). $nd this predica"ent pro"pted her to accept a proposition that "ay have
been offered by the petitioner.
89
These state"ents reveal the true character and "otive of the petitioner. #t is clear that he harbors a
condescendin+, if not sarcastic, re+ard for the private respondent on account of the latter,s i+noble birth, inferior
educational back+round, poverty and, as perceived by hi", dishonorable e"ploy"ent. Obviously then, fro" the
very be+innin+, he *as not at all "oved by +ood faith and an honest "otive. >arryin+ *ith a *o"an so
circu"stances could not have even re"otely occurred to hi". Thus, his profession of love and pro"ise to "arry
*ere e"pty *ords directly intended to fool, dupe, entice, be+uile and deceive the poor *o"an into believin+ that
indeed, he loved her and *ould *ant her to be his life,s partner. <is *as nothin+ but pure lust *hich he *anted
satisfied by a !ilipina *ho honestly believed that by acceptin+ his proffer of love and proposal of "arria+e, she
*ould be able to en/oy a life of ease and security. Petitioner clearly violated the !ilipino,s concept of "orality and
bra0enly defied the traditional respect !ilipinos have for their *o"en. #t can even be said that the petitioner
co""itted such deplorable acts in blatant disre+ard of $rticle 19 of the Civil Code *hich directs every person to
act *ith /ustice, +ive everyone his due and observe honesty and +ood faith in the e-ercise of his ri+hts and in the
perfor"ance of his obli+ations.
?o forei+ner "ust be allo*ed to "ake a "ockery of our la*s, custo"s and traditions.
The pari de"icto rule does not apply in this case for *hile indeed, the private respondent "ay not have been
i"pelled by the purest of intentions, she eventually sub"itted to the petitioner in se-ual con+ress not out of lust,
but because of "oral seduction. #n fact, it is apparent that she had =ual"s of conscience about the entire
episode for as soon as she found out that the petitioner *as not +oin+ to "arry her after all, she left hi". %he is
not, therefore, in pari de"icto *ith the petitioner. %ari de"icto "eans Cin e=ual faultF in a si"ilar offense or cri"eF
e=ual in +uilt or in le+al fault.C
85
$t "ost, it could be conceded that she is "erely in de"icto.
9=uity often interferes for the relief of the less +uilty of the parties, *here his trans+ression has
been brou+ht about by the i"position of undue influence of the party on *ho" the burden of the
ori+inal *ron+ principally rests, or *here his consent to the transaction *as itself procured by
fraud.
83
#n Man$a1ao vs. Lasud,
87
6e declaredA
$ppellants like*ise stress that both parties bein+ at fault, there should be no action by one
a+ainst the other $rt. 1'14, ?e* Civil Code). This rule, ho*ever, has been interpreted as
applicable only *here the fault on both sides is, "ore or less, e=uivalent. #t does not apply *here
one party is literate or intelli+ent and the other one is not. c.f. 2ou+h vs. Cantiveros, '0 Phil.
409).
6e should stress, ho*ever, that *hile 6e find for the private respondent, let it not be said that this Court
condones the deplorable behavior of her parents in lettin+ her and the petitioner stay to+ether in the sa"e roo"
in their house after +ivin+ approval to their "arria+e. #t is the sole"n duty of parents to protect the honor of their
dau+hters and infuse upon the" the hi+her values of "orality and di+nity.
6<9&9!O&9, findin+ no reversible error in the challen+ed decision, the instant petition is hereby 89?#98, *ith
costs a+ainst the petitioner.
%O O&89&98.
0e"iciano, Bidin, Romero and Me"o, --., concur.
Gutierre,, -r., -., is on "eave.

G.R. No. 79159 M$& 3, 1992
ERLINDA L. PONCE, petitioner,
vs.
/ALENTINO L. LEGASPI $!( THE HON. COURT OF APPEALS, respondents.
0.&. 0aro"an & 'ssociates Law Offices for petitioner.

GUTIERRE2, 'R., J.:
This controversy calls for the balancin+ of t*o conflictin+ interestsA the petitioner,s ri+ht to liti+ate versus the respondent,s ri+ht to be protected fro" "alicious
prosecution.
The present case ste""ed fro" the filin+ before the %upre"e Court on October ;, 19(( of a co"plaint for disbar"ent a+ainst respondent $tty. Galentino
3e+aspi by petitioner 9rlinda Ponce.
$t the ti"e of the filin+ of the disbar"ent proceedin+s, petitioner Ponce, to+ether *ith her husband >anuel, o*ned forty three percent ';L) of the stockholdin+s
of 3,?O& >arine %ervices, #nc. 3,?O&). %he *as then Treasurer and director of the 2oard of 8irectors of 3,?O& *hile her husband *as a director. !orty ei+ht
percent '5L) of 3,?O&,s stocks *as o*ned by the spouses 9d*ard and ?or"a Porter *ho *ere then servin+ as PresidentNHeneral >ana+er and %ecretary
respectively.
The pertinent portions of the co"plaint are reproduced belo*A
--- --- ---
10. 8urin+ the ti"e or period *hile respondent is the le+al counsel of the aforecited corporation, there occurred certain fraudulent
"anipulations, ano"alous "ana+e"ent and pre/udicial operations by certain officers of said corporation, na"elyA 9d*ard 7. Porter,
PresidentNHeneral >ana+erF ?or"a I. Porter, %ecretaryF and :enaida T. >analoto, 8irector, *ho caused +reat da"a+e and pre/udice
*hich *ill be related hereunderF
--- --- ---
1'. $bout 7uly, 19(6, said spouses 9d*ard 7. Porter and ?or"a I. Porter, to+ether *ith :enaida T. >analoto, facilitated, assisted and
aided by herein respondent 3e+aspi $nne-es C2C and C2.1C here*ith), incorporated the Irasport 8rydocks, #nc., hereinafter desi+nated
I&$%PO&T, *hich they control *ith the follo*in+ stockholdin+sA
9d*ard 7. Porter 150 shares
?or"a I. Porter 150 shares
9riberto !. Irastor0a 16 shares
:enaida T. >analoto 5 shares
&o"an >. >aceda 5 shares
$ndres $. ?o"brado 5 shares
and *hose line of business is in direct co"petition *ith 3,?O&F
1B. I&$%PO&T, like Irasport 9nterprises, *as launched *ithout the kno*led+e of the "inority stockholders o*nin+ ';L of 3,?O&, and
*as really desi+ned to co"pete, if not eli"inate, 3,?O& as a co"petitorF
16. That as a "atter of fact atte"pts *ere "ade to secure one of 3,?O& /obs in favor of I&$%PO&T, *hich fraudulent sche"e *as
ho*ever frustrated only by the ti"ely opposition of herein co"plainantF
1(. I&$%PO&T like*ise availed of and used the office space, e=uip"ent, personnel, funds, other physical facilities, and +ood*ill of
3,?O& *hile co"petin+ at the sa"e ti"e a+ainst and causin+ the latter +reat da"a+e and irreparable in/uryF
--- --- ---
41. 9d*ard 7. Porter, President.Heneral >ana+er of 3,?O&, purchased fro" #%9CO& #ndustrial %upply Corporation) on ?ove"ber ;,
19(' one skaa+it *inch *ith its cables for P10,000.00F that on ?ove"ber 15, 19(' said 9d*ard 7. Porter assi+ned the purchase of said
skaa+it *inch *ith its cables in favor of 3,?O& at the price of P10,000.00F and that the latter corporation then assu"ed the a+reed
obli+ation coverin+ the P10,000.00 purchase price in favor of #%9CO&F
44. %ubse=uently, on or about October 15, 19(B, said President.Heneral >ana+er 9d*ard 7. Porter "isrepresented facts re+ardin+ the
ac=uisition cost of said skaa+it *inch *ith its cables to the effect that the sa"e *as sold by #%9CO& at the cost of P40,000.00F that he
collected the su" fro" 3,?O& for direct pay"ent to #%9CO& alle+edly to li=uidate in full the obli+ation of P40,000.00 in favor of #%9CO&,
*hen, in truth and in fact, the obli+ation is only P10,000.00 and not "oreF
4;. On account of the aforecited fla+rant fraud, a char+e of 9stafa *as filed a+ainst 9d*ard 7. Porter and the office of the City !iscal
handed do*n a resolution to prosecute hi" in court, copy of pertinent e-hibits here*ith "arked as $nne-es CCC, CC.1C, CC.4C, CC.;C, CC.'C
and CC.BCF
4'. #n vie* of the aforesaid ille+al "anipulations, illicit sche"es, palpable frauds and estafa co""itted by said President.Heneral
>ana+er 9d*ard 7. Porter, in confabulation and conspiracy *ith the other officers of the corporation, na"elyA his *ife ?or"a I. Porter and
:enaida T. >analoto, herein co"plainant re=uested respondent Galentino 3e+aspi to take and pursue appropriate local steps and
seasonable actions in order to protect the para"ount interest of 3,?O& of *hich he is the le+al counsel by retainer, but the latter, *ithout
any valid e-cuse *hatsoever, refused to do so, althou+h he is still collectin+ his "onthly retainerF
4B. On account of the refusal of said corporate attorney of 3,?O&, respondent 3e+aspi, co"plainant *as forced to retain the services of
another counsel to prosecute the appropriate derivative suit in the Court of !irst #nstance of Cebu, copy here*ith "arked $nne- C8CF and
that, in opposition to the sa"e, respondent 3e+aspi appeared as le+al counsel and attorney of 9d*ard 7. Porter and his confederates,
copy of e-hibits "arked $nne- C8.1C here*ithF
46. #n the Cri"inal Case filed a+ainst 9d*ard 7. Porter for 9stafa $nne- CCC supra), respondent 3e+aspi like*ise appeared as counsel for
respondent Porter despite the fact that he is the le+al counsel of 3,?O& *hich is the pre/udiced party and for *hose benefit the cri"inal
case *as really bein+ prosecuted, copy of letter of respondent, "arked as $nne- CC.6C here*ithF
4(. @p to the present ti"e respondent is still collectin+ his "onthly retainer, and for his appearance for 9d*ard 7. Porter, et. als. in the
derivative suit, he collected the su" of P4,000.00 fro" 3,?O& as pay"ent for his illicit le+al services in defendin+ the Porters and
>analoto a+ainst the very interest of the corporation payin+ hi" "onthly retainerF
45. %aid 9d*ard 7. Porter and his confederates, in their respective capacity as such officers of 3,?O&, continue and persist in perpetratin+
"alicious acts, ano"alous "ana+e"ent and fraudulent operations a+ainst the interest of 3,?O&, and that respondent 3e+aspi *as duly
adviced verbally and also in *ritin+ by co"plainant to take the necessary action in his capacity as le+al counsel of 3,?O& to protect
0ealously the interest of the latter, but respondent 3e+aspi has done absolutely nothin+, and +rossly ne+lected and fla+rantly violated his
duties as le+al counsel up to the present ti"e, pertinent e-hibits here*ith "arked as $nne-es C9C, C9.1C, C9.4C, C9.'C, C9.BC, C9.6CF
49. That, on the contrary, respondent 3e+aspi in his dual capacity as le+al counsel of 3,?O& and I&$%PO&T, and at the sa"e ti"e actin+
in his capacity as corporate secretary of I&$%PO&T, facilitated, assisted, aided or other*ise abetted the ille+al "anipulations, illicit
sche"es, fraudulent operations and +rave frauds co""itted by said 9d*ard 7. Porter and his confederates *ho are officers of 3,?O&
a+ainst the interest of the latter and to further the "alicious co"petitive sabota+e of I&$%PO&T alle+ed heretoforeF and
;0. That, upon the fore+oin+, *e "ost respectfully prefer a+ainst respondent Galentino 3e+aspi the follo*in+ char+esA
0irst &pecificationC
That respondent Galentino 3e+aspi has co""itted +ross "isconduct in office as a practicin+ la*yer and "e"ber of the Philippine 2ar,
because, as le+al counsel, he violated his duty to and the trust of his client, 3,?O& >arine %ervices, #nc., *ho" he is professionally duty
bound to represent *ith entire devotion faithfully as such attorney, and *hose para"ount interest he should protect in all +ood faith *ith
absolute fidelity, but that, in truth and in fact, he did not do so.
&econd &pecificationC
That respondent Galentino 3e+aspi, *hile actin+ as le+al counsel of 3,?O& under continuin+ "onthly retainer, has acted at the sa"e ti"e
as la*yer of 9d*ard 7. Porter, et. als., *ho have co""itted ano"alous acts, pre/udicial "anipulations and +rave frauds a+ainst his client
3,?O& >arine services, #nc., that he therefore represented professionally conflictin+ interestF and that he co""itted +rave "alpractice
that is in fla+rant violation of the reco+ni0ed canons of le+al ethics.
=hird &pecificationC
That respondent Galentino 3e+aspi co""itted +rossly corrupt or dishonest conduct *hile under retainer and actin+ as attorney of 3,?O&
>arine %ervices, #nc., *hen he facilitated, assisted, aided or other*ise abetted the or+ani0ation, re+istration and operation of another
co"petin+ entity, Irasport 8rydocks, #nc., in *hich he is also the la*yer and corporate %ecretary, at the e-pense of and to *hich the
business and transactions of 3,?O& are bein+ diverted or other*ise appropriated, includin+ the piratin+ of skilled personnel and also
facilities, and that respondent co""itted the sa"e *ith evident bad faith and absolute lack of fidelity to his client 3,?O&, thereby
de+radin+ the +ood estee", inte+rity and honor of the profession. &ecords, $d"inistrative Case ?o. 1519, pp. '.1;)
#n his co""ent, $tty. 3e+aspi denied the alle+ations in para+raphs 10, 41, 44, 4;, 4', 45, 49 and ;0. <e =ualifiedly ad"itted the alle+ations in para+raphs 1' and
1B, statin+ that Irasport *as not or+ani0ed to co"pete directly *ith 3,?O&. <e averred that 3,?O& could not cope up *ith the business and Irasport *as for"ed
for the purpose of co"ple"entin+ 3,?O&,s business. <e added that there is nothin+ in the la* nor contract *hich prohibits a stockholder fro" co"petin+ *ith the
business of the corporation.
$tty. 3e+aspi ad"itted the alle+ations in para+raphs 46 and 4( that he appeared for 9d*ard Porter in the estafa case filet a+ainst the latter, reasonin+ that his
appearances *ere direct orders of "ana+e"ent and that it *as not i"proper for counsel to represent both the corporate officers *hen they are bein+ sued at the
sa"e ti"e.
$s to the alle+ations in para+raphs 16 and 1(, $tty. 3e+aspi declared that he has no sufficient kno*led+e to for" a belief as to the truth or falsity of the
state"ents contained therein.
On 7anuary 4;, 19(5, the Court issued a resolution dis"issin+ the disbar"ent co"plaint a+ainst 3e+aspi. The resolution is =uoted hereunderA
$d"inistrative Case ?o. 1519 9rlinda 3. Ponce v. Galentino 3. 3e+aspi). SS Considerin+ the co"plaint for disbar"ent a+ainst $tty.
Galentino 3. 3e+aspi as *ell as said respondent,s co""ent thereon, the Court &esolved to 8#%>#%% the co"plaint for lack of "erit.
&ecords, $d"inistrative Case ?o. 1519 p. 91)
The petitioner filed a "otion for reconsideration *hich *as denied by the Court on >arch ;1, 19(5.
On !ebruary 10, 19(5, $tty. 3e+aspi filed before the Court of !irst #nstance no* &e+ional Trial Court of Cebu) a co"plaint for da"a+es a+ainst the petitioner.
The petitioner filed a "otion to dis"iss *hich *as denied by the trial court.
On 7uly 15, 195;, the lo*er court rendered /ud+"ent the dispositive portion of *hich reads as follo*sA
6<9&9!O&9, this court bein+ satisfied that the "aterial alle+ations of the co"plaint have been proved and re"ained uncontradicted
*ith the testi"onial and docu"entary evidence introduced and ad"itted by the court, /ud+"ent is hereby rendered in favor of the plaintiff
and a+ainst the defendant 9rlinda 3. Ponce orderin+ the defendant to pay Galentino 3. 3e+aspi, plaintiff herein, the a"ount of P1,000.00
as actual da"a+es, PB0,000.00 as "oral da"a+es and P4B,000.00 as e-e"plary da"a+es and to pay the costs. Ro""o, p. 11B)
The petitioner appealed to the Court of $ppeals. On >ay 46, 195(, the Court of $ppeals affir"ed the lo*er court,s /ud+"ent. #n affir"in+ the appealed decision,
the Court of $ppeals reasonedA
8efendant.appellant contends that plaintiff.appellee,s action for da"a+es is purely retaliatory in character and ste"s fro" an alle+ed
feelin+ of *ounded pride or amor proprio@ that +rantin+ *ithout ad"ittin+ that the appellee has suffered certain adverse effects in his
reputation because of the disbar"ent case, it does not constitute "alicious prosecution as *ould other*ise perhaps render the appellant
liable for da"a+esF that the facts on record indubitably sho* that the appellant *as "erely e-ercisin+ her ri+ht of access to courts for
redress of le+iti"ate +rievances *hen she filed the disbar"ent case believin+ then as she still does, that appellee co""itted a breach of
his professional duties as a la*yer. #n refutation, appellee alle+es that appellant belittles this action for da"a+es as Cpurely retaliatory in
character and ste"s fro" an alle+ed feelin+ of *ounded pride or a"or proprioCF that by such state"ent, appellant has un"asked herself
as to ho* little re+ard she has for the feelin+s of others and ho* she clin+s to the la* if only to secure her purposeF that *hat is bein+
sou+ht by appellee is co"pensation for appellee,s "alice, falsehoods and deceit in tryin+ to destroy the professional standin+ of a hu"ble
practitioner /ust because he did better than the other.
6hile free access to the courts is +uaranteed under %ection 9, $rticle #G of the 19(; Constitution no* %ection 11, $rticle ### of the 1956
Constitution), it does not +ive unbridled license to file any case, *hatever the "otives are. 6hoever files a case shall be responsible for
the conse=uences thereof *henever his act of filin+ infrin+es upon the ri+hts of others. #n the sa"e *ay that althou+h freedo" of speech
is +uaranteed, one cannot clai" to be protected under such freedo" *hen he is bein+ held liable for the libel he co""its.
The case at bar cannot be considered as one for recovery of da"a+es arisin+ fro" "alicious prosecution, for a disbar"ent proceedin+ is
not a cri"inal action. 8e 7esus.Paras v. Gailoces, 111 Phil. B69F 1 %C&$ 9B', 9B(). <o*ever, *e should not lose si+ht of the fact that
utterances "ade in the course of /udicial proceedin+s, includin+ all kinds of pleadin+s, petitions and "otions, belon+ to the class of
co""unications that are absolutely privile+ed. %ison v. 8avid, 110 Phil. 664F 1 %C&$ 60, (1 citin+ authorities) and no civil action for libel
or slander "ay arise therefro" unless the contents of the petition are irrelevant to the sub/ect "atter thereof. 1 %C&$ (1). #t has also
been held that a privile+ed co""unication should not be sub/ected to "icroscopic e-a"ination to discover +rounds of "alice or falsity.
%uch e-cessive scrutiny *ould defeat the protection *hich the la* thro*s over privile+ed co""unications. The ulti"ate test is that of
bona fides. 8eles v. $ra+ona, 7r., 4( %C&$ 6;;, 6'4). The privile+ed character of her co"plaint filed *ith the %upre"e Court "ust have
been *hat defendant had in "ind *hen she invokes her ri+ht to free access to the courts. <o*ever, defendant,s actuations before and
after the filin+ of ad"inistrative co"plaint *ith the %upre"e Court disprove her bona fides. On this issue, the trial court foundA
Iet, the uncontroverted evidence before the court belie these alle+ations because there are antecedent incidents
bet*een plaintiff and defendant that speak other*iseF that she filed this disbar"ent co"plaint a+ainst plaintiff *ith
"alice aforethou+ht. This conclusion is founded on the fact that defendant *as e"bittered a+ainst hi" for failin+ to
obtain a co"pro"ise a+ainst 9duardo Coronel before the "ilitary due to plaintiff,s defense of his clientF that she
*anted to dissolve the 3,?or Corporation in order to repossess the pre"ises leased to the for"er upon the
corporation,s dissolution and Porter,s ouster *hich *as th*arted by plaintiff,s advice as counsel for 3,?orF plaintiff,s
letter 9-hibit C<C) that she *as not authori0ed to use the title of Chair"an of the 2oardF not counter.si+nin+
plaintiff,s check 9-hibits #, #.1, and #.4)F her insistence to have the surplus profits declared as cash dividend *hich
like*ise failed due to plaintiff,s adviceF her letter 9-h. 7) askin+ plaintiff to desist fro" defendin+ the corporation
and its officersF plaintiff,s refusal to +ive her advice *ithout authority fro" the 2oard of 8irectorsF nu"erous cases
filed *ith the %ecurity and 9-chan+e Co""ission *hich *ere all dis"issed and *ith the Court of !irst #nstance and
Circuit Cri"inal Court *hich plaintiff ably defended causin+ their eventual dis"issal and other acts a+ainst plaintiff
*hich de"onstrated palpably defendant,s hatred for the plaintiff acts clearly evidencin+ "alice contrary to her
aver"ents in the $ns*er.
To top it all, not*ithstandin+ her evident support and advice by counsel, she cleverly hid the identity of said counsel
prosecutin+ all her acts of vilification and harass"ent in her o*n na"e. !urther"ore, the testi"ony of plaintiff that
she distributed copies of her co"plaint for disbar"ent a+ainst plaintiff to his clients re"ain uncontradicted. !inally,
instead of co"in+ to court in +ood faith she instead "oved fro" her residence at %eavie* <ei+hts, 3a*aan,
Talisay, Cebu *ithout infor"in+ the court nor her counsel and has not been heard fro". !ro" the fore+oin+, "alice
is evident.
$ppellant clai"s that the findin+ of the lo*er court that appellant disse"inated infor"ation re+ardin+ the filin+ of her co"plaint for
disbar"ent and caused a copy of the sa"e to be furnished appellee,s clients is totally unsupported by any evidence on record. The
contention is untenable. Plaintiff declared that he ca"e to kno* of the co"plaint a+ainst hi" even before the %upre"e Court re=uired hi"
to co""ent because t*o or three of his clients told hi" that they had a copy +iven to the". p. 5, t.s.n., 7une ;, 195;).
The fore+oin+ acts co""itted by the defendant violate the conduct that she should have observed in her relation to plaintiff, as provided in
the follo*in+ provisions of the Civil Code of the Philippines, to *itA
$rt. 19. 9very person "ust, in the e-ercise of his ri+hts and in the perfor"ance of his duties, act *ith /ustice, +ive everyone his due, and
observe honesty and +ood faith.
$rt. 40. 9very person *ho, contrary to la*, *ilfully or ne+li+ently causes da"a+e to another, shall inde"nify the latter for the sa"e.
$rt. 46. 9very person shall respect the di+nity, personality, privacy and peace of "ind of his nei+hbors and other persons. The follo*in+
and si"ilar acts, thou+h they "ay not constitute a cri"inal offense, shall produce a cause of action for da"a+es, prevention and other
reliefF
1) Pryin+ into the privacy of another,s residenceF
4) >eddlin+ *ith or disturbin+ the private life or fa"ily relations of anotherF
;) #ntri+uin+ to cause another to be alienated fro" his friendsF
') Ge-in+ or hu"iliatin+ another on account of his reli+ious beliefs, lo*ly station in life, place of birth, physical defect, or other personal
condition. Ro""o, pp. 'B.'5)
The petitioner,s "otion for reconsideration *as denied by the respondent Court in its resolution dated 7uly (, 195(. <ence, this petition.
The petitioner assi+ns the follo*in+ errorsA
#
T<9 &9%PO?89?T CO@&T O! $PP9$3% 9&&98 #? $!!#&>#?H T<9 89C#%#O? O! T<9 &9H#O?$3 T&#$3 CO@&T O! C92@,
2&$?C< 11#, 6<#C< !O@?8 T<9 <9&9#? P9T#T#O?9& H@#3TI O! 2$8 !$#T< #? #?%T#T@T#?H $ CO>P3$#?T !O&
8#%2$&>9?T $H$#?%T T<9 P&#G$T9 &9%PO?89?T.
##
T<9 &9%PO?89?T CO@&T O! $PP9$3% 9&&98 #? O&89&#?H T<9 P9T#T#O?9& TO P$I T<9 P&#G$T9 &9%PO?89?T $CT@$3,
>O&$3 $?8 919>P3$&I 8$>$H9% TO P$I T<9 CO%T%. Ro""o, p. 41)
2efore proceedin+ *ith the "erits of the case, the scope of an action for da"a+es arisin+ fro" "alicious prosecution needs to be clarified. 2oth the Court of
$ppeals and the petitioner are of the belief that the suit for da"a+es filed by $tty. 3e+aspi is not one arisin+ fro" "alicious prosecution because Ca disbar"ent
proceedin+ is not a cri"inal action. 8e 7esus.Paras v. Gailoces, 1 %C&$ 9B' D1961E).C The obvious inference is that only an unsuccessful cri"inal action "ay
subse=uently +ive rise to a clai" for da"a+es based on "alicious prosecution. This is not correct. 6hile +enerally, "alicious prosecution refers to unfounded
cri"inal actions and has been e-panded to include unfounded civil suits /ust to ve- and hu"iliate the defendant despite the absence of a cause of action or
probable cause 9=uitable 2ankin+ Corporation v. #nter"ediate $ppellate Court, 1;; %C&$ 1;5 D195'E) the foundation of an action for "alicious prosecution is
an ori+inal proceedin+, /udicial in character. 3orber v. %torro*, (0 P. 4d B1; D19;(EF %hi+eru <ayashida v. Tsunehachi Kaki"oto, 4; P. 4d ;11 D19;;EF Hraves v.
&ud"an, 4B( ?.I.%. 414 D19;4E). $ disbar"ent proceedin+ is, *ithout doubt, /udicial in character and therefore "ay be the basis for a subse=uent action for
"alicious prosecution.
$ perusal of the alle+ations in $tty. 3e+aspi,s co"plaint for da"a+es, particularly para+raphs 10, 11, 14 and 1B thereof Ro""o, pp. B6.B9) sho*s that his "ain
cause of action *as predicated on in/ury resultin+ fro" the institution of the disbar"ent case a+ainst hi". This bein+ the case, *e find that the suit filed by the
respondent la*yer "akes out a case of da"a+es for "alicious prosecution.
$n action for da"a+es arisin+ fro" "alicious prosecution is anchored on the provisions of $rticle 41, 441( and 4419 D5E of the ?e* Civil Code. @nder these
$rticlesA
$rt. 41. $ny person *ho *ilfully causes loss or in/ury to another in a "anner that is contrary to "orals, +ood custo"s or public policy shall
co"pensate the latter for da"a+es.
$rt. 441(. >oral da"a+es include physical sufferin+, "ental an+uish, fri+ht, serious an-iety, bes"irched reputation, *ounded feelin+s,
"oral shock, social hu"iliation and si"ilar in/ury. Thou+h incapable of pecuniary co"putation, "oral da"a+es "ay be recovered if they
are the pro-i"ate result of the defendant,s *ron+ful act or o"ission.
$rt. 4419. >oral da"a+es "ay be recovered in the follo*in+ and analo+ous casesA
--- --- ---
5) >alicious prosecution.
#n order, ho*ever, for the "alicious prosecution suit to prosper, the plaintiff "ust proveA 1) the fact of the prosecution and the further fact that the defendant *as
hi"self the prosecutor, and that the action finally ter"inated *ith an ac=uittalF 4) that in brin+in+ the action, the prosecutor acted *ithout probable causeF and ;)
that the prosecutor *as actuated or i"pelled by le+al "alice, that is by i"proper or sinister "otive. 3ao v. Court of $ppeals, 199 %C&$ B5 D1991EF &ehabilitation
!inance Corporation v. Kohl, ' %C&$ B;B D1964EF 2uchanan v. Giuda de 9steban, ;4 Phil. ;6; D191BE).
The fore+oin+ re=uisites are necessary safe+uards to preserve a person,s ri+ht to liti+ate *hich "ay other*ise be e"asculated by the undue filin+ of "alicious
prosecution cases. Thus, as further held in the aforecited case of Buchanan v. /iuda. de 6steban, supraA C>alice is essential to the "aintenance of an action for
"alicious prosecution and not "erely to the recovery of e-e"plary da"a+es. 2ut "alice alone does not "ake one liable for "alicious prosecution, *here
probable cause is sho*n, even *here it appears that the suit *as brou+ht for the "ere purpose of ve-in+, harassin+ and in/urin+ his adversary. In other words,
ma"ice and want of probab"e cause "ust both e-ist in order to /ustify the action.C 9"phasis suppliedF see also &ehabilitation !inance Corp. v. Koh, supra)
Probable cause is the e-istence of such facts and circu"stances as *ould e-cite the belief, in a reasonable "ind, actin+ on the facts *ithin the kno*led+e of the
prosecutor, that the person char+ed *as +uilty of the cri"e or in this case, the *ron+doin+) for *hich he *as prosecuted. %ee 2uchanan v. Giuda de 9steban,
supra)
The +eneral rule is *ell settled that one cannot be held liable in da"a+es for "aliciously institutin+ a prosecution *here he acted *ith probable cause. #n other
*ords, a suit *ill lie only in cases *here a le+al prosecution has been carried on without probab"e cause. Id.F e"phasis supplied)
The petitioner, at the ti"e of her filin+ of the ad"inistrative co"plaint a+ainst the respondent, held substantial stockholdin+s in 3,?O&. %he believed that 3,?O&
*as defrauded by its PresidentNHeneral >ana+er, 9d*ard Porter, and filed a co"plaint for estafa a+ainst the latter. Porter *as convicted by the trial court but,
upon appeal, *as ac=uitted by the appellate court.
&espondent did not deny that he represented Porter durin+ the preli"inary investi+ation and trial of the cri"inal case. #n his co""ent in the disbar"ent
co"plaint a+ainst hi", he /ustified his action by sayin+ that they *ere Cdirect orders of "ana+e"entC and that there is Cnothin+ i"proper for counsel to represent
both the corporation and corporate officers at the sa"e ti"e they are bein+ sued.C &ecords, $d"inistrative Case ?o. 1519, p. 6')
#t is of no "o"ent no* that Porter *as ac=uitted of the estafa char+e. $pparently, at that ti"e, petitioner Ponce sa* a conflict of interest situation. To her "ind,
the act of the respondent in appearin+ as counsel for Porter, *ho had alle+edly s*indled 3,?O&, the interest of *hich he *as duty bound to protect by virtue of
the retainer contract, constituted +rave "isconduct and +ross "alpractice.
$tty. 3e+aspi did not deny that he aided the Porters in facilitatin+ the incorporation of I&$%PO&T and that he hi"self *as its corporate secretary. <e
e"phasi0ed, thou+h, that due to 3,?O&,% li"ited capitali0ation, I&$%PO&T *as or+ani0ed to co"ple"ent 3,?O&,% business and not to co"pete *ith the
latter,s undertakin+s.
%ince the petitioner, ho*ever, *as of the honest perception that I&$%PO&T *as actually or+ani0ed to appropriate for itself so"e of 3,?O&,s business, then *e
find that she had probable cause to file the disbar"ent suit.
6e take e-ception to the respondent,s co""ent that, assu"in+ the petitioner,s accusation to be true, Cthere is nothin+ in Philippine la* *hich considers as
unethical the for"ation of co"petitive corporations and neither can it be considered *ith evident bad faith and absolute lack of fidelity.C &ecords, $d"inistrative
Case ?o. 1519, p. 69)
The circu"stances of the case do not depict a si"ple case of for"ation of co"petitive corporations. 6hat the petitioner ob/ects to is the fact that both the
respondent la*yer and Porter are fiduciaries of 3,?Or and are at the sa"e ti"e fiduciaries of I&$%PO&T, both of *hich are en+a+ed in the sa"e line of
business.
True, at that ti"e, the Corporation 3a* did not prohibit a director or any other person occupyin+ a fiduciary position in the corporate hierarchy fro" en+a+in+ in a
venture *hich co"peted *ith that of the corporation. 2ut as a la*yer, $tty. 3e+aspi should have kno*n that *hile so"e acts "ay appear to be per"itted throu+h
sheer lack of statutory prohibition, these acts are nevertheless circu"scribed upon ethical and "oral considerations. $nd had $tty. 3e+aspi turned to $"erican
/urisprudence *hich then, as no*, *ielded a persuasive influence on our la* on corporations, he *ould have kno*n that it *as unfair for hi" or for Porter, actin+
as fiduciary, to take advanta+e of an opportunity *hen the interest of the corporation /ustly calls for protection. %ee 2allantine, Corporations, 40', Calla+han O
Co., ?. I. D19'6E)
Parenthetically, this lapse in the old Corporation 3a* is no* cured by sections ;1 and ;' of the Corporation Code *hich provideA
%ec. ;1. Liabi"it1 of directors, trustees or officers. M 8irectors or trustees *ho *illfully and kno*in+ly vote for or assent to patently unla*ful
acts of the corporation or *ho are +uilty of +ross ne+li+ence or bad faith in directin+ the affairs of the corporation or ac=uire any personal
or pecuniary interest in conflict *ith their duty as such directors or trustees shall he liable /ointly and severally for all da"a+es resultin+
therefro" suffered by the corporation, its stockholders or "e"bers and other persons.
6hen a director, trustee or officer atte"pts to ac=uire or ac=uires, in violation of his duty, any interest adverse to the corporation in respect
of any "atter *hich has been reposed in hi" in confidence, as to *hich e=uity i"poses a disability upon hi" to deal in his o*n behalf, he
shall be liable as a trustee for the corporation and "ust account for the profits *hich other*ise have accrued to the corporation.
%ec. ;'. .is"o1a"t1 of a director. M 6here a director, by virtue of his office, ac=uires for hi"self a business opportunity *hich should
belon+ to the corporation, thereby obtainin+ profits to the pre/udice of such corporation, he "ust account to the latter for all such profits by
refundin+ the sa"e, unless his act has been ratified by a vote of the stockholders o*nin+ or representin+ at least t*o.thirds 4N;) of the
outstandin+ capital stock. This provision shall be applicable, not*ithstandin+ the fact that the director risked his o*n funds in the venture.
The Court finds it unnecessary to discuss all the other char+es i"puted to the respondent la*yer in the disbar"ent co"plaint. !ro" the fore+oin+ discussion, *e
have sufficient basis to declare that the petitioner had probable cause in filin+ the ad"inistrative case a+ainst $tty. 3e+aspi. !acts and circu"stances e-isted
*hich e-cited belief in >rs. Ponce,s "ind that the respondent indeed co""itted unethical acts *hich *arranted the i"position of ad"inistrative sanctions.
6hether or not the petitioner,s perception of these facts and circu"stances is actually correct is irrelevant to our in=uiry, the only issue bein+ *hether or not the
petitioner had probable cause in filin+ the co"plaint.
The above discussion should not be construed as a re.openin+ of the disbar"ent proceedin+ a+ainst $tty. 3e+aspi. &eferences to the co"plaint for disbar"ent
and the respondent,s co""ent thereto are "ade only for the purpose of deter"inin+ the e-istence of probable cause.
%ince *e ad/ud+e that petitioner Ponce *as "oved by probable cause, *e need not any"ore ascertain *hether or not the petitioner acted *ith "alice in filin+
the co"plaint. The e-istence of probable cause alone, re+ardless of considerations of "alice, is sufficient to defeat the char+e of "alicious prosecution.
The respondent court treated $tty. 3e+aspi,s co"plaint as one for da"a+es arisin+ fro" libel and applied the test of bona fides, citin+ the case of .e"es v.
'ra$ona 4( %C&$ 6;; D1969E). This is incorrect.
#n the first place, alle+ations and aver"ents in pleadin+s are absolutely privile+ed as lon+ as they are relevant or pertinent to the issues %ee >ontene+ro v.
>edina, (; Phil. 604 D19'4E). The test of +ood faith applies only to a =ualified privile+ed co""unication. <ad the respondent court studied the 8eles case "ore
closely, it *ould have traced the Cbona fidesC test to the case of ?.&. v. Bustos, ;( Phil. (;1 D1915E). #n the latter case, the Court *as referrin+ to a =ualified
privile+ed co""unication *hen it for"ulated the Cbona fidesC test.
>oreover, the test to break throu+h the protective barrier of an absolutely privile+ed co""unication is not Cbona fidesC but relevance. #n the present case, $tty.
3e+aspi,s co"plaint no*here alle+ed that the state"ents "ade by the petitioner *ere irrelevant. Thus, *e find that the petitioner,s co"plaint for disbar"ent is
still covered by the privile+e and "ay not be the basis of a da"a+e suit arisin+ fro" libel.
6e disa+ree *ith the findin+s of the t*o lo*er courts that it *as the petitioner *ho distributed copies of the co"plaint for disbar"ent to $tty. 3e+aspi,s clients. #t
should be noted that $tty. 3e+aspi did not even present these alle+ed clients in court to testify to the source of these copies. Considerin+ that a co"plaint for
disbar"ent beco"es of public record once it is filed *ith the Court, then the petitioner "ay not be pinpointed as the sole and indisputable source of the copies
received by the respondent,s clients.
$tty. 3e+aspi "ay have suffered in/ury as a conse=uence of the disbar"ent proceedin+s. 2ut the adverse result of an action does not per se "ake the action
*ron+ful and sub/ect the actor to "ake pay"ent of da"a+es for the la* could not have "eant to i"pose a penalty on the ri+ht to liti+ate %aba v. Court of
$ppeals, 159 %C&$ B0 D1990E, citin+ &ubio v. Court of $ppeals, 1'1 %C&$ '55 D1956EF see also %alao v. %alao, (0 %C&$ 6B D19(6E and &a"os v. &a"os, 61
%C&$ 45' D19('E, citin+ 2arreto v. $revalo, 99 Phil. ((1 D19B6E). One *ho e-ercises his ri+hts does no in/ury. %aba v. Court of $ppeals, supra, citin+ $uyon+
<ian v. Court of Ta- $ppeals, B9 %C&$ 110 D19('E). #f da"a+e results fro" a person,s e-ercisin+ his le+al ri+hts, it is damnum abs*ue injuria. DId.E
6<9&9!O&9, the petition is hereby H&$?T98. The decision of the respondent Court of $ppeals is %9T $%#89 and &9G9&%98.
%O O&89&98.
0e"iciano, Bidin and Romero, --., concur.
.avide, -r., -., too9 no part.
FIE6T 5I2I6IA<

G.R. No. 115519 M$& 23, 1995
PEDRO P. PECSON, petitioner,
vs.
COURT OF APPEALS, SPOUSES 'UAN NUGUID $!( ERLINDA NUGUID, respondents.

DA/IDE, 'R., J.:
This petition for revie* on certiorari seeks to set aside the decision
1
of the Court of $ppeals in C$.H.&. %P ?o. ;46(9 affir"in+ in
part the order
2
of the &e+ional Trial Court &TC) of Jue0on City, 2ranch 101, in Civil Case ?o. J.'1'(0.
The factual and procedural antecedents of this case as +athered fro" the record are as follo*sA
Petitioner Pedro P. Pecson *as the o*ner of a co""ercial lot located in Ka"ias %treet, Jue0on City, on *hich
he built a four.door t*o.storey apart"ent buildin+. !or his failure to pay realty ta-es a"ountin+ to t*elve
thousand pesos P14,000.00), the lot *as sold at public auction by the city Treasurer of Jue0on City to >a"erto
?epo"uceno *ho in turn sold it on 14 October 195; to the private respondents, the spouses 7uan ?u+uid and
9rlinda Tan.?u+uid, for one hundred three thousand pesos P10;,000.00).
The petitioner challen+ed the validity of the auction sale in Civil Case ?o. J.'1'(0 before the &TC of Jue0on
City. #n its decision of 5 !ebruary 1959, the &TC dis"issed the co"plaint, but as to the private respondents,
clai" that the sale included the apart"ent buildin+, it held that the issue concernin+ it *as Cnot a sub/ect of
the . . . liti+ation.C #n resolvin+ the private respondents, "otion to reconsider this issue, the trial court held that
there *as no le+al basis for the contention that the apart"ent buildin+ *as included in the sale.
8
2oth parties then appealed the decision to the Court of $ppeals. The case *as docketed as C$.H.&. CG ?o.
49;1. #n its decision of ;0 $pril 1994,
9
the Court of $ppeals affir"ed in toto the assailed decision. #t also a+reed
*ith the trial court that the apart"ent buildin+ *as not included in the auction sale of the co""ercial lot. ThusA
Indeed, e+aminin$ the record we are fu""1 convinced that it was on"1 the "and D without the
apartment bui"din$ D which was so"d at the auction sa"e, for p"aintiffAs fai"ure to pa1 the ta+es
due thereon. Thus, in the Certificate of %ale of 8elin=uent Property To Purchaser 9-h. K, p.
;B4, &ecord) the property sub/ect of the auction sale at *hich >a"erto ?epo"uceno *as the
purchaser is referred to as 3ot ?o. 41.$, 2lock ?o. K.;', at Ka"ias, 2aran+ay PiRahan, *ith an
area of 4B6.; s=. "., *ith no "ention *hatsoever, of the buildin+ thereon. The sa"e description
of the sub/ect property appears in the !inal ?otice To 9-ercise The &i+ht of &ede"ption over
sub/ect property) dated %epte"ber 1', 1951 9-h. 3, p. ;B;, &ecord) and in the !inal 2ill of %ale
over the sa"e property dated $pril 19, 1954 9-h. P, p. ;B(, &ecord). ?eedless to say, as it *as
only the land *ithout any buildin+ *hich ?epo"uceno had ac=uired at the auction sale, it *as
also only that land *ithout any buildin+ *hich he could have le+ally sold to the ?u+uids. /eri"1, in
the .eed of 'bso"ute &a"e of Re$istered Land e+ecuted b1 Mamerto !epomuceno in favor of
the !u$uids on October E7, 234F (6+h. ?, p. F55, Record) it c"ear"1 appears that the propert1
subject of the sa"e for %28F,888.88 was on"1 the parce" of "and, Lot E2:', B"9. K:FG containin$
an area of E75.F s*. meters, without an1 mention of an1 improvement, much "ess an1 bui"din$
thereon. e"phases supplied)
The petition to revie* the said decision *as subse=uently denied by this Court.
5
9ntry of /ud+"ent *as "ade
on 4; 7une 199;.
3
On ?ove"ber 199;, the private respondents filed *ith the trial court a "otion for delivery of possession of the lot
and the apart"ent buildin+, citin+ article B'6 of the Civil Code.
7
$ctin+ thereon, the trial court issued on 1B
?ove"ber 199; the challen+ed order
5
*hich reads as follo*sA
%ub"itted for resolution before this Court is an uncontroverted DsicE for the 8elivery of
Possession filed by defendants 9rlinda Tan, 7uan ?u+uid, et al. considerin+ that despite
personal service of the Order for plaintiff to file *ithin five B) days his opposition to said "otion,
he did not file any.
#n support of defendant,s "otion, "ovant cites the la* in point as $rticle B'6 of the Civil
Code . . .
>ovant a+rees to co"ply *ith the provisions of the la* considerin+ that plaintiff is a builder in
+ood faith and he has in fact, opted to pay the cost of the construction spent by plaintiff. !ro"
the co"plaint itself the plaintiff stated that the construction cost of the apart"ent is "uch "ore
than the lot, *hich apart"ent he constructed at a cost of PB;,000.00 in 196B par. 5 co"plaint).
This a"ount of PB;,000.00 is *hat the "ovant is supposed to pay under the la* before a *rit of
possession placin+ hi" in possession of both the lot and apart"ent *ould be issued.
<o*ever, the co"plaint alle+es in para+raph 9 that three doors of the apart"ent are bein+
leased. This is further confir"ed by the affidavit of the "ovant presented in support of the "otion
that said three doors are bein+ leased at a rental of P(,000.00 a "onth each. The "ovant further
alle+es in his said affidavit that the present co""ercial value of the lot is P10,000.00 per s=uare
"eter or P4,B00,000.00 and the reasonable rental value of said lot is no less than P41,000.00
per "onth.
The decision havin+ beco"e final as per 9ntry of 7ud+"ent dated 7une 4;, 199; and fro" this
date on, bein+ the uncontested o*ner of the property, the rents should be paid to hi" instead of
the plaintiff collectin+ the". !ro" 7une 4;, 199;, the rents collected by plaintiff a"ountin+ to
"ore than PB;,000.00 fro" tenants should be offset fro" the rents due to the lot *hich
accordin+ to "ovant,s affidavit is "ore than P41,000.00 a "onth.
6<9&9!O&9, findin+ "erit in the >otion, the Court hereby +rants the follo*in+ prayer thatA
1. The "ovant shall rei"burse plaintiff the construction cost of PB;,000.00.
4. The pay"ent of PB;,000.00 as rei"burse"ent for the construction cost,
"ovant 7uan ?u+uid is hereby entitled to i""ediate issuance of a *rit of
possession over the 3ot and i"prove"ents thereon.
;. The "ovant havin+ been declared as the uncontested o*ner of the 3ot in
=uestion as per 9ntry of 7ud+"ent of the %upre"e Court dated 7une 4;, 199;,
the plaintiff should pay rent to the "ovant of no less than P41,000.00 per "onth
fro" said date as this is the very sa"e a"ount paid "onthly by the tenants
occupyin+ the lot.
'. The a"ount of PB;,000.00 due fro" the "ovant is hereby offset a+ainst the
a"ount of rents collected by the plaintiff fro" 7une 4;, 199;, to %epte"ber 4;,
199;.
%O O&89&98.
The petitioner "oved for the reconsideration of the order but it *as not acted upon by the trial court. #nstead, on
15 ?ove"ber 199;, it issued a *rit of possession directin+ the deputy sheriff Cto place said "ovant 7uan ?u+uid
in possession of sub/ect property located at ?o. (9 Ka"ias &oad, Jue0on City, *ith all the i"prove"ents
thereon and to e/ect therefro" all occupants therein, their a+ents, assi+nees, heirs and representatives.C
9
The petitioner then filed *ith the Court of $ppeals a special civil action for certiorari and prohibition assailin+ the
order of 1B ?ove"ber 199;, *hich *as docketed as C$.H.&. %P ?o. ;46(9.
14
#n its decision of ( 7une 199',
the Court of $ppeals affir"ed in part the order of the trial court citin+ $rticle ''5 of the Civil Code. #n disposin+ of
the issues, it statedA
$s earlier pointed out, private respondent opted to appropriate the i"prove"ent introduced by
petitioner on the sub/ect lot, +ivin+ rise to the ri+ht of petitioner to be rei"bursed of the cost of
constructin+ said apart"ent buildin+, in accordance *ith $rticle B'6 of the . . . Civil Code, and of
the ri+ht to retain the i"prove"ents until he is rei"bursed of the cost of the i"prove"ents,
because, basically, the ri+ht to retain the i"prove"ent *hile the correspondin+ inde"nity is not
paid i"plies the tenancy or possession in fact of the land on *hich they are built . . . D4
TO39?T#?O, C#G#3 CO89 O! T<9 P<#3#PP#?9% 1994) p. 114E. 6ith the facts e-tant and the
settled principle as +uides, *e a+ree *ith petitioner that respondent /ud+e erred in orderin+ that
Cthe "ovant havin+ been declared as the uncontested o*ner of the lot in =uestion as per 9ntry
of 7ud+"ent of the %upre"e Court dated 7une 4;, 199;, the plaintiff should pay rent to the
"ovant of no less than P41,000 per "onth fro" said date as this is the very sa"e a"ount paid
"onthly by the tenants occupyin+ the lot.
6e, ho*ever, a+ree *ith the findin+ of respondent /ud+e that the a"ount of PB;,000.00 earlier
ad"itted as the cost of constructin+ the apart"ent buildin+ can be offset fro" the a"ount of
rents collected by petitioner fro" 7une 4;, 199; up to %epte"ber 4;, 199; *hich *as fi-ed at
P(,000.00 per "onth for each of the three doors. Our underlyin+ reason is that durin+ the period
of retention, petitioner as such possessor and receivin+ the fruits fro" the property, is obli+ed to
account for such fruits, so that the a"ount thereof "ay be deducted fro" the a"ount of
inde"nity to be paid to hi" by the o*ner of the land, in line *ith >endo0a vs. 8e Hu0"an, B4
Phil. 16' . . . .
The Court of $ppeals then ruled as follo*sA
6<9&9!O&9, *hile it appears that private respondents have not yet inde"nified petitioner *ith
the cost of the i"prove"ents, since $nne- # sho*s that the 8eputy %heriff has enforced the 6rit
of Possession and the pre"ises have been turned over to the possession of private
respondents, the =uest of petitioner that he be restored in possession of the pre"ises is
rendered "oot and acade"ic, althou+h it is but fair and /ust that private respondents pay
petitioner the construction cost of PB;,000.00F and that petitioner be ordered to account for any
and all fruits of the i"prove"ents received by hi" startin+ on 7une 4;, 199;, *ith the a"ount of
PB;,000.00 to be offset therefro".
#T #% %O O&89&98.
11
$++rieved by the Court of $ppeals, decision, the petitioner filed the instant petition.
The parties a+ree that the petitioner *as a builder in +ood faith of the apart"ent buildin+ on the theory that he
constructed it at the ti"e *hen he *as still the o*ner of the lot, and that the key issue in this case is the
application of $rticles ''5 and 'B6 of the Civil Code.
The trial court and the Court of $ppeals, as *ell as the parties, concerned the"selves *ith the application of
$rticles ''5 and B'6 of the Civil Code. These articles read as follo*sA
$rt. ''5. The o*ner of the land on *hich anythin+ has been built, so*n or planted in +ood faith,
shall have the ri+ht to appropriate as his o*n the *orks, so*in+ or plantin+, after pay"ent of the
inde"nity provided for in articles B'6 and B'5, or to obli+e the one *ho built or planted to pay
the price of the land, and the one *ho so*ed, the proper rent. <o*ever, the builder or planter
cannot be obli+ed to buy the land if its value is considerably "ore than that of the buildin+ or
trees. #n such case, he shall pay reasonable rent, if the o*ner of the land does not choose to
appropriate the buildin+ or trees after proper inde"nity. The parties shall a+ree upon the ter"s
of the lease and in case of disa+ree"ent, the court shall fi- the ter"s thereof. ;61a)
--- --- ---
$rt. B'6. ?ecessary e-penses shall be refunded to every possessorF but only the possessor in
+ood faith "ay retain the thin+ until he has been rei"bursed therefor.
@seful e-penses shall be refunded only to the possessor in +ood faith *ith the sa"e ri+ht of
retention, the person *ho has defeated hi" in the possession havin+ the option of refundin+ the
a"ount of the e-penses or of payin+ the increase in value *hich the thin+ "ay have ac=uired by
reason thereof. 'B;a)
2y its clear lan+ua+e, $rticle ''5 refers to a land *hose o*nership is clai"ed by t*o or "ore parties, one of
*ho" has built so"e *orks, or so*n or planted so"ethin+. The buildin+, so*in+ or plantin+ "ay have been
"ade in +ood faith or in bad faith. The rule on +ood faith laid do*n in $rticle B46 of the Civil Code shall be
applied in deter"inin+ *hether a builder, so*er or planter had acted in +ood faith.
12
$rticle ''5 does not apply to a case *here the o*ner of the land is the builder, so*er, or planter *ho then later
loses o*nership of the land by sale or donation. This Court said so in #o"eon$co vs. Re$a"adoA
18
$rticle ;61 of the old Civil Code is not applicable in this case, for &e+alado constructed the
house on his o*n land before he sold said land to Coleon+co. $rticle ;61 applies only in cases
*here a person constructs a buildin+ on the land of another in +ood or in bad faith, as the case
"ay be. #t does not apply to a case *here a person constructs a buildin+ on his o*n land, for
then there can be no =uestion as to +ood or bad faith on the part of the builder.
9lse*ise stated, *here the true o*ner hi"self is the builder of *orks on his o*n land, the issue of +ood faith or
bad faith is entirely irrelevant.
Thus in strict point of la*, $rticle ''5 is not apposite to the case at bar. ?evertheless, *e believe that the
provision therein on inde"nity "ay be applied by analo+y considerin+ that the pri"ary intent of $rticle ''5 is to
avoid a state of forced co.o*nership and that the parties, includin+ the t*o courts belo*, in the "ain a+ree that
$rticles ''5 and B'6 of the Civil Code are applicable and inde"nity for the i"prove"ents "ay be paid althou+h
they differ as to the basis of the inde"nity.
$rticle B'6 does not specifically state ho* the value of the useful i"prove"ents should be deter"ined. The
respondent court and the private respondents espouse the belief that the cost of construction of the apart"ent
buildin+ in 196B, and not its current "arket value, is sufficient rei"burse"ent for necessary and useful
i"prove"ents "ade by the petitioner. This position is, ho*ever, not in consonance *ith previous rulin+s of this
Court in si"ilar cases. #n -avier vs. #oncepcion, -r.,
19
this Court pe++ed the value of the useful i"prove"ents
consistin+ of various fruits, ba"boos, a house and ca"arin "ade of stron+ "aterial based on the "arket value
of the said i"prove"ents. #n &armiento vs. '$ana,
15
despite the findin+ that the useful i"prove"ent, a
residential house, *as built in 196( at a cost of bet*een ei+ht thousand pesos P5,000.00) to ten thousand
pesosP10,000.00), the lando*ner *as ordered to rei"burse the builder in the a"ount of forty thousand pesos
P'0,000.00), the value of the house at the ti"e of the trial. #n the sa"e *ay, the lando*ner *as re=uired to pay
the Cpresent valueC of the house, a useful i"prove"ent, in the case of .e Gu,man vs. .e "a 0uente,
13
cited by
the petitioner.
The ob/ective of $rticle B'6 of the Civil Code is to ad"inister /ustice bet*een the parties involved. #n this re+ard,
this Court had lon+ a+o stated in Rivera vs. Roman #atho"ic 'rchbishop of Mani"a
17
that the said provision *as
for"ulated in tryin+ to ad/ust the ri+hts of the o*ner and possessor in +ood faith of a piece of land, to ad"inister
co"plete /ustice to both of the" in such a *ay as neither one nor the other "ay enrich hi"self of that *hich
does not belon+ to hi". Huided by this precept, it is therefore the current "arket value of the i"prove"ents
*hich should be "ade the basis of rei"burse"ent. $ contrary rulin+ *ould un/ustly enrich the private
respondents *ho *ould other*ise be allo*ed to ac=uire a hi+hly valued inco"e.yieldin+ four.unit apart"ent
buildin+ for a "easly a"ount. Conse=uently, the parties should therefore be allo*ed to adduce evidence on the
present "arket value of the apart"ent buildin+ upon *hich the trial court should base its findin+ as to the
a"ount of rei"burse"ent to be paid by the lando*ner.
The trial court also erred in orderin+ the petitioner to pay "onthly rentals e=ual to the a++re+ate rentals paid by
the lessees of the apart"ent buildin+. %ince the private respondents have opted to appropriate the apart"ent
buildin+, the petitioner is thus entitled to the possession and en/oy"ent of the apart"ent buildin+, until he is paid
the proper inde"nity, as *ell as of the portion of the lot *here the buildin+ has been constructed. This is so
because the ri+ht to retain the i"prove"ents *hile the correspondin+ inde"nity is not paid i"plies the tenancy
or possession in fact of the land on *hich it is built, planted or so*n.
15
The petitioner not havin+ been so paid,
he *as entitled to retain o*nership of the buildin+ and, necessarily, the inco"e therefro".
#t follo*s, too, that the Court of $ppeals erred not only in upholdin+ the trial court,s deter"ination of the
inde"nity, but also in orderin+ the petitioner to account for the rentals of the apart"ent buildin+ fro" 4; 7une
199; to 4; %epte"ber 199;.
6<9&9!O&9, the decision of the Court of $ppeals in C$.H.&. %P ?o. ;46(9 and the Order of 1B ?ove"ber
199; of the &e+ional Trial Court, 2ranch 101, Jue0on City in Civil Case ?o. J.'1'(0 are hereby %9T $%#89.
The case is hereby re"anded to the trial court for it to deter"ine the current "arket value of the apart"ent
buildin+ on the lot. !or this purpose, the parties shall be allo*ed to adduce evidence on the current "arket value
of the apart"ent buildin+. The value so deter"ined shall be forth*ith paid by the private respondents to the
petitioner other*ise the petitioner shall be restored to the possession of the apart"ent buildin+ until pay"ent of
the re=uired inde"nity.
?o costs.
%O O&89&98.
%adi""a, Be""osi""o and Kapunan, --., concur.
G.R. No. 117449 O#to6), 11, 1995
SECURIT< -AN1 B TRUST COMPAN< $!( ROSITO C. MANHIT, petitioners,
vs.
COURT OF APPEALS $!( <SMAEL C. FERRER, respondents.

PADILLA, J.:
#n this petition for revie* under &ule 'B of the &ules of Court, petitioners seek a revie* and reversal of the decision N of respondent Court of $ppeals in C$.H.&.
CG ?o. '0'B0, entitled CIs"ael C. !errer v. %ecurity 2ank and Trust Co"pany, et. al.C dated ;1 $u+ust 199', *hich affir"ed the decision NN of the &e+ional Trial
Court, 2ranch 6;, >akati in Civil Case ?o. '4(14, a co"plaint for breach of contract *ith da"a+es.
Private respondent Is"ael C. !errer *as contracted by herein petitioners %ecurity 2ank and Trust Co"pany %2TC) and &osito C. >anhit to construct the
buildin+ of %2TC in 8avao City for the price of P1,(60,000.00. The contract dated ' !ebruary 1950 provided that !errer *ould finish the construction in t*o
hundred 400) *orkin+ days. &espondent !errer *as able to co"plete the construction of the buildin+ on 1B $u+ust 1950 *ithin the contracted period) but he
*as co"pelled by a drastic increase in the cost of construction "aterials to incur e-penses of about P;00,000.00 on top of the ori+inal cost. The additional
e-penses *ere "ade kno*n to petitioner %2TC thru its Gice.President !ely %ebastian and %upervisin+ $rchitect &udy de la &a"a as early as >arch 1950.
&espondent !errer "ade ti"ely de"ands for pay"ent of the increased cost. %aid de"ands *ere supported by receipts, invoices, payrolls and other docu"ents
provin+ the additional e-penses.
#n >arch 1951, %2TC thru $ssistant Gice.President %usan Huanio and a representative of an architectural fir" consulted by %2TC, verified !errer,s clai"s for
additional cost. $ reco""endation *as then "ade to settle !errer,s clai" but only for P400,000.00. %2TC, instead of payin+ the reco""ended additional
a"ount, denied ever authori0in+ pay"ent of any a"ount beyond the ori+inal contract price. %2TC like*ise denied any liability for the additional cost based on
$rticle #1 of the buildin+ contract *hich statesA
#f at any ti"e prior to the co"pletion of the *ork to be perfor"ed hereunder, increase in prices of construction "aterials andNor labor shall
supervene throu+h no fault on the part of the contractor *hatsoever or any act of the +overn"ent and its instru"entalities *hich directly or
indirectly affects the increase of the cost of the pro/ect, O6?9& shall e=uitably "ake the appropriate ad/ust"ent on "utual a+ree"ent of
both parties.
Is"ael C. !errer then filed a co"plaint for breach of contract *ith da"a+es. The trial court ruled for !errer and ordered defendants %2TC and &osito C. >anhit
to payA
a) P4B9,'1(.4; for the increase in price of labor and "aterials plus 14L interest thereon per annum fro" 1B $u+ust 1950 until fully paidF
b) P4',000.00 as actual da"a+esF
c) P40,000.00 as "oral da"a+esF
d) P40,000.00 as e-e"plary da"a+esF
e) attorney,s fees e=uivalent to 4BL of the principal a"ount dueF and
f) costs of suit.
On appeal, the Court of $ppeals affir"ed the trial court decision.
#n the present petition for revie*, petitioners assi+n the follo*in+ errors to the appellate courtA
. . . #? <O38#?H T<$T P3$#?T#!!.$PP93399 <$%, 2I P&9PO?89&$?C9 O! 9G#89?C9 %@!!#C#9?T3I P&OG9? <#% C3$#>
$H$#?%T T<9 89!9?8$?T%.$PP933$?T%.
. . . #? #?T9&P&9T#?H $? OT<9&6#%9 C39$& $?8 @?$>2#H@O@% P&OG#%#O? O! T<9 CO?%T&@CT#O? CO?T&$CT.
. . . #? 8#%&9H$&8#?H T<9 91P&9%% P&OG#%#O? O! T<9 CO?%T&@CT#O? CO?T&$CT, T<9 3O69& CO@&T G#O3$T98
89!9?8$?T%.$PP933$?T%, CO?%T#T@T#O?$3 H@$&$?TI O! ?O? #>P$#&>9?T O! T<9 O23#H$T#O? O! CO?T&$CT.
1
Petitioners ar+ue that under the afore=uoted $rticle #1 of the buildin+ contract, any increase in the price of labor
andNor "aterials resultin+ in an increase in construction cost above the stipulated contract price *ill not
auto"atically "ake petitioners liable to pay for such increased cost, as any pay"ent above the stipulated
contract price has been "ade sub/ect to the condition that the Cappropriate ad/ust"entC *ill be "ade Cupon
"utual a+ree"ent of both partiesC. #t is contended that since there *as no "utual a+ree"ent bet*een the
parties, petitioners, obli+ation to pay a"ounts above the ori+inal contract price never "ateriali0ed.
&espondent Is"ael C. !errer, throu+h counsel, on the other hand, opposed the ar+u"ents raised by petitioners.
#t is of note ho*ever that the pleadin+s filed *ith this Court by counsel for !errer hardly refute the ar+u"ents
raised by petitioners, as the contents of said pleadin+s are "ostly =uoted portions of the decision of the Court of
$ppeals, devoid of ade=uate discussion of the "erits of respondent,s case. The Court, to be sure, e-pects "ore
dili+ence and le+al kno*.ho* fro" la*yers than *hat has been e-hibited by counsel for respondent in the
present case. @nder these circu"stances, the Court had to revie* the entire records of this case to evaluate the
"erits of the issues raised by the contendin+ parties.
$rticle 44 of the Civil Code *hich e"bodies the "a-i", !emo e+ a"terius incommodo debet "ecup"etari no "an
ou+ht to be "ade rich out of another,s in/ury) statesA
$rt. 44. 9very person *ho throu+h an act of perfor"ance by another, or any other "eans,
ac=uires or co"es into possession of so"ethin+ at the e-pense of the latter *ithout /ust or le+al
+round, shall return the sa"e to hi".
The above.=uoted article is part of the chapter of the Civil Code on <u"an &elations, the provisions of *hich
*ere for"ulated as Cbasic principles to be observed for the ri+htful relationship bet*een hu"an bein+s and for
the stability of the social order, . . . desi+ned to indicate certain nor"s that sprin+ fro" the fountain of +ood
conscience, . . . +uides for hu"an conduct DthatE should run as +olden threads throu+h society to the end that
la* "ay approach its supre"e ideal *hich is the s*ay and do"inance of /ustice.C
2
#n the present case, petitioners, ar+u"ents to support absence of liability for the cost of construction beyond the
ori+inal contract price are not persuasive.
@nder the previously =uoted $rticle #1 of the construction contract, petitioners *ould "ake the appropriate
ad/ust"ent to the contract price in case the cost of the pro/ect increases throu+h no fault of the contractor
private respondent). Private respondent infor"ed petitioners of the drastic increase in construction cost as early
as >arch 1950.
Petitioners in turn had the increased cost evaluated and audited. 6hen private respondent de"anded pay"ent
of P4B9,'1(.4;, petitioner bank,s Gice.President &osito C. >anhit and the bank,s architectural consultant *ere
directed by the bank to verify and co"pute private respondent,s clai"s of increased cost. $ reco""endation
*as then "ade to settle private respondent,s clai" for P400,000.00. 8espite this reco""endation and several
de"ands fro" private respondent, %2TC failed to "ake pay"ent. #t denied authori0in+ anyone to "ake a
settle"ent of private respondent,s clai" and like*ise denied any liability, contendin+ that the absence of a
mutua" a$reement made private respondentAs demand premature and base"ess.
Petitioners, ar+u"ents are specious.
#t is not denied that private respondent incurred additional e-penses in constructin+ petitioner bank,s buildin+
due to a drastic and une-pected increase in construction cost. #n fact, petitioner bank ad"itted liability for
increased cost *hen a reco""endation *as "ade to settle private respondent,s clai" for P400,000.00. Private
respondent,s clai" for the increased a"ount *as ade=uately proven durin+ the trial by receipts, invoices and
other supportin+ docu"ents.
@nder $rticle 1154 of the Civil Code, a conditional obli+ation shall be void if its fulfill"ent depends upon the sole
*ill of the debtor. #n the present case, the "utual a+ree"ent, the absence of *hich petitioner bank relies upon to
support its non.liability for the increased construction cost, is in effect a condition dependent on petitioner bank,s
sole *ill, since private respondent *ould naturally and lo+ically +ive consent to such an a+ree"ent *hich *ould
allo* hi" recovery of the increased cost.
!urther, it cannot be denied that petitioner bank derived benefits *hen private respondent co"pleted the
construction even at an increased cost.
<ence, to allo* petitioner bank to ac=uire the constructed buildin+ at a price far belo* its actual construction
cost *ould undoubtedly constitute un/ust enrich"ent for the bank to the pre/udice of private respondent. %uch
un/ust enrich"ent, as previously discussed, is not allo*ed by la*.
!inally, *ith respect to the a*ard of attorney,s fees to respondent, the Court has previously held that, Ceven *ith
the presence of an a+ree"ent bet*een the parties, the court "ay nevertheless reduce attorney,s fees thou+h
fi-ed in the contract *hen the a"ount thereof appears to be unconscionable or unreasonable.C
8
$s previously
noted, the dili+ence and le+al kno*.ho* e-hibited by counsel for private respondent hardly /ustify an a*ard of
4BL of the principal a"ount due, *hich *ould be at least P60,000.00. 2esides, the issues in this case are far
fro" co"ple- and intricate. The a*ard of attorney,s fees is thus reduced to P10,000.00.
6<9&9!O&9, *ith the above "odification in respect of the a"ount of attorney,s fees, the appealed decision of
the Court of $ppeals in C$ H.&. CG ?o. '0'B0 is $!!#&>98.
%O O&89&98.
.avide, -r., Be""osi""o, Kapunan and ;ermosisima, -r., --., concur.
T<#&8 8#G#%#O?
OG.R. No. 113859. F)6,u$,& 7, 2444P
/IOLA CRU2, petitioner, vs. NATIONAL LA-OR RELATIONS COMMISSION,
NOR1IS DISTRI-UTORS, INC., 'OSE RAMIRO A. CARPIO, 'R., >ESSIE
QUISUM-ING, $!( ELI2ALDE AMPALA<O, respondents.
D E C I S I O N
PURISIMA, J.A
This is a petition for certiorari under &ule 6B of the &ules of Court ascribin+ +rave abuse of
discretion to the ?ational 3abor &elations Co""ission ?3&C) in issuin+ its &esolution, dated
?ove"ber 19, 199;, dis"issin+ for lack of "erit petitionerTs co"plaint a+ainst the
respondents, ?orkis 8istributors, #nc., 7ose &a"iro $. Carpio, 7r., 6essie Juisu"bin+, and
9li0alde $"palayoF and the subse=uent Order, dated $pril 1;, 199', denyin+ petitionerTs
>otion for &econsideration.
The antecedent facts are as follo*sA
&espondent ?orkis 8istributors, #nc., a do"estic corporation *ith principal office and
business address at $. %. !ortuna %treet, >andaue City, Cebu, is en+a+ed in the business of
sellin+ "otorcycles and household appliances, *ith branches all over the country, one of
*hich branches is in Galencia, 2ukidnon. &espondents 6essie Juisu"bin+, 7ose &a"iro $.
Carpio, 7r., and 9li0alde $"palayo are its President, Gice.President and >ana+er,
respectively.
Petitioner Giola Cru0 *as hired and e"ployed by respondent ?orkis so"eti"e in >arch 199(
as cashierNbookkeeper at its branch in Ca+ayan de Oro City, and *as later transferred to its
Galencia, 2ukidnon branch. !or her loyalty and dedication to the co"pany, petitioner Cru0
*as +iven co"pensatin+ salary ad/ust"ent of One <undred P100.00) Pesos, effective 7uly
1, 1990.D1E
#n October 1990, the Galencia branch of ?orkis *as scheduled to transfer its office to another
place. On October 1', 1990, *hile petitioner and her co.e"ployees *ere busy packin+ up
and "akin+ an inventory of the thin+s to be "oved preparatory to such transfer, the petitioner
suddenly collapsed. %he *as rushed to the >onsanto Heneral <ospital in Galencia, 2ukidnon
in the evenin+ of the sa"e day but *as able to report for *ork the follo*in+ day.
On October 1(, 1990, petitioner *as transferred to the Capitol Colle+e Heneral <ospital in
Ca+ayan de Oro City and *as confined thereat until October 4B. %he *as dia+nosed to be
sufferin+ fro" CC?% #nfectionA T2 >enin+itis vs. Cryptococcal >enin+itisC. %he *as later
transferred to the >aria &eyna <ospital, *here she *as confined fro" October 4B to
8ece"ber B, 1990, and treated for C#r1ptococca" Menin$itis, %ottHs .isease, and .iabetes
Me""itus =1pe IIC.
%tartin+ October 1B, 1990, the petitioner stopped reportin+ for *ork. On October 19, 1990,
respondent ?orkis *as infor"ed by petitionerTs co.e"ployees of her condition, and it *as
able to recruit a replace"ent cashierNbookkeeper in the person of <ernando 7ua"an, t*o 4)
days after petitionerTs collapse.
On 8ece"ber 45, 1990, petitioner sent a letter to respondent ?orkis to verify the status of her
e"ploy"ent. $s an ans*er, she received a ter"ination letter, dated ?ove"ber 4, 1990,D4E
citin+ health reasons as the cause for her dis"issal, to *itA
C?orkis.G>?H
>andaue City
?ove"ber 4, 1990
ToA Giola Cru0
2ookkeeperNCashier . ?8C Galencia
ThruA 7o/o Cru0
!ro"A P.#. &. 8epart"ent
%ub/ectA &93#9G#?H O! 8@T#9% $?8 !@?CT#O?%
Iour present ill.health conditions has "ade you incapable of perfor"in+ your
assi+ned duties and functions effectively.
2ecause of the above reason, "ana+e"ent has decided to relieve you of your
present duties and responsibilities as 2ookkeeperNCashier of ?8C Galencia
effective i""ediately.
This is done to protect co"pany interest and to avoid disruption of the nor"al
business operations that "ay result to delay in the sub"ission of reports
affectin+ the entire or+ani0ation, and to avoid occurrence of substantial losses.
!urther, this is to protect you fro" any additional physical and "ental burden
that "ay result because of your incapable sic) to *ork nor"ally. This *ill serve
as your notice of ter"ination for health reason *hich *ill take effect upon receipt
of this letter.
!or your infor"ation and co"pliance.
%+d.) 9lenito P. Palan+
<&8 >ana+er
?otedA
%+d.) &a"iro $. Carpio
Gice.President
On >arch 15, 1991, petitioner lod+ed a co"plaint for ille+al dis"issal a+ainst the private
respondents, prayin+ for pay"ent of separation pay in lieu of reinstate"ent, service incentive,
leave pay, "aternity leave pay, 1;th "onth pay, holiday pay and other "oney clai"s, before
the $rbitration 2ranch of the ?3&C in Ca+ayan 8e Oro City.
On >ay 45, 199;, 3abor $rbiter 3eon P. >urillo rendered a decision for
co"plainantNpetitioner, disposin+ as follo*sA
C6<9&9!O&9, in vie* of all the fore+oin+ /ud+"ent is hereby entered orderin+
?orkis 8istributors, #nc. to pay co"plainant Giola Cru0 the follo*in+A
1) %eparation pay P 4B,5;4.10
4) %ervice #ncentive leave pay P 1,519.50
;) Proportionate 1;th "onth pay for 1990 P 4,909.4(
and all the above.na"ed respondents are hereby ordered to /ointly and
severally pay co"plainant Giola Cru0 P100,000.00 in "oral da"a+es and
P40,000.00 in e-e"plary da"a+es.
&espondent ?orkis 8istributors, #nc. is like*ise ordered to pay P1B,0B6.11 as
attorneyTs fees.CD;E
!ro" the said decision both parties appealed to the ?3&CF and on ?ove"ber 19, 199;, the
!ifth 8ivision of the ?3&C reversed and set aside the appealed decision of the 3abor $rbiter,
rulin+ thusA
C6<9&9!O&9, the decision appealed fro" is &eversed and %et $side and a
ne* one dis"issin+ the co"plaint for lack of "erit. <o*ever, respondent
co"pany is ordered to pay co"plainant her unpaid service incentive leave pay
and proportionate 1;th "onth pay for 1990 in the a++re+ate su" of
P',(49.0(.CD'E
$fter her receipt of the &esolution dated $pril 11, 199' of ?3&C, denyin+ her "otion for
reconsideration, petitioner found her *ay to this court via the present petition, i"putin+ +rave
abuse of discretion to the ?3&C, and posin+ as issuesA
#. 6<9T<9& O& ?OT P9T#T#O?9& 6$% #339H$33I 8#%>#%%98 2I
P&#G$T9 &9%PO?89?T%.
##. 6<9T<9& O& ?OT P9T#T#O?9& #% 9?T#T398 TO &9COG9& >O&$3
$?8 919>P3$&I 8$>$H9% $?8 $TTO&?9IT% !99% !&O> P&#G$T9
&9%PO?89?T%.
The petition is visited by "erit.
#n its Co""ent sent in on $pril 19, 199B, respondent ?ational 3abor &elations Co""ission
theori0ed that its factual findin+s cannot be looked into and re.e-a"ined by this Court
follo*in+ the *ell.entrenched doctrine that factual findin+s of =uasi./udicial a+encies like the
?3&C, *hich have ac=uired e-pertise because their /urisdiction is confined to specific
"atters, are +enerally accorded not only respect but even finality, *hen such findin+s are
supported by substantial evidence.
The Court a+rees *ith respondent ?3&C on the validity of the aforecited doctrine. <o*ever, it
is *ell.settled that there are /udicially reco+ni0ed e-ceptions to the said doctrine, one of *hich
is *hen the findin+s of fact of the 3abor $rbiter and of the ?ational 3abor &elations
Co""ission are at variance, such as in the case under scrutiny, *here the Court "ay cull its
o*n findin+ of facts on the basis of the evidence on record.
#n the said letter of ter"ination, dated ?ove"ber 4, 1990, private respondents cited Chea"th
reasonsC as the cause for petitionerTs dis"issal fro" *orkA
C--- This *ill therefore serve as your notice of ter"ination for health reason
*hich *ill take effect upon receipt of this letter. ---CDBE
@nder %ection 5, &ule #, 2ook G# of the &ules and &e+ulations #"ple"entin+ the 3abor Code,
for a disease to be a valid +round for the dis"issal of the e"ployee, the continued
e"ploy"ent of such e"ployee is prohibited by la* or pre/udicial to his health or the health of
his co.e"ployees, and there "ust be a certification by a co"petent public health authority
that the disease is of such nature or at such a sta+e that it cannot be cured *ithin a period of
si- 6) "onths, even *ith proper "edical treat"ent. %ince the burden of provin+ the validity of
the dis"issal of the e"ployee rests on the e"ployer, the latter should like*ise bear the
burden of sho*in+ that the re=uisites for a valid dis"issal due to a disease have been
co"plied *ith. #n the absence of the re=uired certification by a co"petent public health
authority, this Court has ruled a+ainst the validity of the e"ployeeTs dis"issal.D6E
Considerin+ that in the present case, the alle+ed reason for the dis"issal of petitioner *as
her illness, the private respondents have to prove that their decision to ter"inate the services
of petitioner *as reached after co"pliance *ith the aforestated re=uisites under %ection 5.
Private respondents havin+ failed to substantiate the sa"e, the dis"issal of petitioner on the
+round of illness cannot be upheld.
&espondent ?orkis cited as another +round for the dis"issal of petitioner, her alle+ed
une-plained absence for al"ost three ;) "onths, *hich they theori0ed upon as a"ountin+ to
abandon"ent. #t is ar+ued that since petitioner did not infor" the co"pany that she *as sick,
did not file a sick leave and did not also present a "edical certificate to support her illness for
a period of three "onths, she *as considered absent *ithout leave, and to have abandoned
her /ob.
On the other hand, petitioner "aintains that, contrary to private respondentsT alle+ation that
she abandoned her *ork, her serious illness *hich necessitated her confine"ent in a hospital
for al"ost three ;) "onths, caused her inability to report for *ork.
The petition is "eritorious.
!or une-plained absence to constitute abandon"ent, there "ust be a clear, deliberate and
un/ustified refusal on the part of the e"ployee to continue his e"ploy"ent, *ithout any
intention of returnin+.D(E The Court has repeatedly held that "ere absence does not suffice to
constitute abandon"ent. The absence "ust be acco"panied by overt acts unerrin+ly
sho*in+ that the e"ployee si"ply does not *ant to *ork any"ore. #n the case of 'rtemio
Labor, et a". vs. !LR# and Go"d #it1 #ommercia" #omp"e+, Inc. and Rud1 ?1,D5E it *as held
that to constitute abandon"ent, t*o ele"ents "ust concur, to *itA 1) the failure to report for
*ork or absence *ithout valid or /ustifiable reason, and 4) clear intention to sever the
e"ployer.e"ployee relationship, with the second e"ement as the more determinative factor
and bein$ manifested b1 some overt acts.
#n the case at bar, petitionerTs absence *as e-plained by the undeniable fact that she *as
confined for treat"ent in several hospitals for around three ;) "onths. The clai" of
respondent ?orkis that it *as not infor"ed of the sickness of petitioner is belied by the fact
that on October 1', 1990, the day before petitioner stopped +oin+ to *ork, she collapsed
*ithin the office pre"ises and *as i""ediately rushed to a hospital. %uch fact should e-plain
*hy petitioner dee"ed it unnecessary to infor" respondent ?orkis that she *as sick.
>oreover, private respondents *ere apparently told that the petitioner *as ill because in the
letter of ter"ination dated ?ove"ber 4, 1990, they advised petitioner that the co"pany has
decided to replace her as her Cpresent i"":hea"th condition has "ade you her) incapable of
perfor"in+ your her) assi+ned duties and functions effectively.C That she did not file any sick
leave *as of no "o"ent considerin+ that there *as no co""unication fro" the respondent
co"pany re+ardin+ the status of petitionerTs e"ploy"ent. The said letter of ter"ination, dated
?ove"ber 4, 1990, *as only received by petitioner in 7anuary 1991, after she *rote the"
private respondents) on 8ece"ber 45, 1990, re=uestin+ financial assistance.
The additional +round cited by the private respondents for the dis"issal of petitioner *as loss
of trust and confidence as a result of alle+ed defalcation of co"pany funds co""itted by
petitioner. They theori0ed that durin+ an audit and inventory conducted by >r. <ernando
7ua"an, *ho replaced petitioner as cashierNbookkeeper, unaccounted co"pany funds in
petitionerTs custody *ere discovered such that on October 19, 1990, a letter infor"in+
petitioner of such unaccounted funds, to+ether *ith an attached state"ent of account, *as
sent to petitioner and received by her husband 7o/o Cru0. $ follo*.up letter *as sent to
petitioner on October 4', 1990, but petitioner continued to i+nore the sa"e and failed to reply
thereto. #t is private respondentsT sub"ission that the discovery of the "issin+ funds in
petitionerTs custody, her une-plained disappearance and prolon+ed absence "ilitate a+ainst
the protestation of innocence of petitioner and are inculpatory facts and circu"stances of
defalcation a+ainst herF private respondents concluded.
!or her part, petitioner countered that the alle+ations of private respondents are baseless.
$ccordin+ to her, she *as not present *hen the audit *as alle+edly conducted and she *as
neither infor"ed of the char+es a+ainst her nor +iven an opportunity to refute the sa"e. %he
denied receivin+ the letters re=uirin+ her to e-plain the "issin+ funds on the dates they *ere
supposedly sent. >oreover, >r. 7ua"an, *ho alle+edly conducted the audit, did not testify
and neither *as his affidavit presented before the 3abor $rbiter. 6hat *as introduced as
evidence of the alle+ed defalcation *as the affidavit of a certain >r. 9lenito Palan+, *hich
affidavit could not be +iven credence because the latter *as not the one *ho conducted the
audit and had no personal kno*led+e of the defalcation. &eferences *ere "ade to
unaccounted co"pany funds alle+edly in the possession of petitioner but there *as no
cate+orical state"ent as to ho* such shorta+es *ere caused, the audit procedure observed
and it *as petitioner *ho *as responsible for the said shorta+esF petitioner pointed out.
PetitionerTs posture is sustainable. The letter dated October 19, 1990, alle+edly sent to
petitioner re+ardin+ the defalcation char+es, readsA
CThis is to for"ally infor"ed sic) you that due to your indisposition to dischar+e
your duties and responsibilities as the CashierN2ookkeeper of ?8C Galencia, *e
have no other recourse but to have another person to take your place.
#n the turnover and conduct of investi+ation of <ernando 7ua"an, $ccountin+
!ield %taff sent by the "ana+e"ent to take over your place, the follo*in+ thin+s
*ere uncoveredA
1. @naccounted cash fro" the collections of October 14 and 1;, 1990 of PB,;('
and P4,(14, respectively, totalin+ to P5,056F These unaccounted cash *ere
deter"ined fro" the official receipts copies of the branch.
4. @naccounted unclai"ed salaries and *a+es of C%&s Pedro Gersales and
?ilo Pa"utun+an of P596.1B and P(00.00 respectively, totalin+ to P1,B96.1B
%ince it is indeter"inable *hen you can report back to *ork and account the
above"entioned unaccounted cash *e *ill be forced to apply your provident
fund to these accountabilities. Please refer to the attached su""ary of your
partial accountabilities *ith the co"pany.CD9E
The aforesaid letter "ade "ention of the alle+ed unaccounted funds in petitionerTs custody
but no receipts, docu"ents and other proofs *ere attached to prove the collection and receipt
by petitioner of the a"ounts therein listed. The attached state"ent of account is of no
probative value because it *as /ust a su""ary of petitionerTs alle+ed accountabilities. #t does
not suffice to sho* that petitioner did receive, retain and convert funds in her custody.
6hat is "ore, private respondents failed to prove that a copy of the October 19, 1990 letter
*as really sent to and received by petitioner. The alle+ation that said letter as *ell as the
follo*.up letter dated October 4', 1990 *ere received by her husband cannot be relied upon
because the private respondents did not adduce any evidence that petitionerTs husband did
really receive sub/ect letters. #t is also ne+ated by the fact that in later co""unications of
private respondents to the petitioner, no "ention *as ever "ade about her alle+ed
defalcation. #n a letter dated !ebruary ', 1991, or al"ost four ') "onths after the petitioner
*as reportedly infor"ed of the defalcation char+es a+ainst her on October 19, 1990, no
"ention *as ever "ade of petitionerTs alle+ed accountabilities. $s a "atter of fact, the letter
/ust apprised petitioner of the a"ount of separation pay due her, and of the decision of the
co"pany to deduct therefro" the a"ount o*in+ fro" the vehicle she ac=uired fro" the
co"pany under a leasin+ unit planA
C--- the net a"ount due you at PesosA T*elve Thousand T*o <undred T*enty.
Three and t*enty centavos P14, 44;.40).
--- --- ---
--- *e *ill deduct the correspondin+ fees includin+ that for co"pulsory TP3
fro" your separation pay. ---.
6e *ill be preparin+ the separation pay after the re+istration has been rene*ed
and this *ill be for*arded to you i""ediately to+ether *ith the =uit clai" *hich
*ill serve as clearance for the branch to release your >C after you have si+ned
the sa"e.
--- --- ---CD10E
$nd in the follo*in+ letter sent to petitioner on 7anuary 1', 1991, reiteratin+ the co"panyTs
decision to ter"inate her for health reasons, the co"pany even assured her that she *ould
still be considered for any future vacancy in the co"pany, to *itA
C6e are +lad that you have already recovered althou+h partially, and rest
assured that once you *ill beco"e co"pletely healed in the future and certified
by your doctor to be physically fit to return to *ork, *e *ill still consider you for
any vacancy in the co"pany. --- --- ---CD11E
#f it *ere true that petitioner *as +uilty of "isappropriation of co"pany funds and she *as
ter"inated for loss of trust and confidence, *hy did respondent ?orkis still pro"ise petitioner
a future e"ploy"ent in the co"pany. @ntenable is respondentsT contention that *hen they
ter"inated petitioner for health reasons, they intentionally did not "ake "ention of the alle+ed
defalcation because they *anted to +ive petitioner a +raceful e-it fro" the co"pany.
8efalcation or "isappropriation of co"pany funds if true is too serious an offense and breach
of trust not to be e-posed at the first opportunity.
#n the case of 'rtemio Labor, et a". vs. !LR#, Go"d #it1 #ommercia" #omp"e+, Inc. and Rud1
?1,D14E this Court held that the ri+ht of an e"ployer to dis"iss e"ployees on the +round of
loss of trust and confidence "ust not be e-ercised arbitrarily and *ithout /ust cause. !or loss
of trust and confidence to be a valid +round for dis"issal of an e"ployee, it "ust be
substantial and founded on clearly established facts sufficient to *arrant the e"ployeeTs
separation fro" e"ploy"ent. 3oss of confidence "ust not be used as a subterfu+e for
causes *hich are i"proper, ille+al or un/ustifiedF it "ust be +enuine, not a "ere afterthou+ht,
to /ustify earlier action taken in bad faith.D1;E 2ecause of its sub/ective nature, this Court has
been very scrutini0in+ in cases of dis"issal based on loss of trust and confidence because
the sa"e can easily be concocted by an abusive e"ployer. Thus, *hen the breach of trust or
loss of confidence theori0ed upon is not borne by clearly established facts, such dis"issal on
the +round of loss and confidence cannot be allo*ed. #n the case under consideration,
evidence is utterly *antin+ as to the defalcation alle+edly perpetrated by the petitioner.
Conse=uently, her dis"issal on the +round of loss of confidence cannot be countenanced.
6hat is "ore, as inti"ated by petitioner, private respondents *ere re"iss in their duty to
afford her due process. $n e"ployee "ay only be dis"issed for /ust or authori0ed causes and
the le+ality of dis"issal of an e"ployee hin+es onA a) the le+ality of the act of dis"issalF that
is dis"issal on the +rounds provided for under $rticle 45; no* 454) of the ?e* 3abor Code
and b) the le+ality in the "anner of dis"issal.D1'E The la* re=uires that an e"ployee sou+ht
to be dis"issed "ust be served t*o *ritten notices before ter"ination of his e"ploy"ent.
The first notice is to apprise the e"ployee of the particular acts or o"issions by reason of
*hich his dis"issal has been decided uponF and the second notice is to infor" the e"ployee
of the e"ployerTs decision to dis"iss hi". !ailure to co"ply *ith the re=uire"ent of t*o
notices "akes the dis"issal ille+al. The procedure is "andatory. ?on.observance thereof
renders the dis"issal of an e"ployee ille+al and void.D1BE
&ecords on hand sho* that prior to the letter of ter"ination afore"entioned, petitioner *as
never notified, throu+h a "e"o or letter, of the "issin+ funds alluded to. ?either *as she
re=uired to +ive her side re+ardin+ the alle+ed "isappropriation or defalcation of co"pany
funds bein+ i"puted to her. $s pointed out by the %olicitor Heneral, petitioner *as never
served *ith notices by the private respondents, verbally or in *ritin+, to infor" her of the
char+es a+ainst her and to re=uire her to ans*er such char+es. #t bears stressin+ that the
respondents failed to establish that sub/ect letter of October 19, 1990 *as received by
petitioner or her husband. $s a "atter of fact, fro" the evidence it can be +leaned that the
said letter *as antedated so as to fei+n co"pliance *ith le+al re=uire"ents.
There is "erit in petitionerTs sub"ission that the a*ard of "oral and e-e"plary da"a+es in
her favor is *arranted by her un/ustified dis"issal. $*ard of "oral and e-e"plary da"a+es
for an ille+ally dis"issed e"ployee is proper *here the e"ployee had been harrassed and
arbitrarily ter"inated by the e"ployer.D16E >oral da"a+es "ay be a*arded to co"pensate
one for diverse in/uries such as "ental an+uish, bes"irched reputation, *ounded feelin+s
and social hu"iliation occasioned by the e"ployerTs unreasonable dis"issal of the e"ployee.
This Court has consistently accorded the *orkin+ class a ri+ht to recover da"a+es for un/ust
dis"issals tainted *ith bad faithF *here the "otive of the e"ployer in dis"issin+ the
e"ployee is far fro" noble. The a*ard of such da"a+es is based not on the 3abor Code but
on $rticle 440 of the Civil Code. <o*ever, under the attendant facts and circu"stances, the
Court is of the sense that the a"ount of One <undred T*enty Thousand P140,000.00)
Pesos a*arded by the 3abor $rbiter for "oral and e-e"plary da"a+es is too "uch. !ifty
Thousand PB0,000.00) Pesos of "oral da"a+es and Ten Thousand P10,000.00) Pesos of
e-e"plary da"a+es should suffice.
>HEREFORE, the petition is H&$?T98F the resolution of ?ational 3abor &elations
Co""ission in ?3&C Case ?o. >.001'B5.9; is %9T $%#89F and the resolution of the 3abor
$rbiter dated >ay 45, 199;, in ?3&C &$2 Case ?o. 10.0;.00411.91 is hereby
&9#?%T$T98, *ith the "odification that the a*ard of da"a+es is reduced to !ifty Thousand
PB0,000.00) Pesos, as "oral da"a+es, and Ten Thousand P10,000.00) Pesos, as
e-e"plary da"a+es. Costs a+ainst ?orkis 8istributors, #nc.
SO ORDERED.
Me"o, (#hairman), /itu$, and Gon,a$a:Re1es, --., concur.
%an$aniban, -., no part, for"er partner of a party,s counsel.
;G.R. No. 1(0/)0 A#<#9' 11, 2010=
PHIM*O IND+STRIES, IN*., PETITIONER, VS. PHIM*O IND+STRIES LA1OR
ASSO*IATION >PILA?, AND ERLINDA VA2-+E2, RI*ARDO @A SA*RISTAN, LEONIDA
*ATALAN, MABIMO PEDRO, NATHANIELA DIMA*+LANGAN,C RODOLFO MO5I*O,
ROMEO *ARAMAN2A, RE.NALDO GANITANO, AL1ERTO 1AS*ON*ILLO,CC AND
RAMON FAL*IS, IN THEIR *APA*IT. AS OFFI*ERS OF PILA, AND ANGELITA
1ALOSA,CCC DANILO 1ANAAG, A1RAHAM *ADA., ALFONSO *LA+DIO, FRAN*IS*O
DALISA.,CCCC ANGELITO DE5AN,CCCCC PHILIP GAR*ES, NI*ANOR ILAGAN,
FLOREN*IO LI1ONG*OGON,CCCCCC NEMESIO MAMONONG, TEOFILO MANALILI,
ALFREDO PEARSON,CCCCCCC MARIO PEREA,CCCCCCCC RENATO RAMOS, MARIANO
ROSALES, PA1LO SARMIENTO, RODOLFO TOLENTINO, FELIPE VILLAREAL,
ARSENIO 2AMORA, DANILO 1ALTA2AR, ROGER *A1ER,CCCCCCCCC RE.NALDO
*AMARIN, 1ERNARDO *+ADRA,CCCCCCCCCC ANGELITO DE G+2MAN, GERARDO
FELI*IANO,CCCCCCCCCCC ALEB I1ADEE2, 1EN5AMIN 5+AN, SR., RAMON MA*AALA.,
GON2ALO MANALILI, RA+L MI*IANO, HILARIO PEDEA, TERESA
PERMO*ILLO,CCCCCCCCCCCC ERNESTO RIO, RODOLFO SANIDAD, RAFAEL STA. ANA,
5+LIAN T+G+IN AND AMELIA 2AMORA, AS MEM1ERS OF PILA, RESPONDENTS.
D E * I S I O N
1RION, *.
4efore us is the petition for revie# on certiorariNO filed by petitioner Phimco Industries, Inc.
$,2$CO%, see3ing to reverse and set aside the decision,N)O dated February (, )((!, and the
resolution,N=O dated 5ecember ), )((', of the Court of ,ppeals $CA% in C,--.E. 6P <o. "(==+. The
assailed C, decision dismissed P0IMCA/s petition for certiorari that challenged the resolution, dated
5ecember )>, >>;, and the decision, dated February )(, )((), of the <ational @abor Eelations
Commission $3!-C%1 the assailed C, resolution denied P0IMCA/s subse7uent motion for
reconsideration.
FA*T+AL 1A*4GRO+ND
The facts of the case, gathered from the records, are briefly summari?ed belo#.
P0IMCA is a corporation engaged in the production of matches, #ith principal address at Phimco
Compound, Feli* Manalo 6t., 6ta. ,na, Manila. Eespondent Phimco Industries @abor ,ssociation
$2!A% is the duly authori?ed bargaining representative of P0IMCA/s daily-paid #or3ers. The !"
individually named respondents are PI@, officers and members.
9hen the last collective bargaining agreement #as about to e*pire on 5ecember =, >>!, P0IMCA
and PI@, negotiated for its rene#al. The negotiation resulted in a deadloc3 on economic issues, mainly
due to disagreements on salary increases and benefits.
An March >, >>', PI@, filed #ith the <ational Conciliation and Mediation 4oard $3C$B? a <otice
of 6tri3e on the ground of the bargaining deadloc3. 6even $"% days later, or on March +, >>', the
union conducted a stri3e vote1 a majority of the union members voted for a stri3e as its response to the
bargaining impasse. An March ", >>', PI@, filed the stri3e vote results #ith the <CM4. Thirty-five
$='% days later, or on ,pril ), >>', PI@, staged a stri3e.
An May =, >>', P0IMCA filed #ith the <@EC a petition for preliminary injunction and temporary
restraining order $+-O%, to enjoin the stri3ers from preventing - through force, intimidation and
coercion - the ingress and egress of non-stri3ing employees into and from the company premises. An
May ', >>', the <@EC issued an e)-parte TEA, effective for a period of t#enty $)(% days, or until
Cune ', >>'.
An Cune )=, >>', P0IMCA sent a letter to thirty-si* $=+% union members, directing them to e*plain
#ithin t#enty-four $)!% hours #hy they should not be dismissed for the illegal acts they committed
during the stri3e. Three days later, or on Cune )+, >>', the thirty-si* $=+% union members #ere
informed of their dismissal.
An Culy +, >>', PI@, filed a complaint for unfair labor practice and illegal dismissal $ille"al dis'issal
case% #ith the <@EC. The case #as doc3eted as <@EC <CE Case <o. ((-("-(!"('->', and raffled to
@abor ,rbiter $!A% Pablo C. 8spiritu, Cr.
An Culy ", >>', then ,cting @abor 6ecretary Cose 6. 4rillantes assumed jurisdiction over the labor
dispute, and ordered all the stri3ing employees $e*cept those #ho #ere handed termination papers on
Cune )+, >>'% to return to #or3 #ithin t#enty-four $)!% hours from receipt of the order. The 6ecretary
ordered P0IMCA to accept the stri3ing employees, under the same terms and conditions prevailing
prior to the stri3e.N!O An the same day, PI@, ended its stri3e.
An ,ugust );, >>', P0IMCA filed a Petition to 5eclare the 6tri3e Illegal $ille"al stri&e case% #ith the
<@EC, #ith a prayer for the dismissal of PI@, officers and members #ho 3no#ingly participated in
the illegal stri3e. P0IMCA claimed that the stri3ers prevented ingress to and egress from the P0IMCA
compound, thereby paraly?ing P0IMCA/s operations. The case #as doc3eted as <@EC <CE Case <o.
((-(;-(+(=->', and raffled to @, Covencio @l. Mayor.
An March !, >>+, the respondents filed their Position Paper in the illegal stri3e case. They countered
that they complied #ith all the legal re7uirements for the staging of the stri3e, they put up no barricade,
and conducted their stri3e peacefully, in an orderly and la#ful manner, #ithout incident.
@, Mayor decided the case on February !, >>;,N'O and found the stri3e illegal1 the respondents
committed prohibited acts during the stri3e by bloc3ing the ingress to and egress from P0IMCA/s
premises and preventing the non-stri3ing employees from reporting for #or3. 0e observed that it #as
not enough that the pic3et of the stri3ers #as a moving pic3et, since the stri3ers should allo# the free
passage to the entrance and e*it points of the company premises. Thus, @, Mayor declared that the
respondent employees, PI@, officers and members, have lost their employment status.
An March ', >>;, PI@, and its officers and members appealed @, Mayor/s decision to the <@EC.
THE NLR* R+LING
The <@EC decided the appeal on 5ecember )>, >>;, and set aside @, Mayor/s decision.N+O The
<@EC did not give #eight to P0IMCA/s evidence, and relied instead on the respondents/ evidence
sho#ing that the union conducted a peaceful moving pic3et.
An Canuary );, >>>, P0IMCA filed a motion for reconsideration in the illegal stri3e case.N"O
In a parallel development, @, 8spiritu decided the union/s illegal dismissal case on March ), >>>. 0e
ruled the respondents/ dismissal as illegal, and ordered their reinstatement #ith payment of bac3#ages.
P0IMCA appealed @, 8spiritu/s decision to the <@EC.
Pending the resolution of P0IMCA/s motion for reconsideration in the illegal stri3e case and the appeal
of the illegal dismissal case, P0IMCA moved for the consolidation of the t#o $)% cases. The <@EC
acted favorably on the motion and consolidated the t#o $)% cases in its Arder dated ,ugust ', >>>.
An February )(, )((), the <@EC rendered its 5ecision in the consolidated cases, ruling totally in the
union/s favor.N;O It dismissed the appeal of the illegal dismissal case, and denied P0IMCA/s motion for
reconsideration in the illegal stri3e case. The <@EC found that the pic3et conducted by the stri3ing
employees #as not an illegal bloc3ade and did not obstruct the points of entry to and e*it from the
company/s premises1 the pictures submitted by the respondents revealed that the pic3et #as moving,
not stationary. 9ith respect to the illegal dismissal charge, the <@EC observed that the stri3ing
employees #ere not given ample opportunity to e*plain their side after receipt of the Cune )=, >>'
letter. Thus, the <@EC affirmed the 5ecision of @, 8spiritu #ith respect to the payment of bac3#ages
until the promulgation of the decision, plus separation pay at one $% month salary per year of service in
lieu of reinstatement, and (I of the monetary a#ard as attorney/s fees. It ruled out reinstatement
because of the damages sustained by the company brought about by the stri3e.
An March !, )((), P0IMCA filed a motion for reconsideration of the consolidated decision.
An ,pril )+, )((), #ithout #aiting for the result of its motion for reconsideration, P0IMCA elevated
its case to the C, through a petition for certiorari under Eule +' of the Eules of Court.N>O
THE *A R+LING
In a 5ecisionN(O promulgated on February (, )((!, the C, dismissed P0IMCA/s petition for
certiorari. The C, noted that the <@EC findings, that the pic3et #as peaceful and that P0IMCA/s
evidence failed to sho# that the pic3et constituted an illegal bloc3ade or that it obstructed the points of
entry to and e*it from the company premises, #ere supported by substantial evidence.
P0IMCA came to us through the present petition after the C, deniedNO

P0IMCA/s motion for
reconsideration.N)O
THE PETITION
The petitioner argues that the stri3e #as illegal because the respondents committed the prohibited acts
under ,rticle )+!$e% of the @abor Code, such as bloc3ing the ingress and egress of the company
premises, threat, coercion, and intimidation, as established by the evidence on record.
THE *ASE FOR THE RESPONDENTS
The respondents, on the other hand, submit that the issues raised in this case are factual in nature that
#e cannot generally touch in a petition for revie#, unless compelling reasons e*ist1 the company has
not sho#n any such compelling reason as the pic3et #as peaceful and uneventful, and no human
barricade bloc3ed the company premises.
THE ISS+E
In $ontoya v. +rans'ed $anila Corporation,N=O #e laid do#n the basic approach that should be
follo#ed in the revie# of C, decisions in labor cases, thus.
In a Eule !' revie#, #e consider the correctness of the assailed C, decision, in contrast
#ith the revie# for jurisdictional error that #e underta3e under Eule +'. Furthermore, Eule
!' limits us to the revie# of 7uestions of la# raised against the assailed C, decision. In
ruling for legal correctness, #e have to vie# the C, decision in the same conte*t that the
petition for certiorari it ruled upon #as presented to it1 #e have to e*amine the C, decision
from the prism of #hether it correctly determined the presence or absence of grave abuse of
discretion in the <@EC decision before it, not on the basis of #hether the <@EC decision
on the merits of the case #as correct. In other #ords, #e have to be 3eenly a#are that the
C, undertoo3 a Eule +' revie#, not a revie# on appeal, of the <@EC decision challenged
before it. This is the approach that should be basic in a Eule !' revie# of a C, ruling in a
labor case. In 7uestion form, the 7uestion to as3 is. 5id the C, correctly determine #hether
the <@EC committed grave abuse of discretion in ruling on the caseB
In this light, the core issue in the present case is #hether the C, correctly ruled that the <@EC did not
act #ith grave abuse of discretion in ruling that the union/s stri3e #as legal.
O+R R+LING
/e find the petition partly meritorious.
!e3uisites of a alid stri2e
, stri3e is the most po#erful #eapon of #or3ers in their struggle #ith management in the course of
setting their terms and conditions of employment. 4ecause it is premised on the concept of economic
#ar bet#een labor and management, it is a #eapon that can either breathe life to or destroy the union
and its members, and one that must also necessarily affect management and its members.N!O
In light of these effects, the decision to declare a stri3e must be e*ercised responsibly and must al#ays
rest on rational basis, free from emotionalism, and uns#ayed by the tempers and tantrums of hot heads1
it must focus on legitimate union interests. To be legitimate, a stri3e should not be antithetical to public
#elfare, and must be pursued #ithin legal bounds. The right to stri3e as a means of attaining social
justice is never meant to oppress or destroy anyone, least of all, the employer.N'O
6ince stri3es affect not only the relationship bet#een labor and management but also the general peace
and progress of the community, the la# has provided limitations on the right to stri3e. Procedurally, for
a stri3e to be valid, it must comply #ith ,rticle )+=N+O of the @abor Code, #hich re7uires that. $a% a
notice of stri3e be filed #ith the 5epartment of @abor and 8mployment $%O!0% =( days before the
intended date thereof, or ' days in case of unfair labor practice1 $b% a stri3e vote be approved by a
majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in a
meeting called for that purpose1 and $c% a notice be given to the 5A@8 of the results of the voting at
least seven days before the intended stri3e.
These re7uirements are mandatory, and the union/s failure to comply renders the stri3e illegal. N"O The
' to =(-day cooling-off period is designed to afford the parties the opportunity to amicably resolve the
dispute #ith the assistance of the <CM4 conciliatorHmediator, #hile the seven-day stri3e ban is
intended to give the 5A@8 an opportunity to verify #hether the projected stri3e really carries the
imprimatur of the majority of the union members.N;O
In the present case, the respondents fully satisfied the legal procedural re7uirements1 a stri3e notice #as
filed on March >, >>'1 a stri3e vote #as reached on March +, >>'1 notification of the stri3e vote
#as filed #ith the 5A@8 on March ", >>'1 and the actual stri3e #as launched only on ,pril )',
>>'.
Stri2e may be illegal for commission of prohibited acts
5espite the validity of the purpose of a stri3e and compliance #ith the procedural re7uirements, a stri3e
may still be held illegal #here the means employed are illegal.N>O The means become illegal #hen
they come #ithin the prohibitions under ,rticle )+!$e% of the @abor Code #hich provides.
<o person engaged in pic3eting shall commit any act of violence, coercion or intimidation
or obstruct the free ingress to or egress from the employer/s premises for la#ful purposes,
or obstruct public thoroughfares.
1a9!8 o6 o#r !Fa:&6a'&o6 oG 'h! !H&8!6c! Ih&ch 'h! LA H&!I!8 8&GG!r!6'%7 Gro: 'h! NLR* a68
'h! *A, I! G&68 'h! PILA 9'r&J! &%%!<a%. 9e intervene and rule even on the evidentiary and factual
issues of this case as both the <@EC and the C, grossly misread the evidence, leading them to
inordinately incorrect conclusions, both factual and legal. 9hile the stri3e undisputably had not been
marred by actual violence and patent intimidation, the pic3eting that respondent PI@, officers and
members undertoo3 as part of their stri3e activities effectively bloc3ed the free ingress to and egress
from P0IMCA/s premises, thus preventing non-stri3ing employees and company vehicles from
entering the P0IMCA compound. In this manner, the pic3eters violated ,rticle )+!$e% of the @abor
Code.
The Eidence
9e gather from the case record the follo#ing pieces of relevant evidence adduced in the compulsory
arbitration proceedings.N)(O
(or the Company
. Pictures ta3en during the stri3e, sho#ing that the respondents prevented free ingress to and egress
from the company premises1N)O
). ,ffidavit of P0IMCA 0uman Eesources Manager Francis Ferdinand Cinco, stating that he #as one
of the employees prevented by the stri3ers from entering the P0IMCA premises1N))O
=. ,ffidavit of Cinco, identifying 8rlinda 2a?7ue?, Eicardo 6acristan, @eonida Catalan, Ma*imo Pedro,
<athaniela E. 5imaculangan, Eodolfo Mojico, Eomeo Caraman?a, Eeynaldo -anitano, ,lberto
4asconcillo, and Eamon Falcis as PI@, officers1N)=O
!. ,ffidavit of Cinco identifying other members of PI@,1N)!O
'. Folder , containing pictures ta3en during the stri3e identifying and sho#ing @eonida Catalan,
Eenato Eamos, ,rsenio Pamora, Eeynaldo -anitano, ,melia Pamora, ,ngelito 5ejan, Teresa
Permocillo, and Francisco 5alisay as the persons preventing Cinco and his group from entering the
company premises1N)'O
+. Folder ), #ith pictures ta3en on May =(, >>', sho#ing Cinco, together #ith non-stri3ing P0IMCA
employees, reporting for #or3 but being refused entry by stri3ers Teofilo Manalili, <athaniela
5imaculangan, 4ernando Cuadra, Ma*imo Pedro, <icanor Ilagan, Culian Tuguin, <emesio Mamonong,
,braham Caday, 8rnesto Eio, 4enjamin Cuan, 6r., Eamon Macaalay, -erardo Feliciano, ,lberto
4asconcillo, Eodolfo 6anidad, Mariano Eosales, Eoger Caber, ,ngelito de -u?man, ,ngelito 4alosa
and Philip -arces #ho bloc3ed the company gate1N)+O
". Folder =, #ith pictures ta3en on May =(, >>', sho#ing the respondents denying free ingress to and
egress from the company premises1N)"O
;. Folder !, #ith pictures ta3en during the stri3e, sho#ing that non-stri3ing employees failed to enter
the company premises as a result of the respondents/ refusal to let them in1N);O
>. ,ffidavit of Coa7uin ,guilar stating that the pictures presented by Cinco #ere ta3en during the stri3e1
N)>O
(. Pictures ta3en by ,guilar during the stri3e, sho#ing non-stri3ing employees being refused entry by
the respondents1N=(O
. Coint affidavit of Arlando Marfil and Eodolfo 5igo, identifying the pictures they too3 during the
stri3e, sho#ing that the respondents bloc3ed ingress to and egress from the company premises1N=O
and,
). Testimonies of P0IMCA employees Eodolfo 8va, ,guilar and Cinco, as #ell as those of PI@,
officers Ma*imo Pedro and @eonida Catalan.
(or the !espondents
. ,ffidavit of @eonida Catalan, stating that the PI@, stri3e complied #ith all the legal re7uirements,
and the stri3eHpic3et #as conducted peacefully #ith no incident of any illegality1N=)O
). ,ffidavit of Ma*imo Pedro, stating that the stri3eHpic3et #as conducted peacefully1 the pic3et #as
al#ays moving #ith no acts of illegality having been committed during the stri3e1N==O
=. Certification of Police 6tation Commander 4ienvenido de los Eeyes that during the stri3e there #as
no report of any unto#ard incident1N=!O
!. Certification of Eev. Father 8ric3 ,deviso of 5ambanang 4ayan Parish Church that the stri3e #as
peaceful and #ithout any unto#ard incident1N='O
'. Certification of Priest-In-Charge ,ngelito Fausto of the Philippine Independent Church in Punta,
6anta ,na, that the stri3e complied #ith all the re7uirements for a la#ful stri3e, and the stri3ers
conducted themselves in a peaceful manner1N=+O
+. Clearance issued by unon" Baran"ay Mario A. dela Eosa and Baran"ay 6ecretary Pascual
-esmundo, Cr. that the stri3e from ,pril ) to Culy ", >>' #as conducted in an orderly manner #ith no
complaints filed1N="O and,
". Testimonies at the compulsory arbitration proceedings.
In its resolution of 5ecember )>, >>;,N=;O the <@EC declared that &the string of proofs& the company
presented #as &over#helmingly counterbalanced by the numerous pieces of evidence adduced by
respondents * * * all depicting a common story that respondents put up a peaceful moving pic3et, and
did not commit any illegal acts * * * specifically obstructing the ingress to and egress from the
company premisesN.O&N=>O
3! 8&9a<r!! I&'h 'h&9 G&68&6< as the purported &peaceful moving pic3et& upon #hich the <@EC
resolution #as anchored #as not an innocuous pic3et, contrary to #hat the <@EC said it #as1 the
pic3et, under the evidence presented, did effectively obstruct the entry and e*it points of the company
premises on various occasions.
To stri3e is to #ithhold or to stop #or3 by the concerted action of employees as a result of an industrial
or labor dispute.N!(O The #or3 stoppage may be accompanied by pic3eting by the stri3ing employees
outside of the company compound. 9hile a stri3e focuses on stoppage of #or3, pic3eting focuses on
publici?ing the labor dispute and its incidents to inform the public of #hat is happening in the company
struc3 against. , pic3et simply means to march to and from the employer/s premises, usually
accompanied by the display of placards and other signs ma3ing 3no#n the facts involved in a labor
dispute.N!O It is a stri3e activity separate and different from the actual stoppage of #or3.
9hile the right of employees to publici?e their dispute falls #ithin the protection of freedom of
e*pressionN!)O and the right to peaceably assemble to air grievances,N!=O these rights are by no means
absolute. Protected pic3eting does not e*tend to bloc3ing ingress to and egress from the company
premises.N!!O That the pic3et #as moving, #as peaceful and #as not attended by actual violence may
not free it from taints of illegality if the pic3et effectively bloc3ed entry to and e*it from the company
premises.
In this regard, P0IMCA employees Eodolfo 8va and Coa7uin ,guilar, and the company/s 0uman
Eesources Manager Francis Ferdinand Cinco testified during the compulsory arbitration hearings.
,TTF. E8F86. this incident on May )), >>', #hen a coaster or bus attempted to enter
P0IMCA compound, you mentioned that it #as refused entry. 9hy #as this $sic% it refused
entryB
9IT<866. 4ecause at that time, there #as a moving pic3et at the gate that is #hy the bus
#as not able to enter.N!'O
* * * *
Q. 5espite this TEA, #hich #as issued by the <@EC, #ere you allo#ed entry by the
stri3ersB
,. 9e made several attempts to enter the compound, I remember on May ", >>', #e tried
to enter the P0IMCA compound but #e #ere not allo#ed entry.
Q. ,side from May )", >>', #ere there any other instances #herein you #ere not allo#ed
entry at P0IMCA compoundB
,. An May )>, I recall I #as riding #ith our Production Manager #ith the Pic3-up. 9e
tried to enter but #e #ere not allo#ed by the stri3ers.N!+O
* * * *
,E4IT8E M,FAE. 0o# did the stri3ers bloc3 the ingress of the companyB
,. They hold around, joining hands, moving pic3et.N!"O
* * * *
,E4IT8E M,FAE. Eeform the 7uestion, and because of that moving pic3et conducted by
the stri3ers, no employees or vehicles can come in or go out of the premisesB
,. <one, sir.N!;O
These accounts #ere confirmed by the admissions of respondent PI@, officers Ma*imo Pedro and
@eonida Catalan that the stri3ers prevented non-stri3ing employees from entering the company
premises. ,ccording to these union officers.
,TTF. C0:,. Mr. #itness, do you recall an incident #hen a group of managers of
P0IMCA, #ith several of the monthly paid employees #ho tried to enter the P0IMCA
compound during the stri3eB
ME. P85EA. Fes, sir.
,TTF. C0:,. Can you tell us if these $sic% group of managers headed by Francis Cinco
entered the compound of P0IMCA on that day, #hen they tried to enterB
ME. P85EA. <o, sir. They #ere not able to enter.N!>O
* * * *
,TTF. C0:,. 5espite having been escorted by police 5elos Eeyes, you still did not give
#ay, and instead proceeded #ith your moving pic3etB
ME. P85EA. Fes, sir.
,TTF. C0:,. In short, these people #ere not able to enter the premises of P0IMCA, Fes
or <o.
ME. P85EA. Fes, sir.N'(O
* * * *
,TTF. C0:,. Madam #itness, even if Major 5elos Eeyes instructed you to give #ay so
as to allo# the employees and managers to enter the premises, you and your co-employees
did not give #ayB
M6. C,T,@,<. <o sir.
,TTF. C0:,. the managers and the employees #ere not able to enter the premisesB
M6. C,T,@,<. Fes, sir.N'O
The <@EC resolution itself noted the above testimonial evidence, &all building up a scenario that the
moving pic3et put up by NtheO respondents obstructed the ingress to and egress from the company
premisesN,O&N')O yet it ignored the clear import of the testimonies as to the true nature of the pic3et.
Contrary to the <@EC characteri?ation that it #as a &peaceful moving pic3et,& it stood, in fact, as an
obstruction to the company/s points of ingress and egress.
6ignificantly, the testimonies adduced #ere validated by the photographs ta3en of the stri3e area,
capturing the stri3e in its various stages and sho#ing ho# the stri3ers actually conducted the pic3et.
9hile the pic3et #as moving, it #as maintained so close to the co'pany "ates that it virtually
constituted an obstruction, especially #hen the stri3ers joined hands, as described by ,guilar, or #ere
moving in circles, hand-to-shoulder, as sho#n by the photographs, that, for all intents and purposes,
bloc3ed the free ingress to and egress from the company premises. In fact, on closer e*amination, it
could be seen that the respondents (ere conductin" the pic&et ri"ht at the co'pany "ates.N'=O
The obstructive nature of the pic3et #as aggravated by the place'ent of benches, #ith stri3ers standing
on top, directly in front of the open #ing of the company gates, clearly obstructin" the entry and e)it
points of the co'pany co'pound.N'!O
9ith a virtual human bloc3ade and real physical obstructions $benches and ma3eshift structures both
outside and inside the gates%,N''O it #as pure conjecture on the part of the <@EC to say that &NtOhe non-
stri3ers and their vehicles #ere * * * free to get in and out of the company compound undisturbed by
the pic3et line.&N'+O <otably, aside from non-stri3ers #ho #ished to report for #or3, company
vehicles li3e#ise could not enter and get out of the factory because of the pic3et and the physical
obstructions the respondents installed. The bloc3ade #ent to the point of causing the build up of traffic
in the immediate vicinity of the stri3e area, as sho#n by photographs.N'"O This, by itself, renders the
pic3et a prohibited activity. Pic3ets may not aggressively interfere #ith the right of peaceful ingress to
and egress from the employer/s shop or obstruct public thoroughfares1 pic3eting is not peaceful #here
the side#al3 or entrance to a place of business is obstructed by pic3eters parading around in a circle or
lying on the side#al3.N';O
9hat the records reveal belies the <@EC observation that &the evidence * * * tends to sho# that #hat
respondents actually did #as #al3ing or patrolling to and fro #ithin the company vicinity and by #ord
of mouth, banner or placard, informing the public concerning the dispute.&N'>O
The &peaceful moving pic3et& that the <@EC noted, influenced apparently by the certifications $Mayor
delos Eeyes, Fr. ,deviso, Fr. Fausto and Baran"ay 6ecretary -esmundo presented in evidence by the
respondents, #as &peaceful& only because of the absence of violence during the stri3e, but the
obstruction of the entry and e*it points of the company premises caused by the respondents/ pic3et #as
by no means a &petty bloc3ing act& or an &insignificant obstructive act.&N+(O
,s #e have stated, #hile the pic3et #as moving, the movement #as in circles, very close to the gates,
#ith the stri3ers in a hand-to-shoulder formation #ithout a brea3 in their ran3s, thus preventing non-
stri3ing #or3ers and vehicles from coming in and getting out. 6upported by actual bloc3ing benches
and obstructions, #hat the union demonstrated #as a very persuasive and 7uietly intimidating strategy
#hose chief aim #as to paraly?e the operations of the company, not solely by the #or3 stoppage of the
participating #or3ers, but by e*cluding the company officials and non-stri3ing employees from access
to and e*it from the company premises. <o doubt, the stri3e caused the company operations
considerable damage, as the <@EC itself recogni?ed #hen it ruled out the reinstatement of the
dismissed stri3ers.N+O
Intimidation
,rticle )+!$e% of the @abor Code tells us that pic3eting carried on #ith violence, coercion or
intimidation is unla#ful.N+)O ,ccording to ,merican jurisprudence, #hat constitutes unla#ful
intimidation depends on the totality of the circumstances.N+=O Force threatened is the e7uivalent of
force e*ercised. There may be unla#ful intimidation #ithout direct threats or overt acts of violence.
9ords or acts #hich are calculated and intended to cause an ordinary person to fear an injury to his
person, business or property are e7uivalent to threats.N+!O
The manner in #hich the respondent union officers and members conducted the pic3et in the present
case had created such an intimidating atmosphere that non-stri3ing employees and even company
vehicles did not dare cross the pic3et line, even #ith police intervention. Those #ho dared cross the
pic3et line #ere stopped. The compulsory arbitration hearings bear this out.
Ma*imo Pedro, a PI@, officer, testified, on Culy =(, >>", that a group of P0IMCA managers led by
Cinco, together #ith several monthly-paid employees, tried to enter the company premises on May )",
>>' #ith police escort1 even then, the pic3eters did not allo# them to enter.N+'O@eonida Catalan,
another union officer, testified that she and the other pic3eters did not give #ay despite the instruction
of Police Major de los Eeyes to the pic3eters to allo# the group to enter the company premises.N++O
$To be sure, police intervention and participation are, as a rule, prohibited acts in a stri3e, but #e note
this intervention solely as indicators of ho# far the union and its members have gone to bloc3 ingress
to and egress from the company premises.%
Further, P0IMCA employee Eodolfo 8va testified that on May )), >>', a company coaster or bus
attempted to enter the P0IMCA compound but it #as refused entry by the &moving pic3et.&N+"O Cinco,
the company personnel manager, also testified that on May )", >>', (hen the 3!-C +-O (as in
force, he and other employees tried to enter the P0IMCA compound, but they #ere not allo#ed entry1
on May )>, >>', Cinco #as #ith the P0IMCA production manager in a pic3-up and they tried to enter
the company compound but, again, they #ere not allo#ed by the stri3ers.N+;O ,nother employee,
Coa7uin ,guilar, #hen as3ed ho# the stri3ers bloc3ed the ingress of the company, replied that the
stri3ers &hold around, joining hands, moving pic3et& and, because of the moving pic3et, no employee
or vehicle could come in and go out of the premises.N+>O
The evidence adduced in the present case cannot be ignored. An balance, it supports the company/s
submission that the respondent PI@, officers and members committed acts during the stri3e prohibited
under ,rticle )+!$e% of the @abor Code. The testimonies of non-stri3ing employees, #ho #ere
prevented from gaining entry into the company premises, and confirmed no less by t#o officers of the
union, are on record.
The photographs of the stri3e scene, also on record, depict the true character of the pic3et1 #hile
moving, it, in fact, constituted a human bloc3ade, obstructing free ingress to and egress from the
company premises, reinforced by benches planted directly in front of the company gates. The
photographs do not lie - these photographs clearly sho# that the pic3eters #ere going in circles,
#ithout any brea3 in their ran3s or closely bunched together, right in front of the gates. Thus, company
vehicles #ere unable to enter the company compound, and #ere bac3ed up several meters into the
street leading to the company gates.
5espite all these clear pieces of evidence of illegal obstruction, the <@EC loo3ed the other #ay and
chose not to see the unmista3able violations of the la# on stri3es by the union and its respondent
officers and members. <eedless to say, #hile the la# protects the rights of the laborer, it authori?es
neither the oppression nor the destruction of the employer.N"(O For grossly ignoring the evidence
before it, the <@EC committed grave abuse of discretion1 for supporting these gross <@EC errors, the
C, committed its o#n reversible error.
)iabilities of union
officers and members
In the determination of the liabilities of the individual respondents, the applicable provision is ,rticle
)+!$a% of the @abor Code.
,rt. )+!. rohibited activities. - $a% * * *
* * * *
,ny union officer #ho 3no#ingly participates in an illegal stri3e and any #or3er or union
officer #ho 3no#ingly participates in the commission of illegal acts during a stri3e may be
declared to have lost his employment status. Provided, That mere participation of a #or3er
in a la#ful stri3e shall not constitute sufficient ground for termination of his employment,
even if a replacement had been hired by the employer during such la#ful stri3e.
9e e*plained in Sa'ahan" $an""a"a(a sa Sulpicio !ines, 2nc.-3A1!U v. Sulpicio !ines, 2nc.N"O
that the effects of illegal stri3es, outlined in ,rticle )+! of the @abor Code, ma3e a distinction bet#een
participating #or3ers and union officers. The services of an ordinary stri3ing #or3er cannot be
terminated for mere participation in an illegal stri3e1 proof must be adduced sho#ing that he or she
committed illegal acts during the stri3e. The services of a participating union officer, on the other hand,
may be terminated, not only #hen he actually commits an illegal act during a stri3e, but also if he
3no#ingly participates in an illegal stri3e.N")O
In all cases, the stri3er must be identified. 4ut proof beyond reasonable doubt is not re7uired1
substantial evidence, available under the attendant circumstances, suffices to justify the imposition of
the penalty of dismissal on participating #or3ers and union officers as above described.N"=O
In the present case, respondents 8rlinda 2a?7ue?, Eicardo 6acristan, @eonida Catalan, Ma*imo Pedro,
<athaniela 5imaculangan, Eodolfo Mojico, Eomeo Caraman?a, Eeynaldo -anitano, ,lberto
4asconcillo,

and Eamon Falcis stand to be dis'issed as participating union officers, pursuant to
,rticle )+!$a%, paragraph =, of the @abor Code. This provision imposes the penalty of dismissal on
&any union officer #ho 3no#ingly participates in an illegal stri3e.& The la# grants the employer the
option of declaring a union officer #ho participated in an illegal stri3e as having lost his employment.
N"!O
P0IMCA #as able to individually identify the participating union members thru the affidavits of
P0IMCA employees Martimer PanisN"'O and Eodrigo ,. Arti?,N"+O and Personnel Manager Francis
Ferdinand Cinco,N""O and the photographsN";O of Coa7uin ,guilar. Identified #ere respondents ,ngelita
4alosa, 5anilo 4anaag, ,braham Caday, ,lfonso Claudio, Francisco 5alisay, ,ngelito 5ejan, Philip
-arces, <icanor Ilagan, Florencio @ibongcogon, <emesio Mamonong, Teofilo Manalili, ,lfredo
Pearson, Mario Perea, Eenato Eamos, Mariano Eosales, Pablo 6armiento, Eodolfo Tolentino, Felipe
2illareal, ,rsenio Pamora, 5anilo 4alta?ar, Eoger Caber, Eeynaldo Camarin, 4ernardo Cuadra,
,ngelito de -u?man, -erardo Feliciano, ,le* IbaRSe?, 4enjamin Cuan, 6r., Eamon Macaalay,
-on?alo Manalili, Eaul Miciano, 0ilario PeRSa, Teresa Permocillo, 8rnesto Eio, Eodolfo 6anidad,
Eafael 6ta. ,na, Culian Tuguin and ,melia Pamora as the union members #ho actively participated in
the stri3e by bloc3ing the ingress to and egress from the company premises and preventing the passage
of non-stri3ing employees. For participating in illegally bloc3ing ingress to and egress from company
premises, these union members stand to be dismissed for their illegal acts in the conduct of the union/s
stri3e.
P*I0C6 failed to obsere due process
9e find, ho#ever, that P0IMCA violated the re7uirements of due process of the @abor Code #hen it
dismissed the respondents.
:nder ,rticle )""$b%N">O of the @abor Code, the employer must send the employee, #ho is about to be
terminated, a #ritten notice stating the causeHs for termination and must give the employee the
opportunity to be heard and to defend himself.
9e e*plained in Suico v. 3ational !abor -elations Co''ission,N;(O that ,rticle )""$b%, in relation to
,rticle )+!$a% and $e% of the @abor Code recogni?es the right to due process of all #or3ers, #ithout
distinction as to the cause of their termination, even if the cause #as their supposed involvement in
stri3e-related violence prohibited under ,rticle )+!$a%

and $e% of the @abor Code.
To meet the re7uirements of due process in the dismissal of an employee, an employer must furnish
him or her #ith t#o $)% #ritten notices. $% a #ritten notice specifying the grounds for termination and
"ivin" the e'ployee a reasonable opportunity to e)plain his side and $)% another #ritten notice
indicating that, upon due consideration of all circumstances, grounds have been established to justify
the employer/s decision to dismiss the employee.N;O
In the present case, P0IMCA sent a letter, on Cune )=, >>', to thirty-si* $=+% union members,
generally directing them to e*plain #ithin t#enty-four $)!% hours #hy they should not be dismissed for
the illegal acts they committed during the stri3e1 three days later, or on Cune )+, >>', the thirty-si*
$=+% union members #ere informed of their dismissal from employment.
9e do not find this company procedure to be sufficient compliance #ith the due process re7uirements
that the la# guards ?ealously. It does not appear from the evidence that the union officers #ere
specifically informed of the charges against them and given the chance to e*plain and present their
side. 9ithout the specifications they had to respond to, they #ere arbitrarily separated from #or3 in
total disregard of their rights to due process and security of tenure.
,s to the union members, only thirty-si* $=+% of the thirty-seven $="% union members included in this
case #ere notified of the charges against them thru the letters dated Cune )=, >>', but they #ere not
given an ample opportunity to be heard and to defend themselves1 the notice of termination came on
Cune )+, >>', only three $=% days from the first notice - a perfunctory and superficial attempt to
comply #ith the notice re7uirement under the @abor Code. The short interval of time bet#een the first
and second notice spea3s for itself under the circumstances of this case1 mere to3en recognition of the
due process re7uirements #as made, indicating the company/s intent to dismiss the union members
involved, #ithout any meaningful resort to the guarantees accorded them by la#.
:nder the circumstances, #here evidence sufficient to justify the penalty of dismissal has been adduced
but the #or3ers concerned #ere not accorded their essential due process rights, our ruling in A"abon v.
3!-CN;)O finds full application1 the employer, despite the just cause for dismissal, must pay the
dismissed #or3ers nominal damages as indemnity for the violation of the #or3ers/ right to statutory
due process. Prevailing jurisprudence sets the amount of nominal damages at P=(,(((.((, #hich same
amount #e find sufficient and appropriate in the present case.N;=O
3HEREFORE, in light of all the foregoing, #e hereby REVERSE and SET ASIDE the decision
dated February (, )((! and the resolution dated 5ecember ), )((' of the Court of ,ppeals in C,-
-.E. 6P <o. "(==+, upholding the rulings of the <ational @abor Eelations Commission.
The 5ecision, dated February !, >>;, of @abor ,rbiter Covencio @l. Mayor should prevail and is
E8I<6T,T85 #ith the MA5IFIC,TIA< that 8rlinda 2a?7ue?, Eicardo 6acristan, @eonida Catalan,
Ma*imo Pedro, <athaniela 5imaculangan, Eodolfo Mojico, Eomeo Caraman?a, Eeynaldo -anitano,
,lberto 4asconcillo, Eamon Falcis, ,ngelita 4alosa, 5anilo 4anaag, ,braham Caday, ,lfonso
Claudio, Francisco 5alisay, ,ngelito 5ejan, Philip -arces, <icanor Ilagan, Florencio @ibongcogon,
<emesio Mamonong, Teofilo Manalili, ,lfredo Pearson, Mario Perea, Eenato Eamos, Mariano
Eosales, Pablo 6armiento, Eodolfo Tolentino, Felipe 2illareal, ,rsenio Pamora, 5anilo 4alta?ar, Eoger
Caber,

Eeynaldo Camarin, 4ernardo Cuadra, ,ngelito de -u?man, -erardo Feliciano, ,le* IbaRSe?,
4enjamin Cuan, 6r., Eamon Macaalay, -on?alo Manalili, Eaul Miciano, 0ilario PeRSa, Teresa
Permocillo, 8rnesto Eio, Eodolfo 6anidad, Eafael 6ta. ,na, Culian Tuguin, and ,melia Pamora are
each a#arded nominal damages in the amount of P=(,(((.((. <o pronouncement as to costs.
SO ORDERED.
*ar"&o Mora%!9, >*ha&r"!r9o6?, 1!r9a:&6, A$a8, a68 V&%%ara:a, 5r., 55., co6c#r.
FIE6T 5I2I6IA<

G.R. No. L:22559 August 29, 1975
DELFIN LIM $!( 'I1IL TAHA, plaintiffs.appellants,
vs.
FRANCISCO PONCE DE LEON AND ORLANDO MADDELA, defendants.appellees.
Ricardo L. Mana"i"i$ for p"aintiffs:appe""ants.
I<i$o R. %e<a for defendants:appe""ees.

MARTIN, J.:
$ppeal on a =uestion of la* fro" the decision of the Court of !irst #nstance of Pala*an in Civil Case ?o. '16, entitled C8elfin 3i" and 7ikil Taha vs. !rancisco
Ponce de 3eon and Orlando >addelaC, dis"issin+ the co"plaint of the plaintiffs and orderin+ the" to pay each of the defendants /ointly and severally the su" of
PB00.00 by *ay of actual da"a+esF PB00.00 by *ay of attorney,s feesF and P1,000.00 by *ay of e-e"plary da"a+es.
On $pril 49, 1961, plaintiff.appellant 7ikil Taha sold to a certain $lberto Ti"ban+caya of 2rooke,s Point, Pala*an a "otor launch na"ed >N3 C%$? &$!$93C. $
year later or on $pril 9, 1964 $lberto Ti"ban+caya filed a co"plaint *ith the Office of the Provincial !iscal of Pala*an alle+in+ that after the sale 7ikil Taha
forcibly took a*ay the "otor launch fro" hi".
On >ay 1', 1964, after conductin+ a preli"inary investi+ation, !iscal !rancisco Ponce de 3eon in his capacity as $ctin+ Provincial !iscal of Pala*an, filed *ith
the Court of !irst #nstance of Pala*an the correspondin+ infor"ation for &obbery the !orce and #nti"idation upon Persons a+ainst 7ikil Taha. The case *as
docketed as Cri"inal Case ?o. 4(19.
On 7une 1B, 1964, !iscal !rancisco Ponce de 3eon, upon bein+ infor"ed that the "otor launch *as in 2alabac, Pala*an, *rote the Provincial Co""ander of
Pala*an re=uestin+ hi" to direct the detach"ent co""ander.in 2alabac to i"pound and take custody of the "otor launch.
1

On 7une 46, 1964, !iscal Ponce de 3eon reiterated his re=uest to the Provincial Co""ander to i"pound the
"otor launch, e-plainin+ that its subse=uent sale to a third party, plaintiff.appellant 8elfin 3i", cannot prevent the
court fro" takin+ custody of the sa"e.
2
%o, on 7uly 6, 1964 upon order of the Provincial Co""ander,
defendant.appellee Orlando >addela, 8etach"ent Co""ander of 2alabac, Pala*an, sei0ed the "otor launch
C%$? &$!$93C fro" plaintiff.appellant 8elfin 3i" and i"pounded it.
On 7uly 1B, 1964 plaintiff.appellant 8elfin 3i" pleaded *ith Orlando >addela to return the "otor launch but the
latter refused. 3ike*ise, on %epte"ber 40, 1964, 7ikil Taha throu+h his counsel "ade representations *ith !iscal
Ponce de 3eon to return the sei0ed property to plaintiff.appellant 8elfin 3i" but !iscal Ponce de 3eon refused,
on the +round that the sa"e *as the sub/ect of a cri"inal offense.
$ll efforts to recover the "otor launch +oin+ to nau+ht, plaintiffs.appellants 8elfin 3i" and 7ikil Taha, on
?ove"ber 19, 1964, filed *ith the Court of !irst #nstance of Pala*an a co"plaint for da"a+es a+ainst
defendants.appellees !iscal !rancisco Ponce de 3eon and Orlando >addela, alle+in+ that on 7uly 6, 1964
Orlando >addela entered the pre"ises of 8elfin 3i" *ithout a search *arrant and then and there took a*ay the
hull of the "otor launch *ithout his consentF that he effected the sei0ure upon order of !iscal Ponce de 3eon
*ho kne* fully *ell that his office *as not vested *ith authority to order the sei0ure of a private propertyF that
said "otor launch *as purchased by 8elfin 3i" fro" 7ikil Taha in consideration of Three Thousand Pesos
P;,000.00), T*o Thousand Pesos P4,000.00) of *hich has been +iven to 7ikil Taha as advance pay"entF that
as a conse=uence of the unla*ful sei0ure of the "otor launch, its sale did not "ateriali0eF and that since 7uly 6,
1964, the said "otor launch had been "oored at the 2alabac 2ay, Pala*an and because of e-posure to the
ele"ents it had beco"e *orthless and beyond repair. !or the alle+ed violation of their constitutional ri+hts,
plaintiffs.appellants prayed that defendants.appellees be ordered to pay /ointly and severally each of the" the
su" of PB,(B0.00 representin+ actual, "oral and e-e"plary da"a+es and attorney,s fees.
#n their ans*er, defendants.appellees denied the "aterial alle+ations of the co"plaint and as affir"ative
defenses alle+ed that the "otor launch in =uestion *hich *as sold by 7ikil Taha to $lberto Ti"ban+caya on $pril
49, 1961 *as so"eti"e in $pril 1964, forcibly taken *ith violence upon persons and *ith intent to +ain by 7ikil
Taha fro" $lfredo Ti"ban+caya *ithout the latter,s kno*led+e and consent, thus +ivin+ rise to the filin+ of a
cri"inal char+e of robbery a+ainst 7ikil TahaF that !iscal Ponce de 3eon, in his capacity as $ctin+ Provincial
!iscal of Pala*an ordered Orlando >addela to sei0e and i"pound the "otor launch C%$? &$!$93C, for bein+
the corpus de"icti of the robberyF and that Orlando >addela "erely obeyed the orders of his superior officer to
i"pound said launch. 2y *ay of counterclai", defendants.appellees alle+ed that because of the "alicious and
+roundless filin+ of the co"plaint by plaintiffs.appellants, they *ere constrained to en+a+e the services of
la*yers, each of the" payin+ PB00.00 as attorney,s feesF and that they suffered "oral da"a+es in the a"ount of
PB,000.00 each and actual da"a+es in the a"ount of PB00.00 each. They also prayed that each of the"
a*arded e-e"plary da"a+es in the a"ount of P1,000.00.
On %epte"ber 1;, 196B, the trial court rendered its decision, upholdin+ the validity of the sei0ure of the "otor
launch on the +round that Cthe authority to i"pound evidences or e-hibits or corpus de"icti in a case pendin+
investi+ation is inherent in the Provincial !iscal *ho controls the prosecution and *ho introduces those e-hibits
in the court.C $ccordin+ly, the trial court dis"issed the co"plaint of plaintiffs.appellants and ordered the" to pay
/ointly and severally each of the defendants.appellees the a"ount of PB00.00 by *ay of actual da"a+es another
a"ount of PB00.00 for attorney,s fees and P1,000.00 as e-e"plary da"a+es.
<ence, this appeal.
T*o vital issues call for resolution by this Court. !irst, *hether or not defendant.appellee !iscal Ponce de 3eon
had the po*er to order the sei0ure of the "otor launch in =uestion *ithout a *arrant of search and sei0ure even
if the sa"e *as ad"ittedly the corpus de"icti of the cri"e. %econd, *hether or not defendants.appellees are
civilly liable to plaintiffs.appellants for da"a+es alle+edly suffered by the" +rantin+ that the sei0ure of the "otor
launch *as unla*ful.
The +rava"en of plaintiffs.appellants, ar+u"ent is that the takin+ of the "otor launch on 7uly 6, 1964 by Orlando
>addela upon the order of !iscal Ponce de 3oon *as in violation of the constitutional +uarantee a+ainst
unreasonable searches and sei0ures since it *as done *ithout a *arrant.
The pertinent provision of the Constitution then in force readsA
;) The ri+ht of the people to be secure in their persons, houses, papers and effects a+ainst
unreasonable searches and sei0ures shall not be violated, and no *arrants shall issue but upon
probable cause, to be deter"ined by the /ud+e after e-a"ination under oath or affir"ation of the
co"plainant and the *itnesses he "ay produce, and particularly describin+ the place to be
searched, and the persons or thin+s to be sei0ed.
8

$ cursory readin+ of the above provision easily brin+s into focus the unreasonableness of the sei0ure of the
afore"entioned "otor launch. $ search and sei0ure to be reasonable, "ust be effected by "eans of a valid
search *arrant. $nd for a search *arrant to be validA 1) it "ust be issued upon probable causeF 4) the probable
cause "ust be deter"ined by the /ud+e hi"self and not by the applicant or any other personF ;) in the
deter"ination of probable cause, the /ud+e "ust e-a"ine, under oath or affir"ation, the co"plainant and such
*itnesses as the latter "ay produceF and ') the *arrant issued "ust particularly describe the place to be
searched and persons or thin+s to be sei0ed.
9
Thus in a lon+ line of decisions, this Court has declared invalid
search *arrants *hich *ere issued in utter disre+ard of the constitutional in/unction.
5

8efendants.appellees ad"itted that *hen Orlando >addela entered the pre"ises of 8elfin 3i" and i"pounded
the "otor launch he *as not ar"ed *ith a search *arrantF that he effected the sei0ure of the "otor launch in the
absence of and *ithout the consent of 8elfin 3i". There can be no =uestion that *ithout the proper search
*arrant, no public official has the ri+ht to enter the pre"ises of another *ithout his consent for the purpose of
search and sei0ure.
3
$nd since in the present case defendants.appellees sei0ed the "otor launch *ithout a
*arrant, they have violated the constitutional ri+ht of plaintiffs.appellants a+ainst unreasonable search and
sei0ure.
8efendants.appellees ho*ever *ould *ant to /ustify the sei0ure of the "otor launch even *ithout a *arrant
because of !iscal Ponce de 3eon,s alle+ed inherent po*er to order the sei0ure of a personal property *hich is
the corpus de"icti of a cri"e, he bein+ a *uasi /udicial officer *ho has the control of the prosecution and the
presentation of the evidence in the cri"inal case. They ar+ue that inas"uch as the "otor launch in =uestion *as
alle+edly stolen by 7ikil Taha fro" Ti"ban+caya, !iscal Ponce de 3eon could order its sei0ure even *ithout a
search *arrant. 6e cannot a+ree. @nder the old Constitution
7
the po*er to issue a search *arrant is vested in
a /ud+e or "a+istrate and in no other officer and no search and sei0ure can be "ade *ithout a proper *arrant.
$t the ti"e the act co"plained of *as co""itted, there *as no la* or rule that reco+ni0ed the authority of
Provincial !iscals to issue a search *arrant. #n his vain atte"pt to /ustify the sei0ure of the "otor launch in
=uestion *ithout a *arrant !iscal Ponce de 3eon invoked the provisions of &epublic $ct ?o. (;4, *hich
a"ended %ections 16(' and 165( of the &evised $d"inistrative Code. 2ut there is nothin+ in said la* *hich
confers upon the provincial fiscalF the authority to issue *arrants, "uch less to order *ithout *arrant the sei0ure
of a personal property even if it is the corpus de"icti of a cri"e. True, &epublic $ct ?o. (;4 has broadened the
po*er of provincial fiscals to conduct preli"inary investi+ations, but said la* did not divest the /ud+e or
"a+istrate of its po*er to deter"ine, before issuin+ the correspondin+ *arrant, *hether or not probable cause
e-ists therefor.
5

>oreover, under %ections 4 and ; of &ule 144 of the &ules of Court 9 *hich co"ple"ent the constitutional provision earlier cited,
t*o principles are "ade clear, na"elyA 1) that in the sei0ure of a stolen property search *arrant is still necessaryF and 4) that in issuin+ a search *arrant the
/ud+e alone deter"ines *hether or not there is a probable cause. The fact that a thin+ is a corpus de"icti of a cri"e does not /ustify its sei0ure *ithout a *arrant.
$s held in ?.&. v. de "os Re1es and 6s$uerra,
14
citin+ Mc#"ur$ v. BrentonA
11

The "ere fact that a "an is an officer, *hether of hi+h or lo* de+ree, +ives hi" no "ore ri+ht
than is possessed by the ordinary private citi0en to break in upon the privacy of a ho"e and
sub/ect its occupant to the indi+nity of a search for the evidence of cri"e, *ithout a le+al *arrant
procured for that purpose. !o amount of incriminatin$ evidence whatever its source, wi"" supp"1
the p"ace of such warrant. $t the closed door of the ho"e be it palace or hovel even
bloodhounds "ust *ait till the la*, by authoritative process, bids it open. 9"phasis supplied.)
8efendant.appellee !iscal Ponce de 3eon *ould also invoke lack of ti"e to procure a search *arrant as an
e-cuse for the sei0ure of the "otor launch *ithout one. <e clai"ed that the "otor launch had to be sei0ed
i""ediately in order to preserve it and to prevent its re"oval out of the locality, since 2alabac, Pala*an, *here
the "otor launch *as at the ti"e, could only be reached after three to four days, travel by boat.
12
The clai"
cannot be sustained. The records sho* that on 7une 1B, 1964
18
!iscal Ponce de 3eon "ade the first re=uest to
the Provincial Co""ander for the i"poundin+ of the "otor launchF and on 7une 46, 1964
19
another re=uest
*as "ade. The sei0ure *as not effected until 7uly 6, 1964. #n short, !iscal Ponce de 3eon had all the ti"e to
procure a search *arrant had he *anted to and *hich he could have taken in less than a day, but he did not.
2esides, there is no basis for the apprehension that the "otor launch "i+ht be "oved out of 2alabac because
even prior to its sei0ure the "otor launch *as already *ithout its en+ine.
15
#n su", the fact that there *as no
ti"e to secure a search *arrant *ould not le+ally /ustify a search *ithout one.
13

$s to *hether or not they are entitled to da"a+es, plaintiffs.appellants anchor their clai" for da"a+es on $rticles
;4 and 4419 of the ?e* Civil Code *hich provide in part as follo*sA
$&T. ;4. $ny public officer or e"ployee, or any private individual, *ho directly or indirectly
obstructs, defeats, violates or in any "anner i"pedes or i"pairs any of the follo*in+ ri+hts and
liberties of another person shall be liable to the latter for da"a+es.
--- --- ---
9) The ri+hts to be secure in one,s person, house, papers, and effects a+ainst unreasonable
searches and sei0ures.
--- --- ---
The inde"nity shall include "oral da"a+es. 9-e"plary da"a+es "ay also be ad/udicated.
$&T. 4419. >oral da"a+es "ay be recovered in the follo*in+ and analo+ous casesA
--- --- ---
6) #lle+al searchF
--- --- ---
1) $cts and action referred to in $rticles 41, 46, 4(, 45, 49, ;0, ;4, ;' and ;B.
Pursuant to the fore+oin+ provisions, a person *hose constitutional ri+hts have been violated or i"paired is
entitled to actual and "oral da"a+es fro" the public officer or e"ployee responsible therefor. #n addition,
e-e"plary da"a+es "ay also be a*arded. #n the instant case, plaintiff.appellant 8elfin 3i" clai"ed that he
purchased the "otor launch fro" 7ikil Taha in consideration of P;,000.00, havin+ +iven P4,000.00 as advanced
pay"entF that since or sei0ure on 7uly 6, 1964 the "otor launch had been "oored at 2alabac 2ay and because
of e-posure to the ele"ents it has beco"e *orthless at the ti"e of the filin+ of the present actionF that because
of the ille+ality of the sei0ure of the "otor launch, he suffered "oral da"a+es in the su" of P1,000.00F and that
because of the violation of their constitutional ri+hts they *ere constrained to en+a+e the services of a la*yer
*ho" they have paid P1,B00.00 for attorney,s fees. 6e find these clai"s of 8elfin 3i" a"ply supported by the
evidence and therefore should be a*arded the su" of P;,000.00 as actual da"a+esF P1,000.00 as "oral
da"a+es and P(B0.00 for attorney,s fees. <o*ever, *ith respect co plaintiff 7ikil Taha, he is not entitled to
recover any da"a+e *hich he alle+ed he had suffered fro" the unla*ful sei0ure of the "otor launch inas"uch
as he had already transferred the o*nership and possession of the "otor launch to 8elfin 3i" at the ti"e it *as
sei0ed and therefore, he has no le+al standin+ to =uestion the validity of the sei0ure. 6ell settled is the rule that
the le+ality of a sei0ure can be contested only by the party *hose ri+hts have been i"paired thereby, and that
the ob/ection to an unla*ful search and sei0ure is purely personal and cannot be availed of by third parties.
17
Conse=uently, one *ho is not the o*ner, lessee, or la*ful occupant of the pre"ise searched cannot raise the
=uestion of validity of the search and sei0ure.
15
7ikil Taha is not *ithout recourse thou+h. <e can still collect
fro" his co.plaintiff, 8elfin 3i" the unpaid balance of P1,000.00.
8efendant.appellee !iscal Ponce de 3eon *anted to *ash his hands of the incident by clai"in+ that Che *as in
+ood faith, *ithout "alice and *ithout the sli+htest intention of inflictin+ in/ury to plaintiff.appellant, 7ikil TahaC
19
*hen he ordered the sei0ure of the "otor launch. 6e are not prepared to sustain his defense of +ood faith. To
be liable under $rticle ;4 of the ?e* Civil Code it is enou+h that there *as a violation of the constitutional ri+hts
of the plaintiffs and it is not re=uired that defendants should have acted *ith "alice or bad faith. 8r. 7or+e
2ocobo, Chair"an of the Code Co""ission, +ave the follo*in+ reasons durin+ the public hearin+s of the 7oint
%enate and <ouse Co""ittees, *hy +ood faith on the part of the public officer or e"ployee is i""aterial. ThusA
89$? 2OCO2O. $rticle ;4, re+ardin+ individual ri+htsF $ttorney Cirilo Paredes proposes that
$rticle ;4 be so a"ended as to "ake a public official liable for violation of another person,s
constitutional ri+hts only if the public official acted "aliciously or in bad faith. The Code
Co""ission opposes this su++estion for these reasonsA
The very nature of $rticle ;4 is that the *ron+ "ay be civil or cri"inal. #t is not necessary
therefore that there should be "alice or bad faith. To "ake such a re=uisite *ould defeat the
"ain purpose of $rticle ;4 *hich is the effective protection of individual ri+hts. Public officials in
the past have abused their po*ers on the prete-t of /ustifiable "otives or +ood faith in the
perfor"ance of their duties. Precisely, the ob/ect of the $rticle is to put an end to official abuse by
the plea of +ood faith. #n the @nited %tates this re"edy is in he nature of a tort.
>r. Chair"an, this article is fir"ly one of the funda"ental articles introduced in the ?e* Civil
Code to i"ple"ent de"ocracy. There is no real de"ocracy if a public official is abusin+, and *e
"ade the article so stron+ and so co"prehensive that it concludes an abuse of individual ri+hts
even if done in +ood faith, that official is liable. $s a "atter of fact, *e kno* that there are very
fe* public officials *ho openly and definitely abuse the individual ri+hts of the citi0ens. #n "ost
cases, the abuse is /ustified on a plea of desire to enforce the la* to co"ply *ith one,s duty. $nd
so, if *e should li"it the scope of this article, that *ould practically nullify the ob/ect of the article.
Precisely, the openin+ ob/ect of the article is to put an end to abuses *hich are /ustified by a plea
of +ood faith, *hich is in "ost cases the plea of officials abusin+ individual ri+hts.
24

2ut defendant.appellee Orlando >addela cannot be held accountable because he i"pounded the "otor launch
upon the order of his superior officer. 6hile a subordinate officer "ay be held liable for e-ecutin+ unla*ful orders
of his superior officer, there are certain circu"stances *hich *ould *arrant >addela,s e-culpation fro" liability.
The records sho* that after !iscal Ponce de 3eon "ade his first re=uest to the Provincial Co""ander on 7une
1B, 1964 >addela *as reluctant to i"pound the "otor launch despite repeated orders fro" his superior officer.
21
#t *as only after he *as furnished a copy of the reply of !iscal Ponce de 3eon, dated 7une 46, 1964, to the
letter of the Provincial Co""ander, /ustifyin+ the necessity of the sei0ure of the "otor launch on the +round that
the subse=uent sale of the launch to 8elfin 3i" could not prevent the court fro" takin+ custody of the sa"e,
22
that he i"pounded the "otor launch on 7uly 6, 1964. 6ith said letter co"in+ fro" the le+al officer of the
province, >addela *as led to believe that there *as a le+al basis and authority to i"pound the launch. Then
ca"e the order of his superior officer to e-plain for the delay in the sei0ure of the "otor launch.
28
!aced *ith a
possible disciplinary action fro" his Co""ander, >addela *as left *ith no alternative but to sei0e the vessel. #n
the li+ht of the above circu"stances. 6e are not disposed to hold >addela ans*erable for da"a+es.
#? G#96 O! T<9 !O&9HO#?H, the decision appealed fro" is hereby reversed and another one entered
declarin+ the sei0ure ille+al and orderin+ defendant.appellee !iscal !rancisco Ponce de 3eon to pay to plaintiff.
appellant 8elfin 3i" the su" of P;,000.00 as actual da"a+es, plus P1,000.00 "oral da"a+es, and, in addition,
P(B0.00 for attorney,s fees. 6ith costs a+ainst defendant.appellee !iscal Ponce de 3eon.
%O O&89&98.
#astro (#hairman), =eehan9ee, Ma9asiar and 6s$uerra, --., concur.
Mu<o, %a"ma, -, is on "eave.

G.R. No. 53724 S)%t);6), 2, 1999
MHP GARMENTS, INC., $!( LARR< C. DE GU2MAN, petitioners,
vs.
THE HONORA-LE COURT OF APPEALS, AGNES /ILLA CRU2, MIRASOL LUGATIMAN, $!( GERTRUDES GON2ALES, respondents.
Benjamin M. .acana1 for petitioners.
6mmanue" O. =ansin$co for private respondents.

PUNO, J.:
The constitutional protection of our people a+ainst unreasonable search and sei0ure is not "erely a pleasin+ platitude. #t vouchsafes our ri+ht to privacy and
di+nity a+ainst undesirable intrusions co""itted by any public officer or private individual. $n infrin+e"ent of this ri+ht /ustifies an a*ard for da"a+es.
On !ebruary 44, 195;, petitioner ><P Har"ents, #nc., *as a*arded by the 2oy %couts of the Philippines, the e-clusive franchise to sell and distribute official
2oy %couts unifor"s, supplies, bad+es, and insi+nias. #n their >e"orandu" $+ree"ent, petitioner corporation *as +iven the authority to Cundertake or cause to
be undertaken the prosecution in court of all ille+al sources of scout unifor"s and other scoutin+ supplies.C
1
%o"eti"e in October 195;, petitioner corporation received infor"ation that private respondents $+nes Gilla
Cru0, >irasol 3u+ati"an, and Hertrudes Hon0ales *ere sellin+ 2oy %couts ite"s and paraphernalia *ithout any
authority. Petitioner de Hu0"an, an e"ployee of petitioner corporation, *as tasked to undertake the necessary
surveillance and to "ake a report to the Philippine Constabulary PC).
On October 4B, 195;, at about 10A;0 $.>., petitioner de Hu0"an, Captain &enato >. PeRafiel, and t*o 4) other
constabulary "en of the &eaction !orce 2attalion, %ikatuna Gilla+e, 8ili"an, Jue0on City *ent to the stores of
respondents at the >arikina Public >arket. 6ithout any *arrant, they sei0ed the boy and +irl scouts pants,
dresses, and suits on display at respondents, stalls. The sei0ure caused a co""otion and e"barrassed private
respondents. &eceipts *ere issued for the sei0ed ite"s. The ite"s *ere then turned over by Captain PeRafiel to
petitioner corporation for safekeepin+.
$ cri"inal co"plaint for unfair co"petition *as then filed a+ainst private respondents.
2
8urin+ its pendency,
petitioner de Hu0"an e-acted fro" private respondent 3u+ati"an the su" of T<&99 T<O@%$?8 O?9
<@?8&98 P9%O% P;,100.00) in order to be dropped fro" the co"plaint. On 8ece"ber 6, 195;, after a
preli"inary investi+ation, the Provincial !iscal of &i0al dis"issed the co"plaint a+ainst all the private
respondents. On !ebruary 6, 195', he also ordered the return of the sei0ed ite"s. The sei0ed ite"s *ere not
i""ediately returned despite de"ands.
8
Private respondents had to +o personally to petitioners, place of
business to recover their +oods. 9ven then, not all the sei0ed ite"s *ere returned. The other ite"s returned
*ere of inferior =uality.
Private respondents then filed Civil Case ?o. B11'' a+ainst the petitioners for su"s of "oney and da"a+es.
9
#n its 8ecision dated 7anuary 9, 195(, the trial court ruled for the private respondents, thusA
6<9&9!O&9, /ud+"ent is hereby rendered in favor of plaintiffs and a+ainst defendants,
orderin+ the latter /ointly and severallyA
1. To return the a"ount of P;,100.00 to plaintiff >irasol 3u+ati"an *ith interest at 14L per
annu" fro" 7anuary 14, 195', the date of the last receipt issued, until fully paidF
4. To pay plaintiff $+nes Gilla Cru0 the su" of P4,000.00 for the 46 pieces of +irl scout ite"s not
returnedF
;. To pay plaintiffs the a"ount of PB0,000.00 for and as "oral da"a+es and P1B,000.00 for and
as e-e"plary da"a+esF and
'. PB,000.00 for and as attorney,s fees and liti+ation e-penses.
Costs a+ainst the defendants.
%O O&89&98.
The decision *as appealed to the respondent court. On 7anuary 15, 1959, its !ifth 8ivision,
5
affir"ed the
8ecision *ith "odification, thusA
6<9&9!O&9, the decision appealed fro" is $!!#&>98 *ith >O8#!#C$T#O?F and, as
"odified, the dispositive portion thereof no* reads as follo*sA
7ud+"ent is hereby rendered in favor of plaintiffs private respondents) and a+ainst defendants
petitioners), orderin+ the latter /ointly and severallyF
1. To return the a"ount of P;,100.00 to plaintiff respondent) >irasol 3u+ati"an and cancel her
application for distributor,s licenseF
4. To pay plaintiff respondent) $+nes Gilla Cru0 the su" of P4,000.00 for the unreturned 46
pieces of +irl scouts ite"s *ith interest at 14L per annu" fro" 7une ', 195' date the co"plaint
*as filed) until it is fully paidF
;. To pay plaintiffs respondents) the a"ount of P10,000.00 each, or a total of P;0,000.00, for
and as "oral da"a+esF and PB,000.00 each, or a total of P1B,000.00, for and as e-e"plary
da"a+esF and
'. To pay plaintiffs respondents) PB,000.00 for and as attorney,s fees and liti+ation e-penses.
Costs of the case a =uo and the instant appeal are assessed /ointly and severally a+ainst
defendants.appellants petitioners) ><P Har"ents, #nc. and 3arry de Hu0"an.
%O O&89&98.
#n this petition for certiorari, petitioners contendA
0IR&= '&&IG!M6!= O0 6RROR
T<9 CO@&T O! $PP9$3% 9&&98 #? #>P@T#?H 3#$2#3#TI !O& 8$>$H9% TO T<9
P9T#T#O?9&% 6<O 8#8 ?OT 9!!9CT T<9 %9#:@&9 O! T<9 %@279CT >9&C<$?8#%9.
&6#O!. '&&IG!M6!= O0 6RROR
T<9 CO@&T O! $PP9$3% 9&&98 6<9? #T >$89 $ !#?8#?H T<$T T<9 >$??9& 6#T<
6<#C< T<9 CO?!#%C$T#O? O! P&#G$T9 &9%PO?89?T% 6$% TO&T#O@% 2@T
P9?$3#:98 #?%T9$8 T<9 P9T#T#O?9&% 6<O 8#8 ?OT CO>>#T T<9 $CT O!
CO?!#%C$T#O?.
=;IR. '&&IG!M6!= O0 6RROR
T<9 CO@&T O! $PP9$3% 9&&98 6<9? #T !O@?8 !O& T<9 P&#G$T9 &9%PO?89?T%
$?8 $H$#?%T T<9 P9T#T#O?9&%.
6e affir".
$rticle ###, section 4, of the Constitution protects our people fro" unreasonable search and sei0ure. #t providesA
The ri+ht of the people to be secure in their persons, houses, papers, and effects a+ainst
unreasonable searches and sei0ures of *hatever nature for any purpose shall be inviolable, and
no search *arrant or *arrant of arrest shall issue e-cept upon probable cause to be deter"ined
personally by the /ud+e after e-a"ination under oath or affir"ation of the co"plainant and the
*itnesses he "ay produce, and particularly describin+ the place to be searched and the persons
or thin+s to be sei0ed.
This provision protects not only those *ho appear to be innocent but also those *ho appear to be +uilty but are
nevertheless to be presu"ed innocent until the contrary is proved.
3
#n the case at bench, the sei0ure *as "ade
*ithout any *arrant. @nder the &ules of Court,
7
a *arrantless search can only be undertaken under the
follo*in+ circu"stanceA
%ec. 14. %earch incident to a la*ful arrest. . $ person la*fully arrested "ay be searched for
dan+erous *eapons or anythin+ *hich "ay be used as proof of the co""ission of an offense,
*ithout a search *arrant.
6e hold that the evidence did not /ustify the *arrantless search and sei0ure of private respondents, +oods.
Petitioner corporation received infor"ation that private respondents *ere ille+ally sellin+ 2oy %couts ite"s and
paraphernalia in October 195;. The specific date and ti"e are not established in the evidence adduced by the
parties. Petitioner de Hu0"an then "ade a surveillance of the stores of private respondents. They reported to
the Philippine Constabulary and on October 4B, 195;, the raid *as "ade on the stores of private respondents
and the supposed illicit +oods *ere sei0ed. The pro+ression of ti"e bet*een the receipt of the infor"ation and
the raid of the stores of private respondents sho*s there *as sufficient ti"e for petitioners and the PC raidin+
party to apply for a /udicial *arrant. 8espite the sufficiency of ti"e, they did not apply for a *arrant and sei0ed
the +oods of private respondents. #n doin+ so, they took the risk of a suit for da"a+es in case the sei0ure *ould
be proved to violate the ri+ht of private respondents a+ainst unreasonable search and sei0ure. #n the case at
bench, the search and sei0ure *ere clearly ille+al. There *as no probable cause for the sei0ure. Probable cause
for a search has been defined as Csuch facts and circu"stances *hich *ould lead a reasonably discreet and
prudent "an to believe that an offense has been co""itted and that the ob/ects sou+ht in connection *ith the
offense are in the place sou+ht to be searched.C
5
These facts and circu"stances *ere not in any *ay sho*n by
the petitioners to /ustify their *arrantless search and sei0ure. #ndeed, after a preli"inary investi+ation, the
Provincial !iscal of &i0al dis"issed their co"plaint for unfair co"petition and later ordered the return of the
sei0ed +oods.
Petitioners *ould deflect their liability *ith the ar+u"ent that it *as the Philippine Constabulary that conducted
the raid and their participation *as only to report the alle+ed ille+al activity of private respondents.
6hile undoubtedly, the "e"bers of the PC raidin+ tea" should have been included in the co"plaint for violation
of the private respondents, constitutional ri+hts, still, the o"ission *ill not e-culpate petitioners.
#n the case of Lim vs. %once de Leon,
9
*e ruled for the recovery of da"a+es for violation of constitutional ri+hts
and liberties fro" public officer or private individual, thusA
$rt. ;4. $ny public officer or emp"o1ee, or an1 private individua", who direct"1 or indirect"1
obstructs, defeats, violates or in any "anner i"pedes or i"pairs any of the follo*in+ ri+hts and
liberties of another person shall be liable to the latter for da"a+es.
--- --- ---
9) The ri+hts to be secure in one,s person, house, papers, and effects a+ainst unreasonable
searches and sei0ures.
--- --- ---
The inde"nity shall include "oral da"a+es. 9-e"plary da"a+es "ay also be ad/ud+ed.
$rt. 4419. >oral da"a+es "ay be recovered in the follo*in+ and analo+ous casesA
--- --- ---
6) #lle+al searchF
1) $cts and actions referred to in $rticles 41, 46, 4(, 45, 49, ;0, FE, ;', and ;B.
Pursuant to the fore+oin+ provisions, a person *hose constitutional ri+hts have been violated or
i"paired is entitled to actual and "oral da"a+es fro" the public officer or emp"o1ee responsib"e
therefor. #n addition, e-e"plary da"a+es "ay also be a*arded.
--- --- ---
The very nature of $rticle ;4 is that the *ron+ "ay be civil or cri"inal. #t is not necessary
therefore that there should be "alice or bad faith. To "ake such a re=uisite *ould defeat the
"ain purpose of $rticle ;4 *hich is the effective protection of individual ri+hts. Public officials in
the past have abused their po*ers on the prete-t of /ustifiable "otives or +ood faith in the
perfor"ance of their duties. Precisely, the ob/ect of the $rticle is to put an end to official abuse by
plea of the +ood faith. #n the @nited %tates this re"edy is in the nature of a tort. e"phasis
supplied)
#n the subse=uent case of 'berca vs. /er,
14
the Court 6n Banc e-plained the liability of persons indirectly
responsible, vi,A
DTEhe decisive factor in this case, in our vie*, is the lan+ua+e of $rticle ;4. The la* speaks of an
officer or emp"o1ee or person >direct"1 or indirect"1> responsible for the violation of the
constitutional ri+hts and liberties of another. Thus, it is not the actor alone i.e., the one directly
responsible) *ho "ust ans*er for da"a+es under $rticle ;4F the person indirectly responsible
has also to ans*er for the da"a+es or in/ury caused to the a++rieved party.
--- --- ---
6hile it *ould certainly be too naive to e-pect that violators of hu"an ri+hts *ould easily be
deterred by the prospect of facin+ da"a+es suits, it should nonetheless be "ade clear in no
uncertain ter"s that $rticle ;4 of the Civil Code "akes the persons *ho are directly, as we"" as
indirect"1, responsib"e for the trans$ression joint tortfeasors.
--- --- ---
D?Eeither can it be said that only those sho*n to have participated CdirectlyC should be held liable.
$rticle ;4 of the Civil Code enco"passes *ithin the a"bit of its provisions those directly, as we""
as indirect"1, responsib"e for its vio"ations. e"phasis supplied)
$pplyin+ the aforecited provisions and leadin+ cases, the respondent court correctly +ranted da"a+es to private
respondents. Petitioners *ere indirect"1 involved in trans+ressin+ the ri+ht of private respondents a+ainst
unreasonable search and sei0ure. !irstly, they insti+ated the raid pursuant to their covenant in the >e"orandu"
$+ree"ent to undertake the prosecution in court of all ille+al sources of scoutin+ supplies.
11
$s correctly
observed by respondent courtA
#ndeed, the acts co""itted by the PC soldiers of unla*fully sei0in+ appellees, respondents,)
"erchandise and of filin+ the cri"inal co"plaint for unfair co"petition a+ainst appellees
respondents) *ere for the protection and benefit of appellant petitioner) corporation. %uch
bein+ the case, it is, thus, reasonably fair to infer fro" those acts that it was upon appe""ant
(petitioner) corporationAs instance that the %# so"diers conducted the raid and effected the i""e$a"
sei,ure. These circu"stances should ans*er the trial court,s =uery M posed in its decision no*
under consideration M as to wh1 the %# so"diers immediate"1 turned over the sei,ed
merchandise to appe""ant (petitioner) corporation.
12
The raid *as conducted *ith the active participation of their e"ployee. 3arry de Hu0"an did not lift a fin+er to
stop the sei0ure of the boy and +irl scouts ite"s. 2y standin+ by and apparent"1 assentin$ thereto, he *as liable
to the sa"e e-tent as the officers the"selves.
18
%o *ith the petitioner corporation *hich even received for
safekeepin+ the +oods unreasonably sei0ed by the PC raidin+ tea" and de Hu0"an, and refused to surrender
the" for =uite a ti"e despite the dis"issal of its co"plaint for unfair co"petition.
%econdly, 3etter of #nstruction ?o. 1499 *as precisely crafted on >arch 9, 195; to safe+uard not only the
privile+e of franchise holder of scoutin+ ite"s but also the citi0en,s constitutional ri+hts, to witA
T#T39A $PP&9<9?%#O? O! @?$@T<O&#:98 >$?@!$CT@&9&%
$?8 8#%T&#2@TO&% O! %CO@T P$&$P<9&?$3#$ $?8
#>PO@?8#?H O! %$#8 P$&$P<9&?$3#$.
$2%T&$CTA
8irects all la* enforce"ent a+encies of the &epublic of the Philippines, to apprehend
i""ediately unauthori0ed "anufacturers and distributors of %cout paraphernalia, upon proper
app"ication b1 the Bo1 &couts of the %hi"ippines andIor Gir" &couts of the %hi"ippines for warrant
of arrest andIor search warrant with a jud$e, or such other responsib"e officer as ma1 be
authori,ed b1 "awF and to i"pound the said paraphernalia to be used as evidence in court or
other appropriate ad"inistrative body. Orders the immediate and strict comp"iance with the
Instructions.
19
@nder the above provision and as aforediscussed, petitioners "iserably failed to report the unla*ful peddlin+ of
scoutin+ +oods to the 2oy %couts of the Philippines for the proper application of a *arrant. Private respondents,
ri+hts are i""utable and cannot be sacrificed to transient needs.
15
Petitioners did not have the unbridled
license to cause the sei0ure of respondents, +oods *ithout any *arrant.
$nd thirdly, if petitioners did not have a hand in the raid, they should have filed a third.party co"plaint a+ainst
the raidin+ tea" for contribution or any other relief,
13
in respect of respondents, clai" for &ecovery of %u" of
>oney *ith 8a"a+es. $+ain, they did not.
6e have consistently ruled that "oral da"a+es are not a*arded to penali0e the defendant but to co"pensate
the plaintiff for the in/uries he "ay have suffered.
17
Confor"ably *ith our rulin+ in Lim vs. %once de Leon, op.
cit., "oral da"a+es can be a*arded in the case at bench. There can be no doubt that petitioners "ust have
suffered sleepless ni+hts, serious an-iety, and *ounded feelin+s due the tortious raid caused by petitioners.
Private respondents, avo*als of e"barrass"ent and hu"iliation durin+ the sei0ure of their "erchandise *ere
supported by their testi"onies. &espondent Cru0 declaredA
# felt very nervous. # *as cryin+ to loss sic) "y +oods and capital because # a" doin+ business
*ith borro*ed "oney only, there *as co""otion created by the raidin+ tea" and they even
stepped on so"e of the pants and dresses on display for sale. $ll passersby stopped to *atch
and stared at "e *ith accusin+ e-pressions. # *as tre"blin+ and terribly asha"ed, sir.
15
&espondent 3u+ati"an testifiedA
# felt very nervous. # *as cryin+ and # *as very "uch asha"ed because "any people have been
*atchin+ the PC soldiers haulin+ "y ite"s, and "anyN# sic) heard say Cnaka* pala an+ "+a
iyanC for *hich # a" clai"in+ P4B,000.00 for da"a+es.
19
6hile respondent Hon0ale0 stated thusA
# do not like the *ay the raid *as conducted by the tea" sir because it looked like that *hat #
have been sellin+ *ere stolen ite"s that they should be confiscated by unifor"ed soldiers. >any
people *ere around and the "ore the confiscation *as "ade in a scandalous "annerF every
clothes, T.shirts, pants and dresses even those not *rapped dropped to the +round. # *as
terribly sha"ed in the presence of "arket +oers that "ornin+.
24
?eedles to state, the *antonness of the *ron+ful sei0ure /ustifies the a*ard of e-e"plary da"a+es.
21
#t *ill
also serve as a stern re"inder to all and sundry that the constitutional protection a+ainst unreasonable search
and sei0ure is a virile reality and not a "ere burst of rhetoric. The all enco"passin+ protection e-tends a+ainst
intrusions directly done both by +overn"ent and indirectly by private entities.
#? G#96 6<9&9O!, the appealed decision is $!!#&>98 6#T< >O8#!#C$T#O?. 6e i"pose a %#1 P9&C9?T
6L) interest fro" 7anuary 9, 195( on the T6O T<O@%$?8 P9%O% P4,000.00) for the unreturned t*enty.si-
46) pieces of +irl scouts ite"s and a T693G9 P9&C9?T 14L) interest, in lieu of %#1 P9&C9?T 6L), on the
said a"ount upon finality of this 8ecision until the pay"ent thereof.
22
Costs a+ainst petitioners.
%O O&89&98.
!arvasa, %adi""a, Re$a"ado, and Mendo,a, --., concur.
8< 4,<C
G.R. No. L-1)505 F!$r#ar7 4, 1919
GEO. 3. DA.3ALT, plaintiff-appellant,
vs.
LA *ORPORA*ION DE LOS PADRES AG+STINOS RE*OLETOS, ET AL., defendants-
appellees.
C. C. Cohn and +hos. %. Ait&en for appellant.
Crossfield B O'Brien for appellee.
STREET, J.
In the year >(), Teodorica 8ndencia, an unmarried #oman, resident in the Province of Mindoro,
e*ecuted a contract #hereby she obligated herself to convey to -eo. 9. 5ay#alt, a tract of land
situated in the barrio of Mangarin, municipality of 4ulalacao, no# 6an Cose, in said province. It #as
agreed that a deed should be e*ecuted as soon as the title to the land should be perfected by
proceedings in the Court of @and Eegistration and a Torrens certificate should be produced therefore in
the name of Teodorica 8ndencia. , decree recogni?ing the right of Teodorica as o#ner #as entered in
said court in ,ugust >(+, but the Torrens certificate #as not issued until later. The parties, ho#ever,
met immediately upon the entering of this decree and made a ne# contract #ith a vie# to carrying their
original agreement into effect. This ne# contract #as e*ecuted in the form of a deed of conveyance and
bears date of ,ugust +, >(+. The stipulated price #as fi*ed at P!,(((, and the area of the land
enclosed in the boundaries defined in the contract #as stated to be !') hectares and a fraction.
The second contract #as not immediately carried into effect for the reason that the Torrens certificate
#as not yet obtainable and in fact said certificate #as not issued until the period of performance
contemplated in the contract had e*pired. ,ccordingly, upon Actober =, >(;, the parties entered into
still another agreement, superseding the old, by #hich Teodorica 8ndencia agreed upon receiving the
Torrens title to the land in 7uestion, to deliver the same to the 0ong3ong and 6hanghai 4an3 in Manila,
to be for#arded to the Croc3er <ational 4an3 in 6an Francisco, #here it #as to be delivered to the
plaintiff upon payment of a balance of P=,((.
The Torrens certificate #as in time issued to Teodorica 8ndencia, but in the course of the proceedings
relative to the registration of the land, it #as found by official survey that the area of the tract inclosed
in the boundaries stated in the contract #as about .)!; hectares of !') hectares as stated in the
contract. In vie# of this development Teodorica 8ndencia became reluctant to transfer the #hole tract
to the purchaser, asserting that she never intended to sell so large an amount of land and that she had
been misinformed as to its area.
This attitude of hers led to litigation in #hich 5ay#alt finally succeeded, upon appeal to the 6upreme
Court, in obtaining a decree for specific performance1 and Teodorica 8ndencia #as ordered to convey
the entire tract of land to 5ay#alt pursuant to the contract of Actober =, >(;, #hich contract #as
declared to be in full force and effect. This decree appears to have become finally effective in the early
part of the year >!.

The defendant, @a Corporacion de los Padres Eecoletos, is a religious corporation, #ith its domicile in
the city of Manila. 6aid corporation #as formerly the o#ner of a large tract of land, 3no#n as the 6an
Cose 8state, on the island of Mindoro, #hich #as sold to the -overnment of the Philippine Islands in
the year >(>. The same corporation #as at this time also the o#ner of another estate on the same
island immediately adjacent to the land #hich Teodorica 8ndencia had sold to -eo. 9. 5ay#alt1 and
for many years the Eecoletos Fathers had maintained large herds of cattle on the farms referred to.
Their representative, charged #ith management of these farms, #as father Isidoro 6an?, himself a
members of the order. Father 6an? had long been #ell ac7uainted #ith Teodorica 8ndencia and e*erted
over her an influence and ascendency due to his religious character as #ell as to the personal friendship
#hich e*isted bet#een them. Teodorica appears to be a #oman of little personal force, easily subject to
influence, and upon all the important matters of business #as accustomed to see3, and #as given, the
advice of father 6an? and other members of his order #ith #hom she came in contact.
Father 6an? #as fully a#are of the e*istence of the contract of >() by #hich Teodorica 8ndencia
agreed to sell her land to the plaintiff as #ell as of the later important developments connected #ith the
history of that contract and the contract substituted successively for it1 and in particular Father 6an?, as
#ell as other members of the defendant corporation, 3ne# of the e*istence of the contract of Actober =,
>(;, #hich, as #e have already seen finally fi*ed the rights of the parties to the property in 7uestion.
9hen the Torrens certificate #as finally issued in >(> in favor of Teodorica 8ndencia, she delivered it
for safe3eeping to the defendant corporation, and it #as then ta3en to Manila #here it remained in the
custody and under the control of P. Cuan @abarga the procurador and chief official of the defendant
corporation, until the deliver thereof to the plaintiff #as made compulsory by reason of the decree of
the 6upreme Court in >!.
9hen the defendant corporation sold the 6an Cose 8state, it #as necessary to bring the cattle off of that
property1 and, in the first half of >(>, some ),=+; head #ere removed to the estate of the corporation
immediately adjacent to the property #hich the plaintiff had purchased from Teodorica 8ndencia. ,s
Teodorica still retained possession of said property Father 6an? entered into an arrangement #ith her
#hereby large numbers of cattle belonging to the defendant corporation #ere pastured upon said land
during a period e*tending from Cune , >(>, to May , >!.
:nder the first cause stated in the complaint in the present action the plaintiff see3s to recover from the
defendant corporation the sum of P)!,(((, as damages for the use and occupation of the land in
7uestion by reason of the pasturing of cattle thereon during the period stated. The trial court came to the
conclusion that the defendant corporation #as liable for damages by reason of the use and occupation
of the premises in the manner stated1 and fi*ed the amount to be recovered at P),!>". The plaintiff
appealed and has assigned error to this part of the judgment of the court belo#, insisting that damages
should have been a#arded in a much larger sum and at least to the full e*tent of P)!,(((, the amount
claimed in the complaint.
,s the defendant did not appeal, the property of allo#ing damages for the use and occupation of the
land to the e*tent o P),!>", the amount a#arded, is not no# in 7uestion an the only thing here to be
considered, in connection #ith this branch of the case, is #hether the damages allo#ed under this head
should be increased. The trial court rightly ignored the fact that the defendant corporation had paid
Teodorica 8ndencia of ruse and occupation of the same land during the period in 7uestion at the rate of
P!)' per annum, inasmuch as the final decree of this court in the action for specific performance is
conclusive against her right, and as the defendant corporation had notice of the rights of the plaintiff
under this contract of purchase, it can not be permitted that the corporation should escape liability in
this action by proving payment of rent to a person other than the true o#ner.
9ith reference to the rate of #hich compensation should be estimated the trial court came to the
follo#ing conclusion.
,s to the rate of the compensation, the plaintiff contends that the defendant corporation
maintained at leas one thousand head of cattle on the land and that the pasturage #as of the
value of forty centavos per head monthly, or P!,;(( annually, for the #hole tract. The court can
not accept this vie#. It is rather improbable that ,)!; hectares of #ild Mindoro land #ould
furnish sufficient pasturage for one thousand head of cattle during the entire year, and,
considering the locality, the rate of forty centavos per head monthly seems too high. The
evidence sho#s that after having recovered possession of the land the plaintiff rented it to the
defendant corporation for fifty centavos per hectares annually, the tenant to pay the ta*es on the
land, and this appears to be a reasonable rent. There is no reason to suppose that the land #as
#orth more for gra?ing purposes during the period from >(> to >=, than it #as at the later
period. :pon this basis the plaintiff is entitled to damages in the sum of p),!>", and is under no
obligation to reimburse the defendants for the land ta*es paid by either of them during the
period the land #as occupied by the defendant corporation. It may be mentioned in this
connection that the @onto3 tract adjoining the land in 7uestion and containing over three
thousand hectares appears to have been leased for only P,((( a year, plus the ta*es.
From this it #ill be seen that the trial court estimated the rental value of the land for gra?ing purposes at
'( centavos per hectare per annum, and roughly adopted the period of four years as the time for #hich
compensation at that rate should be made. ,s the court had already found that the defendant #as liable
for these damages from Cune, , >(>, to May , >!, or a period of four years and eleven months,
there seems some ground for the contention made in the appellant/s first assignment of error that the
court/s computation #as erroneous, even accepting the rule upon #hich the damages #ere assessed, as
it is manifest that at the rate of '( centavos per hectare per annum, the damages for four years and
eleven months #ould be P=,(>(.
<ot#ithstanding this circumstance, #e are of the opinion that the damages assessed are sufficient to
compensate the plaintiff for the use and occupation of the land during the #hole time it #as used. There
is evidence in the record strongly tending to sho# that the #rongful use of the land by the defendant
#as not continuous throughout the year but #as confined mostly to the reason #hen the forage
obtainable on the land of the defendant corporation #as not sufficient to maintain its cattle, for #hich
reason it became necessary to allo# them to go over to pasture on the land in 7uestion1 and it is not
clear that the #hole of the land #as used for pasturage at any time. Considerations of this character
probably led the trial court to adopt four years as roughly being the period during #hich compensation
should be allo#ed. 4ut #hether this #as advertently done or not, #e see no sufficient reason, in the
uncertainty of the record #ith reference to the number of the cattle gra?ed and the period #hen the land
#as used, for substituting our guess for the estimate made by the trial court.
In the second cause of action stated in the complaint the plaintiff see3s to recover from the defendant
corporation the sum of P'((,(((, as damages, on the ground that said corporation, for its o#n selfish
purposes, unla#fully induced Teodorica 8ndencia to refrain from the performance of her contract for
the sale of the land in 7uestion and to #ithhold delivery to the plaintiff of the Torrens title, and further,
maliciously and #ithout reasonable cause, maintained her in her defense to the action of specific
performance #hich #as finally decided in favor of the plaintiff in this court. The cause of action here
stated is based on liability derived from the #rongful interference of the defendant in the performance
of the contract bet#een the plaintiff and Teodorica 8ndencia1 and the large damages laid in the
complaint #ere, according to the proof submitted by the plaintiff, incurred as a result of a combination
of circumstances of the follo#ing nature. In >, it appears, the plaintiff, as the o#ner of the land
#hich he had bought from Teodorica 8ndencia entered into a contract $8*hibit C% #ith 6. 4. 9a3efield,
of 6an Francisco, for the sale and disposal of said lands to a sugar gro#ing and milling enterprise, the
successful launching of #hich depended on the ability of 5ay#alt to get possession of the land and the
Torrens certificate of title. In order to accomplish this end, the plaintiff returned to the Philippine
Islands, communicated his arrangement to the defendant,, and made repeated efforts to secure the
registered title for delivery in compliance #ith said agreement #ith 9a3efield. Teodorica 8ndencia
seems to have yielded her consent to the consummation of her contract, but the Torrens title #as then in
the possession of Padre Cuan @abarga in Manila, #ho refused to deliver the document. Teodorica also
#as in the end contract #ith the plaintiff, #ith the result that the plaintiff #as 3ept out of possession
until the 9a3efield project for the establishment of a large sugar gro#ing and milling enterprise fell
through. In the light of #hat has happened in recent years in the sugar industry, #e feel justified in
saying that the project above referred to, if carried into effect, must inevitably have proved a great
success.
The determination of the issue presented in this second cause of action re7uires a consideration of t#o
points. The first is #hether a person #ho is not a party to a contract for the sale of land ma3es himself
liable for damages to the vendee, beyond the value of the use and occupation, by colluding #ith the
vendor and maintaining him in the effort to resist an action for specific performance. The second is
#hether the damages #hich the plaintiff see3s to recover under this head are too remote and
speculative to be the subject of recovery.
,s preliminary to a consideration of the first of these 7uestions, #e deem it #ell it dispose of the
contention that the members of the defendants corporation, in advising and prompting Teodorica
8ndencia not to comply #ith the contract of sale, #ere actuated by improper and malicious motives.
The trial court found that this contention #as not sustained, observing that #hile it #as true that the
circumstances pointed to an entire sympathy on the part of the defendant corporation #ith the efforts of
Teodorica 8ndencia to defeat the plaintiff/s claim to the land, the fact that its officials may have advised
her not to carry the contract into effect #ould not constitute actionable interference #ith such contract.
It may be added that #hen one considers the hardship that the ultimate performance of that contract
entailed on the vendor, and the doubt in #hich the issue #as involved K to the e*tent that the decision
of the Court of the First Instance #as unfavorable to the plaintiff and the 6upreme Court itself #as
divided K the attitude of the defendant corporation, as e*hibited in the conduct of its procurador, Cuan
@abarga, and other members of the order of the Eecollect Fathers, is not difficult to understand. To our
mind a fair conclusion on this feature of the case is that father Cuan @abarga and his associates believed
in good faith that the contract cold not be enforced and that Teodorica #ould be #ronged if it should be
carried into effect. ,ny advice or assistance #hich they may have given #as, therefore, prompted by no
mean or improper motive. It is not, in our opinion, to be denied that Teodorica #ould have surrendered
the documents of title and given possession of the land but for the influence and promptings of
members of the defendants corporation. 4ut #e do not credit the idea that they #ere in any degree
influenced to the giving of such advice by the desire to secure to themselves the paltry privilege of
gra?ing their cattle upon the land in 7uestion to the prejudice of the just rights of the plaintiff.
The attorney for the plaintiff maintains that, by interfering in the performance of the contract in
7uestion and obstructing the plaintiff in his efforts to secure the certificate of tittle to the land, the
defendant corporation made itself a co-participant #ith Teodorica 8ndencia in the breach of said
contract1 and inasmuch as father Cuan @abarga, at the time of said unla#ful intervention bet#een the
contracting parties, #as fully a#are of the e*istence of the contract $8*hibit C% #hich the plaintiff had
made #ith 6. 4. 9a3efield, of 6an Francisco, it is insisted that the defendant corporation is liable for
the loss conse7uent upon the failure of the project outlined in said contract.
In this connection reliance is placed by the plaintiff upon certain ,merican and 8nglish decisions in
#hich it is held that a person #ho is a stranger to contract may, by an unjustifiable interference in the
performance thereof, render himself liable for the damages conse7uent upon non-performance. It is
said that the doctrine of these cases #as recogni?ed by this court in -ilchrist vs. Cuddy $)> Phil. Eep.,
'!)%1 and #e have been earnestly pressed to e*tend the rule there enunciated to the situation here
presente.
6ome#hat more than half a century ago the 8nglish Court of the Queen/s 4ench sa# its #ay clear to
permit an action for damages to be maintained against a stranger to a contract #rongfully interfering in
its performance. The leading case on this subject is @umley vs. -ye $N;'=O, ) 8l. L 4l., )+%. It there
appeared that the plaintiff, as manager of a theatre, had entered into a contract #ith Miss Cohanna
9agner, an opera singer,, #hereby she bound herself for a period to sing in the plaintiff/s theatre and
no#here else. The defendant, 3no#ing of the e*istence of this contract, and, as the declaration alleged,
&maliciously intending to injure the plaintiff,& enticed and produced Miss 9agner to leave the plaintiff/s
employment. It #as held that the plaintiff #as entitled to recover damages. The right #hich #as here
recogni?ed had its origin in a rule, long familiar to the courts of the common la#, to the effect that any
person #ho entices a servant from his employment is liable in damages to the master. The master/s
interest in the service rendered by his employee is here considered as a distinct subject of juridical
right. It being thus accepted that it is a legal #rong to brea3 up a relation of personal service, the
7uestion no# arose #hether it is illegal for one person to interfere #ith any contract relation subsisting
bet#een others. Prior to the decision of @umley vs. -ye NsupraO it had been supposed that the liability
here under consideration #as limited to the cases of the enticement of menial servants, apprentices, and
others to #hom the 8nglish 6tatutes of @aborers #ere applicable. 4ut in the case cited the majority of
the judges concurred in the opinion that the principle e*tended to all cases of hiring. This doctrine #as
follo#ed by the Court of ,ppeal in 4o#en vs. 0all $N;;O, + Q. 4., 5iv., ===%1 and in Temperton vs.
Eussell $N;>=O, Q. 4., "'%, it #as held that the right of action for maliciously procuring a breach of
contract is not confined to contracts for personal services, but e*tends to contracts in general. In that
case the contract #hich the defendant had procured to be breached #as a contract for the supply of
building material.
Malice in some form is generally supposed to be an essential ingredient in cases of interference #ith
contract relations. 4ut upon the authorities it is enough if the #rong-doer, having 3no#ledge of the
e*istence of the contract relations, in bad faith sets about to brea3 it up. 9hether his motive is to
benefit himself or gratify his spite by #or3ing mischief to the employer is immaterial. Malice in the
sense of ill-#ill or spite is not essential.
:pon the 7uestion as to #hat constitutes legal justification, a good illustration #as put in the leading
case. If a party enters into contract to go for another upon a journey to a remote and unhealthful
climate, and a third person, #ith a bona fide purpose of benefiting the one #ho is under contract to go,
dissuades him from the step, no action #ill lie. 4ut if the advice is not disinterested and the persuasion
is used for &the indirect purpose of benefiting the defendant at the e*pense of the plaintiff,& the
intermedler is liable if his advice is ta3en and the contract bro3en.
The doctrine embodied in the cases just cited has sometimes been found useful, in the complicated
relations of modern industry, as a means of restraining the activities of labor unions and industrial
societies #hen improperly engaged in the promotion of stri3es. ,n illustration of the application of the
doctrine in 7uestion in a case of this 3ind is found in 6outh 9ales Miners Federation vs. -lamorgan
Coal Co. $N>('O%, ,. C., )=>%. It there appeared that certain miners employed in the plaintiff/s
collieries, acting under the order of the e*ecutive council of the defendant federation, violated their
contract #ith the plaintiff by abstaining from #or3 on certain days. The federation and council acted
#ithout any actual malice or ill-#ill to#ards the plaintiff, and the only object of the order in 7uestion
#as that the price of coal might thereby be 3ept up, a factor #hich affected the miner/s #age scale. It
#as held that no sufficient justification #as sho#n and that the federation #as liable.
In the :nited 6tates, the rule established in 8ngland by @umley vs. -ye NsupraO and subse7uent cases is
commonly accepted, though in a fe# of the 6tates the broad idea that a stranger to a contract can be
held liable upon its is rejected, and in these jurisdictions the doctrine, if accepted at all, is limited to the
situation #here the contract is strictly for personal service. $4oyson vs. Thorn, >; Cal., '";1 Chambers
L Marshall vs. 4ald#in > Dy., )1 4ourlier vs. Macauley, > Dy., ='1 -lencoe @and L -ravel Co.
vs. 0udson 4ros. Com. Co., =; Mo., !=>.%
It should be observed in this connection that, according to the 8nglish and ,merican authorities, no
7uestion can be made as to the liability to one #ho interferes #ith a contract e*isting bet#een others by
means #hich, under 3no#n legal cannons, can be denominated an unla#ful means. Thus, if
performance is prevented by force, intimidation, coercion, or threats, or by false or defamatory
statements, or by nuisance or riot, the person using such unla#ful means is, under all the authorities,
liable for the damage #hich ensues. ,nd in jurisdictions #here the doctrine of @umley vs. -ye NsupraO
is rejected, no liability can arise from a meddlesome and malicious interference #ith a contract relation
unless some such unla#ful means as those just indicated are used. $6ee cases last above cited.%
This brings us to the decision made by this court in -ilchrist vs. Cuddy $)> Phil. Eep., '!)%. It there
appeared that one Cuddy, the o#ner of a cinematographic film, let it under a rental contract to the
plaintiff -ilchrist for a specified period of time. In violation of the terms of this agreement, Cuddy
proceeded to turn over the film also under a rental contract, to the defendants 8spejo and Paldarriaga.
-ilchrist thereupon restored to the Court of First Instance and produced an injunction restraining the
defendants from e*hibiting the film in 7uestion in their theater during the period specified in the
contract of Cuddy #ith -ilchrist. :pon appeal to this court it #as in effect held that the injunction #as
not improperly granted, although the defendants did not, at the time their contract #as made, 3no# the
identity of the plaintiff as the person holding the prior contract but did 3no# of the e*istence of a
contract in favor of someone. It #as also said ar"uendo, that the defendants #ould have been liable in
damages under article >() of the Civil Code, if the action had been brought by the plaintiff to recover
damages. The force of the opinion is, #e thin3, some#hat #ea3ened by the criticism contain in the
concurring opinion, #here it is said that the 7uestion of breach of contract by inducement #as not
really involved in the case. Ta3ing the decision upon the point #hich #as rally decided, it is authority
for the proposition that one #ho buys something #hich he 3no#s has been sold to some other person
can be restrained from using that thing to the prejudice of the person having the prior and better right.
Translated into terms applicable to the case at bar, the decision in -ilchrist vs. Cuddy $)> Phil. Eep.,
'!)%, indicates that the defendant corporation, having notice of the sale of the land in 7uestion to
5ay#alt, might have been enjoined by the latter from using the property for gra?ing its cattle thereon.
That the defendant corporation is also liable in this action for the damage resulting to the plaintiff from
the #rongful use and occupation of the property has also been already determined. 4ut it #ill be
observed that in order to sustain this liability it is not necessary to resort to any subtle e*egesis relative
to the liability of a stranger to a contract for unla#ful interference in the performance thereof. It is
enough that defendant use the property #ith notice that the plaintiff had a prior and better right.
,rticle >() of the Civil Code declares that any person #ho by an act or omission, characteri?ed by
fault or negligence, causes damage to another shall be liable for the damage so done. Ignoring so much
of this article as relates to liability for negligence, #e ta3e the rule to be that a person is liable for
damage done to another by any culpable act1 and by &culpable act& #e mean any act #hich is
blame#orthy #hen judged by accepted legal standards. The idea thus e*pressed is undoubtedly broad
enough to include any rational conception of liability for the tortious acts li3ely to be developed in any
society. Thus considered, it cannot be said that the doctrine of @umley vs. -ye NsupraO and related cases
is repugnant to the principles of the civil la#.
<evertheless, it must be admitted that the codes and jurisprudence of the civil la# furnish a some#hat
uncongenial field in #hich to propagate the idea that a stranger to a contract may sued for the breach
thereof. ,rticle )'" of the Civil Code declares that contracts are binding only bet#een the parties and
their privies. In conformity #ith this it has been held that a stranger to a contract has no right of action
for the nonfulfillment of the contract e*cept in the case especially contemplated in the second
paragraph of the same article. $:y Tam and :y Fet vs. @eonard, =( Phil. Eep., !".% ,s observed by
this court in Manila Eailroad Co. vs. CompaMia Transatlantica, E. -. <o. =; $=; Phil. Eep., ;"'%, a
contract, #hen effectually entered into bet#een certain parties, determines not only the character and
e*tent of the liability of the contracting parties but also the person or entity by #hom the obligation is
e*igible. The same idea should apparently be applicable #ith respect to the person against #hom the
obligation of the contract may be enforced1 for it is evident that there must be a certain mutuality in the
obligation, and if the stranger to a contract is not permitted to sue to enforce it, he cannot consistently
be held liable upon it.
If the t#o antagonistic ideas #hich #e have just brought into ju*taposition are capable of
reconciliation, the process must be accomplished by distinguishing clearly bet#een the right of action
arising from the improper interference #ith the contract by a stranger thereto, considered as an
independent act generate of civil liability, and the right of action e) contractu against a party to the
contract resulting from the breach thereof. 0o#ever, #e do not propose here to pursue the matter
further, inasmuch as, for reasons presently to be stated, #e are of the opinion that neither the doctrine
of @umley vs. -ye NsupraO nor the application made of it by this court in -ilchrist vs. Cuddy $)> Phil.
Eep., '!)%, affords any basis for the recovery of the damages #hich the plaintiff is supposed to have
suffered by reason of his inability to comply #ith the terms of the 9a3efield contract.
9hatever may be the character of the liability #hich a stranger to a contract may incur by advising or
assisting one of the parties to evade performance, there is one proposition upon #hich all must agree.
This is, that the stranger cannot become more e*tensively liable in damages for the nonperformance of
the contract than the party in #hose behalf he intermeddles. To hold the stranger liable for damages in
e*cess of those that could be recovered against the immediate party to the contract #ould lead to results
at once grotes7ue and unjust. In the case at bar, as Teodorica 8ndencia #as the party directly bound by
the contract, it is obvious that the liability of the defendant corporation, even admitting that it has made
itself coparticipant in the breach of the contract, can in no even e*ceed hers. This leads us to consider at
this point the e*tent of the liability of Teodorica 8ndencia to the plaintiff by reason of her failure to
surrender the certificate of title and to place the plaintiff in possession.
It should in the first place be noted that the liability of Teodorica 8ndencia for damages resulting from
the breach of her contract #ith 5ay#alt #as a proper subject for adjudication in the action for specific
performance #hich 5ay#alt instituted against her in >(> and #hich #as litigated by him to a
successful conclusion in this court, but #ithout obtaining any special adjudication #ith reference to
damages. Indemnification for damages resulting from the breach of a contract is a right inseparably
anne*ed to every action for the fulfillment of the obligation $art. )!, Civil Code%1 and its is clear that
if damages are not sought or recovered in the action to enforce performance they cannot be recovered
in an independent action. ,s to Teodorica 8ndencia, therefore, it should be considered that the right of
action to recover damages for the breach of the contract in 7uestion #as e*hausted in the prior suit.
0o#ever, her attorneys have not seen fit to interpose the defense of res 7udicata in her behalf1 and as
the defendant corporation #as not a party to that action, and such defense could not in any event be of
any avail to it, #e proceed to consider the 7uestion of the liability of Teodorica 8ndencia for damages
#ithout refernce to this point.
The most that can be said #ith refernce to the conduct of Teodorica 8ndencia is that she refused to
carry out a contract for the sale of certain land and resisted to the last an action for specific
performance in court. The result #as that the plaintiff #as prevented during a period of several years
from e*erting that control over the property #hich he #as entitled to e*ert and #as mean#hile unable
to dispose of the property advantageously. <o#, #hat is the measure of damages for the #rongful
detention of real property by the vender after the time has come for him to place the purchaser in
possessionB
The damages ordinarily and normally recoverable against a vendor for failure to deliver land #hich he
has contracted to deliver is the value of the use and occupation of the land for the time during #hich it
is #rongfully #ithheld. ,nd of course #here the purchaser has not paid the purchaser money, a
deduction may be made in respect to the interest on the money #hich constitutes the purchase price.
6ubstantially the same rule holds #ith respect to the liability of a landlord #ho fails to put his tenant in
possession pursuant to contract of lease. The measure of damages is the value of the leasehold interest,
or use and occupation, less the stipulated rent, #here this has not been paid. The rule that the measure
of damages for the #rongful detention of land is normally to be found in the value of use and
occupation is, #e believe, one of the things that may be considered certain in the la# $=> cyc., +=(1 )!
Cyc., (') 6edge#ic3 on 5amages, <inth ed., sec. ;'.% K almost as #ellsettled, indeed, as the rule
that the measure of damages for the #rongful detention of money is to be found in the interest.
9e recogni?e the possibility that more e*tensive damages may be recovered #here, at the time of the
creation of the contractual obligation, the vendor, or lessor, is a#are of the use to #hich the purchaser
or lessee desires to put the property #hich is the subject of the contract, and the contract is made #ith
the eyes of the vendor or lessor open to the possibility of the damage #hich may result to the other
party from his o#n failure to give possession. The case before us is not this character, inasmuch as at
the time #hen the rights of the parties under the contract #ere determined, nothing #as 3no#n to any
to them about the 6an Francisco capitalist #ho #ould be #illing to bac3 the project portrayed in
8*hibit C.
The e*tent of the liability for the breach of a contract must be determined in the light of the situation in
e*istence at the time the contract is made1 and the damages ordinarily recoverable are in all events
limited to such as might be reasonable are in all events limited to such as might be reasonably foreseen
in the light of the facts then 3no#n to the contracting parties. 9here the purchaser desires to protect
himself, in the contingency of the failure of the vendor promptly to give possession, from the
possibility of incurring other damages than such as the incident to the normal value of the use and
occupation, he should cause to be inserted in the contract a clause providing for stipulated amount to
the paid upon failure of the vendor to give possession1 and not case has been called to our attention
#here, in the absence of such a stipulation, damages have been held to be recoverable by the purchaser
in e*cess of the normal value of use and occupation. An the contrary, the most fundamental
conceptions of the la# relative to the assessment of damages are inconsistent #ith such idea.
The principles governing this branch of the la# #ere profoundly considered in the case 0adley vs.
4a*endale $> 8*ch., =!%, decided in the 8nglish Court of 8*che7uer in ;'!1 and a fe# #ords relative
to the principles governing #ill here be found instructive. The decision in that case is considered a
leading authority in the jurisprudence of the common la#. The plaintiffs in that case #ere proprietors of
a mill in -loucester, #hich #as propelled by steam, and #hich #as engaged in grinding and supplying
meal and flour to customers. The shaft of the engine got bro3en, and it became necessarily that the
bro3en shaft be sent to an engineer or foundry man at -reen#ich, to serve as a model for casting or
manufacturing another that #ould fit into the machinery. The bro3en shaft could be delivered at
-reen#ich on the second day after its receipts by the carrier it. It #as delivered to the defendants, #ho
#ere common carriers engaged in that business bet#een these points, and #ho had told plaintiffs it
#ould be delivered at -reen#ich on the second day after its delivery to them, if delivered at a given
hour. The carriers #ere informed that the mill #as stopped, but #ere not informed of the special
purpose for #hich the bro3en shaft #as desired to for#arded, They #ere not told the mill #ould remain
idle until the ne# shaft #ould be returned, or that the ne# shaft could not be manufactured at
-reen#ich until the bro3en one arrived to serve as a model. There #as delay beyond the t#o days in
delivering the bro3en shaft at -reen#ich, and a corresponding delay in starting the mill. <o
e*planation of the delay #as offered by the carriers. The suit #as brought to recover damages for the
lost profits of the mill, cause by the delay in delivering the bro3en shaft. It #as held that the plaintiff
could not recover.
The discussion contained in the opinion of the court in that case leads to the conclusion that the
damages recoverable in case of the breach of a contract are t#o sorts, namely, $% the ordinary, natural,
and in a sense necessary damage1 and $)% special damages.
Ardinary damages is found in all breaches of contract #here the are no special circumstances to
distinguish the case specially from other contracts. The consideration paid for an unperformed promise
is an instance of this sort of damage. In all such cases the damages recoverable are such as naturally
and generally #ould result from such a breach, &according to the usual course of things.& In case
involving only ordinary damage no discussion is ever indulged as to #hether that damage #as
contemplated or not. This is conclusively presumed from the immediateness and inevitableness of the
damage, and the recovery of such damage follo#s as a necessary legal conse7uence of the breach.
Ardinary damage is assumed as a matter of la# to be #ithin the contemplation of the parties.
6pecial damage, on the other hand, is such as follo#s less directly from the breach than ordinary
damage. It is only found in case #here some e*ternal condition, apart from the actual terms to the
contract e*ists or intervenes, as it #ere, to give a turn to affairs and to increase damage in a #ay that
the promisor, #ithout actual notice of that e*ternal condition, could not reasonably be e*pected to
foresee. Concerning this sort of damage, 0adley vs. 4a*endale $;'!% NsupraO lays do#n the definite
and just rule that before such damage can be recovered the plaintiff must sho# that the particular
condition #hich made the damage a possible and li3ely conse7uence of the breach #as 3no#n to the
defendant at the time the contract #as made.
The statement that special damages may be recovered #here the li3elihood of such damages flo#ing
from the breach of the contract is contemplated and foreseen by the parties needs to be supplemented
by a proposition #hich, though not enunciated in 0adley vs. 4a*endale, is yet clearly to be dra#n from
subse7uent cases. This is that #here the damage #hich a plaintiff see3s to recover as special damage is
so far speculative as to be in contemplation of la# remote, notification of the special conditions #hich
ma3e that damage possible cannot render the defendant liable therefor. To bring damages #hich #ould
ordinarily be treated as remote #ithin the category of recoverable special damages, it is necessary that
the condition should be made the subject of contract in such sense as to become an e*press or implied
term of the engagement. 0orne vs. Midland E. Co. $@. E., ; C. P., =% is a case #here the damage
#hich #as sought to be recovered as special damage #as really remote, and some of the judges rightly
places the disallo#ance of the damage on the ground that to ma3e such damage recoverable, it must so
far have been #ithin the contemplation of the parties as to form at least an implied term of the contract.
4ut others proceeded on the idea that the notice given to the defendant #as not sufficiently full and
definite. The result #as the same in either vie#. The facts in that case #ere as follo#s. The plaintiffs,
shoe manufacturers at D, #ere under contract to supply by a certain day shoes to a firm in @ondon for
the French government. They delivered the shoes to a carrier in sufficient time for the goods to reach
@ondon at the time stipulated in the contract and informed the railroad agent that the shoes #ould be
thro#n bac3 upon their hands if they did not reach the destination in time. The defendants negligently
failed to for#ard the good in due season. The sale #as therefore lost, and the mar3et having fallen, the
plaintiffs had to sell at a loss.
In the preceding discussion #e have considered the plaintiff/s right chiefly against Teodorica 8ndencia1
and #hat has been said suffices in our opinion to demonstrate that the damages laid under the second
cause of action in the complaint could not be recovered from her, first, because the damages laid under
the second cause of action in the complaint could not be recovered from her, first, because the damages
in 7uestion are special damages #hich #ere not #ithin contemplation of the parties #hen the contract
#as made, and secondly, because said damages are too remote to be the subject of recovery. This
conclusion is also necessarily fatal to the right of the plaintiff to recover such damages from the
defendant corporation, for, as already suggested, by advising Teodorica not to perform the contract,
said corporation could in no event render itself more e*tensively liable than the principle in the
contract.
Aur conclusion is that the judgment of the trial court should be affirmed, and it is so ordered, #ith costs
against the appellant.
Arellano, C.*., +orres, Carson, Araullo, $alcol', Avancea and $oir, **., concur.
8< 4,<C
G.R. No. 59482 August 29, 1959
ATT<. ELADIO CH. RU-IO, petitioner,
vs.
HON. COURT OF APPEALS, HON. NICOLAS P. LAPENA 'R., HON. FIDEL P. PURISIMA
$!( HON. SEGUNDINO CHUA, $++ Cou,t o* A%%)$+s Asso#$t) 'ust#)sG $!( HON.
MARTIN P. -ADONG o* RTC -,$!#" 15, T$6$#o, A+6$&, respondents.
6"adio #h. Rubio for and in his own beha"f.
!emesio R. Bac"ao for .omin$a '. &an %ab"o and her nine chi"dren.
&9%O3@T#O?

PER CURIAMA
The petitioner *as found +uilty of direct conte"pt and sentenced to five B) days
i"prison"ent and a fine of P 400.00 by 7ud+e >artin 2. 2adon+ of the &e+ional Trial Court of
$lbay. <e =uestioned this order in a petition for certiorari *ith the Court of $ppeals, *hich
denied the sa"e on the +round that certiorari *as not the proper re"edy and that, in any
case, the record sho*ed that the respondent /ud+e had i""ediately rectified the errors
i"puted to hi" in his earlier i"pu+ned order. The petitioner has no* co"e before us to
protest this decision.
6e hold at the outset that the respondent Court of $ppeals has co""itted no reversible error
and that, on the contrary, the challen+ed decision is in accordance *ith la* and
/urisprudence. $ccordin+ly, it "ust be, as it is hereby, affir"ed.
2ut the "atter does not end here. There is still the =uestionable conduct of the petitioner in
this case that has elicited the concern of the Court.
8isa+reein+ *ith the choice of ad"inistrator "ade by 7ud+e 2adon+ in the estate
proceedin+s, the petitioner filed in the trial court *hat he captioned an C@r+ent 9-.Parte
>otion Prayin+ that 7ud+e >artin P. 2adon+ <i"self motu proprio &econsider and %et $side
#""ediately <is O*n Order 8ated 7uly 9, 195( $ppointin+ Oppositor 9u+enia Tabinas as the
&e+ular $d"inistrator in this Case %pecial Proceedin+ ?o. T10B, 9tc.C #n this "otion, he
accused 7ud+e 2adon+ of the cri"e of C!$3%#!#C$T#O? for reco+ni0in+ 9u+enia Tabinas
%an Pablo as the le+iti"ate *ife of the decedentC and stressed that the /ud+e *as sub/ect to
the penalties i"posed by the &evised Penal Code. <e averred that the /ud+e *as Cen+a+ed
in $ross misconduct and serious misbehavior and in violatin+ his la*yer,s oath,C and *as
Cdoin+ fa"sehood in his own court and vio"atin$ his "aw1erAs oathC for *hich he should be
C8#%2$&&98.C #n addition, he attached to his "otion a copy of a petition for certiorari *ith a
notation on the "ar+in that it *ould be filed *ith the Court of $ppeals unless the /ud+e
i""ediately rectified his order.
6hen asked to sho* cause *hy he should not be cited for conte"pt, the petitioner filed a 16.
pa+e co"pliance in *hich he repeated substantially the sa"e alle+ations in his "otion in the
sa"e veno"ous lan+ua+e and *ithout any si+n of repentance or apolo+y. The /ud+e
therefore i"posed upon hi" the above."entioned penalty.
#n his present petition, $tty. &ubio has turned his bile on the three "e"bers of the Court of
$ppeals *ho dis"issed his petition and in effect sustained 7ud+e 2adon+,s =uestioned
decision. The sa"e obvious "alice and disdain reveal all too tellin+ly the petitioner,s
conte"ptuous attitude to*ard the said /ustices *ho" he also accuses of CT<9 C&#>9 of
!$3%#!#C$T#O? intentionally "aliciously, feloniously, and OP9?3I bein+ co""ittedC by
the". <e clai"s that they have "ade Cuntruthful state"entsC and that they ,$33 $&9 !@33I
$6$&9 of the @?T&@T<!@3 %T$T9>9?T% #? T<9#& O6? 89C#%#O? and that they are
openly co""ittin+ the cri"e of !$3%#!#C$T#O?.C &epeatedly, he insists that the said /ustices
are C$33 !@33I $6$&9 of T<9#& O6? !$3%9<OO8% #? T<9#& O6? 89C#%#O? and that
Cthey are doin+ !$3%9<OO8% &#H<T #? T<9#& O6? CO@&T $?8 G#O3$T#?H 6#T<
#>P@?#TI T<9#& 3$6I9&%, O$T< C <e stresses that the said /ustices Care no* actively
9?H$H98 #? G9&I %9&#O@% >#%CO?8@CT #? T<9 P9&!O&>$?C9 O! T<9#&
7@8#C#$3 8@T#9% and G9&I >@C< 6O&%9 than for"er 7ud+e 8ionisio ?. Capistrano *ho
*as recently dishonorably dis"issed fro" the /udiciary.C <e concludes that the said /ustices
Cdeserve ?O6 to be 8#%<O?O&$23I 8#%>#%%98 fro" the /udiciary *hich they have
intentionally dishonored and continue to OP9?3I dishonor until no* a) *ith their o*n
!$3%9<OO8 in courtF b) *ith their C&#>9 O! !$3%#!#C$T#O?, and *ith their G9&I, G9&I
%9&#O@% >#%CO?8@CT.C There are si"ilar state"ents found else*here in the records of
this case, "ost of the" capitali0ed to stress the petitioner,s ar+u"ents and also althou+h this
*as not intended) his "alice and boorishness.
The petition is *orded in scurrilous and offensive lan+ua+e that clearly "anifests the
petitioner,s +ross disrespect for the trial /ud+e and the "e"bers of the Court of $ppeals *ho
rendered the challen+ed decision. This conduct and attitude of the petitioner cannot be si"ply
disre+arded by this Court or e-cused as a "ere eccentricity.
6hile every la*yer is entitled to present his case before the courts of /ustice *ith vi+or and
coura+e, he is not per"itted to "anifest such enthusias" throu+h threatenin+ and abusive
lan+ua+e, as in the case before us. The insolence displayed by the petitioner all too clearly
de"onstrates not only his spiteful character but as *ell his lack of respect for the courts of
/ustice. #nti"idatin+ /ud+es and accusin+ the" of personal *ron+doin+, especially if such
accusations are clearly unfounded, ill beco"es a "e"ber of the bar *ho, as such, o*es a
fittin+ courtesy and respect to those *ho sit on the bench and before *ho" he pleads. 6hile
there is no doubt that counsel have every ri+ht to i"pute to /ud+es honest "istakes in their
decisions, ascribin+ to the" personal shortco"in+s and vices and even deliberate atte"pts to
falsify the truth, cannot be condoned under the Code of Professional &esponsibility *hich
every la*yer "ust observe.
The da"nin+ evidence of the petitioner,s o*n verified pleadin+s has indubitably established is
+rossly i"proper conduct *ithout need of further proof or proceedin+s.
The petitioner has clearly sho*n by his arro+ant conduct that he does not deserve to re"ain
in the Philippine 2ar, *hich re=uires the hi+hest standards of decoru" and courtesy a"on+
its "e"bers. 3ackin+ the proper spirit of respect for the courts of /ustice, *hich he has
threatened and abused C*ith i"punity,C to use his o*n *ords, he "ust be e-cluded fro" the
brotherhood he has dishonored until he has pur+ed hi"self of his insolence.
6<9&9!O&9, the Court holds as follo*sA
1. The petition is 89?#98 for lack of "erit.
4. $tty. 9ladio Ch. &ubio is hereby %@%P9?898 as a "e"ber of the Philippine
2ar and is prohibited fro" en+a+in+ in the practice of la* until other*ise ordered
by this Court. This resolution shall be spread in his personal record and is
i""ediately e-ecutory.
%O O&89&98.